ipr case study

ABSTRACTThe test for infringement is therefore a balance of factors in which the standard

of the informed user is used to determine the scope of freedom of the designer to

innovate in the design field, to assess the distinctiveness of the registered design

in light of prior designs, and in comparing the registered design to the allegedly

infringing product. Overall visual impression is key to whether infringement will

be found.

Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 (Redberry).

KENNY J24 OCTOBER 2008MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIAVICTORIA DISTRICT REGISTRY VID 286 OF 2007BETWEEN: REVIEW 2 PTY LTD (IN LIQUIDATION) (ACN 067 634 360)

First Applicant/First Cross-respondent

REVIEW AUSTRALIA PTY LTD (ACN 122 295 836)Second Applicant/Second Cross-respondent

AND: REDBERRY ENTERPRISE PTY LTD (ACN 093 946 260)Respondent/Cross-claimant

JUDGE: KENNY JDATE OF ORDER: 24 OCTOBER 2008WHERE MADE: MELBOURNE

In the Redberry case, Review 2 and Review claimed that Redberry had infringed a

design registration in respect of a “Review” sleeveless, cross-over (or fixed-wrap)

dress (“Review Design”) by importing and selling a dress (“Redberry Dress”)

alleged to embody a design substantially similar in overall impression to the

Review Design.

Redberry challenged the validity of the Review Design principally on the basis that

it was not distinctive in the sense that it was substantially similar in overall

impression to a design(s) forming part of the prior art published before the

application for the Review Design was filed.

Justice Kenny found that the Review Design was different from the designs in the

prior art and was valid. Nevertheless, due to differences in the shape of the skirt

and the pattern of the respective Review Design and Redberry Dress, Her Honour

found that Redberry had not infringed the Review Design. The Judge took into

account the designer’s limited freedom to innovate a cross-over or wrap ladies’

dress other than by reference to the shape and configuration of the skirt

combined with differences in pattern (including colour).

ANALYSISA design will infringe a registered design if it is identical to or substantially similar

in overall impression to the registered design. When assessing substantial

similarity in overall impression, the law requires the Court to place more

importance on the similarities between designs than differences, and to consider

the significance of the design as a whole. This is considered from the point of view

of an informed user of the product – someone who is familiar with the product.

The Court determined that the informed user was a purchaser for fashion outlets

rather than either an average consumer or a fashion designer.

The allegedly infringing dresses were of different colored and patterned fabrics

than the dress shown in the photographs in the design registrations. Redberry’s

dress varied from the registered design in the shape of the skirt as well. The Court

considered that the shape of the skirt in combination with the color and pattern

of the fabric had some significance in creating a different overall impression of the

design. Therefore, the Court found no infringement.

HOW CLOSE TO AN AUSTRALIAN REGISTERED DESIGN DOES A LATER DESIGN NEED TO BE TO INFRINGE IT?

Designs relate to the visual appearance of a product. According to the Designs

Act 2003, to infringe, a later design must be ‘substantially similar in overall

impression’ to a registered design. Several decisions of the Federal Court of

Australia (FCA) and the Full Court of the FCA in recent years provide guidance as

to how this test is applied. Factors to consider in determining whether an

allegedly infringing design is ‘substantially similar in overall impression’ to a

registered design, s19 of the Designs Act requires a court to have regard to

various factors. More weight is to be given to similarities between the designs

than differences; regard is to be had to the state of development of the prior art

base, to any design features identified in a statement of newness and

distinctiveness filed with the design application and to the freedom of the creator

of the design to innovate. If only part of the later design is substantially similar to

the registered design, regard must be had to the amount, quality and importance

of that part in the context of the design as a whole. These factors are to be

assessed at the standard of the informed user.

FACTORS TO CONSIDERIn determining whether an allegedly infringing design is ‘substantially similar in

overall impression’ to a registered design, s19 of the Designs Act requires a court

to have regard to various factors. More weight is to be given to similarities

between the designs than differences; regard is to be had to the state of

development of the prior art base, to any design features identified in a

statement of newness and distinctiveness filed with the design application and to

the freedom of the creator of the design to innovate. If only part of the later

design is substantially similar to the registered design, regard must be had to the

amount, quality and importance of that part in the context of the design as a

whole. These factors are to be assessed at the standard of the informed user.

THE INFORMED USER

The standard of the informed user is therefore the benchmark at which the

similarity of overall impression is assessed. It is therefore important to gauge the

informed user correctly. In Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008]

FCA 1588, which concerned designs for women’s dresses, it was held that the

informed user is not a design expert, but nor are they necessarily an ‘ordinary

user’ of the product. Thus, the informed user in the field of designs for women’s

dresses was likely to have particular familiarity with fashion trends. For example,

containers were typically required to be square or rectangular in shape with

dimensions to facilitate packing for storage and transport; ventilation and

drainage holes were required, feet would assist in achieving ventilation and

drainage, pillars were preferably included to give structural integrity to the

container and to provide substantially clear panels between the pillars. The court

used this information to determine whether the registered design was distinctive

over the prior art base. State of development of the prior art base In each of the

cases mentioned herein, the court compared features of similarity and difference

between the registered designs and a prior art design and made an assessment as

to which features of the design the informed user would have found similar to the

prior art and which distinctive, having regard to any features highlighted in the

statement of newness and distinctiveness filed with the design application and

the freedom of the designer to innovate.

Review brought proceedings against Redberry for infringement of their registered

design no. 307708 in respect of a sleeveless cross-over (fixed wrap) dress. Kenny

J, in applying the test for infringement, noted that s 19 of the Act called for

application of the standard of the informed user. Her Honour noted that the

informed user must be a user of the class of product in question (ladies’ dresses)

and further that the user must be informed and not merely an ordinary

consumer.

In arguing that their dress was not substantially similar in overall impression to

the Review design, Redberry relied on evidence from a person who had worked

mostly as a retail sales assistant, but also as a fashion buyer and design assistant.

Review’s witness was a designer, and a director of the company.

Her Honour took into consideration the decision of the Deputy Registrar of

Designs in the Apple case ((2007) 74 IPR 164), which put forth the view that an

informed user could be an ordinary intended user of the product made from the

design, and ultimately rejected this proposition. Instead, guidance was sought

from several UK authorities, in particular the Architectural Lighting case ([2006]

RPC 1) in which the UK Patents County Court defined the informed user as “a

regular user… to whom the design is directed” and who would be aware of

"'what’s about in the market?’ and 'what has been around in the recent past?'"

Her Honour concluded that in the context of ladies’ dresses, an informed user

would be a woman who might subscribe to fashion magazines and have particular

knowledge of, and familiarity with, fashion trends and that Redberry’s witness

was "in the nature of an informed user". She took into account Redberry’s

evidence that the overall appearance of a dress was principally determined by

style, cut, fit, colour/print and materials.

Noting that a dress designer is constrained by “well-recognized conventional

limits” of shape and configuration, and having regard to the state of the prior art

base, her Honour went on to conclude that when viewed through the eyes of an

informed user, there were sufficient differences in the skirt and pattern (including

colour) of the Redberry dress for a finding of non-infringement.

SCOPE OF DESIGNS INVOLVING COLOR

An issue that arose at trial was whether the color of the dress the subject of the

Review design should be taken into account in determining the extent of Review’s

monopoly. The representations of the design had been lodged in colour by the

applicant.

Kenny J reasoned that "[the] weight… to be given to pattern and colour will

depend on the nature of the product and the relative importance of the different

visual features of the registered design, as viewed by the informed user, having

regard to the prior art, and the freedom of the designer to innovate."

In this instance, the evidence (and the prior art) had shown that colour would be

flagged by an informed user as an important visual element of the design. This

played a significant role in Kenny J’s determination of non-infringement. This

decision highlights the need to take care when submitting representations with a

Designs application. If the registration is not to be confined to a particular color or

pattern, then black and white representations should be lodged. If color

representations are required, for example for clarity, then it may be prudent to

include a Statement of Newness and Distinctiveness disclaiming the color and/or

pattern shown in the representations, to reduce the risk of limiting the

registration

INFRINGEMENT In Review 2 Pty Ltd v Redberry Enterprise Pty Ltd 17, the court held that Review's

design for a cross-over or wrap dress (the Review Design) was valid but not

infringed by a dress it alleged Redberry had made, imported and sold. In

considering whether the Redberry dress was, for the purposes of infringement,

substantially similar in overall impression to the Review Design, Justice Kenny

considered the appearance of the Review Design as a whole by reference to the

standard of the hypothetical 'informed user'. She canvassed the authorities on

this person's qualities, concluding that:

The assessment must be that of a user of ladies' garments, which would

include a potential purchaser, either in retail sales (such as a buyer for a

fashion store) or at the ultimate consumer level.

A designer or manufacturer of ladies' garments is not, on account of design or

manufacturing knowledge alone, an informed user.

The notional user must be informed, in the sense that the user is familiar with

ladies' garments. The informed user is not an expert, but must be more than

barely informed.

The focus for consideration is on eye appeal and not on internal or less visible

manufacturing features.

Ultimately, the court decided that, applying an objective test, the Review Design

was not infringed.

The style of dress was found to be one that was fairly common and gave limited

freedom to innovate. The key 'new' features of the Review Design as opposed to

the prior art were the skirt's shape and the dress's pattern, including its color: the

monopoly covered by the design was restricted to these aspects.

Justice Kenny held that whether color makes a material difference will depend on

the 'nature of the product and the relative importance of the different visual

features of the registered design.' She considered the fact that Review had

submitted color photographs of its design to be relevant.

When compared, the Review Design and the Redberry dress had many similarities

(which were to be given more weight than their differences 18) but the two

differences between them related to those aspects of the Review Design that

differentiated it from the prior art.

In this context, an informed user would not perceive the Redberry dress as

substantially similar in overall impression to the Review Design.

PROBLEMIn the Redberry case, Review 2 and Review claimed that Red berry had infringed a

design registration in respect of a “Review” sleeveless, cross-over (or fixed-wrap)

dress (“Review Design”) by importing and selling a dress (“Redberry Dress”)

alleged to embody a design substantially similar in overall impression to the

Review Design.

In substance, the applicants claim that the Redberry garment embodies a design

that is substantially similar in overall impression to the Review Design because,

when regard is had to the Review Dress, as depicted on the Register, and the

Redberry garment, the following similarities are manifest:

• they are both sleeveless, V-necked, cross-over or fixed wrap dresses;

• the gathering on the shoulders and the shoulder widths of both garments

appears much the same;

• across the upper body, both garments are gathered at the same point on the

side seam, having a similar amount of gathering;

• the fitted waist and waist tie appear the same on both garments;

• whilst the skirt on the Review Design dress is panelled and the skirt on the

Redberry dress is not, the overall effect is much the same since both skirts fall

from a fitted waist and the skirt hem is full; and

• Both garments share much the same proportions, since they appear to have

much the same shoulder to waist and waist to hem lengths.

Redberry challenged the validity of the Review Design principally on the basis that

it was not distinctive in the sense that it was substantially similar in overall

impression to a design(s) forming part of the prior art published before the

application for the Review Design was filed.

QUALITATIVE DATAThe court importantly found that the design registration was limited to a

combination of all the features present in the design representation including the

colors present in the pattern or ornamentation.

DISTINCT DIFFERENCES.

(a) The Review Design skirt is figure-hugging to about half way to the hem, when

it expands suddenly and significantly relative to the top of the skirt, giving the

hem the ruffled look, to which both Ms. Ellis and Ms. Mudie referred. This is to be

contrasted with the floppy or blousy appearance of the Redberry skirt from the

waist to the hem.

(b) The pattern (including color) of the Review Design and the Redberry garment

are different.”

What differentiates the Review Design from the designs embodied in the prior art

(including the Spicy Sugar J3182RB) is the shape and configuration of the Review

Design skirt. Even so, the prior art discloses at least one skirt that is not dissimilar

in shape to the skirt of the Review Design, although the overall impression

between the design embodied in that garment and the Review Design is different.

The prior art also makes it plain that pattern (including colour) can be an

important visual feature in the designs embodied in the dresses said to exemplify

the prior art.

• Having regard to the prior art and to the Review Design, and taking into

account the freedom of the designer to innovate, the informed user would, so

it seems to me, be aware that there is limited freedom to design a cross-over

or wrap ladies’ dress (or similar ladies’ garment) other than by reference to

the shape of the skirt (as opposed to the cross-over itself), combined with

differences in pattern (including colour). In addition, there are significant

constraints on designer innovation arising from the nature of the product in

question. Designs for ladies’ garments are invariably limited by what women

customarily wear. By and large, the "dress" has well-recognized conventional

limits.

Redberry argued that the Court should have regard to every visual feature,

including colour, disclosed in the photographs depicting the Review Design as

registered. According to Redberry:

• The fact that one dress has an orange, blue and brown cross-hatched print

and the other is a brown floral dress is a visual feature (and indeed a striking

visual feature) that must be considered .If the Applicants did not want colour

and print to be considered they could have lodged a black and white

photograph, or a sketch

JUSTICE KENNY STATED:

“Having regard to the prior art and the freedom of the designer to innovate, what

gives the Review Design its different overall impression from the prior art

(discussed further below), from the perspective of the informed user, is the shape

and configuration of the skirt, combined with differences in pattern and

ornamentation”.

QUANTITATIVE DATARedberry apparently ceased the conduct of which the applicants complain when it

became aware of their claim and, in any case, before the issue of proceedings.

The amount of profit to Redberry was modest – less than $2000.

In Amended Particulars of Loss and Damage, the applicants sought:

(a) Damages by reason of lost sales in the sum of $18,919.25, calculated on the

assumption that it would have sold 133 units as sold by Redberry and would have

done so at a profit of $142.25 per garment. (Counsel for the applicants conceded,

however, that the applicants had not intended to depart from the figure of

$18,679.41 mentioned in opening and in the original Particulars

(b) Damages for the applicants’ loss of reputation and position in the Australian

market of $200,000, by reason of:

•Redberry’s copying the Review Design;

•Redberry’s selling the Redberry garment at $59 – more than half of the retail

price at which the applicants sold the Review Dress that embodies the Review

Design; and

•diminution of the applicants’ reputation as an exclusive designer of original

garments only available through their retail stores and concession sites.

(c) Additional damages of $400,000 pursuant to s 75(3) of the Designs Act having

regard to:

•the flagrancy of Redberry’s conduct as constituted by the closeness of copying

and the continued denial of any knowledge of the Review Design and/or copying;

and

•having regard to the apparent business practice of Redberry and/or related

entities to engage in copying the garment designs of other designers which have

been the subject of previous proceedings against Redberry for copyright

infringement; the subject of copyright infringement claims; or the subject of

trademark infringement claims.

DESIGN STATISTICS July 2008 – June 2009

Design Applications Lodged - 5319

Design Registrations - 6512

Design Registrations Certified1985

Designs Ceased (1906 Act) - 2124

Designs Ceased (2003 Act) - 120

DAMAGESWhile not required to consider damages in the Redberry case, having not found

any infringement, Justice Kenny nevertheless considered each of the heads of

damage claimed by Review. Her Honor made the following findings on the

damages issue in the two cases:

FINDINGS

Lost sales – Review argued that it would have sold the same number of dresses as

the respective respondents had imported. Justice Kenny thought some allowance

should be made for the chance that Review would not achieve the same level of

sales. In the Redberry case, the chance of a Review customer buying the Redberry

dress was considered 'very low' and the nominal lost sales would have been

reduced by 90 per cent. Diminution in value – Justice Kenny awarded $3500 in

damages against Redberry) for diminution in the value of the Review Design. The

reproduction of the Review Design 'under the cheaper...label had the distinct

potential to diminish customer interest in the Review Design and, in consequence,

consumer demand for garments embodying the Review Design’. Review

positioned itself as an exclusive brand, sold only through Review stores or

concessions in large department stores, and this exclusivity was commercially

valuable.

Additional damages – In claiming additional damages, Review relied, in part, on

the alleged business practice of Redberry in routinely copying others' designs.

Justice Kenny observed that copying per se was not unlawful under designs law

and, while evidence of repeated design infringements might be relevant to

additional damages, a tendency to copy others' designs was not. She made the

interesting comment that:

The nature of the fashion industry and its products as disclosed in the evidence

can also be borne in mind. The evidence indicates that copying and adapting the

designs of other designers is the accepted modus operandi of designers, including

reputable designers, within the industry; and that it is through this process that

fashion products are created.

An interesting point arose when Redberry attempted to show that their

infringement (if any) did not lie in making the garments (primary infringement)

but only in their importation and sale (secondary infringement), because they had

not been made in Australia. A finding of secondary infringement would have

involved a lower threshold than primary infringement for the respondent to

overcome in proving that any damages awarded should be reduced. Justice Kenny

agreed that the garments in each case were made not in Australia, but in China,

finding that an article will be 'made' in Australia for the purposes of the Act if a

direction to make the garment is given in Australia; however, it will not be made

in Australia if an Australian person issues a direction to make a product while

travelling overseas.

Traditionally, most Australian fashion houses have decided against registering

designs, as the process has been relatively costly and hasn't kept up with the fast

pace of the fashion cycle. Australia's relatively new designs legislation, which

came into effect on 17 June 2004, allows designers to apply to register a design

and have it published (preventing others from obtaining certification of the same,

or a substantially similar, design) without proceeding to registration. While no

action can be taken for infringement of the design until it is certified by the

Designs Office as a validly registered design, the new scheme has made design

registration an increasingly workable and realistic way for fashion designers to

protect their work.

By comparison, in the New Cover Group case, Review succeeded in its claim for

infringement of the same Review Design in respect of the manufacture,

importation and sale of garments labelled “Spicy Sugar”. In contrast to the

Redberry case, Justice Kenny found that whilst the pattern (and colour) of the

Spicy Sugar garments differed to the Review Design, they embodied a design

substantially similar to the Review Design. Again, the validity of the Review Design

was challenged but was upheld.

JUDGEMENTA design will infringe a registered design if it is identical to or substantially similar

in overall impression to the registered design. When assessing substantial

similarity in overall impression, the law requires the Court to place more

importance on the similarities between designs than differences, and to consider

the significance of the design as a whole. This is considered from the point of view

of an informed user of the product – someone who is familiar with the product.

The Court determined that the informed user was a purchaser for fashion outlets

rather than either an average consumer or a fashion designer.

Significantly, the fact that the Review Design was registered in color through the

use of color photographs, without a statement of newness and distinctiveness to

otherwise define the design, was considered by the Judge as relevant to

determining the extent of the monopoly of the registration. In assessing whether

a registered design is infringed, the Court may take into account pattern and color

as visual features which form part of the subject matter protected by registration,

unless disclaimed in some way. When seeking registration of a fashion design,

very careful consideration should be given as to what are the visual features

which are sought to be protected.

The Judge noted in the Redberry case that had infringement been established, the

Court would have been entitled to exercise its discretion to refuse to award

damages or to reduce the damages that would otherwise be awarded as it was

found on the evidence that Redberry was not aware, and could not reasonably

have been expected to have been aware, that the Review Design was registered.

The Designs Act provides that it is prima facie evidence that the defendant was

aware that the design was registered if the product embodying the registered

design to which the infringement proceedings relate, or the packaging of the

product, is marked so as to indicate registration of the design. An example would

be affixing a garment with a swing tag notifying design registration.

In both the Redberry case, the Judge observed that copying and adapting designs

of other designers is common place in the fashion industry. Implementing a

design registration filing strategy can be a particularly useful way for designers to

protect their seasonal fashion wares.

Justice Kenny found that the Review Design was different from the designs in the

prior art and was valid. Nevertheless, due to differences in the shape of the skirt

and the pattern of the respective Review Design and Redberry Dress, Her Honor

found that Redberry had not infringed the Review Design. The Judge took into

account the designer’s limited freedom to innovate a cross-over or wrap ladies’

dress other than by reference to the shape and configuration of the skirt

combined with differences in pattern (including color). Kenny J found that the

Review Design was valid but that Redberry had not infringed it.

In the Redberry case, the Court found no infringement of the registered design

and stated:

“There are also two distinct differences. These are:

(a) The Review Design skirt is figure-hugging to about half way to the hem, when

it expands suddenly and significantly relative to the top of the skirt, giving the

hem the ruffled look, to which both Ms. Ellis and Ms. Mudie referred. This is to be

contrasted with the floppy or blousy appearance of the Redberry skirt from the

waist to the hem.

(b) The pattern (including color) of the Review Design and the Redberry garment

are different.”

This case reminds us that while a design registration may be found valid, the

monopoly conferred by registration can be closely confined by what has been

disclosed in the prior art.

The allegedly infringing dresses were of different coloured and patterned fabrics

than the dress shown in the photographs in the design registrations. Redberry’s

dress varied from the registered design in the shape of the skirt as well. The Court

considered that the shape of the skirt in combination with the colour and

pattern of the fabric had some significance in creating a different overall

impression of the design. Therefore, the Court found no infringement.

Finally judge concluded that Redberry acknowledged that, if differences

between the Review Design and the design in the Redberry garment as regards

the shape of the skirt and the pattern (including color) avoided a finding of

infringement, then the likely outcome was that the Review Design was valid but

not infringed.

REFERENCES

ATACADOR, J. (2008, DECEMBER 3). DESIGNERS UNDER REVIW. Retrieved

from http://www.davies.com.au/ip-news/designers-under-review:

http://www.davies.com.au/

CLAYTON, G. &. (2008, OCTOBER 27). Federal Court of Australia. Retrieved

from http://www.austlii.edu.au/au/cases/cth/federal_ct/2008/1588.html:

http://www.austlii.edu.au/au/cases/cth/FCA/2008/1588.html

Jones, M. L. (2008, OCTOBER 3). INTELLECTUAL PROPERTY. Retrieved from

http://www.allens.com.au/pubs/ip/ipbulldec08.htm:

http://www.allens.com.au

(Clothing cases reveal the limits to design protection, n.d.)Clothing cases reveal the limits to design protection. (n.d.). Retrieved from ipwhiteboard:

http://www.allens.com.au/

http://www.ipwhiteboard.com.au/clothing-cases-reveal-the-limits-to-design-protection/

CONTENTS

ABSTRACT................................................................................................................1

ANALYSIS.................................................................................................................2

FACTORS TO CONSIDER...........................................................................................3

INFRINGEMENT........................................................................................................7

PROBLEM.................................................................................................................8

QUALITATIVE DATA...............................................................................................10

QUANTITATIVE DATA............................................................................................12

DAMAGES..............................................................................................................13

JUDGEMENT..........................................................................................................15

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