Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Wednesday, May 7, 2014

Imitation is not the highest form of flattery – it's copyright infringement!

By Julia Kovarsky, Lawyer

When a competitor's product is used as 'inspiration' for another company's similar product, there is a fine line between independent creation and copyright infringement. The recent decision of Justice Dodds-Streeton in Seafolly Pty Limited v Fewstone Pty Ltd [2014] FCA 321, which saw swimwear heavyweights Seafolly and City Beach (Fewstone) in a dispute over three Seafolly designs, shows what happens when you fall on the wrong side of that line.

The decision stretches to just shy of 650 paragraphs - not surprising given the volume of factual evidence about subsistence of copyright and whether a substantial part of the copyright works had been taken. Whilst the legal tests for copyright subsistence and infringement are easy to state – idea/form of expression dichotomy and qualitative assessment of substantiality – they are often difficult to apply in practice. The degree of originality, the cumulative effect of what has been taken from the original work and the particular balance or juxtaposition of features in the original work are all matters that go into the melting pot in determining whether there has been infringement. And it certainly didn't assist City Beach that its employees in internal communications had referred to one of the infringing designs as a 'Seafolly knock-off'.

The artworks in issue were:

Seafolly's English Rose       v        City Beach's Rosette

Seafolly's Covent Garden       v       City Beach's Sienna

Seafolly's Senorita         v           City Beach's Richelle


Copyright subsistence


City Beach conceded that copyright subsisted, and was owned by Seafolly, in the English Rose and Covent Garden artworks, but not the Senorita artwork. It argued the design was unoriginal and inevitably produced by an industrial sewing machine. Although expert evidence confirmed that diamond patterns were very common, there was no evidence to show that that the shape was inevitable. Rather, the embroidery was the product of labour, skill and effort, together with a process of trial and error, on the part of the Seafolly designers in which copyright subsisted. City Beach had to admit that if copyright subsisted in the Senorita artwork, Seafolly owned it.


No right to adaptation of artistic work


City Beach's defence began by focusing on the fact that owners of copyright in an artistic work do not have an exclusive right to create adaptations of the work. It was submitted that an adaptation of artistic works could be made by anyone, and that infringement therefore 'required a strict, faithful and exact reproduction'. City Beach's swimwear collection was argued to be an adaptation of Seafolly's artworks, which Seafolly had no right to restrain. This argument was quickly rejected since copyright in artistic works would be almost worthless if only exact reproduction constituted infringement.


Substantial part of an artistic work


City Beach's next line of defence was that there was insufficient objective similarity between the Seafolly artworks and City Beach’s designs. It was also argued that any parts taken from Seafolly's artworks were not substantial. Justice Dodds-Streeton emphasised that only those parts originating with the author would be substantial. When the details of the composition originate with the author, then those details can be a substantial part of the work. In determining whether elements of an artwork are a substantial part, it is wrong to merely focus on similarities and differences between the original and infringing work. Her Honour affirmed previous authority that a substantial part can be a feature or combination of features of the work, abstracted from it rather than forming a discrete part.

City Beach claimed that Seafolly's artworks were merely used as 'inspiration' and the parts taken were commonplace or derived from other works. This argument likewise failed to impress. Justice Dodds-Streeton found that there was 'considerable scope for originality' in the way the features of the Seafolly artworks could have been combined, arranged and balanced. By using similar elements and combination of elements as the Seafolly artworks, which cumulatively made up a substantial part of the works, City Beach's designs were more than just inspired by Seafolly, they were copyright infringement.


The copyright-design overlap


The question of a corresponding design being industrially applied was only raised in respect of Seafolly's Senorita artwork. City Beach first had to prove that the Senorita embroidery was a 'corresponding design' within the meaning of s 74(1) of the Copyright Act. In that regard, City Beach claimed that the embroidery was a three-dimensional embodiment of the Senorita artwork which was woven into, and had become part of, the structure of the Senorita swimwear. Continuing City Beach's run of rejected arguments, Justice Dodds-Streeton did not consider the embroidery to be a 'corresponding design', but rather, a feature of pattern or ornamentation applied to the surface of the swimwear. If an artistic work cannot be made into the product and is simply a constituent part of another product, it is not a corresponding design.


Conclusion


Seafolly successfully showed that City Beach's swimwear range crossed the line between acceptable use of its swimwear for inspiration and creating copyright infringing 'knock-offs'. City Beach ended up paying a hefty price for its actions. Seafolly was awarded damages of $250,333.06, comprising $80,333.06 compensatory damages for lost profits, $20,000 compensatory damages for damage to its reputation, and $150,000 in additional damages for the flagrancy of the infringement.

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