Norm’s Bucket

Background

Norm Engineering and Digga Australia are competitors in the manufacturing of earth moving equipment.  The dispute concerned an allegation by Norm Engineering that Digga had copied its “4-in-1 bucket” being a bob cat scoop which allowed the front and rear sections to open and close in a jaw-like effect.  Pivot arms, as components of the bucket, were utilised in the operation of the bucket.  The allegation made was that by copying components of its bucket, Digga had infringed copyright in Norm Engineering’s two-dimensional drawings of components of its bucket.  The bucket was comprised of between 30 and 40 separate components.  

When proceedings were commenced in August 2005 Norm Engineering claimed that Digga had infringed copyright in 19 of its drawings.  In March 2006, Norm Engineering served an amended pleading in which it reconstituted its action relying upon only 2 of the 19 drawings originally identified and adding 5 new drawings.  Five of the drawings were of different component parts of the bucket.  Two of the drawings were assembly drawings for the front bucket and rear bucket respectively.  Further, the amended pleading dropped allegations of direct copying of Norm Engineering’s drawings and limited the allegations of copying to indirect copying — ie indirectly copying the 7 drawings by copying components of Norm Engineering’s bucket.

At trial, Greenwood J found that the copyright in 4 drawings had been infringed.  In respect of 3 of those drawings it was found that the only infringement actionable was the infringement of producing drawings from which Digga’s bucket was (in part) constructed.  In respect of Digga’s three-dimensional reproductions of these 3 drawings it was found that Digga was entitled to raise the defence to infringement provided by the design/copyright overlap provisions of the Copyright Act.  Greenwood J, however, found that this defence was not available to Digga in respect of the three-dimensional reproduction of the drawing of that part of Norm Engineering’s bucket being the pivot arms.  In respect of the infringement being the said 3 drawings nominal damages of $100 per drawing were awarded totalling $300.  In respect of the three-dimensional infringement damages of $61,223 were awarded.   Additional damage (punitive damages) were awarded under s115(4) of the Copyright Act in the amount of $19,450.  The trial took up to 6 hearing days.  Norm Engineering obtained an order that it recover 65% of its costs of the proceedings from March 2006¹ .

The decision has been appealed and the appeal has been set down for hearing by the Full Court of the Federal Court on 5 and 6 November 2007.  

The Facts

Digga commenced selling its version of the bucket in December 2003. Digga conceded that in October 2003 it had access to an old Norm Engineering “4-in-1 bucket” and in October 2003 made conscious use of the bucket as a source of ideas for the design and manufacture of a “4-in-1 bucket” but denied conscious copying.  

Norm Engineering had not obtained registration of the design of its bucket or of any of its component parts under either Designs Act 1906 or the Designs Act 2003.  Digga contended that if copyright subsisted in the drawings Norm Engineering had industrially applied a corresponding design and thus by reason of ss.74 to 77 of the Copyright Act (pre 17 June 2004) and ss.74-77A (post 17 June 2004) it was not an infringement of the copyright in each drawing to reproduce works by applying that corresponding design to its bucket.  

The founder of Norm Engineering, a Mr Acimovic devised the original “4-in-1 bucket” in about 1984.  The only notes from which he manufactured the original bucket were rough or rudimentary and were probably disposed of in about 1995.  From 1984 to 1988, Mr Acimovic refined the design of the bucket and brought into existence various rudimentary plans.  It was not, however, until Norm Engineering was incorporated in March 1998 that Mr Acimovic began developing more sophisticated plans for the larger scale manufacture of the original 4-in-1 bucket with the assistance of employed draftsmen.  These first plans were then utilised in producing Norm Engineering’s 4-in-1 buckets for the next 14 years until the design was changed in 2001-2002.  Between 1993 and 1997, Norm Engineering’s plans for the bucket were prepared in electronic form on Norm Engineering’s computer system by Mr Pesch as an employee of Norm Engineering.

The 1988 drawings were made based on the bucket Mr Acimovic designed in 1984.  Mr Acimovic did not understand how to make drawings.  He understood how to make the product.  Mr Acimovic helped Mr Pesch in 2001 in developing the later version of the bucket and again, Mr Acimovic worked with the bucket not drawings.  

Most of the electronic plans of the bucket were drawn in 1994.  There were no significant changes between the 1988 plans and the plans that Mr Pesch transferred to Norm Engineering’s computer system.  In doing so, Mr Pesch’s aim was not to change the design but just to update and improve Norm Engineering’s records.  

At [43], Greenwood J concluded: “It is clear therefore that the act of Mr Pesch of transferring the “first plans” developed by Mr Acimovic onto the applicant’s Autocad computer system did not involve any act of original authorship.”  

In 2001-2002 the design for the bucket was changed.  The changes evolved initially by working with the bucket in the workshop.  Once those changes had been made, the plans were changed to reflect the improvements.  Mr Pesch drew the plans using Autocad.  

In respect of the 7 drawings sued upon, Greenwood J found, at [48], that once the changes had been made to the bucket in 2001-2002, they were drawn to “reflect” the changes in the bucket.  At [62], Greenwood J found as follows:

“In 2001 and 2002, Mr Pesch, together with the assistance of his father-in-law and some employees of the applicant made changes to the 4-in-1 bucket; began making the changed buckets in November 2001; first brought into existence the [drawings in dispute] in March 2002 thus “formalising” the physical changes made to the 4-in-1 bucket; and thereafter, from time to time, amended the drawings.”

Copyright Infringement

Greenwood J found that the drawings for the components being the floor side plate and the side cutter bar did not involve a sufficient degree of work, labour, effort and skill to bring into existence original works.

However, Greenwood J concluded that the drawings of the outside mounting bracket, the inside mounting bracket, the pivot arms and the assembly drawings for the front bucket  and rear bucket involved sufficient work, labour, effort and skill to result in original works.

At [130] Greenwood J rejected a submission made on behalf of Digga that the relevant drawings could not be original as they were drawn from the three-dimensional components stating:

In rejecting Digga’s submission, Greenwood J, nevertheless, found that drawings based upon three-dimensional components required a sufficient degree of work, labour, effort and skill in their authorship so as to qualify the work as original.  Hence, his finding that the drawings for two of the components did not qualify as original works.

Greenwood J found that employees of Digga examined the old and the new Norm Engineering bucket, made drawings of them and measured them to determine the cost of time, labour and materials that would need to be deployed to make a 4-in-1 bucket based on the features of the components contained in the old Norm Engineering 4-in-1 bucket as amended by the newest version of that bucket.  Greenwood J concluded at [176]:

The reasons do not deal with the issue of indirect copying — ie copying Norm Engineering’s plans by copying the three-dimensional representations of them.  For there to be an infringement of copyright in a work there must be a reproduction (or substantial reproduction) and copying.  It is the act of copying that the Copyright Act protects against. Section 21(3)(a) of the Copyright Act provides that an artistic work (drawings are artistic works) shall be deemed to have been reproduced in the case of a two-dimensional form if a version of the work is produced in three-dimensional form.  As regards the requirement of copying it has been long been recognised in the case law that it can be indirect: King Features Syndicate Inc v. O&M Kleeman Ltd²; Dorling v. Honnor Marine Ltd³; Purefoy Engineering Co Ltd v. Sykes Boxal & Co Ltd⁴; LB (Plastics) Ltd v. Swish Products Ltd⁵ and British Leyland Motor Corp Ltd v. Armstrong Patents Co Ltd⁶.

What is unusual in the factual scenario in Norm Engineering v Digga Australia is that the three-dimensional form was created first.  The factual scenarios discussed in the relevant case law concern the usual scenario of production of working drawings and then manufacture based upon  those drawings.  Copying the three-dimensional reproduction of the drawings in that scenario involves copying a copy (albeit three-dimensional) of the drawings.  By copying the bucket, Digga did not copy a three-dimensional copy of the drawings.  Perhaps this issue will be dealt with in the upcoming appeal.  Perhaps, once the electronic plans were created, Norm Engineering’s components for the bucket were manufactured by reference to these plans — ie the components copied were manufactured utilising the relevant drawings.  This, however, is not clear in terms of the evidence set out in the reasons.

As to substantial reproduction, Greenwood J concluded that the drawings of the outside mounting bracket, the inside mounting bracket, the pivot arms and the assembly drawings were substantially reproduced by Digga but that as the drawings for the side cutter bar and the floor side plate were not original there could be no infringement of them.    As the evidence did not establish when the drawing for the rear bucket assembly was authored, Greenwood J decided that he could not be satisfied that copyright subsisted in the drawing from any particular date.  Hence, he was not in a position to make any finding as to substantial reproduction.

Having found infringement, Greenwood J had to determine whether Digga had made out the defence to infringement provided by the design/copyright overlap provision of the Copyright Act.  In essence, these provisions reflect a policy that the design of articles should be protected by obtaining registration of the design under the Designs legislation and absent such registration copyright in that design will be lost. 

The relevant design/copyright overlap provisions of the Copyright Act were amended taking effect from 17 June 2004.  As a result the conduct of Digga had to be examined in the period December 2003 (the date of infringement commencing) to 17 June 2004 having regard to ss.74 and 77 of the Copyright Act as enacted prior to the commencement of the amended provisions and secondly, in the period 17 June 2004 to judgment by reference to the amendments to the relevant provision of the Copyright Act that commenced on 17 June 2004. 
Pre 17 June 2004

Having set out the relevant statutory provisions, Greenwood J at [217] stated the preconditions to the operation of s.77(2) as follows:

1. the subsistence of copyright in an artistic work;
2. the industrial application  of a corresponding design (“design” by the case law, meaning a design within the meaning of that term as defined in the Designs Act)  by or with the consent of the copyright owner;
3. the sale of articles to which the corresponding design has been applied; and
4. at the time of sale of articles to which the corresponding design has been applied industrially the corresponding design was not registrable under the Designs Act 1906 or had not been registered under that Act.

Greenwood J found that:

1. In respect of the drawings found to infringe (apart for the drawing for the pivot arms) s.77(2) provided a defence to infringement in respect of the three-dimensional reproductions .
2. In respect of the plan-to-plan copying s.77(2) did not provide a defence to infringement.
3. The design for the pivot arms was not a design within the meaning of that term as used in the Designs Act 1906.  Accordingly, in respect of the plan-to-plan copying (by indirect copying) and the three-dimensional copying s.72(2) did not provide a defence to infringement.

The conclusions referred to in (3) above are the pivotal⁹ findings made by Greenwood J.  It was these findings that led to the more substantial award of damages and additional damages.  The findings of plan-to-plan copying resulted in nominal damages only totalling $300.

Greenwood J found that the design of the pivot arms did not fall within the definition of design in the Designs Act 1906 as the fundamental qualification that a design must have some aspect of “visual appeal to the eye” at [225] or have features “capable of being judged by the eye” (at [226]) was absent. 

In so concluding, Greenwood J acknowledged, at [223], that in Australia from the outset (ie 1906) the position has been that a design is not rendered invalid simply because a particular shape selected by the designer assisted a functional purpose¹⁰. Greenwood J also at [223], referred to the 1981 amendment to the Designs Act which provided that a design would not be incapable of registration by reason that the features of shape serve only a functional purpose.  At [225] Greenwood J stated:

The bases of Greenwood J’s conclusion as to the design of the pivot arms are found at [229] and [230] as follows:

[229]    …As to the pivot mechanism, there is no doubt that the outer pivot arm and cranked inner pivot arm assume the features of shape in very large part to give structural strength to the opening mechanism under hydraulic load …. Clearly, the pivot mechanism with its two arms exhibits features of shape. However, it seems to me that these features are more than a blend of industrial efficiency with visual appeal.  These features are very substantially determined by the requirements of strength and configuration for a double arm mechanism to enable the applicant’s 4-in-1 bucket to open and close under hydraulic static and dynamic load.  The demands of function overwhelm the features of shape for such a utilitarian component of a utilitarian bucket.” (underlining added)

The finding that the defence to infringement available under s.77(2) (pre 17 June 2004) does not cover plan-to-plan infringement is consistent with the established case law and is not controversial. 

The finding in relation to the drawing for the pivot arms is, however, quite controversial.  The Davies Collison Cave Intellectual Property Bulletin for June 2007, relevantly, commented as follows:

“The Court determined that the identifiable features of shape in the mechanism were almost entirely dictated by the utilitarian function that the mechanism must perform. Although that had involved some minor shape selection, the Court held that to be insufficient for there to be a relevant design. Absent a relevant design within the meaning of the Designs Act the Court found that there was no corresponding design which could give rise to the infringement exemptions in the Copyright Act. 

This aspect of the decision is puzzling in two respects.  Firstly, in considering the position prior to 17 June 2004, although the Court had regard to the definition of design in the then current Designs Act 1906, it did not seem to take full account of amendments made in 1981 to that Act to deal with functional designs.  Although the Court cites comments made by Gummow J in Hosokawa Micron Inc v. Fortune 26 FCR 393, Northrop and Lochhart JJ in a joint judgment in that same case opine that as a result of the 1981 amendments, designs dictated solely by function would be registrable.”

In Hosokawa, Northrop, Lockhart and Gummow JJ all agreed that an appeal from a decision that s.77 of the Copyright Act provided a defence to infringement of copyright in drawings of certain equipment be dismissed.  Northrop and Lockhart JJ dismissed the appeal for reasons different to those expressed by Gummow J.  The Full Court was applying the relevant provisions of the Copyright Act as they were prior to the 1981 amendments.  The relevant drawing was dated October 1972. 

The position pre the 1981 amendments was that a design dictated solely by function was not a registrable design.  But what is meant by the phrase “dictated solely by function”?  At 19 IPR 546 Lockhart J (with whom Northrop J agreed) stated:

Gummow J at p.552, took a different view as to the meaning of the phrase:

Applying these different approaches to the drawing in issue all three judges concluded that the relevant design was a design within the meaning of the Designs Act 1906. Although Hosokawa has never been expressly disapproved, in Interlego AG v Croner Trading Pty Ltd¹², Black CJ and Lockhart J gave approval to the Gummow J approach to what is meant by the phrase dictated solely by function. 

The effect of the 1981 amendments was that a design dictated solely by function would not for that reason alone be not eligible for registration as a design. A difficulty with Greenwood J’s analysis is that he did not conclude that the design for the pivot arms was dictated solely by function.  Greenwood J found that some features were “very substantially determined by the requirements of strength and configuration”; that “the demands of function overwhelm the features of shape” and that features of the design “involve some minor elements of shape selection” although “almost entirely dictated by the utilitarian function”. 

Accordingly, the finding that the design of the pivot arms was not a design within the meaning of the Designs Act 1906 cannot be based (even in part) on a conclusion that the design was solely dictated by function). Greenwood J referred to the 1981 amendments and clearly acknowledged that even if a design was dictated solely by function that would not by itself take the design outside the definition. The decision, therefore, must solely be based upon the finding that the design lacked the requisite level of being apparent to the eye. As stated by Gummow J in Interlego AG v Croner Trading Pty Ltd¹³ at 376:

Notwithstanding the 1981 amendments a design must appeal to the eye as something which can be “judged by the eye”¹⁴. There must be “sufficient individuality of appearance” so as to distinguish it from its fundamental form¹⁵ or put another way a “particular individual and specific appearance”.¹⁶  

In practice, it is difficult to draw a line between what gives a design dictated solely or substantially by function a particular individual and specific appearance.  Logically, it could be concluded that where functionality dictated that a product could have only one design it would be lacking in this requirement.  Where, however, even if dictated solely by function, (and Greenwood J did not make such a finding) a design for a product can have more than one form, then why shouldn’t that particular design have the requisite individual and specific appearance?  It is trite law that the aesthetics of the design do not determine whether it satisfies the requirement of a particular individual and specific appearance. 

In making the findings referred to above, Greenwood J determined that the design of the pivot arms is not a design of individual and specific appearance (even though its design may be barely discernable from a differently designed product which performs the same function).  The 1981 amendments acknowledge that a design dictated solely by function can, nevertheless, qualify as a design under the Designs Act 1906 — ie that it can have “sufficient individuality of appearance”, it can have a “particular individual and specific appearance”. 

The conclusion reached by Greenwood J leads to a result probably not intended by the legislature.  As stated in the June 2007 Davies Collison Cave Intellectual Property Bulletin: 

That is not to say that Greenwood J was not aware of the consequences of his decision.  He was applying the provisions of the legislation and the case law as he understood them and not an underlying policy.  However, it is not difficult to perceive that a different judicial mind might have concluded that the design for the pivot arms, for the reasons stated above, was a design within the meaning of the 1906 Designs Act. 

Post 17 June 2004

By the 2004 amendments s.77A was introduced and, relevantly, provides:

“(1) It is not an infringement of copyright in an artistic work to reproduce the artistic work … if:

…

(b) the reproduction is in the course of, or incidental to:

In respect of the pre 17 June 2004 infringements, Greenwood J found that although the components made by reference to 3 infringing drawings (being those found to infringe other than the drawings for the pivot arms) were not infringing products, nevertheless, the then existing legislation did not provide a defence against infringement in respect of plan-to-plan copying.  The introduction of s.77A reversed this position.  Greenwood J found that Digga produced the said 3 drawings in the course of or incidental to the reproduction of the non-infringing components.  Greenwood J concluded that the production of the components utilising the 3 drawings was conduct that did not amount to infringement by the operation of the post 17 June 2004 provisions. 

Greenwood J, however, concluded at [247]:

It is inherent in this conclusion that Greenwood J did not consider that the post 17 June 2004 definition of design operated to alter his analysis — ie that his previous analysis was consistent with the conclusion that the design for the pivot arms did not fall within the definition of design as used in the Designs Act 2003. The June 2007 Davies Collison Cave Intellectual Property Bulletin described this finding as follows:

This attack upon the finding was not further expanded upon by reference to any comparison between the pre June 17 2004 definition of “design” and the post June 17 2004 definition.  Such a comparison is set out below:-

Section 74 in the Copyright Act (post 17 June 2004) reflects the above changes in that it provides that a “corresponding design” in relation to an artistic work means “visual features of shape or configuration”.  This is to be contrasted with the pre 17 June 2004 s.74 which provided that a “corresponding design” in relation to an artistic work means “a design”.

Although the commentator from Davies Collison Cave regards the changes in the definition of “design” in the Designs Act 2003 as “radically different to that under the previous Act” that is not borne out by a comparison of those provisions as set out above.  Certainly other commentators do not hold this view.  For example, the editors of Australia Industrial & Intellectual Property (CCH) at [20-400] state:

Although the definition of “design” was not radically altered by the Designs Act 2003, the approach to a “corresponding design” post 17 June 2004 under the Copyright Act has changed.  Pre-17 June 2004 at issue was whether the “design” fell within the definition of design under the Designs Act 1906.  Under the current provisions s.74 expressly provides that a “corresponding design” in relation to an artistic work means visual features of shape or configuration “whether or not the visual features constitute a design that is capable of being registered under the Designs Act 2003”. 

Does this amount to any difference in approach?  It could be said that the test was never whether the design was capable of being registered (this would take into account features such as novelty).  The test, as applied in the case law, has been whether the relevant design fell within definition of design in the Designs legislation.  Under the current legislation “visual features” is not a term defined in the Copyright Act.  Consistently with the established case law, the Courts will turn to the definition of “visual features” in the Designs Act 2003.  Although the definition of “visual features” in the Designs Act 2003 expressly provides that they may serve a functional purpose this provision does no more than state the position already existing under the Designs Act 1906.  What remains is a requirement that the design have features of shape or configuration visible or perceptible to the eye.  Aesthetic appeal to the eye remains irrelevant. 

Although Greenwood J did not analyse all of the differences between the relevant pre and post 17 June 2004 legislation it is unlikely that any such further analysis would have led him to a different conclusion in respect of his finding as to the unavailability of the defence to infringement in respect of the pivot arm drawings post 17 June 2004. 

Conclusion

There is a distinct possibility that the Full Court’s decision in the upcoming appeal will be “marked” by the High Court.

Andrew Crowe SC

Footnotes

1. 73 IPR 77.  
     
2. [1941] AC 417.
3. [1964] Ch 560.
4. [1955] 72 RPC 89.
5. [1979] RPC 551.
6. [1986] AC 577.  In Australia the concept of indirect copying was accepted by the High Court in SW Hart & Co Pty Ltd v. Edwards Hot Water Systems (1985) 159 CLR 466.
7. By Regulation 17 of the Copyright Regulation a design is deemed to have been industrially applied if applied to 50 or more articles.
8. Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd 17 IPR 417 — referred to at [223].
9. Sorry.
10. Referring to Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 at 429-30; Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 375.
11. See also at p.567 “…if there was room for choice by the designer as to the shape of an article the result of the designer’s labours would qualify as a design, even if the articles to which it was applied served a functional purpose and attainment of that purpose was assisted by the particular shape in question.”
12. (1992) 39 FCR 348.
13. (1992) 39 FCR 348.
14. The definition of design in the 1906 Act was: features of shape, configuration, pattern or ornamentation applicable to an article, being features that, in the finished article, can be judged by the eye.
15. Malleys Ltd v JW Tomlin Pty Ltd (1961) 35 ALJR 352.
16. Firmagroup Australia Pty Ltd v Byrne & Davidson Doors (Vic) Pty Ltd (1987) 180 CLR 483 at 488.