2. The respondent ("Croner") has imported and sold in Australia products manufactured by a United States toy manufacturer, Tyco Industries Inc ("Tyco"). The Tyco products compete with toy blocks or bricks marketed in Australia and elsewhere for many years under the names "Lego" and "Duplo". The first appellant ("Interlego") is a Swiss corporation and a member of the Lego group of companies. It holds the intellectual property rights for the Lego group in Australia and elsewhere. The second appellant ("Lego Australia") is a company incorporated in New South Wales and is the sole authorised distributor in this country of the plastic toy building sets of the Lego group.

3. I turn first to the copyright issues, many of which concern the "overlap" between copyright and design law in respect of artistic works made before and after the commencement of the Copyright Act 1968 ("the 1968 Act"). They also include issues as to "originality" in relation to artistic works and "function" in relation to designs.

4. The appellants contend (as they contended unsuccessfully before the primary Judge) that the importation and sale by Croner of the Tyco products contravenes ss. 37 and 38 of the 1968 Act. They base this claim upon copyright owned by Interlego in certain artistic works, being design drawings which allegedly have been reproduced in a material form in the production of the Tyco product. Sub-section 21(3) of the 1968 Act provides that for the purposes of that statute an artistic work shall be deemed to have been produced, in the case of a work in a two dimensional form, if a version of the work is produced in a three dimensional form.

5. A drawing vital to the appellant's case is that described as Drawing No. 5, dated 4 March 1968. Other crucial drawings were made later, after the commencement of the 1968 Act. Drawing No. 5 is a drawing for what was described as the "third generation" 2 x 4 Lego brick. The basic drawings for the "first generation" brick were made in the United Kingdom in 1946 by Mr Hilary Page and Mr F C H Huggins and any copyright therein was later assigned to Interlego. The author of Drawing No. 5, Ellen Jensen, was a Danish national. Toy bricks manufactured pursuant to Drawing No. 5 were first offered for sale in Denmark shortly after the making of the drawing.

6. By Order in Council made 14 March 1923, the Governor- General (in pursuance of powers conferred by sub-s. 30(2) of the Copyright Act 1911 (Imp) ("the 1911 Act")) applied the Copyright Act 1912 ("the 1912 Act") to works first produced or published in, inter alia, Denmark. That Order in Council was revoked by a further Order in Council which came into effect on 30 April 1969, but Order 2 thereof preserved existing rights and Order 3 continued the recognition in Australian law of works of Danish subjects and residents and of works first published there. Interlego acquired ownership of the copyright in Drawing No. 5, by assignment, on 17 May 1983.

7. The 1968 Act came into force on the day after the Order in Council referred to above, that is to say on 1 May 1969. This was more than a year after the date of Drawing No. 5. The 1968 Act repealed the 1912 Act and excluded the further operation in this country of the 1911 Act (ss. 5, 6). But sub-s. 5(2) made it clear that the savings provided for in s. 8 of the Acts Interpretation Act 1901 ("the Interpretation Act") applied. Save for Crown copyright, copyright does not subsist in Australia otherwise than by virtue of the 1968 Act (s. 8).

8. Part XI of the 1968 Act comprises ss. 204-248, and is headed "Transitional". Section 207 states:

"207 Except in so far as this Part otherwise expressly provides,

this Act applies in relation to things existing at the

commencement of this Act in like manner as it applies in

relation to things coming into existence after the

commencement of this Act."

Sections 37 and 38, to which I have referred, are included in Part III of the 1968 Act. In relation to works made after 1 July 1912, and first published before the commencement of the 1968 Act (that is to say 1 May 1969), s. 210 relevantly provides that, notwithstanding anything in Part III, copyright does not subsist by virtue of that Part in such a work unless copyright subsisted in it under the 1911 Act.

9. Division 8 of the Part III (s. 74-77) of the 1968 Act made provision as to "corresponding designs" in relation to an artistic work, that is to say designs which when applied to an article result in a reproduction of that artistic work. In particular, where s. 77 applied, certain activities which otherwise would have been wrongful under the copyright law were treated as not being infringements. However, Division 8 of Part III did not apply to artistic works made before the commencement of the 1968 Act. This was stated by sub-s. 218(1).

10. Sections 74, 75, 77 were repealed with effect on 1 October 1990, by ss. 10, 11 of the Copyright Amendment Act 1989 ("the 1989 Act"). New provisions were inserted in their place. The primary Judge had reserved his decision on 4 May 1990. Written submissions concerning the changes to the law were received, but on the view his Honour took of the case no question arose under s. 77 in any of its forms, and he said he would not deal with the new legislation (102 ALR at 405). But on the appeal, the appellants still pressed for injunctive relief. Subject to any issues which arise as to the reception at this stage of fresh evidence, we should deal with the law as it now stands, particularly in reaching a conclusion as to injunctive relief: Trade Practices Commission v Milreis Pty Ltd (No. 2) [1978] FCA 20; (1978) 32 FLR 234 at 241. I return to this subject later in these reasons.

11. The interaction between copyright and design law in respect of Drawing No. 5 is controlled by sub-s. 218(2) of the 1968 Act. This provision is central to the present appeal. It states:

"218 (2) Copyright does not subsist by virtue of this Act in an

artistic work made before the commencement of this Act

which, at the time when the work was made, constituted

a design capable of being registered under the Designs

Act 1906, or under that Act as amended and in force at

that time, and was used, or intended to be used, as a

model or pattern to be multiplied by an industrial

process." (Emphasis supplied).

The phrases emphasised were not in s. 22 of the 1911 Act. However, they give to sub-s. 218(2) the sense attributed by the House of Lords to s. 22; see King Features Syndicate, Inc. v O. and M. Kleeman Ltd (1941) 58 RPC 207. Thus s. 218 reflects the sense of the old law. The 1911 Act would not have applied to works caught by this sub-section. Section 22 of the 1911 Act would have achieved that result. Sub-section 218(2) thus is a particular application of the general operation of s. 210 of the 1968 Act. This is to deny copyright under the new law where it did not subsist under the old.

12. The appellants submit that on 4 March 1968, when Drawing No. 5 was made, whilst it was intended for use as a model or pattern to be multiplied by an industrial process, it did not then constitute a design "capable" of being registered under the Designs Act 1906 ("the 1906 Act") as amended. Section 17 of this statute then provided for registration of any new or original design which had not been published in Australia before the lodging of an application for its registration.

13. It is common ground that even if Drawing No. 5 "constituted a design" within the meaning of sub-s. 218(2), nevertheless it was not "new or original" when it came into existence. This is because it was derived from earlier drawings which had been published in Australia. Further, the appellants submit that the design was dictated solely by the function of the brick depicted in it, that it represented no more than the "fundamental form" of an article and not a "particular individual appearance". It is said that were it not for the need for the bricks to interlock, there would be no need for the studs and cylinders depicted in the drawings. The appellants contend that the definition of "design" in s. 4 of the 1906 Designs Act forbad the registration of such a design. For its part, the respondent submits that the design did not have these characteristics and that, although not new or original, nevertheless it was still, within the meaning of sub-s. 218(2) of the 1968 Act, an artistic work which "constituted a design capable of being registered under the Designs Act 1906 . . .". It was, they say, so capable because it answered the definition of "design" in that statute and it did not cease to have that intrinsic quality because its lack of novelty made it unregistrable.

14. I propose to put to one side the question of dictation solely by function and cognate matters and to come to the other copyright and design issues in respect of pre-1969 drawings, with particular reference to Drawing No. 5. I will also defer consideration of the copyright and design issues in respect of post-1969 drawings.

15. Sub-section 74(1) of the 1968 Act uses the expression "corresponding design" as meaning "a design that, when applied to an article, results in a reproduction of that work". This spells out what previously was obscure. Section 22 of the 1911 Act and its descendants use the phrase "designs capable of being registered" and state that the 1911 Act should not apply to those designs. The terms of s. 22 present a difficulty which arises from the fundamental distinction between copyright in an artistic work and a design within the terms of the definition in the designs legislation. Lord Romer referred to it in his speech in King Features supra at 221-2.

16. On the other hand, before 1911 that distinction was not so sharply drawn. Counsel for the respondent referred us, by way of example, to the use of the term "design" in the Fine Arts Copyright Act 1862 (UK) ("the 1862 Act"). Section 1 thereof conferred the sole and exclusive right of copying, engraving, reproducing and multiplying a painting "and the design thereof". A question debated in Hanfstaengl v H R Baines and Co. Limited (1895) AC 20 at 23, 27-8, 30, was whether the expression "design" meant anything more than the particular forms and arrangements which comprised the vehicle selected by the artist to express his work. The House upheld the decision of the Court of Appeal that there was no infringement of the pictures in question by tableaux presented on stage at the Empire Theatre as "Living Pictures". Counsel also referred to the definition of "author" (in the International Copyright Act 1886, s. 11) as meaning "the author, inventor, designer, engraver, or maker of any literary or artistic work . . .".

17. To more modern eyes, it is an odd use of language to speak of a copyright statute not applying to "designs". How could the copyright law concerning drawings have applied, in any event, to a registrable design for the shape of an article? The point was put as follows by Mr Blanco White QC in "Patents for Inventions", 4th Ed, 1974, pp 331-2:

"(I)t is hard to see how any ordinary drawing

can be 'capable of registration as a design'.

It is no doubt possible to speak of an adequate

representation of a design as 'registrable' -

meaning that the Patent Office would accept it

as a adequate representation - but this is no

more than a somewhat slovenly ellipsis: what is

registered is not the representation but the

design itself, i.e. the 'features of shape, etc,

applied to an article'."

The learned author draws from this the conclusion that a provision framed in the terms of s. 22 would cut down the ambit of copyright protection but not completely exclude from copyright the drawing in question. On this view there would be no infringement of copyright by reproduction of the drawing in a three dimensional form, something with which the designs legislation is concerned, but it would be an infringement of the copyright to reproduce the drawing in a two dimensional form. It will be necessary for the purposes of this appeal to refer later to this question. The contrary was not contended for in King Features supra at 218, ll. 38-42. But this case is primarily concerned with the use to which Drawing No. 5 has been put immediately by Lego and indirectly by Tyco in its application to three dimensional articles.

18. The phrase "artistic work . . . which . . . constituted a design capable of being registered . . ." was found in the copyright legislation in force in Australia for many years before the commencement of the 1968 Act. The parties accepted that assistance in construing s. 218 is to be derived from the earlier legislation. There is no authority construing that legislation which is binding upon us. I prefer to approach the matter afresh.

19. To appreciate the setting in which the earlier legislation operated, it is necessary first to turn to Imperial law. In the 1911 Act the phrase "self-governing dominion" was defined as meaning inter alia the Commonwealth of Australia. Sub-section 25(1) provided:

"25(1) This Act, except such of the provisions thereof as are

expressly restricted to the United Kingdom, shall

extend throughout His Majesty's dominions: Provided

that it shall not extend to a self-governing dominion,

unless declared by the Legislature of that dominion to

be in force therein either without any modifications

or additions, or with such modifications and additions

relating exclusively to procedure and remedies, or

necessary to adapt this Act to the circumstances of

the dominion, as may be enacted by such Legislature."

The 1912 Act commenced on 20 November 1912. It repealed (s. 4) the earlier Australian statute, the Copyright Act 1905 ("the 1905 Act"). Section 51(xviii) of the Constitution empowers the Parliament to make laws with respect to "Copyrights, patents for inventions and designs, and trade marks". The 1912 Act set up an optional registration system in Australia and also provided for various summary remedies. Section 8 provided that the 1911 Act, a copy of which was set out in the Schedule, "shall, subject to any modifications provided by this Act, be in force in the Commonwealth, and shall be deemed to have been in force therein as from the first of July, One thousand nine hundred and twelve". Section 8 of the 1912 Act was enacted in fulfilment of the condition expressed in the proviso to sub-s. 25(1) 1911 Act, set out above. The 1911 Act thenceforward operated in Australia of its own force and not as a law which was simply the product of an exercise of Commonwealth legislative power: Copyright Owners Reproduction Society Limited v EMI (Australia) Proprietary Limited [1958] HCA 54; (1958) 100 CLR 597 at 604, 616-7. The 1912 Act did include many provisions which were not mere modifications of the 1911 Act, and those rested for their authority on the general power of legislation conferred by the Australian Constitution: The Gramophone Company Limited v Leo Feist Incorporated [1928] HCA 23; (1928) 41 CLR 1 at 15.

20. Section 9(c) of the 1912 Act provided that in the application of the 1911 Act to the Commonwealth, s. 22 of the Imperial Act should be read as follows:

"22(1) This Act shall not apply to designs capable of being

registered under the Designs Act 1906, except designs

which, though capable of being so registered, are not

used or intended to be used as models or patterns to

be multiplied by any industrial process.

(2) General rules under section forty one of the Designs

Act 1906 may be made for determining the conditions

under which a design shall be deemed to be used for

such purposes as aforesaid."

The definition of "design" in the 1906 Act (s. 4) then stated:

"'Design' means an industrial design applicable,

in any way or by any means, to the purpose of

the ornamentation, or pattern, or shape, or

configuration, of an article, or to any two or

more of those purposes."

"Any new or original design, which has not been

published in Australia before the lodging of an

application for its registration, may be

registered under this Act in respect of all or

any of the articles included in one or more of

the classes in the prescribed classification."

21. As enacted by the Imperial Parliament, s. 22 of the 1911 Act provided:

"22(1) This Act shall not apply to designs capable of being

registered under the Patents and Designs Act, 1907,

except designs which, though capable of being so

registered, are not used or intended to be used as

models or patterns to be multiplied by any industrial

process.

(2) General rules under section eighty six of the Patents

and Designs Act, 1907 may be made for determining the

conditions under which a design shall be deemed to be

used for such purposes as aforesaid."

At that time in the United Kingdom the definition of "design" in the Patents and Designs Act 1907 (UK) ("the 1907 Act") was as follows:

"'Design' means any design (not being a design

for a sculpture or other thing within the

protection of the Sculpture Copyright Act, 1814)

applicable to any article, whether the design is

applicable for the pattern, or for the shape or

configuration, or for the ornament thereof, or

for any two or more of such purposes, and by

whatever means it is applicable, whether by

printing, painting, embroidering, weaving,

sewing, modelling, casting, embossing,

engraving, staining, or any other means

whatever, manual, mechanical, or chemical,

separate or combined."

Section 49 of the 1907 Act authorised the registration of "any new or original design not previously published in the United Kingdom".

22. The reference in s. 22 of the 1911 Act to the 1907 Act was construed by the English Court of Appeal in an ambulatory sense. The result was to include in s. 22 of the 1911 Act a reference to the designs statute as amended from time to time after the commencement of the 1911 Act: Usher v Barlow (1951) 69 RPC 27 at 34-5. That conclusion rested at least in part upon the operation of the Interpretation Act 1889 (UK) s. 38. In Australia, the corresponding result flowed from s. 10A of the Interpretation Act (inserted by the Acts Interpretation Act 1916, s. 2) as well as from s. 10 in its original form, and later from the new s. 10 (inserted by s. 4 of the Acts Citation Act 1976, which repealed the old ss. 10 and 10A). Despite suggestions to the contrary by counsel on the present appeal, I do not see in Usher v Barlow any consideration of the question of whether s. 22 of the 1911 Act applied "retrospectively" to artistic works made before the commencement of the 1911 Act.

23. What does follow from this case and the provisions of the Interpretation Act to which I have referred is that when, during the life of s. 22 of the 1911 Act as applied by the 1912 Act, the 1906 Act was amended from time to time, s. 22 was thereafter to be read so as to accommodate those changes to the design law.

24. It will be necessary to refer further to the state of the copyright law in Britain in relation to published works before the 1911 Act, but it should be noted that there were instances where the law was treated as offering double protection. An example is provided by Millar and Lang Limited v Polak (1908) 1 Ch 433. In that case, drawings made for use on mass produced Christmas cards were protected under the 1862 Act. This was despite the submission (at 439) that the drawings were really designs within the definition in s. 60 of the Patents, Designs, and Trade Marks Act 1883 (UK) ("the 1883 British Act"), and that they should have been registered under that statute, save that their novelty had been lost by publication.

25. One of the statutes repealed by the 1911 Act was the Sculpture Copyright Act 1814 (UK). This gave a term of copyright of 14 years with a further reversionary term of 14 years if the author was still living. There was significant scope for dual protection under this law and the later statutes providing for registration of designs applicable to the shape and configuration of articles. The legislature shifted ground several times. In 1843 (by the Copyright of Designs Act s. 2) dual protection was not permitted and subject matter falling within the 1814 statute was excluded from the design law. Then by s. 6 of the Copyright of Designs Act 1850, registration was permitted under the designs law for a term being the whole or the remaining portion of the term under the 1814 statute, as against a shorter period for other designs; see C P Phillips "The Law of Copyright", 1863, p 227. In 1883, designs for sculptures within the 1814 Act were again excluded from the definition of "design". Thus, at the time of the 1911 Act, designs for sculptures were not capable of registration under the designs law but were protected under the 1814 statute. The 1911 Act (sub-s. 35(1)) included works of sculpture as artistic works.

26. It is important in construing s. 22 of the 1911 Act, both in its British and Australian form, to appreciate the distinctions which by that time had appeared between design law and the law as to copyright in drawings and other artistic works. I mention three of them. First, the maximum period of protection was generally longer under the copyright law than that extended under the designs legislation, a state of affairs that still continues. Secondly, whilst various copyright statutes provided for a registration system, title did not depend upon registration. That is to say, registration was a pre-condition to the bringing of an action for infringement, but once registered a plaintiff might sue in respect of anterior activities of the defendant: Warne v Lawrence (1886) 54 LT 371; E.W. Savory, Limited v The World of Golf Limited (1914) 2 Ch 566; Finn v Pugliese [1918] NSWStRp 71; (1918) 18 SR (NSW) 530 at 532-3. On the other hand, since the statute 2 Vict c. 17 of 1839, title to designs has arisen from and depended upon registration. Thirdly, the design law required "novelty or originality" and, whilst the concept of novelty was not the same as that developed in the patent law, it was related to it: Lazarus v Charles (1873) LR 16 Eq 117 at 121; Moody v Tree (1892) 9 RPC 333 at 334. The copyright law fixed not upon novelty but upon the skill and labour of the author as something deserving protection; see Sands and McDougall Proprietary Limited v Robinson [1917] HCA 14; (1917) 23 CLR 49 at 55-6, where Isaacs J refers to a number pre-1911 decisions.

27. It is also important to appreciate that whilst the designs statutes had been concerned with protection of concepts of, inter alia, shape applied to articles, after the 1843 Act designs might be registered for shape and configuration of articles having reference to utilitarian purposes. Protection of shape by this means might go some distance to protecting mechanical function, the province of patent law. Thus, the design law has been bedevilled by "overlap" questions as regards not only the copyright but also the patent law. The 19th century English decisions tolerated protection of designs with a functional element: Hecla Foundry Company v Walker Hunter and Co. (1889) 14 App Cas 550 at 555; Hosokawa Micron International Inc. v Fortune (1990) 26 FCR 393 at 399-408, 416-422.

28. In two respects, patent and design law resembled each other and differed from copyright law; novelty was essential and title was created by grant of registration.

29. In the United Kingdom, the 1907 Act came into force on 1 January 1908 (see s. 99). It increased the maximum period for design registration to 15 years (s. 53). The 1883 British Act had, by s. 50, provided for a maximum registration period of 5 years. It follows from this chronology that upon the commencement on 1 July 1912 of the 1911 Act, there would still have been current registrations of designs effected under the 1883 British Act, that is to say before the compmencement of the 1907 Act. Section 98 of 1907 Act had repealed, inter alia, s. 50 of 1883 statute but stated that, except where otherwise expressly provided, the 1907 statute "shall extend to . . . all designs registered before the commencement of this Act, and to applications then pending, in substitution for such enactments as would have applied thereto if this Act had not been passed".

30. In Australia, the 1906 Act, dealing with designs, had come into force on 1 January 1907, the same day as the 1905 Act, dealing with copyright. No provision in either statute dealt with any "overlap" between them. Section 6 of the 1906 Act saved rights acquired under State designs statutes whilst providing that fresh applications would not be receivable thereunder. As I have indicated, the federal statute came into force on 1 January 1907. Certain of the State Acts provided for 5 year registration of designs: The Patents, Designs and Trade Marks Act 1884 (Qld) s. 50, The Designs and Trade Marks Act 1884 (WA) s. 7, and The Patents Designs and Trade Marks Act 1893 (Tas) s. 58. Other statutes provided for a maximum protection by registration for 3 years: the Copyright Act 1879 (NSW) s. 34, the Copyright Act 1890 (Vic) s. 4, and the Copyright Act 1878 (SA) s. 3. The 1906 Designs Act provided for a 5 year registration (s. 26). But this was increased to a maximum of 15 years by s. 3 of the Designs Act 1912, ("the 1912 Designs Act").

31. The 1912 Act introduced the 1911 Imperial copyright legislation with retroactive effect to 1 July 1912. It follows from the above chain of events that, at that date, in Australia there would have been no existing registrations under any of the State Designs Acts. All would have expired.

32. The 1911 Act repealed wholly or in part the 21 statutes set out in the 2nd Schedule, commencing with the Engraving Copyright Act 1734. (In referring to them in the course of these reasons, I have used the short titles first given them by the Second Schedule to the International Copyright Act 1886 (Imp)). Section 24 of the 1911 Act created "substituted rights" in relation to those existing under the legislation thus repealed and, subject to exceptions not here material, sub-s. 24(3) provided that copyright should not subsist in any work made before the commencement of the 1911 Act otherwise than under and in accordance with the provisions of s. 24.

33. The enactment of a general consolidation of the copyright statutes had been first recommended in Britain by a Royal Commission which had presented its report in 1878; see Scrutton, "The Law of Copyright", 4th Ed, 1903, p 48; "Copinger and Skone James on the Law of Copyright", 8th Ed, 1948, p 13. In the Australian colonies, such a step had already been taken in Victoria by the Copyright Act 1869 (Vic). This dealt with designs as well as copyright in literary, dramatic and musical productions, and copyright in fine arts. South Australia followed with The Copyright Act 1878 (SA), and New South Wales with The Copyright Act 1879 (NSW), both of which covered the same field as the Victorian legislation. Each of these statutes (s. 56 of the Victorian and South Australian Acts, and s. 55 of the New South Wales Act) provided that nothing in them should be deemed to affect the law of copyright as applicable in the colony by any Imperial statute then in force. Further, these and later statutes were concerned only with works made in the particular colony and with giving remedies under the local law in respect of infringement in that colony: Acland Giles, "Literary and Artistic Copyright in the Commonwealth" (1905-6) 3 Commonwealth L Rev 107 at 113. The extension to the Australian colonies of the British copyright law was a complex matter. It was put on a regular footing, only after some anguish, by s. 8 of the International Copyright Act 1886 (Imp); see Scrutton, supra, pp 208-13. Thus, at the time of Federation, the law in force in this country was a patchwork of Imperial and colonial legislation. The matter is discussed further in WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 at 281-2.

34. The system of dual protection was continued in Australia when the Commonwealth entered the field with the 1905 Act. This statute applied to artistic works first made in Australia after 1 January 1907; see s. 35. Section 62 thereof provided:

"62. The owner of any copyright or performing right in any

literary, musical, or dramatic work or artistic work

entitled to protection in Australia by virtue of any Act of

the Parliament of the United Kingdom or entitled to

protection in any State by virtue of any State Copyright Act

in force at the commencement of this Act shall on obtaining

a certificate of the registration of his copyright or

performing right under this Part of this Act have the same

protection in the Commonwealth against the infringement of

his copyright or performing right as the owner of any

copyright or performing right under this Act."

35. The Commonwealth Parliament had regarded itself as subject to the restrictions contained in s. 2 of the Colonial Laws Validity Act 1865 (Imp) upon the passage of legislation repugnant to British statutes applying by paramount force; see the second reading speech in the Senate on the Copyright Bill, Hansard, 24 August 1905, pp 1428-30. The correctness of that view was later established by The Union Steamship Co of New Zealand Limited v The Commonwealth [1925] HCA 23; (1925) 36 CLR 130 at 140-1, 151-2, 153-4, 163, 164. The point is also made in the second reading speech (at p 1430) that the Australian Bill had been drawn largely upon what had been recommended in Britain by the Royal Commission in 1878 in a Report which had since languished.

36. The result in Australia was that as from 1 January 1907, and excepting then subsisting rights, federal legislation replaced that of the States as regards both copyright and designs but that, as regards copyright, there continued the dual system of Imperial and local legislation. The matter is further discussed by Professor Lahore in "Copyright", 1977, Ch 19; see also Acland Giles, supra at 145-6.

37. Section 8 of the 1905 Act provided that the State copyright statutes, being acts relating to copyright registration (see s. 4), would not apply to works in which copyright subsisted under new federal law, but that nothing in it affected rights previously acquired under or protected by the State laws before its commencement. The 1905 Act provided for literary, musical and dramatic copyright (Part III) and for copyright in "artistic works", (Part IV), they being defined in s. 4 as including paintings, drawings, sculptures, together with engravings, etchings, prints, lithographs, woodcuts, photographs "or other work of art produced by any process, mechanical or otherwise, by which impressions or representations of works of art can be taken or multiplied". Section 34 was an important provision. It stated that copyright in an artistic work included the right to reproduce it or any material part of it, "in any manner, form, or size, in any material, or by any process, or for any purpose". The terms I have quoted were more widely expressed than the older statutes and anticipated the provisions of the 1911 Act, to which reference will later be made. (The same is true of the introduction by s. 34 into the law of infringement of the concept of "authorization": WEA International Inc v Hanimex Corporation Ltd supra at 282-6.) Section 36 of the 1905 Act conferred copyright for the longer of (i) 42 years from the making of the work, and (ii) the author's life and 7 years thereafter.

38. In dealing with the issue of "overlap" between design and copyright protection, and in reaching an appreciation of the significance of s. 22 in the scheme established by the 1911 Act, it is important to appreciate the profound changes brought about by that statute in relation to published works.

39. First, the 1911 Act created new forms of copyright in subject matter where no statutory copyright had existed under the previous law. An example is in the protection thereafter given to works of architecture, being buildings or models for buildings; see Laddie, Prescott and Vitoria, "The Modern Law of Copyright", 1980, 4.18, 4.74.

40. Secondly, as a result of the operation of s. 24, the 1911 Act increased the period and scope of protection in relation to certain species of subject matter existing on 1 July 1912. Thus, a general period of protection for published works of the author's lifetime plus 50 years was given in place of the miscellany of periods under the various laws in force before 1912. These are set out in tabular form in Laddie et al, supra 5.20, and for most categories there was a considerable extension in the period of protection. Further, there was an expansion in the scope of the monopoly afforded by the legislation. Sub-section 1(2) of the 1911 Act used the expression "to produce or reproduce the work or any substantial part thereof in any material form whatsoever". The provision went on to spell out in some detail various rights including, in the case of a novel, the right to convert it into a dramatic work by way of performance in public or otherwise. The change which this brought about in the pre-existing British law is illustrated by the following passage from Warne and Co v Seebohm (1888) 39 Ch D 73 at 80-81. The plaintiffs were the proprietors of the copyright in the novel "Little Lord Fauntleroy". In the course of his judgment, Stirling J said:

"The statute (5 and 6 Vict c 45) confers on the

author of a book and his assigns 'the sole and

exclusive liberty of printing or otherwise

multiplying copies' of the book. By implication

every person other than the author and his

assigns is prohibited from printing or otherwise

multiplying copies of the book. But this is the

only restriction imposed on the public, and,

subject to it, every person is free to make such

use of the book as he pleases. So long,

therefore, as he does not print or otherwise

multiply copies of the novel, any person may

dramatize it, and may cause his drama to be

publicly represented. But if, for the purpose

of dramatization, he prints or otherwise

multiplies copies of the book he violates the

rights of the author no less than if the copies

were made for gratuitous distribution."

In relation to artistic works, the matter was discussed as follows by Brennan J in Computer Edge Proprietary Limited v Apple Computer Inc [1986] HCA 19; (1986) 161 CLR 171 at 205-6:

"An exclusive right to reproduce a work in which

copyright subsists has been an aspect of

copyright created by successive Copyright Acts.

Each Act differed from the others, of course, in

the terms and context by and in which that

exclusive right was conferred. Under the Fine

Arts Copyright Act 1862 (Imp), the exclusive

right 'of copying, engraving, reproducing and

multiplying' an original painting or drawing 'by

any means and of any size' was held not to be

infringed by the representation of a painting by

a grouping of figures in a tableau vivant:

Hanfstaengl v Empire Palace (1894) 2 Ch 1. The

Copyright Act 1911 (UK), adopted subject to

modifications by the Copyright Act 1912 (Cth),

adopted a different formulation of the right.

Section 1(2) of the 1911 Act conferred 'the sole

right to produce or reproduce the work . . . in

any material form whatsoever'. That provision

was thought to give wider protection to authors

than that given by the 1862 Act and to remedy

the effect of the decision in Hanfstaengl v

Empire Palace . . . Under the 1911 Act, the

sole right of reproduction of a work is

infringed by its unlicensed reproduction in a

material form different from the form in which

the original work is made. The widening of

protection was particularly significant for the

protection of artistic works. The sole right to

reproduce an artistic work was infringed by the

unlicensed making, in any material form, of an

object visually similar to and derived from the

original work."

(But it should be noted that, in Australia, s. 34 of the 1905 Act - described earlier in these reasons - may well have anticipated sub-s. 1(2) of the 1911 Act.) Accordingly, the application of a drawing, being an artistic work, to the shape of a three dimensional object, would amount to copyright infringement, and the protection afforded by the copyright law would last for the life of the author together with 50 years, without, moreover, any need of registration. Those considerations made copyright protection more attractive than that given by the designs law, which both required registration and was effective for a shorter period.

41. Thirdly, and this is in contrast to the points made above, in addition to creating fresh species of rights and augmenting other existing rights, the 1911 Act operated in derogation of some existing rights. The matter is discussed in detail in Copinger, 8th ed, supra at pp 252-3. Two examples will suffice. The protection given by the 1862 Act to a photograph was for the life of the author and for 7 years after his death. Section 21 provided for the subsistence of copyright in photographs for 50 years from the making of the original negative. It followed that a photograph made more than 50 years before 1 July 1912 acquired no protection under the 1911 Act, although the author might then still have been living or have died less than 7 years before 1 July 1912, so that the period under the 1862 Act had not run out.

42. The other example of abrogation of rights concerns common law copyright. Section 31 of the 1911 Act, whilst preserving the law as to breach of confidence, stated that no person shall be entitled to "copyright or any similar right in any literary dramatic, musical or artistic work, whether published or unpublished" otherwise than under statute. The "existing rights" in respect of which fresh rights were given by s. 24 and the First Schedule included "the right at common law (if any) to restrain publication or other dealing" with the work. The common law right essentially was to prevent publication of published works, a right said to last in perpetuity: see Pacific Film Laboratories Pty Limited v Federal Commissioner of Taxation [1970] HCA 36; (1970) 121 CLR 154 at 166-8; Laddie et al, supra 4.64-4.67.

43. It will have become apparent that the rights which subsisted in Australia prior to the coming into force of the 1912 Act included Imperial rights, which extended to Australia, together with rights conferred under the respective State copyright statutes and the Commonwealth Act of 1905. Section 4 of the 1912 Act repealed the 1905 Act. But by s. 7 it continued the Copyright Register established under the 1905 Act as if it were established under the 1912 Act. Further, s. 6 provided that the administration of any State copyright Act, which had been transferred to the Commonwealth under the 1905 Act, should continue to be transferred and subject to the same terms and conditions as if the 1905 Act still remained in force.

44. These provisions indicate that it was not the intention of the 1912 Act, despite the repeal of the 1905 Act, to abrogate rights existing under the earlier and colonial legislation. The view has been taken that, in its application to Australia, s. 24 of the 1911 Act and the First Schedule conferred substituted rights, not only in relation to Imperial works protected in Australia by force of pre-existing Imperial law, but also in respect of works protected, in the manner I have described, under the pre-existing local legislation: see, for example, Ricketson, "The Law of Intellectual Property", 1984, 7.22-7.24. That this is the correct interpretation is supported by the terms of s. 13 of the 1912 Act. The effect of this provision was that where copyright subsisted in the United Kingdom on or after the commencement of the 1905 Copyright Act, that is to say from January 1907, it should be deemed to have subsisted in the Commonwealth from the same date. This meant that United Kingdom copyrights which did not have an Imperial application were nevertheless afforded protection in Australia under the 1905 Act, and therefore became entitled to a substituted right in Australia under the 1911 Act in its application in this country: Pollock v J C Williamson Ltd [1923] VicLawRp 34; (1923) VLR 225 at 229.

45. The only reference in the Australian Parliament to design-copyright overlap during the debates on the Bill for the 1912 Act concerned the shortness in the period of registration of designs under the 1906 Act (5 years) but the Minister pointed out that s. 3 of the 1912 Designs Act would provide for a maximum of 15 years. (Hansard, House of Representatives, 30 October 1912, p 4869.) In Britain, the Gorell Committee, which had reported in December 1909 to the President of the Board of Trade (Mr W S Churchill MP) had said (p 10) that it was desirable "to make it plain in any fresh enactment that the author of a work of art is to receive the general protection of copyright even though the work is applied to industrial purposes". Of course, this recommendation was rejected by the adoption of s. 22. Likewise, the Committee's objection to a compulsory licence scheme for use of musical works in recordings was counterproductive. Section 19 of the 1911 Act introduced just such a scheme; see Appendix E to the 1979 "Report of the Inquiry by the Copyright Tribunal into the Royalty Payable in Respect of Records Generally", where there is reference to the successful lobbying activities of the nascent recording industry.

46. It may be noted, looking ahead, that s. 19 of the Patents and Designs Act 1919 (UK), effected an amendment of the definition of "design". It henceforth excluded "any mode or principle of construction, or anything which is in substance a mere mechanical device", and required of a registrable design that its features, in the finished article, "appeal to and are judged solely by the eye". Whilst describing this as "a high water mark of feeling against industrial property", Laddie et al say of the new definition (supra 3.7):

"In fact, although this was not realised for

many years, the tendency not to protect

registered designs devoid of eye-appeal,

culminating in the new definition, had almost

the opposite of the effect that was presumably

intended; for . . . it greatly increased the

rights of designers of functional articles

(under the copyright law)."

In Australia, when Drawing No. 5 was made in 1968, the 1906 Designs Act still did not use the explicit terms introduced in Britain in 1919. But similar results were achieved by judicial interpretation of the 1906 Act, as evinced by the decision in Hosokawa Micron International supra.

Did Section 22 of the 1911 Act apply to pre-existing copyright works?

47. In Interlego AG v Tyco Industries Inc. [1988] UKPC 3; (1989) AC 217 ("the Hong Kong case"), the Judicial Committee was concerned with the question of "overlap" between designs and copyright law as it arose under British legislation in force in Hong Kong. Put in very broad terms, their Lordships decided the case by process of reasoning which, when applied to the relevant legislation in force in this country, would assist the respondent and hinder the appellant. Indeed, the primary Judge indicated that in reaching a decision adverse to the appellant, he was influenced by the reasoning of their Lordships (102 ALR at 398).

48. Their Lordships gave close attention to the construction of s. 22 of the 1911 Act. They decided that the phrase "capable of registration" referred to the kind of design for which the 1907 British Act was intended to cater, and that s. 22 did not fix upon designs barred from registration by reason of lack of novelty. They concluded that "novelty was not contemplated as a sine qua non of exclusion from artistic copyright": (1989) AC at 253. This was so, although "read literally", such exclusion would fall within the scope of the phrase "capable of registration". However, as will become apparent, in my view, the literal meaning of that phrase is not so confined. It is equally susceptible of a meaning of inherent adaptability to registration.

49. I return to that matter later in these reasons, but should indicate at this stage my acceptance of the reasoning of French J in the following passage from Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd (1987) 79 ALR 534 at 550 as to the significance of the phrase in design law "novel or original":

"The subject of 'novelty' or 'originality' is

sometimes addressed as though it describes an

attribute of a design. This is understandable

for the Designs Act itself uses the adjectival

forms 'new' and 'original'. Yet on another

analysis these words tell their reader not about

the design but about what has gone before it.

They refer to a time limit for registration

defined by reference to the publication of other

designs which may be similar or identical.

Had the design in question been produced prior

to that which robs it of novelty or originality

it may have been registrable. The only question

would have been - is it a 'design' within the

meaning of the Act? Viewed as temporal or

historical references, novelty and originality

properly fall outside the criteria of

registrability.

The question of registrability then reduces to

the question of definition - is that which it is

sought to register a design or not?"

50. What calls for immediate discussion is the proposition, assumed to be correct by their Lordships in the Hong Kong case and relied upon them in reaching their conclusion as to the construction of s. 22, that its operation was not merely prospective, that is to say in relation to works created after 1 July 1912, but that it operated to abrogate from 1 July 1912 copyright in respect of pre-existing works in which copyright then subsisted. The Board fixed upon the limited reference in s. 22 to the design law, the section referring only to the British Act of 1907, with no mention of its predecessor statutes. Their Lordships saw no rational distinction between denying copyright in relation to designs which were denied registration under the 1907 Act for lack of novelty, and those which were denied registration under the Act of 1883 for want of novelty. Therefore, in their view, it was the more likely that absence of novelty was not a criterion picked up by the phrase "capable of registration" in s. 22.

51. Whilst their Lordships pointed out (at 253) that the view they reached as to the application of s. 22 to existing copyright works, did not "demonstrate conclusively" the correctness of the interpretation of the interpretation they placed upon the phrase "capable of registration", plainly it was an important ground upon which they relied.

52. It will be becoming apparent that in my view s. 22 was to be interpreted prospectively and as not abrogating existing rights. But I am also of the view that nevertheless there are sufficient grounds for supporting the construction of the phrase "capable of being registered" in the way which commended itself to the Judicial Committee, and which is contended for by the respondent. In other words, whilst the appellants may be correct in their attack upon this element of the reasoning of the Privy Council, that is not sufficient to win them the day on this appeal.

53. I turn to express the reasons which lead me to take a different view to that of their Lordships as to the temporal operation of s. 22 of the 1911 Act.

54. First, it is necessary to distinguish between statutes (i) which operate truly prospectively, that is to say only upon rights created after the commencement of the statute, (ii) which operate upon presently existing rights so as to qualify them or abrogate them with effect from the commencement of the statute, and (iii) which operate truly retrospectively, that is to say by attaching different legal characteristics to past events, which preceded the commencement of the statute: Coleman v The Shell Company of Australia Limited [1943] NSWStRp 41; (1943) 45 SR (NSW) 27 at 31; La Macchia v Minister for Primary Industry (1986) 72 ALR 23 at 33-4. In some authorities, the term "retrospective" is used in sense (ii). An example is the treatment by Lord Hanworth MR of s. 24 of the 1911 Act as "retrospective" in its operation because at the date it came into force it replaced existing rights with substituted rights: In re Dickens (1935) Ch 267 at 289; cf. Pacific Film Laboratories supra at 166 where Windeyer J refers to this legislation as operating "in a sense retrospectively".

55. Counsel for the appellants pointed to the need for a clear expression of legislative intent to overcome two presumptions in statutory interpretation, the first the presumption against retrospective legislation in the third sense mentioned above, and the other that against abrogation of existing rights in the second sense. Counsel submitted, with much cogency, that there was a lack of such clear intent manifest in s. 22 as it appeared both in the 1911 Act and 1912 Act. In particular, sub-s. (2) of both sections provided for the making of delegated legislation to determine the conditions under which a design "shall be deemed to be used" as a model or pattern to be multiplied by any industrial process. The sub-section is clearly looking to the future, not back to the past. Moreover, counsel submitted, the same point also tends against a construction which treats the law as to the design-copyright overlap as conferring concurrent rights up to 1 July 1912, but, by reason of s. 22, as having a destructive effect thereafter.

56. Where the 1911 Act abrogated existing rights, it did so in the clear terms, for example, of ss. 24 and 31. Section 24 abrogated any common law rights but substitutionary rights were then conferred pursuant to s. 24 and the First Schedule. The phrase "copyright" in the First Schedule includes any common law rights; see In re Dickens supra at 297, 307-8. Section 24 also spelled out the system of "substituted rights" in respect of other existing works, and went on to say in sub-s. (3) that, with exceptions not here material, copyright shall not subsist in any work made before the commencement of the 1911 Act "otherwise than under, and in accordance with, the provisions of this section". There is nothing in ss. 24 and 31 to subject the regime thereby created to other provisions of the Act which also abrogated existing rights. The inference is that s. 24 is to be read not as subject to s. 22. The view of the construction of s. 22 derives some support from the treatment of the subject by the 1968 Act. As I have indicated, sub-s. 218(2) deals specifically with design-copyright overlap in relation to works in which copyright subsisted under the 1911 Act. But when the 1968 Act deals with copyright in works made before 1 July 1912 (in Part XI Division 5), it does not contain a provisions corresponding to sub-s. 218(2) to deal with design-copyright overlap in terms of s. 22 of the 1911 Act. This is consistent with a view taken by the Australian legislature in 1968 that s. 22 of the 1911 Act only applied to artistic works which were made after it came into force, and did not have any operation upon works made before 1 July 1912.

57. The authorities touching the matter are not highly persuasive. In Stephenson, Blake and Co v Grant, Legros and Co Ltd (1916) 33 RPC 406 at 415, Eve J appears to have accepted the submission that the substituted right given by s. 24 of the 1911 Act for existing works might be excluded by s. 22. (So also did Clauson J in Pytram, Limited v Models (Leicester), Limited (1930) 1 Ch 639 at 645.) However, Eve J held that because at the coming into operation of the 1911 Act the design in question was no longer new, it was not then "capable of registration", and thus was not excluded from copyright under the 1911 Act. His Lordship appears to have been concerned that the consequence of accepting a contrary view would have been the complete loss of protection for works within the scope of the Copyright Act 1842 or the 1862 Act, but not registered under the designs law. However, their Lordships pointed out in the Hong Kong case (at 249):

"That decision has been criticised as leading to

the absurd conclusion that a person who had a

design registrable under the Act of 1907 but had

not troubled to protect himself by registration

retained his artistic copyright and was thus put

in a better position than a person who had

registered and who would so be deprived of his

artistic copyright."

The correct construction of "capable of registration" in 1911 and 1912 Acts and in s. 218 of the 1968 Act

58. It undoubtedly is the case, as counsel for the appellants emphasised, that the copyright and design "monopolies" are different in character. The essence of copyright as now understood is the prevention of copying, and the exclusive monopoly rights extend to the reproduction of two dimensional works into three dimensions. A registered design may be infringed by a fraudulent copy but the 1906 Designs Act contemplated that an injunction (although no damages or penalty) might be awarded against an infringer who committed the infringement unknowingly and without notice that copyright in the design subsisted: s. 31. Further, the monopoly conferred by the 1906 Designs Act was concerned with application of the design "to any article in respect of which the design is registered": s. 30.

59. However, as I have indicated earlier in these reasons, with reference to the use of the word "design" and "designer" in the pre-1911 copyright legislation, the distinction was not then so clearly understood. The phrase "This Act shall not apply to designs capable of being registered under the Designs Act 1906 . . .", in s. 22 of the 1912 Act, is properly to be understood as contemplating an artistic work the design of which, in the sense, for example, of s. 1 of the 1862 Act, might also be a design susceptible of protection under the designs law. The word "design" where it appears in the opening words of s. 22 does not refer solely to "design" as defined in the 1907 Act. Both that definition and the Australian definition in the 1906 Act (which contained the phrase "'design' means any industrial design . . .") have been criticised as tautological by defining a design for the purposes of the design statute in terms of itself. This would by no means have been understood to be so 80 years ago. Rather, there was a concept of "design" which might attract either or both the copyright laws or the law of registered designs, in each case depending upon the terms of the relevant statutes. In s. 22 when first used, "design" refers to a species of artistic work in the sense of the copyright law.

60. So, the reader of s. 22 is to ask of that which is put forward as a "design" in this sense, whether it is capable of registration as a design within the meaning of the 1907 Act (in Britain) or the 1906 Act (in Australia). It follows that I do not accept the submission for the appellants that the two questions presented by the opening words of s. 22 are (i) is it a "design" within the meaning of the Designs Act and (ii) if so, is it "capable of being registered thereunder"?

61. I have indicated earlier in these reasons my agreement with the distinction drawn by French J. in Kevlacat supra between the characteristics of a "design" as defined in the designs legislation and the temporal or historical quality of novelty which is needed for a valid registration.

62. Further, I do not accept that a literal reading of the phrase "capable of registration" is consistent only with the construction contended for by the appellants. In my view, reading the word "design" where it first occurs in the way I have indicated, the phrase which follows it is consistent with the construction contended for by the respondent. That for which registration is sought will be "capable of registration" under the designs statute if of an inherent character which answers the statutory definition. This will be so even if there is no legal right to compel registration because the design lacks the temporal quality of novelty required by s. 17 of the 1906 Act or s. 49 of the 1907 Act.

63. The evident purpose of s. 22, contrary to the recommendations of the Gorell Committee, was more against "double protection". This purpose was implemented by ensuring that the full scope of artistic copyright which otherwise would be conferred under the 1911 Act in respect of new works (and which otherwise would prevent reproduction in any material form during a very long term) would be limited in respect of works also answering the description of a design under the 1907 Act. What was to be treated in this way was the "design" of the artistic works. This meant that, for example and consistently with the view of Mr Blanco White QC (repeated earlier in these reasons), it would still be an infringement of copyright in a drawing to produce it in a two dimensional form, although if s. 22 applied it would be no infringement to industrialise it by reproducing it in a three dimensional form.

64. The discrimen established by s. 22 fixed upon the intention of the author of the work when he completed it, and asked whether he intended it simply as a work of art or as a model or pattern to be implied by an industrial process, or, as Viscount Maugham put it, "whether or not he regarded it as a species of commercial enterprise": King Features supra at 213.

65. The result of the application of s. 22 was to give the author no more than the rights given him by the designs statute. I appreciate what has been said as to the purpose of s. 22 being the avoidance of "dual protection" or "overlap", particularly by Kearney J. in Ogden Industries Pty Ltd v Kis (Australia) Pty Ltd (1982) 2 NSWLR 283 at 297-8, with reference to various authorities and learned writings. By "dual protection" may be meant the concurrent existence of artistic copyright and a design registration.

66. From this, counsel for the appellants developed the submission that there can be "dual protection" only where a design may be registered, and for this novelty is essential. Therefore, it is submitted, copyright will be lost by the operation of s. 22 only if the design is new or original and thus "capable of registration". That is said to make rational sense of s. 22. I do not accept the premises which underpin this construction of s. 22.

67. The appropriate starting point is that perceived by Viscount Maugham in King Features supra at 212. It is that authors who intended to use works for multiplication by an industrial process should not receive in full the extensive rights now to be given by the copyright law, particularly in respect of three dimensional reproduction of drawings, for a lengthy period. Rather, as his Lordship put it, the author should be left with no more than the rights the 1907 Act gave him. If the work in question was a design capable of registration, in the sense of answering the definition in the designs law, then the author was to be put in the same position as any other applicant for a design registration. He, like them, might fail to obtain registration because of prior publication by himself or a third party. But if that proved to be the case, s. 22 did not have the perverse effect of restoring fully his position under the copyright law. Rather, he was left with no protection in respect of the industrialisation of his work.

68. If the phrase "capable of registration" were to be interpreted so as to involve questions of novelty, the operation of s. 22 would be capricious. In Australia, a design drawing sufficiently novel to be entitled to registration for the maximum period of 15 years under the 1906 Act (s. 26) would be excluded from copyright protection; a design drawing lacking novelty and unregistrable nevertheless would be entitled to copyright protection against three dimensional reproduction for the full period of the life of the author together with 50 years.

69. If various constructions of a statute are fairly open, the Court should adopt that construction which tends to further the evident purpose of the provision, rather than to defeat it or to produce a capricious result: Nimmo v Alexander Cowan and Sons Ltd (1968) AC 107 at 121-2, Tickle Industries Pty Ltd v Hann [1974] HCA 5; (1974) 48 ALJR 149 at 153; cf Chugg v Pacific Dunlop Limited [1990] HCA 41; (1990) 170 CLR 249 at 261-2.

70. Further, the issue of novelty or lack of it may be factually complex and the determination of the subsistence of copyright would thus depend upon circumstances remote from the traditional concerns of copyright law with the originality of the work, the nature of the work, the citizenship or residence of the author, and the place of first publication. It is true that s. 22 calls for a new type of inquiry, that as to the intention of the maker as to use as a model or pattern for industrial multiplication. But this additional requirement still stays close to the traditional criteria and does not present a range of inquiry as to the activities of third parties over a possibly long period of time. As Viscount Maugham pointed out in King Features supra at 213, it calls for an answer which the legislature may have thought it would not be very difficult to obtain.

71. The acceptance of the concept of novelty as included in the expression "capable of registration" would, as I have indicated, produce results which would hinder rather than advance the evident statutory purpose. To treat the concept of "capacity" as referrable to the inherent character of a design does not avoid all difficulties. But, as will appear, the acceptance of the existence of those difficulties is no reason for adding to them by introducing the concept of novelty.

72. The concern in the designs legislation, particularly as interpreted by the Courts, of excluding purely functional designs in respect of mechanical devices more properly the subject of the patent law, has produced the result that what otherwise might be design drawings capable of registration under the Designs Act, and therefore excluded from copyright protection by s. 22, will not be so excluded. The result will be that, as indicated earlier in these reasons, there is an anomaly.

73. I appreciate that, on any view, drawings of articles whose features are dictated solely by function will enjoy copyright protection notwithstanding their industrial application, because they fall outside the definition of "design". The same will be so of drawings which lack "eye appeal". Nevertheless, as regards functional designs, the existence of the copyright protection is counter-balanced by the maintenance of the policy as regards the patent law. In any event, the existence of some "anomalies", whichever of the constructions proffered by the parties be adopted, is no reason for further defeating the evident purpose of the legislation by accepting the contentions of the appellants.

74. I accept the respondent's submission that in s. 22 of the 1911 Act, and of the 1912 Act, the phrase "capable of registration" refers to the possession of the characteristics of a "design" within the meaning of the designs law, and that Drawing No. 5, although not novel, was not for that reason not "capable of registration". The corresponding construction should be given s. 218 of the 1968 Act. This means that copyright does not subsist in Drawing No. 5 by virtue of the 1968 Act, provided it otherwise answers the definition of "design" in the 1906 Act.

75. Before moving from this aspect of the appeal, I should indicate that whilst I have preferred to state the reasoning for my conclusions other than by extensive reference to what has been said in certain recent decisions, I have not been unmindful of them. They come from jurisdictions as diverse as Australia, the United Kingdom, Canada, Hong Kong and Israel and include Interlego AG v Alex Folley (Vic) Pty Ltd (1987) FSR 284, Bayliner Marine Corporation v Doral Boats Limited (1987) FSR 497 and Interlego AS v Exin Lines Bros SA (an unreported judgment of the District Court in Tel Aviv-Jaffa in civil matter 331/85). No clear path emerges from the case law. None of it binds this Court. I have preferred to approach the matter of statutory construction more directly.

76. This brings me back to the issues of function, and "fundamental form".

77. The appellants rely on the notion of fundamental form as the basis for two distinct submissions. The first is that novelty is inherent in the concept of a design: that is, in order to be a design, the shape of an article must have sufficient individuality of appearance from the "fundamental form" of that article as determined by the prior art. Secondly, a shape which represents the "fundamental form" of an article cannot be registered as a design because its appearance is dictated solely by function. These two submissions sit awkwardly side by side, each relying on a different interpretation of the notion of fundamental form.

78. As a starting point, it is as well to recall what was said by Kitto J. in In the Matter of Design No. 29076, Class 14, Registered by Zdenek Wolanski [1953] HCA 72; (1953) 88 CLR 278 at 279-80:

"(The subject of a design registration) is not

an article made according to a particular shape

or pattern. Much less is it a method of making

such an article, or a method of achieving an end

by the use of such an article. It is a

conception or suggestion as to shape,

configuration, pattern or ornament . . ., and

accordingly what the proprietor of a design gets

by its registration is a monopoly for one thing

only, and that is 'one particular individual and

specific appearance': Russell Clarke on

Copyright in Industrial Designs (1930) p 17 . . ."

79. The concept and the terminology of "fundamental form" appear to have their genesis in the work of A D Russell-Clarke. Counsel for both parties referred to the passage in his "Copyright in Industrial Designs", 3rd Ed, 1960 at pp 18-19, which states:

"(A design) must be such that it will appeal to

the eye in the finished article, i.e., it must

be noticeable in the finished article. To be

noticeable it must have individuality. The

requirement, therefore, really comes to this,

that a design must have sufficient individuality

of appearance. . . .

Now, where the design is for a shape, there is a

difficulty in making the required comparison

between the original and the finished article.

A design for a shape, as already indicated, can

only be applied to an article by making the

article in that shape. The original article

can, therefore, only exist in the imagination,

which means that the finished article can only

be compared with an imaginary original article.

The question at once arises as to what is this

imaginary article to be taken as being. The

article is the general type of article in

question, the genus or species qua use or

purpose. For instance, chairs as a class, or

tables as a class. Its shape must be taken to

be the simplest and commonest known form of that

type of article. For every species of article

there must be certain incidents or general

characteristics of shape which are essential to

get the article to work and fulfil its function.

An article possessing only these incidents is

the article to which the design must be imagined

to be applied. It may be called the fundamental

article. If a design is a design within the

meaning of the section, any article in which it

has been incorporated must appear to the eye to

possess some incident of shape beyond those

primary essential features which are the

property of the fundamental article. The design

by its application must have produced some

visible alteration or embellishment upon this

fundamental form. If an article to which an

alleged design has been applied does not appear

to the eye to contain any characteristics over

and above the fundamental form, then there is no

design within the meaning of the section."

The concern of this passage is with the sense (if any) in which a design which is for a shape (rather than, say, a pattern) can be said to be applied to an article, if the article does not exist until it is created in that shape. This issue was canvassed by Lindley L.J. in Re Clarke's Registered Design (1896) 13 RPC 351 at 358:

"(The Patents, Designs and Trade Marks Act 1883)

is confined to designs applicable to

manufactured articles, and to the application of

such designs to such articles. Again, the Act

does not apply to things to which a design is

applied; the Act applies to the design applied

to them. The distinction is obvious enough when

the design is for a pattern or ornament; but

when, as in this case, the design is for the

shape of a thing, the distinction is reduced to

the difference between the shape of a thing and

a thing of that shape. A design applicable to a

thing for its shape can only be applied to a

thing by making it in that shape."

So, Russell-Clarke conceives of the article to which the shape is applied as an imaginary article which embodies the fundamental characteristics of articles of that kind. That is, the learned author contends that the imaginary "fundamental form" to which the design is applied is that which embodies the simplest and commonest features of a species of article. This is far removed from the manner in which the appellants define and seek to use the notion of fundamental form. Rather than focussing on the simplest article of that kind, the appellants argue that the Court should look at the prior art, in its most recently developed state, and use that to determine the fundamental form. So, it is urged, the fundamental form in this case is not a building block, or even an inter-connecting building block, but rather the first generation drawings of 1946.

80. In this way, the appellants seek to introduce novelty as an inherent part of the concept of design itself, rather than a pre-requisite to registration of a design. Support is sought from two main sources. The first is a paragraph of Russell-Clarke that follows immediately the passage quoted above:

"(T)he requirement of appealing to the eye is

therefore really a preliminary test as to

novelty, namely, novelty as compared with the

fundamental form of the article as above

defined. In the next chapter a further kind of

novelty will be considered, namely, novelty as

compared with other designs, i.e., other

individual forms within the general species."

81. However, in my view, the appellants' argument is met by the very material on which it relies. The learned author himself qualifies the use of the word "novelty" in relation to fundamental form, and disavows any suggestion that it has the same meaning as "novelty" in relation to other designs. What he propounds is that the shape of an article put forward as a design must embody some feature above and beyond the fundamental form of that article. Novelty in this context means little more than difference; and, even then, it is not difference in relation to other designs (the prior art) but in relation to the simplest form of an article.

82. Secondly, support is sought from the judgment of Lockhart J in Hosokawa Micron International. However, the references by his Honour to novelty, in particular to Le May v Welch (1884) 28 Ch D 24, were made in the context of the registrability of a design rather than of the nature of a design itself. This is clear from the passage on which the appellants placed greatest reliance:

"The essence of the registrability of a design

is that it has an element of novelty having

regard to the nature of the article and the

state of the prior art. The cases mentioned

earlier speak eloquently of this and Le May v

Welch is a notable example." (26 FCR 393 at 408)

Further, in that case I urged caution in the use of terms such as "essence" and "registrability" (at 428):

"It would not be accurate to say that the

essence of registrability of a design was an

element of novelty, having regard to the nature

of the article and the state of the prior art;

of course novelty was essential to

registrability, because the legislation said so

in terms. But non constat that an article

shaped to perform a particular function is not

novel because the same function might be

performed by an article of a different shape.

The design in question may or may not be novel,

but it will be a design in the statutory sense."

The appellants' attempt to merge the definition of a design and prerequisites for registration is at odds with established principle.

83. Nevertheless, it was submitted that the High Court had approved and adopted Russell-Clarke's "test" (as interpreted by the appellants) in Malleys Ltd v J.W. Tomlin Pty Ltd [1961] HCA 77; (1961) 35 ALJR 352. At 352-3, Taylor Menzies and Owen JJ. said:

"It was argued . . . that because an arrangement

of the three sections of the design which has

been described . . . was not indicated with any

precision, the so-called design was altogether

too vague to qualify for registration. The same

contention was put somewhat differently in the

form of an argument that any person inspecting

the certificate of registration, although shown

the features of the design, could not know the

extent to which a different arrangement of those

features would be protected by the registration

of the design. The answer to these contentions

lies, we think, in the recognition of what is

essential to distinguish a design from a mere

shape. It is, of course, true that every shape

is not a design; there must be 'sufficient

individuality of appearance' to distinguish it

from what Russell-Clarke in Chapter 2 of his

book 'Copyright in Industrial Designs' aptly

describes as 'the fundamental form' of an

article. Furthermore, the existence of that

sort of individuality is to be determined by the

eye and not by measuring dimensions. It follows

that a design need not have the precision of a

working drawing; it concerns the shape or

configuration of an article, as it appears to

the eye. If a design applied by another has the

features that are characteristic of the

registered design and are so arranged that to

the eye the resulting shape is substantially the

same, there is infringement, whereas if the same

features are arranged so that to the eye the

resulting shape is different, there is, in the

absence of fraudulent imitation, no infringement."

This case was primarily concerned with the criteria for judging whether a registered design is infringed, rather than with the criteria to determine the existence of a design. The High Court referred to fundamental form as a tag rather than a legal criterion, using the phrase as a convenient short-hand way of saying that a shape must be sufficiently indefinable before it can be called a design. In doing so, their Honours stressed that there need be no precision in the definition of the shape. In this sense, the High Court was reiterating the well-established principle that the design must have eye appeal, i.e. must be apparent in the finished article. This requirement, in most cases readily satisfied, is considered below.

84. In short, Russell-Clarke's use of the term "novelty" is imprecise, the cases have always kept this concept distinct from the inherent nature of a design, and the sense in which the High Court used the phrase "fundamental form" is at odds with that proposed by the appellants. There is no suggestion in the authorities that there is a need to examine the prior art, identify common features, construct an imaginary article, and then determine the extent to which the shape put forward as a design differs from that mental construction. At most, the High Court requires that the shape be sufficiently certain and identifiable before it can be treated as a design.

85. This principle was stated by the High Court more recently, and without any reference to "fundamental form" in Firmagroup Australia Pty Ltd v Byrne and Davidson Doors (Vic) Pty Ltd (1987) 73 ALR 321. At 323, Wilson, Brennan, Deane, Dawson and Gaudron JJ. said:

"Specificity of shape and configuration must be

conveyed by a registrable design; features of a

design which do no more than convey the idea of

a general shape appropriate to the function

which the article is intended to perform and

which are consistent with a variety of

particular shapes in articles copying those

features are not amenable to protection by the Act."

The pre-1969 drawings (including Drawing No. 5) clearly conveyed not the idea of a general shape, but specificity of shape and configuration. They are perfectly consistent with the concept of a design as articulated in both Malleys and Firmagroup.

86. The second way in which the appellants seek to use "fundamental form" is to describe a design which is dictated solely by function.

87. Certainly, that use of the phrase 'fundamental form' is more in keeping with the use made by Russell-Clarke:

"A mere mechanical device is a shape in which

all the features are dictated solely by the

function or functions which the article has to

perform. It is, in fact, the fundamental form,

or something differing therefrom by only minute

variations. Such a shape cannot be registered

as a design." (p 15)

However, the phrase is not necessary to the articulation of the principle that a design whose shape is dictated solely by function is not registrable under the designs legislation. Indeed, it is undesirable. It focuses attention on the mental conception of an article dictated by function which is then compared with a design under consideration, rather than concentrating on the features of the actual shape whose registrability as a design is at issue.

88. The definition of "design" in s. 4 of the 1906 Designs Act (as it stood before the 1981 amendments) was as follows:

"'Design' means an industrial design applicable,

in any way or by any means, to the purpose of

the ornamentation, or pattern, or shape, or

configuration, of an article, or to any two or

more of those purposes."

In Hosokawa Micron International supra, the Full Court held that a design which is dictated solely by function is not a "design" within the meaning of this definition. The question for the Full Court then arose as to what is meant by the phrase "dictated solely by function". Lockhart J (with whom Northrop J agreed) articulated the relevant test at 408:

"In my opinion Utilux and Interlego provide

strong support for the view that features of a

design are dictated solely by the function which

the article has to perform, not when the

article's function for successful performance

requires that it be made in that shape and in no

other, but when the relevant features of the

shape are brought about solely by or are

attributable only to the function which the

article in that shape is to perform even if the

same function could be performed by an article

of different shape."

I pointed to what appeared to be difficulties in the course taken in the British decisions, and concluded at 429:

"In my view, it follows from the course of

authority upon the definition in the 1833 Act,

as understood at the time of the enactment of

the Australian legislation in 1906: (i) that a

design was not invalid by reason only that the

articles to which it was applied would be

assisted by the particular shape of the design

in achieving a functional purpose; and (ii) that

if there was room for choice by the designer as

to the shape of an article, the result of the

designer's labours would qualify as a design,

even if the articles to which it was applied

served a functional purpose and attainment of

that purpose was assisted by the particular

shape in question."

89. Despite the different nuances in the reasoning in the two judgments, all the members of the Court were in agreement over the result in the particular case - namely, that the shape of the Venturi collars was not dictated solely by function. Lockhart J (at 411-2) concluded that the primary Judge's findings were supported by the evidence:

"I agree with King J that it is not possible to

say that every feature of the design of the

Venturis produced by the appellants is dictated

solely by the function which they have to

perform. Indeed, the evidence, including expert

witnesses called by the appellants, was to the

effect that there were so many variations in

possible designs of Venturis that designers

seeking to design a Venturi for the same dust

collector would be unlikely to produce identical

designs."

"I agree with the learned primary judge that the

drawing in issue on this appeal does not depict

a mere mechanical device. King J held on the

evidence that 'there is a range of the forms of

venturi in use in connection with dust

collectors, that each of these forms of venturi

will work acceptably, and that the configuration

of each form depends on the preferences of the

original designer'. Those findings were not

challenged on the appeal. The effect of the

evidence was that there were so many variations

in possible designs of venturis that designers

with the task of designing a venturi for the

same dust collector would be unlikely to produce

identical designs."

90. The authorities supporting the principle that design dictated solely by function is not registrable are considered in detail in the judgments in Hosokawa Micron International. They need not be analysed in detail here. However, what must be stressed is that it is no objection to the registration of a design that it serves a functional purpose, so long as its shape is not dictated solely by function: Hecla Foundry Co v Walker, Hunter and Co supra at 558-9; Cooper v Symington (1893) 10 RPC 264 at 267; Werner Motors Ltd v A W Gamage Ltd (1904) 21 RPC 621 at 629; Gillard v Worrall (1904) 22 RPC 76 at 79; Re Bayer's Design (1906) 24 RPC 65 (CA); (1908) 25 RPC 56 (HL). The rationale is clear: unlike patent law, design law will not give a monopoly in a particular function; but it will give a monopoly in a shape, not dictated solely by function, which produces an article that serves a useful purpose. So it is no objection here that Lego had already received patent protection which had expired. As Vaughan-Williams L.J. stated in Re Bayer's Design supra at 74:

"If a Design is a Design, when tested by the

eye, it will not cease to be a Design, or the

less be a Design, because when you use this

piece of ornamentation by applying it you will

attain a mechanical result which could be

subject matter of Letters Patent."

91. To stress these fundamental points is important because the basic fallacy at the heart of the appellants' submissions on this issue is a confusion between function and shape. The appellants contended that the presence of the studs on the blocks was dictated by function, but did not establish that the shape of those studs was solely dictated by function. When confronted with similar drawings and arguments, the Judicial Committee concluded in the Hong Kong case, at 248-9:

"Thus although the presence of knobs and tubes

is no doubt attributable simply and solely to

the functional purpose of providing clutch-power,

the actual shape and dimensions of the

particular knobs and tubes employed for that

purpose were not dictated solely by their

function but, in part at least, with a view to

the appearance of the article as a whole. This

evidence cannot be ignored and in their

Lordships' view it necessarily negatives any

conclusion that the shape or configuration of

the Lego bricks is dictated solely by the

function which it has to perform. It is a shape

which, in their Lordships' opinion, not only

clearly has eye-appeal but has also significant

features, both of outline and proportion, which

are not dictated by any mechanical function

which the article has to perform as part of a

construction set."

The issue is not determined simply by the appellants' assertion that the studs are a necessary evil which Lego would rather remove altogether. Arguably, spectacles are a necessary evil whose presence is solely attributable to the functional purpose they serve; but that does not deny that there is any element of design in the many varied shapes and styles of spectacles that exist. Counsel for the appellants conceded in argument that there might be 20 or 30 possible shapes for the studs, but claimed that each would be functional. That may be so. But that does not mean that the particular shape adopted is dictated solely by function; indeed, as was the case in Hosokawa Micron International, that potential variety points to the opposite conclusion.

92. Mr Redmond was called by Croner as an expert on industrial design, and in his report he dealt with the design of the Lego bricks. In his Report, Mr Redmond said:

"The particular individual character of the Lego

design is shown in a way which expresses easily

understandable connection, and disconnection,

and carries the implication that things can be

made from it."

Mr Redmond did not state (either here or in the course of an extensive cross-examination) that the design was appealing because the blocks could be connected and disconnected, nor because that connection was easily understandable; but rather because the design expressed easily understandable connection. The appellants argued that the effect of Mr Redmond's evidence was to concede that the design was dictated solely by function. That would involve a conclusion by the expert upon an issue of law for the Court. But putting that to one side, there can be no objection to designs which look functional. Clearly, this can be an integral element of the attractiveness of the product. For example, the car industry employs many people to design bodies that look sleek and fast. The only objection can be where the actual shape of the article is dictated solely by function. In speaking of a design expressing function, Mr Redmond kept those concepts distinct.

93. The appellants further submitted that Mr Gray, the Chief Executive of Tyco, made a significant admission in certain proceedings in the United States to the effect that Tyco could not make a block which worked like Lego without making it look like Lego. But, in truth, this simply amounts to no more than a statement that an article could not perform the same function in exactly the same way as Lego unless it resembled Lego. That statement does not deny that, as in the case of the Venturi collars, different designs could perform the same interlocking function, even if the function were performed in a slightly different way.

94. The issue is whether there is some feature of shape which is not dictated solely by function and which is apparent to the eye. If there is, then it is no objection that every feature of the shape is functional. This issue is not dealt with by comparing an article in that particular shape to an imaginary article in an indeterminate, generic shape and attempting to identify points of similarity and difference.

95. The correct inquiry to be made was succinctly described by Lockhart J. in Dart Industries Inc. v The Decor Corporation Pty Limited (1989) AIPC 38,971 at 38,975:

"The design is the mental conception conveyed to

the mind by the eye; it is the mental picture of

the shape, configuration, pattern or ornament of

the article to which the design has been applied

. . . For a design to be protected there must be

a special or distinctive appearance, something

in the design which captures and appeals to the

eye. To have that effect, the design must be

noticeable and have some perceptible appearance

of an individual character."

The primary Judge correctly identified the test to apply in determining the existence of a design, and no error was demonstrated in his application of that test. The relevant features of shape, not dictated by function, were identified as the proportions of the bricks and studs, the shape of the studs, the number and arrangement of the studs, and the sharpness of the edges of the bricks.

96. The result is that Drawing No. 5 is for a design capable of registration under the 1906 Act. The shape of the Lego brick which it depicts has elements apparent to the eye beyond those necessary for it to function as an interlocking brick in a toy construction set.

97. The appellants' final argument with respect to the pre-1969 drawings was that s. 218 of the 1968 Act only applies where there is an intention to apply the design industrially in Australia. Those words do not appear in the section. The submission should be rejected.

98. To establish this territorial limitation, the appellants relied on Potter v The Broken Hill Proprietary Company Ltd [1906] HCA 88; (1906) 3 CLR 479; Norbert Steinhardt and Son Limited v Meth [1961] HCA 33; (1960) 105 CLR 440; and Hella-Australia Pty Ltd v Quinton Hazell (Aust) Pty Ltd (1967) 10 FLR 86. The first of these cases says no more than that the grant of a patent is an act of sovereignty behind which the courts of another state will not go; the second and third emphasise that infringement of industrial property rights granted in the forum is only actionable if it takes place within the forum. Neither of these propositions, with which the respondent did not take issue, aids the appellants in establishing that an intention to apply industrially in s. 218 must be limited to application in Australia. Likewise, there is nothing in the terms of s. 218 which advances the interpretation that the appellants propose.

99. Where the legislature intends to restrict the operation of the 1968 Act to matters and things situated in Australia, it does so explicitly, for example in ss. 36, 37 and 38 which deal with infringement. Section 218 is concerned to exclude what otherwise would be copyright subsisting by virtue of the 1968 Act in artistic works made before its commencement. If that copyright did subsist it would be infringed only by the doing in Australia of certain acts or the authorization of the doing of those acts in Australia. Sections 36, 37 and 38 in terms provide an explicit territorial nexus. None should be read into s. 218. Consequently, the copyright law contained in the 1968 Act does not apply to the design depicted in Drawing No. 5 (and the other pre-1969 drawings) because it was capable of registration as a design under the 1906 Act.

100. The result is that in Australia copyright does not subsist in the pre-1969 drawings.

101. Whereas the respondent admits that the appellants owned any copyright which subsisted in the pre-1969 drawings, but submits that copyright does not subsist by reason of s. 218, the respondent contests existence of copyright in the post-1969 drawings on the ground of lack of originality. Ownership is admitted. The primary Judge accepted that the post-1969 drawings did not amount to original artistic works. As will become apparent, I have reached the contrary conclusion.

102. At first instance and on appeal, as in the Hong Kong case, the parties focussed on two drawings as illustrating the relevant principles. They were Drawing No. 5 (which was mentioned above) and Drawing No. 8 (the drawing of a 4 x 2 brick, executed by a Danish national, Mr S A Pucek, on 27 April 1976). Mr Pucek was an employee of members of the Lego group who have assigned the copyright to Interlego. Regulation 4 of the Copyright (International Protection) Regulations made under s. 184 of the 1968 Act had the effect of conferring copyright in Australia, in respect of this drawing, subject to the other provisions of that statute. It was agreed that similar issues arose in relation to all the post-1969 drawings; if the appellants succeeded in establishing copyright in Drawing No. 8, it would establish copyright in all post-1969 drawings; if it failed in relation to Drawing No. 8, it would similarly fail in relation to all others. In all cases, the drawings were used for industrial application by the Lego group outside Australia.

103. The relevant facts were not in dispute. Mr Pucek had Drawing No. 5 in front of him when he drew Drawing No. 8. However, he did not trace Drawing No. 5. Some of the scales were different, and there were five main differences between the two drawings:

(a) The flow rib which ran longitudinally along the inside of

the brick in Drawing No. 5 was removed. This required

changes to three of the perspectives in Drawing No. 8.

(b) In Drawing No. 5, the edges of the tube endings were rounded

on both the inside and the outside. In Drawing No. 8, the

edges of the tube endings are rounded only on the inside.

(c) The thickness of the upper wall is visibly less in Drawing

No. 8 than as shown in Drawing No. 5.

(d) The corners of the brick are radiused in Drawing No. 8.

(e) The knob radius in Drawing No. 8 is increased.

It took Mr Pucek half a day to complete the drawing.

104. The appellants relied on a number of cases which considered copyright in artistic works. Most of these principles were not disputed by the respondent. Though recognising that a slavish copy of an earlier work will not enjoy copyright (Ladbroke (Football) Limited v William Hill (Football) Limited (1964) 1 All ER 465 at 469) and that originality must pertain not to ideas but to their expression (University of London Press, Limited v University Tutorial Press, Limited (1916) 2 Ch 601 at 608), the appellants contended that drawings which derive from earlier drawings can still be seen as distinct original artistic works, each attracting its own copyright. This proposition was supported by reference to L B (Plastics) Limited v Swish Products Limited (1979) RPC 551 where Whitford J said (at 569):

"The draughtsmen called on both sides made it

quite plain that even where there has been a

previous drawing or some sketches have been made

which are in part redrawn, the making of any

drawing of the kind I have to consider is a

skilled business involving hours of labour,

although the end result may seem relatively simple."

This decision was applied in this Court in Ownit Homes Pty Ltd v D and F Mancuso Investments Pty Ltd (1988) AIPC 38,235 at 38,239. Similar comments in relation to simplicity were made in British Northrop Limited v Texteam Blackburn Limited (1974) RPC 57. Megarry J said, at 68-69:

"I should be slow to exclude drawings from

copyright on the mere score of simplicity. . .

. I accept that some of (the drawings) are

indeed simple. They include a rivet, a screw, a

stud, a bolt, a metal bar, a length of wire with

a thread cut at one end, a length of cable with

nipples at each end, a block of leather, a

washer and a collar. They are all carefully

drawn to scale, with precise dimensions, and I

cannot extract from the statute any indication

that these drawings should not be able to

quality for copyright."

See also Solar Thompson Engineering Co Ltd v Barton (1977) RPC 537 at 558.

105. In contrast, the respondent sought to rely on a number of cases concerning copyright in literary works, which apply a de minimis principle in relation to the subsistence of copyright: Noah v Shuba (1991) FSR 14 at 33; Exxon Corporation v Exxon Insurance Consultants International Ltd (1982) Ch 119. In developing its submission the respondent referred to the reasons of the Judicial Committee in the Hong Kong case. Their Lordships rejected the Hong Kong Court of Appeal's finding of copyright in the later (post-1972) drawings on two grounds. The first was the fear of a "perpetual monopoly" being established if "minor changes" to a work could result in a fresh copyright (at 255-56). The respondent did not pursue such an argument. In speaking of "minor changes" the argument does not use the language of copyright law. Further, the "monopoly" conferred in respect of works is essentially protection against copying. The second ground for their Lordships' decision was that the changes incorporated in the later drawing were not "visually significant" (at 266). These words were taken, with acknowledgment, by their Lordships from remarks of Whitford J in Rose Plastics GmbH v William Beckett and Co (Plastics) Limited (1989) FSR 113 at 123. But a perusal of that judgment shows that plainly Whitford J was speaking of infringement, not of the subsistence of artistic copyright.

106. There is no doubt that the test of whether one drawing based on another attracts a separate copyright is a visual one. The question for the Court is whether the later drawing is merely a copy of the earlier, or is a new artistic work. The difficulty with the approach of the Privy Council lies in the adoption of a notion of "significance".

107. The appellants submit that this would introduce into copyright law an element of "novelty" that has no place there. It is well established that in copyright law originality is a concept distinct from novelty in design law and patent law and from obviousness in patent law. Whilst the author of what is claimed to be an original artistic work must have expended a significant amount of his skill and labour, "originality" does not mean novelty or uniqueness and does not require inventiveness in the sense of patent law. In this field as in that of literary copyright the courts have been impressed by the precept that "prima facie what is worth copying is worth protecting": University of London Press Ltd v University Tutorial Press Ltd (1916) 2 Ch 601 at 610. The degree of skill and labour required of the artist will vary with the nature of the work. Authorities for these propositions may be found in Laddie et al supra 3.25 and see also Sands and McDougall Proprietary Limited v Robinson supra. There is no rule that an artistic work based on another cannot for that reason alone attract a distinct copyright.

108. In this case, there was no question about the labour involved: some of the post-1969 drawings took two days to execute. Similarly, there seemed little dispute about the skill and judgment of the draftsman. The respondent sought to argue that the relevant skill was skill in copying. But Mr Pucek's affidavit made it clear that even in the apparently simple task of removing lines from a drawing, great skill was involved:

"8. In the case of an alteration to an existing element

drawing by the removal of a feature of the element,

the draftsman must be able to appreciate the relevant

lines, marks and symbols in the existing drawing which

depict that feature so that he knows which lines,

marks and symbols to remove. . . .

9. A change to an existing element drawing may not

involve an alteration to a large percentage of the

existing features of the drawing but may nevertheless

require an accurate redrawing of all of those features

which are unchanged in order to add the altered parts.

An accurate re-drawing of unchanged features of an

element drawing requires skill, application and time.

Drawing features of an existing element in a different

scale and in some cases, in several different scales,

also involves skill, application and time."

Finally, the only evidence before the learned primary Judge on visual difference was that of Professor Haskell who said that the changes made the drawings "visually distinctive". Professor Haskell was not cross-examined.

109. The learned primary Judge erred insofar as he held that the differences between Drawing No. 5 and Drawing No. 8 were not sufficiently significant to give rise to fresh copyright. Since there was copyright in Drawing No. 8, then (as explained above) it should be held that copyright subsisted in all the post-1969 drawings.

110. Given the subsistence of copyright, and the respondent's admission of infringement by the three-dimensional reproduction of a two-dimensional artistic work, the only remaining copyright issue is whether the respondent can establish a defence under Part III Division 8 of the 1968 Act. This Division was substantially amended by the 1989 Act, whose provisions came into force on 1 October 1990. As I have said, the learned primary Judge had reserved his decision on 4 May 1990. There was some debate at first instance concerning the effect of the new provisions on the proceedings, but his Honour considered that since he found that copyright did not subsist in the post-1969 drawings, he would refrain from making any comment on the new or old provisions. Having decided that copyright does subsist in the post-1969 drawings, this Court is in an entirely different position. Hence, I will consider the application of the "old" defence under Division 8, the effect of repeal, and the application of the "new" defence.

111. Prior to 1 October 1990, the 1968 Act relevantly provided:

"74 (1) In this Division, 'corresponding design', in relation

to an artistic work, means a design that, when applied

to an article, results in a reproduction of that work.

(2) In this Division -

(a) a reference to the scope of the monopoly in a

registered design is a reference to the

aggregate of the things that, by virtue of the

Designs Act 1906, the person registered as the

owner, or all persons registered as owners, of

the designs has, or have, the exclusive right to

do; and

(b) a reference to the scope of the monopoly in a

registered design as extended to all associated

designs and articles is a reference to the

aggregate of the things that, by virtue of that

Act, the person registered as the owner, or all

persons registered as owners, of the design

would have had the exclusive right to do if -

(i) when that design was registered, there had

at the same time been registered every

other related design capable of being

registered by virtue of section 25D of

that Act, and the person registered as the

owner, or all persons registered as

owners, of that design had been registered

as the owner, or owners, of every such

other related design; and

(ii) that design, and every other related

design capable of being registered by

virtue of section 25D of that Act, had

been registered in respect of all the

articles to which it was capable of being

applied.

. . .

77. (1) Where -

(a) copyright subsists in an artistic work;

(b) a corresponding design is applied industrially

by, or with the licence of, the owner of the

copyright in the work;

(c) articles to which the corresponding design has

been so applied (in this section referred to as

'articles made to the corresponding design') are

sold, let for hire or offered or exposed for

sale or hire in Australia; and

(d) at the time when those articles are so sold, let

for hire or offered or exposed for sale or hire,

they are not articles in respect of which the

corresponding design has been registered under

the Designs Act 1906-1968,

the succeeding sub-sections of this section have

effect.

(2) During the period of 16 years commencing on the date

on which articles made to the corresponding design

were first sold, let for hire or offered or exposed

for sale or hire in the circumstances referred to in

paragraph (1) (d), it is not an infringement of the

copyright in the work to do anything that, at the time

when it is done, would have been within the scope of

the monopoly in the corresponding design if the

corresponding design had, immediately before that

time, been registered in respect of all articles made

to the corresponding design that had, before that

time, been sold, let for hire or offered or exposed

for sale or hire in those circumstances.

(3) After the expiration of the period referred to in the

last preceding sub-section, it is not an infringement

of the copyright in the work to do anything that, at

the time when it is done, would, if the corresponding

design had been registered immediately before that

time, have been within the scope of the monopoly in

that design as extended to all associated designs and

articles."

(Subsections 77(2), (3) took this form after amendment by s. 330 of the Designs Amendment Act 1981 ("the 1981 Act"). The reference to 16 years in sub-s. (2) replaced that to 15 years and in sub-s. (3) "monopoly in the corresponding design" replaced "copyright in the corresponding design". Nothing for present purposes turns upon these changes). The respondent submitted that since the appellants had applied a corresponding design industrially and sold the resultant articles in Australia, the respondent was afforded by sub-s. 77(2) a defence against infringement of copyright in the post-1969 drawings.

112. The appellants put a number of arguments in response, some of which were parallel to those raised in relation to s. 218. First, it was submitted that the drawings were not designs within the meaning of the 1906 Designs Act. For the same reasons that were given above in relation to the pre-1969 drawings, this argument should be rejected. Secondly, it was argued that a territorial limitation should be read into para 77(1)(b) so that copyright protection would only be lost if (contrary to the facts of this case) the relevant corresponding design were applied industrially in Australia. As discussed above, although there is a territorial limit placed on actions for infringement, there is no limit inherent in the concept of the application of a corresponding design in relation to an artistic work. Nor is the appellants' proposed construction assisted any more by the text of s. 77 than it was by the text of s. 218.

113. There was some suggestion that because the corresponding paragraph in the new s. 77 expressly covered application "in Australia or elsewhere", the old paragraph should be read as limited to application in Australia. There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, at least to avoid a result which would render the amendment unnecessary, or futile or deficient; see especially Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70 at 85-6; Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234 at 254-5. But in doing so caution should be exercised; see Pearce, "Statutory Interpretation in Australia", 3rd Ed, 3.26. It is, after all, a curious way of revealing parliamentary intention at the time of passing the earlier provision. As was observed by Viscount Haldane L.C. in Re Samuel (1913) AC 514 at 526:

"It is not a conclusive argument as to the

construction of an earlier Act to say that

unless it be construed in a particular way a

later enactment would be surplusage. The later

Act may have been designed, ex abundante

cautela, to remove possible doubts."

See also Federal Commissioner of Taxation v Verzyden (1988) 88 ATC 4,205 at 4,210; Downey v Trans Waste Pty Ltd [1991] HCA 11; (1991) 172 CLR 167 at 177.

114. I accept that the new para 77(1)(b) states rather than alters the law as at 1 October 1990. The respondent forcefully argued that the presence of an express territorial limit in the old para (1)(c) suggested that no such limit should be read into para (1)(b) thereof. The primary Judge accepted that argument, and I also am of the opinion that no territorial limitation should be applied other than that which is explicitly stated.

115. Finally, the appellants submitted that the old s. 77 did not apply because the designs were not capable of registration for want of novelty. For the reasons already given, even if the words "capable of registration" could be read into (1)(d), no requirement of novelty would be involved. This is confirmed by previous decisions of this Court: Kevlacat supra at 547-50 per French J; Greenfield Products Pty Ltd v Rover Scott Bonnar Ltd (1990) 95 ALR 275 at 288-89 per Pincus J.

116. The appellants sought to base an argument for a requirement of novelty on sub-para 74(2)(b)(i). This refers to s. 25D of the 1906 Act. That section allows, in limited cases, registration of designs which are not new. Section 25D was added to the 1906 Act by the 1981 Act. Its operation was considered in J Rapee and Co Pty Ltd v Kas Cushions Pty Ltd (1989) 90 ALR 288 at 290-1. Sub-sections (1), (2) and (3) of s. 25D are as follows:

"25D (1) Where -

(a) a design (in this section referred to as the

'original design') has, whether before or after

the commencement of this section, been

registered in respect of an article; and

(b) the person registered as the owner, or all

persons registered as owners, of the design

makes, or make jointly, an application -

(i) for registration of that design, or of

another design that is an obvious

adaptation of that design, in respect of

another article; or

(ii) for registration, whether in respect of

the same article or another article, of a

design that differs from the registered

design only in immaterial details or in

features commonly used in the relevant

trade,

the application shall not be refused, and the

registration made on that application is not invalid,

by reason only of the previous registration, or of any

publication or use, after the priority date in respect

of the application for the previous registration, of

the design registered on that application.

(2) Where a design is registered by virtue of sub-section

(1), the design becomes a design to which this section

applies.

(3) The registration of a design to which this section

applies shall be deemed to have come into force on the

date on which the application for registration of the

design was lodged under this Act and shall remain in

force so long as the registration of the original

design remains in force, and no longer.

The appellants contended that the specific reference in s. 74 to a "design capable of being registered by virtue of s. 25D", revealed that the reference in the old para 77(1)(d) to registration of a corresponding design did not cover the situation where there was want of novelty. This argument does not give effect to the significance of sub-s.74(2). That provision is not directed to the primary question of whether copyright protection is lost. It picks up s. 75 and s. 77(3) and is concerned with the extent of loss of protection after 16 years have passed, based on a hypothetical registration of the design in respect of associated articles.

117. Accordingly, the respondent can establish a defence under the old s. 77 for infringement of the pre-1969 drawings up until 1 October 1990. This raises the question whether in this litigation the repeal of the section has precluded its operation for the period from 1 May 1969 to 1 October 1990.

118. It was common ground that there were no transitional provisions covering the effect of repeal. But the respondent relied on s. 8 of the Interpretation Act, which provides:

"8. Where an Act repeals in the whole or in part a former Act,

then unless the contrary intention appears the repeal shall

not -

(a) revive anything not in force or existing at the time

at which the repeal takes effect; or

(b) affect the previous operation of any Act so repealed,

or anything duly done or suffered under any Act so

repealed; or

(c) affect any right privilege obligation or liability

acquired accrued or incurred under any Act so

repealed; or

(d) affect any penalty forfeiture or punishment incurred

in respect of any offence committed against any Act so

repealed; or

(e) affect any investigation legal proceeding or remedy in

respect of any such right privilege obligation

liability penalty forfeiture or punishment as

aforesaid;

and any such investigation legal proceeding or remedy may be

instituted continued or enforced, and any such penalty

forfeiture or punishment may be imposed, as if the repealing

Act had not been passed."

The respondent submitted that paras (b) and (e) applied: the repeal would affect the operation of a previous Act, and would affect legal proceedings on foot in this Court. The appellants did not challenge these contentions. Rather, they argued that the operation of s. 8 was precluded by the establishment of a contrary intention and referred to G F Heublein and Bro Incorporated v Continental Liqueurs Proprietary Limited [1962] HCA 66; (1962) 109 CLR 153. In that instalment of the "Smirnoff Vodka" litigation, Dixon C.J., Taylor and Windeyer JJ., reversing Kitto J, hel d that the express provision in the Trade Marks Act 1955, s. 5, with respect to the saving of pending applications for registration of trade marks and of registered users thereof, was an exhaustive statement which left no room for the operation of s. 8 of the Interpretation Act upon pending expungement applications under the repealed legislation.

119. To establish such an intention in the 1989 Act, the appellants point to s. 29 thereof. This specifically provides for "savings", none of which include s. 77.

"29. In spite of anything in this Act:

(a) the Principal Act, as in force immediately before the

commencement of section 14 of this Act, continues to

apply in relation to a copy of a television broadcast

made in reliance on section 200A of the Principal Act;

and

(b) the Principal Act, as in force immediately before the

commencement of section 15 of this Act, continues to

apply in relation to a copy of a work or other

subject-matter made in reliance on section 53A, 53B,

53C, 53D or 200A of the Principal Act;

until the end of the period of 4 years beginning on the day

on which the copy was made."

Views may legitimately differ as to rationale for such detailed and limited savings provisions. But they are plainly not exhaustive as regards pending infringement proceedings. This situation is quite different to that in the Vodka Case, where the relevant Act did deal as a distinct subject with pending applications under the repealed legislation.

121. I conclude that s. 8 of the Interpretation Act applies; the defence under s. 77 is preserved for what otherwise would be copyright infringement for the period from 1 May 1969 to 1 October 1990.

122. The only remaining question on this part of the appeal is whether the respondent can mount a similar defence under s. 77 as it presently stands in response to an application for an injunction to prevent continued infringement of copyright in the post-1969 drawings.

123. The relevant new provisions inserted by the 1989 Act read as follows:

"74. In this Division:

'corresponding design', in relation to an artistic work,

means a design that, when applied to an article, results in

a reproduction of that work, but does not include a design

consisting solely of features of two-dimensional pattern or

ornament applicable to a surface of an article.

. . .

77. (1) This section applies where:

(a) copyright subsists in an artistic work (other

than a building or a model of a building, or a

work of artistic craftsmanship) whether made

before the commencement of this section or

otherwise;

(b) a corresponding design is applied industrially,

whether in Australia or elsewhere, by or with

the licence of the owner of the copyright in the

work in the place where the industrial

application happens;

(c) at any time on or after the commencement of this

section, articles to which the corresponding

design has been so applied (in this section

called 'articles made to the corresponding

design') are sold, let for hire or offered or

exposed for sale or hire, whether in Australia

or elsewhere; and

(d) at that time, the corresponding design is not

registrable under the Designs Act 1906 or has

not been registered under that Act.

(2) It is not an infringement of the copyright in the

artistic work to reproduce the work, on or after the

day on which articles made to the corresponding design

are first so sold, let for hire or offered or exposed

for sale or hire, by applying that, or any other,

corresponding design to an article."

Again, the appellants contend that the post-1969 drawings are not designs within the meaning of the 1906 Designs Act, and again they must fail. The appellants' other two arguments in relation to the previous wording of s. 77 are now expressly excluded: para (b) applies whether industrial application occurs in Australia or elsewhere; and para (d) applies not only if the design has not been registered, but also if it "is not registrable" under the 1906 Act.

124. Pressed into this corner, the appellants submit that there are outstanding factual issues which the respondent has to establish if it is to bring its case within the defence given it by s. 77 of the 1989 Act, and that it has failed to do so. Paragraph (a) clearly applies: copyright subsists in the post-1969 drawings. It might be argued that para (b) has not been satisfied because the respondent has not adduced proof of industrial application since 1 October 1990. However, the terms of para (c), which refer to sale on or after the commencement of the section of articles to which the design has been applied, make it clear that the relevant application might occur prior to 1 October 1990. This leaves para (c). It is conceded that the respondent has not adduced evidence of any sales in Australia by any member of the Lego group of articles made according to corresponding designs in the post-1969 drawings. In view of the course of the trial, no criticism should attach to the respondent in this connection.

125. Counsel for the respondent suggested alternative courses to meet that situation. One would involve waiving the requirement to adduce evidence on the ground that the appellants' objection is not bona fide. Order 33 Rule 3 of the Federal Court Rules provides:

"The Court may at any stage of the proceedings -

(a) dispense with compliance with the rules of evidence

for proving any matter which is not bona fide in

dispute . . ."

This rule should not be applied lightly; Arnotts Limited v Trade Practices Commission (1990) 24 FCR 313 at 360, 369. It clearly refers to the waiving of the rules of evidence, rather than of the need to adduce any evidence at all. Secondly, the respondent suggests that this Court order the administration of interrogatories. But at this stage in the proceedings it would not be desirable for us to interrupt the disposition of the appeal in this way.

126. The preferable course is for this Court to grant an injunction to restrain sale of the bricks produced in infringement of the appellants' drawings, but to suspend the operation of the injunction, and to grant the respondent leave to re-open its case before the primary Judge to tender evidence to show sales by the Lego group in Australia since 1 October 1990 and to establish before his Honour the alleged defence under s. 77. The primary Judge may entertain an application to achieve this end by the administration of interrogatories. The matter will be entirely in his Honour's hands.

127. This disposes of the copyright and design issues.

128. I now turn to consider the passing-off and TP Act issues.

Passing off and Contraventions of Section 52 by Sale of the Tyco Bricks - The Appearance of the Products

129. The appellants submit that the appearance of its products and their packaging is such that the respondent has passed off Tyco Super Bricks and Pre-School super bricks as produced by the Lego group of companies or produced by the respondent with the approval or sponsorship of those companies. This conduct is further said to be in contravention of s. 52 of the TP Act. That section is also alleged to have been contravened by the representation that Tyco's product will "work with" Lego's product, a topic with which I shall deal below.

130. The appellants contend that the following features of the Tyco get up would be likely to be taken by a significant number of people as representing some association between Lego and Tyco or the Tyco product: the prominent use of the words "WORKS WITH LEGO"; the use of the name TYCO which is similar to Lego; the identity of shape, material, finish and colours of Tyco bricks and Lego bricks; the use of similar packaging, namely cellophane windows, a two-colour scheme, and the depiction of constructions similar to Lego and Duplo constructions; and the use of an acknowledgment that Lego and Duplo are registered trademarks of Interlego AG. Croner does not dispute Lego's reputation in some integers of the get up of its products, most notably in the marks "Lego" and "Duplo" and in the appearance of the bricks.

131. Indeed, counsel for Croner suggested that some people would interpret the word "Lego" as generic for bricks of that appearance. However, counsel did not concede Lego's reputation in the combination of different features that comprised the get up. It has recently been affirmed that it requires a strong case to establish the necessary reputation in get up of this nature: Drayton Controls (Engineering) Limited v Honeywell Control Systems Limited (1992) FSR 245 at 263-4 per Knox J. I prefer to proceed by addressing the question whether, even if reputation is assumed, deception or the likelihood of deception can be established.

132. Before moving to consider further these remaining issues, some observations concerning the size and coincidence of the relative markets for the products involved should be made.

133. Lego products have been marketed in Australia since 1962; Duplo products since 1969. Until October 1978, this was done through British LEGO Limited, a company incorporated in the United Kingdom. In October 1978, Lego Australia was incorporated and took over the business of British LEGO Limited in Australia. Since that date, Lego Australia has acted as the sole Australian distributor of Lego and Duplo products. The value of Lego sales is measured in millions of dollars and this has been the case for many years. Duplo sales are also large but significantly less than Lego sales.

134. During December 1984, United States manufacturers of Tyco Superblocks and Pre-school Superblocks authorized Croner to distribute those products in Australia. Evidence was tendered showing sales of those products for each of the years from 1986 to 1989 inclusive. Croner's market for Tyco products, though large, was much smaller than the market for Lego and Duplo products.

135. There was also evidence that Tyco products were sold in the same large retail chains as Lego and Duplo products, across the country. Indeed, there was affidavit evidence, supported by photographs, that the products were at times sold side by side on the supermarket shelf.

136. Against that background, the issue arises whether Croner marketed the Tyco products in a way that misled or deceived, or was likely to mislead or deceive, consumers into believing the existence of a trade connection between the respondents and the appellants.

137. The following propositions as to the principles of evidence in this field should be noted. They are not intended as exhaustive. First, potential consumers may give evidence as to the reputation of marks or get up involved: see "Kerly's Law of Trademarks and Trade Names" 12th ed., 1986, pp 404-5. The litigation before Myers J. in Bayer Pharma Pty Ltd v Henry H York and Co Pty Ltd (1964) FSR 143, is a celebrated local example. But reputation and likelihood of deception are distinct issues, the first preceding the second, so that if the plaintiff fails on reputation that is the end of the case: The Rubik's Cube Case (1982) FSR 529 at 537-8 per Dillon J. See also Angove's Pty Ltd v Johnson [1982] FCA 108; (1982) 66 FLR 216 at 225-6, per Franki J.

138. As discussed above, Croner did not dispute Lego's reputation in the words "Lego" and "Duplo" or in the appearance of the bricks. There was some dispute over Lego's reputation in the combination of features that comprise its get up, but the survey evidence did little to elucidate that issue. In any event, as I have indicated, I proceed to deal with the issue of actual or likely deception, assuming reputation.

139. Secondly, the question whether a mark or get up so nearly resembles another as to be deceptive or likely to deceive is a question for the tribunal of fact and is not a matter for any witness to decide: Kerly supra p 425. The issue of whether consumers have been or are likely to be deceived was described by Lord Diplock as a "jury question": GE Trademark (1973) RPC 297. His Lordship said at 321:

"(W)here goods are sold to the general public

for consumption or domestic use, the question

whether such buyers would be likely to be

deceived or confused by the use of the trademark

is a 'jury question'. By that I mean: that if

the issue had now, as formerly, to be tried by a

jury, who as members of the general public would

themselves be potential buyers of the goods,

they would be required not only to consider any

evidence of other members of the public which

had been adduced but also to use their own

common sense and to consider whether they would

themselves be likely to be deceived or confused.

The question does not cease to be a 'jury

question' when the issue is tried by a Judge

alone or on appeal by a plurality of Judges.

The Judge's approach to the question should be

the same as that of a jury. He, too, would be a

potential buyer of the goods. He should, of

course, be alert to the danger of allowing his

own idiosyncratic knowledge or temperament to

influence his decision, but the whole of his

training in the practice of the law should have

accustomed him to this, and this should provide

the safety which in the case of a jury is

provided by their number. But in issues of this

kind Judges are entitled to give effect to their

own opinions as to the likelihood of deception

or confusion and, in doing so, are not confined

to the evidence of witnesses called at the trial

is well established by the decisions of this

House itself."

140. Thirdly, evidence of consumers and retailers as to the likelihood of deception will be critical if a special market is involved. In GE Trademark, Lord Diplock commented at 321:

"(W)here goods are of a kind which are not

normally sold to the general public for

consumption or domestic use but are sold in

specialized markets consisting of persons

engaged in a particular trade, evidence of

persons accustomed to dealing in that market as

to the likelihood of deception or confusion is

essential. A Judge, though he must use his

common sense in assessing credibility and

probative value of that evidence is not entitled

to supplement any deficiency in evidence of this

kind by giving effect to his own subjective view

as to whether or not he himself would be likely

to be deceived or confused."

See also WEA International Inc v Hanimex Corporation Ltd supra at 280. Here, the products are not specialised in any particular sense and the respondent's marketing was directed at a large body of consumers, not comprising persons engaged in a particular trade. Hence the evidence of witnesses accustomed to dealing in a particular market was not necessary.

141. Fourthly, consumer evidence will also be admissible if it establishes the habits of purchasers, even of everyday items. For example, evidence may be led to show whether side by side visual comparison of the two products occurs in shops or supermarkets: Reckitt and Colman Products Limited v Borden Inc [1990] UKHL 12; (1990) RPC 341 at 416 per Lord Oliver of Aylmerton.

142. Fifthly, such evidence as to the habits of purchasers does not include evidence of prospective purchasers that they would be deceived, or evidence of retailers that purchasers would be deceived. This appears from the speech of Lord Macnaghten in Payton and Co v Snelling, Lampard and Co. (1901) AC 308 at 311:

"One word with regard to the evidence I should

like to say. I think, as I have said before,

that a great deal of the evidence is absolutely

irrelevant, and I do not myself altogether

approve of the way in which the questions were

put to the witnesses. They were put in the form

of leading questions, and the witnesses were

asked whether a person going to a shop as a

customer would be likely to be deceived, and

they said they thought he would. But that is

not a matter for the witness; it is for the

Judge. The Judge, looking at the exhibits

before him and also paying due attention to the

evidence adduced, must not surrender his own

independent judgement to any witness."

143. Sixthly, in the present case evidence of actual deception would have been admissible: Angove's Pty Ltd v Johnson supra at 235-6, and at first instance, 55 FLR 1 at 17-18. In Royal Warrant Holders Association v Edward Deane and Beal Limited (1912) 1 Ch 10 at 14-5, Warrington J said:

"I have to apply the analogy of the passing off

basis, and the question proposed to be put is a

question which in a passing off case might be

put to a witness, 'Were you in fact deceived?'

That is, 'Did you (the particular person)

believe that the defendant's goods were the

plaintiff's, and did you form that belief from

the mode in which the goods were made up?'

That, in my opinion, would be an admissible

question. It is in fact the question which is

referred to in Bourne v Swan and Edgar, Ltd (1903)

1 Ch 223 as one class of evidence which, in

Farwell J's opinion, may be called. He says:

'The second point is that it was not necessary

in the old court of Chancery, and is not now in

the Chancery Division, in passing off cases to

prove that any person has actually been

deceived. Of course the fact, if proved, that

persons of ordinary intelligence have in truth

been deceived, would be very material in

assisting the Court in coming to the conclusion

that the mark or the picture complained of was

calculated to deceive. So here, if I have

evidence that a person of ordinary intelligence

and some experience in such matters has actually

formed the belief that the defendants were

authorised to use the Royal Arms, that must be

of some importance in determining the question

whether that use is calculated to lead to that

belief. In my opinion this question is

admissible, just as in a passing off case the

question 'Did you believe that the defendant's

goods were the plaintiff's?' would be admissible."

144. These principles apply to (and limit) all types of consumer evidence, whether in the form of testimony, affidavit or survey evidence. In the course of the preparation of their case, the appellants carried out three surveys. These became known in the course of the first instance hearing as "the pink survey" and the "two white surveys". The primary Judge stated that he did not need to consider the pink survey because it seemed to be fatally flawed and it was only faintly supported by counsel for the appellants. However, at first instance and on appeal, the two white surveys were very much relied upon.

145. The recent decisions in this country and elsewhere dealing with the receipt of survey evidence, and the many issues which arise for practitioners in the preparation of such material are discussed in the paper by Mr Justice Lockhart "Survey Evidence", delivered to the 6th National Conference of the Intellectual and Industrial Property Society in June 1992. Nothing which follows is intended to detract from the utility such evidence may have in many instances.

146. Following the decision in Arnotts Limited v Trade Practices Commission supra, it is clear that survey evidence may be admissible under the Rules of this Court without calling the persons surveyed, notwithstanding what otherwise might be the strength of objections as to hearsay. However, this does not permit to be achieved by indirect means what could not be achieved directly. Survey evidence as to an issue will only be admissible if testimonial evidence by the persons surveyed as to the same effect would be admissible. So, for example, opinion evidence which would be inadmissible if directly tendered, would not be admissible by virtue of the fact that it was expressed in terms of responses to a survey.

147. Survey evidence might be used to establish the habits of consumers in buying toy building bricks in supermarkets. However, that does not readily appear as a substantial purpose for tender of the evidence in this case. The survey evidence would have been admissible if it revealed cases of actual deception of consumers: Royal Warrant Holders Association v Edward Dean and Beale Limited, supra, per Warrington J. However, the evidence here was not so confined.

148. Rather, the purpose of the evidence was to show that potential consumers would have been deceived. Evidence to that effect is inadmissible, since that question is the very issue which the Court has to determine. Moreover, as Farwell J said in Bourne v Swan and Edgar Limited, supra, at 224, one cannot call:

". . . any individual to give what is in truth

expert evidence as to human nature, because what

they are asked in this form of question is, not

what would happen to them individually, but what

they think the rest of the world would be likely

to suppose or believe. They are not experts in

human nature, nor can they be called to give

such evidence, and, apart from admissibility,

one cannot help feeling that there is a certain

proneness in the human mind to think that other

people are perhaps more foolish than they really

are. I do not think that Carlisle is alone in

his estimate of the intelligence of the majority

of the inhabitants of these islands. Therefore

that is ruled out as a matter of evidence."

149. Counsel for the respondent identified and emphasised these faults in the survey evidence. The principal submission upon which counsel relied to criticise the questions in the survey was that the Court should not accept the responses of those surveyed as indicative of what their spontaneous impressions would be likely to be or to have been in the marketplace. Counsel submitted, (and I would accept) that consumer evidence is admissible if it establishes actual deception, but (and this is the fifth proposition I set out above) not if it is used to show that prospective consumers say that they would be deceived. Reference was made to Reckitt and Colman Products Limited v Borden Inc, supra. The survey conducted by the plaintiffs in that case was taken by interviewers who stationed themselves in supermarkets and asked customers who had bought the defendant's lemon juice, what they had bought. Many of them said they had bought Jiff Lemon Juice (the plaintiff's product), when that was not in fact the case; see the report of the decision of Whitford J, (1990) RPC at 350.

150. In the present case the primary Judge, for the main part, accepted the position as I have explained it, saying:

"I think the hypothetical situation which was

created was so artificial as to make it a quite

dangerous guide to what the reactions of actual

shoppers purchasing Lego or Tyco products from

the shelf of the supermarket or a toy shop might

have been." (102 ALR 379 at 416)

As I have indicated, in the absence of a specialised market, evidence of consumers or retailers as to their likely reaction should not be admitted on the issue of whether conduct has been, or is likely to be misleading or deceptive.

151. There was some evidence of actual deception before the primary Judge. This partly consisted of oral evidence by several persons. One of these was Mr Peddie, who is employed by the second applicant as Assistant to the Managing Director. He gave evidence of customer complaints to Lego that suggested actual confusion as to the source of the Tyco product. Two particular incidents were recounted, and reference was made to other general incidents of complaint. There was also oral evidence by people employed at retail outlets which described isolated incidents of consumers being misled or deceived as to a connection between Tyco and Lego. The primary Judge accepted this evidence.

152. The primary Judge also accepted the documentary evidence of what were described as the "product registration cards". These cards were included in all packages and buckets of Tyco products. Each of the cards provides for the name and address of the purchaser, the date of the purchase, the product model number and the title of the set. There are then questions covering such topics as who purchased the set, for whom it was purchased, where it was purchased, how the purchaser first learnt about Tyco products, whether consumers were satisfied with the product, and whether they could make any suggestions for improvement. The aim was clearly to encourage customers to return cards in sufficient quantity to give the manufacturer an idea of the public's reaction to the product as a guide to planning manufacturing and marketing activities.

153. Some 4,000 cards were filled out and were in evidence. These represent approximately only 1% of purchases. Counsel for Croner explained that this was not surprising since the effort involved in filling out the cards and mailing them back, when practically nothing was given in return, would dissuade most consumers. The vast majority of the cards that were filled in reveal satisfied or non-committal customers who neither complain about the product nor suggest that there is any connection between Tyco and Lego products. However, counsel for Interlego and Lego Australia sought to rely on 9 product registration cards to shore up their case. These cards suggest that the consumers who filled them out were misled into believing that there was a connection between Tyco products and Lego products.

154. The primary Judge stated that he took this evidence into account. Nevertheless, his Honour concluded:>

"The customer evidence is sparse and that from

the trade is not significant. There is not that

weight or strength of evidence that one might

have expected if the case relied upon by the

applicants was the powerful one which counsel

for the applicants contend that it is." (102 ALR

379 at 419)

Certainly, the customer complaints and registration card confusion seem to have been more remarkable for their rarity than for their conclusiveness.

155. In my view, his Honour correctly identified what Lord Diplock had described as the "jury question" as a matter ultimately for himself as trial Judge. He identified the relevant principles from well established authority and in that context considered in detail the get-up of Tyco's products. His Honour found, at 421:

"(The) respondent did not intend to deceive

anyone. It had decided, lawfully as I have

found and as it was advised, to copy precisely

the product of another and seek to take some of

its market share. So long as it did not mislead

or deceive the public and did not pretend that

its goods were the goods of Lego, this was a

perfectly lawful course for it to follow and

indeed provided competition in the market place

which the public interest would say was

desirable. In order to achieve its object it

had to make clear that its product was one which

was compatible with or which would work with

Lego. But its get-up is such that one could

not, in my opinion, reasonably find that it was,

to use the words of Lockhart J., get-up which

was 'cleverly pitched at shoppers who would be

perplexed or uncertain about the identity of the

product'. In my opinion, this is not that type

of case."

The case for the appellants did not cast sufficient doubt on that conclusion for an appellate court to interfere with his Honour's finding.

156. Nevertheless, the primary Judge did find that the respondent had represented the Tyco product as a product associated with the appellants, on the basis of what was described as the trademark acknowledgment. This acknowledgment appeared inside the "bullet" on the packaging of every Tyco product. Whenever the word "Lego" appears in it, it is followed by an asterisk and a letter "R" which is circled. At the bottom of the bullet, in what the primary Judge described as "substantially smaller type" appear the words "Lego is a registered trademark of Interlego AG". The word "Lego", where so used, has an asterisk before it commences and a circled letter "R" after it appears. A similar acknowledgment is made with respect to Duplo.

157. As the primary Judge noted, there is no legal obligation in Australia upon a person using a word or words which constitute a trademark to use the letter "R" to indicate that the word or words are a registered trademark. Nevertheless, it is commonly done by owners or licensees to indicate that the trademark is registered and accordingly protected.

158. Moreover, his Honour recognised the size of the print was not such that it would necessarily be noticed by many of the people who purchased the product. I agree. He also said that there appeared to be no evidence suggesting that any customer thought there was a connection between Lego and Tyco because of the trademark acknowledgment (102 ALR 379 at 421).

159. Nevertheless, his Honour reached the conclusion that the appellants made out their case in this respect on the basis that if consumers were to look at and consider the trademark acknowledgment, they could conclude that there was an association between Tyco and Lego. Order (1) of the orders under appeal is an injunction giving effect to that conclusion.

160. Counsel for Croner, the respondent, submitted that the acknowledgment by Tyco of Lego's trademark rights was a matter of United States marketing practice. As is made clear in Irving's Yeast-Vite v Horsenail (1934) 51 RPC 110, this acknowledgment involves no trademark infringement; see also Johnson and Johnson Australia Limited v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310; (1991) 30 FCR 326. Counsel further indicated the respondent had already removed the acknowledgment from its packaging and had given an undertaking to the applicants to continue to refrain from making such references. The trademark acknowledgment was not pleaded as part of the appellants' case on passing off and under the TP Act. It appears to have emerged at the trial following observations by the primary Judge himself. Be that as it may, in my view there is no clear footing for the conclusion reached by the primary Judge. I refer in particular to the size of the relevant print in the bullet. Section 52 of the TP Act - Remaining Issues

161. I turn to consider the second aspect of the s. 52 claims which were made by the appellants. This concerns the words that appear in what was described as the "bullet" on every packet or bucket containing Tyco products and in some of the advertising material. The "bullet" is actually circular in shape, red and yellow in colour, and depicts two 2 x 4 bricks connected together. The bricks are blue and red in colour, two of the colours which Lego itself uses. In large lettering above the bricks appear the words "WORKS WITH LEGO". Underneath the bricks in far less prominent type are the words "Tyco super blocks connect to Lego blocks". In each case, the reference to Lego is followed by the letter "R" which is circled. At the bottom of the bullet, in substantially smaller type appear the words "Lego is a registered trademark of Interlego A.G.". In the case of Pre-School Super Blocks, the words in the bullet are "WORKS WITH LEGO'S DUPLO" and "Tyco Pre-School Super Blocks connect to Lego's Duplo blocks". Again, references to the trademarks are made.

162. Both parties disputed the primary Judge's conclusions on the question whether the words "WORKS WITH LEGO" and "WORKS WITH LEGO'S DUPLO" were misleading and deceptive.

163. There were three aspects to the argument presented by the appellants at first instance:

(i) that Tyco bricks do not "work with" Lego bricks, nor

Tyco Pre-School bricks with Duplo, because of

discrepancies in the forces needed to assemble and

separate different combinations of bricks (described

as "clutch power");

(ii) that Tyco Pre-School bricks do not "work with" Duplo

because they do not work with Lego without the aid of

a special connecting brick (described as the "grey

adaptor brick"); and

(iii) that Tyco bricks and Pre-School bricks do not in general

"work with" Lego and Duplo because some pieces in the Tyco

range simply do not connect with, or perform in the same way

as, their equivalents in the Lego range.

The primary Judge did not accept the appellants' arguments with respect to clutch power or the grey adaptor brick. The appellants took issue with those findings. However, his Honour did accept the appellants' argument on what he described as the "more general matters". Consequently, his Honour held that the respondent was in breach of s. 52 of the TP Act in representing that Tyco "WORKS WITH LEGO" and that Tyco's range of Pre-School blocks "WORKS WITH LEGO'S DUPLO". This finding was the subject of a cross-appeal filed by the respondent.

164. Before considering each of these matters in detail, some observations concerning the meaning of the words "works with" should be made. The primary Judge approached the issue as follows (102 ALR at 422):

"A starting point for a consideration of their

meaning is evidence of the meaning which Tyco

itself intended them to have. This is made

clear by the evidence of Mr Grey (President and

Chief Executive of Tyco in the U.S.) earlier

referred to. I shall not repeat it in detail.

But Tyco's marketing - and thus the respondent's

marketing also - was based upon it being able to

persuade customers that they could buy Tyco

products and use them interchangeably with Lego

products. Mr Grey referred to 'the toy box

concept'. It did not matter to a child playing

with a mixture of Tyco and Lego blocks whether

he picked up a Tyco block or a Lego block;

either would do the job.

In this area of the law a court does not lightly

attribute to words such as are in question here

a meaning narrower or more restricted than that

which the party using them intended them to

have. There may be cases where one will do

this, but if, as here, there is an ambiguity,

the ambiguity must be resolved adversely to the

party which has used the words."

Counsel for the respondent disputed both the relevance of intention, in particular the evidence of Mr Grey, and the validity of the principle (described in argument as akin to the contra proferentem rule) that any ambiguity in a statement should be resolved against its maker in cases under s. 52 of the TP Act.

165. It is well established that the demonstration of a fraudulent intention may be used to support an inference that the intent was effectuated and that there was a contravention of s. 52 of the TP Act: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 488 per Bowen C.J.

166. However, there is a difference between inferring deception from an intention to deceive and inferring a contravention from an intention to use words to convey a certain message. Here, there was no evidence that the respondent intended to deceive consumers, and indeed the appellants made no such submission. In the circumstances, the evidence of Mr Grey as to the meaning which the words "works with" were intended to convey can be no substitute for, and can be of little assistance in determining, the objective question of what meaning Australian consumers would understand the words to convey.

167. The proposition accepted by the primary Judge that any ambiguity in a statement should be resolved contrary to the interests of the person making the statement appears to be taken from contract law. Its proper sphere of operation is restricted to the situation where it is sought to interpret the meaning of an agreement between defined parties, and it has no application to the situation where it is contended that a representation about goods made to consumers at large is misleading and deceptive.

168. Nevertheless, the primary Judge did address the essential issue of how consumers would interpret the words in the bullet. In doing so, his Honour made some important observations (102 ALR at 422-423) which I would respectfully adopt:

"One aspect of this case which needs to be

remembered is that the case is about children's

toys. Children are intended to buy or to ask

parents and others to buy Tyco products for

them. Thus, the respondent's and Tyco's

packaging and marketing are directed at children

who may not be as discerning as older people.

To my mind this consideration has especial

relevance to this part of the case. Children

may not care very much whether Tyco blocks are

made by Lego; but they will certainly be very

concerned about the question whether Tyco blocks

will in fact work with Lego blocks."

169. The primary Judge found that the meaning conveyed by the words "works with" was that Tyco was interchangeable with Lego. I agree. This interchangeability may best be described by reference to what both parties termed the "toy box" concept: the representation was that it would not matter to a child playing with a mixture of Tyco and Lego blocks whether he picked up a Tyco block or a Lego block; either would do the job.

170. The respondent conceded that the representation "WORKS WITH LEGO" applied to any combination of Tyco bricks with Lego bricks, just as "WORKS WITH LEGO'S DUPLO" applied to any combination of Tyco Pre-School bricks with Duplo bricks. Indeed, the respondent sought to limit the representation to such situations and argued that it should not be interpreted as applying more generally to all the pieces in the Tyco and Lego range.

171. Counsel for the appellants argued that the representation made by the respondent was misleading because the forces needed to assemble and separate Lego bricks were different from those needed to assemble and separate combinations of Tyco and Lego bricks. A similar argument was made in relation to the forces needed to assemble and separate Duplo bricks and those needed for combinations of Duplo and Tyco Pre-School bricks. Each argument depends on similar tests and similar expert evidence. For the sake of brevity, I will concentrate on the case with respect to Tyco bricks and Lego bricks.

172. The evidence about clutch power was given principally by Mr P N Randers, and Associate Professor Morton.

173. Mr Randers is Vice-President of the Department of Product Engineering in the Lego Group. His duties include the assessment of new concepts for products, and the monitoring of the existing range of products. The primary Judge concluded from his evidence (102 ALR at 423) that:

"Clutch power is a matter which is of

substantial concern to Lego in the manufacture

of its components in all its factories wherever

they are in the world. There is continuous

testing and samples of products manufactured in

various factories are returned to Billund at

regular intervals for checking. The evidence

establishes that clutch power is an all

important aspect of Lego's product. It is

critical to the success of it. If blocks fit

too tightly, children will not be able to

dismantle objects easily; if they fit too

loosely, objects which they have built will not

be stable."

The respondent did not dispute those findings. Rather, it was argued that the clutch power of Tyco bricks did not differ so significantly from that of Lego bricks as to make misleading the representation that the one works with the other.

174. To substantiate their argument, counsel for the appellants introduced evidence of tests done on Lego and Tyco bricks by Lego in Denmark, and by Professor Morton who had been engaged to carry out independent tests. Professor Morton is currently head of the Department of Applied Physics at the University of New South Wales. He is a Fellow of the Australian Institute of Physics and a Fellow of the Institute of Physics (UK). I will not describe in detail the forces measured or the means used in the different tests except insofar as such details are immediately relevant to explaining the results of those tests.

175. Although the numerical results derived from each set of tests was different, due to the different devices used to measure clutch power, the relationship between the figures for Lego bricks and the figures for Lego and Tyco combinations was the same. The evidence established that the force needed to assemble and separate Lego bricks varied less than the force needed for combinations of Lego and Tyco. That is, the clutch power of Tyco was outside the range that Lego maintained through extensive quality control.

176. Counsel for the appellants argued that having established that clutch power is a critical aspect of Lego's products and that Tyco's clutch power is outside the range monitored and maintained by Lego, they were entitled to succeed under s. 52 on the grounds that it was misleading to represent that Tyco bricks were interchangeable with Lego bricks.

177. The primary Judge did not accept the second step of this argument. To some extent, this was based on the conclusion that Professor Morton's tests did not "appear to bear any relationship with Lego's own results". As explained above, although the results were numerically different, the relationship between the figures obtained for Tyco and Lego in the tests was the same. Indeed, his Honour recognised this (102 ALR at 425) with respect to the different results that were obtained in tests in Denmark:

"It emerged that the later tests done by Lego

had been done on yet another machine which was

different again from either the machine earlier

used by Lego or the machine used by Professor

Morton. It was a faster machine than either of

those machines. It appears however that one may

equate the 16 newtons referred in the earlier

Lego report was 21 newtons achieved on the new machine."

Thus, this finding which was attacked by the appellants, does not appear to have been critical in his Honour's reasoning.

178. What was critical in the primary Judge's reasoning were the factors that could alter or distort clutch power. He said (102 ALR at 425-6):

"I have reached the conclusion that I cannot be

satisfied that the Lego case based on clutch

power is made out. It seems to me that there

are too many variables and imponderables

involved. Lego products are used in so many

different circumstances and so many different

climates that the area is one in which cannot be

certain of one's facts."

Some of these variables had been referred to earlier in his Honour's judgment (102 ALR at 424):

"Clutch power can apparently be affected by the

conditions in which blocks are used and stored.

These conditions include weather conditions,

particularly heat or cold and humidity,

perspiration on a user's fingers and dust.

Light may also play a part."

The appellants addressed this conclusion in two ways. First, they argued that the evidence established, as the primary Judge indicated, that clutch power might vary during the first few separations of the bricks, but would stabilise after the fifth pull. Secondly, they argued that climatic factors would influence both Lego and Tyco equally. The crucial issue was not whether a hot Lego brick would work with a cold Tyco brick, but whether Tyco would work with Lego at the same place, at the same time, indeed, in the same "toy box".was There is some force in these arguments. However, what was essentially at issue was a matter of judgment: whether the clutch power of Tyco so differed from that of Lego that it would be misleading to state that the one worked with the other. The primary Judge had the benefit of expert witnesses and formed an opinion (102 ALR at 426) on that exact issue:

"(I)t is not apparent on the face of the

scientific evidence which has been called that

the respondent's clutch power is significantly

inferior to that of Lego."

The appellants did not establish that that finding was attended with sufficient doubt for this Court to disturb it.

179. The appellants' argument on this point ran as follows: the respondent represented that Tyco Pre-School bricks worked with Duplo; one of Duplo's performance characteristics is that it works with Lego; so, the respondent represented that its Pre-School bricks work with Lego; that is a misleading representation because Lego cannot connect with Tyco Pre-School bricks without the aid of a grey adaptor brick.

180. The primary Judge rejected this argument at its crucial third step (102 ALR at 428):

"(T)he critical words in the bullet, 'Works with

Lego', or 'Works with Lego's Duplo', do not

claim compatibility between Tyco super blocks

and Duplo or compatibility between Tyco

pre-school super blocks and Lego. It was submitted

that I should infer that this representation was

made. I have given the matter due consideration

but, on reflection, do not think that I should

take that course. I do not therefore accept the

case made by Lego in relation to the grey adaptor brick."

181. The appellants' argument here does not depend on clutch power. Rather, it depends on the fact that some pieces in the Tyco range do not connect with pieces in the Lego range, or do not perform in the same way as their Lego equivalents.

182. Whereas counsel for the respondent agreed that the words "works with" extended to bricks, it disputed the primary Judge's finding that the representation extended to all pieces in the Tyco and Lego range. His Honour's findings on this point were the subject of a cross-appeal.

183. The respondent argued for the limited scope of its representation on two main grounds. The first involved looking at the entire bullet within which the words "works with" appear; the second involved looking at the way in which the appellants themselves used phrases such as "works with".

184. As well as stating "WORKS WITH LEGO", the bullet on the packet of Tyco bricks depicts two bricks joined together and states "Tyco super blocks connect to Lego blocks". The respondent argued that the picture and the second statement amounted to a qualification of the first, so as to limit any representation to bricks alone. The primary Judge described that as a construction which was "open", but rejected it on the grounds that it was not the construction intended by the executives of Tyco. As indicated above, the intention of the person making a statement, in the absence of fraud, should not be decisive of an issue of construction arising under s. 52 of the TP Act.

185. Nevertheless, the construction adopted by his Honour may be supported by reference to the bullet itself. The words "WORKS WITH LEGO" are in capital letters and are much larger and more prominent than the other statements in the bullet. Furthermore, although two bricks are depicted, the second statement refers to "blocks" generally. Tyco labels packets containing not only bricks but also various other pieces as "Tyco Super Blocks". This suggests that "blocks" should be understood as referring to all the pieces in the box, and indeed in the Tyco range. The primary Judge did not refer in his reasons to the attempts by the respondent to construct a "trade dictionary" based on the appellants' own advertising. One such statement made by the appellants in reference to Lego and Duplo was that "all bricks and pieces fit together". Counsel for the respondent referred to several examples in evidence of Lego and Duplo pieces that did not fit together. Counsel also referred to the cross-examination of Mr A C Brown, who is Managing Director of the second appellant. After being confronted with the evidence of pieces that would not fit together, Mr Brown was asked:

"So, when you say that Duplo fits with Duplo,

that must be understood that it depends really

on which particular pieces you have got, using

common sense? - -

I understand it to mean that."

Even if that answer could be seen as evidence of intention, then on the same grounds as Mr Grey's intention was irrelevant to interpreting Tyco's representation, Mr Brown's intention would be irrelevant to Lego's statement. In any event, the statements of Lego were not as broad as those of Tyco, and the instances of impossibility of connection were fewer and more extreme than the evidence of Tyco's failure to connect with Lego.

186. So, one must return to the question of how consumers would interpret the statement "WORKS WITH LEGO". Counsel for the respondent argued that the absence of consumer evidence on this issue was fatal to the construction advanced by the appellants. In support of this contention, reference was made to WEA International Inc v Hanimex Corporation Ltd supra at 280, where it was said:

"Ultimately the issue is one for the Court, the

ultimate question being whether what is

complained of by the applicant amounts to

conduct which is misleading or deceptive

'against the background of all surrounding

circumstances': Taco Co of Australia Inc v Taco

Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 at 202.

Nevertheless, there are some cases, and this

case is one in my view, where submissions to the

Court have diminished force unless they are

enlivened by evidence as to the circumstances in

which the allegedly misleading or deceptive

conduct is communicated to those said to be

prejudiced by it and the relevant habits and

attitudes of such persons."

Those observations were not phrased in absolute terms. They were made in response to a submission that, by failing to state in certain advertisements for recording tapes that re-recording of certain sound recordings would infringe copyright, the advertiser contravened s. 52. In the present case the appellants produced surveys, tendered product registration cards and called various witnesses to give oral evidence. I will not consider here the weight or admissibility of that evidence. The crucial issue is how Tyco's representation should be understood against the background of all the surrounding circumstances.

187. The overall "image" and "concept" of Lego is that all integers or elements fit together. Each element can be connected to the others, allowing the child to try any combination. Consumers would understand "WORKS WITH LEGO" against that background and hence would interpret those words as referring to all the pieces in the Tyco range. Moreover, as was stressed above, the marketing is directed towards children and those adults who buy toys for them. Such persons are not to be expected to go into the niceties of qualifying one statement by reference to another statement or to a picture. They would be more likely to expect one piece from a toy box to connect and operate with another if they were told those pieces "worked with" each other.

188. If it be accepted that the representation applies to all pieces, the question then arises as to the precise nature of the representation. The respondent submits that the primary Judge interpreted the words as representing identity or perfect compatibility. That is incorrect. As discussed above, the primary Judge interpreted the words "works with" as representing interchangeability, and I would respectfully adopt that interpretation.

189. Once the scope and nature of the representation is understood, the question then becomes one of judgment, namely whether the instances of pieces of Tyco being unable to connect with or perform in the same way as Lego are so significant that it could be said that the representation of interchangeability was misleading. The primary Judge considered this issue. His Honour had before him the evidence of Mr Jorgen Bruhn, who is Senior Vice President of Research and Development with Lego. This evidence involved "some hours in the witness box demonstrating that many Lego (or Duplo) and Tyco components did not connect at all or did not connect satisfactorily". His Honour recognised that some of these examples were faulted in cross-examination, but nevertheless accepted "the broad thrust" of Mr Bruhn's evidence. He also referred to evidence from the product registration cards and oral evidence which supported the argument advanced by the appellants.

190. The primary Judge detailed the points of difference and incompatibility between Lego and Tyco products, assessed the significance of the quantity and quality of those differences, and decided that they were sufficiently significant to render misleading a representation of interchangeability with regard to the two products.

"In my opinion the totality of the evidence

establishes that the case has been made out.

The applicants are accordingly entitled to

relief in respect of this part of their claims."

192. The pre-1969 drawings were designs capable of being registered under the 1906 Designs Act and by reason of s. 218 of the 1968 Act, copyright does not subsist in those drawings.

193. Copyright subsists in the post-1969 drawings. However, there was no infringement by Croner until the repeal of s. 77 of the 1968 Act in its original form became effective when the 1989 Act commenced on 1 October 1990. The appellants should have an injunction to restrain infringement by the respondent of the copyright in the post-1969 drawings. However the injunction should be suspended, with leave to the respondent to reopen its case before the primary Judge in the manner I have indicated.

194. But the appellants fail in their contention that the primary Judge should have held that the respondent infringed copyright within the meaning of ss. 37 and 38 of the 1968 Act by importing and selling Tyco products in the period before 1 October 1990.

2. Passing off and Section 52 of the TP Act - Appearance of Products

195. The appellants also have not made good their contention that the appearance of the respondent's products and packaging is such that the respondent has misled or deceived, or is likely to mislead or deceive, consumers into believing the existence of a trade connection between Lego and Tyco.

196. However, the primary Judge erred in holding that the use of the words "Lego (or 'Duplo') is a registered trademark of Interlego AG" was likely to misled or deceive consumers into believing the existence of an association between Tyco and Lego. Order 1 of the orders made by the primary Judge (reported 102 ALR at 435) should be set aside.

3. Section 52 of the TP Act - Remaining Issues

197. The respondent is unsuccessful on its cross-appeal. The representation that Tyco's product "WORKS WITH LEGO (or LEGO'S DUPLO)" contravenes s. 52. However, the appellants fail in their contention that that conclusion is supported by evidence of discrepancies in clutch power and the grey adaptor brick.

198. The orders should provide for the setting aside of order (1) made below, and for the grant of an injunction to the effect I have described. Otherwise the appeal and cross-appeal should be dismissed. In all the circumstances, the appellants should pay the costs of the appeal and cross-appeal, including any reserved costs.