Gram Engineering Pty Ltd v Bluescope Steel Ltd

Findings of and about infringement of the Design 9 Jacobson J noted the following: 35 The Design for which Gram applied on 8 February 1994 was registered on 26 August 1994 and expired 16 years later on 8 February 2010. 36 The article for which the Design was registered was a "fencing panel sheet". …. 37 The Design contained a statement of monopoly "in the features of shape and/or configuration of a fencing panel sheet as illustrated in the accompanying representations". It also stated that "in considering the extent of the monopoly protection, the longitudinal extent of the article is to be disregarded". 38 The Design representations which accompanied the registration were as follows:- 10 In rejecting Bluescope's challenge to the validity of the Design, Jacobson J concluded that the Design involved a combination of features that were sufficiently distinctive to defeat the challenge to validity (at [272]), noting, in particular, the distinctive shape or configuration of the Design's sawtooth profile (at [298]). 11 At [324] Jacobson J said: In my opinion, when the Smartascreen panel is viewed as a whole the dominant visual feature is the repeating sawtooth profile consisting of six pans or modules, and the amplitude, wavelength and angles. These features give it a striking physical similarity to the Design and the GramLine product. This is so notwithstanding the difference in the Smartascreen panel consisting of the ridge/valley effect and the micro-fluting. In my opinion those features are comparatively slight and are not sufficient to detract from the overall visual picture of the Design and the GramLine product which I have described above. 12 At [340] he concluded that the "coincidence of market and design pressures in the appearance of the Smartascreen panel point in favour of a finding of obvious imitation".

Gram, Bluescope, the fencing market and the infringing product

The beginning of steel fencing 13 Since at least the mid-1970s one option for privacy fencing for residential properties in Australia has been painted steel fencing. At this time, John Lysaght (Australia) Pty Ltd, a corporation ultimately absorbed into Bluescope's corporate predecessor, BHP Billiton Limited, began offering a steel fencing product called "Trimdek". Bluescope's Building Components Division included a business unit branded as Lysaght which continued to supply steel fencing for residential purposes under the Lysaght name. 14 At all times Lysaght has used painted steel known as Colorbond in its products. Colorbond is a trade mark under which Bluescope's (or BHP's) steel has been sold since 1966. 15 In these reasons Bluescope and Lysaght are interchangeable, although it is apparent that because Bluescope markets its fencing and related products under the Lysaght name many of the witnesses refer to Lysaght and Bluescope as if they were separate entities.

Gram before the infringement 16 Ronald Mann, the principal of Gram, has been involved in the fencing industry since 1975 under the business and then corporate name of Gram Engineering. According to Mr Mann the dominant participants in the steel fencing market until 1983 were Lysaght and Monier (subsequently known as Stramit). Because Gram maintained stock on hand it could fill customers' orders quickly and the business expanded. By 1986 Gram was offering its own coloured steel fencing system known as "Colorline". 17 Mr Mann conceived of new fence profiles including a saw tooth or zig-zag profile from 1993. His aim was to create a profile which looked the same from both sides so that one neighbour did not end up with the "good side" of the fence and the other the "bad side". These designs were registered on 26 August 1994 and included Australian Registered Design No. AU121344S. The commercial manifestation of this design is the product "GramLine" which Gram started to sell from September 1995. GramLine was made from Colorbond until late 2005. Gram sold the posts, rails and caps, as well as other products that were necessary to install GramLine fences. It also sold accessories which were designed to be used with GramLine including lattice screens, gates, ball posts and the like. In common with Lysaght, Gram supplied but did not install its fences. 18 Until 1997 Gram distributed its products from its factory sites and through resellers in New South Wales (NSW) only, where its manufacturing sites are located. Resellers are separate businesses. They are also referred to in these reasons as stockists. Resellers purchase fencing products (and other home building products) wholesale from suppliers such as Lysaght and Gram. Some resellers also offer a fencing installation service but many do not. The resellers sell products to builders, developers, installers and end customers (the homeowners). 19 From 1997 on Gram expanded by starting to sell into new markets via a network of resellers as follows: from 1997, into Queensland; from 1997, into Victoria; from 1997, into Western Australia, particularly Perth; and from June 2005, into Tasmania. 20 Gram's records disclose that its main resellers in Queensland included Accolade Fencing, Cut Price Fencing, Watson Fencing and Pine (from 2008), Millers Hardware (from 2008), and Factory Direct Fencing (from 2006). Its main resellers in Victoria included New Style Fencing Pty Ltd, KPKC Pty Ltd trading as Begonia City Fencing, AAA Fencing Pty Ltd, Universal Fencing, Stramit Building, A-Preston and Macedon Fencing. Its main resellers in Western Australia included AA Fencing Enterprises and Stramit Building in Perth. Its main reseller in Tasmania was Quality Steel Fencing and Stramit Building in Hobart and Launceston. Gram did not enter the South Australian market until 2009. 21 As a result of continued expansion of Gram's business, Gram opened various new factory premises in Smithfield, NSW. In 2001 Gram also acquired a prime-mover to make local deliveries in the Sydney area. From 2004 to 2006, Gram acquired more trucks to make deliveries of its products along the east coast including to Melbourne and Brisbane. After purchasing its second roll-forming machine in 1986 and expanding the business, Gram had a peak number of 60 employees in its Sydney factory in 2003. According to Mr Mann, Gram currently has around 50 employees in Sydney and 10 in other distribution branches elsewhere. 22 At all times Mr Mann operated Gram on the basis that it should have strict quality control of roll forming the fencing panels, stock on hand to be able to meet customer's needs immediately, minimal borrowings, expand only when profits would allow rather than through borrowing, and that Gram should compete on quality not on price. Gram did not extend credit terms to customers but required payment before delivery, with any credit to be approved by Mr Mann. 23 Gram's total sales, including its Colorline and GramLine products, increased substantially up to 2003 but then declined as the following table 9 prepared by one of the experts, Michael Hill, shows. 24 Gram's financial records disclose that by 2002, despite its expansion program outside of NSW from 1997, 85% of its total sales of all products were in NSW. Mr Mann saw Gram as the market leader in Sydney. As will be apparent from the discussion below, by 2001, so did Bluescope. 25 Gram's records disclose that GramLine was substantially outselling Colorline by no later than 1998, by which time around 60% to 70% of sales were of GramLine and around 30% to 40% of sales were of Colorline. During the infringement period Mr Hill calculated that the sales of GramLine to Colorline were about 77% GramLine to 23% Colorline. 26 During the period of infringement, the proportion of Gram's total sales represented by GramLine and associated GramLine products, as calculated by Mr Hill, was around 66%. Gram's total sales of all products before and during the period of Bluescope's infringing conduct and on a State-by-State basis are shown in the following table which Mr Hill prepared from Gram's records: 27 It will be apparent that these tables also show Gram's total sales before and after 2002, which is when Bluescope started selling Smartascreen. 28 As noted, Gram's fencing products were made with Colorbond steel until late 2005. Bluescope offered a materials warranty on Colorbond steel. Gram also provided a warranty on its fencing products, which it continued to do after ceasing to use Colorbond. According to Mr Mann, Gram began offering a warranty when Lysaght started to offer a warranty on its steel fencing products. 29 Gram charged separately for both wholesale and other deliveries of its products. 30 Gram's typical advertising brochures before it stopped using Colorbond steel were prepared in conjunction with Bluescope. The registered trade mark "Colorbond" was prominent in these brochures. Gram's products were identified as "Premium Colorbond Fencing". GramLine was marketed with the logo "The good side is both sides", reflecting the fact that GramLine appeared the same from both sides as a result of the sawtooth profile. The marketing of GramLine included statements such as: • All our Colorbond® fencing products are made from durable, high strength Bluescope® Colorbond® pre-painted steel, backed by Bluescope's 10 year fence warranty. • GramLine® Colorbond® steel fencing was designed and engineered to last with both neighbours in mind. • Exclusively manufactured from Bluescope® steel. … BEWARE OF IMITATIONS • Make sure it's made from Coolorbond® Steel! Look for the branding on your infill sheets, posts & rails ensuring you are purchasing an Australian Colorbond® product. • Imported imitations are not backed by the strength & integrity of Australia's leading steel company Bluescope® Steel Ltd.

Bluescope before the infringement 31 Bluescope (or its corporate predecessor, BHP), through its Lysaght business, also provided Colorbond steel fencing including its original Trimdek product (which became known as Neetascreen). Lysaght's range included a variety of steel building products; most made using Bluescope produced steel, but also sold some products manufactured by third parties. In terms of fencing, Lysaght operated mainly in the wholesale market under the Lysaght trade name, selling its fencing products to retailers such as Bunnings, Jim's Fencing and Mitre 10 who would then on-sell it. Lysaght also had its own branches from which it sold its fencing products, along with other home building products including to retail customers. 32 I infer that BHP and Bluescope maintained the trading name of Lysaght for its steel products because that trading name had existed for over 100 years in the building industry. Lysaght has its national head office in NSW and has other State head offices in Victoria, Queensland, Western Australia and South Australia. In each of these locations Lysaght has one main branch and a large storage site. It also has about 30 additional retail branches nationally. 33 Lysaght had a number of branches in metropolitan Sydney including its main branch at Arndell Park (which was also the manufacturing site), as well as branches at Penrith, Campbelltown, and Parramatta. It also sold into regional NSW and the Australian Capital Territory (the ACT) through its own regional branches (including in Newcastle, Coffs Harbour, Tamworth, Dubbo and Cardiff, Batemans Bay and Queanbeyan) and through key resellers. Key Lysaght resellers included Coffs Metal Market Pty Ltd in Coffs Harbour, Pinus Sawmills Pty Ltd in Queanbeyan, Speedline Fencing Pty Ltd in Newcastle, Bluedog Fences Australia in Tamworth, Alcatraz Fencing Pty Ltd in south Sydney, and WR Engineering Pty Ltd in Canberra. Another reseller, Playsafe Fencing Pty Ltd, in the south of Sydney, mainly stocked Gram products but also stocked some Lysaght products so it could meet customer's requests for those products. 34 Lysaght had eight of its own retail branches in Queensland from 2006 (in Cairns, Townsville, Mackay, Rockhampton, South Brisbane, Toowoomba, Gold Coast and Sunshine Coast). Lysaght's key resellers in Queensland included AAA Fencing & Supplies Matnal Pty Ltd on the Gold Coast, Superior Fences and Gates Treloar Investments Pty Ltd on the north side of Brisbane, and South Burnett Fencing Better Boundaries Pty Ltd servicing the Nanango and Kingaroy regions. Lysaght also sold to Ruby Developments Pty Ltd, the developer of retirement villages in Queensland and the Mac Services Group, which established mining camps in regional Queensland. 35 Lysaght had three of its own retail branches in Victoria in Campbellfield, Geelong and Dandenong South. However, unlike in Queensland, most sales in Victoria were through resellers rather than from Lysaght's own branches. Lysaght's main resellers in Victoria included Surf City Fencing in Geelong, Oz Colour Fencing in Laverton North, Universal Fencing in Bendigo, and New Colour Fencing in Hallam. 36 Lysaght also exported its fencing products to Climar Industries in the United Kingdom and Topline Trading Ltd in New Zealand. 37 In common with Gram, Lysaght did not seek to compete on price, but quality and service. Unlike Gram it offered standard 30 or 60 day credit terms. Lysaght offered a warranty on its fencing products, in addition to the materials warranty on the Colorbond steel given by Bluescope. Lysaght did not charge separately for wholesale deliveries but, like Gram, charged for other deliveries.

The fencing market generally 38 It is apparent from the evidence that the steel fencing market involved some major suppliers (Bluescope, Gram, Metroll and Stratco) who all had substantial market shares, albeit focused in different locations. 39 Gram had started and developed in Sydney and had achieved an estimated 50% market share in Sydney by 2001, but had been expanding into the other States through resellers. 40 Bluescope sold through its Lysaght arm, which had Lysaght branches and Lysaght resellers including what it considered to be the best regional coverage in NSW perhaps matched only by Metroll. 41 Stratco was also a national business but appears not to have been particularly strong in Sydney or NSW (Mr Mann did not consider them to be a major competitor for example), but was considered by Bluescope to be its major competitor in Queensland. 42 By the beginning of the infringement period, NSW was a mature market for steel fencing and also by far the largest market in terms of volume and money, I infer because of Sydney's population and associated residential development. The other States were not mature markets and, while much smaller in terms of volume and money than NSW, were expanding throughout the infringement period. 43 On a national basis, the amount of steel fencing used for residential purposes grew by just over 45% between 2001 and 2010. Over much the same period, the value of the steel fencing market grew by about 55%. The main growth areas were Victoria, Queensland and Western Australia. NSW remained the dominant market in terms of consumption and thus sales, but did not experience as much growth as Victoria, Queensland and Western Australia between 2001 and 2010. 44 The following table, also prepared by Mr Hill, shows the growth in the amount of Colorbond and painted steel fencing used between 2000 and 2010. 45 This table also shows the substantial size of the NSW market compared to the other States. 46 As noted, the major suppliers sold product direct from branches to developers, builders and installers (who were usually regular customers) and retail or end customers, and also sold wholesale to resellers, some of whom were also installers. These resellers also sold to developers, builders and installers (who were usually regular customers) and retail or end customers. As such, Lysaght branches might compete with Lysaght resellers depending on location and Gram branches might compete with Gram resellers depending on location. And, as necessarily follows, Gram and Bluescope were competing not only for resellers but also customers of resellers, albeit that the level of competition varied depending on location (Gram being particularly strong in Sydney and thus NSW). 47 Location was an important factor in competition as between branches and resellers. As Mr Mann said, in metropolitan areas it was desirable that Gram's selling locations be about half an hour's driving distance apart or else they would compete with each other. Installers, in particular, needed metropolitan selling locations to be convenient to them as they would mostly collect the stock they required for the day from the supply location in the morning (noting that Gram and Lysaght both charged for non-wholesale deliveries). This also meant having stock on hand was critical, both Mr Mann for Gram and employees from Bluescope noting that they had to have stock on hand to meet demand because a quick supply of product was expected in the market. 48 In regional areas, the evidence indicates, as might be expected, that sale locations generally competed over a greater geographic area than in metropolitan areas given the wide distribution of the locations.

The infringing conduct 49 In common with Gram, which had increased its sales substantially between the mid-1990s and 2000, Bluescope had also experienced continuous growth in its fencing sales over the same period. By 2000 Bluescope believed it had about 30% of the national steel fencing market on a value basis. However, unlike Gram, its sales revenue went down materially in 2001 due to the GST and a downturn in the residential building market. The same impact on Gram is not apparent which continued to grow strongly until 2003. 50 Emma Marlin held the position of Business Development Manager for fencing products in the Marketing Division of Bluescope from 1999 to 2001. Ms Marlin prepared an internal discussion paper in April 2001 titled "Market Justification for New Fence Infill Profile". This paper recorded Bluescope's material decline in revenue from steel fencing products including in NSW which was important because NSW represented 41% of Bluescope's total fencing revenue. Ms Marlin said: During the last year our market share has fallen by approximately 3% (to 27%) due to a weakening in our competitive position. Our major competitors, Gram and Metroll now offer an infill sheet that looks the same from both sides and aggressively promote them as being superior to our traditional Neetascreen infill sheet. They have also improved the strength of their posts to nearly match our own and this has eroded another of our key points of differentiation. These product innovations have enabled our competitors to successfully gain market share at the expense of BHP Building Products and it is anticipated they will continue to do so as competition intensifies in the depressed residential sector. 51 Ms Marlin's discussion paper continued: Competition (symmetrical infill sheets): Gram Engineering Product: GramLine ('saw tooth' profile) Width: 2365mm panel (3 sheets) Feed: 940mm, .35bmt, doublesided Colorbond XFP Manufactured: Smithfield, Sydney Brochure: Appendix A Gram is a formidable competitor in the national fencing market and is believed to be the largest Colorbond fencing manufacturer with approximately 35% share nationally. They are particularly strong in NSW where they are estimated to have at least 50% share. Gram Engineering is well positioned to gain further share inroads through either expansion into other States or through the appointment of new Stockists. GramLine was launched approximately five years ago and is widely perceived to be the best sheet currently available on the market. They have successfully created this perception by actively lobbying builders and developers and promoting directly to end-users that their sheet is better than traditional infill sheets (including Neetascreen) because it looks the same on both sides and therefore eliminates disputes between neighbours. … Their success in developing a position of product superiority has greatly assisted their efforts in appointing new Stockists and gaining market share from BHP Building Products. Metroll: Product: Metline (square paling type profile) Width: 2350mm panel (3 sheets) Feed: 940mm, .35bmt, doublesided Colorbond XFP Manufactured: Campbelltown, Sydney Brochure: Appendix B Metroll released Metline in Sydney approximately a year ago and promote it as the "the new fencing solution for the new millennium … it's a great fence whichever way you look at it". To date, they appear to be struggling to make inroads into Gram's market share in NSW. This is most likely due to a weak distribution base in the Sydney metro region (Metroll's larger Sydney metro stockists refused to purchase from the Sydney operation, preferring to deal with the Newcastle branch!) and apparently they have been plagued by quality problems (poor lapping). These issues combined with a market that traditionally is slow to adopt new profiles have lessened the Metroll threat in the short-term. However, the product is regarded by many as being more attractive than the GramLine product, so the longer term threat should not be underestimated. 52 Ms Marlin concluded: Final design options: Two designs were selected as being worthy of a more detailed appraisal, currently referred to as 'Cascade 2000' and 'Paling 2000'. … • don't infringe other manufacturers' Design Registrations (confirmed by BHP Intellectual Property Group) … • Cascade 2000 has a similar appearance to GramLine (sawtooth style profile) and hence it is felt that the product will be readily accepted in the market (remembering that the fencing market is traditionally slow to accept new profiles). It is likely the profile will be considered an acceptable substitute in new housing developments currently dominated by GramLine. • Paling 2000 has a similar appearance to a paling fence (the dominant material in the Australian fencing market) and strong vertical lines. It is considered to be visually striking, and many feel it is a significant step forward in Colorbond fence design. However, it is probable that the market acceptance would be slower than that of Cascade 2000. 53 Cascade 2000 became known as Smartascreen, which is the product Jacobson J found to infringe Gram's Design. Jacobson J found as follows: 10 The GramLine fencing sheet was very successful commercially. By 2002 the GramLine range held approximately 35% to 40% of the Australian market for fencing panel sheets. Between 1995 and 2005 Gram purchased almost all of its steel requirements for the GramLine sheet and assorted products from Bluescope and its predecessor. 11 In about the middle of 2002 Bluescope launched its own symmetrical sawtooth or zig-zag fencing panel sheet under the brand name "Smartascreen". There is no escape from the proposition that the Smartascreen fencing panel sheet is very similar in appearance to the GramLine product. In particular, the Smartascreen sheet consists of a six pan sawtooth profile of very similar shape and configuration to the GramLine product, and to Gram's Design. 12 It is also plain that Mr Mann was aware of the similarity at or about the time when the Smartascreen product was launched. Nevertheless, Gram did not institute proceedings against Bluescope until 2011 when the present application and the initial version of the Statement of Claim were filed. 54 Jacobson J also recorded this part of Ms Marlin's evidence: 185 Ms Marlin was cross-examined on the Discussion Paper, and in particular on her statement that the market would readily accept the Cascade 2000 because of its similar appearance to the GramLine product. The following exchange took place at T 422:- Thank you. Then just in relation to the phrase you've got "something that would be accepted within the market", one of the reasons you later, in 2001, chose the Cascade 2000 as that it would be readily accepted within the market? --- Yes. And the reason you thought it would be readily accepted in the market was that it had a similar appearance to GramLine and GramLine's sawtooth profile? --- Yes. That's why you thought it would be accepted in the market? --- Yes. I thought that the market is very, very slow to accept new products. I think that has been shown time and time again in the fencing market. I did have, in my affidavit, a confidential annexure which I'm happy to talk about, but there is obviously some commercial sensitivities in that. But I think you were accepting from me that what you thought was, at the time when you chose Cascade in 2001, that it would be readily accepted because it had a similar appearance to GramLine? --- Yes. And what do you take - when you agree with that, what are you agreeing with - the phrase "similar appearance", what do you take that to mean? --- Well it does have a zigzag profile. There's no doubt about that. That's not to say it's the same at all, but this market is very, very slow to accept new products. Our Neetascreen product, to this day, is still our biggest and most popular selling product because it's very widely accepted in the market. You know, it is difficult to make inroads with new products. And that similarity of appearance was something you were aware of when, in April, you recommended the selection of Cascade 2000? --- Not so much that. It was just that we knew it would be accepted. Our customers would accept it - that they felt that they would have a product that they could compete with. Because it conveyed a similar impression of shape? --- It had a - yes - zigzag shape. Well, it also had similar proportions, didn't it? --- I don't know that that came into my thinking. 55 Although Bluescope started selling Smartascreen in mid-2002, the infringement period is from 16 April 2005 to 8 February 2010. This is because of the limitation period (six years) and the fact that Gram did not commence this proceeding until 2011. 56 According to Mr Mann, when he first heard about Smartascreen, he contacted Gram's account managers for purchasing of steel from Bluescope, Carl Perry and/or Mark Flint. As soon as he was shown a sample of Bluescope's saw-tooth fencing panel infill sheet (which became Smartascreen), Mr Mann considered it to be a copy of GramLine. Mr Mann also gave evidence that he met with Mr Perry and/or Mr Flint about Smartascreen and his ongoing relationship with Bluescope as a purchaser of Bluescope Colorbond steel. In that context, Mr Perry and/or Mr Flint prepared a PowerPoint presentation dated 6 August 2002. This presentation recorded that Gram's purchase of Bluescope Colorbond steel had more than doubled between 1998 and 2002 (to 14,000 tonnes per year). It recorded Gram's share of the national painted steel fencing market as 37.8%. It also set out as a proposed future arrangement in these terms: Potential way's forward The Desireable future - UNIFIED not FRAGMENTED To achieve this future - Gram Engineering supplies LYSAGHTS with GRAMLINE® infills - LYSAGHTS supplies Gram Engineering post & rail frames &/or the new profile. - Both companies sell each others products under a common marketing strategy & promotional program - All three companies define a strategy and to go forward by way of business models, in geographical locations and a plan to grow. Make COLORBOND® Steel fencing the residential boundary fence of choice throughout Australia. TARGET to double the fence market within 5 years. 57 Bluescope suggested to Mr Mann in cross-examination that Gram prepared this document, which Mr Mann denied. I accept Mr Mann's evidence. I consider the document was a marketing exercise by Bluescope, but in so doing Bluescope was seeking to identify Gram's concerns about what Mr Mann (rightly, as it turned out) considered to be a copy of Gram's Design and a possible way forward. In this sense, the document does reflect information and proposals that Gram had put to Bluescope. It is thus an internal marketing document of both Bluescope and Gram representing an ideal vision of how Bluescope and Gram might go forward in business together despite what Mr Mann considered to be Bluescope's infringement of the Design (about which Mr Mann was correct). 58 This idealised vision was never realised, as by late 2005 Bluescope was still selling Smartascreen and Gram had decided to end its commercial relationship with Bluescope by importing its steel from Taiwan, thereby ending its use of Colorbond steel in its products. After this, Gram changed its marketing to remove references to Colorbond. Instead, it said: All GramLine Steel Privacy Fencing: • Is manufactured from Quality, Certified, Tested Prepainted Hi-Tensile Steel. … GUARANTEE • The complete GramLine branded range is backed by our exclusive GramLine Plain English 10 year Steel Warranty. • This ensures you Peace of Mind with the GramLine branded range. 59 Bluescope, via its Lysaght business, marketed Smartascreen along with its other products including Neetascreen (formerly Trimdek) from 2002. Bluescope's marketing for Smartascreen noted the symmetrical profile, saying things such as: • "Something special is about to happen between you and your neighbours" • "Your side looks smarter…and so does your neighbours"; • "Smarter than your average fence"; and • "It lets you and your neighbours both enjoy the same great design, because it's identical both sides". 60 Bluescope sold substantial numbers of Smartascreen. According to Robert Todorcevski, Bluescope's National Manager Finance - Building Components, between 15 April 2005 and 8 February 2010, Bluescope sold 2,354,481 lineal metres of Smartascreen infill panels and 4,182,821 lineal metres of steel for the related Smartascreen posts and rails. Mr Todorcevski calculated Bluescope's gross sales of its Smartascreen infill panels between 2005 and 2010 in the sum of $30,377,796 and associated posts and gross sales of the rails needed to install Smartascreen in the same period in the sum of $11,184,178. 61 Mr Todorcevski was cross-examined about the differences between these figures and his initial evidence which showed even greater gross sales. Mr Todorcevski's explanation, that his initial calculations had inadvertently included sales of a different walling product which was also described using the prefix "Smarta", was convincing and I accept it. I also consider that his method of searching for all invoices disclosing a sale of Smartascreen was reasonable given that fencing products are only one of Bluescope's product lines. While it is possible that Mr Todorcevski missed a relevant sale, this is mere speculation. It involves similar speculation to characterise Mr Todorcevski's evidence of sales of Smartascreen related products as "low" because of the possibility that a person might have purchased a product related to Smartascreen separately from purchasing Smartascreen. While Mr Todorcevski accepted this as a possibility, as he was bound to do given that he could never exclude the possibility, it is nothing more than speculation. There is no evidence of such an event. Moreover, the event appears inherently unlikely. Smartascreen infill panels had to be sold with Smartascreen post and rails. Smartascreen discretionary additions such as gates and lattices also had to form part of the fence as erected. The possibility of retrofitting a Smartascreen fence with gates or lattice or some other product cannot be eliminated, but it seems far more likely that sales of such items were contemporaneous with the sale of the Smartascreen infill panels. 62 For these reasons I consider Mr Todorcevski's evidence about the sales of Smartascreen should be accepted. Otherwise, sales of posts and rails and discretionary accessories associated with Smartascreen were the subject of subsequent agreement (which is another reason why characterising Mr Todorcevski's evidence of sales as "low" is unpersuasive). What Mr Todorcevski's evidence does show is that Bluescope sold substantial quantities of Smartascreen throughout the infringement period. Even though Neetascreen remained Bluescope's biggest seller, Smartascreen was plainly a major product for Bluescope.

Other steel fencing products 63 Mr Tanks, Lysaght's State Sales Manager for Queensland and the Northern Territory, identified Bluescope's three main steel fencing profiles during the infringement period as Neetascreen, Smartascreen and Miniscreen. Neetascreen (formerly Trimdek) has been sold for nearly 40 years and remains Bluescope's best-selling fence profile. Bluescope introduced Miniscreen as a premium product, sold at a higher price than Neetascreen and Smartascreen, in 2003. The evidence indicates that no-one considered Miniscreen to be a major product which directly competed with GramLine probably because of the premium price of Minscreen and that it did not appear the same from both sides due to the use of a rail on one side. Given Ms Marlin's paper, there can be no doubt that Bluescope intended Smartascreen to compete with GramLine on the basis that Smartascreen would be likely to be substituted for GramLine in new housing developments which GramLine "dominated" (in Ms Marlin's words). 64 Smartascreen was manufactured at Bluescope's Emu Plains site in Sydney and shipped to its distributors from that site. 65 In addition to the two non-infringing Bluescope profiles, Mr Tanks identified other steel fencing products sold during the infringement period. Stratco (Australia) Pty Ltd sold four profiles of which one, Wavelok, was symmetrical in the sense that it appeared the same from both sides, but was not a sawtooth design. This profile, however, was not released until 2006 and, as Ms Marlin said, the market was slow to adopt new profiles. Metroll Pty Ltd also sold four profiles of which one, Metline, has the same appearance from both sides, but as Ms Marlin had also noted in 2001, Metroll's symmetrical product was "struggling to make inroads into Gram's market share in NSW" because Metroll had a "weak distribution base in the Sydney metro region (Metroll's larger Sydney metro stockists refused to purchase from the Sydney operation, preferring to deal with the Newcastle branch!)" and had been "plagued by quality problems (poor lapping)". 66 Mr Mann also noted that in 2008 Metroll released a symmetrical fence using a sawtooth profile and Gram took proceedings against Metroll for design infringement. Metroll ceased using this sawtooth design in 2009. Mr Mann said that this Metroll product was a copy of GramLine. It was on the market for about a year. It was removed from the market in 2009 as a result of a mediation between Gram and Metroll in proceedings which Gram took for design infringement. 67 Mr Tanks also identified Dunn & Farrugia Pty Ltd, Steeline Pty Ltd, and Fielders Pty Ltd as other steel fencing providers but it is apparent that the latter two must be minor suppliers. 68 Jacqueline Wall, Bluescope's NSW Pricing Manager, had particular experience in NSW and the ACT. She identified Bluescope's main competitors in Sydney as Gram, Stratco, Metroll and Dunn & Farrugia. According to Ms Wall, Stratco had three or four branches in Sydney, two regional NSW branches and a branch in the ACT. Metroll had one branch in Sydney but regional branches in Dubbo, Lismore, Warners Bay, Tamworth and Wagga Wagga, near to some of Bluescope's Lysaght branches in regional NSW. She said Dunn & Farrugia opened in Penrith in 2005 providing Colorbond steel fencing at aggressively low prices. 69 Jeff Finnegan, a Business Development Manager for Bluescope in NSW, was involved with Dunn & Farrugia. According to Mr Finnegan, Dunn & Farrugia, a new entrant to the supply market, started using Colorbond steel in 2004 and from 2005 to 2010 had a network of branches in NSW and resellers in NSW, Victoria and Queensland. By 2007 Dunn & Farrugia also had started a comprehensive marketing campaign, assisted by Bluescope, both online and through a range of print media. Dunn & Farrugia's main profile was called ColorMAX Trimdek, which did not appear the same from both sides, but in 2007 it introduced ColorMAX Reflect which did appear the same from both sides. Mr Finnegan identified Dunn & Farrugia's competitors as Lysaght, Gram, Metroll and Stratco, as well as some others who are not otherwise mentioned and I infer must be localised or minor competitors. 70 Accordingly, during the infringement period, the suppliers which had a product that appeared the same from both sides were Gram from 1995 (GramLine), Bluescope from 2002 (Smartascreen), Stratco from 2006 (Wavelok), and Dunn & Farrugia from 2007 (ColorMAX Reflect), Dunn & Farrugia being a newcomer to the market starting in Sydney in 2004, only a year before the start of the infringement period. 71 Andrew Cook, Bluescope's State Sales Manager for Lysaght in Victoria and Tasmania, identified Bluescope's main competitors in Victoria as Metroll and Gram. Gram had a large reseller in Ballarat, an area in which Bluescope did not have a branch or reseller. Bluescope had large resellers in Geelong (Surf City Fencing), Laverton North (Oz Colour Fencing), and Bendigo (Universal Fencing), whereas Gram did not have resellers in those areas. Metroll had three branches, in Delacombe near Ballarat, Moolap near Geelong and Laverton North, and a network of resellers and multiple manufacturing bases in Melbourne and regional Victoria. Mr Cook did not think Stratco and Stramit were major competitors, due to fencing being only a small component of their businesses in Victoria. 72 In Mr Mann's view, Stratco "has never been a big company in fencing". I infer that he considered his main competitors to be Metroll and Bluescope. 73 Mr Mann, in common with Bluescope, considered that Dunn & Farrugia sold at aggressively low prices. 74 Bluescope's premium Miniscreen product which was only introduced in 2003 had an infill profile that was the same from each side, but was constructed with a rail that appeared on one side only. In Mr Mann's words, Miniscreen was "a good-side-bad-side product. It doesn't sell much in the marketplace, even though it's heavily promoted".

Gram and Bluescope during the infringement period 75 Gram's evidence included summaries of sales, identifying its major customers, in Queensland, Victoria, Western Australia, Tasmania and South Australia. Gram did not provide similar sales evidence identifying its main customers in NSW, despite NSW being its major market (as noted, around 85% of Gram's sales were in NSW during the infringement period, although it had begun expanding into other States in 1997). Gram's evidence also did not identify any customer of Gram that stopped buying GramLine and instead bought Smartascreen. In contrast, Mr Mann did identify a customer of Gram located in Bankstown NSW that stopped buying GramLine and instead bought Metroll fences. He also said that two major customers (wholesale customers as they are resellers), STY Fencing and New Style Fencing from Victoria, stopped buying GramLine and bought Metroll's Metfence in 2008/2009 (the product that Metroll withdrew from the market after about a year). As Mr Mann put it: STY Fencing was a client of ours in that period. They probably switched to Metroll on price on that product [Metfence], yes. … And do you have a recollection or not as to whether STY Fencing and New Style Fencing were major distributors in Victoria of the Metfence product in 2009? --- Which one is Metfence? That's the Metroll product which was what you referred to as a copy of yours, being a sawtooth design? --- Okay. That's the one which is a copy. Okay. Well, I know they were dealing with Metroll, because they stopped dealing with me in that period. So in 2009 is this the position: that STY Fencing and New Style Fencing stopped dealing with your GramLine product and bought Metroll's Metfence product instead? --- Yes. Right. Thank you. And they did so in substantial quantities, correct? --- Yes. 76 Otherwise Mr Mann gave this evidence about Gram's markets and customers. • … our main states were New South Wales - the main state - then Victoria, then Queensland, and we're now represented in Western Australia to a big degree. • I sold to several companies in Victoria on a distributor basis, including one called New Style Fencing… they're no longer a client of ours, except for bits and pieces in Melbourne. • Five Star Fencing, which is a business I bought… was our first branch [located in Prestons, NSW, operating throughout the infringement period]. • …we could sell to anyone anywhere if they wanted our product. We would help them get our product if they wanted our product. If we couldn't - if we couldn't send them to a closer place, it could help them without them dealing directly with us. So we had - it was whatever they wanted as clients. If they wanted us, then we wanted to help them. • We tried to set up branches in Sydney that are actually within half an hour of each other, that's our dream, but you - if you set them up too close, then you have conflict between branches, so we try and aim at half-hour centres. We used to have a distributor in Bankstown. He's now with other people; one of which is Metroll. And so he's the half-hour, and then there's an hour to Peakhurst, so we try to have them, you know, in reasonable area of each other. We don't like to have people on top of each other when they're distributors. • [In Queensland] In the period, we had one on the southside called Topdog Fencing, so, you know, we also had our branch in the middle and in - I should restate myself, the one at Deception Bay which is called Accolade, I'm not sure where it was called, but it was in the middle of Brisbane because that's where we had our branch, and, therefore, Accolade was not far from the centre of Brisbane. We had a client at Caboolture. We had a client near a place called Deception Bay, called Millers Hardware. • [As to Topdog Fencing]… I don't remember when they were a client and when they stopped being a client, but they were in that area - the south of Brisbane area. • Between 2005 and 2010, Gram had a large reseller in Ballarat; correct? --- Yes - Begonia was their name. • But Gram didn't have a reseller in Bendigo? --- Universal Fencing was a client of ours. • You didn't have a reseller in or within half an hour's drive of Laverton North, did you? --- New Style Fencing were a good client, and I had - I had AAA Fencing, Macedon Fencing. I didn't have everybody in Melbourne where I wanted to have them. I didn't have everything covered, but my business was growing… • Now, in Brisbane, you did not have a distributor in the south Brisbane area between 2005 and 2010, did you? --- When was Topdog buying my product? • You did have Accolade Fencing in the suburb of Virginia, in north Brisbane, didn't you? --- Is that where they were? Yes. Then, I did. • Then, in Sydney, your Sydney branch was based in Smithfield between 2005 and 2010? --- Yes. 77 There was also evidence that during the infringement period, after Gram stopped using Colorbond steel, its prices for GramLine were lower than Bluescope's prices for Smartascreen, but the materiality of that difference is not apparent. Both were more expensive, for example, than Dunn & Farrugia which appears to have undercut competitors on price. Having entered the market in 2004, it must be inferred that Dunn & Farrugia had to develop the kind of distribution network that Gram and Bluescope had already developed. 78 According to Bluescope, leaving aside NSW where Gram did not provide evidence of its major buyers, of the top 215 customers who purchased Smartascreen across Australia during the infringement period, six were also customers of Gram's. Bluescope noted as follows: These six customers are as follows (bearing in mind that for Gram's sales, the figure represents sales of all Gram products, and not just GramLine): (a) Fence Co in Queensland, to which Gram sold up to $80,664 of products and BlueScope sold $57,783 of Smartascreen products during the Period. (b) New Style Fencing in Victoria, which was a major customer of Gram's until 2009 at which time it commenced purchasing and supplying Metroll Metfence product in large quantities. During the Period, Gram sold to New Style Fencing $6,135,565 of products, and BlueScope sold to it $13,131 of Smartascreen products. (c) Universal Fencing in Bendigo, Victoria, to which Gram sold $14,970 in products (Gram's evidence is silent as to which particular products) and BlueScope sold $263,933 of Smartascreen products during the Period. Mr Cook gave unchallenged evidence to the effect that Universal Fencing was a substantial distributor for Lysaght and sold a large volume of Lysaght fencing during the Period, stocking approximately $200,000 worth of Lysaght Fencing at any given time and only stocked other suppliers' products if it was specifically asked to do so. Gram did not have a substantial distributor in Bendigo. Universal also required Colorbond. For these reasons, it is highly unlikely that Gram would have captured the Smartascreen sales made to Universal during the Period.. (d) McNamara Fencing in South Australia, to which Gram commenced selling after June 2008 and to which Gram sold $12,325 of products and BlueScope sold $2,789 of Smartascreen products during the period. (e) Midalia Steel (Mandurah) in Western Australia, to which Gram commenced selling after June 2009 and to which Gram sold $412 of products and BlueScope sold $1,297 of Smartascreen products. (f) Midalia Steel (Welshpool) in Western Australia, to which Gram commenced selling after June 2007 and to which Gram sold $39,520 of products and BlueScope sold $261 of Smartascreen products. 79 The customers in at least (a) to (d) above are resellers and thus wholesale customers whose purchases from Bluescope must have reflected the demand from their own customers. 80 Mr Tanks, Lysaght Queensland, said that Bluescope increased its marketing efforts for Colorbond steel fencing generally from 2006 aiming to take market share from timber fencing which had been dominant in Queensland until the early 2000s. I note that Stratco, Metroll and Dunn & Farrugia used Colorbond steel in their products and, as such, along with Lysaght would have benefited from this general marketing push. 81 Lysaght's Colorbond fences were marketed emphasising Colorbond, its strength, quality, and warranty support. In Mr Tanks' experience while in Lysaght's Rocklea branch most customers asked for a Colorbond fence rather than a particular profile, but requests for specific profiles did occur, perhaps around 10% of the time. Customers, particularly installers, required stock to be available when they needed it, often collecting the stock for an installation on the same day. In South Brisbane, where Lysaght's Rocklea branch was located, Mr Tanks perceived Lysaght's main competitors were Metroll and Stratco because they had branches within 10km. Because of the number of its branches in Brisbane, Mr Tanks thought Stratco was Lysaght's main competitor, noting Stratco also advertised heavily in the area including for its symmetrical Wavelok profile. Metroll also had a branch in south-west Brisbane and thus was also a competitor. Gram did not have a branch in Brisbane but distributed through a reseller Accolade Fencing in North Brisbane about 35km from Rocklea which, I infer, explains why Mr Tanks did not perceive Gram to be a major competitor. Contrary to Mr Tanks' perception, Gram must have been a major competitor of Lysaght based on Gram's sales in Queensland during the infringement period. 82 In regional Queensland, Lysaght had seven branches and Mr Tanks believed no other competitor had the same coverage. Metroll had branches in Cairns, Townsville, Rockhampton, Bundaberg, the Gold Coast, Toowoomba and the Sunshine Coast. Stratco had branches in Bundaberg, the Gold Coast, Toowoomba and the Sunshine Coast. One Gram reseller, Cut Price Fencing, was located on the Gold Coast, near a Lysaght reseller AAA Fencing. 83 Mr Tanks said Lysaght offered deliveries up to 800kms from its branches every two to three days. It also had large resellers such as Mitre 10 who had national agreements with Lysaght. I note that Gram also offered deliveries, the only apparent difference being that Lysaght did not charge separately for wholesale deliveries but did charge separately for other deliveries and Gram charged separately for all deliveries. While some Lysaght wholesale customers said they preferred not to be charged separately for deliveries, I do not infer that Lysaght gave free wholesale deliveries - the delivery price would have been part of Lysaght's overall costs to wholesale customers, which some of its customers preferred. 84 According to Mr Tanks he had regular communications with customers, mainly the installers who collected products every morning from Lysaght's Rocklea branch. Don and Brian from Neighbourhood Fencing "liked dealing with us because they didn't live far away from us", "they wanted somewhere that was in close proximity to where they lived, but also where their jobs were, which was usually in that local south-west Brisbane area", and as they did not want to pay a delivery fee they preferred to collect their products each day as required. According to Mr Tanks: … they chose us - there was some of our competitors that were close to us. They chose us essentially because - they told me that they could place an order either on the day, or the day before, and they knew that they would get what they wanted the following day, when they wanted to pick it up, because we had a full range in stock there, to make up their order, whereas others didn't. The - they placed a lot of emphasis on the brand and warranty; that they only wanted to sell Colorbond fencing, because they thought that they had BlueScope Steel behind them. …they did tell me that the brand Colorbond was an important aspect of why they bought from us, and they put a lot of value in the warranty that came with - not just the Lysaght structural warranty of the fence, but also the BlueScope warranty on the Colorbond material. … They told me on several occasions that they liked dealing with us because they could send their end-user customers in to have a look at the displays that we had set up. And because the majority of their work was in that south-west Brisbane area, a consumer to come to see us at Rocklea was - was much easier for them to say, "If you want to get a picture of what it looks like, you can go here and have a look at it. This is who supplies our material." … …they told me that they liked dealing with us because of the flexibility - the relationship we had and the flexibility that we had with their credit terms. So most of our account customers, like Brian and Don, would run a 30-day account; however, on occasion, depending on jobs they were doing, they would - there were several occasions where I had to ring them to talk to them about their credit, because they may have gone over their credit limit and they may have had to pay early. And there was other occasions where they had to come and speak to me because there may have been a job that was, you know, significantly bigger, and they hadn't been paid yet to pay their account to us on time, and they might have needed five or seven days leeway to pay that account. So we had a fairly good relationship with most of our customers like that, where - like, Brian and Don would - if they knew they were going to have an issue with payment, our credit flexibility - they could come and talk to me about it and we could sort it out between the two of us. 85 Daniel Norman, a one man installer: … he liked the Lysaght - the - the structure and the - and the ease of putting it together. He liked the - the structural - I suppose how solid our fence was. He - he didn't think that others that he had seen were as solid. Whether that was his opinion, I don't know, but that's - that was sort of his words to me quite often. …he placed a lot of emphasis on the brand with Colorbond, because the installers would usually get their marketing material - so a range of brochures they would carry around with them. They would get them from us so that they could then pass them on to the consumers that they were trying to sell a fence to. So Daniel had a pretty big emphasis on the fact that he could come to us and get that sort of marketing material pretty readily. And we would have things like colour chips and brochures and - and installation brochures that he could pass on to his customers. … He discussed with me, on occasion, the - his ability to either stay within the credit terms or what flexibility we had to go outside of those credit terms. So he - again, he was a one-man operation and, you know, cashflow sometimes was an issue and he would talk to us about the flexibility, that we had to accommodate what he needed to do. 86 Brian from Fences R Us, "was based around the southwest region of Brisbane as well. He - his big emphasis was on the fact that he could place an order with us today and he could come in and pick it up tomorrow and he knew that we were going to have the stock in the colour that he wanted and he could get everything at the one time". Further: … I had conversations with him because I was involved in actually setting up his account with the credit terms and that flexibility of credit terms was something that he had told me he valued. 87 Mr Tanks also dealt with a handful of Jim's Fencing franchisees, saying: The ones that we dealt with were mainly from either the southern or the western side of Brisbane. Again, the credit terms with the Jim's Fencing franchisees, some of them were different in that they had a different credit limit, but they still had 30 day accounts, and again, it was all about proximity to where they either ran their business out of or where their jobs were and the fact that they could place an order and come and pick it up the next day and they were assured that the stock would be there. … …because we had an informal agreement with Jim's Fencing that covered a couple of states, they gave us a list of their franchisees in Queensland and I would follow up on those franchisees, and as I said, in Brisbane, we had a handful, probably five, that dealt with us regularly. There was an amount that didn't deal with us and, in my conversations with them to ask why, it was pretty much that we were too far away. So a guy from the northside of Brisbane said, you're too far away. I'm not going to drive all that way just to pick up my fencing. 88 A Lysaght reseller, AAA Fencing on the Gold Coast, told Mr Tanks: … They placed a lot of value on the branding of Colorbond and the associated warranties for their end user customers. They also placed a lot of value, she told me, on the ability to be able to source the orders on short lead times. They were on the Gold Coast, so they could get pretty much the product that they wanted either in 24 or 48 hours on fairly short notice and, again, because they were - they were a little bit different to the installers, so they had a bigger account in regard to credit limit, but that also was something that she emphasised as being important to their business. 89 AAA Fencing also considered Gram a competitor through its reseller Cut Price Fencing on the Gold Coast, the owner saying to Mr Tanks: …on occasion… just like any business probably getting annoyed with a competitor she said to me that, you know, Cut Price Fencing were a bit of a thorn in her side as far as, you know, competition in the market place. 90 Harry Treloar of Superior Fences & Gates on the north side of Brisbane: spoke to [Mr Tanks] on a number of occasions about the importance that he placed on the Colorbond brand and the associated warranties. He placed a lot of value on the fact that he could get the stock from us on the short lead times, and similar to AAA he placed a lot of value on the fact that with Lysaghts he had a 30 day trading account and our, I suppose, flexibility for him over a number of years of being a long-standing customer. 91 Mr Treloar also "spoke to [Mr Tanks] on several occasions about Accolade Fencing being a competitor of his", Accolade being a Gram reseller. 92 Mr Tanks said the principals of BP & CJ Jenner on the south side of Brisbane: … placed a lot of emphasis on the Colorbond brand and the warranties that went with it, and essentially Barry worked probably 80 per cent exclusively for one particular builder doing his new homes, and that builder used Colorbond Fascia gutter and roofing that was supplied through us, and his builder and Barry wanted to, I suppose, have a very BlueScope, a very Colorbond brand theme to their estates. 93 South Burnett Fencing servicing the Nanango and Kingaroy regions "placed a great deal of value on our Toowoomba branch's service …and the fact that we went to that region twice a week with regular deliveries", according to Mr Tanks. 94 Mr Tanks said Ruby Developments, the developer of retirement villages in Queensland, "placed a lot of emphasis on the fact that he was getting a Colorbond fence that was backed up by the BlueScope warranties". 95 Topline Trading Limited, being an importer from New Zealand, told Mr Tanks "we won't go to Stratco and Metroll, because they exist in New Zealand, and that they didn't think they would be doing them any favours in importing product against their own brand over in New Zealand, and they came to Lysaghts because they knew that we were part of BlueScope and that we supplied Colorbond". 96 Mr Tanks' experience with end customers was that they would often ask for Colorbond fencing. Perhaps 10% asked for a specific profile. He could not recall a customer who wanted to buy Smartascreen deciding to buy Neetascreen but accepted it was possible this had occurred, although said that it would have been rare if it did. He said Neetascreen outsold Smartascreen three to one. 97 Mr Tanks recognised that Lysaght's Queensland competitors included Accolade and Cut Price Fencing, as they were near Lysaght distributors and competing with them, but did not conceive of them as Gram distributors (which they were). According to Mr Tanks: … because of Stratco's huge marketing push and consumer awareness, I would think that they would have sold - they would have done everybody some damage with Wavelok. Wavelok was a good profile, and I - I don't know the numbers, because I don't work for Stratco. 98 As noted, Wavelok was introduced in 2006, whereas GramLine had been on the market since 1995 and Smartascreen since 2002, when according to Ms Marlin, the market is slow to accept new profiles. It is also apparent that Stratco was a major competitor in Queensland but did not have the same presence in NSW. 99 Mr Tanks agreed that Metroll's symmetrical product "had a problem with the lapping, and there was an obvious gap in it" (noting that this is not a reference to the product that Metroll released in 2008 and withdrew in 2009 as a result of a mediation with Gram). 100 Ms Wall, Lysaght NSW, identified the Sydney metropolitan area as a key market. She thought that there was not as much competition to Lysaght in regional NSW because Lysaght had a strong distribution network throughout NSW and the ACT. In Sydney she believed that the main competitors of Lysaght were Gram, Metroll, Stratco and Dunn & Farrugia. As to Dunn & Farrugia, I infer that its inroads into the market would have been small initially and then increased during the latter part of the infringement period, particularly after 2007 when it released its symmetrical fence. 101 Most customers, in Ms Wall's experience while working in Lysaght branches, asked for a Colorbond fence but she agreed that some people came in looking for a specific profile they had seen in a brochure, including the symmetrical profile. In some instances, the symmetrical profile was the selling point. Ms Wall must be referring to end customers in the main here, as I infer that wholesale customers, installers, builders and developers would have known about available profiles. 102 According to Ms Wall, Climar Industries, an export company, said it "wanted to source from BHP building products because they made their fences from Colorbond steel". Alcatraz Fencing in south Sydney said it bought "Lysaght product because it was made from Colorbond steel. We offered a strength and - strength and material warranty. We had a good delivery service. We offered credit terms". WR Engineering's Wayne Read, located in Canberra, said "the reason he purchased from Lysaght was because we had a Colorbond fence made from - sorry - a Lysaght fence made from Colorbond material. And that we had - we offered a good delivery service, and that we offered credit terms". Playsafe Fencing in the south of Sydney was a big distributor of Gram, about 90% according to Ms Wall, but stocked Lysaght Colourbond "because they wanted to be able to offer a Colorbond product when people came in the door and specifically asked for it". 103 Ms Wall gave another example as follows: We had a particular fencer, Bob. He used to come from Bob's Fencing, Bob Fawkes from Bob's Fencing. He used to regularly come in, often of an afternoon, and I would discuss with him what work he had on, why he was buying Lysaght, and his reason for buying from Lysaght and from Arndell Park was that it was - he liked the Lysaght system. It was made from Colorbond steel. We had good stocks and we gave him credit terms. 104 Ms Wall said this was typical of her discussions with installers who said they bought from Lysaght "because it was a Lysaght fence made from Colorbond steel, that there was a warranty, both a material and a performance warranty, that we had good stocks in a variety of colours and sizes that they could pick up. We had the - we could also pack individual orders for them if they required so they didn't have to buy in bulk and we offered credit terms". 105 Ms Wall agreed that Bluescope's Smartascreen was intended to compete with GramLine because GramLine was popular in NSW, Gram having about 50% of the Sydney steel fencing market in 2001. Ms Wall had seen Ms Marlin's paper at around the time it was prepared and knew that Bluescope's market share had fallen between 2000 and 2001 by about 3%. Ms Wall said this was due to the GST, the downturn in the residential market, and GramLine's popularity, as well as that of Metroll, and their associated marketing. She agreed that Bluescope anticipated that Gram and Metroll would continue to erode Bluescope's market share unless something was done, and "the purpose of the production of Smartascreen was to arrest that slide" in market share. She agreed that the strengths of Smartascreen were that it was symmetrical, it overcame potential neighbour disputes, it was a strong profile, able to withstand wind gusts, and was new. Ms Wall marketed the Smartascreen profile by reference to these advantages. I should also note that, while new, Smartascreen was an obvious imitation of GramLine which had been on the market since 1995 when the market was slow to accept new profiles and Bluescope must be inferred to have intended that Smartascreen would be used instead of GramLine in new housing developments. 106 Ms Wall, like Ms Marlin, considered Gram to be a formidable competitor in the national fencing market which, in 2001, held a greater share of the national fencing market than Bluescope did. She agreed that, having built up its branch network in NSW from 2004, from 2006 Bluescope increased its marketing efforts for fencing, accepting that there was at that time "a significant push within Bluescope to increase its marketing efforts around its fencing products" to increase its sales and market share. She agreed that the marketing of Smartascreen within this overall push of its fencing products was intended to divert customers from GramLine to Smartascreen. In so doing, she considered that by 2002, when Smartascreen was introduced, Gram had an extensive distribution network, a short lead time for delivery, active marketing of GramLine and its other products, a good colour range, and a good product in GramLine, and thus was likely to continue to acquire market share in the national market. 107 Mr Cook, Lysaght Victoria, identified key competitors in Victoria as Gram and Metroll. He also said that he often spoke to key resellers in Victoria including the principal of Universal Fencing in Bendigo who said: … the price needed to be market competitive. It was critical that the product was a Colorbond product. The credit terms were very critical in his ability to continue to trade with us. Speed of delivery and stock availability were also very important, and the integrity of the product when it arrived, so undamaged. 108 The principal of Farrell Fencing in Echuca said much the same thing. STY Metals in Wangaratta (different from STY Fencing) said "the price needed to be market competitive. It must be Bluescope product and he needed his credit terms available to him. It needed to be fast turnaround and have stock available, and the product needed to be delivered undamaged". Don Sparks Steel Supplies in Albury and Wodonga also said similar things about why they bought from Lysaght, as did Jackal Fencing in Bendigo. 109 Mr Cook agreed Gram had outlets in Melbourne at Sunshine West, but was not otherwise familiar with Gram's Victorian resellers other than a large reseller in Ballarat, Begonia City Fencing. 110 Mr Finnegan, who dealt with Dunn & Farrugia for Lysaght, said that the owner of that business told him that "Colorbond brought inquiries and customers to his business". 111 Wayne Read owns and operates WR Engineering Pty Ltd, a supplier and installer of home improvement products including Bluescope's Lysaght Colorbond steel fencing in Canberra. According to Mr Read, after the bushfires in 2003, the popularity of steel fencing grew in Canberra. WR Engineering's main competitors were Tymlock Fencing Solutions and Robertson's Tanks. They were competitors because their outlets were close to that of WR Engineering. Tymlock sold Metroll products and Robertson's Tanks sold Gram's products. Dunn & Farrugia entered the ACT market in 2009 or 2010 by opening an outlet in Queanbeyan and WR Engineering lost a lot of its commercial customers to Dunn & Farrugia who sold at a much lower price than others including WR Engineering. This is near the end of the infringement period and confirms my inference that, having started in Sydney in 2004, Dunn & Farrugia had to build up the kind of network Gram already had in place by 2001. As noted, Dunn & Farrugia also did not have a symmetrical fence available until 2007. Otherwise, Mr Read said that WR Engineering has a lot of repeat customers and referrals from customers for whom it has previously installed a fence. 112 Because Stratco and Metroll also sold Colorbond fencing, WR Engineering focused its marketing on the fact that it sold Lysaght Colorbond fencing, and was the only supplier in the Canberra area doing so (at least until Pinus Sawmills began supplying Lysaght fencing products in 2007). Customers (I infer end customers) of WR Engineering generally asked for a Colorbond fence without specifying which profile they wanted. When Gram stopped using Colorbond, WR Engineering used this as part of its marketing. WR Engineering preferred Lysaght as a supplier to Gram because Mr Read believed Colorbond to be a better product. Also, Gram required cash on delivery whereas Lysaght offered credit for 60 days and Gram's price was not inclusive of freight for wholesale customers whereas Lysaght's price was inclusive of freight for wholesale customers such as WR Engineering. WR Engineering also had a long relationship with Lysaght which was part of its marketing, which it did not want to change. 113 Before Smartascreen was introduced WR Engineering offered Bluescope's Neetascreen product. Mr Read had pushed Bluescope to develop a fence which looked the same on both sides which would be a neighbour friendly product like those of Stratco and Metroll (and, of course, Gram). From this, I infer that Mr Read perceived a demand for a symmetrical product from his customers but note that Stratco's symmetrical product was not released until 2006. In Mr Read's words, a neighbour friendly profile would make it easier for him to ensure a sale if the neighbours were in dispute. Neetascreen looked different on each side and, I infer, one side was generally perceived to be less attractive than the other (as, if not, there would be no demand for a fence which appeared to be the same from both sides). Neetascreen, however, was WR Engineering's biggest seller, probably representing around 70% of its steel fencing sales. If Smartascreen had not been available, Mr Read believed he would not have acquired GramLine but might have acquired a neighbour friendly profile from Stratco or Metroll who both used Colorbond steel and offered terms similar to Lysaght. 114 Mr Read also gave evidence that his biggest customer was the ACT Government which "stipulated that they wanted the timber fencing replaced with Colorbond fencing and they wherever possible wanted it to be Colorbond Australian made". 115 According to Mr Read "the sawtooth profile [Smartascreen] took away from our Neetascreen sales, so potentially the customer was going to buy a Colorbond fence but [if] they choose Neetascreen or Smartascreen was then a choice". Some customers chose Smartascreen because they had an issue with a neighbour and there was an "argument about who was going to get the good side and who was going to get the bad side", in which event the symmetrical profile of Smartascreen was a significant selling point. Mr Read accepted that Robertson's Tanks, which sold GramLine, was in direct competition with WR Engineering given the proximity of the outlets. He accepted also that his competitors extended beyond Canberra into Queanbeyan, Bungendore and Braidwood and Cooma and the Monaro generally, including Goulburn and Yass. 116 Mr Read confirmed that after the 2003 bushfires in the ACT the demand for steel fencing increased, both for replacement fencing and new fencing. Further, that sales of Smartascreen included accessories such as Smartascreen lattices and gates, screws, caps, flashing, lugs, cement and the like. He accepted that between 2005 and 2010 there had been a steady demand for Smartascreen, although the majority of the work was matching to an existing fence. WR Engineering had matched a Smartascreen fence with an existing GramLine fence. This occurred probably once a month. 117 Doug Reid owns and operates Pinus Sawmills in Queanbeyan, which supplies home improvement products including fencing. Until the early 2000s Pinus Sawmills sold only timber fencing. Then the market sought steel fencing and Pinus Sawmills purchased Lysaght Colorbond steel fencing to meet the demand from 2001. Mr Reid considered his two main competitors to be Gram (via the reseller, Robertson's Tanks) and Metroll which operated in the region in which Pinus Sawmills is located. He considered Stratco to be a minor competitor, which accords with the evidence of Mr Mann. 118 According to Mr Reid, his competitive advantages included same day delivery and free freight on Lysaght products whereas Gram and Metroll charged for wholesale delivery. As noted, I do not infer that Lysaght gave free delivery to wholesale customers. It did not separately charge for freight to wholesale customers which some wholesale customers preferred. From time to time Mr Reid lost customers based on price, as Gram and Stratco's products are cheaper than Lysaght Colorbond products. Pinus Sawmills' main customers are local installers as Pinus Sawmills does not install fencing. Between 2005 and 2010, Pinus Sawmills had a base of about 20 main repeat customers to whom they offered credit terms of 30 days. Mr Reid noticed the increased demand for fencing in the region after the 2003 bushfires. In the early 2000s steel fencing was about 3% of sales but by 2010 it was about 30%. The most popular product of Pinus Sawmills in the range was Neetascreen but some customers preferred the Smartascreen profile because it looked the same from both sides which "speeded up" the sale process. Although Mr Reid had been approached to sell both Gram and Metroll products, he was happy with the product, service and price offered by Lysaght which included favourable credit terms, strong marketing support and a good product with reliable service over a lengthy period. If Lysaght ceased supplying Pinus Sawmills, Mr Reid believed that Metroll offered the most similar relationship to Lysaght and also used Colorbond steel. 119 Mr Reid confirmed that his fencing customers were a relatively small number of installers who were repeat customers at his and other outlets. He said people did ask for a symmetrical profile from time to time during 2005 to 2010 but Neetascreen was the preferred product. If they were after a symmetrical profile, however, the customer, mostly a fencing installer, would not buy Neetascreen but Smartascreen. They would do so because the end customer wanted a symmetrical profile, usually because of an issue with a neighbour. While this did not occur frequently, it did occur and Pinus Sawmill's sales of Smartascreen were not insignificant compared to Neetascreen. 120 Tom Nikolson used to own Oz Colour Fencing in Laverton North, Victoria. The business started with timber fencing as there was little demand for steel fencing in the region until 2000. After 2000 the demand for steel fencing in Victoria increased and Oz Colour Fencing purchased Lysaght Colorbond steel fencing from Bluescope. Oz Colour Fencing was both a supplier and installer (using contractors) and its main customers were developers and home owners, but it also sold to other fencing installers. The vast majority of Oz Colour Fencing's stock was Lysaght Colorbond, with some Metroll and Stratco products also available to meet specific requests. Lysaght assisted Oz Colour Fencing to market itself to developers leading to substantial sale and installation work. Mr Nikolson did not consider Gram to be a material competitor because it did not have a reseller in the Laverton region. Gram's nearest resellers were about an hour away in Ballarat and Scoresby. Metroll and Stratco did have a sales presence in the region and thus were his main competitors. 121 Mr Mann approached Mr Nikolson about selling Gram's products in about 2009 but Mr Nikolson preferred Lysaght due to the historical relationship between his business and Lysaght, Lysaght's proven reliability, the fact Colorbond was Australian made which assisted in marketing, and the favourable trading terms Lysaght offered compared to those Gram offered (particularly that Gram required payment before delivery and Oz Colour Fencing needed the 30 to 60 day credit offered by Lysaght to be viable). 122 Mr Nikolson offered Smartascreen but he did not keep stock of it on hand as he did Neetascreen. He would order Smartascreen when it was requested. Smartascreen was requested by customers who had seen it in a Lysaght brochure or wanted to match an existing fence.

Interim observations 123 Before considering the competing cases on Gram's loss, it is convenient to make some observations about the evidence thus far. 124 The evidence discloses that steel fencing became popular in NSW before it did in other States and that NSW is by far the largest market for steel fencing. For example: (1) 85% of Gram's sales were in NSW. (2) Gram's total sales in NSW increased from $15,809,703 in 1998 to a peak of $27,587,580 in 2002 before declining. By comparison, Gram's sales in all other States (excluding South Australia) had a combined increased from $2,274,895 to $4,846,214 in the same period. (3) Mr Hill's table 8 shows that in 2000 NSW consumed around 70% of the total Colorbond and painted steel in Australia. By 2010 NSW still consumed over 48% of the total Colorbond and painted steel in Australia. (4) Although NSW's market for Colorbond and painted steel grew by only 8.1% between 2000 and 2010, being outstripped by enormous growth rates in Victoria, Queensland and Western Australia, in 2010 NSW still used nearly five times as much Colorbond and painted steel as Victoria and Tasmania, nearly four and a half times as much as Queensland, and more than twice as much as Western Australia. 125 Gram's main market was NSW, which by 2000 was a mature (in the sense of not growing rapidly) market but also was by far the largest market. Gram had about 50% of that market by 2001. Gram's substantial expansion in the years leading up to 2000 and thereafter reflected not only its success and the success of GramLine but the increase in the steel fencing market in Sydney and NSW. The 35% or so market share that Gram had in the national market by 2000 must have reflected its market position in Sydney and NSW. 126 It is apparent that Gram's sales in NSW declined after 2002. By 2010 Gram's sales in NSW were $16,470,110, down from a peak of $27,587,580 in 2002. Gram's sales in NSW also continued to decline throughout the infringement period. 127 In contrast, Gram's sales in Victoria (including Tasmania) peaked in 2004, two years later than in NSW and declined thereafter but not to the same extent as in NSW. 128 Gram's best year in Queensland in terms of sales was in 2009 but Gram's sales grew substantially between 1998 and 2010 in Queensland, including in years after the release of Smartascreen in 2002 and during the infringement period (when Gram was not using Colorbond steel). 129 Gram's best year in Western Australia was in 2010, Gram having grown its sales substantially in that State including throughout the infringement period (when Gram was not using Colorbond steel). 130 The evidence also discloses how important the Sydney fencing market was to the overall market in NSW and thus Australia as a whole during the infringement period. Given the nature of the product, residential fencing, it is not difficult to understand why the Sydney market would be likely to be by far the largest. Bluescope certainly understood that Gram was particularly strong in NSW, with a market share of around 50% in 2001, as Ms Marlin's paper discloses. It necessarily follows that Gram was particularly strong in Sydney where, as Ms Marlin put it, GramLine "dominated" new housing developments. Ms Wall's evidence confirmed what is obvious from Ms Marlin's paper, that Bluescope saw Gram's increasing market share as having eroded its market share and that Bluescope wanted to stop the erosion continuing which it believed would be the case if Gram continued to dominate the NSW market and continued to expand into other States as it had done since 1997. Bluescope, it must be inferred, released Smartascreen because it was directly substitutable for GramLine by reason of its profile. 131 It is apparent that Bluescope took a number of other steps to improve its market position including expanding its national branch and resellers network since 2004 and engaging in a marketing push of its Colorbond fencing products since 2006. By these means Bluescope wanted to both increase the steel fencing market and increase its share of the market. Bluescope rightly believed that Smartascreen would enable Bluescope to better compete with Gram by having a comparable product to GramLine. It must be inferred that Bluescope intended and believed it was likely that a material, perhaps even substantial, proportion of the customers who otherwise would have bought GramLine from Gram branches and Gram resellers would instead buy Smartascreen from Lysaght branches and Lysaght resellers. 132 There are also apparent differences between metropolitan and regional areas. I infer from the evidence that proximity to a selling location is an important factor for fencing installers in particular in metropolitan areas but that regional branches and resellers may have had large catchment areas. 133 It appears from the evidence that Gram and Bluescope did not have a large number of resellers in common. This is not unexpected as it is apparent resellers, as wholesale customers, tend to be affiliated with one or other supplier, although some did offer products from more than one supplier. It is clear from Gram's sales that Gram and Bluescope must have been competing in both metropolitan and regional areas through branches and resellers, albeit that the intensity of competition would depend on the proximity of the outlets. 134 Another point should be made here. It is that the evidence from Lysaght resellers and about regular customers of Lysaght branches needs to be understood as representing that part of the market which has chosen to deal with Lysaght and not Gram, Metroll or Stratco. As explained further below, while Gram could have and did not adduce similar evidence from its resellers and about its regular customers, it is clear that there are substantial numbers of both Gram resellers and Gram regular customers. In these circumstances it would be wrong to infer that the evidence from Lysaght resellers and Lysaght regular customers represented the whole of the market. To do so would be to fail to recognise what the evidence represents, the particular segment of the market which preferred to deal with Bluescope. 135 As also explained further below, it is also necessary to recognise that while some resellers were also installers, many were not. The resellers were wholesale customers of Lysaght who sold on to developers, builders, installers and end customers. As such, their purchases from Lysaght of Smartascreen necessarily reflected the demand for Smartascreen from their customers. The fact that some, perhaps even many, Lysaght resellers would not have purchased GramLine had Smartascreen not been available may be accepted. But it does not change the fact that Lysaght resellers would not have been purchasing Smartascreen at all had it not been available during the infringement period and thus would not have been able to compete with Gram branches and Gram resellers by offering a symmetrical fence, despite what Mr Read's evidence discloses, was a clear demand for such a product. As a result, it would be wrong to conceive of all of the sales of Smartascreen to Lysaght resellers as sales Gram could never have made. 136 I do not know the proportion of Bluescope's sales of Smartascreen to other Bluescope products (Neetascreen and Miniscreen), but there is sufficient evidence to infer that Smartascreen was an important component of Bluescope's offer to its customers during the infringement period. Neetascreen seems to have outsold Smartascreen by about three to one but there were still significant sales of Smartascreen. It appears from the evidence that Miniscreen was a premium product introduced in 2003 and was not as popular as Neetascreen or Smartascreen. 137 Given the above and the following circumstances it would be surprising if a material number of sales of Smartascreen did not represent lost sales of GramLine: (1) Gram was well represented and had achieved a dominant position in the Sydney market. It must be inferred that Gram achieved this largely off the back of its GramLine product which had been available since 1995 and because by 2001 its distribution network, service and marketing had enabled it achieve such a position. It must also be inferred that Bluescope recognised this to be the case. (2) Gram was five years into an apparently successful expansion program into Victoria, Queensland and Western Australia before Smartascreen was introduced in 2002 and, by that time, had made substantial inroads into Victoria and Queensland, given its sales on a State-by-State basis. Again, I infer it did this largely off the back of its GramLine product and because its distribution network, service and marketing enabled it to do so. (3) Despite Smartascreen, Gram continued to grow its market substantially in Queensland and Western Australia. Again, it must be inferred that it did this largely off the back of its GramLine product and because its distribution network, service and marketing enabled it to do so. Further, Gram's capacity to do so does not appear to have been substantially impeded by the fact that it was not using Colorbond steel. 138 In these circumstances, while certain individual Lysaght stores and stockists might not have been competing directly with a Gram outlet or reseller, I am satisfied that Bluescope's perception in 2001 was correct. Gram was a formidable competitor of Bluescope which had effectively achieved market dominance in Sydney and NSW and had in place the things it needed to continue what had proven to be rapid expansion into the other major markets in Victoria, Queensland and Western Australia (namely, a good product, a good distribution network, good marketing and good service which a substantial proportion of the market must have considered just as beneficial as Lysaght's offering). 139 The evidence about competition between GramLine and Smartascreen is clear for NSW in which Gram was dominant and Bluescope was trying to recover and increase its market share by the introduction of Smartascreen. Other evidence disclosing the competition between them includes: (1) Mr Tank's evidence that Lysaght's reseller AAA Fencing on the Gold Coast considered the Gram reseller Cut Price Fencing to be a competitor. (2) Mr Tank's evidence that Lysaght's reseller Superior Fences on the north side of Brisbane considered the Gram reseller Accolade Fencing to be a competitor. (3) Ms Wall's evidence that Playsafe Fencing stocked mainly Gram products but also Bluescope products to meet a specific customer request. (4) Mr Read's evidence that one of WR Engineering's two main competitors was a supplier of Gram's products, Robertson's Tanks. (5) Mr Read's evidence that he pushed Bluescope to develop a fence which appeared the same from both sides and thus was "neighbour friendly" because it would enable WR Engineering to compete with the products offered by his two main competitors, Gram and Metroll who both offered such products. (6) Mr Read's evidence that he competed for customers in his area and the Canberra region, well beyond the immediate surroundings of his business. (7) Mr Read's evidence that after the 2003 bushfires in the ACT, about once a month, WR Engineering had installed a Smartascreen fence to match an existing GramLine fence. (8) Mr Reid's evidence that one of the two main competitors of Pinus Sawmills was a supplier of Gram's products, Robertson's Tanks. (9) Mr Reid's evidence that some customers preferred Smartascreen because it speeded up the sale process due to it appearing the same from both sides. (10) The evidence from all of the witnesses for Bluescope involved in selling fencing products that some customers, albeit a minority, specifically asked for Smartascreen as it was a neighbour friendly profile. (11) The evidence from all of the witnesses for Bluescope involved in selling fencing products that while Neetascreen remained the biggest selling product, Smartascreen was a steady seller (probably around three to one in favour of Neetascreen ). (12) The evidence in Ms Marlin's paper that Smartascreen was introduced, in effect, to regain market share which had been lost to Gram, given the popularity of the GramLine product. (13) The evidence from Ms Wall to the same effect that Smartascreen was introduced, to regain market share which had been lost to Gram, given the popularity of the GramLine product. 140 This evidence requires the inference that Gram must have lost a material number of sales of GramLine to Smartascreen. The fact that Mr Read was matching Smartascreen fences to GramLine fences about once a month during the infringement period is particularly instructive. There is no reason to infer that Mr Read's experience was unusual, apart from the surge in overall demand for steel fencing after the ACT bushfires. The obvious inference is that, but for Smartascreen, a person who had installed GramLine would have purchased GramLine to match the existing fence. But once a month Mr Read was matching Smartascreen to an existing GramLine fence. The evidence confirms that Ms Marlin's views in 2001 were accurate and Smartascreen was being substituted for GramLine, even where there was an existing GramLine fence. 141 This said, I accept that some sales of Smartascreen were likely to be lost sales of Neetascreen. I also accept that there were a variety of factors, as described above, which would have impacted on Gram's sales of GramLine during the infringement period.

Gram's case 142 Gram's approach to its loss as a result of Bluescope's infringing conduct takes as its first premise that a customer buying GramLine will also purchase from Gram: (a) some products which are essential for the construction of a GramLine fence (such as posts, rails, screws and caps), (b) some products which are discretionary additions to a GramLine fence such as lattices, gates, plinths, balls and the like, and the concrete or other material necessary to install these products, and (c) other fencing needs as and when they arise. This premise is now common ground. 143 Gram's case takes as its second premise that Gram had grown rapidly up to 2002 and, but for Smartascreen, would have continued to grow in much the same manner from 2002 and during the infringement period. This premise is not common ground. 144 Based on these two premises Mr Hill calculated Gram's loss by comparing Gram's actual total sales during the infringement period to its hypothesised total sales as if Smartascreen had never been introduced in 2002 and as if Gram had increased its market share in all States in various ways using Gram's sales trajectory up to 2002 as a baseline. 145 While Mr Hill initially prepared four (and then an additional eight) scenarios, he identified in oral evidence that he did not consider two of his scenarios (3 and 4, and the variations of them) to represent a rational and reasonable assessment of Gram's loss. It will be sufficient to say this must be so as in these scenarios Mr Hill assumed that the market in NSW, the largest by far, increased by 45.2% which is contrary to the fact it only increased by 8.1% across the period with which Mr Hill was dealing. As a result, I do not propose to deal with scenarios 3 or 4 (or the variations to them) as Mr Hill himself does not suggest they provide a rational or reasonable basis upon which to assess Gram's loss. Mr Hill proposes scenarios 1 and 2 as his estimates of loss. Scenario 1 assumes what Mr Hill describes as Gram maintaining its market share as at 2002 in each State throughout the infringement period. Scenario 2 assumes what Mr Hill describes as scenario 1, but Gram increasing its market share in NSW by 10% from 50% to 60%. 146 One problem with scenarios 1 and 2, which I identified at the outset (and which led to Mr Hill preparing variations on his scenarios), is that they assume Smartascreen did not exist at all. The difficulty is that Smartascreen, the infringing product, did exist for three years from 2002 until 16 April 2005, which is when the infringement period commences. Mr Hill's assumed market shares for Gram thus assume sales as at 2005 were greater than Gram's actual sales. The effect of this would be to compensate Gram for loss suffered between 2002 and 16 April 2005, which is outside the infringement period. Such loss is embedded within Mr Hill's starting point. This approach is impermissible and would over-compensate Gram. 147 A second problem with Mr Hill's approach to loss is that scenarios 1 and 2 involve Gram's total sales, not its sales of GramLine and products associated with GramLine. It is one thing to accept that a person buying GramLine (or Smartascreen) would buy all accessories from the same provider, but it is another to ignore the fact that Gram continued to sell Colorline. Mr Hill later indicated that GramLine sales and associated sales represented about 66.5% of Gram's overall sales noting, however, that Gram (that is, Mr Mann) continued to believe that Gram's loss should be assessed by reference to Gram's overall sales. Mr Mann's belief is not an adequate foundation for an expert such as Mr Hill to proceed on the same basis (as represented by scenarios 1 and 2). 148 A third problem with Mr Hill's approach to loss is that Mr Hill did not consider the sales of Smartascreen to be relevant. Given that it is Smartascreen that infringes the Design, it is the sales of Smartascreen which must be the starting point for any assessment of lost sales to Gram. Mr Hill's scenarios result in an assessment of loss to Gram many multiples greater than the overall (that is, 100%) sales of Smartascreen even if there is added to those sales the sales of all Smartascreen accessories and related products. This indicates that Mr Hill's approach to loss is unreliable. 149 A fourth problem with Mr Hill's approach to loss is that Mr Hill has assumed that Gram's market position and indeed the market throughout the infringement period would be the same as Gram's market position and the market before the introduction of Smartascreen (or, in his variations, before the infringement period). As discussed, this assumption is unsound. For one thing, Gram had grown rapidly in NSW, the largest State in terms of consumption of steel fencing products. However, NSW was a mature market by 2000. For another, Dunn & Farrugia entered the market in NSW from 2004/2005 and marketed its double sided, symmetrical fencing product at aggressively low prices, including sustained marketing assisted by Bluescope, from 2007. The assumption that Dunn & Farrugia did not materially impact the market at least in NSW (the largest consuming State) during the infringement period is unrealistic. Further, Bluescope had been re-organising itself to ensure it had its branches established from 2004 and had an overall marketing push for Colorbond fencing products from 2006. While Smartascreen was one of its products, Bluescope's opening of new branches and marketing push of all Colorbond products leads to the inference that Bluescope would have increased its market share even if Smartascreen had not been available. This marketing push, moreover, extended to Colorbond steel generally, and not merely Lysaght products. Accordingly, as Bluescope noted, as part of this marketing effort the products of other providers who used Colorbond steel, such as Stratco, Metroll and Dunn & Farrugia, were advertised, including the symmetrical fencing products of these competitors of Gram. One such advertisement, for Metroll, said that: A Metline Premium profile looks exactly the same from both sides, so you and your neighbours can enjoy the beauty of your COLORBOND® steel fence. 150 There is also evidence that Stratco, while not seen as a major competitor in NSW, was a major competitor in Queensland, which used Colorbond steel and thus benefited from Bluescope's overall marketing push from 2006 and also from 2006 offered a symmetrical fencing profile. Mr Hill's approach makes no allowance for Stratco impacting on Gram's capacity to gain sales in Queensland or in other States where Stratco was present, even if not to the same extent as Queensland. Indeed, Mr Hill makes no allowance for any change in the market at all throughout the infringement period. 151 Mr Hill also disregards the potential market disruption caused by Metroll's introduction of its second symmetrical product in 2008, which Metroll removed from sale. Mr Mann considered this also to infringe the Design and to be a copy of GramLine but the relevant point for present purpose is that Metroll, a recognised national competitor of Gram, had a similar product on the market for around a year. Bluescope is not responsible for whatever impact that may have had on the market, yet Mr Hill's approach has the effect of making Bluescope responsible for this and every other change in the market between 2002 and 2010 which may have been to Gram's detriment. 152 Mr Hill does not take into account any potential impact of Gram's decision to change from Colorbond steel to imported steel in late 2005. Gram submitted that it is evident that this could not have been a material factor in its sales performance after 2005 because its sales in NSW declined from 2002 after the introduction of Smartascreen when Gram was still using Colorbond steel. This point has force but does not mean that Gram's sales during the infringement period were unaffected by its decision to change from Colorbond steel to imported steel. It is apparent that before late 2005 Gram had marketed its products as superior because of, in part, the use of Colorbond steel. While I do not accept the submission of Gram that "Colorbond" had become a generic term for a painted steel fence because there is no evidence from which such an inference would be drawn, there is evidence that Colorbond was a well-recognised Australian brand, associated with quality. As noted, Gram's sales continued to decline in NSW and Victoria after 2005 but grew after 2005 in the expanding markets of Queensland and Western Australia, so the significance of the "Colorbond factor" is unclear. Nevertheless, there is evidence that some customers would only use Colorbond steel and some preferred Colorbond steel because it was Australian made or because of its reputation. The fact that Gram was no longer using Colorbond steel after late 2005 must be relevant but Mr Hill's assessment disregards this fact. 153 Mr Hill has not given any weight to the fact that, on the evidence, Gram lost customers for reasons unconnected to Bluescope. Thus, as Bluescope noted, there is evidence that in 2009, two of Gram's key resellers in Victoria, New Style Fencing and STY Fencing, changed from Gram to Metroll and instead of buying GramLine, purchased Metfence in "substantial quantities". Gram also lost a Bankstown distributor to "Metroll and other people". 154 Otherwise, I do not consider that much weight should be given to the difference between Gram's terms of sale and those of Bluescope through its Lysaght arm. Apart from the change from Colorbond steel which I have discussed above, there is no suggestion in the evidence that Gram changed its terms or that its levels of service declined. Gram had grown rapidly in the market on the same terms before 2002. There is no reason to think that the market would have perceived its terms differently during the infringement period. It is true that the decision not to use Colorbond steel meant that Gram's products did not come with Bluescope's warranty on materials but I doubt this warranty was perceived in the market as something separate from the overall reputation of Colorbond. It is also the case that Gram, an Australian company, offered a warranty similar to that of Lysaght. Otherwise, the credit, freight and related terms Gram offered, on the evidence, were not subject to material change before or during the infringement period. 155 It may be accepted that, as a matter of principle, a party's loss caused by an infringement of a registered design may exceed the infringing party's gain (see, for example, Colbeam Palmer Ltd v Stock Affiliates Pty Ltd [1968] HCA 50; (1968) 122 CLR 25 at 32), but Mr Hill's approach to loss does not provide a sound foundation to infer that Gram's losses exceeded Bluescope's sales of Smartascreen by so many multiples or at all. 156 For these reasons, while aspects of Mr Hill's evidence about the fencing market generally and Gram's sales are useful, I consider no weight can be given to Mr Hill's estimates of Gram's loss. This said, I accept on the evidence that it must be inferred that Gram has lost a material number of sales as a result of Smartascreen. Bluescope accepts that it may be inferred that Gram lost some sales, but stressed that the test is lost sales due to the infringement of the Design (as opposed to the mere existence of Smartascreen) and submitted that the proportion of sales lost to Gram by reason of the infringement must be small. I deal with this in the context of Bluescope's case, but the fact that Bluescope accepts on the evidence that I should find that Gram lost some sales due to the infringement (5% according to Bluescope) means that in assessing loss I must do the best I can on the evidence and should resolve doubts in Gram's favour (Aristocrat Technologies Australia Pty Limited (ACN 001 660 715) v DAP Services (Kempsey) Pty Limited (in liquidation) (ACN 055 803 542) [2007] FCAFC 40; (2007) 157 FCR 564 at [35] and TS and B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444 at [207]). 157 While dealing with issues of principle, it is also relevant to note the following. 158 Once loss has been proved, it is consistent with the principle that doubts should be resolved against the infringing party that damages be assessed with a "liberal hand" (Pneumatic Tyre Co Ltd v Puncture Proof Pneumatic Tyre Co Ltd (1899) 16 RPC 209 at 215). In conducting such an assessment, speculation and guesswork may be required and are permissible (Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 3 IPR 619 at 637). Lost profits not arising from lost sales may also be compensable (Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 6) [2010] FCA 694; (2010) 87 IPR 346 at [24]), as may the loss of an opportunity (Gerber Garment Technology Inc v Lectra Systems Ltd (1997)114 RPC. 443 at 459 citing Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332). In applying these principles, regard is to be had to the difference between cases in which precise evidence of loss cannot be adduced and cases where such evidence could have been adduced by the claimant but the claimant has not done so (Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 196 ALR 257 at [38] per Hayne J). I consider the observations of Gordon J in Elwood Clothing Pty Ltd (ACN 079 393 696) v Cotton On Clothing Pty Ltd (ACN 052 130 462) [2009] FCA 633; (2009) 81 IPR 378 at [24] about the need for a claimant to provide proper sales data reflects this principle in action. 159 I consider this latter principle is relevant in the present case because there is evidence that Gram could have adduced to assist the assessment of damages which Gram did not adduce. As noted, Gram did not adduce evidence of all of its resellers and stockists in NSW. It also did not produce comprehensive, intelligible, evidence of its network of branches and resellers. Its evidence in this regard is piecemeal and patchy. Being satisfied that there must have been material lost sales is one thing; trying to gauge the magnitude of the loss is another and Gram's evidence in this regard is not as helpful as it might have been. 160 In the present case, it is apparent that market conditions were changing in numerous material ways during the infringement period, none of which Mr Hill weighed in his analysis. To these changes must be added the fact that, as one witness put it, for a fencing installer there are low barriers to entry. As a result, there must have been new potential customers of Gram and Bluescope entering the market. 161 Bluescope raised a further point of principle concerning causation. Bluescope made this submission: Gram also fails to grapple with the issue that its design gave it a monopoly in the particular sawtooth profile but not a monopoly in double sided boundary fencing. In order to establish that the infringements caused it damage, it needs to prove that BlueScope's Smartascreen sales (through the Lysaght business division) were made by reason of that sawtooth profile and not other factors such as the double sidedness of the fence panel, the perceived quality of its Colorbond steel nor its established distribution chains, favourable credit terms and customer relationships. In other words, it needs to prove that the infringing design induced the sales of Smartascreen. 162 In Norm Engineering v Digga Australia [2007] FCA 761; (2007) 162 FCR 1 Greenwood J said this: [266] In the circumstances, an approach to determining an assessment of reasonable compensation, might be to adopt a stepped method which provides a reasoned foundation for an assessment of compensatory loss. The steps might be these. [267] First, examine the number of sales made by the respondent of the relevant 4 in 1 buckets. [268] Secondly, assume that since Digga was trying to meet the market leader by introducing its 4 in 1 bucket, it was at least trying to capture sales from the supply side market leader (and no doubt from other suppliers). [269] Thirdly, assume that the number of sales actually made by the respondent represents sales, on balance, the applicant would have made, as a starting point. [270] Fourthly, in recognition that it does not follow that a sale by Digga would necessarily have been a sale by the applicant, a discount factor must be applied either to the number of sales or to the amount of compensation determined according to proper principles, so as to reflect a proportionate sense of the impact upon the applicant of the respondent's conduct of selling a competing supply side substitute incorporating the infringing component. [271] Fifthly, a further discount factor needs to be taken into account to reflect the particular circumstances of the conduct. In this case, the applicant's 4 in 1 bucket is made up of between 30 to 40 components in all and a much smaller number of essential components. All of the components no doubt are required for the functionality of the bucket but both Dr Gilmore and Mr Gould recognised some components are more important than others. In that sense, the pivot mechanism is a major component. However, the 4 in 1 bucket is a product made up of assembled parts or components and even though the pivot mechanism is essential to functionality, the extent of its contribution to the loss suffered by the applicant needs to bear a proportionate relationship to the materiality of its contribution as component to the 4 in 1 bucket. By applying such a method, it ought to be possible to determine a reasonable analogue for the purposes of compensatory damages of the loss suffered by the applicant by reason of the respondent's conduct. 163 In Digga the applicant contended that it owned the copyright in drawings for aspects of a bucket that could be attached to a primary apparatus used for the purpose of earthmoving, but not the whole bucket (at [7]). This explains why, after determining the sales the applicant would have made had the respondent not sold its version of the bucket, Greenwood J then said at [297]: However, that sum reflects the lost profit upon sales of the bucket rather than the loss suffered by the applicant by reason of infringement of the copyright in the drawing for the pivot mechanism itself. It seems to me that a further discount should apply to take account of that proportion of the profit which is attributable to a component forming part of an assembled article. In this case, it seems to me that the copyright owner is only entitled to damages that represent the loss attributable to the copyright material taken. Although speaking in terms of conversion damages, the principle in relation to severance was expressed this way by Lockhart J in Polygram Pty Ltd v Golden Editions Pty Ltd (1997) 76 FCR 565 at 571: If the court is presented with goods that comprise infringing and non-infringing matter, it will be necessary to decide whether the goods can be severed into infringing and non-infringing components. If the goods can be severed then the court can find that it was the making of the infringing component that constituted an infringement of the work, and therefore that the infringing copy is only comprised by that component. In such a case, the copyright owner is only entitled to damages that represent the value of the copyright material taken. 164 In the present case, Smartascreen infringed the Design because it involved an obvious imitation of the Design's distinctive sawtooth profile applied to a "fencing panel sheet". While I accept that the onus was on Gram to prove that it had suffered loss by reason of the infringement, I do not consider that that it is possible to sever the infringing from the non-infringing components of Smartascreen in the sense described in Polygram Pty Ltd v Golden Editions Pty Ltd [1997] FCA 687; (1997) 76 FCR 565 at 571. Smartascreen is simply a fencing panel which has a particular profile, being an obvious imitation of the Design. The entire fencing panel is the infringing conduct because it is a single steel panel pressed into the shape which is the obvious imitation of the Design. While it is true that in order to erect Smartascreen it is necessary to acquire the posts, rails and other accessories necessary to do so and that Smartascreen could be purchased with other discretionary additions such as gates, lattices and balls for posts none of which infringed the Design, it is not in dispute that in order to erect Smartascreen a person had to buy non-infringing accessories to enable Smartascreen to be erected and could and did buy other non-infringing accessories such as gates, lattices and ball posts. What it is not possible to do is to identify any separate component of Smartascreen itself which did not infringe the Design, as the entire panel is pressed into the sawtooth profile over which the Design gave Gram a monopoly. This is not to suggest that it is to be assumed that every person who bought Smartascreen did so solely because of the sawtooth profile, but the concept of severing Smartascreen into infringing and non-infringing components is not one I consider open. 165 I also do not accept that Greenwood J was suggesting anything other than a discount from the total sales of the article that contained infringing components in order to reflect the fact that, in Digga, the article involved numerous components only some of which were infringing. In particular, Greenwood J was not suggesting that it was necessary to attempt to identify persons whom it had been proved had purchased the article because of the infringing components. This is likely to be an evidentiary impossibility which, presumably, is the reason why step 1 in Greenwood J's analysis was to identify total sales of the article (not the sales caused by the infringing components), step 3 took the total sales as the starting point, and step 5 discounted those sales to reflect the requirement of causation as between the infringement and the loss.

Bluescope's case 166 Bluescope's case starts from the proposition that painted steel fences of the kind with which this case is concerned are substitutable. I accept that purchasers could choose any one of a number of fences for their residential property, be it timber or steel and, if steel, of many different types. While GramLine was the first symmetrical steel fence to market, there were other profiles available during the infringement period both symmetrical and non-symmetrical. 167 I accept that all of the fencing products were substitutable to varying extents. They perform the same function. A person's decision to buy one or other product involves a choice. The choice will depend on a multiplicity of factors of which the appearance of the steel fence is one factor. For some people appearance may be the most important, or determinative, factor. For others, it may be price. Some people, as the evidence shows, preference or demand Australian materials. Others, such as fencing installers in a metropolitan context, require the convenience of being able to collect the product without too much travel time. Some resellers and fencing installers, such as some of those who purchased from Bluescope, needed favourable credit terms. Others, such as those who purchased from Gram, must have been happy to pay before or on collection. 168 Given this (and the other matters discussed above), Gram's case, that its lost profits would have been multiple times more than Bluescope's sales (even allowing for Gram's lower costs and higher margins), is untenable. Equally untenable is the proposition that every Smartascreen sold necessarily represents a lost sale of GramLine. Bluescope's ultimate proposition is that, having regard to the evidence it has called and the lack of evidence from Gram, it should be inferred that 5% of sales of Smartascreen represent a lost sale to Gram. Bluescope adduced evidence from an accountant, Owain Stone, who calculated Gram's lost profits across the range of 0% to 100% including for essential accessories (posts and rails) and discretionary accessories. In this regard, it should be noted that there is no dispute that Mr Stone's calculations, which apply Gram's lower costs and higher margins to Bluescope's sales data, are correct. I consider 5% to be too low for the reasons given below. 169 The fact that Bluescope must be inferred to have intended and believed it was likely that Smartascreen would be directly substitutable for GramLine because of its infringing sawtooth profile is important. The evidence of Gram's declining sales in NSW before it stopped using Colorbond and before any other symmetrical fence entered the market apart from GramLine, Metroll's inferior product and Smartascreen, together with the evidence that Smartascreen was being substituted by being matched with an existing GramLine fence after the ACT bushfires, are strong indicators that Bluescope should be inferred to have achieved its intention to a material extent. 170 As noted, Bluescope called evidence from a number of its employees involved in the Lysaght business. Amongst other things, they gave evidence about the state of mind of regular customers with whom they dealt in Lysaght branches about why those customers chose to purchase from Lysaght. Bluescope also called evidence from a number of long-term Lysaght resellers who gave evidence about why they preferred to deal with Lysaght, as well as the purchasing habits of their customers and their competition. Much of that evidence has been referred to above. For present purposes, it is necessary to acknowledge that, although Gram called no equivalent evidence, it must not be assumed or inferred that Bluescope's evidence represents the market as a whole. Bluescope's evidence is from that part of the market which has chosen to purchase from Lysaght. In particular, the Lysaght resellers who gave evidence had been Lysaght resellers for years, whose own branding and businesses had been built off the Lysaght brand. Further, the evidence about customers was evidence either about customers such as installers who routinely purchased from a Lysaght branch or a Lysaght reseller or a person who had gone to a Lysaght branch or Lysaght reseller to purchase steel fencing. It is to be expected that such people would hold and express views about the importance of the Lysaght brand, Bluescope material, the use of Colorbond, Lysaght's favourable terms and conditions, and the fact that Lysaght did not charge separately for wholesale deliveries to its resellers. 171 We know, however, that by 2001 Gram had a greater market share than Bluescope (even if that largely depended on the Sydney market) and that after 2001 Gram remained a significant supplier, increasing its sales substantially in Queensland and Western Australia and continuing to sell large quantities of Gram products in NSW and Victoria. As a consequence, it must be inferred that the matters which Lysaght resellers and regular purchasers believed to be important were not necessarily equally important or important at all to others in the market. For example, while I accept that the use of Colorbond steel is important even determinative for some purchasers (wholesale and retail), it is apparent from Gram's increasing sales in Queensland and Western Australia and continued substantial sales in NSW and Victoria after 2005 that Colorbond was not important to a material market segment. In short, Bluescope's evidence is necessarily from that part of the market that values Bluescope's offer. It does not represent the market as a whole. 172 Bluescope noted that: There is a complete void in evidence from any customer who said that they actually bought Smartascreen during the Period, but in the counterfactual world where Smartascreen was not sold, would otherwise have purchased GramLine. The evidence is all the other way; to the effect that if Smartascreen were not available, customers would have purchased another Colorbond product. See for example the evidence of Mr Reid and Mr Read. 173 It may be accepted that Gram did not adduce evidence from any person that had purchased Smartascreen instead of GramLine. It is also true that Bluescope adduced evidence from a number of its resellers to the effect that even if they had not purchased and sold Smartascreen, they would not have purchased and sold GramLine for numerous reasons. This submission, however, overlooks the nature of the market. Bluescope and Gram sold via branches and via resellers. The resellers are thus both wholesale customers and retail sellers. The branches and resellers sold to builders, developers, installers and end customers. Some resellers were also installers, but I infer that many were not. The relevant point for present purposes is that branches and resellers were competing for customers. It is not surprising that a reseller who has dealt with only Bluescope for years and whose main competitors included Gram via a different reseller would not have purchased GramLine if Smartascreen had not been available. The issue for present purposes is different. It is that the customers who were purchasing from resellers and branches had a choice of symmetrical sawtooth profiles as a result of Smartascreen when this choice would not otherwise have existed. 174 The availability of the choice of Smartascreen meant that Lysaght branches and resellers could satisfy the demand of customers for a symmetrical fence. This is not to suggest that some people who bought Smartascreen might not otherwise have bought a non-symmetrical fence such as Neetascreen rather than GramLine. It is merely to recognise that there was a material segment of the market who wanted a symmetrical profile, liked the sawtooth profile in particular, and that Bluescope must have satisfied some material part of that demand where Gram would otherwise have been well (perhaps even best) placed to satisfy that demand during the infringement period, even taking into account the additional competition Gram would have faced for symmetrical profiles from other suppliers from 2006. 175 This reinforces the fact that the sales of Smartascreen are a useful tool in attempting to ascertain what sales of GramLine there would have been if Smartascreen had not been on the market during the infringement period. The relevance of the sales of Smartascreen, however, should not mask the true nature of the assessment process. The relevant exercise is not to imagine what might have induced a person who had in fact purchased Smartascreen to purchase GramLine instead. Such an exercise assumes the choice presented by the infringing conduct existed, when the object of awarding damages is to place the person in the position they would have been in had no infringement occurred, insofar as possible. 176 Bluescope submitted that: …it was an extremely limited class of customer who may have considered purchasing fencing from Gram during the Period rather than from Lysaght or another competitor, because the hypothetical purchaser from Gram, as Mr Mann agreed: (a) had to be content to have a product made of steel imported from Taiwan and not Colorbond steel made in Australia; (b) had to be prepared to pay cash in advance or on delivery; (c) had to be prepared to pay freight or to drive to pick up stock from one of Gram's outlets or distributors; and (d) had to be a person insisting on the sawtooth profile rather than one of the other profiles on the market during the Period whether symmetrical or non-symmetrical. 177 Bluescope noted that Mr Mann agreed with this evidence. I do not think much can be made of Mr Mann's agreement because the submission involves a suppressed premise that Smartascreen was available during the infringement period. Further, on the evidence, Gram made substantial sales of GramLine during the infringement period. Accordingly, the class of people who satisfied (a) to (d) was not limited, it was large. If the class was truly limited in the way Bluescope proposes, Gram would not have made such substantial sales during the infringement period including increasing its sales in some States by a significant proportion. To assume the existence of Smartascreen and that a person who bought Smartascreen would have the choice of Smartascreen (on Bluescope's terms and conditions) and GramLine (on Gram's terms and conditions) cannot be correct. In reality, but for the infringement, that choice would not have existed. Other choices would have existed, but not that choice. It is also apparent that for many people (a) to (c) presented no impediment to sale and that insofar as (d) is concerned, many people were sufficiently content with the profile of GramLine to buy it. There is no reason to assume or infer that all of the people who bought Smartascreen would consider (a) to (c) an impediment to sale or that the concept of a person "insisting" on the sawtooth profile is realistic. Factors (a) to (c) were undoubtedly important for some people as the evidence from and about Lysaght resellers and some installers discloses, but as the evidence also discloses they are a segment of the market only. 178 This is not to say that the matters which Bluescope has identified as relevant to the choice that a customer might have made had Smartascreen not existed are irrelevant. It is to say only that approaching the task as if it involved asking what might have induced a customer who purchased Smartascreen instead to purchase GramLine is conceptually incorrect and, it seems to me, likely to lead to an underestimate of the sales of GramLine Gram would have made had Smartascreen not been on the market during the infringement period. 179 Bluescope submitted that the "evidence has plainly established that Colorbond had a powerful reputation in relation to steel products, such that many customers during the Period regarded it as a sign of quality, strength and durability". I agree. I accept that for some people in the market it would have been important even determinative that the steel fence be a Colorbond fence. In this regard, again, the selection effect inherent in Bluescope's evidence is apparent (an observation made with no criticism of Bluescope, but to caution against inferring that the evidence is representative of the whole of the market). It is to be expected that people who had long-term commercial relationships with Bluescope perceived Colorbond as an important even determinative factor for their decisions. It must also be the case, however, that many customers did not see Colorbond as an important factor because GramLine continued to enjoy substantial sales after Gram stopped using Colorbond. Nevertheless, the fact remains that for some buyers in the market, wholesale or retail, Colorbond was important. As noted, however, the evidence does not enable a reliable quantification of the significance of the Colorbond factor other than that it should not be given too much weight having regard to Gram's increasing sales in expanding markets after 2005 when it stopped using Colorbond. 180 Bluescope submitted that: The evidence shows that the Bluescope/ Lysaght brands enjoyed strong reputations in addition to the reputation of Colorbond. These independently drove sales of Lysaght's steel fencing products. During the period, Lysaght was (and still is) a division of BlueScope which evolved from the well-known Australian business founded by John Lysaght in the 1880s. The Lysaght brand has been "associated with quality and durability for many years". Part of the attraction of dealing with Bluescope/Lysaght during the Period related to the comfort that customers derived from the warranties - both of the BlueScope steel and the Lysaght fencing product. 181 I agree. As noted, however, this does not mean that all or even most of the purchasers in the market during the infringement period would not have purchased GramLine because it was not a Lysaght product made from Colorbond steel carrying a Lysaght and Bluescope warranty. Gram never offered a Lysaght warranty and it had greater market share than Bluescope by 2001. GramLine did not carry the Bluescope warranty on materials after 2005 when Gram ceased using Colorbond steel yet Gram increased its sales in States such as Western Australia and Queensland and continued to make a substantial number of sales in NSW and Victoria. In common with Colorbond, it is to be expected that Lysaght resellers would place importance on these factors. But it is apparent from the evidence that this could not have been the case for the market as a whole. It is also not suggested that Gram changed its warranty during the infringement period. The evidence from Mr Mann was that when Lysaght offered a warranty others in the market, including Gram, offered a comparable warranty. Gram, like Lysaght, is an Australian company. While Gram has not existed for as long as Lysaght, it has been a long-term supplier in the fencing market which had a greater market share than Bluescope by 2001. Gram ceasing to use Colorbond in 2005 meant that the materials in GramLine were no longer the subject of the Bluescope warranty on materials. However, I do not consider that this lack of the Bluescope warranty would have had a material effect on what buyers would have done if Smartascreen did not exist. Any effect would be subsumed into the Colorbond factor discussed above. 182 Bluescope contrasted Gram's requirements for payment on or before delivery and Lysaght's credit terms, noting that: The evidence demonstrates that many of Lysaght's customers who enjoyed Lysaght's 30 or 60 day credit terms, were simply not in the position to meet Gram's cash demands and therefore would not have purchased from Gram during the Period. 183 I accept that for some people credit terms were critical. Again, it is to be expected that Lysaght resellers said that they required such terms (as this would be one of the reasons they were Lysaght resellers rather than Gram resellers). As noted, the relevant point is that these people are not the whole of the market because there were numerous Gram resellers and must have been numerous installers who purchased from these Gram resellers or from Gram directly who were willing to pay on Gram's terms. Further, the Lysaght resellers and branches were competing with the Gram resellers and Gram branches, albeit to different extents. As part of that competition, there were a large number of sales of Smartascreen. Insofar as resellers are concerned, as I have said, their purchases from Bluescope reflected the demands from their customers. And on the evidence it must have been the case that some material part of that demand was for Smartascreen when, if Smartascreen did not exist at all, the demand would have been for GramLine instead. 184 Bluescope submitted that: BlueScope's high level of service and reliability of delivery were also key factors that differentiated it in attracting customers. Again to the extent that there is evidence about Gram's level of service, it is negative. 185 Again, the context is important. It is to be expected that Lysaght resellers and those installers who regularly purchased from Lysaght considered the service they received to be good and an important reason for their continued relationship with Lysaght. On the evidence, it is also apparent, however, that Gram was a very successful fencing supplier, which had long-term relationships with resellers and installers. If Gram did not provide those people with a good level of service, those people presumably would not have continued to purchase from Gram and Gram would not have been able to expand its business as it did. Importantly, the Lysaght customers who value the service provided are the same Lysaght customers who value Colorbond and the other perceived benefits of dealing with Lysaght. Given Gram's performance in the market, I do not see this factor as adding anything material to the proposition, which I accept, that there are some people in the market who purchased Smartascreen from Lysaght but would not have purchased GramLine even if Smartascreen had not been available during the infringement period. Insofar as resellers are concerned, it remains the fact that their purchases reflected demand from other customers not all or even most of whom could have shared the reseller's commitment to Lysaght given Gram's expansion. 186 Bluescope submitted that: BlueScope had an extensive distribution network with outlets across Australia. Additionally, BlueScope delivered products both to its wholesale customers and to installers and end users from its branches. Many of its wholesalers also delivered to installers and end users. 187 This may be accepted but so must the evidence that, based on its market share and sales performance, Gram too must have had an effective distribution network which, like Bluescope, it continued to develop throughout the infringement period. 188 Bluescope submitted that a "considerable number of BlueScope's branches and outlets were located in regional areas in which, on the evidence, Gram did not have a branch or outlet in those locations. For example, Gram did not have a reseller in Geelong, Laverton North or Bendigo, where a number of Lysaght's customers were located". I accept that there was evidence that some Lysaght outlets and resellers did not perceive competition from Gram (such as in Brisbane) and that others did not in fact compete directly with Gram because there was no Gram branch or Gram reseller nearby. But the evidence as a whole indicates that Gram and Bluescope were major competitors. I accept that the lack of evidence from Gram identifying all of its resellers and their locations during the infringement period should be taken into account in assessing damages but the significance of this lack of evidence is tempered by the evidence of Gram's substantial sales and market share in all States and the evidence of Ms Marlin and Ms Wall in particular about the market, Gram, GramLine and Smartascreen. 189 Bluescope submitted that: It is highly improbable that Gram would have set up additional outlets during the Period. Mr Mann made very clear that he was prepared to wait longer than many people in the industry to expand his business because he was "financially conservative" and during the Period, wished to first ensure that the business was sustainable. 190 This submission overlooks the fact that Gram had built up its substantial market share using resellers, not just Gram outlets. As a result, it is not apparent to me that this is a material consideration. 191 Bluescope submitted that "Gram required wholesalers and installers to organise their own freight or pick up the products from a Gram outlet. This added an expense and complexity that customers did not want". Again, this reflects the position of Lysaght's resellers. Lysaght did not charge separately for wholesale freight and some of its resellers preferred this to Gram's approach of charging separately for freight. Yet Gram had its own resellers who, it must be inferred, were content with Gram's terms. It follows that I also do not see this as a material factor. 192 Bluescope submitted that third party competitors were relevant to Gram's ability to sell its fencing products. I agree. This is a material factor for reasons already discussed above. However, it is also the case that Gram had effectively cornered the market in symmetrical painted steel fences up to 2002, when Smartascreen was introduced. Gram had substantial advantages over the only competing symmetrical fence from Metroll at that time, as Bluescope recognised. It must be inferred that but for Smartascreen Gram would have been well placed to have maintained a material proportion of that advantage despite the other changes in the market which I have identified above. 193 Bluescope submitted that in most areas outside of Sydney Lysaght regarded competitors other than Gram as its primary competition. Some care needs to be taken with the evidence on which this submission relies. Mr Tanks did not recognise Gram as a major competitor because it was selling via resellers who were not close enough to the Lysaght Rocklea branch which was Mr Tanks' focus. But Gram's substantial and increasing sales figures in Queensland throughout the infringement period are inconsistent with the inference that Gram was not competing with Bluescope in Queensland. Ms Wall's evidence, that Bluescope's main competitor in regional NSW was Metroll not Gram because Metroll had a similar distribution network to Lysaght whereas Gram did not, may be accepted but does not alter the fact that Bluescope's view in 2001 was that Gram had 50% of the NSW market and, overall, was Bluescope's main competitor in that market. As such, Gram's branches and resellers must have been competing with Lysaght's branches and resellers and, indeed, was out competing them by 2001. Mr Cook also recognised Gram to be a key competitor of Lysaght in Victoria through its resellers because this was the same model Lysaght used in Victoria. 194 Bluescope submitted that during the infringement period: not only did Bluescope heavily promote the benefits of Colorbond in its own Lysaght fencing products but it increased the intensity of the marketing of the connection between other manufacturers' products and the Colorbond steel of which they were made. 195 I agree that this is a factor which would have had the potential to impact on Gram's capacity to maintain and gain sales irrespective of Smartascreen. However, Gram must also have had good marketing capacity as Ms Marlin recognised in 2001. 196 Bluescope submitted that: It can be inferred from this evidence, and the importance of Colorbond to so many fencing purchasers, that if Smartascreen were unavailable, customers insisting on a symmetrical profile, who for some reason did not wish to purchase Lysaght's Miniscreen, would turn to another Colorbond symmetrical product such as Metroll's Metline or Metfence (while it was available) or Stratco's WaveLok. 197 This is an overstatement in that for the reasons already given it can and should be inferred only that some customers who wanted a symmetrical profile would not have purchased GramLine had Smartascreen not been available during the infringement period. 198 Bluescope submitted that: Ms Marlin's comment in 2001 that Gram was well placed to appoint new stockists and distributors is of little if any weight not just because it was no more than her anticipation 4 years before the infringing conduct, but also because it was made in the context of Gram being a Colorbond supplier. The GramLine product was no longer a Colorbond product by the end of 2005. 199 I disagree with this submission. Ms Marlin's paper accurately reflected Gram's position as at 2001. While I accept that Gram's change from Colorbond steel to imported steel is relevant, Gram continued to compete with Bluescope throughout the infringement period gaining substantial sales in Queensland and Western Australia and continuing to sell GramLine in substantial quantities in NSW and Victoria. It must be inferred it did so because GramLine continued to be a good product, continued to be popular in the market, and that Gram continued to offer service on terms that customers were willing to accept. As such, Gram must have continued to be well placed to appoint new resellers during the infringement period and, but for Smartascreen, would have been better placed to do so. 200 I accept that Bluescope promoted Smartascreen as one product in a range and that the evidence supports the inference that some sales of Smartascreen were not lost sales of GramLine but, rather, lost sales of Neetascreen, Bluescope's largest selling product. 201 I do not accept that the sawtooth profile, which is the feature that made Smartascreen appear the same from both sides, was an insignificant element of Bluescope's marketing of Smartascreen. Bluescope created Smartascreen to compete specifically with GramLine and marketed it in a way which ensured it did compete with GramLine. All of the other features of Smartascreen, but for the profile, were already features of Neetascreen (such as Colorbond, strength, durability, colours and quality). What set Smartascreen apart from Neetascreen was the sawtooth symmetrical profile and it was the sawtooth symmetrical profile which gave rise to the infringement. 202 I accept that the evidence was that most customers who entered Lysaght outlets and resellers asked about a "Colorbond fence". As explained above, I infer that this evidence mostly concerned end customers. There was also evidence that end customers did ask for a particular profile, including the Smartascreen profile, albeit this occurred "occasionally", "rarely", or perhaps around 10% of the time or at the rate of one in 30, 50 or 100 sales depending on the witness. 203 This evidence must be weighed with Ms Marlin's paper from 2001 identifying that Gram had effectively marketed GramLine to builders, developers and end-users, as well as the evidence from Mr Read that he was being asked to match a Smartascreen to an existing GramLine fence about once a month. In common with the evidence from Lysaght resellers, care needs to be taken with evidence about what end customers at Lysaght branches and Lysaght resellers requested. As Ms Wall said, Lysaght branches and all Lysaght advertising focused on Colorbond. An end customer entering a Lysaght branch or Lysaght reseller, given this kind of advertising (including on the storefronts according to Ms Wall), was likely to focus on Colorbond. This does not mean the customer was disinterested in profile or would necessarily have purchased another Colorbond steel fence if Smartascreen had not been available. 204 Bluescope submitted that: On the whole, the way that the fencing market worked was that customers chose a supplier and then selected a particular fencing product from the options available from that supplier, or at times, for an end consumer, from that person's chosen installer. See e.g. the evidence of Ms Wall who also observed that the colour was generally the first thing chosen after the supplier. 205 This is the way in which a part of the market operated, specifically the part involving end customers a number of whom would not have been familiar with the available products. Builders, developers, installers and resellers are not end customers, but they are still customers (wholesale or retail) of suppliers like Lysaght and Gram. There is also evidence, in any event, that some end customers knew what they wanted and asked the supplier to supply a specific profile (which is why some resellers stocked more than one range and why branches and resellers were competing for the repeat customers, who were not individual retail customers). Builders, developers and installers were also part of the market and must be inferred to have known about fencing products and profiles and what they wanted. There is evidence that some wanted Colorbond specifically, but there is also evidence that others wanted GramLine specifically. 206 Bluescope submitted that: Gram's design registration gave it a monopoly on the profile the subject of the design but not a monopoly on the symmetrical or double-sided nature of the fencing infill sheet. In any event, the evidence demonstrates that the "neighbour friendly" issue has been overplayed. Ms Wall, for example, said that she could not recall ever being asked for a symmetrical fence profile because a customer was in dispute with a neighbour. 207 The first proposition may be accepted but, as noted, Smartascreen embodied the Design. The second proposition is not persuasive for a few reasons. One, Ms Wall did recall customers requesting Smartascreen as a particular profile. She merely did not recall having been told that the reason was a neighbourhood dispute, which I do not find surprising. The "neighbour friendly" issue has not been overplayed in circumstances where the success of GramLine was because of its "neighbour friendly" profile, Bluescope's lack of a "neighbour friendly" profile and its consequent market decline in the five year period where GramLine was available prompted Ms Marlin's paper and the development of Smartascreen, and Bluescope marketed Smartascreen for its neighbour friendly profile intending it to be substituted for GramLine. To this must be added the evidence from Mr Read that he urged Bluescope to develop a "neighbour friendly" profile, I infer because he was well aware that GramLine was such a profile and gave the Gram reseller who was one of WR Engineering's two main competitors a desirable product which afforded it a competitive advantage. 208 Bluescope submitted that given there was little overlap between its customers (meaning, in this context, resellers) and those of Gram, there was little opportunity for any sale of Smartascreen to have been a lost sale of GramLine. As discussed above, this overlooks the fact that, on the evidence of Gram's market share and sales across Australia, there must have been extensive competition between Lysaght and Gram such as in the case of the businesses of Mr Read and Mr Reid. As also noted, the sales to resellers must have reflected demand from their customers be they builders, developers, installers or end customers. While evidence from Gram about the identity and location of all of its branches and resellers would have assisted, the evidence is sufficient to require the inference that the infringing conduct embodied in Smartascreen caused a material number of lost sales of GramLine. 209 Bluescope submitted that, insofar as the evidence goes, it was all to the effect that if Smartascreen had not been available, GramLine would not have been purchased. I have explained above why this conclusion would be incorrect. Long-term Lysaght resellers whose business was co-dependent with that of Lysaght would not have purchased Gram products but also would not have purchased or offered for sale Smartascreen during the infringement period but for the infringement. Long-term exclusive Lysaght resellers also represent one part of the market, the Lysaght exclusive reseller. But we know from the evidence that there were others, including the long-term Gram exclusive reseller, as well as the resellers who sold products from more than one supplier. We also know that if Lysaght branches and resellers had not been selling Smartascreen then from 2005 to 2006 the only symmetrical product on the market competing with GramLine would have been the inferior Metroll product. And from 2007 to 2010 the major competing products on the market would have been confined to GramLine, Metroll's inferior product, Stratco's product, Metroll's product removed after one year between 2008 and 2009, and Dunn & Farrugia's product from 2007, in circumstances where Dunn & Farrugia started in 2004/2005 and thus was years behind Gram in terms of the development of its distribution network (like Gram, starting in NSW and expanding from there), albeit willing to market at aggressively low prices to achieve market share. I do not give material weight to Bluescope's Miniscreen which was released in 2003 and did not appear the same from both sides due to the rail it required, and was a premium product which does not appear to have been considered by Bluescope itself to be the equivalent of Smartascreen or GramLine. In these circumstances, as I have said, I have no doubt that that a material proportion of the demand that sales of Smartascreen was filling would have been satisfied by GramLine if Smartascreen had not been available during the infringement period. 210 Bluescope submitted that as Gram's major market was NSW which was a mature market, it would have had to lure customers away from Bluescope to grow its market share in NSW "which is far more difficult than simply attracting the custom of new market participants in a growing market". This submission is an oversimplification. When Bluescope refers to "customers" in this context it means resellers of Lysaght products. As explained, Lysaght resellers are wholesale customers whose purchases reflected the demand by their own customers, be they builders, developers, installers or end customers. In this context, the concept of Gram having to lure Lysaght resellers away from Lysaght as customers is misplaced. Gram did not need to do so in order to sell GramLine through its own branches and resellers. But, without Smartascreen, the competition offered by Lysaght branches and Lysaght resellers would not have extended to a symmetrical fencing product. 211 Bluescope submitted that to the extent Gram's case was that people who would have purchased GramLine ended up buying Neetascreen as Smartascreen was unavailable or they changed their minds in store having been lured there by Smartascreen, the case was misconceived. I agree that this cannot be a material consideration. While it is possible that some person might have fitted this template, there is no evidence this occurred and it is unlikely to have occurred. A person intent on purchasing Smartascreen because of its symmetrical profile is unlikely to have purchased Neetascreen which does not have a symmetrical profile. 212 Bluescope submitted that Mr Hill's estimates of loss were flawed in numerous respects. As discussed above, I agree, although Mr Hill did give useful evidence about the market for painted steel fencing across Australia, and Gram's sales. Mr Stone's calculations, as I have said, are reliable. Because of the problems with Mr Hill's evidence it cannot be used to gauge the extent of the impact of Smartascreen on Gram's sales. Mr Stone did not attempt this exercise, for good reason given that he is a forensic accountant, but presented tables showing Gram's lost profits based on Gram's costs and margins assuming between 0% and 100% of Bluescope's sales represent lost sales to Gram of GramLine. Mr Stone's table for the infill sheets or panels is as follows: 213 Mr Stone did the same exercise for what he called "related sales", which are sales of posts, rails and caps. That table is as follows: 214 Mr Hill calculated Bluescope's sales of other discretionary accessories to Smartascreen (such as lattices, gates and balls and the like) in the sum of $302,238. The parties accepted this as a reasonable calculation of 100% of those sales. 215 Bluescope's description of Mr Stone's approach may conveniently be adopted. As Bluescope said: (a) Mr Stone begins with the BlueScopes's Smartascreen sales by revenue (e.g., $700,074 in FY05); (b) he then calculates the percentage difference between BlueScope's weighted average price for a Smartascreen 1790mm sheet and Gram's weighted average price for a GramLine 1790mm sheet, being 12.89%. The use of weighted average prices for 1790mm sheets was accepted by Mr Hill as an appropriate estimate of Gram's counterfactual sales price; (c) Mr Stone then calculates Gram's counterfactual sales of infill sheets at 100% substitution by decreasing the Smartascreen sales revenue (sub-paragraph (a)) by a price differential of 12.89% to account for the slightly lower sales price of Gram's products (sub-paragraph (b)). For example, $700,074 - (12.89% × $700,074) ≈ $609,805 allowing for rounding; (d) he then calculates Gram's gross margin in relation to roll-form fencing for each of FY05 to FY09, being from 25.0% to 30.7%; (e) Mr Stone then applies Gram's gross margin (sub-paragraph (d)) to Gram's counterfactual sales of infill sheets at 100% substitution (sub-paragraph (c)). The sum of these calculations is set out in the "Total" column, 100% row of Exhibit 13, "Percentage proportion of loss for sheets" at REF; (f) thus, at 100% substitution, Gram's loss in relation to infill sheets would be $4,664,770. (g) at 5% substitution, Gram's loss would be $233,238. Mr Stone conveniently sets out the calculations on full range of possible rates of substitution. 216 Mr Stone's calculation process was appropriate. 217 I should record here that Gram accepted Mr Stone's calculations but submitted, for reasons dealt with above, that they were "low" estimates of Gram's loss which needed to be increased or, alternatively, that Gram's loss should be assessed at the upper end of the ranges presented by Mr Stone. I have rejected above the notion that Gram's losses could have exceeded Mr Stone's calculations. I also do not accept that Gram's losses can be estimated to be at the upper end of Mr Stone's calculations even with a liberal approach. Gram has not proved that it lost any reseller to Bluescope because of Smartascreen. It has not proved the identity or location of all of its branches and resellers or the identity or location of all of Lysaght's branches and resellers. It has not proved a representative sample or samples of such branches and resellers. It has not attempted to evaluate the impact on its sales of other factors including the change from Colorbond steel after 2005, Stratco's symmetrical product becoming available in 2006 when we know Gram was expanding into Queensland and Stratco was a major competitor in Queensland, Dunn & Farrugia's symmetrical product becoming available in 2007 when we know Dunn & Farrugia used Colorbond, started in Sydney in 2004/2005, and aggressively marketed at low prices, Metroll's product which was on the market for a year and which Mr Mann said caused two resellers to become Metroll stockists instead of Gram stockists, or Bluescope's opening of new branches in Queensland and elsewhere from 2004 onwards, coupled with Bluescope's overall marketing push of Colorbond steel from 2006 onwards. Instead, Gram largely relied upon its market share and declining overall sales to make its case. 218 This may explain in part why Bluescope has estimated Gram's lost sales as 5% of the total sales of Smartascreen. As noted, I consider this to be an underestimate for a number of reasons summarised below. 219 First, the 5% estimate appears to reflect Bluescope's case that as there was limited overlap of Bluescope's and Gram's customers there was limited opportunity for any sale of Smartascreen to be a lost sale of GramLine. I have explained above that this overlooks the fact that the customers in this submission are resellers who buy wholesale and sell on. The purchases of resellers must reflect the demand from their customers who may be developers, builders, installers or end customers. There did not need to be overlap between resellers as wholesale customers for there to be competition between them, as the evidence of Mr Read and Mr Reid demonstrated. 220 Second, the 5% estimate appears to reflect Bluescope's case based on the importance of Colorbond and other aspects of Lysaght's operations. As explained above, Bluescope's evidence in this regard reflects a part only of the market. The evidence about Gram's substantial sales requires the inference to be drawn that other parts of the market did not consider the matters on which Bluescope relied to be important. While I have accepted that Gram's decision not to use Colorbond after 2005 should be inferred to be a relevant factor, its significance should not be overestimated having regard to the fact that Gram's sales substantially decreased in NSW when Gram was still using Colorbond (but after Smartascreen was introduced) and Gram gained substantial sales in Queensland and Western Australia when it was not using Colorbond. 221 Third, the 5% estimate is difficult to reconcile with the following facts: (1) Gram had achieved a substantial share of the NSW market (50%) and the national market (be it 35% or 37.5%) off the back of the popularity of GramLine in circumstances where, until Smartascreen was introduced in 2002, the only competing symmetrical fence which offered the same identical appearance from both sides was a product from Metroll which the evidence indicates had not obtained a material market share and was inferior. (2) There is evidence that the market is slow to accept new profiles and, leaving aside Smartascreen and Metroll's inferior product, the competing symmetrical profiles did not enter the market until 2006 (Stratco), 2007 (Dunn & Farrugia) and 2008 (Metroll but removed in 2009). GramLine, in contrast, had been on the market since 1995. That fact and it being an obvious imitation of GramLine gave Smartascreen the capacity to be directly substituted for Gramline and thus a substantial competitive advantage over the competition. (3) While the painted steel fencing market may be inferred to be dynamic due to (for example) growth in housing stock or the range of competitors and how their products are marketed, the evidence does not disclose any material factor impacting on Gram's sales between 2002 and 2004, yet in that period when Smartascreen was introduced Gram's total sales in its strongest market, NSW, declined by around 18%. In fact Gram's total sales in 2004 were lower than they had been in any year since 2000. This was at a time when Gram was using Colorbond steel, Dunn & Farrugia were not in or had had only just entered the Sydney market, and Stratco had not yet released its symmetrical fencing product. This shows the potential Smartascreen had to divert sales away from GramLine even in the first two years following its release and in the face of Gram's previous market dominance. (4) Between 2005 and 2006/2007, during part of the infringement period, GramLine, Metroll's inferior product and Smartascreen were the only symmetrical fences which offered the same identical appearance from both sides. It was not until 2006/2007 that Gram had to contend with the symmetrical fencing products from Stratco and Dunn & Farrugia (in Sydney in particular) and not until 2008 that it had to contend with the second Metroll product which was only on the market for one year. Yet Gram's total sales in NSW declined by 23% between 2004 and 2007. Overall Gram's total sales in NSW declined by 38% between 2002 and 2006, when the only new competing product (apart from Smartascreen) was Stratco's product released in 2006 in circumstances where Mr Mann did not consider Stratco to be particularly competitive in NSW. Given what was happening elsewhere in the country in terms of Gram's increasing sales, I am unable to accept that most of this occurred due to Gram no longer using Colorbond steel or because of some other unidentified change in the market. The obvious inference is that much of this was likely due to the impact of Smartascreen, just as Bluescope believed likely and must be inferred to have intended. Although Gram cannot be compensated for any loss before the infringement period, this again shows the potential impact of Smartascreen on Gram's sales of its major product, GramLine. (5) There is evidence that Mr Read was being asked to match a Smartascreen fence to an existing GramLine fence about once a month after the ACT bushfires in 2003. This must represent a fraction of the occasions on which Mr Read sold a Smartascreen fence when, had Smartascreen not been available, a GramLine fence would have been purchased. I say this because it must be inferred that a person with an existing GramLine fence would have been far more likely to purchase another GramLine fence than any other potential customer. Yet some of these customers still purchased Smartascreen, I infer because it was an obvious imitation of the Design which GramLine embodied. This evidence exposes the direct substitutability of Smartascreen for GramLine, from which it should also be inferred that material substitution did occur, just as Bluescope intended it should. 222 Taking into account all of the evidence to which I have referred, the competing factors which would weigh for or against greater or lesser estimates, and adopting a liberal approach albeit tempered by the fact that there was evidence which Gram could have but did not call in support of its case, I consider that the reasonable range within which Gram's loss during the infringement period lies is somewhere between 20% and 40% of Bluescope's total sales of Smartascreen (and thus 20% to 40% of its sales of related posts, rails and caps and discretionary accessories). 223 I do not consider that increased sales of GramLine in the ranges identified would have resulted in material additional costs such as opening new Gram branches or installing a new rolling machine or the like, although there may have been some additional costs for extra shifts being required at the upper end of the range. Based on Mr Mann's evidence I consider that Gram had sufficient capacity within its existing organisational and manufacturing structures to satisfy the increased demand within the range I have identified. 224 Doing the best I can in all of the circumstances, I assess Gram's loss during the infringement period on the basis that 25% of Bluescope's sales of Smartascreen represent lost sales of GramLine. On this basis, using Mr Stone's calculations, the loss involved is: (1) for infill fencing sheets: $1,166,192; (2) for rails, posts and caps: $836,586; and (3) for discretionary GramLine accessories: $75,560 (allowing for rounding), giving a total of $2,078,338. 225 This is at the lower end of my range for all of the reasons I have already identified about the market, changes in the market, and deficiencies in Gram's evidence. 226 I am aware that I have not specified a separate deduction for the risk that Gram would not have captured one in four sales of Smartascreen. This is because I have taken into account the risks by selecting 25% which is at the lower end of the range I consider to be reasonable. To further reduce this estimate by some arbitrary percentage for risk, in my view, would be inappropriate. I also note that this is not a case where, if Gram had adduced evidence of the kind I consider would have been of assistance and which it was within Gram's power to adduce, there would have been no requirement for speculation or guesswork. The overall evaluation would necessarily remain one based on inference, with a considerable degree of speculative assessment necessary. Anything less than 25%, to my mind, would also conflict with the general principle that a liberal approach is to be taken to damages once material loss has been proved. 227 The remaining issues are interest and costs. I propose to be brief. 228 As to tax affecting the interest calculation, Bluescope submitted that this is "a straightforward case of a profitable Australian company paying PAYG tax on its profits on a monthly basis", with the consequence that Gram would not have had the benefit of 100% of its lost profits from year to year. It would have paid tax at the relevant rate of 30% for companies. Thus, according to Bluescope, any interest component of damages should be calculated on 70% of Gram's pre-tax loss of profits. That is the amount it could have retained to its benefit. Bluescope said the present case does not raise the "international dimension" which led to the rejection of an argument to the same effect in Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250; (2017) 124 IPR 23 at [341]-[342]. 229 Bluescope acknowledged this argument was novel. I accept that a novel argument is not necessarily bad for that reason alone. Given, however, that awards of damages representing interest are routinely assessed based on the interest that could have been accrued on pre-tax rather than post-tax losses, I do not consider it appropriate to make Gram the test case for a different approach. If Bluescope wishes to run a test case in an appeal, then that is a matter for Bluescope. 230 As to delay affecting the awarding of interest, it may be accepted that Gram knew of and believed Bluescope to be infringing the Design since 2002. The notion that Bluescope should get the benefit of its infringement by confining the assessment of damages to pre-judgment interest under s 51A of the Federal Court of Australia Act 1976 (Cth) because of Gram's delay in commencing proceedings on a discretionary basis is not persuasive. Gram has already suffered by reason of its delay by being unable to claim damages for the period before 16 April 2005. Further, Bluescope has had the benefit of the money it earned because of the infringing conduct during the infringement period for the entirety of that period and to the date of judgment. Further, as Gram submitted, for a fencing specialist like Gram to take on a large corporation like Bluescope is no small matter. It is not unexpected that Gram's principal, Mr Mann, might have deferred doing so. 231 As a result, I consider that there should be pre-judgment interest calculated throughout the infringement period to the date of judgment (after which s 52 of the Federal Court of Australia Act applies for post-judgment interest). Pre-judgment interest is to be calculated in accordance with Part 2 of Interest on Judgments Practice Note (GPN-INT), that is, 4% above the cash rate last published by the Reserve Bank of Australia before the relevant periods commenced. 232 Mr Hill and Mr Stone agreed that pre-judgment interest should be calculated on the assumption that Gram's lost cash flows would have occurred in the middle of the month. I anticipate the calculation should not be difficult and may be incorporated within orders, the terms of which may be agreed between the parties within 14 days. 233 Costs should be reserved as Bluescope requested.

Conclusions 234 For the reasons set out above, judgment should be entered for Gram in the amount of $2,078,338. It is not appropriate that there be a reduction of interest on account of the fact that Gram would only have benefited from its net profits after paying PAYG tax each month at the company rate of 30%. Pre-judgment interest should be awarded from 16 April 2005 onwards, based on pre-tax loss of profits, at the rate provided for in Part 2 of Interest on Judgments Practice Note (GPN-INT). Costs should be reserved. The parties should submit short minutes of orders reflecting these reasons for judgment, and providing a timetable for resolution of any issue as to costs, within 14 days. I certify that the preceding two hundred and thirty-four (234) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.