FEDERAL COURT OF AUSTRALIA

Lumen Australia Pty Ltd v Frontline Australasia Pty Ltd [2018] FCA 1807

ORDERS

THE COURT ORDERS THAT:

1.    Within 14 days the parties provide any agreed proposed minute of orders to give effect to the Court’s reasons.

2.    If the parties cannot agree, within 21 days each party provide its proposed minute of orders to give effect to these reasons, together with a short written submission in support of the proposed orders.

3.    Any outstanding issues of relief, and the issue of costs, be listed for hearing on a date to be fixed.

4.    There be liberty to apply.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

INTRODUCTION

1    The first applicant (Lumen) is a manufacturer and supplier of electronic automotive components including trailer wiring harnesses (wiring harnesses) for inclusion in towbar kits. In general terms, wiring harnesses contain the wiring and electronics that allow the electrical components on a trailer (such as brake lights, indicators, reversing lights and tail lights) to be connected to a vehicle and operated when the trailer is being towed by the vehicle.

2    The second applicant (Lumen International) is the owner of Australian trade mark no. 958232 for the name LUMEN (the Lumen trade mark), which was registered with effect from 13 June 2003 in respect of goods for the automotive ‘after market’, including parts and accessories for vehicles and trailers.

3    For some years before December 2014, Lumen supplied wiring harnesses (Lumen wiring harnesses) to the first respondent (Frontline) for inclusion in towbar kits it supplied to automotive companies (relevantly, Mitsubishi Motors Australia Ltd (Mitsubishi) and Mazda). Suppliers that supply directly to automotive companies are referred to as “tier 1” suppliers. Suppliers that supply components to a tier 1 supplier are referred to as “tier 2” suppliers. In relation to the products that are the subject of this proceeding, Frontline was a tier 1 supplier and Lumen was a tier 2 supplier (although in other contexts Lumen supplies components directly to automotive companies and is thus a tier 1 supplier). The towbar kits were for installation by automotive dealers.

4    During 2013 and 2014, Frontline took steps to acquire wiring harnesses for its towbar kits from the second and third respondents (together, Vision) in substitution for the Lumen wiring harnesses. The second and third respondents trade together as “Vision Automotive Technology”. To facilitate the reproduction of the Lumen wiring harnesses, Frontline, without the knowledge or consent of Lumen, provided Vision with: samples of the Lumen wiring harnesses (including the electronic control unit (ECU)); engineering drawings for the Lumen wiring harnesses (the Engineering Drawings) (these drawings covered the parts of the wiring harness other than the internal aspects of the ECU); and the installation instructions for the towbar kits including the Lumen wiring harnesses (the Installation Instructions). Vision used the samples and the Engineering Drawings to produce products that were almost identical to the Lumen wiring harnesses. From December 2014 to February 2016, Vision supplied wiring harnesses (Vision wiring harnesses) to Frontline, and Frontline included the Vision wiring harnesses in the towbar kits it supplied to Mitsubishi and Mazda. Frontline did not disclose to Mitsubishi or Mazda that it had substituted the Vision wiring harnesses for the Lumen wiring harnesses. Moreover, Frontline did not seek the approval of Mitsubishi or Mazda to substitute the Vision wiring harnesses, despite there being a requirement that all components be approved pursuant to a Production Part Approval Process (PPAP).

5    Vision produced direct copies of the Installation Instructions and supplied these with the Vision wiring harnesses. The Installation Instructions for some of the models of towbar kits included a depiction of a socket bearing the Lumen trade mark. As Vision produced direct copies of the Installation Instructions, the depictions of the socket with the Lumen trade mark appeared in installation instructions it supplied.

6    In late 2015, Lumen’s business development manager noticed that Lumen’s sales to Frontline of wiring harnesses for Mitsubishi vehicles had experienced a drop-off from forecast sales. In January and February 2016, a staff member of Lumen visited three Mitsubishi dealers and identified wiring harnesses that had not been supplied by Lumen and brought this to the attention of those dealers. Following communication between Lumen and Mitsubishi, on 15 February 2016 Lumen’s solicitors sent a letter of demand to Frontline.

7    On 17 February 2016, Mitsubishi issued an alert to all Mitsubishi dealers throughout Australia, stating that it had been brought to Mitsubishi’s attention that non-approved wiring harnesses may have been used in certain towbar kits, and that stock of the affected towbar kits had been frozen while the issue was being investigated.

8    On 23 March 2016, the applicants commenced this proceeding against Frontline (but not, at this stage, against Vision). It was alleged in the statement of claim that Frontline had engaged in passing off, contravened the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), infringed the copyright of Lumen in various copyright works, misused confidential information of Lumen, breached contractual arrangements between Lumen and Frontline, and infringed the Lumen trade mark.

9    On 14 April 2016, the Court ordered Frontline to provide discovery of two categories of documents (with capitalised terms having the meaning given in the statement of claim):

(a)    correspondence between Frontline and the manufacturer of the Non-Lumen Wiring Harness relating to the design, development and manufacture of the Non-Lumen Wiring Harness; and

(b)    correspondence between Frontline and the manufacturer of the Non-Lumen Wiring Harness attaching or containing Technical Information relating to the Lumen Wiring Harness, including but not limited to technical specifications, drawings and physical product samples.

10    Subsequently, on 23 June 2016, John Kaias, a director and co-owner of Frontline, swore an affidavit of documents listing only three documents. The three documents were inconsequential and did not reveal that Frontline had provided Vision with samples of Lumen’s wiring harnesses, the Engineering Drawings and the Installation Instructions. It is now apparent that Frontline failed to discover a large number of documents falling in the above categories that were in its possession.

11    Subsequently, the applicants joined Vision to the proceeding. Vision later made discovery of a large number of documents passing between Frontline and Vision that fell within the categories of documents set out in [9] above.

12    The applicants’ claims against the respondents were amended at various stages before trial. As at the trial of the proceeding, the applicants’ claims were, in summary, as follows:

(a)    copyright infringement (against both Frontline and Vision) in relation to three different works or categories of works:

(i)    the arrangement of reference designators (text and numerals) on the circuit board forming part of Lumen’s ECU (the Circuit Markings);

(ii)    the Engineering Drawings; and

(iii)    the Installation Instructions;

(b)    passing off, and claims based on contravention of ss 18 and 29 of the Australian Consumer Law (against Frontline only);

(c)    breach of confidence (against Frontline only);

(d)    breach of contract (against Frontline only);

(e)    trade mark infringement (against Frontline only); and

(f)    infringement of rights under the Circuit Layouts Act 1989 (Cth) (against both Frontline and Vision).

13    Lumen seeks damages rather than an account of profits.

14    Vision has brought a cross-claim against Frontline, alleging that Frontline engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law.

15    Frontline has brought a cross-claim against Vision, seeking contribution towards any damages that Frontline is ordered to pay the applicants, pursuant to s 23B(1) of the Wrongs Act 1958 (Vic).

16    The issues in dispute were narrowed in the parties’ opening submissions and then further in the parties’ closing submissions. In particular, in its closing submissions, Frontline conceded many of the claims against it. Among other things:

(a)    Frontline admits that it infringed Lumen’s copyright in respect of the Circuit Markings, the Engineering Drawings and the Installation Instructions;

(b)    Frontline admits that it authorised the reproduction of the Circuit Markings, the Engineering Drawings and the Installation Instructions;

(c)    Frontline admits that its conduct constituted passing off, misleading or deceptive conduct, breach of confidence and breach of contract; and

(d)    Frontline admits that it should be ordered to pay damages to Lumen for the loss or damage that Lumen has suffered and that, in the circumstances, it is appropriate that it also be ordered to pay an amount by way of additional or exemplary damages.

17    The main issues that remain in dispute may be summarised as follows:

(a)    in relation to Lumen’s copyright claims in respect of each of the Circuit Markings, the Engineering Drawings and the Installation Instructions:

(iv)    whether Lumen’s claim is made out (apart from defences);

(v)    whether Vision’s defence under s 115(3) of the Copyright Act 1968 (Cth) is made out; and

(vi)    (in relation to the Circuit Markings and Engineering Drawings) whether Vision’s defence under s 77 of the Copyright Act is made out;

(b)    in relation to the trade mark infringement claim, whether Frontline has established, for the purposes of the proviso to s 120(2) of the Trade Marks Act 1995 (Cth), that using the name LUMEN as it did was not likely to deceive or cause confusion;

(c)    in relation to Lumen’s Circuit Layouts Act claim:

(vii)    whether the circuit upon which Lumen relies is an “integrated circuit” for the purposes of the Circuit Layouts Act;

(viii)    whether Vision’s defence under s 20(1) of the Circuit Layouts Act is made out; and

(ix)    whether Vision’s defence under s 23 of the Circuit Layouts Act is made out;

(d)    in relation to relief:

(x)    whether declaratory and injunctive relief, and delivery up, should be ordered;

(xi)    whether compensatory damages should be ordered and the quantum of any such damages; and

(xii)    whether additional or exemplary damages should be ordered and the quantum of any such damages;

(e)    whether Vision’s cross-claim against Frontline (based on misleading or deceptive conduct) is established; and

(f)    whether Frontline’s cross-claim against Vision (for contribution) is established.

18    In summary, for the reasons that follow, my conclusions in relation to the above issues are:

(a)    in relation to Lumen’s copyright infringement claims, Lumen has made out its claims against both Frontline and Vision in respect of each of the Circuit Markings, the Engineering Drawings and the Installation Instructions;

(b)    in relation to the trade mark infringement claim, Frontline has not established that using the name LUMEN as it did was not likely to deceive or cause confusion; accordingly, the trade mark infringement claim is made out;

(c)    in relation to Lumen’s Circuit Layouts Act claims, the circuit upon which Lumen relies does not constitute an “integrated circuit” for the purposes of the Circuit Layouts Act; accordingly, Lumen’s claims based on this Act are not made out;

(d)    in relation to relief:

(xiii)    it is appropriate to grant declaratory and injunctive relief substantially as sought by Lumen;

(xiv)    compensatory damages should be ordered against Frontline and Vision (jointly and severally) in the sum of $140,750.30;

(xv)    exemplary damages should be ordered against Frontline in the sum of $500,000; no additional or exemplary damages should be ordered against Vision;

(e)    Vision has established that Frontline engaged in misleading or deceptive conduct or conduct likely to mislead or deceive;

(f)    Frontline’s claim against Vision for contribution is to be dismissed.

19    These reasons will be structured under the following headings:

(a)    Procedural matters.

(b)    The witnesses.

(c)    Factual findings.

(d)    Lumen’s claims against Frontline and Vision.

(e)    Vision’s cross-claim against Frontline.

(f)    Frontline’s cross-claim against Vision.

PROCEDURAL MATTERS

20    On the first day of the trial, Lumen was granted leave to amend its originating application and statement of claim. The effect of the amendments was to abandon certain claims and to clarify aspects of other claims. Following these amendments, the latest versions of each document were: the third further amended originating application; and the third further amended statement of claim (the statement of claim).

21    During the course of the trial, both Frontline and Vision were given leave to amend their defences. The effect of the amendments was (in the case of Frontline) to enable Frontline to contend that, for the purposes of the proviso to s 120(2) of the Trade Marks Act, using the name LUMEN as it did was not likely to deceive or cause confusion, and (in the case of both Frontline and Vision) to enable the respondents to contend that the circuit upon which Lumen relies for its Circuit Layouts Act claim was not an “integrated circuit” for the purposes of that Act. The latter amendment was granted on the basis that the respondents would adduce no additional evidence in chief and would simply rely on the cross-examination of Mark Walter (a witness called by Lumen). It was also arranged that Mr Walter would be recalled to deal with this issue on the fifth day of the trial.

22    The trial was conducted by all parties on the basis that no relevant distinction needed to be drawn between the second and third respondents and they could be treated for present purposes as if they were a single entity. I will proceed on this basis.

23    The trial (dealing with both liability and relief) was conducted over seven days. The first day and part of the second day were occupied with opening submissions. The evidence was dealt with during the second, third, fourth and fifth days. After a one-day break for a public holiday, the parties made closing submissions during the sixth and seventh days.

24    As noted above, in its closing submissions, Frontline admitted many of the claims. Frontline’s admissions were set out in its outline of closing submissions, which was filed and served at about 4.30 pm on the day before the day when closing oral submissions were to commence.

THE WITNESSES

25    The following witnesses were called by the applicants and required to attend for cross-examination:

(a)    Mark Walter, a continuous improvement manager employed by Lumen;

(b)    Paul Fletcher, a senior electronics engineer who had been employed by Lumen from around 2010 to 2016 in the role of hardware engineer in the Research & Development Department;

(c)    Robert Ritchie, a quality engineer employed by Lumen; and

(d)    Ihab Sam Qubrosi, Lumen’s Chief Financial Officer.

26    Each of these witnesses was cross-examined by Vision. Apart from Mr Walter in relation to the “integrated circuit” issue, Frontline did not cross-examine the above witnesses. No issue was raised as to the credibility of these witnesses, and I accept their evidence.

27    In addition, the applicants relied on affidavits of the following deponents, who were not required for cross-examination:

(a)    Chris Abrahams, a senior graphic illustrator employed by Lumen;

(b)    Chris Fergusson, a business unit manager at Lumen;

(c)    Bruce Hamilton, a business development manager at Lumen;

(d)    David Waterson, a business development manager at Lumen;

(e)    Paul Mason, an engineering consultant who had been employed by Lumen from around 2003 to 2014; at the time he left Lumen he held the role of Research & Development Manager;

(f)    Pablo Mena, a graphic illustrator employed by Lumen; and

(g)    Robynne Sanders, a solicitor.

28    Frontline called one witness, Dawie Aker, the Chief Executive Officer of Frontline. He was cross-examined. Mr Aker gave considered responses to the questions he was asked during cross-examination. He expressed himself in a way that gave confidence that he was endeavouring to assist the Court. He made significant concessions during cross-examination, which bolstered his credibility. I generally accept his evidence. In some instances, as discussed below, I prefer the evidence of Mr Love to that of Mr Aker.

29    Notably, Frontline did not call:

(a)    John Martin, who had been employed by Frontline at the relevant times as Director – Operations & Strategic Planning and was closely involved in the relevant dealings with Vision; Mr Martin reported to Mr Aker;

(b)    Pino Italiano, who had been employed by Frontline at the relevant times as Senior Quality Assurance Engineer and was closely involved in the relevant dealings with Vision; Mr Italiano reported to Mr Martin; and

(c)    John Kaias, who swore the affidavit of documents referred to above.

30    Lumen submits that an adverse inference should be drawn from Frontline’s failure to call the above individuals: see Jones v Dunkel (1959) 101 CLR 298. I will discuss this issue later in these reasons.

31    The following witnesses were called by Vision and required to attend for cross-examination:

(a)    Anson Cheng, the Research & Development Manager of Vision Automotive Electronics Industrial Co Ltd (Vision Taiwan), a company incorporated in Taiwan that is a supplier to Vision;

(b)    Constantinos Giatas, who was employed by Vision for approximately one year as engineering account manager;

(c)    Philip Love, the sole director, secretary and shareholder of the second respondent; and

(d)    Daniel Regodeiro, a project engineer employed by Vision (Mr Regodeiro in effect took over from Mr Giatas at Vision).

32    In addition, Vision relied on an affidavit of Edward Azzopardi, the sole director, secretary and shareholder of the third respondent. As noted above, the second and third respondents trade together as Vision Automotive Technology. Mr Love has the title, Group Managing Director. Mr Azzopardi has the title, Managing Director. In practice, Mr Love and Mr Azzopardi are joint managing directors.

33    Mr Cheng gave evidence by video-link from Taiwan, with the assistance of an interpreter (located at the Court in Melbourne). The video-link evidence was clear, both visually and in terms of audio. While the interpreter was located in the courtroom in Melbourne rather than with the witness, the process worked smoothly and there did not appear to be any difficulty occasioned by this arrangement. I accept the evidence of Mr Cheng.

34    Mr Giatas was a good witness. He answered questions in a clear and straightforward way. He made sensible concessions. He presented as a frank, honest witness, and I accept his evidence.

35    Mr Love presented his evidence in a quietly spoken manner. He was careful to ensure the accuracy of his answers. His recollection was (understandably) not always clear as to matters of detail, but I do not consider this to affect the veracity of the thrust of his evidence. I generally accept his evidence.

36    Mr Regodeiro was not always precise or careful in his answers to questions during cross-examination. Nevertheless, he presented as an honest witness, and I generally accept his evidence.

FACTUAL FINDINGS

The business of Lumen

37    Lumen is a manufacturer and supplier of electronic automotive components, including the Lumen wiring harnesses. In general terms, wiring harnesses contain the wiring and electronics that allow the electrical components on a trailer (such as brake lights, indicators, reversing lights and tail lights) to be connected to a vehicle and operated when the trailer is being towed by the vehicle.

38    Wiring harnesses are designed to be used in conjunction with conventional trailers, as well as other items which may be towed, such as boat trailers, horse floats, and caravans.

39    Accordingly, it is essential, from a road safety perspective, that wiring harnesses operate reliably. Mr Aker accepted during cross-examination that there is an “obvious safety concern” if wiring harnesses do not work, with potentially “very serious consequences”.

40    Lumen employs engineering, research and development, and graphic design teams to create its automotive components, including wiring harnesses, and associated technical documentation.

41    Lumen International is the owner of Australian trade mark no. 958232 for LUMEN, which was registered with effect from 13 June 2003 in respect of goods for the automotive ‘after market’, including parts and accessories for vehicles and trailers.

42    Lumen supplies automotive components, in its capacity as a tier 1 supplier, directly to many automotive companies. Lumen also supplies automotive components, as a tier 2 supplier, to other tier 1 suppliers, who then include those components in products they supply to automotive companies. For present purposes, Lumen was acting as a tier 2 supplier.

43    Lumen supplied its wiring harnesses to Frontline, for inclusion in towbar kits supplied by Frontline to automotive companies, including Mitsubishi and Mazda.

The importance of PPAPs in the automotive industry

44    Before Lumen could commence to supply any Lumen wiring harnesses to Frontline, it was required to submit PPAPs for approval by Frontline. Similarly, before Frontline could commence to supply towbar kits containing Lumen wiring harnesses (or any other components) to Mitsubishi or Mazda, it was required to submit PPAPs for approval by Mitsubishi and Mazda. Mr Aker accepted in cross-examination that this “is a serious obligation that Frontline must comply with”.

45    There are numerous documents in evidence that emphasise the importance of PPAPs in the automotive industry.

46    ISO/TS 16949 is a major quality management standard applicable to the automotive industry. That standard prescribes that a supplier, such as Frontline or Lumen, “shall conform to a product and process approval procedure recognized by the customer” (cl 7.3.6.3).

47    The fourth edition of an industry guide entitled “Production Part Approval Process” states that:

(a)    an organisation, such as Frontline or Lumen, “shall notify the authorized customer representative of any planned changes to the design, process, or site” and identifies, as examples of changes requiring notification, “[p]roduction from new or modified tools … including additional or replacement tooling”, production from “tooling or equipment transferred to a different plant site or from an additional plant site”, any “[c]hange of supplier for parts”, any “[p]roduct and process changes related to components of the production product manufactured internally or manufactured by suppliers”, including “changes at the suppliers to the organization and their suppliers”; and

(b)    an organisation, such as Frontline or Lumen, “shall submit for PPAP approval prior to the first production shipment” where there is a “new part or product (i.e. a specific part, material or colour not previously supplied to the customer)”, any “[e]ngineering change to design records, specifications, or materials for production product/part number(s)”, unless waived by the customer.

48    Mr Aker gave evidence during cross-examination that he was familiar with this industry guide and each of these requirements, which he understood triggered the need for a PPAP submission and approval.

49    Mitsubishi publishes its own document, entitled “MMAL – Customer Specific Requirements”, which prescribes that:

(a)    the use of PPAP methodology “is required from all suppliers supplying production and [parts and accessories] materials to MMAL manufacturing facilities”;

(b)    all parts must be “individually and clearly identified and tagged for PPAP submissions”;

(c)    all PPAP laboratory data “shall be less than one year old”; and

(d)    the result of a PPAP submission may be: (i) approval, where the part “has been accepted by MMAL [Quality Engineering]”, with the result that “scheduled production may commence”; (ii) interim approval, with the result that production may be permitted “on a limited time or piece quantity basis”; or (iii) rejection, if the parts are “non-conforming and/or unfit for use, or documentation is incomplete”.

50    Frontline publishes a document entitled “Supplier Requirements Manual”, which prescribes that a “full PPAP submission is required before shipment of the first production” where there is a “new part or product – something not previously supplied before”, a “[c]hange in Supplier of product”, a “[c]hange in production process of product” or an “[e]ngineering change on part or product”.

51    These documents demonstrate that the PPAP submission and approval process is of great importance in the automotive industry, to ensure that parts ultimately supplied to automotive manufacturers, such as wiring harnesses, are safe, of high quality, and reliable. Mr Aker gave the following evidence (which I accept) during cross-examination:

And what all this reflects is that the PPAP approval process is fundamental in the automotive industry in – so that all participants in that industry can do their best to ensure safety of products; correct?—That’s not the only purpose of PPAP.

No, but it’s a purpose, isn’t it?—Part of it, yes.

Yes. What other purposes are there?—The quality and performance of the product and reliability.

Yes, which are all important for the end users; correct?—Absolutely.

52    Mr Aker confirmed during cross-examination that he was well aware that under the PPAP scheme, Frontline was not permitted to supply parts to Mitsubishi or Mazda unless Frontline had submitted PPAPs and obtained approval from Mitsubishi and Mazda.

The contractual arrangements between Lumen and Frontline

53    On 1 September 2008, Lumen sent by post a copy of its updated Terms and Conditions of Trade (Lumen T&Cs) to Frontline. The Lumen T&Cs were sent under cover of a letter that provided that:

Upon sale of any further goods or services, these Terms will replace all other terms and conditions. We ask that you sign at the foot of this letter and mail or fax it to us, for our records.

However, if you do not return a signed copy of this letter, we advise that all subsequent dealings with Lumen Australia Pty Ltd (“Lumen”) will be deemed to be conducted upon the enclosed Terms.

54    The Lumen T&Cs contained terms to the following effect:

(a)    Frontline must not at any time create, sell, manufacture or process any products using or taking advantage of the “Intellectual Property” (which was defined to include technical documentation, drawings, schematics and technical data of Lumen, as well as all copyright, rights in circuit layouts and confidential information of Lumen) (cl 10.3);

(b)    any Intellectual Property provided to Frontline by Lumen shall not be copied or communicated to any third party without the prior written approval of Lumen (cl 10.4);

(c)    Frontline must not reverse engineer any of the goods provided to it by Lumen (cl 11.1);

(d)    Frontline must not publish or communicate any of the “Specifications” (which were defined to include technical documentation, drawings, schematics and technical data) to any person or publish or permit them to be copied or communicated to any other person without Lumen’s prior written approval (cl 11.2); and

(e)    all “Specifications” supplied directly or indirectly by Lumen must be held in confidence by Frontline and must not be disclosed by Frontline to others without Lumen’s prior written approval (cl 11.3).

55    After 1 September 2008, Frontline purchased many Lumen wiring harnesses from Lumen and Lumen supplied the Engineering Drawings, the Installation Instructions, and PPAP submissions to Frontline. Frontline purchased the Lumen wiring harnesses pursuant to invoices issued by Lumen that expressly stated that “As per Lumen Terms and Conditions unless otherwise agreed in writing”. Mr Aker accepted in cross-examination that his affidavit did not refer to any other agreement in writing.

March – April 2013: initial interactions between Frontline and Vision

56    Some time prior to March 2013, Mr Aker met with Vision’s joint managing director Mr Azzopardi for dinner in Bangkok, during which Mr Azzopardi mentioned that Vision could supply wiring harnesses and lamps to Frontline. Mr Aker already knew Mr Azzopardi, although Vision had not previously supplied any products to Frontline.

57    On 6 March 2013, Mr Love of Vision went to Frontline’s office and spoke with Mr Martin of Frontline. Mr Martin asked whether Vision was interested in supplying various products to Frontline, including wiring harnesses. Mr Love indicated that Vision was interested and Mr Martin said that a package of samples would be put together for Vision to collect and then quote on. Mr Aker confirmed during cross-examination that Mr Martin reported this to him. Mr Martin was Frontline’s Director – Operations & Strategic Planning. He was responsible for purchasing and reported directly to Mr Aker.

58    By email dated 26 March 2013, Mr Loyson of Frontline informed Mr Love that he had put together a package of samples to be collected. Mr Love forwarded that email to Mr Giatas, requesting that he go and collect the samples. Mr Love stated in his email to Mr Giatas:

Please keep in mind that we may not be able to get drawings for most of these items as they will probably be proprietary to the existing supplier/s (Lumen etc…)

59    The samples were then collected by Mr Giatas of Vision. Mr Giatas gave evidence during cross-examination that this was “to enable Vision to quote on replicating them”. Similarly, the evidence of Mr Love during cross-examination was that “certainly from the start, there was a requirement for the product to be the same”.

60    It was clear to Mr Giatas, from the outset, that Lumen was the supplier of some elements of the towbar kit and that the objective of the quotation exercise was for Vision to replace Lumen in the supply of components used by Frontline in its towbar kits. Having collected the samples, Mr Giatas sent them to Thailand and Taiwan to be analysed and have costings prepared. The samples were of a number of different models of wiring harness (there being different models for different vehicles). Lumen’s wiring harnesses did not all use the same model of ECU. (The ECU forms part of the wiring harness and relates to the lighting system.) The samples of the Lumen wiring harnesses provided by Frontline to Vision included three different models of ECU. One of these was part no. SST-4000G.

May – August 2013

61    On 1 May 2013, Mr Martin wrote to Mr Love asking for an update on the status of the quotation. Mr Love responded to Mr Martin that day, with a copy to Mr Azzopardi: “Our target is to provide you the quotations on the 10th May (As discussed previously)”.

62    The evidence of Mr Love, consistent with the contemporaneous emails, was that in these dealings, Vision was being given “an opportunity to quote and supply these products”. To the extent that Mr Aker suggested that this was merely a “benchmarking study”, I do not accept that characterisation.

63    On 8 May 2013, Chris Pickard of Mitsubishi sent an email to Mr Aker of Frontline stating that Mitsubishi was seeking costs savings in relation to the Pajero Towbar part no. MR936588, and requesting Frontline’s assistance. Mr Aker discussed this email with Mr Martin.

64    On 14 May 2013, Mr Love emailed Mr Martin (copied to Mr Azzopardi and Mr Giatas), and provided “initial quotation estimates for the package of parts you provided”, albeit he stressed that “without detailed drawings & specifications for each item, we have had to make some assumptions”. Mr Love also advised that “ECU’s (our engineers believe that the ECU – 3 versions could be commonized (one version only)” and noted that “[n]o allowances have been made for testing & validation”.

65    During the period May to June 2013, Mr Martin and Mr Love exchanged numerous emails in which they negotiated the supply of the wiring harnesses. In an email dated 2 June 2013, Mr Love stated:

As no drawings or specifications can be provided by Frontline – we would need to get some additional samples from you to assist with the development of these items. (Ideally – 3 sets of each item if possible).

66    Mr Aker was aware throughout this time that Mr Martin was engaged in negotiations with Vision about the supply and pricing of the wiring harnesses. On 21 June 2013, Mr Love wrote to Mr Martin that “we have already informed our plant and suppliers that they have this business, and to start advanced preparation activities etc”.

67    At about the same time, Mr Aker exchanged various emails with Mr Pickard of Mitsubishi regarding the Pajero Towbar part no. MR936588.

68    On 24 June 2013, Mr Aker advised Mr Pickard that “this tow bar is a VERY important part of our business” and informed Mr Pickard that Frontline was “proceeding with re-sourcing of components to meet your cost reduction requests”.

69    On 25 June 2013, Mr Aker informed Mr Pickard that: “Re-sourcing now progressing. Tooling committed. Awaiting [Mitsubishi] validation requirements” and requested that Mr Pickard “confirm the details of [Mitsubishi/Mitsubishi Motor Company] testing / engineering requirements for tow bar harnesses to ensure the PPAP submission can be prepared ASAP and the approval completed smoothly”. (Mitsubishi Motor Company, based in Japan, is the parent company of Mitsubishi.) Mr Aker confirmed, when cross-examined, that he made this request because he understood that Frontline had to obtain PPAP approval before it could supply any re-sourced product to Mitsubishi.

70    On 1 July 2013, Mr Aker again wrote by email to Mr Pickard, and queried whether there was “any progress on the harness testing specifications” and expressed confidence that “all testing will be met however we would appreciate the opportunity to confirm the specific tests ASAP”.

71    On 3 July 2013, Mr Pickard responded by email to Mr Aker. Mr Pickard expressed the view that Mr Aker was “jumping the gun on this”, advised that until potential changes to the 15 MY Pajero (ie, 2015 manufacturing year Pajero) were clarified he was “reluctant to proceed”, and explained that “[o]nce the detail is known” Mitsubishi might approve a “cost down on the current bar” or “may go the RFQ [Request for Quote] route to maximise the savings required”. Mr Pickard stated: “Once I know the direction on the above I have to submit your proposed cost saving submission / RFQ decision formally to [Mitsubishi] departments and then get approval from [Mitsubishi Motor Company] before we move on this”. Finally, Mr Pickard confirmed that, “[regarding] the testing requirements, [Mitsubishi] will be requiring the same testing Lumen did originally on this”.

72    Mr Aker accepted during cross-examination that this email made plain that it was only after all of the contingencies identified by Mr Pickard had been satisfied that Frontline would be able to supply a re-sourced product to Mitsubishi. Mr Aker gave the following further evidence:

Between this email and February 2016, Frontline never submitted any PPAP application to Mitsubishi relating to this Pajero tow bar product, did it?—No.

No. And it follows from that that you knew – you personally knew that Frontline, therefore, had no approval from Mitsubishi to supply Pajero tow bar kits containing wiring harnesses made by anyone but the approved supplier, Lumen; correct?—Correct.

73    Throughout the remainder of July 2013, Mr Aker and Mr Pickard exchanged a number of emails. On 3 July 2013, Mr Aker informed Mr Pickard that Frontline had “decided to re-source these parts anyway” and would “share these savings with [Mitsubishi] regardless (once the tooling is amortised).” On 29 July 2013, Mr Aker again requested “the detail of the [Mitsubishi] wiring harness testing”. The email exchange culminated in an email from Mr Pickard on 30 July 2013, in which he provided Mr Aker with “the latest specifications and what will be required if this proceeds”.

74    Despite this exchange, at no point in time prior to February 2016 did Frontline inform Mitsubishi (or Mazda) that it had, in fact, replaced the Lumen wiring harness with the Vision wiring harness. At no point in time prior to February 2016 did Frontline make any PPAP submission, to either Mitsubishi or Mazda, seeking approval of the Vision wiring harness.

September 2013 – November 2014

75    In early September 2013, Mr Giatas of Vision had a discussion with Pino Italiano, Frontline’s Senior Quality Assurance Engineer, about obtaining access to engineering drawings of the Lumen wiring harnesses. Mr Giatas gave the following evidence (which I accept) during cross-examination:

And why did you need the engineering drawings?—Well, there’s two ways we can work on this, whether we’re – we can either be given a vehicle, and we go and access the vehicle and do everything from scratch, or if we’re provided – you know – the base-line information - and the path to having a replacement product is quicker. So –

So it provides a short cut?—It does. Yes.

(Emphasis added.)

76    On 9 September 2013, Mr Italiano sent an email to Mr Giatas attaching copies of drawings for the Lumen wiring harnesses. The drawings related to a number of different models. The drawings covered parts other than the internal aspects of the ECU. In many cases, the drawing comprised a Lumen drawing enclosed within a Frontline frame or border. For example, the first drawing, which was for a wiring harness for the PB Challenger Towbar 3000 kg, comprised Lumen drawing no 5161 enclosed within a Frontline frame. In some cases, the drawing was simply the Lumen drawing without a Frontline frame. For example, the seventh drawing, which was for a wiring harness for the 10 MY GS45X Outlander, simply comprised Lumen drawing number 4086. The following Lumen drawings were provided by Frontline to Vision by way of attachments to the 9 September 2013 email (either as Lumen drawings enclosed within a Frontline frame or simply as the Lumen drawing): drawing numbers 5161, 1947, 4038, 4041, 4045, 4049, 4086, 6397, 6399, 6461, 607, 7837, 7669 and 5735. Copies of these drawings appear at Court Book (CB) 1301-1318 and (in large size) Exhibit L2, tab 1. In these reasons, the expression “Engineering Drawings” is used to refer to the Lumen drawings, ie, the drawings in respect of which Lumen claims copyright.

77    Mr Italiano’s email included the following:

Please note; information contained in drawings is the Intellectual Property of Frontline Australasia Pty. Ltd and under no circumstances is to be distributed without prior approval.

78    Each of the Lumen drawings (whether enclosed within a Frontline frame or a stand-alone Lumen drawing) contained the following statement under the name LUMEN:

COPYRIGHT SHALL NOT BE USED WITHOUT PERMISSION OR LICENSE.

79    In nearly every case where the Lumen drawing was enclosed within a Frontline frame, the following statement appeared near the edge of the frame:

THE INFORMATION CONTAINED WITHIN THIS DRAWING IS CONFIDENTIAL AND CANNOT BE DISTRIBUTED TO ANY THIRD PARTY WITHOUT THE EXPRESS PERMISSION OF FRONTLINE AUSTRALASIA PTY. LTD. ALL INFORMATION CONTAINED IN THIS DRAWING REMAINS THE INTELLECTUAL PROPERTY OF FRONTLINE AUSTRALASIA PTY. LTD.

80    The explanation for the Lumen drawings appearing within a Frontline frame is as follows. As part of the PPAP process as between Lumen and Frontline for the Lumen wiring harnesses, Lumen had submitted its drawings to Frontline. Then, as part of the PPAP process as between Frontline and Mitsubishi (and possibly Mazda) for the towbar kits, Frontline had enclosed Lumen drawings within a Frontline frame and provided these to Mitsubishi. Thus the drawings that comprised a Lumen drawing enclosed within a Frontline frame had been prepared at an earlier point in time, well before the email of 9 September 2013.

81    Mr Aker accepted during cross-examination that there was no basis for Frontline to claim copyright in the Lumen drawings.

82    Mr Aker said during cross-examination, and I accept, that he was unaware at the time that Mr Martin and Mr Italiano were providing drawings to Vision.

83    Mr Giatas accepted during cross-examination that many of the drawings made it “crystal-clear” that they were “created by Lumen” and that he specifically noticed the copyright statement made by Lumen on those documents (in addition to the Frontline information on many of the drawings).

84    On the same day (9 September 2013), Mr Martin provided Mr Giatas with a computer disc with PPAP information.

85    On 10 September 2013, Mr Giatas responded to Mr Italiano. Mr Giatas thanked Mr Italiano for the drawings and confirmed that: “I think we have most of what we need.” However, a few days later, and after having a “closer look”, Mr Giatas realised that, when he zoomed in, he could not “read the details for most of the drawings”. He explained to Mr Italiano that “[t]he important details are the dimensions and list of component p/nos” and requested that Mr Italiano resend the drawings in “higher resolution”. When cross-examined, Mr Giatas explained that obtaining high resolution versions of the drawings “would help us to get to the end point quicker. That’s – that’s definite.”

86    On 17 September 2013, Mr Giatas sent an email to Mr Italiano and Mr Martin at Frontline, with a copy to Mr Love and Mr Azzopardi at Vision, regarding the Installation Instructions, which Vision had received with the sample Lumen wiring harnesses. Mr Giatas wrote:

Fitting Instructions: Where the originals are completed using black & white sketches, we should be able to scan and reproduce. However, where black & white photos are used, we would need the original pdf files to reproduce clearly. Can you provide pdf’s for at least the fitting instructions with photos?

87    On 21 September 2013, Mr Italiano sent a further email to Mr Giatas, which attached higher resolution copies of a number of drawings. The drawings attached to the email were in a similar format to those attached to the 9 September 2013 email, as described above. The following Lumen drawings (whether enclosed within a Frontline frame or stand-alone drawings) were attached to the email: Lumen drawing numbers 5161, 7837, 7669, 5735, 4040, 4038, 4041, 4045, 4049, 4086, 6397, 6398 and 6461. Copies of these drawings are located at CB 1359-1371 and Exhibit L2, tab 2. The comments set out at [78]-[79] above regarding the Lumen copyright statement and the Frontline intellectual property statement apply equally to these documents.

88    The email also attached a PPAP submission previously made by Lumen to Frontline (CB 1382-1471). Mr Giatas accepted during cross-examination that this was clearly identifiable as a Lumen document.

89    By email dated 9 October 2013, and in response to a request from Mr Giatas, Mr Italiano provided a copy of Lumen drawing number 430 (CB 2255-2258, Exhibit L2, tab 3). This was a stand-alone Lumen drawing. It included the copyright statement set out at [78] above.

90    By email dated 6 November 2013, Mr Martin provided Mr Giatas with “Copies of drawings as discussed”, which included Lumen drawings (either enclosed within a Frontline frame or stand-alone drawings). The following were provided: Lumen drawing numbers 6461, 8665, 8444 and 8445. Copies are at CB 1347-1350 and Exhibit L2, tab 4. Each of these Lumen drawings was enclosed within a Frontline frame. The drawings contained the statements set out at [78]-[79] above.

91    On 7 November 2013, Mr Giatas requested “higher resolution versions for all the MZ p/no’s”. The purpose of this request was, again, so that Mr Giatas could confirm the precise parts used and the dimensions of those parts, being the important details that he had previously identified.

92    By email dated 11 November 2013, Mr Martin then provided copies of drawings. The drawings provided included Lumen drawing numbers 8445, 5394, 8665 and 8444. Copies are at CB 1476-1479 and Exhibit L2, tab 5. Each of these Lumen drawings was enclosed within a Frontline frame. The drawings contained the statements described at [78]-[79] above.

93    On 30 January 2014, Frontline and Vision concluded an agreement for the supply by Vision to Frontline of the Vision wiring harnesses, which was summarised in an email from Mr Love to Mr Martin on 31 January 2014.

94    On 12 February 2014, Mr Giatas requested that Frontline supply “better resolution drawings”, so as to “assist Vision in delivering all p/no’s in a timely manner”. In the same email, Mr Giatas requested: “Fitting instructions – editable files of all the Trailer Wiring Harness kits, so we can adjust if required”.

95    Commencing on 21 February 2014, an “Open Items” list was periodically circulated amongst various Frontline and Vision employees, in relation to the wiring harness project. The first version of that document recorded, in item 2.1, in relation to drawings: “Higher resolution pdf required for clarity of information” in respect of five different wiring harnesses.

96    On 25 February 2014, Mr Giatas circulated an “updated ‘Open Items’” list. That document recorded a number of relevant matters as set out below.

97    First, item 2.1 continued to record, in relation to drawings: “Higher resolution pdf required for clarity of information”. Mr Giatas accepted, when cross-examined, that he was “very eager to get high-resolution drawings”.

98    Secondly, item 2.4 recorded a direction from Frontline to Vision in respect of the drawings: “Frontline direction is to leave drawings unchanged. Any variations to be shown in PPAP documents only”.

99    Thirdly, item 8.1, relating to fitting instructions, stated: “Provide editable files for all P/No’s”. Further, item 8.2 recorded a direction from Frontline to Vision: “Frontline direction is to leave ‘Fitting Instructions’ unchanged. Any variations to be shown in PPAP documents only”.

100    Fourthly, item 11.2 recorded the instruction of Frontline to Vision: “Frontline confirmed they prefer design to remain as identical as possible to current ECU ‘SST-4000G’. Item Closed”. This was so even though Mr Giatas had suggested deleting unused mounting tabs on, and making product improvements to, the ECU. Mr Giatas gave the following evidence (which I accept) during cross-examination:

They were redundant?—In my opinion at the time, yes.

And you also suggested a product improvement, which was to use a waterproof design?—Yes.

And both of these suggestions were rejected by Frontline?—Yes.

And they were rejected because you were instructed that Frontline wanted the design to remain as identical as possible to the [present] ECU?—Correct

101    By email dated 28 February 2014, Mr Italiano provided Mr Giatas with high resolution versions of certain drawings. Each of these was a stand-alone Lumen drawing (that is, without a Frontline frame). The following drawings were provided: Lumen drawing numbers 1947, 8718, 8717, 5735 and 8665. Each of these contained the copyright statement set out at [78] above. Copies are located at CB 1483-1487 and Exhibit L2, tab 6.

102    On the same day, Mr Italiano informed Mr Giatas by email that: “Regarding item 8.1, in the short term you will need to scan fitting instruction that was provided with samples”. On 3 March 2014, Mr Giatas responded and confirmed that “We will scan in the interim”, despite the difficulties he had previously identified in scanning instructions featuring photographs.

103    On 4 April 2014, Mr Italiano informed Mr Giatas by email that “I now have PDF electronic copies of all fitting instructions, as the folder is quite large, I will burn to a disk [and] mail out to you” and also supplied a copy of the Installation Instructions for GJ11-TB-PLUG which he had missed “in the package”.

104    On 17 April 2014, Mr Giatas received a copy of that disc, which contained copies of each of the Installation Instructions. The name LUMEN appeared on the trailer sockets depicted on page 2 of several of the Installation Instructions. Vision never received an editable version of the Installation Instructions. Thus, when Vision ultimately came to supply the wiring harnesses, the non-editable PDF copies of the fitting instructions contained on the disc supplied to Mr Giatas were printed out and used for the Vision wiring harnesses. Some of these fitting instructions included the Lumen trade mark.

105    By email dated 16 May 2014, Mr Italiano provided a further “hi res drawing” to Daniel Regodeiro, a project engineer now employed by Vision in place of Mr Giatas. This was a copy of Lumen drawing number 5394 enclosed within a Frontline frame (CB 1874 and Exhibit L2, tab 7). The drawing included the statements described in [78]-[79] above.

106    Vision provided the ECUs from the Lumen samples to Vision Taiwan. (Despite the similarity in name, Vision and Vision Taiwan are not related companies.) Vision Taiwan considered that one model of ECU (rather than three models) would suffice. It developed an ECU based on the Lumen ECU with part no. SST-4000G. Mr Cheng of Vision Taiwan gave evidence about the process of developing the new ECU.

107    Vision provided the drawings it had received to Chanon Assy Co Ltd (Chanon), a company incorporated in Thailand. Chanon used the drawings to make its own production drawings, and then manufactured the Vision wiring harnesses (apart from the ECU) for Vision in accordance with those drawings.

108    In June 2014, an issue arose regarding the labelling of the wiring harnesses to be manufactured in Thailand. On 27 June 2014, Mr Regodeiro advised Mr Martin that “our plant” cannot print “Made in Taiwan” or “Made in Australia on the labels” in Thailand as “[t]his will cause a concern with customs”. Nevertheless, on 2 July 2014, Mr Martin instructed Mr Regodeiro that: “we need to duplicate the labels and therefore they should be printed as is and placed on the product here in Australia”. When cross-examined, Mr Regodeiro gave the following evidence (which I accept) regarding this episode:

[T]he initial instruction from Mr Martin was that the labels should be duplicated, even though that would involve falsely indicating the country of origin?—Correct.

And so your instructions at this time were not only to replicate the product 100 per cent, but also to replicate labelling which would involve false country [of] origin claims?—Correct.

109    As this evidence indicates, Frontline instructed Vision to make false country of origin claims. This prompted Mr Love to intervene, on 4 July 2014, and raise his concerns that “penalties for falsely claiming country of origin can … be very high”. Later that day, Mr Martin relented, and instead instructed that “we should delete the country of origin from these three (3) labels”.

110    Mr Regodeiro then proceeded to prepare and submit PPAP submissions to Frontline, so that Vision could obtain approval to proceed with the manufacture and supply of the wiring harnesses (including ECUs). The PPAP submissions of Vision included the Engineering Drawings.

111    In October 2014, Mr Italiano sent Mr Regodeiro the necessary PPAP approvals.

December 2014 – February 2016: the period of substitution

112    In about December 2014, Frontline began supplying to Mitsubishi towbar kits containing the Vision wiring harnesses in place of the Lumen wiring harnesses.

113    On 17 February 2015, Mr Italiano provided Mr Regodeiro with a further drawing. This was Lumen drawing number 10059, enclosed within a Frontline frame (CB 1802 and Exhibit L2, tab 8). The drawing contained the statements set out at [78]-[79] above.

114    The provision of Lumen drawings by Frontline to Vision took place from September 2013 to February 2015, a period of approximately 17 months. Mr Aker maintained during cross-examination that he was unaware throughout this period that Frontline was providing Lumen drawings to Vision. I accept this evidence.

115    Frontline and Vision agreed that Frontline would undertake dual sourcing for the initial three months, with a minimum 50% from Vision. On 27 March 2015, Mr Love sent an email to Mr Martin querying the status of the change to 100% supply to Vision and stating “I know that this is a bit of a sensitive subject for you”. Mr Love requested updates on this issue from Mr Martin on 6 May 2015, 12 May 2015, and 20 May 2015. On 20 May 2015, Mr Martin provided a response stating:

We are starting to transition 100% sourcing with Vision for all products except Mazda parts which are subject to further consideration within Frontline as to the best approach to ensure this business is not lost to both of us and sourced direct with Lumen by Mazda.

116    On 3 June 2015, Mr Love requested a further update from Mr Martin on Frontline’s plan to change sourcing to 100% Vision, noting that Mazda would be excluded “as per your previous comments”. Mr Martin responded on 4 June 2015, stating that “[c]hangeover will occur this week and will be subject to stock run out at both Lumen and Frontline”.

117    In December 2015, Mr Martin ceased employment at Frontline.

118    On 23 February 2016, in an email from Mr Love to Mr Loyson and Mr Aker, Mr Love queried the volume sharing of Mazda parts. Mr Love noted that the arrangement to transition to 100% Vision sourcing had been temporarily revised due to “sensitive/political” issues with Mazda.

119    Between December 2014 and February 2016, Frontline supplied a substantial quantity of towbar kits containing Vision wiring harnesses in substitution for Lumen wiring harnesses to Mitsubishi and Mazda (the latter over a shorter period). I discuss the number of towbar kits sold by Frontline later in these reasons. The substitution continued for 14 months, without detection.

120    Mr Aker was aware that Frontline was supplying towbar kits to Mitsubishi and Mazda that included Vision wiring harnesses in place of Lumen wiring harnesses and that Frontline had not sought or obtained approval from Mitsubishi or Mazda for this substitution. The following exchange took place during his cross-examination:

Now, the fact is that you proceeded to source wiring harnesses for this Pajero towbar from Vision, didn’t you?—Yes.

And Frontline proceeded to supply those products to Mitsubishi and continued to supply those products to Mitsubishi up until early 2016; that’s correct, isn’t it?—Yes.

So – and Frontline proceeded to do that despite your knowledge that it did not have Mitsubishi’s approval to do so because you had not submitted a PPAP application to Mitsubishi and Mitsubishi had not approved any such application; that’s correct, isn’t it?—Yes.

…

HIS HONOUR: Mr Aker, were you personally aware that Frontline was supplying the towbar kits to Mitsubishi that included the Vision product?—Yes.

121    Frontline continued to sell towbar kits to Mitsubishi and Mazda at the same price, despite re-sourcing a cheaper wiring harness. Frontline had made no profit on the wiring harnesses sourced from Lumen, whereas it made profits on each of the wiring harnesses sourced from Vision. The following evidence was given during Mr Aker’s cross-examination:

So the advantage for your company was that by selling the non-Lumen wiring harnesses, you started making profits on the wiring harness as well as the tow bar, didn’t you?—Yes.

Late 2015 to February 2016: discovery of the substitution

122    In late 2015, David Waterson, Lumen’s Business Development Manager, noticed that Lumen’s sales to Frontline of wiring harnesses for Mitsubishi vehicles had experienced a drop-off from forecast sales. This triggered some discussion between Mr Waterson and Chris Fergusson, Lumen’s Business Unit Manager, in around December 2015.

123    In January and February 2016, Mr Fergusson visited three Mitsubishi dealers in Mornington, Dandenong and Frankston, and identified wiring harnesses that were not supplied by Lumen, and brought this to the attention of those dealers.

124    On 12 February 2016, Mr Waterson communicated the issue to Rajitha Jayasinghe, Mitsubishi’s Supply Chain Co-ordinator. Later that day, after receiving further details by email from Mr Waterson, Mr Jayasinghe responded by email:

Obviously we are going to have a lot [of] questions for Lumen and Frontline (once you have officially advised Frontline) regarding parts/vehicles affected, rectification for existing stock and vehicles fitted with one of these harnesses and of course Mitsubishi’s decisions regarding [the] future of Frontline as a supplier.

125    Emails between Mr Waterson and Mr Jayasinghe between 15 and 17 February 2016 record the investigation they undertook, comparing stock held by Mitsubishi against supplies made by Lumen.

February 2016: Lumen’s letter of demand and the conduct of Frontline and Vision following receipt of the letter of demand

126    On 15 February 2016, the solicitors for Lumen sent a letter of demand to Mr Aker of Frontline. The letter included the following:

1.    BACKGROUND

We have been instructed that your company was requested by Mitsubishi to supply a towbar kit including a wiring harness & electronic control module kit. Your company engaged our client to design, develop and supply the wiring harness, which it did at no charge to you.

As part of that process, our client provided to your company detailed technical information, drawings and samples relating to the parts.

Our client has been supplying your company with those parts since April 2009. However, since June 2015 there have been no sales of the trailer harness from our client to your company, despite Mitsubishi continuing to require the trailer harness.

Our client has recently obtained a sample of the trailer harness your company is supplying to Mitsubishi, and inspected the wiring harness.

Attached and marked “Attachment A” is a document comparing the instructions that accompanied the product incorporating our client’s wiring harness and the document that accompanied the product that our client inspected. Attached and marked “Attachment B” are images of our client’s wiring harness and the wiring harness inspected. Attached as “Attachment C” is a document comparing the circuit boards for our client’s product and the counterfeit product. Attached as “Attachment D” and “Attachment E” are visual guides to our client’s complete kits.

The installation instructions for both products are identical. It is clear that the product inspected is not our client’s wiring harness or electronic control module, but has such stark similarities that it could only have been developed and manufactured by reference to our client’s confidential information.

2.    BREACH OF CONFIDENTIALITY

As stated above, during the development and design process for the wiring harness, our client provided to your company detailed technical information, drawings and physical samples relating to the wiring harness. These documents were clearly marked as documents of our client and contained valuable proprietary information. A sample of such documents are attached.

This information was provided to your company solely for the purpose of complying with Mitsubishi’s specifications and the approval of the products for sale.

Given the stark similarities between our client’s product and the counterfeit product inspected, it appears highly likely that the counterfeit product was made by reference to our client’s product and the technical documents provided by our client to your company. Our client only provided the technical documents to your company and therefore the only way the supplier of the counterfeit product could have had access to those documents is if they were supplied by your company.

It therefore appears that your company has provided our client’s proprietary confidential information in its product and the technical documents and drawings, to the supplier of the counterfeit product shown in Attachment B.

This is a clear breach of our client’s rights in that confidential information, and has caused significant damage to our client.

Our client is in the process of undertaking more detailed testing of the counterfeit product, but they are very concerned that the product may not be of sufficient quality to meet Mitsubishi’s standards, which has the potential to cause significant further financial and reputational damage to our client and Mitsubishi.

3.    BREACH OF COPYRIGHT

Our client is the owner of copyright in the documents embodying the technical information and drawings referred to above. Self-evidently, given the similarities between our clients product and the counterfeit product inspected, your company must have supplied those copyright works to the manufacturer of the counterfeit product. Such supply constitutes an infringement of our client’s valuable copyright in those technical documents, drawings and samples.

Our client is also the owner of copyright in the installation instructions shown in Attachment A. The installation instructions found in the product you supplied to Mitsubishi are an almost identical copy of those installation instructions.

By supplying those instructions, your company has engaged in an infringement of our client’s valuable copyright rights in those installation instructions.

4.    TRADE MARK INFRINGEMENT

Lumen International Holdings Pty Ltd is the registered proprietor of Australian Trade Mark No. 958232 for LUMEN in respect of automotive parts and accessories. Our client is an authorised user of that mark. Full details of trade mark no. 958232 are attached as “Attachment F”.

The installation instructions enclosed with the product you supplied to Mitsubishi include, in the image of the trailer socket, the trade mark LUMEN. Such use of our client’s registered trade mark in respect of products not supplied by our client is an infringement of those registered trade mark rights.

5.    MISLEADING OR DECEPTIVE CONDUCT AND FALSE REPRESENTATIONS

Given the almost identical appearance of the counterfeit product to our client’s product, the use of our client’s installation instructions including our client’s trade mark and the fact that, unlike our client’s product, the counterfeit product is completely unbranded, such conduct also constitutes conduct that is likely to mislead or deceive consumers that the counterfeit product is our client’s product and of the quality of our client’s product constituting:-

•    misleading or deceptive conduct in breach of section 18 of Schedule 1 of the Competition and Consumer Act; and

•    a false representation as to standard or quality in breach of section 29(1)(e), and sponsorship or approval in breach of section 29(1)(g) and (h) of Schedule 1 of the Competition and Consumer Act.

The letter then set out a proposal for resolution of the dispute.

127    On 18 February 2016 (1.08 pm), Mr Italiano sent an email to Mr Regodeiro attaching copies of fitting instructions, and stating:

There [has] been a minor change to fitting instructions. Find attached updated booklets. Please ensure old instructions are discarded from your system and replace with attached.

All future orders and your current stock must use the attached.

(Emphasis added.)

128    After receiving this email, Mr Regodeiro telephoned Mr Italiano and, in the course of that conversation, queried what was the “minor change”. Mr Italiano said the Lumen name had been left on the trailer socket on page 2 of the instructions and Frontline was now removing the name. It is to be inferred that Mr Italiano had been made aware of the issue that had arisen between Lumen and Frontline.

129    On 18 February 2016 (7.41 pm), Mr Italiano emailed Mr Regodeiro, stating that “I need your help urgently”. Mr Italiano requested “testing data for harnesses as per attached matrix”.

130    On 19 February 2016, Mr Regodeiro sent Mr Italiano drawings from Vision for part numbers MR935181, MR936591, MR936596, MZ350485, MZ350174, MZ350126, MZ350127, MZ350485, and MZ350576 (which included Lumen drawing numbers 5161, 5175, 5394, 1947, 1865, 4040, 4086, 6398, 6174, 6397, 6175, 6460, 6973, 6461, 8665, 8663 and 10059). Copies of these drawings are located at CB 1812-1862 and Exhibit L2, tab 9. These emails show that Frontline had provided Vision with copies of Lumen drawing numbers 1865, 5175, 6174, 6175, 8663, 6460 and 6973 (in addition to the Lumen drawings referred to earlier in these reasons).

131    By email dated 19 February 2016, Mr Italiano requested that Mr Regodeiro “confirm via return email, that harness testing was not conducted due to …”. Mr Regodeiro accepted in cross-examination that this email confirmed that the Vision wiring harnesses had not been tested to the Mitsubishi standard:

The wiring harness had not been tested by Vision Australia, Chanon Assy or Vision Taiwan to the Mitsubishi standard, had it?—We never got a Mitsubishi standard to start with.

No. And, as a consequence, the wiring harness had not been tested to that standard, had it?—Well, not to that standard, but to our own internal standard. Correct.

So is the answer to my question that it wasn’t tested to the Mitsubishi standard?—Correct.

Thank you?—Because we didn’t have that standard. I want you to be clear with that.

Because it wasn’t supplied to you by Frontline?—Correct.

132    In a further email dated 19 February 2016, Mr Regodeiro confirmed that Mr Martin had “agreed that testing was not required for the harness itself as all components used were identical to the current parts you were supplying apart from the agreed deviations by Frontline”. The email stated that the only testing that had been required was for new items, namely the ECU and trailer plug.

133    In further emails circulated on 22 and 23 February 2016, Mr Regodeiro sought to identify what testing had been undertaken, and what testing was required.

134    On 24 February 2016, Mr Love and Mr Regodeiro attended a meeting at Frontline with Mr Aker, Mr Italiano and Mr Delacorn of Frontline about test results that were needed for submission of PPAPs to Mitsubishi. The presence of Mr Italiano at the meeting indicates that he was involved in Frontline’s response to the issue that had arisen between Lumen and Frontline.

135    At the end of that meeting, Mr Aker took Mr Love aside for a private conversation. In Mr Love’s affidavit, he gave evidence that Mr Aker said words to the following effect:

(a)    there was an issue with Lumen;

(b)    Lumen was making a legal claim regarding the copying of their products;

(c)    Frontline wanted support from Vision and technical support;

(d)    Mr Aker requested that Vision not divulge any information to anyone other than Frontline; and

(e)    Mr Aker asked that Vision not disclose that Vision had received the drawings.

Mr Love also gave evidence in his affidavit that: he responded to these requests by saying “OK, but we would not lie in Court”; Mr Aker accepted this; Mr Aker went on to say that he was “disappointed (embarrassed)” in the way Mr Martin had handled “this business” and that it reflected poorly on him and Frontline; and Mr Aker also said that it was a change without following customer process for approval.

136    There is no dispute that Mr Aker and Mr Love had a private conversation, but there is a dispute about some aspects of what was said. Mr Aker in his affidavit stated that he agreed that he said words to the effect set out in paragraphs (a) to (c) above. Mr Aker disagreed that he said words to the effect of paragraph (d); rather, he said words to the effect that Vision should liaise with Frontline before responding to any communication of a legal nature from Lumen. Mr Aker stated in his affidavit that he strongly disagreed that he said words to the effect of paragraph (e) above.

137    Mr Love made a file note of the conversation. The file note, which Mr Love wrote by hand during the conversation, included:

Dawie Aker (Private discussion)

–    Issue with Lumen

–    legal claim regarding copy of

their products.

–    Need support from Vision

→ Tech info etc.

–    Requested not to divulge

any info to anyone other

than FL

–    Not to mention we rec’d

Dwgs

→ Advised OK → But

would not lie in Court

(DA accepted this)

–    Dawie very disappointed (embarrassed)

in way JM handled this business –

reflected poorly on him + FLA.

–    Change without following

customer process for

approval etc.

138    Both Mr Aker and Mr Love were cross-examined on the conversation. Mr Aker maintained that he did not request Vision not to disclose that it had received drawings from Frontline. Mr Aker accepted that he said words to the effect recorded in other parts of the file note. For example, he accepted that he said that he was disappointed with the whole situation and that it was a change without following customer process for approval (because the PPAPs for Mitsubishi had not been submitted). Mr Aker said that he requested that Frontline and Vision co-ordinate, and it was agreed by both Frontline and Vision that they would make a co-ordinated response (in the context of the letter of demand to Frontline).

139    Mr Love stated during cross-examination that he was “100 per cent” confident that his file note truly reflected the conversation.

140    I consider that Mr Love’s version of the conversation (as set out in his file note) is more likely to be correct. His version is supported by a contemporaneous file note of the conversation. No other interpretation of the file note was suggested that would explain the statement, “Not to mention we rec’d Dwgs”. In the context of the letter of demand having been received some days earlier, the meeting at Frontline, and the other matters discussed in the private conversation, it is plausible that Mr Aker asked Mr Love not to mention that Vision had received drawings from Frontline. The fact is that Frontline had, on eight occasions, emailed drawings to Vision. It is plausible that Mr Aker became aware, in the days following receipt of the letter of demand, of the fact that drawings had been provided to Vision, even though he had not previously been aware of this. In the days after receipt of the letter of demand, the dealings between Frontline and Vision are likely to have been the subject of intense scrutiny by Mr Aker, and this is likely to have revealed that the drawings had been provided. To the extent that there is a (minor) difference between Mr Love’s affidavit evidence and his file note – in his affidavit Mr Love stated that Mr Aker asked that Vision not “disclose” that it had received the drawings; in the file note Mr Love recorded Mr Aker requesting Vision not to “mention” that it had received drawings – I prefer the file note. To the extent that Mr Aker gave evidence that he was not aware at this stage that drawings had been provided by Frontline to Vision, and that he did not request Mr Love not to mention that Vision had received drawings, I consider Mr Aker’s recollection to be faulty.

February 2016: Mitsubishi’s investigation

141    In or about February 2016, Mitsubishi sought to identify, quarantine, and block the sale of, the substitute wiring harnesses.

142    On 17 February 2016, Mitsubishi issued a ‘P&A Inventory Bulletin’ to all Mitsubishi dealers throughout Australia, in which it stated:

It has been brought to [Mitsubishi’s] attention that non approved towbar harnesses may have been used in the Towbar Kit part numbers listed above. Stock of the affected towbar kits has been frozen by [Mitsubishi] whilst this issue is being investigated with the supplier.

If you have stocks on hand at your dealership, please quarantine these parts until further notice.

143    The investigation undertaken by Mitsubishi is well illustrated by documents produced by Mitsubishi in answer to a subpoena issued by Lumen.

144    By email dated 17 February 2016, Mr Princi, the Head of Corporate Financial Planning and Company Secretary of Mitsubishi, queried whether there had been “any failures of the allegedly counterfeit wiring harness” and whether it had “any technical shortcomings”. In response, Mr Shibuya, the Deputy Director, Parts and Accessories, advised that “[t]his is [a] serious issue and I think that earlier action is required”.

145    By email dated 18 February 2016, Mr Jayasinghe reported to Mr Shibuya that Mitsubishi had “[b]locked all our existing and incoming stock of these suspect towbar part numbers”. Later that day, Mr Botha, the Head of Parts and Accessories, also confirmed by email that “[a]ll [Mitsubishi] stock quarantined at SPDC [a parts distribution centre] for checking and rectification if required” and that enquiries would be made into “warranty claims for Tow Bar harness over the last 6 months”.

146    Also on 18 February 2016, Mitsubishi wrote to Frontline in the following terms:

Mitsubishi Motors Australia Limited (‘MMAL’) has been made aware by Lumen Australia Pty Ltd (‘Lumen’) that Frontline Australasia Pty Ltd (‘Frontline’) may have allegedly breached the contractual agreement between MMAL and Frontline for the supply of towbars and wiring harness (‘parts’) to MMAL by sourcing the parts from an unknown supplier rather than Lumen. MMAL is very concerned that the changes to the parts may have been made without prior MMAL’s approval.

MMAL requests Frontline’s formal explanation of this matter and look forward to receiving your response by 5 pm Wednesday 24 February 2016.

(Emphasis added.)

147    By email dated 19 February 2016 and entitled “URGENT Towbar Harness inspect / rework required”, Mr Bergin, a technical analyst at Mitsubishi, requested that a fellow Mitsubishi employee “arrange urgently for the following task to be completed”. The task involved using “Harness Comparison charts” to identify the substitute wiring harnesses and to replace them with “[a Mitsubishi] Approved harness kit which is identified with a Green Dot”. The charts contained photographs of the Lumen and substitute wiring harnesses, including ECUs, with specific comments explaining how to identify the substitute products.

148    On 19 and 23 February 2016, further P&A Inventory Bulletins were circulated to all Mitsubishi dealers regarding the substitute wiring harnesses.

149    By email dated 23 February 2016, Mr Jayasinghe of Mitsubishi directed Mr Aker and Mr Delacorn that “[Frontline] to supply current and any future orders to [Mitsubishi], only with the approved Lumen harness”.

150    By email dated 24 February 2016, Mr Botha of Mitsubishi instructed that “any vehicle in the dealership that has incorrect HNS [harness] should have this replaced no exceptions. Understand this could have some implications [for] customers however, we need to have dealers follow the process and change over HNS asap”.

151    On the same day, Mr Aker sent a letter to Mr Princi, the Company Secretary of Mitsubishi, seeking to explain why Frontline had supplied the substitute wiring harnesses to Mitsubishi. Mr Aker confirmed, when cross-examined, that he wrote the letter and took full responsibility for it. The letter included the following:

Frontline Australasia would firstly like to confirm that as a long term MMAL supplier we have taken all appropriate steps to ensure we are 100% certain of the integrity of all parts supplied to MMAL by our organisation. Frontline and our tier 2 suppliers are 100% committed to providing all testing and evaluation data to MMAL in order to ensure all Mitsubishi expectations are satisfied.

Secondly, Frontline would like to acknowledge and apologise that despite our best intentions we have recently determined that the MMAL complete procedure for a change of part has not been followed correctly in the case of harness re-sourcing. As a result of MMAL cost down request activity this was essentially a purchasing driven exercise and while the full internal PPAP has been completed in accordance with our regular process, a combination of factors (including the fact that the components used in the re-sourced harness were identical to the existing harness and various communications with MMAL) has unfortunately resulted in this supplier change circumventing the MMAL quality approval process. We take this matter seriously and will provide a summary of our investigation, root cause and countermeasure in line with MMAL procedures.

Finally, Frontline would like to request MMAL to consider the detailed history of this change which was initially instigated by an MMAL request in 2013 to Frontline Australasia regarding the requirements for VA / VE cost down activity on the Pajero towbar. At the time several alternatives were proposed which included the re-sourcing of the tow bar wiring harness. MMAL confirmed that this component was the responsibility of Frontline and MMAL encouraged this re-sourcing activity in order to achieve the requested cost down. At that time MMAL inferred that the current supplier was not preferred.

During the re-sourcing activity there was regular correspondence and follow up between Frontline and MMAL which clearly shows this activity was known within MMAL. Based on the strong MMAL request for cost savings Frontline vetted and selected a capable automotive wiring supplier and completed stringent automotive OE testing and satisfies the MMAL specifications that was sought by Frontline Australasia and provided by MMAL for this specific activity. This testing will be supplied to your quality department with sample parts for MMAL/MMC approval.

152    As set out above, the letter stated that “Frontline would like to acknowledge and apologise that despite our best intentions we have recently determined that the [Mitsubishi] complete procedure for a change of part has not been followed correctly”. That sentence was misleading, for the following reasons:

(a)    Frontline had been aware, for 14 months, that it had not complied with Mitsubishi’s PPAP procedure. Mr Aker conceded during cross-examination that: “[I]n light of what you said to his Honour yesterday, it was false to say to Mitsubishi that this was something that you had only recently determined as at February 2016; do you accept that?—Yes”.

(b)    It was false, or at least misleading, to assert that this had occurred “despite our best intentions”. To the contrary, as Mr Aker conceded, “It was your intention to provide the Vision products to Mitsubishi despite the fact that you did not have a PPAP approval. That was a deliberate choice by Frontline, wasn’t it?—Yes”.

153    The next sentence of the letter stated: “As a result of [Mitsubishi] cost down request activity this was essentially a purchasing driven exercise”. However, the evidence at trial made clear that:

(a)    between March and May 2013, and prior to any approach from Mitsubishi, Frontline had provided Vision with an opportunity to quote on supply of the products;

(b)    the communications between Mr Pickard and Mr Aker in May 2013 were limited to the Pajero product and (as Mr Aker fully understood) PPAP approval remained a requirement; and

(c)    Frontline never informed Mitsubishi that it had, in fact, implemented any “cost down” measures. To the contrary, Mr Aker accepted during cross-examination that: “[T]he advantage for your company was that by selling the non-Lumen wiring harnesses, you started making profits on the wiring harness as well as the tow bar, didn’t you?—Yes”.

154    In the third paragraph of the letter set out above, Mr Aker wrote that “[Mitsubishi] encouraged this re-sourcing activity in order to achieve the requested cost down”. Mr Aker accepted, when cross-examined, that “[I]nsofar as this suggests that [Mitsubishi] encouraged you to provide unapproved parts, that couldn’t be true, [could] it?—No. That wasn’t the case”.

155    In the next paragraph of the letter, Mr Aker wrote that “this activity was known within [Mitsubishi]”. However, during cross-examination, Mr Aker accepted the following proposition: “[I]t’s perfectly clear that Frontline never informed Mitsubishi that the wiring harnesses supplied by Frontline included those relevant products from any source other than the approved supplier, Lumen. You accept that?—Yes”.

156    Mr Aker also stated in the same paragraph of the letter that “stringent automotive OE testing” had been undertaken on the substitute wiring harnesses “that satisfied the [Mitsubishi] specifications”. However, and as set out above, the testing undertaken on the Vision wiring harness did not conform to Mitsubishi standards.

March to June 2016

157    On 1 March 2016, Mr Italiano sent an email to Mr Regodeiro stating that he had checked the test data provided and “all appears to be OK” with the exception of the test standard ES-X40059 (relating to corrugated tubes). In respect of this standard, Mr Italiano stated: “According to Mitsubishi standard, heat resistance should be conducted at 160 deg C, your report shows 120 deg C, please clarify”. Mr Regodeiro accepted, when cross-examined, that this revealed that Vision’s testing had been undertaken at 120 degrees, but the Mitsubishi standard required testing to be undertaken at 160 degrees.

158    By email dated 9 March 2016, and in response to an email from Mr Regodeiro earlier that day regarding the “Crimp standard” used by the factory, Mr Delacorn of Frontline stated: “The way I read this is that the [Mitsubishi Motor Company] spec is slightly higher than the Vision spec for the 0.5 and 1.25. The actual result of the parts however complies to the [Mitsubishi Motor Company] spec? The 3.0 wire size remains a concern?”. Mr Regodeiro gave the following evidence (which I accept) about the data set out in the email that he had sent to Frontline:

So should we read that table to mean that the Mitsubishi standard required that if you had a cable size of between 3 and 15 millimetres …?—Yes.

… and that cable had to withstand a – I think you said force pull test of 50 kilograms; is that right?—Yes.

And the problem which Mr Delacorn was identifying, if you keep going down and look at your cable size 3 millimetres …?—Yes.

… was that, in fact, your cable had a pull force test resistance of 30 kilograms?—Correct.

159    Later the same day, Mr Regodeiro sent an email in response to Mr Delacorn’s email. Mr Regodeiro stated “our crimping spec is slightly lower than the [Mitsubishi] standard”. Mr Regodeiro also stated:

Saying that, we were not given any data on this item for production, thus the UL standard being followed. In saying that, all crimps comply to the standard we have used with only a small proportion being under spec’d to [Mitsubishi] standard.

160    Mr Regodeiro accepted, when cross-examined, that:

So the consequence of this was that Vision had manufactured components, which had then been provided to Mitsubishi, which did not comply with Mitsubishi standards?—Well, if you look at it that way, yes.

161    By email dated 11 March 2016, Mr Regodeiro reported to Frontline (including Mr Aker) that the reason there were gaps in the testing was “purely because there was no test spec provided at the time of the project”. He stated that the gaps were “only small” and suggested there “should be enough surrogate data to not cause any issues or major concerns”. Mr Regodeiro also stated that:

… the testing plan for this product was discussed and approved by John Martin. Because this was before my time at the company I have very limited data on how the test plan was produced and why certain tests were removed from the test plan.

162    When cross-examined, Mr Regodeiro gave the following evidence (which I accept):

That is, when you looked into the test plan, it was apparent to you that certain tests had been taken out, and you couldn’t work out why?—Yes, correct.

And they were tests that you now knew Mitsubishi would require in order for these products to conform to its standards?—Correct.

163    On 23 March 2016, the applicants commenced this proceeding against Frontline (but not, at this stage, Vision). It was alleged, in the statement of claim, that Frontline had, by supplying the Vision wiring harnesses to Mitsubishi and Mazda, engaged in passing off, contravened the Australian Consumer Law, infringed the copyright of Lumen in various copyright works, misused the confidential information of Lumen, breached the Lumen T&Cs, and infringed the Lumen trade mark.

164    By email dated 12 April 2016, Mr Pearson, Senior Product Development Engineer at Mitsubishi, reported to various officers of Mitsubishi in Japan: “It is a very disappointing issue where [Mitsubishi] Towbar Supplier Frontline have sought to re source the Towbar Harness from approved supplier (Lumen) to a non approved supplier without advising [Mitsubishi]”. Mr Pearson also reported that “Each non [Mitsubishi] approved Harness has … been found to be an almost identical copy of the original however each is not approved by [Mitsubishi / Mitsubishi Motor Company]” (emphasis added). Mr Aker accepted, when cross-examined, that both of these statements were correct.

165    Further, in a Mitsubishi document headed “Notification of Dealer Rework Campaign” (which was attached to an internal Mitsubishi email dated 29 April 2016), it was recorded that Frontline had “been supplying Towbar Kits with a non-approved harness included in the kit. The towbar harness kits have not been approved by [Mitsubishi] or [Mitsubishi Motor Company]”. It was also recorded that the “Root Cause” of this problem was that “Frontline introduced a cost down harness kit from another harness supplier and introduced it into production without submitting a PPAP to [Mitsubishi] for approval”. Again, Mr Aker accepted, when cross-examined, that both of these statements were correct.

166    In light of the documents described in the two preceding paragraphs, Mr Aker accepted the following propositions during cross-examination:

So from these documents that we’ve seen from Mitsubishi, it’s perfectly clear that Frontline never informed Mitsubishi that the wiring harnesses supplied by Frontline included those relevant products from any source other than the approved supplier, Lumen. You accept that?—Yes.

It’s also perfectly clear from these documents that Frontline’s conduct led Mitsubishi to believe that the wiring harnesses that you sourced from Vision were supplied by Lumen. Do you accept that?—Yes.

167    On 12 April 2016, Mr Love emailed Mr Aker seeking an update on the “Lumen issue”. It is apparent from the email chain that earlier, in March 2016, Lumen’s solicitors had sent a letter to Vision. In the 12 April 2016 email, Mr Love also asked whether there had “been any feedback from Mitsubishi regarding the Vision products and approvals etc”.

168    On 14 April 2016, this Court made orders at a case management hearing, including the following discovery order:

4.    By 4.00 pm on 15 June 2016, [Frontline] provide discovery in the following categories (capitalised terms have the meanings given in the statement of claim dated 23 March 2016):

(a)    correspondence between [Frontline] and the manufacturer of the Non-Lumen Wiring Harness relating to the design, development and manufacture of the Non-Lumen Wiring Harness;

(b)    correspondence between [Frontline] and the manufacturer of the Non-Lumen Wiring Harness attaching or containing Technical Information relating to the Lumen Wiring Harness, including but not limited to technical specifications, drawings, and physical product samples.

169    That order was brought to Mr Aker’s attention around that time, and he read it. Frontline was represented by solicitors and Mr Aker had their assistance in complying with these obligations. Mr Aker understood that the references to the respondent and the manufacturer of the Non-Lumen Wiring Harness were references to Frontline and Vision. Mr Aker understood that Frontline was required to search for and make discovery of documents in Frontline’s possession falling into either of the categories in paragraphs 4(a) and (b) of the order.

170    On 14 April 2016 (8.56 pm), Mr Regodeiro sent an email to Mr Aker with responses to four questions that Mr Aker had posed in an email sent to Mr Love on 13 April 2016. Mr Regodeiro stated in his email:

Hi Dawie

Phil has asked me to answer your questions below, please see response in RED

Please keep in mind that the ECU was designed on the basis of instructions from Frontline that the design must be 100% the same as the current version.

If you have any further questions, please feel free to call me

The four questions that Mr Aker had posed and Mr Regodeiro’s responses were as follows:

171    On 14 April 2016 (9.50 pm), Mr Aker sent an email to Mr Regodeiro, with a number of further questions:

Thanks Daniel.

How did you determine the reference designator values in the first place?

I.e. Did your engineers determine these based on the design required or were they based on the physical lumen sample?

Lumen are trying to claim that the reason these designators are the same is that vision had access to other technical information about the ecu/harness (not just the physical sample) and they were simply copied from this technical information.

Please confirm that the reference designator values were derived from only the physical samples (not other technical information) and the vision design process.

Regards, Dawie.

172    On 14 April 2016 (10.13 pm), Mr Regodeiro responded as follows:

Hi Dawie

This is correct, the designators were based on the physical parts hence why the majority are in the same place.

This is a very simple PCB and can be quite easily replicated without any technical documents. The ECU is basically a relay module designed to take the load from the vehicle. I am certain there are dozens of companies that can replicate this product fairly easy by just the physical sample

Thanks

Daniel

173    On 15 April 2016 (11.09 am), Mr Aker sent an email to Mr Regodeiro pressing him further on the issue of the design of the Vision wiring harnesses:

Thank you Daniel, this helps a lot,

I know this question has already been answered but could you please consider once again (in fine detail) –

I really don’t want any surprises.

Is there any element of the Vision product design / manufacture that relies upon technical information that cannot be determined [from] the physical samples?

Frontlines position is that the harness development was 100% based on the physical samples.

Any technical information – whether it was provided or not, is irrelevant.

I note that this email asks whether any element of Vision’s product relied on technical information “that cannot be determined [from] the physical samples” and that the email puts forward the position that technical information – “whether it was provided or not” – was irrelevant. These statements tend to suggest that Mr Aker was aware that Lumen technical information had been or, at least, may have been provided, but considered that any such information had not been necessary to develop the Vision wiring harnesses; in other words, the Vision wiring harnesses could have been developed on the basis of the physical samples alone, even if they were in fact developed on the basis of Lumen technical information.

174    On 15 April 2016 (3.11 pm), Mr Regodeiro responded to Mr Aker:

Hi Dawie

The Vision product was purely developed from the physical sample provided to us by Frontline. This is something that could of easily be developed by us but by having the physical sample it has speed up the process in development time.

Please let me know if you need any further information

Thanks

Daniel

This email conveys a misleading impression, namely that the Vision wiring harness was “purely” developed from the physical samples provided by Frontline to Vision. In fact, as described above, the Vision wiring harness was developed on the basis of both the physical samples and the drawings. It may be that, in referring to the Vision “product”, Mr Regodeiro was intending to refer to the ECU rather than the wiring harness as a whole. Or it may be that Mr Regodeiro was simply mistaken. In any event, the impression conveyed was misleading.

175    On 19 May 2016, Mr Aker emailed Mr Love. Mr Aker noted that Mitsubishi were still in the process of testing the wiring harnesses in Japan and “[t]he result of these tests will determine if a product recall is required”.

176    On 23 June 2016, Frontline’s director and co-owner, Mr John Kaias, swore an affidavit in purported compliance with paragraph 4 of the 14 April 2016 orders. (Mr Kaias’s brother, James Kaias, is the other director and co-owner ). John Kaias’s affidavit relevantly stated:

1.    I am a director of [Frontline] and I am authorised to make this affidavit on [Frontline’s] behalf.

2.    I have made reasonable enquiries as to the existence and location of the documents specified in the Order.

3.    To the best of my knowledge, information and belief, there are no documents specified in the Order that are or have been in [Frontline’s] control, other than the documents specified in this list of documents.

177    The list attached to Mr Kaias’s affidavit identified only three documents:

(a)    an email chain dated 10 and 11 March 2015 together with a purchase order sent on 11 March 2015 by Mr Martin of Frontline to Mr Love and Mr Regodeiro of Vision, with a copy to Guy Loyson of Frontline;

(b)    two invoices dated 1 September 2015 and 24 March 2015 from Vision to Frontline for testing costs, approved by Mr Love and signed by Mr Martin; and

(c)    an email dated 13 October 2014 from Mr Loyson to Mr Regodeiro, copied to Mr Jones of Frontline, referring to a Stock Requirement Request.

178    These three documents are inconsequential for the purposes of this proceeding. No party sought to rely on these documents, other than in relation to the issue of Frontline’s failure to comply with the discovery order. The list of documents did not include a large number of documents that were in Frontline’s possession and fell within the terms of the discovery order. Frontline failed to discover the many emails (described above) by which it provided copies of the Engineering Drawings to Vision. Frontline also failed to discover many other items of relevant correspondence passing between it and Vision. Such documents were discovered later in the proceeding, after the second and third respondents (ie, Vision) were joined to the proceeding and made discovery.

179    Mr Italiano was employed by Frontline throughout the period that Frontline was responding to the discovery order. (He left Frontline later, on 30 June 2016.)

180    At trial, Lumen tendered a list of documents (by reference to tab numbers in the Court Book) which it claimed should have been – but had not been – discovered by Frontline (Exhibit L35). It was acknowledged by Lumen that tabs 169, 170, 171, 172 and 173 should not have been included in the list. With that adjustment, the list comprises some 144 unique documents. I am satisfied that most, if not all, of these documents were discoverable by Frontline pursuant to paragraph 4 of the 14 April 2016 orders but were not discovered by Frontline.

181    In the lead up to the trial, Lumen gave notice to Frontline that it would be putting in issue the adequacy of Frontline’s discovery and indicated that it expected Mr Kaias to give evidence and be available for cross-examination. However, Frontline did not call Mr Kaias to give evidence on the issue or make him available for cross-examination. There was no evidence to suggest that he was not available.

182    Mr Aker was cross-examined at length on the issue of Frontline’s discovery. Although he did not swear the affidavit of documents, he assisted Mr Kaias in making inquiries for the purposes of the affidavit. It was put to Mr Aker that any reasonable inquiry would at least include speaking to Mr Italiano. Mr Aker indicated that this did not occur because his understanding was that the delivery of samples to Lumen was the source of their design and “our understanding at the time was that there [were] no technical documents in existence”. In these circumstances, Mr Aker said, Frontline’s preference was “to keep this issue within senior management without involving the staff because of the seriousness of the issue at that time”. Mr Aker agreed that, in hindsight, this was “unacceptable”.

183    Mr Aker accepted that the PPAP approvals (ie, Frontline’s approval of PPAP submissions provided by Vision) were held in the records of Frontline. Mr Aker accepted that at all times while he was dealing with the allegations raised in the statement of claim and the Court’s requirement to make discovery, he knew that Vision went through a PPAP process before it supplied the products to Frontline. He accepted that, even if he was reluctant to speak to employees about those allegations, he knew that the PPAP applications and approvals between Vision and Frontline were held in Frontline’s records.

184    Mr Aker also accepted that, when he was dealing with the allegations in the period after February 2016, he knew that Mr Italiano had been involved in the acquisition of these parts from Vision. Nevertheless, for the reason given by Mr Aker in his evidence, both he and Mr Kaias chose not to speak to Mr Italiano. Mr Aker rejected the proposition that he made a conscious decision not to reveal documents. Mr Aker gave the following evidence:

Well, are you seriously suggesting to the judge that during this period, between the judge making his orders and the two months and one week that you had to prepare this list of documents, you knew that Mr Italiano did not have any relevant documents?—No.

No. On the contrary, you had every reason to believe that he had plenty of relevant documents. Correct?—Relevant documents, yes.

Documents relevant to the supply of these products from Vision to Frontline. Correct?—Yes.

(Emphasis added.)

185    Mr Aker was taken to examples of emails sent by Mr Italiano to Vision attaching the drawings, described earlier in these reasons. Mr Aker accepted that the drawings were of Lumen products. He accepted that none of the emails would have been provided to Lumen or the Court if they had not been discovered or put in evidence by Vision. He accepted that if he or Mr Kaias or anyone delegated by them spoke to Mr Italiano and asked him whether Frontline had any documents that constituted correspondence between Frontline and Vision attaching drawings, then those documents are what Mr Italiano would have identified. Mr Aker accepted that these documents were, on any view, documents that Frontline was required to discover in compliance with the Court’s orders. He rejected the proposition that it was more important to keep these facts concealed than to discover the documents in compliance with the Court’s orders.

186    In my view, Frontline’s response to the discovery order made on 14 April 2016 was seriously deficient and no adequate explanation has been provided. Plainly, a large number of documents that should have been discovered by Frontline were not discovered. I do not consider Mr Aker’s explanation as to why staff such as Mr Italiano were not consulted to be satisfactory. An obvious inquiry for the purposes of making discovery would have been to speak to the staff involved in the dealings between Frontline and Vision and to review their emails. It is unacceptable that this did not occur. It may be that Mr Aker chose to rely on the first sentence of the email from Mr Regodeiro dated 15 April 2016 (3.11 pm), to the effect that the Vision product had been “purely” developed from the physical samples provided by Frontline to Vision. However, this does not provide a satisfactory explanation for the failure to ask Mr Italiano the most basic of questions regarding the existence of relevant documents. Further, it does not provide a satisfactory explanation for the failure to conduct the most basic of searches of Frontline’s email system. I am not prepared to conclude that Mr Aker or Mr Kaias made a conscious decision to conceal relevant documents rather than to discover them in compliance with the Court’s order. Nevertheless, I consider the failure to comply with the Court’s order to be serious and without adequate explanation. This conclusion is reinforced by the failure of Frontline to call Mr Kaias to give evidence about this issue. I infer that any evidence he may have given would not have assisted Frontline.

187    In making the factual findings set out above, it has not been necessary to draw any adverse inference from the failure of Frontline to call Mr Martin and Mr Italiano to give evidence. The documents in evidence support the findings set out above. It is not necessary to resort to adverse inferences in the sense discussed in Jones v Dunkel.

LUMEN’S CLAIMS AGAINST FRONTLINE AND VISION

188    It will be convenient to consider the claims and issues under the following headings:

(a)    Copyright infringement.

(b)    Passing off and contraventions of the Australian Consumer Law.

(c)    Breach of confidence.

(d)    Breach of contract.

(e)    Trade mark infringement.

(f)    Claims under the Circuit Layouts Act.

(g)    Relief.

189    As indicated earlier in these reasons, the copyright and Circuit Layouts Act claims are made against both Frontline and Vision. The other claims are made against Frontline only.

Copyright infringement

190    Lumen relies on three different works or categories of works: the Circuit Markings; the Engineering Drawings; and the Installation Instructions. The claims in relation to each of these will be considered separately.

Circuit Markings

191    Lumen’s claims are set out in [19]-[29A] and [30]-[32] of the statement of claim. The expression “Circuit Markings” is effectively defined in the statement of claim as the arrangement of reference designators (text and numerals) on the printed circuit board (PCB) forming part of the SST-4000G ECU. I will refer in these reasons to the PCB forming part of the SST-4000G ECU as the Lumen PCB and to the printed circuit board assembly (PCBA) forming part of the SST-4000G ECU as the Lumen PCBA. A diagram of the Lumen PCBA appears at CB 3086-3087 and a photograph appears at CB 673. The reference designators indicate where each component is to be placed on the PCB and are cross-referenced to the reference designators of components in the schematic drawings. Lumen makes allegations to the following effect:

(a)    The Circuit Markings: were authored by an employee or employees of Lumen, in the course of their employment; and are an original literary and/or artistic work in which copyright subsists for the purposes of the Copyright Act.

(b)    Lumen is the owner of the copyright vesting in the Circuit Markings pursuant to s 25(2) of the Copyright Act and, pursuant to s 31(1) of that Act, has the exclusive right to: reproduce the Circuit Markings, or a substantial part of the Circuit Markings, in a material form; or to authorise the reproduction by another person.

(c)    Each of the Vision wiring harnesses has an ECU having a circuit board that incorporates a reproduction of a substantial part of the Circuit Markings.

(d)    By manufacturing the Vision wiring harnesses, Vision has reproduced at least a substantial part of the Circuit Markings in a material form. This conduct was without the licence or authority of Lumen.

(e)    As a result of the above, Vision has, pursuant to s 36 of the Copyright Act, infringed Lumen’s copyright in the Circuit Markings.

(f)    The design and manufacture of the Vision wiring harnesses by Vision and/or Vision’s sub-contractors was undertaken at the request of Frontline. As a consequence, Frontline has authorised the reproduction of the Circuit Markings by Vision or Vision’s sub-contractors.

(g)    As a result of the above, Frontline has, pursuant to s 36 of the Copyright Act, infringed Lumen’s copyright in the Circuit Markings.

(h)    Further, both Frontline and Vision knew or ought reasonably to have known that the making of the Vision wiring harnesses constituted an infringement of Lumen’s copyright in the Circuit Markings. As a result of the above, Frontline and Vision have, pursuant to s 38 of the Copyright Act, infringed Lumen’s copyright in the Circuit Markings.

192    In addition, Lumen makes allegations at [30]-[32] of the statement of claims concerning joint liability of Frontline for copyright infringement by Vision, authorisation of copyright infringement by Vision, and loss and damage.

Whether Lumen’s copyright claims are made out (apart from defences)

193    In its outline of closing submissions, Frontline concedes that the evidence establishes that the Circuit Markings are literary and/or artistic works that were authored by Lumen and in which copyright subsists. It also concedes that it authorised Vision to reproduce those works.

194    However, Frontline submits that, for its conduct concerning the Circuit Markings to have caused Lumen to suffer loss or damage, Vision must have reproduced (or otherwise used) those works in the design of the layout of the PCBA in the Vision wiring harnesses. Frontline refers to the evidence of Mr Cheng in this regard, and relies on the submissions of Vision as to whether it reproduced (or otherwise used) those works.

195    Vision’s written submissions do not deal directly with this issue, but Vision makes the following submissions in the context of the defence under s 23 of the Circuit Layouts Act. Vision submits that: Vision Taiwan did not “copy” the Lumen layout embodied in the Lumen ECU; and the evidence of Mr Cheng is that evaluation and analysis were performed. Vision’s submissions can be summarised as follows:

(a)    The process Vision Taiwan followed to manufacture the ECU is described in the witness statement of Mr Cheng. Vision Taiwan, from the ECU with part no. SST-4000G provided by Frontline, drew a schematic diagram and PCB layout design, then made its own PCB in accordance with its own production standards. Because Frontline had insisted that the casing for the ECU be the same as the ECU it had supplied to Vision, the result was an ECU that was visually similar to the ECU with part no. SST-4000G.

(b)    However, when the PCB inside the Lumen ECU and the PCB inside the Vision ECU are compared, there are clear differences between them. This can be seen not only from a visual comparison of the actual PCBs, but also by comparing the Lumen layout at CB 3086-3087 with the schematic diagram and the PCB layout design prepared by Vision Taiwan (exhibits V4 and V5).

(c)    Mr Cheng in his witness statement describes the differences, as well as explaining why there are similarities, the latter arising from Frontline instructing Vision that the ECU housing (ie, the casing or enclosure) had to be exactly the same as the Lumen housing for the SST-4000G and the fact that the two ECUs had the same performance requirements and functions.

(d)    In his oral evidence, Mr Cheng further explained that Vision Taiwan used the same integrated circuits as appear in the Lumen PCBA and the manufacturer of the integrated circuits provided the reference design. This means that all points that appear in the PCBA will be similar across the Lumen PCBA and the Vision PCBA. The fact that there may be unused points on the Vision PCBA that are similar to the Lumen PCBA reflects the fact that the same integrated circuits have been used.

196    I now set out the applicable principles, followed by my consideration of whether Lumen’s copyright claims are made out (apart from defences).

197    Section 32 of the Copyright Act provides that copyright subsists in original literary and artistic works. In order for a work to be “original”, there is no requirement that creativity be demonstrated: IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 (IceTV) at [33].

198    Section 10(1) of the Copyright Act defines a “literary work” to include “a … compilation, expressed in words, figures or symbols”. There is no requirement of “literary merit”: Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd (2010) 189 FCR 109 at [30]. A technical document may constitute an original literary work even if parts of it have “been lifted directly” from another source, provided that the document as a whole can be described as original: ACP Machinery Australia Pty Ltd v Aerospace Technologies of Australia Ltd (No 3) (2013) 103 IPR 435 at [87]-[88]. Indeed, it will be sufficient, to establish originality, if “skill and judgment – intellectual effort – was brought to bear” in making a selection of the technical data to be included in such a document: Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (2011) 91 IPR 488 at [77]-[84].

199    Section 10(1) defines an “artistic work” to include a “drawing … whether the work is of artistic quality or not”. A “drawing” is defined, in turn, to include a diagram, map, chart or plan. Copyright has been held to subsist in design and machine drawings for an array of functional items, including drawings of key blank profiles, divan legs, and surfboard fins: see, eg, Ogden Industries Pty Ltd v Kis (Australia) Pty Ltd [1982] 2 NSWLR 283 at 287-289; Temple Instruments Ltd v Hollis Heels Ltd [1973] RPC 15 at 18; William McCausland v Surfing Hardware International Holdings Pty Ltd [2013] NSWSC 902 at [874]-[882].

200    As to ownership, s 35(2) of the Copyright Act provides that the author of a literary or artistic work “is the owner of any copyright subsisting in the work”. Section 35(6) further provides that where the work “is made by the author in pursuance of the terms of his or her employment by another person … that other person is the owner of any copyright subsisting in the work”.

201    Section 115(1) of the Copyright Act provides that the owner of a copyright may bring an action for an infringement of the copyright. Section 36(1) provides that copyright in a literary or artistic work is infringed by a person who, not being the owner of the copyright and without the licence of the owner of the copyright, does in Australia or authorises the doing in Australia of “any act comprised in the copyright”.

202    Section 13(1) of the Copyright Act provides that a reference to “an act comprised in the copyright” in a work is a reference to “any act that, under [the Copyright Act], the owner of the copyright has the exclusive right to do”. Section 31(1) provides, inter alia, that copyright in relation to a literary or artistic work is the exclusive right to reproduce that work in a material form. Section 14(1)(b) provides that a reference in the Copyright Act to a reproduction of a work shall be read as including a reference to a reproduction of a substantial part of the work.

203    Section 38 of the Copyright Act further provides that copyright in a literary or artistic work is infringed by a person who, without the licence of the owner of the copyright, sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article if the person knew, or ought reasonably to have known, that the making of the article constituted (or would if made in Australia have constituted) an infringement of copyright.

204    The “reproduction” of a work has been said to require two elements, namely resemblance to, and actual use of, the copyright work: Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 at 314; SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 472. Where the question is one of whether a “substantial part” of the original work has been taken, substantiality is qualitative rather than quantitative: SW Hart & Co Pty Ltd v Edwards Hot Water Systems at 482; see also Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273; Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1; University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601.

205    The Circuit Markings were created by Paul Fletcher, who was employed as a hardware engineer in the research and development division of Lumen. Mr Fletcher explained in his evidence the approach he adopted to the selection and placement of the reference designators in creating the Circuit Markings. I accept Mr Fletcher’s affidavit evidence that the approach he adopted is not common or widely used in the industry.

206    I consider that the Circuit Markings are a diagram, chart or plan as to the arrangement of reference designators, such that they constitute an original artistic work in which copyright subsists; the Circuit Markings are also an original compilation of figures, such that they constitute a literary work in which copyright subsists.

207    As between Lumen and Frontline, there is no dispute that the Circuit Markings were authored by an employee or employees of Lumen in the course of their employment, that the Circuit Markings comprise an original work in which copyright subsists and that, to the extent that copyright subsists in the Circuit Markings, Lumen is the owner of such copyright.

208    To the extent that Vision challenges the originality of the Circuit Markings, I reject that challenge. The fact that the reference designator letters may be contained in a standard published (in America and Canada) entitled “Graphic Symbols for Electrical and Electronics Diagrams” (the IEEE Standard) is beside the point. Among other things, there is no evidence from any witness in this proceeding that they had ever encountered, let alone followed, the teachings contained in the IEEE standard. The evidence of Mr Fletcher was that he was not familiar with the IEEE Standard. Further, it is apparent that the approach to alpha-numeric numbering adopted by Mr Fletcher involved (albeit this is not required) a degree of creativity. In particular, Mr Fletcher “purposely number[ed] the components”, making a selection as to which component ought be allocated which number, by endeavouring to put them “in as close proximity to the IC [integrated circuit] as possible”. It is readily apparent, looking at the Lumen PCBA, that the components on that PCBA could have been labelled in a number of different ways. Mr Fletcher exercised independent intellectual judgment to determine the most logical way of labelling, and arranging, each of the reference designators, sufficient to render the Circuit Markings an original copyright work.

209    Accordingly, I find that the Circuit Markings were authored by an employee or employees of Lumen in the course of their employment, that the Circuit Markings comprise an original work in which copyright subsists and that, to the extent that copyright subsists in the Circuit Markings, Lumen is the owner of such copyright.

210    Further, I find that the Vision wiring harnesses included a PCBA with an arrangement of reference designators that reproduced a substantial part of the Circuit Markings. A photograph of the Lumen PCBA appears at CB 673. A photograph of the Vision PCBA appears at CB 720. The Vision PCBA was used in all of the Vision wiring harnesses.

211    A comparison of the reference designators appearing on the Lumen PCBA and the reference designators appearing on the Vision PCBA reveals that there has been a substantial reproduction of the Circuit Markings. By way of summary:

(a)    the reference designators used are substantially identical – both the Lumen PCBA and the Vision PCBA feature the reference designators R1-R4, R10-R17, R20, R22, R25, R27, R30-R39, R58, R59, U10, U20, U30, D1, D3, D4, D10, D11, D21, D30-D32, D52, C1-C8, C10-C12, C20, C21, C30-C32, T30 and T50; and

(b)    the arrangement of those reference designators on the PCBs is substantially identical – for example, the top left corner of both boards feature the reference designator D3, situated immediately above the reference designators R15, R14, R10, R11, R13, C12 and C11, which are themselves situated immediately above the reference designators D11, D10, U10 and C10. The overall arrangement of those reference designators across the whole of the PCBs shares a striking similarity.

212    As set out above, in an email exchange on 13 and 14 April 2016, Mr Aker asked Mr Love whether the Vision PCBA had many of the same reference designators as the Lumen PCBA. The response of Mr Regodeiro was: “After comparison between the two parts, this is correct”. Further, Mr Regodeiro explained that “There is no industry standards or specifications for component designators ... These will vary from product to product”. Mr Regodeiro explained the similarity in this case on the basis that “Vision were asked to replicate the existing product 100% to avoid any issues with end customer thus causing the majority designators to be the same”.

213    In my view, the evidence establishes that:

(a)    Frontline instructed Vision to copy and manufacture, at a lower price, precise replicas of the Lumen wiring harnesses, including the SST-4000G ECU, for inclusion in towbar kits to be supplied to Mitsubishi and Mazda, and required the design to remain as identical as possible to the current ECU. The evidence of Mr Love was that “certainly from the start, there was a requirement for the product to be the same”.

(b)    In order to facilitate precise copying, Frontline put together a package of samples to be collected. The samples included the Lumen PCBA, which Mr Giatas sent to Vision Taiwan to be analysed and costings prepared.

(c)    The result of that analysis was the Vision PCBA, with all of its similarities to the Lumen PCBA. Mr Regodeiro accepted, when cross-examined, that the Vision PCBA included various reference designators located in almost identical positions to the same reference designators on the Lumen PCBA, which made no functional contribution to the operation of the Vision PCBA. The copying of the Lumen PCBA extended to the copying of redundant elements of that PCBA.

214    I do not consider the evidence of Mr Cheng to be inconsistent with these propositions.

215    In these circumstances, I consider that the arrangement of the reference designators on the Vision PCBA constitutes a reproduction of a substantial part of the Circuit Markings. Further, I find that Frontline knew or ought reasonably to have known that the making of the Vision wiring harnesses constituted an infringement of Lumen’s copyright in the Circuit Markings.

216    It follows that: Frontline has infringed, pursuant to s 36 of the Copyright Act, the copyright subsisting in the Circuit Markings by authorising Vision or Vision’s sub-contractors to reproduce the Circuit Markings in a material form; Vision has infringed, pursuant to s 36, the copyright subsisting in the Circuit Markings by reproducing the Circuit Markings in a material form or authorising its sub-contractors to reproduce the Circuit Markings in a material form; and Frontline has infringed, pursuant to s 38, the copyright in the Circuit Markings by selling or by way of trade offering and exposing for sale the Vision wiring harnesses including the Vision PCBA. Accordingly, Lumen’s copyright claims in relation to the Circuit Markings are to this extent made out, apart from defences. Further, it follows from the above that the conduct was causative of loss and damage.

Whether Vision’s defence under s 115(3) of the Copyright Act is made out

217    Vision raises a defence under s 115(3) of the Copyright Act. Section 115(3) provides:

Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

218    Vision submits that: the word “reasonable” needs to be kept in mind; the test is not “no grounds for suspecting” or “could not be expected to have known”; as was said by the High Court in another context, the word “reasonably” does not equate to “possibly” (see Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at [15]); that is, in this context, the test is not “no possible grounds for suspecting” or “could not possibly be expected to have known”; and although it is an objective test, regard must still be had to the knowledge, capacity and circumstances of a particular defendant: see Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 (Raben Footwear) at 91.

219    Vision submits that: the circumstances that Vision found itself in are of critical importance; there was an express and repeated claim to intellectual property by Frontline; and there is a well-known practice of tier 1 suppliers holding the intellectual property in products supplied by tier 2 suppliers.

220    To invoke this defence, Vision bears the onus of establishing: first, an actual lack of subjective awareness that the impugned acts constituted an infringement of the copyright; and secondly, that objectively considered, Vision had no reasonable grounds for suspecting that the impugned acts constituted an infringement: Henley Arch Pty Ltd v Lucky Homes Pty Ltd (2016) 120 IPR 317 at [169]. If the evidence establishes that Vision had an awareness of a question arising as to the propriety of its conduct, it will not be able to rely upon the defence: Tolmark Homes Pty Ltd v Paul (1999) 46 IPR 321 at [52]. A deliberate choice not to inquire as to ownership of, or licence to use, the work may suggest a mind in which real suspicion resided: Golden Editions Pty Ltd v Polygram Pty Ltd (1996) 61 FCR 479 at 488. Further, it has been held that “merely relying on assurances of another as to ownership or the existence of a licence will not ‘come close to establishing that [the infringer] had no reasonable grounds for suspecting that its acts would infringe’, even where those assurances may in fact have been misleading or deceptive”: Henley Arch at [170], citing Tamawood Ltd v Habitare Developments Pty Ltd (2015) 112 IPR 439 (Tamawood) at [181].

221    In my view, Vision has not established that it had no reasonable grounds for suspecting that the acts constituting the infringement (described above) were an infringement of the copyright in relation to the Circuit Markings. Although in the email dated 9 September 2013 (being the first email by which Frontline provided drawings to Vision), Mr Italiano stated that “information contained in drawings is the Intellectual Property of Frontline”, that statement was made some time after the samples of the Lumen wiring harnesses had been provided by Frontline to Vision, and the statement related to the drawings (of parts other than the PCBA) rather than to the PCBA. No comparable statement was made in relation to the Lumen PCBA. Vision never made an enquiry of Frontline as to whether Lumen consented to the use of the Circuit Markings, in circumstances where Vision was well aware that the project was designed to replicate the Lumen wiring harnesses. For these reasons, the defence is not made out.

Whether Vision’s defence under s 77 of the Copyright Act is made out

222    Vision raises a defence under s 77 of the Copyright Act. Section 77 relevantly provides as follows:

77    Application of artistic works as industrial designs without registration of the designs

(1)    This section applies where:

(a)    copyright subsists in an artistic work (other than a building or a model of a building, or a work of artistic craftsmanship) whether made before the commencement of this section or otherwise;

(b)    a corresponding design is or has been applied industrially, whether in Australia or elsewhere, and whether before or after the commencement of this section, by or with the licence of the owner of the copyright in the place of industrial application; and

(c)    at any time on or after the commencement of this section, products to which the corresponding design has been so applied (the products made to the corresponding design) are sold, let for hire or offered or exposed for sale or hire, whether in Australia or elsewhere; and

(d)    at that time, the corresponding design is not registrable under the Designs Act 2003 or has not been registered under that Act or under the Designs Act 1906.

…

(2)    It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which:

(a)    products made to the corresponding design are first sold, let for hire or offered or exposed for sale or hire; or

(b)    a complete specification that discloses a product made to the corresponding design is first published in Australia; or

(c)    a representation of a product made to the corresponding design and included in a design application is first published in Australia;

by embodying that, or any other, corresponding design in a product.

…

(5)    In this section:

…

design application has the same meaning as in the Designs Act 2003.

representation, in relation to a design, has the same meaning as in the Designs Act 2003.

223    The expressions “corresponding design” and “embodied in” are defined in s 74 of the Copyright Act as follows:

(1)    In this Division:

corresponding design, in relation to an artistic work, means visual features of shape or configuration which, when embodied in a product, result in a reproduction of that work, whether or not the visual features constitute a design that is capable of being registered under the Designs Act 2003.

(2)    For the purposes of subsection (1):

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

224    Vision submits as follows:

(a)    There can be no argument that the Lumen wiring harnesses (including the ECU) have been sold in Australia for the purposes of s 77(1)(c). Nor can it be argued that the Lumen wiring harnesses (including the ECU) do not involve a design being applied industrially. The issue, however, in terms of s 77(1)(b) is whether it is a “corresponding design” as defined in s 74(1).

(b)    The starting point is to note that, in terms of the definition of “artistic work” in s 10(1) of the Copyright Act, the Circuit Markings are an artistic work. Thus, the definition of “corresponding design” in s 74(1) can apply, it being defined “in relation to an artistic work”.

(c)    Vision never received any drawings from Frontline of or in respect of the Circuit Markings, therefore there is no case for “plan to plan” copying in respect of the Circuit Markings. The reference designators per se do not satisfy the requirements for originality, as they are no more than a letter and a number allocated in accordance with an industry convention or standard, where “C” is a capacitor, “D” a diode, “R” a resistor, “T” a transformer, “U” an integrated circuit and “X” a socket connector, and the number that follows each letter typically is a sequential number that accords with the number of capacitors, diodes, etc that are on a PCB.

(d)    When the actual Lumen PCB and the Vision PCB are examined, it is plain that as part of the process of making the PCB the layout is embodied in the PCB (the process used is either one of etching or additive – the word “printing” (in the term “printed circuit board”) is misleading; the layout and markings are integral to the board). It is significant that the particulars to [65C] of the statement of claim expressly refer to the Lumen Layout being “embodied” in the Lumen Circuit, thus picking up the definition of “corresponding design” in s 74(1).

(e)    When one looks at the Circuit Markings themselves on the actual PCBs (ie, the Lumen PCB and the Vision PCB), it is clear that as part of the manufacturing process, the reference designators are put on to the PCB matching the layout in each case. This is not a case where the reference designators are separately added on, but rather a case where in the making of the PCB they are “embodied” in the PCB: see Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 313 ALR 41 (Seafolly) at [479]. The Lumen PCB clearly has “worked into” it or “impressed upon” it, the Circuit Markings.

(f)    Even two dimensional articles will have protection under s 77, provided that the article satisfies s 74(2). Lumen’s submissions to the contrary should be rejected.

225    In my view, Vision has not established this defence. I have found, above, that the Circuit Markings constitute both a literary work and an artistic work. The defence applies only to artistic works and provides no answer to the claim based on the Circuit Markings as a literary work. It is therefore unnecessary to determine whether the definition of “corresponding design” in s 74(1) is satisfied on the facts of the present case. I note that one of the issues that would need to be determined is whether visual features of shape or configuration can be said to have been “embodied in” the product (namely, the PCB): see Seafolly at [470]; see also, generally, Polo/Lauren Company LP v Ziliani Holdings Pty Ltd (2008) 173 FCR 266 at [48]-[56].

Engineering Drawings

226    Lumen’s claims are set out in [18W]-[18MM] and [30]-[32] of the statement of claim. It is alleged that in the course of designing the Lumen wiring harnesses, Lumen created the Engineering Drawings. The drawing numbers and corresponding part numbers are set out in [18W] of the statement of claim. Lumen makes allegations to the following effect:

(a)    Each of the Engineering Drawings: was authored by an employee or employees of Lumen in the course of their employment; is an original artistic work in which copyright subsists for the purposes of the Copyright Act; further or alternatively, comprises a compilation of text, figures, symbols and/or drawings in which copyright subsists as an original literary work for the purposes of that Act.

(b)    Lumen is the owner of the copyright vesting in each of the Engineering Drawings pursuant to s 25(2) of the Copyright Act and, pursuant to s 31(1), has the exclusive right to: reproduce each of the Engineering Drawings, or a substantial part of the Engineering Drawings, in a material form; and authorise the reproduction of the Engineering Drawings, or a substantial part of the Engineering Drawings, in a material form.

(c)    Each of the Engineering Drawings displays the name LUMEN and contains the statement “COPYRIGHT SHALL NOT BE USED WITHOUT PERMISSION OR LICENSE” or a statement to a similar effect.

(d)    On dates between 9 September 2013 and 19 February 2016, Frontline reproduced the Engineering Drawings and provided copies to Vision. This reproduction was a reproduction of one or more of the Engineering Drawings in a material form.

(e)    During the design and manufacture of the Vision wiring harnesses, Vision created engineering drawings of the Vision wiring harnesses (the Vision Engineering Drawings). Each of the Vision Engineering Drawings is a reproduction, or reproduces a substantial part, of one of the Engineering Drawings.

(f)    By creating and circulating copies of the Vision Engineering Drawings, Vision has reproduced at least a substantial part of the Engineering Drawings in a material form.

(g)    Between about June 2014 and March 2015, Vision prepared PPAP submissions (the Vision PPAP submissions) and supplied them to Frontline in relation to the Vision wiring harnesses. The Vision PPAP submissions included reproductions of the Engineering Drawings and the Vision Engineering Drawings. By creating and circulating the Vision PPAP submissions, Vision reproduced at least a substantial part of the Engineering Drawings in a material form.

(h)    The respondents’ conduct described above was at all times without the licence or authority of Lumen.

(i)    As a result of these matters, each respondent has, pursuant to s 36 of the Copyright Act, infringed Lumen’s copyright in the Engineering Drawings.

(j)    The design and manufacture of the Vision wiring harnesses by Vision or Vision’s sub-contractors was undertaken at the direction and request of, and facilitated by, Frontline. As a result of these matters, Frontline has authorised the reproduction of the Engineering Drawings by Vision or Vision’s sub-contractors. As a result, Frontline has, pursuant to s 36 of the Copyright Act, infringed Lumen’s copyright in the Engineering Drawings.

227    In addition, Lumen makes allegations at [30]-[32] of the statement of claim concerning joint liability of Frontline for copyright infringement by Vision, authorisation of copyright infringement by Vision and loss and damage.

Whether Lumen’s copyright claims are made out (apart from defences)

228    In its outline of closing submissions, Frontline concedes that the evidence establishes that the Engineering Drawings include original artistic works and literary works (being a compilation of text, figures, symbols and/or drawings) that were authored by Lumen and in which copyright subsists. Frontline concedes that it infringed Lumen’s copyright in the drawings by providing copies of them to Vision and that it authorised Vision to reproduce the relevant artistic and literary works.

229    Frontline makes the following further submissions:

(a)    For this conduct to have caused Lumen any loss or damage, Vision must have relevantly reproduced (or otherwise used) those works in the design or manufacture of the Vision wiring harnesses.

(b)    Insofar as the artistic works are concerned, the evidence has not established that Vision relevantly reproduced (or otherwise used) the artistic works in the Engineering Drawings.

(c)    Insofar as the literary works in the Engineering Drawings are concerned, Frontline concedes that a sufficient portion of the Lumen and Vision drawings are sufficiently similar for the Court to find that Vision reproduced a substantial portion of (or otherwise used) the literary works in the Engineering Drawings. Accordingly, Frontline concedes that its infringement of copyright in respect of the Engineering Drawings caused Lumen to suffer loss and damage.

230    In the course of oral closing submissions, senior counsel for Lumen said that in light of Frontline’s concession regarding whether the Vision drawings constituted a reproduction of a substantial part of the Engineering Drawings as literary works, it was not necessary for the Court to deal with the issue of whether the Vision drawings constituted a reproduction of a substantial part of the Engineering Drawings as artistic works. In other words, to this extent, Lumen does not press its claim. I take this as applying to its claims against both Frontline and Vision.

231    Although Frontline in its closing submissions made the concessions referred to above, Vision did not make comparable concessions.

232    In Vision’s outline of closing submissions, it adopts submissions made by Frontline in its opening submissions. Thus, Vision, in effect, makes the following submissions:

(a)    To establish that Vision reproduced the drawings (or a substantial part thereof) Lumen relies on the evidence of Mr Walter. Mr Walter has marked up copies of the Engineering Drawings and the Vision Engineering Drawings. Those marked-up drawings identify the parts of the Lumen and Vision drawings that Mr Walter says he regards as the same.

(b)    As those marked-up drawings show, Mr Walter’s evidence is not that he regards the drawings (or a substantial part of them) as the same. Indeed, a side-by-side comparison of the drawings shows that in most (if not all) cases, the relevant Lumen drawing and the alleged copy bear little (if any) resemblance. Rather, Mr Walter regards certain information in the drawings as the same – such as the dimensions, locations and types of parts specified in the drawings.

(c)    Accordingly, if the Engineering Drawings are compilations that comprise a literary work, many of the aspects of the Lumen and Vision drawings that Mr Walter regards as the same are in fact different and do not constitute reproductions.

233    For the reasons indicated above, it is only necessary to consider the claims based on the Engineering Drawings as literary works (as distinct from artistic works). There does not appear to be any real issue, and in any event I find, that the Engineering Drawings constitute original literary works (to the extent that they comprise a compilation of manufacturing data, part information, symbols and drawings), and that the copyright in the Engineering Drawings is owned by Lumen.

234    The Engineering Drawings are used by Lumen during the manufacture of the components they depict and contain important information regarding the parts to be used, dimensional data, and manufacturing notes, which are not necessarily apparent from the components once manufactured.

235    The Engineering Drawings are of significant commercial value to Lumen, as they provide clear instructions as to how to manufacture the components depicted and contain the necessary information to facilitate the manufacture of those components.

236    The evidence establishes that both Frontline and Vision repeatedly engaged in the reproduction of the Engineering Drawings, without the licence of Lumen.

237    First, in a series of emails from Mr Italiano and Mr Martin of Frontline to Mr Giatas and Mr Regodeiro of Vision, referred to above, Frontline provided to Vision, and thereby reproduced, the whole of the Engineering Drawings. These drawings were provided in response to repeated requests by Mr Giatas, who accepted, when cross-examined, that he was “very eager to get high-resolution drawings”. Mr Giatas explained that he was keen to obtain these drawings because they provided “the base-line information”, such that “the path to having a replacement product is quicker”.

238    Secondly, Vision provided the Engineering Drawings to Chanon, which then made its own production drawings from the Engineering Drawings, in order to manufacture the Vision wiring harnesses. The act of Vision providing the Engineering Drawings to Chanon involved an unauthorised reproduction.

239    Thirdly, Vision prepared PPAP submissions for the components of the wiring harnesses. These were important documents, as Vision was unable to supply the parts to Frontline until PPAP approval was granted. The Vision PPAP submissions almost invariably contained reproductions of the Engineering Drawings.

240    These email exchanges and PPAP submissions involved a reproduction of the whole of the Engineering Drawings, without modification, and without the licence of Lumen, and thereby infringed the copyright of Lumen in the Engineering Drawings.

241    As noted above, Frontline concedes that a sufficient portion of the Lumen and Vision drawings are sufficiently similar for the Court to find that Vision reproduced a substantial portion of (or otherwise used) the literary work in the Engineering Drawings. Vision disputes this. I do not accept Vision’s contentions. On the basis of the evidence in Mr Walter’s first affidavit at [62]-[65] (including confidential exhibit MW-11 and as corrected in his third affidavit), I find that the Vision drawings reproduced a substantial part of the Engineering Drawings as literary works. In confidential exhibit MW-11, Mr Walter analysed a series of corresponding Lumen and Vision drawings, indicating where the material was, in his view, the same. I accept the evidence of Mr Walter, both in his affidavits and during cross-examination, relating to the similarities between the drawings.

242    It follows that Frontline and Vision have infringed, pursuant to s 36 of the Copyright Act, the copyright subsisting in the Engineering Drawings as literary works. Accordingly, Lumen’s copyright claims in relation to the Engineering Drawings are made out, subject to the defences raised by Vision. Further, Lumen’s claim against Frontline based on authorisation of copyright infringement by Vision is made out. For the reasons indicated, the conduct was causative of loss and damage.

Whether Vision’s defence under s 115(3) of the Copyright Act is made out

243    Vision raises a defence under s 115(3) of the Copyright Act. Vision’s submissions in relation to s 115(3) have been set out above, in the context of the Circuit Markings claim. The principles relating to s 115(3) have been discussed above.

244    In my view, Vision has not established the defence under s 115(3). Although in the email of 9 September 2013 Mr Italiano stated that the “information contained in drawings is the Intellectual Property of Frontline” and many of the drawings (ie, those with a Frontline frame around the Lumen drawing) contained the statement set out at [79] above, these matters need to be viewed in their full context. That context included: the fact that the drawings provided by Frontline to Vision included the LUMEN name and a claim to copyright on its behalf (set out at [78] above); some of the drawings provided by Frontline to Vision were stand-alone Lumen drawings – these drawings contained Lumen’s name and copyright claim and no claim to copyright on behalf of Frontline; when the drawings were sent to Mr Giatas and Mr Regodeiro, they both reviewed them carefully – Mr Giatas confirmed, when cross-examined, that he noticed the “references to Lumen and the claim by Lumen for copyright” in the drawings and accepted that it was “crystal-clear” that the drawings had been created by Lumen; as Mr Giatas accepted during cross-examination, he knew from the beginning of the project that Lumen “were the supplier of … some elements of” the towbar kit and that “the whole purpose of [the] exercise was for Vision to replace Lumen in the supply of these parts”; as Mr Love explained during cross-examination, “from the start, there was a requirement for the product to be the same”; and Vision proceeded with the project even though it became aware that Frontline had instructed it, not only to replicate the product 100 per cent, but also to replicate labelling that would involve false country of origin claims. Taking these contextual matters into account, I am not satisfied that Vision had no reasonable grounds for suspecting that the acts constituting the infringement (described above) were an infringement of the copyright in relation to the Engineering Drawings.

Whether Vision’s defences under ss 77 and 77A of the Copyright Act are made out

245    Vision raises a defence under s 77, which has been set out above. Vision also relies on s 77A, which provides as follows:

77A    Certain reproductions of an artistic work do not infringe copyright

(1)    It is not an infringement of copyright in an artistic work to reproduce the artistic work, or communicate that reproduction, if:

(a)    the reproduction is derived from a three-dimensional product that embodies a corresponding design in relation to the artistic work; and

(b)    the reproduction is in the course of, or incidental to:

(i)    making a product (the non-infringing product), if the making of the product did not, or would not, infringe the copyright in the artistic work because of the operation of this Division; or

(ii)    selling or letting for hire the non-infringing product, or offering or exposing the non-infringing product for sale or hire.

(2)    It is not an infringement of copyright in an artistic work to make a cast or mould embodying a corresponding design in relation to the artistic work, if:

(a)    the cast or mould is for the purpose of making products; and

(b)    the making of the products would not infringe copyright because of the operation of this Division.

246    Vision makes the following submissions:

(a)    In the statement of claim, Lumen alleges that Vision created engineering drawings and that they were a reproduction in whole or as to a substantial part of the Engineering Drawings.

(b)    The particulars to Lumen’s allegations refer to various emails from Mr Regodeiro of Vision to Mr Italiano of Frontline attaching drawings. The drawings that Mr Regodeiro sent are production drawings that Chanon had made from the engineering drawings that Frontline provided to Vision, or were from Vision Taiwan. The production drawings are not the same as the Engineering Drawings, as can be seen from the comparison that Mr Walter performed, although there are dimensional and part number similarities. Mr Walter accepted in oral evidence that the Chanon drawings are not the same. He also accepted that the part number similarities arose because the wiring harness kits were being made for Mitsubishi, and this would be the case whoever made the kits.

(c)    That said, assuming (but not conceding) that Lumen makes out its case for reproduction based on those similarities, Vision relies on s 77A (which is to be read together with s 77). Section 77A was introduced by the Design (Consequential Amendments) Act 2003 (Cth) and is intended to stop claims for breach of copyright based on alleged “plan on plan” infringements, where a drawing was made in the course of, and incidental to, the making of a product: see Digga Australia Pty Ltd v Norm Engineering Pty Ltd [2008] FCAFC 33 at [117]-[119]. That was the case here in relation to the Vision Engineering Drawings. Section 77A(1) requires that the reproduction of an artistic work be “derived from” a three dimensional product: but here it is important to note that Chanon had earlier received from Vision (well before the Engineering Drawings) the samples that Frontline had provided to Vision. There is no requirement in s 77A that the reproduction be exclusively derived from the product.

247    In my view, Vision has not established a defence under s 77 or 77A of the Copyright Act. These defences relate to artistic works. However, as explained above, Lumen only presses its claims in relation to the reproduction of the Engineering Drawings by Vision on the basis that they are literary works. The defences are not applicable to these claims. In these circumstances, it is unnecessary to determine whether the defences in s 77 or 77A would otherwise be available.

Installation Instructions

248    Lumen’s claims are set out in [18A]-[18K] and [30]-[32] of the statement of claim. Copies of the Installation Instructions appear at CB 207-408. Lumen makes allegations to the following effect:

(a)    Each of the Installation Instructions: was authored by an employee or employees of Lumen in the course of their employment; contains text that comprises an original literary work in which copyright subsists for the purposes of the Copyright Act; further or alternatively, contains a series of drawings each of which comprises an artistic work in which copyright subsists for the purposes of that Act; further or alternatively, comprises a compilation in which copyright subsists as an original literary work for the purposes of that Act.

(b)    Lumen is the owner of the copyright vesting in each of the Installation Instructions pursuant to s 25(2) of the Copyright Act and, pursuant to s 31(1), has the exclusive right to: reproduce each of the Installation Instructions, or a substantial part of the Installation Instructions, in a material form; and authorise the reproduction of the Installation Instructions, or a substantial part of the Installation Instructions, in a material form by another person.

(c)    On or around 4 April 2014, Frontline created a disk containing electronic versions of the Installation Instructions.

(d)    On or around 17 April 2014, Frontline provided the disk containing the electronic versions of the Installation Instructions to Vision. The disk constituted a reproduction of the Installation Instructions in a material form.

(e)    On 18 February 2016, Frontline sent to Vision by email electronic copies of the Installation Instructions in which reference to the name LUMEN had been removed. The copies constituted reproductions of the Installation Instructions in a material form.

(f)    Frontline has supplied each of the non-Lumen towbar kits with a set of instructions (the Vision Instructions) to vehicle manufacturers.

(g)    Each of the Vision Instructions is a reproduction, or reproduces a substantial part of, the Installation Instructions.

(h)    Vision or Vision’s sub-contractors have created the Vision Instructions by reproducing the Installation Instructions or a substantial part thereof in a material form and have supplied the Vision Instructions to Frontline together with the Vision wiring harness.

(i)    Frontline has authorised the reproduction of the Installation Instructions or a substantial part thereof by Vision or Vision’s sub-contractors.

(j)    The conduct of Frontline and Vision was at all times without the licence or authority of Lumen.

(k)    As a consequence of these matters, Frontline has, alternatively Frontline and Vision have, pursuant to s 36 of the Copyright Act, infringed Lumen’s copyright in the Installation Instructions.

(l)    Further, or in the alternative, Frontline and Vision knew or ought reasonably to have known that the making of the Vision Instructions constituted an infringement of Lumen’s copyright in the Installation Instructions. As a result, Frontline and Vision have, pursuant to s 38 of the Copyright Act, infringed Lumen’s copyright in the Installation Instructions.

249    In addition, Lumen makes allegations at [30]-[32] of the statement of claim concerning joint liability of Frontline for copyright infringement by Vision, authorisation of copyright infringement by Vision and loss and damage.

Whether Lumen’s copyright claims are made out (apart from defences)

250    In its outline of closing submissions, Frontline concedes that the evidence establishes that the Installation Instructions include literary and/or artistic works that were authored by Lumen and in which copyright subsists. Frontline concedes that it infringed Lumen’s copyright in the instructions by providing copies of them to Vision, that it authorised the reproduction of the instructions by Vision and that this conduct caused Lumen to suffer loss and damage.

251    Vision, in its outline of closing submissions, adopts [21]-[23] of Frontline’s outline of opening submissions in relation to this claim. Thus, Vision effectively makes the following submissions:

(a)    Lumen cannot identify the person or persons who authored the Installation Instructions for the Mitsubishi Pajero (parts MZ935181 and MR936591) and it can only identify the person who had “primary responsibility for the documents” for the Mitsubishi Outlander (MZ350174 and MZ350576).

(b)    Even for the Installation Instructions for which there is direct evidence of authorship, the alleged authors say that they have only created parts of the instructions. Substantial parts have been copied from a library of images, previous sets of instructions or images provided by Frontline. Copyright does not subsist in works that are mechanical reproductions or slavish copies of earlier copyright works: Pokémon Company International Inc v Redbubble Ltd (2017) 351 ALR 676 (Pokémon) at [34].

252    The Installation Instructions are lengthy documents containing detailed text explaining, and drawings depicting, how to install the towbar kits (including the wiring harnesses).

253    I am satisfied that the Installation Instructions are original works in which copyright subsists as a whole, and that the Installation Instructions each also contain original literary works (text) and original artistic works (drawings).

254    The unchallenged evidence of Mr Abrahams, a senior graphic illustrator employed by Lumen, was that:

(a)    in his current role, he supervises a team of graphic illustrators employed by Lumen;

(b)    one of the jobs he undertook, when employed by Lumen between 2010 and 2016 as a graphic illustrator, “was the creation of fitting instructions for Lumen products”;

(c)    he has personally worked on several of the Installation Instructions and supervised and worked alongside other graphic illustrators employed by Lumen who have created and worked on the Installation Instructions;

(d)    the process of creating the Installation Instructions typically commences around one month before parts are to be supplied, and involves graphic illustrators undertaking site visits and photographs of the installation process, before the graphic illustrator “prepares a series of line drawings based on the photographs that were taken” and the graphic illustrator “also prepares the text accompanying the drawings”;

(e)    to the extent that Lumen components are to be depicted in the Installation Instructions, the graphic illustrator “creates line drawings” of those components; to the extent that other components are to be depicted, the graphic illustrator will make a selection of such components from “a library of images kept by Lumen for this purpose” or obtain CAD drawings from the manufacturer of the part, by reference to which the graphic illustrator will then “create line drawings suitable for inclusion in the fitting instructions based on these CAD drawings”; and

(f)    in total, the amount of time taken by a graphic illustrator to create a full draft of each issue of the Installation Instructions “was around 20-25 working hours”.

255    The evidence establishes that graphic illustrators employed by Lumen wrote the text appearing in those instructions and either drew themselves, or selected, the images used in those instructions.

256    Mr Abrahams has identified the Installation Instructions he created and has identified (with two exceptions, namely the instructions for MZ935181 and MR936591) the graphic illustrators who created the other Installation Instructions. All of the graphic illustrators identified by Mr Abrahams were employed by Lumen. I infer that the graphic illustrators who created the instructions for MZ935181 and MR936591 were also employed by Lumen. The evidence of Mr Abrahams is corroborated by the unchallenged evidence of Mr Mena.

257    The evidence of Mr Abrahams and Mr Mena that they and other Lumen employees created large parts of the Installation Instructions is sufficient to establish that Lumen owns the copyright in the Installation Instructions. This is not a case in which there has been “a mere mechanical reproduction or a slavish copy of an earlier copyright work”: Pokémon at [34]. To the contrary, the creation of the Installation Instructions plainly involved “the requisite degree of originality over and above the earlier work” (Pokémon at [34]), the creation of which involved independent intellectual effort: see IceTV at [33]. The Installation Instructions are recognisably “the author’s own work as opposed to a copy of another’s work or a trivial variation on another’s” (Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd (2008) 248 ALR 364 at [42]), even if certain aspects of the Installation Instructions may have been taken from elsewhere.

258    There is no issue as between Lumen and Frontline as to infringement of copyright in relation to the Installation Instructions. Whether covered by this concession or not, I find that Frontline knew or ought reasonably to have known that the making of Vision’s instructions constituted an infringement of Lumen’s copyright in the Installation Instructions.

259    Although Vision does not make the same concession as Frontline, Vision does not make any specific submissions as to infringement in relation to the Installation Instructions. In my view, the evidence clearly establishes that Vision infringed Lumen’s copyright in the Installation Instructions. The evidence establishes that Vision engaged in wholesale and unlicensed copying of the Installation Instructions. When Vision ultimately came to supply its wiring harnesses, the non-editable PDF copies of the Installation Instructions (that had been provided by Frontline to Vision) were printed out and used for the Vision wiring harnesses.

260    It follows that: Frontline and Vision have infringed, pursuant to s 36 of the Copyright Act, the copyright subsisting in the Installation Instructions by reproducing the instructions in a material form; Frontline has infringed, pursuant to s 36, the copyright subsisting in the Installation Instructions by authorising Vision to reproduce the instructions in a material form; and Frontline has infringed, pursuant to s 38, the copyright subsisting in the Installation Instructions by selling and by way of trade offering or exposing for sale towbar kits including the Installation Instructions. Accordingly, Lumen’s copyright claims in relation to the Installation Instructions are to this extent made out, apart from defences. There is no issue that the conduct was causative of loss and damage.

Whether Vision’s defence under s 115(3) of the Copyright Act is made out

261    Vision raises a defence under s 115(3) of the Copyright Act. Vision’s submissions in relation to s 115(3) have been set out above, in the context of the Circuit Markings claim.

262    In my view, Vision has not established that it had no reasonable grounds for suspecting that the acts constituting the infringement (described above) were an infringement of the copyright in relation to the Installation Instructions. Although in the email dated 9 September 2013 Mr Italiano stated that “information contained in drawings is the Intellectual Property of Frontline”, that statement related to the drawings rather than to the instructions. No comparable statement was made in relation to the instructions. Vision never made an enquiry of Frontline as to whether Lumen consented to the use of the Installation Instructions, in circumstances where Vision was well aware that the project was designed to replicate the Lumen wiring harnesses. I note also that Frontline was unable to supply Vision with an editable copy of the Installation Instructions, and that some of the instructions contained the LUMEN name on the depiction of the trailer socket.

263    It follows from the above that Lumen has made out its copyright infringement claims against both Frontline and Vision in respect of each of the Circuit Markings, the Engineering Drawings and the Installation Instructions.

Passing off and contraventions of the Australian Consumer Law

264    These claims are brought against Frontline only. Although the claims are admitted, it is necessary to describe them in order to provide context for the issues of relief. It is convenient to deal together with passing off and contraventions of the Australian Consumer Law as these claims are based on essentially the same conduct. This is consistent with the approach taken by the parties in their submissions.

265    Lumen makes the following allegations in the statement of claim relating to what are described as, the “Equivalent Harness Representations”. Lumen alleges, in summary:

(a)    Between around July 2007 and February 2016, Frontline made PPAP submissions to vehicle manufacturers, including Mitsubishi and Mazda, to obtain approval for towbar kits that included the Lumen wiring harness.

(b)    Each of the PPAP submissions included drawings and technical information relating to the corresponding Lumen wiring harness.

(c)    Each of the PPAP submissions was subsequently approved by vehicle manufacturers, including Mitsubishi.

(d)    After obtaining PPAP approval from vehicle manufacturers for the towbar kits, Frontline commenced supplying the towbar kits to vehicle manufacturers, including Mitsubishi and Mazda.

(e)    By reason of the above matters, Lumen has acquired a substantial and valuable reputation in the Lumen wiring harness among vehicle manufacturers including Mitsubishi and Mazda.

(f)    Subsequently, and without notice to any relevant vehicle manufacturers, Frontline commenced supplying towbar kits in which the Lumen wiring harness had been replaced by a non-Lumen wiring harness.

(g)    The non-Lumen wiring harness supplied by Frontline in the towbar kits bears a close visual resemblance to the Lumen wiring harness.

(h)    By its conduct in supplying the towbar kits having the non-Lumen wiring harness in the circumstances, Frontline has made the following representations (described as the “Equivalent Harness Representations”):

(i)    that each of the non-Lumen wiring harnesses is the same product as the respective Lumen wiring harness;

(ii)    that the supplier and manufacturer of the non-Lumen wiring harnesses is the same as the supplier and manufacturer of the Lumen wiring harnesses;

(iii)    that the non-Lumen wiring harnesses have the sponsorship or approval of the supplier and manufacturer of the Lumen wiring harnesses;

(iv)    that the non-Lumen wiring harnesses are of the same standard and quality as the Lumen wiring harnesses;

(v)    that the non-Lumen wiring harnesses have the same place of origin as the Lumen wiring harnesses;

(vi)    that the non-Lumen wiring harness was manufactured, supplied, licensed or approved by Lumen;

(vii)    that the towbar kits supplied by Frontline to vehicle manufacturers at all times subsequent to the approval of the PPAP submissions contained the parts detailed in the PPAP submissions, including the Lumen wiring harness; and

(viii)    that the non-Lumen wiring harness had been subjected to and passed the same level of testing as the Lumen wiring harness prior to being supplied to vehicle manufacturers.

(i)    Each of the Equivalent Harness Representations was false in that:

(ix)    the non-Lumen wiring harness is not the same product as the Lumen wiring harness;

(x)    the supplier and manufacturer of the non-Lumen wiring harness is not the same as the supplier and manufacturer of the Lumen wiring harness;

(xi)    the non-Lumen wiring harness does not have the sponsorship or approval of the supplier and manufacturer of the Lumen wiring harness;

(xii)    the non-Lumen wiring harness is not of the same standard and quality as the Lumen wiring harness;

(xiii)    the non-Lumen wiring harness does not have the same place of origin as the Lumen wiring harness;

(xiv)    the non-Lumen wiring harness was not manufactured, supplied, licensed or approved by Lumen;

(xv)    Frontline supplied towbar kits to vehicle manufacturers that did not include the Lumen wiring harness subsequent to the approval of the PPAP submissions; and

(xvi)    the non-Lumen wiring harness had not been subjected to and passed the same level of testing as the Lumen wiring harness prior to being supplied to vehicle manufacturers.

266    Lumen then makes the following allegations regarding passing off and contraventions of the Australian Consumer Law:

(a)    The Equivalent Harness Representations were made in the course of trade or commerce.

(b)    As a result of Frontline’s conduct, Lumen has suffered, and continues to suffer, loss and damage.

(c)    As a consequence of the above matters, Frontline has committed the tort of passing off.

(d)    As a consequence of the above matters, Frontline has:

(xvii)    engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law;

(xviii)    made false or misleading representations that goods are of a particular standard or quality in contravention of s 29(1)(a) of the Australian Consumer Law;

(xix)    made false or misleading representations that goods have sponsorship or approval in contravention of s 29(1)(g) of the Australian Consumer Law; and

(xx)    made false or misleading representations regarding the place of origin of goods in contravention of s 29(1)(k) of the Australian Consumer Law.

267    In its outline of closing submissions, Frontline concedes that the evidence establishes that it engaged in conduct that constitutes passing off, and conduct that was misleading or deceptive or likely to mislead or deceive, by supplying the non-Lumen wiring harnesses to Mitsubishi and Mazda in circumstances where it did not submit or obtain approval of PPAP submissions in respect of those products.

268    In light of this concession, and in light of the factual findings set out earlier in these reasons, I find that Lumen’s passing off claim and claims based on contraventions of ss 18 and 29 of the Australian Consumer Law are made out.

Breach of confidence

269    This claim is brought against Frontline only. Again, although the claim is admitted, it is necessary to describe the claim to provide context for the issues concerning relief.

270    The allegations in the statement of claim are summarised below. I note that Lumen abandoned its breach of confidence claim in respect of the samples (T99). Lumen’s allegations (with this adjustment) are as follows:

(a)    During the process of developing and designing the Lumen wiring harness, Lumen developed documentation containing technical information and drawings (defined as “Technical Information” in the statement of claim).

(b)    In or around 2009, Lumen provided the Technical Information to Frontline.

(c)    The Technical Information included information confidential to Lumen.

(d)    The Technical Information was provided to Frontline in circumstances such that Frontline knew, or ought to have known, that an obligation of confidence applied to the information.

(e)    On dates between 9 September 2013 and 17 February 2015, Frontline provided the Technical Information (or parts thereof) to Vision, for the purpose of manufacturing the non-Lumen wiring harness.

(f)    The use or disclosure of the Technical Information was without the approval or consent of Lumen.

(g)    As a consequence of the use or disclosure of the Technical Information, Lumen has suffered, and continues to suffer, loss and damage.

(h)    As a consequence of the above, Frontline has breached its obligation of confidence to Lumen.

271    In its outline of closing submissions, Frontline concedes that its conduct in supplying Lumen’s PPAP submissions and the Engineering Drawings to Vision constituted a breach of confidence. Frontline notes that, insofar as the PPAP submissions are concerned, Lumen has not said what (if any) part of the PPAP submissions Vision used in the manufacture and supply of the non-Lumen wiring harnesses (save for the Engineering Drawings). Accordingly, Frontline submits, the breach of confidence claim concerning the PPAP submissions does not appear to add anything to the breach of confidence claim concerning the Engineering Drawings.

272    In light of this concession and the factual findings set out earlier in these reasons, I find that Lumen’s breach of confidence claim is made out. It does not appear that the claim based on the provision of Lumen’s PPAP submissions to Vision adds anything to the claim based on the provision of the Engineering Drawings.

Breach of contract

273    This claim is brought against Frontline only. As with earlier claims, although the claim is admitted, it is necessary to describe the claim to provide context for the issues concerning relief.

274    The allegations in the statement of claim can be summarised as follows:

(a)    The supply of the Lumen wiring harnesses from Lumen to Frontline was subject to the Lumen T&Cs.

(b)    The Lumen T&Cs form a contract between Lumen and Frontline.

(c)    By its conduct as set out in [5], [6]-[32] and [56]-[59] of the statement of claim (being the allegations concerning trade mark infringement, copyright and breach of confidence), Frontline breached cl 10.3 of the Lumen T&Cs.

(d)    By its conduct as set out in [56]-[59] of the statement of claim (ie, the breach of confidence allegations), Frontline breached clauses 10.4, 11.2 and 11.3 of the Lumen T&Cs.

(e)    Further, or in the alternative, on or around 26 March 2013, Frontline provided samples of the Lumen wiring harnesses to Vision for the purpose of reverse engineering the Lumen wiring harnesses and developing a product with identical function to the Lumen wiring harnesses.

(f)    By its conduct as set out above, Frontline breached cl 11.1 of the Lumen T&Cs.

(g)    As a consequence of Frontline’s breach of the Lumen T&Cs, Lumen has suffered, and continues to suffer, loss and damage.

275    In its outline of closing submissions, Frontline concedes that its conduct in supplying the samples, the Engineering Drawings and the Installation Instructions to Vision was a breach of contract as alleged by Lumen.

276    In light of this concession and the factual findings set out above, I find that Lumen’s breach of contract claim is made out.

Trade mark infringement

277    This claim is brought against Frontline only.

278    In the statement of claim, the applicants rely on both ss 120(1) and 120(2) of the Trade Marks Act. However, in the course of closing submissions senior counsel for the applicants said that they did not press their claim based on s 120(1) (T592). I note that, in Frontline’s opening submissions in relation to s 120(1), it was submitted that: Frontline did not supply goods to the ‘after market’ at any relevant time; it only supplied towbar kits to car manufacturers for installation by those manufacturers into new cars. The Lumen trade mark is in respect of goods for the automotive ‘after market’. This would seem to explain why the applicants decided not to press their claim based on s 120(1).

279    Section 120(2) provides as follows:

(2)    A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

(a)    goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or

(b)    services that are closely related to registered goods; or

(c)    services of the same description as that of services (registered services) in respect of which the trade mark is registered; or

(d)    goods that are closely related to registered services.

However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.

(Notes omitted.)

280    The expression “deceptively similar” is defined in s 10 of the Trade Marks Act as follows:

For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

281    The applicants’ allegations in relation to s 120(2) of the Trade Marks Act can be summarised as follows:

(a)    Lumen International is the owner of the Lumen trade mark, being Australian trade mark no. 958232 for the name LUMEN. The trade mark was registered with effect from 13 June 2003 in respect of goods for the automotive after market, including parts and accessories for vehicles and trailers.

(b)    Lumen is an authorised user of the sign the subject of the Lumen trade mark within the meaning of s 8 of the Trade Marks Act.

(c)    From a date unknown to Lumen and Lumen International, Frontline has promoted and supplied towbar kits including non-Lumen wiring harnesses to vehicle manufacturers under and by reference to the name LUMEN. Lumen’s allegations relate to the Installation Instructions for the towbar kits for three Mitsubishi vehicles: the Pajero, the Challenger and the Lancer. Copies of the relevant Installation Instructions are annexed to Mr Abrahams’s affidavit dated 17 January 2018. The name LUMEN appears in the depiction of the trailer socket in certain of the Installation Instructions.

(d)    Frontline’s conduct is and has at all material times been without the licence, authority or approval of Lumen or Lumen International.

(e)    Frontline’s use of LUMEN as set out above constitutes use of LUMEN as a trade mark as defined in s 17 of the Trade Marks Act.

(f)    Frontline has used LUMEN as a trade mark in relation to goods of the same description as goods in respect of which the Lumen trade mark is registered.

(g)    As a result, Frontline has, pursuant to s 120(2) of the Trade Marks Act, infringed the Lumen trade mark.

(h)    As a result of Frontline’s conduct, Lumen has suffered, and continues to suffer, loss and damage.

282    Frontline accepts that Lumen International is the owner and Lumen is an authorised user of the Lumen trade mark.

283    Frontline submits that any use of the LUMEN sign will not constitute infringement pursuant to s 120(2) if Frontline can establish that using the sign as it did was not likely to deceive or cause confusion. Frontline submits that: in considering whether its use of the sign was likely to deceive or cause confusion, the focus is on the particular use of the sign that is said to constitute an infringement, not the more general conduct that Lumen relies on for the purpose of its misleading or deceptive conduct and passing off allegations; in the Installation Instructions for the towbar kits for the Pajero, the Challenger and the Lancer, the word LUMEN appears only once; in each case the text is so small it is unlikely to have ever been noticed, let alone caused confusion; and in these circumstances the applicants’ claim under s 120(2) should fail.

284    The proviso in section 120(2) allows a respondent “to show that what he has actually done or threatens to do is not likely to deceive or cause confusion, or to be taken as indicating the connexion in the course of trade”: Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227 at 233. In the present case, Frontline has not established that its use of the LUMEN sign in several of the Installation Instructions was not likely to deceive or cause confusion. The Installation Instructions are annexed to the affidavit of Mr Abrahams. The LUMEN name appears on the depiction of the trailer socket in some, but not all, of the instructions. For example, it appears in the Installation Instructions for the towbar kit for the Challenger 5 and 7 Seater (at page 2, CB 234). Although the font size is small, the name LUMEN is readable. It indicates a connection in the course of trade between the wiring harness and Lumen. This was likely to cause confusion in circumstances where copies of the relevant Installation Instructions were provided with towbar kits that included the Vision wiring harness rather than the Lumen wiring harness. Accordingly, I conclude that the applicants’ trade mark infringement claim is made out.

Claims under the Circuit Layouts Act

285    This claim is brought against both Frontline and Vision. Lumen claims, in summary, that the layout of the circuit included in the SST-4000G ECU (which forms part of the Lumen wiring harnesses) is an “eligible layout” for the purposes of the Circuit Layouts Act and that Frontline and Lumen, by copying that layout or authorising others to copy the layout, have infringed Lumen’s “EL rights” under the Act. The main issue that arises is whether the circuit upon which Lumen relies is an “integrated circuit” for the purposes of the Act.

Key relevant provisions

286    The key relevant provisions of the Circuit Layouts Act (the long title for which is “An Act to provide for the protection of certain layouts for integrated circuits, and for related purposes”) are as follows.

287    Section 5 contains the following definitions of present relevance:

In this Act:

…

circuit layout means a representation, fixed in any material form, of the three-dimensional location of the active and passive elements and interconnections making up an integrated circuit.

…

eligible layout means an original circuit layout:

(a)    the maker of which was, at the time the layout was made, an eligible person; or

(b)    that was first commercially exploited in Australia or in an eligible foreign country.

eligible person means:

(a)    an Australian citizen or a person resident in Australia;

(b)    a body corporate incorporated by or under a law in force in a State or Territory;

(c)    a citizen, national or resident of an eligible foreign country; or

(d)    a body corporate incorporated by or under a law of an eligible foreign country.

EL rights means the exclusive rights specified in section 17 in relation to an eligible layout.

…

integrated circuit means a circuit, whether in a final form or an intermediate form, the purpose, or one of the purposes, of which is to perform an electronic function, being a circuit in which the active and passive elements, and any of the interconnections, are integrally formed in or on a piece of material.

material form, in relation to a circuit layout, includes any form of storage (whether visible or not) from which the layout, or a substantial part of it, can be reproduced.

…

protection period, in relation to an eligible layout, means the period beginning on the day on which the layout was made and ending: