JUDGMENT No ABQ an IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG No. 192 of 1987 ) GENERAL DIVISION ) Between: TURBO TEK ENTERPRISES INC. and AUTOPACE PTY. LTD. (Applicants) And: SPERLING ENTERPRISES PTY. LTD. and EWAN SPERLING (Respondents) Judge Making Order Ryan J. Date of Order: 17 August 1987 Where Made: Melbourne MINUTE OF ORDER UPON THE RESPONDENTS by their counsel undertaking until the hearing and determination of the application herein or further order not to communicate or disseminate any representation in the terms or to the effect that: (i) the United States retail price of the "Turbo-Wash" spray device is US$9.99, or (ii) the current retail price in Australia of the "Turbo-Wash" spray device is A$50.00. AND UPON THE APPLICANTS by their counsel undertaking to pay to any party adversely affected by the interlocutory orders set forth hereunder such compensation (if any) as the court thinks just in such manner as the court directs IT IS ORDERED THAT: 1. The respondents be restrained until the hearing and determination of the application herein or further order, whether by themselves, their servants or agents or howsoever otherwise from advertising, displaying, exposing or otherwise offering for sale, selling or supplying any spray washer device the same as or substantially identical with Exhibit 1 tendered herein on 6 August 1987. 2. Unless any of the times set out in this paragraph be enlarged by mutual consent of the parties: (1) The applicants on or before 24 August 1987 file and serve a Statement of Claim by 24th August 1987. (ii) The respondents on or before 31 August 1987, file and serve a defence and any cross claim. (i111) The applicants on or before 7 September 1987 file and serve a reply and defence to cross claim. Civ) Both parties file and serve affidavits of documents on or before 14 September 1987 and give inspection saving ail just claims to privilege on or before 18 September 1987, (v) Any further affidavit evidence in chief to he relied upon by the applicants be filed and served on or before 25 September 1987 and any further affidavit evidence to be relied upon by the respondent in answer be filed and served on or before 9 October 1987 and any further evidence in reply by the applicants be filed and served on or before 16 October 1987. The directions hearing herein be adjourned to 16 October 1987. The costs of and incidental to the applications for interin and interlocutory injunctions and the directions hearing herein, including all reserved costs, be costs in the substantive application. NOTE: Liberty be reserved to any party to apply for further directions herein as he or it may be advised on not less than 48 hours notice in writing to the other parties. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG No. 192 of 1987 GENERAL DIVISION Between: TURBO TEK ENTERPRISES INC. and AUTOPACE PTY. LTD. (Applicants) And: SPERLING ENTERPRISES PTY. LTD. and EWAN SPERLING (Respondents) Coram: Ryan J. Date: 17 August 1987 REASONS FOR JUDGMENT This is an application for an interlocutory injunction to restrain conduct which is alleged to be in contravention of s.52 of the Trade Practices Act 1974 ("the Act"). The applicants also invoke the court's jurisdiction in respect of associated matters and seek injunctive relief for infringement of the first-named applicant's monopoly in a design registered under the Designs Act 1906 ("the Designs Act") and for passing off. Turbo-Tek Enterprises Inc. ("Turbo-Tek") which 18 incorporated in the United States of America 1585 the proprietor of a design registered under the Designs Act, No. 96482. That registration was granted on an application lodged on 17 September 1985. An advertisement for the Product embodying that design describes it 1n the following terms: "New Turbo-Wash 1s the easy-to-use high pressure cleaner that simply clicks onto your garden hose. Turbo-wash uses specially formulated suds to power away dirt on cars, bikes, patios and even second storey windows. ... The ultimate power pressure washer." Turbo-Tek's operations are based in California and it relies on overseas distributors to market its product internationally. For this purpose, 1t appointed Autopace Pty. Ltd. (""Autopace") to be its exclusive Australian distributor to promote and sell "Turbo-Wash". Autopace is itself a manufacturer and distributor throughout Australia of an extensive range of automotive parts and general hardware. In November 1986 Autopace received its first shipment of the "Turbo-Wash" device for release onto the Australian market. In June 1987, it commenced an extensive campaign of advertising the product on television and in daily newspapers. On 20 July 1987 Mr. Barlow, the International Sales Manager for Turbo-Tek, Mr. Welch, the General Manager of Autopace, and a Mr. Reinstein, one of the co-designers of the Turbo-Wash device attended the Australian Auto Parts Accessories trade show at the Sydney Showgrounds. They there noticed a display stand conducted by the first-named respondent, Sperling Enterprises Pty. Ltd. Amongst other products on display were several pressure spray washing devices, one of which was enclosed in clear blister packaging on a cardboard backing. That backing bore the inscription "Cosmic Aqua Blaster - Suds and rinse spray gun." On 22 July 1987 when Mr. Barlow again attended the trade show he met Mr. Quenton Pilling, adviser to the United States Consul in New Zealand. Mr. Pilling who was there for the purpose of promoting American products in Australia and New Zealand, provided Mr. Barlow with a brochure which he claimed to have received from Sperling Enterprises Pty. Ltd. The brochure, under the heading "Sperling Enterprises Pty. Ltd. Newsletter" depicted an illustration of the respondents' product and contained, amongst other things, the following representations: "Now you can buy a high power car washer at a reasonable price. We now make it possible for you to retail the Cosmic Aqua Blaster for : $35 - $40 (Recommended retail price) We consider the Cosmic Aqua Blaster to be the best car washer in Australia. Just look and compare its features: * Practical elegant styling with pistol grips for ease of use. * Uses all famous Australian 'wash and wax' liquids. N.B. also compatible with 'Turbo Wash' preparation washing liquids. * Attractive clear blister packaging for unrestricted viewing of product. * Realistic retail price point of $35-$40. x Enjoy the benefits of our heavy advertising campaign programmed for this summer season." The brochure went on to invite the reader to: "Compare these facts about the other available brand product 'Turbo Wash' Turbo Wash in the U.S.A. Retail price $9.99 after USD $5.00 rebate. Yet the same 'Turbo-Wash'in Australia Retail Price (current) AU $50.00. Just see for yourself from these local U.S.A. advertisements." There followed two advertisements which were apparently reproduced from American publications in support of the respondents' claims. It has been the distribution of this brochure and the fact that the respondents were offering for sale a product which the applicants claim is identical with or substantially the same as the "Turbo-Wash" device which prompted the applicants to apply on 24 July 1987 for interim injunctions. In the event, on that day, on giving the usual undertaking as to damages they were granted an interim injunction restraining the respondents: ",.. until 4.15 p.m. on Thursday 30th July 1987 or further order whether by themselves, or by their directions, servants, agents, or howsoever otherwise from: (a) distributing or disseminating the brochure identified in Schedule 4 to the application herein; (b) communicating or disseminating any representations in the terms or to _ the effect that:- (i) the Cosmic Aqua Blaster is 'compatible with Turbo-Wash'' ; (i1) representing that the United States retail price of the 'Turbo-Wash' spray washer device 15 US$9.99; (iii) representing that the current retail price in Australia of the 'Turbo-Wash' spray washer device 1s As50.00." To expedite the hearing of the application for interlocutory relief , I also abridged all times specified by the Rules of the Court and gave directions as to service to enable that application to come on for hearing on 30 July 1987 in Sydney. - On 30 July 1987 the respondents were represented by their solicitor, Mr. Jenkins and after hearing some argument, necessarily limited because of the short time which Mr Jenkins had been afforded to obtain instructions, I granted an injunction restraining the respondents until 4.15 p.m. on 6 August 1987 or further order from: ""(a) advertising, displaying, exposing or otherwise offering for sale, selling or supplying any spray washer device the same as or substantially identical with any of the devices respectively depicted in Schedules 1, 2 and 3 to the application herein; (db) communicating or disseminating any representations in the terms or to effect that: (i) the United States retail price of the 'Turbo-Wash' spray washer device is US$9.99; (1i) the current retail price in Australia of the 'Turbo-Wash' spray device is A$50.00." On the matter coming back before me on 6 August 1987 the applicants were again represented by Mr. N. J. Young of counsel, and Mr. Catterns of counsel appeared for the respondents. At the outset of the hearing on that day Mr. Catterns intimated that his clients would undertake until the hearing and determination of the substantive application to refrain from the conduct from which they were enjoined by Paragraph (b) of the order of 30 July 1987. Accordingly, the issue between the parties for interlocutory purposes has been narrowed to one of whether the applicants are entitled to a continuation until the trial of the application of the restraint imposed on the respondents by paragraph (a) of the order of 30 July 1987. The resolution of that issue requires, in turn, an analysis and evaluation of the applicants' claim that the respondents have infringed, or have threatened to infringe the first-named applicant's monopoly in the design registered under the Designs Act 1906 No. 96482 in respect of "a pressure sprayer". Ultimately, the task for the court will be to determine whether the design applied to that allegedly infringing device is a "fraudulent or obvious imitation" of the applicant's registered design within the meaning of s.30(1) of the Designs Act. A related question raised by the respondents is whether they are entitled to an order for rectification of the register kept pursuant to the Designs Act by expunging the entry in respect of Turbo-Tek's design for its lack of the novelty or originality required by 3.17 of that Act. It has been accepted by counsel on each side that, for the purposes of the present application for interlocutory relief, the Court should consider, first, whether, on the evidence so far adduced, the applicants have demonstrated a serious question to be tried, and, secondly, if they have, whether the balance of convenience favours the grant of an interlocutory injunction. See e.g. The Australian Coarse Grains Pool Pty. Ltd. v. The Barley Marketing Board of Queensland (1982) 57 ALJR 425. Accordingly, it is neither necessary nor appropriate for me to reach a concluded view on whether the product which the respondents propose to import is an obvious or fraudulent imitation of Turbo Tek's design. It is sufficient for the applicants to persuade me that a serious question has been raised as to whether an infringement of the registered design has occurred in one or other of those ways. As Lockhart J. observed in Firmagroup Australia Pty. Ltd. v. Byrne & Davidson Doors (Vic) Pty. Ltd. (1986) 67 ALR 29 at 41: "Whether imitations are obvious or fraudulent in one sense raises separate questions, but they overlap." For an allegedly infringing article to be an obvious imitation of a registered design it must be "a copy apparent to the eye notwithstanding slight differences"; Malley Ltd. v. J. W. Tomlin Pty. Ltd. (1961) 35 ALJR 352 at 354. The relevant certificate of registration recites that "Monopoly is claimed in the shape and configuration of A PRESSURE SPRAY WASHER and the like as shown in the representations." Registered design No. 96482 shows a single cylinder from the top front of which protrudes a telescopically extendible barrel of three sections, tapering towards a nozzle. At the rear of the cylinder, likewise mounted eccentrically is an inlet valve designed for connexion to a garden hose. The registered design also depicts, at the front of the cylinder mounted directly beneath the barrel, a triangular knob or tap apparently for regulating the flow of detergent, and, immediately below that, a circular cap covering an aperture through which the cylinder is filled with detergent. A further exhibit, JNB2, is another pressure washing device which has been asserted to be identical to that displayed by the first respondent at the Sydney Trade Show. The allegedly infringing article has a similar single cylinder with a tri-sectional telescopically extendible barrel protruding eccentrically from the front and in line with the top of the barrel. The top of the barrel is clean, not cluttered by changeable spare nozzles or a pair of slightly raised projections like the registered design. The most significantly different feature of the allegedly infringing article is a "pistol-grip" handle which depends from the cylinder at roughly a right angle to it. The attachment by which a domestic hose can be joined to the device 1s located at the bottom of the handle which is hollow to permit the passage of water to the cylinder and thence along the barrel and out through the nozzle. A stop cock is incorporated in that attachment to enable the jet of water from the hose to be turned on and off. As a result of the addition of the handle, the rear of the cylinder on the accused device is free of the water inlet valve and stop cock which are depicted on the rear of the cylinder in the registered design. However, there is a knob mounted on the rear of the cylinder of the accused device for shutting on and off the ad mixture of detergent to the water ejected from the nozzle of the spray. 10. The allegedly infringing device, like the registered design, has at the front of the cylinder a knob or tap mounted directly beneath the barrel for controlling the admixture of detergent to water. However, that knob 1s rectangular rather than triangular in shape. Immediately below that is a circular cap which can be removed to introduce detergent to the cylinder. At each edge of the front of the cylinder and mounted centrally are the stored alternative nozzle tips which on the registered design protrude from the top of the cylinder. As on the registered design, the cylinder of the allegedly infringing device is encased by an annulus approximately one centimetre wide. However, on the registered design the annulus is at the front extremity of the cylinder and serves to enlarge the face of the cylinder on which are mounted the barrel, detergent regulator and reservoir cap. By contrast, the annulus on the accused article is toward the rear of the cylinder and flows into the "pistol-grip" handle. In an appropriate case the court may form its visual appreciation of the registered design and the alleged copy instructed by expert evidence. Thus, in Firmagroup Australia Pty. Ltd. v. Byrne & Davison Doors (Vic) Pty. Ltd. (supra) Lockhart J. observed, at p.37: "It is for the court to determine the meaning of a design in any proceedings under the Designs Act whether the central question be the meaning of the design, novelty or infringement. Some ll. designs are simple so that the court needs no expert assistance to interpret them. Other designs are complex and judges require technical assistance to understand them. Such evidence 18 plainly admissible but ultimately it 1s for the court to rule on the meaning of a design. Similarly, the understanding and interpretation of prior art may call for expert assistance to be provided to the court for similar reasons. On the other hand, prior art may be a fairly simple matter in a particular case, requiring little or no technical evidence. It goes, I think, too far to say that questions of infringement must be determined by reference to the eye of the consumer or of the relvant industry or trade because that comes perilously close to asserting that the determination of questions of infringement depend on the evidence of such persons and cannot be determined by the court itself. On the other hand [I see no objection in an appropriate case to evidence being received from persons in the relevant trade or industry or members of the public directed to the question of infringement; but it is for the court to determine that question with or without such evidence." With a view to providing instruction of that kind the applicants have relied on evidence of expert opinion from Mr. Bayly, a local expert in design, and Professor Marinissen, the Professor of Industrial Designing at the Technical University of Delft. Professor Marinissen's evidence was given in the course of proceedings taken in the Netherlands by Turbo-Tek for infringement of a design substantially similar to, if not identical with, its Australian registered design, by importation of a "Squirt Gun" high pressure cleaner of Taiwanese manufacture, which, I infer, was to the same design as the article which the present respondents propose to import into Australia. 12. The relevant conclusions reached by Professor Marinissen, as stated by him in translation, were: "A first global look learns already the striking resemblance of this product with the 'Turbo wash'. The technical appearance, obtained by the same elements such as_ storage cylinder, nozzle and colour scheme make one rapidly think of the 'Turbo Wash'. The fact that to the 'Squirt Gun' a grip was added hardly diminishes the resemblance; the main elements are present and can be seen. The grip should be seen asa detailing as it is also present at the water inlet of the 'Turbo Wash'. Striking is the choice of the proportions and dimensions of the storage cylinder and the nozzle. The storage cylinder of the 'Squirt Gun' has a diameter of over 71 mm and a length up to the collar of 93 mm; for the "turbo Wash" these dimensions are 71 mm and 96 mm respectively. The difference between the two products as regards diameter of the three components of the nozzle is only 0.5 mm at the most and also the total length of the two nozzles is almost identical. Even the small step at the position of the passage to the storage cylinder to the nozzle 1s identical in the two designs. ... I come to the conclusion that the device under the Trade Mark 'Squirt Gun' cannot be held to constitute a new, original work. In essential points the design of this product shows a colorable imitation of the product 'Turbo Wash'." Mr. Bayly made a comparison of Turbo Tek's Australian registered design with the allegedly infringing article which the first respondent proposes to market under the name "Cosmic Aqua Blaster". The relevant paragraphs of his affidavit are: "13. After inspecting the registered design and the Consmic Aqua Blaster I formed the view that the overall configuration of the 14. 15. 13. Cosmic Aqua Blaster was substantially similar to that of the registered design. The features which I observed to be strikingly similar which serve to give the 1tem a machine gun-like appearance were: the appearance and proportions of the cylindrical barrel; the positioning, proportion and appearance of the extendable wand and the eccentric mounting of the wand onthe barrel, the shape of the nozzle at the wand's extremity; the shape of the control taps for water and detergent supply positioned on the end face of the barrel from which the wand extends. I also observed certain design features which distinguished the Cosmic Aqua Blaster from the registered design, although these, in my opinion, are minor variations. These are: slight differences in the dimensions of the component parts of both items; the handle of the Cosmic Aqua Blaster is absent from the registered design; the difference in the positioning of the water inlet valve on both items. In the case of the Cosmic Aqua Blaster this valve is positioned at the base of the handle device whereas on the registered design these are shown to be located on the base or the rear face of the cylindrical barrel. Other minor observable differences are the type of sockets used for the hose-insertion section of the attachment, and the graduated appearance of the tip section of the wand. My overall impression was that the Cosmic Aqua Blaster bore a striking resemblance to the registered design drawings. This impression derives from the substantially Similar shape of the cylindrical barrel with its extendable protruding wand and nozzle tip, together with the shape and location of the water and detergent opening and control tap devices common to both items. Overall the Cosmic Aqua Blaster replicates the machine gun-like appearance constituted by the barrel and wand features which confer upon the registeed design its obvious distinctiveness. 14. 16. Whilst the addition of the handle device, and the different shape and positioning of the water inlet valve on the Cosmic Aqua Blaster represent different design features, they do not, in my view, detract from the overall striking similarity in appearance of both items." Mr. Bayly on the assumption that the "Cosmic Aqua Blaster" is identical with the "Squirt Gun" examined by Professor Marinissen indicated that: "In essence I agree with the opinions expressed by Professor Marinissen on page 4 of that document to the effect that in essential points the design of, in this case, the Cosmic Aqua Blaster shows a colourable imitation of the product "Turbo-Wash" as represented in the registered design drawings. I also agree with Professor Marinissen's view that within the restrictions imposed by the technical and functional aspects of manufacturing, 1t would have been quite possible to have produced another design without compromising the fitness and quality of the product." The respondents relied on the evidence of Mr. Redmond, another expert in industrial design, who compared Turbo-Tek's registered design with an example of the allegedly infringing article bearing the name "Jet Gun Washer". Mr. Redmond identified the three Major components of the article disclosed by the registered design and the "Jet Gun Washer" as "a barrel or wand that concentrates and aims the water jet, a container for soap and a hose connection for the water supply." He first addressed himself to the nature of the articles and its effect in determining their configuration, having noted that "the configuration of the three major 15. components and some of the minor parts are to some extent determined by the nature of the article and to some extent by design choice." Mr. Redmond then made the following assessment of the design registered No. 96482, a ""Turbo-Wash" device said to be made to that design, and the "Jet Gun Washer":- "In respect of the design applied in the Design Registration No. 96482, except for the aspects that may relate to configuration, design 15s confined to the detailing of the wand/barrel end of the soap container; the placing of the alternative nozzles on the soap container; the detail at the rear of the soap container - the secondary soap insertion point; hose coupling; the detailing of the control knobs, container caps and nozzles; as well as the detailing of the ends of the wand/barrel segments. The aesthetics of the Registered Designs are relatively unsophisticated and have what I would term an 'engineered' appearance. This may be by accident, in that an engineer without visual skills may have designed the product, considering only mechanical and production engineering factors, or it may be that it was designed by an industrial designer to have the appearance of an 'engineered' rather than 'styled' product. Comparison of the Design Registration 96842 with the design applied to the JET GUN WASHER reveals a different configuration of the parts of the article, in that an additional element, a pistol grip handle has been introduced at right angles to the soap container - wand/barrel axis, with the hose coupling being at the end of the pistol grip, at right angles to the water line in the Registered Design. This pistol grip gives the product a pronounced 'gun' or 'pistol' like appearance which is different to the appearance of the Registered Design. There are similarities of aspects of the Registered Design 96842 and the JET GUN WASHER, principally the relationship between the axis of the wand/barrel and the axis of the soap container, and the proportions of the two parts, as well as the layout of the control and cap at 16. the wand/barrel end of the soap container, however, as has been previously maintained some of these aspects are matters of the nature of the article rather than design. In addition to the difference of the overall configuration of parts and the addition of the pistol grip handle on the JET GUN WASHER, there are differences in the design of the control knobs, container cap, hose coupling, nozzles and soap container." There has also been placed before the court by both sides a body of prior art which is substantially the same and consists of extracts, including drawings, from records in the United States Patent Office related to articles variously described as a "hose mounted fluid mixing sprayer", a "fluid operated spraying device", a "spray gun for viscous materials" a "detergent dispensing device" and the like. Examination of that material reveals that each device incorporates what Mr. Redmond called the three major components, namely a hose connection, a container for soap or detergent and a barrel or nozzle from which the mixture of water and detergent is expelled. However, peruse of the prior art also discloses a considerable diversity in the design, comparative proportions and arrangement of those three components. In some, a compact hose inlet and nozzle are mounted on top of a large jar-like detergent container. In others, the outlet valve or nozzle is attached to a non-rigid conduit from the detergent reservoir. Some have a wand or barrel not unlike those on the present registered design and the allegedly infringing article, but with a quite different location and proportion in relation to the 17. detergent reservoir. At least two examples of the prior art have "pistol grip" handles like that adopted for the accused device but mounted in a maredly different configuration and proportion to the nozzle and detergent container. It was pointed out by Mr. Catterns for the respondents in the course of argument that Turbo Tek might, pursuant to s.20(4) of the Designs Act, have caused its application for registration of its design to be accompanied by a statement of monopoly in respect of some more limited aspect of its design than the "shape and configuration of a pressure spray washer". I accept that Turbo-Tek's adoption of such a wide statement of monopoly requires the court to compare the allegedly infringing article as a while with the totality of the registered design. Similarity in one or two features such as the barrel or detergent cylinder, will not entail that a device is an obvious imitation of the registered design. For the court to find- obvious imitation in a case like this, the allegedly infringing article as a whole must present itself to the eye as aocopy of the whole of the registered design. The result of a visual comparison of the first respondent's device with the registered design depends, as the expert evidence suggests, on whether one is struck principally by the similarity in the barrel and detergent cylinder, or principally by the presence of the "pistol 18. grip", and the absence of a rear mounted inlet valve in the allegedly infringing article. I am satisfied at least that there is a serious question as to whether the features of Similarity are not so striking as to lead on balance to the conclusion that the first respondent's device is an apparent copy of the registered design. Since the respective physical features of the respondent's device and the registered design can be appreciated as well now as they could at the trial of the application, and since the expert evidence 1s unlikely to alter significantly in content or effect, I might have expressed a concluded view of my own on this question had the applicants' case for infringement turned solely on whether or not there has been an obvious imitation of Turbo-Tek's registered design. However, I am persuaded that there is also, on the evidence as it stands at present, a serious question whether the Taiwanese manufacturers of the allegedly infringing article have not been guilty of fraudulent imitation of the registered design. A fraudulent imitation has been characterized by the High Court in Malleys Ltd. v. J. W. Tomlin Pty. Ltd. (supra) at 9854 as "a copy with differences which are both apparent and not so slight as to be insubstantial but which have been made to disguise the copying". The concept has been further elaborated as follows by Lockhart J. in Firmagroup Austrlia Pty. Ltd. v. Byrne & Davison Doors (Vic) Pty. Ltd. (supra) at 41: 19. "A closer correspondence between the registered design and the accused design 18 necessary to satisfy the test of obvious imitation than fraudulent imitation. In using the phrase 'fraudulent imitation' Parliament doubtless contemplated an imitation that is fraudulent without being obvious. ... Visual comparison will establish whether the offending design 1s the registered design or an obvious imitation of it but something more is required to establish whether there has been a fraudulent imitation. A design may be an obvious imitation within the meaning of s.30 notwithstanding that the person who puts the obvious imitation on the market may not know of the registered design. A fraudulent imitation presupposes a knowledge of the registered design and making use of it: Dunlop Rubber Co. Ltd. v. Golf Ball Developments Ltd. (1931) 48 RPC 268 at 279 per Farwell J. and Lewis Falk Ltd. v. Jacobowitz (1944) 61 RPC 116. The use of the word fraudulent in the Act is perhaps somewhat unfortunate because fraudulent does not necessarily connote dishonesty; neither dishonest intent nor a deliberate or conscious intention to copy is a necessary element. The essence of fraudulent imitation is that the respondents' design has knowingly, consciously or deliberately been based on or derived from the registered design: Grafton v. Watson (1884) 50 LT (NS) 420; Pugh v. Riley Cycle Co, supra; Lewis Falk v. Jacobowitz, supra. In Duniop Rubber Co. Ltd. v. Golf Ball Development Ltd. Farwell J. said at pp.279 and 280: 'Now with regard to the two words 'fraudulent' or 'obvious', in my judgment 'obvious' means something which, as soon as you look at it, strikes one at once as being so like the original design, the registered design, as to be almost unmistakable. I think an obvious imitation is something which is very close to the original design, the resemblance to the original design being immediately apparent to the eye looking at the two. With regard to the word 'fraudulent', fraudulent I think does pre-suppose a knowledge of the registered design. I think it would be difficult for a court to come to the conclusion that an imitation was fraudulent unless the court was satisfied that the registered design had been known to the author of the alleged infringing design, and further, it seems to me that 'fraudulent' imports something in the nature of making use of the registered 20. design. It does not necessarily import deliberate intention to steal the property of the owner of the registered design. It does not import any intention to be fraudulent, because a person may be the author of a fraudulent imitation believing perfectly honestly that he has so altered the registered design as to make them two different designs, and so far as his own mind and his own intention are concerned, he may be honest in that sense. But fraudulent imitation seems to me to be an imitation which is based upon, and deliberately based upon, the registered design, and is an imitation which may be less apparent than an obvious imitation; that is to say, you may have a more subtle distinction between the registered design anda fraudulent imitation, and yet the fraudulent imitation, although it is different 1n some respects from the original and in respects which render it not obviously an imitation may yet be an imitation perceptible when the two designs are closely scanned and accordingly an infringement." The inference that the Taiwanese manufacturers of the allegedly infringing article had knowledge of the design of the Turbo-Wash device is almost inescapable in the light of the following evidence given by the second respondent, Mr. Sperling: "When I was there (in Taiwan) in February (1987) when I mentioned they had prototypes, the patent rights were mentioned because they were guns without the modification this has (indicating the accused article). They were certainly complete look-a-likes to the original Turbo-Wash". The inference of intentioned imitation is reinforced by the fact that the allegedly infringing article like the Turbo-Wash device made in accordance with the registered design is composed of black plastic with the nozzle tip, stored alternative nozzle tips, detergent cylinder cap and 21. control knobs in red plastic. Mr. Catterns for the respondents argued that the adoption of such a_ strikingly Similar colour scheme for the Taiwanese product signifies the absence of any belief by its manufacturers that they were infringing any rights of Turbo Tek. Had there been a conscious intention to infringe, so the argument went, the Taiwanese manufacturers would have been likely to camouflage the infringement by putting their product out in completely different colours. However, it is conscious derivation from a registered design, not consciousness of guilt of infringement which lies at the heart of fraudulent imitation. Accordingly, it is open to the applicants to point to the striking similarity in colours between the "Turbo-Wash"" device and the Taiwanese product as evidence that the manufacturers of the latter knew of the design embodied in the "Turbo-Wash" device. If that knowledge is established, as it would be if the evidence were to remain as it is, the respondents could escape liability only if the fraudulent (in the special sense explained by Lockhart J. in the passage which I have just quoted) and partly disguised "copying" had not resulted in a "copy", as was held by Fullagar J. to have happened in L.J. Fisher & Co. Ltd. v. Fabtile Industries Pty. Ltd. (1979) 49 OJPT & D 3611, and at first instance and bya majority of this court on appeal in Firmagroup Pty. Ltd. v. Byrne & Davison Doors (Vic) Pty. Ltd. (supra). 22. Since I have already concluded that there is in the present case a serious question of obvious imitation, 1t follows a_fortiori that a serious question also exists whether there has been the less faithful reproduction of Turbo Tek's design necessary to make out fraudulent imitation. As I have indicated, the respondents have foreshadowed a counterclaim to have Turbo-Tek's registered design under s.32 of the Desiqns Act expunged. However, s.26(3) of that Act provides: "The certificate of registration shall be prima facie evidence of the facts stated therein and of the validity of the registration" As I held in Harry the Hirer Pty. Ltd. v. Mac II Enterprises Pty. Ltd. (unreported 22 December 1987) on p.7 that section casts an onus on a respondent of persuading the court by evidence that there is no respectable argument for resisting a counterclaim for the expunging of the registered design. It will be apparent from my review of the evidence so far adduced of the prior act in respect of pressure spraying devices that I have not been so persuaded in the present case. It becomes necessary therefore to consider whether damages would afford an adequate remedy to the applicants if they were ultimately to succeed in establishing infringement, and, if not, whether the balance of convenience is for or against the grant of an interlocutory injunction. 23. The applicants have spent almost twelve months and a considerable advertising budget in developing an Australian market for the Turbo-Wash product. The respondents on the other hand, apart from displaying the "Cosmic Aqua blaster" at the Sydney Trade Fair at a stand partly given over to other products in which the first respondent already has an established trade, and from distributing to trade representatives about 200 copies of the "home-made" brochure, have done little by way of promoting the allegedly infringing article. The second respondent, Mr. Sperling, has expressed the opinion that a car washing device of the same general type as the Turbo-Wash and "Cosmic Aqua Blaster" is a "two-summer product", which he explained to mean that most of its sales would be achieved in the first two summer seasons following its emergence on the Australian market. If that opinion were to prove correct, and the respondents were allowed to participate in the first full summer season until the substantive application and any appeal could be heard and determined, the applicants, on the assumption that they ultimately establish infringement, would lose about half of the period in which their presumptive Australian monopoly would generate most of its likely profit. Account must also be taken of the effect of the presence in the market of a rival product on those retailers and others in the distribution chain who have purchased from Autopace on the faith of the monopoly in the registered design. (See Appleton 24. Papers Inc. v. Tomasetti Paper Pty. Ltd. £19833 3 NSWLR 208 at 219 1 IPR 569 at 581) By contrast with the applicants, the respondents have not yet established the "Cosmic Aqua Blaster" in the Australian market. Television advertising of that product has been projected to occur in November 1987 and a budget of up to $20,000 has been allocated for newspaper advertisements between now and Christmas 1987. No expenditure has so far been incurred on that advertising. The first respondent has made arrangements to have 10,000 "Cosmic Aqua Blasters" shipped to Australia in August 1987 and proposes to import further large quantities in each of September, October and November 1987 and January 1988. Its liability to pay for the first shipment in the event that an interlocutory injunction is granted in these proceedings may depend, Mr. Sperling has suggested, on the "goodwill" of the Taiwanese sellers. Thus the principal disadvantage which respondents will suffer from an interlocutory injunction will be the handicap, or further handicap, which it will be forced to concede to the applicants in what Mr. Sperling believes to be a short period of competition. Mr. Catterns for the respondents urged as a matter to be weighed in the exercise of the court's discretion to grant or refuse an interlocutory injunction the fact (not initially disclosed in affidavits filed on behalf of the applicants) 25. that a new model "Turbo-Wash" device is now being marketed in Australia which does not conform as closely as the original model with the registered design. One visible difference beween the new and old model is that on the former the stored replaceable nozzles, which are different in shape, have been removed from the top to the rear of the cylinder which has been restyled to present a more streamlined "hi-tech" appearance. The front of the cylinder has also been restyled and the cap located there has been redesigned to match the stop-cock at the top rear above the water inlet valve which in turn has been modified to provide a "snap-on", instead of a threaded, connexion with a hose. However, I consider it to be clear beyond argument that the new model is still derived from the registered design. Nor am I _ persuaded that' the applicant's failure at the outset of these proceedings to disclose the existence of the new model evinces a lack of candour of such a kind as to disentitle them to the equitable relief which they seek. Mr. Young for the applicants relied on the question of the balance of convenience, on doubts which have been expressed as to whether the "Cosmic Aqua Blaster" will satisfy the requirements of various Australian authorities like the Melbourne and Metropolitan Board of Works, the New South Wales Products Safety Committee and the Adelaide Water Board, governing the sale or use of devices to be connected to a domestic water supply. However, I am not prepared to assume that the "Cosmic Aqua Blaster" will be offered to the public in contravention of those requirements. 26. I therefore disregard as a matter affecting the balance of convenience, the likelihood of the ""Turbo-Wash" and the "Cosmic Aqua Blaster" respectively complying with the regulatory requirements to which I have just referred. "In the light of the circumstances, including such weight as the authorities indicate may be attached to the preservation of the status quo, I have concluded that the balance of convenience is in favour of the grant of an interlocutory injunction. Accordingly, the order of the Court will be: UPON THE RESPONDENTS by their counsel undertaking until the hearing and determination of the application herein or further order not to communicate or disseminate any representation in the terms or to the effect that: (i) the United States retail price of the "Turbo-Wash" spray device is USS9.99, or (11) the current retail price in Australia of the "Turbo-Wash"" spray device is As§50.00. AND UPON THE APPLICANTS by their counsel undertaking to pay to any party adversely affected by the interlocutory orders set forth hereunder such compensation (if any) as the court thinks just in such manner as the court directs 27. IT IS ORDERED THAT: 1. The respondents be restrained until the hearing and determination of the application herein or further order, whether by themselves, their servants or agents or howsoever otherwise from advertising, displaying, exposing or otherwise offering for sale, selling or supplying any spray washer device the same as or substantially identical with Exhibit 1 tendered herein on 6 August 1987. 2. Unless any of the times set out in this paragraph be enlarged by mutual consent of the parties: (1) The applicants on or before 24 August 1987 file and serve a Statement of Claim by 24th August 1987. - (11) The respondents on or before 31 August 1987, file and serve a defence and any cross claim. (iit) The applicants on or before 7 September 1987 file and serve a reply and defence to cross clain. 28. (iv) Both parties file and serve affidavits of documents on or before 14 September 1987 and give inspection saving all just claims to privilege on or before 18 September 1987, "ty) Any further affidavit evidence in chief to be relied upon by the applicants be filed and served on or before 25 September 1987 and any further affidavit evidence to be relied upon by the respondent in answer be filed and served on or before 9 October 1987 and any further evidence in reply by the applicants be filed and served on or before 16 October 1987. The directions hearing herein be adjourned to 16 October 1987. The costs of and incidental to the applications for interim and interlocutory injunctions and the directions hearing herein, including all reserved costs, be costs in the substantive application. Liberty be reserved to any party to apply for further directions herein as he or it may be advised on not less than 48 hours notice in writing to the other parties. I certify that this and the preceding twenty-seven (27) pages are a true copy of the Reasons for Judgment of the Honourable Mr. Justice Ryan. Dated: "7 2 #7 Py Fane we Associate