The Full Federal Court of Australia has recently handed down its decision in BlueScope Steel Limited v Gram Engineering Pty Ltd  FCAFC 107. This case concerned a design registration registered under the Designs Act 1906 (Cth). The Designs Act 1906 (Cth) has been superseded by the Designs Act 2003 (Cth).
Whilst the case has been decided under old law, the case is of interest as few design cases progress to the Full Federal Court. Furthermore, there are still designs on the Register where issues of validity and infringement may arise under the 1906 Act.
In 1993, Mr Mann, Managing Director of Gram Engineering Pty Ltd (‘Gram’), came up with a design of a fencing sheet with a sawtooth profile and six repeating pans (‘the Gram Fence Sheet’). The Gram Fence Sheet dealt with the so called “good side/bad side” problem of fences in that the Gram Fence Sheet was such that the fence looked the same from both sides. Gram applied for registration of the Gram Fence Sheet design on 8 February 1994 and the application proceeded to registration under AU 121344S (‘the Gram Registration’). The representations which formed part of the Gram Registration are reproduced below in Illustration 1.
Click here to view image.
In 2002, BlueScope launched its own symmetrical six-pan sawtooth fencing panel under the name ‘Smartascreen’. A sample of the Smartascreen is reproduced below in Illustration 2.
Click here to view image.
In 2011, Gram commenced proceedings against BlueScope claiming that the Smartascreen was an ‘obvious’ or ‘fraudulent’ imitation of the Gram Registration. BlueScope cross-claimed for invalidity of the Gram Registration.
The primary judge upheld the validity of the Gram Registration and found that the Smartscreen was an obvious imitation of the design the subject of the Gram Registration. The primary judge further held that there was insufficient evidence to support a finding of fraudulent imitation. Infringement of a design can be based on either obvious imitation or fraudulent imitation.
Thus the primary judge found that the Gram Registration was valid and that the Smartscreen product sold by BlueScope infringed the Gram Registration.
BlueScope appealed this decision challenging the primary judge’s conclusion that the Smartscreen product was an obvious imitation of the design in the Gram Registration. Gram cross-appealed challenging the primary judge’s finding that the Smartascreen product was not a fraudulent imitation of the Gram Registration design.
Scope of Monopoly
It is well established that the scope of a registered design is determined in the context of the prior art at the priority date. BlueScope did not challenge the primary judge’s conclusion that the Gram Registration was valid. However, BlueScope submitted that the primary judge’s conclusions as to the scope of the monopoly afforded by the Gram registration were incorrect. It was submitted that these conclusions erroneously led the primary judge to find that BlueScope’s Smartascreen product infringed the Gram Registration.
The primary visual features of the Gram Registration design, according to the primary judge, were the sawtooth pattern consisting of six identical repeating pans, oriented vertically. These primary visual features defined the scope of the monopoly afforded to the Gram Registration. In challenging the primary judge’s conclusion on infringement, BlueScope challenged his conclusion as to the primary visual features of the Gram Registration design.
In particular, with regards to the vertical orientation of the Gram Registration design, BlueScope contended that this construction was impermissible as, for example, fencing panels supplied for use horizontally would not infringe the Gram Registration. It is apparent that BlueScope put forward these arguments in an attempt to bring in further prior art directed towards side panel and cladding systems, which were orientated horizontally in use. This further prior art, if considered relevant to the Gram Registration, would have narrowed the scope of the monopoly afford by the Gram Registration and bolstered BlueScope’s case that the Smartscreen did not infringe.
However, the Full Federal Court noted that designs cannot be construed without context. It is inescapable that the Gram Registration is for sheet metal fencing and the construction of the scope of the Gram Registration must reflect this. Furthermore, crucially, for the present purposes, the appearance of the Gram Registration design changes when orientated horizontally. On this basis, the Full Federal Court held that it was entirely open for the primary judge to form a conclusion that the pans were vertically orientated and, therefore, there is no error in this conclusion.
The Full Federal Court dismissed BlueScope’s separate arguments regarding the number of repeating pans, the sawtooth profile and secondary features of the Gram Registration design. In essence, the Full Federal Court held that the Gram Registration design and the prior art must be looked at as a whole. Breaking down the Gram Registration design and the prior art into its constituent elements may be helpful in the comparisonhowever, it must not be allowed to obscure the general appearance of the Gram Registration design and prior art. Taking the visual features of the Gram Registration design as a whole, the Full Federal Court upheld the primary judge’s construction on the proper extent of the monopoly afforded to Gram.
Under the 1906 Act, infringement can be found on one of three footings:
- a person applies the design;
- an obvious imitation of the design; or
- a fraudulent imitation of the design.
As the Smartasceen did not apply the Gram Registration design, the relevant footings of infringement in this case were obvious or fraudulent imitation.
An obvious imitation will be close to the registered design, only varying in insignificant ways, but otherwise being ‘a copy apparent to the eye’ or ‘substantially the same’.
A fraudulent imitation is a copy derived from the registered design but altered so that it varies in ways that are not insubstantial. A fraudulent imitation ‘may display greater departures from the original design than would otherwise have been apparent if the case were one of obvious imitation as there is involved an attempt to disguise the imitation’.
- Obvious Imitation
Based on the primary judge’s construction of the Gram Registration, the key question was whether the ridge/valley effect and the microfluting of the Smartascreen sufficiently set it apart from the Gram Registration design.
Under the 1906 Act, the ultimate judgment assessing overall similarity was arguably excessively influenced by the weight which was often attached to a list of differences. The 2003 Act expressly provides that greater weight should be given to similarities.
The primary judge found that the Smartascreen was an obvious imitation of the Gram Registration design on the following basis:
In my opinion, when the Smartascreen panel is viewed as a whole the dominant visual feature is the repeating sawtooth profile consisting of six pans or modules, and the amplitude, wavelength and angles. These features give it a striking physical similarity to the Design and the GramLine product. This is so notwithstanding the difference in the Smartascreen panel consisting of the ridge/valley effect and the micro-fluting. In my opinion those features are comparatively slight and are not sufficient to detract from the overall visual picture of the Design and the GramLine product.
The Full Federal Court agreed with the primary judge’s findings that the appearance of the Smartascreen supported the conclusion of an obvious imitation.
The Full Federal Court did note that the primary judge had erred in his analysis on obvious imitation by considering the commercial objectives that BlueScope may have had for developing the Smartascreen product. Obvious imitation is a visual comparison between the registered design and the infringing design. This is different from fraudulent imitation where intent may form part of the analysis. However, it was clear to the Full Federal Court that the commercial objectives of Bluescope did not form a material part of the primary judge’s final analysis with regards to obvious imitation.
- Fraudulent Imitation
As the primary judge found that the Smartascreen was an obvious imitation, he only briefly dealt with fraudulent imitation.
The primary judge found that there was no fraudulent imitation in the present case. The primary judge reached this conclusion with reservation because of the striking similarities between the designs and the fact the Smartascreen was designed to look like the GramLine product. An Internal memo in BlueScope, prepared by a Mr Field (their draftsman), suggested that they were designing a ‘Gram look a like’. However, to Gram’s detriment, his delay in bringing proceedings resulted in Mr Field being unable to give testimony at trial, clarifying this memo, due to his old age and ill-health.
Gram submitted that the primary judge relied too heavily on the so-called gravity of the matters alleged when he considered the question of fraudulent imitation. The Full Federal Court rejected this criticism and held that ‘the allegation of fraudulent imitation was a more serious one than an allegation of an obvious imitation’. The Full Federal Court also noted that had Mr Field been able to give evidence, the primary judge would have been able to determine whether or not there was fraudulent imitation with greater certainty.
Take Home Points
- As the Australian Designs Register still contains a considerable number of registrations under the 1906 Act, it is important to be aware of the differences between design registrations under the 1906 Act and the 2003 Act when considering commercial strategies.
- The monopoly of a design registration cannot be construed without context. The registered design and the prior art must be looked at as a whole.
- The 1906 Act has been criticised for the weight attached to differences between designs in determining infringement. However, certain shape alterations alone will not be sufficient to avoid infringement, particularly when there is a lack of relevant prior art.
- Fraudulent imitation can be satisfied even in the absence of any intention to deceive. The design owner does not need to show some proof of dishonest concealment by the copyist. However, the evidence at trial needs to demonstrate with certainty that a product “was deliberately based or derived from the registered design”. That is, it needs to be shown that the design was knowingly derived from a registered design and the changes made were not sufficient to take it outside the scope of the registration.