In Oraka Technologies Limited v Geostel Vision Limited  NZCA 111, the Court of Appeal has provided further guidance as to the principles applicable to claims of copyright infringement.
In its judgment, the Court confirmed the continued applicability of the well-known "Wham-O" test, which requires a plaintiff to establish that: (a) the defendant has reproduced the entire copyright work or a substantial part of it; (b) there is sufficient objective similarity between the infringing work and the copyright work, or a substantial part thereof; and (c) there is a causal connection between the copyright work and the infringing work.
In the present case, the Court held that there was sufficient objective similarity between the defendants' product (a cup assembly for an asparagus grading machine) and the plaintiff's copyright works to merit a consideration of the remaining two steps.
As to causal connection, in most cases, copying can be deduced by inference. However, this was an unusual case, in that there was direct evidence of copying. In particular, notes and diagrams made it clear that the defendants' design path began with the plaintiff's works and there was evidence that the defendants had suggested that problems with the design be resolved by reference to solutions found in those works.
Significantly, the Court also held that it was appropriate to draw a negative inference from the defendants' failure to call evidence from the only person who knew whether or not reference was made to certain material during the design process, particularly given the speed with which the defendants' design was produced.
As to the question of substantiality, the Court noted that it is wrong to jump to the conclusion that a substantial part has been taken just because copying has occurred. The quality of what has been taken is much more significant than the quantity, what is or is not 'substantial' is closely associated with how original the work at issue is, and functional constraints may assist in determining both originality and substantiality.
Applying these principles to the case before it, the Court found that the defendants had copied a substantial part of the copyright works. In particular, it disagreed with the defendants that many of the constraints they relied on to explain the similarities were truly functional.
The Court of Appeal's judgment highlights the risk for businesses in using competitors' products as the basis for their own designs. While doing so will not automatically result in copyright infringement, it will increase the risks of claims of this nature, particularly if the features focused on are highly original.