Shape not misleading

Last week, we looked at Mortimer J’s reasons for dismissing Shape Shopfitters’ allegations of trade mark infringement against Shape Australia. Presumably, given the colour and stylistic constraints of the registered trade mark, Shape Shopfitters’ main attack was based on the prohibition against misleading or deceptive conduct under the Australian Consumer Law. It too was unsuccessful.

Shape Shopfitters’ contention was that, by changing its name from ISIS to Shape Australia, Shape Australia was misrepresenting to the public that the two businesses were affiliated in some way with Shape Shopfitters being the specialist shopfitting arm of the Shape Australia. The descriptive nature of the common term, Shape Shopfitters’ fairly confined reputation and the fact that most of its dealings were with well-established contacts combined to mean that there was no such misrepresentation.

In about October 2016 when Shape Australia changed its name, Shape Shopfitters had annual turnover of between $10 million to $13 million a year. Almost all of its business was in fitting out, or the maintenance of, retail food outlets; especially quick service restaurants. Two thirds of its jobs were for contracts under $5,000; over 90% was for jobs under $200,000. Most of its business was in Victoria. 88% of its business outside Victoria was for the same seven clients: Grill’d, Nando’s, Sumo Salad, San Churro, Mad Mex, Schnitz or Coco Cubano. All of whom were well-established customers. Most of its work came from invitations to participate in closed tenders requested by established clients or directly negotiated contracts, once again with established customers.

In contrast, Shape Australia had annual revenues of around $400 million and the average size of its contracts was $1.55 million. Its role was usually as head contractor and construction manager, contracting out the work to specialist sub-contractors. It did do, however, some shopfitting work.

Mortimer J rejected Shape Australia’s argument that the relevant public was restricted just to the purchasers of construction services. Section 18 is not limited just to consumers; it provides protection to all people dealing with the respondent. In this case, including suppliers such as architects and subbies.

Mortimer J also rejected Shape Australia’s argument that none of its customers would mistakenly think that there was a connection with Shape Shopfitters. That was irrelevant. The question was whether people aware of Shape Shopfitters’ reputation would be misled or deceived.

However, there was no real, practical risk that the public would be misled or deceived. The businesses were simply too different and those dealing with Shape Shopfitters were well aware of its identity: At [216] – [217]:

I am not satisfied that participants in the industry would be led into such an error [i.e. thinking that Shape Shopfitters was an arm of Shape Australia]. The parties’ business activities are too different, they operate in different areas, with the applicant being far more specialised and more geographically contained. The link the applicant posits is possible and not fanciful in a theoretical sense, but it is without any foundation in the reality of the way the parties’ business activities are conducted, and in the way the “participants in the commercial construction industry” encounter the two businesses. That is especially so when one considers evidence such as that from Mr Billings that the applicant secures a lot of its business through word-of-mouth referrals.

The most that can be said is that there is a likelihood that participants in the industry, on isolated occasions, may be led to confuse the two entities because they both have the word “Shape” in their name, and occasionally communications may be directed to one when meant for the other. That is what the evidence discloses has in fact occurred, from time to time, in relatively few instances.

While there was some evidence of confusion, confusion itself is not enough and they were isolated instances only. Quickly dispelled.

You might recall that her Honour excluded evidence of print outs of websites of various businesses as hearsay and prejudicial. Evidence of the registration of such businesses as companies or business names was admitted, however, because the evidence was official ASIC records. There were 12 such businesses.[1] While Mortimer J accepted that this evidence did not take the matter very far, nonetheless it showed that the public could well come across other “Shape” entities in circumstances which undermined the potential for Shape Shopfitters to be seen as an “arm” of Shape Australia:

I accept that evidence of the bare existence of these entities cannot take the matter very far. However, the number of such entities using the word “shape” in their corporate names, and (I am prepared to infer) trading activities, is not without significance. Even without more information about those entities, the relative prevalence of the word “shape” in corporate and trading names, frequently in conjunction with construction-related words such as “joinery” and “projects” suggests that “participants in the industry” (including potential clients, purchasers and subcontractors) might well come across other entities using the word “shape” in the provision, sale and promotion of their particular services. That possibility cannot be discounted, and it tends against the linear proposition on which the applicant’s case relies: namely, the likelihood that the applicant (and it would appear, only the applicant) will be perceived to be part of the respondent’s larger group, and perhaps as its specialist shopfitting arm. That linear proposition must depend, it seems to me, on the applicant occupying something of a unique place in the market so that such a representation by the respondent’s use of the word “SHAPE” could only be made in respect of the applicant, and not other entities. This evidence tends against such a conclusion.

There was also some evidence from a search engine optimisation expert. It showed that neither business had very active websites. Those people who searched for Shape Shopfitters, however, typically did so by reference to the term “shopfitters”. This reinforced her Honour’s impression that it was its shopfitting specialty that identified Shape Shopfitters. On the other hand, Shape Australia did not typically generate hits in searches on terms related to “shopfitting”. If it did come up, it was invariably placed below the result for Shape Shopfitters:

Because of this, people searching for the Shape Shopfitters Website through searches for these terms are very unlikely to be misdirected to the SHAPE Australia website.

The passing off allegations failed similarly for want of the necessary misreprensation.

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865


  1. Shape Building Pty Ltd; Shape Design; Shape Property Developments; Shape Consulting; Shape Constructions Pty Ltd; Shape Project Management Pty Ltd; Shape Builders Pty Ltd; Shape Joinery & Design Pty Ltd; Shape Fitouts Pty Ltd; Shape Projects Pty Ltd; Shape Construction; the 12th, Shape Developments Pty Ltd changed its name in the course of the litigation although the reasons for that were not known.  ?

Copyright in bikini designs

Seafolly is in the news again: this time as the winner. In her last decision before retiring, Dodds-Streeton J has ordered that City Beach[1] pay Seafolly $250,333.06 by way of damages for infringing copyright in 3 Seafolly designs: the English Rose artwork, the Covent Garden artwork and the Senorita artwork.

The English Rose artwork and the Covent Garden artwork were both patterns or ornamentation printed on the fabric. The Senorita artwork, however, was in effect stitched on to the garment using shirring and smocking. Dodds-Streeton J, however, rejected City Beach’s defence based on sections 74 and 77 of the Copyright Act. Apart from all the other issues, her Honour’s application of the Full Court’s decision in the Polo/Lauren case struck me as particularly important.

Seafolly’s Senorita artwork:

321.12
321.11

City Beach’s Richelle embroidery:

321.13

The subsistence point

As you can see, the Senorita design is pretty simple in appearance. City Beach’s argument was that this simple design was the more or less inevitable outcome of using the type of industrial sewing machine used to produce it. According to the evidence, however, it involved significant trial and error to produce because smocking fabric was very difficult to work with, smocking did not always involve using triangles or diagonals and City Beach’s expert conceded “there was a huge array of different ‘cams’ which could produce an almost indefinite variety of patterns.” Her Honour rejected City Beach’s attack, therefore:

416 …. the Senorita embroidery was not the inevitable outcome of the operation of an industrial sewing machine. Nor was the work so rudimentary and simple as to be unprotectable because, in essence, there was no meaningful distinction between the subject matter and the form of expression.

The use of the sewing machines, therefore, appears to involve use of the machine to implement the human idea more in the vein of Coogi or a wordprocessor to record the text than as an automatically generated entity like the phone books in PDC. The second point made by her Honour seems to pick up the High Court’s point that the ordering of title and time of television program in chronological order did not involve sufficient creativity (or intellectual effort) to qualify as original.[2]

The copyright/design overlap

City Beach’s defence based on the copyright/design overlap provisions failed also, because the Senorita design when sewn on to the bikinis was not a corresponding design.

When the Designs (Consequential Amendments) Act 2003 introduced the current form of s 74 and s 77, it was hoped that the old problems about whether something constituted a “design” and whether it had been “applied to” an article had been sidestepped. All that was necessary, was to identify an artistic work which had been embodied in the features of shape or configuration of the product.[3] Rares J, at first instance in the Polo case adopted that too simplistic (as we now know) approach to find that the 700 or so stitches used to embroider the Polo logo on to a shirt qualified. This was set right by the Full Court on appeal.

Dodds-Streeton J acknowledged that the Full Court’s observations were obiter. Her Honour also acknowledged that the Full Court’s reasoning “is not consistently explicit, but must be inferred”. Her Honour considered that the Full Court’s reasons:

470 …. in substance indicate that it is the features of shape or configuration of an artwork (not a label on which the artwork is reproduced) that must be relevantly embodied in a product, which will occur when the product (in the present case, a garment) is made in the shape or configuration of the artwork.

Thus, the diamond pattern was not a corresponding design because, when stitched on to Seafolly’s bikinis, it did not define the shape or configuration of the bikini as a garment.

In reaching this conclusion, Dodds-Streeton J had to interpret the Full Court’s declaration at [58] that a design must be conceptually distinct from the product in which it was embodied to qualify as ‘embodied’ for the purposes of s 74. That created a problem in the present case as Dodds-Streeton J considered the stitching, or smocking, could not have existed independently of the garment:

473 It is true that, in contrast to the logo in Polo/Lauren itself, the reproduction of the Senorita artwork sewn on to the relevant garment may not retain a separate existence, as probably, it could not survive removal and is not conceptually distinct from the garment. Accordingly, if the Full Court’s observations in [58] represent the correct and comprehensive test, the Senorita artwork could be embodied within the meaning of s 74(1). As stated above, however, the comment at [58] does not comprehensively reflect the reasoning of the Full Court’s judgment.

I am not sure, with respect, why the Senorita design was any the less capable of independent existence than the Polo logo. I think the design could not have an independent existence because it was created by attaching the stitching to the shirring framestrings and there was presumably no drawing.

Dodds-Streeton J identified a further problem. It seems difficult, with respect, to reconcile the Full Court’s interpretation of s 74 with the clear legislative intent to capture woven tapestries, bas relief and “textured” carpets within the concept of corresponding design by the inclusion in s 74(2) of:

“embodied in , ” in relation to a product, includes woven into, impressed on or worked into the product.

According to Dodds-Streeton J:

480 Following the insertion of the words “woven into”, “impressed on” or “worked into” in s 74(2), it seems clear that features of shape or configuration of an artwork can be embodied in an article which is itself a piece of embroidery, a carpet, bas?relief or similar, by being woven or worked in. This was the qualification to the maintenance of the tradition [sic] position to which the Full Court referred at [48]. The amendment to s 74(2) did not, however, apply to the circumstances of Polo/Lauren itself as the relevant product was a garment rather than a carpet, bas?relief or embroidery (although the design was applied or attached by means of embroidery or “weaving in”).

Instead:

481 In the light of the Full Court’s emphasis that the position was otherwise unchanged, it would seem that it rejected Rares J’s analysis not simply or principally because the logo remained conceptually distinct from the garment, but because the garment was not made in the shape or configuration of the artistic work, irrespective of whether it was three dimensional.

It’s not clear why garments should be treated any differently to tapestries, carpets etc. I suppose a carpet could for example be woven in the shape of a (stylised) polo player or teddy bear or some other novelty shape thought to be appealing to someone out there in the wide world, but a tapesty? One might have thought (if one didn’t have the Full Court’s obiter dicta hanging over one) the legislature intended to catch all such woven, stitched or otherwise ‘applied’ artistic works from its intention to ensure that carpets, tapestries and the like be “clearly” brought in.

This is not to say that the alternative, literal approach to interpreting s 74 is not without its challenges. Dodds-Streeton J went on in dicta to consider that the Full Court really also disagreed with Rares J’s view that the embroidered stitching was sufficiently three-dimensional to qualify as features of shape or configuration.In any event:

486 … the surface of the garment onto which the smocking is sewn is not flat because the fabric is shirred. Any protrusion of the smocking from the surface is minimal and probably significantly less than that in Polo/Lauren itself, which on a fair reading of its judgment, the Full Court nevertheless thought insufficient.

So, there may well be questions of degree in how much three dimensional appearance is required before something qualifies as shape or configuration.[4] That is, however, a problem which long challenged designs law.

Seafolly Pty Ltd v Feswtone Pty Ltd [2014] FCA 321

 

Update:

Tim Golder points out:

  1. At paragraph 13, her Honour noted that the Señorita work subsisted in final drawings – so my attempt to rationalise her Honour’s perceived distinction to the Polo logo fails dismally.
  2. City Beach has already lodged its appeal: VID224/2014 for mention before Gordon J on 2 May.

  1. City Beach Australia is the trading name of Fewstone Pty Ltd.  ?
  2. IceTV Pty Ltd v Nine Network Pty Ltd (2009) 239 CLR 458 at [54] and [170].  ?
  3. Putting to one side, of course, all the fun and games of what may be a work of artistic craftsmanship for the purposes of s 77(1)(a) or the difference between “shape or configuration” and “pattern or ornamentation”.  ?
  4. This would also be an issue to some extent under the UK’s test of “surface decoration”: see Lambretta Clothing v Teddy Smith [2004] EWCA Civ 886.  ?