Global Brand Marketing Inc v Cube Footwear Pty Ltd

Federal Court of Australia|2005-04-22|Before: Goldberg J

introduction 1 The first respondent, Cube Footwear Pty Ltd, applied by Notice of Motion for orders that the proceeding be dismissed or alternatively that the Third Amended Statement of Claim filed 13 October 2004 ("the statement of claim") be struck out. The first respondent relied upon O 11 r 16 of the Federal Court Rules and has submitted that the statement of claim discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceeding and is otherwise an abuse of process of the Court. That submission, if successful, would lead to the statement of claim being struck out. 2 This is the fourth statement of claim that has been filed. There was originally a claim for infringement of a registered design, but that was abandoned, as the registration of the design was invalid.

background 3 The proceeding concerns a claim for infringement of copyright in respect of two styles of footwear, the "Wish" style and the "Kortnay" style. The applicant, Global Brand Marketing Inc, claims declarations of infringement of copyright based on ss 37 and 38 of the Copyright Act 1968 (Cth) ("the Act"), damages (including damages pursuant to ss 115(4) and 116 of the Act) or an account of profits and associated and ancillary relief. 4 The first respondent is an importer, and the other respondents are sellers, of shoes. The applicant claims that the importation and sale of certain shoes by the first respondent infringes its copyright in the patterns for the shoes by reason of ss 37 and 38 of the Act. Section 37 of the Act makes importation of certain articles for the purpose of sale or hire an infringing act where the importer knows, or ought reasonably to have known, that the making of the article in Australia would have constituted an infringing act. Section 37 provides: "Infringement by importation for sale or hire (1) Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, without the licence of the owner of the copyright, imports an article into Australia for the purpose of: (a) selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article; (b) distributing the article: (i) for the purpose of trade; or (ii) for any other purpose to an extent that will affect prejudicially the owner of the copyright; or (c) by way of trade exhibiting the article in public; if the importer knew, or ought reasonably to have known, that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of the copyright.

(2) In relation to an accessory to an article that is or includes a copy of a work, being a copy that was made without the licence of the owner of the copyright in the work in the country in which the copy was made, subsection (1) has effect as if the words 'the importer knew, or ought reasonably to have known, that' were omitted." 5 Section 38 provides: "Infringement by sale and other dealings (1) Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, in Australia, and without the licence of the owner of the copyright: (a) sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or (b) by way of trade exhibits an article in public; if the person knew, or ought reasonably to have known, that the making of the article constituted an infringement of the copyright or, in the case of an imported article, would, if the article had been made in Australia by the importer, have constituted such an infringement. (2) For the purposes of the last preceding subsection, the distribution of any articles: (a) for the purpose of trade; or (b) for any other purpose to an extent that affects prejudicially the owner of the copyright concerned; shall be taken to be the sale of those articles." 6 The statement of claim pleads infringement of the applicant's copyright in sample patterns and graded patterns made during the process of manufacture of the Wish style footwear and the Kortnay style footwear.

THE STATEMENT OF CLAIM 7 The original design of the Wish Style Footwear was created in September 2000 by employees of the applicant, Ms Adams and Ms Burg, and comprised a design drawing ("Wish design drawing"), which was then given to a pattern maker and manufacturer of footwear, Guangzhou CTN Footwear Co Ltd in China ("CTN") to make a sample of the footwear. An employee of CTN created a pattern, based on the Wish design drawingand instructions from Ms Adams and Ms Burg ("Wish sample pattern"), and a drawing for the sole of the shoe ("Wish sole drawing"). In September/October 2000 CTN created a sample shoe in accordance with the Wish sample pattern ("Wish sample shoe"). 8 Once Ms Adams and Ms Burg approved the design of the sample shoe in September/October 2000, an employee of the applicant made specification sheets for the Wish style footwear ("Wish specification sheets") and in November/December 2000 an employee of CTN created graded patterns based on the Wish sample pattern ("Wish graded patterns"). Graded patterns are reproductions of the sample pattern in a range of different sizes. 9 The Wish graded patterns and the Wish specification sheets were then used to manufacture the Wish style footwear, which the applicant made available for retail sale through its exclusive Australian distributor in 2001. 10 According to the applicant, the Wish design drawing, the Wish sample shoe and the Wish graded patterns have been "inadvertently misplaced, lost or destroyed by the applicant". 11 The applicant alleged that the Wish sample pattern and the Wish graded patterns are original artistic works in which copyright subsists. (There are issues as to the assignment of the copyright to which I shall refer later in these reasons). The first respondent, it is alleged, infringed that copyright by importing or selling footwear ("the infringing footwear"), where the first respondent knew, or ought reasonably to have known, that the making of that footwear would have constituted an infringement of the applicant's copyright in the Wish sample pattern and the wish graded patterns. The act of infringement is alleged in two ways. First, the applicant alleged that in the making of the infringing footwear a two‑dimensional pattern was created, which would itself have infringed the copyright in the Wish sample pattern and Wish graded patterns. Secondly, the infringing footwear constituted a reproduction in a material form of the Wish sample pattern and Wish graded patterns. The infringing footwear was made in men's and women's styles. 12 The applicant alleged that the first respondent requested, directed or ordered the making of the infringing footwear, providing specific details about appearance. The manufacturer of the shoes is unknown. The applicant alleged that the first respondent knew from its general industry knowledge that: (a) the Wish style footwear was available for sale in Australia; (b) in order to manufacture footwear, patterns must be created and pieces of material comprising the components of the shoe must be cut out; and (c) to manufacture Wish style footwear, patterns for this footwear would be, and were in fact, made and corresponding pieces of material cut for manufacture. 13 By reason of the first respondent's importation and knowledge, the applicant claimed that the first respondent infringed the applicant's copyright within ss 37 and 38 of the Act. 14 The applicant also claimed infringement of copyright in respect of its Kortnay style footwear, which was designed by Ms Burg and Ms Adams in August 2001 and again given by them to CTN to prepare a sample of the footwear. The allegations made against the first respondent in respect of the Kortnay style footwear are substantially the same, mutatis mutandis, as those alleged in respect of the Wish style footwear. 15 The claims of copyright infringement in respect of both styles of footwear follow a similar conceptual format which can be summarised as follows: · The applicant is the owner of the copyright in a design drawing from which a sample pattern and graded patterns were made. · The sample pattern and graded patterns are original artistic works in which copyright subsists in Australia. The applicant manufactured sample shoes in accordance with those patterns. · The first respondent imported into Australia footwear the making of which would have constituted an infringement of the applicant's copyright in the sample or graded pattern. · The particulars of that allegation of infringement include that the infringing footwear was manufactured by the use of a pattern or patterns which were made during the course of manufacture, the making of which patterns constituted a substantial reproduction of the copyright materials. · The making of the infringing footwear was also said to constitute a reproduction of the applicant's patterns in a material form. 16 On a pleading motion such as this the Court must accept the existence of, and assume that the allegations of fact which are pleaded and particularised in the statement of claim will be made good at trial: see Empire Shipping Company Inc v Owners of the Ship "Shin Kobe Maru" (1991) 32 FCR 78 at 80, per Gummow J. I must therefore accept for present purposes that: · the sample pattern and graded patterns were made in the course of the manufacture of the applicant's footwear; · the patterns are original artistic works; · the copyright in those patterns is owned by the applicant; and · the respondent used a pattern or patterns in the course of the manufacture of the infringing footwear, the making of which pattern constituted a substantial reproduction of the sample pattern and graded patterns. 17 The first respondent submitted that there was no suggestion in the statement of claim that the respondents have themselves created two dimensional designs or patterns which might themselves infringe. That submission is strictly correct, so far as the respondents are concerned. But it misses an important point. One of the particulars of the infringing conduct is that the relevant article, the footwear, was manufactured by the use of patterns the making of which substantially reproduced the patterns of the applicant. In substance, it is alleged that the process of manufacture of the infringing footwear included the making of an infringing pattern. 18 Although it is not alleged that any of the respondents themselves manufactured the shoes, that does not matter because for the purposes of ss 37 and 38 it is necessary to undertake a hypothetical exercise and assume what would have happened if the footwear had been made in Australia by the respondents.

Amendments to the Copyright Act in June 2004 19 The significance of the amendments to the Act in June 2004 is the insertion of s 77A, which limits the extent to which the applicant can now claim relief in respect of the matters it alleges. Section 77A provides: "(1) It is not an infringement of copyright in an artistic work to reproduce the artistic work, or communicate that reproduction, if: (a) the reproduction is derived from a three-dimensional product that embodies a corresponding design in relation to the artistic work; and (b) the reproduction is in the course of, or incidental to: (i) making a product (the non‑infringing product), if the making of the product did not, or would not, infringe the copyright in the artistic work because of the operation of this Division; or (ii) selling or letting for hire the non-infringing product, or offering or exposing the non-infringing product for sale or hire. (2) It is not an infringement of copyright in an artistic work to make a cast or mould embodying a corresponding design in relation to the artistic work, if: (a) the cast or mould is for the purpose of making products; and (b) the making of the products would not infringe copyright because of the operation of this Division." 20 It is no longer an infringement to take a three‑dimensional product that embodies a corresponding design and make plans from that object which are then used to copy the article. 21 It was common ground that the copyright infringement in issue ceased to continue as a result of the amendments to the Act in June 2004 and that this would have reversed the decision in Muscat v Le (2004) 204 ALR 335. The defence to plan‑to‑plan infringement, inserted by operation of s 77A, means that the applicant's claim is for damages until 16 June 2004 (the day before the amendments came into force) and the applicant is not entitled to any injunctions on the copyright claim.

22 Before the statement of claim can be struck out on the basis that it does not disclose a reasonable cause of action, the Court must be satisfied that the causes of action are unarguable, or are so untenable that they cannot possible succeed or are manifestly groundless in the sense explained by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. Recently, in Spotwire Pty Limited v Visa International Services Inc (2003) ATPR 41‑949, Bennett J summarised the manner in which the test in General Steel has been applied (at 47,410, par [10]):

"Such an order would only be made where it is clear that there is no real question to be tried (SmithKlein Beecham (Australia) Pty Ltd v Chipman[2002] FCA 674; Douglas v Tickner (1994) 49 FCR 507) or that it is hopeless and bound to fail (Orchard v Comrie(1998) 80 IR 76) or clearly untenable (Faessler v Neale (1994) 29 IPR 1) or hopeless to the extent that it should not be permitted to go to trial (Bray v F Hoffman‑La Roche (2003) ATPR 41‑946; [2003] FCAFC 153 per Carr J). It must be plain and obvious that the impugned portions of a statement of claim are unarguable (Murex Diagnostics Australia Pty Ltd v Chiron Corp (1995) 55 FCR 194) or it must be very clear that there is no issue deserving of a hearing (Anderson v Commonwealth Bank of Australia [1995] FCA 787). However, proceedings will not be dismissed summarily merely on the ground that it appears, at the hearing of the motion, that the claim may fail (Australia Building Industries Pty Ltd v Stramit Corp Ltd [1997] FCA 1318)." 23 The statement of claim may also be struck out on the basis that it has a tendency to cause prejudice, embarrassment or delay in the proceeding and is otherwise an abuse of process of the Court. 24 The bases of the first respondent's application can be summarised as follows: · None of the conduct alleged amounts to an infringement of copyright as the making of the footwear did not involve any reproduction of the applicant's patterns. The "making" of the footwear did not include the process of design and the making of a pattern. Thus, there would not have been any reproduction of any pattern in Australia during any manufacture in Australia. · The first respondent had an absolute defence in reliance upon ss 75, 77 and 77A of the Act. · The applicant did not have sufficient title at the time of the issue of the proceeding to maintain an action for breach of copyright. · The applicant has lost or mislaid essential documents for proving its case, namely the design drawings, sample shoes and the graded patterns in respect of each of the styles of footwear.

Copyright infringement 25 I do not accept the submission that it is not arguable that the conduct alleged amounts to an infringement of copyright within ss 37 and 38 of the Act. A specific allegation made is, as I have noted earlier, that the infringing footwear was manufactured by the use of a pattern or patterns the making of which constituted a substantial reproduction of the applicant's pattern in which copyright subsists. 26 It therefore appears to be alleged that if the article had been made in Australia, which making includes the making of patterns and therefore the reproduction of the patterns in which copyright is claimed to exist, the making of the article would have constituted an infringement because of the reproduction of the patterns and their use in the course of manufacture. 27 In such circumstances a cause of action is disclosed. Whether the cause of action can be established will depend, in particular, upon evidentiary considerations.

"Making" the article 28 The first respondent's primary submission was that the statement of claim did not disclose a cause of action, as the only allegation made was one of importing, and the first respondent would not have infringed if it had made the shoes in Australia. It would not have "copied the pattern" in the process of the making of the footwear. 29 The first respondent submitted that the expression "the making of the article" in s 37 meant "manufacture, fabricate, make", whereas the applicant contended that it encapsulated a longer process. The difference between the parties was that the first respondent contended that the expression only covered the actual process of manufacturing an article to the point of its embodiment, in this case the making of the shoes. The applicant characterised the "making of the article" in the present case as being a process that commenced with the making of a shoe pattern. The process of manufacture begins once the design drawing is given to a manufacturer, who necessarily makes a pattern to realise the design work. Counsel for the applicant explained the beginning of the process of the making of a shoe in these terms: "Your Honour, there is a design department and the design department says to the manufacturing department, 'Make up shoes to this design'. What's the first thing that the manufacturing department is going to do? It's going to get a drawing of the design, done by the designers, a 3‑D type drawing. The first thing is the pattern makers will make a pattern to realise the design work. They're quite discrete roles. In other words, pattern makers are not designers. They're realisers of a design concept." 30 The first respondent argued by way of analogy with the "Made in Australia" provisions of the Trade Practices Act 1974 (Cth) (ss 65AA to 65AN), which it submitted use "Make" as meaning to manufacture or produce. However I note that "make" is not specifically defined in those provisions of the Act. The first respondent also submitted that "make" logically means to produce or manufacture, with or without prior design, whereas design may or may not result in a three‑dimensional object. 31 This issue is resolved, for present purposes, by the applicant's allegation, to which I have earlier referred, that the infringing footwear was manufactured by the "use" of patterns "the making of which constituted the substantial reproduction of [the applicant's patterns]". In other words, the allegation is that as part of the process of manufacture patterns were made which substantially reproduced the applicant's patterns. For present purposes, I must accept the existence of that fact.

The defences under ss 75 and 77 of the Act 32 The first respondent relied upon the provisions of ss 75 and 77 of the Act, as well as s 77A to which I have referred earlier, as an absolute defence to the claim of infringement of copyright made in the statement of claim. However, the application before me is an application either to dismiss the proceeding or strike out the current statement of claim on the basis that the statement of claim discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceeding and is otherwise an abuse of the process of the Court. The fact that a respondent may have a defence to a claim made in the statement of claim is ordinarily, of itself, no basis for striking out the statement of claim or dismissing the whole proceeding. The availability of a defence may provide a basis for obtaining summary judgment in favour of a respondent pursuant to O 20 r 2 of the Federal Court Rules. 33 Thus, the availability of defences under ss 75, 77 or 77A of the Act are no basis upon which an application can be made for dismissing an action or striking out a statement of claim on the basis that the statement of claim is in some way defective in accordance with O 11 r 16 of the Federal Court Rules.

Section 75 34 Section 75 provides a defence to infringement where a design has been registered (pre‑June 2004 amendments): "Subject to section 76, where copyright subsists in an artistic work (whether made before the commencement of this section or otherwise) and a corresponding design is or has been registered under the Designs Act 1906 on or after that commencement, it is not an infringement of that copyright to reproduce the work by applying that, or any other, corresponding design to an article." 35 It is not part of the pleading in the statement of claim that in relation to an artistic work a corresponding design is or has been registered under the Designs Act 1906 (Cth). 36 The first respondent submitted that the manufacture of infringing footwear in Australia would not have constituted infringement, because of the defences available under ss 75 and 77 of the Act to a claim of infringement by means of the making in Australia of a three dimensional article which embodies a two dimensional copyright work. 37 But the pleading, on a fair reading, relies not just on what would have occurred if the footwear had been made in Australia, it also alleges that in the process of the making of the footwear a pattern was made. Put another way, the allegation is not only what would have occurred if the footwear was made in Australia but also that the pattern would have been reproduced, which was itself a copy of the artistic work. 38 The first respondent contended that as the footwear, being the corresponding design to any pattern to make the footwear, had been registered under the Designs Act 1906 (Cth), it was not an infringement of copyright in the patterns to reproduce those patterns by applying the patterns to an article. The applicant said that s 75 did not apply as there was no relevant registered design. 39 Section 75 of the Act does not appear to be a defence to the claim as pleaded or, alternatively, for present purposes, it is arguable that s 75 is not a defence. First, there is no registered design. Secondly, s 75 provides a defence to infringement where the artistic work, in this case the patterns, is applied to an article. However where the present pleading alleges a substantial reproduction of the patterns by the making of patterns, not the application of patterns to an article, such an allegation is not answered by s 75.

Section 77 40 Alternatively, where the design is not registered, the first respondent submitted that it had a defence under s 77 of the Act, which provided (pre‑June 2004 amendments): "Application of artistic works as industrial designs without registration of the designs (1) This section applies where: (a) copyright subsists in an artistic work (other than a building or a model of a building, or a work of artistic craftsmanship) whether made before the commencement of this section or otherwise; (b) a corresponding design is applied industrially, whether in Australia or elsewhere, by or with the licence of the owner of the copyright in the work in the place where the industrial application happens; and (c) at any time on or after the commencement of this section, articles to which the corresponding design has been so applied (in this section called articles made to the corresponding design) are sold, let for hire or offered or exposed for sale or hire, whether in Australia or elsewhere; and (d) at any time, the corresponding design is not registrable under the Designs Act 1906or has not been registered under that Act.

(2) It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which articles made to the corresponding design are first so sold, let for hire or offered or exposed for sale or hire, by applying that, or any other, corresponding design to an article. (3) This section does not apply in relation to any articles in respect of which, at the time when they were sold, let for hire or offered or exposed for sale or hire, the corresponding design concerned was excluded from registration by regulations made under the Designs Act 1906 …" 41 The definition of "corresponding design" is contained within s 74 of the Act: "corresponding design, in relation to an artistic work, means a design that, when applied to an article, results in a reproduction of that work, but does not include a design consisting solely of features of two‑dimensional pattern or ornament applicable to a surface of an article." 42 The first respondent submitted that the s 77(2) defence only applies where a respondent reproduces an applicant's artistic work by applying that artistic work or any other corresponding design to an article, being an article of manufacture. In Muscat v Le (supra) the respondent was making a dressmaking pattern, which is why the defence did not operate. In the present case, the article is a shoe, which is an article of manufacture, and the defence applies. Muscat v Le is therefore irrelevant and inapplicable to the present case. The proper construction of s 77(2), according to the first respondent, is that it is not an infringement of the pattern to reproduce that pattern by applying that or any other pattern to a shoe. 43 The applicant conceded that the finding in Muscat v Le would not be open to the Court following the amendments to the Act inserting s 77A which came into force on 17 June 2004. However, if the sample patterns and graded patterns were reproduced in Australia before 17 June 2004 by the making of footwear, then infringement would be deemed to have occurred, subject to the knowledge of the importer being satisfied. 44 In Muscat v Le Finkelstein J said (at 350, [57]): "The s 77(2) defence only applies when a defendant reproduces the plaintiff's work 'by applying that, or any other, corresponding design to an article'. In this context 'article' means an article of manufacture". 45 In this case the applicant's work is the patterns and a corresponding design would be the design drawing for the footwear. The allegation is that the copyright was infringed by means of the reproduction of the pattern during the manufacture of the infringing footwear. Finkelstein J found, at 352 (par [63]) that "a dressmaking pattern is not an article of manufacture". In s 77(2) terms, the infringement in the present case is therefore by means of reproduction and not by application to an "article of manufacture", such as a shoe. The present case is one of plan to plan copying, to which s 77(2) does not apply. Finkelstein J stated (at 350, par [57]): "It follows that s 77(2) has no application to what has come to be known as 'plan to plan' copying, that is where an artistic work (such as a design drawing) is reproduced by a drawing or plan in the course of the industrial application of the design: Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 24 IPR 461 at 474; Shacklady v Atkins (1994) 30 IPR 387 at 393. See also Compagnie Industrielle de Precontrainte et D'Equipment des Constructions SA v First Melbourne Securities Pty Ltd (1999) 44 IPR 512 at 530-1 per Merkel J: 'It was also common ground that the s 77 defence only applies to three-dimensional reproductions of CIPEC's two-dimensional copyright works. Thus, s 77 has no application to plan copyright infringements'. As the respondents' dressmaking patterns are not articles of manufacture, s 77 has no application." 46 Section 77(2) is no defence to the allegation of infringement made, as the s 77 defence only applies where the applicant's patterns are reproduced by either the patterns or their corresponding design (the design drawings) being applied to an article of manufacture, such as a shoe. The applicant's patterns or their corresponding designs are here applied to patterns.

Entitlement to copyright 47 The applicant claims title to copyright by operation of two agreements. First, the applicant alleges that CTN assigned rights to the applicant by means of a Manufacturing Agreement made on or about 10 December 2002 between the applicant and CTN ("the manufacturing agreement"). Clause 2.5 of that agreement states: "All right to designs of any Products developed by Manufacturer [CTN] for GBMI [the applicant] shall be the property of, and owned by GBMI and all Molds or patterns which are used in manufacturing Products shall be the property of, and owned by GBMI irrespective of any such other agreements covering amortization of such Molds or patterns." 48 Secondly, pursuant to a Deed of Assignment of Copyright made around 19 May 2004 (two months after the commencement of proceedings), CTN assigned: "(a) any and all rights, title and interest it may own, in the copyright and all other intellectual property rights subsisting in the Works; and (b) all rights and immunities relating to, or arising, or to arise from any of the copyright subsisting in the Works, including all past, present and future rights to sue for infringement of the copyright and all other intellectual property rights in the Works." 49 The first respondent contended that the applicant must choose whether to hang its claim to title on the manufacturing agreement or the assignment. If the retrospective assignment is bad in law, that part of the pleading should be struck out. Once it is struck out, the first respondent submitted that the deficiency in copyright title under the manufacturing agreement should lead to dismissal, as it cannot be cured. 50 The applicant submitted that there is no requirement in law that the manufacturing agreement expressly refer to an assignment of "copyright" in order for an assignment to be effective, provided the intention of the parties is clear. I consider that it is arguable that cl 2.5 of the Manufacturing Agreement effects an assignment of the copyright and intellectual property claimed in this proceeding. This is an issue which can only be resolved at trial. In Wilson v Weiss Art Pty Ltd (1995) 31 IPR 432, Hill J said at 432: "It was submitted for the respondent that the cases show that the courts 'strive' to find that a particular contract operates as an assignment, rather than as a licence. This is said particularly to be the case where artistic works are concerned. I was referred to a number of cases, among which were London Printing and Publishing Alliance Ltd v Cox (1891) 3 Ch 291; E.W. Savory Ltd v The World of Golf Ltd [1914] 2 Ch 566; Murray v King (1984) 4 FCR 1; Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71; Wintergarden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173; and Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417. What these cases demonstrate, however, is merely that the question whether there has been an assignment is one of construction of the particular instrument in the light of the particular circumstances. It is true, as Lacy v Toole (1867) 15 LT 512, Chaplin and the Rover-Scott Bonnar cases demonstrate, that formal language will not be required to effect an assignment. It will not be necessary that an assignment use the word 'assign' (cf Chaplin), nor will it be necessary for there to be specific reference to 'copyright': Murray v King (supra), where the sale of 'all right, title and interest in' a business was held to effect an assignment pursuant to s196 of copyright owned by the vendors. The writing relied upon, if a legal assignment be asserted, may be in the form of a receipt: (see The world of Golf (supra)) or an invoice (London Printing and Publishing Alliance (supra)). Ultimately, the question whether there has been an assignment, if a legal assignment is relied upon or, if not, whether there has been an equitable assignment will depend upon whether the writing or the terms of the agreement reached reflects or reflect an intention on the part of the assignor to effect an assignment of, or to agree to, assign copyright. In reaching a conclusion upon intention the commercial significance of the transaction to the parties will, no doubt, form part of the surrounding circumstances to be considered: Messager v British Broadcasting Corporation Ltd [1929] AC 151; Loew's Inc v Littler (1958) 2 All ER 200, both cases on facts wildly different, however, from the present." 51 When these observations are applied to the present circumstances under consideration, it is quite apparent that the applicant's claim to be the assignee of the copyright under cl 2.5 of the manufacturing agreement is arguable and that there is a real question to be tried on the issue. 52 In any event, I do not consider that it is appropriate on a pleading motion to be required to construe an agreement such as the manufacturing agreement for the purposes of determining whether a cause of action can be established, particularly when evidence of any circumstances surrounding the making of the agreement is not yet before the Court. 53 There is no reason why the applicant should, at this early stage, be put to any election as to whether it wishes to rely on the manufacturing agreement or the later deed of assignment. The basis of the assignment upon which the applicant wishes to rely can be pleaded in the alternative. This is an argument for the defence of the claim and not for strike out. 54 The first respondent submitted that the applicant issued the proceeding without an entitlement to the claim made, as the manufacturing agreement was not sufficient to assign copyright and the deed of assignment was retrospective. The first respondent relied upon Dixon Projects Pty Ltd v Masterton Homes Pty Ltd (1996) 36 IPR 136, which it contended stood for the proposition that in a copyright case you must have title when the proceeding is issued, and that lack of title at such a time cannot be rectified by a retrospective assignment of title. 55 In Taypar Pty Ltd v Santic (1989) 21 FCR 485Spender J held that an assignee of copyright could not bring an action in respect of an infringement which occurred prior to an assignment. The applicant distinguished Taypar on the basis of the form of the assignment. In the present case the form of assignment included the right to sue for all actions for copyright infringement, both past and present. In Taypar, Spender J noted that there was nothing 'retrospective' in the form of the assignment. His Honour said at 491: "In particular there was no assignment or purported assignment of any right to litigate in respect of earlier breaches of copyright." 56 The applicant submitted that there was no need to join CTN to the proceeding, as the cause of action arose at the time of commencement of proceedings, which was assigned to the applicant (albeit retrospectively). 57 The applicant submitted that in Dixon v Masterton (supra) Spender J noted (at 140) that the applicant must show an interest in copyright at the time of the commencement of proceedings. In Dixon v Masterton, as in Taypar, the form of assignment which post‑dated commencement did not expressly state that the assignment was to operate retrospectively. 58 I consider that it is arguable that Dixon v Masterton (supra) and Taypar v Santic (supra), upon which the first respondent relied, are distinguishable from the present circumstances. In Taypar Spender J said at 491: "Any infringement of the copyright in the drawing 87.404, the 'Reflections' plan, or the house at Drayton Terrace, occurred at a time when Taypar was not the owner of the copyright, and in my view, Taypar is not competent to sue in respect of any such infringement. The documents of 24 March 1988 are relied on as an assignment of copyright. In my view there is nothing retrospective in any assignment effected by those documents. In particular there was not assignment or purported assignment of any right to litigate in respect of earlier breaches of the copyright." 59 According to par 24 of the statement of claim, the deed of assignment purports to assign "all past, present and future rights to sue for infringement of the copyright and all other intellectual property rights in the said sample patterns and footwear patterns used to produce footwear under licence from the applicant." This assignment of rights to sue is an assignment not of a bare right of action but the assignment of a right which is incidental to the assignment of intellectual property rights: see Taypar at 491‑492. The distinction between an assignment of copyright simpliciter and an assignment of copyright coupled with an assignment of rights to sue for infringement, whether past, present or future, does not appear to have been the subject of consideration in Dixon v Masterton. 60 Accordingly the paragraphs of the statement of claim relating to the assignment of the copyright should not be struck out. They disclose issues in respect of which there are real questions which should be tried.

Missing documents 61 The fourth basis advanced for striking out the statement of claim and dismissing the proceeding is the issue relating to missing documents, which the first respondent says makes the case against it unfair. The statement of claim pleads six elements in the shoe making process, from paper patterns to sample shoes, and of the six, three pieces of supporting evidence are missing. The first respondent says that it is unfair to base a copyright case on articles that cannot be produced in court and that in this case half the documents that are essential to the case are missing. 62 Paragraph 26 of the statement of claim provides: "The Wish Sample Pattern and the Wish Graded Patterns are original artistic works in which copyright subsists by virtue of Part III of the Act, and the said copyright was owned by the Applicant at all relevant times. The Wish Sample Pattern and the Wish Graded Patterns are collectively referred to as the Wish Copyright Materials." (emphasis in original) 63 The first respondent asks how the court can be satisfied, and how the respondents may test, whether the copyright materials are owned by the applicant and are original artistic works, when three out of the six things going to their creation are missing. The graded pattern is not available, and it is unclear why there are four other things pleaded in the "ownership" paragraphs. 64 The applicant submitted that the existence of evidence for the trial is not an appropriate subject matter for consideration in an application to strike out and should be dealt with as a question of proof and evidence at trial. In any event, in respect of the Wish style footwear and the Kortnay style footwear, the sample pattern is available and the graded patterns, which are missing, are merely reproductions of that pattern in different sizes. Therefore the court and the respondents are in a position to have full regard to the sample patterns which may enable them to determine whether copyright subsists and whether an infringement has occurred. 65 I accept the submission of the applicant on this issue. The matter of availability of documents is clearly one of proof and evidence that will be dealt with at trial. It does not form a basis in this case on which the Court may strike out a claim or dismiss the proceeding. 66 I am not satisfied that there are any grounds on which to strike out the statement of claim or dismiss the proceeding. The applicant may confront difficulties of proving its case but these matters should await trial. 67 The first respondent respondent's motion will be dismissed with costs. I certify that the preceding sixty‑seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

Associate: Dated: 22 April 2005 Counsel for the Applicant: C Golvan SC

Trade Practices Act 1974(Cth)

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Judgment (16 paragraphs)

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Legislation Cited (3)

Cases Cited (20)

Cited By (6)