CATCHWORDS Trade Practices - metal, woodburning fireplaces - copyright - whether substantial reproduction - non-expert defence - application of artistic work as individual design without registration of design - misleading and deceptive conduct ~ passing off - injunction - delivery up of products - damages - appropriate relief Trade Practices Act 1974, s.52 r Copyright Act 1968, ss.71, 74, 77, 115(2) and 116 (2) Designs Act 1906, s.18 FIRE NYMPH PRODUCTS LIMITED and ALPEN HOLDINGS PTY. LTD. v. JALCO PRODUCTS (W.A.) PTY. LTD. KENT HEATING LTD. and ALPEN HOLDINGS PTY. LTD. v. JALCO PRODUCTS (W.A.) PTY. LTD. Nos. WA Gi of 1982 WA Gli of 1982 Toohey J. Perth 5 May 1983 of "y IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Nos. WA Gl of 1982 WA Gil of 1982 BETWEEN FIRE NYMPH PRODUCTS LIMITED and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.) PTY. LTD. Respondent KENT HEATING LTD. and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.} PTY. LTD. Respondent Oo R D £E R JUDGE MAKING ORDER 2 Toohey J. DATE OF ORDER 3 5 May 1983 WHERE MADE z Perth THE COURT ORDERS THAT: 1. Each application stand for judgment on a date to be fixed. 2. Not less than 3 days before motion for judgment the solicitors for the applicants in WA G11 of 1982 lodge with the District Registrar and serve on the solicitors for the respondent a minute of the judgment for which they intend to move in that application. Not less than 3 days before motion for judgment the solicitors for the respondent lodge with the District Registrar and serve on the solicitors for the applicants in WA Gl of 1982 a minute of the judgment for which they intend to move in that application. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Nos. WA Gl of 1982 WA Gli of 1982 BETWEEN ; FIRE NYMPH PRODUCTS LIMITED and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.) PTY. LTD. Respondent KENT HEATING LTD. and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.) PTY. LTD. Respondent CONTENTS Page Introduction 1 The Applications 2 The Evidence 4 Development of Fire Nymph Products 4 Development of Kent Products 7 Development of Jalco Products - Evidence 11 Development of Jalco Products - Conclusions 29 Comparisons - Alpine v. Nordanse and Nordess 31 2. Comparisons - Kent Tile Fire v. Jalco Home Fire (Freestanding Model) Comparisons - Kent Log Fire v. Jalco Home Fire (Inbuilt Model) Jalco Inbuilt and Freestanding Units - Model A Copyright Copyright - Fire Nymph Copyright - Kent Breach of Copyright - General Observations Was there a Breach of Copyright? - Fire Nymph v. Jalco Was there a Breach of Copyright? - Kent Tile Fire v. Jalico Freestanding Unit Was there a Breach of Copyright? - Kent Log Fire v. Jaico Inbuilt Unit Copyright - The Non Expert Defence Copyright - Application of Artistic Work as Industrial Design without Registration of Design Misleading or Deceptive Conduct - The Claim Misleading or Deceptive Conduct - The Evidence Passing Off Summary of Findings and Conclusions Relief to be Granted 3740 7375 IN THE FEDERAL COURT ) OF AUSTRALIA ) : WESTERN AUSTRALIA ) Nos. WA Gl of 1982 DISTRICT REGISTRY ) WA G11 of 1982 GENERAL DIVISION ) BETWEEN : FIRE NYMPH PRODUCTS LIMITED and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.) PTY. LTD. Respondent KENT HEATING LTD. and ALPEN HOLDINGS PTY. LTD. Applicants and JALCO PRODUCTS (W.A.) PTY. LTD. Respondent CORAM: TOOHEY J. 5 May 1983 REASONS FOR JUDGMENT INTRODUCTION This litigation is about metal fireplaces, wood burning fireplaces. There was no order for consolidation of the two actions but, at the request of the parties, I agreed to hear them together. They raise common questions of law and to some 2. extent of fact though the applicants' products are different from each other. It 1s convenient to deliver one set of reasons for judgment, drawing a distinction between the two applications where distinction needs to be drawn. THE APPLICATIONS The first application concerns Fire Nymph Products Limited ("Fire Nymph"), a New Zealand company; Alpen Holdings Pty. Ltd. ("Alpen"), a West Australian company; and Jalco Products (W.A.}) Pty. Ltd. ("Jalco"), also a West Australian company. The second application concerns Kent Heating Ltd. ("Kent"), a New Zealand company; and Alpen and Jalco, already mentioned. Although Fire Nymph and Kent are New Zealand companies, they are not connected in any way. They do however distribute their products in Western Australia through Alpen. They distribute their products elsewhere in Australia but no other distributor is involved in these proceedings. In or about 1977 Fire Nymph designed, developed and manufactured a metal fireplace which is sold under the name "Alpine". It has marketed those fireplaces in New Zealand since 1978, in New South Wales and Victoria since July 1979 and in South Australia and Western Australia since early 1980. Fire Nymph contends that its fireplace has a distinctive appearance and design and an unique interior system; that its product has become widely known in Australia as a result of advertising and promotion; and that the Alpine fireplace is distinctive in appearance and design, readily recognizable by members of the public as Fire Nymph's product. Fire Nymph claims that 1n or about December 1980 Jalco copied the design of the Alpine fireplace and since then has, in Australia, manufactured and marketed fire- places under the names "Nordanse" and "Nordess", which are almost identical in design, dimension and appearance to the Alpine fireplace so that the public has been led to believe that Nordanse and Nordess are Australian versions of Alpine. Jalco denies those allegations. In or about 1978 Kent acquired a licence to Manufacture and distribute throughout New Zealand and overseas a log burning heater known as the "Kent Log Fire". In 1979 Kent designed and began manufacturing a variation of the Kent Log Fire known as the "Kent Tile Fire". Kent has been marketing its heaters in Australia since 1978. The essential difference between the log fire and the tile fire is that the former is inbuilt while the latter is freestanding. Kent contends that its log fire and tile fire are distinctive in appearance and design, readily . recognizable by members of the public as its products, and that through advertising and promotion those products have become widely known in Australia. It alleges that in or about November 1981 Jalco copied the design of the log fire 4. and tile fire and proceeded to manufacture and market heaters under the names "Home Fire Inbuilt Model" and "Home Fire Free Standing Model". Kent claims that the former is almost identical in design, dimensions and appearance to the log fire and that the latter is almost identical to the tile fire. In the first application Fire Nymph and Alpen, and in the second application Kent and Alpen, seek relief against Jalco by way of injunction, damages and the delivery up of offending products. They rely upon three causes of action - breach of copyright, passing off, and misleading and deceptive conduct under the Trade Practices Act 1974. The claims for breach of copyright are brought only by Fire Nymph and Kent; Alpen makes no claim in that regard. THE EVIDENCE Much evidence, oral and written, was adduced by the parties and it is appropriate now to consider aspects of that evidence in regard to each of the applications. DEVELOPMENT OF FIRE NYMPH PRODUCTS Norman Wilkinson has been the managing director of Fire Nymph since its incorporation in 1974. He described how, after manufacturing some models which have now been discontinued, the company produced the Alpine 900 and the Alpine 700. The former is slightly larger than the latter, the numbering being descriptive of the width of each unit. The earlier models produced by Fire Nymph were open fireplaces and the intention in developing the Alpine was to combine the notion of an open fireplace with that of a high performance slow combustion heater. The open fireplace appeals to many people but it is inefficient. What Fire Nymph was seeking to achieve was a fireplace with glass doors, giving some of the appearance of an open fire with the efficiency of a slow combustion burner. Folding back the doors emphasises the aspect of open fire, though at the expense of efficiency. A succinct description of the Alpine, borrowed from the report of Dr. J.J. Todd whose evidence is referred to later in these reasons, is that it is an enclosed non- airtight heater with a grate, ash pan, flue damper, glass panelled doors and multiple skins to reduce surface temperatures. Its external appearance is characterised by large glass doors, glass side panels and a sloping hood above the doors. Asked to identify the functional features of the Alpine, Mr. Wilkinson referred to the controlled entry of air under the grate and over the ash to pre-heat the ash pan chamber, and to the grate itself which is of cast iron to cope with different fuels (wood and coal). Also significant is the combustion chamber. In earlier experiments Fire Nymph found that the heat would go directly up the chimney so it sought to have the surface area of the top of the fire-box exposed to the heat. A backing plate behind the grate was designed to do this. But this had the effect of rolling smoke down on to the glass doors and dirtying them. To overcome this the company designed a smoke shelf at the top of the combustion chamber. This directed the snoke away from the glass doors. Mr. Wilkinson added : "... the flue is actually overset behind the back of the fire-box. That allowed us to have more room to the surface area in the front and eventually allowed us to use a ducting system up the back which would help keep the rear wall cool. I believe that 1s unique with our fireplace". As to the damper arrangement, he mentioned that normally in a fireplace the damper 1s operated with a handle beside the flue. In the case of the Alpine, to avoid the situation of a control at the top where there was a hot air outlet, the control was brought down to the front of the unit. The damper unit is a separate unit that can be removed and replaced if necessary. Asked about the 'skin' of the fireplace, Mr. Wilkinson answered : "When we came to develop the Alpine we found ... the heat rise was quite dramatic within the unit and we found that we had to devise a second type of ducting system within the unit to form double flows through to protect the outside skin. We achieved this and we have, to my knowledge, the only fireplace with protected copper on the outside, it is protected by a lacquering - except for of course, another one in court at the moment". This was a reference to the Jalco Nordess tendered in evidence. Other less significant features were described by Mr. Wilkinson. There are side covers of a particular configuration to balance the large ashpan in the base. There are runners. There is an airflow underneath the unit to protect the floor, and the airflow up through the unit is related to the design of the base. There 1s on top of the unit a guard or screen to protect children from the flue and also to protect the wall at the back of the unit. DEVELOPMENT OF KENT PRODUCTS Robert Noel Lockhart has been the managing director of Kent for 17 years. He is a qualified engineer. Mr. Lockhart described how Kent began as a small company making oil fired heating equipment. At the time of the oil crisis, he said, "the market crashed quite dramatically for oil heating and we switched to solid fuel heating and we have built up quite a substantial business now in wood- burning heating". Mr. Lockhart estimated that Kent has about 80% of the New Zealand market for wood-burning stoves and about 20% of the Australian market. It distributes and sells to the United States, Canada, Europe and Chile. He described the development of Kent's wood-burning appliances. In the 1960's a New Zealander, Anthony Barker, was working on the idea of a wood-burning appliance. Mr. Barker had a technical background in chemistry. He had developed prototypes in which Kent was interested but which it felt were not yet ata marketable stage. Kent entered into an agreement with Barker so that, building on his ideas, the company could develop a marketable product. In return Barker received money under a written agreement. The Kent log fire and tile fire function in this way. Air for combustion flows in through the top of the unit, changes from white to blue and flows down inside the door. This has the dual effect of keeping the door glass clean and at the same time preheating air for combustion. Through a natural draught, the system is connected to a flue which develops a negative pressure inside the heater causing air to be induced into the heater. The air flows to the bottom of the heater and circulates through the wood. Gases then circulate within the primary combustion chamber, immediately above which is a secondary burning chamber and a baffle. The secondary chamber serves to complete the combustion of the wood. Wood is composed of about 80% volatile material and about 20% solid material; the volatile material has a very high energy content. In an ordinary open fireplace the smoke goes up the chimney and that heat and accompanying energy are lost. In the Kent units the volatile material is burned almost completely, through a combination of primary and secondary combustion chambers. , Immediately below the flue there is a bypass damper arrangement which can be opened and closed. It is opened when the heater is first lit and the gases then bypass straight up the chimney. After the heater warms,up the bypass damper may be closed and the only way out for the gases is through the secondary chamber where the temperature is elevated and complete combustion occurs. The bypass damper is also used when refuelling the heater. When the door 1s open the damper apens at the same time; this ensures that the flame will not come through the door but will pass up through the chimney, thereby operating as a safety device. Asked to describe the principal functional character- istics of the Kent design, Mr. Lockhart answered : "The main functional chracteristics are a sealed combustion chamber with a door which will ensure that the only air which can be admitted is through the air inlet and in our case it 1s shown at the top. The second is the deflector which deflects the air down inside the glass keeping the glass clean and ensuring that a visual flame is there all the time. The third is the secondary chamber which permits the gases to burn completely. The fourth one would be the bypass damper arrangement inside the secondary chamber, isolating it from the primary chamber". Mr. Lockhart stated that at the time the Kent units were being developed there were no other heaters, of which he was aware, having these functional characteristics. In terms of wood-burning heating appliances, the most common was the open 10. fireplace. There were some sealed units, mainly coal burning, which had refractory linings and cast iron grates, some with solid doors and some with doors with small glass apertures. There was the Scandanavian type of cast iron stove or pot bellied stove. Also there was a canopy type freestanding fireplace. According to Mr. Lockhart, what Kent was seeking was a heater which could be used as an insert into a fire- place or as a freestanding heater. The company was looking at a heater that could burn natural timber efficiently; that could be used for cooking and heating water to some extent,and that contained a large combustion chamber holding sufficient wood to enable the heater to operate overnight. The first log fire produced commercially by Kent was in 1978 and the first tile fire was in 1979. The log fire was generally available in Australia from 1979 onwards and in early 1980 the tile fire was introduced to this country. Kent's heaters have not remained identical in design since they were first manufactured. Mr. Lockhart expressed the view that although there had been some changes, with the tile fire it would be very difficult to detect them. The log fire has changed in appearance but the original unit is still in production to meet requests made from time to time, Although they function in a similar way, the log fire and tile fire are not alike in appearance. The combustion chamber of the log fire is of plate steel and once installed what is 11. visible 1s a metal front with glass door and grille above. The freestanding tile fire is rectangular with ceramic tiles on each side. It has a single door with glass panel and a patterned perforated metal grille on top. The flue is of course visible. DEVELOPMENT OF JALCO PRODUCTS ~— EVIDENCE Jalco is a West Australian company, in business for more than 30 years. It has manufactured a wide range of products including bathroom cabinets, kitchen canopies, flue kits and fireplaces. It was described by its managing director, Richard Pangbourne Bird, as a "general sheetmetal jobbing-type company". Mr. Bird has been the managing director of Jalco for about 3 years; during that period Jalco began to manufacture the units which have given rise to this litigation. The manufacture of fireplaces and flue kits is the most substantial part of Jalco's business; it was estimated by Mr. Bird at 65% to 70%. In 1980 Jalco made a decision to get more involved in the solid fuel heating industry because 1t was believed to have growth potential. The company spent a lot of time and money developing new products. A brochure tendered in evidence (exhibit 60) shows the range of Jalco heating products being offered for sale in 1981. There are a number of fireplaces. Some are open and a few, the Nordess and Nordanse in particular, have doors. 12. The brochure contains a sketch showing the outline of an appliance and a number of arrows. Mr. Bird explained that the sketch was intended to demonstrate "the flow of convected air around an internal fire-box and out into the room at the top of the fire-box". He further explained that a number of the heaters shown in the brochure embodied that principle as did other heaters which did not appear but which were manufactured by Jalco and marketed through other companies. According to Mr. Bird, Jalco came to be involved in the development of the Nordanse and Nordess in this way. Jalco was selling fireplaces in other States and in particular to a company in South Australia. One of the proprietors of that company rang Mr. Bird one day to say that he had in his premises a fireplace called the Fire Nymph and suggested that Jalco look at it. In August 1980 Jalco received from South Australia what was referred to as an Alpine Nymph. Mr. Bird described the unit as similar to the Fire Nymph tendered in evidence. He said that he was not impressed with the appearance of the Fire Nymph but 1t was put in Jalco's showroom and much to his surprise it was sold rather guickly. However, before it was sold Mr. Bird asked one of Jalco's senior employees, Mr. Baldwin or Mr. Davis, to examine the unit. Mr. Baldwin is the works manager of the company; he is a sheetmetal worker by occupation and 13. has been employed by Jalco for over 20 years. Mr. Davis is also a sheetmetal worker and he has been employed by Jalco for nearly 20 years. Mr. Bird did not think that the Fire Nymph unit was dismantled by the company's employees but steps were taken to get hold of some brochures. According to Mr. Bird : "We studied it primarily to find out whether the design of the product was registered, whether there were any patents on it or anything of that nature. Having sought legal advice on this I then suggested, through our methods of production, that we produce something sim1zlar to it". Notwithstanding Mr. Bird's expressed concern as to whether any patent existed in respect of the Fire Nymph and the consultation of a patent attorney, his investigations were cursory. Apart from the attorney's examination of the brochure itself to see whether any mention was made of a design registration or patent, no steps by way of search or otherwise were taken. Jalco then began the development of the Nordanse and Nordess appliances, experimenting with prototypes. It was just before Christmas 1980 that, In Mr. Bird's words, "we finally came up with a product that worked". 14. Mr. Bird himself played little part in the development of the Nordanse and Nordess. This was left mainly to Mr. Baldwin, from the design viewpoint, and to Mr. Davis, on the construction side. The first units built had straight tops. Mr. Baldwin thought that it would be more aesthetically pleasing if the top was scalloped as had been other units built by Jalco over the years. Nordanse was the name given to the unit as first designed; with the scalloped top it was called Nordess. The latter was so clearly more acceptable to buyers that Jalco ceased making the Nordanse about February or March 1981. It was not suggested by Jalco that there was any difference between the Nordess and Nordanse produced for sale other than the shape of the hood or canopy. The production of Jalco's inbuilt and freestanding units came about in this way. According to Mr. Bird, early in 1981 he "issued a directive to our staff to develop a slow combustion fireplace with a glass door, believing this was the way the market was going". 15. Mr. Bird was adamant that the units should have two doors not one, because he believed that people like to see as much of the fire as possible. Various prototypes were built but they were not successful, primarily because of inability to control the air flow. This meant that doors were not as clean as was thought desirable nor could the requisite degree of slow combustion be obtained. As a result the notion of a two doored unit was abandoned and about June 1981 Jalco began to look at a unit with a single door. Once again various prototypes were built until what Mr. Bird described as "a successful fire-box" was produced about October 1981. While this development was taking place, Jalco had in its possession brochures relating to appliances produced by a number of companies including Kent. The prototypes that Jalco was developing bore resemblance to several of these products. These prototypes, said Mr. Bird, were not built from engineering drawings. This may seem curious; he explained it in this way : "First of all we did not have the capability of doing these drawings that really meant anything and, secondly, we have found by experience that we can produce these units without drawings. It was basically - what would you call it - a suck-it- and-see exercise, trial and error, build and then rebuild". 16. Although this seems a strange way for a company to conduct its operations, Mr. Bird's evidence in this respect was corroborated by that of Mr. Baldwin and Mr. Davis. I accept that explanation as to the way un which Jalco developed its inbuilt and freestanding units. With the Jalco freestanding unit, it was decided to place a decorative surround on the side walls. Mr. Bird suggested to Mr. Baldwin that tiles be used for they could be changed to suit the decor. The building of the Jalco inbuilt model was described by Mr. Bird as "a different kettle of fish altogether -.-- what I wanted to achieve was a unit that would take the place of the old Vulcan oil heaters because oil was getting expensive and if we could develop a unit that you could literally put in the place of an old Vulcan oil heater I believed we would have something that was very marketable". To do this, according to Mr. Bird, a number of things were necessary. The dimensions of the fire-box had to be smaller than those of the freestanding model, the dimensions of the former being very much controlled by the dimensions of the Vulcan oil heater. It was necessary to put a casing around the inbuilt model to 17. direct the flow of outer air and then to make a fascia panel. A decision was made, said Mr. Bird, that as the Vulcan o11 heaters had been so successful 1t would be as well to settle for a fascia which was not dissimilar, "That is precisely what we did". While this development was taking place, Mr. Bird was aware of the Kent log fire. With Mr. Baldwin he had seen one in the display room of the Housing Industries Association in West Perth about the middle of 1981. They did not take any measurement of 1t. And, said Mr. Bird, he did not take any measurement of the tile fire when he first saw one at Esperance about May 1981. Mr. Bird stated that he had seen tiles on appliances other than the Kent model, more accurately that he had seen brochures from Italy and the United States showing tile sided fires,and these had been available to him as early as 1980. Late in 1981 Jalco produced its first run of 20 inbuilt and freestanding units. The fire-boxes were identical except that 10 were 100mm shorter than the others, so that they might fit into fireplaces designed to take the Vulcan heater. In those 20 units the air inlet was above the door in the fire-box itself and there was a baffle plate and a bypass damper at the back, Asked whether the 1nternal configuration of those 20 units was in any way similar to the Kent units, Mr. Bird answered "Yes, very similar". 18. Thereafter Mr. Bird sought advice from a patent attorney in Canberra and was told that Kent had applied for a patent which included an air inlet at the top and that if at were granted Jalco could well be infringing the patent. The attorney's advice was that it would be unwise for Jalco to continue to develop units with air inlets at the top. As a result of this advice, Jalco altered the position of the air inlet on its units to the bottom. Of those original 20 units, most were sold. Mr. Bird believed that the patent attorney still had one; he had one and a former partner of his had one. Further modifications were made to the Jalco inbuilt and freestanding units. A secondary baffle plate was installed because the air was no longer circulating around the fire-box but was going straight to the top. The Kent units have a bypass damper consisting of a heavy circular plate which moves over a circular hole. The Jalco units have a bypass damper that sits at the back of the unit but is in the form of a flap on a 45 degree angle plate with a hole in it. The flap opens and closes the hole. That design was embodied 1n the Jalco units about March 1982. Mr. Baldwin explained that he did no construction work himself on the Nordess or Nordanse or on the inbuilt and freestanding models. His role was to discuss with Mr. Davis how the units were to be built to be put into production. 19. He confirmed the origin of the Nordess and Nordanse in the arrival of the Fire Nymph from Adelaide. At that time Jalco was having problems with some of the units it was developing. In trying to keep the fire-box as small as possible there was a tendency for the unit to smoke at the front rather than draw efficiently up the chimney. According to Mr. Baldwin, after the arrival of the Fire Nymph Jalco built a unit from measurements taken from 1t. Mr. Baldwin did not himself take measurements from the Fire Nymph but he believed that Mr. Davis did. The prototype was built without any glass enclosure, being just an internal fire-box. It was found to smoke. Thereafter Jalco went about enclosing the unit with glass to see if this made a difference to the draw. It did reduce the air coming into the unit which performed better. But it was not entirely satisfactory; there was still some smoking on the side glass. Thereafter Jalco completed a unit with the outer casings. As already mentioned, it was Mr. Baldwin who thought that a concave top would improve the appearance of the unit Jalco was developing. Mr. Baldwin described various changes that were made in the course of development. A bar across the 20. front of the unit was raised and lowered; the size of the flue was increased. Asked whether Jalco had in fact deliberately copied the Fire Nymph unit, Mr. Baldwin replied : "It was certainly similar to but as an absolute copy I would say, no, 1t was not an absolute copy because it had various components that we had built into it. In other words, by saying components I mean, by ways of forming the hearth around the ash box, the body of the fire- box which we decided to bend in one piece rather than various pieces, to that extent, no. it is not an exact copy". Questioned about the development of the inbuilt and -free- standing models, Mr. Baldwin commented that early in 1981 Mr. Bird had asked him and Mr. Davis to produce a slow combustion fire box. They did so but it was not successful. They did in fact try to use the configuration of the Nordess front and turn it into a true slow combustion unit but this too was not successful. About the middie of 1981 they began to develop a two door model, without the configuration of side glass, but again without success. In all these units, air was coming in through the grate. It seems that the main problem lay in keeping the glass clean. Mr. Baldwin described how he looked at brochures published by other manufacturers including Kent to see how they appeared to deal with the problem. He explained : 21. "We noted that the air inlet to these fire-boxes was common between these three [referring to the Woodsman, Warm Airand Kent]. They were all delivered in a very similar manner, at the top of the unit and directed towards the glass panel, which obviously indicated to us that 1t was there for the purpose of keeping the glass clean and introducing the air at the base of the fire-box". With this in mind Jalco proceeded to build a unit similar to the Woodsman with the configuration of an octagonal fire-box. In further development a unit was built similar to the Kent fire-box, using that air delivery method. Later the flue diameter was altered. In order to overcome the problem of a sticking air slide control a heavier bar was used. Ultimately, in October or November 1981, a prototype was arrived at which appeared to be satisfactory. Asked whether that prototype was a direct copy of the Kent appliances, Mr. Baldwin replied : "Not an absolute direct copy although we used the air flow system from the fire-box because to absolutely copy it - we did not really have machinery capacity to copy it in that manner, to that degree". Mr. Baldwin acknowledged that what he extracted from the Kent brochures and from an inspection of the Kent unit were the approximate measurements of the fire~-box (length, heaght and width) and its air delivery system. As to the Jalco freestanding appliance, it was decided that tiles on the side of the unit improved its appearance and so these were incorporated. 22. Mr. Baldwin confirmed Mr. Bird's evidence as to the absence of detailed working drawings. He explained that as Mr. Davis built the prototypes he (Mr. Davis) took measurements which he then recorded. With this record it was possible to provide a cutting list for the body of the unit, that is the fire-box. A cutting list with measurements was given to Elders Metal Ltd. and was used continuously. A phone call with an order number and identifying the model as freestanding or inbuilt was sufficient to obtain components. As Christmas 1981 approached Jalco was anxious to get its units finalised. Mr. Baldwin came up with the idea of designing the fascia panel of the inbuilt unit as a Vulcan oil heater or similar thereto. He thought that as the Vulcan unit had been successful over many years it must be aesthetically pleasing to the public. In answer to a question whether the design of the casing of the inbuilt model was influenced by any Kent appliance, Mr. Baldwin answered : 23. "No. The actual configuration of the louvres were derived from the Woodsman unit because, at that particular time, we did have a Woodsman in the factory". Mr. Baldwin explained, as Mr. Bird had explained, that the size of the fire-box for the inbuilt model was governed by the desire to provide a unit which would replace existing oil heaters without the need to alter the brick work in the fireplace. Once these changes had been made the production run took place of 20 units, 10 inbuilt and 10 freestanding. Mr. Baldwin agreed that the freestanding units had an anternal configuration similar to the Kent units, In January 1981 a change was made to the Jalco units, affecting the second batch produced. The air inlet was moved from above the door to the bottom of the unit. To give effect to this change of position, the cutting lists had to be revised to allow for extra components. Mr. Davis was the person most directly concerned with construction of the Jalco units. He recalled seeing a Fire Nymph Alpine in Jalco's premises in August or September 1980. Mr. Baldwin asked him to look at it and then asked him what he thought of it. Mr. Davis thought it was very - impressive. Mr. Baldwin asked him to make some sketches of the unit before it was taken away by the customer 24, who had bought it. Mr. Davis did so. Asked what sort of examination he had made in order to prepare the sketches, Mr. Davis replied : "The appliance is in such a way that you can see down through the top of it. You can open the doors and inspect the inside section with ease. You can remove the ashpan and inspect all those details without much trouble. The thing that I thought was impressive about the unit or that struck me was the fact that it was a very narrow unit compared with the ones that we had been experimenting with before this one came on the scene". By 'narrow' Mr. Davis meant from front to back. Mr. Davis was puzzled why the fire-box did not smoke since Jalco had had so many problems with smoke in the models it had thus far developed. His interest was only in the fire-box. He said < "I might add that at no time was it ever suggested to me by Mr. Baldwin that we were undergoing a project here that would result 1n a complete copy of this unit". Having made sketches and taken measurements -in an exercise book, Mr. Davis, on instructions from Mr. Baldwin, proceeded to make°up a fire-box. It had no glass and did smoke out the front. It was then thought that perhaps a bigger flue might rectify the problem. Jalco carried out a number of experiments aimed at reducing the smoke problem. 25. Finally, Mr. Davis installed doors on the prototype, doing so from his own specifications. Asked about any resemblance between the first prototype and the Alpine unit, Mr. Davis replied : "The first prototype would have been probably near identical as much as I could have possibly made it, going by the measurements I have here and by what I was able to remember from actually my visual inspection of it". Mr. Davis described the changes that took place between the first prototype and the final model which was ready by Christmas 1981. In trying to eliminate the smoke problem various components of the fireplace had to be altered. That involved cutting sections off and welding other sections on the unit. He summed 1t up in this way : "ZT did not change things probably to a great extent from the Fire Nymph design. It was still very much along the same appearance as that although, as I say, we did a lot of things differently from a manufacturing point of view". He explained this by saying that when he first saw the Fire Nymph unit he was amazed at the number of little bits and pieces, particularly in the ashpan area. He therefore set to work to make a unit of 26. more simple construction with less components. Mr. Davis pointed out that the prototype developed by Jalco at the end of 1980 differed from earlier prototypes in having the damper control coming out of the top and having a handle protruding from the bottom of the heater, rather than the top- Asked to describe the differences between the earlier prototype and the final model, Mr. Davis referred to the canopy section which became concave on the Nordess instead of straight-sided. The grate was different, being pressed steel rather than cast iron. In the earlier model, where the air inlet was at the bottom of the fireplace, there was an ashpan in the form of a slide operating by a handle moved from right to left to let air in underneath the fire. The damper control was at the top and operated at the top. In the later model the controls for the air inlet and the damper are in the front left hand side. It is apparent from Mr. Davis' evidence that Jalco made a conscious decision to introduce some variations to the Alpine design. For instance he thought it would be far cheaper to put the air inlet in the front of the ashpan, so that the front of the 27. ashpan and the slide were all constructed as one, making it easier to assemble all the front section under the fire-box without a need for an air inlet in that area. Mr. Davis referred to differences in the back plate : ".,. you will notice in the drawing theirs is bent in such a way to strengthen it on the bottom, with a box section by the looks of it. We left ours at the bottom with a raw edge and simply tucked it ... behind an angle iron frame which eliminated it from buckling with the heat. The top section of the Alpine has got a raw edge which means there are no angled bends on it to strengthen it, but ours we bent back towards the back of the fire and then bent 1t down again so that also hooked into an angle iron frame. That was simply to locate 1t and stop it from buckling". As to the top plate, Mr. Davis described that on the Alpine as sloping down to the plinth and being fully welded raght out to the outside edge of the front glass section. The Nordess 1s made in two sections - the middle section over the glass doors being separate from the two end pieces of the glass side panel. As to the skin of the fire-box, Mr. Davis said that Jalco was quite familiar with the notion of protecting the outside skin of aq fireplace. It had built units to give 28. effect to this concept so that having constructed the fire-box it was just a matter of making up suitable components. In cross-examination Mr. Davis was then asked to compare exhibit 35, 'exploded' or sectional drawings of the Alpine, with a notional exploded drawing of the Nordess and Nordanse appliances. For the most part he denied any close resemblance in this regard. I deal expressly with a comparison of the units later in these reasons. When the prototype was completed about Christmas 1980, it was for Mr. Davis to prepare cutting and bending or processing lists. He said that he was quite familiar with all the components and as the prototype was being developed "... I noted all the various parts, the measurements of them and their bends and so forth, and from that I was able then to draw up a complete cutting list which would be for the guillotine operator, all the various metals, their gauges and so forth. Then it was necessary for me to make up patterns in order to show where the various bends were, the angles required, holes and slots etcetera that were needed to be in those various parts. It was left to me to prepare all those things". I accept Mr. Davis' evidence that, however unprofessional it may seem, he did not work from detailed drawings but provided cutting and bending lists to Elders Metal Ltd. Mr. Davis was involved in the development of the inbuilt and freestanding appliances. Early in 1981 he was told, either by Mr. Bird or Mr. Baldwin, that the company 29. wished to move into the slow combustion side of fireplaces. In his words "We agreed that we would try and make a slow combustion unit along the same lines as the front of the Nordess with the idea being the main part of the fireplace would be inside the brick work of an open fire and the glassed area would be able to protrude out more on to the hearth of the brick work, so I was instructed to make up a fire-box along that line. This I consequently did". Mr. Davis described how Jalco tried first to make a slow combustion unit with two large glass doors. Although the fire-box worked quite well, there were problems with the glass smoking up. In the end it was decided to keep the glass area smaller. By that time there were in Jalco's office brochures relating to Kent and Warm Air units. I infer from his evidence that these provided some assistance to Jalco in deciding on the final shape of the glass doors. DEVELOPMENT OF JALCO PRODUCTS - CONCLUSIONS From the totality of the evidence of Messrs. Bird, Baldwin and Davis I draw these conclusions : 1. In 1980 Jalco made a decision to become more involved in the production of solid fuel heating units. 2. The initiative for the development of the Nordanse and Nordess came from the Fire Nymph sent from South Australia. Mr. Davis, on instructions, made sketches and took measurements of that unit. Jalco's 30. first prototype was made as near identical to the Fire Nymph as possible, having regard to the fact that the unit had been sold and Jalco was dependent upon measurements taken by Mr. Davis and his recollection of the unit. Various changes were made by Jalco as development proceeded. These changes were aimed at simplifying construction. Some changes were made consciously to avoid too close a resemblance to the Fire Nymph. The Nordess replaced the Nordanse, the difference between the two being in the design of the hood. The hood of the Nordanse was much closer in appearance to that of the Fire Nymph than was the hood of the Nordess. The initiative to develop the inbuilt and freestanding units came from a directive given by Mr. Bird early in 1981. The directive was to produce a unit with two doors but this proved difficult and in June 1981 Jalco began to look at the construction of a unit with one door. While Jalco was developing its inbuilt and freestanding units it had access to brochures for heating units produced by several companies including Kent and Warm Air. The prototypes bore resemblances to several of these units. In particular Jalco borrowed the air 31. flow system from the Kent £fire~box though lacking the expertise and equipment to make an exact copy. Mr. Bird and Mr. Baldwin looked at a Kent log fire about the middle of 1981. 7. The prototypes provided by Jalco and the finished products were not built from engineering drawings. As prototypes were made Mr. Davis took measurements which he recorded and in the end had a cutting list from which orders were placed with Elders Metals Ltd. 8. The dimensions of the inbuilt model were determined largely by those of the Vulcan oil heater, Jalco's hope being that this model would replace the Vulcan. The fascia panel of the inbuilt model was derived mainly from that of the Vulcan. COMPARISONS - ALPINE v. NORDANSE AND NORDESS As mentioned earlier, the Nordanse is no longer in production. It is however part of Alpine's claim. With its straight sloping hood, its resemblance to Fire Nymph's Alpine is more striking that is Jalco's current model, the Nordess. A comparison of the Alpine and Nordess was made in a report submitted by Dr. J.J. Todd, lecturer at the Centre for Environmental Studies, University of Tasmania. Dr. Todd had considerable experience in the energy field, in particular domestic heating, wood combustion, energy conservation and alternative energy systems. I accept his evidence. 32. In his report (exhibit 52) Dr. Todd commented : "The two heaters are of the same type, that 1s they are enclosed, non-airtight heaters with grates, ashpans, flue dampers, glass panelled doors and multiple skins to reduce surface temperatures. Their external appearances are characterised by their large glass doors and glass side panels and the sloping hood above the doors. The external appearance of the two heaters differs in that the Fire Nymph Alpine has straight sloping panels on the hood whereas the Jalco Nordess has concave panels on the hood. The dimensions of the combustion area are larger on the Jalco Nordess than on the Fire Nymph Alpine. The ratio of sold grate to grate openings on the Jalco Nordess 1s about 1.45:1 whereas on the Fire Nymph Alpine the ratio is 1.22:1. The Fire Nymph Alpine has a grate shaker, the Jalco Nordess does not. The layout of the combustion areas in the two heaters, that is the position of the grate, doors, side panels, rear heat liner, are very similar." The similarities and differences noted by Dr. Todd may be seen in the series of photographs, exhibit 43. COMPARISONS - KENT TILE FIRE v. JALCO HOME FIRE (FREESTANDING MODEL) The Kent tile fire and the Jalco home fire freestanding model were also the subject of a report by Dr. Todd (exhibit 51). He concluded : "The two heaters are remarkably similar un external appearance but they are not identical". I accept Dr. Todd's description of the two heaters which in any event wasborne out by a visual inspection in the court room itself. The similarities and differences may be summed up in this way. 9. 10. 11. 33. Both heaters are designed to have six 200mm x 200mm ceramic tiles attached to each side. Both heaters have identically patterned perforated metal grilleson top though their external dimensions are slightly different. Both heaters have single doors with a glass panel, the Kent with clear glass and the Jalco with mottled glass. Both heaters sit on metal pedestals of similar shape. Both heaters have a small metal spark or ashguard fixed below the door. The air inlet controls and the baffle bypass control are differently located though both models make use of small spherical handles on the controls. Externally the Kent is slightly wider and slightly taller than the Jalco; they are of about the same length. Both heaters make use of the top exiting flue located near the rear of the heater. The mounting feet on the heaters are different. Both heaters have a single air gap between the sides of the combustion chamber and the tiles. Both heaters have double air gaps between metal plates at the rear, the Jalco having a single heat shield under the fire box and the Kent a double heat shield. 34. Turning from the external appearance of the heaters to their combustion systems, these similarities and differences may be observed. 12. Both heaters have sheet steel fire boxes, neither making use of fire bricks in the combustion area and both relying on the build up of an ash bed to insulate the base of the fire. 13. Internally the fire boxes are of similar length but the Kent is slightly higher and somewhat wider. 14. Both heaters have a large baffle extending almost three quarters of the length. 15. The clearance between the baffle and the top of the heater is about 55mm for the Kent and 63mm for the Jalco. 16. Both heaters have a bypass damper through the baffle directly under the flue exit. The Kent has a catch system which only allows the door to be opened when the baffle damper is open whereas the Jalco has a lever arrangement which automatically opens the damper when the door is opened. 17. The dampers on the two heaters are shaped differently. 18. Both heaters have air tight seals around the door. 19, The most significant difference in the combustion systems of the two heaters is in the location of the air inlets. Both heaters direct the combustion 35. air onto the inside glass on the door but in the Kent the air enters from above the door and in the Jalco the air enters on both sides of the door. The air inlet control of the Kent is above the door and on the Jalco it is below. The operating characteristics of the two heaters are very similar but, as Dr. Todd observed, "it must be stressed that there are many factors which can influence how a heater operates and so these observations must be treated with caution" (exhibit 51 p.1). Dr. Todd's conclusion was in these terms : "Over all I consider the appearance, combustion system and performance of the two heaters as being very similar". I agree with this conclusion. COMPARISONS - KENT LOG FIRE v. JALCO HOME FIRE (INBUILT MODEL) From the very fact that the Kent log fire and Jalco home fire inbuilt unit is each inbuilt, the scope for resemblances in external appearance is more limited than in the case of the freestanding models. A comparison of the two units is complicated by a change in the external appearance of the Kent log fire since its inception. The most significant change in the Kent log fire has been in the number of grilles, reduced from 7 to 5. The Jalco home fire has 7 grilles, giving it a stronger resemblance to the earlier and now largely superceded Kent log fire than to the current model. Nevertheless, 36. there are similarities. They lie mainly in the overall dimensiors and shape of both units, the air slide cover, door and door handle, ash spill tray, knobs, flue diameter, air inlet, door hinge, double skin, mounting plinth and baffle, primary and secondary burning chambers, damper location and arrangement, front panels, and fascia surround. The appearance of individual grilles 1s similar but in the case of the Kent log fire, the reduction from 7 to 5 has lessened the overall resemblance of the units. JALCO INBUILT AND FREESTANDING UNITS - MODEL A In dealing with the development of the Jalco products I mentioned the decision by Jalco, on advice from a patent attorney, to alter the position of the air inlets on its units from the top to the bottom. For the purpose of the proceedings the earlier units, of which there were 20, were referred to as model A. The contemporary units were referred to as model B. In furnishing particulars of those aspects of Jalco's appliances said to be almost identical to Kent's units, Kent provided a list which included the following : "Top air inlet Deflector Rectangular damper arrangement". At the hearing counsel for the applicants made it clear that these similarities were alleged in respect of the earlier model A only. 37. When this hearing began counsel for the respondent stated that his client did not wish to fight the action so far as the model A units were concerned. In his words the respondent was : " ... quite content to give an undertaking to the court in terms of the relief sought in the statement of claim and to submit to any other consequential order which is appropriate". Thus whatever the outcome of the rest of the action, Kent is entitled to relief in respect of the 20 model A Jalco units. The nature and extent of that relief must be looked at in the context of the outcome overall of these proceedings. COPYRIGHT Each application asserts a breach of copyright on the part of Jalco. This contention gives rise to a number of questions of law and of fact. As a first step in making good their claim, Fire Nymph and Kent must each show the existence of drawings and writings capable of copyright and in which the copyright is vested in them. Although Jalco does not admit that Fire Nymph or Kent holds copyright in any of the material in question, largely consisting of drawings prepared by each company for the purpose of manufacturing its units, it does not dispute that the drawings themselves are capable of copyright. COPYRIGHT - FIRE NYMPH Fire Nymph claims copyright in the following material : (a) a series of drawings entitled "Fire Nymph Model 700 and 900 Room Heaters, dated 11 November 1979 and under 38. the hand of J.B. Duke. These drawings show in detail Fire Nymph fireplaces model 700 and model 900. (b) A drawing entitled "overall dimensions Alpine fireplace", dated 16 November 1979 and under the hand of J.B. Duke. This drawing depicts an Alpine fireplace. (c) The drawings and writings in Fire Nymph's installation and operating manual. Mr. Wilkinson identified a series of drawings (exhibit 35) as drawings prepared by Fire Nymph in connection with the development and manufacture of its fireplaces, being (a) and (b) above. He described them as : "... showing a series of parts and their inter-relationship to each other within the fireplace as a guide to assembly". He said those drawings were the property of Fire Nymph and I accept that evidence. Mr. W1lkinson then produced two brochures, both relating to the Fire Nymph Alpine. The first (exhibit 36) was published in February 1978 identifying the unit as a "Combination slow combustion and open fireplace". It contains a photograph of the unit, both series 900 and series 700, with sketches showing dimensions and features. The other brochure (exhibit 37) was published in 1980. Again it contains a photograph of the Alpine, reference to the series 900 and series 700, sketches of both units with dimensions and a cut away sketch showing features of both. 39. Mr. Wilkinson also produced documents in the form of Fire Nymph Alpine operating instructions (exhibit 38) and Fire Nymph Alpine location instructions (exhibit 39). As the names suggest, the operating instructions deal with the controls on the Alpine, the method of lighting a fire and the operating controls. The location instructions deal with such matters as hearth size and safe clearance requirements. I accept Mr. Wilkinson's evidence that the documents comprising the brochures and instructions are the property of Fire Nymph. As already mentioned, the respondent does not challenge that copyright subsists in the drawings and other documents to which I have referred. Copyright is therefore presumed to subsist in those works (Copyright Act 1968 s.126(a)). As to the ownership of that copyright, by reason of s.126(b) of the Act the applicant Fire Nymph is "presumed to be the owner of the copyright if (it) claims to be the owner of the copyright and the defendant does not put in 1ssue the question of his ownership". In terms of the pleadings the respondent does not deny that Fire Nymph is the owner of the copyright in the Material in question but it "makes no admission" as to the allegations contained in the relevant paragraph of the statement of claim. Can 1t be said that the respondent has not put in issue the question of ownership? In my view a submission to that effect on behalf of the applicants must be 40. rejected. Order 11 rule 13(1) of the Federal Court Rules provides, broadly speaking, that an allegation of fact made by a party in a pleading is deemed to be admitted by the opposite party unless traversed. Sub-rule (2) reads: "A traverse may be made either by a specific denial or by a statement of specific non admission". Thus either a denial or specific non admission operates to traverse an allegation and so, in my view, to put that allegation in issue. It did not emerge who was the author the drawings and material in question save that the drawings bore the name "J.B. Duke". The inference to be drawn from the evidence is that Mr. Duke was an employee of Fire Nymph. Section 35(6) of the Copyright Act provides that where a work to which neither of the two preceding sub-sections applies is made by an author in pursuance of the terms of his employment by another person under a contract of service, that other person is the owner of any copyright subsisting in the work. Neither sub-s.(4) nor (5) is applicable and in the absence of evidence to the contrary I conclude that Fire Nymph is the owner of the copyright in the drawings, brochures and sets of instructions. COPYRIGHT - KENT Kent claims to be the owner of copyright in a number of drawings and writings, identified in this way : (a) (b) (c) (da) (e) (£) (g) (h) (2) (3) (k) 41. A drawing entitled "Barker Log Burner Final Assy" dated 1 February 1978 and identifying number C20-04-005. A drawing entitled "Kent Barker Log Fire - Over-all Dimensions" dated 7 June 1978 and identifying number C20-04-004. A drawing entitled "Kent Barker Log Fire ~ Log Fire Assembly" dated 30 October 1978 and identifying number C20-04-009. A drawing entitled "Tile Fire Heat Exchanger Weld Assembly" dated 9 October 1979 and identifying number D20-06-007. A drawing entitled "Tile Fire Final Assy" dated 26 February 1980 and identifying number D20-06~-005. A drawing entitled "Tile Fire Final Assembly" dated 4 December 1980 and identifying number D20-06-147N. A drawing entitled "Log Fire Final Assy" dated 26 March 1981 and identifying number D20-04-227E. A drawing entitled "L/F Heater Insert Assy Black" dated 31 August 1981 and identifying number C20-04-251H. A drawing entitled "Log Fire Front Assy (Black) " dated 31 August 1981 and identifying number C20-04-252B. The drawings and writings in Installation and Operation Manual Tile Fire - August 1981. The drawings and writings in Installation instructions file Fire, 42. (1) The drawings and writings and Operating instructions for Log Fire and Tile Fire. The drawings and other material were tendered in evidence (exhibits 2-13). Those plans and drawings constitute the basis for the manufacture of the Kent log fire and tile fire. Mr. Lockhart gave evidence that Kent had the drawings prepared over a number of years. I accept that the drawings were prepared by employees of Kent, on the instructions of the company and for the purposes of the company. The pleading situation is as described in relation to Fire Nymph and so Kent cannot rely upon s.126 (b) of the Copyright Act. But 1t can rely upon s.35(6) of that Act in support of its claim to be the owner of a copyright aun the drawings and writings in question. The brochure entitled "Installation and Operation of the Tile Fire by Kent" contains a photograph of the freestanding model with detailed operating anstructions and instructions for its installation. The brochure contains quite detailed sketches with dimensions of the unit and,when current,was issued to customers who purchased the unit. The brochure "Installation Instructions the Tile Fire", again as its name suggests, contains instructions for the installation of the tile fire and again describes the unit in some detail. It is dated April 1982 and was by way of replacement for the earlier brochure. Mr. Lockhart. explained that the operating instructions were segregated so that customers could retain them. 43. The remaining material in respect of which copyright is claimed 1s entitled "Operating Instructions for the Log Fire, the Tile Fire, the Forrester". The Forrester is another Kent woodburning stove which did not feature in the litigation. This brochure (exhibit 13) was published by Kent at the same time as the installation instructions (exhibit 12). I am satisfied that Kent 1s the owner of the copyright in the drawings and in the brochures. BREACH OF COPYRIGHT - GENERAL OBSERVATIONS The next question is whether there was a breach of copyright. It is not suggested by Fire Nymph or Kent that Jalco had access to their working drawings at any time. But it is alleged that Jalco had access to brochures and units and that it made use of these. In the case of both the Fire Nymph and Kent units, the applicants' submission is that there has been a breach of copyright in two respects. One 1s in the preparation of drawings which were copies of the applicants' drawings and the other is in the reproduction of the applicants' drawings through the heaters themselves. In each application the statement of claim pleads that the respondent has infringed copyright by producing or causing to be produced drawings which are copies of the drawings in question and by reproducing each of the drawings in the form of Nordanse and Nordess fireplaces, on the one hand, and home fire 44, heaters, on the other, and by selling and offering or exposing those fireplaces for sale by way of trade without the licence of Fire Nymph or Kent. Infringement of copyright is particularised as ; (a) the production of drawings which are copies of Fire Nymph's or Kent's drawings (b) the manufacture, offer for sale and sale in the ordinary course of Jalco's business of Nordanse and Nordess fireplaces and of home fire heaters similar in all material respects to the Alpine fireplaces, on the one hand, and to the Kent heaters, on the other, depicted in the drawings. To establish the element of copying in the cause of action based on copyright the applicants rely upon a comparison of the units themselves, upon certain drawings done by Jaico and upon admissions made by Jalco's witnesses. As to the admissions upon which the applicants rely, I have already referred to much of the evidence relating to the way in which Jalco's products came into existence. It was common ground between the parties that there is no infringement of copyright unless what results is a substantial copy of the drawings or product for which copyright is claimed. "Whether a part is substantial must be decided by its quality rather than its quantity" (Lord Pearce in Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. (1964) 1 W.L.R. 273 at p.293). 45. As to the units themselves, their samilarities and differences, I have dealt with most of the evidence already. In documents tendered in the course of their final addresses (exhibits 80 and 81) counsel sought, on the one hand, to draw attention to similarities and, on the other, to emphasise differences between the units. That there are differences is not in issue. But the concept of substantial reproduction does not demand that the product complained of be identical in every respect. And it is part of the applicants' case that the respondent has quite consciously set out to create some differences. It is Kent's submission that on its external features Jalco's inbuilt home fire is a copy of the earlier model of the Kent log fire and not of the current model. It is conceded that there is a difference in the external appearance of the log fire current model and the earlier model, Kent's case being that, so far as copyright is concerned, the Jalco unit infringes the internal design of both but only the external design of the former. It was put this way by counsel for the applicants : "... we say that the In-built model infringes both the earlier Kent model and the current Kent log fire model and that in its essential features in the design, the internal design if you like, there is still a continuing infringement. However, in that the external features of the Jalco In-built are the same as the external features of the first model, we say an infringement occurs in relation to the first model but in so far as the second model of Kent is different then there is clearly not an infringement in that area". 46. This becomes of some importance when considering not only the cause of action based on copyright but also that based on passing-off. It was conceded by counsel for the applicants that : "... we would have some difficulty in respect of the latest model of the Kent because the external appearance of that has changed, therefore the element of deception or misrepresentation in the terms of the external appearance of the Jalco may not be so clear". As against Kent, Jalco has never sought to defend its conduct in regard to what was described as model A, its earlier model The emphasis in evidence and in addresses has been on the later Jalco model, referred to as model B, which incorporates a different air inlet and other characteristics. WAS THERE A BREACH OF COPYRIGHT? FIRE NYMPH v. JALCO As mentioned earlier, while the Fire Nymph unit received from South Australia was in Jalco's premises, Mr. Davis made sketches and took measurements of it in an exercise book (exhibit 46). In the respondent's submission Mr. Davis then made up a fire-box along the lines of the Fire Nymph fire-box to see whether it smoked in the way that existing Jalco units were smoking. In that respect the respondent accepted that there was a copying of the Fire Nymph product. But it was the respondent's case that 1n the various changes 47. and improvements that were made thereafter the completed Jalco unit, though possessing external resemblances, was quite different in its detailed design. In its counsel's submission : "The only thing really ... which is admittedly a direct copy of the Alpine appliance is the locking device on the ash pan". In my view that submission is justified. It is borne out by an examination of the units and in particular of photographs of the Fire Nymph Alpine and the Jalco Nordess (Exhibit 43). The differently shaped hoods have been referred to more than once. Other photographs show differences in the appearance and method of construction of the two units - in the appearance of the grate, in the position of the controls, in the construction of the plinth, un the extent to which the doors fold back, in the method of construction of the fire-box, in the operation of the grate shaker mechanism and in the configuration of the flue. Of course it may be easy to find differences between two products, one of which is said to have infringed copyright in the former. The question still remains - was there, in the production of the Nordanse and Nordess, a substantial reproduction of the drawings and other material for which Fire Nymph claims copyright and for which I have held copyright to exist? 48. "... there is no infringement unless it is established that the defendant has produced a work which both closely resembles the plaintiff's work and has been produced by direct or indirect use of those features of the plaintiff's work in which copyright subsists" (Copinger and Skone James on Copyright (12th ed) para. 458). There 1s no doubt that initially Jalco attempted to reproduce the Fire Nymph as closely as possible. And Jalco built upon the ideas reflected in the Fire Nymph unit available to it. But in the end the home fire units which it produced lack in appearance and function a substantial copying of the Fire Nymph. In the applicants' submission the very making of sketches by Mr. Davis constituted a breach of copyright. That may be so but it was not conduct that of itself caused any damage to Fire Nymph. The hearing was conducted on the basis that 1t was the production and sale of the Jalco Nordess and Nordanse for which Fire Nymph was claiming relief. WAS THERE A BREACH OF COPYRIGHT? KENT TILE FIRE v. JALCO FREESTANDING UNIT Jalco did not ever have in its possession a Kent tile fire unit. Mr. Baldwin and Mr. Davis did see one at the Housing Exhibition and Mr. Davis there took one measurement from the spigot, the flue opening down to the 49. baffle plate. As well Jalco had in its possession brochures and other material relating to the Kent tile fire. Counsel for the respondent stressed that simply by looking at the Kent tile fire unit it was not possible for any of the Jalco staff to see the internal design and functioning of that unit. But the close resemblance of the Kent tile fire and Jalco home fire freestanding unit 1s unquestionable. I accept Dr. Todd's description of them as "remarkably similar in external appearance" and "the appearance, combustion system and performance of the two heaters as being very similar". Those impressions remain even after days of evidence in which differences, as well as similarities, were directed to the attention of witnesses and to the attention of the court. The similarities extend to the overall appearance of the two units, to their overall shape and dimensions, to the appearance of and method of fitting the tiles, to the shape of the top surround and its function as a support and base for cooking, to the air slide cover, to the appearance though not the position of the door handle, to the shape of the ash spill tray, to the door hinge in its appearance and function, to the double baffle system, to the appearance of the mounting plinth, to the positioning of the flue, to the overall shape of the primary and 50. secondary burning chambers and to the location of the damper. Counsel for Jalco emphasised that although the Jalco freestanding Model A had a deflector and bypass damper arrangement similar to those on the Kent tile fire, these were changed in the Model B units. Counsel pointed out that Mr. Lockhart had acknowledged the upper air inlet to be a material aspect of the design of the Kent unit. This argument has force but I do not think ut destroys the overall similarity of the two units, both as to external and internal design. The resemblances are too strong to be explained on the grounds of coincidence. I am satisfied that in producing the home fire freestanding units, Models A and B, Jalco was guilty of an infringement of Kent's copyright in its tile fire. WAS THERE A BREACH OF COPYRIGHT? KENT LOG FIRE v. JALCO INBUILT UNIT In terms of external design, Kent asserts a breach of copyright only in respect of its earlier log fire with 7 grilles. But in terms of internal design, it alleges a breach both as to its earlier model and its current 5 grille unit. Comparing the earlier Kent log fire and the Jalco inbuilt unit, Mr. Lockhart noted that the general 51. dimensions and shape were similar, that there were the same number of grilles, that the front panels on both models were made up of 4 pieces though those on the Jalco unit were more indented, that the door knob and handles were essentially the same, that the two door hinge arrangement and latch were similar and that the similarities present in the internal features of the Kent tile fire and Jalco freestanding models were also present. But there are differences, differences which of course are more striking in the case of the current Kent log fire. As counsel for Jalco pointed out, the evidence 1s that the Jalco units were first produced 1n November 1981 and that Messrs. Bird, Baldwin and Davis did not see the current model until later, in the case of Mr. Bird, and perhaps of the others, not until after these proceedings had begun. Even in terms of Kent's earlier model, the evidence satisfies me that, although Jalco was influenced by aspects of the Kent log fire, it set about copying the Vulcan and to some extent the Woodman units. The dimensions of the Jalco anbuilt unit were taken from the Vulcan rather than the Kent. Differences between the Kent and Jalco units are noted in Exhibit 80; I shall not repeat them here. 52. The test 1s one of substantial reproduction. I am not satisfied that the construction of the Jalco inbuilt model constitutes a breach of Kent's copyright either in its earlier or current log fire. COPYRIGHT - THE NON EXPERT DEFENCE Section 71 of the Copyright Act provides that " ""(a) the making of an object that is in three dimensions does not infringe the copyright in an artistic work that is in two dimensions; and (b) the making of an object that is in two dimensions does not infringe the copyright in an artistic work that is in three dimensions, 1f the object would not appear to persons who are not expert in relation to objects of that kind to be a reproduction of the artistic work". The double negative throws the onus upon a person relying upon s.71 to demonstrate, in the appropriate case, that the offending object would not appear to a person who is not an expert to be a reproduction of the artistic work in respect of which copyright was claimed and upheld. In both applications there are objects in existence IMade by the applicants from the drawings and other material the subject of copyright. But it was accepted by both counsel that, for the purposes of s.71, the judge may not go to the applicants' own product. The comparison must be between the applicants' drawings and the respondent's product. 53. The applicants submitted that in any event s.71l could have no application to some of the drawings in respect of which copyright was claimed. Since it was the units made by Jalco that were said to infringe Fire Nymph and Kent's copyright, the comparison had to be between an object in three dimensions and an artistic work in two dimensions. Counsel for the applicants argued that in the case of Fire Nymph drawings (exhibit 35), those numbered 1-5 were in three dimensions as were some of the drawings in the brochures. In the case of the Kent drawings, counsel conceded that those numbered 2-10 were two dimensional but argued that the others were in three dimensions. In the applicants' submission an artistic work 1s in two dimensions if 1t shows height and width or height and depth or depth and width but if a drawing shows all three dimensions, para.(a) of s.71 can have no application. Counsel for the respondent argued that this was not the true meaning of s.71, submitting that whether or not a drawing purported to show two or three dimensions, 1t was on paper and must therefore be regarded as being in two dimensions. Since I have held that a breach of copyright took place only in respect of the Kent tile fire, what follows should be read in that light. 54. In my view the respondent's submission should be accepted. It is consistent with the authorities in which s.71 or its counterpart have been considered. For instance in Merchant - Adventurers Ltd. v. M. Grew & Co. Ltd. (1972) Ch. 242 at p.255 Graham J. commented : "There is infringement of drawings by three-dimensional reproduction of those drawings 1f they are sufficiently clear for a man of reasonable and average intelligence to be able to understand them and from an inspection of them to be able to visualise in his mind what a three-dimensional object made from them would look like and if the alleged infringement looks to him to have been made from such drawings". A reading of the judgment in that case suggests that the drawings in respect of which copyright was upheld showed height, width and depth. Nevertheless they were regarded as an artistic work in two dimensions for the purposes of the English equivalent of s.71. The same may be said of other decisions, some of which are noted in Lahore's Intellectual Property Law in Australia Copyright para. 1150. Again in the recent decision of Kearney J. in Ogden Industries Pty. Ltd. v. Kis (Australia) Pty. Ltd. (1982) 2 NSWLR 283 the operation of s.71 was considered in relation to the infringement of the plaintiff's design of key blanks by reproduction of the key blanks themselves. It would seem, from a reading of the case, that the designs showed length, width and depth. In Ogden Industries at pp.289~-290 Kearney J. made these comments about s.71 : 55, "The corresponding provision in the English legislation has been the subject of consideration, accompanied by unenthusiastic comment, from which the following propositions may be distilled: it operates by way of defence after the court has decided that the alleged infringement is a substantial reproduction of the two-dimensional work (LB (Plastics) Ltd. v. Swish Products Ltd. [1979] RPC 551, at p.662); the noticnal non-expert is supposed to be a man of reasonable and average intelligence (Merchant Adventurers Ltd. v. M. Grew & Co. utd. (Trading as Emess Lighting) [1972] Ch 242, at p.255); the drawing together with any explanatory matter thereon are to be sufficiently clear for such a man to be able to understand them (Merchant Adventurers case); the non-expert is to make a visual comparison of the drawings with the alleged infringing object viewing them together (Solar Thomson Engineering Co. Ltd. v. Barton [1977] RPC 537, at p.559; LB (Plastics) Ltd. case [1979] RPC 551, at p.622); the non- expert judge may determine the point without evidence, and indeed evidence from non-expert persons may not be admissible or conclusive (LB _ (Plastics) Ltd case); the proper approach is for the judge to consider whether the non-expert when making a visual comparison would recognize the points of resemblance or identify which are really there, but which the non-expert would have failed to recognize as points of resemblance or identity in the three dimensional form with the result that it would not have appeared to him that there had been the reproduction of any substantial part of the original artistic work: LB (Plastics) Ltd case [1979] RPC 551, at p.630". 56. In the light of the approach dictated by the authorities I must look at Kent's drawings and other material and ask myself whether Jalco has demonstrated that its freestanding unit would not appear to be a reproduction of the work for which copyright exists. The object of the exercise, as Kearney J. pointed out, 18 to consider whether the non-expert would recognize points of resemblance or identity which are really there which he would have failed to recognize as points of resemblance or identity in the three dimensional object viz. the unit itself. I do not uphold the defence based on s.71 for it has not been demonstrated that, on a comparison of the drawings of the Kent tile fire and Jalco's freestanding model, it would not appear that the latter was a reproduction of the former. Indeed there are several aspects of the drawings pointing to a conclusion that a reproduction has taken place. COPYRIGHT ~ APPLICATION OF ARTISTIC WORK AS INDUSTRIAL DESIGN WITHOUT REGISTRATION OF DESIGN Section 77 of the Copyright Act operates where copyright subsists in an artistic work; a corresponding design 1s applied industrially by, or with the licence of, the owner of the copyright in the work; articles to which the corresponding design has been so applied are sold, let for 57. hire or offered or exposed for sale or hire; and at the time when those articles are so sold, let for hire or offered or exposed for sale or hire, they are not articles in respect of which the corresponding design has been registered under the Designs Act 1906. In such a case, during the period of 16 years commencing on the date on which articles made to the corresponding design were first sold, let for hire or offered or exposed for sale or hire, it is not an infringement of the copyright in the work to do anything that, at the time when it is done, would have been within the scope of the copyright in the corresponding design if the corresponding design had, immediately before that time, been registered in respect of all articles made to the corresponding design that had, before that time, been sold, let for hire or offered or exposed for sale or hire in those circumstances. (s.77(2)). The term "corresponding design" is defined by s.74 to mean "a design that, when applied to an article, results in a reproduction of that work". Section 18 of the Designs Act 1908 reads : "18. An application for registration of a design shall not be refused, and a registered design is not invalid, by reason only that the design consists of, or includes, features of shape or configuration that serve, or serve only, a functional purpose". That section, it would seem, was introduced following the report of the Franki Committee and to overcome the effect of the decision in Amp Inc. v. Utilux Pty. Ltd. (1972) R.P.C. 103. 58. It was submitted by the applicants that s.18 did not come into force until 1 April 1982 by which time it was too late for either Fire Nymph or Kent to apply for registration under the Designs Act. The submission was that prior to the section coming into operation, if a design of an article was dictated by its function it was not registrable under the Designs Act and that Fire Nymph and Kent's designs being so dictated, there was nothing that could be registered under the Designs Act. The applicants' submission was that for s.77 of the Copyright Act to operate, the design in question must have been capable of being registered at the time it was applied industrially. That date is to be discerned from the Copyright Regulations. Those regulations appear as statutory rules 1969 No. 58 and reg.17 provides that, for the purposes of s.77, a design shall be deemed to be applied industrially if it is applied to more than 50 articles or to one or more articles manufactured in lengths or pieces. The applicants' argument was that once more than 50 heaters had been produced and offered for sale in Australia (a date that was not specified but was well before 1 April 1982) it was no longer possible to obtain registration under the Designs Act. And so, notwithstanding the introduction of s.18 permitting registration of a design and 59. notwithstanding that it was based on some functional characteristic, "... the applicants' designs are not registrable under the Designs Act and never will be because of the provisions of section 77 and the provisions of the Designs Act itself which are complementary". I accept that submission to the extent that the operation of s.77 of the Copyright Act should be considered as if s.18 of the Designs Act had no application. The applicants' further submission was that a defence under s.77 could apply only in respect of externally visible features of the Fire Nymph and Kent heaters. In so far as there had been a copying by Jalco of the internal features of the Fire Nymph and Kent units, s.77 could have no operation. Again I confine my comments to the Kent tile fire and Jalco freestanding units. It was the applicants' case that the features of the heaters copied by Jalco were essentially dictated by function. Referring to the Kent tile fire, counsel for the applicants said that no doubt it could have been constructed in more ways than one but that equally there was no doubt that its shape and configuration were dictated by function. Speaking of the top surround, counsel said : "Its purpose is to hold the sides in place and also to support the top panel. It may be that it has an appearance which is distinctive but its appearance has been determined by the function it was to perform. If you take the top panel itself it has a distinctive appearance but the actual design of it is determined by function". 60. Counsel went on to point to the fact that the top panel is in two parts and that this is functional, to enable the front part to be removed for cooking. It is designed with a grille mesh on top to allow heat to dissipate and also to allow cooking utensils to be placed upon it. It can be turned over to bring the mesh closer to the hot plate and it can be taken out altogether to enable cooking directly on the hot plate itself. All of these, said counsel, are features dictated by function. Equally, 1t was said, the side panels are to allow convection to take place so that air may be drawn up from the bottom of the heater through the space between the cladding and the fire-box and out through the top panel. Counsel went on to argue that the air slide cover, the door, the ash spill tray, the knobs on the heater, the door hinge, the double skin design, the mounting plinth and baffle, the primary and secondary burning chambers, the damper location and arrangement are for the most part internal features and so not visible and in any event, where they have a distinctive appearance, it is a design dictated by function. Counsel relied upon the judgment of Brinsden J. in S.W. Hart v. Edwards Hot Water Systems (unreported decision delivered 27 September 1982, presently on appeal to the Full Court of the Federal Court of Australia) in 61. - which his Honour held that where an object consists of component parts, unless each component is a finished article in itself intended to be sold separately and to bear the design mark required by the Designs Act, it is not a component capable of registration under that Act. The applicants sought to apply that approach to the external components that made up its heaters. "We would say, for example, that the top surround, the top panel, the air slide cover, the door, the handles, all of which are components, are not in themselves capable of being registered under the Designs Act". While keeping the point open in case this matter goes further, counsel for the respondent said : "... for present purposes I concede before your Honour that the design of individual components of the Kent heaters would not be registrable under the Designs Act". I accept the submission that the features of the Kent tile fire copied in the Jalco freestanding unit are dictated by function. The Kent tile fire 1s a functional unit and its components are, without exception, functional even where they have a design aspect. None of the components is a finished article in itself, intended to be sold separately. The design of the tile fire was not shown to be capable of registration under the Designs Act at the relevant time and a defence based on s.77 of the Copyright Act cannot succeed. 62. In reaching this conclusion it has been unnecessary to consider the implications of the judgment of Wootten J. an British Franco Electrical Pty. Ltd. v. Dowling Plastics Pty. Ltd. (1981) 1 NSWLR 448. His Honour rejected a submission that because the only novel feature of a registered design 1s dictated by function the design is not registrable. This view was adopted by Kearney J. in Ogden Industries Pty. Ltd. v. Kis (Australia) Pty. Ltd., referred to earlier. Wootten J. was not persuaded that the definition of 'design' in s.4 of the Designs Act carried the limitation "dictated solely by ... function" to be found in the definition in comparable English legislation. I do not find 1t necessary to consider this question because, even under the English legislation, the exclusion from the expression "design" of a method or principle of construction or features of shape or configuration "which are dictated solely by the function which the article to be made in that shape or configuration is to perform" does not oblige the court to conclude that the object in question has no visual appeal. Nor does it mean that because there are alternatives of shape, each of which may do what is required, each may not be dictated solely by function. See Amp Inc. v. Utalux Pty. Ltd., supra, in particular Lord Morris of Borth-y-Gest at pp.110,113: Viscount Dilhorne at p.116 and Lord Pearson at p.121. Within these guidelines I am satisfied that the shape of the Kent tile fire is dictated solely by the function it is to perform. MISLEADING OR DECEPTIVE CONDUCT - THE CLAIM In addition to the claim for breach of copyright, 63. the applicants rely upon s.52(i) of the Trade Practices Act 1974 which reads : "(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". Fire Nymph claims that in copying the design of the Alpine fireplace, in manufacturing and marketing the Nordanse and Nordess fireplaces being almost identical in design, dimensions and appearance to the Alpine fireplaces, and in distributing and selling the Nordanse and Nordess fireplaces, Jalco engaged and continues to engage in conduct that 1s misleading and deceptive or is likely to mislead or deceive, hence is conduct in contravention of s.52 of the Trade Practices Act. Kent pleads that in copying the design of its heaters, in manufacturing and marketing the home fire heaters, both freestanding and unbuilt models, being almost identical in design, dimensions and appearance to the Kent heaters and in distributing and selling those heaters, Jalco has engaged and is continuing to engage in conduct that is misleading and deceptive or is likely to mislead or deceive, hence is conduct in contravention of s.52 of the Trade Practices Act. Jalco denies those allegations. The applicants also plead that Jalco's conduct, as just described, amounts to a passing off and an attempt to pass off the respondent's products as those of the applicants. I shall deal with 64, this cause of action later but each statement of claim contains a pleading which I take to be relevant to the cause of action under s.52 and to that of passing off. Save for the name of the applicant, the pleading is identical in each case. It alleges that the conduct of Jalco, said to contravene s.52, is calculated to lead and has led to Jaico's fireplaces being confused with those of the applicants and to members of the public acquiring Jalco's fireplaces in the belief that Jalco is affiliated with the applicants and that they (the members of the public) are acquiring the applicants' fireplaces. On the matter of deceptive and misleading conduct counsels' submissions were largely directed to the decision of the High Court in Parkdale Custom Built Furniture v. Puxu Pty. Ltd. (1982) 42 ALR 1. Before I turn to those submissions it is necessary to say something of the evidence called in regard to this cause of action. MISLEADING OR DECEPTIVE CONDUCT - THE EVIDENCE Naturally both applicants stress the resemblances between their heaters and those of the respondent. Evidence was given by Keith Cornelis Arie Jan Bronwasser who was a director of Alpen, Fire Nymph and Kent's distributor in Western Australia. Alpen operates by buying Fire Nymph 65. - and Kent heaters from New Zealand and selling them to a number of specialist fireplace dealers. Alpen sells to about 35 specialist resellers in Western Australia and to another 30 or so non-specialist dealers on what Mr. Bronwasser described as "a very ad hoc basis". In both categories of resellers there are those who sell Jalco products as well as Kent and Fire Nymph heaters. Alpen buys on a FOB basis and the heaters are shipped, usually to Melbourne, and then carried by rail to Perth. Including duty the Kent tile fire lands in Perth at $340 and the Kent log fire at $335. The Fire Nymph Alpine 300, the larger model, lands at about $660, the Alpine 700 about $50 less. Alpen itself operates a retail business known as Hearth House which carries a range of heaters including those of Fire Nymph and Kent. The 1982 retail price of the Kent tile fire was $630 and the log fire $580. The Fire Nymph Alpine was $1000 for the 900 series and $850 for the 700 series. In each case the cost of a flue must be added, about $70. In selling to resellers, Alpen applies a Margin of 15% off the retail price, with special arrangements for quantity buyers. Mr. Bronwasser gave evidence that Jalco units are usually for sale at a price Just below the comparable Fire Nymph and Kent products. 66. He described how he became aware of the Nordanse in 1980 and immediately contacted Fire Nymph in New Zealand to let them know that something was amiss- He said that when he saw the Nordanse his reaction was that it was rather a blatant copy- At that time, so far as Mr. Bronwasser was aware, the Nordess was not on the market. Mr. Bronwasser became aware of the Jalco home fire inbuilt and freestanding models towards the end of 1981. As a result of something said by him one of Alpen's customers he visited premises where Jalco products were for sale. He said : "T saw the home fire freestanding model and I was more shocked when I actually physically saw it because it was all the things that we had been selling to the public just there; all the features... it was just a blatant copy". A week later he saw a Jalco inbuilt model and he described his reaction in these terms : "I was concerned, It looked the same, at the time. My immediate recollection is that it looked very similar to the Kent log fire externally. It had certain features of the new Kent log fire that was coming out, as well as having certain distinct features of the old Kent log fire front. It was the front external feature that I am talking about". - Asked whether he had noticed any reaction among customers to the existence of the Fire Nymph on the one hand and the Nordess and Nordanse on the other; and the Kent 67. tile fire and Kent log fire on the one hand and the home fire inbuilt and freestanding models on the other, Mr. Bronwasser answered : ",.. there has been a total state of confusion, both by the customers and the dealers. I have found it very disconcerting; how to overcome this". By way of amplification, Mr. Bronwasser described how customers would say: "Are you aware that there is another product on the market that looks the same?". When analysed Mr. Bronwasser's evidence amounted to this. Customers, aware of Fire Nymph or Kent products, through advertising or otherwise, would go into a shop looking for one or other. If the shop stocked Jalco heaters, they might be shown such a heater, told that it was locally made and that it was just as good as the product they had set out to find. Confusion also arose when customers came into Mr. Bronwasser's shop, saw the Kent tile fire for instance, were told the price and then said they could get one down the road for $50 cheaper. In those circumstances he would explain to the customer that they were talking about the Jalco product, explain the differences in the heaters and ask the customer to have a close look at the unit and make sure they were making the correct decision "before they just go for price and things like that". 68. In effect Mr. Bronwasser's complaint was that Alpen, in its retail activities, was losing sales of Fire Nymph and Kent heaters, mainly because customers believed they could buy a similar product elsewhere at a cheaper price. I do not think that Mr. Bronwasser's evidence went further than to demonstrate that the existence of Jalico heaters on the market was a potential source of confusion and an actual source of confusion in some cases. It was not that customers thought that Jalco products were Fire Nymph or Kent products. Rather it was that they were puzzled or concerned that, on going into Alpen's retail outlet, there was a heater for sale similar to one they had seen elsewhere but at a higher price. Kimley Wayne Watters, who runs a retail outlet store for fireplaces at Glen Forrest, gave evidence for the applicants. He had been selling Fire Nymph and Kent products for about 2 years, obtaining these from Alpen. He said : "They have been accepted very well by the public. People appear to want them and I think this is due Mainly to the advertising and that they are good products". Mr. Watters testified that he first became aware of existence on the market of the Jalco inbuilt and freestanding models late in 1981 and of the Nordanse and 69. Nordess models a little before that. He had a Jalco home fire freestanding heater in his premises and spoke of customers being confused between it and the Kent tile fire. In particular he spoke of having sold customers a Kent tile fire and then have them ring up and complain that he had overcharged them. On enquiry it appeared that they had seen a Jalco product advertised for sale at a lower price. On one occasion he had taken a customer to his shop to point out that they were in fact different products. Again Mr. Watters spoke of customers looking at the Fire Nymph Nordess or Nodanse and telling him that his price was too high. In discussion it emerged that they were basing this complaint on the price of a Jalco product they had seen. Warren Ivan Murray conducts Solid Fuel Heating Advisory service at Gosnells, a shop stocking heating units. He stocks Fire Nymph and Kent heaters as well as those made by other companies. He spoke of the good reputation that those products enjoy. In his opinion, the existence of the Jalco products has been a source of confusion : "... because people are genuinely confused about it because they do look alike - very similar - ". Once again it appeared that the complaint customers were making to Mr. Murray was that they had seen products elsewhere which appeared to them to be the same, at a lower price. In his words : 70. "Of course, once I explained to them that there is a difference; that they are not in actual fact comparing the Tile Fire against a Tile Fire but they are comparing a Home Fire against a Tile Fire they are different and they accept that - most times they accept that". There have been occasions when nevertheless they asked why they should buy a Kent product when they could buy another product at a cheaper price. Douglas Andrich, a motor mechanic and business proprietor, had dealings with Reflective Insulations, the business conducted by Mr. Watters. He spoke of an occasion an early September 1982 when he contacted Mr. Watters regarding a tile fire. He asked Mr. Watters to visit him and give him a quote which Mr. Watters did. Mr. Andrich accepted the quote and about a week later saw an advertisement for what he described as the same type of tile fire but much cheaper than what Mr. Watters had quoted. Mr. Andrich was upset at what had happened until Mr. Watters explained that the cheaper heater was in fact a different one. In cross-examination Mr. Andrich said: "After Mr. Watters pointed this out to me, when I had another look at the advert I noticed the word 'Jalco' on it". It is apparent that most of the confusion that has arisen is between the Kent tile fire and the Jalco freestanding unit. But it is confusion in the minds of 71. customers rather than that they are deceived or misled. In all cases 1t is possible, on reasonable inspection, to discern from labels the identity of the units in question. I base this conclusion upon the units tendered in evidence. The Fire Nymph has on its back a metal label headed "Fire Nymph Fireplaces", with a New Zealand address and description of the model and other details. The Jalco Nordanse has a metal label below the glass doors with the words "Jalco - Craftsmen in Metal". The Kent tile fire has a metal label at the rear with the words "Kent Heating Limited", an address and information about the unit. On its front is the name "Kent". The Jalco freestanding model has no identification on the back but it has a metal label attached to the front below the door and another stuck-on label above the door. Each bears the name "Jalco". The Kent log fire has the name "Kent" on the front of the unit in the bottom right hand corner. The Jalco inbuilt model has a metal plate bearing the name "Jalco" in roughly the same position. Complaint was made by the applicants of newspaper advertisements, the complaint being that these further increased the extent to which the public might confuse the applicants' and the respondent's products. 72. Some advertising tendered in evidence was a legitimate cause for complaint by the applicants had the advertisements been authorised by the respondent. But the evidence was that those particular advertisements had not been so authorised and that the respondent was not a party to the advertising in question. In so far as other advertisements might be said to lead to confusion, it 1s a fact that the advertising of the respondent's products was accompanied with the name Jalco. The tests applied by the members of the court in Parkdale differ. Gibbs C.J. asked whether a consumer acting reasonably would be misled (at pp.6-7). Mason Jd. asked whether a purchaser to whom it was important to buy a particular brand would be misled (at p.16). Brennan J. asked whether a consumer, "not labouring under any mistake or imperfection of understanding of law" would be misled(at p.27). Underlying all judgments is the notion that it is not enough to establish a case under s.52 of the Trade Practices Act to show that there may be misunderstanding or confusion in the minds of consumers. And that is so even where one manufacturer has deliberately copied the product of another. Conduct does not breach s.52 merely because members of the public may have cause to wonder whether it might not be the case that two products came from the same source. 73. The applicants have not established that in the manufacture and sale of its heaters Jalco was guilty of conduct that was misleading or deceptive or likely to mislead or deceive. PASSING OFF The tort of passing off raises some considerations different to those operating in the case of an application based on s.52 of the Trade Practices Act. In particular it 1s concerned with damage to goodwill. But the facts relied upon by the applicants were much the same in each case. Counsel for the parties took as a starting point the judgment of Lord Diplock in Warnink v. Townend and Sons (Hull) Ltd. (1979) 3 WLR 68 at pp.74-75. "My Lords, Spalding v. A.W. Gamage Ltd., 84 L.J. Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or {in a quia timet action) will probably do so". 74. In my opinion the claim of each applicant based on passing off fails because each failed to establish that there was a misrepresentation in the sense required by the authorities. Despite similarities in the applicants' products and those of the respondent, all of which have been noted earlier in these reasons, I am not satisfied that intentionally or otherwise Jalco offered its products as those of Fire Nymph or Kent. Jalco's products were identified as its own, both in their labelling and in any advertising for which Jalco was responsible. There was scope for confusion in the case of the Kent tile fire and Jalco home fire freestanding unit though not, I would have thought, in the case of Kent's current log fire and Jalico's inbuilt unit, nor in the case of the Fire Nymph Alpine and the Jalco Nordess. But I do not accept that there was deception or the likelihood of deception. SUMMARY OF FINDINGS AND CONCLUSIONS 1. In manufacturing and selling the Jalico freestanding unit there was a breach of copyright in the drawings and other material relating to the Kent tile fire. 75. 2. Otherwise there was no breach of copyright in respect of either the Kent or Fire Nymph drawings and other material. 3. Jaleo did not contravene s.52 of the Trade Practices Act in respect of the manufacture and sale of its Nordess, Nordanse, or its home fire freestanding and inbuilt units. 4. There was no passing off of the Jalco units as those of Fire Nymph or Kent. RELIEF TO BE GRANTED Jalco argued that if Fire Nymph and Kent were otherwise entitled to relief, an injunction should be denied because of laches. I need only be concerned with Kent and there is no substance in the argument so far as that company is concerned. It acted with reasonable speed once it became aware of the Jalco units on the market. I am of the opinion that this is a proper case for an injunction. A breach of copyright has been established by the manufacture and sale of the Jalco freestanding unit and Kent is entitled to an injunction to restrain any further breach. Kent is also entitled to an order for delivery up of any Jalco freestanding units still in the possession of Jalco. As to damages, s.116(1) of the Copyright Act reads : ra 76. "116.(1) Subject to this Act, the owner of the copyright in a work or other subject-matter is entitled in respect of any infringing copy, or of any plate used or intended to be used for making infringement copies, to the rights and remedies, by way of an action for conversion or detention, to which he would be entitled if he were the owner of the copy or plate and had been the owner of the copy or plate since the time when it was made". Sub-section (2) of s.116 removes the entitlement to damages or other pecuniary remedy in certain circumstances, but in my view none of those circumstances is applicable here. Section 115(2) of the Copyright Act empowers the court to grant by way of relief an injunction and either damages or an account of profits. Counsel for the applicants agreed that there was no entitlement to both damages and an account. In his submission damages were appropriate in respect of those units which had been sold. Exhibit 71, the schedule of Jalco sales, shows that Jalco had sold 656 of its freestanding units to July 1982. Kent is entitled to damages in respect of the sale of those units. But counsel did not direct submissions to a precise figure. The matter is further complicated by the 20 Model A Jalco home fire units for which no defence was offered. In the circumstances I propose to give counsel an opportunity to be heard on the amount of damages appropriate in the light of these reasons. Py) 77. As some matters remain to be resolved, including the question of costs, I propose to do no more than publish these reasons and direct that each application stand for judgment on a date to be fixed after discussion with counsel. I further direct that not less than 3 days before motion for judgment the applicants will lodge with the District Registrar and serve on the solicitors for the respondent a minute of the judgment for which they intend to move and that the respondent do likewise in respect of the application brought by Fire Nymph and Alpen. I certify that this and the seventysix preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Toohey Por Zeke Assdciate Dated: 5 May 1983