FEDERAL COURT OF AUSTRALIA

Comino v Watson Webb Pty Ltd [2026] FCAFC 66

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to confer and prepare a form of order which reflects these reasons, and provide an agreed form of order or, if agreement cannot be reached, competing forms of draft orders to the chambers of Moshinsky, Downes and Owens JJ within 14 days.

2.    The parties are to file and serve submissions on the form of order which is proposed (if agreement on same cannot be reached) and on the issue of costs, with submissions to be limited to 5 pages, within 14 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to confer and prepare a form of order which reflects these reasons, and provide an agreed form of order or, if agreement cannot be reached, competing forms of draft orders to the chambers of Moshinsky, Downes and Owens JJ within 14 days.

2.    The parties are to file and serve submissions on the form of order which is proposed (if agreement on same cannot be reached) and on the issue of costs, with submissions to be limited to 5 pages, within 14 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal is refused.

2.    The parties are to confer and prepare a form of costs order relating to the costs associated with the application for leave to appeal.

3.    The parties are to file and serve submissions on the form of order which is proposed (if agreement on same cannot be reached) and on the issue of costs, with submissions to be limited to 3 pages, within 14 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

SYNOPSIS

1    These reasons deal with two appeals.

2    The first is an appeal from the orders made following the decision of Watson Webb Pty Ltd v Comino (2025) 188 IPR 1; [2025] FCA 871 (liability judgment or LJ). The appellants in NSD1656/2025 are Mr John Alexander Comino and Strongcast Pty Ltd (Strongcast), a company associated with Mr Comino. It is convenient to describe this appeal as the main appeal.

3    The respondents to the main appeal are All Valve Industries Pty Ltd (AVI) and Italian company Cav. Uff. Giacomo Cimberio S.p.A. (Cimberio).

4    The second is an appeal by AVI and Cimberio in NSD1998/2025 from the liability judgment in relation to the primary judge’s dismissal of their claim concerning unjustified threats. It is convenient to describe this appeal as the unjustified threats appeal.

5    Mr Comino also applies for leave to appeal from the decision of Watson Webb v Comino (No 2) [2025] FCA 1294 (costs judgment or CJ). This application is in proceeding NSD2057/2025.

6    For the following reasons:

(a)    in the main appeal, ground 8 succeeds (being the ground relating to the remedy of constructive trust);

(b)    in the main appeal, ground 9 succeeds in part, but this does not have any impact on the orders made below;

(c)    the remaining grounds of appeal which were pressed in the main appeal are rejected;

(d)    Mr Comino and Strongcast are granted leave to file and rely upon the Notice of Contention which was annexed to their outline of submissions in the unjustified threats appeal;

(e)    the unjustified threats appeal succeeds;

(f)    leave to appeal from the costs judgment will not be granted.

OVERVIEW OF PROCEEDINGS BELOW

7    There were two proceedings before the primary judge.

8    The first proceeding was an appeal by Watson Webb Pty Ltd (Watson Webb), as the solicitor for AVI and Cimberio, from a decision of the Australian Designs Office concerning the ownership of two registered Australian designs for valves numbered 201811005 (005 Design) and 201811810 (810 Design) (together, the Designs). The respondent to the appeal below was Mr Comino, who is recorded on the Australian Designs Register as the owner of the Designs.

9    In the second proceeding, AVI and Cimberio advanced claims against Mr Comino and Strongcast for (inter alia) copyright infringement under the Copyright Act 1968 (Cth), breach of confidence, breach of contract, contraventions of s 18(1) of the Australian Consumer Law (ACL) being Sch 2 to the Competition and Consumer Act 2010 (Cth), and making unjustified threats of design infringement. Mr Comino and Strongcast cross-claimed against AVI for (inter alia) infringement of the Designs by importing into Australia and selling valves that are identical or substantially similar in overall design to the Designs (defined by the primary judge as the AVI Ball Valves) and associated water meter assemblies.

10    By order dated 5 July 2022 made in the second proceeding, Justice Jagot ordered that issues of liability including the entitlement to but not the quantum of any additional damages are to be determined separately from and prior to issues concerning the quantum of pecuniary relief.

11    Relevantly to this appeal, the primary judge found at LJ [7] that:

(a)    Cimberio was (at least) a co-designer of the Designs and an entitled person at the time of the registration of each of the Designs for the purposes of the Designs Act 2003 (Cth);

(b)    the letter dated 28 February 2020 that was sent by Foundry Intellectual Property Pty Ltd, on behalf of Mr Comino, to each of the applicants referring to the 005 Design (Foundry IP letter) did not constitute an unjustified threat under s 77 of the Designs Act;

(c)    Mr Comino and Strongcast directly infringed the copyright of Cimberio in a drawing (described as the C9746 Design Drawing) by providing it, wholly or in substantial part, to Infinity Design Pty Ltd (Infinity Design) in February 2018, and to their patent attorney, and by their patent attorney, as their agent, providing it to the Designs Office for the purpose of registering the Designs;

(d)    Mr Comino and Strongcast authorised the infringement by Infinity Design of the copyright of Cimberio in the C9746 Design Drawing in February 2018;

(e)    Mr Comino and Strongcast breached the obligations of confidence that they owed to Cimberio in disclosing the C9746 Design Drawing to Infinity Design, and to their patent attorney for the purpose of registering the Designs and by their patent attorney, as their agent, providing it to the Designs Office for the purpose of registering the Designs;

(f)    the written agreement entered into between Strongcast and AVI on 16 July 2013 entitled “Product Distribution Agreement” (Distribution Agreement) did not extend or apply to the C9746 Design Drawing;

(g)    Mr Comino and Strongcast contravened s 18 of the ACL by making representations to the effect that they would only use the C9746 Design Drawing for the purpose of signing off the drawing prior to manufacture by Cimberio and would not apply for an application to register a design in respect of the C9746 Valve or use the C9746 Design Drawing for that purpose.

12    As to relief in the second proceeding, the primary judge made certain orders and declarations on 27 August 2025, and stated at LJ [10] that:

The quantification of the account of profits or damages and additional damages under the Copyright Act and damages and/or compensation under the ACL are to be determined at a subsequent hearing on the quantum of pecuniary relief pursuant to the order separating liability and quantum made by Jagot J on 5 July 2021 in NSD 1337/2021.

13    By order dated 24 October 2025 in the first proceeding, the primary judged ordered that Mr Comino is to pay the costs of Watson Webb and AVI with respect to the appeal and with respect to the proceeding before the Designs Office.

RELEVANT FACTUAL BACKGROUND (LIABILITY JUDGMENT)

Facts not in dispute below

14    The following facts were not in dispute before the primary judge.

15    AVI is an importer, supplier and distributor of a range of valves, meter boxes and associated goods.

16    Cimberio is an Italian company engaged in the business of design and fabrication for plumbing, heating, air conditioning and gas and water distribution systems, including the design and manufacture of valves for those systems.

17    Mr Comino is the sole director and shareholder of Strongcast, involved in the day-to-day management of the business of Strongcast, and in effective control of the conduct and business of Strongcast.

18    In early 2013, Mr Comino contacted AVI seeking assistance in relation to the manufacture of certain plumbing product components.

19    On 16 July 2013, AVI and Strongcast entered into the Distribution Agreement, which remained in force until at least 14 May 2019.

20    From the middle of 2013 to at least 2018, AVI supplied plumbing fittings to Strongcast, including a valve provided by AVI to Strongcast, which AVI had sourced and obtained from Cimberio (C6827 Valve).

21    From approximately December 2019, AVI sold the AVI Ball Valves in Australia, which were manufactured by Airaga Rubinetterie S.p.A. (a manufacturer of plumbing equipment) (Airaga).

Factual findings

22    The following factual findings were made by the primary judge which are not the subject of challenge in the appeals.

23    On 11 January 2013, Mr Roberto Cimberio (director of Cimberio) raised several questions by email with Mr Daniel Dillenbeck (marketing manager at AVI) in response to his request for quotation for a tap project for Strongcast, including:

2.    Do you need the valve to be exact same construction or alike function would suffice (we can offer much better design than this one)

…

5.    Since this product will be used on potable water and (I assume) water meter, would a lockable tamper proof handle be preferred?

(LJ [99])

24    Later that day, Mr Dillenbeck forwarded Mr Cimberio’s email to Mr Comino at strongcast@gmail.com, asking him for his thoughts on the questions that Mr Cimberio had raised, and Mr Comino relevantly responded to Mr Dillenbeck by email to the questions reproduced above:

…

2) I am very interested in seeing what the engineers have in mind with a similar valve of the same functions. The critical element with this project is that Strongcast has exclusive sole rights to the agreed products supplied by All Valves due to it’s unique characteristics. If this can be maintained, I am more than happy to proceed with another design of the same use.

…

5) A lockable tap is certainly an option as long as this addition doesn’t increase the price significantly.

…

If there are elements of the tap design that already exist, it will hopefully speed up the manufacturing and approval processes. If the engineers create some images of their design, I would like to view them before production.

(LJ [100])

25    In the course of the negotiation of the terms of the Distribution Agreement, Mr Comino sent an email on 18 April 2013 in which he provided a summary of his proposed changes to the draft agreement, including the following suggested change to the retention of title clause:

The title shall be passed from Company to Client and both will acknowledge the proprietary rights of all modifications made to new and existing products requested by Strongcast. The rights of items will be specified with drawings of products manufactured exclusively for Strongcast.

(LJ [84])

26    On 30 April 2013, Mr Dillenbeck responded to Mr Comino’s email by marking up responses on it, including the following response to Mr Comino’s retention of title clause comments:

Are you asking something different here compared to what I have already written into the agreement? I have written under Section III - Proprietary Rights that you will have all rights to the housing, however, I don’t believe this should be given to you for the ball valve. The product you came to us with compared to the final product design by Cimberio is significantly different. I’m sure you wouldn’t take it and have it manufactured by someone else, but we need to cover this anyway. You will of course have exclusive distribution of this design under the contract, but Cimberio will still own the design of the ball valve.

(LJ [85])

27    At LJ [86], the primary judge stated the following about this email exchange:

The exchange is significant because it shows that as early as 2013, Mr Comino understood the importance of intellectual property rights and that the applicants had agreed to give him exclusive distribution rights over “new and existing products requested by Strongcast” but when the product brought by him was “significantly different” to the final product design by Cimberio, Cimberio would own the design of the ball valve.

28    On 11 July 2013, Mr Dillenbeck emailed Mr Comino with a series of design drawings, including drawing C6882/0 that had been renumbered as 31820/0, and the item code of which had been changed to Cim C6827 (C6827 Design Drawing). Mr Dillenbeck asked Mr Comino, if he agreed with all the drawings, to sign them and return them to AVI so they could be kept on file: LJ [101].

29    On 31 July 2013, Mr Dillenbeck emailed Mr Comino pictures of Cimberio lockable valves in response to a request from Mr Comino for samples of lockable/tamper-proof valves that AVI had in stock or that Cimberio was able to supply: LJ [103].

30    In late 2014, Mr Comino received “feedback from Unity Water that they wanted a ball valve that could be locked”. Unity Water was a customer of Strongcast: LJ [104].

31    On 25 June 2015, Mr Comino sent an email to Mr Dillenbeck and Mr Cimberio in relation to the introduction of a lockable handle into the C6827 Valve to which he attached six photographs of the C6827 Valve with a locking wing made out of rough tin affixed to the valve body as a separate piece. Mr Comino explained in the email:

I have been looking at the lockable handle issue and have attached some images that can be used as an indication for a concept. I believe we can achieve success through the use of a simple brass fitting.

(LJ [105])

32    On 6 July 2015, Mr Cimberio responded to Mr Comino’s email in the following terms (as written):

yes the pictures where fine an explain the concept well.

Before confirming this is a feasible way, we need to design the parts and make some prototypes to validate the design.

I will get back with some results and test data by end of month.

It is a pleasure and fun to develop products with you. It is not often to work with someone that have similar understanding of the product like you.

(LJ [106])

33    In or about mid to late 2015, Mr Augusto Riva (a designer for Cimberio) created several designs for lockable handles that he considered were commercially feasible and provided a less expensive lockable solution compared with Cimberio’s existing designs. None of the designs was commercialised because Strongcast informed Cimberio that they were too expensive: LJ [107].

34    On 14 November 2015, Mr Cimberio emailed Mr Dillenbeck drawings of new versions of Cimberio valves, including the C6827 Valve, with the “possibility to lockable handle in the closed position”, where the lockable handle was integrated into the body of the valve, in response to a request from Mr Dillenbeck for concept drawings of the “dog ear handle design”. Mr Cimberio advised Mr Dillenbeck in his email that the dog ear handle was “far too expensive for the application” and stated that Cimberio had redesigned all their valves in an attempt to minimise the impact on price of the addition of a lockable handle: LJ [108].

35    In February 2016, Mr Comino engaged a company called “RCR Laser” to produce a locking plate which could be retrofitted to the C6827 Valve to lock the handle in a fixed position: LJ [109].

36    On 10 March 2016, RCR Laser produced a drawing for a locking plate for Mr Comino, and subsequently Mr Comino placed an order for the manufacture of 1701 locking plates: LJ [110].

37    In or about March 2016, Mr Comino engaged Machinery Solutions Pty Ltd (Machinery Solutions) to drill 7-millimetre holes into the handles of valves, including C6827 Valves: LJ [111].

38    On 7 May 2016, Mr Dillenbeck forwarded to Mr Comino an email that he had received from Mr Cimberio. Mr Cimberio explained in his email that the “last models have been created after John’s visit and we have sent samples for test and approvals”. He then stated:

The gap in the process that has not generated automatically a price construction for these new models is that we have not received formal approval on samples. This is something generated by working crossed between John you and us. A new element we need to implement in our system and improve for future (even if l wish we do not have to go through this mess again in future).

So to make sure we are talking about the right products to quote, I need confirmation on your end.

- Telescopic valve. With John we have designed a lighter version of this valve. Enclosed 2 models C8707 and C8474. Please confirm it is what is requested to be quoted.

(Emphasis in original.) (LJ [112])

39    Mr Cimberio then outlined work that had been done with respect to the handle and the new version of the angle valve for the C8719 valve that had been “built based on John’s request” that had been designed with a new handle but that could be replaced with the C8922 valve quoted handle. He also stated that it had been agreed that the valve body mould would be produced for a cost of 3,000 Euros and the cost would be split “1000 Euro each (you me and him) if this product would have failed to sell.”: LJ [113].

40    Mr Cimberio concluded his email to Mr Dillenbeck with the following remarks:

I hope this give you a better picture of what was discussed, agreed and developed with John.

If you confirm above on Monday, I will work our prices and send you the quote by Monday night. It will be with you Tuesday morning.

(LJ [114])

41    The references to “John” in Mr Cimberio’s email were to Mr Comino: LJ [115].

42    On 25 May 2016, Mr Dillenbeck emailed Mr Comino an email he had received from Mr Cimberio in which Mr Cimberio had attached four new drawings “for review”, including a drawing numbered C8474/3, featuring an integrated locking wing, and provided short explanations for each drawing, including the following explanation:

Drawing C8474 is for telescopic valve with female end having new body that incorporate a locking wing. This is using standard handle with added hole diameter 7mm. the body is pierced with 10 mm in case you want to use the new special handle in future. If this is not an option the hole can be reduced to 7 mm as well.

(LJ [116])

43    Mr Cimberio then enquired in his email to Mr Dillenbeck, for Mr Comino’s attention:

Please let me know if the drawings are okay. We can then agree on product price to finalize the quote and hopefully get the order.

(LJ [117])

44    In or about April 2017, Mr Comino commissioned Machinery Solutions to modify further C6827 Valves by machining a thread into the bore of the nozzle to provide both male and female coupling options (Dual Thread Feature): LJ [118].

45    In or about April 2017, Mr Comino, AVI and Cimberio also engaged in discussions about proposed modifications to the C6827 Valve: LJ [119].

46    On 21 April 2017, Mr Comino sent an email to AVI attaching photographs showing the modified C6827 Valve with the addition of the Dual Thread Feature: LJ [120].

47    On 25 September 2017, Mr Comino sent an email to Mr Dillenbeck in relation to new orders of C6827 Valves and changes he wanted made to the C6827 Valve, including a request for an integrated locking wing. Mr Comino stated in the email:

Lockable Body/Handle

As we have discussed, the lockable aspect of the valves is timely and costly. If we can have a “lockable-wing” added to the valve bodies it will simply mean that we can knock out orders quicker without the assembly and manufacturing currently required. I wish this wasn’t the case, but Unity Water are our largest council for the kits and there isn’t a way around it.

These valves will also need a hole in the handle so it can be locked and if the quantities warrant the new handle it’ll be great. If not, the existing handle will have to do. Keep in mind that this new handle and wing will be of interest with the next C7094 valves we produce too, so more volume again.

(LJ [121])

48    On 27 September 2017, Mr Dillenbeck sent an email to Mr Cimberio, in dot point form, under similarly worded headings, outlining the requests made by Mr Comino in his email of 25 September 2017. Mr Dillenbeck included in his email to Mr Cimberio the following points for discussion raised by Mr Comino with respect to the locking wing:

Lockable Body/Handle

•    We would like to review if the C6827 body can be amended to include a locking wing. I believe it is a Strongcast specific mould?

•    We will continue to drill the 7mm holes into the handles to allow a padlock unless there are other viable handle options available.

(LJ [122])

49    Mr Dillenbeck concluded his email with the following request from Mr Comino:

We will need to order more product very soon, so please let’s review these points asap to see that improvements can be done in the next order.

(LJ [123])

50    On 24 October 2017, Mr Cimberio replied to Mr Dillenbeck’s 27 September 2017 email. Mr Cimberio attached two drawings of a valve with a “padlock wing” (numbered C6891/0 and C6827/0) and included the following response in his email to the discussion points previously addressed with respect to the locking wing and the valve body:

Lockable Body/Handle

•    Attached modified drawing with padlock wing. This would be a special custom made mould for Strongcast. There is a mould cost to consider of approximately 3000 Euro.

•    The valve includes 7mm hole in the handle. Other option needs to be evaluated. I believe you have quite a good quantities of solutions to evaluate.

C6827/C6891 Valve Body

•    No need for sample. The photo show the concept quite well. My only concern is about the resistance of the thread trapped. Is enough wall on the valve to avoid cracking during installation or service? We would not feel responsible for any issue connected to this activity.

•    Attached drawing of valve with female connection and wing for locking. It is the same body as above model. This gives us the flexibility to use different end parts to create different combination. These drawings are already in your hands since last year together with valve quote, but in case I need to review pricing.

(LJ [124])

51    On 25 October 2017, Mr Dillenbeck forwarded to Mr Comino the email that he had received from Mr Cimberio on 24 October 2017: LJ [125].

52    On 7 November 2017, Mr Dillenbeck responded to Mr Cimberio’s 24 October 2017 email in which he conveyed in red text the responses that he had received from Mr Comino, including the following with respect to the modified drawing with the padlock wing:

The wing needs to come out further to clear the body of the valve, otherwise it is difficult to fit a padlock. Attached is a drawing of a previously drawn model which is correct.

We hope that the price isn’t affected too much with the wing?? if we are paying for the mould, then the additional cost of brass should be very little. If this is not the case, then we are wasting time on reviewing this request. Please check how this affects cost before spending too much time on this solution.

(Emphasis in original.) (LJ [126])

53    In his affidavit evidence at trial, Mr Comino gave unchallenged evidence that he provided the instruction in the first paragraph reproduced above but did not directly address the second paragraph. Further, the primary judge inferred from the context – that is, the red text, the reference to “additional cost” and the tone of the language – that the second paragraph was also a response that Mr Comino provided to Mr Dillenbeck: LJ [127].

54    The “drawing of a previously drawn model” that was attached to Mr Dillenbeck’s email to Mr Cimberio was Mr Riva’s drawing, numbered C8474/3, which depicts a locking wing integrated into the body of the valve. This drawing had been provided to Mr Dillenbeck by Mr Cimberio and was subsequently emailed by Mr Dillenbeck to Mr Comino on 25 May 2016: LJ [128].

55    On 12 December 2017, Mr Cimberio emailed Mr Dillenbeck his responses, marked in green text, in response to the red text markup in Mr Dillenbeck’s email of 7 November 2017, including the following with respect to the modified drawing with the padlock wing and attached three drawings of a valve with a padlock wing:

Attached drawings with modified wing. This is now longer as you required. I guess it will add as much as 0,25 Euro. If confirmed I can make due calculation.

(LJ [129])

56    In or about late 2017, Mr Comino procured from Machinery Solutions a new sleeve part for a “dual thread” valve that Machinery Solutions had manufactured from brass on a lathe in which an internal thread was provided on both sides of the valve. The primary judge found that that it was readily apparent from the photographs of the Machinery Solutions valve admitted into evidence that it did not include a lockable handle: LJ [130].

57    On 24 January 2018, Mr Dillenbeck emailed Mr Comino the C9746 Design Drawing. The email had an apparent subject heading “New C9746” and simply stated:

Here is the updated drawing.. working on some prices now.

(LJ [131])

58    The C9746 Design Drawing included a copyright notice in English, identifying “GIACOMO CIMBERIO S.p.A” as the owner of the copyright in the drawing. It also contained a confidentiality notice in Italian, “Riservato é Confidenziale”, but in terms that one might expect would be readily understood by an English speaker: LJ [132].

59    At LJ [151], the primary judge referred to a concession by Mr Comino that the first time he saw the C9746 Valve reduced to visible form was when it was provided to him on 24 January 2018 and that he himself had never reduced the C9746 Valve with the integrated locking wing to visible form. At LJ [164], the primary judge found that Mr Riva, rather than Mr Comino, first reduced the design to visible form when he produced the C9746 Design Drawing.

60    The design process for the C9746 Design Drawing involved more than 120 hours of work. Mr Riva was assisted by other Cimberio employees, but he was the sole author of the C9746 Design Drawing: LJ [265]. When he designed the C9746 Valve, including the lockable handle and side wing, Mr Riva had to consider “several items of design, including: the shape, configuration, dimensions, materials, and aesthetic features” and he had to consider the “cost of production, feasibility of the engineering and the machining requirements” of the components of the C9746 Design Drawing, including the design of the ball within the ball valve, the stem, the body, the handle and the locked wing: LJ [266].

61    At LJ [150], the primary judge observed that the relevant controversy by the end of the trial was whether Cimberio was a co-designer of the Designs, or whether Mr Comino was the sole designer. At LJ [153], the primary judge found that Mr Riva, and through him, Cimberio, was “at least a co-designer” of the Designs.

62    The C9746 Design Drawing was provided to Mr Comino on 24 January 2018 on a confidential basis: LJ [187].

63    On 2 February 2018, Mr Comino and Mr Dillenbeck had the following email exchange in relation to the C9746 Valve:

(a)    Mr Comino emailed Mr Dillenbeck informing him that he was looking at the potential usage and volumes required of the “new dual threaded C9746 valve (with or without the ring)” and suggested that, given forecast order volumes, “surely we can keep price around the $13 mark”;

(b)    Mr Dillenbeck responded to Mr Comino’s email indicating that he did not think there was much chance of “getting too close to $13”, “probably we’ll aim to get your price to around $15.50 + gst” and noting that was $3.40 less than what Mr Cimberio had recently proposed;

(c)    Mr Comino then replied to Mr Dillenbeck’s email stating:

There must be a way to get things down from $15.50 to somewhere towards the C6891 or C6827 priced on the attached price changes you sent through? If not, would it be worth discussing the C9647 valve with the new mob even for a price comparison exercise? If we are planning on making the NSW valves elsewhere, then the C9647 valve may as well be manufactured at the same factory being so similar. The C9647 and the NSW valve should really be manufactured from the same mould at the same factory.

As always guys, I’m not cracking the shits or trying to bend anyone over a barrel, but we will be the most expensive suppliers in this space with these simple commodity style items even before Strongcast add a margin on the single valve sales. Let me know what you think about taking the C9647 to the new manufacturer to price up and we can place a few orders with CIM to survive the interim if we decide to go this way.

(LJ [268])

64    The references in the second email to the “C9647” valve were references to the C9746 Valve: LJ [269].

65    On 5 February 2018, Mr Comino and Mr Dillenbeck had the following further email exchange:

(a)    Mr Dillenbeck emailed Mr Comino advising him that:

If we approach the other manufacturer it will probably be at least 6+ months before we see product in Australia, assuming they will be cheaper anyway. I’m sure we could ask for the C9647 price out of interest, but we need to have further discussion on to move forward as you know how we feel about dumping Cim[berio] with our long standing relationship. At least we haven’t discussed the NSW concept with Cim[berio] yet and we can start discussions with Airaga on this product first.

(b)    Mr Comino responded to Mr Dillenbeck’s email, in which he raised pricing issues with other Cimberio valves, including the C6827 Valve, and then stated:

As you know this time of 6-12 months will fly by so we should be considering these other options as early as possible. Do you think that if we do have success with Airaga and the NSW valves that it would be a practical decision to enquire about the (9647? Surely it has the potential to lower the prices of both valves if we increase the volumes of the common valve body? WM King will be easy too.

One underlying issue with the extra cost of the wing is that it still needs to have the CIM Alt nuts added as well when selling to the utilities requesting lockable valves. It adds on even more to the total price and there’s the time to do the assembly as well. It just bumps up our price and labour even further.

Feel free to call me to chat further, but we need to sort out the next orders ASAP to stay ahead. Right now we are scraping it in.

(LJ [270])

66    On 15 February 2018, Mr Comino sent an email to Mr Kilner, managing director of AVI, with a subject heading “Drawings for Airaga” which attached a copy of the C9746 Design Drawing and a drawing of a bracket for use in Queensland. Mr Comino’s email included the following text:

Hi mate,

As discussed, here are the drawings for the CIM valve and steel bracket we are working on.

…

We have samples of this gear, so when we go over we’ll be able to discuss it face to face.

Let me know when we need to go when you can.

Best regards

John Comino/Managing Director

Strongcast Pty Ltd

(LJ [271])

67    The reference in the email to “when we need to go” was a reference to a forthcoming visit by Mr Comino with AVI to Airaga in Italy to discuss alternative manufacturing options: LJ [272].

68    On 16 February 2018, Mr Comino and Mr Dan Murphy, Studio Manager at Infinity Design, exchanged the following emails:

(a)    at 9.02 am, Mr Comino sent an email from his Strongcast email address to Mr Murphy, attaching the C9746 Design Drawing (file name C9746_0.pdf);

(b)    at 1.50 pm, Mr Murphy sent an email to Mr Comino, attaching an edited version of the C9746 Design Drawing, which was materially the same as the drawing other than the removal of the Cimberio trademarks and detailing (file name C9746_0 - EDITED 180216.pdf) (First Edited C9746 Design Drawing);

(c)    at 1.57 pm, Mr Comino sent an email to Mr Murphy, attaching an annotated version of the C9746 Design Drawing (file name C9647 - Dual Threads.pdf); and

(d)    at 2.16 pm, Mr Murphy sent an email to Mr Comino, attaching a further edited version of the C9746 Design Drawing, which was materially the same as the drawing, other than the removal of the Cimberio trademarks and detailing, and the addition of a second female internal thread (file name C9746_0 - EDITED 180216-Rl.pdf) (Second Edited C9746 Design Drawing).

(LJ [273])

69    Each of Mr Comino and Strongcast authorised the two reproductions of the C9746 Design Drawing made by Mr Murphy on 16 February 2018 within the meaning of s 36(1) of the Copyright Act. By his emails to Mr Murphy on 16 February 2018, and in his oral communication or communications that took place in the period between when those emails were sent, Mr Comino and Strongcast requested Mr Murphy, and thereby authorised Infinity Design, to reproduce a substantial part of the C9746 Design Drawing. Mr Comino provided Infinity Design with a copy of the C9746 Design Drawing, asked Mr Murphy to remove the Cimberio markings, measurements and text and then instructed him to alter the C9746 Design Drawing to add the additional internal thread by emailing him a handwritten annotated version of the C9746 Design Drawing: LJ [307].

70    At some point in the period between 16 February and 20 February 2018, Mr Comino sent an email to his patent attorney attaching a copy of the Second Edited C9746 Design Drawing for the purpose of registering the 005 Design: LJ [274].

71    On 20 February 2018, Mr Comino’s patent attorney filed an application for what became upon registration the 005 Design with the Designs Office, in Mr Comino’s name, (005 Application) that contained a copy of the Second Edited C9746 Design Drawing, which included revised measurements, markings and text to replace the measurements, Cimberio markings and text removed by Infinity Design: LJ [275].

72    On 23 February 2018, Mr Dillenbeck sent an email to Mr Andrea Milani, a representative of Airaga, that was copied to Mr Kilner with a subject heading “NSW Meter Bracket Concept”. The email commenced:

Dear Andrea

As you know we have been speaking with the water authority here in Sydney trying to get the best product made for the market. John from Strongcast is now assisting in developing this product with us. Strongcast is an existing customer supplying our product to other areas in Australia. You will meet him when he flies to Italy with Trent soon.

(LJ [276])

73    Mr Dillenbeck’s email included the following “top down” view from the C9746 Design Drawing:

(LJ [277])

74    The view included all the measurements and text that had been included on the original of the C9746 Design Drawing that had been provided by Cimberio: LJ [278].

75    At some point in the period between 16 February and 23 March 2018, Mr Comino sent an email to his patent attorney attaching a copy of the First Edited C9746 Design Drawing for the purpose of registering the 810 Design: LJ [279].

76    On 19 March 2018, Mr Comino and Mr Kilner attended a meeting in Gozzano in Italy with two representatives of Airaga, being Mr Gianni (or Giovanni) Airaga (Chief Operating Officer) and Mr Milani. The purpose of the meeting was to determine if Airaga had the capability to manufacture products for Strongcast, including ball valves, and to Mr Comino’s understanding, Cimberio was not aware that Mr Comino was looking at using another manufacturer to make the C9746 Valve: LJ [280].

77    On 23 March 2018, Mr Comino’s patent attorney filed an application for what became upon registration the 810 Design with the Designs Office, in Mr Comino’s name (810 Application). That application contained a copy of the First Edited C9746 Design Drawing which included revised measurements, markings and text to replace the measurements, Cimberio markings and text removed by Infinity Design: LJ [281].

78    On 24 October 2019, the 005 Design was certified by the Designs Office: LJ [282].

79    On 30 April 2020, the 810 Design was certified by the Designs Office: LJ [283].

80    Mr Comino’s patent attorney was at all material times acting as Mr Comino’s agent in filing the 005 Application and the 810 Application with the Designs Office for registration of the Designs in Mr Comino’s name: LJ [301].

81    The initial provision of the C9746 Design Drawing to Infinity Design by Mr Comino on 16 February 2018 was a copy of the whole of the drawing. Each of the subsequent reproductions of the C9746 Design Drawing referred to above between Mr Comino and Infinity Design on 16 February 2018, between Mr Comino and his patent attorney and between Mr Comino’s patent attorney and the Designs Office, constituted a copying of a substantial part of the drawing. The only omissions or additions from the C9746 Design Drawing in those reproductions were (a) the removal of the Cimberio markings, text and measurements from the drawing by Infinity Design, (b) minor changes and additions made by Infinity Design to the drawing, and (c) the addition of measurements, markings and text to replace the measurements, Cimberio markings and text removed by Infinity Design. The 810 Design was an embodiment of the C9746 Design Drawing: LJ [288].

MAIN APPEAL (COMINO AND STRONGCAST)

82    The grounds of appeal advanced by Mr Comino and Strongcast in the main appeal will now be addressed.

Breach of confidence (Grounds 4, 5 and 6)

83    Grounds 4, 5 and 6 state as follows:

4.    The primary judge erred (J [414]-[415]) in finding that both Appellants engaged in acts of breach of confidence, being the Six Acts.

5.    The primary judge erred by finding (J [415]) that the C9746 Design Drawing “as a whole” comprised six discrete views of the C9746 Valve which was confidential information of Cimberio.

…

6.     The primary judge erred by finding (J [405]) that the Appellants owed “a duty of confidence” to both Respondents (or to Cimberio alone: see J [415], [418]) with respect to the C9746 Design Drawing, in circumstances where there was an absence of evidence from Mr Cimberio (for Cimberio) and Mr Dillenbeck (for AVI) which might provide the basis of a fiduciary obligation owed to Cimberio by the Appellants: see J [402].

    (Emphasis original.)

84    By their submissions, Mr Comino and Strongcast challenge the overall finding of breach of confidence on the basis that two “seminal findings” are incorrect, namely, (a) the finding that the C9746 Design Drawing as a whole comprised (only) Cimberio’s confidential information: LJ [415]; and (b) the finding that sufficient evidence was led at trial to establish that the circumstances in which Mr Comino or Strongcast received the C9746 Design Drawing were such that they owed an obligation of confidence to Cimberio: LJ [414].

Finding that C9746 Design Drawing was confidential information

The primary judge’s reasons

85    The primary judge stated the following at LJ [387]–[388]:

Confidentiality may exist in a design as a whole, notwithstanding that the information contained in it may be publicly available where a design draws on information that is already known to create a new solution to a problem that can only be replicated by somebody who goes through the same process: Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (2008) 78 IPR 262; [2008] FCA 803 at [89] (Gordon J); Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 49 (Gowans J).

As Lord Greene MR stated in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 at 415; (1948) 65 RPC 203 at 215:

I think that I shall not be stating the principle wrongly, if I say this with regard to the use of confidential information. The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker on materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process.

86    After referring to the submissions of the parties, the primary judge reasoned as follows at LJ [391]–[394]:

The respondents’ complaint that the applicants have failed to identify with sufficient particularity the information in the C9746 Design Drawing that is alleged to be subject to the alleged duty of confidence owed to Cimberio is misconceived.

The applicants’ breach of confidence claim is pleaded on the basis that the C9746 Design Drawing had been kept confidential to Cimberio and had the necessary quality of confidence, each of the respondents was under an equitable obligation to treat the C9746 Design Drawing confidentially and one or both of the respondents breached that obligation of confidence by disclosing the C9746 Design Drawing and/or by using it for an extraneous purpose, or otherwise counselling, procuring or knowingly assisting in such a breach (ASOC at [43]-[47]).

The claim is directed at the C9746 Design Drawing as a whole, both to identify the information imparted under a duty of confidence and to identify how the obligation of confidence was breached. The claim was not that any particular or discrete information within the C9746 Design Drawing was imparted under a duty of confidence or there was any disclosure or use for an extraneous purpose of any particular or discrete information within the drawing.

The C9746 Design Drawing comfortably falls within the description of a document that could be characterised as a formula, a plan or a sketch. It is the drawing as a whole that constitutes the confidential information, not any discrete or severable part of it. The value of the drawing is that it provides information in a form in the nature of a formula of a plan to manufacture a valuable engineering product for sale to commercial entities.

87    At LJ [415], the primary judge referred to his “conclusions above” that the confidential information in the C9746 Design Drawing was the drawing as a whole, comprising the six discrete views of the C9746 Valve and that was confidential information of Cimberio provided to Mr Comino and Strongcast.

Consideration

88    Mr Comino and Strongcast submit that the primary judge failed to specifically identify the confidential information contained in the C9746 Design Drawing and failed to deal with this by finding that the drawing as a whole was the confidential information. They submit that, consistently with the primary judge’s finding that there were co-designers of the Designs, the C9746 Design Drawing had contributions from both Cimberio (through Mr Riva’s drafting and technical acumen) and Mr Comino (through his contribution to the shape and configuration). Specifically, Mr Comino and Strongcast submit that Mr Comino contributed to shape and configuration within the meaning of s 7 of the Designs Act which defines “visual feature” as including “the shape, configuration, pattern and ornamentation” of a product.

89    Mr Comino and Strongcast submit that it is possible to “sensibly discern” that the actual drawings of the six views and measurement information are Mr Riva’s contribution, but that they are reflective of the conception of the shape and configuration that Mr Comino produced through his modifications to the existing valve. In support of that submission, Mr Comino and Strongcast point to the primary judge’s findings at LJ [97] (which refers to the acceptance by AVI and Cimberio that Mr Comino proposed the idea of an internal thread in addition to an external thread) and LJ [105]–[130] (which paragraphs are cited in these reasons above as part of the factual findings by the primary judge). As such, Mr Comino and Strongcast submit that the primary judge’s finding that the C9746 Design Drawing was the confidential information of Cimberio alone was plainly an error, and it should have been found to be the confidential information of both of the parties.

90    However, for the following reasons, we are not persuaded that the primary judge erred as contended by Mr Comino and Strongcast.

91    At LJ [387], the primary judge referred to the proposition that confidentiality may exist in a design as a whole, which proposition is undoubtedly correct as a matter of law. It is therefore not correct to say that the primary judge failed to specifically identify the confidential information contained in the C9746 Design Drawing.

92    At LJ [394], the primary judge found that the C9746 Design Drawing “comfortably falls within the description of a document that could be characterised as a formula, a plan or a sketch” (emphasis added). This adopts the language of Lord Greene MR in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215, with the relevant passage being extracted and cited at LJ [388]. As Lord Greene MR stated in the cited passage, “what makes [the document] confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process”. Based on the primary judge’s findings, the maker (namely Cimberio through Mr Riva) has produced a result which, as a whole, is confidential, notwithstanding that the information contained in it may be publicly available or produced as a consequence of information provided by a third party.

93    We also do not accept Mr Comino’s contention that he contributed to the shape and configuration of the C9746 Design Drawing, and that therefore he is the co-owner of the confidential information in that drawing. That is because such a contention is contrary to factual findings in the liability judgment which are not challenged in this appeal, namely:

(a)    the work undertaken by Mr Riva in integrating the locking wing into the C9746 Valve could not simply be characterised as producing engineering drawings to Mr Comino’s specifications: LJ [154];

(b)    Mr Riva did not receive verbal instructions from Mr Comino when creating the C9746 Design Drawing: LJ [160];

(c)    Mr Riva gave specific evidence of the work which he undertook in progressing the C9746 Design Drawing to reflect the instructions conveyed to him from Mr Comino for a valve with a locking wing handle and internal threads: LJ [162];

(d)    Mr Riva denied that he had relied on Mr Comino’s tin prototype in preparing the locking wing of the C8474/3 design: LJ [163];

(e)    Mr Riva, rather than Mr Comino, first reduced the design to a visible form when he produced the C9746 Design Drawing: LJ [164]. See also LJ [171];

(f)    the addition of internal threads on the Designs is comparatively less significant than the addition of the locking wing mechanism from a design perspective because (a) while being a visual feature, the internal threads are significantly less noticeable and visible than the locking wing visual feature(s), and (b) their appearance is constrained by function due to their standard size: LJ [172].

Finding of obligation of confidence

The primary judge’s reasons

94    Before addressing whether an obligation of confidence was owed, the primary judge made findings concerning whether the information in the C9746 Design Drawing had the necessary quality of confidence.

95    At LJ [395], the primary judge referred to the matters to be considered when deciding whether information has the necessary quality of confidence as including (a) the extent to which the information is known outside the business, (b) the value of the information to the applicant and its competitors, (c) the amount of effort or money expended by the applicant in developing the information, (d) the ease or difficulty with which the information could be properly acquired or duplicated by others, (e) whether industry practice supports the claim for confidentiality, (f) whether the applicant believed it to be confidential and that belief was reasonable, and (g) could the information be readily identified.

96    At LJ [398]–[399], the primary judge made the following findings:

It was common ground, and I accept, that the C9746 Design Drawing was kept confidential in the period up to at least the disclosure of the drawing to Infinity Design.

I am also satisfied that the C9746 Design Drawing had the “necessary quality of confidence” as that requirement has been addressed in the authorities for the following reasons:

(a)    the C9746 Design Drawing had only been disclosed by Cimberio to AVI and the respondents;

(b)    the drawing had significant value to Cimberio as the design for the manufacture and sale of ball valves and equally to its competitors, particularly Airaga;

(c)    Cimberio had expended considerable effort and resources in developing the C9746 Design Drawing;

(d)    the specific work undertaken by Mr Riva in producing a detailed engineering design drawing for the manufacture of the C9746 Valve, as explained above at [264], could not properly be obtained from other sources or easily duplicated by others;

(e)    industry practice, namely the provision of final drafts of design drawings for approval prior to manufacture supported the claim for confidentiality;

(f)    the confidentiality markings on the drawing demonstrated that Cimberio believed it to be confidential and that belief was reasonable given the circumstances in which it was created and the limited purpose for which it was provided to the respondents;

(g)    the information could be readily identified, namely the C9746 Design Drawing as a whole depicting the six images of the C9746 Valve.

97    At LJ [402]–[405], the primary judge then addressed whether a duty or obligation of confidence was owed on the facts of this case in these terms:

I am satisfied, notwithstanding the absence of any evidence from Mr Dillenbeck or Mr Cimberio, that the C9746 Design Drawing was provided to the respondents for the limited and confined purpose of signing off on the drawing prior to manufacture in accordance with a practice that had developed between Cimberio, AVI and the respondents over the five years leading up to January 2018.

That the C9746 Design Drawing was provided for that purpose is consistent with both the inherent logic of events and the procedure for signing off previous Cimberio design drawings, as it applied to any modifications to the C6827 Valve pursuant to the terms of the Distribution Agreement. Section 2 of Art 2 of the Distribution Agreement provided that:

2.    Variations in Product Design

Upon approval of the sample provided to [Strongcast], a signed copy of the drawing as per Appendix A and Appendix B must be provided to [AVI]. No variations to the product design will be accepted until all units, as specified under Article 11; Section 4, have been purchased and paid for, or monies forfeited where [Strongcast] has made financial contributions to capital purchases. Any variations thereafter will require a new quotation to be submitted and drawing to be approved.

The C9746 Design Drawing was provided as an attachment to an email from Mr Dillenbeck to Mr Comino dated 24 January 2018. In the course of his cross-examination Mr Kilner gave the following explanation of the purpose for which the drawing was provided to Mr Comino:

And then if you go to tab 117, what you will see there is an email between Mr Dillenbeck … and Mr Comino of Strongcast, dated 24 January 2018, and attached to that is the C9746 design drawing. You see that?---Yes.

Now, it’s your understanding that all those communications with – further to what you said at the very end of yesterday – all of those communications were conducted as between Mr Comino and AVI, and then AVI and Cimberio, on a confidential basis, correct?---Yes.

And this communication that we see at tab 117 is part of that chain of confidential communications, correct?---Yes.

And this design was then being provided – this design drawing – was then being provided from AVI to Mr Comino for him to then sign off, correct?---Yes.

And it was Mr Comino, on behalf of his company Strongcast, that was the party that was approving the sign – approving the design for that valve, correct?---Yes. The customer.

The customer. It wasn’t – it wasn’t – it wasn’t AVI that was approving the design, was it?---No, it was the customer.

I accept this evidence of Mr Kilner. As is apparent from the cross-examination extracted above, it was not challenged by the respondents. Rather, it was the respondents’ case that all communications between Mr Comino and AVI and then between AVI and Cimberio, including the provision of the C9746 Design Drawing, were conducted on a confidential basis. That the respondents may have provided confidential information in dealings with the applicants which informed the making of the C9746 Design Drawing does not negate the existence of a duty of confidence conversely owed to the applicants when they provided the C9746 Design Drawing on a confidential basis for a limited purpose.

Consideration

98    Mr Comino and Strongcast submit that if the confidential information had been properly identified such that the joint contributions were found, the finding that there was an obligation of confidence would not have followed.

99    There are three problems with this submission.

100    First, the confidential information was properly identified in that it reposed in the entire drawing for the reasons explained above.

101    Secondly, even if it was the case that Mr Comino was a joint owner of the confidential information, it does not follow that he would not owe any obligation of confidence to Cimberio, which was the co-owner on his own case. As the primary judge found at LJ [405] “That [Mr Comino and Strongcast] may have provided confidential information in dealings with [Cimberio and AVI] which informed the making of the C9746 Design Drawing does not negate the existence of a duty of confidence conversely owed to [Cimberio and AVI] when they provided the C9746 Design Drawing on a confidential basis for a limited purpose”. We respectfully agree.

102    Thirdly, the cross-examination of Mr Kilner which is referred to in the primary judge’s reasons proceeded on the premise that the communications conducted as between Mr Comino and AVI, and then AVI and Cimberio, were on a confidential basis, and the primary judge accepted Mr Kilner’s evidence at LJ [405]. That acceptance is not challenged on this appeal.

103    Further, the primary judge’s finding that the obligation of confidence was owed was made in the context of other factual findings which support that finding and which are not challenged on this appeal (other than the complaint that confidentiality did not attach to the entirety of the C9746 Design Drawing, which complaint we have not accepted). Those findings are:

(a)    the C9746 Design Drawing included the copyright notice in English, and the Italian confidentiality notice which was able to be readily understood by an English speaker: LJ [132];

(b)    the primary judge’s non-acceptance that Mr Comino was not aware of and did not appreciate the significance of the copyright notice on the C9746 Design Drawing: LJ [325];

(c)    that the drawing by Infinity Design was identical to the C9746 Design Drawing, save that the Cimberio markings and copyright notices, measurements and writing were removed other than certain markings: LJ [330];

(d)    that Mr Comino had explained that he wanted the copyright notices removed during a skype call with Mr Murphy of Infinity Designs: LJ [334];

(e)    the primary judge’s non-acceptance that Mr Cimberio simply overlooked the copyright notice in the C9746 Design Drawing: LJ [346];

(f)    the primary judge’s non-acceptance that Mr Comino believed he had exclusive distribution rights over the C9746 Valve: LJ [347];

(g)    the findings at LJ [398]–[399], as referred to above.

104    Mr Comino and Strongcast next submit that the primary judge’s reasoning was flawed because there was no direct evidence from Cimberio or AVI in support of the obligation of confidence. They assert that two witnesses ought to have been called, being Mr Cimberio and Mr Dillenbeck. They submit that, instead, Cimberio and AVI called Mr Riva and Mr Kilner. Mr Comino and Strongcast submit that the primary judge ought to have drawn adverse inferences, being that the evidence from the absent witnesses would not have assisted Cimberio.

105    The Full Court in Pitcher Partners Consulting Pty Ltd v Neville’s Bus Service Pty Ltd (2019) 271 FCR 392; [2019] FCAFC 119 (Allsop CJ, Yates and O’Bryan JJ) observed at [90]:

…The rule in Jones v Dunkel [(1959) 101 CLR 298] is enlivened where there is an unexpected failure of a party to give evidence or to call a witness. It arises not in drawing an adverse inference, but in inferring the evidence would not have assisted the case of that party, allowing contrary inferences to be drawn more confidently: Holloway v McFeeters (1956) 94 CLR 470 at 480–481; Manly Council v Byrne [2004] NSWCA 123 at [51]. There is no requirement to draw any inference based on Jones v Dunkel; it is a matter for the fact finder…Further, the Court should not be astute to draw uncertain inferences in favour of a wrongdoer: McCartney v Orica Investments Pty Ltd [2011] NSWCA 337 at [148]–[160] and [198]–[219].

106    We note that, at LJ [402], the primary judge expressly took into account the absence of any evidence from Mr Dillenbeck and Mr Cimberio. However, there was no requirement that an inference be drawn that the evidence of these witnesses would not have assisted AVI and Cimberio.

107    Notably, the primary judge addressed the failure to call these witnesses at LJ [26]–[28]:

The rule in Jones v Dunkel only applies, however, where a party is “required to explain or contradict” something: Jones v Dunkel at CLR 321. In the present case, the respondents have not identified, with one exception, any material matter within the knowledge of Mr Cimberio or Mr Dillenbeck that they were required to explain or contradict, for two principal reasons.

First, Mr Comino’s dealings with Mr Dillenbeck and Mr Cimberio appear to have been almost exclusively by email, as appears were Mr Cimberio’s dealings with Mr Dillenbeck. Moreover, Mr Comino’s dealings were largely limited to dealings with Mr Dillenbeck with very little direct interaction with Mr Cimberio.

Second, Mr Comino did not give any evidence-in-chief of any specific conversations that he had with either Mr Dillenbeck or Mr Cimberio concerning the issues to be determined in the proceedings. As a consequence, there was nothing that either Mr Dillenbeck or Mr Cimberio were required to explain or contradict.

(Emphasis original.)

108    In the circumstances, there is no error by the primary judge in failing to infer that the evidence of Mr Dillenbeck and Mr Cimberio would not have assisted AVI and Cimberio.

Conclusion

109    For these reasons, grounds 4, 5 and 6 must fail.

Remedy of Constructive Trust (Ground 8 and Notice of Contention Grounds 1-3)

110    It is convenient to deal together with:

(a)    ground 8 of the Notice of Appeal in the main appeal; and

(b)    grounds 1-3 of the draft Amended Notice of Contention which was annexed to AVI and Cimberio’s submissions in the main appeal.

111    There was no issue about AVI and Cimberio having leave to rely on grounds 1-3 of the draft Amended Notice of Contention. Those grounds were included in an earlier draft Notice of Contention.

112    By ground 8 of the Notice of Appeal, Mr Comino and Strongcast contend that the primary judge erred in finding (at LJ [430]) that (in addition to an account of profits) Cimberio was entitled to the imposition of a constructive trust over Mr Comino’s rights, title and interests in the 005 Design and the 810 Design. We will consider ground 8 on the basis (consistently with the above conclusion) that the appeal grounds relating to breach of confidence (grounds 4, 5 and 6) fail.

113    By grounds 1-3 of the Notice of Contention, Cimberio contends (in summary) that the primary judge ought also to have found that Cimberio was entitled to a constructive trust over any and all rights, title and interests of Mr Comino in the 005 Design and the 810 Design as a result of Mr Comino’s infringement of Cimberio’s copyright in the C9746 Design Drawing (as distinct from breach of confidence as the basis for the constructive trust).

114    We will first consider appeal ground 8, then the Notice of Contention grounds.

Appeal Ground 8

The primary judge’s reasons

115    The primary judge dealt with the breach of confidence issue in Section K of his reasons.

116    Having found that Mr Comino had breached Cimberio’s confidence in relation to the C9746 Design Drawing (by providing it to Infinity Design as the basis for registration of the designs in his own name), the primary judge considered whether to impose a constructive trust in respect of Mr Comino’s interest in the Designs in Section K.7 (LJ [420]-[439]).

117    The primary judge discussed the legal principles relating to constructive trusts at LJ [420]-[428].

118    His Honour summarised Mr Comino and Strongcast’s submissions on this issue at LJ [429].

119    His Honour’s core reasoning on this issue is at LJ [430]-[439]. In essence, his Honour reasoned that:

(a)    “[w]hether the conduct of the [Comino parties] giving rise to the breach of confidence is sufficient to justify the imposition of a constructive trust largely turns on the extent to which it is contrary to conscience, generally expressed as unconscionable conduct (referring to Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 (Lenah Game Meats) at [102]) (at LJ [434]);

(b)    the breach of confidence here involved a significant degree of dishonesty, exploitation, sharp practice and a lack of good faith (LJ [436], [438], [439]);

(c)    it was therefore appropriate to impose a constructive trust over Mr Comino’s rights in the Designs (LJ [439]; see also [430]).

The primary judge’s declarations and orders

120    For the purpose of considering ground 8, it is relevant to have regard also to the primary judge’s declarations and orders. Following the publication of the primary judge’s reasons for judgment, the parties were directed to provide orders giving effect to the primary judge’s reasons. The parties provided proposed orders, and the primary judge then made orders and declarations on 27 August 2025.

121    The relevant declarations and orders made by the primary judge on 27 August 2025 were as follows:

(a)    In NSD1337/2021 (the main proceeding below), the primary judge relevantly declared that:

(i)    Mr Comino and Strongcast had infringed Cimberio’s copyright in the C9746 Design Drawing (declaration 2);

(ii)    Mr Comino and Strongcast had breached Cimberio’s confidential information by disclosing the C9746 Design Drawing to Infinity Design and the Designs Office and using it for an extraneous purpose (declaration 3);

(iii)    Mr Comino holds (and has since 16 February 2018 held) his rights, title and interests in the 810 Design and the 005 Design on constructive trust in favour of Cimberio (declaration 5);

(iv)    Cimberio is entitled to file an application with the Designs Office in respect of the designs depicted in the 810 Design and the 005 Design, such applications having the same priority dates as the 810 Design and the 005 Design (declaration 6).

(b)    Further, in that proceeding, the primary judge ordered that:

(i)    Mr Comino assign in writing to Cimberio, by 4.30 pm on 10 September 2025, all of his rights, title and interests in the designs the subject of the 810 Design and the 005 Design and any design applications the subject of declaration 6 (order 4).

(ii)    On request of Cimberio, Mr Comino do all things necessary to give effect to order 4, including executing documents etc (order 5).

(iii)    Cimberio is entitled to: damages or an account of profits (at its election) from Mr Comino and Strongcast in respect of the copyright infringement; and an account of profits from Mr Comino and Strongcast in respect of the breach of confidence (order 6).

(iv)    There be an inquiry as to the quantum of pecuniary relief pursuant to order 6 (order 7).

(c)    In the other proceeding below (NSD1335/2021) (the Design Office proceeding), the primary judge:

(i)    declared that, in accordance with s 53(2) of the Designs Act, each of Mr Comino and Cimberio was an “entitled person” in respect of the 810 Design and the 005 Design at the time each design was registered.

(ii)    ordered that each of the 810 Design and the 005 Design be revoked pursuant to s 52 of the Designs Act.

122    The above orders need to be read with ss 51-56 of the Designs Act.

123    Having regard to those provisions, the rationale and effect of the declarations and orders may be stated as follows:

(a)    The Designs (which had been registered in the name of Mr Comino alone) were revoked pursuant to s 52. This was because they had been registered in the name of Mr Comino alone but in fact both Mr Comino and Cimberio were entitled persons. The procedure stipulated by ss 51-56 in such a situation requires revocation of the design (rather than simply amendment of the Register) and the filing of a new application (further discussed below).

(b)    The primary judge declared that each of Mr Comino and Cimberio was an “entitled person”. (That expression is defined in s 5 of the Designs Act and means a person entitled under s 13 to be entered in the Register as the registered owner of the design.)

(c)    If no other declarations or orders had been made, Mr Comino or Cimberio would have been entitled (under ss 21 and 55) to file new applications for the designs that had been the subject of the 810 Design and the 005 Design, and if they did so, the designs would have the same priority date as they had under the 810 Design and the 005 Design. However, the following further declarations and orders were made.

(d)    It was declared that Mr Comino held (and had since 16 February 2018 held) his rights, title and interests in the 810 Design and the 005 Design on constructive trust in favour of Cimberio.

(e)    Mr Comino was ordered to assign to Cimberio all his rights, title and interests in the designs the subject of the 810 Design and the 005 Design and any design applications in respect of the underlying designs. The effect of the assignment would be that Mr Comino would not be able to file applications under ss 21 and 55 in respect of the designs. This order gave effect to the constructive trust referred to in paragraph (d) above.

(f)    It was declared that Cimberio was entitled to file an application with the Designs Office in respect of the designs depicted in the 810 Design and the 005 Design, such applications having the same priority dates as the 810 Design and the 005 Design. This reflected the position – so far as Cimberio was concerned – outlined in paragraph (c) above. However, no such declaration was made regarding Mr Comino.

124    The overall effect of these declarations and orders was that: the 810 Design and the 005 Design were revoked; only Cimberio could file applications in respect of the designs that were the subject of the 810 Design and the 005 Design (and if it did so, the designs would have the same priority date as the 810 Design and the 005 Design); and the registered designs would be in the name of Cimberio alone.

125    Thus, assuming the designs were re-registered, all profits from the registered designs for the balance of their period of registration (about 2 years) would accrue to Cimberio (and none would accrue to Mr Comino and Strongcast).

Submissions

126    Mr Comino and Strongcast submit that the primary judge made two errors in imposing a constructive trust for breach of confidence:

(a)    the constructive trust was imposed as a punitive measure; and

(b)    the imposition of a constructive trust was not necessary given the other relief granted to Cimberio.

127    Mr Comino and Strongcast submit that the circumstances which founded Mr Comino’s entitlement as a co-designer preceded the acts in breach of confidence.

128    In relation to the first alleged error, Mr Comino and Strongcast submit that the imposition of a constructive trust involves the imposition of an equitable remedy to bring about disentitlement to a valid legal right as a punitive measure. This, they submit, is contrary to established authority (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 (Hospital Products) at 109) and the remedial purpose of the trust (Hospital Products at 108-110).

129    In relation to the second alleged error, Mr Comino and Strongcast submit that a constructive trust is a remedy of last resort (Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 at [42]; Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [10]; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 (John Alexander’s Clubs); Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [505]-[508]). They submit that the imposition of a constructive trust goes beyond the necessities of the case, relying on John Alexander’s Clubs at [128]-[129].

130    Cimberio submits that the misconceived premise of Mr Comino’s and Strongcast’s submissions is that registration is an “unalloyed benefit, and it is somehow self-evident that Cimberio desired the Designs to be registered” (emphasis in original). Cimberio submits that the effect of registration (even with Cimberio as co-owner) was that Cimberio’s distributor, AVI, would be excluded from selling ball valves embodying the Designs without a licence, which licence could only be granted with Mr Comino’s consent (Designs Act, s 14(2)(c)). Cimberio submits that its economic interest, as evidenced by its conduct at the time, was to maintain the confidentiality of its engineering drawing and not to seek to register any such rights.

131    Cimberio submits that Mr Comino and Strongcast are wrong to suggest that the breach of confidence occurred after the point at which Mr Comino had acquired his registered rights in the Designs. Cimberio submits that the application (for the designs) itself fundamentally required and involved the misuse of the confidential information comprised by the C9746 Design Drawing. Cimberio submits that Mr Comino met the statutory requirements (for registration of the designs) by misusing Cimberio’s confidential information in the C9746 Design Drawing. Therefore, it is submitted, the analysis is the same as in Lenah Game Meats. In that case, the copyright work came into existence due to the tortious trespass to land.

132    In Mr Comino and Strongcast’s reply submissions, they submit that Cimberio was never going to be entitled to a monopoly in respect of the valve, nor was there an intent to keep the three-dimensional manifestation of the valve confidential; rather, Cimberio intended for valves to be supplied to Mr Comino and Strongcast for sale and distribution (i.e., publicly) in Australia. Mr Comino and Strongcast submit that, in light of Cimberio’s contention that it had an economic interest in not seeking registration of the designs, the imposition of a constructive trust constitutes an outcome greater than what would have occurred but for the breach – if the statutory registration had not been perfected, once distribution commenced in Australia, there could have been no statutory monopoly obtained in respect of the designs by reason of that publication.

133    During the hearing of the appeal, in response to a question from the Court as to whether Mr Comino would give an undertaking not to impede Cimberio licensing the designs (if they were re-registered in the names of both Mr Comino and Cimberio), senior counsel for Mr Comino and Strongcast said that he had instructions to give the undertaking: that is, an undertaking not to impinge upon or impede Cimberio licensing the designs to any third parties. In substance, this would be an undertaking by Mr Comino to consent to any request by Cimberio to license the designs (if the designs were re-registered in the names of both Mr Comino and Cimberio). Senior counsel for Mr Comino and Strongcast also said that the undertaking was not conditional upon a corresponding undertaking being given by Cimberio. In response to a similar question from the Court, senior counsel for Cimberio said that he did not have instructions to give a comparable undertaking.

Consideration

134    In our view, the imposition of a constructive trust over the Designs goes beyond what is necessary in the circumstances of this case.

135    It is established that a constructive trust should not be imposed where the other remedies are adequate. In John Alexander’s Clubs, five members of the High Court (French CJ, Gummow, Hayne, Heydon and Kiefel JJ) stated at [128]: “A constructive trust ought not to be imposed if there are other orders capable of doing full justice.” Further, their Honours stated at [129]: “One point made in the Giumelli v Giumelli line of cases is that care must be taken to avoid granting equitable relief which goes beyond the necessities of the case.” See also Hospital Products at 109-110.

136    A critical feature of this case is that Mr Comino contributed to the designs that were the subject of the 810 Design and the 005 Design. The primary judge found that he was an “entitled person” in relation to the designs; that finding is reflected in one of the declarations.

137    A further feature of the present circumstances is that, but for Mr Comino’s breach of confidence, either (a) the Designs would have been registered in the names of both Mr Comino and Cimberio; or (b) the Designs would not have been registered at all. In its written submissions on the appeal, Cimberio stated that its economic interest was to maintain the confidentiality of its engineering drawings and not to seek to register design rights. This was reiterated in oral submissions. There is a question whether there was direct evidence about this at trial. If Cimberio’s position is accepted, then, but for the breach of confidence, the Designs would not have been registered at all.

138    In our opinion, the primary judge erred by not giving any or sufficient consideration to whether the imposition of a constructive trust over the Designs in favour of Cimberio would go beyond what was necessary to do justice in the case. The primary judge did not expressly consider this issue. Further, it does not appear that his Honour implicitly considered the issue. In our opinion, it was necessary to consider the issue in circumstances where (a) the imposition of a constructive trust would give Cimberio an entitlement to all of the profits (past and future) referable to the Designs; (b) Mr Comino was an entitled person in relation to the Designs; and (c) but for the breach of confidence, the Designs would either have been registered in the names of both Mr Comino and Cimberio or they would not have been registered at all.

139    In light of that error, it is necessary for the Full Court to consider afresh whether a constructive trust should be imposed.

140    We start by noting that the other orders provide for an account of profits and revocation of the designs.

141    Secondly, absent a constructive trust (and the associated order for an assignment), the designs could be re-registered in the names of both Mr Comino and Cimberio pursuant to ss 21 and 55 and they both could benefit from the re-registered designs. Cimberio complains that this would put it into the position of a “forced marriage” with Mr Comino, in circumstances where it did not want to register the designs. In particular, Cimberio pointed to the fact that it would not be able to license the designs without Mr Comino’s consent (see s 14(2)(c) of the Designs Act). However, that concern is fully addressed by the undertaking given by Mr Comino to consent to any request by Cimberio to license the designs. After that concern was addressed by the undertaking proffered by Mr Comino, Cimberio raised other concerns during oral submissions. However, we are not persuaded that any of the other concerns have merit.

142    In our view, the reasoning in Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FCR 527; [2008] FCAFC 9 at [88]-[89] is apposite. In that case, the Full Court (Finn, Bennett and Greenwood JJ) said:

This is not an appropriate case in which to enter in any detail upon the question when a constructive trust may appropriately be imposed upon a proprietary advantage obtained in consequence of a breach of confidence: but see LAC Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574; Ohio Oil Company v Sharp 135 F (2d) 303 (1943); Meagher RP, Gummow WMC, Lehane JRF, Equity: Doctrines and Remedies (4th ed, Butterworths, 2002), pp 1141-1142. The archetypal case, we would note though, has been one where the confidential information related to the quality or value of property in which an interest was then acquired to the wrongdoer’s gain in breach of confidence: eg LAC Minerals Ltd [1989] 2 SCR 574 above. The present is far removed from such a case.

The alleged breach of confidence relied upon by Polwood seems to be different in character from that found by his Honour (which related to Foxworth’s use of the information for its own purposes after the expiry of the licence). The reasons given for refusing proprietary relief were notably brief. But what we take from them is equally apt to the present case (assuming without deciding in Polwood’s favour both that Foxworth committed a breach of confidence in the manner now alleged and that the invention itself was capable of being the subject matter of a trust). The confidential information was conceptual in character and, though it was used in developing the PSU, it was augmented by Foxworth’s expenditure of much time, energy and inventive skill. His Honour made no finding of the actual extent of the contribution so made by Foxworth, but he did find that it was inventive. In these circumstances, it cannot properly be said that the invention was attributable solely to the confidential information used. Absent any contractual entitlement to the advantage of Foxworth’s exertions, Polwood has no proper basis for claiming that all of the advantage produced by those exertions ought belong to it because some part of it was contributed to by the confidential information used. We would note in passing that Polwood denies that it should be obliged to make any allowances to Foxwood for its time etc, in the event that proprietary relief were to be granted.

(Emphasis added.)

143    The present facts are quite different from cases where, but for the breach of confidence, the relevant intellectual property would have been registered solely in the name of the plaintiff: cf Council of the City of Sydney v Goldspar Pty Ltd (2004) 62 IPR 274; [2004] FCA 568 at [143]; City of Sydney v Streetscape Projects (Australia) Pty Ltd (2011) 94 IPR 35; [2011] NSWSC 1214 at [246]-[248]; Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574 at 669.

144    Game Meats Company of Australia Pty Ltd v Farm Transparency International Ltd (2025) 312 FCR 272; [2025] FCAFC 104 is distinguishable. The respondent in that case enjoyed no pre-existing rights in relation to the video images it had obtained and created through its trespass of the appellant’s premises. There was nothing akin to the primary judge’s finding in this case that Mr Comino was an “entitled person” in relation to the 810 Design and the 005 Design.

145    Having regard to these matters, in our view, the imposition of a constructive trust goes beyond what is necessary to do justice in the circumstances of this case.

146    Accordingly, appeal ground 8 should be upheld. The orders of the Full Court should record the undertaking given by Mr Comino. Further, in principle, and subject to hearing from the parties on the form of orders:

(a)    Declaration 5 in NSD1337/2021 made on 27 August 2025 (the constructive trust declaration) should be set aside.

(b)    Declaration 6 in those orders should be varied to refer to Mr Comino as well as Cimberio being entitled to apply to re-register the designs.

(c)    Orders 4 and 5 in those orders (the assignment order and a related order) should be set aside.

147    However, we consider it appropriate to hear from the parties as to the form of orders. The form of orders may be affected by whether a new design application has already been filed by Cimberio. In this regard, we note that Mr Comino and Strongcast handed up a proposed Amended Notice of Appeal in the main appeal, which amended the relief sought by them.

148    We also note for completeness that, insofar as it was ordered that Cimberio was entitled to an account of profits from Mr Comino and Strongcast in respect of the breach of confidence, it is unclear whether this was intended to cover (a) all profits derived by Mr Comino and Strongcast from selling the products that are the subject of the 810 Design and the 005 Design; or (b) merely the profits that they derived that exceed the profits they otherwise would have derived had there been no registration of designs. However, this is not part of the appeal ground, and the issue was not given any attention in the parties’ submissions. In these circumstances, we consider it preferable not to express a view on this.

Notice of Contention Grounds 1-3

149    Cimberio contends that the primary judge ought to have imposed a constructive trust in response to Mr Comino and Strongcast’s infringement of Cimberio’s copyright in the C9746 Design Drawing.

150    The primary judge did not consider it necessary to determine whether to impose a constructive trust for copyright infringement, as it was to be considered in any event in relation to breach of confidence (see LJ [383]). We do not read the primary judge’s reasons as deciding that, as a matter of principle, a constructive trust could not be imposed for copyright infringement.

151    Proceeding on the basis that it is conceptually open to impose a constructive trust in respect of the copyright infringement, the reasons set out above would apply equally to the question whether a constructive trust should be imposed for the copyright infringement. In applying for the registration of the Designs, Mr Comino infringed Cimberio’s copyright in the C9746 Design Drawing. When considering whether a constructive trust should be imposed in favour of Cimberio in relation to the Designs, the same circumstances as are set out above apply. For these reasons, it is not appropriate to impose a constructive trust for the copyright infringement.

152    For these reasons, we reject grounds 1-3 of the Notice of Contention.

Additional Damages for Copyright Infringement (Ground 3)

153    Ground 3 complains that the primary judge erred in finding at LJ [380] that Mr Comino and Strongcast were liable for additional damages under s 115(4) of the Copyright Act with respect to the direct infringement of the C9746 Design Drawing.

The primary judge’s reasons

154    After setting out the text of s 115(1)–(4) of the Copyright Act, the primary judge referred to the relevant principles relating to the award of additional damages for copyright infringement at LJ [377].

155    At LJ [379], the primary judge noted that “s 115(3), that might have foreclosed an award of damages, would not have relevantly been engaged in the present case because I have concluded that Mr Comino was aware, or ought reasonably to have been aware, that the respondents had infringed Cimberio’s copyright in the C9746 Design Drawing. It necessarily follows that he could not have had reasonable grounds for not suspecting that there had been an infringement of Cimberio’s copyright.”

156    The conclusion reached by the primary judge as referred to in LJ [379] harks back to the analysis of Mr Comino’s evidence especially at LJ [324]–[346], in which the primary judge:

(a)    did not accept that Mr Comino was not aware of and did not appreciate the significance of the copyright notice on the C9746 Design Drawing: LJ [325];

(b)    found that Mr Comino was concerned to ensure that his email communications with Mr Murphy of Infinity Design were kept to a bare minimum and did not disclose the reason for or the nature of the revisions that he was asking Mr Murphy to make to the C9746 Design Drawing, and that had Mr Comino genuinely believed he had an implied licence to use the C9746 Design Drawing for the purpose of registering the Designs, it is implausible that his email communications with Mr Murphy would have been so circumscribed: LJ [342];

(c)    referred to Mr Comino’s acknowledgment in the course of being cross-examined that as at 2017, he understood that copyright was contained in drawings, such as those on a page of a Strongcast document entitled “data sheet” and the words “Copyright Strongcast Proprietary Limited”, and that he believed that if someone did copy the drawings without the permission of Strongcast it would be a breach or an infringement of Strongcast’s copyright: LJ [343];

(d)    found that Mr Comino gave inherently implausible evidence about the circumstances in which he used the C9746 Design Drawing: LJ [345];

(e)    did not accept that Mr Comino simply “overlooked” the copyright notice on the C9746 Design Drawing, or that he did not appreciate the difference between copyright and designs: LJ [346].

157    At LJ [380]–[381], the primary judge concluded that Cimberio was entitled to an award of additional damages, stating that:

I am also satisfied that Cimberio is entitled to an award of additional damages having regard to the flagrancy of the contravention of Cimberio’s copyright in the C9746 Design Drawing, the need to deter similar infringements of copyright, the conduct of the respondents after being informed of the infringement in disputing the claim, going as far in their defence, although ultimately not pressed in final submissions, to contend that they owned all the intellectual property rights in the C9746 Valve, and the benefits that were received from the infringement being the use of the C9746 Design Drawing to facilitate the registration of the Designs and thereby enable the exploitation of the design rights obtained with respect to the Designs.

In particular, I am satisfied that (a) Mr Comino was aware of, or at least recklessly indifferent to, the existence of Cimberio’s copyright in the C9746 Design Drawing, (b) Mr Comino engaged in a deliberate and calculated plan to obtain registration of the Designs in order for the respondents to obtain exclusivity over designs, that substantially reproduced the design the subject of the C9746 Design Drawing, in order to enable the respondents to approach alternative manufacturers to manufacture ball valves to that design, and (c) there is a compelling need for deterrence in this case to deter people from using the intellectual property rights of others to gain intellectual property rights for themselves.

Consideration

158    Mr Comino and Strongcast accept, as is the case, that the finding concerning additional damages involved the exercise of discretion, such that they must disclose error within the principles in House v The King (1936) 55 CLR 499; see also Hytera Communications Corporation Ltd v Motorola Solutions Inc (2024) 308 FCR 68; [2024] FCAFC 168 (Beach, O’Bryan and Rofe JJ) at [903]–[904].

159    The first complaint is that the primary judge failed to consider, and give weight to, Mr Comino’s honest belief that he was the sole owner of the two Designs. There is no merit in this contention as the primary judge did consider Comino’s “state of mind at the time of infringement” when weighing the evidence in respect of copyright infringement and the asserted defences and available relief.

160    At LJ [346], the primary judge did not accept that Mr Comino “simply “overlooked” the copyright notice on the C9746 Design Drawing”, and nor did the primary judge accept that “he did not appreciate the difference between copyright and designs”, given the matters relied upon by the primary judge at LJ [324]–[346]. In the context of the primary judge’s rejection of the asserted implied licence defence, the primary judge considered the position that Mr Comino’s claim that “he could use the drawing as he saw fit because they were his designs” and found his evidence to be “unsatisfactory and inconsistent”: LJ [346]. In respect of Mr Comino’s state of mind, the primary judge found that he “was aware of, or at least recklessly indifferent to, the existence of Cimberio’s copyright in the C9746 Design Drawing”: LJ [381]. The primary judge also made an (unchallenged) finding that Mr Comino’s evidence should be approached with “great caution”: LJ [35].

161    The second complaint is, in substance, that the primary judge ought not to have taken into account that Mr Comino and Strongcast pleaded but did not ultimately press an argument as to ownership of copyright in the C9746 Design Drawing. In light of the evidence given by Mr Comino under cross-examination, especially his understanding of copyright, such a claim ought never to have been advanced by Mr Comino, and there is no error in the primary judge having taken this claim, and its withdrawal, into account: see s 115(4)(b)(ib) and (iv) of the Copyright Act.

Conclusion

162    For these reasons, ground 3 must fail.

Contraventions of the ACL (Grounds 9 and 10 and Notice of Contention Ground 4)

163    Grounds 9 and 10 state as follows:

9.     The primary judge erred in finding:

(a)     that each of the Representations (defined in J [475]) were conveyed (J [483], [487]);

(b)     that the second and third Representations were each not as to a future representation (at J [486] and cf J [475]), contrary to AVI’s contention that they were each representations as to a future matter; and

(c)     AVI had a reasonable expectation with respect to the three matters set out in J [483].

…

10.    The primary judge erred in finding (J [492]) that AVI had established an entitlement to damages and/or compensation pursuant to s 236 and/or s 237 of the Australian Consumer Law.

Finding that representations were made

The primary judge’s reasons

164    The primary judge discussed the legal principles relating to misleading or deceptive conduct, including whether silence is sufficient to constitute conduct that is misleading or deceptive, and misleading representations with respect to future matters at LJ [467]–[472].

165    The primary judge then identified the three representations that Mr Comino, on his own behalf, and on behalf of Strongcast, was alleged to have made by silence at LJ [473], namely:

(a)    they would only use design drawings as provided to them in respect of the modified form of the C6827 Valve for the purposes of “signing off” on those drawings prior to their manufacture by Cimberio (which we will describe as the first representation);

(b)    one or both of them did not intend or otherwise consider it to be a possibility that they would make an application for one or more registered designs in respect of the modified form of the C6827 Valve (which we will describe as the second representation);

(c)    one or more of them did not intend or otherwise consider it to be a possibility that one or more design drawings with which they were to be provided would be used in an application for one or more registered designs (which we will describe as the third representation).

166    After referring to the submissions of the parties, the primary judge stated as follows at LJ [482]–[487]:

The Representations are pleaded as being made with respect to the “design drawings as provided to them in respect of the modified form of the C6827 Valve”. In context, they are directed at the C9746 Design Drawing. The “modified form of the C6827 Valve” language appears to be driven by the applicants’ breach of contract case which is advanced on the basis the C9746 Valve was a modified form of the C6827 Valve.

For the reasons outlined at [150]-[172], [398]-[399] and [402]-[405] above, I am satisfied, given the circumstances in which the C9746 Design Drawing was provided to the respondents and the nature of the commercial relationship that had evolved between AVI and Mr Comino, on behalf of Strongcast, with respect to the acquisition by the respondents of Cimberio products designed by Cimberio or designed jointly by Mr Comino and Cimberio, that AVI had a legitimate and reasonable expectation that the respondents would (a) only use the C9746 Design Drawing for the purpose of signing off the drawing prior to the manufacture of the C9746 Valve, (b) not make an application to register any designs with respect to the C9746 Valve, and (c) not use the C9746 Design Drawing in an application for any registered designs. Such an expectation in my view was both legitimate and reasonable given the previous refusal by AVI to agree to the respondents’ request for ownership of the design of the C6827 Valve, the absence of any subsequent notification to AVI of any intention on the part of the respondents to register any design that was based on modifications to the C6827 Valve or a design that was otherwise an evolution of the C6827 Valve, and the provision of the C9746 Design Drawing, in accordance with previous practice, for the purpose of signing off the final design before manufacture. In the period leading up to 24 January 2018 the respondents had been astute to ensure they had exclusive distribution rights over the valves manufactured by Cimberio and had not, after being rebuffed in their claims for ownership of the design for the C6827 Valve, evinced any intention to seek to register any design for a valve manufactured by Cimberio that Mr Comino or Strongcast was the designer of the valve and entitled to register it as a design.

The existence of such an expectation is wholly consistent with the inherent logic of events. It is almost inconceivable that a person, who had sent a design drawing to a customer for the purpose of the customer signing off on the final design before manufacture and where to both parties knowledge, the manufacturer had made a substantial contribution to the design, would not reasonably expect that the customer would not delete all references to the author of the design drawing and then without any notice use the design drawing to register one or more designs in their own name.

The first Representation was pleaded as a future representation in that it was directed at not doing a particular act in the future, that is in substance, using the design drawings for any purpose other than signing off on them prior to their manufacture by Cimberio. I am satisfied for the reasons advanced above at [482]-[484] that the respondents did not have any reasonable grounds for making the first Representation.

Neither the second nor third Representation, however, was pleaded as a future representation. Each was addressed to an intention or consideration that existed in the period that the Representations were alleged to have been made. Each was therefore a representation that was capable of being proven to be true or false at the time that it was made, it was not a promise, forecast or prediction about something that would only transpire or not transpire in the future: Australian Competition and Consumer Commission v Woolworths Group Ltd (formerly Woolworths Ltd) (2020) 281 FCR 108; 415 ALR 356; [2020] FCAFC 162 at [132] (Foster, Wigney and Jackson JJ).

Further, I am satisfied that each of the Representations was made in trade or commerce as part of ongoing commercial arrangements between AVI and Mr Comino, on behalf of Strongcast.

Consideration

167    Mr Comino and Strongcast submit that, as considered by the primary judge at LJ [482], the ACL case run at trial was directed toward the contract case which had failed (see LJ [440]-[465]). They submit that there is a tension between that finding and the conclusion that the representations were made by reference to the pleaded phrase “a modified form of the C6827 valve”, which was borrowed from the contract. We disagree. As AVI and Cimberio submit, the primary judge was correct to find at LJ [482] that the ACL claim was, in context, directed at the C9746 Design Drawing, as the reference to the modified form of the C6827 valve was understood colloquially as being a reference to the C9746 valve.

168    Mr Comino and Strongcast next submit that, because AVI and Cimberio pleaded that all three representations were future representations, the primary judge’s finding that the second and third representations were not representations as to future matters meant that those two representations were not made as pleaded, and the conclusion that they were conveyed was therefore erroneous. This submission is also without merit. As is demonstrated from the Amended Statement of Claim at [56]–[63] and AVI/Cimberio’s closing written submissions at [102], AVI’s case was advanced on alternative bases, one of which was that the representations were to “future matters”. In particular, it is plain from [61] of the Amended Statement of Claim that the three alleged representations were pleaded as either representations, or (alternatively) representations as to a future matter.

169    Mr Comino and Strongcast next submit that the primary judge’s reasoning at LJ [483] and [484] conflates the interests of AVI and Cimberio. They submit that, in the course of coming to a conclusion that there was a reasonable expectation of disclosure, the primary judge referred back to and relied upon his reasons for his finding of joint entitlement to the Designs (LJ [150]–[172]), his reasons for his finding that the C9746 Design Drawing had the necessary quality of confidence (LJ [398]–[399]), and his reasons for his finding that the C9746 Design Drawing was provided for the limited purpose of signing off on the drawing ([402]–[405]). They submit that none of these findings are relevant or determinative. They say that the finding of joint entitlement to the Designs pertain to Mr Comino and Cimberio, not AVI, and it is unclear why this joint entitlement would mean that AVI would reasonably expect to be told the matters that are the subject of the alleged representations. Mr Comino and Strongcast also submit that there was no engagement by the primary judge with why AVI had a reasonable expectation that the appellants would disclose to them something in the nature of a contemplation about a statutory right that they were never entitled to obtain. Finally, they submit that the finding of the confidential nature of the Drawings pertain to the relationship between Mr Comino/ Strongcast and Cimberio, not AVI, and for that reason, do not provide a reason to explain why AVI would have a reasonable expectation of disclosure of the facts and matters that are the subject of the representations.

170    By this submission, we did not understand Mr Comino and Strongcast to suggest that AVI did not have standing to bring the proceeding for contravention of s 18 of the ACL. If such a submission was intended, then it cannot be accepted: see Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591; [2000] HCA 11. Rather, we understood the submission to be directed at undermining the finding that AVI had the legitimate and reasonable expectation as found in LJ [483] on the basis that such matters were not relevant to AVI’s substantive rights. However, the findings that Cimberio had a joint entitlement to the Designs and that the C9746 Design Drawing was provided for the limited purpose of signing off on the drawing were relevant to AVI’s substantive rights. Such relevance arises from the fact that Comino’s contraventions of the ACL enabled AVI to be sued for infringement, and further affected AVI’s rights to distribute valves “substantially similar” to the Designs such that AVI would have an expectation of being informed if it was about to exposed to such consequences. Further, that the C9746 Design Drawing was found to have the necessary quality of confidence was a further reason to find that AVI expected to be informed of the matters referred to in (at least) the second and third representations.

171    Mr Comino and Strongcast submit that AVI’s witness (Mr Kilner) only became aware of what a registered design was in the context of New South Wales Supreme Court proceedings, and complain that this evidence was not considered by the primary judge. Based on this evidence, they submit that AVI could not have had a reasonable expectation to be notified of contemplations in relation to a statutory right of which AVI had no knowledge. However, at best for Mr Comino and Strongcast, Mr Kilner’s evidence only applies to the second and third representation, as the first representation was not pleaded with reference to an application for a registered design.

172    In any event, the lack of awareness of registered design rights does not mean that there could be no expectation by AVI of the kind alleged; rather, in substance, the expectation which arose was that Mr Comino and Strongcast would not apply for a statutory monopoly which would expose AVI to suit. Any lack of awareness by AVI of the precise legal basis of that monopoly does not assist Mr Comino and Strongcast.

173    Finally, Mr Comino and Strongcast submit that AVI’s own conduct does not evince an intention to provide the C9746 Design Drawing for the purpose of signing off the drawing prior to the manufacture of the C9746 Valve, in light of its engagement with Airaga. AVI and Cimberio submit that AVI still had the legitimate expectation as found as they would have needed to have known if their discussions with Airaga would be affected by a statutory monopoly. However, that submission does not address the complaint. We consider that there is force in the submission that AVI could not have had any legitimate expectation that Mr Comino and Strongcast would only use the C9746 Design Drawing for the purpose of signing off the drawing prior to the manufacture of the C9746 Valve in light of the email exchanges which took place between 2 and 15 February 2018 (which appear in LJ [268]–[271]). That is because such exchanges related to a joint approach to a new manufacturer of the C9746 Valve (which would require the drawing being used for a purpose other than signing off), which exchanges occurred prior to any steps being taken by Mr Comino to register the modified C9746 Design Drawing: LJ [273].

174    For these reasons, we would uphold ground 9 in relation to the first representation only on the basis that we do not accept that, in the circumstances, AVI had a legitimate and reasonable expectation that Mr Comino and Strongcast would only use the C9746 Design Drawing for the purpose of signing off the drawing prior to the manufacture of the C9746 Valve. However, we note that this conclusion has no practical effect on the orders made by the primary judge or on the outcome of the appeal.

175    We would otherwise reject ground 9 insofar as it relates to the second and third representations.

Finding concerning damage

The primary judge’s reasons and order

176    The reasons of the primary judge appear at LJ [488] – [492]:

The applicants seek damages and/or compensation under s 236 and/or s 237 of the ACL. In relation to loss suffered, the applicants submit that they are entitled to an award of damages or compensation for any loss that they have suffered as a result of Mr Comino having registered the Designs. By way of example, they point to the rejection by Queensland Urban Utilities (QUU) on two occasions of a request for approval of an assembled meter box in mid-2020 in which QUU cited infringement allegations and current litigation.

The applicants also seek an order pursuant to s 232(6)(b) of the ACL that the Designs be transferred to Mr Cimberio as Mr Comino was only in a position to file the Designs by reason of making the representations to AVI and therefore, obtaining the C9746 Design Drawing. The applicants submit that an order of this nature is suitable in order to avoid a scenario where the Court finds infringement of the 810 Design but does not order ownership transferred to Mr Cimberio. The applicants submit that in this context, AVI will suffer further loss at the point that the respondents obtain an inquiry into damages for design infringement. They submit, however, at that point, the Court will also need to inquire into AVI’s damages under the ACL. They submit that this would be a moot exercise, as the loss that AVI will suffer as a result of the misleading conduct is the same amount as AVI would be ordered to pay in damages for design infringement.

The respondents submit that there is no nexus between the conduct alleged by AVI and the relief sought, and there is no evidence of any ongoing threatened or intended conduct. Moreover, they submit that there is no principled foundation for the order sought by AVI that Mr Comino transfer all rights, title and interest in the Designs to Cimberio because Cimberio is not a party to the alleged contravention of s 18 of the ACL and does not seek that relief. Further they submit the alleged loss arising from QUU’s rejections for approval of the meter box does not establish any damage because QUU referred to “concerns raised internally” regarding patent infringement, not design infringement.

…

Given my findings at [430]-[439] above that Mr Comino holds his interests in the Designs on a constructive trust for Cimberio and those interests are to be transferred to Cimberio by reason of the respondents’ breach of confidence, the relief sought by the applicants under s 232(6)(b) of the ACL does not arise.

I am otherwise satisfied that the identification and quantification of any loss that AVI may have suffered for which an award of damages or compensation under s 236 and/or s 237 of the ACL might be made, should be determined at the foreshadowed subsequent hearing on damages. I am not in a position on the evidence before me to conclude that AVI is not entitled to any damages or compensation on the basis that there is not a sufficient nexus between the conduct alleged by AVI and the relief sought.

(Emphasis in original.)

177    By order 8 of the Order dated 27 August 2025, the primary judge ordered that there be an inquiry as to the quantum of any award of damages and/or compensation pursuant to ss 236 and 237 of the ACL in respect of any loss that AVI suffered by reason of the contraventions of the ACL summarised in the declaration in those orders (emphasis added). Thus, the primary judge left it open to the inquiry to determine whether there had been any loss suffered and if so, the quantum of that loss.

Consideration

178    Mr Comino and Strongcast submit that the conclusion of the primary judge at LJ [492] is inconsistent with principle, in that an award of damages under s 236 of the ACL requires a causal connection between the misleading and deceptive conduct and the loss or damage claimed, and an award under s 237 of the ACL requires a demonstration of loss or likelihood of loss as well as the requisite causal connection. They also submit that the primary judge deviated from the Orders of Jagot J made on 5 July 2022 bifurcating the proceedings, and there was significant prejudice to Mr Comino and Strongcast in doing so. They submit that this is contrary to the case management objectives of fairness and efficiency, particularly when Mr Comino and Strongcast raised the issue of lack of proof of damage before the primary judge.

179    However, in our view, the course which the primary judge took was one which was open to him in circumstances where he had the ongoing management of the trial. Once the primary judge determined that he was not in a position to conclude that AVI had no entitlement to damages (LJ [492]), he was entitled to defer the issue of whether any loss had been suffered to the inquiry referred to in order 8 of the Order dated 27 August 2025, rather than determining the issue as part of the liability judgment. In a case of this kind, with multiple causes of action and such a large number of issues to be decided, such a course was open to the primary judge. In some cases, it may be more efficient and practical to consider the issue of whether any loss has been suffered together with the issue of the quantum of any loss.

180    For these reasons, ground 10 must fail.

Notice of Contention Ground 4

181    By ground 4 of the draft Amended Notice of Contention, AVI and Cimberio contend that, insofar as ground 10 of the appeal is upheld, we should find that the damage incurred by AVI flowing from the contraventions of the ACL includes certain identified costs and losses.

182    In light of our conclusion that ground 10 must fail, the premise upon which ground 4 of the draft Amended Notice of Contention is advanced does not arise, and it is therefore unnecessary to consider it.

APPEAL (UNJUSTIFIED THREATS)

183    At LJ [7(d)] and [240], the primary judge referred to the Foundry IP letter. The letter claimed that the AVI Ball Valves would appear to be covered by the 005 Design and were visually similar to the 005 Design and it included a demand for an undertaking from AVI, its servants and assigns that they not make or offer to make, import, sell, hire or otherwise dispose of a ball valve which embodies the 005 Design. At LJ [251], the primary judge stated that he was not satisfied that at the time that the Foundry IP letter was sent that it contained threats that were “unjustified” for the purposes of s 77(1)(a) of the Designs Act.

184    The grounds of appeal advanced by AVI and Cimberio are as follows:

1.    The primary judge erred in failing to find that the Foundry IP letter dated 28 February 2020 (Letter) constituted an unjustified threat under s 77 of the Designs Act 2003 (Cth) (e.g., at J [7]; [250]-[251]; [608]).

…

2.    Having made the error in ground 1, the primary judge erred by finding that the “issue of relief does not relevantly arise” in respect of the Appellants’ claim for unjustified threats (e.g., at J [254]).

(Emphasis omitted.)

The primary judge’s reasons

185    After referring to the submissions of the parties and the relevant legislative provisions, the primary judge found as follows at LJ [249] – [251]:

I am satisfied that the Foundry IP letter constituted a threat of infringement proceedings, rather than the mere notification of the existence of a registered design under s 80 of the Designs Act. The letter included a request for specific undertakings by specified dates, including for the destruction of unsold valves, and an express reservation of the right to commence proceedings for design infringement and identified remedies that the Court could order for design infringement, including additional damages.

I am also satisfied that the respondents cannot rely on a defence pursuant to s 78 of the Design Act [sic]. The Foundry IP letter alleged that the conduct of the applicants constituted an infringement of the 005 Design but the infringement claims with respect to the 005 Design have been dismissed by consent.

Nevertheless, I am not satisfied that at the time that the Foundry IP letter was sent that it contained threats that were “unjustified” for the purposes of s 77(1)(a) of the Designs Act. A subsequent decision not to proceed with design infringement proceedings does not carry with it any necessary implication that threats made in an earlier letter to bring infringement proceedings in respect of a design were unjustified.

186    As to relief, the primary judge stated at LJ [254] that:

Given my conclusion that the Foundry IP letter did not contain threats that were unjustified for the purposes of s 77(1)(a) of the Designs Act, the issue of relief does not relevantly arise.

Consideration

187    Section 77 of the Designs Act provides:

(1)     If a person is threatened by another person (the respondent) with infringement proceedings, or other similar proceedings, in respect of a design, an aggrieved person (the applicant) may apply to a prescribed court, or to another court that has jurisdiction to hear and determine the application, for:

 (a)     a declaration that the threats are unjustified; and

 (b)     an injunction against the continuation of the threats; and

 (c)    the recovery of damages sustained by the applicant as a result of the threats.

(1A)     The court may include an additional amount in an assessment of damages sustained by the applicant as a result of the unjustified threats, if the court considers it appropriate to do so having regard to:

 (a)     the flagrancy of the threats; and

 (b)     the need to deter similar threats; and

 (c)     the conduct of the respondent that occurred after the respondent made the threats; and

(d)     any benefit shown to have accrued to the respondent because of the threats; and

 (e)     all other relevant matters.

(Emphasis original.)

188    Section 78 of the Designs Act provides:

A court may grant the relief sought by an applicant under section 77, unless the respondent satisfies the court that:

(a)     the design concerned is registered, has been examined and a certificate of examination has been issued; and

(b)     the acts about which the threats were made infringe, or would infringe, the registered design.

189    Section 80 of the Designs Act provides that the “mere notification of the existence of a registered design does not constitute a threat of infringement proceedings for the purposes of s 77.”

190    The foundation of the appeal by AVI and Cimberio is that, on the proper construction of these provisions, a threat is prima facie “unjustified” unless the threat-maker satisfies a court that the acts complained of do infringe, or would infringe, a registered design. They submit that there is no way to prove that a threat is “justified” other than to rely on the statutory defence in s 78, and a threat-maker will be liable under s 77 if they bring infringement proceedings which fail.

191    In response, Mr Comino and Strongcast submit that deciding whether a threat is “unjustified” is an evaluative exercise, considering all the circumstances, and that the threat-maker does not have to stand behind their threat to the point of proving infringement to escape liability. They submit that the purpose of the unjustified threats provisions is to prevent or address the stifling effect on competition that threats can have, and that this purpose does not require the extreme position that a conclusion of no infringement means that a prior threat was unjustified.

192    It was common ground on the appeal that there is a residual discretion to withhold relief from unjustified threats, but, on the case advanced by AVI and Cimberio (which was not accepted by Mr Comino and Strongcast), the factors informing that discretion do not include whether the threat was justified at the time that it was made based on (for example) the strength of the case for infringement at that time.

193    As a starting point, we observe that the plain and ordinary meaning of the words of s 77 require that for it to apply, there must be (a) a threat by one person to another of infringement proceedings, or other similar proceedings and (b) the threatened proceedings are in respect of a design.

194    If those two elements are met, an aggrieved person may apply to a prescribed court, or to another court that has jurisdiction to hear and determine the application and grant one or more of the forms of relief, namely a declaration, an injunction and damages.

195    No reference is made in the legislation to any form of evaluative exercise, or the factors which inform any such evaluative exercise.

196    Further, on the assumption that the person who made the threat does not satisfy the court of the matters in s 78, the legislation does not stipulate that the issue of whether the threat was justified at the time that it was made be revisited by the court when deciding whether to grant relief. Again, no reference is made to any form of evaluative exercise in the legislation, or the factors which inform that evaluation.

197    The Explanatory Memorandum to the Designs Bill 2002 (Cth) states at [122] that s 78 “provides that a court may grant the relief sought by the threatened person, unless the person making the threats satisfies the court that the design is validly registered (i.e. a certificate of examination has been issued) and that the threats were aimed at acts that infringe, or would infringe, the registered design. This is intended to discourage any person making threats unless successful infringement proceedings could be brought against those acts.”

198    To the extent that relevant authority exists in relation to the proper construction of the Designs Act, we note that the construction advanced by AVI and Cimberio is consistent with that taken in GM Global Technology Operations LLC v SSS Auto Parts Pty Ltd (2019) 139 IPR 199; [2019] FCA 97. At [553] of that decision, Burley J stated the following (albeit that this was in the context of addressing a different construction issue):

[I]t is apparent that the policy and purpose of Pt 3 of Ch 6 of the Designs Act is to ensure that a threat of infringement is not made absent the ability to justify it on the basis that a right that has been infringed. This affords protection to trade to ensure that caution is exercised in making threats, but also ensures that those engaging in unlawful conduct may be the subject of appropriate warning where the registered design rights can be vindicated. The provision is accordingly directed to substantive rights. For example, if a trader has registered but not had the design certified, and threatens infringement then it will be exposed. However, if the substantive rights are subsequently vindicated by the certification of the design, then the owner may be protected. In my view it is consistent with this policy for the Designs Act to enable a registered owner to defend what is prima facie an unjustified threat, and avoid the grant of relief for that threat, if it establishes that the previously uncertified design was certified and infringed.

(Emphasis added.)

199    The approach taken in cases which concern equivalent (but not necessarily identical) legislation concerning other intellectual property rights has not been consistent. For this reason, they only provide limited assistance in resolving the issue of the construction of the Designs Act.

200    For example, in relation to s 128 of the Patents Act 1990 (Cth), the Full Court in Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd (2023) 178 IPR 20; [2023] FCAFC 202 (Nicholas, Burley and Rofe JJ) at [79] appeared to endorse the proposition that:

Once a threat has been established, it is prima facie unjustifiable unless the person making the threat establishes that it was justified. The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent: s 129.

201    In CQMS Pty Ltd v Bradken Resources Pty Ltd (2016) 120 IPR 44; [2016] FCA 847, Dowsett J (at [177]) likewise emphasised that under s 128 of the Patents Act:

… the statutory entitlement to relief will only be lost if infringement is demonstrated. The current legislation is not designed merely to relieve the person threatened of the threat of proceedings. It provides a remedy against the consequences of unjustified threats, which remedy will be available unless infringement is proven.

202    However, in Damorgold Pty Ltd v Blindware Pty Ltd (2017) 130 IPR 1; [2017] FCA 1552 (Middleton J) (Damorgold) (which concerned the Patents Act), his Honour stated at [422] that:

Just because proceedings for infringement are not sustained does not necessarily mean the threats are unjustified in terms of s 128. I do not regard the threats as objectively groundless or unjustifiable in light of the matters raised by Damorgold, which I accept. Section 128 is not aimed at deterring infringement proceedings, and the conduct of Damorgold and the sending of the correspondence was not the type of conduct that s 128 was aimed at covering in its operation.

203    In MSA 4x4 Accessories Pty Ltd v Clearview Towing Mirrors Pty Ltd (2024) 185 IPR 216; [2024] FCA 24 (Downes J) (which also concerned the Patents Act), the decision of Damorgold was cited and applied at [349]–[350], but it was determined that the relevant threat was unjustified in any event.

204    In Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd (2016) 120 IPR 478; [2016] FCA 820 (which concerned s 129 of the Trade Marks Act 1995 (Cth)), Moshinsky J stated at [233] that it is insufficient for the purposes of s 129 “for the defendant to show, for example, that a bona fide belief that the acts of the threatened person constituted infringement; the defendant must establish infringement”.

205    Likewise, in Koninklijke Douwe Egberts BV v Cantarella Bros Pty Ltd (2024) 185 IPR 20; [2024] FCA 1277 (which also concerned the Trade Marks Act), Wheelahan J stated at [556] that the statutory inquiry under s 129 “does not call for a roving inquiry into whether the person who made the threats acted reasonably”, but rather whether s 129 is engaged and the express defence established.

206    By contrast, in Telstra Corp Ltd v Phone Directories Co Pty Ltd (2014) 107 IPR 333; [2014] FCA 568 (Murphy J) (which concerned the Copyright Act), his Honour concluded (at [675]) that “the question of whether a threat is justifiable is to be answered by reference to whether the threat had a proper legal basis”. On that footing, his Honour decided that a threat to commence infringement proceedings was not unjustifiable because the maker of the threat had “good legal grounds for asserting the rights” which assertion was based “on the law as it stood” at the time of the threat: [681].

207    It is not necessary to decide which of these approaches is the preferable one by reference to the legislation being considered in those cases, and the facts which were found, and submissions made, in each case. Rather, we prefer the construction posited by AVI and Cimberio in circumstances where it accords with the ordinary meaning of the words used in the relevant legislative provisions of the Designs Act, and with the Explanatory Memorandum. In circumstances where the legislation does not refer to any additional matters which provide support for the alternative construction advanced by Mr Comino and Strongcast, and in the absence of any direct authority which supports their interpretation of the Designs Act, we do not accept their construction.

208    For these reasons, we consider that the correct construction of ss 77 and 78 of the Designs Act is as follows:

(a)    if an applicant establishes that they have received a threat of infringement proceedings, or other similar proceedings and the threatened proceedings are in respect of a design, it is prima facie unjustifiable;

(b)    the person who made the threat can avoid the grant of relief to the applicant for that threat if it satisfies the court of the matters in s 78, in particular, that the acts about which the threats were made infringe, or would infringe, the registered design;

(c)    if the court is not so satisfied of the matters in s 78, the court retains a discretion whether to grant relief under s 77. For example, the court may decide not to grant an injunction if it lacks utility. However, when exercising the discretion whether to grant the relief, the court does not engage in an assessment of whether the threat was “unjustified” by reference to, for example, whether the threat was objectively arguable.

209    In light of the findings at LJ [249] and [250], it follows that the primary judge erred in failing to find that the Foundry IP letter constituted an unjustified threat under s 77 of the Designs Act. In this regard, we observe that the arguments advanced on appeal were more refined and developed than those which were advanced before the primary judge.

210    It follows from this conclusion that the primary judge further erred in finding that the issue of relief does not arise.

211    As to the issue of relief, AVI and Cimberio ask the Full Court to exercise the discretion to grant relief, being declaratory relief, an inquiry into damages and additional damages. Mr Comino and Strongcast oppose this and seek leave to file a Notice of Contention which was Annexure A to their outline of submissions. We did not understand that leave was opposed and so will grant that leave.

212    Mr Comino and Strongcast advance three reasons why the relief sought should not be granted.

213    First, they submit that AVI and Cimberio abandoned any claim for declaratory relief as this issue was not included in the statement of agreed issues: see LJ [239].

214    However, the omission of an express reference to the declaratory relief in the statement of agreed issues does not amount to an abandonment of that relief. As AVI and Cimberio submit, to conclude otherwise would require parties to engage in the unhelpful exercise of reproducing every paragraph of their originating processes and any cross-claims. Further, when read as a whole, the statement of agreed issues was not intended to repeat each of the paragraphs of relief sought. That is confirmed by the fact that no specific issues were identified in relation to declaratory relief for a number of causes of action, including design revocation, breach of confidence, copyright infringement, breach of contract and breach of the ACL, despite those declarations being made (at least insofar as those causes of action were successful).

215    It is therefore sufficient that the originating application sought the declaratory relief, being a position reinforced by AVI’s and Cimberio’s closing submissions at trial.

216    For these reasons, we reject Mr Comino and Strongcast’s first submission.

217    Secondly, they submit that, if we conclude that no damage can be established in the circumstances, then there would be no utility in a declaration being made.

218    We do not agree. Given our decision reached below that the issue of damages should be remitted to the primary judge for determination, the premise that declaratory relief would lack utility as damage has not been established falls away. Further and in any event, it does not appear to us that damage must be established for a declaration to have utility. Section 77 confers a wide discretionary power to make declarations, and the requisite utility may, for example, be found in the expression of the Court’s disapproval of certain conduct. The conduct of Mr Comino and Strongcast in this case, when viewed as a whole (and encompassing the sending of the Foundry IP letter) warrants an expression of such disapproval.

219    Thirdly, they submit that the discretion to grant declaratory relief should not be exercised because doing so would be inconsistent with the purpose of the legislative regime, which is directed to addressing any stifling effect of a threat by preventing or discouraging abusive conduct or compensating loss flowing from the threat. In particular, Mr Comino and Strongcast submit that Mr Kilner’s evidence shows that there was no such stifling effect or loss because AVI never intended to sell a valve embodying the 005 Design in Australia and the Foundry IP letter did not change AVI’s or Cimberio’s behaviour in any way.

220    Again, the issue of whether there has been loss as a consequence of the Foundry IP letter is a matter which should be remitted for determination by the primary judge. Even if loss is not established, there is utility in the grant of a declaration in this case for the reasons explained above.

221    For these reasons, the declaratory relief sought will be granted.

222    As to the question of damages, we consider it to be appropriate to remit to the primary judge the question of whether damages and additional damages should be awarded. Although Mr Comino and Strongcast submit that no damage was suffered by AVI and Cimberio by reason of the Foundry IP letter such that it would be futile to grant relief by way of damages, it remains open to the primary judge to grant nominal damages under s 77(1)(c) and then additional damages under s 77(1A) should his Honour consider it appropriate to do so.

APPLICATION FOR LEAVE TO APPEAL (COSTS JUDGMENT)

223    Mr Comino brings an application for leave to appeal from the order of the primary judge following the costs judgment. Before the primary judge, Mr Comino accepted that a costs order should be made in favour of Watson Webb, as the appellant in the Designs Office appeal, but contended that there should not be a third party costs order in favour of AVI: CJ [8].

224    Consistently with the approach taken by the Full Court in Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd and Ors (Costs) (2024) 306 FCR 13; [2024] FCAFC 155 (Perram, Downes and O’Sullivan JJ) (Vehicle Monitoring Systems) at [1]–[10], we observe that the relevant factual findings by the primary judge are stated at CJ [13]–[33], which findings are not sought to be challenged by Mr Comino. We do not propose to set out those facts in these reasons.

225    By grounds 1(a) and (c) of his proposed Notice of Appeal, Mr Comino contends that the primary judge erred in making an order that Mr Comino pay the costs of AVI because the liability of AVI to pay Watson Webb for legal services did not constitute “costs” of AVI which were incurred “in” proceedings, and it therefore fell outside the power to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth). He submits that this conclusion follows from the proper construction and application of the statutory language itself, rather than from any implied limitation on the Court’s broad discretion as to costs.

226    In support of his contention, Mr Comino relies upon Life Therapeutics Ltd v Bell IXL Investments Ltd (No 2) (2008) 170 FCR 595; [2008] FCAFC 158 (Ryan, Goldberg and Gordon JJ) (Life Therapeutics), which was agreed between the parties to be the only Full Court decision to have considered the extent to which s 43 permits costs orders in favour of non-parties. In that case, the Full Court concluded at [24] that the Court has jurisdiction under s 43 to award costs in favour of a non-party where the non-party has been brought before the Court for the purposes of seeking an order for costs against that non-party. Mr Comino argues that Life Therapeutics, and the cases there cited, emphasise the need to examine carefully the wording of s 43 when identifying the outer limits of the power it confers. He submits that, properly understood, those authorities proceed on the basis that there must first be “costs”, and that those costs must have been incurred “in” proceedings before the Court, before the discretionary power to award costs is enlivened.

227    On that footing, Mr Comino submits that the power was not enlivened on the facts because AVI’s liability to pay Watson Webb’s fees did not constitute “costs”, nor were they incurred “in” the proceedings, since (a) Watson Webb charged fees; it did not incur costs; and (b) AVI paid those fees; it did not become involved “in” the proceedings itself as an applicant, intervener or otherwise. In support of this, he contends that if the payment of legal fees in respect of legal work performed in proceedings was sufficient to enliven s 43, then any person who paid the legal expenses of a party to the proceeding would fall within its scope, regardless of whether that person was a litigation funder or merely standing behind the payee.

228    However, as AVI submits and in light of the facts referred to by the primary judge, it is incorrect to say that AVI was not, in substance, brought before the Court and involved “in” the proceedings within the meaning of s 43. As stated by the primary judge at CJ [58], with which we respectfully agree, the requirement that costs be incurred in the litigation “does not speak to or otherwise seek to confine costs that have actually been incurred in the litigation to costs that are payable by a party to the litigation.”

229    By ground 1(b) of his proposed Notice of Appeal, Mr Comino contends that the primary judge erred in finding that the circumstances of the present case fell “generally” within the “fourth established category of cases” in which a third party costs order had been made in favour of a non-party for two reasons: CJ [55]. First, he submits that the so-called nominal party cases relied upon by the primary judge did not concern whether a costs order could be made in favour of a non-party at all, but rather addressed the distinct question of the scope of recovery under a costs order made in favour of a party. Secondly, he submits that those cases are correctly characterised as limited exceptions to the general indemnity principle, under which a party with a costs order in its favour can only recover the costs that have been incurred.

230    However, as AVI submits, the categories of cases in which a third party costs order can be made are not closed. Therefore, whether or not the circumstances of AVI’s case fell “generally” within the alleged “fourth established category of cases” is a distraction as s 43(1) is designed to cater to any number of unusual circumstances, such as those which were before the primary judge. Contrary to the thrust of Mr Comino’s submissions, the statutory language should not be read down by attempting to confine the circumstances in which costs can be awarded to “established categories of cases”. For this reason, even if the primary judge erred in the limited manner contended by Mr Comino, which we do not accept, it does not follow that the costs order made by the primary judge ought not to have been made as this was only one of the factors which the primary judge took into account.

231    By grounds 1(d), (e) and (f) of his proposed Notice of Appeal, Mr Comino contends that, although the primary judge correctly observed that costs orders in favour of non-parties are generally only made in exceptional circumstances, they should be treated with considerable caution, and a non-party must establish a justifiable expectation of being entitled to its costs. He submits that the primary judge erred:

(a)    by failing to take into account that AVI did not seek to be joined to or appear in Watson Webb’s appeal, notwithstanding that Watson Webb (acting for AVI) was on notice that it was the party to the revocation application and that Watson Webb was the party named in the appeal;

(b)    by failing to take into account the lack of any evidence from AVI as to whether AVI had any expectation to recover its costs, or the reasonableness of any such expectation. He submits that, in the absence of such evidence, the primary judge should not have accepted any assertion as to whether or not there was any expectation on the part of AVI as to it being entitled to its costs;

(c)    in finding that “in no relevant sense did AVI seek to protect itself from any adverse costs consequences” was relevant to the issue of whether AVI was entitled to an order for costs in its favour, and submits that this was not relevant to the issue of any (unproven) expectation on the part of AVI that its costs would be met.

232    The primary judge did not expressly address that AVI did not seek to be joined to the appeal, or the absence of evidence from AVI as to whether it had any expectation of recovering, being matters which were the subject of submissions by Mr Comino. However, the primary judge was not required to give extensive reasons in relation to a costs award. It suffices that his Honour was aware that Watson Webb was acting for AVI, as evidenced by his observation at CJ [65] that Watson Webb had made clear on numerous occasions that it was pursuing the Designs Office proceeding and the Designs Office appeal for the benefit of, or on behalf of, AVI. Further, his Honour formed the conclusion at CJ [66], based on the facts of the case summarised at CJ [14]–[32] and AVI’s undertaking to meet any adverse costs order, that those matters were sufficient to establish that AVI had a direct and substantial interest in the outcome of the Designs Office proceeding and appeal, giving rise to a justifiable expectation that it would obtain the benefit of a costs order if the appeal were successful.

233    Additionally, the primary judge did not err in treating AVI’s failure to seek to protect itself from adverse costs exposure as relevant. As the primary judge correctly noted at CJ [42(e)], regard must be had to the particular circumstances of each case, the requirements of reason and justice, and the nature of the relationship between the non-party and the litigation.

234    For these reasons, we refuse leave to appeal as we are not persuaded that the costs judgment is attended by sufficient doubt to warrant reconsideration by the Full Court. Further, and for the same reasons, even if error by the primary judge had been demonstrated as alleged by Mr Comino, we would not have made a different costs order to that made by the primary judge.

CONCLUSION AND DISPOSITION

235    In the main appeal and the unjustified threats appeal, we will direct the parties to provide orders which reflect these reasons and brief submissions relating to the issue of costs in the event that agreement cannot be reached.

236    The application for leave to appeal from the orders made following the costs judgment will be refused. We will hear from the parties as to the form of costs order which should be made.

Associate:

Dated: 21 May 2026