Sheldon v Metrokane

[2004] FCA 19

FEDERAL COURT OF AUSTRALIA

Sheldon v Metrokane [2004] FCA 19

COPYRIGHT – work of artistic craftsmanship copyright – claimed by United States company (respondent/cross-claimant) – work related to handle enclosing mechanism of corkscrew – mechanism subject of recently expired international patent – United States company exports corkscrew product to Australia – Australian company (applicant) imports corkscrew made by another overseas manufacturer having similar handle enclosing same mechanism – whether Australian importer committed secondary infringement of copyright claimed by United States company for work of artistic craftsmanship relating to handle enclosing the mechanism of corkscrew imported by Australian company from the other manufacturer – authorship of copyright claimed by United States company and its designer not established – artistic craftsmanship not demonstrated in respect of United States company’s corkscrew for qualification as artistic work copyright – if affirmative finding of joint authorship and of copyright had been established then finding of infringement of copyright would have been established – finding of no secondary infringement by Australian company as importer in any event – meaning and implications of work of artistic craftsmanship

PASSING OFF – DECEPTIVE CONDUCT – not established by United States company against Australian company

DECEPTIVE CONDUCT – not established by Australian company against United States company

Copyright Act1968 (Cth) ss 10(1) (various definitions), 14(1), 22(1), 31(1), 32(4), 33(2), 35(2), 36(1), 37(1), 38(1), 74, 75, 76, 77(1), 77(2), 115(1), 115(3), 115(4), 184, 202(1), 218(2) and 249
Copyright (International Protection) Regulations1969 (Cth)
Trade Practices Act1974 Cth ss 52, 53(a), 53(c) 53(d) and 53(g)
Designs Act1906 (Cth)
Patents Act1990 (Cth) s 67

Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450
Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273
SW Hart & Co.  Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466
Zeccola v Universal City Studios Inc (1982) 46 ALR 189
Milpurrurru & Ors v Indofurn Pty Ltd & Ors (1994) 54 FCR 240
Interlego AG & Anor v Croner Trading Pty Ltd (1992) 25 IPR 65
Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88
Performing Rights Society Ltd v London Theatre of Varieties [1924] AC 1
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Express Newspapers v News (UK) Ltd (1990) 18 IPR 201
George Hensher Ltd v Restawhile Upholstery (Lancs.) Ltd [1976] AC 64
Merlet v Mothercare plc (1984) 2 IPR 456
Cuisenaire v Reed [1963] VR 719
Walter v Lane [1900] AC 539
Commissioner of Taxation (Cth) v Murray (1990) 21 FCR 436
Coogi Australia Pty Ltd v Hysport International Pty Ltd & Ors (1998) 86 FCR 154
Bulun Bulun v R T Textiles Pty Ltd (1998) 41 IPR 513
Redwood Music Ltdv B Feldman & Co Ltd (1979) 48 RPC 385
Apple Computer Inc & Anor v Computer Edge Pty Ltd (1986) 161 CLR 171
Bonz Group (Pty) Ltd v Cooke (1994) 3 NZLR 216
Schott Musik International GMBH & Co v Colossal Records of Australia Pty Ltd (1997) 75 FCR 321
Jones v Dunkel
Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700
Warwick Film Productions Ltd v Eisinger [1967] 3 All ER 367
Millwell Pty Ltd v Olympic Assessments Pty Ltd (1991) 43 IPR 32
International Writing Institute Inc v Rimila Pty Ltd and another (1994) 30 IPR 250
AG v Croner Trading Pty Ltd (1992) 25 IPR 65
Payne v Parker [1976] 1 NSWLR 191
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394
Dr Martens Australia Pty Ltd v Rivers (Australia) Pty Ltd (1999) 95 FCR 136
Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90

SHELDON AND HAMMOND PTY LTD v METROKANE INC

N 634 of 2002

CONTI J
23 JANUARY 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 634 OF 2002

BETWEEN:

SHELDON AND HAMMOND PTY LTD
APPLICANT

AND:

METROKANE INC
FIRST RESPONDENT

METROKANE INC
FIRST CROSS-CLAIMANT

EDWARD KILDUFF
SECOND CROSS-CLAIMANT

SHELDON AND HAMMOND PTY LTD
CROSS-RESPONDENT

JUDGE:

CONTI J

DATE OF ORDER:

23 JANUARY 2004

WHERE MADE:

SYDNEY

THE COURT DECLARES THAT:

1.Pursuant to s 202(1) of the Copyright Act 1968 (Cth), and in the events which have happened, Metrokane Inc was not justified in making the threat or threats pleaded and particularised in the Amended Statement of Claim.

THE COURT ORDERS THAT:

1.Proceedings brought by Metrokane Inc and Edward Kilduff against Sheldon and Hammond Pty Limited by way of cross-claim for secondary infringement of copyright, passing off and contravention of the Trade Practices Act 1974 (Cth) be dismissed.

2.Further claim brought by Sheldon and Hammond Pty Ltd against Metrokane Inc for contravention of the Trade Practices Act 1974 (Cth) be dismissed.

3.The hearing of submissions upon orders to be made as to costs of the proceedings, inclusive of any reserved costs, be stood over for determination on a date to be fixed.

4.The parties provide written submissions as to costs three clear days in advance of the adjourned hearing.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 634 OF 2002

BETWEEN:

SHELDON AND HAMMOND PTY LTD
APPLICANT

AND:

METROKANE INC
FIRST RESPONDENT

METROKANE INC
FIRST CROSS-CLAIMANT

EDWARD KILDUFF
SECOND CROSS-CLAIMANT

SHELDON AND HAMMOND PTY LTD
CROSS-RESPONDENT

Sheldon v Metrokane [2004] FCA 19

Index to Reasons for Judgment

Paragraph numbers	Heading
1 to 10	Background to the design, assembly and marketing of the Rabbit corkscrew by Metrokane
11 to 15	Background to Sheldon and Hammond and its importation of the Pull It corkscrew into Australia
16 to 28	Commencement of the litigation and the respective cases pleaded by the parties
29 to 37	The Australian copyright legislation scheme and the respective submissions of the parties as to the operation thereof
38 to 44	The controversy as to boundaries of statutory protection of copyright and designs
45 to 57	Copyright ownership of the Rabbit corkscrew – standing of Metrokane to bring the cross-action as variously amended
58 to 80	The meaning of work of artistic craftsmanship – review of authorities
81 to 96	Whether Metrokane established the existence of authorship of any work of artistic craftsmanship
97 to 117	Whether the Rabbit corkscrew is a work of artistic craftsmanship – assessment of the expert evidence
118 to 128	Whether the Rabbit corkscrew is a work of artistic craftsmanship – assessment of the expert evidence
129 to 152	Whether Metrokane would have established infringement of copyright if the issue as to work of artistic craftsmanship had been resolved in its favour
153 to 160	Whether Metrokane would have established secondary infringement of copyright if the issue as to work of artistic craftsmanship had been resolved in its favour
161 to 170	Claims advanced by Metrokane based upon the tort of passing off and provisions of the Trade Practices Act
171	Claims advance conversely by Sheldon and Hammond pursuant to provisions of the Trade Practices Act
172	Conclusions and costs

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 634 OF 2002

BETWEEN:

SHELDON AND HAMMOND PTY LTD
APPLICANT

AND:

METROKANE INC
FIRST RESPONDENT

METROKANE INC
FIRST CROSS-CLAIMANT

EDWARD KILDUFF
SECOND CROSS-CLAIMANT

SHELDON AND HAMMOND PTY LTD
CROSS-RESPONDENT

JUDGE:	CONTI J
DATE:	23 JANUARY 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Background to the design, assembly and marketing of the Rabbit corkscrew by Metrokane

1. This litigation has its origins in a corkscrew product called Rabbit, the development whereof was initiated in the United States of America, in or about September 1997 by the Respondent/Cross-Claimant Metrokane Inc (‘Metrokane’), a company established in 1983 in the United States.  Metrokane conducts the business of designing and selling unique houseware products.  The marketing director and one of two substantial shareholders of Metrokane has been at all material times Robert Larimer (‘Mr Larimer’), who gave evidence in the proceedings by affidavit and by video link from New York.

2. In about October 1997, Metrokane engaged Edward Kilduff, (‘Mr Kilduff’) being the second cross-claimant and a citizen of the United States, and then associated informally with Daniel Winigrad (‘Mr Winigrad’) under the business name Link Product Design and Development of New York, to develop a new design for a corkscrew having a lever-action.  His instructions were to produce a design which would be refined and elegant yet be ‘utilitarian and homely’.  It was also to have award winning aesthetics, with a distinctive design and an aesthetically visual appeal, rather than something merely utilitarian and functional.  Mr Kilduff is, and was at all material times, an industrial designer, as also apparently was Mr Winigrad.  Their business relationship was not formalised by documentation.  The mechanism of the corkscrew was to be based upon the technical principles of a patent for lever action corkscrews, owned by the multinational manufacturer Le Creuset, which was due to expire in July 1999.  The trade name of the Le Creuset corkscrew was and apparently still is Screwpull.  Mr Larimer informed Mr Kilduff that he expected that a number of lever-action corkscrews would be produced and arrive on the market after the expiry of that patent.

3. Mr Kilduff initially produced to Metrokane for approval a two-dimensional drawing, referred to in the evidence as the Kilduff drawings.  The Kilduff drawings are Exhibit ‘R3’ in the proceedings.  Mr Kilduff explained that he incorporated into the design certain elements intrinsic to the Screwpull product, including a lever handle and two gripping handles.  Those elements were said by Mr Kilduff to be necessary to the operation of an effective lever-action corkscrew.  He then drew the shape of the housing for the elements of the mechanism, which were not to be visible in the contoured body designed to cover and obscure the mechanical elements.  Mr Kilduff also drew contoured curves ‘as aesthetically pleasing as possible’, with the resemblance of a rabbit head.  Mr Kilduff determined that the coating of the plastic components be that of ‘an easy-to-grip rubberised finish of Japanese manufacture’, comprising ‘transparent spray-on material with the ability to actually “texturise” a smooth plastic surface’, said by him to contribute to the ultimate rabbit-like appearance of the product by giving it a ‘furry’ look and feel.  He asserted that such ‘finish’ on the body and three handles tended to ‘unite the parts into one aesthetic whole’. 

4. The drawings when completed were submitted to Metrokane for approval, and Mr Kilduff was thereafter instructed by Mr Larimer to move to the next phase of his retainer, namely the transformation to a three dimensional model of the completed two-dimensional drawing.  That transformation was completed in December 1997, and comprised the first prototype of the Rabbit corkscrew, being identified in the proceedings as the Renshape prototype.  A photograph or photocopy thereof is Exhibit ‘R4’ in the proceedings.  It could not apparently be any longer located in the factory in China and therefore could not be tendered in evidence.  In the course of that transforation, he added two distinctive features to the lever-action handle, being grip pads on the top and bottom of the handle, and the encasement of a magnifying lens on the top of the corkscrew.  The Renshape prototype was a rough semi-working model and took two to three weeks to construct.  It was made out of material called Renshape, which is similar to compressed foam, by using an exacto blade (or razor blade), a dremel (a mechanical piece of sandpaper that oscillates), and bondo (an auto body filler used to correct mistakes).  It had a lever action style and an internal mechanism adapted by Metrokane from the Screwpull corkscrew.  To cite Mr Kilduff’s oral evidence, ‘[i]t was pretty much an exact use of that mechanism’.  It could move but was not functional as a corkscrew.  Mr Kilduff said that the moulding of the Renshape prototype ‘… wasn’t an easy process, a lot of trial and error… but I had the guts of the Screwpull mechanism and I would attach the Renshape compressed foam material encompassing the mechanism and a combination of those two materials and the bonds and myself sculpting away…’.

5. Mr Kilduff next prepared design control drawings to enable Metrokane’s manufacturing factory in China to build the product and ‘to figure out how to inject mould in all three pieces and make all these pieces snap fit’.  The dimensions of the prototype were measured with electronic callipers to ensure the dimensions in the design control drawings would be the same size as the prototype.  Mr Kilduff entered the data into a computer program called ‘Ashlar Vellum’.  The Renshape prototype was not tendered into evidence.

6. After the design control drawings and the prototype had been sent to the factory in China, they were redrawn in a three dimensional wire-frame shape, using thereby an AutoCAD computer program.  That shape did not undergo subsequent alteration, at any rate, to any significant extent.  After the wire-frame drawing was completed, the factory hooked it up to a milling machine and made another prototype of the shape; this was referred in the evidence as the ‘CNC Model’.  That was done before the factory began cutting the moulds for the tools of the product.  The CNC Model was then sent to Mr Kilduff in the United States for approval.  The CNC Model was also not tendered into evidence.

7. Mr Kilduff thereafter instructed the Metrokane factory in China to make the Rabbit corkscrew black in colour by using black plastic, and to apply a rubber coating called Whale.  He said that he oversaw the design and assembly in the factory in China, in order ‘… to make sure it is what I had in mind’.  Although the Rabbit corkscrew is a so-called ‘functional or utilitarian article’, Metrokane’s case was that the same had nevertheless ‘real aesthetic qualities’, being described by Metrokane as having the following artistic features:

   ‘(i)contoured body, which resembles the head of a rabbit presenting a “bunny profile” – the lever handle being the profile of a rabbit’s ears, the body being the rabbit’s head and the end of the lever axel serving as the rabbit’s eye;

   (ii)rubberised finish supporting the rabbit analogy with a “fury” texture;

   (iii)rubberised finish applied to the three handles as well as the body uniting the four parts into a single aesthetic whole;

   (iv)soft grip pads (of neoprene) inserted in the top and bottom of the lever handle to facilitate a good grip in use; and

   (v)Metrokane logo.’

   Mr Kilduff said in evidence that ‘… most of the aesthetics were followed off my original design, I would say all of them’.

8. It was in January 2000 when Metrokane first introduced and displayed the Rabbit corkscrew to the public.  That occurred at the International Housewares Show in Chicago.  Orders were taken from buyers for delivery in May 2000.  The first shipments from China to the United States were in fact made by that time.  The Rabbit corkscrew was first displayed in Australia in February 2000 at the Reed Gift Trade Fair conducted in Darling Harbour, being a display undertaken for giftware wholesale buyers and not for the general public.

9. Since May 2000, Metrokane has sold and distributed throughout the world, including Australia from about September 2000, approximately one million Rabbit corkscrews.  The distributor of the Rabbit corkscrew in Australia has been Argyle Wine Accessories Pty Ltd, and the national stores which have sold the same have been Myers, House, King of Knives and Executive Chef.  The product has been advertised in Australia via the Metrokane website and in various magazines.  About 2000 Rabbit corkscrews were imported into Australia between September 2000 and September 2001, which reduced to 1000 or thereabouts between September 2001 and August 2002, following the entry into the Australian market of the Pull It corkscrew.

10. The design of the Rabbit corkscrew received the following two awards in 2001:

    (i)The IDSA 2001 Award for design excellence in consumer products, which was judged by the Industrial Designers Society of America, and sponsored by Business Week Magazine; and

    (ii)The Good Design Award from the Chicago Athenaeum Museum for ‘The World’s Best and Most Innovative New Product Designs’.

    The IDSA press release described the Rabbit corkscrew as having ‘… an ergonomic design that sets a new standard for ease of use without sacrificing beauty’.

    Background to Sheldon and Hammond and the importation of the Pull It corkscrew into Australia

11. Sheldon and Hammond Pty Limited (‘S & H’), being the applicant and cross-respondent, is an Australian incorporated company which has been engaged since 1975 in the distribution of a large range of products.  S & H has been appointed since May 2001 as the exclusive distributor in Australia for Pacific China Industries Ltd (‘PCI’) of a lever style corkscrew known as Pull It.  The name Pull It is a registered trade mark in Australia belonging to S & H.  The first importation of the Pull It corkscrew into Australia occurred on 21 June 2001, and since about that time, S & H has sold in Australia about 50,000 units.  S & H has about 100 employees, whereof 20 are sales and marketing personnel.

12. The Pull It corkscrew was originally priced by S & H at $89.95 in June 2001 for retail sale in Australia, the wholesale price then being $47.45 (including GST).  The recommended retail price was reduced to $59.95 as a 2001 Christmas promotion, and to $49.95 in early 2002, and yet again to $39.95 by June 2002.  The recommended retail price of the Pull It for Christmas 2002 was further reduced to $35.95, based on a normal wholesale price to S & H by then of $19.97.  The managing director of S & H, Mr Angus, who testified in the proceedings, said that the reason for those price reductions of the Pull It corkscrew was competition in the market from competing lever style corkscrews.  During those times, S & H has been also selling two other lever style corkscrews, imported into Australia by PCI under the trade marks The Wasp and Avanti Cellar Wiz. 

13. Mr Angus recalled seeing the Metrokane corkscrew in late 2000, or early 2001, at a trade fair or a retail outlet.  He said that he did not spend time considering its shape or other features, other than to observe that it had a lever style corkscrew similar to the Screwpull lever style corkscrew, which he then understood to be the subject of the patent belonging to Le Creuset (identified in [2] above), which was about to lapse.  He did not then purchase a Metrokane corkscrew.

14. In the course of his visit to the Hong Kong trade fair in April 2001, Mr Angus was shown the Pull It corkscrew at a stand operated by PCI.  At the time he was shown, and was considering the distribution by S & H of the Pull It product, he claimed he had no recollection of the shape of the Metrokane corkscrew, or of any of S & H’s customers saying there was any similarity between the Metrokane and the Pull It corkscrews.  He also said that between April and May 2001, when conducting negotiations with Mr Kushner of PCI for the distribution of the Pull It corkscrew in Australia, no mention was made by or to him of the Metrokane corkscrew.  It is understandable, in the light of circumstances later to be examined, why Mr Angus would not have done so, but the fact that Mr Kushner did not do so is potentially damaging to his credibility, for reasons which will later become apparent in the course of my review of Mr Kushner’s evidence.

1. The Pull It corkscrew is imported by PCI pre-packaged into Australia, and the pre-packaging prominently incorporates the Pull It trade mark, being a trade mark registered in favour of S & H in Australia.  The only changes made to the packaging of the Pull It product, prior to its importation into Australia, have been the incorporation of a bar code, a product number, and a reference on the packaging to the fact that the Pull It product is made of solid polycarbonate, zinc alloy and a hardened steel teflon coated screw.  Mr Angus testified that there were many differently branded lever style corkscrews available on the Australian market, ranging in price from the Screwpull Elegance, the retail price whereof at the time he made his affidavit being over $300.00, to a number of significantly cheaper lever style corkscrews which were then selling for prices between $30.00 and $50.00.  He identified three differently branded lever style corkscrews available in Australia which were said by him to be identical to the Pull It corkscrew, and which were not made by the manufacturer of the Pull It model.

   Commencement of the litigation and the respective cases pleaded by the parties

2. Mr Larimer first became aware of the Pull It corkscrew at the International Housewares Show in Chicago in January 2001, about one year after the launch of the Rabbit corkscrew.  At that time the Pull It corkscrew was called Just Pull It.  A letter dated 17 January 2001 was promptly sent by Saidman Design Law Group of Silver Spring in the United States, on behalf of Metrokane, to the President of Beau International Inc of Inwood, New York, which described Metrokane as the exclusive manufacturer and distributor of the Rabbit corkscrew, and asserted infringement of the product design of the Rabbit corkscrew.  That product design was identified as ‘US Pat.  No Des.  430,944’ issued by the US Patent & Trademark Office on 19 September 2000.  The letter also asserted infringement of the trademark Rabbit by the United States Patent & Trademark Office (‘Ser No.  75/846,419’).  It demanded removal of the Just Pull It from the market by 26 January 2001.  By letter in response dated 8 February 2001 of Cobrin & Gittes, patent etc attorneys of New York, marked ‘for settlement purposes only’, infringement and likelihood of confusion was denied, for reasons set out in detail.  Their letter concluded to the effect that ‘[a]s a matter of precaution, however, and in the interest of avoiding any doubts, Beau is in the process of redesigning the Just Pull It corkscrew in order to further distinguish it from Metrokane Inc’s the Rabbit corkscrew’, no retail sales having allegedly been made up to that time of the Just Pull It corkscrew.

3. About sixteen months later on 7 June 2002, the Australian solicitors for Metrokane wrote to S & H and alleged infringement of Metrokane’s copyright in the Rabbit corkscrew as an artistic work, and in particular as a work of artistic craftsmanship, within par (c) of s 10(1) of the Copyright Act 1968 (Cth) (‘Copyright Act’), by reason of S & H’s importation into, and distribution within Australia of the Pull It corkscrew, and demanded that S & H immediately cease and forever desist from, inter alia, the importation and distribution of the product.  The solicitors for S & H responded by letter of 24 June 2002 to the effect that there was no basis for Metrokane’s claim of copyright, and further that there were a number of differences between the Rabbit and Pull It products such as to indicate that S & H’s product was not a copy of Metrokane’s product. The solicitors for S & H demanded that Metrokane cease making groundless threats of infringement of copyright. In the result, the subject proceedings were commenced by S & H on 28 June 2002 for declaratory and injunctive relief pursuant to s 202(1) of the Copyright Act, and also for breach of ss 52 and 53(g) of the Trade Practices Act 1974 (Cth) (‘TP Act’).

4. S & H submitted that having regard to the undisputed circumstances in which Metrokane had threatened to bring an action against S & H for copyright infringement, and also to Metrokane’s subsequent admission in the ensuing pleadings filed by Metrokane that S & H was a ‘person aggrieved’ within s 202 of the Copyright Act and there was no discretion in the Court to refuse relief to S & H pursuant thereto, unless Metrokane satisfied the court that the acts in respect of which Metrokane’s proceedings were threatened constituted, or, if done, would constitute, infringement of copyright.

5. The ensuing pleadings of Metrokane in these proceedings took a protracted course, and were not finalised until after the hearing in Court had concluded.  Those of Metrokane were generally framed in line with the allegations, and later the evidence, which emerged at the instance of Metrokane before and during the hearing, concerning the creation of a prototype for what became the ultimate manufacturing line of the Rabbit corkscrew, and the other functions and processes undertaken by Mr Kilduff.  The final version of the initiating pleading of S & H comprised an amended statement of claim dated 18 July 2002, which set out the circumstances why the Rabbit product was said to be neither an artistic work, nor a work of artistic craftsmanship, within the Copyright Act, and which alternatively asserted that the Pull It product did not constitute a reproduction or adaptation of the whole or a substantial part of the Rabbit product.  The first of those contentions comprised the first of the two main defences of S & H to Metrokane’s claim for breach of copyright, and the second comprised the other main defence.

6. Further or alternatively, S & H pleaded that the importation, offer for sale, and sale of the Pull It product did not infringe any copyright of Metrokane, for the following reasons:

   (i)a corresponding design to any artistic work reproduced by the Rabbit product had been applied industrially in Australia with the licence of S & H;

   (ii)on or after 1 October 1990, articles to which that corresponding design had been so applied had been sold in Australia and elsewhere;

   (iii)at the time of those sales, the corresponding design had not been, and at no time had it since been, registered under the Designs Act 1906 (Cth) (‘Designs Act’);

   (iv)by reason of the foregoing matters, and of s 77 of the Copyright Act, it was not an infringement of the alleged copyright of Metrokane to reproduce Metrokane’s work by applying any such corresponding design to an article; and

   (v)accordingly the importation, offer for sale and sale of the Pull It product did not infringe Metrokane’s alleged copyright. 

   In addition, S & H maintained its averments of breach of the TP Act on Metrokane’s part, based on the same circumstances as those which S & H pleaded in support of its denial of copyright.

7. The initial pleadings of Metrokane in response comprised a defence, which put in issue the allegations of S & H’s amended statement of claim, and a cross-claim.  The defence was not subsequently altered, but Metrokane’s cross-claim underwent extensive amendments, most comprehensively after the commencement of the final hearing of the proceedings.  The facts and circumstances pleaded in Metrokane’s cross-claim from the outset, concerning the design, development and sale of the Rabbit corkscrew in the United States, and subsequently sale in Australia, referred to Mr Kilduff as author of the design, and to the sale and distribution since May 2000 of about one million Rabbit corkscrews throughout the world, and of about 3000 in Australia through Argyle Wine Accessories Pty Ltd as authorised distributor, and by Myer, House, King of Knives and Executive Chef stores as retailers. 

8. The causes of actions pleaded by Metrokane’s cross-claim against S & H are for infringement of copyright of the Rabbit corkscrew as a work of artistic craftsmanship, for breaches of ss 52 and 53(a), (c) and (d) of the TP Act, and for passing off.

9. The features of the Rabbit corkscrew were pleaded by Metrokane from the outset to be as follows:

   (a)       lever-operated corkscrew device;

   (b)       flat interior surface of the frame;

   (c)       outline shape of an inverted mushroom;

   (d)       having a stern bearing straight parallel vertical sides;

   (e)       having a head with a straight horizontal bottom and semi-circular top;

   (f)        rubberised finish giving the corkscrew a ‘furry feel’;

   (g)upper portion of the frame resembling the head of a rabbit, and having an egg shaped bulge which is tilted;

   (h)larger end of the egg shaped bulge representing the nose of the rabbit and being higher than the small end representing the back of the head;

   (i)ends of the operating handle projecting rearward from the top of the ‘head’, being shaped to resemble a rabbit’s ears;

   (j)operating handle pivoting on a pin approximately at the centre of the egg shaped bulge;

   (k)pins or screw heads resembling two small circles appearing on both sides of the flat surface of the head, resembling the eyes of a rabbit; and

   (l)underside of the egg shaped bulge being inwardly sloped and gradually tapering and merging with the vertically extending lateral surface of the lower portion of the frame, in order to represent the body of a rabbit.

10. Ownership of Metrokane’s copyright was asserted to have been derived by Metrokane by deed of assignment in its favour from Mr Kilduff dated 3 September 2002.  That assignment was purportedly effected after the issue of the original and amended statement of claim of S & H.  Further and better particulars dated 27 September 2002 were also filed by Metrokane, which referred to the distribution of the Pull It corkscrew in the United States, and subsequently in the United Kingdom, under the name ‘Just Pull It’, the manufacturer thereof being PCI, the change of name thereafter to ‘Pull It’, and the later Australian distributorship of the Pull It corkscrew by S & H.

11. Ultimately Metrokane belatedly produced to S & H and to the Court its Defence and Further Further Amended Cross-Claim bearing date 31 March 2003, being seven days after the commencement of the final hearing of the proceedings on 24 March 2003.  That very belated pleading was formally filed in Court on 1 April 2003.  It effected comprehensive changes to the previously pleaded defence and amended cross claim, being amendments claimed by Metrokane to be necessary in the light of oral evidence by then tendered at the final hearing, in particular from Mr Kilduff by way of addition to his affidavit evidence.  The consequences of the last of those amendments to Metrokane’s cross-claim in the proceedings were pleaded by Metrokane to be mainly as follows:

    (i)copyright in the Rabbit corkscrew had subsisted at all material times in the following alternatives in temporal sequence of creation or assembly:

    (a)the Renshape prototype of the Rabbit corkscrew; or

    (b)       the CNC Model of the Rabbit corkscrew; or

    (c)       the first manufactured Rabbit corkscrew;

    each being said to comprise a work of artistic craftsmanship, the critical term referred to in the Copyright Act definition of artistic work; and

    (ii)Metrokane had been the legal owner of copyright in the ‘Rabbit’ corkscrew, or alternatively the equitable owner thereof, at least since the execution of certain instruments of assignment provided in favour of Metrokane by Mr Kilduff, Mr Winigrad and Pollen Design Inc, in circumstances to which I shall later refer in more detail.

    Mr Kilduff was added as a party to the proceedings as second cross-claimant (Metrokane being the first cross-claimant), pursuant to Metrokane’s Defence and Further Further Cross-Claim dated 31 March 2003.

12. By virtue of the addition of Mr Kilduff as an additional cross-claimant with Metrokane, what S & H thereafter described as ‘the Metrokane parties’ were asserted to have been placed in the position, as at the close of the hearing, whereby ‘they owned any relevant copyright’.  S & H submitted that as a consequence, if the Court was to find in principle in favour of Mr Kilduff and/or Metrokane as cross-claimant for copyright infringement, the issue as to which those parties had valid title to sue for damages, and from what point in time, would still fall for determination, as well as additional issues as to appropriate orders for the costs of the proceedings, in the light of such belated amendments to Metrokane’s cross claim.  For reasons which will later become evident, I have not found it necessary so to do.

13. In S & H’s Reply and Defence to the Further Further Amended Cross-Claim subsequently filed by S & H on 9 April 2003, which was filed understandably after the conclusion of the viva voce hearing of the proceedings on 28 March 2003 by reason of the belated amendments made by Metrokane to its cross-claim, S & H pleaded, inter alia, that any copyright in Metrokane’s alleged work of artistic craftsmanship was owned by Link Product Design & Development (see [2] above), and not by Metrokane or Mr Kilduff.  As already indicated however, Link Product Design & Development was not a legal entity, but constituted merely a business or firm/partnership name used by Mr Kilduff, and perhaps also for a limited period of time by Mr Winigrad as his purported or informal partner, or stated perhaps more precisely, his tentatively proposed partner.  It was alternatively denied by S & H in that concluding pleading in the proceedings that Metrokane was an equitable owner of the copyright in dispute.  It was further thereby pleaded by S & H that until it received the letter of demand of 7 June 2002 from Metrokane’s solicitors referred to in [17] above, S & H was not aware, and had no reasonable grounds for suspecting, that its importation into and sales made in Australia of corkscrews under the name of ‘Pull It’ involved any infringement of copyright.

14. After the close of the hearing of the proceedings, the parties engaged in the provision of comprehensive and extensive written submissions, in the following sequence:

    (i)        S & H submissions in chief filed on 9 May 2003, comprising 7 pages;

    (ii)Metrokane submissions on defence and cross claim filed on 2 June 2003, comprising 91 pages;

    (iii)S & H submissions on defences to cross claim filed 3 July 2003, comprising 51 pages; and

    (iv)Metrokane submissions by way of reply to defences to cross claim, filed on 18 July 2003 comprising 25 pages.

    The submissions of both parties reflect considerable credit upon the industry and competence of the legal representatives for the parties to the proceedings.  In order to keep these reasons for judgment within such parameters as can be reasonably managed, I have not found it necessary or appropriate to refer to every single submission which has been made, much less every piece of evidence referred to in those 174 pages of written submissions.

    The Australian copyright legislative scheme and the respective submissions of the parties as to the operation thereof

15. It is common ground that Australia and the United States are parties to the Berne Convention for the Protection of Literary and Artistic Works, originally made at Berne on 9 September 1886, and signed by Australia on 14 April 1928, and subsequently signed by the United States on 1 March 1989, and further that the effect of Regulation 4 of the Copyright (International Protection) Regulations 1969 (Cth), made pursuant to ss 184 and 249 of the Copyright Act, is that the Copyright Act potentially applies in relation to the Rabbit corkscrew in like manner as the provisions thereof apply in relation to artistic works first published in Australia, and to citizens or residents of Australia (Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450 at 456-458). It follows that the Court is required to determine the issues here arising as to whether or not copyright subsists in the Rabbit corkscrew, and if so, as to any infringement thereof on the part of S & H in accordance with the provisions of the Australian legislation.

16. A convenient starting point to a discussion of the controversial issues of statutory interpretation arising is the definition of ‘artistic work’ contained in s 10(1) of the Copyright Act, which reads as follows:

    ‘artistic work means:

    (a)a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;

    (b)a building or a model of a building, whether the building or model is of artistic quality or not; or

    (c)a work of artistic craftsmanship to which neither of the last two preceding paragraphs applies;

    …’.

    As I have foreshadowed, Metrokane propounded its case for breach of copyright upon the footing of the par (c) expression a work of artistic craftsmanship.  No definition of artistic craftsmanship appears in the Copyright Act.

17. By s 22(1) of the Copyright Act, a reference in the Copyright Act to the time when, or the period during which, an artistic work was made, shall be read as a reference to the time when, or the period during which, the work was first reduced to writing or to some other material form. By s 31(1)(b) of the Copyright Act, copyright in any artistic work is the exclusive right to reproduce that work in a material form, to publish that work, and to communicate that work to the public. By s 35(2) of the Copyright Act, it is the author who or which is the owner of any copyright subsisting in an artistic work. By s 36(1) of the Copyright Act, copyright in any artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner, does in Australia, or authorises the doing in Australia of, any act comprised in the copyright. However by s 14(1) of the Copyright Act, that exclusive right is qualified as follows:

    ‘In this Act, unless the contrary intention appears:

    (a)a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter; and

    (b)a reference to a reproduction, adaptation or copy of a work, shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be.’

18. Whether a part is substantial, within s 14(1), must be decided by its quality rather than its quantity: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 293 (Lord Pearce). Further, as Wilson J said in S.  W.  Hart & Co.  Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 482, ‘…the question whether there has been a reproduction is a question of fact and degree depending on the circumstances of each case. The emphasis upon quality rather than quantity directs attention to the significance of what is taken’. The importance or the essence of the materiality of the part taken must be compared to the whole of the protected work, for there should be a sufficient objective similarity between the original work and the infringing work: Zeccola v Universal City Studios Inc (1982) 46 ALR 189 at 193 (Lockhart and Fitzgerald JJ).

19. Infringement of copyright in any artistic work, and thus of a work of artistic craftsmanship, by the importation of an article into and its distribution in Australia, is addressed by s 37 of the Copyright Act; sub-section (1) thereof reads as follows:

    ‘37(1)Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, without the licence of the owner of the copyright, imports an article into Australia for the purpose of:

    (a)selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article;

    (b)distributing the article:

    (i)for the purpose of trade; or

    (ii)for any other purpose to an extent that will affect prejudicially the owner of the copyright; or

    (c)       by way of trade exhibiting the article in public;

    if the importer knew, or ought reasonably to have known, that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of the copyright.’

    As has been earlier recounted, S & H has imported into Australia and distributed for the purposes of trade the Pull It corkscrew, in alleged breach of Metrokane’s copyright in the Rabbit corkscrew by virtue of the asserted artistic craftsmanship character of the latter. The reference to ‘ought reasonably to have known’ in s 37(1) above is to constructive knowledge: see Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240 at 257 (Von Doussa J). To those provisions should be added reference to s 38 of the Copyright Act concerning the sale of goods within Australia the subject of copyright held by another person, sub-section (1) thereof reading as follows:

    ‘38(1)Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, in Australia, and without the licence of the owner of the copyright:

    (a)sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or

    (b)by way of trade exhibits an article in public;

    if the person knew, or ought reasonably to have known, that the making of the article constituted an infringement of the copyright or, in the case of an imported article, would, if the article had been made in Australia by the importer, have constituted such an infringement.’

    It is the case of Metrokane that at least since S & H received Metrokane’s letter of 7 June 2002 (see [17] above), S & H knew or ought reasonably to have known that its sale or offer for sale of the Pull It corkscrew in Australia would constitute a breach of Metrokane’s copyright in relation to the Rabbit corkscrew.

1. A special defence to a claim for breach of copyright is stipulated by ss 77(1) and (2) of the Copyright Act; s 77 has already been mentioned in relation to the defence of S & H summarised in [20] above; those sub-sections read as follows:

   ‘77(1)  This section applies where:

   (a)copyright subsists in an artistic work (other than a building or a model of a building, or a work of artistic craftsmanship) whether made before the commencement of this section or otherwise;

   (b)a corresponding design is applied industrially, whether in Australia or elsewhere, by or with the licence of the owner of the copyright in the work in the place where the industrial application happens;

   (c)at any time on or after the commencement of this section, articles to which the corresponding design has been so applied (in this section called “articles made to the corresponding design”) are sold, let for hire or offered or exposed for sale or hire, whether in Australia or elsewhere; and

   (d)at that time, the corresponding design is not registrable under the Designs Act 1906 or has not been registered under that Act.

   (2)It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which articles made to the corresponding design are first so sold, let for hire or offered or exposed for sale or hire, by applying that, or any other, corresponding design to an article.’

   The above expression corresponding design is defined by s 74 of the Copyright Act to mean, in relation to an artistic work, and so far as is presently material, ‘… a design that, when applied to an article, results in a reproduction of that work…’.  It is common ground that a corresponding design of the Rabbit corkscrew has not been registered by Metrokane as a design under the Designs Act.

2. As indicated in [25] above, Metrokane’s case is that copyright subsists in the first manufactured Rabbit corkscrew, a three dimensional example of which is Exhibit ‘R1’ in the proceedings, as a work of artistic craftsmanship within the s 10(1) definition of artistic work, or in the earlier created CNC Model, or in the yet earlier again created Renshape prototype.  Upon those alternative footings, Metrokane claims that the Pull It corkscrew has reproduced a substantial part of Metrokane’s copyright in the Rabbit corkscrew, within s 14(1) of the Copyright Act.

3. S & H put in issue the claims of Metrokane for qualification of its Rabbit corkscrew as a work of artistic craftsmanship, and in any event contended by way of additional defence, largely in line with what was pleaded in S & H’s statement of claim, as follows:

   (i)the only real candidate for copyright qualification, even as an artistic work, though only as a drawing within the s 10(1) definition thereof, is the so-called Kilduff drawing, a computer downloaded copy whereof is Exhibit ‘R3’ earlier referred to;

   (ii)a corresponding design, resulting in a reproduction of the Kilduff drawing as an artistic work, has been applied industrially by Metrokane within s 77(1)(b) of the Copyright Act by Metrokane as alleged copyright owner;

   (iii)articles to which the corresponding design have been applied have been sold in Australia or elsewhere after 1 October 1990; and

   (iv)at the time of those sales, the corresponding design, albeit registrable under the Designs Act, had not been so registered by Metrokane.

4. The response of Metrokane to this alternative defence on the part of S & H was that s 77 has no application in the first place, because the Rabbit corkscrew is in any event a work of artistic craftsmanship within the Copyright Act definition thereof, and thus for the purposes of s 77 of the Copyright Act. Metrokane’s case was that if it made good that proposition, the s 77 defence of S & H must fail. It has been unfortunate that I have found it necessary to recount so much from the pleadings of the parties, but the complexity of the issues propounded by the parties, and the protracted course which the pleadings took, need to be explained in order that the convoluted nature and time of emergence of the issues between the parties can be appreciated.

   The controversy as to boundaries of statutory protection of copyright and designs

5. S & H drew attention to what was described as the enigma of the so-called copyright/design ‘overlap’ protection provisions, in support of a contention that s 77 could not sensibly have been intended, as a matter of legislative intention, to permit an article, said by S & H to be registrable under the Designs Act, to secure so much longer protection as an artistic work under the Copyright Act. I shall record some observations and submissions of a preliminary nature advanced on that complex topic by counsel for S & H.

6. Copyright protection enures for the life of the author plus 50 years (s 33(2) of the Copyright Act), whereas design protection, dictated by shape, is limited to a maximum of 16 years, even in circumstances where it may be open alternatively to seek copyright protection (I was informed that there is before the Commonwealth Parliament draft legislation which would reduce the latter period to 10 years). Moreover patent protection, dictated by function, is limited to 20 years (s 67 of the Patents Act 1990 (Cth)). Thus in the case of the Rabbit corkscrew, had design protection been sought and obtained by Metrokane by virtue of registration under the Designs Act, Metrokane’s rights to protection would have been available until about 2013. If however copyright protection is available to Metrokane, the duration thereof would be for a period of time expiring not before about 2047, together with the imponderable period of whatever might be the unexpired length of Mr Kilduff’s lifetime from the time of creation of the alleged copyright. Much discussion took place, at the insistence of S & H, as to the enigmatic nature of the protection Metrokane was seeking to establish in Australia.

7. Counsel for S & H asserted the existence of an evolving legislative policy to require that designs that are industrialised, or applied industrially (to adopt the s 77(1)(b) Copyright Act language), be protected either under the Australian designs legislation, or not at all. I was referred to s 22 of the Copyright Act 1911 (Imp), which was applied to Australia by the Copyright Act 1912 (Cth), and to s 218(2) of the present Australian copyright legislation. I was further referred to the scheme of ss 74 to 77 of the Copyright Act being what counsel described as ‘copyright/design overlap provisions’ (I have already extracted s 77(1) and (2) of the Copyright Act). Attention was also drawn to the existence of official inquiries and reports undertaken since the Copyright Act was enacted in 1968.

8. In that context it was submitted by S & H that the legislative policy underlying amendments which have been made to the Copyright Act reveal a steady trend towards ‘closing loopholes’ that have allowed the owners of designs to exploit the operation of s 77 of the Copyright Act, being a policy said to be reflected in the Explanatory Memorandum to the Copyright Amendment Bill 1988 (Cth), which became the Copyright Amendment Act 1989 (Cth), and in particular pars 16 to 25 thereof. It was acknowledged by S & H that an exception to the trend of removing copyright protection for registrable designs, albeit irrelevant to the present case, related to two-dimensional surface designs, which had been unprotected by copyright up to 1990, but for which such protection has been restored from 1990.

9. Consistent with the asserted legislative policy in principle against the availability of dual protection was submitted by S & H to be the circumstance that the Australian Designs Office categorises Australian design applications by using the International Classification for Industrial Designs (Locarno Classification).  That was described as a system whereby common mass-produced articles, such as corkscrews, in respect of which design registration may be sought, are classified by that Office into 32 classes, and if appropriate, sub-classes within those 32 classes, some of which are local classifications specific to Australia.  Class 7 is described as ‘Household goods, not elsewhere specified’, and contains nine sub-classes.  Sub-class 07.06 is described as ‘Other table utensils’, and contains five further sub-classes.  Sub-class 07-06D is described as ‘Bottle and jar openers and resealers.  Cork extractors’.  Accordingly S & H submitted that the design protection in Australia contemplates that corkscrews are items which may be the subject of design protection.

10. It is however apparent that the presence within s 77 of the undefined expression ‘artistic craftsmanship’ has left open for the Courts to determine its parameters. So much was in effect acknowledged by the Gregory Committee Report of 1953 in the following terms:

    ‘It is clear that some protection of this kind is required to cover works of art other than such things as works of painting, drawing and sculpture, which are mentioned by name.  We are here concerned not with articles manufactured under conditions of ordinary industrial production (artistically meritorious as many of these are) which can secure their own appropriate protection under the Registered Designs Act, but with the works of craftsmen working in many media (silversmiths, potters, woodworkers, hand-embroiderers and many others) in circumstances for which that Act does not provide appropriate protection.  We do not think it will be questioned that original works of the kind we have in mind are fully entitled to protection and but for the Copyright Act this would be lacking.  We believe that copyright provides the proper basis for protecting these works and to ensure this protection we believe that it is necessary to retain the term “works of artistic craftsmanship” in the Act.  It is by no means certain that full preliminary sketches or drawings are prepared for all kinds of articles made by the craftsman (in which case copying the article itself might infringe copyright as a reproduction of the sketch), or, even where there is a full design, that the finally finished article as it leaves the craftsman’s hands would unquestionably be regarded in every case as a reproduction of that copyright design.  In these circumstances the only safe way to ensure protection is by making specific mention of this class of work.  In doing so, it will be necessary, we believe, to retain the word “artistic” in conjunction with “craftsmanship”, but we do not believe it is practicable to draft a statutory definition equally applicable to each of the whole range of activities and of the varieties of materials used.  Faced with these almost endless possibilities we feel that, as now, the decision in doubtful cases must be left to the courts to decide on the facts before them, and we recommend that while the protection given to “works of artistic craftsmanship” should remain, the term should not be defined in the Act.’

    It would appear that the copyright protection which Metrokane seeks to enforce in the present proceedings is conceptually beyond the scope of what was envisaged by the Gregory Committee Report, unless Metrokane could establish its claim as one of the ‘doubtful cases’ which the Report seemingly had in mind.  To that observation I would add reference to dictum in Interlego AG v Croner Trading Pty Ltd (1992) 25 IPR 65 at 97, where Gummow J, with whom Black CJ and Lockhart J agreed, said as follows, in terms of the distinction between the principles of protection respectively afforded by the general law as to copyright, designs and patents:

    ‘It is well established that in copyright law originality is a concept distinct from novelty in design law and patent law and from obviousness in patent law.  Whilst the author of what is claimed to be an original artistic work must have expended a significant amount of his skill and labour, “originality” does not mean novelty or uniqueness and does not require inventiveness in the sense of patent law … The degree of skill and labour required of the artist will vary with the nature of the work.’

11. Of the four conditions or requirements of s 77(1) which would be required to be established by S & H, in order that Metrokane’s infringement proceedings be thereby not sustainable in principle, only one relates to registrability or absence of registration under the Designs Act, namely that contained in par (d) thereof. Although two of the remaining three conditions of s 77(1) may also be made out by S & H in the circumstances of the case, namely par (b) by virtue of the Rabbit corkscrew having been applied industrially, and par (c) by virtue of a ‘corresponding design’ having been sold and exposed for sale, nevertheless the remaining condition would remain to be fulfilled, namely par (a) to the effect that copyright subsists in an artistic work other than a work of artistic craftsmanship.  Hence the first principal issue arising in the proceedings falls for resolution, namely whether the Rabbit corkscrew is an artistic work in the nature of a work of artistic craftsmanship.  It is that issue of qualification or otherwise as a work of artistic craftsmanship to which I shall shortly turn, subject to disposal of threshold issues of a preliminary nature raised by S & H as to purported ownership, as distinct from existence, of the alleged copyright in the Rabbit corkscrew, which I will first address.  It is convenient to adopt that course, because of the complexity of the latter, in terms of legal principles as well as the particular circumstances of this case.

    Copyright ownership of the Rabbit corkscrew – standing of Metrokane to bring the cross-claim as variously amended

12. The issues as to the ownership of the alleged copyright in the Rabbit corkscrew have been foreshadowed above. Sub-section 35(2) of the Copyright Act provides that ‘[s]ubject to this section, the author of a[n] …artistic work is the owner of any copyright subsisting in the work by virtue of this Part’, being Part III comprising ss 31 to 83. Sub-section 115(1) of the Copyright Act provides that ‘[s]ubject to this Act, the owner of a copyright may bring an action for an infringement of the copyright’, including an application for injunction and damages or an account of profits. The contention of S & H is that Metrokane’s threat of copyright infringement proceedings, which led to S & H’s institution of the present proceedings pursuant to the ‘groundless threats’ provisions of s 202 of the Copyright Act, was made without statutory foundation, because apart from no infringement of copyright having occurred, Metrokane was not the owner of any relevant copyright at the time of making threats, whether in law or in equity. S & H pointed out in that regard that Metrokane’s case from the outset had been that Mr Kilduff was the author of the artistic work in issue, irrespective of whether that artistic work should be categorised as Mr Kilduff’s final two-dimensional drawings, or the Renshape prototype model, or the later CNC Model, or the first manufactured Rabbit corkscrew.  Two statutory provisions are material to the arguments of S & H, which are reproduced below.

13. Section 196 of the Copyright Act provides for the devolution or transfer of title to copyright as follows:

    ‘(1)Copyright is personal property and, subject to this section, is transmissible by assignment, by will and by devolution by operation of law.

    …

    (3)An assignment of copyright (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignor.

    …’.

    Sub-section 202(1) of the Copyright Act provides, as follows:

    ‘202(1)Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first-mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.’

14. In Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 94, the following appears in the joint judgment of Mason CJ, Deane and Gaudron JJ:

    ‘… there is something to be said in support of the view that the threat of proceedings for infringement must, if it is to be justified, have been of proceedings by a person competent to maintain them.  That precise point did not, however, seem to us to be fully explored in argument and, in view of the conclusion which we have ultimately reached in relation to other matters, it is unnecessary that we form a final view in relation to it’.

    Dawson J (at 105) said that ‘…there is much to be said for the view that Avel … has no standing under s 202…’. McHugh J took a different view (at 118-119) as follows:

    ‘… The evident object of the section is not to determine whether the threats are justifiable in some general sense but to provide a curial mechanism for a “person aggrieved” by threats of legal proceedings to obtain a determination as to whether the acts in respect of which the action or proceedings was threatened constituted or would constitute an infringement of copyright.  In my opinion, the distributor was entitled to defend the action brought against it under s.202(1) by establishing that the acts in respect of which the action or proceeding was threatened constituted or, if done, would have constituted an infringement of Williams’ copyright.’

    Moreover to complicate matters further, in Performing Right Society Ltd v London Theatre of Varieties [1924] AC 1, Viscount Cave spoke (at 13-14) of the need to have the legal owner of copyright joined in proceedings as a party, where the applicant has only equitable title, since the successful defendant might otherwise have to face further proceedings by the legal owner after having defeated the claim of the equitable owner; nevertheless his Lordship recognised the entitlement of the equitable owner alone to initiate proceedings for interlocutory relief. That principle has been restated in subsequent authorities.

15. Metrokane asserted that it held at the material time or times sufficient title to the alleged copyright subsisting in the Rabbit corkscrew as a work of artistic craftsmanship, such as to authorise the bringing of its cross-claim in the proceedings.  Title in law was said to have been acquired by Metrokane pursuant to certain deeds of assignment of copyright executed by Mr Kilduff in favour of Metrokane respectively on 20 December 1999, and/or 9 January 2001, and/or 20 March 2003, and/or pursuant to further deeds of assignment of copyright respectively executed by Mr Winigrad on 27 March 2003 and by Pollen Design Inc on 3 September 2003.  Mr Kilduff’s relationships with Mr Winigrad, and their involvement together in the unincorporated firm Link Product Design and Development, and subsequently in Pollen Design Inc, have already been identified.  Metrokane additionally asserted that prior to the execution of those instruments, title was held by Metrokane pursuant to the trade custom and practice in the design industry in New York that designers would assign copyright/intellectual property rights in respect of designs authored by them to clients who retained them, if called upon to do so, unless otherwise agreed.  It is readily apparent from the evidence that no such contrary agreement was ever contemplated, much less made.

16. In Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, the High Court addressed principles as to the existence or otherwise of custom or usage that might authorise the implication of a contractual term or condition, an issue said to be one of fact to be resolved by evidence. An entitlement by trade custom or usage to an assignment of copyright, upon making a call or demand for assignment of copyright, would be in the nature of equitable ownership of copyright. The response of S & H was to the effect that Mr Kilduff should be treated as having merely ‘… later claimed copyright in his drawings by placing “Pollen Design Inc” stamps on them when printing them out, even in 2003’, thereby allegedly indicating an absence of any earlier intention on his part to transfer the copyright therein to Metrokane. The evidence which emerged in the course of Mr Kilduff’s cross-examination was that Pollen Design was a business name which he adopted, subsequently to discontinuing his association by way of informal partnership with Mr Winigrad, and that his company Pollen Design Inc. was not incorporated until 16 March 2000, by which time his association with Mr Winigrad, however it might have been earlier characterised in law, had ceased altogether, and had been replaced by his association with Mr Dean Chapman, which seems to have been as non-definitive or unclear in legal terms as that which Mr Kilduff had earlier conducted with Mr Winigrad.

1. The inference available from the evidence adduced on behalf of Mr Kilduff and Metrokane as cross-claimants, including the affidavit and viva voce testimonies of Mr Larimer and Mr Kilduff, is that both Mr Kilduff and his former associate Mr Winigrad, from the outset of the retainer by Metrokane of the unincorporated firm of Link Product Design and Development, held on behalf of Metrokane beneficially all right, title and interest in such copyright as may have subsisted in the Rabbit corkscrew, at least pursuant to the principles of the general law of Australia as to constructive trusts, and in particular, constructive trusts of copyright.  That implication of law follows in my opinion from the circumstances of Metrokane’s respective retainers of those persons/entities for reward, irrespective of the instruments of legal assignment subsequently entered into, and thus irrespective of the times when those instruments purportedly took effect.  No suggestion has been advanced that the law as to constructive trusts is relevantly different in the United States to that in Australia, and in the absence of evidence to the contrary, a presumption as to that general effect being applicable to Australia should be readily drawn, and to the extent (if at all) Metrokane may need to do so.

2. The account given by Mr Kilduff of his subsequent business relationship with his later associate Mr Chapman bore some of the constituent imprecision as that given by Mr Kilduff in relation to his association with Mr Winigrad.  The relationship with Mr Chapman appears to have been constituted, ultimately by about March 2000, in the form of an equality of shareholding held between Mr Kilduff and Mr Chapman in Pollen Design Inc.  The relationship so structured may be described on the evidence as being in the nature of a partnership in corporate form.

3. Metrokane and Mr Kilduff are of course parties together in the proceedings as cross-claimants, and are pursuing the same relief by common legal representation.  Whilst neither Mr Winigrad, nor Mr Chapman, nor Pollen Design Inc were joined as additional cross-claimants in the proceedings, the inference open to be drawn is that Mr Kilduff and Mr Winigrad, were informal partners of the firm of Link Product Design and Development, and that Mr Kilduff’s conduct was relevantly that of the informal partnership (I use the expression ‘informal’ in the sense at least of an absence of legal documentation).  The inference is further open to be drawn that Mr Kilduff, initially as sole proprietor of Pollen Design, and subsequently as the corporator or dominant corporator of Pollen Design Inc, succeeded to any preceding purported partnership practice of Messrs Kilduff and Winigrad. 

4. It is to be readily inferred from the evidence that in relation to all relevant issues arising in these proceedings, Mr Kilduff’s design and manufacturing activities in relation to the Rabbit corkscrew, such as purportedly took place, were undertaken by him physically in and from New York, and presumably in the course of his visits to China, under the business name of Link Product Design and Development, and later under the business name of Pollen Design, and later still under the corporate name of Pollen Design Inc.  These activities were carried out on the implicit footing of Metrokane’s beneficial ownership as principal of whatever copyright might have subsisted or been acquired in relation to the Rabbit corkscrew, notwithstanding the absence of any formal instrument or instruments of assignment of copyright in Metrokane’s favour.  Those activities were undertaken for the sole benefit of, and were financed by, Metrokane for its benefit, as principal.  The resulting beneficial ownership in Metrokane’s favour as principal, arising from the outset by virtue of the relationship constituted between Metrokane and Mr Kilduff, and subsequently Pollen Design Inc, respectively, as agents for reward, inevitably followed pursuant to the law of constructive trusts prevailing at least in Australia.  When referring to Mr Kilduff, it may be taken that he also stood in the shoes of any purported or informal partner of his for the time being, whether that might have been Mr Winigrad or possibly Mr Chapman (if of course any such partnership relationships ever in law existed).  No challenge was made by S & H to the authenticity of the various deeds of assignment of copyright made in favour of Metrokane, to which reference has earlier been made. 

5. Therefore to the extent that it might have been the case, that Metrokane did not get in legal title such relevant copyright as may have subsisted at any material time, I would nevertheless conclude that by virtue of Metrokane’s purported retainer for reward of Mr Kilduff as designer, instructed by and at all times accountable to Metrokane as principal, and subsequently by virtue of the status of the corporate vehicle Pollen Design Inc as his apparent or possible successor in corporate form, Mr Kilduff (and if necessary Pollen Design Inc) held as constructive trustee on behalf of, and for the benefit of, Metrokane beneficially, all right title and interest in whatever copyright has existed in relation to the Rabbit corkscrew: see generally Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 392-398 (Gibbs J) and 408-413 (Stephen J). As I have foreshadowed, no evidence was adduced to the effect that the law of Australia as to constructive trusts differed relevantly at any material time from that of the United States.

6. Returning then to the operation of s 202(1) of the Copyright Act, I think that given that an equitable owner of copyright can institute proceedings for an interlocutory injunction for the protection of that copyright, it would be curious indeed if an equitable owner could not have standing to threaten to bring such proceedings in respect of specified infringement of its copyright. Moreover, in the events which happened and which I have described, Metrokane got in legal title prior to any entry of judgment in these proceedings, and indeed prior to the close of the written submissions of the parties.

7. It follows also in my opinion that at least the locus standi of Metrokane as a cross-claimant in the proceedings against S & H should be recognised as having prevailed at all material times, irrespective of the belated addition of Mr Kilduff as an additional cross-claimant during the hearing of the proceedings, and irrespective of the absence of Mr Winigrad, Mr Chapman and Pollen Design Inc as cross-claimants.

8. For completeness I should add that in the course of the hearing, there was marked for identification 1, 4 and 5 respectively the following instruments tendered by Metrokane:

   (i)MFI-1: Certificate of registration of authorship of Mr Kilduff of ‘Corkscrew Pictograms’ in the United States Register of Corkscrew Pictograms (dated 25 January 2001);

   (ii)MFI-4: Assignment of patented invention known as Cork Extractor registered in the US Department of Commerce (dated 22 December 1999); and

   (iii)MFI-5: Deed of Assignment from Daniel Winigrad in favour of Metrokane of the Australian copyright in a so-called new design for a corkscrew later known as the ‘Rabbit’ (undated).

   Ultimately after the conclusion of the hearing, no objection was pressed by S & H as to those documents being admitted in evidence, subject to argument as to costs.  The informality or possible lack of efficacy or lack of ultimate relevance of those documents is apparent, but in any event, the same are consistent with the imputation of constructive trusts on the part of the relevant United States individuals involved in favour of Metrokane which I have established for other reasons.

   The meaning of work of artistic craftsmanship – review of authorities

9. Whether the Rabbit corkscrew qualifies as a work of artistic craftsmanship, within par (c) of the subs 10(1) definition of artistic work, by reference to any one or more of the three alternatives referred to in [25(i)] above, ranks as one of the two central issues in the proceedings.  If it does not, Metrokane’s case for breach of copyright inevitably fails.  As I have earlier also mentioned, incidentally, the Rabbit corkscrew has not been registered as a design under the Australian Designs Act.

10. Metrokane conceded that if the three dimensional Rabbit corkscrew is to be characterised as no more than a reproduction of Mr Kilduff’s original design drawings and that those drawings therefore constitute the only artistic work on which Metrokane can rely, the provisions of s 77 of the Copyright Act would defeat Metrokane’s claim to copyright. That is because that claim is based on the existence of a work of artistic craftsmanship, being one of the three bracketed exceptions appearing in s 77(1)(a). The two dimensional design drawings could not be rightly described of course as works of artistic craftsmanship, and hence Metrokane’s recourse to any one of the three-dimensional articles identified in [25(i)] above as potential candidates. 

11. Because the Copyright Act does not define what constitutes a work of artistic craftsmanship, it has been necessary for the courts to throw light incrementally upon the meaning and operation of that statutory expression.

12. A convenient starting point for clarification of the principles appertaining to, inter alia, a work of artistic craftsmanship, is the need for originality.  This derives from s 32 of the Copyright Act (infra).

    Where the form of expression of a work indicates the application of some degree of knowledge, judgment, skill or labour by the author, that work will be original for the purpose of establishing the subsistence of copyright: see Express Newspapers v News (UK) Ltd (1990) 18 IPR 201 at 206-207 (Browne-Wilkinson V-C), being a case which involved the literary copyright of a newspaper subsisting in the original work of its reporter. In relation to what may be described as mass produced articles intended for sale to members of the public for frequent or everyday use, such as lever operated corkscrews having their mechanisms visually encased by attractive materials, any attraction of the description of artistic craftsmanship to those encasements is attended with conceptual difficulty.  The leading authority in the United Kingdom governing the meaning of artistic craftsmanship, in the context of manufactured goods, is to be found in the speeches of the House of Lords in George Hensher Ltd v Restawhile Upholstery (Lancs.) Ltd [1976] AC 64. The report contains the reasons for decision of the Court of Appeal in rejecting the claim by the manufacturer for qualification as a work of artistic craftsmanship, followed by the speeches of each of the five members of the House of Lords which, although containing individual reasoning, nevertheless unanimously dismissed the appeal from the Court of Appeal.

13. The circumstances in Hensher involved a popular style of a manufactured suite of upholstered furniture consisting of a settee and two chairs bearing the mark ‘Bronx’.  The chairs had been made from a prototype or ‘mock-up’ designed and produced by the manufacturer’s employees, which consisted of a light frame with upholstery nailed thereto so as to resemble a chair.  That prototype was not durable enough to be actually used as a chair, but it served as a sufficient model for the chairs which were manufactured and sold.  Several other manufacturers thereafter copied the ‘Bronx’ chairs, including the respondent to the appeal which had succeeded in the Court of Appeal in establishing the absence of copyright.  No design had been registered by the appellant manufacturer under the Registered Designs Act 1949 (UK).  As earlier indicated, the Rabbit corkscrew is not registered under the Australian Designs Act.  The issue arising in Hensher was whether the prototype was a work of artistic craftsmanship.  Although all presiding members of the House of Lords were unanimous in their denial of that claim, each wrote speeches which sometimes differed in their respective reasons.

14. Lord Reid’s leading speech set out the following introduction to the issue or principal issue arising (at 77):

    ‘It is common ground that we must consider the prototype and not the furniture put on the market by the appellants.  Apparently this is because the articles put on the market were not works of craftsmanship.  But if there was copyright in the prototype then the furniture put on the market by the appellants was copied from it, and the respondents’ products were copied from the furniture which the appellants put on the market.  The respondents do not deny that this would be infringement of that copyright.’

    Thus his Lordship confirmed the notion that there could not be craftsmanship inherent in the mass production of manufactured goods.  As I have already indicated, Metrokane relies upon three candidates for qualification as a work of artistic craftsmanship, as set out in [25(i)] above, one of which bears the description of prototype, but another the first run of manufacture, the latter in reliance upon certain first instance authority of this Court the subject of adjudication after the decision of the House of Lords in Hensher.  The prototype of Metrokane’s corkscrew was not available to be exhibited to the Court, the same having apparently been long since destroyed or misplaced in the factory in China used by Metrokane.  His Lordship observed (also at 77) that ‘[a] work of craftsmanship suggests to me a durable useful handmade object and a work of artistic craftsmanship suggests something, whether of practical utility or not, which its owner values because of its artistic character’ and further that ‘[i]t appears to me to be difficult to bring within the terms or the intention of the statute an object which, however artistic it might appear to be, is only intended to be used as a step in a commercial operation and has no value in itself’.  His Lordship added, ‘I express no concluded opinion on this matter, on which the decision of this case can be of no authority’.

15. Thereafter Lord Reid analysed the statutory meaning of artistic, observing, inter alia, as follows (at 78):

    ‘But here two questions must be determined.  What precisely is the meaning of “artistic” in this context and who is to judge of its application to the article in question? There is a trend of authority with which I agree that a court ought not to be called on to make an aesthetic judgment.  Judges have to be experts in the use of the English language but they are not experts in art or aesthetics.  In such a matter my opinion is of no more value than that of anyone else.  But I can and must say what in my view is the meaning of the word “artistic”.

    I think we must avoid philosophic or metaphysical argument about the nature of beauty, not only because there does not seem to be any consensus about this but also because those who are ignorant of philosophy are entitled to have opinions about what is artistic.  I think that by common usage it is proper for a person to say that in his opinion a thing has an artistic character if he gets pleasure or satisfaction or it may be uplift [ing] from contemplating it.  No doubt it is necessary to beware of those who get pleasure from looking at something which has cost them a great deal of money.  But if unsophisticated people get pleasure from seeing something which they admire I do not see why we must say that it is not artistic because those who profess to be art experts think differently.  After all there are great differences of opinion among those who can properly be called experts.

    It is I think of importance that the maker or designer of a thing should have intended that it should have an artistic appeal but I would not regard that as either necessary or conclusive.  If any substantial section of the public genuinely admires and values a thing for its appearance and gets pleasure or satisfaction, whether emotional or intellectual, from looking at it, I would accept that it is artistic although many others may think it meaningless or common or vulgar.

    I think that it may be misleading to equate artistic craftsmanship with a work of art.  “Work of art” is generally associated more with the fine arts than with craftsmanship and may be setting too high a standard…’

    Lord Reid addressed the statutory notion of craftsmanship, adding (at 79) ‘[t]he whole conception of artistic craftsmanship appears to me to be to produce things which are both useful and artistic… A person who only wants, or has only room for, one of a particular kind of household object may be willing to pay more to get one which he regards as artistic; if a work of craftsmanship, it is none the less of artistic craftsmanship because his primary purpose is to get something useful’.  In relation to the furniture the subject of the appeal, his Lordship returned to the notion of artistic, concluding (at 74) as follows:

    ‘… I find no evidence at all that anyone regarded the appellants’ furniture as artistic.  The appellants’ object was to produce something which would sell… No doubt many customers bought the furniture because they thought it looked nice as well as being comfortable.  But looking nice appears to me to fall considerably short of having artistic appeal.  I can find no evidence that anyone felt or thought that the furniture was artistic in the sense which I have tried to explain.’

    In the present case, there can be no doubt that the external features of the Rabbit corkscrew at least look ‘nice’, as was also I think the case of the Pull It corkscrew.  Both contain however, the same mechanism, built of different material to that of the external features, based of course on that which was the subject of the Le Creuset patent.

16. Lord Morris of Borth-y-Gest queried (at 80-81) the validity of the agreed concession, for the purposes of the litigation, that the ‘knock up’, which appears to have been a paraphrase for prototype, could qualify as a work of craftsmanship, his Lordship observing that ‘I would reserve for future consideration the question whether so transient and incomplete a fabrication as the described “knock-up” did really come within what Parliament had in contemplation as a work of craftsmanship’.  As I have already indicated, the prototype here involved constitutes one of Metrokane’s three candidates for copyright protection.  Turning then to the meaning of artistic, his Lordship continued (at 81) as follows:

    ‘… the word “artistic” will be well understood.  As a word it can stand on and by its own strength… in this field personal judgment has to be formed: there are no absolute standards: there can be no scientific precision in measurement.  Nor can there be unanimity in conclusion though a general consensus of opinion among those whose views command respect will surely be firm ground on which judgment in a court of law can be based…’

    And thereafter addressing the meaning of artistic craftsmanship, Lord Morris continued:

    ‘In deciding whether a work is one of artistic craftsmanship I consider that the work must be viewed and judged in a detached and objective way.  The aim and purpose of its author may provide a pointer but the thing produced must itself be assessed without giving decisive weight to the author’s scheme of things… But an effort to produce what is artistic may, if forced or conscious, for that very reason fail.  Nor should undue emphasis be given to the priorities in the mind of a possible acquirer.  A positive need to purchase an object or thing in order to put it to practical use may be the primary reason for its acquisition but this may be reinforced by a full appreciation of its artistic merits if they are possessed… the object under consideration must be judged as a thing in itself.’

    On the subject of adducement of evidence necessary to qualify as artistic, Lord Morris added (at 82) the following as to the role of expert evidence in the determination of disputes such as that presently before me:

    ‘… as in all situations where a decision is required upon a question of fact the court must pay heed to the evidence that is adduced.  Though it is a matter of individual opinion whether a work is or is not artistic there are many people who have special capabilities and qualifications for forming an opinion and whose testimony will command respect.  In practice a court will not have difficulty in weighing their evidence and in deciding whether it clearly points to some conclusion.  In cases where the court is able to see the work which is in question that will not warrant a decision on the basis of spot opinion formed by the court itself but it will be a valuable aid to an appreciation of the evidence.’

    His Lordship was thus of a similar view as Lord Reid as to the admissibility of expert evidence as to whether an item is ‘artistic’ as a work of ‘craftsmanship’.  It may be observed that Lord Morris did not purport to establish qualification in respect of a work which a court is not able to view.

1. It is largely in the light of the foregoing evidence, including expert opinions, that I must determine whether S & H, as the importer into Australia of the Pull It corkscrew for the purpose of trade, has indirectly infringed or reproduced Metrokane’s asserted copyright in its Rabbit corkscrew as a work of artistic craftsmanship, assuming (contrary to the findings I have already made) that any such copyright has been established.  I have earlier set out the relevant legislative scheme, and the authorities, relating to what may constitute a substantial part of a work of copyright, which refer of course to an emphasis on quality of the significance taken, rather than quantity, and as involving questions of fact and degree as to objective similarity (see [31-32] above).  I am of the opinion that the question which I have framed on those assumptions should be answered in the affirmative, both in terms of the quality and quantity taken, largely for the reasons advanced by or on behalf of Metrokane which I have already recorded above.  I exclude of course from those reasons any purported reliance upon the mechanism of the Rabbit corkscrew, notwithstanding Metrokane’s reference thereto recorded in the last preceding sub-paragraph (i) of these reasons.

2. I do not accept that it is correct for S & H to assert, or for it to be asserted by Mr Brown on its behalf, that S & H ‘simply design[ed] an article using similar design vocabulary … to one already in the market place’, or that the Pull It corkscrew and the Rabbit corkscrew are merely ‘common in their “organic” design styling’, being a ‘common design styling since the mid-1990’s’, particularly having regard to Mr Brown’s view, correctly put forward, that none of the other corkscrews addressed in his evidence have completely adopted that styling.  A comparison of the two critical corkscrews under scrutiny in this litigation demonstrates how closely the Pull It corkscrew resembles the Rabbit corkscrew, and the numerous other ways in which the Pull It corkscrew could have been designed to avoid any such resemblance.  As I think Metrokane rightly submitted, Mr Kushner could have used one of the other versions of the Pull It design which he said he prepared.  Moreover as Mr Geddes further correctly pointed out:

   (i)only the Rabbit and Pull It corkscrews are both black with chrome detailing, and both feature a textured grip zone on the lever handle;

   (ii)the core characterising element of the Rabbit corkscrew is retained in the Pull It, and the method of creating that element has been reproduced by it; it is those factors which reflect the unique, identifying and market differentiating feature of design in the Rabbit corkscrew; and

   (iii)while a similar design might result, when designing a corkscrew based on the mechanical principles of the Screwpull, it is not pre-determined that a similar design would so result.

3. I do not think that I should accept the credibility of Mr Kushner’s evidence that his sending to the engineer at PCI’s factory in China the drawing at RGK-1/page 4 (see [141] above) was only for the purpose of obtaining accurate pricing, and I am unable to accept the credibility of Mr Kushner’s denial that the same could have assisted the manufacturer to understand the details of the design for what was wanted for manufacturing purposes.  I would infer, from the evidence I have earlier reviewed, that the factory in China created the drawing at RGK-1 page 5 as a result of having received the drawing at RGK-1 page 4 (Exhibit A14) from Mr Kushner, and as a further result of his having discussions with that factory, and further that his purpose of making the changes to the design was to attempt to defeat any allegations of infringement of the Rabbit corkscrew that might subsequently be made.  Mr Kushner did agree that some aspects of the shape of RGK-1 page 5 were more like the Rabbit shape than what appears as RGK-1 page 4.  I accept the submission of Metrokane that the similarities between the Rabbit corkscrew and the Pull It corkscrew are such that no inference should be drawn, other than one of derivation, and thus of copying a substantial part of the Rabbit corkscrew, being of course the part comprising the enclosure of the mechanism.  In reaching those conclusions, I have borne in mind, and have sought to apply, the principles enunciated by Lord Millet in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] All ER 700 at 708-709 which are reproduced below -

   ‘It must be borne in mind that this is an action for infringement of copyright.  It is not an action for passing off.  The gist of an action for passing off is deceptive resemblance.  The defendant is charged with deceiving the public into taking his goods as and for the goods of the plaintiff.  A visual comparison of the competing articles is often all that is required.  If the overall impression is that ‘they just do not look sufficiently similar’ then the action will fail.

   An action for infringement of artistic copyright, however, is very different.  It is not concerned with the appearance of the defendant’s work but with its derivation.  The copyright owner does not complain that the defendant’s work resembles his.  His complaint is that the defendant has copied all or a substantial part of the copyright work.  The reproduction may be exact or it may introduce deliberate variations – involving altered copying or colourable imitation as it is sometimes called.  Even where the copying is exact the defendant may incorporate the copied features into a larger work much and perhaps more of which is original or derived from other sources.  But while the copied features must be a substantial part of the copyright work, they need not form a substantial part of the defendant’s work (see Warwick Film Productions Ltd v Eisinger [1967] 3 All ER 367, [1969] Ch 508). Thus the overall appearance of the defendant’s work may be very different from the copyright work. But it does not follow that the defendant’s work does not infringe the plaintiff’s copyright.

   The first step in an action for infringement of artistic copyright is to identify those features of the defendant’s design which the plaintiff alleges have been copied from the copyright work.  The court undertakes a visual comparison of the two designs, noting the similarities and the differences.  The purpose of the examination is not to see whether the overall appearance of the two designs is similar, but to judge whether the particular similarities relied on are sufficiently close, numerous or extensive to be more likely to be the result of copyright than of coincidence.  It is at this stage that similarities may be disregarded because they are commonplace, unoriginal, or consist of general ideas.  If the plaintiff demonstrates sufficient similarity, not in the works as a whole but in the features which he alleges have been copied, and establishes that the defendant had prior access to the copyright work, the burden passes to the defendant to satisfy the judge that, despite the similarities, they did not result from copying.

   …

   Once the judge has found that the defendant’s design incorporates features taken from the copyright work, the question is whether what has been taken constitutes all or a substantial part of the copyright work.  This is a matter of impression, for whether the part taken is substantial must be determined by its quality rather than its quantity.  It depends upon its importance to the copyright work.  It does not depend upon its importance to the defendant’s work, as I have already pointed out.  The pirated part is considered on its own (reference at this point being made to Ladbroke referred to in [32] above) and its importance to the copyright work assessed.  There is no need to look at the infringing work for this purpose.’

   Whether Metrokane established secondary infringement of copyright

4. This next issue arising was not of course one of alleged actual reproduction of the Rabbit corkscrew in the form of Pull It corkscrew neither Mr Kushner nor PCI being respondents to the proceedings. It was a case of so-called secondary infringement of copyright on the part of S & H, pursuant to ss 37 and 38 of the Copyright Act, which are extracted in [33] above. S & H asserted in response that if Metrokane did have copyright in the Rabbit corkscrew as a work of artistic craftsmanship, its incorporation which of course I have already found to the contrary in any event, S & H did not know, nor ought reasonably to have known, that into Australia and sale in Australia of the Pull It corkscrew would have constituted an infringement of that copyright. Nevertheless s 115(3) of the Copyright Act stipulates a measure of certain adverse consequences to S & H, if Metrokane were to have established its claim to copyright, irrespective of its unawareness etc of Metrokane’s alleged copyright, in the following terms:

   ‘Where, in action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under the section or not.’

   Metrokane asserted an entitlement to additional damages pursuant to s 115(4) of the Copyright Act, upon the basis that S & H’s alleged infringing conduct was even flagrant, the same reading (so far as is relevant) as follows:

   ‘Where, in an action under this section:

   (a)an infringement of copyright is established; and

   (b)the court is satisfied that it is proper to do so, having regard to:

   (i)the flagrancy of the infringement; and

   (ii)…

   (iii)any benefit shown to have accrued to the defendant by reason of the infringement; and

   (iv)all other relevant matters;

   the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.’

5. The evidence of Mr Angus (first identified herein at [12] above), which I think I should accept, was directly and emphatically that S & H, and himself as its chief executive officer, did not have any such requisite knowledge. Consistent with that denial, Mr Angus said that he had been expressly advised in mid 1991, in relation to another new lever action corkscrew being sold in Australia under the name Baccarat, and resembling the Pull It corkscrew, that it was unlikely that S & H would have any claim against the company marketing the Baccarat corkscrew. In those circumstances, S & H submitted that Mr Angus could not, as a lay person, reasonably have suspected that another party could make a claim against S & H for infringement of copyright of artistic craftsmanship in respect of a corkscrew design. I was left with no doubt, from my observation of his demeanour in Court during the hearing, and his reactions under cross-examination, that his evidence in denial in effect of the statutory prescription as to ‘know or ought reasonably to have known’ contained in ss 37(1) and 38(1) of the Copyright Act should be accepted for the benefit of S & H’s case, and that consequently no flagrancy of infringing conduct on the part of S & H had occurred. For what it may matter in the light of my finding in favour of S & H in relation to the non-existence of copyright. I should record that in my approach to the resolution in any event of the s 115(3) issue tendered by Metrokane, I bore in mind the following dicta of the Full Federal Court in Millwell Pty Ltd v Olympic Assessments Pty Ltd (1991) 43 IPR 32 at [52]:

   ‘To obtain the protection of s 115(3), a defendant must establish (i) an active subjective lack of awareness that the act constituting the infringement was an infringement of the copyright, and (ii) that, objectively considered, he or she

   
   
   

   had no reasonable grounds for suspecting that the act constituted an infringement.’

6. I would record, in that latter regard, that Metrokane made no claim to any copyright, either on the packaging of the Rabbit corkscrew, or on the website of Metrokane, or by way of copyright registration in the United States, such as to have put, or conceivably to have put, S & H on notice as to any claim to copyright in any Metrokane design or work of artistic craftsmanship, prior to the letter of demand sent to S & H by Metrokane’s lawyers of 7 June 2002 (see again [17] above which also refers to what intellectual protection Metrokane applied for in the United States).

   I also accept the contention of S & H that the mere importation of the Pull It corkscrew by S & H, without the requisite knowledge, cannot be deliberate in the sense viewed by authority: see International Writing Institute Inc v Rimila Pty Ltd and another (1994) 30 IPR 250 at 255 (per Lockhart J).

7. Moreover in the circumstances of this complex dispute, the period of time between actual receipt by S & H of the letter of demand of 7 June 2002, and the commencement by Metrokane of the proceedings on 21 June 2002, could hardly be described as an adequate period of time within which to substantiate the ownership of copyright by a United States resident company in a corkscrew manufactured in China, and sold in and distributed from the United States that letter of demand required written undertakings of the directors of S & H to be furnished within 14 days, not just to cease importation of the Pull It corkscrew into Australia, but also to withdraw from sale all such stocks in S & H’s control, to deliver up all such stocks in its possession to Metrokane, to provide a statutory declaration as to a substantial amount of business information, and perhaps most startling of all at that stage of absence of prior communication, to ‘pay, at the option of [Metrokane], damages on an account of profits relating to the infringement of our client’s copyright’.

8. I do not accept that S & H had actual knowledge, or ought to have known, that it was infringing Metrokane’s claimed copyright, by reason of its receipt of the above letter of demand, and given that S & H had no earlier such knowledge.  To ascertain whether a demanding non-resident stranger has copyright in the nature of a work of artistic craftsmanship (which of course I have found not to have been established in any event)  requires no small feat of judgment, as for example the speeches in Hensher which I have earlier extracted at some length duly tend to exemplify. I duly acknowledge the principles as to the operation of s 39 (and consequently of s 38 as well) of the Copyright Act, enunciated in Milpurrurru (at 225-6) by Von Doussa J, as follows:

   ‘ “Knowledge”, for the purposes of s 37, refers to notice of facts such as would suggest to a reasonable person having the ordinary understanding expected of persons in a particular line of business that a breach of copyright was being committed … Constructive knowledge is sufficient.  Knowledge of the law is not required.  It is sufficient that there be actual or constructive knowledge that intellectual property rights would be infringed, without knowing the precise nature of those rights.’

   But even in the case of constructive knowledge, the recipient of any constructive notice should normally be entitled to a reasonable time to consider the basis for a previously unforeshadowed demand, if also an unanticipated demand, of a putative overseas resident copyright owner, before adequately responding thereto, particularly an infringement demand of the nature here involved, without prior warning.  Notice of a claim in the kind of circumstances here involved, without prior warning cannot sensibly mean that the recipient must ‘close down the shutters’, to use the traditional description, without being allowed reasonable enquiry and investigation.  It is of course readily apparent that mere claims of breach of copyright are not always soundly based. 

9. Counsel for Metrokane acknowledged Mr Larimer’s concession that other than with respect to the pictorial diagrams located on the packaging, and in the instructions booklet, for the Rabbit corkscrew:

   (i)there were no copyright certificates of registration available or provided in relation to the design of the Rabbit corkscrew as a product;

   (ii)no claim was made to copyright on the packaging of the Rabbit corkscrew;

   (iii)no one involved in preparing Metrokane’s website had been apparently instructed to ensure that its alleged copyright in the Rabbit corkscrew was claimed thereby; and

   (iv)so far as he understood, copyright did not subsist in the Rabbit corkscrew design in the United States.

   Counsel for Metrokane submitted that none of those circumstances were material to the issue of constructive notice, but I do not think there is force in the submission (cf what I have recorded in [57] above).

10. Metrokane nevertheless submitted that apart from the content of the letters of demand, the following matters were known by S & H, or ought reasonably to have been known by S & H, prior to the writing by Metrokane of the letter of demand, such as to have put S & H on actual or at least constructive notice:

    (i)both the Pull It and the Rabbit corkscrews were on display at the Reed Gift Trade Fair in either Melbourne or Sydney in or about September 2001;

    (ii)Mr Angus testified in his affidavit evidence that he recalled seeing the Rabbit corkscrew in late 2000 or early 2001 at a trade fair or retail outlet, and that he did not become aware of the Pull It corkscrew until later at Hong Kong trade fair in April 2001, yet when he next saw the Pull It corkscrew, he did not by then recall having the Rabbit corkscrew at that later time; given the number of manufactured corkscrews exploiting the Le Creuset mechanism which entered the market, following upon the expiration of its patent relating thereto, that absence of recollection is in my opinion by no means surprising or startling; indeed the very circumstance that Juerg Haertel of Victorinox, in an email dated 5 June 2001, after having been provided with a sample of the Pull It corkscrew, observed that there were ‘a few of these models on the market already’, tends to support the bona fides of the explanations proffered by Mr Angus;

    (iii)the advertising of Rabbit corkscrews in five newspapers/journals in Australia in July, August (two of the journals) and December 2001, and in February 2002, each using the slogan ‘pulls a cork in 3 seconds’;

    (iv)Mr Kushner’s reference to the Rabbit corkscrew in a fax to Mr Angus of 4 July 2002, which enclosed a copy of Metrokane’s US Design Patent for the Rabbit corkscrew (ie 27 days after the letter of demand, and 13 days after commencement of the subject proceedings);

    (v)the admission of Mr Angus that he did not make any inquiries or cause any inquiries to be made as to the whereabouts of Mr Ho, the alleged designer of the Pull It corkscrew on the instructions of PCI , it being contended by Metrokane that its allegations against PCI were such as to render it reasonable and prudent that he do so; and

    (vi)the knowledge of Mr Angus, through conversations with Mr Kushner, that threats had been made by Metrokane in the United States ‘regarding infringement of the Rabbit’ (the cross-examination did not however specify the nature of the intellectual property the subject of those threats of infringement), yet he did nothing to ascertain the truth of the allegations being made by Metrokane or reason why the shape of the Pull It was altered.

    In my opinion, none of the foregoing matters, cumulatively or otherwise, realistically constituted  requisite notice to Mr Angus in  the circumstances in which he was realistically placed, and thus to S & H And in particular, notice of a claim of constructive notice of copyright of the controversial nature of artistic craftsmanship.  Mr Angus was plainly entitled to think that Metrokane’s claim merely reflected on example of the kitchen manufacturers overseas to exploit the expired Le Creuset patent.

1. Nevertheless, once the subject proceedings were commenced on 21 June 2002, there can be no dispute that S & H was thereupon placed on notice of the basis of Metrokane’s claim being advanced against it, namely for breach of copyright in a work of artistic craftsmanship.  It may be readily inferred however that S & H did not thereupon acknowledge Metrokane’s claim of copyright, by reason of the legal advice doubtless bona fide given to and received by S & H, being advice apparently unrelated to the earlier advice received in respect of the Baccarat corkscrew (ante).  The fact that such privileged material was not put in evidence does not in my opinion matter, it being in my judgment obvious to all concerned from the outset that the present claim of copyright was going to be highly controversial.  It was in my view an uncharted course for Metrokane to have pursued a case for copyright entitlement in the nature of artistic craftsmanship, in relation to the handle of a corkscrew, albeit attractively presented, which merely embodied however the mechanism the subject of a recently expired patent held virtually worldwide by an unrelated and famous French manufacturer.  If I am wrong in my conclusions as to the absence of qualification for copyright of that nature in relation to the Rabbit corkscrew, and as to authorship in any event of that alleged copyright entitlement, I would not, in any event, have reached a conclusion in favour of Metrokane for exemplary damages against S & H, having regard to all the circumstances of the case which I have reviewed.

   Claims advanced by Metrokane based upon passing off and the Trade Practices Act

2. I agree with the contention of S & H that these claims face formidable hurdles, irrespective of the conclusions I have already reached on the copyright issues arising.  The following passages from judgments of the High Court in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 exemplify that observation:

   ‘… the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled.  There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another.  In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves.  In some cases, indeed, no other design would be practicable.  In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article.  In all of these cases, the normal and reasonable way to distinguish one produce from another is by marks, brands or labels.  If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public’ (per Gibbs CJ at 149 CLR 191 at 199-200).

   ‘Therefore, a manufacturer who exercises his freedom to manufacture goods according to a design which is not protected by valid registration does not engage in conduct which is misleading or deceptive or which is likely to mislead or deceive.  If consumers or potential customers believe that all goods of a particular design are manufactured by him who first establishes a market reputation as a manufacturer of those goods, that belief is or may be erroneous.  The error may be attributed to a preconceived belief that the manufacturer who first establishes a market reputation has a monopoly in the manufacture and sale of goods of that kind but, unless the manufacturer has acquired a statutory monopoly, that belief is also erroneous and the error flows from a misconception of law.  A later manufacturer who does no more than exercise his freedom to manufacture and sell goods made in accordance with a design in the public domain does not mislead or deceive; and if a consumer has an erroneous preconceived belief that the first manufacturer has a monopoly, a false assumption by the consumer as to the source of the later manufacturer’s goods is self-induced.  That was the approach taken by the full court of the Federal Court with respect to trade names in McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394, and I respectfully agree with it’ (per Brennan J at 149 CLR 191 at 225).

3. For the reasons I have earlier outlined in the segment relating to infringement, the evidence discloses in the present proceedings that both the Rabbit and Pull It corkscrews are sold within differing and well marked and labelled packaging, notwithstanding that the products may ‘closely resemble’ one another, to adopt the expression used by Gibbs CJ above.

4. Two authorities of Full Courts of this Court have also addressed the theme of similar or almost identical goods marketed under or by their respective or different labels.  Thus in Dr Martens Australia Pty Ltd v Rivers (Australia) Pty Ltd (1999) 95 FCR 136 at [41], Sundberg, Emmet and Hely JJ, after referring to Puxu, said as follows:

   ‘If the appellants in Puxu could copy the respondents’ claims provided they labelled them so that it was clear they were not the goods of the respondents, we can see no reason why the appellants cannot do the same with their footwear…’

   And subsequently in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90, in finding that the passing off and TP Act claims concerning a rotary shaver, with a similar appearance to the appellant’s rotary shaver, should fail, Burchett J, with whom Branson and Hill JJ agreed, said (at 281) as follows:

   ‘Nor is there any more reality to the suggestion that the mere similarity of goods … might lead some persons to assume the Remington shaver is produced under licence, or is a sub-brand of Philips … The public is thoroughly accustomed to competing brands of almost identical products, which may or may not have some link…’

5. In my opinion, however closely identical the Pull It corkscrew is to the Rabbit corkscrew for the reasons I have earlier set out relating to the issue of infringement of copyright, the different packaging of both products, in which the same are sold in Australia, is such as not to mislead consumers in Australia or potential consumers by reason of any deceptive resemblance, or of having any endorsement, approval, licence or sponsorship of Metrokane, consequential upon any conduct of S & H in the nature of passing off.  In any event, essentially for the reasons appearing in the earlier segment above headed ‘Secondary infringement of copyright’, I would reject the contention of Metrokane that the conduct of S & H complained of was carried out with the intention of appropriating and taking advantage of the reputation and goodwill of Metrokane.

6. The claims made by Metrokane under s 52 and 53(a), (c) and (d) of the TP Act, as in the case of the claim for passing off, were of course made independently of, and not linked to, the success or otherwise of the claims made by Metrokane for infringement of copyright. Obviously enough, the importation, distribution and sale by S & H of the Pull It corkscrew constituted conduct in trade and commerce within the meaning of that expression as used in the TP Act. The untrue representations allegedly made by S & H to members of the public is said by Metrokane to be that the Pull It corkscrews are the products of Metrokane, or alternatively products licensed or approved by, or otherwise associated with, Metrokane, or that the Pull It corkscrew has a sponsorship and approval of Metrokane, or an association with Metrokane, which the Pull It corkscrew does not have.

7. Metrokane further asserted that it had established substantial goodwill and reputation in the Rabbit corkscrew in Australia, such that members of the public throughout Australia recognised the features of the Rabbit corkscrew as being that of Metrokane, and thus emanating from a single source.  Moreover Metrokane claimed that the advertising, promotion, importation, sale and supply in Australia of Pull It corkscrews having the features of the Rabbit corkscrew, have signified, or are likely to have signified, to persons in Australia, that the Pull It corkscrew is made by and/or sold with the licence or approval of Metrokane.

8. Essentially for the same reasons as I have dismissed Metrokane’s cause of action for passing off, I would dismiss the causes of action of Metrokane based on the TP Act. Metrokane acknowledged the significance, potentially adverse to its TP claims, referrable to the different packaging of the Rabbit and Pull It corkscrews, but contended that both corkscrews were often displayed outside their packaging, and that people often tend to take away with them imperfect recollections of those displays.  No evidence was specifically cited in support of that submission.  Moreover in that context, Metrokane submitted that what consumers ‘take away with them when they have seen an item in a store is this rabbit-like profile, or even if they don’t think of it as a rabbit, that distinct moulded shape, and that it is very easy to confuse the two’.  It was further submitted by Metrokane that ‘[i]f one goes to a dinner party and sees the Pull It or Rabbit corkscrew it would be very easy to confuse the two when you saw it [later] in a store’.  Some reservations I have with those submissions are first, that it is unlikely that any display of either corkscrew outside its packaging is equally likely to be so displayed upon or immediately adjacent to that packaging, and in the example of the dinner party hypothesis, observers would still have to later buy the product in, or in association with, its packaging when he or she might decide to acquire the product with which he or she was supposedly impressed.  The hypothesis assumes in any event that what may be observed on a social occasion may involve a representation made by or on behalf of S & H, which may not be readily established in any event.  For all those reasons, I do not think that Metrokane can avoid the impact of the reasoning that has underpined authorities such as those cited above albeit in the immediate context of unsuccessful passing off causes of action.

9. Metrokane formulated the following matters in furtherance of its contention as to confusion, or likely confusion, by reason of the similarity of the two corkscrews, which I have earlier established in my segment relating to infringement of copyright:

   (i)since May 2000, approximately one million ‘Rabbit’ corkscrew have been sold and distributed throughout the world;

   (ii)Argyle Wine Accessories Pty Ltd (first identified in [21] above (‘Argyle’), appointed the exclusive distributor of the Rabbit corkscrew in Australia in February 2000, distributed throughout Australia between June 2000 and 31 October 2002 approximately 3,778 Rabbit corkscrews;

   (iii)whereas initially from June 2001, Argyle distributed the Rabbit corkscrew through approximately 500 retailers in Australia, by November 2002 the number of retailers through which Argyle distributed the Rabbit corkscrew had reduced to approximately 187;

   (iv)S & H for its part distributed the Pull It through some of the same retail stores as Metrokane, including Myers, House, King of Knives and Executive Chef;

   (v)S & H has distributed and sold approximately 70,000 Pull It corkscrews in Australia since 21 June 2001;

   (vi)Argyle’s director Mr Symons first became aware that the Pull It corkscrew was being sold in Australia in June 2001, after it was on display at the Reed Gift Trade Fair; he testified that his ‘initial reaction was that it was strikingly similar in appearance to the Rabbit corkscrew, he recalled both existing and potential retail customers, at the Reed Gift Trade Fair, telling him they were going to buy ‘a rabbit’ somewhere else’;

   (vii)Mr Symons further said that ‘a number of his retail clients informed him that they stopped buying the Rabbit corkscrew simply because they had a cheaper alternative available’;

   (viii)strong evidence of actual confusion was reflected in the circumstance that Argyle had actually experienced a Pull It corkscrew being returned to it ‘by the agent that sells the ‘Rabbit’ corkscrew’, on account of claimed defects;

   (ix)Argyle had twice received Pull It corkscrews from Myers for repair by persons describing them as Rabbit corkscrews, when in fact they were Pull It corkscrews;

   (x)items such as corkscrews are nearly always sold by retail together; and

   (xi)sales of the Rabbit corkscrew made by Argyle reduced by one half in the first year following the initial sale of the Pull It corkscrew in Australia, and are now less than one eight of the number of sales achieved when first introduced into Australia.

   The difficulty for Metrokane is whether any of that evidence establishes the breaches of the provisions of the TP Act on the part of S & H purportedly relied upon.

10. As in the case of the cause of action for passing off, Metrokane is faced with the hurdle of the distinct, and I might add, attractive packaging of each of the two products which would be evident to prospective buyers at the point of sale. It is deception at the point of the sale which is critical, not for instance at the point of return of goods for repair of defects. I think that authorities which I have cited above present insuperable obstacles to the causes of action propounded by Metrokane against S & H under the TP Act. In particular the circumstance that consumers stopped buying the Rabbit corkscrew, because they had the option of the cheaper alternative of the Pull It corkscrew (see sub-para (vii) immediately above) does not establish that they were misled or deceived in any of the circumstances addressed by ss 52 and 53(a), (c) and (d) of the TP Act. The market indications as to increasing popularity of the Pull It corkscrew, and the declining market popularity of the Rabbit corkscrew, does not establish that consumers were misled and deceived in the circumstances of the different packaging of the respective two products at the point of sale.  Particularly would that be so in the circumstances of the market penetration of other manufactured corkscrews which entered the Australian market with the benefit of adoption of the mechanism the subject of the expired Le Creuset patent.  I do not think that the circumstances set out in [168] are sufficiently probative of any of those claims (as to which, see for instance [12] and [15] above).  Moreover the loss of major market support for the Rabbit corkscrew could conceivably have been attributable to pricing circumstance which I have earlier featured.  Moreover I do not think that there is a case to be made by Metrokane by reference to the circumstances that some retailers may have displayed Pull It corkscrews out of their respective packaging; that seems to me to be something for which a manufacturer cannot be held accountable under the TP Act or for passing off. There is no evidence to the effect that S & H instructed its retailers to display the Pull It corkscrew for sale in any manner which might tend to mislead or confuse prospective buyers. 

11. I would therefore also reject the claims of Metrokane based upon the TP Act.

    Claims advanced conversely by Sheldon and Hammond pursuant to provisions of the Trade Practices Act

12. The S & H case for breaches on the part of Metrokane of the TP Act, being referrable to ss 52 and 53(g) thereof, is said to follow from the circumstance of Metrokane’s groundless threats of contravention of s 202 of the Copyright Act, which I have found to have occurred by reason of Metrokane’s absence of any entitlement to copyright in relation to the Rabbit corkscrew. The case for the existence of such statutory breaches seems to me however to be misconceived. S & H has not established that it was misled or deceived by reason of any such representations on the part of Metrokane. On the contrary, it rejected from the outset Metrokane’s allegations of breach of copyright, and also of such breaches of the TP Act as Metrokane later claimed. There is moreover no evidence of loss or damage sustained by S & H caused by any such supposed breaches on Metrokane’s part of the TP Act. As in the case of Metrokane, S & H’s pursuit of causes of action for breach of the TP Act must fail.

    Conclusions and Costs

13. S & H has achieved substantial success in the proceedings. My tentative view is that in the exercise of my discretion, S & H should not be entitled to an order for the whole of its costs of the proceedings. I have found in favour of Metrokane on one of the major issues in the proceedings, namely whether Metrokane established infringement of copyright (referrable of course to the conduct of Mr Kushner and his company PCI) upon the assumed basis of course that the issue as to existence of copyright in the first place had been established in its favour. Coupled with the circumstance that PCI had contributed $50,000 to S & H’s cost of the proceedings (see [140] above), it may well be unjust that such sum should be in effect made available for recoupment to Mr Kushner and PCI, directly or indirectly, by virtue of an award of the costs of the entire proceedings in favour of S & H. I have made certain adverse findings concerning the conduct of Mr Kushner and PCI in relation to that substantial issue of infringement. What I tentatively have in mind would be to make orders that the costs of the proceedings be paid by Metrokane on the usual party and party basis, less the sum of $50,000. I would add that whilst Metrokane has been also wholly successful in relation to the counter-claim of S & H based upon the TP Act, what was involved in relation to that counter-claim was relatively insignificant, in terms of cost and expense. I should add that even if there be in fact no arrangement for the return of that sum of $50,000 by S & H to PCI, I tentatively am of the view that in principle, my proposal would be equitable in all the circumstances of the case. However I wish to have the benefit of submissions of the parties upon any costs proposals.

I certify that the preceding one hundred and seventy two (172) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice R. Conti.

Associate:

Dated:             3 February 2004

Counsel for the Applicant:	Mr R Cobden
Solicitor for the Applicant:	Spruson & Ferguson Lawyers
Counsel for the Respondent:	Mr A Crowe SC and Ms D K Grigg
Solicitor for the Respondent:	Gadens Lawyers
Date of Hearing:	24-28 March 2003, 21 July 2003
Date of Judgment:	23 January 2004