Caroma Industries Ltd v Technicon Industries Pty Ltd

The registered design 12 The design of the Trident pan was registered under the Designs Act 1906 (Cth) ('the 1906 Act') pursuant to application No. 2602/92 made by Caroma on 15 September 1992. 'Design' is defined in s 4 of the 1906 Act and provides: design means features of shape, configuration, pattern or ornamentation applicable to an article, being features that, in the finished article, can be judged by the eye, but does not include a method or principle of construction.

13 The 1906 Act was repealed by the 2003 Act on 17 December 2003: see s 150 of the 2003 Act. However, pursuant to s 151(2)(a) of the 2003 Act a design registered under the 1906 Act is taken to be registered under the 2003 Act from the date of commencement of the 2003 Act. Pursuant to ss 151(3), 156(2) and 156(3) of the 2003 Act such registered design remains subject to the 1906 Act for the purposes of determining the validity of the registration of such design and determining whether the monopoly of such design has been infringed. It follows that s 71 of the 2003 Act which concerns design infringement has no application to these proceedings. The test for infringement of the monopoly in designs in respect of these proceedings is contained in s 30 of the 1906 Act. 14 The Register of Designs records the details of the owner and author of the design and denotes the article in respect of which the design was registered as 'A lavatory pan'. The registered design also includes a Statement of Monopoly. 'Statement of Monopoly' is defined in s 4 of the 1906 Act as follows: … in relation to a design, means a statement relating to the representations of an article to which the design is applied that indicates:

(a) those features of the representations in respect of which the applicant for registration of the design wishes to claim a monopoly; and

(b) those features of the representations that are to be disregarded in considering the extent of the monopoly protection.

15 The Statement of Monopoly included in the registered design provides: Monopoly is claimed in respect of the shape and/or configuration of a lavatory pan as illustrated in the representations.

16 The representations referred to in the Statement of Monopoly are incorporated in the Register of Designs by way of six line drawings, namely a perspective view, a plan view, a left side view, an inverted plan view, a rear view and a front view of the registered design (see Annexure A). 17 Caroma chose not to specify any particular features of the representation in respect of which it claimed a monopoly nor did it designate any particular features of the representations which are to be disregarded in considering the extent of the monopoly protection. In Wanem Pty Ltd v John Tekiela and Another (1990) 19 IPR 435 Gummow J, after being referred to Dalgety Australia Operations Ltd v Seeley (FF) Nominees Pty Ltd (1986) 64 ALR 421 and Turbo Tek Enterprises Inc and Another v Sperling Enterprises Pty Ltd and Another (1989) 88 ALR 524, said at 439-440: The authorities are collected there for the proposition that where the statement of monopoly does not identify particular features of shape or configuration of the design, the design applies to the appearance of the article as a whole and issues of infringement are to be approached with that in mind.

See also Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd (1991) 103 ALR 239 at 246-247; McCallum & Co Pty Ltd v Allen Manufacturing Co Pty Ltd and Another (2001) 52 IPR 550 at [17]-[18]. Accordingly, no aspect of the shape or configuration of the registered design is to be disregarded. 18 'Statement of Novelty' is defined in s 4 of the 1906 Act and relevantly provides: … in relation to a design, means a statement relating to the representations of an article to which the design is applied that indicates those features of the representations in respect of which novelty or originality is claimed.

19 There is no Statement of Novelty in the registered design. However, it has been recognised that certain features of an article may give rise to a distinct character in a design which may be the subject of registration: see D. Sebel & Co. Ltd. v National Art Metal Co. Pty. Ltd. (1965) 10 FLR 224 at 227-228. The principal distinguishing feature relied upon by Caroma is the distinctive curvilinear shape of its registered design.

Applicable principles 20 Section 30 of the 1906 Act provides: (1) A person shall be deemed to infringe the monopoly in a registered design if he, without the licence or authority of the owner of the design:

(a) applies the design or any fraudulent or obvious imitation of it to any article in respect of which the design is registered;

(b) imports into Australia for sale, or for use for the purposes of any trade or business, any article in respect of which the design is registered and to which the design or any fraudulent or obvious imitation of it has been applied outside Australia without the licence or authority of the person who was the owner of the registered design at the time when the design or imitation was so applied; or

(c) sells, or offers or keeps for sale, or hires, or offers or keeps for hire, any article:

(i) to which the design or any fraudulent or obvious imitation of it has been applied in infringement of the monopoly in the design; or

(ii) in respect of which the design is registered and to which the design or any fraudulent or obvious imitation of it has been applied outside Australia without the licence or authority of the person who was the owner of the registered design at the time when the design or imitation was so applied.

(2) If any person infringes the monopoly in a registered design, the owner of the design may bring an action or proceeding against him for infringement of the monopoly in the design.

21 The seminal explanation of s 30 of the 1906 Act is found in Malleys Limited v J. W. Tomlin Pty. Limited (1961) 180 CLR 120 where the High Court of Australia said at 127: Turning to s. 30 it is apparent that there is infringement in any one of three cases - that is, where the design which has been applied is: - (i) the registered design (ii) an obvious imitation of the registered design (i.e., not the same but a copy apparent to the eye notwithstanding slight differences) and (iii) a fraudulent imitation (i.e., a copy with differences which are both apparent and not so slight as to be insubstantial but which have been made merely to disguise the copying). Visual comparison will establish (i) or (ii) but a finding of fraudulent imitation must require something more because in such a case visual comparison is not of itself sufficient to establish imitation; otherwise it would be an obvious imitation.

22 Caroma's Further Amended Statement of Claim alleges that the Technicon pan applies the registered design. However, Caroma made no submissions in support of such allegation. The Court is accordingly not required to determine whether design infringement of that kind has occurred. 23 The Court observes that an infringing article can be both an obvious imitation and a fraudulent imitation: see Rose v J. W. Pickavant and Co Ltd (1923) 40 RPC 320 at 332, approved in LJ Fisher & Company Ltd v Fabtile Industries Pty Ltd (1978) 1A IPR 565 at 581-582. The Court is accordingly required to determine whether the Technicon pan is an obvious imitation and/or a fraudulent imitation of the registered design.

Relevance of the prior art 24 In defence to Caroma's claim, Technicon submits that the registered design evolved from prior art comprising several toilet suites which were manufactured before the manufacture of the Trident pan. The prior art includes pans made by Caroma and other manufacturers, namely the Royal Doulton V504 Trident pan, the Caravelle, the Bristile Hospital 450 pan, the Uniset, the Solitaire and the Viceroy/Sovereign ('the prior art pans'). 25 The relevance of prior art to the determination of design infringement was considered in Dart Industries Inc and Another v Decor Corporation Pty Ltd (1989) 15 IPR 403 at 409 where Lockhart J said: 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."

His Honour continued: 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 everyone 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 [sic] Industries Pty Ltd (1978) 49 AOJP 3611 per Fullagar J at 3620.

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…

26 Technicon submits that the most visually significant advance of the registered design over the prior art is the scalloping feature. Technicon submits that such feature together with the shape of the bowl, the shroud, the hump, the neck, the fixing holes and the rear inlet opening is the conception of shape that defines the monopoly of the registered design. 27 Sam McCallum, the joint Chief Executive Officer and Executive Technical and Marketing Director and co-founder of Technicon, testified that the pans incorporated in each of the toilet suites known as the Caravelle, the Trident, the Bristile Hospital 450, the Uniset, the Solitaire and the Viceroy/Sovereign have shrouds as depicted in the registered design and, subject to the scalloping feature, are very similar to the registered design. 28 Michael John Wynne, a hydraulic services provider, plumbing consultant and licensed plumber, provided evidence for Technicon. Mr Wynne has no qualifications in graphic or other design, but is experienced in the supply and installation of toilet pans. Mr Wynne deposed that he had seen prior to September 1992, namely when Caroma applied for the registration of its design for the Trident pan, toilet pans with a skirt or shroud which was 'very similar' to the registered design. 29 David John Granger, an industrial designer, was engaged by Caroma as an expert witness. Mr Granger noted distinguishing features in each of the prior art pans and considered that there were significant differences between each of such pans compared to the registered design. 30 The Court has compared the pans which it is said represent the state of the prior art with the registered design. None of the prior art pans disclose the combination of features with such similarity to the registered design and the Technicon pan to warrant the conclusion that the similarities between the registered design and the Technicon pan can be explained by reference to the history of the prior art. The Court finds that the registered design represents a clear advance upon the prior art pans. 31 In view of such finding Technicon must demonstrate a greater degree of difference between the Technicon pan and the registered design to establish that there has been no design infringement: see Dart v Decor at 409.

Expert evidence - infringement of the registered design 32 Although expert evidence is not to supplant the role of the Court (see Dart v Decor at 408-409), the Court has considered the expert witnesses' evidence regarding their respective visual comparisons of the registered design with the Technicon pan. 33 Mr Granger said in relation to the registered design: In my view the main "design features" of the Registered Design is the overall curvilinear shape of the bowl [A] (on annexure 'C' and 'D') its relationship to the shroud [B] (on annexure 'C' and 'D') and the shape of the shroud itself. Aspects of this design include the concealing by the shroud of the waste pipe (an "S" trap) and the balanced proportions of these two inter-related elements, being the bowl and the shroud. The design conveys a "clean" overall impression which harmonises the separate elements of bowl and shroud in a simple yet elegant way.

34 Mr Granger considered that the absence of the scalloping feature in the Technicon pan did not alter the curvilinear shape of the overall design and in fact emphasised such curvilinear shape. He noted that the scalloping feature incorporated in the registered design was visible from a side view only, and said: [t]he designer has given minimal visual impact to the scalloping feature by ensuring that it is recessed at the rear of the pan where the consumer is unlikely to perceive it, or perceive it as of visual significance having regard to the whole pan/shroud combination. Accordingly, in my view the ribbed voids are not characteristic of the design and are not readily observable or of visual significance from a design perspective. 35 The Court observes that its visual comparison of the registered design with the alleged infringing object is not to be made by reference to the perspective of the consumer: see Dart v Decor at 409. It follows that no particular perspective should be valued above another, in that the appearance of the relevant pans when viewed in situ in a showroom or bathroom should not be prioritised over any other angle of viewing or perspective of such pans. 36 Mr Granger considered other visual differences between the registered design and the Technicon pan. He opined that the rear supporting rib of the Technicon pan was of a slightly different curvature in side profile only when compared to the registered design and that the inlet pipe of the Technicon pan had a smooth transition into the rear of the bowl when compared to the registered design. However, Mr Granger considered that such differences were insufficient to detract from the main design features of the registered design incorporated in the Technicon pan, namely the overall curvilinear shape of the bowl, the bowl's relationship to the shroud and the shape of the shroud itself. 37 Mr Granger compared the Technicon pan with the BNKS Lara pan and concluded that he could not see 'any significant design similarity' between the Technicon pan and the BNKS Lara pan. Mr Granger opined that the Technicon pan was a reproduction of the design of the Trident pan. 38 Mr Wynne considered that the 'main immediate visual difference' between the registered design and the Technicon pan was the scalloping feature incorporated in the former. He also observed that the angles of the skirts and the bolt hole positions differed and that the flushing rims were 'particularly different and distinctive'. 39 The Court notes that Mr Wynne provided his evidence in chief based upon answers he gave to specific questions from Technicon's solicitors that sought his opinion relating to the differences and similarities between the Technicon pan and the registered design. However, it is not of assistance to catalogue the precise differences and similarities, as this is not the test to be applied. Rather, it is 'the overall appearance of the registered design and the alleged infringing article that must be compared': see Autocaps (Aust) Pty Ltd and Others v Pro-Kit Pty Ltd and Another 46 IPR 339 per Finkelstein J at [83]; see also Tu and Another v Pakway Australia Pty Ltd (t/as Pakway Plastics) and Others (2004) 62 IPR 637 at [106]-[107]. 40 In cross examination Mr Wynne gave evidence of the similarities between the Technicon pan and the registered design. Mr Wynne agreed that from the plan view the 'two bolt holes at the back' were similar; the bowls were similar, the only difference being the proportion of the bowl of the Technicon pan; the arrangement of the bowl and shroud was 'very similar';there was only a slight difference between the Technicon pan and the registered design when one stood directly above the Technicon pan; and the rear detail was 'quite similar', the only difference being the slightly more rounded shroud of the Technicon pan. 41 Mr Wynne acknowledged in cross examination that when the Technicon pan was viewed from a distance it could readily be seen that there was a close resemblance to the Trident pan, and that from a distance the overall outlines of the Technicon pan and the Trident pan were virtually the same.

Obvious imitation 42 For an article to constitute an obvious imitation it must appear to the eye to be a copy notwithstanding slight differences: see Malleys at 127. In Dunlop Rubber Co. Ld. v Golf Ball Developments Ld. (1931) 48 RPC 268 at 279 Farwell J said that 'obvious' means: …something which, as soon as you look at it, strikes one at once as being so like the original design, the registered design, as to be almost unmistakable. I think an obvious imitation is something which is very close to the original design, the resemblance to the original design being immediately apparent to the eye looking at the two.

43 In Autocaps Finkelstein J held at [83]: To determine whether there has been an obvious imitation (when there is not an exact replication) the question is whether, based on the overall impression to be gained from the design and the alleged infringing article, there is substantial similarity between them.

44 On first impressions, the bases of the Technicon pan and the registered design, with the bolt holes located in the same position on each, are identical; the shrouds with rear humps are the same; and the bowls give the same appearance, as do the rims and the throats. 45 Lockhart J in Dart v Decor at 413indicated that the visual comparison undertaken by the Court involves both first impressions and later impressions. The Court accordingly observes that while the similarities between the Technicon pan compared with the registered design are initially striking, closer inspection reveals certain differences. 46 Principally, the Technicon pan does not incorporate the scalloping feature. The Court also observes that the inside rim of the registered design is not as deep as that of the Technicon pan and that the front of the shroud in the Technicon pan appears to be slightly more rounded than that in the registered design. 47 Additionally, the bowl of the Technicon pan appears to be slightly larger and protrude further forward than the bowl depicted in the registered design, and the rear supporting rib of the Technicon pan is slightly wider than the rear supporting rib of the registered design. Also, the inlet pipe or duct of the Technicon pan has a smooth transition into the rear of the bowl when compared to the registered design where the transition of the inlet pipe into the rear of the bowl is more stepped. There is also a slight curve outward at the floor of the front of the Technicon pan which is not present in the registered design. Each difference is almost imperceptible, but can be observed upon careful inspection. 48 The Court concludes that the Technicon pan does not possess such a close resemblance to the registered design that it is 'almost unmistakeable': see Dunlop Rubber at 279. The Court accordingly finds that the Technicon pan is not an obvious imitation of the registered design.

Test for fraudulent imitation 49 While a person who designs and markets what is found to be an obvious imitation of a registered design may not in fact know of the registered design (see Dart v Decor at 411), the test for determining whether a product constitutes a fraudulent imitation of a registered design requires an examination of the alleged infringer's state of knowledge of the relevant registered design: see Dart v Decor at 411; Dunlop Rubber at 279. To establish the requisite state of knowledge it is not necessary that the alleged infringer had actual knowledge of the fact of registration of the registered design, but merely that the alleged infringer had reason to believe or strongly suspect, or had wilfully disregarded the likelihood of such registration: see Polyaire Pty Ltd v K-Aire Pty Ltd and Others (2005) 221 CLR 287 at [17]-[18]. 50 Technicon submits that 'wilfully closing its eyes' to the possibility of Caroma's design being registered is not the appropriate test to determine whether the element of fraud exists for the purpose of a finding of fraudulent imitation. However, in Polyaire at [17] the High Court referred to the decision of Lord Esher MR in The English and Scottish Mercantile Investment Company, Limited v Brunton [1892] 2 QB 700 at 707-708 and noted the inference of fraud that may be drawn when a person 'wilfully shuts his eyes' (see note (35) in [17]). The Court accordingly rejects Technicon's submission that wilful blindness is not an appropriate test for fraud in the present context. 51 In Polyaire at [19] the High Court quoted from the decision of Farwell J in Dunlop Rubber at 279 in relation to the distinction drawn between obvious and fraudulent imitation: His Lordship said (41): "… With regard to the word 'fraudulent', fraudulent I think does pre-suppose a knowledge of the registered design. I think it would be difficult for a Court to come to the conclusion that an imitation was fraudulent unless the Court was satisfied that the registered design had been known to the author of the alleged infringing design, and further, it seems to me that 'fraudulent' imports something in the nature of making use of the registered design."

Farwell J went on to say of the term "fraudulent" in this context (42): "It does not necessarily import deliberate intention to steal the property of the owner of the registered design…[A] person may be the author of a fraudulent imitation believing perfectly honestly that he has so altered the registered design as to make them two different designs, and so far as his own mind and his own intention are concerned, he may be honest in that sense." (Emphasis added.)

52 In Elconnex Pty Limited v Gerard Industries Pty Limited (1991) 32 FCR 491, Burchett J said at 503: It seems to me that what makes conduct of the relevant kind fraudulent is the infringer's dishonest concealment of the reality of copying in order to evade being held legally responsible for it. That form of dishonesty can only arise where the copier knows or suspects that his copying will infringe another's legal rights.

53 In addition to the existence of the requisite mental element in the alleged infringer, it must be established that the allegedly infringing article is based on or derived from the registered design to warrant a finding of fraudulent imitation: see Koninklijke Philips Electronics NV and Another v Remington Products Australia Pty Ltd (1999) 91 FCR 167 at 200. Even if the alleged infringer set out to copy the registered design, and even if the intention in adopting any differences was to disguise such copying, a finding of fraudulent imitation cannot be made unless the impugned article is in fact an imitation or copy: see Polyaire at [33] adopting Besanko J in Polyaire Pty Ltd v K-Aire Pty Ltd & Ors [2003] SASC 41 at [293]. 54 Where the element of fraud is found to exist a greater degree of difference between the registered design and the infringing object will suffice for a finding of fraudulent imitation: see Dunlop Rubber at 280, approved in Dart v Decor at 411. In Fisher & Paykel the Full Court said at 248: The authorities demonstrate (in particular Malleys, supra) that to support a finding of fraudulent imitation there may be greater differences between the registered design and the offending design than between the registered design and what could be held to be an obvious imitation. This is because the person who has deliberately set out to copy the registered design is presumed more readily to have achieved his object than the person who did so innocently. In this respect designs law, though having no common law base, is analogous to passing off…Nevertheless, whether the imitation is obvious or fraudulent, in the final analysis, as the decision in Malleys, supra, illustrates, the offending article must have the same fundamental or basic design as the article embodied in the registered design.

Such passage was cited with approval in Polyaire at [21].

State of knowledge of Technicon 55 It is useful to refer to the stages of development of the Technicon pan in determining whether the requisite mental element exists on the part of Technicon.

State of knowledge - early stages of design development of the Technicon pan 56 Mr Granger's evidence establishes that it is a designer's usual practice to undertake several preliminary stages before a design is achieved that is considered suitable for production. The first stage includes information gathering of successful products already in the market and reference to any marketing design brief provided by a client and the making of conceptual sketches based upon this information. The sketches are then reduced in number by a process of elimination. Computer aided design software is used to apply real proportions to the drawings and to further enhance three dimensional images. It is usual for these initial steps to be completed within two to three months. 57 Mr Granger said that prototypes or form studies are then produced from clay or other workable material. Refinements and alterations are then made to the prototype or form study. From the prototype stage, a further two or three months' work is involved before the production design drawing stage is reached. At this stage of the production it is usual for there to be much interaction between the designer and professional moulders of vitreous china due to the nature of the material and the skill required to work with such material successfully. 58 Mr Granger said that the next stage of the production involves integrating the design with the production techniques required by the manufacturer, 'proving' the design in the context in which it is to work and 'finetuning' the functionality of the design ('the production proving stage'). The production proving stage does not necessarily influence the already determined design of the product. 59 Mr Granger said that these early stages in design production were not undertaken in the production of the Technicon pan, and that Mr McCallum progressed directly to the production proving stage.

State of knowledge - Technicon's negotiations with Plumbing Plus 60 At the preliminary stage of its design manufacture process in 2001 Technicon entered into negotiations with Plumbing Plus, a retailer of plumbing supplies carrying on its business in Australia, to determine whether Technicon could produce a toilet suite which would be marketed by Plumbing Plus. 61 In such negotiations reference was continually made to the Trident pan. Estimates of production costs were based on the known costs of production of the Trident pan and samples of the Trident pan were among those that were used for idea gathering. Mr McCallum said: My starting point in designing this pan was to identify features of existing toilet pans that I considered attractive (from both a functional and aesthetic perspective) and then combine the best of those features into the new china link pan.

62 The other pan which Mr McCallum said was relied upon as a basis for the design of the Technicon pan was the BNKS Lara pan. Mr McCallum stated that: By October 2002, I had decided to base the Bellini china link pan [the Technicon Pan] on the Caroma Trident pan manufactured by the Applicant and the BNKS Lara pan manufactured by Imperialware.

State of knowledge - Technicon's correspondence in late 2001 to early 2002 63 On 21 November 2001 Mr McCallum forwarded an email to Mr Guo of Technicon proposing target dates for the manufacture of the Technicon pan. At that time Tangshan Monopy Ceramic Co Ltd ('Monopy'), a manufacturer in the PRC, was being considered by Technicon to manufacture its pan. After suggesting a target date for completion of the testing of the pan, namely the 'end of March 2002', the email concluded: WE MUST TREAT THIS PROJECT WITH URGENCY DUE TO CAROMA AND THEIR CURRENT MARKET ACTIVITIES.

64 On 5 December 2001 Technicon wrote a letter to the Executive Officer of Plumbing Plus. In anticipation of a meeting to be held between Technicon and Plumbing Plus on 11 December 2001 Technicon proposed product options for review which included the Trident pan. Correspondence ensued between Technicon and Plumbing Plus which involved the discussion of product mixes, costs and arrangements for the shipping of various Caroma products including the Trident pan to the manufacturer. 65 In a letter dated 21 February 2002 addressed to the Executive Officer of Plumbing Plus, Mr McCallum wrote, inter alia: Although we understand the reluctance of the committee to empower us with the authority to manufacture or plagiarise the Caroma range, the rationale behind doing just that is sound.

66 A memorandum was prepared by Plumbing Plus entitled 'Brief for Exclusive Sanitaryware March 2002' which recorded the instructions of the National Purchasing Committee of Plumbing Plus. Such memorandum stated: If we are to develop a link suite, it should be similar to Caroma's Trident/Sovereign 2000 suite and have all the requirements listed above.

State of knowledge - change of manufacturer 67 By 12 October 2002 Technicon had selected Oumer as its manufacturer instead of Monopy. The change was reported to Mr Warwick Beutler (of Plumbing Plus), Mr Ron Rouwenhorst (Co-Director of Technicon) and others in Technicon's report of that date. By this time the proposals for the design of the Technicon pan had advanced. Mr McCallum wrote in the report: I will discuss with both management teams the options we have available to us regarding making subtle changes to the samples we have at our factory.

Later in the report Mr McCallum stated: As stated at our last meeting in Yantai, the first step is to make subtle changes to the designs and for us all to review the drawings.

68 A remark to a similar effect was made by Mr McCallum to Mr Beutler and Mr Rouwenhorst and other representatives of Plumbing Plus and Technicon in Mr McCallum's report entitled 'Sanitary Ware October Trip Update' dated 30 October 2002: At the start of our sample review we asked the engineer to review the various samples which we had selected from the sources listed overleaf and to give us his comments with regards to the product design and quality. This set the pace for our next step which was to review the designs and agree on subtle changes to some of the samples which would take us forward to the next stage of making models for review.

69 Later in the report under the heading 'Product Range Development' the following was included: The engineer advised us that the Caroma trap inlet area was the best design of the two.

The outer front profile of the bowl will be between the Lara and the Caroma pan which will be in keeping with the required shape for the boxed rim.

Our design will have 3 bolt holes, one in the centre of each side and one at the rear. The Lara has four; two centre and two rear, and the Caroma two rear only.

The outer profile of the pan shroud will be between the Lara and the Caroma pan with a smaller side recess section than the Lara.

70 The three bolt hole configuration referred to above was not adopted by Technicon in the design of its pan. Instead provision was made for two bolt holes corresponding with the registered design. 71 The report concluded under 'General Notes': All products will be consistent in colour and shall be as close to the Caroma white as possible with the Monopy white being of the minimum acceptable level of variation from the Caroma white. The engineer has confirmed that we can achieve consistency in this area.

State of knowledge - awareness of similarity 72 In the report prepared by Plumbing Plus entitled 'Report on Exclusive Sanitaryware January 2003' reference is made to the similarities between the Caroma pan and the Technicon product intended to be manufactured by Oumer. One portion of the report referring to the prototype of the Technicon pan states: This prototype was considered too close to the Trident pan although it differs from the Trident in that it is a box-rim pan. It was suggested that the rear holes for the pan screws be shifted to the side, towards the rear.

73 The Court observes that the bolt holes remained at the rear of the Technicon pan in correspondence with the registered design. 74 The 'Sanitary Ware Review Report' prepared by Mr McCallum following a meeting held for the Plumbing Plus Sanitaryware Review on 12 and 13 May 2003 records the following: We reviewed the pan base width against the caroma counter sample our pan was about 5mm narrower in the width at the base. After a full discussion with all present at the review, it was decided that the sample was acceptable.

75 A drawing of the Technicon pan prepared by Technicon on 26 July 2003 was described as the 'finished product'. Such drawing appears to be identical to the Trident pan, notwithstanding the absence of the scalloping feature at the rear of the bowl rim. An attached document entitled 'Features and Benefits of Gallery Sanitary Ware' referred to other toilet suites and in relation to the Technicon pan stated as follows: The toilet pan is very similar to the trident sovereign pan with the added benefit of being a box rim pan which is much stronger than the Caroma sovereign and also the flushing will be much smother [sic] due to the box rim design.

76 The report continued: The pan base dimensions are similar to the Caroma Trident thus giving us more opportunity of sales in the renovation market.

State of knowledge -warnings from Mr Beutler 77 On 24 February 2004 Mr Beutler sent an email to Mr McCallum with copies to other directors and stated, inter alia: I am rather sensitive to all the references to the Caroma products (as you will see in my suggested changes below). I think this should be sold as a Technicon [emphasis in original] developed range, and it should stand on its own two feet as such. Technicon should not concede that certain products were modelled on Caroma products or were designed in a similar way to the Caroma equivalent. They were independently designed and developed in a Chinese factory after careful evaluation of what the Australian market required and in close consultation with Plumbing Plus members who provided valuable input based on their deep knowledge of that market!!

Direct comparisons or pointed references to similarities with the Caroma product - particularly in a written document such as this - are very dangerous, in my opinion.

78 Mr Beutler's concerns were reiterated in another email he forwarded to Mr McCallum, also on 24 February 2004, when he said: As I said in my previous email, my reservation about this is the direct comparison with Caroma product. If you want to use it, go ahead, but I think it might invite trouble if it is published.

I could be wrong, but I think it's best not to scratch the sleeping tiger!!

State of knowledge - Mr McCallum's evidence 79 Mr McCallum's knowledge of the significance of legal rights in designs was tested in cross examination. With regard to the proposed manufacture of the Technicon pan by Monopy he claimed that he was anxious to ensure that Technicon had exclusivity of the product from that factory, and stated that Technicon's main objective was to ensure that 'we would have had control over Monopy that they could not sell into our Australian market anything'. 80 In cross examination Mr McCallum acknowledged that in 1990 he had been aware that the designs of products could be protected by registration. Mr McCallum said that during the creation of the Technicon pan, which went into production in July 2004, he was aware that designs could be registered. 81 Mr McCallum acknowledged in cross examination that Technicon had consulted solicitors in relation to the registration of designs of various products marketed by Technicon. Mr McCallum said that he was aware of the need for Technicon to protect its designs by registration. Mr McCallum acknowledged that he was aware that on 3 January 2003 an application was lodged by Mr Rouwenhorst for the registration of one of Technicon's tap designs. Mr McCallum conceded that he was aware that Technicon had registered other designs for tap ware products since that time. 82 Despite such responses, Mr McCallum claimed in cross examination that at around that time, namely January 2003, he had not considered that the design of the Trident pan may have been protected by registration. The transcript records the following exchange: Now, at the time that Plumbing Plus were expressing the opinion that the prototype Bellini was too close to the Trident pan, you were very conscious, were you not, of the registration of designs in Australia for the protection of the shape of products?---To be honest, yes, I was not conscious of that. I never did think of it. … And this is your evidence to the Court that you didn't really turn your mind to registered designs at around that time [January 2003]?---I never, I never thought of it. You never thought of any registered design at that time. Is that your evidence?---My consideration was always that there were many products that were very similar to this product in the market place, yes. And nonetheless, you were deeply conscious, were you not, at that time that registered designs could be obtained for the shapes of different products, weren't you?---Deeply conscious means basically I was thinking about it and I never considered it at that time. 83 Mr McCallum stated that in the development of the Technicon pan, which he said was modelled on the Trident pan and the BNKS Lara pan, he did not seek legal advice to determine whether any other party's rights may have been infringed in the development of the Technicon pan. The following is recorded in Mr McCallum's cross examination: Because you have no idea what would be revealed from a search of the registered design?---We had no idea, I never even thought it would be possible that a pan which was considered generic would be registered.

And you considered the pan to be generic but you didn't ask any legal representatives?---No, we did not.

84 The transcript also records the following exchange in relation to design infringement: You expected that other companies should be careful about making their own designs of products to ensure that they were not infringing your Technicon registered designs?---I would expect so, yes.

Yes. You were prepared if somebody did infringe a Technicon registered design to enforce that design against anyone who had reproduced it?---This is the reason why we registered the design, yes.

You were very conscious, weren't you, that Technicon itself should be very careful not to infringe somebody else's registered designs?---At that time I think we were more conscious of registered designs, yes.

Yes. By that time you were referring to 2003?---Referring to 2004, 2003 and possibly 2005.

Yes. During all that period you knew that it was an important thing to be careful that your company did not reproduce somebody else's registered design; didn't you?---During that period it became more aware that - we became more aware of the need for registered design.

But not only the need for Technicon to have a registered design but also for Technicon not to infringe somebody else's registered design, you knew that; didn't you?---I think at that time we were only considering our protection.

I see. It never occurred to you that somebody else could have a similar protection; is that your evidence?---Yes, it did occur to us but it was not at the forefront in our thought when we made this registered design.

State of knowledge - warnings contained in Caroma brochures 85 A Caroma brochure entitled 'Caroma Toilet Suites and Basins' was tendered as evidence. Such brochure contained the following warning: Warning: Products in this leaflet are the subject of registered designs and patents.

Similar warnings have been published on almost all of Caroma's brochures advertising its sanitary ware. 86 Although Mr McCallum claimed that he had never seen the tendered Caroma brochure before, he acknowledged that it was the same style of brochure he had considered when undertaking research in 2001. Mr McCallum acknowledged that in the process of designing the Technicon pan he obtained brochures from Caroma and several other manufacturers. 87 The Court draws the inference that the Caroma brochures in Mr McCallum's possession contained warnings of the type referred to above. 88 Mr McCallum said he could not recall whether he saw such a warning on the Caroma brochures that were in his possession. Mr McCallum claimed that the Caroma brochures were disposed of when he was cleaning out his office 'probably about a year ago'.

State of knowledge - finding 89 The evidence referred to above leads to the inescapable inference that Technicon had reason to believe or strongly suspect that the Trident pan could have been registered. In reaching such conclusion the Court considers the undermentioned matters to be particularly significant. 90 Firstly, the Court accepts Technicon's claim that the Caroma brochures had been disposed of. However, the Court observes that Technicon obtained and relied upon the Caroma brochures in the development of its Technicon pan. The Court draws the inference that such brochures were read by Technicon and that the warnings contained therein would have come to its attention. The Court accordingly rejects Technicon's submission that it was not aware of the warnings and rejects Mr McCallum's claim that he had no recollection of having seen such warnings. 91 Warnings had been provided to Mr McCallum by Mr Beutler regarding the danger of written references to the similarity of the Technicon pan to Caroma products. Such concern was clearly raised because of the potential risk that some rights of Caroma could be infringed. The Plumbing Plus report entitled 'Report on Exclusive Sanitaryware January 2003' also contained implicit warnings of the danger in Technicon producing a product which was too similar to the Trident pan. Such communications would have alerted Mr McCallum to the possibility that Caroma's design in the Trident pan could have been protected by registration. 92 Mr McCallum was aware from 1990 that the designs of products could be protected by registration. He was aware of the need to protect Technicon's products by registration. Mr McCallum had also had dealings with lawyers relating to registered designs. 93 Mr Rouwenhurst was also well aware of the need to protect Technicon's designs. He had secured registration of a tap design in January 2003 for Technicon and in this process had engaged patent attorneys. Mr Rouwenhurst was not called to give evidence. 94 The Court cannot accept Technicon's submission that Technicon's experience in registering its own designs did not generate in its directors' minds the likelihood of the Trident pan designs also being registered. The Court finds implausible Mr McCallum's evidence that in January 2003 he was aware of Technicon registering the design of a tap but in the same month did not turn his mind to the possibility that the design of a toilet pan could have been protected by registration. The Court does not accept Mr McCallum's claim that he considered that toilet designs were 'generic' and therefore did not realise that such designs could be registered. Nor does the Court accept that Mr Rouwenhurst could not have provided some evidence of Technicon's state of knowledge of the possibility of registration of Caroma's design in the Trident pan. The Court infers that Mr Rouwenhurst would not have been able to assist Technicon's defence: see Jones v Dunkel and Another (1959) 101 CLR 298. 95 Although the evidence before the Court supports the inference of a deliberate intention on the part of Technicon to copy Caroma's design (for example, Mr McCallum was explicit in his intention to 'manufacture or plagiarise' the Caroma range), the Court observes that no such deliberate intention is required to satisfy the requisite mental element: see Dunlop Rubber at 279. Further, the satisfaction of the mental element does not require the alleged infringer to have an actual knowledge of the registration of the design in question: see Polyaire at [18]. A finding of fraud may be made if the Court is satisfied that Technicon had reason to believe, strongly suspected or wilfully shut its eyes to the possibility of the design of the Trident pan being registered: see Polyaire at [17]-[18]. 96 In the present circumstances the Court is satisfied that Technicon 'had reason to believe or strongly suspected' that the design of the Trident pan may have been registered: see Polyaire at [18].

Imitation 97 The Court observes that 'there will be no fraudulent imitation unless the accused article is in fact an imitation or a copy': see Polyaire at [33]. The Court also observes that a fraudulent imitation may be 'less apparent' than an obvious imitation: see Dunlop Rubber at 280. 98 The Technicon pan incorporates significant visual features of the registered design, namely the overall curvilinear design, the outline of the shroud and throat, and the same configuration for the bolt holes. The principal visual detail which distinguishes the Technicon pan from the registered design is the absence of the scalloping feature. However, the absence of the scalloping feature does not sufficiently distinguish the Technicon pan from the registered design. Nor does the adoption of a box rim sufficiently distinguish the Technicon pan from the registered design. 99 The Court is satisfied that the Technicon pan is an imitation or copy of the registered design for the purposes of a finding of fraudulent imitation under s 30 of the 1906 Act.

Conclusion - fraudulent imitation 100 It follows from the above findings that the Technicon pan is a fraudulent imitation of the registered design.

COPYRIGHT INFRINGEMENT 101 Caroma submits that copyright subsists in the Caroma drawing and that it is the owner of the copyright in such drawing. The Caroma drawing in respect of which copyright is claimed was allegedly drawn by Mr Farid Shahidi, a former employee of Caroma. Caroma submits that a comparison between the Caroma drawing and the Technicon drawing demonstrates that the latter is a material reproduction of the former. 102 Mr Shahidi was employed by Caroma as a production artist responsible for Caroma's desktop publishing system from June 1990 to June 2000. Mr Shahidi's drawings were used in Caroma's product brochures and Caroma's handbooks for plumbers, including a plumber's technical manual which was tendered as evidence ('the Plumber's Technical Manual'). Mr McCallum acknowledged that he had a copy of the Plumber's Technical Manual. 103 The representation of the Trident suite in respect of which copyright is claimed is not the original work, but is a published version of Mr Shahidi's drawing. The original drawing no longer exists, but Caroma claims that such drawing has been reproduced in Caroma brochures, the Plumber's Technical Manual and on Caroma's website.

Test for copyright infringement 104 Section 32(2) of the Copyright Act sets out the types of published work and the particular circumstances in which copyright subsists and relevantly provides: Subject to this Act, where an original literary, dramatic, musical or artistic work has been published:

(b) if copyright in the work subsisted immediately before its first publication--copyright continues to subsist in the work;

(c) the first publication of the work took place in Australia;

(d) the author of the work was a qualified person at the time when the work was first published;

A qualified person means an Australian citizen or a person who is resident in Australia: see s 32(4) of the Copyright Act. 105 Section 10(1) of the Copyright Act relevantly defines an 'artistic work' as: (a) a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;

106 Section 31(1)(b) of the Copyright Act identifies the nature of the exclusive rights provided to the owner of copyright in an artistic work. Such rights include the right to reproduce the work in a material form, to publish the work and to communicate the work to the public. 107 Section 36(1) of the Copyright Act provides that copyright in an artistic work is infringed where a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia of, any act comprised in the copyright. Substantial reproduction of the artistic work is sufficient for a finding of infringement: see s 14 of the Copyright Act.

Copyright infringement - the evidence 108 Technicon developed box drawings, instruction sheets and brochures to accompany the Technicon pan. Mr McCallum provided evidence of the development of such documentation. 109 Mr McCallum said that in about November 2003 he instructed Ms Jenny Chen of Oumer to create box drawings of the Technicon pan. Box drawings appear on the outside of the boxes in which the pans are distributed. The purpose of box drawings is to provide simple line drawings to identify the pan inside. 110 Caroma does not allege that the box drawings of the Technicon pan infringe copyright in the Caroma drawing. The Technicon pan box drawings do not depict the scalloping feature which appears in the Caroma drawing and the registered design. 111 Mr McCallum said that in about March 2004 he instructed Tom Qu and Tony Bayot, employees of Oumer, to work with Ms Chen to adapt the completed box drawings of the Technicon pan into technical specifications. Technical specifications are more detailed than the box drawings and are used for the purposes of instruction sheets and brochures. Instruction sheets are glossy double-sided A4 sheets that have text on one side of the sheet and line drawings on the other. 112 Mr McCallum acknowledged in cross examination that he showed 'a brochure' to Mr Qu, Mr Bayot and Ms Chen to guide them in the preparation of the layout of the technical specifications. Mr McCallum claimed that he could not recollect whether the brochure he provided was a Caroma brochure. 113 On 7 April 2004 Mr McCallum sent a message to 'Tony Bayot & Tom, copy Mr Guo'. The message contains, inter alia, the following: Tom to prepair [sic] all the changes I requested to the line drawings with Jenny. He shall then ask tony to assist him to add the required dimensions. They shall measure the product and use the Caroma brochure as a guide.

114 The Technicon pan technical specifications depict the scalloping feature which, as discussed above, appears on the registered design and the Caroma drawing but not on the Technicon pan. The technical specifications for the Technicon pan were incorporated into the Technicon brochure entitled 'Gallery Bathroom and Sanitaryware', the Technicon pan instruction sheet and the Technicon website. Such publications of the Technicon pan technical specifications comprise 'the Technicon drawing' which Caroma alleges infringes copyright in the Caroma drawing. 115 Mr McCallum said that he reviewed the Technicon pan technical specifications, but that at no time after inspecting the technical specifications drawings did he think that Ms Chen had copied them from Caroma's line drawings of the Trident pan. He said he assumed that Ms Chen had used the box drawings of the Technicon pan, which did not depict the scalloping feature, as the basis for the technical specifications. Relying upon this assumption he claimed that he did not compare the technical specifications with the box drawings of the Technicon pan. 116 Mr McCallum claimed that after he received the letter of demand from the solicitors of Caroma dated 3 July 2006 ('the letter of demand') he spoke with Ms Chen regarding the technical specifications. Mr McCallum claimed that Ms Chen said words to the following effect: In order to put the links and seat covers into the drawings I scanned copies of drawings of the Caroma Trident product. The drawings I scanned were in one of the brochures left at the Oumer factory.

117 Mr Granger deposed to having compared the Caroma drawing with the Technicon drawing and observed that the illustrated profile of the void at the rear of the pan is almost identical in both drawings; that the Technicon drawing almost identically reproduces the scalloping feature appearing on the Caroma drawing, even though the Technicon pan itself does not include such scalloping feature; that the illustrated profile of the inlet pipe or duct at the rear of the pan is almost identical in both drawings; and that the Technicon drawing almost identically reproduces the stepped profile of the inlet pipe or duct appearing on the Caroma drawing even though the inlet pipe or duct of the Technicon pan has a smooth transition into the rear of the bowl. 118 Mr Granger testified that the Caroma drawing is the source of the Technicon drawing. Mr Granger further said that the Technicon drawing depicts the Trident pan, not the Technicon pan.

Technicon's submissions 119 Technicon submits that the 'source drawing exists purely as assertion and speculation'; that since the original drawing has not been tendered in evidence Caroma cannot establish that the drawing in the brochure upon which it relies is a reproduction of the original work; and that there is no evidence of authorship of the drawing contained in the Plumber's Technical Manual. As a consequence, Technicon submits that copyright subsistence and ownership is not established. 120 Technicon further submits that if copyright subsists in the Caroma drawing and Caroma owns such copyright, infringement has not been established as the Technicon drawing is not a qualitatively substantial reproduction of the Caroma drawing. 121 In the alternative Technicon claims that if infringement occurred it resulted from innocent mistake: see s 115(3) of the Copyright Act. Technicon submits that it was not aware and had no reason to believe that the drawings it received and subsequently reproduced were not the original work of the maker, Ms Chen.

Findings - copyright 122 The Court must determine whether the Caroma drawing is an original work; whether copyright subsists in the Caroma drawing; whether Caroma is the owner of any such copyright; and whether any such copyright has been infringed by Technicon in its Technicon drawing. If the Court finds that infringement occurred, it will also consider whether additional damages should be awarded. 123 Mr Shahidi testified that in preparing the drawing of the Trident suite he made what he described as an 'ugly drawing' into a 'beautiful drawing' for the purpose of marketing. Mr Shahidi identified the Caroma drawing as his style of drawing. 124 Mr Shahidi said that he created his drawing from earlier drawings and the drawings were prepared during his employment with Caroma. His drawing constitutes 'the expression of original or inventive thought': see University of London Press Limited v University Tutorial Press Limited [1916] 2 Ch 601 per Peterson J at 608. Although the original drawing is not in evidence, the Court accepts that such drawing is reproduced in the Plumber's Technical Manual, in brochures published by Caroma relating to the Trident suite and on Caroma's website. 125 The Court finds that copyright subsists in the Caroma drawing and that Caroma owns such copyright. At the time Mr Shahidi created the Caroma drawing using Caroma's computer drawing software he was a qualified person for the purposes of s 32(4) of the Copyright Act, being an Australian citizen, and pursuant to s 32(2) of the Copyright Act Caroma owns the copyright in such drawing. 126 In considering whether Technicon has infringed Caroma's copyright in the Caroma drawing, namely a copy of the original drawing created by Mr Shahidi, the Court observes that indirect copying is sufficient to establish copyright infringement, provided that the alleged infringing work is in fact a reproduction of the copyrighted work or a substantial part thereof: see Frank M Winstone (Merchants) Ltd v Plix Products Ltd [1985] 1 NZLR 377 at 380 where Cooke J said '[t]here can be no doubt that in principle a reproduction may be the result of indirect copying…The question must always be whether the work alleged to be an infringement can fairly be said to be a reproduction of the copyright work or of a substantial part of that work'. Such decision was applied by this Court in LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 35 IPR 215. 127 The Court accepts the evidence of Mr Granger that the Technicon pan does not possess either the rear void or inlet pipe detail depicted in the Technicon drawing. The Court also accepts the evidence of Mr Granger that the Technicon drawing depicts the scalloping feature which appears in the Caroma drawing and the registered design but not in the Technicon pan. The Court finds that the Technicon drawing depicts the Trident pan rather than the Technicon pan. 128 The Court finds that the Technicon drawing substantially reproduces the Caroma drawing: see s 14 of the Copyright Act. 129 It follows from the above that Technicon has infringed Caroma's copyright in the Caroma drawing.

Was the infringement innocent? 130 In considering Technicon's defence of innocent infringement, the Court has regard to both the oral testimony of Mr McCallum and the discovered records of Technicon. Such records reveal the above excerpted email sent on 7 April 2004 by Mr McCallum to 'Tony Bayot & Tom, copy Mr Guo' instructing such recipients to 'use the Caroma brochure as a guide'. 131 Mr McCallum made no mention of such communication in his affidavit evidence. The communication demonstrates clearly that the Caroma drawing was to be used in the preparation of the Technicon drawing. The Court rejects Mr McCallum's claim that his instruction to 'use the Caroma brochure as a guide' only related to the layout of the Caroma brochure. The Court accordingly rejects Technicon's defence of innocent infringement.

Additional damages 132 Caroma additionally submits that the conduct of Technicon in copying its drawing was flagrant as provided by s 115(4) of the Copyright Act. 133 Section 115(4) of the Copyright Act provides: Where, in an action under this section:

(a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having regard to:

(ia) the need to deter similar infringements of copyright; and

(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and

(ii)whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and

(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances. 134 The Court observes that no particular factor within s 115(4)(b) of the Copyright Act should be prioritised in the Court's consideration of whether additional damages should be awarded: see Raben Footwear Pty Ltd v Polygram Records Inc and Another (1997) 75 FCR 88 at 93, 103. The discretion conferred on the Court in s 115(4) is broad (see Raben at 103; Microsoft Corporation and Others v Goodview Electronics Pty Ltd and Others (2000) 49 IPR 578 at [64]), and if the Court is satisfied that 'any one or more of the circumstances' listed in s 115(4)(b) are present, the Court has a discretion to award additional damages as it considers appropriate: see Raben at 103. 135 'Flagrancy' in the context of copyright infringement was considered in Polygram Pty Ltd and Others v Golden Editions Pty Ltd and Another (1997) 148 ALR 4 at 14 where Lockhart J said: The term "flagrancy" has been variously defined in the reported cases. It was described in Prior v Lansdowne Press Pty Ltd (1975) 12 ALR 685 at 690; 29 FLR 59 at 65 as a "calculated disregard of the plaintiff's rights, or cynical pursuit of benefit". In Ravenscroft v Herbert & New English Library Ltd [1980] RPC 193 it was described at 208 as "the existence of scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringements"; not mere mistake or carelessness. If the infringer mistakenly believed that he or she owned the relevant copyright (Prior v Lansdowne Press) or acted in the bona fide belief that no copyright subsisted in the plaintiff's work (International Credit Control Ltd v Axelsen [1974] 1 NZLR 695) the conduct is not flagrant. See also Tyco Industries Inc v Interlogo [sic] AG (1987) 9 IPR 133 and on appeal to the Privy Council Interlego AG v Tyco Industries Inc [1988] 3 WLR 678; (1989) 12 IPR 97.

136 In Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) [2008] FCA 746 Besanko J said at [19]: The meaning of "the flagrancy of the infringement" has been described in various ways. In Ravenscroft v Herbert and New English Library Limited [1980] RPC 193 Brightman J referred to it as "scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringement"; in Prior v Lansdowne Press Pty Ltd [1977] VR 65 at 70, Gowans J (at 70) referred to it as a "calculated disregard of the plaintiff's rights, or cynical pursuit of benefit"; and in Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 at 103 flagrancy was said to connote conduct which could probably be described as "glaring, notorious, scandalous" or "blatant". In Polygram at 461-462 Lockhart J said that flagrancy did not include mere mistakes or carelessness and that if the infringer mistakenly believed that he or she owned the relevant copyright, or acted in the bona fide belief that no copyright subsisted in the plaintiff's work then the conduct was not flagrant.

137 The Court must consider all of the circumstances surrounding the infringement in its consideration of whether the infringement was flagrant or resulted from mistake or carelessness: see Wellington Newspapers Ltd v Dealers Guide Ltd [1984] 2 NZLR 66 per McMullin J at 69. Those circumstances include the state of mind of Technicon relating to the design infringement which has been referred to in the Court's finding on fraudulent imitation. 138 Technicon submits that additional damages should not be awarded because there was no purpose or advantage in Technicon publishing a drawing which did not reflect its product. 139 Although s 115(4)(b)(iii) of the Copyright Act provides that any benefit shown to have accrued to the infringer is one of the factors the Court is to take into account in considering whether to award additional damages, the Court observes that the absence of that factor does not prohibit an award under that subsection. As discussed above, the Court's discretion to award additional damages under s 115(4) is not dependent upon all the factors set out in s 115(4)(b) being satisfied; rather, such discretion may be exercised if only one of the factors set out in s 115(4)(b) is present: see Raben at 103. Accordingly, the absence of one of those factors, in this instance, the lack of benefit accruing to Technicon as a result of its infringement of Caroma's copyright, does not preclude the Court from exercising its discretion under s 115(4). Technicon's submission is rejected. 140 Technicon also submits that any copying of the Caroma drawing resulted from a 'lack of attention'. Technicon submits that such carelessness is not sufficient to render Technicon's conduct flagrant. 141 The Court is satisfied that the infringement of copyright has resulted from more than mere carelessness by Mr McCallum, an astute businessman. Mr McCallum's email dated 7 April 2004 (see above) reveals Mr McCallum's intention to utilise the Caroma drawing in the creation of the Technicon drawing. 142 However, the evidence establishes that Mr McCallum's instruction was to use the Caroma drawing 'as a guide'. Although the Court has found that such instruction did not merely relate to the layout of that brochure, the Court is not satisfied that such instruction evinces a blatant intention to reproduce the Caroma drawing. In these circumstances the Court does not consider that Technicon's infringement was flagrant. The Court finds that additional damages are not payable under s 115(4) of the Copyright Act.

CROSS CLAIM - UNJUSTIFIED THREATS 143 Technicon has brought a cross claim pursuant to s 77 of the 2003 Act and s 202 of the Copyright Act. Technicon claims that the letter of demand contained unjustified threats of proceedings brought for alleged infringement of the registered design and the copyright. 144 Section 77 of the 2003 Act provides: (1) If a person is threatened by another person (the respondent) with infringement proceedings, or other similar proceedings, in respect of a design, an aggrieved person (the applicant) may apply to a prescribed court, or to another court that has jurisdiction to hear and determine the application, for:

(a) a declaration that the threats are unjustified; and (b) an injunction against the continuation of the threats; and (c) the recovery of damages sustained by the applicant as a result of the threats.

(2) A threat mentioned in subsection (1) may be by means of circulars, advertisements or otherwise.

(3) If a certificate of examination has not been issued in respect of a design, a threat to bring infringement proceedings, or other similar proceedings, in respect of the design is an unjustified threat for the purposes of this section.

145 Section 202 of the Copyright Act relevantly provides: (1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first‑mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first‑mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.

146 The letter of demand contained allegations that Technicon had infringed both the registered design and Caroma's copyright and sought interim undertakings from Technicon. 147 Technicon submits that the letter of demand went beyond mere notification of Caroma's copyright and its registered design right. Technicon claims that the letter of demand contained threats of the kind referred to in s 77 of the 2003 Act and s 202 of the Copyright Act and that such threats will be unjustified if Caroma does not succeed in establishing that Technicon has infringed Caroma's registered design and infringed Caroma's copyright in the Caroma drawing. 148 The Court has found that Technicon has infringed both Caroma's registered design and Caroma's copyright in the Caroma drawing. Accordingly, since such findings constitute an entire defence to the cross claim, it is unnecessary for the Court to consider the cross claim further.

CONCLUSION 149 Technicon has infringed Caroma's registered design No. 116692 pertaining to the Trident pan. Technicon has also infringed Caroma's copyright in its drawing relating to the Trident suite. I certify that the preceding one hundred and forty-nine (149) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

Counsel for the Applicant: SCG Burley SC, CN Bova

Solicitor for the Applicant: Spruson & Ferguson Lawyers

Date of Hearing: 22-26 October 2007 and 7, 8 & 14 February 2008