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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY
CIV 2005-419-809
BETWEEN ORAKA TECHNOLOGIES LIMITED
First Plaintiff
AND ORAKA GRADERS LIMITED
Second Plaintiff
AND M W SCHWARZ
Third Plaintiff
AND GEOSTEL VISION LIMITED
First Defendant
AND P DAYNES AND G ROBERTSON
Second Defendants
AND NAPIER TOOL AND DIE
CO LIMITED
Third Defendant
Hearing: 19-23 May, 26-30 May, 3-4 June and
29 September-1 October 2008
Appearances: B Henry and A McDonald for plaintiffs
E J Hudson and D M O'Neill for second
defendants
K J Crossland, P C Verboeket and R J Robertson for third defendant
Judgment: 18 February 2009
JUDGMENT OF ALLAN J
In accordance with r 11.5 I direct that the Registrar endorse this judgment
with the delivery time of 1 pm on Wednesday 18 February 2008
Solicitors/counsel:
B Henry, Auckland b.p.h@clear.net.nz
A E McDonald,
Auckland alex@amcdonald.co.nz
Tim Kinder, PO Box 62, Putaruru kinder@xtra.co.nz
E J Hudson, Hamilton elliothudson@xtra.co.nz
D M
O'Neill, Hamilton david.oneill@nzbarrister.com
Stace Hammond, PO Box 19-101 Hamilton advice@shg.co.nz
ORAKA TECHNOLOGIES LIMITED
AND ORS V GEOSTEL VISION LIMITED AND ORS HC HAM CIV
2005-419-809 18 February 2009
Introduction
[1] In many parts of the
world asparagus is a greatly appreciated vegetable, and
in high demand when available. The primary growing season is in spring and
early
summer. Major producers are to be found in Europe, the United States, Mexico,
Peru and Asia. Significant quantities are also
grown in Australia, New Zealand and
in parts of Africa and Latin America.
[2] In former times, asparagus spears were graded
manually, but that was
inefficient and uneconomic. More recently, machines and equipment have been
developed for the purpose of grading
asparagus spears automatically by reference to
weight, colour, size and general appearance.
[3] The third plaintiff, Mr Schwarz,
has been heavily involved in the
development of asparagus grading equipment since about the early 1980s. The
development process
was long and difficult. Mr Schwarz gave evidence of the
problems presented by the very nature of asparagus spears, which precluded
solutions developed for other fruit and vegetables. Asparagus does not roll in the
same way as do many common fruit species; it does
not behave well under water,
and it is much more delicate than most other products. It cannot be tipped, shovelled
or stacked. No
two spears are ever precisely the same shape. Moreover, the size
range between the largest and the smallest is substantial. So asparagus
resisted
mechanisation for longer than did most other crops. Nevertheless, solutions were
found.
[4] Mr Schwarz says that
he worked independently, although there was some
evidence of parallel work by developers in other parts of the world. Over time,
Mr Schwarz developed what he called the "Oraka grader". In evidence in chief he
described the grader in the following manner:
16. ... The Oraka grader is essentially a conveyor belt with a specialised
cup assembly that receives an
individual asparagus spear and carries
it under a camera/illumination station at the rate of about 12 spears
per second. The image of an individual spear is captured by the
camera, processed by a PC and each spear is graded according to its
length, colour and quality, depending
on the demands of the market
for which the crop is destined. When the asparagus spear reaches
the designated
collection chute for its grade, the cup assembly is
electronically tripped to tip the cup and the spear falls into
a
collection chute where it is packaged with other spears as part of the
machine's delivery of a programmed
weight of spears into a chute
specific to the grade.
17. At the outset of the grading process, a small
header belt pushes the
asparagus spear lengthwise onto the cup. The tip of the spear faces
away from
the chute so that when the cup trips and inclines and the
spear slides out, the butt end of the spear impacts on the
chute door.
When the computer registers that the right number of spears are in
the chute, the chute
door opens and an asparagus bunch slides down
to the bottom half of the chute ready for bundling. At that stage
human hands take over the process.
18. The header belt runs at a slightly faster speed than the cups, pushing
the tips of the spears so that all the tips are in line and the same
length of spear extends from the
trigger end of the cup. The butt end
of the spear extends from the other end and is passed under a cutter
to trim the spear to the longest pack length (if the spear is long
enough to reach that cutter).
19.
The spear passes under the camera where it is electronically graded
in terms of diameter; whether it is cut squarely
and cleanly;
whether there is any white left on the spear and into what chute it
should be ejected
if it has achieved saleable standard. If the spear
has too much white or is not cut squarely it will remain on the
conveyor belt to be cut again before it arrives at its designated chute
which will have been determined
electronically at the outset.
[5] Mr Schwarz did not personally develop every aspect of the grader; for
example
the slatted belt and the necessary computer software were developed by
others and were the subject of appropriate contractual arrangements.
But he was
directly involved in the development of the cup assembly used to transport and grade
individual asparagus spears, and
in the collection chutes designed to collect the
spears when a cup assembly is electronically triggered. It is the cup assembly and
the chute which is the subject of this litigation.
The parties
[6] The first and second plaintiffs are respectively Oraka
Technologies Limited
(Technologies) and Oraka Graders Limited (Graders), companies in which
Mr Schwarz has a significant shareholding
and which played a role both in the
development of the Oraka grader, and its sale to operators in New Zealand and
overseas. To
date, Mr Schwarz's asparagus grader has been sold to growers in New
Zealand, Australia, the United States, South Africa, Greece,
England, the
Philippines, Chile, Mexico and Peru.
[7] The second defendants, Messrs Paul Daynes and Gordon Robertson, are
shareholders
in the first defendant, Geostel Vision Limited (Geostel). Mr Daynes
was formerly associated with Mr Schwarz, for whom he developed
much of the
computer software incorporated in the Oraka grader. Mr Daynes, through his
company, Kamber Electronics Company
Limited, worked for Mr Schwarz as an
independent contractor.
[8] Over time Mr Daynes became disenchanted with Mr Schwarz, whose
business methods he thought inefficient, and whose funding arrangements he
considered to be inadequate. Perceiving an opportunity
of his own, he incorporated
Geostel with Mr Robertson, who formerly had been Mr Schwarz's Greek
representative. Thereafter, Geostel engaged in competition
with the plaintiffs both in
respect of the sale of new graders, and in respect of the provision of replacement
parts for the plaintiffs'
grader.
[9] The third defendant, Napier Tool and Die Limited (NTD) is a Napier
engineering company. It undertook for
Mr Schwarz design, tooling and
manufacturing work in respect of the cup assembly, although not of the collection
chute which has
a quite different design history.
The statement of claim
[10] The plaintiffs sue all defendants for infringement of copyright;
additionally,
they sue NTD for breach of fiduciary duty. It is necessary to consider the plaintiffs'
pleading in some detail.
[11]
The plaintiffs went to trial on a statement of claim dated 18 February 2008,
and described as the fourth amended statement of
claim (an earlier pleading dated
19 December 2007 was also described as a fourth amended statement of claim). The
plaintiffs plead
that in the course of the development of the Oraka cup assembly the
following artistic works were produced:
a) drawings
and sketches created by Mr Schwarz of the workings of the
cup chassis and trigger of the Oraka cup assembly.
These were
alleged to have been drawn on the back of a beer coaster at Perth
International Airport,
and were said to have been followed by
approximately three drawings prepared by hand by Mr Schwarz for,
and given to, NTD by him;
b) a prototype comprising a cup made from PVC piping with a chassis
and trigger
each made from sheet metal and incorporating springs;
c) some 18 drawings being:
i) one drawing
dated 3 February 1993;
ii) three drawings dated 10 February 1993;
iii) eleven drawings dated
respectively either 1 March 1993,
15 March 1993 or 25 March 1993;
iv) three drawings, two
of which are dated 13 November 2003 and
the last 16 December 2003.
d) a mould created by reference
to the foregoing works.
[12] Each of the 18 drawings identified in [11](c) above is alleged to have been
created by employees
of NTD and/or Mr Bob Witham (described as a principal of
NTD) on commission by the first or third plaintiff.
[13] The statement
of claim then alleges that the commission was "express or
implied" and was entered into in or about 1993. The plaintiffs' pleaded
particulars
allege that the drawings were produced by NTD in performance of an agreement
between the first or third plaintiff and
NTD, entered into in about 1993, in terms of
which NTD agreed to design and produce a tool for the manufacture of the Oraka
cup
assembly in accordance with certain design parameters provided by the first or
third plaintiff to NTD. It is further alleged that
the asserted agreement imposed on
the first or third plaintiff an implied obligation to pay NTD for the creation of the
drawings,
and that prior to the creation of the 18 drawings by NTD, Mr Witham of
NTD represented to Mr Schwarz or to the first plaintiff that
the plaintiffs would own
copyright in the tooling. The plaintiffs allege that such representations were made
by Mr Witham in discussions
with Mr Schwarz in 1992 or early 1993, at NTD's
business premises in Napier and/or at Boyds Packhouse in Cambridge, and/or in the
course of telephone discussions between Mr Schwarz and Mr Witham.
[14] The statement of claim further pleads that:
a)
in about 2003 NTD permitted Graders to uplift the tooling from NTD
without payment, and
b) the
claim to ownership of copyright now made by NTD in its
counterclaim was not communicated to the plaintiffs until
approximately July 2007, after this proceeding had commenced.
[15] The statement of claim includes the following allegation in respect of the
asserted implied commission
agreement:
The implication that the drawings were produced pursuant to a commission
is reasonable and equitable, obvious
and necessary to give business efficacy
to the agreement, including providing the first or third plaintiff with the right
to take action against third parties for copyright infringement.
[16] With respect to the collecting chute, the plaintiffs
allege that copyright exists
in six sketches or drawings of their prototype chute. Five of the drawings are
described as "Bayform"
drawings, and the sixth sketch is alleged to have been
prepared by Mr Schwarz. The Bayform drawings are undated, but are alleged
to
have been created in 1993 or early 1994 by Mr Van Garderen of Bayform Industries
Ltd (Bayform) on commission by Technologies.
Mr Schwarz's sketch is alleged to
have been prepared in or about November 1994. Finally, the plaintiffs claim
copyright
in a prototype chute made by Mr Schwarz in 1994.
[17] The plaintiffs' pleading particularises a number of design features in
respect
of both the cup assembly and the chute which are said to be disclosed in the
plaintiffs' copyright works. These features
are:
10 The Oraka cup assembly has the following design features:
10.1 The v-shape, length and flaring
of the cup itself;
10.2 The combination of a cup, chassis and trigger, the cup being
held
in a horizontal position by the engagement of a hook
positioned on the underside of the cup with a latch
positioned at one end of the trigger. The operation of the
trigger releasing the hook from
the latch and the cup from
the horizontal position to a tipping position;
10.3 The pivoting
arrangement of the cup on the chassis
involving the position of a pivot point near the centre of
gravity and springs arranged on the underside of the cup and
the underside of the trigger to aid
the movement of the cup
to tipping point.
11 The Oraka chute has the following design features:
11.1 a flared entry section shaped and dimensioned to receive
flying asparagus spears discharged
from the cup assembly
and to discharge them in flight into the middle section;
11.2 a middle
section which catches the spears passing through
the entry section in alignment for bundling;
11.3 a hinged chute door providing a floor for the top section
when closed and when open providing a clear
passage from
the top section to a bottom section for asparagus bundles to
pass;
11.4 a bottom section shaped and dimensioned to receive a
bundle of asparagus spears from the
top section ready for
packing.
[18] The plaintiffs allege that Geostel and NTD have each infringed the plaintiffs'
copyright. In the case of Geostel the claim is that in or about 2001 and afterwards it
manufactured and sold a cup assembly and chute
that are substantial copies of the
plaintiffs' copyright works, and that in doing so Geostel substantially reproduced the
design
features of the Oraka cup assembly and chute. NTD is alleged to have
infringed the plaintiffs' copyright in the cup assembly only,
by manufacturing
infringing works both for Geostel and on its own account. The plaintiffs seek the
usual injunctive relief against
each defendant, together with an order directing the
delivery up of infringing copies, an award of special damages and an inquiry
into
general damages.
[19] In a second cause of action against NTD alone the plaintiffs plead that, if
NTD is the owner of the copyright in the designs and tooling for the
cup assembly,
then it is under a fiduciary duty to hold its rights in trust for the first and third
plaintiffs. On that second cause
of action the plaintiffs seek an injunction restraining
NTD from manufacturing or selling a cup assembly which breaches the pleaded
fiduciary duties, an order directing NTD to assign copyright to the third plaintiff, a
declaration that pending the assignment of
the copyright NTD holds any such
copyright in trust for Mr Schwarz, and an inquiry as to damages.
The defendants' position
[20]
Most aspects of the plaintiffs' claim are in dispute. The defendants do not
accept that the plaintiffs own the copyright in the
cup assembly or the collecting
chute. All facets of the plaintiffs' claim to infringement are denied. The defendants
say the plaintiffs
are not entitled to any relief.
[21] Accordingly the question of copyright ownership is a threshold issue. I turn
to a discussion
of the law as to ownership, and in particular the position in respect of
commissioning.
Copyright ownership
[22] The Copyright
Act 1962 (CA62) was repealed by the Copyright Act 1994
(CA94), which came into force on 1 January 1995. By virtue of Schedule 1 section
14 of the latter Act, the question of first ownership of copyright in a work made
before the commencement of the 1994 Act is to be
determined in accordance with
the law in force at the time the work was made. Most of the works in which
copyright is claimed by
the plaintiffs came into existence in 1993 or 1994. As to
them, ownership questions are to be determined in accordance with CA62.
Section 9
of that Act provides:
9. Ownership of copyright in literary, dramatic, musical, and
artistic
works
(1) Subject to the provisions of this section, the author of a work shall
be entitled to any copyright
subsisting in the work by virtue of this Part of
this Act.
(2) Where a literary, dramatic, or artistic work is
made by the author in
the course of his employment by the proprietor of a newspaper, magazine, or
similar periodical
under a contract of service or apprenticeship, and is so
made for the purpose of publication in a newspaper, magazine, or
similar
periodical, the said proprietor shall be entitled to the copyright in the work in
so far as the copyright relates
to publication of the work in any newspaper,
magazine, or similar periodical, or to reproduction of the work for the
purpose of its being so published or to broadcasting the work; but in all other
respects the author shall be entitled to
any copyright subsisting in the work
by virtue of this Part of this Act.
(3) Subject to subsection (2) of this
section, where a person
commissions the taking of a photograph, or the making of a painting,
drawing, engraving, model,
or sculpture and pays or agrees to pay for it in
money or money's worth, and the work is made in pursuance of that
commission, the person who so commissioned the work shall be entitled to
any copyright subsisting therein by virtue of this
Part of this Act.
(4) Where, in a case not falling within either subsection (2) or
subsection (3) of this section,
a work is made in the course of the author's
employment by another person under a contract of service or apprenticeship,
that other person shall be entitled to any copyright subsisting in the work by
virtue of this Part of this Act.
(5) Subsections (2), (3), and (4) of this section shall each have effect
subject, in any particular case, to any agreement
excluding the operation
thereof in that case.
(6) The preceding provisions of this section shall have effect subject
to
the provisions of Parts 7 and 8 of this Act.
[23] The starting point is therefore that the author of a copyright work is presumed
to be the first owner of copyright
in that work, and is the person in whom is vested
the right to sue for copyright infringement: Section 120(1) CA94.
[24] The
effect of s 9(3) is that a person who commissions a copyright work in the
manner described by the sub-section becomes, in effect,
the author of that work and
entitled to take action thereby for infringement. In Pacific Software Technology Ltd
v Perry Group Ltd
[2004] 1 NZLR 164 the Court of Appeal discussed in depth the
ingredients of a valid commissioning. There the Court considered s 21 of CA94
which provides:
21 First ownership of copyright
(1) Subject to the provisions of this section, the person who is the author
of a work is the first owner of any copyright in the work.
(2) Where an employee makes, in the course of his
or her employment,
a literary, dramatic, musical, or artistic work, that person's employer is the
first owner of any
copyright in the work.
(3) Where--
(a) A person commissions, and pays or agrees to pay for, the
taking of a photograph or the making of a computer
program, painting, drawing, diagram,
map, chart, plan,
engraving, model, sculpture, film, or sound recording; and
(b) The work
is made in pursuance of that commission,--
that person is the first owner of any copyright in the work.
(4) Subsections (2) and (3) of this section apply subject to any
agreement to the contrary.
(5) Subsections
(1) to (4) of this section apply subject to sections 26 and
28 of this Act.
[25] For the purposes of this case there is
no material distinction between s 9(3) of
CA62 and s 21(3) of CA94.
[26] The Court of Appeal explained the concept of commissioning
in Pacific
Software at [55] in the following manner:
[55] First, to "commission" simply means to "order" or "request".
[56] Secondly, this commissioning must be antecedent to the work. It must
have been arrived at before the work is made.
[57] Thirdly, s 21 requires, in terms, a commission and an agreement to pay.
Whilst an antecedent commissioning does
not necessarily imply an
obligation to pay, usually it will do so. And the very existence of a payment
obligation can
lend force to the notion of the commission itself. An
agreement to pay can be express or implied. In Alwinco Products Ltd
v
Crystal Glass Industries Ltd [1985] 1 NZLR 716, this Court thought it
sufficient that it be established that the work is to be paid for. For the
purposes of a commission
there need not necessarily be agreement as to the
precise amount to be paid. And the authors of Laddie, Prescott and Vitoria,
The Modern Law of Copyright and Designs, Vol 1 (2nd ed, 1995) at para
11.50 cite with approval P S Johnson & Associates
Ltd v Bucko Enterprises
Ltd [1975] 1 NZLR 311 for the proposition that there can be an implied
commissioning arrangement "where it can only be assumed that [the work]
would ultimately be paid for". That said, matters can be left so vague that the
supposed commission becomes unenforceable.
(For a reported instance of
this kind, see Leah v Two Worlds Publishing Co Ltd [1951] Ch 393.)
[58] Fourthly, this payment is a quid pro quo for the copyright: that is, the
making of the copyright work, not the
physical embodiment of the work
itself.
[59] Fifthly, the copyright in the commissioned work belongs to the
commissioning party so soon as part of it is done. That is, the commission
applies to incomplete as well as complete works.
[60] Sixthly, it will be apparent from the foregoing that although it is an
agreement of a kind, a commission is closer
to a term of art which is
employed in the copyright area for the resolution of first ownership issues.
To put this
another way, the notion of a commission is sui generis to
copyright law. It involves the Court finding an arrangement of the
requisite
character between the parties, and what the terms of it are. The very
existence of the commission may be
inferred.
[27] Payment or agreement to pay must pre-date the creation of the copyright
works, and must relate to that creation.
It is not sufficient that payment be made for
the product manufactured by means of the utilisation of the copyright works. In Plix
Products Ltd v Frank M Winstone (Merchants) Ltd (1984) 3 IPR 390, Prichard J said
at 411-422:
Without proof of a prior commissioning payment for the work in whatever
form is of
no consequence. Commissioning means ordering. In this
context it means more than requesting or encouraging. It connotes an
obligation to pay. Not just to pay for the finished products if and when they
are purchased; but to pay for the very
article in which the copyright resides,
irrespective of whether any of the finished products are purchased.
[28] It is
unnecessary that commissioning be the subject of a written agreement, or
indeed that there be any express agreement at all. Commissioning
may be inferred in
all the circumstances of the case: Hansen v Humes-Maclon Plastics Ltd (1984)
1 NZIPR 557 at 570, but a commissioning, express or implied, must involve an
agreement to pay. This agreement must be a true consensus and
not a mere
unexpressed intention to pay or a unilateral expectation that there will be a payment:
Apple Corps Ltd v Cooper [1993] FSR 286..
Mr Schwarz's own cup assembly works
[29] Mr Schwarz says that he sketched the basic design of a cup assembly on a
beer coaster
at Perth Airport, but that he did not retain those sketches. He says that
at a later point in time he prepared further similar but
tidier sketches, which were
given to Mr Witham at NTD so that the latter would know what Mr Schwarz
expected the cup assembly to
look like. These sketches have not been retained by
NTD and Mr Schwarz accepted that he did not expect Mr Witham to retain them.
For his part, Mr Witham has no recollection of receiving them at all. Mr Crossland
advises the Court that the sketches were not included
in the list of documents sworn
on behalf of the plaintiffs in the proceeding.
[30] The plaintiffs also claim copyright in a prototype
comprising a cup formed
from split PVC and shaped in a steel mould, and a trigger made from galvanised
iron. Mr Schwarz said that
this prototype was the product of a period of lengthy trial
and error.
[31] Mr Witham accepted that an example of this prototype
was provided to him
by Mr Schwarz and indicated that its primary value to NTD was that it illustrated the
pivot principle upon which
the cup assembly was intended to operate. The prototype
was not retained by NTD.
[32] The result is that neither Mr Schwarz's
sketches nor the prototype are before
the Court. Neither is there any secondary evidence of their appearance. While that
is not necessarily
fatal, an assessment of originality in artistic works claimed to be
copyright works requires either a visual inspection of those
works, or secondary
evidence of their appearance. In Plix Products Ltd the Court had sufficient
secondary evidence of lost
original drawings in the form of finished patterns and
moulds for kiwifruit pouches.
[33] In Wham-O Manufacturing Co Ltd v Lincoln
Industries Ltd [1984] 1 NZLR
641, the form of a missing wooden model could be determined from the form of the
final moulded plastic product. But the Court was unable
to determine that copyright
existed in missing earlier drawings because modifications had been carried out prior
to the creation
of the model, and later the final goods.
[34] In the present case the Court has no evidence of the precise form of the
sketches,
either by description or by comparison with a model. The prototype did
not form the basis for the NTD design so the form of the prototype
cannot be
determined by working back from the drawings or from the cup assembly ultimately
produced by NTD. While it is not in dispute
that Mr Schwarz approached NTD with
an idea for a cup assembly, and that the sketches and prototype constituted certain
expressions
of that idea, the precise expression to be found in the missing works
cannot be determined.
[35] The Court is accordingly unable
to conclude that copyright existed in the
missing works. It is likely that Mr Schwarz expended sufficient skill and effort for
copyright
to subsist, but the difficulty is that the Court cannot compare his work with
the articles alleged to infringe copyright in the missing
sketches and prototype.
[36] For copyright purposes the sketches and prototype must be set to one side.
Of themselves they cannot
found a claim for infringement, although it is common
ground that a prototype was made available to Mr Witham.
Commissioning of
cup assembly drawings
[37] The evidence of Mr Schwarz and Mr Witham about precisely what occurred
at the outset of their relationship
is not materially different. Mr Schwarz says that he
approached NTD late in 1992 or early in 1993 for engineering assistance with
respect to the cup assembly. He did so by reason of NTD's established reputation in
the engineering field, and in particular its
familiarity with fruit and vegetable
grading. It is common ground that NTD had no detailed knowledge of asparagus
grading; however
at an early point Mr Witham, in the company of Mr Schwarz,
inspected an earlier version of an asparagus grader in operation at Boyds'
Packhouse
near Cambridge. Mr Schwarz says he provided Mr Witham with some sketches and
with the prototype discussed earlier.
Mr Witham acknowledges receipt of the
prototype but has no recollection of any drawings. NTD then produced the first of
the concept
drawings dated 3 February 1993. Mr Witham discussed this sketch with
Mr Schwarz; there were problems with the geometry which Mr Schwarz
explained
would not have been noted by a layman, but which in practice would present serious
operational problems.
[38] NTD
went back to the drawing board and on 10 February 1993 produced a
further three drawings which provided greater component detail
and were
satisfactory to Mr Schwarz.
[39] Having approved the three design drawings of 10 February 2003,
Mr Schwarz asked NTD
to prepare a quote for the preparation of tooling based upon
the designs, and also for the manufacture of components using the tooling.
NTD
duly prepared a written form of quotation, which was subsequently accepted by
Mr Schwarz. No party has retained a copy of the
written quotation, but it must
necessarily have followed Mr Schwarz's approval of the design drawings of 10
February 1993.
[40]
Subsequently NTD produced tooling drawings and then manufactured the
tool itself. Later it entered into agreements with Mr Schwarz
for the production of
cup assemblies, utilising that tooling.
[41] NTD did not charge for its design work and there is no evidence
that the
plaintiffs ever paid for the creation of the concept and design drawings as distinct
from later tooling and manufacturing
work. Mr Witham gave detailed evidence
about NTD's approach to design work. It offers a free design service aimed at
attracting new
customers with a view to securing later tooling and manufacturing
work. NTD regards as a point of difference the complete design,
tooling and
manufacturing service offered, and in particular the fact that design work is carried
out free of charge.
[42] Had Mr Schwarz
decided not to proceed to the tooling stage, he could have
done so without any financial obligation, Mr Witham said. Although that
would
have resulted in a loss to NTD, such losses are outweighed by the additional
engineering and manufacturing work attracted to
the company.
[43] An example of NTD's free design service arose again in 2001 when the
plaintiffs asked NTD to design a new slat
for the Oraka grading belt. Design
drawings were prepared, but ultimately Mr Schwarz decided not to proceed with slat
production
in accordance with the new design. In evidence Mr Schwarz accepted
that he was not charged for that design work either.
[44]
At trial, NTD called customer evidence that corroborated its policy of
providing design work free of charge. I am satisfied that
it did not charge the
plaintiffs for the concept and design drawings of 3 and 10 February 1993, and that no
plaintiff made any payment
in money or money's worth to NTD for those drawings.
[45] In evidence Mr Schwarz said that one of the selling points Mr Witham
made
to him in the early stages was that any work produced by NTD for the plaintiffs
would "entirely belong to us", if at any time
the plaintiffs chose to go to another
manufacturer. Mr Schwarz also said that it was implicit in that advice that since the
plaintiffs
had the right to control production from the mould, they would also own
copyright in the mould and the final design of the cup assembly.
[46] Mr Witham has no explicit recollection of any such assurance, but accepts
that he could well have assured Mr Schwarz that
ownership of the tooling, and the
exclusive right to use it, would rest with the plaintiffs. At the time, Mr Witham
himself never
gave any thought to copyright issues, and says he did not become
aware of the legal position until he got detailed legal advice in
2007. The proper
inference is that Mr Schwarz was likewise ignorant of the copyright implications
arising from the commissioning
of drawings, and indeed, he does not assert that
Mr Witham expressly provided any assurance about copyright ownership as such.
At
the time, copyright appears never to have been considered. NTD's purpose in
offering a free design service was simply to attract
new and additional custom. In
doing so, there is no suggestion that it deliberately sought to appropriate copyright
entitlements
that would not otherwise have been available to it. In the event, the
plaintiffs did in 2003 uplift the tooling from NTD, with that
company's co-operation.
[47] There is no evidence of an express agreement between the parties whereby
the plaintiffs would pay
NTD for the February 1993 drawings. Neither is there
anything which might constitute a consensus as to payment. NTD simply accepted
a
request to prepare some drawings for consideration by Mr Schwarz, and did so.
There was no mention of payment at the time, no subsequent
request for payment,
and no offer of it. The free design service was no doubt attractive to the plaintiffs,
both inherently and because
on the evidence it is plain that Mr Schwarz and the
entities through which he operated were under-capitalised throughout the period
material to this litigation.
[48] As Mr Crossland submits, the plaintiffs have tended to conflate what I find to
have been two
quite separate instructions to NTD. The first was the instruction to
prepare concept and design drawings. The second instruction
was for the production
of tooling and later for the manufacture of components. Between the two sets of
instructions Mr Schwarz approved
the February drawings, sought and considered a
quote from NTD for tooling and production, and accepted that quote. It is not
possible
on the evidence to regard payments made by the plaintiffs for tooling and
production as somehow referable in part to earlier design
work. The need carefully
to distinguish between design work on the one hand and tooling production on the
other is emphasised by Prichard J in Plix Products and by the Court
of Appeal in
Pacific Software at [58].
[49] Somewhat curiously, the plaintiffs plead both an express and an implied
commission.
I have set out the particulars of the asserted implied term earlier in this
judgment. The plaintiffs plead that commissioning must
be implied by reason of the
need for business efficacy.
[50] The ordinary business efficacy test is that found in BP Refinery
(Westernport)
Ltd v Shire of Hastings (1977) 16 ALR 363 at 376. The term to be implied must be
reasonable and necessary in order to make an agreement work. No such term is
required in the
present case. The plaintiffs paid for tooling and for subsequent
production. NTD accepts that the plaintiffs have the exclusive right
to possess and
use the tool for its lifetime. NTD also accepts that the plaintiffs are licensed to
utilise the underlying intellectual
property for that period. So the ordinary test for
the implication of the term is not met.
[51] But perhaps even more importantly,
to imply a term here would be to subvert
the statutory requirements of s 9(3) of CA62. The law of copyright is now governed
by statute.
The requirements for a valid commissioning are set out in s 9(3). Those
requirements are not met in the present case. Implication
of the term sought by the
plaintiffs would in effect confer upon them copyright entitlements not authorised by
the Act.
[52]
Concept and design drawings were prepared by employees of NTD, which
thereby became the owner of copyright in the drawings, unless
there was a
commissioning by the plaintiffs that fell within s 9(3) CA62. No such
commissioning occurred. To imply
a term that conferred copyright entitlements on
the plaintiffs would provide a windfall to the plaintiffs by permitting them to secure
copyright without incurring the obligation to pay prescribed by s 9(3).
[53] The plaintiffs also sought to rely on a trade custom.
No such custom was
pleaded. Mr Crossland initially objected to the plaintiffs' trade custom evidence.
Ultimately however, he concluded
that NTD was able to call evidence by way of
rebuttal from witnesses who were to give evidence in any event, and his formal
objection
lapsed.
[54] The plaintiffs called evidence from a Mr Raymond Pryor, a designer working
in the plastics industry. He gave evidence
of the existence of a trade custom by
which the commissioning of designs is implied where a customer subsequently
commissions the
tooling. In such circumstance, he said, the customer owns the
copyright.
[55] Mr Pryor thought that if a customer secured free
design work, then the
customer would enjoy copyright entitlements because the idea was that of the
customer, and not of the designer.
But of course, ideas themselves are not protected
by copyright. It is the expression of those ideas which enjoys protection.
[56]
Mr Pryor said that the practice described by Mr Witham of providing a
product design service to customers at no charge is not uncommon
for plastics
moulding/tooling companies. His own company offers a complete service, although
it contracts out the tooling work.
He says that the clear understanding upon which he
operates is that the ownership of the intellectual property stays with the client
where the customer pays for the tooling it is assumed that the customer will own the
underlying intellectual property.
[57]
The implication of a term by normal trade custom involves a consideration of
a series of factors, discussed in Woods v NJ Ellingham
& Co Ltd [1977] 1 NZLR 218
and in Westpac Banking Corporation Ltd v Ancell (1993) 4 NZBLC 103 (CA). The
factors are:
a) The custom must have acquired such notoriety that the parties must be
taken
to have known of it and intended it to form part of the contract;
b) The custom must be certain;
c) The
custom must be reasonable.
d) Until the Court takes judicial notice of the custom it must be proved
by clear and convincing evidence; and
e) The custom must not be inconsistent with any express contract.
[58] Here,
I accept Mr Crossland's submission that the evidence called for the
plaintiffs is insufficient to show that the term contended for
constitutes a notorious
trade practice which goes without saying: Everist v McEvedy [1996] 3 NZLR 348 at
360. Neither is the term contended for certain. Moreover, it is inconsistent with the
express requirements of s 9(3) of CA62,
reaffirmed in s 21(3) of CA94.
[59] I reject the argument that there exists a trade custom to which the Court ought
to have regard
despite the clear language of s 9(3) CA62. In my opinion, ownership
of the copyright in the concept and design drawings of February
1993 rests with
NTD. There was no agreement between the plaintiffs and NTD for payment in
respect of those drawings. NTD did not
seek payment because it offered a free
design service. Payments made at a later time in respect of tooling and manufacture
are irrelevant,
as is clear from the judgment of Prichard J in Plix Products: a
qualifying payment under s 9(3) must relate to "the very article
in which the
copyright resides irrespective of whether any of the finished products are
purchased".
[60] Mr Henry argues that
such a conclusion is untenable in public policy terms,
and that it was for NTD to point out to the plaintiffs the implications of
its free
design service in respect of copyright entitlements.
[61] As Mr Crossland submits, the complete answer to Mr Henry's
public policy
concern is that, in enacting both the 1962 and 1994 Acts, Parliament has applied the
long standing prima facie rule
that an author is the first owner of copyright unless
contrary arrangements are made. Where there is no commissioning that falls
within
the statute and no express agreement as to ownership of copyright, the author of a
work is its owner. It is for the plaintiffs
to establish ownership of copyright in the
concept and design drawings. In my opinion they have failed to do so.
[62] The remaining
1993 drawings in respect of which the plaintiffs claim
copyright may be described as tooling drawings. Mr Henry did not devote separate
attention to this group of documents. I accept Mr Crossland's argument that the
tooling drawings simply copy or adapt the concept
and design drawings and in effect
are no more than a mirror image of those drawings. They are therefore of
insufficient
originality to qualify for separate copyright protection. The mould itself
is in the same category.
[63] The last three documents
for which copyright is claimed date from 2002.
Again, Mr Henry devoted no separate argument to them. These documents came
into existence
after the Geostel components were designed, and so, as Mr Crossland
submits, cannot found an argument for infringement in their own
right.
[64] The plaintiffs' claim in respect of the cup assemblies, insofar as it rests upon
alleged infringement of copyright,
fails.
The fiduciary duty argument
[65] If, as I have found, NTD and not the plaintiffs is the owner of copyright in
the relevant
works, Mr Henry argues that nevertheless such copyright must be held
in trust by NTD for the plaintiffs, by reason of a fiduciary
duty owed by NTD.
[66] Counsel for the defendants took this cause of action to relate to the plaintiffs'
confidential information
and responded to it on that basis. But in both his opening
and closing addresses Mr Henry made it clear that he was relying upon
the principles
discussed in Watson v Dolmark Industries Ltd [1992] 3 NZLR 311. There the
defendants entered into an arrangement with the Australian plaintiff under which
they acquired sole distribution rights
in New Zealand for plastic storage trays, along
with rights to use the plaintiffs' dies to manufacture that product. The defendants
agreed to pay a royalty. The defendants engaged in false accounting for the purpose
of depressing the sales made by them in New Zealand,
and used the money that
ought to have been applied in payment of royalties to make new moulds for the
purpose of selling a product
similar to that of the plaintiff.
[67] The Court of Appeal held that the relationship between the parties was
fiduciary. The
plaintiff had entrusted the dies to the defendants to deal with them for
the benefit of the plaintiff, or for purposes authorised
by the plaintiff and not
otherwise. The plaintiff was vulnerable as she was dependent on the accuracy of the
defendant's reports
as to the extent of manufacturing and marketing in New Zealand.
The Court applied the principles discussed in certain well known
authorities
including Reading v R [1949] 2 KB 232 and Hospital Products Ltd v United States
Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41.
[68] Mr Henry argues that this case is similar to Watson v Dolmark because:
The issue is one of trust and confidence
in that the plaintiff was vulnerable in
the event the third defendant decided (as it did) to secretly promote the
interest
of a competitor. Then as a defence, when caught, to assert there had
been no commissioning so that they were the owners of
the copyright in a
design that the plaintiff had through his own labours developed.
[69] This argument must fail. It is
founded on the proposition that it is a breach of
fiduciary duty for NTD to assert (correctly) that it, rather than the plaintiffs,
is the
owner of copyright in the drawings concerned. Without more the argument is
untenable. It could succeed only where evidence
existed of an underlying agreement
between the parties, pursuant to which NTD was obliged to exercise its rights to
copyright in
the interests of the plaintiffs, and not otherwise. There is no evidence of
any such agreement. This case is wholly different from
Watson v Dolmark where
the Court found that the defendants had breached an express obligation to account,
and to use certain dies
for stipulated purposes and not others.
The chutes
[70] Geostel accepts that between 2001 and 2003 it acquired and utilised
the same
chutes as were at times manufactured for the plaintiffs. The chutes concerned were
described for the purposes of this litigation
as the Ziebe version two chutes. The first
and second defendants accept that if the plaintiffs have copyright in the Ziebe
version
two chute, then Geostel is in breach of that copyright.
[71] The plaintiffs statement of claim does not refer to the Ziebe chutes
at all, and
it is therefore necessary to trace the relevant course of events. The starting point is
the plaintiffs' pleading. The
pleaded copyright works comprise five drawings known
as the Bayform drawings, a prototype chute made by Mr Schwarz, and a sketch
prepared by him in or about November 1994. The Bayform drawings were allegedly
prepared by Mr Bob Van Garderen, managing director
of Bayform, a company
which undertook chute manufacture at times for the plaintiffs. Mr Van Garderen
was called as a witness by the
plaintiffs. Although confirming that drawings A, D
and E (pleaded in paragraphs 9.2.1, 9.2.4 and 9.2.5 respectively of the statement
of
claim) were produced by Bayform, he denied any knowledge of drawings B
(paragraph 9.2.2) and C (paragraph 9.2.3), which I set
to one side despite
Mr Schwarz's reliance on them.
[72] Mr Schwarz says that the Bayform drawings were prepared on instructions
by
him and in consequence of information, sketches and photographs shown by him to
Bayform. The prototype chute in respect of which
copyright is claimed was, he
claims, made by him in the United States in 1994. Although the prototype itself was
not brought back
to New Zealand, it was photographed and the photographs were
utilised here for the purpose of instructing designers and manufacturers.
Mr Schwarz made the separately pleaded sketch personally in the later part of 1994
for that same purpose.
[73] It is convenient
to commence with a preliminary issue. Geostel asserts that
the work undertaken by Mr Schwarz in the USA that gave rise to his pleaded
prototype was not original, in that the prototype is derived from, and in effect is an
infringing copy of, an earlier chute to which
Mr Schwarz had access in the USA.
[74] Some context is necessary. In 1993 Mr Schwarz had supplied an asparagus
grader to a Mr
Tom Philleo, who grew asparagus in Washington State, USA.
Difficulties were encountered with the machine during the 1993 growing
season. In
about April 1994 Mr Schwarz travelled to the United States. Among his objectives
in making the trip was that of assisting
Mr Philleo in overcoming the difficulties
hitherto experienced by him with the machine. Evidently Mr Schwarz stayed with
Mr Philleo
for some weeks. Between the two northern growing seasons Mr Philleo
had been in New Zealand for a time. In his evidence he said he discussed with
Mr Schwarz and others at that time,
the possibility of installing chutes on asparagus
graders. Until then, asparagus spears were simply discharged onto tables from where
they were cleared by hand. Mr Schwarz accepted that during that period he and
Mr Philleo may well have discussed the feasibility
of providing chutes, although his
evidence was that he himself had been considering the possibility independently for
some considerable
period.
[75] Mr Philleo's evidence at trial was that in the early part of 1994, he designed a
prototype chute which was manufactured
in stainless steel and subsequently attached
to his machine. He said that Mr Schwarz had unlimited and constant access to his
sheds,
and therefore had every opportunity of inspecting the Philleo prototype chute.
[76] Mr Schwarz's account is different. He said
Mr Philleo did not develop his
chute until the 1995 growing season, and that he himself did not see it in 1994.
Moreover, he asserts,
Mr Philleo was involved in a traffic accident during the 1994
growing season, was absent from the property for some time and so
not in a position
to give evidence about Mr Schwarz's movements. Mr Philleo is adamant however
that his chute was manufactured in
1994, and said he was in hospital for only a few
days and absent from work for only eight days.
[77] Mr Schwarz claims that he
developed his chute independently at a
neighbouring property in Washington State, without reference to anything that
Mr Philleo was
doing.
[78] Lengthy evidence was given at the trial by expert witnesses on either side.
The plaintiffs called Mr Stevens and
the defendants called Mr Hanlon. I derived
considerable help from both. They were agreed that the Philleo and Schwarz
prototypes
bore the following similarities:
a) Both were U section gravity feeders, although such designs are
commonplace;
b) Both had a flared top section in order to assist in catching asparagus
spears as they left the cup
without damage to the spears;
c) Both involved a "ski-jump", an uncommon feature which was
provided
in order to avoid damage to the spears by contact with the
chute or with other spears;
d) Both had a
closed bottom section.
[79] Messrs Stevens and Hanlon agreed however, that there were two important
differences:
a)
The Schwarz chute had an additional centre section;
b) There was no gate between the sections of the Philleo chute.
[80] Mr Hanlon thought that the Schwarz prototype was an enhanced version of
the Philleo chute. Mr Philleo himself believed that
the Schwarz prototype was
derived from his own. Mr Schwarz, of course, denied any reliance on the Philleo
chute for the reasons
I have earlier outlined.
[81] Where an allegation of copying is made the Court must compare the two
designs, noting similarities
and differences; if the impugned design incorporates
features of the complainant's design, then the question is whether or not what
has
been taken is all, or a substantial part, of that design. If the similarities are sufficient,
either in number or in scope, to
justify an inference of copying, then they are likely
also to be sufficiently substantial to satisfy a requirement for the copying
of a
substantial part of the complainant's work: Designers Guild Ltd v Russell Williams
(Textiles) Ltd [2000] UKHL 58; [2000] 1 WLR 2416.
[82] Features that are commonplace will not amount to the copying of a
substantial part of a complainant's work: Designers Guild
at p 2423. The correct
approach is first to determine whether copyright exists in the entire work of the
complainant and then to
determine if what has been taken is a substantial part of that
work: Ladbrooks (Football) v William Hill (Football) Ltd [1964] 1 WLR 273 at
277.
[83] The making by a defendant of modifications will always be relevant, but
where it is shown that the impugned article
was in fact designed by reference to the
complainant's design, an inference of copying will be likely: Steelbro NZ Ltd v Tidd
Ross
Todd Ltd [2007] NZCA 486 at [113].
[84] Mr Hudson accepts that the fact that both chutes are "U" shaped gravity
conveyors with a stop at the bottom does not amount
to a relevant similarity, but
rather is a commonplace feature which ought to be disregarded. But he relies on two
similarities:
a) The flaring of the top section of the chute to catch the produce as it is
discharged; and
b) The ski-jump.
[85] Mr Hudson places particular reliance on the latter. He submits that the Court
should note that
there is no evidence of the nature and extent of Mr Schwarz's
asserted prior research into the possibility of providing chutes for
asparagus graders.
He says also that it is plain that Mr Schwarz had the opportunity of inspecting
Mr Philleo's prototype chute.
He further asks rhetorically why it was that
Mr Schwarz should develop his prototype on a neighbouring property rather than
in
Mr Philleo's own packhouse, unless Mr Schwarz wanted to keep his work secret
from Mr Philleo.
[86] I think it is more likely
than not that Mr Philleo did indeed develop his chute
in 1994, and that the prototype was available in his packhouse at a time when
Mr Schwarz was residing with him. Mr Philleo is unlikely to have made a mistake
on the point, given the twin circumstances that Mr
Schwarz was staying with him at
the time, and that his traffic accident occurred during that same season. In other
words, there were
markers by which Mr Philleo would be able to recollect whether
the prototype was developed in the 1994 season (as he asserts) or
in the following
year (as Mr Schwarz contends).
[87] It follows that Mr Schwarz had the opportunity of inspecting the Philleo
chute and was likely to have done so.
[88] However, I am not prepared to draw an inference of copying from that
circumstance.
There was prior discussion between Messrs Philleo and Schwarz
between the two US growing seasons about the possibility of producing
chutes, and
Mr Schwarz says he had himself studied the issue separately. There is evidence that
a so-called ski-jump is used in respect
of the grading of certain other fruit and
vegetables so it is not entirely unknown (and indeed was known to Mr Schwarz) but
most
importantly, there is the provision by Mr Schwarz of a centre section in his
own chute and of a gate between the sections of his
chute, a feature missing in the
Philleo chute.
[89] Aside from the ski-jump, most of the similarities between the chutes are
commonplace, or dictated by the function each was intended to perform.
[90] Accordingly, I proceed on the footing that Mr Schwarz's
prototype, as
photographed by him and referred to in the statement of claim, was sufficiently
original to attract copyright protection.
[91] In evidence in chief Mr Schwarz said that when he returned to New Zealand
from Washington State in mid 1994, he took a photograph
of his prototype chute to
Bayform where he asked Mr Van Garderen to design a chute by reference to the
prototype photograph, and
having obtained a quote, to commence manufacturing
chutes on the basis of Bayform's design. Bayform's designs are not in evidence
save
for the three sketches discussed earlier. Bayform continued to make Oraka chutes
through much of 1995.
[92] Mr Schwarz also
dealt with Mr Harry Ziebe, the owner of Ziebes Engineering
Ltd. Mr Ziebe had previously worked at Dobson Engineering Ltd, which had
made
earlier asparagus graders for Mr Schwarz. Ziebe Engineering took over this work
when Dobson Engineering went out of business.
Mr Schwarz's evidence in chief
was that in late 1994 he gave Mr Ziebe a photograph of the prototype and one of the
Bayform sketches,
and asked Mr Ziebe for the first time to have the chutes made to
that design. But in cross-examination Mr Schwarz conceded that Mr
Ziebe had
received a series of photographs or negatives from him when Mr Schwarz was still in
the USA or shortly thereafter. A facsimile
sent by Mr Schwarz to Mr Ziebe dated 27
May 1994 makes reference to Mr Ziebe's possession of the photographs, which must
have been sent to Mr Ziebe somewhat earlier. The facsimile
includes a sketch by
Mr Schwarz of the inter-relationship of parts of the chute with the belt assembly, and
expressly requests Mr
Ziebe to study the photographs of the chute. So, contrary to
Mr Schwarz's evidence in chief to the effect that Mr Ziebe was instructed
to work on
the chutes only late in 1994, it is plain that by late May 1994 the latter was heavily
involved. It therefore appears
that Mr Schwarz was obtaining chutes through both
Bayform and Mr Ziebe from about mid 1994, and through much of 1995.
[93] Mr
Ziebe's evidence is supported by certain documents produced in
evidence:
a) A quotation from Mr Ziebe to Mr Schwarz
dated 28 June 1994 for
items that included chutes;
b) Two job cards dated 22 July 1994 in respect of
the building of
asparagus graders for supply to customers of the plaintiff in Hawera
and the Philippines.
The cards included references to Metal Products
Ltd, which undertook the manufacture of the chutes for Mr Ziebe;
c) A quotation by Mr Ziebe to build a machine for a Mr Haylock,
including chutes, dated 30 November 1994;
and
d) A series of invoices from Metal Products Ltd to Mr Ziebe dated
31 October 1994 for the supply
of chutes.
[94] It is fair to say that Mr Schwarz accepted only with reluctance the early role
played by Mr Ziebe in the design
and production of chutes for him. Even in cross-
examination Mr Schwarz contended that Bayform, not Mr Ziebe, had been
responsible
for the production of chutes during 1994, and that Bayform supplied
them to Mr Ziebe as required.
[95] Unfortunately Mr Schwarz's
evidence as to chute design was self-
contradictory and confusing. During the course of cross-examination he first
claimed that
the Ziebe Version two design was undertaken by him in conjunction
with Bayform, but he later accepted that Mr Ziebe had undertaken
a modification of
Ziebe Version one so as to create Ziebe Version two, on his own initiative. He
thought that might have been about
September 1994, and in any event before
11 October 1994 when Mr Schwarz sent to Mr Ziebe a facsimile comprising a very
rough sketch
setting out what appeared to be proposed cross-sections for various
portions of a chute.
[96] Mr Ziebe retired in about 2002
and his company was later struck off the
register. His records were not readily available, but during the trial he located
certain
additional documents which were put to Mr Schwarz, who was recalled for
the purpose. It was only in the face of those documents that
Mr Schwarz accepted
that his recollection had been wrong, and that Mr Ziebe had played a much greater
role in the design and production
of chutes for him than he had earlier accepted.
[97] Mr Ziebe gave evidence for the defendants. He confirmed having received
photographs (including of the prototype) from Mr Schwarz in mid-1994 and said that
on Mr Schwarz's instructions he worked on the
design of a chute that would
conform to Mr Schwarz's requirements. This became known in the litigation as the
Ziebe Version one chute.
Mr Ziebe said that he quoted for two machines in June.
Those quotes were accepted by Mr Schwarz and manufacturing commenced in July
1994. He said that those machines were provided with Ziebe Version one chutes,
designed by him and manufactured for him by Metal
Products Ltd.
[98] Mr Ziebe said in evidence that his design was radically different from what
could be seen in the photographs
sent to him by Mr Schwarz, in that:
a) The bottom part of the chute was properly rolled;
b) The door was
formed differently in order to suit the shape of the
rolled collector in the centre, and was folded at right angles
with the
hinged part towards the top;
c) The receiving tray was different in that the left hand side was raised
higher to catch the asparagus
spears when they came out of the cups;
d) The receiving tray was on the tipping side;
e) The pneumatic
cylinder used to open the door was mounted vertically
as opposed to horizontally.
[99] Later in 1994, Mr Ziebe
changed the chute design, apparently unilaterally.
The alterations were:
a) The receiving tray differed in that the
right side was flared out;
b) The tray was also widened in order to catch the asparagus at speed;
c) It
was also flatter and lower at the sides.
[100] Mr Van Garderen gave evidence for the plaintiffs on subpoena, but he was
unable
to corroborate Mr Schwarz's claims that Bayform and he together had been
responsible for the design of the Ziebe chutes. Mr Van Garderen's
recollection was
limited and he appeared to be confident only where there was support from the
documentary material. As earlier
discussed, Mr Van Garderen disclaimed as his
documents, two drawings pleaded by the plaintiffs as copyright drawings prepared
by
Bayform on Mr Schwarz's instructions.
[101] The relevant events took place of course some 15 years ago, and it is
understandable
that memories will have dimmed. Moreover, only limited documents
have been made available by Bayform and by Mr Ziebe. But having
said that, it is
difficult to be confident about the accuracy of Mr Schwarz's recollection of precisely
what occurred. I am more
confident about Mr Ziebe's evidence, particularly since
documents for which he searched during the trial tended to corroborate his
account,
and not that of Mr Schwarz.
[102] As to the design process itself, Mr Ziebe said that Mr Schwarz's photographs
were of
only broad assistance because:
... The prototype you can see in the photographs was a very rude
contraption. There
were no plans sent nor was there anything apart from the
photographs. No chute was provided. I could not possibly design anything
from the photographs besides the basic shape and I had to set about
designing it myself.
[103] Mr Ziebe also gave
evidence to the effect that Mr Schwarz was not
mechanical by nature, and that except for the photographs, he was given nothing by
Mr Schwarz other than rough sketches which illustrated Mr Schwarz's ideas.
Beyond that, the whole of the design work fell to Mr Ziebe.
It was for him to work
out specifications and details such as appropriate curvature, depth, width, and in
general the detail of the
chute components. Mr Schwarz was never invoiced by
Mr Ziebe for design time or the design process.
[104] There is no evidence that
Mr Ziebe had access at any relevant time to the
three drawings prepared by Bayform. He did of course have access to the prototype
photographs, but says that they formed only a general touchstone for his work, which
entailed a fresh design from the ground up.
[105] Mr Ziebe claims copyright for both the Ziebe version one and Ziebe version
two chutes, He says they were very largely the
product of his own work, and that he
was not commissioned by the plaintiffs to design them for the purposes of s 9(3)
CA62 because
there was no agreement for payment for such work.
[106] I agree that there is no evidence of a relevant commissioning, but it remains
to determine whether or not the Ziebe chutes qualify for copyright protection in their
own right, having regard to Mr Ziebe's partial
reliance on the prototype photographs
supplied by Mr Schwarz.
[107] The Ziebe chutes will qualify as original works for the purposes
of copyright
protection, provided that there has been sufficient material alteration and
embellishment which renders the totality
of the Ziebe chutes original: Interlego A.G.
v Tyco Industries Inc [1988] UKPC 3 at 18; L B (Plastics) Ltd v Swish Products Ltd
[1979] R.P.C. 551 at 567-568.
[108] Copyright is not concerned with the originality of ideas but with their form of
expression. The expression need
not be original or novel in form, but it must
originate with the author and not be copied from another work. But copyright
protection
does not extend to ideas, as distinct from the expression of those ideas:
British Northrop Ltd v Texteam Blackburn Ltd [1974] R.P.C 57 at 68. The idea
behind the chute is illustrated by the prototype photographs.
[109] Mr Stevens, an impressive expert witness for
the plaintiffs, acknowledged
that there could be no confusion between the chute depicted in the prototype
photographs on the one
hand and the Ziebe chutes on the other. There is evidence
from Mr Ziebe of independent design (albeit without the support of documents
which have long since been discarded). That being so, and given that the plaintiffs'
own expert witness accepts that there are material
differences between the Ziebe
chutes and the prototype, the proper conclusion is that the Ziebe chutes qualify for
separate copyright
protection, and that such copyright resides in Mr Ziebe.
[110] In reaching that conclusion, I take into account the fact that Mr
Ziebe has no
interest in misrepresenting the position to the Court. There is evidence that he is
owed a significant sum of money
by the plaintiffs, who have promised repayment if
the proceeding is successful, so his interest lies in seeing the plaintiffs win.
Moreover, Mr Ziebe is now long retired and gains no personal advantage in retaining
copyright in the Ziebe chutes for his own purposes.
I regard him as a reliable
witness whose evidence tended to be corroborated by documentary material.
[111] Mr Hudson argues that
the Court would be justified in reaching the
conclusion that the Bayform drawings were prepared in reliance on the Ziebe version
two chute, rather than the other way around. It is not possible, and in any event
unnecessary, to determine that question. There
is no evidence that the Bayform
drawings were relied upon by Mr Ziebe, or indeed that he had any access to them
when he designed
his chutes. And there is no evidence of a breach by Geostel of any
copyright residing separately in the works pleaded by the plaintiffs.
[112] Geostel carries on business in competition with the plaintiffs. It accepts that,
for a time, it sold what were in effect
Ziebe version two chutes, manufactured by an
independent manufacturer on its instructions. I have held that the plaintiffs do not
own copyright in the Ziebe chutes. They accordingly lack standing to sue for
infringement.
Result
[113] For the foregoing reasons
I conclude that the plaintiffs have failed to
establish their ownership of copyright in either the cup assemblies or the chutes.
Accordingly, their claim must fail. It is therefore unnecessary to deal with
alternative arguments raised by counsel for the
defendants as to which of the
plaintiffs is the owner of the copyright, as to infringement, and as to relief.
[114] On NTD's counterclaim,
I grant a declaration that it is the owner of copyright
in the drawings of 3 February 1993 and the three drawings of 10 February
1993.
Costs
[115] The defendants are entitled to costs. Counsel may file memoranda if they are
unable to agree.
C J Allan
J
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