Mining Equipment *Minquip* Pty Ltd v Alfagomma Australia Pty Ltd [2005] FCAFC 25 (3 March 2005)

Last Updated: 3 March 2005

FEDERAL COURT OF AUSTRALIA

Mining Equipment "Minquip" Pty Ltd v Alfagomma Australia Pty Ltd

[2005] FCAFC 25

INTELLECTUAL PROPERTY – designs – new and original – prior use – burden of proof in respect of claim of prior use – whether respondent discharged burden – findings of fact – whether findings justified having regard to contemporaneous documentary evidence.

Designs Act 1906 (Cth)


Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 followed





















MINING EQUIPMENT "MINQUIP" PTY LTD (ACN 068 658 962) v ALFAGOMMA AUSTRALIA PTY LTD (ACN 052 243 366)

SAD 154 of 2004




BLACK CJ, MOORE AND LANDER JJ
3 MARCH 2005
PERTH (HEARD IN ADELAIDE)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 154 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	MINING EQUIPMENT "MINQUIP" PTY LTD (ACN 068 658 962) APPELLANT
AND:	ALFAGOMMA AUSTRALIA PTY LTD (ACN 052 243 366) RESPONDENT
JUDGES:	BLACK CJ, MOORE AND LANDER JJ
DATE OF ORDER:	3 MARCH 2005
WHERE MADE:	PERTH (HEARD IN ADELAIDE)

THE COURT ORDERS THAT:

1. The appeal be allowed.
2. Paragraphs 1 and 2 of the orders made by the primary judge on 23 June 2004 and the order made on 29 June 2004 be set aside.
3. The respondent’s cross-claim be dismissed.
4. The respondent pay the appellant’s costs on the cross-claim.
5. The appellant’s claim be remitted to the primary judge for further determination.
6. The respondent pay the appellant’s costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 154 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	MINING EQUIPMENT "MINQUIP" PTY LTD (ACN 068 658 962) APPELLANT
AND:	ALFAGOMMA AUSTRALIA PTY LTD (ACN 052 243 366) RESPONDENT

JUDGES:	BLACK CJ, MOORE AND LANDER JJ
DATE:	3 MARCH 2005
PLACE:	PERTH (HEARD IN ADELAIDE)

REASONS FOR JUDGMENT

THE COURT:

The Parties and the Proceedings

1 The appellant was the applicant in proceedings before a single judge of this Court in which it claimed that the respondent had breached the Designs Act 1906 (Cth) (the Act) by using the appellant’s registered design.

2 The respondent cross-claimed seeking a declaration that the appellant’s design was invalid. The respondent succeeded on the cross-claim and the primary judge dismissed the appellant’s application and ordered that the register be rectified by expunging the appellant’s design.

3 The appellant has appealed, seeking orders setting aside the order for rectification and the order dismissing the appellant’s application, and seeking, instead, that the respondent be restrained from infringing the appellant’s design and a further order referring the matter back to the primary judge for the assessment of the appellant’s damages or an account of profits.

4 The inquiry both before the primary judge and on this appeal was a factual one.

5 The matter at issue was whether the appellant’s registered design was invalid because it had been ‘used’ before 15 April 1997 (the priority date) and, separately, because it had been ‘applied industrially’ before that date.

6 The primary judge found that the design had been used prior to 15 April 1997 and therefore the design was invalid.

History

7 David Byrne is, and always has been, the Managing Director of the appellant, Mining Equipment "Minquip" Pty Ltd (Minquip) which he caused to be incorporated on 16 March 1995.

8 Mr Byrne had had significant experience in the supply of equipment to the mining industry.

9 Minquip was incorporated in order to specialise in the engineering, manufacture and sale of equipment to the mining industry, including heavy-duty hose couplings.

10 Many tools and appliances in the mining industry are driven by air pressure which is delivered to the tools through hoses through which compressed air is passed. Those hoses need to be joined and are joined with coupling systems. Coupling systems are also used for the delivery of water in mines.

11 The mining industry is the largest consumer of couplings but they are used in other industries such as the hiring industry, the wine industry and in general agriculture.

12 There are three different types of couplings available on the Australian market:

(1) Type ‘A’ which is of European design;
(2) Type ‘B’ which is of American design; and
(2) ‘Surelock’ which is of Australian design.

13 The couplings look similar but are, in fact, different. The coupling types are not interoperable or interchangeable so that it is not possible to use a Type A design with a Surelock design. Each of the different couplings has a different locking arrangement.

14 Mining companies, therefore, generally elect to use one type or the other and persist with the same type for a number of years. There is a significant cost to a mining company in changing from one type of coupling to another.

15 Mr Byrne had extensive experience in the mining industry and had demonstrated that if couplings which did not leak at low pressure were used then substantial savings in air consumption could be made. Those savings had a significant dollar value.

16 The appellant marketed both Type A and Surelock couplings.

17 The original Type A coupling had a solid rubber seal within the coupling. That had two particular disadvantages; first, it was difficult to join the couplings together and, secondly, the coupling tended to leak.

18 Mr Byrne designed a non-solid rubber seal which was called a ‘bellows seal’.

19 The appellant’s Surelock range of couplings were sometimes called ‘Safetyloc(k)’ or ‘S/L’. The appellant’s Surelock range included couplings of various diameter sizes. The appellant also offered a choice of bellows seals or a ‘high pressure’ solid seal. The appellant sometimes referred to the Surelock coupling with a bellows seal as a ‘standard’ to contrast it with the ‘high pressure’ seals also available in the Surelock range. In 1996 Mr Byrne improved the rubber bellows seals which were used in the appellant’s Surelock range and the invention giving rise to those improvements became the subject of Australian petty patent no. 689751 and Australian patent application no. 14964/97.

20 The appellant first introduced a Type A coupling to the market in 1996. As already observed, it had a solid seal. Mr Byrne introduced a new seal to the Type A couplings by increasing the axial length of the collar of the solid seal. The seal thus created leaked less than the original solid seal but it was more difficult to put the couplings together. The market rejected that seal.

21 Mr Byrne then designed a Type A coupling which featured a toroidal cavity which housed the bellows seal. It had three advantages. First, it was much easier to connect than the existing Type A couplings with solid seals. Secondly, it was capable of withstanding high burst operating pressures. Thirdly, it did not leak at low pressure.

22 It was the design of the coupling which featured the toroidal cavity which was the subject of an application for registration on 15 April 1997. The design was registered. The priority date of the application became 15 April 1997, the date the application was lodged: s 21 of the Act.

23 The Certificate of registration was in the following form:

‘Certificate of registration
of a design
No. 131967

Designs Act 1906

I, Bruce Ian Murray, Registrar of Designs, certify that the design, a representation of which is attached, has been registered in the Register of Designs and that the following details have been entered in the Register in respect of that registration.

Name and Address of Owner(s):

Mining Equipment (Minquip) Pty Ltd
Unit 2 2 Piping Lane Lonsdale South Australia 5160 Australia

Name of Author(s): David Byrne

Article in respect of which the design is registered: A coupling.

Application Number: 1173/1997

Date on which Application for Registration of the Design was lodged: 15 April 1997

Statement of Monopoly: Monopoly is claimed in the shape and configuration of a coupling as illustrated in the accompanying representations.

Statement of Novelty: Novelty is in the internal toroidal cavity.

Term of Initial Registration: One year commencing on 6 November 1997.’

24 The representations attached to the Certificate of registration of the design showed:

25 The registration of the design was due to expire on 6 November 1998 but, prior to its expiration, Minquip applied to extend the period of registration. Initially, that was opposed by a competitor and the Registrar determined that the registration should not be renewed because the relevant design was not relevantly new or original, but was merely an adaptation of the previous design with a square cavity. Minquip applied under s 27A(11) of the Act to have that decision reviewed and that application was heard by Allsop J. The matter proceeded before Allsop J without a contradictor and, in the end result, Allsop J was satisfied that the design was new and original and ordered that the period of registration be extended to 15 April 2003: see Minquip Pty Ltd v Mining Supplies Australia Pty Ltd [2001] FCA 1378. No argument was advanced to his Honour in those proceedings that the registration was invalid by reason of prior publication or use.

26 The respondent is a supplier of assembled hose and coupling packages to the mining industry. It was the exclusive Australian distributor of Minquip couplings between late 1996 and January/February 2001.

27 In early 2001, Minquip began to sell directly to the industry, although it continued to supply its products to the respondent for sale by retail.

28 At or about the same time as Minquip began to sell directly to the industry, the respondent commenced selling a coupling made by a company called ‘Eagle’ which was made of iron. The Minquip coupling was about 20 per cent more expensive than the Eagle coupling.

29 It was the sale by the respondent of the Eagle couplings which was the subject of the appellant’s claim.

The Respondent’s Cross-Claim

30 The respondent’s cross-claim was that the coupling, the subject of the design, was published or used in Australia before the priority date of 15 April 1997 and the design is and has at all material times been invalid.

31 In its cross-claim, the respondent identified five different circumstances which it said supported its claim. It said that on 29 October 1996 the appellant invited the respondent to demonstrate to potential customers and to promote, offer for sale and sell Type A couplings. Secondly, it said that in or about 1996 the appellant provided the respondent with Type A couplings for the purpose of demonstration, promotion, offer for sale and sale. Thirdly, it said that the appellant and the respondent met with a number of customers and demonstrated the couplings with a view to securing orders for the sale of Type A couplings. It identified those customers as NEH-Powercoal, Pit Top Mining – BHP Collieries and AC Whalans and others. Fourthly, it said that, since at least 1996, the appellant has manufactured and offered for sale those couplings. Finally, it said that since at least 1996 the appellant sold couplings to mining operators in Australia and, in particular, had sold couplings to Pasminco Mine.

32 The respondent’s cross-claim was supported by the evidence of Gerald Wilson who is the New South Wales Branch Manager of the respondent and who has been employed by the respondent in that capacity since 1996. Prior to that, he was employed by the respondent as the New South Wales Sales Manager for a period of five years.

33 His evidence, which was contained in an affidavit upon which he was cross-examined, was to the effect pleaded in the cross-claim.

34 He said that the respondent was approached by the appellant; first, by letter on 29 October 1996 and later, in the circumstances identified in the cross-claim, for the purposes of marketing the appellant’s Type A couplings.

35 The appellant did not deny that it had approached the respondent seeking the respondent’s assistance to market its Type A couplings but it said that it did not do so prior to the priority date. Its case was that the matters deposed to by Mr Wilson, with the exception of the letter of 29 October 1996, did not occur in 1996 but, in fact, occurred in 1997. The appellant’s case relied upon three affidavits of Mr Byrne and upon which he was also cross-examined.

36 In the end result, the matter before the primary judge and the matter before this Court was whether the circumstances deposed to by Mr Wilson happened in 1996/1997 or in 1997/1998.

The Proceedings before the Primary Judge

37 The appellant’s counsel conceded before the primary judge that if Mr Wilson’s evidence was accepted then it would follow that the design was invalid.

38 He said in opening to the primary judge, after referring to the infringement issue which depended upon a decision on validity, the issue raised in the cross-claim:

‘[COUNSEL]: That is because the prior art issue is confined to one single fact, and that is that the assertion that before the design was applied for by my client on 15 April 1997, my client Minquip, together with Alfagomma, went out and did some marketing amongst mining companies and mining supply agents, in the course of which they provided samples which embodied the design which ultimately came to be the subject of the registration.

Now, your Honour, if I could just tell your Honour, the cross-claim arises out of the requirements of section 17 of the Act. If I could just briefly take you to that. It provides in subsection (1):

"Subject to this Act, a design shall not be registered unless it is a new or original design and in particular shall not be registered -

and so on. My friend says it wasn’t, at the date of application, a new design because the two parties together were out in the market showing couplings embodying the design to prospective purchasers, so that it’s an anticipation by use rather than publication, if you like; it’s said that things were made according to it and put about the place.

There are two witnesses who give evidence relevant to that issue. For our part there is Mr Byrne who is the director of Minquip, and for my friend’s part there’s a Mr Wilson who is an officer of Alfagomma, and it’s a simple factual question. The controversy is as to whether the activity that’s asserted in support of the cross-claim occurred before or after the application.

HIS HONOUR: Do you accept that if Mr Wilson’s statements were true, you would not have been entitled to register the design.

[COUNSEL]: Yes. It’s a use which would make it not new within the meaning of the Act.

HIS HONOUR: So the dispute is to whether Mr Wilson’s dates in particular are right?’

39 There is no doubt that the matter proceeded before the primary judge upon that understanding. Both parties accepted that if the other party’s witness’ evidence was preferred then the other party would succeed on the issue of prior use.

The Primary Judge’s Findings

40 The primary judge found it difficult to resolve the question of fact for two reasons. First, he said that neither party had a complete set of records dating back to 1996 and 1997 and many of the documents put before the primary judge were ambiguous. Secondly, it was his opinion that neither of the principal witnesses had a good recall of detail. Whilst the primary judge did not form an adverse view of either witness, he was not prepared to rely upon their recollections of dates for other matters unless it was otherwise corroborated.

41 The primary judge found that there were three pieces of evidence which tended to support Mr Wilson’s account; first, the letter of 29 October 1996; secondly, statements made by Mr Byrne in two statutory declarations sworn 16 November 1998 and 23 April 1999 and; thirdly, an affidavit of the Superintendent of Production at Pasminco which was sworn on 19 June 2001 and read in the Federal Court proceedings before Allsop J.

42 He said that the letter of 29 October 1996 supported an inference that samples of the bellows coupling were available for testing and assessment in 1996. He said that those inferences were confirmed by the two statutory declarations. He said that the statutory declaration of 16 November 1998 dealt with the development of the bellows seal used in the Type A couplings and that in that statutory declaration Mr Byrne had deposed to the development of the bellows seal during the period from June 1995 to about March 1996. He said those developments included the development of the bellows seal for a Type A coupling and that the clear inference would seem to be that the samples of the bellows coupling were made and tested in early 1996.

43 He said that Mr Byrne referred to the introduction of the internal toroidal cavity in 1996 in the second statutory declaration.

44 Whilst he noted that Mr Byrne said that the dates in the statutory declarations were wrong, he found that Mr Byrne’s current recollection was unlikely to be accurate.

45 He said of the affidavit of Mr Evers at [25]:

‘In that affidavit he deposed to being approached by Mr Byrnes "in 1996" and shown a bellows coupling. He says that he agreed "to put some of these new Type A couplings onto a drilling rig to evaluate performance under actual working conditions". It would seem to be clear from that affidavit that this testing occurred in 1996. Mr Evers was not called to give evidence in these proceedings. In these circumstances I am only prepared to give limited weight to that evidence. Nevertheless it does support the case put by Alfagomma.’

46 Neither the transcript nor the primary judge’s reasons addressed the circumstances in which Mr Evers’ affidavit was tendered. However, from the way in which the primary judge has used the affidavit, it must have been tendered for the truth of the contents notwithstanding that Mr Evers was not called in the proceedings.

47 In any event, the appellant made no complaint of the way in which the primary judge used the affidavit.

48 The primary judge concluded at [27]:

‘ Unsatisfactory as the evidence is I am nevertheless satisfied that, taken together, the statutory declarations made by Mr Byrne; the letter of 26 [sic] October, 1996; the support provided by the affidavit of Mr Evers [the Superintendent of Production of Pasminco] and the common sense that samples of the bellows couplings were produced and tested prior to 15 April, 1997 all serve to confirm Mr Wilson’s evidence that samples were available in late 1996 and early 1997 and that those samples were shown to and made available for testing by Alfagomma and some of its customers. Consequently I am satisfied that Mr Wilson’s evidence in that regard is correct at least in general terms.’

49 The primary judge therefore found the registration of the design was invalid.

50 Notwithstanding his Honour’s conclusion that the registration of the design was invalid, his Honour considered the appellant’s claim of infringement and found that the respondent had imported at least six couplings into Australia which infringed the appellant’s registered design although he was not satisfied that the manufacture of the six couplings was fraudulent for the purpose of s 30 of the Act.

51 He found three other couplings which were discovered in the proceedings were in the possession of the respondent but it had not been established that it was intended to infringe the appellant’s right in the registered design. In any event, he found that those couplings did not infringe the appellant’s registered design because the internal cavity in each of them could not be described as toroidal.

52 He also found that whilst the respondent intends in the future to sell a coupling of the kind that was tendered into evidence, that particular coupling does not infringe the appellant’s registered design.

53 However, of course, because he found that the registration of the design was invalid he dismissed the appellant’s claim.

The Legislation

54 Sections 17 and 17A of the Act provide:

‘ 17. (1) Subject to this Act, a design shall not be registered unless it is a new or original design and, in particular, shall not be registered in respect of an article if the design:

(a) differs only in immaterial details or in features commonly used in the relevant trade from a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of the same article; or

(b) is an obvious adaptation of a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of any other article.

(1A) For the purposes of subsection (1), account shall not be taken of any secret use.

(2) 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.

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).’

55 The issue in this case was whether the design was a new or original design: s 17(1).

56 Section 17A applies in circumstances where copyright subsists in an artistic work and an application is made for the registration of a corresponding design.

57 Section 17A has the effect of deeming a design not being other than new or original by reason only of any use previously made of the artistic work unless the matters contained in paragraphs (c) and (d) are established.

58 It follows, therefore, that a design shall not be treated as being other than new or original unless the previous use consisted of, or included:

(1) the sale, letting for hire or offering or exposing for sale or hire of, articles to which the design had been applied industrially; and
(2) the previous use was made by, or with the consent of, the owner of the copyright in the artistic work.

59 In this matter it may be assumed that the subject matter of the design is not one of the articles specified in regulations made for the purpose of subsection 17(2).

60 The primary judge, after referring to s 17 and s 17A, said at [6]:

‘ The effect of these provisions in the context of the present case can be summarised as follows:

(a) A design cannot be registered if the article for which registration was sought was ‘published or used’ prior to the priority date: s 17(1) of the Act;

(b) The principle in (a) does not apply if the person holds the copyright in the artistic work (such as the drawings) for which the application for registration is a corresponding design: s 17A(1) of the Act;

(c) The qualification in (b) does not apply if the previous use included offering or exposing the articles for sale or applying them industrially: s 17A(1)(c) of the Act.’

The Appellant’s Contentions on Section 17A

61 The appellant contended on this appeal that the primary judge had applied an incorrect statutory test.

62 It was submitted that the primary judge misstated the effect of s 17A(1)(c) by treating the exception to the deeming effect of s 17A(1) (concerning previous use) as being satisfied either by:

(a) offering or exposing articles for sale, or
(b) industrial application of the design to articles.

63 It was submitted that s 17A(1)(c) only operates to defeat the deeming of the design as not being other than new or original where ‘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’. (Emphasis added.)

64 It was also submitted that the respondent could only succeed in overcoming the deeming effect of s 17A(1) by proving that the articles offered or exposed for sale etc were the product of a process of industrial application. It was submitted that it was not sufficient for the respondent to establish merely:

(a) the offering or exposing for sale of an article to which the design has been applied, or
(b) that the design has been applied industrially.

65 It was contended that the primary judge erred in failing to appreciate that it was necessary for the respondent to prove a process of industrial application to overcome the deeming effect of s 17A(1).

66 It is correct, as the appellant has contended, that the primary judge in summarising the effects of s 17 and s 17A did not in par (c) of his reasons (at [60] above) state that the deeming provision would not take effect if 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. The primary judge said that the qualification in par (b) ‘does not apply if the previous use included offering or exposing the articles for sale or applying them industrially’.

67 However, nothing turns on the primary judge’s construction of s 17 or s 17A. This case was not about whether the deeming provision in s 17A(1) operated by reason only of any use previously made of the artistic work. Nor was it about whether the deeming provision had been overcome because the respondent had established the matters in pars (c) and (d) of s 17A.

68 In fact, the deeming provision was irrelevant to his Honour’s conclusion. The matter before the primary judge, as has been previously observed, was a factual inquiry as to whether the design was new or original as at 15 April 1997, or whether there had been, in fact, previous use of the design. The criticism of his Honour’s reasons does not advance the appellant’s case. The question remains whether the appellant had previously used the design. That was how the case was brought before the primary judge. Indeed, the appellant’s counsel at trial identified that as the only issue.

The Question on Appeal

69 The question on this appeal is whether the primary judge was right to conclude that, on the balance of probabilities, the events deposed to by Mr Wilson in his affidavit and in his oral evidence occurred in 1996/1997 or 1997/1998.

70 Before considering all of the evidence which was before his Honour, it is worthwhile observing the manner in which the respective cases were presented. The respondent, who bore the onus of establishing prior use, relied only upon the evidence of Mr Wilson and documentary evidence. The appellant, for its part, relied only upon the evidence of Mr Byrne and some further documentary evidence. The appellant did call a Mr Holt who had been employed by the respondent in 1996/1997 as its Western Australian manager and who was, in fact, the person to whom the letter of 29 October 1996 was addressed, to establish a chain of evidence. However, neither party sought to adduce any evidence from him in relation to the issue before the primary judge as to when the events occurred.

71 Curiously, neither party sought to lead evidence from the parties to whom it was suggested the couplings had been shown or sold. Even more surprisingly, neither party sought to call the customers referred to in the respondent’s cross-claim who might have been able to establish when it was that the couplings had been offered to them for sale. The Superintendent of Production of Pasminco was not called even though he had previously sworn an affidavit, and it was asserted in the cross-claim, that since at least 1996 the couplings ‘were sold to the operation of and used at the Pasminco Mine’: par 8 of the cross-claim.

72 This is not intended to be any criticism of the parties. There may have been good reasons why the parties did not call those customers.

73 However, in the end result, the primary judge was left with the very difficult exercise of determining whether Mr Byrne or Mr Wilson was accurate in their recollection of the timing of events.

74 As the primary judge said, that difficult exercise was made even more difficult because neither of those witnesses was able to recall dates and matters of detail.

75 His Honour concluded that both witnesses were unreliable but he was not prepared to find that either witness was attempting to mislead him. He simply found that they both had incomplete memories.

76 This matter was not decided by the primary judge on the credibility of witnesses and whilst this Court will, of course, give respect and weight to the conclusions arrived at by the primary judge, this Court is in as good a position as the primary judge to decide on the proper inferences to be drawn from the evidence presented to the primary judge: Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551.

The Three Pieces of Evidence relied upon by the Primary Judge

77 The primary judge made one observation before turning to the three pieces of evidence which he said supported his ultimate conclusion. He said at [17]:

‘Although the issue was not explored in detail in the evidence it would seem obvious that Minquip produced samples of the bellows coupling for its own testing and design purposes well before 15 April, 1997. Mr Byrne in his affidavit of 24 May, 2004 refers to the production before that date of bellows couplings by machining previous A type couplings with square cavities.’

78 His Honour seems to have used that finding for the further finding at [17] that:

‘As a matter of common sense there must have been some, and maybe a considerable number, of bellows couplings in existence prior to 15 April, 1997.’

79 The appellant contended that his Honour’s finding that Mr Byrne’s affidavit supported a finding that Minquip produced samples of the bellows couplings well before 15 April 1997 was wrong.

80 That contention must be accepted. Mr Byrne’s affidavit of 24 May 2004 does refer to the initial manufacture of the Type A bellows seal couplings but he said the manufacture of the prototypes did not occur until after he had instructed his patent attorneys to apply for registration of the design. He says in paragraphs 9, 10 and 11 of his affidavit:

‘9. After I instructed the attorneys to apply for registration of the design, I set out to manufacture a number of prototype Type "A" bellows seal couplings which could be used for demonstration purposes. I requested my foundry to make 200 special Type "A" couplings (100 with a male thread, and 100 with a hose end) without a cavity for the seal. I did this with the intention of having the toroidal cavity machined into the blank couplings with a high finish so that the couplings could be used for demonstration purposes ("the blank couplings"). Now shown to me and marked DB 15 is a copy of correspondence from my foundry which confirms this request. The name of the foundry and the price of the couplings are commercial in confidence and I have removed that information from the copy of the documents exhibited. The original documents may be produced at court and inspected by the respondent’s solicitors provided appropriate undertakings as to confidentiality are given. I note from these documents that the blank couplings were freighted to Minquip on or about 7 May 1997.

10. Upon receipt of the blank couplings I then forwarded the couplings to a high quality machining company to have the toroidal cavity machined into the blanks. Now shown to me and marked DB 16 is a copy of correspondence between Minquip and the machining company concerning these instructions. Again I have removed identifying detail from the copies because that information is commercial in confidence. From these documents I note that the blank couplings were delivered to the machining company and invoiced between 24 June 1997 and 13 August 1997.

11. Now shown to me and marked DB 17 is a copy of the first purchase order given by Minquip to its foundry for the supply of fully finished (ie including the toroidal cavity) Type "A" bellows couplings. Included in DB 17 is a copy of the response from the foundry. I note that the purchase order was made on 16 June 1997 and the ordered couplings were received by Minquip in late August – early September 1997. The order was for sample quantities so I could see the quality of couplings produced from the foundry’s new pattern.’

81 His oral evidence was to the same effect. He said the research and development of the A Type coupling with a bellows seal commenced in the beginning of 1997. Neither Mr Byrnes’ evidence nor his affidavit supports a finding that ‘there were some, and maybe a considerable number of, bellows couplings in existence prior to 15 April 1997’.

82 The appellant argued that that finding infected the remainder of his Honour’s reasons. That contention needs to be addressed by having regard to the three matters upon which his Honour relied for his ultimate conclusion.

83 On 29 October 1996 Mr Byrne wrote to Mr John Holt in the following terms:

‘ Please find enclosed samples of our coupling, clamp and splicer range, for you to be able to show potential customers the standard of the product, also enclosed is our catalogue complete with third party accreditation test certificates for all types of couplings.

John I would like to point out this is a very important sales pitch because we are the only company in the market to be able to obtain these high burst pressures with standard seals. This point carries a lot of weight with mines and government departments concerned with O.H. and Safety requirements. The other sealing features due to machined seal areas and redesigned seals are that these couplings do not leak at low pressure (oppositions always have) this point means savings in air and water costs to the end user.

Couplings are manufactured from carbon steel ensuring total ductility at all times plus a mechanical coating to prolong the life of the coupling, all of the above features for the same price as they are paying now.

Also enclosed is our new marketing policy, we would envisage Alfagomma nationally blitzing the $35000.00 per month sales target to obtain the 50% discount, I understand you may not for the first few months, however I am happy for you to start off with the 50% structure.

It is my intention to come over to W.A. early in the new year to promote the coupling range and other products, so we can sit down and work out any problems we see arising.

Stock is due late January at this point, but we will keep you posted.’

84 The letter was addressed to John Holt, the respondent’s branch manager in Western Australia.

85 The letter was not addressed to Mr Wilson who was then the respondent’s branch manager in New South Wales and who only had responsibilities in that State.

86 Nevertheless, Mr Wilson deposed:

‘7. Alfagomma Australia received samples of the couplings from Minquip. Exhibited to me at the time of swearing this affidavit and marked "GW-01" is a copy of a letter dated 29 October 1996 from Minquip to Alfagomma Australia.’

He does not say that the respondent received A Type couplings or that they were enclosed with that letter, although those inferences might arise especially having regard to the next two paragraphs of that affidavit where he deposed:

‘8. In about mid-November 1996, I arranged for tests to be conducted on the Minquip couplings. The couplings were assembled into one metre trial hose assemblies and hydrostatically tested in our test tank located in the Sydney workshop in the Alfagomma Australia NSW Branch office. The workshop fitter at the time and I were present while these tests were conducted.

9. In about late November 1996, I had a conversation with Mr Byrne. To the best of my recollection I said words to the following effect:

We have tested the Type A bellows seal couplings and the results are in accordance with what you say. Alfagomma Australia will agree to promote the coupling in the market through our distributor network. Let’s arrange to visit a number of our major distributors.’

87 He was cross-examined about paragraph 7 of his affidavit and admitted that he could not remember what samples were supplied at that time.

88 There is nothing in the letter itself to indicate whether the couplings referred to were A Type or Surelock couplings. However, it was Mr Byrne’s evidence that the letter of 29 October 1996 enclosed Safetyloc couplings and not Type A couplings.

89 Whilst the letter does say that couplings were enclosed ‘for you to be able to show potential customers’ in view of that evidence, it is not possible to infer that A Type couplings were supplied with that letter unless there is other evidence to support that inference.

90 The letter shows that a catalogue was enclosed ‘with third party accreditation test certificates for all types of couplings’.

91 The catalogue accompanying that letter was exhibited to Mr Wilson’s affidavit. It advised in a document entitled ‘Company Profile’ that the product range of air and water couplings ‘will be the SL and A Type styles’.

92 The catalogue contained an information data sheet which spoke of the Minquip range of A type and Safetyloc couplings.

93 The information data sheet said:

‘(3) Redesigned seals (patent pending) to give much better results to any on the current market, no leaks between 0 – 800 P.S.I. "AMDEL" who are a NATA approved testing authority and recognized by the N.S.W. Mines department as a certified testing authority were chosen to conduct our tests. (See attached test results).

This point is the major achievement because the savings in a typical underground mining operation employing between 200 - 250 would be in the order of $40,000 - $50,000 per year in compressed air savings due to no leaks. Minquip would be able to supply our seals to existing couplings throughout an existing mine to ensure these savings were effected.’

94 The AMDEL test results which were referred to in the catalogue were not exhibited as part of that catalogue, although the catalogue says that they were attached. The catalogue appears, therefore, to be incomplete.

95 Clearly, if the catalogue was sent with the letter the AMDEL test results referred to must have been published before 29 October 1996.

96 Various AMDEL test results were tendered. However, no AMDEL test result showing ‘no leaks between 0 – 800 P.S.I.’ was tendered. Therefore, it is impossible to know whether that AMDEL test result was referring to an A Type or Surelock coupling.

97 In our opinion, the letter and so much of that catalogue as was tendered in that exhibit to Mr Wilson’s affidavit did not establish or even tend to establish that Mr Wilson’s account of events was accurate.

98 The primary judge referred to AMDEL test reports dated 20 April 1996 which tested Minquip Type A one inch snap-on hose end coupling. In the first report, it is noted that two hose end couplings were subjected to hydrostatic pressurisation at 50 and 600 P.S.I. for a period of 10 minutes at each pressure during which time leakage or subsequent failure was noted. The first report shows leakage from under claw clamp at 540 P.S.I. when the assembly was pressurised to 600 P.S.I.

99 Clearly, that AMDEL test report could not be the test report referred to in the catalogue.

100 A second report of the same date, which subjected Minquip Type A one inch snap-on hose end coupling to the same procedure, reported no leakage visible when pressurised to 50 P.S.I. and 600 P.S.I. but, when pressurised to failure, leakage between mating rubber seals at 1430 P.S.I. Again, that could not be the AMDEL test report referred to in the catalogue which was said to have accompanied the letter of 29 October 1996.

101 The primary judge said at [20]:

‘On the face of it the letter of 29 October, 1996 from Minquip would seem to be referring to the bellows coupling and would seem to be promoting it as a product in the market place.’

102 In our opinion, that does not necessarily follow. There is nothing in the catalogue or the information data sheet which establishes that the catalogue was referring to the bellows coupling. The catalogue could have been referring to the solid seal coupling which was first introduced by the applicant.

103 Even if the letter and enclosure may be construed as referring to the bellows seal, there is nothing in the letter or catalogue which indicates that the couplings themselves had the toroidal cavity.

104 His Honour went on to say at [21]:

‘ In his affidavit of 14 April, 2004 Mr Byrnes said that the letter and attachments of 29 October, 1996 did not refer to an A type coupling, but to the surelock coupling. However, it is clear from the AMDEL report of April, 1996 that as at October, Minquip was able to produce an A type coupling that answered the performance of a bellows coupling. It would also appear from his evidence that the only coupling capable of that performance was the bellows coupling.’

105 Again, assuming that it was right to infer that the bellows seal had been developed as early as April 1996, that does not mean that the letter of 29 October 1996 necessarily refers to an A Type coupling. It could still be referring to a Surelock coupling as Mr Byrne deposed.

106 The primary judge acknowledged that the letter of 29 October 1996 would not, of itself, be enough to establish that the samples of the bellows coupling were available for testing and assessment in 1996. He therefore considered the matters contained in Mr Byrne’s statutory declarations.

107 Before discussing the evidence contained within the statutory declarations, it is worthwhile observing that Mr Byrne exhibited a catalogue to the first of those statutory declarations which must have been published after the registration of this design because it refers to registered design no. 131967, the subject of this action. It must have also been published after 18 December 1997 because it contains a report from AMDEL of that date.

108 The catalogue includes data information in the same format as that contained in the catalogue said to be enclosed with the letter of 29 October 1996.

109 However, there is an important distinction. The data information is in the following form:

‘(3) Redesigned seals (patent pending) to give much better results to any on the current market, no leaks between 0 and failure. "AMDEL" who are a NATA approved testing authority and recognized by the N.S.W. Mines department as a certified testing authority were chosen to conduct our tests. (See test result at back of catalogue). This point is the major achievement because the savings in a typical underground mining operation employing between 200 – 250 would be in the order of $40,000 - $50,000 per year in compressed air savings due to no leaks. Minquip would be able to supply our seals to existing couplings throughout an existing mine to ensure these savings were effected.’

110 It can be seen that the AMDEL test results there refer to no leaks between ‘0 and failure’.

111 The catalogue contains substantial information about the A Type coupling and the bellows seal.

‘ "MINQUIP"

TECHNICAL INFORMATION

"A" TYPE COUPLING
"BELLOW SEAL"

Move into the 21^st Century ahead of the rest, couple up with safety and ease "MINQUIP"
Type "A" Bellow Couplings
Full range available TOTALLY compatible with existing couplings

[DIAGRAM NOT COPIED]

An Innovative Design to make the "A" Type Coupling much more user friendly. Occupational Health and Safety features vastly improved. Effort required to connect and disconnect reduced by 80%. Operating Pressures greatly increased. Due to increased sealing areas.

"Registered Design No. 131967"

COMPLIES WITH AND EXCEEDS A.S. 2660-1991
A.S. 2554-1982’

112 The AMDEL test reports are attached to this catalogue.

113 Three of the reports, two dated 11 December 1995 and one dated 18 October 1996, refer to Safetylock couplings. It is interesting to note that the report of 18 October 1996 does refer to Safetylock couplings. That report was provided only 11 days before the letter of 29 October 1996 but it has to be noted that it does not speak of a test between 0 and 800 P.S.I.

114 There are two reports of 18 December 1997 which do refer to Minquip Type A couplings which show that there was no loss of pressure or seal failure prior to failure which occurred at 1050 P.S.I. and 1100 P.S.I. Both of those reports make it clear that the Type A couplings were fitted with bellows seals.

115 That catalogue establishes that the applicant was still testing its A Type bellows couplings as late as December 1997.

116 That would be consistent with Mr Byrne’s evidence that the events occurred in 1997/1998.

117 There are other AMDEL reports dated 30 April 1996 which refer to testing Minquip one inch Type A snap-on hose end couplings. Those reports do not refer to the bellows seal as do the later reports. From that, it may be inferred that those reports relate to the solid seal.

118 However, not too much can be inferred from the various AMDEL reports which were tendered in the trial.

119 The AMDEL reports are, in the end result, equivocal and cannot be used to support either of the accounts advanced by the witnesses for the parties.

120 The first of Mr Byrne’s statutory declarations traces the history of the development of the bellows seal in both the Surelock and A Type couplings.

121 In the first statutory declaration Mr Byrne said:

‘... I spent about one year, from about June 1995 to about March 1996, together with Nigel Wotton of Adelaide Technical Rubber developing a seal configuration that was optimal for use across all ranges of coupling, with a view to enhancing the capacity of the seal to withstand high pressure and also to no longer be considered a "leaker". Initially I worked with the 11/2 – 2 inch "surelock" coupling because its larger size relative to the A-type meant that it was easier to accurately effect changes.’

122 His Honour said, of the evidence to which we have referred, that there was a clear inference that samples of the bellows coupling were made and tested in early 1996.

123 In the second statutory declaration Mr Byrne deposes in paragraph 5:

‘The only other change to the head shape made since the introduction of the A-type coupling is the one that I introduced through my company Minquip, and is the subject of Registered Design 131967. These are the only changes that have been made that are known to me either through my own knowledge or discussion with individuals in the industry.’

124 In paragraph 6, Mr Byrne deposes to a chronology of the changes made to the head shape of the different couplings and in relation to the Type A coupling states that in 1996 ‘internal toroidal cavity introduced’.

125 Mr Byrne’s evidence was that the dates to which he referred in his statutory declarations were wrong. He says that the error arose because of confusion between the patent issues in relation to the bellows seal and the design application in relation to the bellows coupling.

126 His Honour said at [24]:

‘However, he made the statutory declarations significantly closer to the dates on which the events occurred than when he gave evidence before me. Further, as the statutory declaration of 16 November, 1998 makes clear, the development of the seal and of the coupling were not entirely separate. I think it more likely that those dates are correct than that his current recollection is accurate.’

127 His Honour was entitled to reason in that way. The statutory declarations do tend to support Mr Wilson’s account.

128 Mr Pat Evers was the Superintendent of Production at Pasminco Mining who swore an affidavit on 19 June 2001 in proceedings in this Court between the applicant and Mining Supplies Australia Pty Ltd.

129 The respondent tendered his affidavit in these proceedings. Presumably the affidavit was received upon the basis that it was the evidence that Mr Evers would have given if called.

130 He deposed:

‘6. In 1996 I was approached by David Byrne of Mining Equipment "Minquip" Pty Ltd ("Minquip"). He showed me a new style of the Type A claw coupling with an altered internal cavity to house a bellows type seal in place of a solid type seal ("the new Type A coupling").

7. David Byrne claimed that this method of sealing was a vast improvement on the existing solid type of seal. He claimed the new bellows seal:

7.1 eliminated leakage;

7.2 complied with Australian Standards for hose assemblies; and

7.3 was easier to connect and disconnect.

I was told by him that testing had confirmed these improvements. He showed me third party testing results that supported these claims.

8. I agreed to put some of these new Type A couplings onto a drilling rig to evaluate performance under actual working conditions. These new Type A couplings incorporating the new "bellow seal" design were monitored over a six week period. My testing at that time established to my satisfaction that the new Type A couplings performed as claimed.

9. Pasminco has been using the new Type A coupling at Broken Hill ever since. As an end user I am pleased to say that the new Type A couplings is a substantial improvement on the old Type A coupling.’

131 That evidence also tended to support the respondent’s case.

132 The primary judge said at [25]:

‘It would seem to be clear from that affidavit that this testing occurred in 1996. Mr Evers was not called to give evidence in these proceedings. In these circumstances I am only prepared to give limited weight to that evidence. Nevertheless it does support the case put by Alfagomma.’

133 On the face of the affidavit, that finding was open to the primary judge. However, there was other evidence from which it might be concluded that Mr Evers’ evidence was incorrect.

134 Mr Evers’ evidence was that Pasminco used A Type couplings with an altered internal cavity to house a bellows seal from 1996.

135 On 17 April 1998 Minquip published a document entitled ‘Alfagomma Sales "Current Average" Minquip Products February ‘98-April ‘98’. It read:

'Existing Customers

N.S.W. $12,610/mth - Powercoal, NEH, A.E. Baker, Rubicon, Sullivan, Agents.

W.A. $31,070/mth - Atkins – Kalgoorlie / Mt. Tom Price, K.M.W., Contractors.

Brisbane $7,620/mth - Sandco (Mt. Isa), Sandco (Townsville), Contractors.

Mackay $3,695/mth - B.H.P. Crinum (Blackwoods).

Victoria $4,705/mth - Stawell, Tasmania, Contractors.

Total $59,700/mth

"Projected Sales" by December 1998

Target Customers

N.S.W. $50,000/mth - Woolongong [sic] Area (B.H.P. & others), Hunter Area (Dartsbrook, Ulan, Teralba etc.)

W.A. $50,000/mth - Western Mining, National Mine Management, Henry Walker, Darwin Area.

Brisbane $20,000/mth - Cannington, Mt. Isa Mine, Gunpowder.

Mackay $40,000/mth - Target all mines – nothing being done at present other than crinum.

Victoria $25,000/mth - Roxby Downs.

Total $185,000/mth’

136 As at that date, Pasminco was not noted as an existing customer. If Mr Evers’ evidence was correct it might be expected that Pasminco would be shown as an existing customer. It may be that Pasminco did not purchase through the respondent, although that is unlikely because the respondent was the appellant’s exclusive distributor. It may be that it did not purchase any couplings in that period, but that is also unlikely because of Mr Evers’ statement in paragraph 9 that ‘Pasminco has been using the new Type A coupling ever since’.

137 However, because Mr Evers did not give evidence, those matters could not be explored. Very limited weight could only be given to Mr Evers’ affidavit.

138 We therefore agree with the primary judge that there were two pieces of evidence which tended to support Mr Wilson’s account, although little weight could be put upon that second piece of evidence. We cannot, with respect, agree that the letter of 29 October 1996 was of any support to either party.

139 In those circumstances, the question is whether the respondent discharged the onus cast upon it to establish the prior use of the design.

140 Before answering that question, the other evidence tendered in the trial should be examined.

The Other Evidence in the Trial

141 In May 1995 Mr Byrne commenced work on developing a non-leaking bellows seal for Surelock couplings. The work continued until about February 1996 when Minquip lodged a Design and Provisional Patent Application in relation to a re-designed bellows seal in the Surelock range. AMDEL tests were carried out on the Surelock couplings in December 1995.

142 At or about the same time, Mr Byrne began work on A Type couplings to produce a seal which was less ‘leaky’. He increased the axial length of the collar of a solid seal which did reduce leaking. However, the coupling was more difficult to put together than the couplings already on the market. He had not initially intended to introduce the bellows seal into the A Type couplings because:

‘The total surface area being considerably smaller for the type A compared to the "surelock" type. The corollary of this is that there was in my view some grave doubts initially as to whether a bellows seal could be incorporated to function effectively into the A-type couplings, because sealing capacity is critically dependent upon the surface area available for sealing and the capacity of the "surelock" bellows seal to withstand pressure did not leave much room to reduce the sealing capacity of the seal/coupling combination and still be acceptable to customers and fall within the Australian standards.’

143 In April 1996 AMDEL reports were obtained for a ‘Minquip – Type A’ snap on hose end coupling. The reports do not indicate whether these couplings had a redesigned solid seal or a bellows seal. It might be assumed that one of the couplings did not have a bellows seal because leakage occurred at 540 P.S.I.

144 A further AMDEL report was obtained on 18 October 1996, less than two weeks before the letter of 29 October 1996. That report addressed a Minquip Small Safetyloc 1 inch male coupling. There was no visible leakage at 50 P.S.I., 600 P.S.I., but failure at 1500 P.S.I.

145 The letter of 29 October 1996 was the first time Minquip approached the respondent with a view to establishing a distributorship arrangement for Minquip products.

146 No document evidencing a reply from the respondent was tendered. In fact, there are no documents evidencing any further contact between the parties after October 1996 and before January 1997.

147 On 4 March 1997 Mr Byrne sent a fax to Mr Holt in Western Australia in the following terms:

‘As per our meeting January 1997 Mining Equipment "Minquip" P/L would like Alfagomma Aust. to distribute our products in Western Aust. & Northern Territory.

We have agreed that this arrangement be trialled [sic] for a 6 months period when we will review sales volumes being achieved as per our discussion.’

148 As already noted, Mr Holt was the Western Australian manager. The first contact between the appellant and respondent was the letter of 29 October 1996. There is no evidence, apart from Mr Wilson’s oral evidence, of any other contact after that time in 1996. This fax establishes that Mr Byrne and Mr Holt met in January 1997 and an agreement was reached either then or between then and 4 March 1997 that the respondent would distribute the appellant’s products in Western Australia and the Northern Territory.

149 It is highly unlikely that the respondent would have distributed any of the appellant’s products or taken any steps to distribute the appellant’s products before a distributorship agreement had been arrived at. The fact that the distributorship agreement was subject to a six months trial period also suggests that the parties were entering into a new commercial agreement.

150 It may be inferred that that was the only commercial arrangement between the parties at that time and the respondent had only been appointed to distribute the appellant’s products in Western Australia and the Northern Territory. It must be remembered that Mr Wilson’s responsibilities were restricted to New South Wales.

151 Importantly, on 27 March 1997, the appellant sent a fax to Mr Phil Noonan in which he referred to the ‘proposal’ to Mr Holt and offering to appoint the respondent as distributor for ‘national sales’. It is not clear from the fax where Mr Noonan was stationed but, clearly, he was not in Western Australia and he had national sales responsibilities. The communication suggests that until that time, with the possible exception of the respondent’s Western Australia office, the respondent had no commercial relationship with the appellant.

152 If that were so, it would be most unlikely that the respondent was showing the appellant’s products to its customers.

153 On 15 April 1997 the appellant applied for registration of the design.

154 Mr Byrne’s evidence was that after registration of the design he requested his foundry to make 200 special Type A couplings; 100 with a male thread and 100 with a hose end without a cavity for the seal.

155 His intention was to have the toroidal cavity machined into the blank couplings.

156 An invoice ‘For the special A Type Couplings that had been made without a seal groove machined [sic]’ and dated 5 May 1997 was tendered.

157 It would appear from subsequent invoices and documents that those blanks were delivered to the machine shop some time between 24 June 1997 and 13 August 1997.

158 That is the first evidence of any couplings which could have been altered to provide a toroidal cavity.

159 A purchase order dated 22 May 1997 in which the respondent placed an order with the appellant for Type A bellows seal couplings was tendered. Mr Byrne said, in his affidavit evidence, that the appellant was unable to fill that order. He said that the order was filled by Minquip supplying the respondent with standard Type A couplings on or about 16 June 1997.

160 That evidence would be consistent with the earlier evidence to which reference has been made which tended to suggest that the first blanks were not supplied to the appellant until some time after 24 June 1997.

161 On 4 August 1997 Mr Byrne wrote to ‘Jerry Wilson’ in the respondent’s New South Wales office advising:

‘You are aware I have two new couplings being trialled in mines, they are the Quickloc and Type "A" bellows seal. Quickloc is patented and Type "A" bellow has a registered design on it.’

162 On 7 August 1997 Mr Byrne wrote again to Mr ‘Jerry Wilson’:

‘Product display board plus new type coupling samples dispatched via "TOLL" Transport today, they have promised delivery Mon. 11/8/97. At the latest Tues.’

163 Mr Jerry Wilson was the respondent’s witness.

164 In August 1997 Mr Byrne was still referring to the Type A couplings with bellows seals as ‘new type coupling’. As will be seen, two months later the respondent was itself referring to these couplings as ‘new’.

165 On 28 August 1997 Mr Byrne wrote to the respondent stating, inter alia:

‘We never discussed this in detail, but the runout sale of the standard type A range can be engineered with all managers before the release of the new bellow seal range.’

166 That suggests that the Type A coupling with the toroidal cavity was released some time after August 1997.

167 On 18 September 1997 Mr Byrne wrote to ‘Jerry Wilson’ setting out a program ‘to gain acceptance of our product in the ... collieries serviced by N.E.H.’. The program included a visit to nine collieries between 29 September 1997 and 30 September 1997. The document spoke of providing samples of bellows couplings to parties.

168 On 9 October 1997 the respondent sent to Mr Byrne a product price list in which the respondent refers to prices for Type A couplings with solid seals and Type A couplings with ‘New easy connect bellow seals’. Importantly, the respondent states in the cover facsimile to Mr Byrne that it has offered a ‘run out deal of less sixty-three per cent on solid seal Type A’s’. This is consistent with a response to Mr Byrne’s statement, to which we have already referred, that ‘the run out sale of standard type A range can be engineered with all managers before the release of the new bellow seal range’.

169 That document also suggests that the release of the Type A couplings with the toroidal cavity occurred in late 1997.

170 On 28 October 1997 Mr Byrne wrote to Mr Holt in the following terms:

‘Below is a summary of my visit to W.A.

(1) Paraburdoo / Tom Price, Atkins manager Jim Green introduced Geoff and myself to relevant production personnel to whom we introduced the Bellow Couplings, all were impressed and agreed to evaluate samples, these samples have been delivered to Jim. John Holt / Ken Smith to follow up.
(2) Murchison Zinc – Proposal for bulk supply of hoses and fittings submitted to Dave Hak. John Holt to follow up.
(3) Perth visits to Atkins customers with Kevin – all liked the product and asked for part numbers to change their computers.

EXPO INQUIRIES

Kundama Gold Pty Ltd- Trevor Jones (Mining Engineer) wants samples of Type A (Bellows) for evaluation.

Dyno Noble Wesfarmers – Purchasing – Price on T151 Hose buys in 60 metre lengths.

Samples – Bellow Couplings – Cut away board Mick Quinn (Atkins) Kalgoorlie.

Byrnecut Engineering (name unknown) suggests we see Brian Hobby (purchasing) in regards to trailing T151 Hose and Fittings to A.S. 2554.

Kambalda Nickel Plant washdown area plant operator suggest we should talk to area supervisor in regards to chemical resistant hose supply and new Type A Coupling.

Gary ? – Henry Walker workshop supervisor taken catalogue, likes Bellows Coupling.

Victory Mining – Kambalda (Geoff Lewis)

- Now using Hardie Spicer not Pownall L-601

- K.M.W. to make contact

- Also uses Minsup

- Ashleigh (Fitter) Ph. 019 681 240

K.M.W. Contacts Terry Roy

(1) "National Mine Management" (Sid) Terry explained Australian Standards requirements to Sid, Roy told me next day Sid has said N.M.M. will use Minquip.
(2) Byrnecut - Terry / John Holt to follow up.
(3) W.M.C. - Terry / John Holt to follow up.
(4) Centaur - Mick - Bring presentation to site - 6 x 3" S/L seals for testing by Centaur (Minsup seals fail)
Terry K.M.W. to deliver.
(5) Barminco - Terry / John Holt to follow up.
(6) Samples of Bellow Type A Couplings, Catalogues, Display Board to K.M.W.
Do K.M.W. have room for a consigned Anfo Pressure Loader ?

John my view is if we continue to push the standards issue we will achieve excellent results. Can you let me know when and how you wish to approach the Darwin issue, it should be done fairly quickly. Many thanks for the hospitality given to me by all in W.A.’

171 That memorandum suggests that Mr Byrne travelled through Western Australia in October 1997 exhibiting the new bellow couplings. Again, that document is consistent with Mr Byrne’s evidence and tends to suggest that the bellow couplings had been recently released.

172 A facsimile from the respondent to Mr Byrne, dated 21 November 1997, speaks of ‘our final presentation requirements’ in relation to Type A coupling systems.

173 That presentation was to Power Coal Pty Ltd and, on 28 November 1997, the respondent sent to that company samples of Type A couplings with bellow seals.

174 As already noted, on 17 April 1998 the respondent prepared a facsimile for use by the applicant in relation to the promotion of these products. In that facsimile, the respondent wrote:

‘It has been several months since we introduced you to our new Type "A" Bellows Seal fitting range. Since our meeting there have been a number of developments take place which we felt needed to be addressed before we further progressed the presentation of our product to the market.’

175 That document also supports Mr Byrne’s evidence. It would be unlikely that the document would have mentioned ‘several months’ passing if this had occurred in 1996.

176 On 17 April 1998, as already observed, the applicant published the list of its existing customers and its projected sales. Pasminco was not stated to be an existing customer.

177 On 8 July 1998 the respondent distributed a circular to its branch managers and sent a copy of the circular to Mr Byrne, advising them that the applicant had agreed to rework all of the Type A standard seal couplings to incorporate the bellows seal at the cost of the applicant. It was recognised that the standard seal had become redundant after the bellows seal had been accepted by the market. This document also suggests that the Type A coupling with toroidal cavity went to the market in 1997/1998.

Conclusion

178 The contemporaneous documentary evidence available at trial suggests that the market was being approached in 1997/1998. Indeed, there was no documentary evidence tendered at trial which supported Mr Wilson’s evidence that the events occurred prior to the registration of the design.

179 At the very least, that evidence tended to cast doubt upon Mr Wilson’s recollection that the market was approached in 1996/1997.

180 The only evidence which supported the respondent’s case was that contained in Mr Byrne’s statutory declarations and Mr Evers’ affidavit. As already mentioned, there is some doubt as to the reliability of Mr Evers’ evidence having regard to the document which suggested that Pasminco was not an existing customer as at July 1998. But, in any event, for the reasons given by the primary judge, little weight could be put upon Mr Evers’ evidence.

181 The onus was on the respondent to establish prior use of the design before the priority date. Having regard to the evidence to which reference has been made, that onus was not discharged.

182 In those circumstances, the appeal must be allowed. Paragraphs 1 and 2 of the orders made by the primary judge on 23 June 2004 and the order made on 29 June 2004 should be set aside.

183 In lieu thereof, there should be an order dismissing the respondent’s cross-claim and an order that the respondent pay the appellant’s costs on the cross-claim.

184 The appellant’s claim should be remitted to the primary judge for further determination.

185 The respondent must pay the appellant’s costs of the appeal.

I certify that the preceding one hundred and eighty-five (185) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Court.

Associate:

Dated: 3 March 2005

Counsel for the Appellant:	D Yates QC with M Hoile
Solicitor for the Appellant:	Piper Alderman
Counsel for the Respondent:	I Jackman SC
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	15 November 2004
Date of Judgment:	3 March 2005