Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor [2011] FMCA 519 (2 September 2011)

Last Updated: 6 September 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LADAKH PTY LTD v QUICK FASHION PTY LTD & ANOR

[2011] FMCA 519

COPYRIGHT – Infringement – whether drawing – whether original artistic work – whether copying carried out by the first respondent or an unknown third party.

Copyright Act 1968, ss.10, 32 Evidence Act 1995, ss.69, 136

Clarendon Homes (Aust) Pty Ltd & Anor v Henley Arch Pty Ltd & Ors (1999) 46 IPR 309; (1999) AIPC 91-519; [1999] FCA 1371 Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd [2008] FCAFC 197; (2008) 172 FCR 580 IceTV Pty Ltd & Anor v Nine Network Australia Pty Ltd [2009] HCA 14; (2009) 239 CLR 458 Interlego AG & Anor v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348 Muscat v Le & Ors [2003] FCA 1540; (2003) 60 IPR 276 Telstra Corporation Ltd & Anor v Phone Directories Company Pty Ltd & Ors (2010) 90 IPR 1

Applicant:

LADAKH PTY LTD (ACN 079 120 595)

First Respondent:

QUICK FASHION PTY LTD (ACN 126 154 890)

Second Respondent:

FENG JIANG

File number:

MLG 669 of 2010

Judgment of:

Riley FM

Hearing dates:

7, 8 & 9 March and 13 & 14 April 2011

Date of last submission:

13 May 2011

Delivered at:

Melbourne

Delivered on:

2 September 2011

REPRESENTATION

Counsel for the Applicant:

Mr Heerey

Solicitors for the Applicant:

Middletons

Counsel for the Respondents:

Ms Gatford

Solicitors for the Respondents:

Clayton Utz

ORDERS

(1) The application filed on 6 May 2010 is dismissed.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MLG 669 of 2010

LADAKH PTY LTD (ACN 079 120 595)

Applicant

And

QUICK FASHION PTY LTD (ACN 126 154 890)

First Respondent

FENG JIANG

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. This case concerns a claim of copyright infringement. The applicant, Ladakh Pty Ltd, was incorporated in 1997. It is a wholesaler and distributor of women’s clothing, which it sells to independent retailers in Australia, under the Ladakh brand name and various other brand names.
2. The first respondent, Quick Fashion Pty Ltd, was incorporated in 2007. It is also a wholesaler and distributor of women’s clothing, which it sells under the Sweetacacia brand name. The second respondent, Feng Jiang, is and was at all material times the sole director of Quick Fashion.
3. Ladakh claims that one of its employees produced an original artwork, being a butterfly drawing, which it sent to a manufacturer in China to print onto fabric. Ladakh engaged a clothing maker in China to manufacture women’s clothing from the fabric printed with the butterfly drawing. That clothing was imported into Australia.
4. The respondents question whether the butterfly drawing is a drawing within the meaning of the Copyright Act 1968. The respondents also say that the butterfly drawing is not an original artwork, but a slight variation of an original design by an English fashion designer, Matthew Williamson.
5. The respondents claim that their buyer found fabric with the butterfly drawing already printed on it in the fabric market in China. The respondents acknowledge that they arranged to have clothing made in China out of fabric with the butterfly drawing already printed on it and imported that clothing into Australia.
6. Ladakh says that it is a concoction that the respondents’ buyer found fabric in the market with the butterfly drawing already printed on it. Ladakh says that the respondents’ various witnesses who have given evidence supporting that version of events are all lying. Ladakh says that Quick Fashion, with the authority of Mr Jiang, copied Ladakh’s butterfly drawing in Australia, arranged for it to be printed onto fabric in China, arranged for the resulting fabric to be manufactured into clothing in China, and imported that clothing into Australia.
7. Ladakh says that it is entitled to damages for infringement of its copyright in the butterfly drawing:
   1. from Quick Fashion, for the infringement; and
   2. from Mr Jiang, for authorising the infringement.

Is the butterfly drawing a drawing within the Act?

8. Pursuant to s.32 of the Copyright Act 1968, copyright subsists in original artistic works, on certain conditions that are presently irrelevant. Pursuant to s.10 of the Act, an artistic work is defined to mean a painting, sculpture, drawing, engraving or photograph, and a drawing is defined to include a diagram, map, chart or plan. Ladakh argues that the butterfly drawing was a drawing within the meaning of the Act.
9. Ladakh relies on Muscat v Le & Ors [2003] FCA 1540; (2003) 60 IPR 276 at [37] to say that it is well established that a clothing design drawing can be an artistic work in which copyright subsists. However, as the respondents point out, Muscat v Le concerned drawings for the design of a garment and dress making patterns, rather than a design that was printed onto fabric from which any number of different styles of garment could be made.
10. Otherwise, the respondents submit that whether the butterfly drawing is a drawing within the meaning of the Act is a matter for Ladakh to prove. That is obviously correct.
11. The butterfly drawing is reproduced in exhibit TK-5 to the affidavit affirmed by Tarek Kourhani on 13 September 2010 (CB42). A copy of the butterfly drawing is annexure A to these reasons. To my mind, the butterfly drawing is clearly a drawing within the meaning of the Act. It has lines, shapes and colours and it is vaguely representational. In Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd [2008] FCAFC 197; (2008) 172 FCR 580 at [49], Lindgren, Goldberg and Bennett JJ said:
    • There can be a drawing in the form of a pattern, using shapes, colours and other elements to give pleasure, or simply (as here) to attract attention and to convey a visual impression – a certain “look and feel”.

The butterfly drawing clearly falls within that notion of a drawing.

Is the butterfly drawing an original artistic work?

12. The next question is whether the butterfly drawing was original or, as the respondents submit, copied from a similar drawing by Matthew Williamson. Photographs of two dresses made from fabric with the Matthew Williamson drawing are reproduced in exhibit JAF-7 to the affidavit affirmed by Jonathan Feder on 18 February 2010 (CB1697 and 1700). Copies of the photographs of each of the dresses with the Matthew Williamson drawing in CB1697 and CB1700 are annexures B.1 and B.2 to these reasons. Unfortunately, the photographs do not show the fabric drawing entirely clearly, and the dresses also have a lower panel made from a fabric with a completely different drawing printed on it. However, there are obvious similarities between the parts of the Matthew Williamson dresses that are made from fabric with his butterfly drawing and Ladakh’s butterfly drawing.
13. Ladakh argued that the obvious similarities between its butterfly drawing and the Matthew Williamson butterfly drawing did not prevent Ladakh’s butterfly drawing having the required originality. Ladakh relied particularly on Interlego AG & Anor v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348. In that case, Interlego did not have copyright in a drawing for a piece of Lego called Drawing No 5 because the drawing preceded the commencement of the Act. Croner submitted that Interlego did not have copyright in Drawing No 8, which post dated the Act, and was also a drawing for a piece of Lego, because it was too similar to Drawing No 5.
14. Gummow J, in the Full Federal Court, with whom Black CJ and Lockhart J agreed, said at 378 – 380:

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

(a) The flow rib which ran longitudinally along the inside of the brick in Drawing No. 5 was removed. This required changes to three of the perspectives in Drawing No. 8.
(b) In Drawing No. 5, the edges of the tube endings were rounded on both the inside and the outside. In Drawing No. 8, the edges of the tube endings are rounded only on the inside.
(c) The thickness of the upper wall is visibly less in Drawing No. 8 than as shown in Drawing No. 5.
(d) The corners of the brick are radiused in Drawing No. 8.
(e) The knob radius in Drawing No. 8 is increased.

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

The appellants relied on a number of cases which considered copyright in artistic works. Most of these principles were not disputed by the respondent. Though recognising that a slavish copy of an earlier work will not enjoy copyright (Ladbroke (Football) Limited v William Hill (Football) Limited [1964] 1 All ER 465 at 469) and that originality must pertain not to ideas but to their expression (University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 608), the appellants contended that drawings which derive from earlier drawings can still be seen as distinct original artistic works, each attracting its own copyright. This proposition was supported by reference to L B (Plastics) Ltd v Swish Products Ltd [1979] RPC 565 where Whitford J said (at 569):

“The draughtsmen called on both sides made it quite plain that even where there has been a previous drawing or some sketches have been made which are in part redrawn, the making of any drawing of the kind I have to consider is a skilled business involving hours of labour, although the end result may seem relatively simple”.

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

“I should be slow to exclude drawings from copyright on the mere score of simplicity ... I accept that some of [the drawings] are indeed simple. They include a rivet, a screw, a stud, a bolt, a metal bar, a length of wire with a thread cut at one end, a length of cable with nipples at each end, a block of leather, a washer and a collar. They are all carefully drawn to scale, with precise dimensions, and I cannot extract from the statute any indication that these drawings should not be able to quality for copyright”.

See also Solar Thompson Engineering Co Ltd v Barton [1977] PC 537 at 558.

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

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

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

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

“8. In the case of an alteration to an existing element drawing by the removal of a feature of the element, the draftsman must be able to appreciate the relevant lines, marks and symbols in the existing drawing which depict that feature so that he knows which lines, marks and symbols to remove . . .
9. A change to an existing element drawing may not involve an alteration to a large percentage of the existing features of the drawing but may nevertheless require an accurate redrawing of all of those features which are unchanged in order to add the altered parts. An accurate re-drawing of unchanged features of an element drawing requires skill, application and time. Drawing features of an existing element in a different scale and in some cases, in several different scales, also involves skill, application and time”.
Finally, the only evidence before the learned primary judge on visual difference was that of Professor Haskell who said that the changes made the drawings "visually distinctive". Professor Haskell was not cross-examined.
The learned primary judge erred insofar as he held that the differences between Drawing No. 5 and Drawing No. 8 were not sufficiently significant to give rise to fresh copyright. Since there was copyright in Drawing No. 8, then (as explained above) it should be held that copyright subsisted in all the post-1969 drawings.

15. The respondents argue that Interlego v Croner must be treated with considerable caution, as the test of originality has been altered by the High Court in IceTV Pty Ltd & Anor v Nine Network Australia Pty Ltd [2009] HCA 14; (2009) 239 CLR 458 and the new test had been applied by the Full Federal Court in Telstra Corporation Ltd & Anor v Phone Directories Company Pty Ltd & Ors (2010) 90 IPR 1. In particular, the respondents noted that Keane CJ said in Telstra v Phone at [82]:
    • The dicta in IceTV shift the focus of inquiry away from a concern with the production of the interests of a party who has contributed labour and expense to the production of work, to the “particular form of expression” which is said to constitute an original literary work, and to the requirement of the Act “that the work originates with an author or joint authors from some independent intellectual effort”.
16. However, as Ladakh points out, in IceTV at [33], French CJ, Crennan and Kiefel JJ cited Interlego v Croner as authority for the proposition that:
    • ... originality means that the creation (ie the production) of the work required some independent intellectual effort, but neither literary merit nor novelty or inventiveness as required in patent law.
17. On these authorities, the test of originality requires “some independent intellectual effort”. However, IceTV and Telstra v Phone both concerned the existence of copyright in literary works whereas Interlego v Croner concerned drawings, as does the present case. As a result, the reference in IceTV to intellectual effort presumably does not necessarily apply. It seems to me that, instead of some independent intellectual effort, some independent creative or technical or intellectual effort would be sufficient for a drawing to be original.
18. In the present case, Mr Kourhani said in his affidavit affirmed on 13 September 2010 that, from May 2008 to March 2009, he was a design room assistant employed by Ladakh. He now works as a designer at another fashion label. He said that in June 2009 he began the work for his butterfly drawing by searching Google Images to find a photograph on the internet of a butterfly. He said that he found the photograph that is exhibit TK-3 to his affidavit affirmed on 13 September 2010 (CB30). It is annexure C to these reasons.
19. Mr Kourhani said he then used Photoshop to extract the image of the butterfly from the photograph and to make the white whiter and the black blacker. Mr Kourhani said that he then exported the picture he had made of the butterfly to a computer program called Adobe Illustrator as a live drawing. Mr Kourhani said that he then manipulated the image by creating different sized butterflies, moving the butterfly around and adding various colours to the butterfly. He said he had a number of drafts. One of them was chosen to be printed onto fabric for eventual use in garments made for Ladakh. Mr Kourhani said that the first draft of the butterfly drawing took him five or six hours during the course of one day to complete.
20. Mr Kourhani said in a second affidavit affirmed on 7 March 2011 that he knew Matthew Williamson was an English high end fashion designer. Mr Kourhani said that, when he created Ladakh’s butterfly design, he was not aware of Matthew Williamson’s fabric prints that are shown in annexures B.1 and B.2 to these reasons, and he did not refer to them or copy them. Matthew Williamson’s butterfly print was publicised in the fashion industry in 2007.
21. In cross examination, Mr Kourhani said that he manipulated the butterfly image to turn it into a flower. He said he did one version in a blue colourway and one in a pinky orange colourway. Mr Kourhani said that the pinky orange colourway was the one that was eventually made into garments. He said that he knew of Matthew Williamson but was not aware of his butterfly drawing when he designed his own.
22. Mr Kourhani said there were many differences between the two butterfly drawings. He said that Matthew Williamson’s was much larger in scale, it had watercolour behind it, it had a purple base cloth and its butterflies did not have bodies, just wings. Mr Kourhani agreed that in both drawings, the butterfly wings had been arranged in a circle. He agreed that in Matthew Williamson’s drawing, the wings remained white and the colour was around them, whereas in Mr Kourhani’s drawing, the colour was in the wings and the background was white.
23. Patrick Snelling affirmed an affidavit on 21 February 2011 which was filed on behalf of Ladakh. Mr Snelling is the Program Director of Textile Design in the School of Fashion and Textiles at RMIT University. He was asked to identify the similarities and differences between the Ladakh butterfly drawing and the Matthew Williamson butterfly drawing, based on various photographs of it.
24. One of those photographs was contained in exhibit JAF-9 to the affidavit of Jonathan Feder affirmed on 18 February 2011. It is annexure D to these reasons. Mr Snelling said that he thought that the print shown in annexure D was the same as the print shown in annexures B.1 and B.2, except that it has a different colour palette and it is hard to determine the scale of the repeat. In my view, the print shown in annexure D has a completely different look to the butterfly print in the Matthew Williamson dresses shown in annexures B.1 and B.2 and the Ladakh butterfly print. That is largely because annexure D is coloured all over, and the dresses shown in annexures B1. and B.2 and the Ladakh print are substantially white. Annexure D does not seem to me to be a very helpful comparator.
25. Mr Snelling also expressed an opinion about the similarities and differences between the Ladakh butterfly print and the Matthew Williamson butterfly print as shown in annexures A and B.1 and B.2. (Annexures B.1 and B.2 consist of the photographs Mr Snelling describes as pages 28 and 31.) Mr Snelling said:
    • I have examined the pictures of the Williamson fabric depicted in the photographs which are pages 25 to 32 of exhibit JAF-7. The photographs are of a better resolution than the photographs referred to above (an in (sic) particular the photographs on pages 28 and 31 are the clearest), and therefore I am able to identify some aspects of the key motifs and colours used and I comment as follows:
      • (a) the similarities between the Ladakh Print and the Williamson Print are as follows:
        • (i) both prints are printed onto white based cloth and adopt a background motif of a graphic black all over pattern; and
        • (ii) a section near the hip of the Williamson Print in page 31 of JAF-7 is a representation of an overlay of several butterfly wings which has some similarities to the background motif of the Ladakh Print; and
      • (b) the differences between the Ladakh Print and the Williamson Print are as follows:
        • (i) on pages 25, 26, 28, 30 and 31 of JAF-7 the bottom half of the Williamson Print is completely different to the Ladakh Print;
        • (ii) the pattern in the background motif in the Williamson Print is completely different to the Ladakh Print;
        • (iii) the pattern in the coloured motif in the Williamson Print is completely different to the coloured motif in the Williamson Print;
        • (iv) the colours adopted in the Williamson Print and the Ladakh Print are substantially different;
          • (v) the repeat pattern is larger in scale on the Williamson Print than on the Ladakh Print;
        • (vi) the colours in the Ladakh Print are much more vibrant and stronger; and
      • (c) the quality of the resolution, however, still does not enable me to identify what the key motifs within the black and white pattern or the key coloured motif are. Accordingly, I cannot identify whether there are any other similarities or differences between the key motifs or colour palettes in the patterns in the Ladakh Print and the Williamson Print; and
      • (d) the image on page 32 is no better than the previous images I have referred to above and I cannot make any additional comments based on that image.
26. Unfortunately, I do not find this evidence very helpful. I do not know what Mr Snelling means by “some similarities”, “completely different” and “substantially different”. Accordingly, I will compare annexure A and the fabric shown in annexures B.1 and B.2 myself.
27. To my eye, a comparison of annexure A and annexures B.1 and B.2 reveals two strikingly similar drawings (leaving aside the parts of the Matthew Williamson dresses that are not made out of fabric bearing a butterfly drawing.) Both clearly contain images of butterfly wings that are arranged in a circular pattern to make them look something like a flower, and both have other butterfly wings that appear to be arranged more randomly in a background behind the circles. In both drawings, the outline of the butterfly wings is black and each wing has patterns on it that are also outlined in black. In both cases, some of the wings are pink or purple, and others are white, or almost white.
28. The differences between the two drawings, that I can detect, are that the Matthew Williamson drawing seems to be larger in scale and the wings seem to have been drawn more neatly than in the Ladakh design. The Ladakh design has a bit of yellow in the wings whereas the Matthew Williamson drawing does not. The Ladakh butterflies have bodies whereas the Matthew Williamson butterflies do not. In the Ladakh drawing, the wings in the circular arrangement are colourful, and the background wings are white, whereas in the Matthew Williamson drawing, the wings in the background are colourful and the wings in the circular arrangement are white, or almost white. In the Ladakh drawing, the white is really white, whereas in the Matthew Williamson drawing, the white has a mauve tinge.
29. The Ladakh butterfly design is definitely not a copy of the Matthew Williamson butterfly design. However, the similarities are so great, and the design itself is so unusual, that it is impossible to believe that the Ladakh butterfly design was not strongly influenced, whether consciously or unconsciously, by the Matthew Williamson butterfly drawing.
30. However, applying the reasoning in Interlego v Croner and IceTV, I consider that the Ladakh butterfly drawing is an original artistic work within the meaning of the Copyright Act 1968. The Ladakh butterfly drawing took five or six hours to create. More importantly, its creation required some independent creative or technical and possibly intellectual effort. Although it appears to have been based on the Matthew Williamson butterfly drawing, it was not a copy of it.

Did the respondents copy Ladakh’s butterfly drawing?

31. It is obvious that the butterfly print on the fabric used by Quick Fashion in its garment contained in exhibit JK-23 to the affidavit sworn by Jane Kidston on 8 November 2010 is a copy of the butterfly print on the fabric used by Ladakh in its garment contained in exhibit JK-13 to the affidavit sworn by Jane Kidston on 8 November 2010. The fact that Quick Fashion’s version is a copy of Ladakh’s is confirmed by the inclusion in Quick Fashion’s fabric of what was described at the hearing as a glitch in the design, consisting of a stray pink line in some of the circular arrangements of butterfly wings. The only differences between the two fabrics are that Quick Fashion’s version has a smaller pattern and brighter colours than Ladakh’s version.
32. The fundamental question is who made the copy. Ladakh argues that Quick Fashion did. The respondents argue that someone unknown made the copy, and Quick Fashion’s garment maker in China simply bought the fabric ready made in the Chinese fabric market and used the ready made fabric to make garments. Ladakh argues that the various witnesses relied on by the respondents to support their case have concocted a litany of lies.

Ladakh’s evidence

33. Ladakh’s evidence relating to copying is as follows.

a. Mr Kourhani’s evidence

34. Mr Kourhani said in his affidavit affirmed on 13 September 2010 that he created the artwork for Ladakh’s butterfly drawing in June 2009 on a computer. He said that he made various drafts which were exhibited to his affidavit. They included a bluish colourway (CB34) and a reddish colourway (CB36). He said that Ladakh’s production team then sent the artwork to a manufacturer in China to be printed on a fabric strike-off. A strike-off is a small sample of material with the relevant print on it. In this case, the strike-off was in the red colourway only (CB33). The strike-off was sent back to Mr Kourhani, he approved it and that was the end of his involvement with the artwork
35. In cross examination, Mr Kourhani said that “a production girl” showed him the strike-off. He said that the artwork was sent to the manufacturer in China in the form of an electronic file, being a PDF or a JPEG. He said that he did not get the electronic file back, “because ... our company owns the factory, so ... there’s no use ... getting a CD back from them.”
36. Mr Kourhani was asked whether he saw a strike-off of the butterfly drawing in the blue colourway. He said definitely not. He was asked whether Ladakh might have sent it to China. He said they did not. He said he sent the pinky orange (that is, red) colourway to China and he did not send the blue colourway to China.
37. Mr Kourhani said that, when he left his employment at Ladakh, he kept a copy of the artwork as an electronic file in his portfolio on his computer. He said it was his artwork.

b. Ms Ling’s evidence

38. Zi Jian Ling affirmed an affidavit on 15 November 2010. She said that she is a director of Ladakh. She said her main role is to manage and oversee Ladakh’s manufacturing operations in China. She said that, since 2000, Ladakh had owned and operated its own factory in Shanghai called Shanghai Yixin Fashi Ltd China. Ms Ling said that, at about the end of July 2009, Yixin Fashi received the artwork for Ladakh’s butterfly drawing as an electronic file on a compact disc. She said the compact disc was delivered to Yixin Fashi by DHL International Parcel Post.
39. Ms Ling said in her affidavit that Ladakh had used Zhejiang Yatai Printing Co Ltd for a number of years to manufacture its fabric. Yatai Printing’s factory is in Shaoxing, which is about 120 kilometres from Shanghai. Ms Ling said, when Yixin Fashi received the compact disc with the butterfly drawing, Yixin Fashi sent it directly to Yatai Printing to manufacture the fabric with the butterfly drawing printed onto it.
40. Ms Ling said that, when Yatai Printing makes fabric for Yixin Fashi, Yatai Printing always rolls the fabric so that the print is on the inside, stitches the roll of fabric in a cotton or calico bag, and delivers the fabric directly to Yixin Fashi. Ms Ling said that Ladakh did not have any garments made from the butterfly fabric that were not made in Yixin Fashi’s factory. Ms Ling said that she was not aware of any means by which a third party could have obtained the butterfly fabric or the artwork for it before Ladakh’s garments were released for sale in Australia.
41. Ms Ling affirmed a second affidavit on 8 March 2011, shortly prior to giving her oral evidence. In that affidavit, she said that Yixin Fashi was incorporated to make clothes for Ladakh and does not make garments for anyone except Ladakh. Ms Ling also said that, contrary to her first affidavit, Ladakh’s butterfly print dress and skirt were not made entirely in Yixin Fashi’s factory. She said the cutting and finishing were done in Yixin Fashi’s factory, but the sewing was done by a subcontractor by the name of Xinyu.
42. Ms Ling referred to exhibit JK-15 to the affidavit of Jane Kidston sworn on 8 November 2010. That exhibit contains some untranslated documents in Chinese. Ms Ling said that the first page of exhibit JK-15 (CB980) is an invoice that does not relate in anyway to Ladakh’s butterfly print fabric. Ms Ling said the second page of exhibit JK-15 (CB981) is a packing list showing that Yatai Printing manufactured 2,081 metres of the butterfly print fabric in 22 rolls of different lengths and charged Ladakh CNY12 per metre and CNY24,972 in total. Ms Ling said that the third page of exhibit JK-15 (CB982) is a telegraphic transfer dated 15 October 2009 which shows that Yixin paid CNY24,972 to Shaoxing City Afa Textile Co Ltd (“Afa Textiles”) by telegraphic transfer. Ms Ling said Yixin Fashi always paid Afa Textiles for fabric printed by Yatai Printing.
43. In cross examination, Ms Ling, contrary to her first affidavit, said that Yixin Fashi was not actually owned by Ladakh. Rather, Ms Ling said that Yixin Fashi is owned by her mother and brother and managed by Ms Ling herself. She said that Yixin Fashi had more than 100 full time employees and some subcontractors.
44. Ms Ling said that she personally did not receive the compact disc with the butterfly drawing on it. She said it was actually received by Ming Xiao Jiang, who is Yixin Fashi’s fabric manufacturing manager. Ms Ling said that she had asked him about it and he had told her that he remembered receiving the compact disc. Ms Ling said she did not ask Ming Xiao Jiang if he still had the compact disc, or if he made a copy of the compact disc before sending the original to Yatai Printing.
45. Ms Ling said that Ming Xiao Jiang sent the compact disc to Kon Hu Zhi Wei, who is the sales manager at Yatai Printing. Ms Ling said the invoice came from Afa Textiles, which is a company related to Yatai Printing, but Yixin Fashi paid Yatai Printing. Ms Ling said that she did not know whether Afa Textiles makes the type of fabric in issue in the present case.
46. Ms Ling said that she did not see the strike-off of the butterfly print. She said that she was told that it was sent to a person called Qin at Ladakh in Sydney. Ms Ling said Qin is a Chinese speaking production coordinator. Ms Ling confirmed that Ming Xiao Jiang and Qin both still work for Yixin Fashi and Ladakh respectively and both were available to give evidence. However, they did not do so.
47. Ms Ling was referred to CB978, which is a Ladakh local fabric order form for 20 metres of the butterfly print fabric. Ms Ling said that the fabric sample was required to make some sample garments. Ms Ling said that a sample of the butterfly print fabric was received by Ming Xiao Jiang in about the middle of August 2009.
48. Ms Ling said that normally, a sample of fabric would be accompanied by a delivery docket showing how many metres were delivered and how much it cost. She said she did not have the delivery docket for the butterfly print sample.
49. Ms Ling said that, although Ladakh ordered a sample of 20 metres of the butterfly print fabric, a whole roll of 96 metres was delivered. She said that the minimum quantity was one whole roll, because it was Ladakh’s artwork. She denied that Yatai Printing could have given Yixin Fashi 20 metres and sold the balance of the roll to another person or persons. She said that Yatai Printing makes fabric for the whole world, including America and Canada, and they know how to protect their customers’ copyright.
50. Ms Ling said that, when the order was placed with Yatai Printing for the butterfly print fabric, it was not necessary to ask them to look after the artwork and use it only for Ladakh because she was confident that Yatai Printing would do that without being specifically asked.
51. Ms Ling said that, after what appeared to be the breach of Ladakh’s copyright that occurred in this case, she did not bother to speak to anyone at Yatai Printing about it.
52. Ms Ling said that after the 20 metre sample of the butterfly print fabric was delivered to Yixin Fashi, it was given to the people in the sample room to make up sample garments. Ms Ling said that 15 people work in the sample room. Ms Ling said that she did not ask any of the people in the sample room if they had had any dealings with the butterfly print fabric that they should not have had, or if they had given any of the butterfly print fabric to anyone outside the Yixin Fashi factory. Ms Ling said that there would be a documentary record of how many samples were made and who made them. (That record was not provided to the court.)
53. Ms Ling was referred to exhibit JK-15, and an English translation of it, which was marked as exhibit 10. Ms Ling reiterated the evidence in her second affidavit to the effect that the first page of JK-15 and the first page of the English translation of it that is in exhibit 10, and which is headed “Special Purpose Receipts for Capital Gains Tax”, is not relevant to this proceeding. Ms Ling was unable to explain why it had been discovered or included in Ms Kidston’s affidavit. Ms Ling said that she thought it was irrelevant but then thought it might have been an invoice which included the amount for the butterfly print fabric, as well as some other fabrics. Alternatively, Ms Ling said that perhaps Yatai Printing had adjusted something in the invoice, as they sometimes did, for their own purposes. Ms Ling said:
    • ... but they’re tricky. They give us some invoice with their other purpose, but won’t hurt us, but good for them, sort of thing.
54. Ms Ling said that Ladakh had paid Afa Textiles, on behalf of Yatai Printing, the CNY32,228.50 mentioned on the Special Purpose Receipt, which was dated 30 October 2009. She said she had checked and that was the amount that was paid.
55. Ms Ling was referred to the second page of exhibit 10, which is headed China Construction Bank, Electronic Transfer Receipt, and says, “Order date: 15/10/2009”. It said that Yixin Fashi transferred CNY24,972 to Afa Textiles. Ms Ling said that the CNY24,972 was part of the other payment.
56. Ms Ling was adamant that Ladakh had the order form for the butterfly print fabric but did not know why it had not been discovered. Ms Ling said that Ming Xiao Jiang did the order for the butterfly print fabric. She said he was too busy in the factory in China to give evidence in court.
57. Ms Ling said that Ladakh sometimes bought fabric off the shelf from the fabric markets in China. She said Ladakh mostly bought plain fabrics off the shelf from the fabric markets but sometimes patterned fabrics. Ms Ling said that Ladakh did not claim exclusivity for the patterned fabrics bought from the fabric market in China.
58. In relation to Ms Ling’s claim in her first affidavit that all the garments Ladakh made from the butterfly print fabric were manufactured in the Yixin Fashi factory, Ms Ling said that no fabric was sent out to the subcontractor. She said the fabric was cut in the factory, sent to the subcontractor to be sewn, and then returned to the factory for finishing. Ms Ling agreed that the subcontractor, who was located outside the Yixin Fashi factory, was sent pieces of the butterfly print fabric.
59. Ms Ling was referred to the packing list at CB993 and CB994, and the document at CB995 and 996. She said that they were both packing lists, for the same shipment, but it was necessary to do one list a week or 10 days in advance of the shipment, for the purposes of making the booking, and then do another one to actually send with the shipment.

c. Mr Wei’s evidence

60. Hu Zhi Wei affirmed an affidavit on 4 December 2010. He said he was the sales and accounts manager of Yatai Printing. He said Yatai Printing received a compact disc with the artwork for the butterfly design on 19 August 2009. He said Yatai Prining made a sample of 96.5 metres of the butterfly print fabric, and delivered it directly to Ladakh’s factory in Shanghai. (Other evidence made it clear that the fabric was actually delivered to Yixin Fashi, which is not strictly speaking Ladakh’s factory.)
61. Mr Wei said that Yatai Printing had strict control procedures to protect its customers’ copyright. He explained those procedures as being to roll the fabric with the print on the inside, stitch the rolls of fabric into cotton or calico bags and deliver them directly to the customer. He said that was done in the case of Ladakh’s butterfly print.
62. Mr Wei was not available for cross examination. It was decided to receive his evidence on the basis that the respondents could provide a list of questions that they would have asked him with a view to highlighting the deficiencies in his evidence. That list was a document marked MFI-1.
63. The questions concerned the following, among other things:
    1. payment for Ladakh’s butterfly print was not made to Yatai Printing but to Afa Textiles, suggesting that Afa Textiles actually made the butterfly print fabric rather than Yatai Printing;
    2. a company search shows that Yatai Printing had 881 employees in 2004;
    100. who exactly received the compact disc with the butterfly print artwork, whether any paperwork was sent with it, the present whereabouts of the compact disc, whether the compact disc was returned to the sender, whether any copies were made of the artwork on the compact disc, who has access to electronic files, whether artwork is ever sent by email;
    4. whether it would be easy to make an additional strike-off and sample and send them to a third party;
    5. the discrepancy between the sample ordered (20 metres) and the sample delivered (96 metres);
    6. the discrepancy in JK-15 between the first page, showing a payment of ¥32,228.50 for 3069 metres, and the second page, showing a payment of ¥24,972.00 for 2081 metres;
    7. the absence of any evidence about how customers’ copyright is protected other than rolling the fabric inwards and sending it directly to their factories;
    8. the absence of evidence about how electronic files containing artwork are kept secure;
    9. the absence of evidence about the security of strike-offs and samples; and
    10. the opportunity that Yatai Printing and Afa Textiles had to leak the butterfly print to the market by August 2009.

d. Ms Kidston’s evidence

64. Jane Kidston swore affidavits on 8 November 2010, 17 November 2010 and 2 March 2011. She is Ladakh’s general manager. She said that Ladakh has a design team consisting of six designers, a house model, two pattern makers, two production co-ordinators, a production manager, three sample machinists and an unspecified number of freelance designers and graphic artists. Ms Kidston said that in 2000, Ladakh opened its own factory in China to manufacture its garments. (That factory turned out to be Yixin Fashi, which was owned by Ms Ling’s mother and brother.)
65. Ms Kidston said that, in about June 2010, Ladakh placed an order with its factory in China to manufacture 20 metres of fabric with the butterfly print. Ms Kidston said that later, Ladakh ordered 2,081 metres of fabric with the butterfly print. Ms Kidston said that Ladakh’s factory in China sent to Ladakh in Australia, on or about 11 November 2009, 1,854 dresses in the butterfly print and, on or about 14 November 2009, 749 skirts in the butterfly print.
66. Ms Kidston said that the dress and skirt were advertised to Ladakh’s wholesale customers as being available for delivery in December 2009 and as being “print exclusive”. Ms Kidston said the dress and skirt were in Ladakh’s “look book” for its October 2009 range. A look book is a collection of photographs of garments. It was made available to Ladakh’s wholesale customers. Photographs of the dress and skirt in issue in this case are shown at page 13 of Ladakh’s October 2009 look book (CB1018).
67. Ms Kidston said that all of the dresses and skirts were sold to retailers in Australia. She said the skirt was first dispatched to retailers on 17 November 2009 and the dress was first dispatched to retailers on 18 November 2009. (There was no evidence from any retailers about when the dress or skirt was first put on public display.)
68. Ms Kidston said that, on 9 January 2010, a representative of Ladakh went to a shop called Cocoland and bought the dress in exhibit JK-23 to Ms Kidston’s affidavit. That exhibit is Quick Fashion’s dress in the butterfly print. Ms Kidston said that she instructed her solicitors to send a letter of demand to Quick Fashion on 19 January 2010. She said that the solicitors did so, but Quick Fashion did not reply. Ms Kidston said that she instructed her solicitors to send a second letter of demand on 2 February 2010 and they did so.
69. By letter dated 5 February 2010, Jiawen Su, the manager of Quick Fashion, replied to the letter of demand saying that she had asked her customers to stop selling the dress, and return the stock to her. Ms Su also said in the letter that:
    • ... we have begun to investigate the Chinese fabric market where we sourced the print in question as well as Chinese manufacturers. Several fabric shops have claimed that this print was produced by them a few years ago.
70. In cross examination, Ms Kidston said that she was unable to read the exhibit to her affidavit marked JK-15 as it is in Chinese and she does not read Chinese. In her affidavit sworn on 8 November 2010, Ms Kidston identified JK-15 as the tax invoice and packing list from Ladakh’s fabric manufacturer and a bank receipt confirming payment for the invoice. She said that she had been told what the documents were when she swore her affidavit. She said that a Vicky Haung, of Ladakh had identified the documents for her. She said Ms Haung is a production coordinator for Ladakh in Australia and she was available to give evidence. (Ms Huang was not called.)
71. Ms Kidston said that she did not herself receive the strike-off of the butterfly print and she does not know where it is. She agreed that Ladakh does not manufacture large numbers of exclusive prints. Ms Kidston was not involved in the receipt of sample garments made up in the butterfly print. She said Ladakh did two or three exclusive prints per month. She said she was not aware of any others having been copied.

e. Mr Snelling’s evidence

72. Mr Snelling, who has been previously mentioned, swore another affidavit on 21 February 2011. It primarily concerned the methods by which a fabric print could be copied if one started with a piece of the fabric or a photograph of the fabric. He said the easiest method would be to digitally photograph or scan the fabric, transfer the image to a computer and manipulate it using Photoshop or Illustrator. Mr Snelling said that the image could then be transferred to a silk screen by a person with the appropriate technical abilities. Alternatively, the image could be directly printed onto fabric using a digital printing machine.
73. Mr Snelling apparently was not asked to give affidavit evidence about how a fabric print design could be copied if one started with an electronic file of the fabric print design. Presumably, armed with an electronic copy of the fabric print design, one could go straight to printing it onto fabric using a digital printing machine.
74. Mr Snelling also said that the Ladakh butterfly print fabric was rayon and the Quick Fashion butterfly print fabric was cotton/polyester.
75. In cross examination, Mr Snelling said that, in conversation with Ladakh’s solicitor, he was given certain information about the present proceedings separately from his letter of instructions. Mr Snelling agreed that the copying process he had described could have happened entirely within China. Mr Snelling agreed that a person in possession of an electronic file of the fabric print design could reproduce as many print runs of it as he or she liked.
76. Mr Snelling said that the pink line glitch in the Ladakh butterfly print and in the Quick Fashion butterfly print made it possible that they came from the same electronic file.
77. Mr Snelling said that the resolution in the photographs of the Ladakh butterfly print dress and skirt in Ladakh’s October 2009 look book was too poor to have allowed an exact copy of the butterfly design to be made from that source.
78. Mr Snelling said that it is accepted that 100 metres is the minimum print run for digitally printed fabrics and 1,000 metres is the minimum print run for screen printing.

The respondents’ evidence

79. The respondents’ evidence relating to the issue of copying was as follows.

a. Ms Su’s evidence

80. Jiawen Su, also known as Emily Su, affirmed an affidavit on 25 January 2010 and another on 7 April 2011. Ms Su said that she was born in Shanghai where her parents ran a fashion business. She came to Australia in 2000, after high school, and obtained a Bachelor of Accounting from RMIT.
81. Ms Su said she became the General Sales Manager of Quick Fashion on 24 November 2008. She said she was in charge of the day to day operations of Quick Fashion. Ms Su said that Quick Fashion has premises in Sydney and Melbourne. She said she mostly works in Sydney, but spends a couple of months overseas each year, looking at fashion trends and visiting factories in China.
82. Ms Su said that Quick Fashion has five full time employees, other than herself. Ms Su said that Quick Fashion does not manufacture garments itself, but arranges for third parties to manufacture garments for it. She said its main manufacturer is Allure Fashion Development Co Ltd, which is located in Guangzhou.
83. Ms Su said that, to her knowledge, Quick Fashion does not manufacture any fabric itself and has never asked a factory to manufacture fabric for it. She said Quick Fashion uses fabric that has already been manufactured in China such as the fabric that is available in the Guangzhou fabric market. She said that Quick Fashion does not buy fabric directly from fabric markets, but leaves it to the manufacturer to source fabrics.
84. Ms Su said that she chose what garments to order from the manufacturer based on samples they provided. She said that Allure sent samples and fabric swatch cards to Quick Fashion every week. She said that she asked Ms Lin Yin from Allure to send her swatch cards with certain types of fabric, depending on the garment that was to be made.
85. Ms Su said that Allure sent her a fabric swatch in about October 2009, with a butterfly print in two colours, red/orange and blue/purple. The card said it was from Da Shun Clothing. Ms Su said that a photograph of the swatch card was provided to Quick Fashion by Allure (CB1580). Ms Su said that she gets so many swatch cards that she does not keep them. She said they arrive without any itemised list of what has been sent.
86. Ms Su said that she ordered a sample of a garment in the red/orange butterfly print by telephone. Ms Su said that she then ordered 125 dresses in the butterfly print by fax on 10 November 2009. She said 110 garments arrived on about 30 December 2009.
87. Ms Su said that she was unaware of Ladakh’s dress and skirt in the butterfly print until she received a letter of demand dated 19 January 2010. She said that she did not cause the manufacture of the fabric used in Quick Fashion’s butterfly print dress.
88. In cross examination, Ms Su said she went to her customers’ shops about once a week to see the fashion trends. She said she did not go to Myer, except in a personal capacity, because Myer is not at Quick Fashion’s price point. She said that she did not go to the shops in Oxford Street Paddington to look at fashion trends.
89. Ms Su confirmed that the 110 butterfly print dresses that arrived at Quick Fashion on 30 December 2009 were sold to retailers very quickly, and a lot were in fact dispatched to retailers on the day they were received by Quick Fashion. She said that buyers looked at samples of garments in the Quick Fashion warehouse and placed orders for them. She said she only showed samples of garments that she had already ordered, and she would order more if they sold well. Ms Su said that she got feedback from her customers about what was selling well in the market place.
90. Ms Su said that her customers tried to get a discount from her. She denied that customers asked her to provide cheaper versions of garments which looked like Ladakh garments.
91. In relation to her letter dated 5 February 2010, Ms Su said that she had asked Allure to investigate the Chinese fabric market at that time. From Quick Fashion’s confidential sales report at CB2180, it is clear that the last of the butterfly print dresses were sold on 20 January 2010. Ms Su said her letter was true when it said that Quick Fashion had stopped selling the dresses before receiving Middleton’s letter of 19 January 2010, because she did not receive that letter until 20 January 2010 at the earliest.
92. Ms Su said her letter was also correct in saying that market feedback for the butterfly print dress was very bad so Quick Fashion had only ordered a small quantity once. She said, normally, Quick Fashion sold garments much more quickly than the butterfly print dress was sold, so, prior to the receipt of the letter dated 19 January 2010 from Middletons, she had decided not to place another order for the butterfly print dress.
93. Ms Su was asked whether it was normal, given how quickly garments are sold, for garments to sit in boxes for three weeks in Guangzhou. Ms Su said it depended on the time of year. She said that the Chinese Commodity Inspection Bureau had to go to the factory to inspect the goods, and this takes time. Ms Su conceded that she did not have any direct knowledge of such an inspection in the present case.
94. Ms Su agreed that she was in China between 7 and 18 February 2010 but denied that she had visited the Allure factory in Guangzhou. She said that she visited her family in Shanghai, and that her passport recorded that she entered and exited China from there.
95. It was put to Ms Su that Ying Lin had said in evidence that Ms Su saw Ying Lin at the Allure factory in China in February 2010. Ms Su said that was not true, and Ms Lin must have been mistaken. Ms Su said that she visited the Allure factory in 2009.
96. Ms Su agreed that she had asked Ying Lin, from Allure, to take a photograph of the Da Shun fabric store displaying the butterfly print fabric for sale, and any other fabric shop displaying the same fabric.
97. Ms Su confirmed that her order form for the butterfly print dress was dated 10 November 2009, which predated the Ladakh butterfly print dress first being dispatched by Ladakh to retailers on 17 November 2009. Ms Su said that the order form was not included in Quick Fashion’s first affidavit of documents because she threw away all order forms once the garments had been delivered. However, she said that she was later able to obtain a faxed copy of the order form from Allure and that document was discovered (confidential CB2170).
98. Ms Su said that, for her, rayon was the name of a fabric but its content was cotton/polyester.
99. It was put to Ms Su that:
    1. she learned about Ladakh’s butterfly print garments when they went on sale on 17 or 18 November 2009;
    2. Quick Fashion had ample time between 17 or 18 November 2009 and 30 December 2009 to arrange for the fabric in those garments to be copied, manufactured and delivered to Quick Fashion;
    100. Quick Fashion made a copy of Ladakh’s butterfly print fabric and sent it to Allure to make the butterfly print fabric which was used in Quick Fashion’s butterfly print dress; and
    4. Quick Fashion knew it was copying Ladakh’s fabric and went ahead and imported and sold garments which incorporated copies of Ladakh’s fabric.
100. Ms Su denied all of those matters.

b. Ms Lin’s evidence

101. Ying Lin affirmed an affidavit on 25 January 2011. She said she has been a procurement officer for Allure in China since June 2008. She said her responsibilities include searching for new fabric swatches and fabrics in the fabric market, purchasing fabric in accordance with customers’ fabric orders and dealing with Allure’s customers in relation to fabrics.
102. Ms Lin said that Allure has six or seven major customers, including Quick Fashion. She said Allure manufactures and exports women’s clothing.
103. Ms Lin said that she searches in a specialised fabric market, the Guangzhou International Textile Trade Centre, for fabric swatches which she sends to customers. She said Allure buys fabric ready made from the suppliers in the market, rather than from fabric manufacturers or printers directly. She said, usually, the suppliers had the fabric in stock, but, if not, it could be ordered. Ms Lin said, once Allure has the fabric, it takes about one week to make up to 150 garments.
104. Ms Lin said that she was involved in the design and manufacture of Quick Fashion’s butterfly print dress. She said she sourced the fabric for it, after Ms Su told her that rayon print was popular. Ms Lin said that she then looked for that type of fabric.
105. Ms Lin said she first saw the butterfly print at the shop of a fabric supplier, Da Shun, in the Guangzhou International Textile Trade Centre at about the end of September 2009. She said the swatch had two colour ways of the butterfly print, a red and a blue. Ms Lin said that she sent the swatch to Ms Su in about the middle of October 2009. Ms Lin said that she chose the butterfly print swatch because it was rayon.
106. Ms Lin said that, before she sent the swatch to Quick Fashion, no one had ever shown her any garments, drawings or photographs showing the fabric they wanted for the Quick Fashion dress. Ms Lin said she had never seen the fabric before. She said that there was nothing about the fabric or the circumstances in which she was given it by Da Shun that made her think it was exclusive to another fashion label.
107. Ms Lin said that she sent a sample garment in the butterfly print to Ms Su in November 2009, and received a purchase order for 125 garments on 10 November 2009. Ms Lin said she placed the order for the fabric for the garments from Da Shun on 16 November 2009 and collected the fabric later that day.
108. Ms Lin said she did not ask Da Shun or any other factory to manufacture the fabric for the butterfly print dress. She said she purchased the fabric ready made.
109. Ms Lin provided photographs of butterfly print fabric:
     1. that appears to be the same as Ladakh’s;
     2. that appears to be on sale in Da Shun’s shop; and
     100. that appears to be on sale in three other fabric suppliers.

Ms Lin said she took the photographs herself. She said she took the photograph of the Da Shun shop on 20 February 2010 and that it had looked similar when she first saw the fabric on sale there in September 2009.

110. Ms Lin gave evidence through an interpreter. She was cross examined at length about the fact that she had said that she was looking in the market for a rayon print when she claimed to have found the butterfly print but it was in fact a cotton/polyester print that she provided to Quick Fashion. Ms Lin said that, in the fabric market, no one mentioned that type of thing.
111. Ms Lin was also cross examined about the fact that she claimed to have the order from Quick Fashion and the fabric on 16 November 2009, and she claimed that it usually took about one week to make orders of under 150 garments, but she did not dispatch the butterfly print dresses until 29 December 2009. Ms Lin said that Allure was very busy at that time.
112. Ms Lin was shown CB1580, which is a photograph of the Da Shun butterfly print. It has a code number of B142. Ms Lin was shown the invoices from Da Shun from the following pages of the court book:
     1. CB2214, which has a fabric code of A1002, and is addressed to Ms Chen;
     2. CB2215, which has a fabric code of A959, and is addressed to Mr Woo;
     100. CB2216, which has a fabric code of A1009, and is addressed to Ms Lin;
     4. CB2217, which has a fabric code of A930, and is addressed to Lee;
     5. CB2218, which has a fabric code of A959;
     6. CB2219, which has no fabric code but, which, according to counsel, says in Chinese “Cotton fabric”, has no client named and is for only two metres of fabric;
     7. CB2220, which has a fabric code of A927;
     8. CB2223, which has a fabric code of B109;
     9. CB2224, which has a fabric code of B109.
113. It was put to Ms Lin in relation to CB2216 that when sending invoices to Allure, it was sufficient for Da Shun to address the invoice to her. Ms Lin said that was true but sometimes they also wrote Allure Proprietary Limited.
114. Ms Lin was referred to CB1626, which she said was the invoice from Da Shun to Allure for the butterfly print. Ms Lin agreed that it did not have a code number for the fabric, but described the fabric, in Chinese, as “butterfly flower”. Ms Lin said that was normal, because Da Shun only had one fabric answering that description.
115. It was put to Ms Lin that, on her evidence, Da Shun actually had two butterfly flower fabrics, one in a red colourway and one in a blue colourway. Ms Lin said that she had cut a piece of the fabric that she wanted, and Da Shun knew which one she wanted. She said it was up to Da Shun to write its invoice as it wished.
116. It was put to Ms Lin that it was unusual that Da Shun invoice number 2058, at CB2216, which is dated 16 November 2009, was addressed to Ms Lin, whereas Da Shun invoice number 2066, at CB1626, which was also dated 16 November 2009, was addressed to “Allure Clothing Company Limited”. Ms Lin said that the first invoice was only for a small amount of material (it says two metres) whereas for the second invoice she had to go to the warehouse (it says 200 metres).
117. Ms Lin said that she goes to Da Shun to buy rayon because that is what they sell. She said every bit of material Da Shun sells is rayon print. She said that to her, rayon and cotton/polyester feel the same. She said:
     • The only thing is the printing it – printing the pattern is not about – when you feel it is quite the same – quite similar, you can’t – we can’t tell.
118. Ms Lin was referred to a number of invoices from other suppliers who all addressed their invoices to her as Ms Lin, rather than Allure: CB2231, CB2232, CB2233. However, the invoice at CB2234 was addressed to “Allure”.
119. It was put to Ms Lin that Da Shun would be happy to give her a false invoice because, as she said, she had large transactions with them. Ms Lin denied that. The interpreter later said that she had misinterpreted the evidence in that Ms Lin had not said that she had large transactions with Da Shun but she had said that she did business with them.
120. It was put to Ms Lin that the only time any one wrote the full name of “Allure Clothing Company Limited” was on the false invoice for the butterfly print. Ms Lin denied it was a false invoice. She said sometimes people write the full name and sometimes the short name.
121. Ms Lin was referred to CB2225-CB2228 which are a packing list for the Quick Fashion butterfly print dress dated 5 December 2009 and the airway bill for those garments dated 29 December 2009. Ms Lin was asked why the dresses were left sitting in boxes for 24 days. Ms Lin said that side of things was not her job. (Ladakh’s witness, Ms Ling, gave evidence to the effect that it was necessary to do a packing list a week or 10 days in advance of the shipment for booking purposes: T235.)
122. It was put to Ms Lin that she had coordinated with Ms Su when she took the photographs of the Da Shun shop (CB1627 and CB1628) on 20 February 2010, a couple of days after Ms Su visited China. Ms Lin denied coordination. She agreed that she had seen Ms Su in China “last year” but was not sure of the date. Ms Lin did not accept that Ms Su had visited the Allure factory in March 2010. Ms Lin said that Ms Su asked her by telephone to do things.
123. It was put to Ms Lin that she would also have taken the photograph of the Da Shun swatch at CB1629 on 20 February 2010 if it had existed then, but she in fact took it on 30 March 2010, after Ms Su had visited China again. Ms Lin said that she only wanted to take the photograph of the Da Shun shop on 20 February 2010 and she did not agree that Ms Su had seen her in March 2010.
124. It was put to Ms Lin that she asked Da Shun, after 20 February 2010, to create a swatch of the butterfly print in the red and blue colourways. Ms Lin denied that.
125. In re-examination, Ms Lin said that her name appeared at the end of Allure’s name on the invoice for the butterfly print at CB1626.

The onus of proof

126. Ladakh said in its written submissions dated 29 April 2011 that the authorities establish that, where the similarities between the applicant’s work and the respondent’s work are sufficiently great, and the respondent had the opportunity to gain access to the applicant’s work, the onus of proof shifts to the respondent to establish that he created his work without copying the applicant’s.[1]
127. The respondents argued that all of those authorities were distinguishable because they concerned situations in which “it was not in issue that the alleged infringing work was made by the [respondent] itself” with the result that the allegedly infringing work could properly be described as the “[respondent’s] work”. In other words, in each of the cases relied on by Ladakh, the respondent acknowledged that it had made something like the applicant’s work, and the question was whether the respondent had made a copy or had arrived independently at something similar to the applicant’s work.
128. In the present case, Quick Fashion did not acknowledge that it had made something similar to Ladakh’s work and did not claim to have arrived independently at something similar to Ladakh’s work. Quick Fashion said it simply bought off the shelf fabric with a butterfly drawing like Ladakh’s, and any copying was done by an unrelated and unknown third party.
129. In reply, Ladakh said that the evidence was that Quick Fashion was involved in inspecting and approving the fabric to be used in making its butterfly print dresses. That submission is correct, but it begs the question of whether the print on the fabric was “the respondent’s work” or someone else’s work. Obviously, simply being in possession of a work does not necessarily mean that one made it.
130. It seems to me that, logically, the authorities relied on by Ladakh are not engaged in this case, because there is an unresolved preliminary issue of whether the print on the fabric used in Quick Fashion’s butterfly print dress was Quick Fashion’s work, or someone else’s work.
131. Moreover, the authorities relied on by Ladakh require that the respondent had the opportunity to gain access to the applicant’s work before the onus will be reversed. In the present case, Ladakh said that Quick Fashion had access to Ladakh’s butterfly print:
     1. when the look books became available for its October 2009 range;
     2. when Ladakh’s butterfly print dress and skirt were dispatched by Ladakh to retailers on 17 and 18 November 2009; and
     100. when customers of Ladakh had seen samples of Ladakh’s butterfly print and asked Quick Fashion to make it for them more cheaply.
132. Mr Snelling said that the copy fabric could not have been made from Ladakh’s look book, because the photograph in the look book was too small and indistinct. That is obviously correct. A copy made from the look book would not have had the pink glitch, and in every other respect would not have been as precise a copy as the Quick Fashion version of the print.
133. When Ladakh’s butterfly print dress and skirt were dispatched to retailers on 17 and 18 November 2009, it is reasonable to infer that the dress and the skirt were put on public display in retail outlets within a day or two. However, that does not appear to be sufficient to prove access.
134. In Clarendon Homes (Aust) Pty Ltd & Anor v Henley Arch Pty Ltd & Ors (1999) 46 IPR 309, it was alleged that Mr Polglase, who was employed by the respondent, had copied the plans for his Oakridge house from the applicant’s Glengrand house. The Glengrand plans were published in 1987 and a display home based on the Glengrand plans was opened to the public in 1988. There was evidence that many developers visited the display centre and saw the Glengrand display home. However, there was no evidence that Mr Polglase personally had access to the plans or visited the Glengrand display home or any other emanation of the Glengrand plans.
135. The trial judge considered that these circumstances did not amount to access in the relevant sense, even though Mr Polglase, as a member of the public, and a person who no doubt had a professional interest in house design, would have been able to look at the Glengrand house if he had wished. On appeal, at [15], the Full Federal Court apparently accepted the trial judge’s understanding of the notion of access, and did not disturb his Honour’s finding on that issue.
136. Similarly, in the present case, Ladakh’s butterfly print dress and skirt were on public display in retail outlets from about 19 November 2009. However, unlike a display home, dresses and skirts are not always displayed in such a way that they will be readily seen on any visit to the relevant premises. Some garments are placed in prominent window and other displays, while others might be squashed in one of countless racks. There was no evidence about how Ladakh’s butterfly print dress and skirt were displayed in about late November 2009 in any of the retail outlets where they were for sale.
137. Nevertheless, Ms Su, as a person with a professional interest in fabrics, would have been able to see the butterfly print on display if she had made a sufficiently thorough examination at one of the retail outlets where Ladakh’s dress and skirt were available for purchase in late November 2009. However, there was no evidence that Ms Su made any examination of any retail outlet where Ladakh’s butterfly print dress and skirt were on public display.
138. Ladakh emphasised that Ms Su gave evidence that she visited her customers at least once a week to see what they were selling, and that three of the customers that Quick Fashion sold its butterfly print dress to also appear on Ladakh’s list of customers (confidential exhibit JK-3, CB1903ff). The implication was that Ms Su would have visited those three customers and seen the Ladakh butterfly print. However, Ladakh’s customer list is partly undated and is partly dated 17 March 2010, well after the events in question. In any event, the court was not directed to any evidence that Ladakh had sold its butterfly print dress or skirt in late November 2009 to any of the three customers that it shared with Quick Fashion.
139. Ladakh suggested that Ms Su, as part of her normal research into fashion trends, would have visited retail outlets close to Quick Fashion’s premises in Sydney and Melbourne where the Ladakh butterfly print dress and skirt were on sale. However, only two retail outlets were put to Ms Su as shops that she visited. The first she said she had never heard of. The other, Myer, she said she only visited in a personal capacity because it was too pricey for Quick Fashion’s range. There was no evidence that Ms Su visited Myer in November or December 2009.
140. It was also put to Ms Su that she would have visited two streets in Sydney well known for their fashion outlets. However, she said she did not visit one often and did not visit the other at all.
141. In all the circumstances, I do not accept that Ms Su, or any one else from Quick Fashion, had access, in the relevant sense, to the Ladakh butterfly print in a retail shop in late November 2009.
142. The third basis on which Ladakh suggested that Quick Fashion had access to Ladakh’s butterfly print was through Ladakh’s customers telling Quick Fashion about the butterfly print and asking Quick Fashion to produce a similar garment at a cheaper price. This is no more than a theoretical possibility. There is no evidence that this happened. Ultimately, if the court is persuaded that Quick Fashion did copy Ladakh’s butterfly print, the court might regard this as a possible way in which the copying was instigated. However, on the question of access, Ladakh’s suggestion that a customer asked Quick Fashion to make a cheaper garment out of Ladakh’s butterfly print fabric is entirely speculative.
143. For these reasons, I do not consider that the onus of proof is reversed in this matter. It is for the applicant to prove its case in the usual way. In any event, for the reasons which follow, whether the onus of proof is reversed or not, the applicant is unable to succeed in the present case.

Ladakh’s case

144. Ladakh’s case does not contain a “smoking gun”, so to speak. There is no direct evidence of copying by Quick Fashion. Rather, Ladakh’s case is circumstantial and inferential.
145. In its submissions in reply, at [60], Ladakh conceded that:
     • ... given the size of China it must be accepted as a matter of probability that many Chinese printing companies do in fact leak their customers’ design[s].
146. Leakage by someone in Ladakh’s own camp is a distinct possibility in this case. That is, someone in Ladakh’s camp could have copied the butterfly drawing and sold it to a fabric manufacturer who went on to manufacture the butterfly print fabric and make it available for sale in the Guangzhou market.
147. There were many points at which, at least in theory, the leakage could have occurred. For example, unauthorised copying could have been undertaken by:
     1. Mr Kourhani, or someone in Ladakh’s production team, who had access to an electronic copy of the butterfly drawing or the swatch;
     2. someone at Ladakh who had access to the fabric;
     100. someone at Yixin Fashi, who had access to the electronic file, or the fabric, including the subcontractors who sewed the garments;
     4. someone at Yatai Printing who had access to the electronic file or the fabric; and
     5. someone at Afa Textiles who had access to the electronic file or the fabric, if they were in fact involved in the manufacture.
148. Ladakh went to some lengths to try to establish that Yatai Printing could not have been the source of a leak. There was evidence that Yatai Printing rolled the fabric inwards and wrapped it in calico before transporting it. That evidence suggests that it would have been virtually impossible for an external third party to copy the fabric while it was in transit between Yatai Printing and Yixin Fashi. However, that evidence does not address the issue of employees or subcontractors of either organisation copying the fabric or the electronic file.
149. On that issue, Ms Ling said that she trusted Yatai Printing. She said that if it failed to protect its customers’ copyright, it would lose business. It was also noted that Yatai Printing has 800 employees and it had international customers. Ladakh acknowledged that there probably are fabric printing companies in China that leak their customers’ designs. However, Ladakh argued that, because Yatai Printing has international customers, the court could infer that it was the “type” of business that would protect its customers’ copyright, rather than be one of the Chinese companies that Ladakh acknowledged probably leaked their customers’ designs.
150. It is probably fair to say that most large companies in China have international customers. I do not consider that the fact that Yatai Printing has international customers takes it out of the normal run of Chinese fabric printing companies, many of which, on Ladakh’s own admission, probably leak their customers’ designs.
151. However, this sort of speculation is not of assistance. The simple fact is that there were numerous people, in Ladakh, Yixin Fashi, Yatai Printing and, possibly, Afa Textiles, who had access to the electronic file or the fabric itself, and who could have copied the butterfly drawing. There was some discrepancy in the evidence about whether all of Ladakh’s garments in the butterfly print were made by one subcontractor or a number of subcontractors. Either way, there were many people who had the relevant opportunity.
152. Other than during transportation, there was no evidence that there were any particular security measures taken to protect the fabric or the electronic file from copying. In particular, there was no evidence that anyone on Ladakh’s side asked for the compact disc to be returned. Perhaps that was because, as a matter of common knowledge, the compact disc could have been copied easily, and retrieving the original compact disc would have provided no guarantee of anything.
153. It must also be noted that there were certain questionable aspects of Ladakh’s evidence. For example, Ladakh initially said that Yixin Fashi was Ladakh’s own factory, when in fact it is owned by Ms Ling’s mother and brother. Ladakh also said that all the garments were manufactured in house. However, it then emerged that Yixin Fashi used outworkers. There was a lack of clarity about whether only one outworker sewed all of the 1,854 Ladakh dresses and all of the 749 Ladakh skirts in the butterfly print or whether a number of outworkers were engaged to sew the butterfly print garments.
154. In addition, there was a discrepancy in Ladakh’s documents concerning the size of the sample that was ordered (20 metres) and the size of the sample that was delivered (96 metres). Similarly, there was a discrepancy in JK-15 between the first page, showing a payment of ¥32,228.50 for 3069 metres of fabric, and the second page, showing a payment of ¥24,972.00 for 2081 metres. These discrepancies suggest that there might have been fabric made on Ladakh’s request that was not delivered as ordered, but provided to another entity and used for unauthorised copying.
155. Moreover, Ladakh’s documents show that the payment for the fabric was actually made to Afa Textiles, rather than Yatai Printing, who was said to have been the supplier. In relation to the mysterious invoicing in JK-15, Ms Ling said, of Yatai Printing:
     • ... they’re tricky. They give us some invoice with their other purpose, but won’t hurt us, but good for them, sort of thing.
156. This evidence, from a director of Ladakh, indicates that Yatai Printing is not entirely above board, at least where invoicing is concerned. This evidence also casts considerable doubt on whether Yatai Printing would be as honest and careful with other people’s copyright as Ladakh claims.
157. Additionally, Mr Kourhani was adamant that he did not send an electronic copy of the blue colourway of the butterfly drawing to China. A photograph Ms Lin said she took of the Da Shun shop on 20 February 2010 shows the butterfly print fabric in two colourways, a red one and a blue one (CB1627). Ladakh only had the fabric made up in the red colourway and only had garments made in the red colourway (T30). Consequently, only garments in the red colourway were on sale in Australia. If Quick Fashion had in fact copied Ladakh’s fabric from a garment on display in Australia in late 2009, Quick Fashion would have copied the red colourway only, and not the blue.
158. It seems unlikely that the blue colourway would have been in the market in February 2010 if the genesis of the copying had been Quick Fashion copying Ladakh’s red colourway. Of course, with an electronic file, someone could have independently decided to print a colour variation, but it would be an extraordinary coincidence if such a person would have chosen the same colour variation as the one that Mr Kourhani created but did not use.
159. There was a vague intimation that Quick Fashion had arranged the manufacture of the fabric in the blue colourway for the purposes of this case. However, it seems that the respondents would not have known that Mr Kourhani had prepared a draft drawing with the blue colourway until his affidavit affirmed on 13 September 2010 was served. The photograph of Da Shun’s shop showing the butterfly fabric in the red and the blue colourways is dated much earlier, namely, 20 February 2010. There was no evidence that cameras are able to put false dates on photographs. There is no reasonable basis to conclude that the photograph was not taken on 20 February 2010.
160. Consequently, the evidence relating to the blue colourway would tend to suggest that Quick Fashion was not responsible for the copying. Moreover, that evidence would tend to suggest that, if there had in fact been any leakage from people associated with Ladakh, it probably occurred from Ladakh itself, rather than from its suppliers in China.

The “lies” identified by Ladakh

161. Notwithstanding the possibility of leakage of the butterfly drawing by people associated with Ladakh, and notwithstanding the discrepancies in and questionable aspects of Ladakh’s own case, Ladkah maintained that Quick Fashion has copied Ladakh’s butterfly drawing.
162. Ladakh’s case was that Ms Su and Ms Lin had blatantly and deliberately conspired and lied about relevant matters and someone had forged documents to support Quick Fashion’s case. Ladakh submitted that, because Ms Su and Ms Lin had demonstrably lied about relevant matters, the court should not accept Ms Su’s denial of copying and should in fact infer that Quick Fashion did in fact copy Ladakh’s butterfly drawing in Australia, and sent it to China to be printed on fabric and made into garments.
163. The particular lies, issues of concern and false documents identified by Ladakh are as follows.

a. Coordination of evidence

164. Ladakh argued, in effect, that Ms Su and Ms Lin conspired to lie in their affidavits and obtain forged documents to put before the court in this case. The evidence relied upon to support that very serious allegation was that:
     1. Ms Lin agreed that she had gathered evidence at Ms Su’s request, including finding documents and taking photographs of butterfly print fabric in Da Shun’s shop;
     2. there were various deficiencies in the evidence, discussed below, which it was submitted led to an inference of a conspiracy to lie to the court and forge documents;
     100. a former director of Quick Fashion, Mr Zhang, owned Allure and had approved Ms Lin cooperating with Quick Fashion for the purposes of this case;
     4. when Mr Zhang was a director of Quick Fashion, he was aware of a complaint by Ladakh that Quick Fashion “should stop making products similar to those of the applicant”;[2] and
     5. Ms Lin and Ms Su had given contradictory evidence about when Ms Su saw Ms Lin in China.
165. In relation to the point at paragraph 164.e), Ms Lin said that she saw Ms Su in Guangzhou, China, at some time in 2010, but she was not sure when. Ms Su said that she did not go to Guangzhou at all in 2010, and last went there in May 2009. Her passport shows entry and exit stamps for Guangzhou at around May 2009. Ms Su said that she went to Shanghai to see her family in February 2010. Her passport shows entry and exit stamps for Shanghai at that time. She said Ms Lin may have been mistaken in her evidence about when Ms Su had seen her. Ms Lin said that Ms Su did not need to see her to ask her for things in relation to the case because she could ask her over the telephone.
166. Ladakh suggested that it was surprising that Ms Su would go to China and not visit the main supplier of the company for which she worked.

b. Rayon

167. The Ladakh butterfly print fabric was made of rayon. Quick Fashion’s butterfly print fabric was made of cotton/polyester. Ladakh seemed to accept Ms Lin’s evidence that Da Shun only sold rayon. As Quick Fashion’s butterfly print was not made of rayon, Ladakh argued that Ms Lin and Ms Su’s story of looking for rayon and finding it at Da Shun was false.

c. Quick Fashion’s order form dated 10 November 2009

168. Ms Su acknowledged that a significant document in the proceeding was Quick Fashion’s order form for its butterfly print dresses. She said she looked for it but could not find it. In its first affidavit of documents filed on 16 July 2010, Quick Fashion said that it had sent the order form to China and no longer had it. Ms Su later said that she got a copy of the order form from Allure. It was provided with the respondents’ substantive affidavits on 25 January 2011.
169. Ladakh argued that Quick Fashion’s failure to find such a crucial document for so long suggested that the document that was eventually produced was not genuine. Ladakh also noted that it was “convenient” that the order form predated the sale in Australia of the Ladakh butterfly print garments by about a week.

d. Da Shun’s invoice dated 16 November 2009

170. Ladakh noted that the invoice from Da Shun to Allure for the butterfly print fabric was not provided to Ladakh until 10 August 2010. Ladakh argued that the late provision of the invoice indicated that it was not genuine.
171. Ladakh noted that the invoice did not refer to the product code shown on the swatch for the butterfly print fabric, although many other Da Shun invoices did refer to the relevant product code. The invoice, instead of a product code, described the fabric as “butterfly flower”. Ms Lin explained this by saying Da Shun did not use a product code in this particular case because it had only one butterfly print. However, her own evidence was that Da Shun had two butterfly prints, a red and a blue. Ms Lin then said that she recalled on that day, about 18 months before the trial, cutting out a sample of the particular fabric she wanted and giving it to Da Shun to identify the required fabric.
172. Ladakh argued that the evidence concerning the missing product code suggested that the Da Shun invoice had been fabricated by Da Shun at Allure’s request. Ladakh said this construction of events was supported by Ms Lin’s evidence that Da Shun would be happy to help a good customer such as Allure.
173. The respondents submitted that the admittedly small sample of invoices put into evidence by the respondents showed a considerable variation in how products were described. They disputed that it was customary, much less invariable, to use a product code. The respondents referred to the invoices at CB3/2219, which simply referred to fabric, CB3/2229, which referred to ramie cotton jersey, and CB3/2233, which referred to boutique rayon.
174. Ladakh noted that all but two of the fabric invoices put into evidence by the respondents were addressed to a person, such as Ms Lin, or Mr Woo, rather than the company for which the person worked. The two exceptions were invoice 2066 for the butterfly print, and invoice 4053 for fabric unrelated to this proceeding. The former was addressed to “Anure Clothing Company Limited”. The latter was addressed to “Anuer”. “Anuer” is apparently a variation on “Allure”.
175. Ms Lin sought to explain the formal way in which the purchaser of the butterfly print fabric was identified on the invoice by saying that she needed to go to the warehouse to collect the butterfly print fabric, rather than just the shop, and a different person there had filled in the invoice. She said it was a matter for Da Shun how they completed their invoices.
176. Ladakh submitted that the use of Allure’s full formal name in the invoice for the butterfly print indicates that that invoice is not genuine and was fabricated by Da Shun for the purposes of this litigation.
177. Ladakh submitted that the Da Shun invoice for the butterfly print fabric is admissible as a business record under s.69 of the Evidence Act 1995. However, Ladakh submitted that the invoice was essentially a hearsay document which should be treated with caution pursuant to s.136 of the Evidence Act 1995 because no one from Da Shun was called to give evidence and face cross examination.
178. The respondents submitted that there was actually a good deal of variety in the way that invoices are addressed in the Chinese fabric market. The respondents referred to the Da Shun invoices at CB3/2218, 2221 and 2222, which contained the full company name of the purchaser, and the Da Shun invoices at CB3/2219, 2223 and 2224, which had no customer name at all.
179. The respondents also noted that they had provided the Da Shun invoices surrounding the invoice for the butterfly print fabric. It was submitted that this demonstrated that the invoice for the butterfly print fabric invoice was in a sequence with the other invoices: CB3/2214-2224.

e. The packing list detail dated 5 December 2009

180. Ladakh submitted that the timeline proposed by the respondents was implausible and should be rejected. That timeline is as follows:
     1. Allure had the fabric to make up Quick Fashion’s order on 16 November 2009;
     2. on Ms Lin’s affidavit evidence, it took one week to make 150 garments, as were made for Quick Fashion in this case;
     100. the garments should have been ready by 23 November 2009;
     4. the packing list shows that they were packed on 5 December 2009; and
     5. the garments were not dispatched until 24 days later, on 29 December 2009, even though Quick Fashion had asked for them as soon as possible.
181. Ladakh argued that the delays in the respondents’ timeline, between order and manufacture, and between packing and dispatching, showed that the timeline was fabricated to hide the fact that Ms Su saw Ladakh’s butterfly print dress and skirt in the shops on or about 20 November 2009 and proceeded to copy the fabric. Ladakh argued that Ms Su had plenty of time, between seeing Ladakh’s butterfly print dress and skirt in the shops on 20 November 2009 and putting her garments in the shops on about 30 December 2009 to have:
     1. the butterfly print fabric copied;
     2. the fabric manufactured;
     100. a garment designed;
     4. the fabric made up into dresses; and
     5. the dresses dispatched to Australia by 30 December 2009.
182. The respondents said that Ms Su’s evidence was that it normally took between four and seven weeks between ordering garments from Allure and receiving them. She said seven weeks was more common at busy times of the year, such as just before Christmas. Ms Su said that goods for export were checked by the Chinese authorities and that could lead to further delays.
183. Ms Lin said in oral evidence that Allure did a quality check on the garments. Any quality check by Allure would presumably be carried out before the garments were packed for export to Australia. Ms Lin also said that Allure processed orders in the order that they were received. She said Allure had been quite busy in November 2009.
184. Ladakh argued that Ms Lin’s oral evidence should not be believed, because it was provided late. Ladakh said that Ms Lin’s affidavit evidence that it took one week to manufacture 150 garments should be taken as the truth. Consequently, Ladakh argued that the court should infer that Allure received the fabric to make Quick Fashion’s butterfly print dresses on or about 22 December 2009, being one week before they were dispatched.

f. Memory of obscure details

185. Ladakh also argued that Ms Lin and Ms Su claimed to have remembered in mid 2011 details from as early as July 2009, including a conversation about rayon print, but could not remember more recent events. Ladakh said that their evidence was implausible for this reason, in addition to the others stated above.

Conclusion on “lies” alleged by Ladakh

186. Clearly, Ladakh’s allegation that Ms Su and Ms Lin have conspired to and did lie to the court and put false documents before the court is an extremely serious one. The court could only be satisfied of such conduct based on sound evidence. Reasonable inferences from established facts may be drawn, but suspicion, or even strong suspicion, would not be enough.
187. Taking the evidence of the “lies” and discrepancies identified by Ladakh as a whole, it seems to me that there is some cause for suspicion but insufficient evidence to make a finding that Ms Su and Ms Lin have conspired to and did lie to the court and place forged documents before the court.
188. In relation to the coordinating of evidence issue, it is unfortunate that the point was not explored in more detail. The idea of coordinating evidence, especially when conveyed through an interpreter, can have many meanings, some acceptable and some not. It is not particularly sinister to ask a supplier in China to affirm an affidavit or to gather documentary and photographic evidence. That is a far cry from coordinating evidence in the sense of matching stories and actually constructing stories.
189. I accept Ms Su’s evidence on her visits to China. I do not find it at all surprising that Ms Su would visit her family in Shanghai and not go a very great distance out of her way, while she was on holiday, to visit a supplier of her employer. I consider that Ms Lin simply confused Ms Su’s visit in 2010 with her visit in 2009. In any event, as Ms Lin said, Ms Su did not need to visit to ask her to do things for the case; she could make requests by telephone.
190. All in all, I am not satisfied that the evidence relied on by Ladakh warrants a finding that Ms Su and Ms Lin coordinated their evidence in a way that supports a conclusion of lying to the court and forging documents.
191. On this point, I note in passing that Ladakh seems to have also coordinated its evidence in a sense. Mr Wei (CB 1423) and Ms Ling (CB1417) used identical words to describe how Yatai Printing rolls the fabric and so on for transportation. Additionally, Mr Snelling conceded that he was given information about this case from Ladakh’s solicitors separately from his formal letter of instruction.
192. In relation to the rayon issue, Ladakh’s conclusion is premised on Ms Lin’s evidence that Da Shun only sold rayon being technically correct, even though Ms Lin’s evidence was to the effect that, when she said rayon, she meant prints and Ms Su’s evidence was to the effect that when she said rayon she meant artificial cotton. There was no other evidence that Da Shun only sold rayon.
193. I consider that, when Ms Su said to Ms Lin in Chinese that “rayon is popular”, she meant, and Ms Lin understood, that artificial cotton prints are popular. I consider that, when Ms Lin said that she was looking for rayon prints, she meant she was looking for light weight, printed, artificial fabrics. When Ms Lin said that Da Shun only sells rayon, I do not consider that she meant that Da Shun only sells fabric that is technically rayon. Apart from anything else, it strikes me as odd that a fabric seller would only sell fabric with a particular chemical composition. On the other hand, it seems likely that a fabric seller might choose to only sell light weight, printed fabrics. That seems to be what is shown in the photograph at CB1633.
194. In relation to Quick Fashion’s order form dated 10 November 2009 and Da Shun’s invoice dated 16 November 2009 being provided late in the litigation, I do not consider that the lateness, alone, or in combination with the other evidence, is sufficient to satisfy the court that the documents were forged. Clearly, this is a very serious allegation. The lateness gives rise to some grounds for suspicion. However, grounds for suspicion are not enough.
195. In relation to the absence of a product code on the Da Shun invoice dated 16 November 2009, I accept the respondents’ submission, on the limited evidence available, that there is a good deal of variation in the description of products on fabric invoices in China. However, Ms Lin’s evidence that the description of the product as “butterfly print” was adequate because Da Shun only had one butterfly print was clearly wrong, on Ms Lin’s own evidence. On her evidence, Da Shun had two butterfly prints, the red and the blue.
196. Ms Lin’s attempt to salvage the situation by saying that she remembered cutting off a sample of the red fabric to identify it seems a stretch, after all the time that has passed since the events occurred. This does cast some doubt on her evidence overall. However, Ms Lin’s core evidence, that she bought the relevant fabric from Da Shun with the butterfly print already on it, remains plausible.
197. Regarding the customer name on the Da Shun invoice dated 16 November 2009, again, I accept the respondents’ submission, on the limited evidence available, that there is a good deal of variation in the way customers are identified in Chinese fabric invoices. Having said that, it does seem odd that the person completing the invoice would have set out the customer name in a full and formal way, but the product description in a casual way.
198. However, there is also the fact that the Da Shun invoices in the sequence surrounding the butterfly print invoice were provided to the court. That tends to suggest that the butterfly print invoice is genuine. The alternative is that the whole series of invoices were forged. If that had happened, one would have expected the forgeries to be more consistent in product description and customer name than the invoices that have been provided to the court.
199. In relation to the delays in the manufacturing and delivery, it seems to me to be entirely plausible that Allure:
     1. would take one week to make 150 garments, once it actually started making them;
     2. would process orders in the order that they were received;
     100. would have been busy in November 2009;
     4. would have started on Quick Fashion’s order close to the end of November 2009; and
     5. would have finished Quick Fashion’s order, including any quality checking, by about 5 December 2009.
200. It also seems to me that Ms Su’s evidence that:
     1. it takes four to seven weeks to receive garments after the order is placed;
     2. it takes seven weeks at busy times;
     100. November is a busy time; and
     4. the Chinese authorities inspect exports;

is reasonably plausible.

201. In relation to the delay between the packing list dated 5 December 2009 and the dispatch of the garments on 29 December 2009, I note that Ms Ling, a director of Ladakh, said, in relation to her own packing lists at CB993 and CB994, that it was necessary to do two packing lists for the same shipment. She said it was necessary to do one list a week or 10 days in advance of the shipment, for the purposes of making the booking, and then do another one to actually send with the shipment.
202. That may be so. If that is what happened in this case, there should have been a second packing list, perhaps with a later date. However, it has not been provided to the court. I can only assume that there was only one packing list in the present case. Consequently, the only explanation for the delay between 5 December 2009 and 29 December 2009 is that the Chinese authorities may have been very slow to inspect the products in this case. That does not seem to me to be a particularly compelling explanation. This matter gives rise to a reasonable suspicion that the respondents have fabricated their case.
203. However, I do not consider that the delay between 5 and 29 December 2009, alone or in combination with the other matters identified by Ladakh, is sufficient to persuade the court that that Ms Su and Ms Lin have conspired to lie to the court and place forged documents before the court. Something may simply have gone wrong in the export process. It is a big leap to make findings of conspiracy, lies and forgery from the limited evidence that is before the court in this case.
204. It should also be noted that Ms Su and Ms Lin are both young women who are employees of Quick Fashion and Allure respectively. They both gave evidence in what appeared to be a frank and forthright manner. Ms Lin in particular seemed to be genuinely affronted by the suggestion that she was not telling the truth.
205. All in all, I have some doubts about the version of events told by Ms Su and Ms Lin. However, those doubts do not reach a level that would permit a finding that the respondents’ case is a web of lies and forged documents.

Conclusion

206. It is obvious that Ladakh’s butterfly drawing has been copied by someone. It is natural that suspicion would fall on Quick Fashion, which arranged for the manufacture of garments made from the copied fabric. However, Quick Fashion’s explanation, that it acquired the fabric through a third party, with the butterfly drawing already printed on it, is plausible. That explanation contains some aspects that give rise to a suspicion that Quick Fashion’s witnesses have not told the truth. However, the grounds for suspicion do not rise to a level that would justify the very serious findings that the respondents’ witnesses conspired to and did lie to the court and forge documents to place before the court.
207. That is, I am not satisfied that Ladakh has proved that Quick Fashion was instrumental in the copying of Ladakh’s butterfly drawing. Moreover, I am satisfied that Quick Fashion has proved that it was not instrumental in copying Ladakh’s butterfly drawing.
208. Consequently, questions of indirect infringement, authorisation and damages do not arise. The application must be dismissed.

I certify that the preceding two hundred and eight (208) paragraphs are a true copy of the reasons for judgment of Riley FM

Date: 2 September 2011

ANNEXURE A

ANNEXURE B.1

ANNEXURE B.2

ANNEXURE C

ANNEXURE D

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[1] Tamawood v Henley Arch [2004] FCAFC 78; (2004) 61 IPR 378 at [44] per Wilcox & Lindgren JJ; Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd [2001] FCA 1636; (2001) 116 FCR 448 at [19]; Vawdrey v Krueger [2009] FCAFC 156; (2009) 261 ALR 269 at [25]; Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 461 IPR 309 at 313-314.
[2] Ladakh’s submissions filed 2 May 2011 paragraph 136