Sunlec International Pty Limited v Electropar Limited HC Auckland CIV 2007-404-005044

[2008] NZHC 2591

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-005044

UNDER  The Copyright Act 1994

BETWEEN  SUNLEC INTERNATIONAL PTY LIMITED

Plaintiff

ANDELECTROPAR LIMITED First Defendant

ANDGRANT LACHLAN WALLACE Second Defendant

ANDCAMERON LACHLAN WALLACE Third Defendant

ANDTONY LACHLAN WALLACE Fourth Defendant

Hearing:         25 August 2008

Appearances: K McLeod and M Hayes for the Plaintiff

G Williams for the First, Second, Third and Fourth Defendants

Judgment:      24 September 2008 at 10.00am

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 24 September 2008 at 10.00am

pursuant to r 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

A J Park, P O box 565, Auckland

Bell Gully, P O Box 4199, Auckland

SUNLEC INTERNATIONAL PTY LTD V ELECTROPAR LTD AND ORS HC AK CIV 2007-404-005044  24

September 2008

[1]      This  is  a  copyright  infringement  proceeding.    Sunlec  International  Pty Limited (“Sunlec”) alleges that Electropar Limited (“Electropar”) has infringed copyright subsisting in two literary works and one photographic work.

[2]      The pleaded works are as follows:

a)       Four photographs and a caption, “How it works – Four Easy Steps” (“the Four Easy Steps work”);

b)        A photograph of a Grafoplast item number 175 (“the item 175 work”);

and

c)       Caption of a Grafoplast 050C Trasp case – “‘Field Friendly’ – the best choice for field work” (“the Field Friendly work”).

[3]      Electropar admits that Sunlec is the proprietor of copyright in the Four Easy Steps work and in the item 175 work.   It admits that it infringed the copyright subsisting in these works.   However, it denies that Sunlec is the proprietor of copyright in the Field Friendly work.

[4]      Sunlec’s  proceedings  also  alleged  infringement  by  G  L,  C  L,  and  T  L Wallace, all of whom are directors of Electropar.  However, at the commencement of the proceedings, Mr McLeod advised that Sunlec was not pursuing its claims against the directors, but only against the company.

[5]      As the hearing progressed, it became apparent that the principal issues for determination were of relatively narrow scope.  They were as follows:

a)        Can copyright subsist in the Field Friendly work?

b)        If copyright does subsist in that work, has Electropar infringed it?

c)       What  if  any  compensatory  damages  are  payable  by  Electropar  to Sunlec in respect of the admitted infringements and any infringement of the Field Friendly work?

d)Whether the circumstances of the case justify an award of additional damages pursuant to s 121 of the Copyright Act 1994?

[6]      In addition Electropar belatedly raised a pleading point.   On the basis of answers given by a Mr Ellard for Sunlec in the course of cross-examination, it submitted that the Field Friendly work had not been sufficiently pleaded.

Background

The parties

[7]      Sunlec is an Australian company that carries on business as an importer and distributor   of   wire   marking   products   in   the   Australasian   region,   including New Zealand.

[8]      The wire marking products are manufactured in Italy by an entity known as Grafoplast S.p.A.  The products provide a simple method of labelling electrical wires with letters and/or numbers so that the purpose of a particular wire can be readily identified.   The products are used to mark electrical wires in control wiring for electrical plant and machinery across a wide range of industries.

[9]      Sunlec has a 60% interest in an entity known as Grafoplast Wire Markers Inc, which is an American company responsible for importing and distributing Grafoplast wire marking products in the United States.

[10]     Initially,  the  distribution  rights  for  Grafoplast  wire  marking  products  in

Australia and New Zealand were held by an entity known as CPE Pty Limited.  In

1987 it obtained an exclusive agreement with Grafoplast S.p.A. permitting it to distribute the products in Australia and New Zealand.  Those distribution rights were taken over by Sunlec in 1989, and in the same year Sunlec entered into a sub- distribution agreement with Electropar.  Electropar was granted the exclusive right to sub-distribute  Grafoplast  wire  marking  products  in  New  Zealand  on  behalf  of Sunlec.

[11]     In  1996,  the  exclusive  distribution  agreement  which  Sunlec  had  with Grafoplast S.p.A. came to an end. Sunlec has continued to import and distribute Grafoplast wire marking products in both Australia and New Zealand, but on a non- exclusive basis.

[12]     In November 1998 Sunlec gave Electropar notice of termination of the sub- distribution agreement, and that agreement came to an end on 5 December 1998. Electropar  then  began  purchasing Grafoplast  wire  marking products  direct  from Grafoplast S.p.A. in Italy, and importing them into New Zealand for distribution.

[13]     Sunlec then appointed another entity – Southern Distributors Limited – as its

New Zealand sub-distributor of Grafoplast wire marking products.

[14]     As can be seen Sunlec and Electropar are in effect trade competitors  in New Zealand and I was left with the firm impression that that fact has very much coloured these proceedings.

Creation of the pleaded copyright works

[15]     Mr Ellard, who is the managing director of Sunlec and  the  president  of Grafoplast Wire Markers Inc, gave evidence.   He stated that he had first become aware of the Grafoplast wire marking products in 1986/1987.  He took on marketing them in Australia “against all odds” because the Italian manufacturers had only Italian literature.   He had to determine the best method of introducing the product into the Australian and New Zealand markets, and to that end he had to develop strategies and material that demonstrated the product, and its simplicity of use.  He gave evidence that he had spent the last 21 years promoting the use of the product.

[16]     It was Mr Ellard’s evidence that in 1994/1995 Grafoplast Wire Markers Inc, in conjunction with Sunlec, created marketing material to promote Grafoplast wire marking  products.    That  material  was  intended  to  be  used  by  Grafoplast  Wire Markers Inc. in the United States, and by Sunlec in Australia and New Zealand.

[17]     Mr Ellard gave detailed evidence in relation to the creation of the three works at issue in these proceedings.

a)       The Four Easy Steps work

[18]     The Four Easy Steps work consists of four photos, and a caption – “How it works – Four Easy Steps”.   This shows how simple the Grafoplast wire marking system is to use.  It was Mr Ellard’s evidence that he created the Four Easy Steps work  in  early  1994  as  an  employee  of  Sunlec.    He  stated  that  the  work  was undertaken with the assistance of a marketing company – JMG Marketing Pty Limited (“JMG”).   JMG took photographs of the wire marking system and wrote advertising copy for a brochure.  A hand shown in the photographs was the hand of an employee of Sunlec and the photos were taken at Sunlec’s premises in Perth. Sunlec was invoiced by JMG for its services in creating the work.  Unfortunately, the records have been destroyed, but Mr Ellard could recall that an invoice had been received and paid.  It was Mr Ellard’s evidence, and that of a Mr Murphy who was the former owner of JMG, that Sunlec was billed approximately A$15,000 for the creative concept and development of the Four Easy Steps work.  The work was used in marketing brochures and in conference notes and manuals.  It was presented at a distributors’   conference   in   1994   which   was   attended   by   representatives   of Electropar, and they were given copies of material containing the work.  The Four Easy Steps work has been used in Sunlec’s marketing material since it was created in

1994; it features on the company’s website and on the website of Grafoplast Wire

Markers Inc.

b)       The item 175 work

[19]     The item 175 work comprises a photograph and a photographic negative of a

Grafoplast item number 175.  The photograph is of a terminal box known as an item

175 against a blue background.  Mr Ellard told me that in May 1995 he asked a Mr Tim O’Hara of O’Hara Photography to take a photograph of the item.   It was his evidence that he put together the terminal block for the photos that were to be taken, and gave Mr O’Hara instructions on how the item should be photographed.   As a result he has a photographic negative dated 11 May 1995.  Mr O’Hara was paid by

Grafoplast Wire Markers Inc to take the photograph.  It has since assigned its rights in the photograph to Sunlec by way of a deed of assignment dated 5 October 2007. The item 175 work has been used by Sunlec in its marketing material and on the company’s website since it was created.  It has also been used on Grafoplast Wire Markers Inc’s website since 1996.  Mr Murphy gave evidence that the cost to create the photograph would have been approximately A$250.  A Mr Howell on behalf of Electropar  gave  evidence  that  he  had  obtained  indicative  costs  for  producing  a similar photograph, and that they had ranged between NZ$33.75 and NZ$101.25 (both  inclusive  of  GST).    The  difference  between  Mr  Murphy’s  estimate  and Mr Howell’s indicative costs is de minimis.

c)       The Field Friendly work

[20]     It was Mr Ellard’s evidence that he created the Field Friendly work in early

1994 together with a Mr T J Boyle.  Mr Boyle was at the time a full-time employee of Grafoplast Wire Markers Inc, and a paid consultant to Sunlec.  Mr Ellard said that he  and  Mr Boyle  created  the  Field  Friendly  work  when  they  were  preparing marketing conference notes and manuals for Sunlec’s 1994 distributors’ conference. He told the Court that they spent a lot of time devising a “snappy memorable phrase” to best describe how the Grafoplast product could be used by customers.   They reviewed and rejected a number of different phrases before finally deciding to use the slogan –  “‘Field Friendly’ – the best choice for field work” – in relation to an item known as the Grafoplast 050C Trasp case.   This is a portable see-through plastic case with various dividers containing a number of component parts of the Grafoplast wire marking system.  It is a travel kit intended to be used by customers at on-site locations.   Mr Ellard stated that the Field Friendly phrase was written down.  In the course of cross-examination, it became apparent that the phrase had been written down in substantial notes prepared for the 1994 distributors’ conference and that those notes were in excess of 100 pages long.   The phrase has been reproduced in Sunlec’s marketing material since it was created in 1994.  It was used at the 1994 conference.  It was also used at the 1995 distributors’ conference.  It is on Sunlec’s website and on Grafoplast Wire Markers Inc’s website.   Grafoplast assigned its rights in the Field Friendly work to Sunlec in the deed of assignment dated 5 October 2007.

[21]     Mr Murphy was not involved in the creation of the Field Friendly work. However he stated that had JMG Marketing been asked to create the  work for Sunlec’s marketing material, the costs would have been in the region of A$5,000 to A$15,000.  The costs would have been towards the lower end of that range if the creator had the kind of background knowledge that JMG had developed from its involvement with Sunlec.   If the creator did not have that knowledge, he believed that it would have been towards the high end of the range.

Alleged infringements

[22]     Evidence in relation to the infringements was given primarily by Mr Howell. He is Electropar’s marketing co-ordinator.   It was his responsibility to maintain Electropar’s website, and to oversee the design and development of its marketing materials.

a)       The Four Easy Steps work

[23]     In relation to the Four Easy Steps work, Mr Howell explained that in or around 2006 he was asked to redesign Electropar’s website.  He discussed how best to do this with Electropar’s internet service provider – Tin Soldier.  Tin Soldier set up a shell website that was not accessible to the public.  This shell website contained a basic page structure but it was left to Mr Howell to upload all relevant product and marketing material that Electropar wished to include on the site, and to insert appropriate hypertext links, either by using material from Electropar’s then existing website, or by creating new material.  As part of this process, Mr Howell updated the links page on the  website.   This involved creating individual pages on the site detailing the suppliers and distributors of Electropar’s products, and making them accessible through what is known as a hypertext link navigation system.  If a user clicked on the name of the supplier or distributor, he or she would be taken through to the supplier’s or distributor’s own website.  In the course of undertaking that task, Mr Howell created a link to Grafoplast products.  His intention was to create a link to the Italian supplier - Grafoplast S.p.A.  In order to do that, he typed the words, “ into the search engine Internet Explorer.   He assumed – it transpires wrongly – that this was the web address or url of the Italian supplier.  In

fact what he did was first to access and then to create a link to Sunlec’s “Four Easy Steps” webpage.   As part of the process, Mr Howell uploaded jpeg images of the Four Easy Steps work from the Sunlec webpage to the server provided by Tin Soldier  that  Electropar  uses  to  host  its  website.    Anybody who  clicked  on  the Grafoplast link on Electropar’s website was taken to a webpage on the Electropar website that reproduced part of Sunlec’s Four Easy Steps webpage.   There was a further  link  on  the  Electropar  webpage  –    Anybody  who clicked on that further link was taken to Sunlec’s website.

[24]     It was Mr Howell’s evidence – which I accept – that he did not know that the owner of the site was Sunlec, and that he assumed – in the event wrongly – that the website from which he uploaded the Four Easy Steps work was that of Grafoplast S.p.A.   He thought that he was entitled to do so because Grafoplast S.p.A. is the manufacturer of the product and Electropar’s supplier.

[25]     It was also Mr Howell’s evidence that Electropar’s new website went live on

26 July  2007.    He  was  firm  on  this  date  despite  being  tested  on  it  in  cross- examination.

[26]     It was Mr Ellard’s initial written evidence that he became aware of the breach of copyright in July 2007.   In oral evidence he stated that the Electropar website went live on 13 June 2007.  He told the Court that it was his practice to go on the internet from time to time and see what his trade competitors were doing in the market place.  On 21 June 2007 he went to the Electropar website and found that it had a new website which had gone live on 13 June.  He produced an email to this effect which he had sent to his New Zealand distributor.   It confirmed the date, although it did not refer to any infringement of the Four Easy Steps work.

[27]     I considered that both Mr Ellard and Mr Howell were honest and truthful witnesses.  Therefore the discrepancy in dates is puzzling.  It may be that Mr Ellard mistook Electropar’s old website for its new website; it may be that Mr Howell was confused.  I do not think that anything turns on this discrepancy, and accordingly I do  not  need  to  resolve  the  same.    Regardless  of  which  date  is  correct,  the infringement occurred for a short period only.   It was Mr Howell’s evidence that

there were 21 “hits” on the Electropar website in the period 26 July to 1 August

2007.  He suspected that many of those hits would have been from Electropar staff checking the  new  website,  and  that  others  would  have  been  by Sunlec  and  its advisers.  If the new website with the infringing material was available online from an earlier date there may well have been more hits, but I doubt that the numbers would have been substantial and there was no suggestion by Sunlec that its business suffered as a result.

b)       The item 175 work

[28]     Mr Howell’s told the Court that as part of his task of creating a new website for Electropar, he created new webpages for the various products that Electropar sells, including webpages that listed Grafoplast products available from Electropar.

[29]     One of the items sold by Electropar is the terminal block item 175.

[30]     Mr Howell found a colour digital image of item 175 – the item 175 work – on his computer’s hard drive.  He had no idea where the image had come from or when it had been placed on his computer’s hard drive.   He had inherited the computer when he commenced employment with Electropar.

[31]     He used the colour image from his computer’s hard drive to create two clear cut images of item 175.  A clear cut image is an image where the background has been removed.  In other words Mr Howell removed the blue background from the item 175 work, and he was left with a photograph of the terminal block only.  One of the images created by Mr Howell was in colour – the other in grey scale, or black and white.  He uploaded the colour image to Electropar’s website where it appeared on the relevant Grafoplast product page.  The website was set up in such a way that it automatically created a further thumbnail version of the same image which appeared on a more comprehensive Grafoplast product listing webpage.

[32]     Two copies of the grey scale clear cut image were included in Electropar’s quick reference product guide dated October 2006.   The quick reference product guide is approximately 180  pages  long.    It  contains  very many photographs  of

products of a similar style and nature to the photograph comprising the item 175 work.  There were 2,100 copies of the guide printed in November 2006.  As at the date of hearing, Electropar had only 44 copies of the guide left under its control.

c)       Field Friendly work

[33]     The slogan “‘Field Friendly’ – the best choice for field work” was included by Electropar in relation to a travel case called a “Grafoplast Handy Pack” in its November 2006 flyer known as TradelineNZ.

[34]     The Field Friendly work was included in the TradelineNZ flyer as a result of a discussion Mr Howell had with a Mr Simon Pratt, who was a sales manager employed  by Electropar.    This  discussion  occurred  in  or  around  October  2006. Mr Howell and Mr Pratt were discussing the flyer and the various products to be referred to in it.   Mr Howell referred to the Grafoplast Handy Pack.   Mr Pratt responded by saying to him, “Field Friendly – the best choice for field work”.  Mr Howell subsequently included this phrase in the flyer.

[35]     The slogan appeared under the heading Grafoplast Handy Kit as a subheading on page 2 of the TradelineNZ flyer.   There was a photograph of the Handy Pack under the slogan.  The Handy Pack was one of four items appearing on page 2.  The TradelineNZ flyer was four pages long.  Some 3,000 copies of the flyer were printed, and 1,560 of those copies were mailed to actual or prospective customers.   The balance were in large part distributed in the normal course of Electropar’s business. It retains approximately 70 copies.  The flyer was also available for download from the Electropar website.   Mr Howell thought that some 30 or 40 downloads had occurred.

Response to alleged infringements

[36]     Mr  Ellard  became  aware  that  Electropar  had  reproduced  the  claimed copyright  works  without  permission  in  July 2007.    On  31  July  2007,  Sunlec’s Australian solicitors wrote to Electropar putting it on notice of the rights claimed by

Sunlec,  and  requesting  that  Electropar  immediately  remove  Sunlec’s  copyright works from its website and other publications.

[37]     Mr Howell was told by one of Electropar’s directors – Mr Grant Wallace – that he had created a link to Sunlec’s website on or about 1 August 2007.  He told the Court that as soon as he was informed of his mistake, he deleted the link.  He also contacted Tin Solider and asked them to remove the jpeg images of the Four Easy Steps work that he had uploaded to the server.

[38]     Mr Howell deleted the colour image of item 175 from his computer’s hard drive on or about 1 August 2007.  He also deleted the clear cut colour image he had created on or about that date, and subsequently he arranged for it to be deleted from Electropar’s website on or about 20 August 2007.

[39]     When Mr Howell was told that Sunlec had complained about Electropar’s use of the slogan – “‘Field Friendly’ – the best choice for field work” – he replaced it on the electronic version of the TradelineNZ flyer that was available to be downloaded with the words, “Grafoplast Handy Pack – Handy because it is!”.

[40]     Electropar  replied  to  Sunlec’s  solicitors  on  2  August  2007  through  its solicitors  advising that  the works  with  which  Sunlec  had  taken  issue  had  been removed from the website and from the TradelineNZ flyer.  It was stated this action had been taken to resolve the matter, and  not  because Electropar  accepted  that Sunlec was entitled to copyright in the relevant images and copy.  With regard to the Field Friendly work, it was asserted that this was a phrase that had come into use in the marketing of Grafoplast products by Sunlec and Electropar during the 1980s, when Electropar was a sub-distributor for Sunlec, and that there was a good chance that the phrase had in fact been coined by Electropar.  Electropar declined to give an undertaking to cease using Sunlec’s claimed intellectual property.  It also declined to disclose the names of its customers to whom newsletters containing the works in respect of which copyright had been claimed had been sent.

[41]     A further letter from Sunlec’s solicitors inviting Electropar to take various steps, and threatening proceedings in the event of default  was  sent  to  it  by its

solicitors on 9 August 2007.  There was no response to this letter and the present proceedings were commenced on 17 August 2007.

Legal issues

[42]     The law of copyright in New Zealand is governed by the Copyright Act 1994. Copyright is a property right that exists in original works which come within the various descriptions set out in s 14(1) of the Act.

[43]     Inter alia, s 14(1) refers to literary, dramatic, musical, or artistic works.  The words “literary work” are defined in s 2 of the Act.  The definition reads as follows:

Literary work means any work, other than a dramatic or musical work, that is written, spoken, or sung; and includes—

(a)       A table or compilation; and

(b)      A computer program.

[44]     As well as showing that the works fall within one of the caregories in s 14(1), Sunlec has to establish that the works in respect of which it claims copyright are original works.   The requirements of the Act in this regard have recently been discussed by the Supreme Court in Henkel KGaA v Holdfast New Zealand Limited [2007] 1 NZLR 577. In giving the judgment of the Court, Tipping J noted that the concept of originality is not defined in the Act, and that the common law principles apply. The Court noted that to be original for copyright purposes, the work must originate from its author, and it must be the product of more than minimal skill and labour. Originality in this context is not to be equated with novelty, and the Court observed that the threshold for originality is a low one.

[45]     Sunlec also to prove that Electropar infringed its copyright in the works. Infringement occurs where somebody makes an unauthorised copy of the copyright work.  It is not necessary for Sunlec to show that Electropar copied the whole of the copyright work, or that the copying was exact.  It is enough if Sunlec demonstrates that Electropar copied substantial parts of its copyright works – see Henkel at [42] and [44].

[46] In the present case Electropar acknowledges that it has infringed Sunlec’s copyright in the Four Easy Steps work and in the item 175 work. The only issue in relation to these infringements is that of damages, which I deal with below. There are however a number of disputes in regard to the Field Friendly work. I deal first with the pleading point and then with each of the points identified in [5].

Sunlec’s pleadings

[47]     This  point  came  in  by  something  of  a  side  wind.    In  my  view  it  is opportunistic and does not bear close analysis.

[48]     Sunlec pleaded that it was the proprietor of copyright subsisting in the artistic or literary work comprising – “Caption of Grafoplast 050C Trasp case –   ‘Field Friendly’ – the best choice for field work”.  Mr Ellard stated in his written brief that the work was written down.  When cross-examined in relation to this assertion, he told the Court that the phrase was written down in substantial notes prepared for the

1994 distributors’ conference.  He thought that there were probably some 100 pages or so of notes, and that the phrase had been written down by Mr Boyle.

[49]     On this basis, Mr Williams submitted that the work pleaded did not exist.  He referred to the decision of the Supreme Court in Henkel.   In that case, Henkel, a German company, sued Holdfast, a New Zealand company, alleging breach of copyright.  Henkel’s pleading commenced by stating that it manufactured and sold in several countries a range of adhesives which included products known as “SuperBonder” and “Quicktite”.   Its cause of action was based on the proposition that Holdfast had infringed its copyright in artistic works – namely its packaging. The pleading did not refer to a product known as “SuperAttak”.   In response to a request  for  further  particulars,  Henkel  had  identified  features  common  to  its packaging generally, but not any underlying copyright works.   Holdfast submitted that the pleadings did not allow Henkel to rely on any infringement of Henkel’s artwork for SuperAttak.  The Supreme Court accepted this submission and held that the cause of action pleaded (and the submissions at trial) did not permit Henkel to rely on the SuperAttak packaging, or any drawing which underlay that packaging. The Court referred to Rule 108 of the High Court Rules which governs particularity

of pleading.  It held that Henkel had failed to plead the copyright work on which it ultimately sought to rely, and that as a result, it was unable to rely on that work.  It noted that Henkel’s pleading fell well short of being sufficient to inform the Court and Holdfast that its cause of action relied on the graphic work underlying the SuperAttak packaging.   Holdfast had presented its case on the basis of Henkel’s pleading, and the Court considered that it would have been quite unfair to Holdfast to allow Henkel to present a different case on appeal.  Henkel’s appeal was therefore dismissed.  Tipping J noted at [29] as follows:

… A cause of action for breach of copyright necessarily involves clear and accurate identification of the copyright work in respect of which the defendant is said to have infringed.

[50]     In my view, the pleading in the present case does not suffer from the defect identified in Henkel.   Sunlec clearly identified the Field Friendly work as the copyright work it alleges has been infringed.  The pleading was sufficient to inform the Court and Electropar of the work relied on.   Similarly the evidence and the submissions directly referred to the Field Friendly work.  Electropar was not in any way misled, and there has been no unfairness to it.

Can copyright subsist in the Field Friendly work?

[51]     This case puts in issue whether copyright can exist in the slogan “‘Field

Friendly’ – the best choice for field work”.

[52]     As noted above at [42], copyright is a property right which exists in, amongst other things, original literary and artistic works – s 14(1) of the Copyright Act 1994.

[53]     Mr McLeod’s case for Sunlec was that:

a)        s  2(1)  defines  a  literary work  as  including  “any work  other  than dramatic or musical work that is written …”;

b)the Field Friendly work is prima facie a literary work because it was written down; and

c)        copyright can, as a matter of law, subsist in the Field Friendly work, notwithstanding that it is a slogan.

He argued that the Field Friendly work is an original literary work, that time, skill, labour and judgment were exercised in its creation, and that it is clearly associated with Sunlec’s products and business.   He submitted that there was no evidence to suggest that Sunlec copied this slogan from another source, and that the slogan provides information and/or instruction as to a Sunlec product in a catchy and memorable way.

[54]     Mr Williams for Electropar submitted that copyright could not subsist in the Field Friendly work because it is an advertising slogan.  He submitted that the work is too insubstantial for copyright to subsist in it, and that it does not convey sufficient information, instruction or literary enjoyment to qualify as a work for the purposes of copyright protection under the Act.

[55]     The starting point is the definition of the words “literary work” in s 2 of the

Copyright Act 1994 noted at [43] above.

[56]     Subject to the statutory requirement of originality, there is no requirement that the literary work have any literary merit, and the Courts have accorded copyright protection  to  very mundane  literary works  –  e.g.  exam  papers  in  University  of London Press Limited v University Tutorial Press Limited [1916] 2 Ch 601 and football pool coupons in Ladbroke  (Football) Limited v  William Hill  (Football) Limited [1964] 1 WLR 273. Other than to exclude dramatic and musical works, the statutory definition does not elaborate on what is necessary to constitute a literary work. Traditionally a literary work has been said to be something intended to give information, instruction or pleasure – see Exxon Corporation v Exxon Insurance Consultants International Limited [1982] 1 Ch 119 at 143 and Noah v Shuba [1991] FSR 14 at 33.

[57]     In Copinger and Skone James on Copyright (15th  ed, Sweet and Maxwell,

2005) at para 27-306, it is stated that copyright does not subsist in advertising slogans, but that more substantial copy may be protected as a literary work.  Two

cases are referred to in the relevant footnote – Sinanide v La Maison Kosmeo (1928)

139 LT 365 and Kirk v Fleming (1928 – 35) MacG. Cop. Cas 44.  In the former, the slogan “Beauty is a social necessity, not a luxury” was considered by the Court of Appeal (in obiter observations) to be insufficient for  copyright protection.   The Court, however, did not decide that there can be no copyright in a slogan (see in particular the judgment of Greer L J at 367).   In the latter  case, the following advertising copy was refused protection – “Good sight is your most valued asset. Avoid the predicament of being without your glasses.  Let us make you a spare pair. Broken lenses promptly and accurately repaired.”  Luxmore J observed at 50 that this was nothing more than the stringing together of four ordinary and commonplace sentences.

[58]     A number of similar examples are given in the text – Laddie  et  al  The

Modern Law of Copyright and Designs (3rd ed, Butterworths, 2000) at paras 3.62 and

3.63.  The learned authors however caution that:

… it should not be assumed that an advertising slogan, or a title, is incapable of protection as a matter of principle; rather, the amount of independent skill, labour and judgment involved in its composition is usually too small to count.

I refer also to Frankel and McLay Intellectual Property in New Zealand (LexisNexis

Butterworths 2002) at para 5.5.1 in this regard.

[59]     The issue has also received some consideration in Australia.  In Sullivan & Anor v F N H Investments Pty Limited t/as Palm Bay Hideway (2003) 57 IPR 63, the Federal Court of Australia held that copyright did not subsist in two slogans – “Somewhere in the Whitsundays” and “The Resort that Offers Precious Little”. Jacobsen J found that the plaintiff was the author of the slogans, but that that authorship did not require the requisite degree of judgment, effort, and skill to make it an original literary work in which copyright could subsist. To the same end Kenny J in Brodel v Telstra Corporation [2004] FCA 505 at paras 13 to 19 held that copyright could not subsist in the word “SmartFax”. He considered a number of the relevant authorities.

[60]     There is relatively little New Zealand authority on the point insofar as I am aware.  In No Fear Inc v Farmers Trading Co Limited HC AK M1616/95 31 August

1998, Morris J, copyright was claimed in relation to attitudinal slogans on two t-shirt prints referred to as “Button Your Lip” and “If You Aren’t Living On The Edge, You’re Taking Up Too Much Room”.   His Honour preferred to leave open the question of whether copyright could subsist in slogans, titles and words.  He noted that the law remains relatively undeveloped on this question.

[61]     In Green v Broadcasting Corporation of New Zealand (1983) 2 IPR 191, Ongley J was considering a claim to copyright in the words “Opportunity Knocks”, which was the title of a talent quest show. He held that copyright did not subsist in the title. His Honour noted at 199 that it is a difficult but not an impossible task to establish copyright in a title. He referred to the Privy Council decision in Francis

Day & Hunter Limited v 20th  Century Fox Corporation Limited [1940] AC 112 at

123.  This case involved the song title, “The Man Who Broke the Bank of Monte Carlo”.    Lord  Wright  stated  that  as  a  rule,  a  title  does  not  involve  literary composition, and that it is not sufficiently substantial to justify claims of protection. He went on to note that that does not mean that in particular cases a title may not be on so extensive a scale and of so important a character as to be a proper subject of protection against being copied.  The Court considered that to “break the bank” was a hackneyed expression, and that Monte Carlo is, or was, the most obvious place at which that achievement or accident might take place.   On appeal to the Court of Appeal it was accepted by counsel that there was no copyright in the title and Somers J was of the view that Ongley J’s conclusion “was inevitable in light of the judgment of the Privy Council in Francis Day …” – see [1988] 2 NZLR 490 at 495. This point was not discussed in the Privy Council – [1989] 3 NZLR 18.

[62]     Having considered the various authorities, in my view the question is not to be approached on  an a priori basis as Electropar would suggest.   It cannot  be asserted that copyright cannot exist in a slogan, simply because it is a slogan.  Rather inquiry must be made into the circumstances in which the slogan was evolved and has been created.  If independent skill, labour and judgment have been involved in its creation  such  that  it  satisfies  the  requirement  of  originality,  and  if  it  conveys

information, instruction, or pleasure, then in my view a slogan can attract copyright protection.

[63]     In the present case, it was Mr Ellard’s evidence that he and Mr Boyle had spent  a  lot  of  time  devising  the  Field  Friendly work  to  best  describe  how  the Grafoplast product could be used by customers.  He told me that they had reviewed and rejected a number of different phrases.  In cross-examination, he stated that the Field Friendly work referred to the core value of the product, and that it was “all in the definition of how you sold it because it was for the field worker”.  To this end he had gone to the extent of having Grafoplast S.p.A. redesign the kit so that it was more “field friendly”.

[64]     There was nothing to deny Mr Ellard’s evidence, and I accept the same.  I am satisfied that independent skill, labour, and judgment were exercised in the creation of the Field Friendly work and it is original in the sense discussed in Henkel at [37] to [38]. Although the language used is taken from the common stock of the English language, the slogan uses language in a succinct and relatively memorable way. I do not, on balance, think that it can be said that the slogan is hackneyed. The slogan is associated with the product produced by Grafoplast S.p.A., and the Trasp case designed by Sunlec. It conveys information about the product and the Trasp case in which it is contained. In my view on the evidence and circumstances of this case copyright does subsist in the Field Friendly work.

Has Electropar infringed Sunlec’s copyright in the Field Friendly work?

[65]     As noted above, infringement of copyright occurs when somebody makes an unauthorised copy of the copyright work.  It is not necessary to show that Electropar copied directly from Sunlec’s work.  It can be indirect.  It is sufficient for Sunlec to establish some chain of causation linking its copyright with Electropar’s infringing copies.  That copying has taken place is for Sunlec to establish as a matter of fact. The  beginning  of  the  necessary proof  can  lie  in  the  establishment  of  objective similarity combined with proof of access to Sunlec’s copyright works.   I refer to Wham-O MFG Co v Lincoln Industries [1984] 1 NZLR 641 at 668-670.

[66]     I have set out above Mr Howell’s evidence in relation to how Electropar came to use the Field Friendly work.  It was suggested to Mr Howell by a Mr Pratt, who was employed by Electropar.

[67]     Mr Pratt was not called to give evidence.

[68]     There is no proof of direct copying, and as a result, the Court has to rely on inference.   Here the Field Friendly work and the words used by Electropar are identical – including the speech marks around the words “Field Friendly”.   The closer  the  similarity  between  the  works,  the  stronger  the  inference  of  copying: Henkel at [43]. Electropar did not use the Field Friendly work in relation to a 050C Trasp case. Rather it used it in regard to another case – albeit a case which is also intended for use in the field. That, however, is irrelevant: see Henkel at [44]. Electropar has copied the Field Friendly work and in relation to a very similar item. Clearly Electropar directors had access to the copyright work. The slogan may well have become known to Mr Pratt, and through him to Mr Howell. In my view the use of the Field Friendly work in relation to a substantially similar product supports the inference of copying, and on the balance of probabilities, I conclude that the copyright has been infringed.

Summary

[69]     In summary I have concluded that Sunlec had copyright in the Field Friendly work  and  that  its  copyright  has  been  infringed.    Electropar  admits  infringing Sunlec’s copyright in the Four Easy Steps work and the item 175 work.  I now turn to consider the appropriate remedy.

Damages

[70]     Mr McLeod properly accepted that Sunlec could not point to any loss of sales, and that there was no evidence to show any effect on its business at all.  He submitted   that   the  appropriate  approach   was   to   award   a   nominal   sum   as compensatory damages, and then to award additional damages, in an amount equivalent to the sum Sunlec had paid to create the works.   He submitted that in

assessing additional damages, the Court should look at the entire benefit derived by Electropar from the infringements, and in particular, that the Court should note that Electropar had avoided expending its own time and effort, or paying third parties, to produce the material it had reproduced and used.   He submitted the appropriate award of additional damages should be that which Sunlec had to spend in creating the copyright materials.

[71]     Mr Williams submitted that the appropriate award is nominal damages, or, alternatively, a small award to reflect the small licence fee that Sunlec may have been able to demand for the unauthorised infringements.

[72]     In proceedings for infringement of copyright, relief by way of damages is available  to  a  plaintiff,  in  the  same  way  as  it  is  available  in  respect  of  the infringement of any other property right – s 120(2) of the Copyright Act.

[73]     Sunlec has the burden of proving its loss, and here it cannot quantify any actual loss.  However, its rights have been infringed and it is a characteristic notion of property that any invasion produces a damages award even if on occasion it is not high – Wilson v Broadcasting Corporation of New Zealand [1990] 2 NZLR 565 at

575.

[74]     On the evidence, I am satisfied that infringement incurred due to a series of simple errors made by Mr Howell.  First, in relation to the Four Easy Steps work, he mistakenly thought that the website which he accessed and from which he took the work was owned by Grafoplast S.p.A..  Secondly, in relation to the item 175 work, he utilised a photographic image on the hard drive of his computer.  Thirdly, in relation to the Field Friendly work, he took a phrase uttered by a work colleague at face value, and used it in Electropar’s marketing material. Each of these infringements was on the evidence unintentional albeit perhaps naive. The infringing conduct in relation to the Four Easy Steps work occurred for only a short period.  The number of hits received on the relevant webpage during the period of infringement was small.  Further, any visitor to Electropar’s website clicking on the relevant link would have been taken through to Sunlec’s website.   This fact reinforces the unintentional nature of the infringement.  In relation to the item 175

work, the infringing conduct resulted in the creation of a more permanent hard copy infringement, but the infringement was in my view relatively insignificant.   It consisted of the copying and then editing of a photograph of an item.   The infringement of the Field Friendly work was also relatively minor.  While hard copy was produced, the infringing item was only one of a number of products detailed in the advertising flyer.  There was no knowing infringement and each was terminated insofar as practicable at the earliest opportunity.

[75]     Under s 120(2), an award of nominal damages can be made as a token sum to recognise the invasion of the property right which has occurred.   I refer to the judgment of McMullin J in the Court of Appeal in Wellington Newspapers Limited v Dealers Guide Limited [1984] 2 NZLR 66 at 69. I also note the judgment of Sunberg J in the Federal Court of Australia in MJA Scientifics International Pty Limited & Anor v S C Johnson & Son Pty Limited (1998) 43 IPR 275 at 281. While a declaration that Electropar breached Sunlec’s copyright may have been open to me

– see, eg. Fresh Prepared Limited v de Jong & Anor, HC AK CIV 2004-404-1264, Harrison J at [30] – in the present case nominal damages to recognise the invasions of the property rights which have occurred is the more appropriate remedy.

[76]     I award nominal damages as follows:

a)       In respect of the infringement of the Four Easy Steps work    $500 b)       In respect of the infringement of the item 175 work               $250 c)       In respect of the infringement of the Field Friendly work       $500

Total  $1,250

[77]     I now turn to Sunlec’s claim for additional damages.

[78]     Section 121(2) of the Copyright Act provides as follows:

In proceedings for infringement of copyright, the court may, having regard to all the circumstances and in particular to—

(a)       The flagrancy of the infringement; and

(b)Any   benefit   accruing   to   the   defendant   by   reason   of   the infringement,—

award such additional damages as the justice of the case may require.

[79] I have already set out the circumstances relating to the infringements here in issue in [74]. In my view none of the infringements was flagrant. What is flagrant is of course a question of fact and degree – Wellington Newspapers at 69. Here there was nothing in Electropar’s actions which was flagrant in the sense of being glaring, scandalous or outrageous. Nor was there any evidence that any benefit of any significance had accrued to Electropar by reason of the infringements.

[80]     It is inappropriate to try and assess what a nominal licensing fee would have been, because the plaintiff neither sells copies of the relevant copyright works, nor grants licenses to use them.   There was no evidence put before me to make any reasonable assessment of what a reasonable royalty would have been.

Conclusion

[81]     I award nominal damages of $1,250 to Sunlec.  Given that these are nominal damages for invasion of Sunlec’s property rights, it is not appropriate that interest should run on that sum under s 87 of the Judicature Act 1908, and I make no award for interest from the various dates of infringement to the date of this judgment.  As from the date of judgment interest will run in accordance with r 538 of the High Court Rules.

[82]     Sunlec   is   also   entitled   to   an   injunction   restraining   Electropar   from reproducing or using the Four Easy Steps work, the item 175 work, or the Field Friendly work, or otherwise infringing its copyright in those works.

Costs

[83]     It is my preliminary view that costs should lie where they fall.

[84]     If the parties wish to take the issue of costs any further, then I direct as follows:

a)        Sunlec is to file its submissions on costs within 10 working days of the date of release of this decision;

b)Electropar is to file its submissions in relation to costs within a further period of 10 working days;

c)        Sunlec  is  to  file  any  submissions  in  reply  to  the  defendant’s submissions within a further period of five working days.

Wylie J