Digga Australia Pty Ltd v Norm Engineering Pty Ltd [2008] FCAFC 33 (12 March 2008)

COPYRIGHT – infringement – respondent manufactured and sold buckets for use with Bobcat in accordance with engineering drawings it prepared for the bucket components – the drawings were in computerised form – appellant "reverse engineered" from respondent’s bucket to enable it to manufacture and sell its buckets and, to that end, to prepare engineering drawings – whether appellant effected two-dimensional and three-dimensional reproductions of respondent’s drawings of the bucket components – respondent’s drawings reduced three-dimensional prototype of bucket to two-dimensional form - respondent’s drawings recorded electronically on computer by use of computer aided design (CAD) system –– primary Judge found respondent had copyright in drawings created in September 2003 – whether primary Judge was entitled to so find – unclear state of evidence as to when drawings came into existence – primary Judge’s finding that drawings came into existence as culmination of "process of "origination" over lengthy period culminating in September 2003 –whether that finding sustainable on the evidence – testimony of respondent’s managing director to effect that drawings made in early 2002 – whether respondent had proved that its bucket that was inspected and copied by appellant was manufactured in accordance with the drawings sued upon – if not, whether respondent had failed to prove unbroken chain of causation between its drawings in which copyright subsisted and appellant’s drawings and buckets – operation of s 77 within Div 8 of Pt III of the Copyright Act 1968 (Cth) prior to the Designs (Consequential Amendments) Act 2003 (Cth) – whether s 77(2) excepted from infringement appellant’s two-dimensional reproductions (drawings) that came into being as steps on the way to appellant’s three-dimensional reproductions of the buckets – whether appellant’s drawings were articles of manufacture – whether in the case of one component (Pivot Arms) there was a "design" and therefore a "corresponding design" following the Designs Amendment Act (1981) (Cth) - effect of changes to Div 8 made by the Designs (Consequential Amendments) Act 2003 (Cth) as from 17 June 2004.
Held: (1) on the evidence, the primary Judge was entitled to find that the requisite degree of originality was established for copyright to subsist; (2) on the evidence, the primary Judge was entitled to find the necessary causal chain was established; (3) prior to 17 June 2004 s 77(2) of the Copyright Act did not except from infringement drawings prepared in the course of the manufacture of articles, even though the manufacture of the articles was itself excepted from infringement; (4) after 17 June 2004, the new s 77A did effect such an exception; (5) both before and after 17 June 2004, the design of the pivot arm component fell within the definition of "corresponding design" and the manufacture of that component did not constitute a three-dimensional infringement of the respondent’s copyright in its drawings.

Copyright Act 1968 (Cth) ss 10(1) ("artistic work"), 31, 32, 36, 74, 77, 77A
Designs Act 1906 (Cth) ss 4 ("design"), 18
Designs Act 2003 (Cth) ss 5 ("design"), 7 ("visual feature")

Amalgamated Mining Services Pty Ltd v Warman International [1992] FCA 542; (1992) 111 ALR 269 discussed
Biotrading & Financing OY v Biohit Ltd [1996] FSR 393 cited
Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 cited
Blackie & Sons Ltd v The Lothian Book Publishing Co Pty Ltd [1921] HCA 27; (1921) 29 CLR 396 referred to
Burge v Swarbrick [2007] HCA 17; (2007) 234 ALR 204 referred to
C&H Engineering v F Klucznik & Son Ltd (1992) 26 IPR 133 cited
Compagnie Industrielle de Precontrainte et D’Equipment des Constructions SA v First Melbourne Securities Pty Ltd [1999] FCA 660; (1999) 44 IPR 512 discussed
Edwards Hot Water v SW Hart & Co Pty Ltd (1983) 49 ALR 605 cited
Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 65 IPR 44 cited
Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 95 ALR 275 cited
SW Hart & Co Pty Ltd v Edwards Hot Water Systems [1985] HCA 59; (1985) 159 CLR 466 cited
Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 discussed
Interlego AG v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348 cited
Interlego AG v Tyco Industries Inc [1988] UKPC 3; [1989] AC 217 cited
L A Gear Inc v Hi-Tec Sports Plc [1992] FSR 121 cited
L B (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 cited
Macmillan Publishers Ltd v Thomas Reed Publications Ltd [1993] FSR 455 cited
Muscat v Le (2003) 204 ALR 335 discussed
The Reject Shop Plc v Robert Manners [1995] FSR 870 discussed
Shacklady v Atkins (1994) 126 ALR 707 discussed
Swarbrick v Burge [2004] FCA 813; (2004) 208 ALR 19 cited
Tamawood Ltd v Henley Arch Pty Ltd [2004] FCAFC 78; (2004) 61 IPR 378 cited

Garnett K, Gillian D and Garbottle G, Copinger and Skone James on Copyright (15^th ed, Sweet & Maxwell, London, 2005)

DIGGA AUSTRALIA PTY LTD (ACN 010 443 875) v
NORM ENGINEERING PTY LTD (ACN 010 799 943)

QUD 175 OF 2007

LINDGREN, BENNETT AND LOGAN JJ
12 MARCH 2008
SYDNEY (HEARD IN BRISBANE)

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 175 OF 2007

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

BETWEEN:	DIGGA AUSTRALIA PTY LTD (ACN 010 443 875) Appellant
AND:	NORM ENGINEERING PTY LTD (ACN 010 799 943) Respondent

JUDGES:	LINDGREN, BENNETT AND LOGAN JJ
DATE OF ORDER:	12 MARCH 2008
WHERE MADE:	SYDNEY (HEARD IN BRISBANE)

1. The parties attempt to agree on the form of the orders to be made (including orders as to costs) to give effect to the Reasons for Judgment published today.

2. By 25 March 2008, the parties provide to the Associate to Lindgren J an agreed form of orders, or, if agreement has not by then been reached, the forms of orders for which they will respectively contend accompanied by written submissions in support.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 175 OF 2007

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

BETWEEN:	DIGGA AUSTRALIA PTY LTD (ACN 010 443 875) Appellant
AND:	NORM ENGINEERING PTY LTD (ACN 010 799 943) Respondent

JUDGES:	LINDGREN, BENNETT AND LOGAN JJ
DATE:	12 MARCH 2008
PLACE:	SYDNEY (HEARD IN BRISBANE)

1 The appellant (Digga) appeals from declarations of infringement of copyright and associated orders made in favour of the respondent (Norm) in Norm Engineering Pty Ltd v Digga Australia Pty Ltd (No 2) [2007] FCA 860; (2007) 73 IPR 75 (Norm v Digga (No 2)). The primary Judge had previously delivered the reasons for his decision: Norm Engineering Pty Ltd v Digga Australia Pty Ltd [2007] FCA 761; (2007) 162 FCR 1. Unless otherwise specified, my references to the primary Judge’s reasoning are references to the latter of the cases mentioned.

2 Digga was found to have infringed the copyright in engineering drawings (I will use the terms "drawings" and "plans" indiscriminately) for a bucket designed by Norm to be attached to a "Bobcat", which is a species of "skid steer equipment".

3 Whereas a standard bucket is "fixed", and allows the operator of the Bobcat only to push, load or scoop material using the leading edge of the bucket manipulated by the hydraulic arms of the skid steer apparatus, Norm manufactures a "4 in 1 bucket", the advantages of which were explained by his Honour (at [5]) as follows:

4 Norm claimed that the drawings for its 4 in 1 bucket were original artistic works in which it held the copyright and that Digga had reproduced them in a material form: see ss 31(1)(b)(i), 32, 36(1) and 10(1) ("artistic work") of the Copyright Act 1968 (Cth) (Copyright Act) discussed at [35] below. Norm alleged that Digga had reproduced the drawings in both two-dimensional and three-dimensional forms: see s 21(3) of the Copyright Act.

5 Norm’s case at trial, which his Honour accepted, was that Digga had "reverse engineered" a Norm 4 in 1 bucket with the consequence that Digga’s resulting drawings and bucket reproduced a substantial part of Norm’s drawings for its 4 in 1 bucket.

6 The first two grounds of appeal raise questions as to precisely in which, if any, of Norm’s drawings copyright subsisted, and whether there was the necessary causal connection between the particular drawings in which copyright was found to subsist and the acts said to constitute a "reproduction" of them.

7 The third and fourth grounds of appeal raise questions as to the relationship between the Copyright Act and the Designs Act 1906 (Cth) (Designs Act 1906) and its successor, the Designs Act 2003 (Cth) (Designs Act 2003). Associated with the repeal and replacement of the Designs Act 1906, amendments were made to Div 8 of Pt III of the Copyright Act (Division 8 or Div 8) by the Designs (Consequential Amendments) Act 2003 (Cth). Division 8 deals with the relationship between copyright and designs by providing, generally speaking, that copyright protection is not available where design protection is available. Again, generally speaking, the legislative intention is that where design protection is available, it is only the short term protection afforded upon registration of a design that is to be available. Digga argued that Div 8 applied in the present case with the result that Digga had not infringed copyright.

8 The Designs Act 2003 and the associated amendments to Div 8 commenced on 17 June 2004. It has been necessary to consider the interaction between the copyright and designs legislation in relation to Digga’s conduct both before and after that date.

9 In about 1984, a boilermaker and general engineer, Vlada Acimovic, took a standard form of excavating bucket, and, by his own efforts in a workshop, produced a modified bucket that could be opened and closed. The one bucket could perform four operations (it was thus a "4 in 1" bucket). The design of this bucket was not recorded in formal drawings, and no patent or design registration was sought. Mr Acimovic simply commenced manufacturing buckets from notes which he described as "rough or rudimentary". He said that the notes had long since been disposed of.

10 On 29 March 1988, Mr Acimovic caused Norm to be incorporated. In that year, he transferred his business to Norm. The company was named after his son-in-law, Norman Pesch, an engineer. Mr Pesch said that he started working for Norm in 1989 or 1990. Initially he was a workshop supervisor, but over time he assumed the role of general manager.

11 Mr Pesch was a full-time employee of Norm when he undertook the work referred to below, and that work was done "in pursuance of the terms of his...employment" by Norm: see s 35(6) of the Copyright Act.

12 It was after Norm was incorporated that Mr Acimovic, for the first time, caused drawings to be prepared for his 4 in 1 bucket (the First Plans). A draughtsman who was a full time employee of Norm did the necessary work. The First Plans were hand drawn.

14 From 1988 to late 2001 or early 2002 Norm manufactured a 4 in 1 bucket in accordance with the First Plans (the Old Norm Bucket).

15 In about 1993, Mr Pesch began converting the First Plans to electronic format using "AutoCAD software". The acronym "CAD" stands for "computer aided design". Mr Pesch said that he transferred the First Plans to Norm’s computer system between 1993 and 1997. He said that his aim was not to change the design recorded in the First Plans but just to update and improve Norm’s records by transferring the handwritten drawings to the computer system.

16 His Honour found (at [43]) that Mr Pesch’s act of transferring the First Plans onto Norm’s AutoCAD computer system "did not involve any act of original authorship".

17 Over time, customers of Norm began to use the 4 in 1 bucket with more powerful machines. This led Norm to take steps in 2001 to modify the design with a view to strengthening the product, in particular, by making the pivot system more resistant to breakage. In 2001, Mr Acimovic returned to Norm’s workshop to help Mr Pesch in this work. Again, Mr Acimovic worked without using drawings. After the design had been modified in this way, drawings that recorded the modified bucket were brought into existence. Other employees of Norm were also involved in this process. Mr Pesch managed the process.

18 In affidavit evidence, Mr Pesch identified the drawings that resulted as the 26 drawings for components numbered 5 to 24 and 185A to 185G in Norm’s List of Documents.

19 There was no evidence establishing the roles of the respective individuals who were involved in modifying the design, but the decisions to modify the Old Norm Bucket in various respects were made collaboratively by one or more of Mr Pesch, Mr Acimovic and unnamed employees of Norm.

20 The amended statement of claim complained of infringement of copyright in the following seven drawings which were endorsed with the following numbers, names and March 2002 dates:

Number	Name	Date
BC41–A003	Rear Bucket Assembly	04/03/02
BC41-A004	Front Bucket Assembly	04/03/02
BC41–D018	Outside Mounting Bracket	04/03/02
BC41–D016	Inside Mounting Bracket	04/03/02
BC41–D013	Side Cutter Bar	12/03/02
BC41–D014F	Floor Side Plate	12/03/02
BC41–D015	Pivot Arms	12/03/02

Mr Pesch explained that "BC" stood for Bobcat, "41" for 4 in 1, "A" for the size of the paper, and "D" for Norm’s medium size range of buckets (Norm also produced large and small buckets).

21 His Honour found that copyright existed in five of the seven drawings. The two exceptions were BC41-D014F (Floor Side Plate) and BC41–D013 (Side Cutter Bar). His Honour found that these two drawings had not, whereas the other five drawings had, resulted from sufficient work, labour, skill and effort for them to be characterised as original works when compared with the drawings for the Old Norm Bucket.

22 By early 2002 (Mr Pesch said as early as November 2001), Norm was manufacturing and selling the 4 in 1 bucket, the design of which had been modified to make the bucket fit for use with more powerful machines (the New Norm Bucket).

23 It will be necessary in the discussion of the first ground of appeal to consider more closely the evidence relating to the creation of Norm’s drawings for the New Norm Bucket. It is to be noted at this stage, however, that the direct evidence was unclear as to what drawings came into existence in association with the commencement of manufacture of the New Norm Bucket.

24 Copies of all seven drawings were before his Honour and they did indeed bear the dates in March 2002 specified above. On each plan under the drawing number there appeared an entry "cad file" followed by a repetition of the drawing number.

25 His Honour was faced with other evidence, however, including expert evidence relating to the AutoCAD system that suggested a much later date as the date of creation of the drawings. His Honour said (at [111]) that after weighing the evidence he was satisfied that it was more likely than not that the drawings in suit were brought into existence on or about 18 September 2003. Mr Pesch repeatedly said that they were created well before then, and in fact, that they were created in early 2002. At one point, however, he conceded that it may have been later, and would not rule out the possibility that it may have been as late as September 2003.

26 His Honour accepted (at [113]) that Mr Pesch was the author of the seven drawings in suit and that he had brought them into existence, applying his own labour, skill, effort and judgment, using electronic computer aided software.

27 In sum, his Honour’s finding was (at [130]) that through the work of its employee, Mr Pesch, Norm held copyright in the five drawings (see [21] above) as from the date of their being made on or about 18 September 2003.

28 In about late October or early November 2003, Digga began developing its own 4 in 1 bucket. His Honour found (at [176]) that for this purpose, employees of Digga examined one of the New Norm Buckets. They made drawings and measurements of it to determine precisely the cost in terms of time, labour and materials that would need to be deployed for Digga to make a similar bucket. They did so for the purpose of copying the New Norm Bucket as representing the most recent emanation of the most successful Norm 4 in 1 bucket in the market. His Honour found (at [177]) that Digga "consciously copied" the New Norm Bucket.

29 His Honour also found (at [180]) that, on the balance of probabilities, the New Norm Bucket that employees of Digga examined had been manufactured by Norm "after on or about 18 September 2003", that is to say, after the date which his Honour found to be the date of creation of the five drawings in which he held that copyright subsisted.

30 His Honour found (at [179]) that as from the middle to the end of November 2003, Digga made drawings (Digga Drawings) in order to enable it to manufacture its own 4 in 1 buckets (Digga Buckets). Digga made its first sale of a Digga Bucket on about 2 December 2003 .

31 The primary Judge addressed the question of infringement of the five Norm drawings, in which he held that copyright subsisted, by reference to both the Digga Drawings (a question of two-dimensional reproduction) and the Digga Buckets (a question of three-dimensional reproduction). His Honour concluded (at [213]) that, subject to the operation of Div 8, Digga infringed Norm’s copyright in each of the following Norm drawings by both two-dimensional reproduction (making the Digga Drawings) and three-dimensional reproduction (manufacturing the relevant components of the Digga Buckets):

and that Digga infringed Norm’s copyright in the following Norm drawing by two-dimensional reproduction alone:

32 The appeal concerns only the four drawings mentioned in the preceding paragraph (the Subject Drawings).

33 I mentioned at [7] above the amendments made to Div 8 by the Designs (Consequential Amendments) Act 2003 (Cth). One of those amendments was the introduction of a new s 77A into Div 8. His Honour held (at [241]) that prior to the introduction of s 77A, Div 8 did not except from infringement drawings that were prepared as steps along the way to the making of articles of manufacture, even though the making of the articles themselves attracted the benefit of the exception. Accordingly, at least down to 17 June 2004, Div 8 did not save the Digga Drawings from infringing Norm’s copyright in the Subject Drawings (see [244] of his Honour’s reasons). However, Div 8 did save from infringement the three-dimensional reproductions (the manufacture of the components of the Digga Buckets) except the Pivot Arms (see [248] of his Honour’s reasons). The Pivot Arm mechanism was regarded differently because his Honour held that Norm’s drawing for that mechanism did not involve a relevant "design" (see [230] of his Honour’s reasons), as that term was defined in the Designs Act 1906 prior to 17 June 2004, and that therefore there was no "corresponding design" for the purposes of s 77 of the Copyright Act. His Honour did not discuss separately the question of the Div 8 immunity in relation to the Pivot Arms in respect of the period on and after 17 June 2004, but appears to have considered that his conclusion in relation to the earlier period applied to the later period.

34 In the result, his Honour declared (in Norm v Digga (No 2)) that Digga had infringed Norm’s copyright in:

Because his Honour found that in the case of the three drawings referred to in (a), Digga had a complete defence on and from 17 June 2004 by reason of the new s 77A, he gave injunctive relief in respect of the drawing for the Pivot Arms alone.

35 Section 32(1) of the Copyright Act provides that copyright subsists in an original artistic work that is unpublished and of which the author is a qualified person when the work is made. This provision gives rise to no issues in the present case. The expression "artistic work" is defined in s 10(1) to mean, inter alia, a drawing. Copyright in relation to an artistic work is the exclusive right, inter alia, to reproduce the work: s 31(1)(b)(i). An artistic work is reproduced if a substantial part of it is reproduced: s 14(1). A work is taken to have been reproduced if it is converted into or from a digital or other electronic machine-readable form: s 21(1A). An artistic work is deemed to have been reproduced if, in the case of a work in two-dimensional form, a version of the work is reproduced in a three-dimensional form: s 21(3). Section 36 provides, relevantly, that a person infringes the copyright in an artistic work if the person, not being the owner of the copyright and without the licence of the owner of the copyright, does in Australia, any act comprised in the copyright.

36 Norm alleged that Digga had infringed its copyright in the Subject Drawings by reproducing them in two-dimensional form (the relevant Digga Drawings) and three-dimensional form (the relevant components of the Digga Buckets).

37 Digga’s contends that his Honour erred in holding that the Subject Drawings were original artistic works in which copyright subsisted and had subsisted since 18 September 2003. Digga submits that the only proper conclusion available on the evidence was that the Subject Drawings were not original: they were merely the result of a recording on 18 September 2003 of computerised drawings that had been made in or about March 2002.

38 This first ground of appeal turns largely on [117] and [130] of his Honour’s reasons which were as follows:

39 The trial proceeded on the basis that Norm was relying on copyright in the seven drawings (which included the Subject Drawings) bearing the numbers, titles and dates listed at [20] above, copyright in which his Honour found, notwithstanding the March 2002 dates on them, subsisted in Norm on and from 18 September 2003.

40 The primary Judge held that the Subject Drawings were the culmination in September 2003 of a "process of origination" which commenced with the making of the New Norm Bucket in late 2001or early 2002.

41 Mr Pesch stated in his affidavit that the changes in the design of the 4 in 1 bucket which took place then evolved initially from his and others’ working with the buckets themselves (as distinct from making drawings) for the purpose of improving the previous design.

42 In cross-examination Mr Pesch agreed that the design changes were made first and the drawings followed. His evidence was that Norm started manufacturing the New Norm Bucket in as early as November 2001; that the drawings were intended to formalise the design changes made to the product; and that after making the drawings in or about March 2002, he continued to make changes and amendments to them from time to time.

43 The amended statement of claim does not plead when Mr Pesch produced the drawings which included the Subject Drawings but states correctly that they bore the dates in March 2002 referred to at [20] above. The claim is not that Digga reproduced the identifiers set out at [20] above: it is only that Digga reproduced the drawings themselves. Accordingly, Norm’s pleaded claim is simply that Digga reproduced, relevantly, the Subject Drawings regardless of when they were made.

44 There are references in the evidence and submissions to the making by Norm of a "prototype" between November 2001 and March 2002. Usually, a "prototype" is a single trial or sample product made prior to the commencement of commercial manufacture of the product. The primary Judge found (at [62]) that Norm started making the New Norm Bucket in November 2001. Mr Pesch’s evidence was that drawings of the New Norm Bucket followed soon afterwards in the early months of 2002. The evidence did not establish that the sequence was the making of a single prototype followed by the making of drawings followed by routine manufacture of the New Norm Bucket. I understand his Honour to say (at [117] set out at [39] above) that drawings were necessary to enable such routine manufacture, but not for the preliminary manufacture that began in November 2001, the precise nature and extent of which was not revealed in the evidence. The word "prototype" should be understood to refer to that preliminary (pre-drawing) manufacturing of the New Norm Buckets between November 2001 and March 2002.

45 Apart from Mr Pesch’s evidence that he continued to make changes and amendments to the drawings of the New Norm Bucket from time to time, there was a gap in the evidence as to what, if anything, happened between March 2002 and September 2003. There was no evidence that the design of the New Norm Bucket as manufactured between those dates changed, and his Honour appears to have accepted (at [26]) that it did not.

46 Under the heading "The anomaly of the dates", his Honour stated (at [98] - [99]):

47 There was expert evidence before his Honour that addressed these anomalies, the nature of which I need not recount. His Honour accepted that evidence and on the basis of it and other matters to which he referred, expressed himself satisfied (at [111]) that it was "more likely than not that the new drawings were brought into existence on or about 18 September 2003". Similarly, his Honour found (at [114]) "that the date of creation of the drawings the subject of the proceeding [was] on or about 18 September 2003".

48 The effect of his Honour’s reasoning appears to be that the process of origination began with the work of Mr Acimovic and others with the bucket in the workshop that led to the manufacture of the prototype; that drawings were necessary for ongoing manufacturing; that some unidentified drawings probably came into existence "in or about March 2002" or "in March 2002"; and that the process of origination culminated with the creation of drawings, which included the Subject Drawings, in September 2003.

49 Digga challenges what it describes as his Honour’s "core proposition" expressed in [130] of his Honour’s reasons (set out at [38] above) that the plans that came into existence in September 2003 were original artistic works by reason of their having arisen out of a "process of origination" commencing with the development of the prototype in late 2001. Digga does not challenge the concept of a process of origination of engineering drawings or contend that workshop trial and error may not form part of it. Digga’s argument is that on the facts, the concept could not furnish originality to the drawings of 18 September 2003.

50 An artistic work must be original in order for copyright to subsist in that work: s 32(1) of the Copyright Act. Digga submits that the requirement of originality poses difficulty for Norm because:

• The most obvious candidate for a work which could be characterised as "original" was the prototype of the New Norm Bucket which Mr Acimovic and others developed in the workshop before March 2002, but that prototype was not relied upon by Norm as the subject matter of its copyright;

• The next possible candidate for a work that could be characterised as "original" was the "number of plans" that his Honour thought it was likely were made "in or about March 2002" to record the features of the prototype, so as to permit the ongoing manufacture of the New Norm Bucket, but Norm relied on particular identified drawings that his Honour found came into existence on 18 September 2003;

• The drawings on which Norm relied "were prepared, for no apparent reason and without any apparent modification, 18 months later in September 2003".

• His Honour accepted (at [43]) that Norm’s mere act of putting its First Plans into an AutoCAD format was not of itself sufficient to make those plans an "original" artistic work, and that the same must apply in September 2003;

• His Honour did not find, and the evidence did not establish, that there was any aspect of the expression in the plans of September 2003 (which included the Subject Drawings) that modified or developed the design of the prototype that must have been recorded in plans of March 2002;

• His Honour did not find that the "process ... resulting in the expression of a conception" was in any respect incomplete in March 2002;

• The immediate purpose of the development process between late 2001 and early 2002 was to produce a prototype which was to be the basis for (ongoing) manufacture and that that purpose was achieved by March 2002;

• It may be inferred that another purpose of the development process was to produce manufacturing plans, and that this was also achieved by March 2002;

• There was no finding of any change in the design of the New Norm Bucket between March 2002 and September 2003, or of any need for such a change and therefore for new plans after March 2002;

• The rather long period of 18 months between March 2002 and September 2003, and the absence of any explanation for the creation of plans in September 2003, confirms the absence of any nexus between the work done down to March 2002 and the creation of the plans (which included the Subject Drawings) in September 2003.

52 The following principles of law were, it appeared, not controversial on the appeal:

• The necessary skill and labour to confer originality for copyright purposes is not necessarily excluded where there is change from one medium to another, for example, a drawing of a three-dimensional object, such as a prototype: see L B (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 at 568-569; Interlego AG v Tyco Industries Inc [1988] UKPC 3; [1989] AC 217 (Interlego) at 263; Swarbrick v Burge [2004] FCA 813; (2004) 208 ALR 19 at [138] – [140]; Garnett K, Gillian D and Garbottle G, Copinger and Skone James on Copyright (15^th ed, Sweet & Maxwell, London, 2005) (Copinger) vol 1 at [3–135].

• The owner of copyright in an original artistic work does not, simply by mechanically reproducing it, create a further original artistic work attracting copyright protection: The Reject Shop Plc v Robert Manners [1995] FSR 870 (The Reject Shop). If the position were otherwise, the way would be open for the copyright owner to "re-start" the period of copyright protection, and, indeed, to do so many times: see Interlego at 255-256, 263, 268.

• Where a copyright owner makes a mere a mere mechanical reproduction of the copyright work, the copy will not itself be an original work attracting copyright protection, but it may be seen to enjoy vicariously the benefits of the copyright protection attached to the earlier work, although only for the duration of that copyright, and only, of course, if remedies are still available in respect of that copyright: Copinger vol 1 at [3-134]; and see Interlego at 268; Biotrading & Financing OY v Biohit Ltd [1996] FSR 393 at 395-396; Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 at 116-117.

• Whether successive revisions of an earlier original work will attract independent copyright protection depends on whether they have the requisite quality of originality over and above that of the earlier original work or earlier original revision: Interlego at 263; Interlego AG V Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348 at 378-379 per Gummow J; C&H Engineering v F Klucznik & Son Ltd (1992) 26 IPR 133 at 139.

• Where the author of a drawing makes preliminary drawings before producing the final version, the final version is not denied originality merely because it was preceded by the preliminary drawings: L A Gear Inc v Hi-Tec Sports Plc [1992] FSR 121 at 136; Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 at 116-117; Copinger vol 1 at [3-133]-[3-134].

53 Digga relies on The Reject Shop. In that case the respondent brought criminal proceedings against the appellant for dealing in tins, notebooks, photographic albums and other items that bore copies of designs created by the respondent in the form of handmade decorative tiles. In order to produce the design for the tiles, the respondent had produced a drawing, photocopied it and enlarged the photocopy by 10%. That "final image" was then glued onto a laminate and cut around with a saw. A base plate was then added to produce a template from which the tiles were manufactured.

54 Importantly, the alleged copyright works relied on in the summonses were the enlarged photocopies. It was conceded before the magistrate that copyright subsisted in the original drawings. The magistrate held that copyright also subsisted in the enlarged photocopies, and therefore found the offences proved.

55 The Divisional Court allowed an appeal. That Court rejected the respondent’s argument that the making of the original drawing should be seen as a link in one continuous chain of labour leading to the final image, the enlarged photocopy. Leggatt LJ, with whom Kay J agreed, characterised the step of making the enlarged photocopy not as a stage in the production of an artistic work, but as a stage in the manufacturing process. His Lordship stated (at 876):

56 Digga submits that so far as the evidence discloses, all that happened on 18 September 2003 was that the Subject Drawings were entered into the computer – a "wholly mechanical" step taken in relation to drawings that must have been already in existence.

57 The present case is not on all fours with The Reject Shop because in that case it was conceded that the original drawing, which was in evidence, was an original artistic work. In the present case the evidence does not permit Digga to point to particular earlier drawings that were simply transferred to the computer on 18 September 2003. Digga asks the Court to find, as the primary Judge did not, that drawings existed in March 2002 and that the Subject Drawings that came into existence in September 2003 bore no element of originality above such drawings of March 2002.

58 As already noted, the only evidence of development of the drawings of the New Norm Bucket between March 2002 and September 2003 was Mr Pesch’s testimony that after making drawings of the New Norm Bucket (he was speaking of March 2002) he continued to make changes and amendments to them from time to time. It follows from his Honour’s findings that it was very likely that drawings existed in March 2002 to enable manufacture and that there was no change in the New Norm Bucket as manufactured between March 2002 and September 2003, that Mr Pesch’s changes and amendments between March 2002 and September 2003 must, at least on an overall view of the New Norm Bucket, have been minor. It is impossible, however, to describe with confidence their effect on the drawing for any particular component. We know only that the changes and amendments did not generate any change in the New Norm Bucket as manufactured.

59 Digga relies on his Honour’s statement that the earlier transferring of the First Plans to Norm’s AutoCAD computer system "did not involve any act of original authorship" (at [43] referred to at [16] above). I accept that the mere act of entering drawings into a computer will not supply the originality required to make the electronic version original artistic works. It follows that his Honour was correct, with respect, to find that Mr Pesch’s conversion of the First Plans to electronic format using AutoCAD software did not make the computerised version of the First Plans original works. In terms of originality, entering existing drawings into a computer is akin to the photocopying in The Reject Shop. What happened in relation to the drawings of the New Norm Bucket, however, was quite different. There were no drawings outside the computer system that were transferred onto it. The very making of the drawings, both those that his Honour said it was likely existed in March 2002 and those that he found were created in September 2003, took place electronically. The evidence does not establish that either in March 2002 or September 2003, there was a mechanical act that brought into being computerised drawings ready made from elsewhere.

60 Digga contends, for the reasons outlined earlier, that any process of origination must have culminated in or about March 2002, when the New Norm Bucket began to be manufactured. In a sense, however, the procedure by which the drawings were made does not lend itself to a notion of "culmination", because there is always the possibility of further change. The making of drawings electronically is akin to the painting of a picture on a canvas over time. If an artist had virtually completed a painting in March 2002 then touched it up once or twice between then and September 2003, what is the principle of law that would deny to the September 2003 painting the character of an original artistic work? To express the question differently, what is the legal principle that would prevent the skill and labour down to March 2002 from "counting" towards establishing that the September 2003 work was original?

61 The answers to these questions might be straightforward if it was clearly shown that the painting as at March 2002 was a completed work. In that case, the touching up of an eyebrow in the next 18 months may not amount to so material a change as to bring a whole new work into being in September 2003. Digga’s submission seems to be that the Court should infer from the fact that routine manufacturing was taking place from March 2002, that any changes and amendments made by Mr Pesch between March 2002 and September 2003 could not have brought the Subject Drawings into existence as original artistic works in September 2003. I do not accept that submission.

62 The first ground of appeal must be resolved by reference to two possibilities with respect to the Subject Drawings, which, it must be remembered, are only four of a much larger number of drawings for the components of the New Norm Bucket. One possibility is that changes and amendments that Mr Pesch made between March 2002 and September 2003 were made to March 2002 precursors of the Subject Drawings. The other possibility is that changes and amendments that Mr Pesch made during that period were made not to March 2002 precursors of the Subject Drawings, but to other drawings of components of the New Norm Bucket.

63 According to the first possibility, it is not shown, in my opinion, that his Honour was not entitled to find that the Subject Drawings were created in September 2003 as the product of a process of origination that continued down to September 2003. The situation is akin to that described in Copinger vol 1 at [3-133] as a work "in the course of creation".

64 On the other hand, according to the second possibility there would be copyright in the Subject Drawings commencing from March 2002 rather than from September 2003. As stated in Copinger vol 1 at [3-134] "...either the later drawings will as a whole be original or, of not, they are evidence of what earlier, and original, drawings looked like". In the latter case, copyright continues to subsist in the earlier original drawing.

65 As noted earlier at [43] above, Norm did not plead a time of creation of the Subject Drawings. It gave the March 2002 dates that appeared on them only as identifiers. Therefore, the pleading does not stand in the way of the inevitable finding that, subject to the other grounds of appeal dealt with below, Digga infringed Norm’s copyright in the Subject Drawings, subsisting either from September 2003 or March 2002: see Macmillan Publishers Ltd v Thomas Reed Publications Ltd [1993] FSR 455 at 463-5.

66 In my view, the first ground of appeal does not succeed in impugning his Honour’s conclusion that copyright subsisted in the Subject Drawings.

67 Digga’s second ground of appeal is that on the evidence there was an absence of the necessary causal link between the Subject Drawings and the making of the Digga Drawings and the Digga Buckets. Infringement consisting of reproduction requires not only sufficient objective similarity, but also a causal connection between the two works: see SW Hart & Co Pty Ltd v Edwards Hot Water Systems [1985] HCA 59; (1985) 159 CLR 466 at 472 per Gibbs CJ (with whom Mason and Brennan JJ agreed); Tamawood Ltd v Henley Arch Pty Ltd [2004] FCAFC 78; (2004) 61 IPR 378 at [43] ff and authorities there referred to.

68 The primary Judge found (at [177]) that Digga consciously copied components of the New Norm Bucket when preparing the Digga Drawings, which subsequently found expression in three-dimensional form in the relevant components of the Digga Bucket. Digga’s submission is that there was no finding, and no evidence to support a finding, that the particular New Norm Bucket that was inspected by Digga’s employees "was caused to be produced through use of", relevantly, the Subject Drawings. Digga submits that "the Trial Judge did not conclude that the plans [which were only created on about 18 September 2003] had any role in the production of the New Norm Buckets and that [t]here was simply no evidence to this effect".

69 In response Norm relies on the finding made by his Honour (at [180] set out in full at [74] below) that the New Norm Bucket inspected by Digga’s employees was manufactured by Norm after on or about 18 September 2003. Norm submits that because AutoCAD plans were used as part of Norm’s manufacturing process, this finding can only mean that it was the drawings that his Honour found were made on or about 18 September 2003, which included the Subject Drawings, that were used to manufacture the particular New Norm Bucket that Digga’s employees inspected.

70 Norm further submits that if, as Digga argued in support of its first ground of appeal, the Subject Drawings were a September 2003 version of drawings of early 2002 that were used by Norm for the manufacture of all of its New Norm Buckets from that time, the necessary causal link must be satisfied.

71 Another submission made by Norm is that, in any event, his Honour was entitled to infer that the September 2003 plans were used to manufacture the New Norm Bucket that was inspected "in circumstances where there has been admitted conscious copying of an article based on a finding of reproduction". I understand this submission to be based on the proposition that "[i]t is not for the court to make the way of the taker of copyright matter easy": Blackie & Sons Ltd v The Lothian Book Publishing Co Pty Ltd [1921] HCA 27; (1921) 29 CLR 396 at 404 per Starke J. Whatever effect this proposition should be permitted to have on the question of whether the Digga Bucket was objectively similar to the New Norm Bucket, it is irrelevant to the question of a causal link between the Subject Drawings and the particular New Norm Bucket that was inspected.

72 Senior counsel for Digga referred to the evidence of Mr Pesch that establishes that:

• At Norm’s premises, the latest version of the computerised plans were stored "upstairs" in the administration or drafting office and hard copies of the plans were held "downstairs" in the workshop where manufacturing took place;

• The computerised plans were resorted to not as a matter of routine, but only in the case of items that were made occasionally. In those cases, a printout would be taken from the computer upstairs. For routine manufacture of standard items, however, the hard copy drawings held downstairs in the workshop were sufficient.

Based on this evidence, senior counsel for Digga framed Digga’s submission in the following way:

• His Honour found that plans were used in the process of manufacture of the New Norm Bucket, and so plans were used from March 2002;

• Those plans were not the same plans as the plans in suit, which were found not to have been brought into existence until September 2003;

• The New Norm Bucket did not change between March 2002 and September 2003, and so there would have been no need to obtain a printout of the new plans from the computer "upstairs".
Therefore, Digga submits, the September 2003 plans were never directly used in the process of manufacture of the buckets, and the necessary causal link was not established.

73 I agree that his Honour does not expressly address the question whether the particular New Norm Bucket that was inspected by Digga’s employees included three-dimensional reproductions of the Subject Drawings. However, while his Honour did not say expressly that that the relevant components of that particular New Norm Bucket were made in accordance with the Subject Drawings that were created on 18 September 2003, he was careful to recount (at [178] - [180]) the facts concerning the relationship between the New Norm Bucket that was inspected and the date 18 September 2003. Working backwards, his Honour said that Digga sold its first bucket on 2 December 2003 and that that 4 in 1 bucket must have been manufactured on 30 November, 1 December or possibly 2 December 2003. Then his Honour discussed the evidence as to the timing of Digga’s inspection of the New Norm Bucket. Various witnesses estimated the timing as "October or November 2003", "some months before Digga sold its 4 in 1 bucket" and "late 2003". His Honour then placed the preparation of the Digga Drawings as having occurred towards the "middle to the end of November 2003". His Honour thought it "very likely" that the particular New Norm Bucket was inspected in "late October or November 2003".

75 His Honour elsewhere found objective similarity between the Digga Bucket and the Digga Drawings on the one hand and the Subject Drawings on the other hand. There must have been at least some degree of similarity between the Subject Drawings and the New Norm Bucket that was inspected.

76 In my opinion, in the circumstances of the primary Judge’s finding that the Subject Drawings were created on or about 18 September 2003 and the pains to which his Honour went to identify the timing of the subsequent events, his Honour’s finding that the particular New Norm Bucket that was inspected was manufactured after on or about 18 September 2003 carried with it an implied finding that it was manufactured in accordance with the Subject Drawings he found were created on that date. The causal link between the Subject Drawings and the relevant components of the particular New Norm Bucket that was inspected that was implicitly found by his Honour is supportable.

77 In the alternative, if the Subject Drawings that his Honour found were created in September 2003 were not original because they were the same as those of March 2002, Digga’s second ground of appeal would still not succeed, because there would be a causal link between the relevant components of the particular New Norm Bucket that was inspected, and the Subject Drawings dated as of March 2002 (see the alternative reason I gave earlier for not supporting the first ground of appeal).

78 For the above reasons, in my view Digga’s second ground of appeal should not be upheld.

THIRD GROUND OF APPEAL: INTERMEDIATE DRAWINGS AND THE S 77(2) EXCEPTION TO INFRINGEMENT

79 The third ground of appeal concerns, first, the application of Div 8 in the period down to 17 June 2004 when the amendments to Div 8 commenced, and, second, its application in the period following the commencement of the amendments.

80 His Honour found that the components the subject of the Subject Drawings were "articles" within the meaning of "article" as used in ss 74 and 77 within Div 8 from 2 December 2003 (the date of Digga’s first sale of a Digga Bucket) to 17 June 2004 (the date on which the relevant provisions of the Designs Act 2003 and associated amendments to Div 8 commenced), and "products" within the meaning of "product" as used in ss 74, 77 and 77A within Div 8 on and from 17 June 2004 (at [233] and [247]).

81 It is to be noted that there has never been any registration of the design of the New Norm Bucket or of any component part of it, under the Designs Act 1906 or the Designs Act 2003.

82 Section 77 of the Copyright Act, as in force during the period down to 17 June 2004, provided:

84 The expression "corresponding design" in relation to an artistic work was defined in s 74 to mean a design that, when applied to an article, resulted in a reproduction of that work, but did not include a design consisting solely of features of two-dimensional pattern or ornament applicable to a surface of an article.

85 Section 4 of the Designs Act 1906 (as in force during the period down to 17 June 2004) defined "article" to mean any article of manufacture and as including a part of such an article if made separately. As mentioned at [80] above, his Honour found that the three-dimensional components, the subject of the Subject Drawings, were articles for the purposes of ss 74 and 77 of the Copyright Act.

86 "Design" was defined in s 4 of the Designs Act 1906 to mean features of shape, configuration, pattern or ornamentation applicable to an article, being features that, in the finished article, could be judged by the eye, but did not include a method or principle of construction. Section 18 of the Designs Act 1906 (set out at [128] below) provided that it was no obstacle to the registration or validity of a design that the design consisted of, or included, features of shape or configuration that served, or served only, a functional purpose.

87 The primary Judge addressed the question whether s 77(2) had the effect that Digga, by its making of the two-dimensional Digga Drawings and the three-dimensional Digga Buckets, had not infringed Norm’s copyright in the artistic works consisting of the September 2003 drawings.

88 His Honour summarised, at [217], the four integers of s 77(1) that were a pre-condition to the operation of s 77(2). His Honour appears to have accepted that these four integers were satisfied. In these circumstances, s 77(2) had scope for operation and, by reason of that provision, Digga would not infringe Norm’s copyright in the Subject Drawings if it were to apply the relevant, or any other, corresponding design to an article.

89 The primary Judge held that, by reason of s 77(2), the three-dimensional components of the Digga Buckets did not infringe the copyright in Norm’s drawings, except in the case of the Pivot Arms component. As will be seen below, Digga’s fourth ground of appeal challenges his Honour’s conclusion that s 77(2) did not apply to the Pivot Arms.

90 However, the primary Judge held (at [241]) that s 77(2) did not apply to the bringing into existence of a two-dimensional drawing. Section 77(2) operates in circumstances where a "corresponding design" is applied "to an article", and in substance his Honour held that the making of the Digga Drawings was not the application of a corresponding design to an article.

91 Referring to Amalgamated Mining Services Pty Ltd v Warman International Ltd [1992] FCA 542; (1992) 111 ALR 269, Shacklady v Atkins (1994) 126 ALR 707 and Compagnie Industrielle de Precontrainte et D’Equipment des Constructions SA v First Melbourne Securities Pty Ltd [1999] FCA 660; (1999) 44 IPR 512, his Honour held that because the statutory exception to infringement applied only in relation to the application of a corresponding design to an "article of manufacture" (being, it will be recalled, the definition given to an article by s 4 of the Designs Act 1906), it did not apply to the making of the Digga Drawings. His Honour added (at [237]):

92 Digga disputes that s 77(2) did not apply to the Digga Drawings, being two-dimensional drawings that were brought into being as a step on the way to manufacture. In its submissions, Digga addresses the three authorities mentioned by his Honour and refers to two further authorities, Muscat v Le (2003) 204 ALR 335 and Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 65 IPR 44. Digga submits that no court has yet determined the present question by reference to fundamental principle, and that the force of recent authorities is diminished by the fact that they have merely followed previous cases in which the issue was either conceded or not tested.

93 I will deal in chronological order with the five authorities mentioned above before turning to Digga’s submission as to the proper construction of s 77(2).

94 Like the present case, Warman concerned engineering drawings. It was a case of direct plan-to-plan copying, but by a company that was not itself a manufacturer.

95 Wilcox J had to consider Div 8 and the relevant provisions of the Designs Act 1906 in, inter alia, their form following the enactment of the Designs Amendment Act 1981 (Cth) which commenced on 1 April 1982 and the Copyright Amendment Act 1989 (Cth). His Honour held that s 77(2) of the Copyright Act did not produce the result that plan-to-plan copying did not infringe copyright. Section 77(2) provided that it was not an infringement of copyright in an artistic work to do anything that would have been "within the scope of the monopoly in the corresponding design" (that is, the monopoly obtainable under the Designs Act 1906 upon registration under that Act), if the corresponding design had been registered in respect of articles that had been made to the corresponding design. The expression "corresponding design" in Div 8 was defined in s 74(1) in relation to an artistic work to mean a design that, when applied to an article, resulted in a reproduction of that work. In s 4 of the Designs Act 1906, there were definitions of "article" (referring to an "article of manufacture"), "artistic work", "corresponding design" (defined to have the same meaning as in Div 8) and "design". Section 30(1) of the Designs Act 1906 defined infringement of the monopoly in a registered design. The various acts constituting infringement there referred to all related to an "article".

96 Wilcox J held (at 282) that although the word "article" was not defined in the Copyright Act, the word bore the same meaning in that Act as it bore in the Designs Act 1906. In the result, according to his Honour, plan-to-plan copying was not protected by s 77(2) of the Copyright Act and the notion of an "article of manufacture" did not include the sheet of paper whose only function was to carry the design. His Honour added (at 282):

97 Digga submits that the ratio of the decision in Warman is limited to a conclusion that the s 77(2) exception to infringement, in the period down to 17 June 2004, does not apply to plan-to-plan copying by a party that does not itself apply the design to articles of manufacture but makes a copy or copies of the drawings and supplies it or them to others who do so. Digga submits that s 77(2) applies to plans when made by persons like Digga who themselves manufacture the articles and produce plans as part of the process of doing so.

98 The distinction suggested by Digga did not arise before Wilcox J on the facts in Warman. It is difficult, however, to accommodate the distinction to his Honour’s reasoning. His Honour observed that s 20 of the Designs Act 1906, which provided for the making of applications to register designs, had the effect that registration was available in relation to articles not in relation to a design per se (at 282). The section required an application to register a design to be accompanied by representations of the article to which the design was applied. His Honour emphasised the article-related nature of the exclusive rights that registration of a design gave. The various acts constituting infringement referred to in s 30(1) of the Designs Act 1906 all related to an "article". For example, the primary provision was that a person infringed the monopoly in a registered design who, without the licence or authority of the owner of the design, applied it to any article in respect of which the design was registered.

99 As Wilcox J noted, at the time of the plan-to-plan copying, there was no application of a design to any article of manufacture.

100 I consider Wilcox J’s decision in Warman to be inconsistent with Digga’s present submission.

101 Mr Shacklady was the owner of certain models, drawings, plans and specifications for the "Adams 10" class yacht. He sought declaratory and injunctive relief against Messrs Atkins and Carroll, who, he alleged, were threatening to infringe his copyright in the models and drawings. It was common ground that the models, as well as the drawings, were artistic works for the purposes of the Copyright Act.

102 Mr Shacklady alleged that Messrs Atkins and Carroll were seeking to engage a builder to reproduce the Adams 10 design by a process of "flop moulding", which is accomplished by "using an existing vessel as the plug from which a female mould is constructed" (at 711).

103 It was s 77 in the form set out at [82] above that applied at the relevant time.

104 Davies J held (at 713-714) that the requirements of s 77(1) were satisfied and so the succeeding subsections of s 77 were enlivened. His Honour held (at 718) that:

• A corresponding design would have been registrable under the Designs Act 1906;

• A yacht was an "article" within s 77 of the Copyright Act and s 4 of the Designs Act 1906;
and that therefore s 77(2) operated with the result that the threatened reproduction (that is, the threatened construction of a yacht) would not infringe Mr Shacklady’s copyright.

105 Digga acknowledges that Shacklady was not a case of plan-to-plan copying, but submits that the creation (or intended creation) of the flop mould served a "similarly facilitative purpose" as the Digga Drawings. Digga suggests that Davies J’s omission to suggest that the intermediate step alone could be constrained is consistent with the view that steps that were incidental to the application of the corresponding design to the yacht were not an infringement of copyright by reason of s 77(2).

106 With respect, in my view this seeks to draw too much from his Honour’s omission to suggest that Mr Shacklady, the copyright owner, might have sought relief in respect of the flop mould and that, if he had done so, he would have succeeded. If anything is to be drawn from Shacklady relevant to the present issue, it is the sentence referred to in the next paragraph ([107] below), which suggests that s 77(2) applies only to except from infringement of copyright the three-dimensional reproduction itself.

Compagnie Industrielle de Precontrainte et D’Equipment des Constructions SA v First Melbourne Securities Pty Ltd [1999] FCA 660; (1999) 44 IPR 512 (CIPEC)

107 In CIPEC Merkel J noted that it was common ground that the s 77(2) defence applied only to three-dimensional reproductions of CIPEC’s copyright works, and not to two-dimensional reproductions of them. His Honour cited (at [82]) as supporting the position taken by the parties in this respect the judgment of Davies J in Shacklady at 30 IPR 393 (126 ALR 713). In Shacklady, at that reference, Davies J stated:

Digga submits that neither Shacklady nor CIPEC can be regarded as authority for that proposition. I agree that the proposition is not part of the ratio decidendi of either case, but the obiter dicta of Davies J and Merkel J are clear and deserve respect.

108 Muscat concerned the direct copying by the respondents of dressmaking patterns in which the applicant owned the copyright. From the copies, the respondents manufactured garments which they sold. The copyright owner conceded that s 77(2) provided the respondents with a defence in relation to the reproduction of the design by the actual manufacture of the garments. The dispute concerned the pattern-to-pattern copying.

109 Finkelstein J referred (at 350) to Warman, Shacklady and CIPEC. His Honour treated those authorities as establishing that the s 77(2) defence did not apply to plan-to-plan copying, and that it applied only to the application of a corresponding design to an article of manufacture.

110 The present case is not one of direct plan-to-plan copying but, in my view, this does not matter. It can be described as one of indirect plan-to-plan copying. What matters for present purposes is that the making of the Digga Drawings, like the making of the dressmaking patterns by the respondents in Muscat, was not an application of a corresponding design to an article of manufacture. Muscat is directly on point.

111 In this case an application to strike out a statement of claim was dismissed in reliance, inter alia, on Muscat.

112 Ultimately, the present issue turns on the meaning of the expression "by applying that, or any other, corresponding design to an article" in s 77(2) of the Copyright Act. I do not think that the making of a two-dimensional drawing fits within these words. The word "article" when used in Div 8 has the same meaning as it is given in s 4 of the Designs Act 1906 (that is, articles of manufacture), and neither the Digga Drawings nor that on which they were recorded, were articles of manufacture to which a "corresponding design" was applied.

113 Digga submits that s 77(2) is ambiguous, permitting either a narrow or a broad meaning. The narrow meaning, which Digga invites the Court to repudiate, is that the "application" of the corresponding design to an article looks only at what happens to the article at the time of its manufacture, whereas the broader construction, which Digga asks the Court to adopt, treats the "application" of the corresponding design as a process that can happen over time. Digga submits that the broader construction accommodates the practical realities of modern industrial manufacture, and that the narrow one limits the operation of s 77(2) to the work of artisans, who need no intermediate plans or drawings to apply a design to the final product.

114 While I appreciate the force of this argument from a policy viewpoint, ultimately I do not think that the statutory language is reasonably capable of bearing the broad construction suggested by Digga. Reproduction of a work in a material form may be two-dimensional or three-dimensional: see s 21(3) of the Copyright Act. In the circumstances contemplated, there are both two-dimensional and three-dimensional reproductions in a material form that will constitute separate infringements of the copyright unless excepted by s 77(2). Section 77(2) excepts only a particular form of reproduction. That form is the application of a corresponding design to an article of manufacture.

115 The broad construction urged upon the Court by Digga would apparently embrace all plans, drawings and models that constituted reproductions and that were made in the course of, or incidental to, the application of the corresponding design to an article of manufacture. To state the submission in this way emphasises the fact that distinct infringements of copyright may be involved, and Digga invites the Court to grant immunity to more than the one form that the Parliament saw fit to specify.

116 I do not accept Digga’s submission, and think that the primary Judge’s conclusion was correct.

117 It follows from what I have said above, that in my view the Parliament was correct in thinking that if a two-dimensional reproduction was to enjoy the exception to infringement provided by Div 8, that result could be achieved only by legislative amendment. That legislative amendment came with the insertion of s 77A into Div 8 as from 17 June 2004 by the Designs (Consequential Amendments) Act 2003 (Cth). Section 77A provides:

(a) the reproduction is derived from a three-dimensional product that embodies a corresponding design in relation to the artistic work; and

(i) making a product (the non-infringing product), if the making of the product did not, or would not, infringe the copyright in the artistic work because of the operation of this Division; or

(ii) selling or letting for hire the non-infringing product, or offering or exposing the non-infringing product for sale or hire.

(2) It is not an infringement of copyright in an artistic work to make a cast or mould embodying a corresponding design in relation to the artistic work, if:

(b) the making of the products would not infringe copyright because of the operation of this Division.

119 His Honour accepted (at [247]) that the new s 77(2) continued to except from infringement the three-dimensional components of the Digga Buckets (although, as was the position under the old s 77(2), the Pivot Arms component was not excepted from infringement), and (at [248]-[249]) that s 77A extended the immunity to the Digga Drawings of the Inside Mounting Bracket, the Outside Mounting Bracket and the Front Bucket Assembly. His Honour did not consider the effect of the new s 77(2) or s 77A on the Digga Drawing of the Pivot Arms, no doubt because of his view that Norm’s drawing of the Pivot Arms did not give rise to a "corresponding design". If his Honour erred in that respect (see the fourth ground of appeal discussed below), it seems clear that Digga’s drawing of the Pivot Arms would enjoy the immunity provided by the new s 77A because that drawing, like the other Digga Drawings, was made in the course of, and incidental to, the making of the Digga Bucket.

FOURTH GROUND OF APPEAL: FUNCTIONAL COMPONENTS AND THE S 77(2) EXCEPTION TO INFRINGEMENT

120 This ground of appeal relates only to the Pivot Arms. His Honour accepted that s 77(2) operated in respect of the other components the subject of the Subject Drawings, to permit Digga to manufacture the Digga Bucket although not to make drawings in the process of doing so (see [87]–[91] above).

121 According to the fourth ground of appeal, his Honour erred in finding (at [230]) that in respect of the Pivot Arms depicted in Norm’s drawing BC41-D015, there was no relevant "design" and therefore no relevant "corresponding design" for the purposes of s 77 of the Copyright Act, as in force from 2 December 2003 until 17 June 2004, and (at [244]) that therefore s 77(2) did not apply to permit Digga’s three-dimensional reproduction of Norm’s drawing of the Pivot Arms. Digga also contends that his Honour erred in finding (at [247]) that s 77(2), as in force from 17 June 2004, did not provide a defence to Digga in respect of its three-dimensional reproduction in the case of the Pivot Arms.

122 As will be recalled, s 77 uses the term corresponding design, which was defined in s 74 to mean a design that, when applied to an article, resulted in a reproduction of that work, but did not include a design consisting solely of features of two-dimensional pattern or ornament applicable to a surface of an article (see [84] above). At [86] above I set out the definition of "design" in s 4 of the Designs Act 1906 and s 18 of that Act which applied in this period.

123 The primary Judge addressed the concept of a "corresponding design" and noted (at [219]) that the term "design" was not defined in the Copyright Act but was defined in the Designs Act 1906. His Honour observed (at [221]) that in Edwards Hot Water v SW Hart & Co Pty Ltd (1983) 49 ALR 605, Franki J held (at 632) that before a design could be a "corresponding design" within Div 8, it must satisfy the definition of "design" within the Designs Act 1906. Similarly, the High Court noted in Burge v Swarbrick [2007] HCA 17; (2007) 234 ALR 204 (at [17]) that the term "design" in s 74 of the Copyright Act picked up the definition in the Designs Act 1906 (citing Muscat at 349). In similar vein, the primary Judge held (at [224]) that a design for the purposes of ss 74 and 77 of the Copyright Act is a design as defined by the Designs Act. In other words, there must be a design that fell within the definition of s 4 of the Designs Act 1906 before there could be a corresponding design, and before the s 77 exception can operate.

124 The primary Judge discussed the principles in relation to designs. At [225] and [226], his Honour stated:

125 The primary Judge’s reasoning on the issue as to whether there was a relevant "design" in respect of the Pivot Arms is found at [229] and [230]:

126 It is apparent from [231] of the primary Judge’s reasons that in [229] and [230], his Honour was addressing only the question of whether the drawings satisfied the first limb of the definition of design, that is, whether they exhibited "features of shape, configuration, pattern or ornamentation". In subsequent paragraphs, his Honour addressed the other limbs of the definition, namely, whether the features were applicable to an article (at [231] - [234]) and whether they were "capable of being judged in the finished article" (at [235]).

127 Digga submits that Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 (Hosokawa) and other authorities referred to by his Honour were concerned with the statutory concept of "design" as it existed prior to 1 April 1982 (in Hosokawa, the design was created in October 1972) and are therefore no longer relevant. At that time, the definition in s 4 was:

128 The Designs Amendment Act 1981 (Cth) replaced the definition of "design" in s 4 of the Designs Act 1906 and replaced s 18 of that Act. The definition of "design" became:

Importantly, prior to the amending act of 1981, there was no equivalent to the s 18 that was introduced by that Act and which provided:

129 The Explanatory Memorandum for the Designs Amendment Bill 1981 stated in its outline:

Similar words were used by the Hon D.S Thomson, Minister for Science and Technology, in the Second Reading Speech in the House of Representatives on the Designs Amendment Bill 1981 (Parl Debs, HR, vol 122, 7 April 1981, 1368) in which the Minister stated (at 1369):

Clause 10 of the Explanatory Memorandum for the Design Amendment Bill 1981 that related to the proposed s 18 was:

130 As mentioned at [123] above, a design must fall within the definition of "design" before it can be a "corresponding design". However, there is no requirement that, in order to be a "corresponding design", a design must satisfy the other requirements of registrability (Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 95 ALR 275 at 287). Norm submitted that s 18 is relevant only to the registrability of a design, and not the definition of "design", and that therefore s 18 has no relevance to the inquiry as to whether a design falls within the definition of "corresponding design". I disagree. Section 18 is an elaboration of the definition of "design" in s 4. It would be nonsense to consider the definition as insisting that features of shape or configuration not serve a functional purpose, and then to attempt to apply s 18 to the field of candidate designs for registration. Designs that s 18 would have saved would have been already eliminated from the field, and s 18 would be left with no work to do.

131 It follows that features of the finished article of the kind described in the definition of "design" in s 4 (as in force during the period down to 17 June 2004) will be features capable of falling within the definition of "design" unless they are "a method or principle of construction", and the fact that they include or consist of features of shape or configuration that serve only a functional purpose is not a disqualification. There was no suggestion that the features of shape of the Pivot Arms were a method or principle of construction (see his Honour’s comments at [242]).

132 With respect, I do not think his Honour gave effect to the legislative change made by the Designs Amendment Act 1981 (Cth). His finding that "the requirements of strength and configuration" did "overwhelm the features of shape" did not resolve the issue before him in the light of that amendment. His Honour accepted (at [230] set out above) that the Pivot Arms exhibited "features of shape". Indeed, the primary Judge had earlier identified those features of shape as being both "original" and "visually apparent" when considering whether the drawings of the Pivot Arms were original works in which copyright subsisted. His Honour stated (at [127]):

The amendments made as a result of the 1981 Act make it clear that the fact that those features of shape also served, and were chosen to assist, a functional purpose, did not prevent those features of shape from falling within the definition of "design".

133 Furthermore, on the basis that the test proposed by Gummow J in Hosokawa (referred to by the primary Judge at [225] set out at [124] above) remains relevant to the question of design (contrary to Digga’s submission noted at [127] above), there was "room for choice" in the shape and configuration of the Pivot Arms. In cross-examination, Mr Pesch agreed that the choice of the shape of the Pivot Arms depended on the designer’s choice. In its submissions at trial in support of the originality of Norm’s drawing of the Pivot Arms, Norm submitted:

134 With respect, I do not think it was open to the primary Judge to hold that there was no "design", and no "corresponding design" on the basis stated by his Honour at [229] and [230] set out at [125] above. There does not seem to be any reason why his Honour’s findings (at [231]–[235]) as to the remaining limbs of the definition of design in relation to the drawings for the other components would not apply to the Pivot Arms. Therefore, in relation to the period down to 17 June 2004, Digga’s appeal succeeds in relation to the three-dimensional reproduction of Norm’s drawing for the Pivot Arms.

Consideration of fourth ground of appeal for period on and from 17 June 2004

137 The definition of "corresponding design" in s 74 changed from that set out at [84] and [122] above to:

Importantly, this definition of "corresponding design" does not depend upon satisfaction of the definition of "design" under the Designs Act 2003.

(ii) if the product also has a pattern that repeats itself--more than one repeat of the pattern.

139 Just as the word "design", undefined in the Copyright Act, when used in the definition of "corresponding design" which existed in the Copyright Act prior to 17 June 2004, was construed conformably to the definition of the word in the Designs Act 1906 (see [123] above), so the expression "visual features" in the definition of "corresponding design" should be construed conformably to the definition of "visual feature" in s 7 of the Designs Act 2003.

140 In the Explanatory Memorandum for the Designs (Consequential Amendments) Bill 2002, it was stated (cl 32) that the new s 77(2) arose in part from the amendment of the definition of "corresponding design". The Explanatory Memorandum stated (cll 8–10) in relation to that change:

141 While I do not agree with Digga that "[t]he position is even clearer after the 17 June 2004 amendments", I accept its submission that what is required in the case of the Pivot Arms is simply an inquiry as to whether the visual features of shape or configuration in relation to the artistic work which is Norm’s Pivot Arms drawing BC41-D015, when embodied in, relevantly, the three-dimensional Pivot Arms, result in a reproduction of that artistic work.

142 On his Honour’s findings those features did so, even though he found that they were dictated largely by the utilitarian function that a Pivot Arm must perform.

143 Therefore, in relation to the period on and from 17 June 2004 also, Digga’s appeal succeeds in relation to three-dimensional reproduction within the Digga Bucket of Norm’s drawing of the Pivot Arms.

144 Digga has failed on the first and second grounds of appeal and has succeeded in part on the third and fourth grounds of appeal. The parties should have the opportunity to agree on the form of orders to be made, including orders as to costs. There should be directions accordingly.

I certify that the preceding one hundred and forty-four (144) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 175 OF 2007

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

BETWEEN:	DIGGA AUSTRALIA PTY LTD (ACN 010 443 875) Appellant
AND:	NORM ENGINEERING PTY LTD (ACN 010 799 943) Respondent

JUDGES:	LINDGREN, BENNETT AND LOGAN JJ
DATE:	12 MARCH 2008
PLACE:	SYDNEY (HEARD IN BRISBANE)

145 I agree with the conclusions reached by Lindgren J and the reasons for those conclusions. I also agree with the directions proposed by his Honour.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 175 OF 2007

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

BETWEEN:	DIGGA AUSTRALIA PTY LTD (ACN 010 443 875) Appellant
AND:	NORM ENGINEERING PTY LTD (ACN 010 799 943) Respondent

JUDGES:	LINDGREN, BENNETT AND LOGAN JJ
DATE:	12 MARCH 2008
PLACE:	SYDNEY (HEARD IN BRISBANE)

146 I have had the privilege of reading in draft the reasons for judgment intended to be published by Lindgren J. I agree with his Honour’s reasons and with the directions proposed by him.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Counsel for the Appellant:	Mr J McKenna SC and Mr T Bradley

Solicitor for the Appellant:	Hopgood Ganim Lawyers

Counsel for the Respondent:	Mr D Campbell SC and Mr M Johnston

Solicitor for the Respondent:	McInnes Wilson Lawyers

Date of Hearing:	5, 6 November 2007

Date of Judgment:	12 March 2008

Federal Court of Australia - Full Court

Digga Australia Pty Ltd v Norm Engineering Pty Ltd [2008] FCAFC 33 (12 March 2008)