Re Press-Form Pty Limited and Kelrit Investments Pty Limited v Henderson'S Limited; Henderson'S Industries Pty Limited; Terence Lloyd Elliott; Caroline Nicolette Elliott and Press-Tech International Limited [1993] FCA 46 (19 February 1993)

FEDERAL COURT OF AUSTRALIA

Re: PRESS-FORM PTY LIMITED and KELRIT INVESTMENTS PTY LIMITED
And: HENDERSON'S LIMITED; HENDERSON'S INDUSTRIES PTY LIMITED; TERENCE LLOYD
ELLIOTT; CAROLINE NICOLETTE ELLIOTT and PRESS-TECH INTERNATIONAL LIMITED
No. G333 of 1992
FED No. 45
Number of pages - 25
Designs - Statutes
(1993) AIPC 90-964
(1993) 112 ALR 671
(1993) 40 FCR 274

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Designs - validity of design - whether design had been "applied industrially" - whether deeming clause is inclusive or exhaustive.

Statutes - words and phrases - "deemed".

Designs Act 1906

Copyright Act 1912

Broadcasting and Television Act 1942

Designs Act 1968

Copyright Act 1968

Designs Amendment Act 1981

Copyright Amendment Act 1989

Copyright Act 1911 (Imp)

The Designs Rules 1932 (Imp)

Statutory Rule No. 58 of 1969

Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) AIPC 90-210

Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd (1987) 79 ALR 534

Taypar Pty Ltd v Santic (1990) AIPC 90-645

Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234

Downey v Trans Waste Pty Ltd (1991) 172 CLR 166

Ware v Anglo-Italian Commercial Agency Ltd (No. 1) (1917-23) Macg CC 346

Hunter Douglas Australia Pty Ltd v Perma Blinds [1970] HCA 63; (1970) 122 CLR 49

Re The News Corporation Ltd (1987) 70 ALR 419

Lorenzo and Sons Pty Ltd v Roland Corporation [1992] FCA 318; (1992) AIPC 90-904

National Research Development Corporation v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252

HEARING

SYDNEY, 4 February 1993
19:2:1993

Counsel and solicitors Mr D.K. Catterns QC and
for the Applicants: Miss J. Baird instructed by

Michell Sillar

Counsel and solicitors Mr P.D. McMurdo QC

for the Respondents: instructed by Clayton Utz.

ORDER

The Court:
Orders that the matter be stood over to a date to be fixed
for the bringing in of short minutes to give effect to the
Reasons for Judgment delivered today and for further
directions.

DECISION

GUMMOW J. The first respondent ("Henderson's") is the registered proprietor, pursuant to the Designs Act 1906 ("the Act") of design No. 89480 ("the Design"). The priority date of the Design is 9 May 1983. The article in respect of which registration was granted was described as "Vehicle Chair Moulding". The second respondent ("Henderson's Industries") is a related corporation of Henderson's.

2. The applicants complain that Henderson's Industries has threatened them with legal proceedings for the alleged infringement of the Design. Threats are also alleged to have been made against the third and fourth cross-respondents, Mr and Mrs Elliott, and the fifth cross-respondent, a company of which Mr Elliott is a director.

3. Various issues arise on the pleadings, which include a cross-claim. With the consent of the parties, on 30 October 1992 the Court ordered that the question of the validity of the Design be determined separately from and before the other issues in the proceeding. The legal representatives co-operated in the expeditious preparation of that issue, which was heard on 4 February 1993.

4. At the trial of the separate issue, Mr McMurdo QC, counsel for the respondents, Henderson's and Henderson's Industries, being the registered proprietor of the Design and a related corporation, contended for the validity of the registration, and the contrary was urged by counsel for the applicants, Mr Catterns QC.

5. The Design is said to be invalid because it was published in Australia prior to the priority date of 9 May 1983, with the result that it was not a "new or original design" within the meaning of s. 17 of the Act, as it stood after the amendment effected by s. 9 of the Designs Amendment Act 1981 ("the 1981 Act"). The amendment came into operation on 1 April 1982.

6. The particular point of construction which arises resembles that considered by King J. in Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) AIPC 90-210, by French J. in Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd (1987) 79 ALR 534 at 545-7, and by Spender J. in Taypar Pty Ltd v Santic (1990) AIPC 90-645. In essence, it concerns the proper construction of a "deeming" provision and arises in the following way.

7. The evidence, to which it will be necessary to refer later in greater detail, establishes that between May and August 1982, that is to say before the priority date, the respondents caused to be manufactured and installed in a prototype bus 41 seats made in accordance with the Design. This bus was publicly displayed on 27 August 1982 at the Wayville Showgrounds in Adelaide when the South Australian Minister for Transport "launched" what was known as the North East Busway Project.

8. Those events meant that s. 17A of the Act was of critical importance to the validity of the Design. Section 17A was added to the Act by the Designs Act 1968 ("the 1968 Act") with effect 1 May 1969. It was amended by the 1981 Act. The section provides that certain designs which otherwise would be treated as new or original will escape that classification. It states:

"17A (1) Where
(a) copyright under the Copyright Act 1968 subsists
in an artistic work; and
(b) an application is made by, or with the consent
of, the owner of that copyright for the
registration of a corresponding design;
that design shall not be treated for the purposes of
this Act as being other than new or original, or as
having been published, by reason only of any use
previously made of the artistic work unless:
(c) the previous use consisted of or included the
sale, letting for hire or offering or exposing
for sale or hire of articles to which the design
had been applied industrially, other than
articles specified in regulations made for the
purposes of subsection 17 (2); and
(d) the previous use was made by, or with the
consent of, the owner of the copyright in the
artistic work.
(2) Any regulations in force under the Copyright Act 1968
that make provision for determining the circumstances
in which a design is, for the purposes of section 77
of that Act, to be deemed to be applied industrially
have effect for the purposes of subsection (1)."

9. The reference in s. 17A to regulations made for the purposes of sub-s. 17 (2) is to a provision of the Act which deals with the exclusion from registration of designs for articles which are primarily literary or artistic in character. This has no application to the present case. The issue here concerns the regulations referred to in sub-s. 17A (2), dealing with industrial application.

10. Turning to sub-s. 17A (1), it is not disputed that copyright subsisted under the Copyright Act 1968 ("the Copyright Act") in artistic works being certain drawings, that application was made by or with the consent of the owner of those copyrights for the registration of the Design, being a "corresponding design", and that the only previous use of the artistic works was made by or with the consent of the owner of the copyright. It follows that the Design is not to be treated as being other than new or original by reason only of that previous use, provided that the previous use answered the description in para. (c) of sub-s. 17A (1).

11. Thus, the issue becomes whether the previous use in the production and display of the 41 units was a dealing in articles "to which the design had been applied industrially". The answer to that question then depends upon the application of the regulations referred to in sub-s. 17A (2).

12. Section 77 of the Copyright Act is concerned with the "overlap" between copyright and designs law where, to put it shortly, copyright subsists in an artistic work and a corresponding design has been applied industrially without registration of that design. The section in its present form was inserted by s. 11 of the Copyright Amendment Act 1989 ("the 1989 Act"). For the purposes of the present case, it is necessary to have regard to s. 77 as it stood at the relevant priority date, 9 May 1983.

13. Section 77 then provided, again to put it shortly, that for the period of 16 years commencing on the date on which articles made to the corresponding design were first sold it would not be an infringement of a copyright in the artistic work to do anything which would have been within the scope of the monopoly in the corresponding design had it been registered; at the end of the 16 year period, it would not be an infringement to do anything which, if the corresponding design had been registered, would have been within the scope of the monopoly in that design as extended to "all associated designs and articles".

14. Sub-section 77 (5) of the Copyright Act provided that the regulations might make provision for determining "the circumstances in which a design is, for the purposes of this section, to be deemed to applied industrially".

15. Such regulations were made by Statutory Rule No. 58 of 1969 ("the Copyright Regulations"). Regulation 17 of the Copyright Regulations was in the following terms:

"17 (1) For the purposes of section 77 of the Act, a design
shall be deemed to be applied industrially if it is
applied -
(a) to be more than 50 articles; or
(b) to one or more articles (other than hand-made
articles manufactured in lengths or pieces.
(2) For the purposes of paragraph (a) of the last
preceding sub-regulation, any two or more articles -
(a) that are of the same general character;
(b) that are intended for use together; and
(c) to which the same design, or substantially the
same design, is applied,
shall be deemed to constitute a single article.
(3) For the purposes of this regulation, a design shall be
deemed to be applied to an article
if -
(a) the design is applied to the article by a
process (whether a process of printing,
embossing or otherwise); or
(b) the design is reproduced on or in the article in
the course of the production of the article."

16. As I have said, s. 17A was inserted in the designs statute by s. 6 of the 1968 Act, with effect 1 May 1969. This was the date of the commencement of the Copyright Act. The Copyright Regulations commenced on the same day. Thus there was from 1 May 1969 both a temporal and conceptual link between the double function performed by reg. 17. For the purposes of s. 77 of the Copyright Act, the regulation assisted in the determination of the "overlap" question, as regards the infringement of copyright where there was no design registration. For the purposes of s. 17A of the Act, reg. 17 helped determine whether a corresponding design should be treated as being other than new or original.

17. Whilst the present dispute concerns the construction of reg. 17 in its second operation, in construing the regulation it must be borne in mind that the construction placed upon it will be of significance for the regulation in its other operation.

18. The term "deemed" does not appear in that part of s. 77 in its present form in the copyright legislation, as inserted by s. 11 of the 1989 Act. Sub-section 77 (4) now states:

"77 (4) The regulations may specify the circumstances in which
a design is, for the purposes of this section, to be
taken to be applied industrially."

Regulation 17, as substituted by Statutory Rule 301 of 1990, now states:

"17 (1) For the purposes of section 77 of the Act, a design is
taken to be applied industrially if it is applied:
(a) to more than fifty articles; or
(b) to one or more articles (other than hand-made
articles) manufactured in lengths or pieces.
(2) For the purposes of paragraph (1) (a) any 2 or more
articles:
(a) that are of the same character; and
(b) that are intended for use together; and
(c) to which the same design, or substantially the
same design, is applied;
are taken to constitute a single article.
(3) For the purposes of this regulation, a design is taken
to be applied to an article if:
(a) the design is applied to the article by a
process (whether a process of printing,
embossing or otherwise); or
(b) the design is reproduced on or in the article in
the course of the production of the article."

No argument was put to the Court in which reliance was placed upon the shift in language (emphasised above) in the new reg. 17 and in sub-s. 77 (4) of the Copyright Act as throwing light upon the proper construction of the previous regulation and sub-s. 77 (5); cf Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234 at 254-5; Downey v Trans Waste Pty Ltd [1991] HCA 11; (1991) 172 CLR 167 at 177.

19. It is, however, appropriate to refer to the design and copyright law as it stood before the changes which came into force on 1 May 1969.

20. Section 22 of the Copyright Act 1911 (Imp) ("the 1911 Act") dealt, as is well known, with the question of "overlap" between design and copyright law. It stated:

"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."

Regulation 92 of The Designs Rules 1932 (Imp) is plainly the progenitor of reg. 17, though it differs from it in various respects. Regulation 92 provided:

"92 A design shall be deemed to be used as a model or pattern to
be multiplied by any industrial process within the meaning
of section 22 of the Copyright Act, 1911 -
(a) When the design is reproduced or is intended to be
reproduced in more than fifty single articles, unless
all the articles in which the design is reproduced or
is intended to be reproduced together form only a
single set, as defined by Rule 2 of these Rules;
(b) Where the design is to be applied to (1) printed paper
hangings, (2) carpets, floor cloths or oil cloths,
manufactured or sold in lengths or pieces, (3) textile
piece goods, or textile goods manufactured or sold in
lengths or pieces, (4) lace, not made by hand."

Rule 2 defined "set" as follows:

"'Set' means a number of articles of the same
general character ordinarily on sale together,
or intended to be used together, all bearing the
same design with or without modifications or
variations not sufficient to alter the character
or substantially to affect the identity thereof."

21. The nature of the "deeming" provision of sub-s. 22 (2) of the 1911 Act and of Rule 92 does not appear to have been considered in any of the English decisions. No real assistance is to be derived from the only case to which I was referred, namely Ware v Anglo-Italian Commercial Agency, Ltd (No. 1) (1917-23) Macg CC 346.

22. In Australia, s. 9 of the Copyright Act 1912 ("the 1912 Act") in dealing with the application of the 1911 Act to Australia provided in para. (c) that any reference in s. 22 of the 1911 Act to the 1907 British Act should be read as a reference to the Designs Act 1906, and the reference in s. 22 to s. 86 of the 1907 British Act should be read as a reference to s. 41 of the 1906 Act. I was told that no regulations had been made under s. 41 at the time of the repeal of the 1911 Act and the 1912 Act and the introduction of the new regime with effect from 1 May 1969.

23. The evidence which I have outlined indicates that any industrial application of the Design fell short of the application to more than 50 articles referred to sub-reg. 17 (1). Therefore, the Design is not, by virtue of that provision, to be deemed to have been applied industrially. If the matter stopped there, the consequence would be that the validity of the Design would be preserved. This would be because whilst there was prior publication of the Design, s. 17A operated to protect the Design from the consequences thereof i.e. invalidity. It would be a case where the Design was not to be treated, pursuant to s. 17A of the Act, as being other than new or original. The previous use would not have involved articles to which the Design had been applied industrially within the exception or reservation against validity spelled out in para. (c) of sub-s. 17A (1).

24. Counsel for the respondents sought to preserve this position by submitting that reg. 17 exhaustively defines the circumstances of industrial application for the operation of s. 17A; counsel for the applicants submits that the phrase in sub-s. 17A (2) and in the regulation made thereunder, "deemed to be applied industrially" does no more than state the effect or meaning which some matter or thing has, "the way in which it is to be adjudged": Hunter Douglas Australia Pty Ltd v Perma Blinds [1970] HCA 63; (1970) 122 CLR 49 at 65-6, per Windeyer J. Further, counsel for the applicants submitted that it is open for a party attacking validity to point to evidence which whilst not showing application of the design to more than 50 articles, and thus not enlivening reg. 17, nevertheless establishes within the meaning of para. 17A (1) (c) that the previous user consisted of dealings in articles to which the Design "had been applied industrially".

25. (Counsel for the respondents elaborated his first submission by contending that because the 41 seats in question were of the same general character, were intended for use together, that is to say in the subject bus, and were articles to which the same design was applied, they were deemed to constitute but a single article within the meaning of sub-reg. 17 (2); it is unnecessary to determine whether this is so. As counsel for the applicants pointed out his clients did not contend on any basis, whether the 41 seats be taken as a single article or as a plurality of articles, that reg. 17 applied.)

26. Secondly, the respondents submit that even if the construction contended for by the applicants be correct, so that reg. 17 is not to be read as an exhaustive statement of what suffices for industrial application, and one may look further to para. 17A (1) (c), nevertheless the evidence in the present case does not establish that what occurred amounted to industrial application within the meaning of para. 17A (1) (c).

27. I turn to the issue of construction.
As I have indicated, s. 17A of the Act and s. 77 of the Copyright Act came into force on the same day. So did sub-s. 17 (2) of the Act, a provision also dealing with the question of "overlap". However, sub-s. 17 (2) is drafted in a markedly different fashion from sub-s. 77 (5) of the Copyright Act. In particular, on no footing is sub-s. 17 (2) to be considered a "deeming" provision. It states:

"The regulations may make provision for the
exclusion from registration under this Act of
designs for such articles, being articles that
are primarily literary or artistic in character
as are specified in the regulations."

28. In Re The News Corporation Ltd (1987) 70 ALR 419, the Full Court held that ss. 90E and 92B of the Broadcasting and Television Act 1942 did not exhaustively define the meaning of the expression "being in a position to exercise control, directly or indirectly, of a company". Bowen C.J. (at 431-2) said:

"As Lord Radcliffe said in St. Aubyn v Attorney- General
[1951] UKHL 3; (1952) AC 15 at 53:
'The word "deemed" is used a great deal in
modern legislation. Sometimes it is used to
impose for the purpose of a statute an
artificial construction of a word or phrase that
would not otherwise prevail. Sometimes it is
used to put beyond doubt a particular
construction that might other-wise be uncertain.
Sometimes it is used to give a comprehensive
description that includes what is obvious, what
is uncertain and what is, in the ordinary sense,
impossible.'
The word 'deemed' may be used in any of those senses (see
Redland Shire Council v Stradbroke Rutile Pty Ltd (1974) 133
CLR 641 at 655). It is most often used for the purpose
of putting beyond doubt what is uncertain or creating a
statutory fiction (Muller v Dalgety and Co. Ltd [1909] HCA 67; (1909) 9
CLR 693 at 696; Barclays Bank Limited v Inland Revenue
Commissioners (1961) AC 509 at 528). It is true that
there is no presumption, still less any rule, that wherever
the word 'deemed' is used in a statute it will serve that
purpose (Hunter Douglas Australia Pty Ltd v Perma Blinds
[1970] HCA 63; (1969) 122 CLR 49 at 67). The precise wording of the
provision in question and the purpose for which it was
included in the Act must always be considered. But it
should be borne in mind that exhaustive deeming clauses are
the exception rather than the rule.
An example of an exhaustive deeming provision is to be found
in the old case of R v Norfolk County Council (1891) 60
LJQB 379. There a clause beginning 'The following . . .
Shall be deemed to be' was held to be an exhaustive
definition, because it purported to cover all of the
categories which were logically open. This is not such a
case. Section 92B (1) does not even go near to exhausting
all of the possible situations in which effective control
may be exercised over a company."

Beaumont J. (at 444-446) said:

"Although s. 92B (1) bears the marginal note
'Meaning of control of a company', it is not, in
form at least, framed as a definition or
interpretative provision as is s. 91 (1).
Rather, it provides that, in certain specified
circumstances, a particular result will follow -
a person shall be 'deemed' to be in a position
to exercise control of the company. Moreover,
the provision is not expressed in exhaustive
language: it does not in terms say (to borrow
the language of s. 92D (4)) that a company shall
be deemed to be controlled by a person or
persons 'if, and only if' certain facts exist. . .
As Windeyer J. observed in Hunter Douglas
Australia Pty Ltd v Perma Blinds [1970] HCA 63; (1969) 122
CLR 49 at 65-7 a 'deeming provision' may not
create a 'statutory fiction'; it need not import
artificiality; rather it may simply state the
effect of some matter - 'the way in which it is
to be adjudged': see also University of
Wollongong v Metwally [1984] HCA 74; (1984) 56 ALR 1, per
Mason J. at p 12 . . .
In my opinion this is the present case."

29. In approaching the issues of construction of legislation dealing with the "overlap" between copyright in artistic works and the designs law, it is to be borne in mind that whilst the protection for the artistic work essentially is against copying and a design registration gives protection more in the nature of a true monopoly, the period of protection of copyright greatly exceeds the maximum registration period for a design and, of course, in respect of the artistic work no registration is necessary. In broad terms, the scheme of the legislation as it stood at the relevant priority date 9 May 1983, was to induce owners of copyright in artistic works in respect of which there was a corresponding design, to rely exclusively upon a registration under the design law.

30. The evident purpose of sub-s. 17A is to save the corresponding design from invalidity or unregistrability in certain circumstances where there has been prior use of the design by or with the consent of the owner of the copyright in the artistic work. Of course, there will not then be double protection afforded by both the design registration and by the copyright law. Section 77 of the Copyright Act deals with the overlap by cutting into the copyright in the artistic work, to the extent described in Lorenzo and Sons Pty Ltd v Roland Corporation [1992] FCA 318; (1992) AIPC 90-904 at 38,555-6.

31. However, the design may still be treated as lacking in novelty or originality if the user was of articles to which the design had been applied industrially. That is the sting in para. (c) of sub-s. 17A (1). As counsel for the respondents pointed out, the exposing for sale before the priority date of merely one article may be sufficient to bring down the design, provided the design has been applied industrially to more than 50 articles.

32. Sub-section 77 (5) of the Copyright Act at the relevant time stated:

"77 (5) The regulations may make provision for determining the
circumstances in which a design is, for the purposes
of this section, to be deemed to be applied industrially."

Turning to the designs legislation, sub-s. 17A (2) states that the regulations in force under the copyright law which make provision for determining the circumstances in which a design is for the purposes of s. 77 "to be deemed to be applied industrially have effect for the purposes of (sub-s. 17A (1))". These provisions are not so drawn (as is sub-s. 17 (2) of the Act) as to provide for regulations which will "specify" when a design has been applied industrially; nor are the regulations to provide that industrial application has occurred "if and only if" certain conditions are satisfied.

33. There may be designs applicable to articles of such a substantial or complex nature that whilst it is unlikely that more than 50 articles will ever be made by the owner of the design registration, in ordinary parlance the design will have been applied industrially by manufacture of something less than 50 articles. If the design is subsequently registered by the industrialist and the legislation and reg. 17 has the meaning contended for by the respondents, the design will not have been applied industrially before registration. This means that the design will not be treated as invalid by reason of the previous exploitation, albeit that exploitation maximised the use to which the owner of the design wished to put it.

34. Counsel for the respondents submitted that were the legislation and reg. 17 to be read as not involving an exhaustive statement of what amounted to industrialisation, the result would be to permit the validity or invalidity of valuable proprietary rights to depend upon difficult questions of fact. However, the legislation dealing with the design-copyright "overlap" is, on any basis, so complex as inevitably to give rise to such difficult questions. Further, reg. 17 itself may involve issues of intention (para. 17 (2) (b)) and require an understanding of various processes of production.

35. What reg. 17 does do is to supply a fairly plain measure by which there may be drawn the line beyond which there is industrialisation of the design. If it is shown that the previous use, within the meaning of para. (c) of sub-s. 17A (1) of the Act, consisted of or included the sale or other relevant dealing with articles to which the design had been applied industrially within the meaning of reg. 17, and that previous use was made by or with the consent of the owner of the copyright in the existing work, that is determinative of the issue of lack of novelty or originality for the designs law.

36. Further, the design may still be treated as lacking novelty or originality and as outside the special protection of s. 17A, if the other activities by or with the consent of the owner of the copyright in the artistic work amounted to the design having been applied industrially within the sense of para. (c). In that latter case also, the fundamental scheme of the "overlap" legislation will have its effect. The owner of the copyright will not be able to register the corresponding design because it will not be new or original; and by reason of the industrialisation of the design s. 77 of the Copyright Act will cut into the artistic copyright.

37. Accordingly, I accept that the present case does not involve an exhaustive "deeming" provision, by way of what Bowen C.J. described as an exception rather than the rule.

38. Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd supra was an application for an interlocutory injunction, but French J. received detailed argument on various issues. One of them was the contention that reg. 17 exhaustively defined the circumstances of industrial application. Of this, his Honour said (at 545-6):

"As a proposition, that is, I think, attended by
considerable doubt. Regulation 17 is made
pursuant to s. 77 (5) for the purpose of
determining the circumstances in which a design
is deemed to be industrially applied. The word
'deemed' may be used in a statutory definition
to extend its meaning to include matters that
might or might not fall within the scope of the
word 'define'. When used in that way the word
has an inclusive rather than exhaustive sense:
Pearce: Statutory Interpretation in Australia
2nd ed. para. 62; Ex parte Armstrong; Re Hughes
(1963) 80 WN (NSW) 566. The sense will
depend upon the context, but there does not seem
to be any statutory policy warranting an
exhaustive construction.
In Safe Sport Australia Pty Ltd v Puma Australia
Pty Ltd (1985) 4 IPR 120 King J. considered a
submission that reg. 17 did not require the
production of 50 articles as a necessary
condition of industrial application of a
corresponding design, and said (at 126): 'The
question whether there has been industrial
application of a design where it has been
applied to more than 50 articles could be a
difficult question of fact, but reg. 17 disposes
of all doubts on the point. It seems
undesirable that a deeming provision should have
any wider application that it needs to have
(sic), and I think that there is nothing
incongruous in leaving it to be decided as a
question of fact whether there is industrial
application of a design in a case where less
than 50 applications of the design have taken place'.
The facts disclosed that the only relevant
application of the design in that case was to
the production of a prototype. His Honour took
the view that the making of prototypes is not an
industrial application of a design. It was
therefore not necessary for him to express a
concluded view of the operation of reg. 17. The
better view, I think, is that the regulation is
inclusive and, if it is inclusive, it is
inclusive in all respects."

39. It follows from what I have said above that I would reach the same conclusion and that as a result the first issue should be resolved adversely to the respondents.

40. The result is that it is open to the respondents to point to evidence which otherwise establishes within the meaning of para. 17A (1) (c) that the previous use consisted of dealings in articles to which the Design "had been applied industrially". This was the course followed by French J. in Kevlacat supra (at 547). His Honour there said that accepting as he did the non-exhaustive construction of reg. 17, he was satisfied that the production of catamaran hulls from the use of moulds in the way described in the evidence before him fell within the statutory concept of an industrial application of the relevant design.

41. Upon this branch of the case, counsel for the applicants pointed to evidence showing that the use of the design was to produce a prototype set of bus seats which were "not produced for the purposes of making a profit" from their production and sale; they were produced for "an isolated transaction" rather than in "a continuous activity of production". Further, the production was by a method which, although perhaps appropriate for the commercial production of other types of articles, was unsuited to the commercial production of bus seats by reason of excessive cost and deficient consistency of quality and strength, and was not employed in the manufacture of bus seats in Australia or elsewhere. There was a "once only exercise" with a lack of continuity or repetition sufficient involve a "system of production".

42. Counsel referred to Safe Sport supra at 36, 155-6, where the design was in respect of a sporting helmet and King J., after finding that only three prototypes of the plaintiff's helmets had been made before the relevant date, said that "on the face of it the making of prototypes is not the industrial application of a design".

43. I turn to consider the evidence.
On 7 April 1982, the General Manager of Henderson's Industries wrote to the Project Director of the North East Busway Project thanking him for the opportunity to submit an offer for the supply of "individual high back seats for the prototype Mercedes Benz Bus". He said that the prime objective was to design a seat offering maximum comfort, safety and appearance, with regard to ease of maintenance and resistance to vandalism, and that his company's seat design provided a sensible and economical solution to the Project's requirements of design and performance. A detailed specification of 13 pages, plus annexures, was attached.

44. On 26 May 1982, the Project Director replied to the General Manager, and, after referring to discussions subsequent to a letter of 28 April, set out the Project's terms and conditions for the supply of seats for the prototype bus. Paragraph 7 provided that the South Australian State Transport Authority "will assume ownership of all tooling". The letter also stated that an order for the supply of the seats would be placed by Mercedes-Benz (Australia) Pty Limited.

45. Further meetings followed at the State Transport Authority's offices on 20 and 22 September 1982 at which there was detailed discussion of technical matters. Minutes of those meetings are in evidence. On 23 September 1982, the Project Director wrote to the General Manager pointing out that until an evaluation of a fully-developed prototype seat had been carried out, the Project was not in a position to deal with questions concerned with the production of seats of any larger scale. Further correspondence and meetings followed, leading up to a letter dated 25 January 1984 (well after the priority date of 9 May 1983) in which the General Manager wrote to the South Australian Minister for Mines and Energy informing him that Henderson's Industries had tendered for the supply of seating to be fitted in buses for the North East Busway, the tender having a value which might be in excess of $1m. The tender document is in evidence.

46. The prototype seats which had been manufactured before the priority date were made from hand-laid glass reinforced polyester resin fibreglass. The evidence is that that process, whilst suitable for the production of a limited number of prototype seats, would have been unsatisfactory for the commercial production of seats pursuant to the tender. For that production the appropriate technique would have been a compression moulding which requires special tooling.

47. Up to 30 June 1983, at least $198,000 had been spent on development of the prototype seats. The respondents believed that there would be a reasonable prospect of obtaining a contract from the State Transport Authority of South Australia to build and supply seats in such numbers to enable the cost of the project to be recouped and a profit to be made.

48. Mr T. Rigby, an industrial designer, was engaged by the respondents in March 1982 to conduct stress calculations of seat structures, and to develop "concept sketches" of the bus seat, taking into consideration the specifications which had been set out by the Authority. He had various meetings in April 1982 with persons who were part of the North East Busway Project team. At those meetings, a number of "design issues" were discussed. These led to adjustments in the Design. For example, the "comfort factor" of the seat had to be compromised so as to accommodate the requirement for extra seats on one side of the bus. On 10 May 1982, Mr Rigby, at the request of Henderson's Industries, assisted in the supervision of the construction of the 41 shells of bus seats made in accordance with the Design. The 41 seats were then, as I have indicated, installed in the prototype bus which was "launched" on 27 August 1982.

49. The phrase in sub-s. 77 (5) of the Copyright Act "for determining the circumstances in which a design is, for the purposes of this section to be deemed to be "applied industrially" specifies a criterion which may perhaps be described as distinguishing between what in another context the High Court called the fine arts and the useful arts, the latter being more concerned with the field of economic endeavour; see National Research Development Corporation v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252 at 275.

50. Given the particular nature of the legislation which is here involved, no great assistance, in my view, is to be derived from decisions construing the term "industrial dispute" in para. 51 (xxxv) of the Constitution, nor from decisions dealing with industrial use in town planning law.

51. The matter of ordinary usage, and "industry" may be described as a trade or other particular form or branch of productive labour, and something as "industrialised" when devoted or directed to such an activity. Implicit in this, as French J. pointed out in Kevlacat supra at 546-7 is an element of system.

52. In the present case, by the time the priority date was reached on 9 May 1983, the respondents had devoted considerable time, effort and expenditure towards their goal of providing seats for the Busway Project. It is true that no immediate profit had come home, but the contemplation was that the expenditure upon the prototypes would be recouped from the contract which it was hoped to obtain for the building and supply of seats in considerable numbers. There were, as I have indicated, various meetings and discussions of a technical nature with officers of the Project. In these activities, undoubtedly engaged in as part of the business of the respondents, the artistic works for which the corresponding design was later registered undoubtedly were put to account as an important step necessary to achieve the ultimate goal of obtaining the contract.

53. If all the relevant circumstances are taken into account in this way, it follows, in my opinion, that it is an apt use of language, and within the meaning of the legislation, to say that the design had been applied industrially before the priority date.

54. There is, in my view, no absolute proposition that the production of a prototype takes any particular case outside the scope of industrial application; nor, whilst it is a matter to be taken into account, is it particularly significant that the method of production of the prototype differed from the more expensive procedures which would be necessary to produce the final commercial product if the contract were in fact obtained.

55. It follows that the applicants have made out their case that the registration of the design is invalid for want of novelty or originality, the case not falling within the special provisions of s. 17A of the Act.

56. I will stand the matter over for the bringing in of short minutes to give effect to these reasons, and for the giving of any further directions that are necessary for the resolution of the remaining issues in the litigation.