Watkins Manufacturing Corporation v Prestige Pools Limited

[2018] NZHC 709

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KOTI MATUA O AOTEAROA TAMAKI MAKAURAU ROHE

CIV-2016-404-2671 [2018] NZHC 709

UNDER

The Designs Act 1953

IN THE MATTER

of registered design infringement

BETWEEN

WATKINS MANUFACTURING CORPORATION

Plaintiff

AND

PRESTIGE POOLS LIMITED

First Defendant

MICHAEL MCGURK

Second Defendant

Hearing:	26-28 March 2018
Appearances:	G Arthur and J Ballance for Plaintiff K Glover for Defendants
Judgment:	18 April 2018

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 18 April 2018 at 11.00 am pursuant to r 11.5 of the High Court Rules.

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Registrar / Deputy Registrar

Solicitors/Counsel:

Greg Arthur, Barrister, Wellington In-Legal Limited, Wellington

Kevin McDonald & Associates, Takapuna, Auckland

WATKINS MANUFACTURING CORP v PRESTIGE POOLS LTD & ANOR [2018] NZHC 709 [18 April 2018]

Introduction

[1]                 The plaintiff (“Watkins”) is a Californian corporation, and the registered proprietor of the New Zealand Registered Design 418933 (“NZ 418933”). NZ 418933 is the design for a spa pool cabinet.

[2]                 In this proceeding, Watkins alleges the importation, advertising, offers to sell, and sale by the first defendant (“Prestige”) of certain models of its spa pools infringes Watkins’ copyright in the design of its spa pool cabinet. Those impugned models are from Prestige’s Sunrans SR range, specifically  models  SR 805A,  SR 806A,  and SR 808A. Prestige admits at least such importation, advertising, and offers to sell (although not sale); but it denies any infringement. (The proceeding has been discontinued by consent against the second defendant, Mr McGurk.)

[3]                 Associate Judge Doogue made consent orders for Prestige’s liability only to be determined at this trial. The issue for determination is thus whether Prestige’s particular spa pools are not substantially different from NZ 418933.

The facts

[4]                 Watkins manufactures spa pools. Its primary brand is Hot Spring®. Its flagship range is the ‘Highlife Collection’, in which Watkins has showcased its best products for over 40 years.

[5]                 Watkins decided to redesign the Highlife Collection from the ground up. It contracted a BMW Group company, Designworks, to provide the design. In intensive collaboration with Watkins over the course of 2013, BMW Designworks developed what became Watkins’ NXT design.

[6]                 Watkins’ senior design engineering manager, Christopher Carl Larsen, gave evidence on the development of the NXT range over audio visual link from Spain. He identified elements of the design Watkins considered to represent a break from the pre- existing state of spa pool cabinet design. He spoke generally of competing manufacturers’ undifferentiated and monolithic cabinets, which were constructed of plastic extruded panels – designed to look like narrow vertical or horizontal wooden

slats – joining at the cabinet’s rounded corners, and sitting above a low recessed kickboard.

[7]Mr Larsen emphasised the NXT’s:

(a)distinct corner sections, seeking to integrate with the top of the spa pool shell but differentiated from the rest of the cabinet, so as to present as “a pedestal supporting the spa pool”;

(b)relatively high bevelled baseplate in place of the kickboard, seeking to give the cabinet “a floating appearance”;

(c)recessed lighting on each corner and in the baseplate, providing a dispersed “wash” of light; and

(d)side panels with the appearance of fewer, wider horizontal wooden slats separated by narrow recessed black grooves.

[8]                 Watkins owns 50 per cent of Hot Spring Spas New Zealand Limited (“HSSNZ”), Watkins’ New Zealand dealer. HSSNZ’s general manager, Aaron Bruce Sampson, gave evidence Prestige Pools advertised and offered to sell the allegedly infringing spa pools, and actually sold a model SR 805A to Mr Sampson.

[9]                 Both Mr Larsen and Mr Sampson also contended in evidence for the Prestige Sunrun SR range’s similarity to Watkins’ NXT design, and were cross-examined substantially on their supposed distinctions, which they disputed.

[10]             Watkins also adduced expert evidence from experienced and recognised New Zealand industrial designer, Peter Haythornthwaite. He explained the process of industrial design, and its intended influence on consumers. He explained what he took from seeing first NZ 418933, then the NXT design (both in a brochure and as the actual product). He distinguished them from images of the prior art provided to him. Finally, he inspected and compared the Prestige SR 805A with the NXT design. He too was cross-examined largely on their distinctions, which he also disputed.

[11]             Prestige called only one witness, Wayne Philip Cuff. Mr Cuff has been involved in the design, manufacture, sale, and marketing of pools for over 50 years, and of spa pools for over 40 years.

[12]             Mr Cuff listed differences he  noted  between  NZ 418933  and  Prestige’s  SR range spa pool cabinets, which he found significant enough to give the pools “a different appearance from the design”. He emphasised the “use of columns in the centre of the basepan on each side of the pool” – one of which included the power inlet, marked with an electrical warning sign – and also the pool cabinets’ inclusion of other features, such as audio equipment, without regard for their impact on the cabinet’s design. Overall, in his opinion, the pools lacked the design’s “floating effect” and “grace”. He also compared the pools with photos of the NXT design, to the effect “it is clear you are looking at two different products”, particularly in actual use, when low light conditions “would highlight the differences”.

[13]             Mr Cuff was in due course cross-examined principally on the similarities between NZ 418933 and Watkins’ NXT range on the one hand, and the Prestige SR range on the other. He agreed the NXT design’s corners, and horizontal slats and grooves, were innovative. The latter would be copied by competitors. Mr Cuff initially thought two side-by-side photographs of the NXT and SR pools were both of SR pools.

[14]             All witnesses also commented on aspects of the commercial context in which spa pools were designed, marketed, purchased, and used.

The law

[15]             Section 11(1) of the Designs Act 1953 (the “Act”) gives the registered proprietor of a design under the Act:

… the copyright in the design, that is to say, the exclusive right in New Zealand to make or import for sale or for use for the purposes of any trade or business, or to sell, hire, or offer for sale or hire, any article in respect of which the design is registered, being an article to which the registered design or a design not substantially different from the registered design has been applied, and to make anything for enabling any such article to be made as aforesaid, whether in New Zealand or elsewhere.

[16]Section 2 of the Act defines ‘design’ as meaning:

… features of shape, configuration, pattern, or ornament applied to an article by any industrial process or means, being features which in the finished article appeal to and are judged solely by the eye; but does not include a method or principle of construction or features of shape or configuration which are dictated solely by the function which the article to be made in that shape or configuration has to perform … .

[17]             Section 5(2) of the Act provides a design is not registrable “unless it is new or original”, and:

… in particular shall not be so registered in respect of any article if it is the same as a design which before the date of the application for registration has been registered or published in New Zealand in respect of the same or any other article or differs from such a design only in immaterial details or in features which are variants commonly used in the trade.

The state of pre-existing design is referred to as ‘prior art’.

[18]             Last, the Design Regulations 1954 require an application for design registration be accompanied by a statement of the features of the design for which novelty is claimed, and a representation of the design.1

[19]             There is little New Zealand caselaw on registered design infringement. The principal authority is UPL Group Ltd v Dux Engineers Ltd, relating to the registered design of a toilet seat.2

[20]             Somers J, delivering the Court of Appeal’s judgment, noted our statutory provisions are the same as those in the United Kingdom’s now-superseded Registered Design Act 1949, of which there was much judicial consideration,3 then most recently the decision of the Privy Council in Interlego AG v Tyco Industries Inc.4 Lord Oliver there said:5

… the purpose of the Act, as appears both from its terms and its legislative history, is to protect novel designs devised to be ‘applied to’ (or, in other words, to govern the shape and construction of) particular articles to be manufactured and marketed commercially … [t]he whole purpose of a design is that it shall not stand on its own as an artistic work but shall be copied by

1      Design Regulations 1954, regs 23(2) and 25(1).

2      UPL Group Ltd v Dux Engineers Ltd [1989] 3 NZLR 135 (CA).

3      At 138.

4      Interlego AG v Tyco Industries Inc [1988] 3 WLR 678 (PC).

5      At 685-686.

embodiment in a commercially produced artefact. Thus the primary concern is what the finished article is to look like and not with what it does and the monopoly provided for the proprietor is effected by according not, as in the case of ordinary copyright, a right to prevent direct reproduction of the image registered as the design but the right, over a much more limited period, to prevent the manufacture and sale of articles of a design not substantially different from the registered design. The emphasis therefore is upon the visual image conveyed by the manufactured article.

[21]             Somers J held “[w]hether there is an infringement of copyright in a registered design is a question of fact of which the eye is the [judge]”.6 He continued:

The test is whether the article alleged to be an infringement has substantially the same appearance as the registered design. This involves a comparison between the article complained of and the representations of the article contained in the application for registration.

[22]             The Judge emphasised registration and infringement had to be viewed against the other, so that the subject of the design was to be taken as the measure of any infringement. There also was a relationship between the scope of the design’s novelty or originality and the extent of any infringement: small differences would not save the defendant, unless the novel or original features were “but little removed from prior art”.7

[23]             The Judge acknowledged “[it]is not always easy to compare a two-dimensional design with a three-dimensional object”, and accordingly “articles manufactured by the plaintiff which embody the design may be compared with the artefact said to infringe”.8 However, ultimately the comparison is between the design representations and the impugned product, and manufactured articles must be disregarded to the extent they fail to reflect those design representations.9

[24]             After identifying “the most striking” of the design representation’s standout features, largely corresponding to the registered proprietor’s manufactured product, but materially differing from the competing product, the Court of Appeal held:10

Having considered the design representation and the Dux seat and lid over a lengthy period both separately and together and closely and at a distance, we are of opinion that the Dux seat does not infringe the registered design.

6      UPL Group Ltd v Dux Engineers Ltd, above n 2, at 139.

7      At 139.

8      At 139.

9      At 140.

10     At 142.

[25]             In addition to the ‘separately and together and closely and at a distance’ methodology, the authors of James & Wells’ Intellectual Property in New Zealand contend for:11

(a)an ‘imperfect recollection’ test. The test is drawn from United Kingdom judgments, and posits a design-conscious consumer’s confusion as to whether a particular article embodies the previously seen design.12 The authors assert that test to have been applied by the Court of Appeal in UPL (although I cannot identify it); and

(b)an ‘actual use’ test, where the design-conscious consumer is taken to disregard technical similarities for real-world distinctions.13

[26]             I agree with Prestige’s counsel, Kevin Glover, there is a legitimate basis to cavil at customer confusion as a measure of design infringement. But the judging eye nonetheless is that of the informed customer or consumer,14 with “an instructed eye” as to:15

… the characteristics of the article to which the design is applied, the manner in which such articles would normally be found in trade, commerce and in use, so as to secure that the proper basis of comparison is that which will present itself in the normal channels of trade.

I found the experts’ evidence useful to that end.

The design representation

[27]             The cabinet of Watkins’ NXT design is the subject of NZ 418933. NZ 418933 registers the cabinet’s design in Watkins’ name as of 23 December 2013. The registration certificate’s “time honoured”16 ‘statement of novelty’ explains:

The design is to be applied to a spa and the novelty of the design resides in the features of shape and/or configuration of the article as shown in the accompanying representations, excluding those portions shown in broken line.

11     Ian Finch (ed) James & Wells: Intellectual Property in New Zealand (3rd ed, Thomson Reuters, Wellington, 2017) at [6.15.2(2) and (3)].

12     Valor Heating Co Ltd v Main Gas Appliances Ltd (1973) 90 RPC 871 at 878.

13     Samsung Electronics (UK) Ltd v Apple Inc [2012] EWHC 1882 (Pat); Samsung Electronic (UK) Ltd v Apple Inc [2012] EWCA CIV 1339.

14     D A Lewis v Thorn Bros Ltd (1984) 1 TCLR 236 (HC) at 240.

15     R B Watson & Company Ltd v Smith Brothers (Wirewares) Ltd [1963] RPC 147 at 151.

16     UPL Group Ltd v Dux Engineers Ltd, above n 2, at 139.

[28]Those representations primarily are as follows:

[29]The representations include:

(a)rear, right, and left side views, which are identical to the front view above, except for their omission of the double broken lines shown at the top right of the panel to the left of the top right corner of the cabinet’s front view, and

(b)a top view into the shell of the spa pool, which is shown entirely in broken lines.

The commercial embodiment

[30]             I inspected Watkins’ NXT product, in the company of counsel. The NXT product also is illustrated in Hot Spring advertising as shown below:

The article

[31]             Prestige’s allegedly infringing spa pools from its Sunrans SR range are shown below:

(a)SR 805A model:

(b)SR 806A model:

(c)SR 808A model:

[32]             My inspection included Prestige model SR 805A side-by-side with Watkins’ NXT product.

My assessment

[33]             I took from the statement of novelty and the design representations (disregarding anything depicted by broken lines) the appearance of a spa pool cabinet:

(a)comprised of a few horizontal planks, narrowly spaced vertically apart;

(b)joined at each of its four corners by a separate full height stout leg, of a material different from the cabinet, enclosing the abutting cabinet side ends in curved and chamfered dimensions tapering toward its base;

(c)with some indeterminate device high on the centre of each of those legs and at the internal extremities of each side of a high and deep angled recessed container base;

(d)together offering an illusion the contained spa pool’s bulk was supported by the legs, rather than the base.

[34]             All witnesses accepted the design representations’ appearance constituted a material break from prior art. While that may be what Mr Sampson and especially Mr Larsen could have been expected to say, it is also Mr Haythornthwaite’s independent and informed observation. Most tellingly, Mr Cuff accepted the design representations’ “elaborate” corner leg detail was to his knowledge new to the industry in 2013. He implied the same of the cabinet’s sides, of which he said “this panelling is going to be used everywhere, you watch, wait and see, everyone’s started using it”. He expressly agreed the representation of wide slats with a dark groove between them was new with Watkins’ NXT product.

[35]             My inspection of Watkins’ NXT product affirmed the product’s commercial embodiment of the design representations. The sides of the cabinet were plainly single panels, but their black horizontal and indented grooves gave the impression of separate distinctly coloured planks. Although, especially when viewed from any distance, the cabinet was plainly resting on its base, its appearance was of support from corner legs standing proud of the cabinet’s sides. The leg devices were lights. By the time of my inspection I knew – and at the time could feel – the base devices were indentations leading to handhold recesses, but the indentations were not visible to me.

[36]             My inspection of Prestige’s model SR 805A gave me the same impression. Although less well-resolved than Watkins’ NXT product, the Prestige model could easily have been an earlier iteration from the design representation. That particularly was my impression viewing the two products side by side, both closely (while keeping both in vision) and especially at any greater distance. Mr Cuff’s mistake in assuming the side-by-side photographs of the competing products were both of Prestige’s pools illustrates the point.

[37]             Watkins’ counsel, Greg Arthur, submitted, because the Prestige model required its central columns to distribute its weight, they had to be disregarded as any part of the design, as being “dictated solely by the function which the article to be made in that shape or configuration has to perform”.17 I disagree. While the central columns were likely required by the Prestige model’s need for weight distribution, there was

17     Designs Act 1953, s 2 (definition of ‘design’).

no evidence that necessitated their shape or configuration. As illustrated by Watkins’ NXT product, other shapes or configurations could achieve the necessary weight distribution. Thus the central columns are not dictated solely by the function which the article to be made in that shape or configuration has to perform. But, even having regard for the Prestige model’s additional central columns, they were not sufficiently distinct from its recessed base to affect the illusion of the cabinet being supported by its corner legs. The corner leg support was in any event the design’s conceit, rather than its reality.

[38]             I was not shown other than photographic representations of Prestige’s models SR 806A and SR 808A. I apprehend from the similarity of those photographs to the photograph of the Prestige model SR 805A I would reach the same assessment from an inspection of those models as I reached of the model I inspected. From the photographs alone, the Prestige models are not substantially different from the design representations. I cannot make the same “less well resolved” comparison between the photographs of the respective manufacturers’ products.

Result

[39]             I find Prestige’s models SR 805A, SR 806A, and SR 808A to be articles to which a design not substantially different from Watkins’ NZ 418933 has been applied.

Next steps

[40]             Given the split trial on liability only, counsel are to file and serve memoranda (desirably joint) within 10 working days of this judgment, proposing a timetable for any further steps required.

Costs

[41]             Given those further steps, I reserve costs. In my preliminary view, Prestige should be liable to pay 2B costs and disbursements to Watkins.

—Jagose J