Mining Equipment “Minquip” Pty Ltd v Alfagomma Australia Pty Ltd
[2004] FCA 780
•23 JUNE 2004
FEDERAL COURT OF AUSTRALIA
Mining Equipment “Minquip” Pty Ltd v Alfagomma Australia Pty Ltd [2004] FCA 780
DESIGN ACT – Prior use – whether design had been ‘applied industrially’ before priority date
Design Act 1906 (Cth)
Trade Practices Act 1974 (Cth)Minquip Pty Ltd v Mining Supplies Australia Pty Ltd [2001] FCA 1378
Press-Form Pty Ltd v Hendersons Ltd (1993) 112 ALR 671
Wanem Pty Ltd v Tekiela (1990) 19 IPR 435MINING EQUIPMENT “MINQUIP” PTY LTD (ACN 068 658 962) v ALFAGOMMA AUSTRALIA PTY LTD (ACN 052 243 366) & ERIC SACCO
S 31 of 2004
SELWAY J
23 JUNE 2004
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
S 31 0f 2004
BETWEEN:
MINING EQUIPMENT “MINQUIP” PTY LTD
(ACN 068 658 962)
APPLICANTAND:
ALFAGOMMA AUSTRALIA PTY LTD
(ACN 052 243 366)
FIRST RESPONDENT/CROSS - CLAIMANTERIC SACCO
SECOND RESPONDENTAND:
MINING EQUIPMENT “MINQUIP” PTY LTD
(ACN 068 658 962)
CROSS-RESPONDENTJUDGE:
SELWAY J
DATE OF ORDER:
23 JUNE 2004
WHERE MADE:
ADELAIDE
THE COURT DECLARES:
1.That Australian Registered Design No 131967 is and has been at all material times invalid.
AND THE COURT ORDERS:
2.That the register be rectified by the expungement of Australian Registered Design No 131967.
3. That the application by the applicant is dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
S 31 OF 2004
BETWEEN:
MINING EQUIPMENT “MINQUIP” PTY LTD
(ACN 068 658 962)
APPLICANTAND:
ALFAGOMMA AUSTRALIA PTY LTD
(ACN 052 243 366)
FIRST RESPONDENT/CROSS - CLAIMANTERIC SACCO
SECOND RESPONDENTAND:
MINING EQUIPMENT “MINQUIP” PTY LTD
(ACN 068 658 962)
CROSS-RESPONDENT
JUDGE:
SELWAY J
DATE:
23 JUNE 2004
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
On 2 March, 2004 the applicant Mining Equipment ‘Minquip’ Pty Ltd (‘Minquip’) issued proceedings in this Court seeking declarations, injunctions and damages against the respondents in respect of alleged breaches of the Design Act 1906 (Cth) (‘the Act’) and the Trade Practices Act 1974 (Cth) (‘the TPA’) and for passing off. The claims relate to an ‘A’ type bellows seal coupling (bellows coupling) which is described in more detail below. The action under the TPA and for passing off has been abandoned and in consequence the proceedings against the second respondent have been dismissed. What is left is an action against the first respondent Alfagomma Australia Pty Ltd (‘Alfagomma’) for an alleged breach of Minquip’s registered design. Alfagomma disputes that it has breached Minquip’s registered design. In addition Alfagomma has cross-claimed alleging that the registered design was published or used in Australia by Minquip before the priority date of 15 April 1997 with the consequence that the registered design is invalid. Minquip denies the alleged prior use. The parties desired an early hearing of the action. It was heard for three days from 25 May 2004. For the reasons given below, Alfagomma succeeds on its cross-claim that the registration of the design is invalid. It follows that the application by Minquip must be dismissed.
The first issue to be resolved depends upon the validity of Minquip’s registered design. There is no dispute between the parties that Minquip developed the bellows coupling for use in the mining industry and elsewhere.
In order to understand the significance of that development it is necessary to discuss some of the background to it. The previous ‘A’ type coupling used in the mining industry consisted of a coupling with a square recess in the barrel. That coupling was joined with another coupling for the purpose of joining the two hoses attached to the couplings. One coupling contained a stiff rubberised seal. Such seal was held in place by a square ridge which fitted into the recess in the barrel of the coupling. This seal formed by the solid seal pushing against the surface of the other coupling suffered from the disadvantage that the stiffness of the rubberised seal meant that the couplings were difficult to connect. In addition the seal often leaked. There were other coupling types available, particularly the surelock coupling. This had a bellow (or hollow) rubberised seal. It was easier to use that the ‘A’ type coupling which was then available, but was less effective in forming a seal that did not leak.
The development by Minquip involved the use of a cylindrical or rounded internal cavity in the barrel of the coupling into which was placed a corresponding convex or rounded bellow-type seal. The resulting coupling was the bellow coupling which is the subject of these proceedings. The advantage of the bellow coupling over the previous ‘A’ type coupling and the surelock coupling was that it was both easy to use and maintained a seal from low pressure to the physical failure of the coupling.
Sections 17 and 17A of the Act provide in part:
‘17 (1) Subject to this Act, a design shall not be registered unless it is a new or original design and, in particular, shall not be registered in respect of an article if the design:
(a)differs only in immaterial details or in features commonly used in the relevant trade from a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of the same article; or
(b)is an obvious adaptation of a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of any other article.
(1A)For the purposes of subsection (1), account shall not be taken of any secret use.
…
17A (1) Where:
(a)copyright under the Copyright Act 1968 subsists in an artistic work; and
(b)an application is made by, or with the consent of, the owner of that copyright for the registration of a corresponding design;
that design shall not be treated for the purposes of this Act as being other than new or original, or as having been published, by reason only of any use previously made of the artistic work unless:
(c)the previous use consisted of or included the sale, letting for hire or offering or exposing for sale or hire of articles to which the design had been applied industrially, other than articles specified in regulations made for the purposes of subsection 17(2); and
(d)the previous use was made by, or with the consent of, the owner of the copyright in the artistic work.
(2)Any regulations in force under the Copyright Act 1968 that make provision for determining the circumstances in which a design is, for the purposes of section 77 of that Act, to be deemed to be applied industrially have effect for the purposes of subsection (1).’
The effect of these provisions in the context of the present case can be summarised as follows:
(a)A design cannot be registered if the article for which registration was sought was ‘published or used’ prior to the priority date: s 17(1) of the Act;
(b)The principle in (a) does not apply if the person holds the copyright in the artistic work (such as the drawings) for which the application for registration is a corresponding design: s 17A(1) of the Act;
(c)The qualification in (b) does not apply if the previous use included offering or exposing the articles for sale or applying them industrially: s 17A(1)(c) of the Act.
On 15 April, 1997 Minquip applied for a registered design for the bellows coupling. (It would also appear that Minquip applied for a petty patent for the corresponding bellows seal, but that is not a matter that arises in these proceedings). The design was registered for a period of one year on 6 November, 1997 (registered design 131967). The Certificate of registration provided in part:
‘I, Bruce lan Murray, Registrar of Designs, certify that the design, a representation of which is attached, has been registered in the Register of Designs, and that the following details have been entered in the Register in respect of that registration.
Name and Address of Owner(s):
Mining Equipment (Minquip) Pty Ltd
Unit 2 2 Piping Lane Lonsdale South Australia 5160 AustraliaName of Author(s): David Byrne
Article in respect of which the design is registered: A coupling
Application Number: 1173/ 1997
Date on which Application for Registration of the Design was lodged: 15 April 1997
Statement of Monopoly: Monopoly is claimed in shape and configuration of a coupling as illustrated in the accompanying representations.
Statement of Novelty: Novelty lies in the internal toroidal cavity.
Term of Initial Registration: One year commencing on 6 November, 1997’
The attached representations were as follows:
Prior to the expiration of registration on 6 November, 1998 Minquip applied to extend the period of registration. This was opposed by a competitor of Minquip. The Registrar determined that the registration should not be renewed on the basis that the relevant design with a cylindrical or rounded cavity was not relevantly new or original, but was merely an adaptation of the previous design with a square cavity. Minquip applied under s 27A(11) of the Act to have that decision reviewed in this Court. Those proceedings were heard by Allsop J. In the event there was no contravener to Minquip. Nevertheless his Honour gave detailed considerations to the argument put by Minquip. In the result Allsop J was satisfied that the design was new and original and ordered that the period of registration be extended to 15 April, 2003: see Minquip Pty Ltd v Mining Supplies Australia Pty Ltd [2001] FCA 1378. It should be noted that there was no argument put to Allsop J that the registration was invalid by reason of the prior publication or use of the bellows coupling by Minquip prior to the registration date. This issue was not considered in the reasons for judgment. It is also noted that Allsop J made it plain that the orders he made were only between Minquip and the objector (see at [64]). Alfagomma was not a party to the proceedings. Those orders do not bind Alfagomma.
The currency of the registration of the design has been maintained since that date. Subject to the question of validity, Minquip currently holds the registered design.
Alfagomma says that prior to its application for a registered design Minquip had displayed the bellows coupling and had provided samples of it to Alfagomma and to prospective customers. For this purpose it relied primarily on the evidence of Mr Wilson, an employee of Alfagomma. His evidence was that Mr Byrne of Minquip approached Alfagomma in about September, 1996 seeking to interest Alfagomma in distributing Minquip couplings. Mr Wilson says that Mr Byrne told him at that time that he had developed the bellows coupling. He says that Minquip provided a sample of the bellows coupling in November, 1996 which Alfagomma tested. As a result Alfagomma agreed to distribute Minquip products. According to Mr Wilson ‘in or about December [1996] or early 1997’ Mr Byrne and he visited various distributors and customers of Alfagomma for the purpose of showing samples of the bellows coupling. These included Mr Donaldson of Powercoal.
Mr Webb SC, who appeared for Minquip, properly conceded that if this case were established then the registration of Minquip’s design would be invalid. On Alfagomma’s case it would seem clear that Minquip had ‘used’ the bellows couplings before the priority date: see s 17 of the Act. Assuming that Minquip had the copyright in drawings etc it would also seem clear on that case that Minquip had applied the bellows coupling industrially prior to the priority date: see s 17A of the Act and see Press-Form Pty Ltd v Hendersons Ltd (1993) 112 ALR 671, 681-682.
Minquip’s case was that Mr Wilson’s evidence was wrong. Minquip called Mr Byrne. His evidence was that there was no arrangement between Minquip and Alfagomma until January, 1997 and that that arrangement had been made with Mr Holt (who was employed by Alfagomma), not with Mr Wilson. Mr Byrne gave evidence that there were no drawings of the bellows coupling until 15 April, 1997 when he made the drawings for submission to the patent attorneys. He says that he did not manufacture any quantities of the coupling until after he received ‘blank couplings’ on or about 7 May, 1997. Those blank couplings were then machined in accordance with the drawings. He says that Minquip did not order fully finished couplings (which included the curved cavity) until June, 1997 and they were not supplied until late August. He says that the bellow coupling was not supplied to Alfagomma until August, 1997 and that it was not displayed to distributors or customers until at least October, 1997. He says, for example, that Mr Donaldson of Powercoal tested the bellow seal in December 1997. He denied that he ever attended a meeting with Mr Donaldson at which Mr Wilson was also present.
The result is that there is a relatively straight forward factual dispute. Mr Wilson says that events occurred before 15 April, 1997 which Mr Byrne says occurred after that date.
There are two problems with resolving this factual dispute. The first is that neither party still retains the relevant documents for the period from late 1996 to early 1997 that could resolve it or, if they do, they have not been put before me. What documents there are, are ambiguous or are not directly relevant to the critical issue of when the bellows coupling was first produced by Minquip and first displayed or promoted by it. Nor were any other witnesses called (such as the other persons referred to in the evidence) who may have been able to assist as to the dates that various events occurred. The only witness who was called who may have been able to corroborate any of the evidence of the other two was Mr Holt. He was called by Minquip at short notice for the purpose of establishing a chain of evidence. Neither party asked him any questions concerning the critical factual dispute, notwithstanding that he did have some involvement as an employee of Alfagomma in 1996-1997.
The other problem is that both of the primary witnesses had obvious difficulties in recalling matters of detail, particularly dates. I did not form the view that either Mr Wilson or Mr Byrne deliberately lied in their evidence. However, given the difficulties they had I am not prepared to rely upon their recollections of dates or other matters of detail unless it is independently corroborated.
The documentary record confirms Mr Byrne’s evidence that the bellows coupling was not generally available for commercial sale in the market until the second half of 1997 and probably after August, 1997. However, that is not the issue. The issue is whether samples were available and distributed to those in the market place for testing before 15 April, 1997. In my view the documents relied upon by Mr Byrne do not confirm his evidence that they were not available. At best they may assist his memory as to what occurred at particular dates or times. As already mentioned I am not prepared to rely upon his memory.
Although the issue was not explored in detail in the evidence it would seem obvious that Minquip produced samples of the bellows coupling for its own testing and design purposes well before 15 April, 1997. Mr Byrne in his affidavit of 24 May, 2004 refers to the production before that date of bellows couplings by machining previous A type couplings with square cavities. There was also evidence that in 1998 a ‘substantial stock’ of the remaining A type couplings with square cavities were machined to create bellow couplings. Obviously the production of samples by machining the previous A type coupling was possible. It was also necessary. The testing of the product (which Mr Byrne accepted had occurred prior to the application for registration) required not only a coupling with a curved cavity but also the production of the bellows seal that fitted the cavity. As a matter of common sense there must have been some, and maybe a considerable number, of bellows couplings in existence prior to 15 April, 1997. So understood the relevant documents relied upon by Mr Byrne do not in fact address the question whether samples of the bellows coupling were provided to Alfagomma and others for testing prior to 15 April, 1997.
There are two separate pieces of evidence that tend to confirm not only that samples were available, but also that they were made available in the market place.
First is a letter of 29 October, 1996 sent by Minquip to the Western Australian office of Alfagomma. That letter refers to ‘redesigned seals ... [that] do not leak at low pressures (oppositions always have).’ The Minquip product catalogue attached to that letter identified the major improvements to Minquip products (specified as A type and surelock couplings) as including:
‘Redesigned seals (patent pending) to give much better results to any on the current market, no leaks between 0 - 800 P.S.I. “AMDEL” who are a NATA approved testing authority and recognized by the N.S.W. Mines department as a certified testing authority were chosen to conduct our tests. (See attached test results).’
It is not clear what AMDEL report was attached. However, there was tendered into evidence an AMDEL report to Minquip dated 30 April, 1996 in relation to the testing of an A type coupling which showed that there was no leakage from low pressure to the failure of the seal. Indeed, it would appear that the coupling in at least one of those tests performed better than did a bellows coupling tested by AMDEL on 18 December, 1997.
Admittedly this letter and its attachments do not expressly refer to bellows couplings. However, the terms of Minquip’s current product catalogue are in similar terms to the catalogue of October, 1996 and Mr Byrnes did accept that those terms in the current catalogue do refer to the bellows coupling. Further, Mr Byrne gave evidence that the bellows coupling did not leak between zero pressure and coupling failure in contrast to the couplings of his competitors and his own previous product which did. On the face of it the letter of 29 October, 1996 from Minquip would seem to be referring to the bellows coupling and would seem to be promoting it as a product in the market place.
In his affidavit of 14 April, 2004 Mr Byrnes said that the letter and attachments of 29 October, 1996 did not refer to an A type coupling, but to the surelock coupling. However, it is clear from the AMDEL report of April, 1996 that as at October, Minquip was able to produce an A type coupling that answered the performance of a bellows coupling. It would also appear from his evidence that the only coupling capable of that performance was the bellows coupling.
The letter of 29 October, 1996 would probably not be enough by itself to establish that samples of the bellows coupling were available for testing and assessment in 1996. However, the inferences from that letter are confirmed by other material from Mr Byrne. Mr Byrne made two statutory declarations in relation to the objections made to the renewal of the registration of the design. In a statutory declaration made by him on 23 April, 1999 Mr Byrne deposed:
‘… The only other change to the head shape made since the introduction of the A-type coupling is the one that I introduced in 1996 through my company Minquip, and is the subject of Registered Design 131967.’
In that same statutory declaration Mr Byrne sets out a chronology of the changes to the head shape of the coupling. For the year 1996 he refers to the introduction of the ‘Internal toroidal cavity’ to the type A coupling.
Mr Byrne made another statutory declaration on 16 November, 1998. That statutory declaration does not deal expressly with the development of the bellows coupling. However, it does deal with the development of the bellows seal that went into the coupling. In that statutory declaration he deposed to the development of the bellows seal during the period from June 1995 to ‘about March, 1996’. Those developments included the development of a bellows seal for an A type coupling. As is clear from that statutory declaration, the development of the rubberised bellows seal could not proceed independently of the development of the bellows coupling. Again the clear inference would seem to be that samples of the bellows coupling were made and tested in early 1996.
In relation to these statutory declarations Mr Byrne said that the dates were wrong. He says that the error was the result of the confusion between the patent issues in relation to the bellows seal (which apparently related to 1996) and the design application in relation to the bellows coupling (which related to 1997). However, he made the statutory declarations significantly closer to the dates on which the events occurred than when he gave evidence before me. Further, as the statutory declaration of 16 November, 1998 makes clear, the development of the seal and of the coupling were not entirely separate. I think it more likely that those dates are correct than that his current recollection is accurate.
There are some other matters which also help to confirm that samples were available in 1996. There is the affidavit of Mr Evers, then Superintendent of Production at Pasminco Mining which was sworn on 19 June, 2001. That affidavit was filed on behalf of Minquip in the Federal Court proceedings before Allsop J. In that affidavit he deposed to being approached by Mr Byrnes ‘in 1996’ and shown a bellows coupling. He says that he agreed ‘to put some of these new Type A couplings onto a drilling rig to evaluate performance under actual working conditions’. It would seem to be clear from that affidavit that this testing occurred in 1996. Mr Evers was not called to give evidence in these proceedings. In these circumstances I am only prepared to give limited weight to that evidence. Nevertheless it does support the case put by Alfagomma.
I should mention two other pieces of evidence relied upon by Alfagomma. The first is a letter from the solicitors for Minquip dated 21 January, 2004 which asserts that Minquip has manufactured and sold the bellows coupling ‘since 1996’. However, that letter relies upon the instructions apparently given by Mr Byrne. As I am not prepared to rely upon his current memory as to the dates when things occurred in 1996 and 1997 I can hardly rely upon the instructions that he apparently gave based upon that memory. The second is a statutory declaration made on 20 April, 1999 by Mr Ian Donaldson who was then employed by Powercoal. In that declaration Mr Donaldson deposed to having identified in 1996 a problem with the couplings and seals then being used by Powercoal and that the company tested and then used Minquip’s bellows couplings to resolve that problem. However the statutory declaration does not specify when the testing was undertaken. I am not prepared to assume that it occurred before 15 April, 1997.
Unsatisfactory as the evidence is I am nevertheless satisfied that, taken together, the statutory declarations made by Mr Byrne; the letter of 26 October, 1996; the support provided by the affidavit of Mr Evers and the common sense that samples of the bellows couplings were produced and tested prior to 15 April, 1997 all serve to confirm Mr Wilson’s evidence that samples were available in late 1996 and early 1997 and that those samples were shown to and made available for testing by Alfagomma and some of its customers. Consequently I am satisfied that Mr Wilson’s evidence in that regard is correct at least in general terms.
In my view Minquip ‘used’ the bellows coupling prior to the priority date of 15 April, 1997. In my view Minquip applied the bellows coupling industrially prior to the priority date. It follows that the registration of the design was invalid. The cross claim by Alfagomma is successful.
Given this conclusion it is strictly unnecessary for me to consider whether Alfagomma infringed Minquip’s registered design, assuming that the registration was valid. However, in case the issue may need to be considered further elsewhere:
(a)I am satisfied that Alfagomma imported into Australia and sold at least six couplings which were purchased by Mr Holt on or about 10 December, 2003 and which were tendered as Exhibit A4 and Exhibit A5.
(b)Applying the test summarised by Gummow J in Wanem Pty Ltd v Tekiela (1990) 19 IPR 435 at 440 I am satisfied that the six couplings referred to in (a) infringe Minquip’s registered design: see s 30 of the Act. In particular, I am satisfied that the cavity in the barrel of those couplings is a concave cavity that can be described for relevant purposes as a ‘toroidal’ cavity. It is an obvious imitation of the registered design. I make that finding notwithstanding that some of the machining of the cavity is not smooth and, to that extent, the cavity might be said to consist of a number of small planes between the various ridges or grooves resulting from that machining. I am satisfied that the overall appearance of each of the six couplings, and the cavity in particular, is an infringement of the registered design.
(c)Notwithstanding my finding in (b) I am not satisfied that the manufacture of the six couplings referred to in (a) was ‘fraudulent’ for the purposes of s 30 of the Act.
(d)I am not satisfied that Alfagomma imported into Australia or sold in Australia the three couplings that were discovered by Alfagomma in these proceedings and which were tendered as Exhibit 12. In my view the production of those couplings during the discovery process established no more than that those couplings were in the possession of Alfagomma. Mere possession is not sufficient to infringe the applicant’s rights in the registered design. In any event even if the three couplings were imported or sold I am not satisfied that those three couplings infringed Minquip’s registered design. Although the question may be arguable in relation to one of them (which was marked with the letter ‘A’) I am satisfied that the internal cavity in each of them is not sufficiently continuously curved so as to be generally described as ‘toroidal’ or so as to infringe the registered design.
(e)There was some evidence before me that Alfagomma intends in the future to sell a coupling in the form of the coupling R9 which was tendered into evidence. In my view the coupling R9 does not infringe the registered design. The internal cavity would be described as ‘rectangular’ rather than ‘toroidal’.
These findings and conclusions are dependant upon the validity of the registration of the design. For the reasons already given, in my view the design was not validly registered.
There will be judgment for Alfagomma on the cross claim and declarations and orders should be made accordingly. The application by Minquip should be dismissed. I will hear the parties as to the appropriate orders, including as to costs.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Selway. Associate:
Dated: 23 June 2004
Counsel for the Applicant (also the Cross-Respondent): R Webb SC with M Hoile Solicitor for the Applicant: Piper Alderman Counsel for the First Respondent (also the Cross-Claimant) and the Second Respondent: I Jackman SC Solicitor for the First Respondent (also the Cross-Claimant) and the Second Respondent: Minter Ellison Date of Hearing: 25, 26, 27 May 2004 Date of Judgment: 23 June 2004
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