BlueScope Steel Limited v Gram Engineering Pty Ltd

Federal Court of Australia (Full Court)|2014-08-26|Before: Mr J, Ms P, Yates JJ, Middleton JJ

Introduction 153 Although the validity of the Design was a live issue at trial, Bluescope did not appeal from the primary judge's finding that the Design was new or original over the prior art, which consists of 10 designs (designated as Designs 2, 4, 5, 6, 8, 12, 16, 18, 19 and 23 respectively), and the designs of other products such as Bluescope's Trimdeck and Custom Orb products. However, on appeal, Bluescope challenged the basis on which the primary judge arrived at that finding. In essence, Bluescope submitted that the primary judge erred in his construction of the Design. 154 Bluescope's challenge focused on two important findings made by the primary judge. The first was that the Design is to be construed as "one in which the sawtooth pans extend vertically down the face of the sheet": see at [245]. The second was that the visual appearance of any given sawtooth design (that is, as applied to a fencing panel sheet) will be substantially affected by the amplitude, wavelength and angles of the sawtooth in combination with the number of modules (or pans) created thereby: see at [250]. 155 When considering the overall appearance of a fencing panel sheet to which the Design has been applied, the second finding should not be considered in isolation from the first finding concerning the orientation of the Design, specifically the vertical orientation of the six pans. The primary judge reasoned that the vertical orientation of the pans has a substantial effect on the three-dimensional appearance of a fencing panel sheet made in accordance with the Design, particularly in that, in that orientation, the sheet has a symmetrical appearance, "causing it to look the same from both sides": see at [245]. This last mentioned finding is a reference to the fact that, in that orientation, a fencing panel sheet to which the Design has been applied will have the same appearance, front and back, when the sheet is rotated 180° about its vertical axis. 156 The significance of these challenges by Bluescope is that, if successful, the novelty or originality of the Design over the prior art would lie substantially with two features of the Design which the primary judge considered to be of secondary importance. 157 The first is the feature of a "sawtooth within a sawtooth". The primary judge described this as a "subtle" feature that is, nevertheless, one that should be recognised as a new visual feature: see at [259]. Functionally, this feature acts as a "stiffener" which prevents "oil canning" - the process of deformation of a sheet due to buckling in the course of manufacture or installation. 158 The second feature is the appearance of the flanges on each side of the fencing panel sheet. Each flange functions to enable a "lap joint" to be formed, so that the fencing panel sheet can be conveniently joined with other fencing panel sheets to which the Design has been applied. 159 If, as Bluescope contended, the novelty or originality of the Design is to be found substantially in these two features, it would follow that the comparison between the Design and the design of the Smartascreen product, when considering whether the latter is an obvious imitation of the former, should have proceeded on a fundamentally different basis to the comparison which the primary judge, in fact, undertook. This is because, as the primary judge also recognised (see at [29]), questions of infringement, and novelty or originality, are connected. 160 In Dart Industries Inc v DÉcor Corporation Pty Ltd (1989) 15 IPR 403 Lockhart J (at 409-410) observed: The scope of a registered design must be determined with reference to the background of the prior art at the priority date and questions of infringement and novelty or originality are connected. In Hecla Foundry Co v Walker, Hunter & Co (1889) 14 App Cas 550 at 55 Lord Herschell said : "… one may be able to take into account the state of knowledge at the time of registration, and in what respects the design was new or original, when considering whether any variations from the registered design which appear in the alleged infringement are substantial or immaterial." Where novelty or originality is discovered in slight variations, there cannot be infringement without a very close resemblance between the registered design and the article alleged to be an infringement of the design. Lloyd-Jacob J in Rosedale Associated Manufacturers Ltd v Airfix Products Ltd [1956] RPC 360 at 364 said that the court would have regard to what was "known and old", and: "… if the particular features which provide a novel conception have not been reproduced in the alleged infringement, the similarity of appearance between the article complained of and the registered design if present must necessarily reside in the common possession of characteristics which are free to everybody to employ." See also Macrae Knitting Mills Ltd v Lowes Ltd (1936) 55 CLR 725 at 731 per Dixon J and L J Fisher & Co Ltd v Fabtite Industries Pty Ltd (1978) 49 AOJP 3611 at 3620 per Fullagar J. Small differences between the registered design and the prior art will generally lead to a finding of no infringement if there are equally small differences between the registered design and the alleged infringing article. On the other hand, the greater the advance in the registered design over the prior art, generally the more likely that a court will find common features between the design and the alleged infringing article to support a finding of infringement: Kevi A/S v Suspa-Verein UK Ltd [1982] RPC 173 at 179 per Falconer J; Firmagroup v Byrne & Davidson, supra, at 38; D Sebel & Co Ltd v National Art Metal Co Pty Ltd (1965) 10 FLR 224 at 229 per Jacobs J; Russell-Clarke, Designs, 5th ed, pp. 85-7; Blanco White on Patents and Designs, 4th ed, pp 326-7; and Ricketson, The Law of Intellectual Property, p 493. The trial judge paid regard to the importance of prior art and did so, in my opinion, correctly when he said [Dart Industries Inc v Decor Corporation Pty Ltd (1988) 11 IPR 134 at 139]: "The significance of relevant prior art is that the scope of protection of a registered design will depend upon the extent to which its features are seen to be novel or original against the background of prior knowledge." 161 Further, Bluescope submitted that the "sawtooth within a sawtooth" feature is a "visually striking" and "important" feature (as opposed to the "secondary" and "subtle" feature found by the primary judge) which was not present in the prior art or, indeed, the design of the Smartascreen product. 162 Given this setting, it is convenient to return to consider the correctness of the two findings concerning the primary judge's construction of the Design which Bluescope has challenged.

Vertical orientation 163 Bluescope advanced a number of submissions when challenging the primary judge's finding that the Design is to be considered as one in which the sawtooth pans extend vertically down the face of the fencing panel sheet. These submissions can be summarised as follows: Orientation is not a feature of shape or configuration. The Design should not be construed by reference to one particular use of the article to which the Design will be applied. Bluescope submitted that the primary judge went further than construing the Design with an "instructed eye". The primary judge "read into the Design" other features, such as posts and rails. The primary judge was wrong to rely on Mr Wightley's evidence because, amongst other things, Mr Wightley took into account considerations of utility. The primary judge erred in finding that the vertical orientation of the Design gave it novelty or originality over the prior art. Bluescope submitted that the prior art articles are only relevant in respect of their shape, not the orientation of the articles to which those shapes have been applied. Vertical orientation is not a feature of the Design. Bluescope submitted that if vertical orientation is a feature of the Design, it does not confer novelty or originality over the prior art because symmetrical Z-shaped designs were not novel or original. 164 In order to appreciate the thrust of Bluescope's submissions, it is important to distinguish between how an article to which a design has been applied may be orientated irrespective of its design, and how a design, properly construed, is intended to be applied to the article in respect of which it is registered. In other words, the design itself may have a specific orientation which, when properly applied to the relevant article, imparts the orientation in which the article should be viewed. In this way, the orientation of a design may be a substantial contributing factor to the appearance of the article to which it has been applied. 165 In the present case, the primary judge found that the Design has a specific orientation. In arriving at that conclusion, the primary judge correctly noted that there is no express mention in the registration that the pans have a vertical orientation. Nevertheless, his Honour found that a proper reading of the Design indicates that orientation. 166 In my respectful view, the primary judge was plainly correct in coming to that conclusion. Here, the accompanying representations illustrating the Design unequivocally show that the flanges are located at the sides of the sheet, not at the top and bottom ends of the sheet. This means that the pans must have a vertical orientation. This is not a reading of the Design which necessarily requires the assistance of expert evidence. In my view, it is the obvious conclusion to be drawn from looking at the accompanying illustrations, particularly the second illustration representing a side view of the sheet, which clearly shows a flange as a side element. 167 Mr Halpern (one of Bluescope's witnesses) gave evidence that he read the representations as depicting the pans running vertically because the end forms (that is, the flanges) are designed to overlap adjoining sheets within (I infer, vertically within) posts and rails. Mr Wightley (Gram's expert witness) gave evidence to the same effect. He pictured the pans in a vertical orientation meeting or overlapping in a neat way to form a continuous fence fitting together at the edges between posts and rails. 168 The primary judge's reference to Mr Halpern's and Mr Wightley's conception of the vertically orientated sheets fitting within posts and rails appears to be the reason for Bluescope submitting that the primary judge read into the Design "features and requirements … which do not and cannot form part of the monopoly of the Design". 169 Mr Wightley also gave evidence that, if installed horizontally, a fencing panel sheet made according to the Design would be likely to buckle or deform. In other words, the "stiffeners" (that is, the "sawtooth within a sawtooth" feature) would not perform their apparently intended function. The primary judge's reference to this evidence is the reason for Bluescope submitting that the primary judge impermissibly took into account questions of utility when construing the Design. 170 In my view, the primary judge did not err in taking Mr Halpern's and Mr Wightley's evidence into account, in the particular way in which his Honour did, when construing the Design. 171 First, I do not accept that the primary judge read into the Design features and requirements that were not part of the Design. Rather, the primary judge treated the Design for what it truly is - a design for a fencing panel sheet. The description of the article as a panel sheet conveys, as a matter of ordinary language, the notion that the article to which the Design is intended to be applied, is one to be supported by or enclosed within some structure, frame or border. In the context of fencing (a fencing panel sheet), this would clearly include, but would not necessarily be confined to, a structure, frame or border provided by posts and rails. But, by referring to Mr Halpern's and Mr Wightley's evidence in this regard, the primary judge did not thereby incorporate additional features, such as posts and rails, into his construction of the Design itself. 172 Secondly, Mr Wightley's evidence that the "sawtooth within a sawtooth" feature has an apparent functional significance, as well as a visual significance, plainly assists in understanding whether the Design has a specific orientation. This appreciation is not tantamount to judging the validity of the Design, in terms of its novelty or originality, by its utility as opposed to its appearance. Whether or not the "sawtooth within a sawtooth" feature would usefully act as a stiffener and would, by reason of such utility, distinguish the fencing panel sheet of the Design from prior fencing panel sheets or other analogous items, is not a question that is relevant to the novelty or originality of the shape or configuration claimed as the Design: Moody v Tree (1892) 9 RPC 333. Clearly, the primary judge did not treat utility in that way. However, his Honour correctly reasoned (at [209]) that it would be artificial to exclude from the construction of the Design an appreciation, through the instructed eye, that one of its visual features also has an apparently intended functional significance. When one has that appreciation, the presence of the "sawtooth within a sawtooth" feature assists in understanding whether the Design has a specific orientation. If so, the question is whether the Design, as so construed (that is, with its specific orientation), is new or original as a matter of, relevantly, shape or configuration applied to a fencing panel sheet. This is the correct question, which the primary judge addressed. 173 In my view, it is beside the point that, as Bluescope suggested in argument, someone might seek to install a fencing panel sheet to which the Design has been applied, in a fashion in which the pans run horizontally and not vertically. This is not the intended use of an article made according to the Design. In the case of the commercial embodiment of the Design (the GramLine product), the use of the sheet with the pans running horizontally is not a use that was promoted or, indeed, suggested by Gram. Moreover, in relation to the Smartascreen product, such use is not a use of that product that was promoted or suggested by Bluescope. The aberrant use of an article to which the Design or an alleged imitation of it has been applied, can be put to one side. 174 The vertical orientation of the pans distinguishes the Design from the prior art designs having sawtooth or sawtooth-like profiles. The prior art designs do not reveal, at the relevant time, the existence of a fencing panel sheet of a sawtooth design where the pans extend vertically down the face of the sheet, let alone such a fencing panel sheet which is symmetrical in appearance, front and back, when viewed in that orientation. The prior art cladding, represented by Designs 2, 4, 5, 6, 8, 12, 16, 18, 19 and 23 - which the primary judge described, collectively, as simulated or faux weatherboard (but which also include roofing elements) with pans running across the width of the articles - has a horizontal orientation. In that orientation, these designs do not present a symmetrical appearance, front and back. Further, these designs possess other features, not found in the Design, which materially contribute to the appearance of the articles to which each is intended to be applied, and which further distinguish them from the Design. The prior art designs represented by products such as the Trimdeck and Custom Orb products do not present a sawtooth appearance.

The sawtooth design 175 Bluescope's submissions dealt separately with the primary judge's findings concerning, first, the significance of the number of vertical pans in the Design and, secondly, the significance of the particular appearance of the sawtooth shape of the Design. 176 Bluescope submitted that the primary judge erroneously regarded the number of pans as being relevant to the novelty or originality of the Design. Bluescope submitted that it is the repeating pattern of the pans that provides a visually striking feature, not the number of pans in the Design. Bluescope also submitted that the primary judge did not have regard to "the potential for the prior art to be repeated to achieve six panels across the same (hypothetical) panel width", or consider a comparison with "designs of the same relative scale". 177 In my view, the primary judge did not err by taking into account, when assessing novelty or originality, the number of pans per fencing panel sheet shown in the Design. The number of pans is plainly part of the combination that is claimed as the Design. The Design is not merely one for a fencing panel sheet having an indefinite number of repeating pan-like elements. Rather, it is for a fencing panel sheet having six vertically orientated pans, bounded on each side of the sheet by flanges having a particular appearance. As the statement of monopoly makes clear, only the longitudinal extent of the fencing panel sheet "is to be disregarded". The longitudinal extent of the fencing panel sheet, in the context of the accompanying representations of the Design, is plainly a reference to the length of the sheet, top to bottom, in its vertical orientation. 178 With respect to the amplitude, wavelength and angles of the sawtooth shape, Bluescope submitted that, when a side-by-side comparison of the prior art designs with the Design is undertaken, the range of amplitude, wavelength and angles that give the Design its novelty is "narrow". Bluescope relied, in particular, on Designs 2, 4 and 6 of the prior art which, it submitted, are examples of sawtooth shapes having similar amplitude, wavelength and angles to the amplitude, wavelength and angles of the sawtooth shape of the Design. However, to argue that particular prior art designs exhibit sawtooth shapes having similar amplitudes, wavelengths and angles to the Design does not advance matters significantly when other features of the Design distinguish it from the prior art designs. Whilst as a matter of systematic exposition, one can describe and compare, in turn, separate features of shape or configuration in given designs, it is, of course, the combination of features - the overall appearance - of a design which is important. 179 As Young J put the matter in Ullrich Aluminium Pty Ltd v Dias Aluminium Products Pty Ltd (2006) 153 FCR 437 at [64]: … Even if one or other piece of prior art contains a particular feature that is similar to that found in the registered design, does the blending together of a number of features of that kind, alongside other features of style, configuration or pattern, result in a combination that has a special and distinctive appearance which is new or original? ... 180 The primary judge was mindful of this fact, noting at [255] that none of the items of prior art relied upon by Bluescope had the same combination of six pans with the proportions and angles shown in the representations of the Design. His Honour's reasons also make clear that this particular finding was not divorced from, and should not be seen in isolation from, his Honour's finding concerning the orientation of the six pans: none of the prior art designs had "sawtooth pans that extend vertically down the face of the sheet": see at [245] and [246].

Overall conclusion on novelty or originality 181 The features of the Design identified by the primary judge are features of substance, all of which contribute materially (although in different ways) to the overall shape or configuration of the fencing panel sheet to which the Design is to be applied. In my respectful view, the primary judge's analysis does not reveal any error in his Honour's identification of those features or with respect to the significance which his Honour gave them, as a matter of design construction. 182 Similarly, the differences noted by the primary judge, when comparing the Design with the prior art designs, are differences of substance, all of which contribute materially (although in different ways) to distinguishing the Design from the prior art designs, in terms of novelty or originality. In my respectful view, the primary judge's analysis does not reveal any error in his Honour's identification of those differences or with respect to the significance which his Honour gave them, as a matter of design comparison. 183 The primary judge's assessment of these features and differences plainly informed his Honour's understanding of the scope of the monopoly in the Design, when considering the question of obvious imitation.

Obvious imitation 184 The foundation for Bluescope's challenge to the primary judge's finding that the design of the Smartascreen product is an obvious imitation of the Design, is its contention that the scope of the monopoly in the Design is narrow and: … is found in the distinguishing sawtooth-within-a-sawtooth feature in the middle of each pan together with a particular combination of amplitude, wavelength and angles. 185 Bluescope submitted that it is these features of the Design that must be considered when assessing infringement. In other words, it submitted that when comparing the Design and the design of the Smartascreen product, it is the presence or absence of these features in the design of the Smartascreen product that is critical to the analysis of whether that design is an obvious imitation of the Design. 186 The following matters should be noted. 187 First, in confining the comparison in this way, Bluescope seeks to put to one side the fact that the Design is one in which the sawtooth shape defines six vertically orientated pans bounded at the sides of the sheet by flanges of a particular shape, such that the sheet is symmetrical in appearance when viewed from front and back. However none of the prior art designs exhibits this combination. Each prior art design is of a markedly different appearance. Yet, this combination is, undoubtedly, a fundamental part of the design of the Smartascreen product. 188 Secondly, Bluescope's contention that the sawtooth shape of the Design is formed by a particular combination of amplitude, wavelength and angles is undoubtedly correct. But this does not mean that the amplitude, wavelength and angles of the sawtooth shape of the Design should be confined to the very narrow limits that Bluescope's contention seems to imply. One sawtooth shape may closely resemble another in appearance, even though the former does not possess the same amplitude, wavelength and angles of the latter. The issue is one of eye appeal, not geometric identity or exactitude. Further, the sawtooth shape of the Design, and the sawtooth shape of the design of the Smartascreen product, should not be considered in isolation from the particular combination referred to in the preceding paragraph. 189 There are, however, two features of the design of the Smartascreen product to which reference should be made. 190 The first is that the rendering of the sawtooth shape in the design of the Smartascreen product includes a "ridge/valley" feature. This feature is visible in the image of the Smartascreen product reproduced at [53] of the primary judge's reasons. It is also identified in Figure 6 in an affidavit made by Bluescope's expert, Mr Richardson. Figure 6 is reproduced at [61] of the primary judge's reasons. The ridge/valley feature is identified by the letters A and B. This feature affects the appearance of the sawtooth shape in the design of the Smartascreen product. It also affects the amplitude, wavelength and angles of that shape. Bluescope submitted that the Smartascreen sawtooth profile is "more complex and subtle with more bends and angle changes than the Design". 191 The second feature is that the design of the Smartascreen product has "micro-fluting" on the face of each pan. This feature can also been seen in the photograph reproduced at [53], and in Figure 6 (see letter C) reproduced at [61], of the primary judge's reasons. 192 Given that the design of the Smartascreen product has, but the Design does not have, the ridge/valley feature and the micro-fluting feature, and given that the Design has, but the design of the Smartascreen product does not have, the sawtooth within a sawtooth feature, the question for the primary judge was whether these differences meant that the design of the Smartascreen product could not be an imitation, let alone an obvious imitation, of the Design - even though the design of the Smartascreen product possesses all the other features that distinguish the Design over the prior art designs and render it to be a new and original design when applied to a fencing panel sheet. 193 On appeal, Bluescope submitted as follows: Smartascreen does not have the novel and original features of the Design, namely, the distinctive sawtooth within the sawtooth or the same amplitude, wavelength and angles. When judged by the eye, the differences between Smartascreen and the Design are substantial and immediately apparent. Those differences are material given the narrow scope of Gram's monopoly in light of the prior art corpus … The absence in Smartascreen of the novel and original features of the Design, together with the striking additional features present in Smartascreen, mainly the ridge/valley and micro-fluting features, mean that there is no obvious imitation. Smartascreen does not bear a "very close" or "almost unmistakable" resemblance to the Design. 194 The primary judge rejected a similar submission at trial. The critical passage of the primary judge's reasons is at [324]: 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 which I have described above. … 195 Once again, it is clear that, when referring to the repeating sawtooth profile consisting of six pans or modules, the primary judge was referring to the six pans or modules being disposed in a vertical orientation. 196 The primary judge gave a number of reasons for coming to this conclusion. These included a preference for the views expressed by Mr Wightley, rather than the views expressed by Mr Richardson, on the degree of similarity between the Design and the design of the Smartascreen product. In expressing this preference, it is clear that his Honour's acceptance of Mr Wightley's views was based on the fact that they accorded substantially with his Honour's own perceptions and appraisal. 197 The primary judge's reasons also included reference to Bluescope's commercial justification for developing and launching the Smartascreen product. Bluescope submitted that the primary judge was in error in taking this matter into account. It submitted that this consideration was "inapposite" in the context of considering the question of obvious imitation. Whether this is so, depends on how, precisely, the primary judge sought to rely on this matter. 198 In this part of his reasons, the primary judge noted the emphasis that Bluescope placed on producing a product that "looked the same from both sides": see at [338]. The primary judge also noted (at [339]) the content of a discussion paper dated 26 April 2001 that had been prepared by Ms Marlin, the Business Development Manager in Bluescope's Marketing Division. This is an important document. It is discussed in detail in earlier passages of his Honour's reasons. It contains the recommendation on which Bluescope proceeded for the commercialisation of the Smartascreen product, whose design was then referred to as Cascade 2000. In that paper, Ms Marlin said with respect to the GramLine product (the commercialisation of the Design): Cascade 2000 has a similar appearance to Gramline (sawtooth style profile) and hence it is felt that the product will be readily accepted in the market remembering that the fencing market is traditionally slow to accept new profiles). It is likely the profile will be considered an acceptable substitute in new housing developments currently dominated by Gramline. 199 Later in the paper, Ms Marlin said: …it is recommended urgent approval be given to pursue Option 3 in the 'Cascade 2000' profile (Gramline substitute) to enable us to defend our market position and prepare for further growth… 200 When considering the question of obvious imitation, the primary judge referred to the attraction that Cascade 2000 had for Bluescope because "it had a similar appearance to the GramLine sawtooth profile and would gain ready market acceptance": see at [339]. In making that observation, I am of the view that the primary judge was doing no more than placing reliance on Bluescope's own acknowledgement - expressed contemporaneously at a marketing level - that there was indeed a real similarity in appearance between the Design and the design of the Smartascreen product, which rested in the sawtooth profile. This is the very feature which, in the context of the proceeding for infringement, Bluescope has sought to downplay. Ms Marlin's view can be taken as a reliable and expert opinion that this visual feature would be the abiding impression of shape or configuration created in the minds of purchasers of the Smartascreen product, not the ridge/valley feature or the micro-fluting feature. This evidence coincided with the primary judge's own view that the dominant visual feature of the Design is the repeating sawtooth profile. The primary judge saw it as pointing in favour of a finding of obvious imitation. 201 So understood, I can see no error in the primary judge's reliance on Bluescope's commercial justification. It is important to note that the primary judge was careful to make clear in his reasons that he was not relying on this evidence as a manifestation of deliberate copying, which would be a relevant consideration when considering whether the design of the Smartascreen product is a fraudulent imitation of the Design. Indeed, when dealing with this evidence in this part of his reasons, the primary judge stated that he did not consider the Smartascreen panel to be a fraudulent imitation of the Design. 202 In my view, the primary judge's finding that the design of the Smartascreen product is an obvious imitation of the Design is one that was open to his Honour, particularly having regard to the scope of the monopoly of the Design, properly understood. The primary judge's comparison of the design of the Smartascreen product with the Design proceeded on correct legal principles. That being the case, the primary judge's conclusion that the design of the Smartascreen product is an obvious imitation of the Design is really a practical and evaluative judgment resting on matters of impression and degree. I am not persuaded that, in exercising that judgment, his Honour erred. For this reason, the appeal should be dismissed.

Fraudulent imitation 203 I agree with Besanko and Middleton JJ's reasons for concluding that Gram's cross-appeal against the primary judge's finding that there was no fraudulent imitation, should be dismissed.

Disposition 204 I agree with the orders proposed by Besanko and Middleton JJ. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

INTRODUCTION AND BACKGROUND 1 The appellant and cross-respondent, BlueScope Steel Limited ('BlueScope') is a well-known manufacturer of flat steel products in Australia. It is now a separate company, but was previously a division of BHP Billiton Limited, and operated under the name, John Lysaght (Australia) Pty Ltd. 2 The respondent and cross-appellant, Gram Engineering Pty Ltd ('Gram') produces and sells steel fencing panel sheets which are used primarily for backyard privacy fencing in homes throughout Australia. Gram sells its fencing panel sheets in competition with BlueScope. 3 Historically, a vexing problem for manufacturers of fence sheeting was how to design fencing that looked the same regardless of which side it was viewed - that is, it did not have a bad side. 4 In 1993, Mr Mann, Managing Director of Gram, came up with a design of a fencing sheet with what has come to be called a sawtooth or zig-zag profile with six repeating pans or units ('the Design'), which dealt with the so called good side, bad side problem as it looked the same from both sides. 5 Pursuant to the Designs Act 1906 (Cth) ('the Act'), Gram applied for registration of the Design on 8 February 1994, which was registered on 26 August 1994 ('AU 121344S') and expired 16 years later on 8 February 2010. 6 The fencing panel sheet was manufactured by Gram substantially in accordance with the Design on or about 12 September 1995 and was sold under the name 'GramLine'. 7 The GramLine fencing sheet was very successful commercially. By 2002, the GramLine range commanded 35-40 per cent of the Australian market for fencing panel sheets. 8 In 2002, BlueScope launched its own symmetrical six-pan sawtooth fencing panel under the name 'Smartascreen'. 9 In 2011, Gram commenced proceedings against BlueScope claiming under s 30(1)(a) of the Act that the Smartascreen was either an 'obvious' or 'fraudulent imitation' of the Design. BlueScope, by cross-claim, challenged the validity of the Design pursuant to s 17 of the Act. The infringement and invalidity claims fall to be determined under the Act rather than the Designs Act 2003 (Cth) ('the New Act'): see ss 150, 151(3) and 156(3) of the New Act. 10 The primary judge in Gram Engineering Pty Ltd v Bluescope Steel Limited [2013] FCA 508 upheld the validity of the Design and found that the Smartascreen applied an obvious imitation to the Design. The primary judge further held that there was insufficient evidence to support a finding of fraudulent imitation. 11 BlueScope appealed this decision challenging certain findings the primary judge made in the context of validity and his conclusion that the Smartascreen product was an obvious imitation of the Design. Gram, by cross-appeal, challenged the primary judge's finding that the Smartascreen product was not a fraudulent imitation of the Design. 12 For the reasons below, the appeal and cross-appeal should be dismissed.

SCOPE OF MONOPOLY 21 The primary judge's conclusion that the Design was valid was not challenged by BlueScope on the appeal. However, the primary judge's assessment of the significance of the prior art was challenged on the appeal as part of BlueScope's challenge to his Honour's conclusion that BlueScope's Smartascreen product infringed the Design. BlueScope submitted that the primary judge's conclusions as to the scope of the monopoly which he had reached by reference to the prior art were incorrect and that that led his Honour to conclude erroneously that BlueScope's Smartascreen product infringed the Design. 22 The connection between the scope of the monopoly protected by a registered design, including questions of novelty and originality on the one hand and questions of infringement on the other, has been discussed in a number of cases. The principles are not controversial and it is sufficient to refer to the following observations of Lockhart J in Dart Industries v Decor Corporation (1989) 15 IPR 403 ('Dart Industries') at 409: The scope of a registered design must be determined with reference to the background of the prior art at the priority date and questions of infringement and novelty or originality are connected. In Hecla Foundry Co v Walker, Hunter & Co (1889) 14 App Cas 550 Lord Herschell said at 555: "… one may be able to take into account the state of knowledge at the time of registration, and in what respects the design was new or original, when considering whether any variations from the registered design which appear in the alleged infringement are substantial or immaterial." Where novelty or originality is discovered in slight variations, there cannot be infringement without a very close resemblance between the registered design and the article alleged to be an infringement of the design. Lloyd-Jacob J in Rosedale Associated Manufacturers Ltd v Airfix Products Ltd [1956] RPC 360 at 364 said that the court would have regard to what was "known and old", and: "… if the particular features which provide a novel conception have not been reproduced in the alleged infringement, the similarity of appearance between the article complained of and the registered design if present must necessarily reside in the common possession of characteristics which are free to everybody to employ." See also Macrae Knitting Mills Ltd v Lowes Ltd (1936) 55 CLR 725 per Dixon J at 731 and L J Fisher & Co Ltd v Fabtite Industries Pty Ltd (1978) 49 AOJP 3611 per Fullagar J at 3620. 23 As we discuss later, in the context of validity, the primary judge found that the dominant visual features of the Design were the six modules or pans and the amplitude, wavelength and angles: at [202]-[212]. When he came to consider infringement, the primary judge found that BlueScope's Smartascreen product had these visual features: at [324]. 24 In challenging the primary judge's conclusion on infringement, BlueScope challenged his conclusion as to the dominant visual features of the Design. It challenged his conclusion that the Design showed a vertical orientation for the fencing sheet and submitted that it showed no particular orientation. It challenged his assessment of the prior art and the significance he placed on the fact that there were six modules or pans. As counsel for BlueScope put it at one point, a proper assessment of the prior art would have meant, 'the sixness [i.e., the presence of six pans] of itself is going to retreat into the background'. 25 In those circumstances, it is necessary to consider carefully the primary judge's reasons with respect to validity.

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