Federal Court of Australia

Watson Webb Pty Ltd v Comino [2025] FCA 871

ORDERS

THE COURT ORDERS THAT:

1. The parties provide to the associate to Halley J agreed or, if not agreed, competing, draft orders giving effect to these reasons, including as to the costs of the proceeding, by no later than 4.00 pm on Thursday, 14 August 2025.

2. The proceeding be listed for a case management hearing for the purpose of resolving any outstanding issue in relation to orders to give effect to these reasons, including as to costs, at 9.30 am on Monday 18 August 2025.

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

ORDERS

THE COURT ORDERS THAT:

1. The amended notice of cross-claim filed by the first cross-claimant on 17 May 2022 be dismissed.

2. The parties otherwise provide to the associate to Halley J agreed or, if not agreed, competing, draft orders giving effect to these reasons, including as to the costs of the proceeding, by no later than 4.00 pm on Thursday, 14 August 2025.

3. The proceeding be listed for a case management hearing for the purpose of making directions for the determination of issues as to quantum and resolving any outstanding issue in relation to orders to give effect to these reasons, including as to costs, at 9.30 am on Monday, 18 August 2025.

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

REASONS FOR JUDGMENT

HALLEY J:

A.     Introduction

A.1.    Overview

1 These two interrelated proceedings arise from a breakdown in commercial relationships between parties relevantly engaged in the design, fabrication, manufacture, importation and distribution of valves, meter boxes and brackets for water distribution systems.

2 The first proceeding is an appeal by Watson Webb Pty Ltd, as the solicitor for All Valve Industries Pty Ltd (AVI) and Cav.Uff. Giacomo Cimberio S.p.A. from a decision of the Australian Designs Office concerning the ownership of two registered Australian designs for valves numbered 201811005 (005 Design) and 201811810 (810 Design) (together, Designs). The respondent to the appeal, Mr John Comino, is recorded on the Australian Designs Register as the owner of both Designs.

3 In the second proceeding, AVI and Cimberio advance claims against Mr Comino and his company, Strongcast Pty Ltd, for copyright infringement, breach of confidence, breach of contract and inducing breach of contract, contraventions of s 18(1) of the Australian Consumer Law (ACL) being Sch 2 to the Competition and Consumer Act 2010 (Cth), invalidity of the Designs, and making unjustified threats of design infringement. AVI and Cimberio contend that any rights held by Mr Comino in the Designs are held on constructive trust for Cimberio.

4 There are two cross-claims in the second proceeding. Mr Comino and Strongcast cross-claimed against AVI (First Cross-Claim) for infringement of the Designs by importing into Australia and selling valves that are identical or substantially similar in overall design to the Designs (AVI Ball Valves) and associated water meter assemblies (AVI Water Meter Assemblies) for infringement of claims 1 to 4 in an Australian Innovation Patent with respect to a bracket for holding pipes numbered 2017100757 (757 Patent). Mr Comino was recorded on the Patent Register as the owner of the 757 Patent until it expired on 18 July 2024. AVI, in turn, cross-claims against Mr Comino, claiming that claims 1 to 4 of the 757 Patent are invalid (Second Cross-Claim).

5 In these reasons for judgment, I refer to AVI and Cimberio as the applicants and I refer to Mr Comino and Strongcast as the respondents.

6 The parties have prepared a statement of agreed facts and issues for determination.

7 For the reasons that follow, I have concluded that:

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

(b) both of the Designs are distinctive over the design of the C6827 Valve (the valve provided by AVI to Strongcast, which AVI had sourced and obtained from Cimberio);

(c) the AVI Ball Valves are not identical to, or substantially similar in overall impression to, the 810 Design;

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

(e) the respondents directly infringed the copyright of Cimberio in the C9746 Design Drawing (a drawing of a valve with a lockable handle and an internal thread numbered C9746/0) by providing it, wholly or in substantial part, to Infinity Design Pty Ltd (Infinity Design) in February 2018, to their patent attorney for the purpose of registering the Designs and by their patent attorney, as their agent, to the Designs Office;

(f) the respondents authorised the infringement by Infinity Design of the copyright of Cimberio in the C9746 Design Drawing in February 2018;

(g) the respondents breached the obligations of confidence that they owed to Cimberio in disclosing the C9746 Design Drawing to Infinity Design, their patent attorney for the purpose of registering the Designs and by their patent attorney, as their agent, to the Designs Office and using it for an extraneous purpose;

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

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

(j) claims 1 to 4 of the 757 Patent are invalid and should be revoked as each lacks clarity, support and/or sufficiency under s 40(2)(a) or s 40(3) of the Patents Act 1990 (Cth) (Patents Act);

(k) had I otherwise found that the 757 Patent was valid, AVI did not infringe the 757 Patent by supplying any of the AVI Brackets or the AVI Water Meter Assemblies.

8 It follows that the applicants have succeeded on design entitlement and infringement, breach of copyright and obligations of confidence, the ACL claims, patent invalidity and, had it otherwise arisen, patent infringement, but not on their design invalidity and breach of contract claims.

9 As for relief, I have concluded that:

(a) Cimberio is entitled to an order for an account of profits, or subject to any election to the contrary, damages, from the respondents with respect to the respondents’ infringement of their copyright in the C9746 Design Drawing;

(b) Cimberio is entitled to additional damages pursuant to s 115(4) of the Copyright Act 1968 (Cth) (Copyright Act) from the respondents with respect to the respondents’ infringement of their copyright in the C9746 Design Drawing;

(c) an order is to be made revoking the registration of each of the Designs;

(d) a declaration is to be made that each of Cimberio and Mr Comino was an entitled person in respect of each of the Designs at the time it was registered;

(e) a declaration is to be made that Mr Comino holds his interest in the Designs on a constructive trust in favour of Cimberio and an order should be made that his interest is to be transferred to Cimberio;

(f) the applicants are entitled to damages and/or compensation pursuant to s 236 and/or s 237 of the ACL for any loss they have suffered by reason of the respondents’ contraventions of s 18 of the ACL;

(g) a declaration is to be made that the 757 Patent is invalid;

(h) an order is to be made revoking the 757 Patent.

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

A.2.    Glossary

11 I have used the following defined terms in these reasons:

A.3.    Dramatis personae

12 The following are the principal persons referred to in these reasons for judgment:

B.     Witnesses

B.1.     The applicants’ lay evidence

13 The applicants relied on lay evidence from six witnesses.

14 Mr Trent Kilner is the managing director of AVI. Mr Kilner affirmed three affidavits in the proceedings. In his first affidavit, Mr Kilner gave evidence directed at design issues, addressing AVI’s relationship with Cimberio and Strongcast, the sharing of design drawings between Cimberio, AVI and Strongcast, the involvement of AVI in the development of the C6827 Valve and the C9746 Valve (a valve with a lockable handle and an internal thread), his knowledge of the registration of the Designs by Strongcast, and the complaints made by Strongcast about the AVI Ball Valves. In his second affidavit, Mr Kilner gave evidence on patent issues directed at the holes in the First AVI Bracket (a bracket that, during the period from 28 July 2020 to 3 September 2021, AVI sold, offered to sell, kept for those purposes and imported as part of the Inground Water Meter Assembly), the Second AVI Bracket (a modified version of the First AVI Bracket that from 27 May 2021, AVI sold, offered to sell, kept for those purposes and imported), and the bolts in the Third AVI Bracket (a bracket that AVI has sold, offered to sell, kept for those purposes and imported into Australia from approximately May 2021). Mr Kilner also gave evidence directed at the use of recesses in each of the First AVI Bracket, the Second AVI Bracket and the Third AVI Bracket (together, the AVI Brackets). Mr Kilner was cross-examined.

15 Mr Kilner gave evidence directly and did not seek to engage in any advocacy. He made appropriate concessions, and I was satisfied that he was answering questions honestly and to the best of his recollection. In particular, he accepted that Mr Daniel Dillenbeck, Marketing Manager at AVI, was the main point of contact between AVI and Strongcast, to his knowledge Mr Comino spoke and dealt almost exclusively with Mr Dillenbeck since early 2013 and he personally did not have any discussions with Mr Comino about product design. He also accepted, without prevarication, that two paragraphs in a statutory declaration that he gave to the Designs Office were in error and objectively misleading.

16 Mr Augusto Riva is a technical project development designer for Cimberio. Mr Riva has been employed in Cimberio’s Technical and Design team for almost 30 years and swore two affidavits in the proceedings. Mr Riva gave evidence of the background to Cimberio, the relationship between Cimberio and AVI, the Cimberio design process and his involvement in the design of the C6827 Valve and the C9746 Valve. Mr Riva was cross-examined with the assistance of an interpreter.

17 Mr Riva was an impressive witness. I am satisfied, after giving due allowance for the inherent difficulties of being cross-examined on technical issues through an interpreter, that he answered questions directly and without prevarication. I gave more weight, however, to his oral evidence than his affidavit evidence. As the respondents submitted, Mr Riva’s affidavits were prepared in an unorthodox fashion. Mr Riva’s affidavits were translated from Italian into English with the assistance of Mr Cimberio’s secretary, who is not an accredited translator, and online translation services. As a general principle, if a witness can only give evidence orally with the assistance of an interpreter, it is highly desirable, particularly in giving evidence on technical matters, that accredited translators are used for the purpose of preparing affidavit evidence and the necessary certifications are made on the affidavit.

18 Ms Anna Ellis is the manager of Draper Enterprises Ltd (Draper). Ms Ellis affirmed one affidavit in the proceedings. She gave evidence directed at prior art for the patent invalidity case, in particular, Draper new product catalogue printed in approximately January 2015 (Draper Catalogue), the sale of products featured in the Draper Catalogue, and two invoices for the sale of Draper Products (the products marketed in the Draper Catalogue) in 2013 and 2014. Ms Ellis was cross-examined.

19 Mr Andrew Nicholls is currently a landscaper but in the period between 2013 and 2019, he was employed by Draper in various roles in the family business that had been established by his grandfather. Mr Nicholls swore one affidavit in the proceedings. Mr Nicholls is the brother of Ms Ellis.  Mr Nicholls gave evidence of his involvement in the preparation of the Draper Catalogue and the distribution of the catalogue in Australia and New Zealand.

20 Both Ms Ellis and Mr Nicholls were cross-examined as to their personal knowledge of the publication of the Draper Catalogue and the sale of Draper Products before the priority date for the 757 Patent. Both answered questions directly and without prevarication and made appropriate concessions. I was satisfied that I could accept their evidence.

21 In addition, Dr George Mokdsi gave evidence concerning publication dates of two United States designs, and Mr Alec Tonkin, a solicitor employed by the solicitor for the applicants, gave evidence on chain of custody issues for the copy of the Draper Catalogue admitted into evidence. Neither was cross-examined.

B.2.     The applicants’ failure to call witnesses

22 The respondents contend that a critical consideration is that neither Mr Roberto Cimberio, a director of Cimberio, who gave evidence before the Designs Office below, nor Mr Daniel Dillenbeck, who was the person at AVI who dealt with Mr Comino and Mr Cimberio, gave evidence for the applicants.

23 The respondents submit that both Mr Riva and Mr Kilner gave evidence of their limited involvement on important issues to be determined, in particular, that Mr Riva did not deal directly with Mr Comino; Mr Cimberio was the person who dealt with the commercial arrangements with clients; Mr Dillenbeck was the AVI representative responsible for AVI’s relationship with Strongcast in the period since early 2013; and Mr Kilner did not have any discussions with Mr Comino about new product design.

24 The respondents submit that the applicants ought to have called evidence from Mr Cimberio and Mr Dillenbeck if they were going to seriously dispute the evidence given by Mr Comino. They submit that the Court should draw appropriate inferences pursuant to the rule in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 9 at 320-321 that the evidence each would have given would not have assisted the applicants’ cases.  They also seek to rely on the rule in Blatch v Archer (1774) 1 Cowp 63 at 65 to the effect that all evidence must be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to contradict.

25 The respondents also contend that the Court should draw appropriate inferences from the applicants’ failure to lead evidence from Mr Kilner in relation to the meeting that he attended in Italy with Airaga Rubinetterie S.p.A. (a manufacturer of plumbing equipment) on 19 March 2018, in which the applicants contend that Mr Comino disclosed the C9746 Design Drawing.

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

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

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

29 The one exception was the decision by the applicants not to lead any evidence from Mr Kilner with respect to the alleged provision of the C9746 Design Drawing by Mr Comino to Airaga prior to, or in the course of, the meeting with Airaga in Italy on 19 March 2018. I address that failure below in connection with the design invalidity issues.

B.3.     The respondents’ lay evidence

30 The respondents relied on four affidavits from Mr Comino. Mr Comino gave evidence directed at the ownership of the Designs and the 757 Patent, as well as in response to claims by the applicants involving breach of confidence, copyright infringement and contraventions of the ACL. In particular, Mr Comino’s evidence focussed on his involvement in the design and development of the C6827 Valve and the C9746 Valve, Strongcast’s relationship with AVI, the sharing of design drawings between Cimberio, AVI and Strongcast, and the registration of the Designs by Strongcast.

31 Mr Comino was not an impressive witness. He had a pronounced tendency to be combative and argumentative. He was reluctant to make appropriate concessions when confronted with compelling evidence to the contrary and at times his evidence appeared to change or at least evolve to meet the cases that were being advanced by the applicants.

32 The approach that Mr Comino took to giving evidence is readily apparent in the following exchanges during his cross-examination.

33 When pressed about whether he told Mr Dillenbeck that he was planning to use the C9746 Design Drawing to register the Designs, he gave the following evidence:

And did you tell Mr Dillenbeck before he sent you the drawing on 24 January 2018 that you were planning to go off and register a design based on the drawing?---I don’t recall. But I mean – I don’t recall that happening. I don’t recall if it did or if it  didn’t happen. It may have happened.

You say it may have happened, do you?---Look, I can’t recall. I can’t recall. I was very open with AVI with things that I was doing. It may have happened, but I honestly can’t recall.

So your position before his Honour is that you may have told Mr Dillenbeck before 24 January that you were going to go off and register a design; is that right?---I can’t recall if it happened or not, Mr Flynn.

34 Equally, instructive was the following evidence he gave when he was challenged about evidence that he had given to the Designs Office – that, at the time that he had filed the Designs for registration, AVI was aware that he was going to do so:

And the designs were filed in February and March 2018, correct?---Yes.

And it’s false that those designs’ applications were filed with the knowledge of All Valve, do you agree?---This is – I am just trying to catch up here, Mr Flynn. I can see that the dates precede the file date. The – yes. Sorry. Can you ask your question 5 again, please, Mr Flynn?

It’s false that the design applications, which were filed on 20 February 2018 and 23 March 2018, were filed with the knowledge of All Valve; do you agree?---I’m not sure.

Well, Mr Comino, you swore an oath in the Designs Office, saying that they will file with the knowledge of All Valve. And now you’ve sworn an oath before his Honour, and you’re saying you’re not sure. So - - -?---Sorry.

Do you want to respond to that?---I’m just digesting it, Mr Flynn. Look, I’m not sure what to say there. There’s – the dates seem to precede each other. Yes.

You agree it’s false?---I think so.

…

Yes. And so when you said in the Designs Office that these designs applications were filed with the knowledge of All Valve, that was – false, wasn’t it?---I find it to  be quite a grey statement. It’s – it’s just difficult because of how many – how many times I communicate with Dillenbeck. I still – I can see that the dates don’t line up, yes.

…

And I want to suggest to you that this email, even though you say, as you know, was the first time you told AVI that you had a registered design. Do you agree?---I’m not sure, Mr Flynn. I – I – I – I know this was probably the first time I – I emailed it, but, I mean, I – I think I’m – I communicated so much with Dillenbeck that it’s – it’s – I find it challenging to know for sure other than if there was any verbal communication about it.

So when you said in the design’s office that the design’s applications were filed with 40 the knowledge of All Valve, is your position that you swore that on oath even though you weren’t sure whether that was true?---Look, I was sure at the time. Like, I was – I – I felt confident that that was the position, but you helping me see things are not looking quite the same.

And you knew when – did you know when you swore this declaration in the Designs Office that you weren’t going to get cross-examined?---Sorry, can you please repeat that? That I wasn’t going to get cross-examined?

Yes?---I – I had no idea about any of these sort of – these proceedings, so - - -

So you haven’t repeated this statement in your affidavit, have you?---I don’t believe so.

And I want to suggest to you you haven’t repeated it because you knew it was  wrong; is that right?---I – I’m not sure, Mr Flynn.

35 For these reasons, I approached the evidence given by Mr Comino, in particular his denials, with great caution and gave it comparatively less weight in weighing his evidence against other contemporaneous evidence and the inherent logic of events.

B.4.     Expert evidence

B.4.1.     Overview

36 Three expert witnesses gave evidence at trial. AVI and Cimberio retained Mr Kevin Smerdon on both design and patent infringement and invalidity.  Mr William Hunter was retained by Mr Comino and Strongcast for the purposes of patent infringement and  invalidity and design infringement. Mr Comino and Strongcast retained Mr Alexander Richardson on design invalidity.

37 Prior to the trial, the experts prepared four joint expert reports:

(a) Mr Smerdon, Mr Hunter and Mr Richardson prepared a joint expert report on common topics on design invalidity and design infringement;

(b) Mr Smerdon and Mr Richardson prepared a joint expert report on design invalidity;

(c) Mr Smerdon and Mr Hunter prepared a joint expert report on design infringement; and

(d) Mr Smerdon and Mr Hunter prepared a joint expert report on patent infringement and invalidity.

38 The experts gave evidence in concurrent sessions in respect of each of the four joint expert reports. I found that the evidence given by the experts in the concurrent sessions, in the context of their joint expert reports, was of considerable assistance in addressing the principal issues for determination. The concurrent sessions provided an invaluable platform to expose the reasoning of each of the experts and permit it to be tested and evaluated. At times, the experts strayed into positions that appeared to be driven more by advocacy than expertise but I was generally, subject to some exceptions, satisfied that each of the experts was genuinely seeking to assist the court in a non-partisan and constructive manner.

B.4.2.     Mr Smerdon

39 Mr Smerdon is a consultant mechanical engineer and product designer, and currently the director of AusCreate Pty Ltd. Mr Smerdon has over 25 years of experience in product development and design experience, including with respect to the design of plumbing products and injection-moulded plastic components. Mr Smerdon has a Bachelor of Engineering (Mechanical).

40 Mr Smerdon was employed by Avtex Pty Ltd, working in the design and manufacture of components for aerospace systems, Viscount Plastics (Australia) Pty Ltd, Islex Australia Pty Ltd (where Mr Smerdon’s design expertise became more plumbing and piping focused), Industrial Plastics (Australia) Pty Ltd, and Everhard Industries Pty Ltd.

41 In his roles at Islex, Industrial Plastics and Everhard, Mr Smerdon was actively involved in the development of plastic products for pipes, plumbing systems and related projects and was required to design water ball valves as part of wider design programs on a regular basis.

42 Mr Smerdon is the named designer on several registered designs in Australia and one patent.

43 Mr Smerdon prepared five affidavits for use in the proceedings in which he addressed design and patent invalidity and infringement issues that had arisen in the proceedings. The manner in which Mr Smerdon’s affidavits were prepared, however, was unsatisfactory and ultimately caused me to place little weight on his affidavit evidence. The approach adopted to the preparation of his affidavits was in summary, to conduct an online conference by Microsoft Teams with Mr Smerdon in which various design and patent issues were discussed and a solicitor present on the conference call would type up a first draft of the affidavit as the conference call progressed. Mr Smerdon was not able to observe on his screen what was being typed by the solicitor. The draft affidavit prepared by the solicitor would then be provided to Mr Smerdon for his review and a second conference call would be arranged. In the course of the second conference call, Mr Smerdon would raise any changes he had to the draft affidavit. A revised draft of the affidavit would then be provided to Mr Smerdon for his final approval.

44 The essential flaw in this procedure is that it has the very real potential to subvert the integrity of the provision of independent expert evidence to the Court. A solicitor with knowledge of the issues in the proceeding and no relevant expert knowledge, with the best will in the world, may well frame the evidence in the initial draft in a manner that fails to reflect the expert’s evidence accurately or free of potential ambiguity. At the same time, an expert reviewing a draft affidavit prepared by a solicitor may be expected to focus more on matters of substance and not appreciate subtle matters of emphasis or positioning that may have been introduced into the initial or subsequent draft of the affidavit.

45 There is a fundamental difference between the orthodox position of an expert preparing an initial draft of their evidence in response to specific questions, and then editing that evidence in response to requests for clarification, or a refining of the questions to be addressed, and the position of an expert relying on a solicitor to prepare an initial and subsequent drafts of their evidence, based on what the expert has stated in the course of a conference, irrespective of whether it is in person or online. I do that accept that the practice adopted by the applicants in this case in preparing Mr Smerdon’s affidavit is consistent with the principles informing the code of conduct enshrined in the Court’s expert practice note or with the principles underpinning the reception of expert evidence in proceedings.

46 Not surprisingly, the oral evidence given by Mr Smerdon in the course of the expert conclave was at times inconsistent with his affidavit evidence.

47 Given the manner in which Mr Smerdon’s affidavits were prepared, I have principally had regard to his oral evidence and the evidence attributed to him in each of the four joint expert reports, rather than his affidavit evidence.

B.4.3.     Mr Hunter

48 Mr Hunter is a mechanical engineer with more than 30 years of experience. He has a Bachelor of Mechanical Engineering and a Masters of Engineer Science.

49 Mr Hunter has held a variety of roles including as a mechanical engineer with Hawker Siddeley, a product design consultant with Invetech Pty Ltd and Niche Innovation Pty Ltd (Mr Hunter’s own company), and as a design contractor to product design firms such as Design+Industry and Planet Innovation. During these roles, Mr Hunter worked on various product design projects which related to valves and pumps, including the development of different scientific instruments with air and liquid handling systems, which incorporated various types of valves, including ball valves, and the development of a sand filtration filter for swimming pools which included a gate valve.

50 Mr Hunter prepared four affidavits in the proceedings on design and patent issues, two of which annexed expert reports addressing design infringement and patent issues.

51 Mr Hunter has considerable experience in giving evidence in patent litigation and, at times, in his evidence on design issues, appeared to be focusing more on functionality than visual appearance.

B.4.4.     Mr Richardson

52 Mr Richardson is an industrial designer with over 40 years of experience in product design. He is currently the managing director and owner of Design Edge, a product design consultancy business. Mr Richardson has a Bachelor of Engineering (Mining) and a Bachelor of Arts (Industrial Design).

53 Mr Richardson has held a variety of design related positions including senior consultant designer at Design Resource Pty Ltd, consultant designer at Lightmakers Pty Ltd and planning engineer at Utah Development Company.

54 Mr Richardson’s product experience includes working with plumbing, pool equipment, public water stations, water treatment and filtration, irrigation monitoring, electrical equipment, medical equipment and consumer items.

55 Mr Richardson prepared an affidavit in the proceedings annexing an expert report addressing design invalidity issues.

C.     Factual Background

56 The following factual background by way of a general overview to the various claims advanced in these proceedings is taken from the Agreed Facts or from evidence that was not the subject of any dispute between the parties

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

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

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

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

61 On 16 July 2013, AVI and Strongcast entered into the Distribution Agreement. At all relevant times, Mr Comino had knowledge of the existence and terms of the Distribution Agreement.

62 The Distribution Agreement remained in force until at least 14 May 2019.

63 From the middle of 2013 to at least 2018, AVI supplied plumbing fittings to Strongcast, including the C6827 Valve.

C.1.     AVI Ball Valves

64 From approximately December 2019, AVI sold a Queensland version of a ball valve (QLD Ball Valve) and a New South Wales version of a ball valve (NSW Ball Valve).

65 Airaga is the manufacturer of the AVI Ball Valves.

66 AVI has purchased the AVI Ball Valves from Airaga and imported them into Australia. AVI has sold and offered to sell the AVI Ball Valves, including online with the product code 0194A0606. The product code 0194A0606 correlates with the QLD Ball Valve.

67 AVI is not licenced by either of the respondents to import or sell the AVI Ball Valves.

C.2.     Sub Meter Assemblies

68 AVI advertised and offered for sale a sub meter assembly kit online with product codes SMLIM and SMA20M (together, the Sub Meter Assemblies).

69 The SMA20M was supplied with two QLD Ball Valves, and the SLMIM with two NSW Ball Valves.

70 AVI has sold the Sub Meter Assemblies to customers in Australia.

71 AVI is not licenced by either of the respondents to import and sell the AVI Ball Valves as part of the Sub Meter Assemblies.

D.     Conduct of the respondents from late 2017 to March 2018

D.1.     Overview

72 The applicants contend that Mr Comino’s conduct in the period from 2017 to early 2018 is important to several of the issues for determination in this proceeding, including the appropriateness of constructive trust relief, additional damages for copyright infringement, breach of confidence, and ACL contraventions based on non-disclosure.

D.2.     Submissions

D.2.1.     Applicants

73 The applicants submit that up until late 2017, AVI and Strongcast had been acting cooperatively on the distribution of their Cimberio-designed and sourced products, in particular the C6827 Valve. They submit that such distribution was governed by the bargained-for Distribution Agreement that was entered into in 2013, whereby Strongcast had been granted exclusive distribution rights in Australia, but Mr Comino had expressly been refused design ownership of the C6827 Valve due to Cimberio’s participation in the design process.

74 The applicants submit that instead of again seeking to negotiate and bargain for exclusivity in late 2017, Mr Comino, believing he did not have exclusivity over the upcoming C9746 Valve, decided to seek registered design rights in relation to the C9746 Valve knowing that such rights would enable him to prevent others (including AVI and Cimberio) from selling the same or similar products in Australia without his consent.

75 The applicants submit that given his knowledge of intellectual property rights and the implications of registration, including copyright since 2012 and patents and designs since 2016, Mr Comino did not inform AVI or Cimberio of his plans to achieve registered design rights with respect to the C9746 Valve prior to receiving the C9746 Design Drawing on 24 January 2018.

76 The applicants submit that Mr Comino sent the C9746 Design Drawing to Mr Kilner on 15 February 2018 “for the purpose of providing them to Airaga”. They submit that the very next day, Mr Comino emailed Infinity Design and asked for a “Skype call”, so he could explain without a written record the actions he wished to be taken in respect of the C9746 Design Drawing, namely, to have images created for the purpose of registering the Designs.

77 Next the applicants submit that Mr Comino knew Mr Riva of Cimberio was the author of the C9746 Design Drawing and that there was a copyright notice on the drawing. They submit that he never asked for permission to use the C9746 Design Drawing despite knowing, when he was filing the two Designs, that Mr Riva had participated in the design process. They submit that Mr Comino continued to “overlook” Cimberio’s copyright markings, not because he thought he owned the copyright in the C9746 Design Drawing, but because he deliberately went ahead regardless of any other parties’ rights. They submit that he was in a rush as he knew that he could not file a registered design, and thus “surreptitiously achieve ownership and exclusivity”, after there had been a non-confidential disclosure to a third party.

78 The applicants then submit that once the 005 Design was filed, Mr Comino considered that he was protected if there were further non-confidential disclosures and therefore, he did not ask whether Mr Kilner had any confidentiality measures in place with Airaga and he did not seek to re-deploy the Strongcast “standard” confidentiality deed before or after his trip to Milan.

D.2.2.     Respondents

79 The respondents submit that the applicants have constructed a narrative of the respondents’ conduct in late 2017 to early 2018 which is not supported by the evidence.

80 The respondents submit that the negotiated exclusivity in the Distribution Agreement was only with respect to the two products depicted in the Annexures to the agreement. They submit that Mr Comino’s belief that he did not have any “exclusivity” in the C9746 Valve was only with respect to the provisions of the Distribution Agreement as its terms did not extend to products beyond the C6827 Valve.

81 The respondents submit that the applicants’ narrative ignores Mr Comino’s steadfast belief that the Designs were his own, his steadfast rejection that Airaga was provided with a copy of the C9746 Design Drawing at their meeting, and incorrectly suggests AVI had a claim to ownership of the intellectual property in the C6827 Valve (which Mr Kilner agreed was incorrect).

82 The respondents submit that Mr Comino’s evidence regarding the timing of his dealings with Infinity Design was frank and candid and there was no basis to suggest that his testimony was not honest. They also submit that the suggestion that he “was in a rush – he knew that he couldn’t file a registered design, and thus surreptitiously achieved ownership and exclusivity, after there had been a non-confidential disclosure to a third party” is contradicted by the “true nature” of his state of mind as is clear from his oral evidence.

D.2.3.     Consideration

83 Ultimately any acceptance of the applicants’ narrative of Mr Comino’s conduct in late 2017 and early 2018 turns upon Mr Comino’s claimed “steadfast belief” that he was the exclusive  designer of the C9746 Valve, the extent of his knowledge of intellectual property rights and the inherent logic of events. I address below Mr Comino’s knowledge of intellectual property rights in the period leading up to late 2017 and early 2018. I address Mr Comino’s “steadfast belief” that he designed the C9746 Valve in the context of the inherent logic of events in addressing issue 1, being the question of entitlement to the Designs.

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

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

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

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

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

E.     Design issues

E.1.     Overview

87 There was significant tension between the entitlement, invalidity and infringement design claims advanced by the parties in the proceeding. The tension was most evident in the approach that the parties and their experts took to “substantial similarity” in addressing the significance of the visual differences between the designs of the ball valves with respect to invalidity and infringement.

88 The applicants, consistently with the evidence of Mr Smerdon, adopted a narrow approach to visual differences on infringement but a broader and more inclusive approach when addressing invalidity. Understandably this gave rise to a submission from the respondents that Mr Smerdon’s evidence on the significance of visual differences in addressing those issues was irreconcilable.

89 Conversely, the respondents adopted a broad, inclusive approach to visual differences on infringement but a narrower, more exclusive approach when addressing invalidity.  Unlike the applicants, the respondents did not rely on the one expert to address both invalidity and infringement. In support of infringement, the respondents relied on Mr Richardson’s inclusive and broad approach to visual differences, which contrasted with the narrower approach taken by Mr Hunter to visual differences in addressing invalidity.

90 Ultimately in reconciling the competing evidence given by the experts as to the significance of visual differences between the valves, I have generally adopted a consistent and comparatively more narrow and confined approach to the significance of visual differences in assessing substantial similarity, rather than the broad and inclusive approach advocated by Mr Richardson on infringement and Mr Smerdon on invalidity.

F.     Issue 1: Entitlement to 810 and 005 Designs

F.1.     Overview

91 Cimberio contends that it was at least the co-designer of each of the Designs for the purposes of s 13(1)(a) of the Designs Act.

92 The respondents contend that Mr Comino was the sole designer of each of the 810 and 005 Designs.

93 It is well established that a designer for the purposes of s 13(1)(a) of the Designs Act is the person whose mind conceives the relevant shape, configuration, pattern or ornamentation applicable to the article in question and reduces it to visible form. A person is not a creator, for the purposes of s 13 of the Designs Act, if they have converted a design created by another person into another form, such as a technical drawing: LED Technologies Pty Ltd v Elecspess Pty Ltd (2008) 80 IPR 85; [2008] FCA 1941 at [26] (Gordon J).

94 More than one person may be entered on the register as the registered owner of a design: s 13(3)(a) of the Designs Act. Each of the persons registered must fall within one or more of the categories of persons listed in s 13(1). If not all of the persons entitled to be registered as the owner of the design are included in the registration, the court may revoke the registration: s 93(3)(c) of the Designs Act.

95 It is also well established that a design that combines various features, including where those features can be found in the prior art, is capable of being new and distinctive: LED Technologies at [12].

96 In order to determine whether Cimberio, as the employer of Mr Riva, was at least a co-designer of each of the Designs, it is necessary to determine who created the Designs. In part, that question is informed by an identification of what visual features are new in the Designs over the prior art. In this case, the principal new visual features in the Designs were the lockable handle and the additional internal threads.

97 The applicants accept that Mr Comino proposed the idea of an internal thread, in addition to an external thread, in the C9746 Valve. The addition of an internal thread in the C9746 Valve was replicated in the internal thread in the 810 Design and the two internal threads in the 005 Design. The applicants, however, submit that the internal thread should be given less weight than the integrated lockable handle, as the internal threads are completely constrained by function, given they are standard thread sizes, and the second internal thread in the 005 Design cannot even be seen from the “end view”.

98 The critical question for determination remains to identify which person or persons created the Designs. This necessarily includes a consideration of who conceived the relevant shape, configuration, pattern or ornamentation of the integrated lockable handle visual feature, who reduced it to visible form, and the weight to be given to the internal threads as a design feature.

F.2.     Factual findings

99 On 11 January 2013, Mr Cimberio raised several questions by email with Mr Dillenbeck in response to his request for quotation for a tap project for Strongcast, including:

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

…

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

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

…

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

…

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

…

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

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

102 It is common ground that the C6827 Design Drawing is an artistic work under the Copyright Act, the prior art base (for the purposes of the Designs Act) for each of the Designs includes the design of the C6827 Valve and the design of the C6827 Valve is shown in the C6827 Design Drawing.

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

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

105 On 25 June 2015, Mr Comino sent an email to Mr Dillenbeck and Mr Cimberio in relation to the introduction of a lockable handle into the C6827 Valve to which he attached 6 photographs of the C6827 Valve with a locking wing made out of rough tin affixed to the valve body as a separate piece. Mr Comino explained in the email:

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

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

yes the pictures where fine an explain the concept well.

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

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

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

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

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

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

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

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

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

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

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

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

(Emphasis in original.)

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

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

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

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

115 The references to “John” in Mr Cimberio’s email were to Mr Comino.

116 On 25 May 2016, Mr Dillenbeck emailed Mr Comino an email he had received from Mr Cimberio in which Mr Cimberio had attached 4 new drawings “for review”, including a drawing numbered C8474/3, featuring an integrated locking wing, and provided short explanations for each drawing, including the following explanation:

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

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

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

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

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

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

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

Lockable Body/Handle

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

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

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

Lockable Body/Handle

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

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

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

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

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

Lockable Body/Handle

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

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

C6827/C6891 Valve Body

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

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

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

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

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

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

(Emphasis in original.)

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

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

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

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

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

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

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

132 The C9746 Design Drawing included a copyright notice in English, identifying “GIACOMO CIMBERIO S.p.A” as the owner of the copyright in the drawing and a confidentiality notice in Italian “Reservato Confidenziale” but in terms that one might expect would be readily understood by an English speaker.

F.3.     Submissions

F.3.1.     Applicants

133 The applicants submit that while Mr Comino proposed the idea of an internal thread in the C9746 Valve (which was incorporated into the 810 Design and the two internal threads in the 005 Design), such an act alone is insufficient to render Mr Comino a sole creator of the Designs. They submit that is insufficient because the internal threads (a) are largely not visible, and (b) are completely constrained by function. The applicants therefore submit that the pivotal question one must consider in determining the ownership of the Designs is who “conceived the relevant shape, configuration, pattern or ornamentation” applicable to the lockable handle visual feature and reduced it to visible form.

134 The applicants submit that the idea of having the lockable tamper-proof handle was first introduced by Mr Cimberio in his email to Mr Dillenback of 11 January 2013. The applicants refer to the email from Mr Cimberio to Mr Dillenbeck of 14 November 2015 (which was forwarded to Mr Comino a day after), attaching a “new version of C6827 – with possibility to lockable handle in closed position”. They submit that this attachment was a drawing of an integrated lockable handle, and it was the first time such a component had been designed and reduced to a drawing in the business relationship between the parties.

135 The applicants submit that in May 2016, Mr Riva developed more detailed key design drawings, depicting a locking wing integrated into the valve body.  The applicants place particular emphasis on the email from Mr Dillenbeck to Mr Comino, forwarding a number of Cimberio drawings, including the C8474/3 drawing of a “telescopic valve with female end having new body that incorporate an integrated locking wing … using standard handle with added hole diameter 7mm”. The applicants note that the hole in the C9746 Design Drawing, and ultimately, the Designs, was 7 millimetres.

136 The applicants point to Mr Riva’s evidence that when he designed and added the locking wing to the C8474/3 drawing, he did not have Mr Comino’s tin prototype in mind, because the locking wing in the C8474/3 drawing was integrated inside the mould of the valve’s body.  They submit that, in contrast, the locking wing in the photograph of the prototype that Mr Comino sent to Mr Cimberio on 25 June 2025 was “an outside application”. The applicants submit that Mr Comino agreed in cross-examination that the locking wing in his June 2015 prototype was a separate component.

137 The applicants submit that Mr Comino’s 25 September 2017 email was the first time (in the evidence in this proceeding) in which he had requested an integrated locking wing; that is, at a time after it was proposed and designed by Mr Riva in relation to the C8474 valve. They submit that there was nothing in Mr Comino’s affidavit evidence to the effect that he had designed an integrated lockwing or even requested it be designed prior to September 2017.

138 The applicants submit that, applying the test in LED Technologies, Mr Riva conceived of the visual features and first reduced them to visible form, including the shape, dimensions, configuration and position of the integrated locking wing visual feature in the 005 and 810 Designs. They note that Mr Comino agreed in cross-examination that he never reduced the C9746 Valve with an integrated locking wing to visible form, and the first time he saw the C9746 in visible form was when Mr Dillenbeck sent him the C9746 Design Drawing on 24 January 2018. They submit that the respondents’ attempt to deemphasise the importance of the requirement for a reduction to visible form results from the evidence that emerged at the trial about the integrated locking wing. They submit that the respondents’ case, which centred around the question of who had come up with the idea, assumes that ideas have a sufficiently concrete existence before they are reduced to visible form. They further submit that proposition is contrary to (a) the statutory definition of a “design”, being the overall appearance of the product resulting from one or more visual features of the product, and (b) the legal test for authorship outlined in LED Technologies, which requires that a person both conceives of the relevant shape, configuration, pattern or ornamentation applicable to the article in question and reduces it to visible form.

139 The applicants submit that the process of integrating the locking wing into the body of the valve was not straightforward, and Mr Riva’s design efforts and skill over a multi-year period were far removed from those in LED Technologies, where there was a simple conversion from detailed sketches showing all relevant features to an electronic form. They submit that, the height of Mr Comino’s input was a photograph of a years-earlier (unsuccessful) attempt to design a valve with a (separate) locking function, and a “simple suggestion” as to the length of the locking wing based on a design that Mr Riva had created 18 months earlier. The applicants submit that such input cannot give rise to Mr Comino’s complete ownership and the resulting 10-year monopoly over the Designs.

140 The applicants submit that, against this background, and giving due recognition to the evolution of the integrated lockable handle, Mr Riva, and, therefore, Cimberio as his employer, are rightfully (at least) co-designers of the Designs.

F.3.2.     Respondents

141 At the outset, the respondents submit that the of Delegate Lyons’ treatment of the internal threads as not constituting a relevant visual feature in the Designs in the context of “newness” in Watson Chiarella Pty Ltd v John Alexander Camino [2021] ADO 2 was an error. Against this background, the respondents submit that there are three main new features in the Designs over the C6827 Valve, being (a) the addition of a side wing to the valve, (b) the addition of a through-hole added to the valve lever, and (c) the introduction of the dual threaded connection in the valve body in the end opposite the swivel nut, (with the 005 Design involving a further modification, being the introduction of a female internal thread on both the inlet and outlet sides of the ball valve). They submit that, while there are some other less significant visual differences between the Designs and prior art, the pivotal question for determination is who conceived of each of the new features (a) to (c) in the valve configuration. The respondents point to the fact that the applicants concede that Mr Comino is the designer of feature (c).

142 The respondents submit that the legal test for authorship plainly has an emphasis on the person who has come up with the “idea” for the design. They submit that the reduction to visible form test is directed at the reflection of the “idea”, and that if the person who has reduced the design to a visible form is not the person who came up with the idea, then the first person cannot seek to lay claim to be an author, or co-author because they have had no involvement in the conception of the idea.

143 The respondents submit that, in the present case, having regard to the evidence, the person who conceived the idea for each of the 005 and 810 Designs was Mr Comino. They submit that Mr Comino’s idea was conveyed to persons employed by Cimberio merely as “a pre-manufacturing step”, via AVI, in the form of photographs of the prototypes Mr Comino had commissioned, and by the provision of a drawing from an earlier project. They submit that by the 7 November 2017 email (with the provision of the C8474 drawing), Mr Comino completed the picture for the design idea and met the requirement to reduce the idea to a visible form for the first time.

144 The respondents submit that the C9746 Valve was produced exclusively for Mr Comino and Strongcast. They submit that consistently with that exclusivity, Mr Riva confirmed that Cimberio’s practice was to require customers to “sign off” on design drawings before manufacturing started, which is what occurred in the present case.

145 The respondents submit that the integrated locking wing was incorporated into the design by Mr Riva on Mr Comino’s instructions. They submit that (a) Mr Comino conveyed his intention for the incorporation of the locking wing into his new ball valve by his instruction to Mr Dillenbeck to the effect of: “if we can have a lockable-wing added to the valve bodies”, (b) Mr Riva had confirmed that the locking wing on the earlier C8474/3 drawing had been requested by Mr Comino, (c) the drawing had been provided by Mr Comino to Cimberio to show the locking wing he intended for the C9746 design, and (d) the drawing had been prepared for a previous valve design project resulting from instructions received from Mr Comino.

146 The respondents submit that the applicants’ contentions – that Mr Comino relied on features found in prior art comprising ball valves designed by Cimberio and only made minor additions or variations to those valves – (a) do not reflect the evidence in the proceeding, and (b) ignore the relevant legislative question. They submit that Mr Comino was the first to conceive of putting all the features together, in combination, in a ball valve, and it was Mr Comino who first conveyed that idea, in the form of photographs, a “mock-up”, and previous Cimberio drawings.

147 The respondents submit that, Mr Riva merely conveyed Mr Comino’s idea (including by various 2-dimensional images, including a photograph of a “mock-up” and providing a C8474 drawing from a previous design project) and was asked to produce a drawing of Mr Comino’s design as a pre-manufacturing step. They submit that Mr Riva made no contribution to the idea embodied in that design. They submit that, although he may have produced a drawing which brought together for the first time in a single drawing all the various features of the design, that does not mean Mr Riva was the person who created the design.

148 The respondents submit that there is no requirement for a design to be reduced to visible form in a single drawing. They submit that prior to the provision of the C9746 Design Drawing, Mr Comino had provided the photographs of a valve with a locking wing, the photographs with the internal thread tapped in and the C8474/3 drawing showing the locking wing with the right link integrated into the valve. The respondents submit that it was therefore Mr Comino, not Mr Riva, who first reduced the C9746 Design to visible form.

149 Further, the respondents submit that there is no evidence to suggest that the C9746 Valve was not produced exclusively for Mr Comino/Strongcast. Mr Riva pointed to the “label” on the valve as a sign of exclusivity but said that Mr Cimberio was the person at Cimberio who would know about the issue of exclusivity. They submit that given neither Mr Cimberio, nor Mr Dillenbeck gave evidence in the proceeding, the Court can safely draw inferences that their evidence would not have assisted the applicants.

F.3.3.     Consideration

150 The relevant controversy by the end of the trial was whether Cimberio was a co-designer of the Designs, or whether Mr Comino was the sole designer. The applicants only faintly, if at all, advocated that Cimberio was the sole designer of the Designs.

151 The answer to that controversy is complicated by the extent of the historical collaborative commercial dealings between the parties, the evolution in the design of the locking wing, the joint development of other valves by the parties, including valves with locking wings, the fundamentally functional characteristics of the internal and, arguably, largely not visible internal threads, the concession by Mr Comino that the first time he saw the C9746 Valve reduced to visible form was when it was provided to him on 24 January 2018 and that he himself had never reduced the C9746 Valve with the integrated locking wing to visible form, the relationship between the C9746 Design Drawing and the Designs, the work undertaken by Mr Riva in connection with the C9746 Design Drawing, the absence of any evidence from Mr Dillenbeck and Mr Cimberio, and my reservations as to the weight I can give to the evidence given by Mr Comino.

152 The answer to that controversy is further complicated by the extent to which the respondents’ opposition to the entitlement case advanced by the applicants relies on (a) the well-established principle that a design that combines various features, each of which is found in the prior art base, is capable of being new or distinctive, and (b) a more problematic proposition that a first reduction to visible form in such circumstances can occur by virtue of “mosaicking” multiple documents which have been created on different occasions, sometimes separated by many months from each other.

153 I was ultimately satisfied, however, that Mr Riva, and through him Cimberio, was at least a co-designer of the Design, for the following reasons.

154 First, the work undertaken by Mr Riva in integrating the locking wing into the C9746 Valve travelled well beyond the work undertaken in the authorities that the respondents relied upon to refute the joint designer claims advanced by the applicants. It could not simply be characterised as producing engineering drawings to Mr Comino’s specifications. Unlike in LED Technologies, the work undertaken by Mr Riva was not simply to convert hand-drawn sketches into CAD (Computer Aided Design) format in order to facilitate the production process: LED Technologies at [23] and [26].

155 In the course of oral closing submissions, senior counsel for the respondents placed particular reliance on the decision of Kekewich J in Pearson v Morris Wilkinson & Co (1906) 23 RPC 738. In that case, a workman, Mr Eaton, had been instructed by the plaintiff, Mr Pearson, to make what was described in the judgment as a “baby-carriage” or “perambulator”, which we would now refer to as a pram, based on a sketch supplied by Mr Pearson. His Honour concluded that Mr Pearson, not Mr Eaton, was the original designer and he had the novelty of the design.

156 Justice Kekewich found that Mr Pearson made some remarks on what he characterised as a “rough sketch” that included the size of the perambulator and some “rough instructions”. His Honour then observed at 743:

If it had stopped there it might have been difficult to see how Mr. Eaton managed to produce the article which we have from that sketch. My knowledge would fail to see how it could possibly have been evolved, but there was a good deal of conversation and good deal of verbal instruction to work out the sketch.

157 His Honour relevantly concluded at 743:

But what is important is that Eaton with the sketch and the verbal instructions produced the very thing that Mr. Pearson intended to be produced. He took it back to Mr. Pearson and he at once approved it. There was no alteration: no going backwards and forwards; once the article was produced, it was also approved as being the thing which Mr. Pearson wanted. Eaton may have slightly improved on Mr. Pearson’s instructions: that is quite possible; but the article which he made was the article which Mr. Pearson wanted to be made.

158 Senior counsel for the respondents submitted that the passage cited above “reads perfectly onto the facts of the present case”. I accept at first glance that the facts appear to be somewhat analogous to the position in this case and certainly closer than the position in LED Technologies. There are, however, significant and material differences.

159 There was no suggestion in Pearson that Mr Pearson and Mr Eaton had previously collaborated on the design of perambulators or that any distinguishing visual feature of the design of the perambulator in issue had previously been included in designs that had been created by Mr Eaton.

160 Next, there was no suggestion in the present case that Mr Riva had received any verbal instructions from Mr Comino that may have assisted him in the work that he undertook leading up to and including the final version of the C9746 Design Drawing. There was no evidence of “a good deal of conversation” or “a good deal of verbal instruction” between Mr Comino and Mr Riva.

161 Mr Comino met with Mr Cimberio in or about May 2016 but the only reference, in evidence, to what may have been discussed at that meeting, as disclosed in Mr Cimberio’s email to Mr Dillenbeck shortly after the visit, were that the discussions concerned a joint collaboration between Mr Comino and Cimberio on design issues. As noted above at [112] to [114], Mr Cimberio reported in his email that  “with John [Comino] we have designed a lighter version of this valve” (a reference to the C8707 and C8474), Cimberio had built a new version of the angle valve “based on John’s request”  that had been designed with a new handle but it could be replaced with the quoted handle for the C8922, and a more general observation that he hoped the email would provide a better  picture  “what was discussed, agreed and developed with John”.

162 Further, unlike in Pearson, Mr Riva gave specific evidence of the work that he undertook in progressing the C9746 Design Drawing to reflect the instructions conveyed to him from Mr Comino for a valve with a locking wing handle and internal threads. Mr Riva explained that in order to integrate the locking wing into the C9746 Valve it was necessary for him to:

To find where to put the locking wing and which side to put the locking wing, to put it on the body of the valve because its positioning – because its positioning depended exclusively on – on the internal component that determined the movement of the valve – of the sphere. The important components are the stem; the sphere, the ball; and always the handle… So first of all, I had to think about these components and their characteristics before I – I thought about where to put this handle – this attachment. This is the most important thing, and the other thing would have been the sizing of the components to make sure that they were compatible too.

163 Second, Mr Riva denied that he had relied on Mr Comino’s tin prototype in preparing the locking wing of the C8474/3 design, being the design drawing referred to by Mr Comino as a “drawing of a previously drawn model which is correct” in his response provided on or around 7 November 2017 in relation to Mr Cimberio’s email of 24 October 2017, attaching Mr Riva’s “modified drawing with padlock wing”. When it was suggested to Mr Riva in cross-examination that he was seeking to replicate what he had seen in the photographs of the tin prototype in preparing the shape of the locking wing, Mr Riva responded:

No, because if we look at the design C8474/3, and we only concentrate on the part that you highlighted, but we also consider the – the part – the design on top. We can see that the locking wing is being integrated inside the mould of the – of the actual body of the valve.

…

But in the one that you are referring to in the email, in that picture, it is an outside application, it’s not part of the body. And also, if you look at the picture nominated D on the right-hand side, if I apply my design abilities, so if I tried to get the locking wing directly in the body of the – of the valve, I had to  increase or make longer the application so that I could then put on the design that I had decided would work in that valve, and it is completely different to a disc that is applied on top. If you look at the – looking at the top from above at the diagram, it can seem to be on the outside. But if you look at the diagram from the other views, you can see that it’s a different thing altogether. In fact, I repeat that it was a part that was integrated inside the body of the valve and not a part that was on the outside as external.

164 Third, Mr Riva, rather than Mr Comino, first reduced the design to visible form when he produced the C9746 Design Drawing. The temporal differences and different contexts in which Mr Comino provided the photographs of a valve with a locking wing, the photograph with the internal thread tapped in and the C8474/3 drawing showing the locked wing with the right link integrated into the valve, precludes any finding that the C9746 Valve was first reduced to visible form in the manner contended by the respondents.

165 On 25 June 2015, Mr Comino provided the following photographs of a valve with a locking wing which was not integrated into the valve’s body and was instead applied to it as a separate piece that he stated could “be used as an indication for a concept” to Mr Cimberio and Mr Dillenbeck:

166 On 21 April 2017, nearly two years later, Mr Comino included in an email to Mr Dillenbeck and others from AVI photographs of C6827 Valve with an internal thread tapped in, which are reproduced below:

167 Mr Comino explained in his 21 April 2017 email:

As discussed, here is our meter bracket that is approved in QUU. This utilises the CIM C6827 ball valve we have plenty of and it is quite a clever way to assemble the valves.

Let me know what you think and if we can bundle these things in with some of your itron [sic] high rise sales. I’d be all for it.

168 On or about 7 November 2017, after a further six months had elapsed, Mr Comino provided a copy of the Cimberio C8474/3 design drawing to Mr Dillenbeck, which is reproduced below:

169 Mr Comino stated, as reproduced in red text in the email from Mr Cimberio to Mr Dillenbeck of 24 October 2017:

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

170 Mr Comino’s statement was made in response to an earlier provision of a drawing from Mr Cimberio and the following advice from Mr Cimberio:

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

171 Had the photographs and the C8474/3 design drawing been provided at or about the same time in the context of the design of a specific valve, that might have been sufficient to conclude that Mr Comino had first reduced the design of the C9746 to visible form, but as is readily apparent from the above chronology that was clearly not the case here.

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

G.     Issue 2: Revocation of the 810 and 005 Designs

G.1.     Overview

173 The parties agreed that the following issues arise for determination with respect to the claims advanced by the applicants for revocation of the 810 Design and the 005 Design:

a.    Does the C9746 Design Drawing form part of the "prior art base" for the Designs?

b.    If yes to (a), are either of the Designs "new or distinctive" over the C9746 Design Drawing?

c.    Further or in the alternative, are either of the Designs "distinctive" over the design of the C6827 Valve?

G.2.     Legal principles

174 Section 16(2) of the Designs Act provides:

(2)     A design is distinctive unless it is substantially similar in overall impression to a design that forms part of the prior art base for the design (see section 19).

175 The question is whether designs are “substantially similar in overall impression”, taking into account the factors identified in s 19 of the Designs Act and noting the “substantial similarity” test is the same for infringement. The informed user must compare the “visual features” of the two designs, and the question of whether the two designs are to be considered “substantially similar” is “to be decided on the basis of a visual comparison of the shape and configuration of the two designs”: Hunter Pacific International Pty Ltd v Martec Pty Ltd (2016) 121 IPR 1 at [38]-[39]; GME Pty Ltd v Uniden Australia Pty Ltd (2022) 166 IPR 551; [2022] FCA 520 at [23]-[37] (Burley J).

176 Section 19 provides:

(1)     If a person is required by this Act to decide whether a design is substantially similar in overall impression to another design, the person making the decision is to give more weight to similarities between the designs than to differences between them.

(2)     The person must also:

(a)    have regard to the state of development of the prior art base for the design;

and

(b)    if the design application in which the design was disclosed included a statement (a statement of newness and distinctiveness) identifying particular visual features of the design as new and distinctive:

(i)     have particular regard to those features; and

(ii)     if those features relate to only part of the design — have particular regard to that part of the design, but in the context of the design as a whole; and

(c)    if only part of the design is substantially similar to another design, have regard to the amount, quality and importance of that part in the context of the design as a whole; and

(d)    have regard to the freedom of the creator of the design to innovate.

(3)     If the design application in which the design was disclosed did not include a statement of newness and distinctiveness in respect of particular visual features of the design, the person must have regard to the appearance of the design as a whole.

(4)    In applying subsections (1), (2) and (3), the person must apply the standard of a person who is familiar with the product to which the design relates, or products similar to the product to which the design relates (the standard of the informed user).

(5)    In this section, a reference to a person includes a reference to a court.

177 It follows that he following factors must be taken into account by the informed user, namely: (a) more weight is to be given to similarities than differences; (b) regard must be had to the “state of development of the prior art base for the design”; (c) if only part of the design is substantially similar, it is necessary to consider the “amount, quality and importance of that part in the context of the design as a whole”, and (d) regard must be given to the freedom of the creator of the design to innovate.

G.3.     Was the C9746 Design Drawing part of the “prior art base” for the Designs

G.3.1.     Submissions

178 The applicants submit that there are at least three ways in which the C9746 Design Drawing was part of the prior art base at the priority date for each of the Designs.

179 First, the applicants submit that the C9746 Design Drawing was sent to AVI on 23 January 2018, to Mr Comino on 24 January 2018, and then to Infinity Design by Mr Comino on 15 February 2018 (I note it was in fact provided to Infinity Design on 16 February 2018), prior to the priority date of both Designs. They submit that if, contrary to their primary case, the provision of the C9746 Design Drawing was not sent to Mr Comino in circumstances where he was bound by express or implied confidentiality, then the C9746 Design Drawing must form part of the prior art base under s 15(2) of the Designs Act, and therefore it must follow that both of the Designs must be invalid.

180 Second, the applicants submit that if, contrary to their primary case, Mr Comino did not owe a duty of confidence to Cimberio in respect of the C9746 Design Drawing, and that duty was owed to the respondents instead, then the C9746 Design Drawing became part of the prior art base for the 810 Design through Mr Comino’s authorisation of a non-confidential disclosure of it (or part of it) by Mr Dillenbeck of AVI to Airaga on 23 February 2018. In this regard, the applicants submit that (a) the 23 February 2018 email was not subject to any confidentiality restrictions, as Mr Comino did not take any steps to ensure that there was a confidentiality agreement in place with Airaga, and (b) the extract contained in the 23 February 2018 email was sufficiently detailed to render the C9746 Design Drawing “disclosed”, and Mr Smerdon’s evidence to that effect should be preferred to Mr Richardson’s evidence to the contrary.

181 Third, the applicants submit that the C9746 Design Drawing was part of the prior art base for the 810 Design because Mr Comino himself “must have” disclosed it to Airaga prior to 23 March 2018, the filing date of the 810 Design, either by way of email or in person during the meetings that he attended with Airaga in Italy.

182 The respondents submit that the C9746 Design Drawing did not form part of the “prior art base” for the Designs because it was not publicly available (or published) before the filing dates for the Designs, namely 20 February 2018 for the 005 Design and 23 March 2018 for the 810 Design.

183 In relation to the “first way” in which the applicants submit the C9746 Design Drawing became part of the prior art base, the respondents submit that the communication between Mr Dillenbeck and Mr Comino on 24 January 2018 and the two communications from Mr Comino to Infinity Design on 16 February 2018 were each made in confidence, given a confidentiality deed signed by Infinity Design and the evidence given by Mr Comino.

184 As to the “second way”, the respondents submit that (a) it was plain from the evidence given by Mr Comino that he proceeded on the basis that, in line with his prior dealings with AVI, any communications with overseas manufacturers facilitated by AVI, including the email to Airaga of 23 February 2018, would be confidential, (b) that communication was not capable of “disclosing” the whole design, as it contained only one of six drawings from different viewpoints comprising the C9746 Design Drawing, and, as contended by Mr Richardson, there were many things that the limited drawing did not disclose, and (c) the experts’ consideration of whether there had been a disclosure of the C9746 Design Drawing was infected by hindsight because, prior to giving evidence on that issue, the experts had reviewed the C9746 Design Drawing in considerable detail, and none of them were therefore opining on what the drawing contained in the email of 23 February 2018 represented to them independently of having seen the whole of the C9746 Design Drawing.

185 In relation to the “third way” submitted by the applicants, the respondents submit that Mr Comino’s denials that he showed a copy of the C9746 Design Drawing to Airaga at the meeting with them on 19 March 2018 or emailed a copy of it to them prior to 23 March 2018 should be accepted, particularly in the absence of any evidence from Mr Kilner, who attended the Airaga meeting, or any contradictor. The respondents further submit that, in any event, Mr Comino gave evidence that whatever he discussed with, or communicated to, Airaga was confidential.

G.3.2.     Consideration

186 I am not satisfied that the C9746 Design Drawing was part of the prior art at the priority date for either of the Designs.

187 As for the 005 Design, I am satisfied that the C9746 Design Drawing was provided to Mr Comino on 24 January 2018 on a confidential basis, and the provision of the C9746 Design Drawing to Infinity Design on 16 February 2018 was governed by the terms of the confidentiality deed between Strongcast and Infinity Design that was signed by Glenn Bevan, the General Manager of Infinity Design, and emailed to Mr Comino on 29 September 2014. There was therefore no basis on which these disclosures could render the C9746 Design Drawing part of the prior art for the 005 Design.

188 The above reasoning equally applies to the first way in which the applicants submit the C9746 Design Drawing became part of the prior art base for the 810 Design.

189 As to the “second way”, I accept, in the absence of any evidence from Mr Dillenbeck or Mr Kilner to the contrary, and consistently with the practice adopted by Strongcast in its dealings with Cimberio, AVI and Infinity Design, together with the evidence of Mr Comino, that any disclosure of the C9746 Design Drawing to Airaga, had it occurred, was a disclosure on a confidential basis. AVI was the party in a position to lead evidence from Mr Dillenbeck and Mr Kilner that might contradict the evidence given by Mr Comino but chose not to do so. Consistent with the principle in Blatch v Archer, I infer that the evidence of Mr Dillenbeck and Mr Kilner on the issue of whether the communications and meetings with Airaga were conducted on a confidential basis would not have assisted AVI. Nor do I consider that the absence of any documented confidentiality agreement or deed precludes a finding that the communications and meetings were conducted on a confidential basis.

190 Moreover, I am not satisfied that the disclosure of the “top down” view of the C9746 Design Drawing on 23 February 2018 in the email from Mr Dillenbeck to Airaga was a disclosure of the whole of the design. It was only one of six views of the design. I accept the evidence of Mr Richardson in his supplementary report dated 12 April 2024 that in order to define the three-dimensional “shape, configuration, features, components assembly and to clarify visually the appearance of the physical features” of the C9746 Valve, it would be necessary to have other views of the valve.

191 As to the “third way” in which the applicants submit the C9746 Design Drawing became part of the prior art base for the 810 Design, I accept, in the absence of any evidence from Mr Kilner,  Mr Comino’s evidence that (a) he did not take a copy of the C9746 Design Drawing to the meeting with Airaga on 19 March 2018, (b) he did not email a copy of the drawing to Airaga prior to 19 March 2018, and (c) Mr Gianni Airaga, the Chief Operating Officer of Airaga, and Mr Andrea Milani of Airaga indicated at the 19 March 2018 meeting that they did not want to see any Cimberio drawings. Mr Kilner attended the Airaga meeting with Mr Comino on 19 March 2018 and communicated with Mr Comino in the period leading up to the meeting. As outlined at paragraph 189[189] above, AVI was the party in a position to lead evidence from Mr Kilner that might have contradicted the evidence given by Mr Comino, but chose not to do so. Again, consistently with the principle in Blatch v Archer, I infer that the evidence of Mr Kilner on the issue of whether Mr Comino disclosed the C9746 Design Drawing to Airaga would not have assisted AVI.

192 I therefore find that the C9746 Design Drawing was not part of the prior art base for the 810 Design.

G.4.     Are the Designs “new or distinctive” over the C9746 Design Drawing?

G.4.1.     Submissions

193 The applicants submit that if the C9746 Design Drawing is found to be part of the prior art base, each of the Designs must therefore be revoked. They submit that given the respondents admit that the 810 Design is an “embodiment” of the C9746 Design Drawing, it cannot be new or distinctive over the design in the C9746 Design Drawing. As for the 005 Design, the applicants submit that the only difference between that design and the C9746 Design Drawing is the additional internal thread, which Mr Hunter conceded could not even be seen on the end view of the 005 Design. The applicants submit that such a difference (even assuming it is shown on the Designs) could not possibly be sufficient to render the 005 Design not “substantially similar in overall impression” to the C9746 Design Drawing.

194 The respondents accept that if the C9746 Design Drawing is found to form part of the “prior art base” for the Designs, then the 810 Design was not “new or distinctive” over the design in the C9746 Design Drawing. They submit, however, that the 005 Design is new and distinctive over the C9746 Design Drawing because of the addition of the second internal thread.

G.4.2.     Consideration

195 Given my conclusion above – that the C9746 Design Drawing was not part of the prior art for either of the Designs – the issue of whether the Designs were “new or distinctive” over the C9746 Design Drawing does not arise.

G.5.     Are the Designs “new or distinctive” over the C6827 Valve?

G.5.1.     Submissions

196 The applicants submit that the Designs are not “new and distinctive” when compared with the design of the C6827 Valve (as shown in the C6827 Design Drawing).

197 The applicants submit that that there is an “overwhelming similarity” between the Designs and the C6827 Design Drawing. They contend that the Designs are substantially similar in overall impression to the C6827 Valve itself, particularly when more weight is given to similarities than differences, and the ability to innovate in respect of those differences, namely the locking wing and the internal threads.

198 The applicants submit that Mr Smerdon and Mr Hunter agreed that the only differences between the C6827 Valve and the Designs are the lockable handle/side wing and the internal threads.

199 The applicants submit that when considering internal threads as a “visual feature” for the purposes of s 19, they should be given little weight as they are standard thread sizes and are “completely constrained by function”, “leaving very little, or zero, design freedom or ability for the designer to innovate”. Next, the applicants submit that “[c]onsistently with the public policy objectives underpinning the Designs Act, one must be careful to endow a party with a registered design over features that cannot be avoided by another competitor”. The applicants further submit that the internal threads are “largely not visible when the valve is in use”, while the second internal thread in the 005 Design could not even be seen from the “end view”, as conceded by Mr Hunter.

200 As to the locking wing handle, the applicants submit that Mr Smerdon’s evidence that the locking wing handle was a “purely functional decision that is based on the particular use case” and was not “striking at all to [him] as a designer”, should be accepted.

201 The applicants submit that any additional minor differences identified by Mr Richardson, such as the removal of measurement lines from the C6827 Design Drawing compared with the Designs (a) must, at most, take a “minor role visually” (b) must be considered in the context of the freedom of the designer to innovate, and (c) cannot be sufficient, even when taken cumulatively, to render the Designs new or distinctive over the C6827 Valve. Relatedly, the applicants submit that Mr Richardson’s evidence should be treated with caution due to his failure to consider similarities between the Designs and the C6827 Valve, as required by the statutory test, and instead focusing on the “very minor differences” between them.

202 The respondents submit that the principal differences between the Designs and the C6827 Valve are (a) the locking wing with a lockable handle that has a hole in it, and (b) the internal threads.

203 The respondents submit that both Designs were distinctive over the C6827 Valve at their respective priority dates. They submit that even though there are a number of similarities between each Design and the C6827 Valve, the two principal differences are sufficient to warrant a finding that the Designs are not substantially similar in overall impression to the C6827 Valve because  (a) while the statutory test requires that similarities be given more weight than the differences, it does not mean that substantial visual differences between the C6827 Valve and the Designs are not to be afforded proper weight, (b) the locking wing with the lockable handle and the internal threads are striking visual differences which “make an immediate impression on the eye”, (c) the lockwing with the lockable handle of itself is a significant visual feature, which has been acknowledged by each Mr Hunter, Mr Smerdon and Mr Richardson, (d) Mr Smerdon took an impermissible approach when he sought to diminish the visual importance of the internal thread because of the simplicity in the manufacturing step of tapping it into the valve, (e) Mr Smerdon’s evidence in which he sought to diminish the significance of the visual differences is irreconcilable with the emphasis that he placed on less significant visual differences when addressing infringement, and (f) Cimberio regarded the C9746 Valve design (which is an embodiment of the 810 Design) as a new project and allocated a new valve model number for the C9746 Valve, which demonstrates that the C9746 Valve (and, therefore, the Designs) is not a “modification” of the C6827 Valve, but a new and distinctive valve design.

204 As to additional minor differences between the C6827 Valve and the Designs identified by Mr Richardson, the respondents submit that, in circumstances where there are functional constraints on the freedom to innovate, which in this case the respondents submit are driven by standard pipe sizes, even modest changes in visual appearance may be sufficient to bestow distinctiveness over prior art.

G.5.2.     Consideration

205 I note that while the C6827 Design Drawing itself has not expressly been admitted by the respondents to form part of the prior art base for the Designs, the parties have agreed that the design of the C6827 Valve (which has been admitted as prior art for each of the Designs) is shown in the C6827 Design Drawing. I therefore accept that the exercise of comparison of the Designs to the C6827 Valve for present purposes can be done by reference to the C6827 Design Drawing.

206 I am satisfied that the Designs are new or distinctive over the C6827 Valve.

207 I accept that although the internal threads are a visual feature, as shown in the design drawings for the Designs, they should be given comparatively reduced weight as they are almost exclusively functional, driven by standard pipe dimensions, leaving little in terms of freedom to innovate for the purposes of s 19(2)(d) of the Designs Act. I do not, however, agree with Mr Smerdon’s opinion that the locking wing handle was a purely functional decision based on “a particular use case” and was not “striking at all” from a design perspective. The creator of the design of the locking wing had substantial freedom to innovate in relation to shape and dimension of that feature. The locking wing handle was a significant and prominent feature of the Designs, which was not present in the C6827 Valve. It was both visually obvious and distinctive. Neither the functional dimension to the locking wing handle, nor the number of similarities between the Designs and the C6827 Valve, detracts from the significance of the difference in the overall appearance from a design perspective between the C6827 Valve (as shown in the C6827 Design Drawing) and the Designs, as illustrated below:

H.     Issue 3: Infringement of the 810 Design

H.1.     Overview

208 The parties agreed that the following issues arise for determination with respect to the claims advanced by the respondents for design infringement of the 810 Design:

a.    Is the AVI Ball Valve identical or substantially similar in overall impression to the 810 Design?

b.    If yes to (a), is AVI entitled to a defence to infringement under an implied licence and/or s 71(2) of the Designs Act?

c.    From what date did Mr Comino provide to Strongcast a valid exclusive licence in respect of the 810 Design?

d.    If infringement is found, what relief are the Respondents entitled to, and from what date, (including additional damages under the Designs Act)?

H.2.     Identical or substantially similar in overall impression

H.2.1.     Overview

209 The respondents contend that the AVI Ball Valves are substantially similar in overall impression to the 810 Design, and thereby by importing and selling the AVI Ball Valves in Australia since December 2019, AVI has infringed the 810 Design.

210 In order to determine whether a registered design has been infringed it is necessary to consider whether the allegedly infringing design is substantially similar in overall impression to the registered design by comparing the allegedly infringing product to the registered design in the context of the whole appearance of the two designs: see s 71(1) and (3), and s 19, Designs Act; LED Technologies at [72]-[73] and [77] (Gordon J). See also: GME at [24]-[27] (Burley J); Hunter Pacific at [38]-[39] (Nicholas J).

211 In determining whether a design is infringed the Court must give more weight to similarities between the designs than to differences between them: s 19(1) of the Designs Act. The matters set out under s 19(1), (2) and (3) of the Designs Act are to be assessed through the lens of an informed user, being a person who is familiar with the product to which the registered design relates. A “design” is defined in s 5 of the Designs Act as meaning (in relation to a product) the overall appearance of the product resulting from one or more visual features of the product (note also the separate definition of “visual features” under s 7 of the Designs Act).

H.2.2.     Submissions

212 The respondents submit that the AVI Ball Valves are not identical to the 810 Design, but rather embody, for the following reasons, a design which is substantially similar in overall impression to the 810 Design. It is on that basis, the respondents submit, that the AVI Ball Valves infringe the 810 Design.

213 First, the respondents submit that other than the visual differences that the experts agreed separated the 810 Design from the prior art (namely, the C6827 Valve), being the locking wing with a through hole added to the valve body, a hole in the valve lever and a dual threaded connection in the valve opposite the swivel nut (Principal Differences), implicitly in all other respects the AVI Ball Valves have visual features that are the same as the 810 Design. They submit that the evidence given by Mr Hunter to the effect that the differences between the AVI Ball Valves and the 810 Design were “slight” should be accepted and giving more weight to similarities than differences, the AVI Ball Valves are substantially similar in overall impression to the 810 Design. Further, they submit that because Mr Smerdon acknowledged that the three visual differences that he had identified in addition to the Principal Differences (Additional Differences) were not significant visually, it follows that the Additional Differences were not significant enough to warrant any meaningful consideration in determining whether the AVI Ball Valves were substantially similar in overall impression to the 810 Design.

214 Second, the respondents submit that the evidence of Mr Hunter should be preferred to that of Mr Smerdon as the probative value of Mr Smerdon’s evidence is diminished because (a) Mr Smerdon was not provided with a letter of instructions as to the statutory question before expressing his opinion on infringement, (b) Mr Smerdon did not prepare his own evidence, rather, he attended an online conference with the applicants’ solicitors in which a solicitor typed his affidavits, and (c) Mr Smerdon’s oral evidence was inconsistent with his written reports and he accepted that it was possible that the inconsistent sentences in his reports were written by someone else. In this respect, the respondents submit that Mr Hunter’s evidence should be preferred to that of Mr Smerdon.

215 Third, as to the Principal Differences, the respondents submit that while it is true that there are a number of small visual differences between the handle for the AVI Ball Valves and the 810 Design as observed by Mr Smerdon, when each of those differences is considered separately or together it is apparent that they are each very minor visual differences. They submit that Mr Smerdon’s decision to draw attention to these very minor visual differences, and place significance upon them, is consistent with an unduly narrow, technical approach which stands in contrast to the more pragmatic approach adopted by Mr Hunter. Further they submit that Mr Smerdon’s narrow approach on infringement is irreconcilable with his broader and more liberal approach to invalidity in which he stated that minor visual differences were in his view of no significance.

216 The applicants submit that the determination of “substantial similarity” in addressing infringement, as for invalidity, must focus on visual similarity, not function. They submit that Mr Hunter improperly focused on function and gave less weight to visual differences that did not have a functional difference. That is, on Mr Hunter’s view, for a difference to be visual, there must be a functional outcome.

217 The applicants submit that, in applying the factors in s 19 of the Designs Act – in particular, the freedom to innovate criterion – if a feature of a design is a functional requirement for the product (such as a standardised thread for a valve), that should reduce the importance of the visual feature for the s 19 assessment. They submit that this is due to the designer lacking sufficient freedom to innovate in respect of that feature.

218 The applicants submit that, in contrast, Mr Smerdon correctly focused on the significance of differences in the visual appearance of the AVI Ball Valves and the 810 Design and his evidence is to be preferred to the evidence of Mr Hunter that is “blinkered by function”. For the foregoing reasons, the applicants submit that the AVI Ball Valves are not substantially similar in overall impression to the 810 Design.

H.2.3.     Consideration

219 I accept, as I explain above at [43], that the initial briefing of Mr Smerdon and the preparation of his expert reports were deficient in material respects. Nevertheless, I accept that the evidence given by Mr Smerdon in the joint expert report and in the expert conclave on design infringement correctly addressed the statutory question, focused on visual differences, not function, and was persuasive.

220 In contrast, Mr Hunter gave too much weight to function and failed to appreciate or acknowledge material visual differences between the overall appearance of the AVI Ball Valves and the 810 Design. Mr Hunter acknowledged in the course of the expert conclave that his conclusion that there were “slight visual differences” between the AVI Ball Valves compared with the 810 Design and that in “giving more weight to obvious visual, functional similarities than minor visual differences” his characterisation of the differences was influenced by his belief that they did not make any functional difference to the designs. Mr Hunter also agreed that he gave more weight to a feature that he regarded as a visual difference if it also had a functional difference in assessing substantial similarity between designs for the purposes of infringement.

221 The contrast between the approach taken by Mr Hunter and Mr Smerdon was highlighted in their respective evidence in the expert conclave concerning the significance of the differences in the shape of the handle between the AVI Ball Valves and the 810 Design. The visual appearances of the AVI Ball Valves and the 810 Design are illustrated in the following diagrams that Mr Smerdon included in the joint expert report on design infringement:

222 Mr Smerdon described the handle as having a “relatively large visual component” and it was “extremely noticeable” that the AVI Ball Valves had an “integrated stem and handle” in contrast to the 810 Design having a “two-piece” design and referred to the AVI Ball Valves as having more of a “squashed overall appearance” because of the different height of the handle.

223 Mr Hunter gave the following evidence in response to Mr Smerdon’s assessment of the visual differences between the AVI Ball Valves and the 810 Design:

MR FLYNN:     Mr Hunter, do you agree that the AVI ball valve has a more squashed overall appearance?

MR HUNTER:     I don’t think that’s – that’s particularly evident, but looking at the exercise we went to previously, I can see that if you put a ruler next to the two, that would be observable, yes.

MR FLYNN:     But it’s observable even without a ruler, isn’t it?

MR HUNTER:     I don’t really think anyone would notice.

MR FLYNN:     So you say you can’t notice the difference in the height of them at all, without a ruler, is that right?

MR HUNTER:     No. I can’t.

224 I do not accept this evidence of Mr Hunter. It reflects poorly on his objectivity. The difference in height is easily observable without a ruler and is clearly noticeable.

225 I am satisfied that AVI has not infringed the 810 Design by reason of its importation and sale in Australia of the AVI Ball Valves. The AVI Ball Valves and the 810 Design are not identical or substantially similar in overall appearance. The differences in the height of the handle and the overall impression of the AVI Ball Valves and the 810 Design are readily apparent from a visual inspection of the physical exhibits, as shown in the diagrams at [221221221221221221] above. In my view the visual differences are significant and preclude any finding of “substantial similarity” after giving more weight to similarities, considering the prior art and having regard to a designer’s ability to innovate. A conclusion that I have more readily reached because Mr Smerdon gave evidence that the handle is “where the users eyes are drawn when the plumber is installing or viewing the valves when they are in the metre box” and Mr Hunter agreed that if a person is considering interacting with a valve, the first place they would look “would be the point of obvious interaction with the valve, which is the handle”.

H.3.     Implied licence and s 71(2)

226 The respondents submit that it is difficult to see how AVI can sensibly maintain its contention that it had an implied licence, other than with respect to the AVI Ball Valves the subject of Strongcast’s invoices in the period May 2019 to February 2020, or has a defence under s 71(2) of the Designs Act, given that it accepts that it does not (presently) have a licence from either of the respondents to import or sell the AVI Ball Valves in Australia.

227 The applicants did not advance any submissions in support of these contention in their defence to the First Cross-Claim.

228 Had I otherwise concluded that AVI had infringed the 810 Design, I am satisfied that AVI would not have had any defence under an implied licence, other than with respect to the AVI Ball Valves the subject of Strongcast’s invoices in the period May 2019 to February 2020, or s 71(2) of the Designs Act.

H.4.     Valid exclusive licence for Strongcast

229 The respondents contend that Strongcast has been, at all relevant times, the exclusive licensee of the 810 Design.

230 The applicants admitted in their defence to the First Cross-Claim that Mr Comino was granted an exclusive licence in respect of the 810 Design but only from 4 March 2022.

231 The respondents submit that given both Mr Comino and Strongcast seek relief for design infringement, Mr Comino is entitled to relief for infringing conduct prior to 4 March 2022, even if Strongcast did not become an exclusive licensee until that date.

232 The applicants did not advance any submissions in response to this proposition, and I accept that there does not appear to be any necessity to resolve whether Strongcast was the exclusive licensee prior to 4 March 2022 for present purposes but might have arisen for determination if there had been a subsequent hearing on quantum.

H.5.     Relief

H.5.1.     Submissions

233 The respondents submit that AVI is liable for additional damages under s 75(3) of the Designs Act on the basis that (a) AVI was at all material times aware of the 810 Design; (b) AVI unsuccessfully took action before the Designs Office, (via a “straw man” applicant) challenging Mr Comino’s entitlement to the 810 Design and must therefore be taken to have engaged in the infringing conduct subject to the risk that it may be unsuccessful in that proceeding; (c) AVI gave evidence before the Designs Office that was not truthful and was misleading given the claim to ownership of the design of the C6827 Valve was relevant to the Design Office proceeding; and (d) AVI broke-off all commercial relations with Mr Comino and Strongcast and continued to import and sell the AVI Ball Valves in Australia (without any licence from the respondents) after previously approaching Airaga with Mr Comino for the purpose of securing a new supply chain for the C9746 Valve (which embodied the 810 Design).

234 The applicants submit that in the event infringement had been established there should be no award of additional damages because AVI reasonably considered that the 810 Design was properly owned by Cimberio and/or was clearly invalid in the light of the C6827 Valve and C9746 Valve.

H.5.2.     Consideration

235 Section 75(3) of the Designs Act provides:

The court may award such additional damages as it considers appropriate, having regard to the flagrancy of the infringement and all other relevant matters.

236 Had I otherwise determined that AVI had infringed the 810 Design, I would not have awarded additional damages to the respondents.

237 I accept that AVI had knowledge of the 810 Design at all relevant times. I  have also taken into account Mr Kilner’s concession in cross-examination that the evidence he gave to the Designs Office in the revocation proceedings concerning the 810 Design and the 005 Design, to the effect that the Distribution Agreement included a term stating “AVI retains for itself all proprietary rights in and all designs, engineering details, and other rights pertaining to the C6827 valve” and “AVI has not granted nor assigned any rights in the C6827 Design to Strongcast”, was inconsistent with his understanding at the time. That understanding was that AVI did not hold all proprietary rights in the C6827 Valve, and that it was, in truth, a “Cimberio design and a Cimberio copyright”.

238 The applicants’ challenge to the validity of the 810 Design could not be characterised as “hopeless or improperly pursued” and an unsuccessful defence of invalidly is not sufficient to warrant an award of additional damages: see Zetco Pty Ltd v Austworld Commodities Pty Ltd  (No 2) [2011] FCA 848 at [268] (Bennett J) (in the context of additional damages under the equivalent provision in s 122(1A) of the Patents Act).

I.     Issue 4: Unjustified threats for design infringement

I.1.     Overview

239 The parties agreed that the following issues arise for determination with respect to the claims advanced by the applicants for unjustified threats for design infringement:

a.    Was the Foundry IP letter in relation to the 005 Design (see Tab 119 of the CB), an “unjustified threat” under s 77 of the Designs Act?

b.    Would the Court exercise its discretion to either (or both) damages and additional damages pursuant to s 77 of the Designs Act.

240 The Foundry IP letter was sent after a request for revocation of the 005 Design and the 810 Design had been filed by Watson Chiarella Pty Ltd, on instructions from AVI, with the Designs Office. The letter claimed that the ball valve offered for sale by AVI (the AVI Ball Valves) would appear to be covered by the 005 Design and it was visually similar to the 005 Design and included a demand for an undertaking from AVI, its servants and assigns that they not make or offer to make, import, sell, hire or otherwise dispose of a ball valve which embodies the 005 Design.

I.2.     Unjustified threat

I.2.1.     Submissions

241 The applicants submit that an objective reading of the Foundry IP letter shows it goes beyond a “mere notification” under s 80 of the Design Act. Rather, they submit that the letter would have conveyed to any reasonable person that Mr Comino intended to bring infringement proceedings and therefore satisfies the definition of a “threat”.

242 Next, the applicants submit that as a result of the Court’s earlier dismissal of the respondents’ claim for infringement of the 005 Design, Mr Comino can no longer satisfy the elements of the defence under s 78. They submit that Mr Comino cannot now satisfy the Court that “the acts about which the threats were made infringe or would infringe the registered designs”.

243 The respondents submit the Foundry IP letter was not an “unjustified threat” because (a) the assertions made in the letter were only made once, and they were subsequently followed by the commencement of infringement proceedings; (b) the subsequent proceedings were for infringement of the 005 Design and also the 810 Design in respect of the AVI Ball Valves (but they acknowledge the claim in respect of the 005 Design was abandoned at the commencement of the trial); (c) Mr Kilner confirmed that AVI never had any intention of selling a dual-threaded valve in Australia which embodied the 005 Design and so he could not have taken the letter as a “threat”; (d) Mr Comino had an unwavering and reasonable belief at the time that the letter was sent that he was the true owner of the Designs (including the 005 Design).

244 The respondents further submit, that the focus of the unjustified threat provisions, in an intellectual property context, are primarily concerned with avoiding unjustified deterrence of competitors or on stifling or deterring competition.

245 The respondents submit that if the Court otherwise found that the Foundry IP Letter constituted a threat falling within s 77(1) of the Designs Act, the Court would not exercise its discretion to grant relief, because no damage could arise because AVI never had any intention of selling a dual threaded vale in Australia that embodied the 005 Design.

I.2.2.     Consideration

246 Section 77 of the Designs Act relevantly provides:

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

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

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

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

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

(a) the flagrancy of the threats; and

(b)     the need to deter similar threats; and

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

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

(e)     all other relevant matters.

(Emphasis in original.)

247 Section 78 of the Designs Act provides:

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

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

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

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

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

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

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

I.3.     Relief

I.3.1.     Submissions

252 The applicants submit that Mr Comino’s conduct in making the threats was flagrant, and that he should be liable to pay additional damages under s 77(1A) of the Designs Act, including because, in the circumstances, he engaged in such conduct for the purpose of seeking to exert commercial leverage over the applicants, and then when the matter came to Court, he simply dropped the claim for infringement of the 005 Design.

253 The respondents submit that in the event the Court were to find that they had made an unjustified threat of design infringement no relief should be ordered. They submit that there is no evidence to suggest that the claims in the Foundry IP letter would be repeated and further the Court has already dismissed the respondents’ claims for infringement of the 005 Design, being the design the subject of the Foundry IP letter. Next, they submit that given AVI never intended to sell, nor sold a valve, that embodied the 005 Design no damage could have been suffered as a result of any threat made in the Foundry IP letter.

I.3.2.     Consideration

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

J.     Issue 5: Copyright infringement

J.1.     Overview

255 Cimberio had initially advanced copyright infringement cases against the respondents with respect to both the C6827 Valve and the C9746 Valve, but ultimately only pressed the C9746 Valve copyright infringement case.

256 The parties agreed that the following issues arise for determination with respect to the claims advanced by the applicants for copyright infringement (after deleting references to the C6827 Valve):

a.    Is the C9746 Design Drawing an original copyright work in which copyright subsists?

b.    If so, does Cimberio own the copyright in the C9746 Design Drawing?

c.    By reason of one or more of the following, did Mr Comino and/or Strongcast reproduce and/or publish a substantial part of the C9746 Design Drawing:

i.     Mr Comino sending the email on 16 February 2018 at 9.02am to Infinity Design, attaching the C9746 Design Drawing (file name C9746_0.pdf);

ii.     Mr Murphy sending the email on 16 February 2018 at 1.50pm, attaching an edited version of the C9746 Design Drawing (file name C9746_0 – EDITED 180216.pdf);

iii.     Mr Comino sending the email on 16 February 2018 at 1.57pm, attaching an annotated version of the C9746 Design Drawing (file name C9647 – Dual Threads.pdf);

iv.     Mr Murphy sending the email to Mr Comino on 16 February 2018 at 2.16pm, attaching an edited version of the C9746 Design Drawing (C9746_0 – EDITED 180216-Rl.pdf).

v.     Mr Comino emailing his patent attorney a copy of the two edited drawings by Mr Murphy, including by inference, the documents with file names C9746_0 – EDITED 180216.pdf and C9746_0 – EDITED 180216-Rl.pdf;

vi.     Mr Comino and/or his patent attorney filing with the Designs Office each of the 005 Application and the 810 Application, including, by inference, a copy of one or more of the drawings contained in the C9746_0 – EDITED 180216.pdf and/or the C9746_0 – EDITED 180216- Rl.pdf.

d.    By reason of the acts in (c) above, did both the respondents, or either of them, infringe copyright in the C9746 Design Drawing pursuant to s 36(1) of the Copyright Act?

e.    Further or alternatively, if one of the respondents did not directly infringe such copyright, did that respondent authorise the other, and/or direct or procure or enter into a common design and thereby infringe the copyright in C9746 Design Drawing as a joint tortfeasor?

f.    Further or alternatively, did either of the respondents:

i.    authorise Infinity Design to reproduce the whole or a substantial part and, further or in the alternative, to publish the C9746 Design Drawing, and thereby infringed copyright in the drawing  pursuant to s 36(1) of the Copyright Act; and/or

ii.    direct or procure or enter into a common design with Infinity Design to reproduce the whole or a substantial part and, further or in the alternative, to publish the C9746 Design Drawing, and thereby infringe copyright in the drawing as a joint tortfeasor.

g.    If the copyright in the C9746 Design Drawing would be infringed by taking the acts referred to in (c) above:

i.    was the commercial arrangement between the parties such that the first respondent owned all intellectual property rights in any and all products designed by the first respondent, including any and all rights in any drawings produced by the second applicant to facilitate the manufacture of those products?

ii.    or in the alternative to (i) did the first respondent have an implied licence from the second applicant to use any of the manufacture drawings produced in respect of the manufacture of the first respondents’ products?

h.    If copyright infringement is found, what relief is Cimberio entitled to (including whether Cimberio is entitled to additional damages (under s 115(4) of the Copyright Act))?

J.2.     Does copyright subsist in the C9746 Design Drawing?

J.2.1.     Submissions

257 The applicants submit, and the respondents agree or at least do not dispute, that copyright subsists in the C9746 Design Drawing.

J.2.2.     Consideration

258 The application of provisions concerning copyright subsistence (and infringement) under the Copyright Act extend to works made by Italian citizens and bodies corporate incorporated under Italian law by virtue of s 184 of the Copyright Act and reg 4 of the Copyright (International Protection) Regulations 1969 (Cth).

259 It was common ground, and I am satisfied, that copyright subsists in the C9746 Design Drawing as an original artistic work. The definition of “artistic work” in s 10 of the Copyright Act specifically provides that the work need not have artistic quality to be an “artistic work” and, as established below, the C9746 Design Drawing meets the requirements of originality and authorship by virtue of Mr Riva’s application of intellectual effort.

260 Copyright has been held to subsist in engineering and manufacturing drawings: Vawdrey Australia Pty Ltd v Krueger Transport Equipment Pty Ltd (2009) 261 ALR 269; [2009] FCAFC 156; S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466; [1985] HCA 59.

J.3.     Does Cimberio own the copyright in the C9746 Design Drawing?

J.3.1.     Submissions

261 The applicants submit that Mr Riva was the author of the C9746 Design Drawing, which involved significant artistic skill, labour and judgment, and that Cimberio owns the copyright in the C9746 Design Drawing through Mr Riva being Cimberio’s employee.

262 The respondents do not dispute Cimberio’s claim for ownership of the C9746 Design Drawing.

J.3.2.     Consideration

263 In Lumen Australia, Moshinsky J stated at [198]:

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].

264 I am satisfied that the work undertaken by Mr Riva that led to the creation of the C9746 Design Drawing may have involved the “lifting directly” of material from other sources but nevertheless involved the bringing together of skill, judgment and intellectual effort to select the technical data to be included and then used to produce an original detailed engineering drawing.

265 The design process for the C9746 Design Drawing involved more than 120 hours of work. Mr Riva was assisted by other Cimberio employees, but he was the sole author of the C9746 Design Drawing. The assistance from other Cimberio employees comprised the provision or facilitation of what Mr Riva described in cross-examination as information that he used “in preparation of the drawing” and he used the information “to plan and to design” the C9746 Valve. Another Cimberio employee who provided assistance was only responsible for certification issues.

266 Mr Riva gave evidence, that I accept, that when he designed the C9746 Valve, including the lockable handle and side wing, he had to consider “several items of design, including: the shape, configuration, dimensions, materials, and aesthetic features” and he had to consider the “cost of production, feasibility of the engineering and the machining requirements” of the components of the C9746 Design Drawing, including the design of the ball within the ball valve, the stem, the body, the handle and the locked wing.

267 I am satisfied that by reason of Mr Riva’s employment by Cimberio, it owns the copyright in the C9746 Design Drawing pursuant to s 35(6) of the Copyright Act.

J.4.     Did the respondents reproduce or publish the C9746 Design Drawing?

J.4.1.     Factual findings

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

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

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

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

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

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

269 I infer that Mr Comino’s references to the “C9647” valve in his second email to Mr Dillenbeck on 2 February 2018 were typographical errors, and he must have intended to refer to the C9746 Valve.

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

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

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

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

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

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

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

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

Hi mate,

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

…

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

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

Best regards

John Comino/Managing Director

Strongcast Pty Ltd

272 It is not readily apparent whether the reference to “samples of this gear” extends to a sample of a Cimberio valve, but I am confident and readily infer that the reference to “when we need to go” was a reference to a forthcoming visit by Mr Comino with AVI to Airaga in Italy to discuss alternative manufacturing options.

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

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

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

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

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

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

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

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

Dear Andrea

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

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

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

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

280 On 19 March 2018, Mr Comino and Mr Kilner attended a meeting in Gozzano in Italy with two representatives of Airaga, Mr Airaga and Mr Milani. Mr Comino gave evidence, which I accept, because it is consistent with the inherent logic of events, that the purpose of the meeting with Airaga was to determine if Airaga had the capability to manufacture products for Strongcast, including ball valves, and to his understanding Cimberio was not aware that he was looking at using another manufacturer to make the C9746 Valve.

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

282 On 24 October 2019, the 005 Design was certified by the Designs Office.

283 On 30 April 2020, the 810 Design was certified by the Designs Office.

J.4.2.     Submissions

284 The applicants submit that Mr Comino and by extension Strongcast, reproduced a substantial part of the C9746 Design Drawing. They submit that each of the email exchanges between Mr Comino and Mr Murphy on 16 February 2018, the subsequent provision of the First Edited C9746 Design Drawing and the Second Edited C9746 Design Drawing to the patent attorney, and the filing of the 005 Application and the 810 Application, involved the reproduction of a substantial part of the C9746 Design Drawing.

285 The respondents accept, and I am otherwise satisfied, that the two emails sent by Mr Comino to Mr Murphy on 16 February 2018 attached a reproduction of the whole or at least a substantial part of the C9746 Design Drawing.

286 The respondents contend, however, that Cimberio’s pleaded case did not include any allegation that either of the respondents was involved in the act of filing the Designs or any authorisation of a copyright infringement by reason of conduct of a third party and Cimberio should be held to its pleaded case.

J.4.3.     Consideration

287 In order to determine whether a substantial part of material subject to copyright has been copied it is necessary to consider both the extent of what is copied and the quality of what has been copied, it is ultimately a question of fact and degree: IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458; [2009] HCA 14 at [30]-[32] (French CJ, Crennan and Kiefel JJ); Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 172 FCR 580; [2008] FCAFC 197at [66] (Lindgren, Goldberg and Bennett JJ).

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

J.5.     Did the respondents infringe copyright in the C9746 Design Drawing?

J.5.1.     Submissions

289 The applicants submit that the respondents directly infringed copyright in the C9746 Design Drawing by (a) making the reproductions of the drawing in the attachments to the two emails sent by Mr Comino to Infinity Design on 16 February 2018, (b) the email sent by Mr Comino to his patent attorney, and (c) the filing by the patent attorney, as his agent, of each of the 005 Application and the 810 Application with the Designs Office.

290 Further, the applicants submit that the respondents authorised the infringement of copyright in the C9746 Design Drawing in the two emails sent by Infinity Design to Mr Comino attaching edited copies of the C9746 Design Drawing.

291 The respondents contend that neither of them infringed Cimberio’s copyright. They submit that Cimberio’s pleaded claim is limited to reproductions effected in communication with Infinity Design and the respondents had an implied licence to use the C9746 Design Drawing which arose from its negotiations with AVI. I address the alleged implied licence below at [308]-[348].

292 The respondents otherwise submit that no authorisation case in relation to the filing and registration of the Designs was pleaded by Cimberio and accordingly the question of whether the respondents authorised or entered into a common design with Mr Comino’s patent attorney does not arise for determination. Moreover, the respondents submit that Mr Comino’s patent attorney, not either of the respondents, attended to the filing of the applications for registration of the Designs with the Designs Office.

J.5.2.     Consideration

293 I am satisfied, for the following reasons, that both of the respondents infringed copyright in the C9746 Design Drawing under s 36 of the Copyright Act.

294 First, as I have found above at [263]-[267], (a) Cimberio owns the copyright in the C9746 Design Drawing and (b) each of the First Edited C9746 Design Drawing, Annotated C9746 Design Drawing, and Second Edited C9746 Design Drawing, included a substantial part of the C9746 Design Drawing.

295 Second, as I explain below at [307], I am satisfied that the emails sent by Mr Murphy on 16 February 2018 to Mr Comino were authorised by the respondents, and I do not accept that the respondents had an implied licence to use the C9746 Design Drawing in its communications with Infinity Design.

296 Third, I accept that the applicants did not plead any case that Mr Comino or Strongcast had authorised Mr Comino’s patent attorney to file the 005 Application and the 810 Application with the Designs Office for registration of the Designs. I am satisfied, however, that the applicants have pleaded a case that the respondents infringed the copyright in the C9746 Design Drawing by reason of Mr Comino’s provision of the First Edited C9746 Design Drawing and the Second Edited C9746 Design Drawing to his patent attorney and the subsequent filing by his patent attorney of the 005 Application containing the Second Edited C9746 Design Drawing and the 810 Application containing the First Edited C9746 Design Drawing.

297 The applicants’ copyright infringement case with respect to the communications with Mr Comino’s patent attorney and the filings with the Designs Office is relevantly pleaded and particularised in the ASOC at [34] to [36] in the following terms:

34.    On one or more occasions, one or both of Mr Comino and Strongcast reproduced and further or in the alternative published the whole or a substantial part of the C9746 Design Drawing.

Particulars

(I)    The Applicants refer to paragraphs 27 to 33 above.

(II)    Correspondence between Mr Comino and his patent/design attorneys before the filing of the 005 Application and the 810 Application referred to in paragraphs 14, 16 and 18 of the First Comino Declaration.

(III)    Further particulars may be provided after evidence and discovery.

35.    The acts pleaded in paragraph 34 above were done without the licence of Cimberio.

36.    By reason of the matters pleaded in paragraphs 34 and 35 above, the Respondents, or either of them, infringed the copyright in the C9746 Design Drawing pursuant to section 36(1) of the Copyright Act.

298 In turn, [28], [29], [31] and [32] of the ASOC relevantly include:

28.    On 20 February 2018, an application for the 005 Registered Design was filed in Mr Comino’s name (005 Application).

29.    The 005 Application contained the First Edited C9746 Design Drawing.

…

31.    On 23 March 2018, an application for the 810 Registered Design was filed in Mr Comino’s name (810 Application).

32.    The 810 Application contained the Second Edited C9746 Design Drawing.

299 It is readily apparent that the contraventions with respect to (a) the communications with Mr Comino’s patent attorney are explicitly advanced in the ASOC at [34] to [36] by reason of particular II to [34], and (b) the filings with the Designs Office are explicitly advanced in the ASOC at [34] to [36] by reason of particular I to [34] and then in turn [28], [29], [31] and [32] of the ASOC.

300 Fourth, consistently with the essential attributes of an agent, Mr Comino in retaining a patent attorney to file the applications for the registration of the designs expressly or impliedly manifested assent that the patent attorney should act on his behalf so as to affect his legal relations with third parties: see Bowstead and Reynolds on Agency (23rd ed 2024, Sweet & Maxwell) at [1-001].  

301 I am therefore satisfied that Mr Comino’s patent attorney was at all material times acting as Mr Comino’s agent in filing the 005 Application and the 810 Application with the Designs Office for registration of the Designs in Mr Comino’s name.

J.6.     Did the respondents enter into a common design and thereby infringe copyright?

J.6.1.     Submissions

302 The applicants contend that if the Court were to find that either Mr Comino or Strongcast did not infringe copyright then that respondent authorised or directed or procured or entered into a common design with the infringing respondent and thereby infringed copyright in the C9746 Design Drawing as a joint tortfeasor.

303 The respondents submit that Cimberio has failed to articulate the facts or other matters that it relies upon as giving rise to the claim for copyright infringement founded on a common design case or authorisation and in any event, there is no basis to contend that Mr Comino was standing apart from Strongcast and therefore the relevant “true actor” was Strongcast.

J.6.2.     Consideration

304 Given my conclusion above that both Mr Comino and Strongcast infringed copyright in the C9746 Design Drawing, this issue does not arise.

J.7.     Did the respondents authorise or enter into a common design with Infinity Design?

J.7.1.     Submissions

305 The applicants submit that the respondents authorised the two reproductions made by Mr Murphy on 16 February 2018 within the meaning of s 36(1) of the Copyright Act or in a common design as joint tortfeasors.

306 The respondents accept that an authorisation and common design case in relation to the communications between the respondents and Infinity Design on 16 February 2018 was pleaded but submit that they had an implied licence from AVI to engage in those communications. I address the alleged implied licence below at [308] to [348].

J.7.2.     Consideration

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

J.8.     Did Strongcast own all intellectual property rights or have an implied licence to use the C9746 Design Drawing?

J.8.1.     Relevant principles

308 The word “licence” in s 36(1) of the Copyright Act means “consent” or “permission” that may be given “orally or be implied by consent” and it may be granted by “a positive permission or consent being implied from the circumstances of a particular case”: QAD Inc v Shepparton Partners Collective Operations Pty Ltd (2021) 159 IPR 285; [2021] FCA 615 at [88] (Thawley J) citing Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534; [1977] HCA 52 at 539 and Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 at 51 (Sheppard, Spender and Gummow JJ).

309 In Trumpet Software Pty Ltd v Ozemail Pty Ltd (1996) 34 IPR 481; [1996] FCA 560 at 499-550, Heerey J, in considering what terms should be implied into a software licence in the context of a claim for copyright infringement, stated:

The juristic basis for any terms to be included in a licence for the use of software might be better founded in the analogous doctrine of implied contractual terms as expounded by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. Such doctrine applies by analogy rather than directly because, as already mentioned, the licence under consideration was not a contractual one. But it must have some terms and conditions. In my opinion the most rational approach is to apply the BP Westernport criteria. And the contractual analogy is a close one because the shareware licence would mature into a contract if a user were to effect registration — rather like goods taken on a sale or return basis. The evidence of computer experts I find of assistance, not as direct evidence of trade custom in the legal sense but as indicating how this particular trade operates and providing an informed background against which the BP Westernport criteria can be applied.

In particular two criteria are apposite, namely (i) whether the supposed condition is necessary to give business efficacy, in the light of the fundamental purpose of shareware, which is that of evaluation, and (ii) whether it is so obvious that it ``goes without saying’.

(Emphasis added.)

J.8.2.     Submissions

310 The respondents submit that they had an implied licence from Cimberio to use any of Cimberio’s design drawings. Alternatively, the respondents plead in their defence at [35(b)] that such a licence was not required because Strongcast owned all the intellectual property in the Designs. That contention, however, was not, or was only faintly, pressed in final submissions. In their final submissions, the respondents acknowledged that Mr Comino did not believe he owned the copyright in the C9746 Design Drawing. Rather, they sought to rely on Mr Comino’s evidence that he always believed “the Designs were his” and, therefore, he was permitted to use the drawings of the Designs to substantiate the implied licence defence and resist an order for damages and additional damages under s 115(3) and (4) of the Copyright Act.

311 The respondents submit that the nature of the parties’ conduct and the commercial landscape in which it emerged clearly gave rise to an implied licence.

312 The respondents submit that the implied licence arose because Cimberio was engaged to prepare drawings for a product for which there was a common understanding that the respondents had, at least, exclusive sales or distribution rights. They submit that only the respondents could therefore have any rights in relation to the three-dimensional manifestation of the valve the subject of the C9746 Design Drawing and only they could use the drawing in an application for a registered design.

313 The respondents also submit that the implied licence to use the C9746 Design Drawing in communications with Infinity Design arose from negotiations between the respondents and AVI in October 2018, specifically in the email Mr Kilner sent to Mr Comino on 16 October 2018.

314 The respondents submit that it follows from these matters that they had an implied licence that extended to use of the C9746 Design Drawing in furtherance and protection of their exclusive rights in respect of the three-dimensional representations of the subject of the copyright work.

315 The applicants submit that there was no implied licence.

316 First, the applicants submit that the 16 October 2018 email from the respondents to AVI in October 2018 cannot bear upon the existence of an implied licence as at the time of Mr Comino’s correspondence in January 2018 or February 2018.

317 Second, the applicants submit that the existence of an implied licence is an objective rather than a subjective exercise.

318 Third, the applicants contend that the evidence does not establish that there existed a common understanding between the parties that the respondents had exclusive sales or distribution rights under the Distribution Agreement with respect to the C9746 Valve. Rather, to the contrary, they submit that the evidence establishes that Mr Comino never considered whether he had exclusive distribution rights under the Distribution Agreement.

319 Fourth, the applicants submit that as there was a distinction drawn between exclusive distribution rights and ownership in previous negotiations, it is implausible that there could be an implied licence to use copyright work in a way that would give Mr Comino any implied ownership just on the basis that there was some exclusive distribution understanding.

J.8.3.     Consideration

320 I do not accept that the nature of the parties’ conduct and the commercial landscape in which the drawings emerged gives rise to an implied licence for the following reasons.

321 First, the negotiations between AVI and the respondents, as recorded in Mr Kilner’s 16 October 2018 email to Mr Comino (relied on by the respondents), could not give rise to any implied licence for the respondents to provide the C9746 Design Drawing to Infinity Design in February 2018.

322 The respondents rely on the following item in a “very general list of matters” that Mr Kilner includes in his email that the proposed a “trading agreement” between AVI and Strongcast would cover:

* Strongcast owns the rights to any product that is being custom manufactured for Strongcast by AVI’s suppliers / manufacturers. Except where another agreement is in place, for example the MLM bracket.

323 It is immediately apparent that this is (a) a statement of matters that it is proposed to be included in an agreement, not a statement of what matters had been included in any agreement prior to 16 October 2018, (b) made at a time when the commercial landscape had fundamentally altered because AVI and the respondents were by then exploring manufacturing opportunities with Airaga rather than Cimberio, and (c) speaks only to AVI’s objective intention, not any objective intention of Cimberio, in circumstances where Mr Kilner gave evidence that AVI never asserted that it had any intellectual property rights in the valves manufactured by Cimberio.

324 Second, any subjective belief that Mr Comino may have had as to the ownership of the design the subject of the C9746 Design Drawing, cannot provide any support for an implied licence to use the C9746 Design Drawing for the purposes for which it was used by the respondents, as the existence of an implied licence is determined objectively: see QAD Inc [110]-[113].

325 I do not accept that Mr Comino was not aware of and did not appreciate the significance of the copyright notice on the C9746 Design Drawing.

326 Mr Comino’s denials must be weighed against the contemporaneous email communications between Mr Comino and Mr Murphy on 16 February 2018, including Mr Comino’s subsequent attempts in his affidavit evidence to advance a benign, or at least relatively benign, explanation for the revisions he was asking Mr Murphy to make to the C9746 Design Drawing. Those denials also must be considered in the context of Mr Comino’s contemporaneous and pressing desire to explore an alternative manufacturer for the Cimberio valves, including the C9746 Valve, and the timing of the meeting with Airaga in Italy, as outlined at [280] above.

327 At this point it is necessary to compare the C9746 Design Drawing provided by Mr Comino to Mr Murphy and the First Edited C9746 Design Drawing prepared by Mr Murphy and provided to Mr Comino.

328 The C9746 Design Drawing provided by Mr Comino to Mr Murphy is reproduced below:

329 The First Edited C9746 Design Drawing is reproduced below:

330 The six figures showing different views of the valve are identical; the only difference is that all Cimberio markings and copyright notices, measurements and writing have been removed, other than the E and E-E markings on two of the figures.

331 Mr Comino gave the following explanation in his affidavit evidence of instructions he gave to Mr Murphy on 16 February 2018 that led to the creation of the First Edited C9746 Design Drawing:

On 16 February 2018, I sent a copy of the C9746 drawing to Dan Murphy of Infinity Design. I asked Mr Murphy to remove the details off the drawing (such as measurements), so that the views could be used for an Australian design filing. The different perspectives of the valve were separated into individual images and labelled and then submitted as part of the application for the 810 Design. Annexed to this affidavit and marked JAC-29 is a copy of this email chain and the attachments.

332 Mr Comino makes no reference to the removal of the Cimberio markings and copyright notices, apparently content to limit the examples of “details” to “measurements”.

333 In stark contrast, Mr Comino’s contemporaneous email instruction to Mr Murphy sent at 9.02 am was in the following superficially innocuous, but contextually illuminating, terms:

Hi mate,

Got some drawings we need sorted out and just wanted to pick your brain about it.

Here is one attachment we need slightly amended, so please feel free to skype me about it when you have a minute.

Best regards

John Comino/Managing Director

Strongcast Pty Ltd

334 On no view would Mr Murphy understand from that email what he was being asked to do by Mr Comino. I infer the explanation of the manner in which the drawing was to be “slightly amended”, including the removal of the copyright notice was explained in the skype call that must then have taken place prior to Mr Murphy amending the drawing to create the First Edited C9746 Design Drawing that he emailed to Mr Comino at 1.50 pm as an attachment to an email he which he stated:

Hi John,

Please see edited valve drawing attached as requested. Is this what you were thinking?

Cheers,

335 As explained above, the only “edits” made to the C9746 Design Drawing to create the First Edited C9746 Design Drawing were to remove all Cimberio markings and copyright notices, measurements and writing. I infer that was not what Mr Comino may have been “thinking” because at 1.57 pm, Mr Comino emailed Mr Murphy the Annotated C9746 Design Drawing, on which he had made handwritten annotations to show a second internal female thread as an attachment to an email in which he simply stated:

This is it mate.

336 The Annotated C9746 Design Drawing is reproduced below:

337 The handwritten annotations made by Mr Comino can be seen in the left side of the figure in the top right of the Annotated C9746 Design Drawing.

338 Mr Comino provided the following explanation in his affidavit evidence of how he came to send the Annotated C9746 Design Drawing to Mr Murphy:

Also on 16 February 2018 (which can be seen in the email chain that is Annexure JAC-29), I emailed Mr Murphy a hand annotated version of the C9746 Drawing (C9746 -Dual Threads.pdf) - which I had annotated - to show the design of the prototype I had machined in late 2017 (that I referred to in paragraph 56 above), and I requested that Mr Murphy draw the additional piece (without any dimension labelling). Annexed to this affidavit and marked JAC-30 is a copy the attachment "C9746 - Dual Threads.pdf' and also the edited images emailed back to me by Dan Murphy, namely “C9746_0-EDITED 180216 - R1 .pdf’. The different perspectives of this valve were separated into individual images and labelled and then submitted as part of the application for the 005 Design. I note that these valves are yet to be commercialised by Strongcast on a commercial scale.

339 Mr Murphy then prepared the Second Edited C9746 Design Drawing which included the second internal female thread and provided it to Mr Comino at 2.16 pm as an attachment to an email in which he asked:

Hey John,

You mean something like this?

340 The Second Edited C9746 Design Drawing is reproduced below:

341 At 2.18 pm, Mr Comino responded to Mr Murphy by email stating:

Spot on mate!

342 I infer from the email exchange above that Mr Comino was concerned to ensure that his email communications with Mr Murphy were kept to a bare minimum and did not disclose the reason for or the nature of the revisions that he was asking Mr Murphy to make to the C9746 Design Drawing. Further, the speed with which Infinity Design reacted to Mr Comino’s request for the production of the edited C9746 Design Drawings is consistent with a concern, as put to Mr Comino in cross-examination, that the Designs be registered as soon as possible in the context of his proposed meeting with Airaga to explore alternative manufacturing options for the Cimberio valves, including the C9746 Valve. Had Mr Comino genuinely believed he had an implied licence to use the C9746 Design Drawing for the purpose of registering the Designs it is implausible that his email communications with Mr Murphy would have been so circumscribed.

343 Third, Mr Comino acknowledged in the course of being cross-examined about a Strongcast document that included a page entitled “data sheet” and the words “Copyright Strongcast Proprietary Limited” that as at 2017, (a) he understood that copyright was contained in drawings, such as those on that page, (b) he had placed the words on the page in 2017 in order to protect Strongcast’s copyright in the drawings, (c) he believed putting a copyright notice on a document helped protect the copyright of it, (d) the copyright notice served as a notice that Strongcast did not want the drawings to be copied without its permission, and (e) he believed that if someone did copy the drawings without the permission of Strongcast it would be a breach or an infringement of Strongcast’s copyright. Mr Comino also acknowledged that to his knowledge it was not possible to avoid the need to obtain permission by copying the drawings and leaving off the copyright notice.

344 Later Mr Comino gave the following evidence when challenged about whether he knew that there was a copyright notice on the C9746 Design Drawing:

Now, because you knew that Mr Riva, who worked for Cimberio, was the author and because there was a copyright notice on the bottom in the form we’ve looked at on the earlier drawing - - -?---Yes.

- - - you knew that Cimberio were likely to own the copyright in the drawing; correct?---I probably overlooked it at the time. So I can say that I must have been aware of it, but I don’t think I paid particular attention to it.

So you were aware that Cimberio owned the copyright in the drawings that had been prepared by Mr Riva, but you say you didn’t pay particular attention to it?---Only on the premise that I was looking at the drawing of the valve that I’d designed, and I was obviously excited and focused on that.

345 When pressed further about the circumstances in which he used the C9746 Design Drawing to apply for design registration he initially claimed he could not recall if he asked for Cimberio’s permission to do so and then gave the following inherently implausible evidence:

Is your position that if you had, before 24 January 2018, told either AVI or Cimberio that you wanted to use Cimberio’s copyright drawings to get an intellectual property right that would give you exclusivity in Australia, they would have just said yes?---I didn’t feel obligated to tell them. That – that’s – that was my position. I wasn’t particularly concerned if  they were to say their position, but I just didn’t feel the need to actually communicate that with them.

But you knew you had to copyright – you knew, in order to get the registration, you had to copy Cimberio’s copyright drawing; correct?---Look, I always believed they were manufacturing drawings prepared for – for production under my instructions, so I always believed that they were mine.

Do you believe you own the copyright in them. Is that what you’re saying?---No, no, no. I just believe that they were my designs.

Even though it had “copyright Cimberio” written on it?---Yes, I have mentioned that I probably – I can say that I would have overlooked that. Yes.

So you overlooked – your position is you simply overlooked that you wanted to go and copy a drawing which you understood had copyright in it, “owned by Cimberio,” that you could copy that to get a registered design, but you overlooked that, to do that, you had to use Cimberio’s drawing without asking them?---I saw the drawings as drawings that were prepared on my – like, for me, by Cimberio, so I just believed that the design was mine.

Did you take any steps to confirm that belief with Cimberio?---I don’t believe so.

346 I do not accept that Mr Comino simply “overlooked” the copyright notice on the C9746 Design Drawing. Nor do I accept given the extent of his dealings with Cimberio and AVI that he did not appreciate the difference between copyright and designs, not least because of the steps he took to ensure that he was registered as the owner of the Designs, his previous attempts to obtain design rights for the C6827 Valve, in addition to exclusive distribution rights to the C6827 Valve, and the use by him of copyright notices on Strongcast drawings. His evidence on the issue was unsatisfactory and inconsistent. He was not prepared to claim he owned the copyright in the C9746 Design Drawing but at the same time he claimed he could use the drawing as he saw fit because they were his designs. He gave evidence that he did not feel the need to ask Cimberio if he could use the drawing but then claimed he must have overlooked the copyright notice. This evidence from Mr Comino did not support and was largely inconsistent with the existence of any implied licence for Mr Comino to use the C9746 Design Drawing for the purpose of registering the Designs.

347 Fourth, I do not accept that Mr Comino believed he had exclusive distribution rights over the C9746 Valve. Such a contention is contradicted by the following evidence he gave in cross-examination:

Your position, as I understand it, is that you didn’t have exclusive distribution rights in relation to the valve we see depicted at court book 1790 [the C9746 Valve] under the distribution 25 agreement; correct?---I never considered that at the time, Mr Flynn.

348 Moreover, I respectfully agree with the approach taken by Heerey J in Trumpet Software to the implication of terms into an implied licence. Any implied licence necessarily cannot be at large. I do not consider that there is any plausible basis, consistently with the analogous doctrine for the implication of terms into a contract, that it was necessary to infer a term into any implied licence to the respondents that they were permitted to use the C9746 Design Drawing for the purpose of registering the Designs, either (a) to give business efficacy to the basis on which the C9746 Design Drawing was provided to the respondents, being to approve the design for manufacture, or (b) on the basis that it was so obvious that it “goes without saying”.

J.9.     What relief is Cimberio entitled to for any copyright infringement?

J.9.1.     Submissions

349 The applicants submit that the breaches of copyright entitle the applicants to an order for an account of profits. The applicants also seek additional damages under s 115(4) of the Copyright Act, citing the following factors as compelling such an award.

350 First, the applicants submit the breaches of copyright were flagrant and give rise to an entitlement to additional damages under s 115(4) of the Copyright Act. Specifically, the applicants contend that Mr Comino was aware that Mr Riva was the author of the C9746 Design Drawing and was aware of both the presence of a copyright notice on the C9746 Design Drawing and the effect of such copyright notices. Consequently, the applicants submit Mr Comino was aware that removing the copyright markings from the C9746 Design Drawing was wrong and this is why he did not put instructions to remove the markings in writing. Further, they submit Mr Comino did not take steps to “confirm” his belief that the designs were “mine”. The applicants contend that the “plain inference” from Mr Comino’s conduct is that Mr Comino ultimately did not seek permission from Cimberio to use the C9746 Design Drawing as he knew that permission would have been refused in light of what had occurred with the previous C6827 Valve, where there had been an explicit refusal to grant Mr Comino design rights.

351 Second, the applicants contend that specific and general deterrence is necessary. The applicants submit that the respondents have not accepted that their actions have resulted in copyright infringement, notwithstanding Mr Comino’s concessions regarding communications with Infinity Design, and Strongcast does not, on the evidence, appear to have limited resources to meet a substantial additional damages award. The applicants also submit that additional damages are required to deter others in the market from using others’ copyright to obtain registered rights.

352 Third, the applicants submit that additional damages are warranted given the benefits accrued as a result of infringement, including the ownership of two registered designs for six years which has enabled the respondents to prevent competition in the market and instigate lengthy litigation against AVI.

353 The applicants also submit that any interest that Mr Comino may have in the C9746 Design Drawing is held on constructive trust and he is liable to transfer such interest to Cimberio.

354 The respondents submit that, if infringement is established, s 115(3) is engaged such that the Court would not make an award of damages, and further, or in the alternative, any account of profits (or award of damages) would be nominal.

355 In addition, the respondents submit there is no warrant for any award of additional damages under s 115(4) of the Copyright Act. The respondents submit that at all times Mr Comino believed that he was the owner of the design, the subject of the C9746 Design Drawing. They submit that his evidence on this issue was “steadfast and unwavering”, there was no reason to doubt his honesty, and his cross-examination proceeded on the basis of a “significant amount of nuanced knowledge as to various intellectual property rights”. They submit that the thrust of his evidence was that he believed the drawings prepared by Cimberio in relation to the C9746 Design Drawing were manufacturing drawings prepared for production under his instructions and he confirmed that he did not believe he “owned the copyright in the drawings” but always believed that “they were his designs”.

356 The respondents submit that Mr Comino’s belief is entirely consistent with the commercial arrangement between the parties. They submit that it is this background which gives rise to the implied licence for which they contend in answer to Cimberio’s claim for copyright infringement.

357 The respondents submit that any damage arising from the 16 February 2018 emails between the respondents (or either of them) and Infinity Design is minimal. They submit that Cimberio’s claim travels beyond the remit of an award “in respect of the infringement”, and rather Cimberio seeks to recover damages or an account of profits by reference to damages recovered by the respondents against AVI by asserting the Designs. They submit that Cimberio impermissibly seeks an award of damages (or an account of profits) in respect of copyright infringement by reference to a measure of damage for a discrete legislative right. They submit that such a claim is contrary to the “Copyright/Designs overlap provisions” contained in the Copyright Act and is answered by the defence provided for in s 75 of the Copyright Act.

358 Next, the respondents submit that the applicants impermissibly seek to have a constructive trust imposed in respect of one statutory right (the designs) by reason of infringement of a discrete statutory right (copyright). They submit this in circumstances where there are statutory remedies available for the copyright infringement, and the imposition of a constructive trust would be expressly contrary to the Copyright/Design overlap provisions in the Copyright Act (and the policy which underpins those provisions).

359 The applicants submit in response that neither s 75 nor s 77 of the Copyright Act are applicable in the current case, as both sections are confined to reproductions of artistic works by “embodying” that corresponding design “in a product” as opposed to making a reproduction of a drawing “as a drawing”.

J.9.2.     Copyright /Design overlap

J.9.2.1.     Overview

360 Before considering Cimberio’s claims for relief for copyright infringement it is necessary to address what is generally referred to as the Copyright/Design overlap provisions in the Copyright Act.

361 The respondents contend that those provisions preclude Cimberio from obtaining the relief claimed by the applicants for copyright infringement of the C9746 Design Drawing.

J.9.2.2.     Relevant principles

362 The Copyright/Design overlap provisions are contained in s 74 to s 77A of the Copyright Act.

363 For present purposes it is sufficient to have regard to s 75, s 76 and s 77 of the Copyright Act.

364 Section 75 of the Copyright Act provides a defence to copyright infringement in an artistic work where a corresponding design is, or has been, registered as a design. It provides:

Subject to section 76, where copyright subsists in an artistic work (whether made before the commencement of this section or otherwise) and a corresponding design is or has been registered under the Designs Act 1906 or the Designs Act 2003 on or after that commencement, it is not an infringement of that copyright to reproduce the work by embodying that, or any other, corresponding design in a product.

365 Section 76 provides:

(1)    This section applies if:

(a)     proceedings (copyright proceedings) are brought under this Act in relation to an artistic work in which copyright subsists; and

(b)    a corresponding design was registered under the Designs Act 2003; and

(c)    the exclusive right in the design had not expired by effluxion of time before the copyright proceedings began; and

(d)    it is established in the copyright proceedings that:

(i)    none of the persons who are registered owners of the registered design are entitled persons in relation to the design; and

(ii)    none of those persons were registered with the knowledge of the owner of the copyright in the artistic work.

(2)      Subject to subsection (3), for the purposes of the copyright proceedings:

(a)      the design is taken never to have been registered under the Designs Act 2003; and

(b)    section 75 does not apply in relation to anything done in respect of the design; and

(c)     nothing in the Designs Act 2003 constitutes a defence.

(3)    Ignore subsection (2) if it is established in the copyright proceedings that the act to which the proceedings relate was done:

(a)     by an assignee of, or under a licence granted by, the registered owner of the registered design; and

(b)    in good faith relying on the registration and without notice of any proceedings (whether or not before a court) to revoke the registration or to rectify the entry in the Register of Designs in relation to the design.

366 Section 77 relevantly provides:

(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.

(1A)     This section also applies if:

(a)     a complete specification that discloses a product made to the corresponding design; or

(b)     a representation of a product made to the corresponding design and included in a design application;

is published in Australia, whether or not paragraphs (1)(b) and (c) are satisfied in relation to the corresponding design.

367 The Full Court in State of Escape Accessories Pty Limited v Schwartz (2022) 166 IPR 242; [2022] FCAFC 63 explained the operation and policy behind the Copyright/Design overlap provisions in the following terms at [6]-[9] (Greenwood, Nicholas and Anderson JJ):

Many products are three-dimensional reproductions of a prototype of a product or a drawing of the product. These prototypes and drawings may be artistic works as defined by s 10(1) of the Copyright Act. Subject to the “overlap” provisions of the Copyright Act, these works may be protectable as artistic works under the Copyright Act or as registered designs under the Designs Act. However, an artistic work cannot be afforded protection under both the Copyright Act and the Designs Act simultaneously. The overlap provisions operate to remove copyright protection for an artistic work where a “corresponding design” has been “embodied in a product” and applied “industrially”. Regulation 12 of the Copyright Regulations 2017 (Cth) provides that a design is taken to be “applied industrially” if it is (inter alia) applied to more than 50 articles.

Section 75 of the Copyright Act provides a defence to copyright infringement in an artistic work where a corresponding design is, or has been, registered as a design. A person will not infringe copyright that subsists in an artistic work by reproducing the work in three-dimensional form when applying a corresponding design to a product. Section 77 of the Copyright Act also provides a defence to copyright infringement in an artistic work where a corresponding design is applied industrially and the design is not registered or is not registrable under the Designs Act.

…

The policy behind the overlap provisions is to ensure that works which are functional and intended for mass production in three dimensional form should not be afforded protection under the Copyright Act. The Revised Explanatory Memorandum to the Designs (Consequential Amendments) Bill 2003 (Cth) states that “[t]he broad policy is that artistic works, commercially exploited as three-dimensional designs should generally be denied copyright protection.” The legislative policy is to encourage the use of the registered design system, rather than copyright, for the purpose of protecting artistic works which are applied to industrial products: see Burge v Swarbrick (2007) 232 CLR 336 (Burge) at [10].

J.9.2.3.     Consideration

368 The policy underlying the removal of copyright protection where a corresponding three-dimensional design has been registered is not directly engaged in the present context. As matters currently stand, Cimberio is the owner of the copyright in the C9746 Design Drawing but is not the registered owner of any corresponding design that has been registered with the Designs Office, which would give rise to a situation where the copyright owner has simultaneous rights under the Copyright Act and the Designs Act.

369 Rather, the present position would appear to be more consistent with the inherent qualification to that policy provided by the exception in s 76 of the Copyright Act to the removal of copyright protection. Cimberio has brought proceedings under the Copyright Act in relation to an artistic work in which copyright subsists (the C9746 Design Drawing), corresponding designs (the Designs) have been registered under the Designs Act, the exclusive rights in the Designs had not expired by effluxion of time before the copyright proceedings began, and none of those persons were registered (Mr Comino) with the knowledge of the owner of the copyright in the artistic work (Cimberio). The only missing integer is that I have found that the person who is registered as an owner of the Designs (Mr Comino) is entitled to be a joint registered owner of the Designs. It therefore follows that the applicants cannot rely on s 76 of the Copyright Act as an answer to any application of the prohibition in s 75 of the Copyright Act on a copyright infringement claim based on a reproduction of a work by embodying it in a corresponding design registered under the Designs Act.

370 Further, this is not a case in which Cimberio had committed to design registration under the Designs Act and was at the same time seeking to resort to the Copyright Act to enforce three-dimensional representations of a drawing of the product: cf State of Escape at [6]-[9] (Greenwood, Nicholas and Anderson JJ).

371 Ultimately, s 75 of the Copyright Act cannot relevantly be engaged because at the time of the two-dimensional to two-dimensional copying of the C9746 Design Drawing by the respondents or with the authority of the respondents, no corresponding design was or had been registered under the Designs Act.

372 Further, as submitted by the applicants, both s 75 and s 77 of the Copyright Act are directed at the “embodying” of a design in a product, that is the creation of a three-dimensional object from a two-dimensional drawing, plan or sketch. Neither section is concerned with any two-dimensional copying of a drawing, plan or sketch.

373 Moreover, s 77(1), (1A), and (2) of the Copyright Act are not relevantly engaged. At the time of the two-dimensional copying of the C9746 Design Drawing there had been no application industrially of the Designs “by or with the licence of the owner of the copyright” in the place of any industrial application and there had not been any relevant publication of the C9746 Design Drawing in Australia that would otherwise engage s 77(1A) of the Copyright Act.  In addition, s 77(2) of the Copyright Act only prohibits copyright infringement claims for embodying the work in a product on or after the day the product is sold or a representation in a design application is published.

374 Therefore, noting there was some ambiguity regarding the manner in which the respondents rely upon s 75 and s 77 of the Copyright Act, neither section can be relied upon as a substantive defence to the applicants’ copyright infringement claim with respect to the two-dimensional copying of the C9746 Design Drawing.

375 Insofar as the respondents raise the Copyright/Design overlap as a defence to the applicants’ claims for relief for copyright infringement as including “any damages that Strongcast/Mr Comino recovers against AVI by asserting the Designs”, this does not arise because I have concluded that the respondents have not established their design infringement claim against AVI.

J.9.3.     Account of Profits and Additional Damages

J.9.3.1.     Relevant principles

376 It is next necessary to turn to s 115 of the Copyright Act that relevantly provides:

(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.

(2)    Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.

(3)     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.

(4)    Where, in an action under this section:

(a)  an infringement of copyright is established; and

(b)  the court is satisfied that it is proper to do so, having regard to:

(i)    the flagrancy of the infringement; and

(ia)    the need to deter similar infringements of copyright; and

(ib)    the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and

(ii)    whether the infringement involved the conversion of a work or other subject - matter from hardcopy or analog form into a digital or other electronic machine - readable form; and

(iii)    any benefit shown to have accrued to the defendant by reason of the infringement; and

(iv)    all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.

377 The principles in relation to the award of additional damages under s 115(4) of the Copyright Act were conveniently distilled by Thawley J in QAD Inc at [145], (affirmed on appeal in Shepparton Partners Collective Operations Pty Ltd v QAD Inc [2021] FCAFC 206 (Greenwood, Jagot and Rofe JJ)) in the following non-exclusive terms:

(1)    The award is made under s 115(4)(b) of the Copyright Act and it is the terms of that provision which are of paramount importance. The Court must have regard to the matters in subparagraphs (i) to (iv) of s 115(4)(b) in being satisfied that it is proper to award additional damages. Those matters, to which the Court must have regard, are not in the nature of pre-conditions which must be satisfied in order to make the award: Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763 at [17].

(2)    Subparagraph (iv) of s 115(4)(b) requires the Court to take into account all relevant matters. The discretion is, accordingly, broad and its exercise will be closely tied to the particular facts of the case. No doubt other cases might provide some guidance in various ways, but the focus must be on the particular facts before the Court.

(3)    The Court has a broad general discretion to award additional damages not fettered in any arithmetical or mechanical way: LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24 at 50, [91].

(4)    Additional damages need not be proportionate to any award of compensatory damages: Futuretronics at [17]. Damages may be awarded even if the copyright owner is only entitled to nominal compensatory damages: Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (No 3) (2014) 312 ALR 705 at [52].

(5)    It is, nevertheless, permissible to calculate additional damages as an “uplift” in a fixed percentage on top of the licence fee that the infringer would have paid — see, for example: Halal Certification Authority Pty Limited v Scadilone Pty Ltd (2014) 107 IPR 23 at [111]–[113].

(6)    Additional damages may be assessed having regard to principles derived from awards of aggravated and exemplary damages at common law: Autodesk Inc v Yee (1996) 68 FCR 391 at 394. However, additional damages are not “exceptional”— rather, an element of penalty is an accepted factor: Tonnex at [43]. When an award of additional damages includes a punitive component, the individual circumstances of the infringer must be taken into account in the award: Tonnex at [53].

(7)    The blatancy of the infringing conduct may be taken into account — see: Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 111 ALR 269 at 286–7, in which Wilcox J said that “[i]f copyright protection is to mean anything, the courts must take a severe view in cases [that are] blatant”.

(Emphasis in original.)

378 I am satisfied that Cimberio is entitled to an order for an account of profits pursuant to s 115(2) of the Copyright Act with respect to the breach of copyright but the quantification of any account of profits, must necessarily await the further quantification hearing.

379 The applicants have elected, at least in their written submissions,  to seek an account of profits rather than damages but I note that s 115(3), that might have foreclosed an award of damages, would not have relevantly been engaged in the present case because I have concluded that Mr Comino was aware, or ought reasonably to have been aware, that the respondents had infringed Cimberio’s copyright in the C9746 Design Drawing. It necessarily follows that he could not have had reasonable grounds for not suspecting that there had been an infringement of Cimberio’s copyright.

J.9.3.2.     Consideration

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

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

382 The quantum of the additional damages will need to be determined at the subsequent quantification hearing.

J.9.3.3.     Constructive Trust

383 Finally, I have concluded that the question of whether the relief sought by the applicants – namely, the imposition of a constructive trust over Mr Comino’s interests in the Designs, by reason of the respondents’ infringement of Cimberio’s copyright in the C9746 Design Drawing – should be granted is more appropriately addressed in the context of the breach of confidence claims advance by Cimberio. The remedies for infringement of copyright under the Copyright Act plainly do not extend to equitable remedies such as the imposition of a constructive trust. While equitable remedies may well be pursued with respect to conduct constituting an infringement of copyright, in circumstances where claims are also advanced by Cimberio for breach of confidence, in effect relying on the same conduct, it is unnecessary to address those claims here in determining relief for copyright infringement.

K.     Issue 6: Breach of confidence

K.1.     Overview

384 The parties agreed that the following issues arise for determination with respect to the breach of confidence claims advanced by the applicants:

a.    What is the specific information contained in the C9746 Design Drawing which is said to constitute Cimberio’s confidential information?

b.    Was the C9746 Design Drawing, and/or the information as per (a) kept confidential and did it have the necessary quality of confidence and to whom any such confidence was owed?

c.    Did either of the respondents owe Cimberio a duty of confidence with respect to the C9746 Design Drawing?

d.    Did one or more of the respondents breach their obligation of confidence owed to Cimberio by disclosing the C9746 Design Drawing, and further or in the alternative, using it for an extraneous purpose?

e.    If the answer to (d) is yes, is Cimberio entitled to damages, equitable compensation or an account of profits?

f.    Further, if the Court finds that Mr Comino has an ownership interest in one or more of the Designs, would the Court exercise its discretion by finding that such rights in the Designs, or either of them, are held on constructive trust for Cimberio?

385 In order to make good a breach of confidence claim in equity, it is necessary to establish that (a) the information in question has been identified with specificity, (b) it has the necessary quality of confidence, (c) it was received in circumstances importing an obligation of confidence, and (d) there is an actual or threatened misuse of the information without the consent of the party who provided it: Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281 at [39] (Finn, Sundberg, Jacobson JJ).

386 It is also well established that even in the absence of a contract, equity will grant relief in personam not to disclose or use information other than for the purpose for which it was communicated if the nature of the information and the circumstances in which it was communicated require that confidence to be respected by reference to notions of conscience: Crown Resorts Ltd v Zantran Pty Ltd (2020) 276 FCR 477; [2020] FCAFC 1 at [25] (Allsop CJ).

K.2.     What is the specific information in the C9746 Design Drawing said to be confidential information of Cimberio?

K.2.1.     Relevant principles

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

388 As Lord Greene MR stated in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215:

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

K.2.2.     Submissions

389 The applicants submit that the C9746 Design Drawing constituted confidential information of Cimberio.

390 The respondents submit that Cimberio has failed to identify with any specificity the information in the C9746 Design Drawing that is subject to the alleged duty of confidence owed to Cimberio. They submit that it is incumbent on Cimberio to identify and then prove that the specific confidential information the foundation for its claim was its confidential information and its failure to do so precludes any finding that an equitable obligation of confidence arose.

K.2.3.     Consideration

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

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

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

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

K.3.     Was the confidential information in the C9746 Design Drawing kept confidential and did it have the necessary quality of confidence?

K.3.1.     Relevant principles

395 The matters to be considered in determining whether information has the necessary quality of confidence have been held to include, (a) the extent to which the information is known outside the business, (b) the value of the information to the applicant and its competitors, (c) the amount of effort or money expended by the applicant in developing the information, (d) the ease or difficulty with which the information could be properly acquired or duplicated by others, (e) whether industry practice supports the claim for confidentiality, (f) whether the applicant believed it to be confidential and that belief was reasonable, and (g) could the information be readily identified: Del Casale v Artedomus (Aust) Pty Limited (2007) 73 IPR 326; [2007] NSWCA 172 at [40] (Hodgson JA with McColl JA agreeing).

K.3.2.     Submissions

396 The applicants submit that the C9746 Design Drawing was kept confidential and had the necessary quality of confidence because it was provided to the respondents in circumstances that gave rise to an obligation of confidence that arose out of (a) five years of consistent interactions between Strongcast, AVI and Cimberio, (b) explicit statements of intellectual property ownership and confidentiality on design drawings, including the C9746 Design Drawing, (c) the Distribution Agreement, and (d) relevant industry practice.

397 The respondents submit that the consistent evidence before the Court is that the C9746 Design Drawing was in fact kept confidential by the applicants and respondents prior to the Designs being filed. They submit, however, this does not of itself resolve the second issue because Cimberio’s “steadfast refusal” to identify the specific information the subject of its claim makes it difficult to determine whether, as a matter of fact, the information has the necessary quality of confidence, having regard to a range of factors which may include the skills and effort expended to collect or develop the information and the value of the information.

K.3.3.     Consideration

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

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

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

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

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

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

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

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

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

K.4.     Did either respondent owe Cimberio a duty of confidence?

K.4.1.     Submissions

400 The applicants submit that the respondents owed a duty of confidence with respect to the C9746 Design Drawing because it was confidential material provided to the respondents for the limited purpose of signing off on the drawing prior to production in accordance with established previous arrangements between the parties and industry practice.

401 The respondents submit that Cimberio has not established that they owed any obligation of confidence to Cimberio. They submit that Cimberio did not have any direct dealings with the respondents from which such an obligation could have arisen, and a greater problem is Cimberio’s unexplained failure to adduce any evidence from Mr Cimberio, given that Mr Riva made plain in his evidence that he was not involved in any commercial negotiations with Cimberio’s customers concerning the manufacture and supply of goods. Further, the respondents submit that, while it is common ground that the communications between AVI, Cimberio and Strongcast were confidential, that fact alone does not establish that a duty of confidence was owed to the applicants. Rather, they submit that the duty of confidence was owed to the respondents as the drawing contained confidential information provided by and belonging to the respondents.

K.4.2.     Consideration

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

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

2. Variations in Product Design

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

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

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

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

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

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

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

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

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

K.5.     Did the respondents breach any obligation of confidence?

K.5.1.     Relevant principles

406 Lord Greene MR stated in Saltman Engineering at 215:

What the defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculation and careful draughtsmanship. No doubt, if they had taken a finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence.

407 The conduct of the defendant in Saltman Engineering and the benefit they derived from that conduct was relevantly indistinguishable from the conduct and the benefit derived by the respondents in this case. As acknowledged by Mr Comino, the respondents used the C9746 Design Drawing for the purpose of preparing the design drawings to facilitate the registration of the Designs with the Designs Office.

408 In Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd (1959) 1B IPR 777; [1960] RPC 128, Roxburgh J, in a passage of his judgment that was reported in a footnote of the report of that case in the Court of Appeal, and which is more fully set out in the judgment of Roskill J in Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293; [1964] 3 All ER 289 at 1317-8, after rejecting an argument from Mr G. Aldous QC, who appeared for the defendants, stated:

Frankly [Mr. Aldous] admitted that there is no suggestion of such a doctrine in any reported case. I go further and say that it is inconsistent with the principles stated by Lord Greene in Saltman’s case. As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential communication, and spring-board it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public. The brochures are certainly not equivalent to the publication of the plans, specifications, other technical information and know-how. The dismantling of a unit might enable a person to proceed without plans or specifications, or other technical information, but not, I think, without some of the know-how, and certainly not without taking the trouble to dismantle. I think it is broadly true to say that a member of the public to whom the confidential information had not been imparted would still have to prepare plans and specifications. He would probably have to construct a prototype, and he would certainly have to conduct tests. Therefore, the possessor of the confidential information still has a long start over any member of the public. The design may be as important as the features. It is, in my view, inherent in the principle upon which the Saltman Case rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start; or, in other words, to preclude the tactics which the first defendants and the third defendants and the managing director of both of those companies employed in this case.

(Footnotes omitted.)

409 As observed by Gowans J in Ansell Rubber at 43, a sharp distinction in the above passage can be drawn between the publication of features of a device, or the ascertainment of those features by inspection by a member of the public, on the one hand, and, on the other hand, publication of the whole plan or design of the complete device.

410 The passage of Roxburgh J, as more fully set out in Cranleigh, has also been cited with approval more recently in Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 2) [2017] FCA 1581 at [182] (White J); Liberty Financial Pty Ltd v Jugovic [2021] FCA 607 at [273] (Beach J); and Smart EV Solutions Pty Ltd v Guy [2023] FCA 1580 at [85] (Derrington J).

411 The statements made by Lord Greene MR in Saltman Engineering and Roxburgh J in Terrapin cited above, reflect the more general principle that the further disclosure of confidential information is limited to the purpose for which it was conveyed and equity will intervene to restrain a use beyond that purpose: Mastec at [185].

K.5.2.     Submissions

412 The applicants submit that the respondents breached their duty of confidence to Cimberio by disclosing the C9746 Design Drawing to Infinity Design and the Designs Office and using it for an extraneous purpose, namely the exploitation of the drawing to register the Designs. They submit that the confidential information, being the C9746 Design Drawing has been identified with sufficient specificity, the drawing had the necessary quality of confidence, and it was imparted to the respondents in circumstances identifying or imparting an obligation of confidence.

413 The respondents submit that they did not breach any obligation of confidence by disclosing the C9746 Design Drawing or using it for an extraneous purpose. They submit that Cimberio has failed to prove that an equitable duty owed to it arose in the circumstances and in any event the true position is that any confidential information contained in the C9746 Design Drawing was owned by (and thus any duty was owed to) the respondents, not Cimberio.

K.5.3.     Consideration

414 It was common ground, or I am otherwise satisfied for the reasons outlined above, that the C9746 Design Drawing was provided (a) to the respondents on 24 January 2018 in circumstances giving rise to an obligation of confidence, (b) by the respondents to Infinity Design on 16 February 2018, and (c) subsequently to the Designs Office for the purpose of registering the Designs.

415 Further, given my conclusions above that the confidential information in the C9746 Design Drawing was the drawing as a whole, comprising the six discrete views of the C9746 Valve and that was confidential information of Cimberio provided to the respondents solely for the purpose of confirming that the design was approved for manufacture, it necessarily follows that the respondents breached their duty of confidence to Cimberio by disclosing the C9746 Design Drawing to Infinity Design and the Designs Office and using it for an extraneous purpose, namely the exploitation of the drawing to register the Designs, without the authority, consent or any notification to Cimberio.

K.6.     Is Cimberio entitled to any relief for any breach of confidence?

K.6.1.     Submissions

416 Cimberio seeks pecuniary relief in the form of an account of profits from the respondents referrable to their exploitation of the Designs and a declaration that Mr Comino’s interest in the Designs is held on constructive trust for Cimberio.

417 The respondents submit Cimberio is not entitled to any pecuniary relief as neither has breached any duty of confidence to Cimberio and, in any event, Cimberio’s persistent failure to identify the specific information the basis for its claim is prejudicial in the context of damages, as any claim for damage is properly damage consequential from the alleged breach.

K.6.2.     Consideration

418 Given my findings above that the respondents owed and have breached duties of confidence that they owed to Cimberio, I am satisfied that they are entitled to pecuniary relief by way of an order for an account of profits from the respondents. The quantum of that pecuniary relief is to be determined at a subsequent hearing.

419 For the reasons that I have advanced at [391]-[394] above, I do not accept that there has been any relevant prejudicial failure by the applicants to identify the specific information the subject of the claim.

K.7.     Should a constructive trust be imposed on Mr Comino’s interest in the Designs?

K.7.1.     Legal principles

420 As the High Court stated in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 at 559 it is a “cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts.”

421 Consistently with that statement, the High Court stated in Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 at [42]:

… before the court imposes a constructive trust as a remedy, it should first decide, whether, having regard to the issues in the litigation, there are other means available to quell the controversy.

422 Similarly, the plurality in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 (an equitable estoppel case) stated at [10] (Gleeson CJ, McHugh, Gummow and Callinan JJ):

The present case fell within the category identified by the Privy Council in Plimmer v Mayor, &c, of Wellington where “the Court must look at the circumstances in each case to decide in what way the equity can be satisfied”. Before a constructive trust is imposed, the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust. At the heart of this appeal is the question whether the relief granted by the Full Court was appropriate and whether sufficient weight was given by the Full Court to the various factors to be taken into account, including the impact upon relevant third parties, in determining the nature and quantum of the equitable relief to be granted.

(Footnotes omitted.)

423 A constructive trust may be imposed in circumstances where there has been an invasion of legal or equitable rights and where it would be inequitable and against good conscience for a person to assert ownership of copyright against the person whose legal or equitable rights have been infringed. In such circumstances, the person whose rights have been infringed may obtain a declaration as to the subsistence of a trust and an order requiring the assignment by the infringing person of their legal (that is statutory) title to the intellectual property right in question: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [102] (Gummow and Hayne JJ).

424 A constructive trust was imposed over intellectual property rights in the following cases.

425 In Sheldon v Metrokane (2004) 135 FCR 34; [2004] FCA 19, Conti J found that a designer, retained by a principal for reward to design a corkscrew, held as a constructive trustee all right, title and interest in whatever copyright may have existed in relation to the corkscrew (at [50]-[54]).

426 In Foster’s Australia Ltd v Cash’s Australia Ltd (2013) 219 FCR 529; [2013] FCA 527, an application was made for registration of designs by an entity that was not entitled to registration of the designs and the designs were subsequently registered in its name. Justice Kenny found that the entity that was registered as the owner of the design held the applications for design registration and the registrations of the designs as a constructive trust for the entity that was entitled to registration of the designs (at [126]-[127]). Her Honour cited at [129] the decision of Gordon J in Edwards v Liquid Engineering 2003 Pty Ltd (2008) 77 IPR 115; [2008] FCA 970 as authority justifying the imposition of a constructive trust in the circumstances, specifically the proposition advanced by Gordon J at [65]:

[W]here an application for registration is made by other than the true owner, the court may rectify the situation by imposing a constructive trust on the application and subsequent registration from the date on which the application was lodged and additionally or alternatively rectifying the Register through substitution of the true owner’s name: Figgins Holdings Pty Ltd v Registrar of Trade Marks (1995) 59 FCR 147 at 149.

427 In Council of the City of Sydney v Goldspar Pty Limited (2004) 62 IPR 274; [2004] FCA 568, the Council had entered into a contract with the first respondent, Goldspar for the manufacture and supply of street poles. The contract included a clause 10 prohibiting Goldspar from using all intellectual property, including in drawings and specifications, relating to the street poles other than for the purposes of manufacturing and supplying the street poles (at [6]). Goldspar conceded that it had authorised the making of certain drawings which reproduced substantial parts of drawings provided to them by the Council (at [140]). Justice Gyles found that Goldspar had then registered designs that were “plainly based” on the drawings provided by the Council without the knowledge or consent of the Council in breach of clause 10 and implied terms in the contract. His Honour was satisfied that the designs registered by Goldspar represented intellectual property of the Council and held that Goldspar held the designs on constructive trust for the Council (at [143]).

428 Relatedly, in very similar circumstances to Goldspar, Einstein J found in City of Sydney v Streetscape Projects (Australia) Pty Ltd (2011) 94 IPR 35; [2011] NSWSC 1214 that Streetscape, a manufacturer of street lights for the Council had registered a design based upon the City of Sydney’s intellectual property in certain drawings in breach of its contractual obligations to the City of Sydney not to use the drawings for any purpose other than the execution of work under its contract with the City of Sydney (at [231], [244]-247]). His Honour found that for those reasons, Streetscape held the registered design for the benefit of, or on constructive trust, for the City of Sydney and was obliged to return it to the City of Sydney (at [248]).

K.7.2.     Submissions

429 The respondents submit that Cimberio’s claim for breach of confidence does not give rise to a proper basis for any finding that the respondents hold rights in the Designs on constructive trust for Cimberio. They submit that this was not the archetypal case where the alleged confidential information related to the quality or value of the property in which an interest was then acquired to the wrongdoer’s gain in breach of confidence and equitable proprietary remedies are generally only available where a fiduciary relationship exists.

K.7.3.     Consideration

430 In my view the imposition of a constructive trust over the respondents’ rights in the Designs is both justified, and the most appropriate remedy given the breach of confidence by the respondents. The reproductions of the C9746 Design Drawing were the means by which the respondents obtained the registration of the Designs. In that sense, the respondents’ contraventions can fairly be construed as an archetypal case where the confidential information related to the quality or value of the property in which an interest was then acquired to the wrongdoer’s gain in breach of confidence.

431 Next, given that Mr Comino remains as at least a jointly registered owner of the Designs, the remedies of damages for past conduct and an injunction to prevent future conduct would not be available. It is not readily apparent how the Court could grant an injunction to prevent Mr Comino, as a registered owner of the Designs, albeit jointly with Cimberio, from exploiting the intellectual property rights that he might have obtained in breach of confidence.

432 The imposition of constructive trusts over interests in registered designs in Goldspar and Streetscape Solutions both arose in a context where there had been express contraventions of contractual provisions seeking to preserve intellectual property rights. Nevertheless, in my view, in determining whether intellectual property rights can be the subject of a remedial constructive trust, a breach of copyright or a duty of confidence is broadly analogous to a breach of contract.

433 Further, unlike in Goldspar and Streetscape Solutions, in the present case the registered owner of the designs was found to have a joint entitlement to be registered as the owner of the Designs. That entitlement, however, is subject to any relief that Cimberio might obtain with respect to the breach of copyright and breach of confidence claims.

434 Whether the conduct of the respondents giving rise to the breach of confidence is sufficient to justify the imposition of a constructive trust largely turns on the extent to which it is contrary to conscience, generally expressed as unconscionable conduct: see Lenah Game at [102].

435 In Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155, Allsop CJ, Middleton and Mortimer JJ described unconscionably in the following terms at [155]:

To behave unconscionably should be seen, as part of its essential conception, as serious, often involving dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism. None of these terms is definitional. The Shorter Oxford Dictionary on Historical Principles (1973) gives various definitions including “having no conscience, irreconcilable with what is right or reasonable”. The Macquarie Dictionary (1985) gives the definition “unreasonably excessive; not in accordance with what is just or reasonable”. (The search for an easy aphorism to substitute for the words chosen by Parliament (unconscionable conduct) should not, however, be encouraged …) These are descriptions and expressions of the kinds of behaviour that, viewed in all the circumstances, may lead to an articulated evaluation (and criticism) of unconscionability. It is a serious conclusion to be drawn about the conduct of a businessperson or enterprise. It is a conclusion that does the subject of the evaluation no credit. This is because he, she or it has, in a human sense, acted against conscience. The level of seriousness and the gravity of the matters alleged will depend on the circumstances. Courts are generally aware of the character of a finding of unconscionable conduct and take that into account in determining whether an applicant has discharged its civil burden of proof.

436 In my view, the breach of confidence involved a significant degree of dishonesty, exploitation, sharp practice and a lack of good faith.

437 The C9746 Design Drawing was provided to the respondents, consistently with a course of dealing for the past five years, for the purpose only of confirming the design depicted in the drawing was acceptable prior to manufacture and in circumstances where the respondents had not registered designs over previous ball valves. Mr Comino did not inform the applicants that he intended to use the C9746 Design Drawing to facilitate the registration of the Designs to enable him to explore alternative manufacturing options and he must have recognised that they did not know that he intended to use the drawing for that purpose.

438 In those circumstances, Mr Comino’s conduct of forwarding the C9746 Design Drawing to Infinity Design for the purpose of removing all the text and measurements, together with the Cimberio marks and copyright notices, in order to obtain the “sanitised” First Edited C9746 Design Drawing and the Second Edited C9746 Design Drawing, and then using them as the basis for the 005 Application and the 810 Application in order to obtain the registration of the Designs, involved a flagrant breach of confidence and a significant degree of dishonesty, sharp practice and a lack of good faith.

439 Any incomplete, mistaken or absence of knowledge of any aspect of intellectual property law cannot plausibly excuse or relevantly mitigate the inherent and manifest flagrancy, dishonesty, sharp practice and lack of good faith. That it is plainly wrong to take the work of someone else, remove all the identifying features on it and then use it to obtain a valuable benefit without telling or seeking permission from the person who gave it to you for an entirely different purpose, is self-evident.

L.     Issue 7: Breach of contract

L.1.     Overview

440 The parties agreed that the following issues arise for determination with respect to the breach of contract claims advanced by the applicants:

a.    Did the Distribution Agreement extend or apply to the C9746 Design Drawing?

b.    Did Strongcast:

i.    copy, provide or otherwise make available, in whole or in part, a portion of the C9746 Design Drawing, and/or

ii.     did Strongcast copy, provide or otherwise make available, in whole or in part, a portion of the C6827 Design Drawing.

c.    What conduct is relied upon by AVI in support of the claim at (b) above?

d.    If yes, did Strongcast’s conduct constitute a breach of the Distribution Agreement?

e.    Has AVI suffered damage by reason of any breach(es) of the Distribution Agreement?

f.    If yes, is AVI entitled to damages from Strongcast?

441 Article 3 of the Distribution Agreement included a retention of proprietary rights clause and a restricted use clause. Article 3 was in the following terms:

[AVI] retains for itself all proprietary rights in and to all designs, engineering details, and other data pertaining to the Goods specified in Appendix A. Similarly, [Strongcast] retains the same rights to the Goods specified in Appendix B. [Strongcast] shall not contact any other person for the purpose of manufacture for the Goods as shown in Appendix A, or during the Agreement Term for the product in Appendix B.

The products listed in Appendix A are being made available to [Strongcast] in confidence and solely on the basis of its confidential relationship to [AVI], similarly the products made available to [AVI] for manufacture on [Strongcast’s] behalf, and both parties agree not to copy, provide or otherwise make available, in whole or in part, any portion of an original or modified drawings or related materials.

442 Appendix A to the Distribution Agreement was a one-page Cimberio design drawing numbered 31820 for the C6827 Valve with a version number 31820/0.

443 Appendix B to the Distribution Agreement was a one-page Cimberio design drawing numbered 31825 for a C6703 Meter Housing with a version number 31825/0.

L.2.     Submissions

L.2.1.     Applicants

444 The applicants submit that it is clear on the evidence that for the purposes of Art 3, the C9746 Design Drawing is a “modified drawing” of the C6827 Design Drawing, a “related material”, and/or contains “any portion” of the C6827 Design Drawing in Appendix A.

445 The applicants submit that this construction is supported by Art 1 of the Distribution Agreement that also uses the word “modifications” and is directed at modifications to existing products that are specifically requested by Strongcast (as the client).

446 Next, the applicants submit that there is a significant amount of material in the case where witnesses refer to the valve in the C9746 Design Drawing as a modified version of the C6827 Valve or the C6827 Valve with modifications. The applicants point to (a) the evidence of Mr Hunter that both Designs “use the C6827 ball valve as a starting point for design modification”, (b) the agreed fact that “between April 2017 and January 2018, Mr Comino, AVI and Cimberio engaged in discussions regarding proposed modifications to the C6827 Valve”, and (c) the evidence of Mr Comino that in or about April 2017 he instructed Machinery Solutions to screw an additional thread on to a C6827 Valve, and his email to AVI in September 2017 requesting a “lockable-wing be added to valve bodies, including the “existing C6827 Valve”.

447 The applicants submit that the breaches of copyright reproductions by Strongcast (referred to at [273273]-[275275]) also evidence how Strongcast copied, provided or otherwise made available, in whole or in part, the C9746 Design Drawing in breach of the restricted use clause in the Distribution Agreement.

L.2.2.     Respondents

448 The respondents submit that the Distribution Agreement does not apply to the C9746 Design Drawing for three principal reasons.

449 First, the respondents submit that such a construction is contrary to the clear meaning of Art 3 of the Distribution Agreement, considered in the light of the agreement as a whole. They submit that the scope of Art 3 is clearly limited to the “Goods specified in Appendix A”, which comprises the C6827 Design Drawing.

450 Second, the respondents submit that such a construction is contrary to the applicants’ own evidence as to the genesis and import of product numbers for projects and design drawings.

451 Third, the respondents submit that in maintaining the breach of contract claim, AVI is asking the Court to construe and enforce a retention of rights clause in Art 3 in a manner contrary to the true position and its own understanding that AVI does not have and did not assert any intellectual property rights in the C6827 Design Drawing or the C9746 Design Drawing. They submit that Art 3 therefore cannot have any application as a clause framed by reference to the retention of rights in circumstances where AVI never retained any proprietary rights in the C6827 Design Drawing, is of no force or effect, and certainly does not operate to prevent the respondents dealing with the different C9746 Design Drawing.

L.3.     Consideration

452 The essential foundation for the breach of contract case advanced by the applicants is that the restricted use clause in Art 3 of the Distribution Agreement extended to the C9746 Design Drawing. I do not accept that foundation has been established for the following reasons.

453 First, both textually and contextually, the restricted use clause in Art 3 only relevantly extends to any “portion of an original or modified drawings or related materials” to the C6827 Design Drawing. Article 1 of the Distribution Agreement provides that the distribution rights for “products in this agreement” include “any modifications to existing products specifically requested by [Strongcast]”. The reference to “products in this agreement” takes one back to the products identified in Appendix A and Appendix B. The inclusion of the word “including” in Article 1 makes clear that the article does not relevantly operate to extend the restricted use clause to include “any modification to an existing product specifically requested by Strongcast” except to the extent that the “existing product” was a “product in this agreement”.

454 Second, given my finding that the Designs were new and distinctive over the C6827 Valve, and my finding that it was common ground that the 810 Design was not new or distinctive over the design in the C9746 Design Drawing, the concept of “modification” to an existing product would have to be read very broadly to extend to the C9746 Design Drawing. Such a broad construction would not appear to be consistent with the objective intention of an agreement that provided for the grant of exclusive distribution rights to specific products.

455 Third, statements made by witnesses that they regarded the valve in the C9746 Design Drawing as a modified version of the C6827 Valve or the C6827 Valve with modifications can only provide limited assistance in objectively construing the scope of “modification” in Art 5. More compelling and relevant to the meaning to be given to “modification” was the evidence given by Mr Riva to the preparation by Cimberio of design drawings and the numbering system use for various iterations of existing projects and new projects. Mr Riva explained that the initial design drawing for a valve, such as the C6827 Valve, would be numbered C6827/0 and design drawings for subsequent modifications to the valve would be numbered sequentially C6827/1 and C6827/2. Mr Riva then gave the following evidence:

THE INTERPRETER: This is a design – this is a numbering that occurs during the design projection, and it changes during the production phase.

MR FOX: Yes. And that’s because there are modifications that might be made along the way.

THE INTERPRETER: Correct.

MR FOX: And for a new valve that’s being designed there would be a new code given.

THE INTERPRETER:     The name of the valve stays the same. It’s given a new name when the project is completely finished.

MR FOX: And then it might be that a new project starts for a different valve.

THE INTERPRETER:     No.

MR FOX: For a different valve.

HIS HONOUR: Sorry, was there an answer? Yes. I don’t think we got an answer 30 to that previous question. Did you agree or disagree with the previous question?

THE INTERPRETER:     Yes, I agree with the fact that the numbers increase. Yes, I agree.

MR FOX: And then when the project ends and a new project starts for a different valve, there will be a new project – a new product code given?

THE INTERPRETER: Yes, a new valve, new number.

MR FOX: New valve, new number; correct?

THE INTERPRETER:     The number – numbering occurred during the – the production phase, but the new number, when it’s completely – so when the project is completely finished, and it – everybody is happy with the result, then a new number is given, a new design project starts, and a new number starts.

456 It is not necessary for present purposes to determine whether revised drawings that are prepared during the “design projection” phase for a new valve that might be numbered C6827/1 and C6827/2 are relevantly “modifications” for the purposes of Art 3. It is sufficient to have regard to Mr Riva’s evidence that a new valve number is used when the new “project is completely finished” and a “new design project starts”. In the present context that has occurred when the numbering of the design drawing in issue is changed to C9746.

457 Fourth, and relatedly, the evidence relied upon by the applicants as providing objective context in construing the scope of modifications referred to at [445] above all appears to be directed at the design process reflected in the revised drawings that were prepared during the “design projection” phase for C9746 Valve as described by Mr Riva, namely those numbered C6827/1 and C6827/2, rather than the completed design reflected in the C9746 Design Drawing.

458 Had I otherwise been satisfied that Art 3 extended to the C9746 Design Drawing, I would not have accepted the respondents’ contention that in maintaining the breach of contract claim, AVI is asking the Court to construe and enforce a retention of rights clause in Art 3 in a manner contrary to the true position accepted by AVI.

459 The applicants’ breach of contract case is limited to the restricted use clause in Art 3 of the Distribution Agreement. They do not contend or rely upon the clause in Art 3 purporting to provide for AVI to retain all proprietary rights in the Goods specified in Appendix A, namely the C6827 Design Drawing. Such a contention, as submitted by the respondents, would be contrary to the position advanced by AVI, consistently with the evidence of Mr Kilner, that it did not have any proprietary rights in the C9746 Design Drawing. It does not follow, however, that the restricted use clause in Art 3 is therefore unenforceable. The restricted use clause can stand independently of the retention of proprietary rights clause. There is no necessary or implied connection between the two clauses. The restricted use clause does not depend on AVI having any underlying proprietary rights in the C6827 Design Drawing.

460 For the foregoing reasons, the applicants have not established their breach of contract case. It is therefore unnecessary to consider whether AVI has suffered any loss or damage by reason of the alleged breach of contract and if so, whether it is entitled to any pecuniary relief, including exemplary damages from Mr Comino.

M.     Issue 8: Tort of inducing breach of contract

M.1.     Overview

461 The parties agreed that the following issues arise for determination with respect to the tort of inducing breach of contract claims advanced by the applicants:

a.    Assuming the Court finds that Strongcast breached the Distribution Agreement, did Mr Comino have knowledge in or recklessly indifferent to Strongcast’s breache(s)?

b.    In the circumstances, is Mr Comino liable for the tort of inducing those breaches?

c.    If yes to (b), is AVI entitled to damages including exemplary damages as against Mr Comino?

M.2.     Submissions

462 The applicants submit that if the Court finds that a breach of the Distribution Agreement occurred, it must follow that Mr Comino induced Strongcast’s breaches because he had knowledge of the Distribution Agreement and he counselled, procured and/or induced the acts that caused the breaches. They submit that he took the C9746 Design Drawing from the email from AVI, then sent it to Infinity Design, knowingly asking that the copyright labels and trademarks be removed and then filed the Desings in his own name. They submit that he knew, or at the very least was recklessly indifferent, as to whether the acts relied upon for the breach of copyright contentions constituted a breach of the restricted use clause in the Distribution Agreement.

463 Next, the applicants submit that any alleged belief that Mr Comino had that his conduct would not give rise to a breach of contract could not be genuine given the terms of the restricted use clause, of which he was aware, his knowledge of the C9746 Design Drawing process and the face of the drawing itself.

464 The respondents submit that the claim is without merit as the applicants have not articulated why the Court would conclude that, if a breach of contract is established, Mr Comino was acting other than in his role as director.

M.3.     Consideration

465 Given my finding that there was no breach of the Distribution Agreement because the agreement did not extend to the C9746 Design Drawing, it necessarily follows that the tort of inducing a breach of contract cause of action advanced against Mr Comino must fail.

N.     Issue 9: Contraventions under the ACL

N.1.     Overview

466 The parties agreed that the following issues arise for determination with respect to the ACL contraventions advanced by the applicants:

a.    Did either of Mr Comino/Strongcast by their silence, prior to receipt of the 24 January 2018 Email, make any of the following representations to AVI:

i.    they would only use design drawings as provided to them in respect of the modified form of the C6827 Valve for the purposes of 'signing off on those drawings prior to their manufacture by Cimberio;

ii.    one or both of them did not intend or otherwise consider it to be a possibility that they would make an application for one or more registered designs in respect of the modified form of the C6827 Valve;

iii.    one or more of them did not intend or otherwise consider it to be a possibility that one or more design drawings with which they were to be provided would be used in an application for one or more registered designs.

b.    Were those representations each a representation as to a future matter per s4(1) of the ACL?

c.    If any of the representations are found to be conveyed, were they made in trade or commerce?

d.    If so, were those representations misleading, deceptive, or likely to mislead or deceive (including whether there was a reasonable basis for making the representations)?

e.    If so, what damage or harm flows from the making of the representations (found to be conveyed)?

f.    Were the representations, so far as they are found to be conveyed, false, misleading or deceptive?

g.    Did one or more of the Respondents contravenes 18(1) of the ACL?

h.    To the extent that either Mr Comino/Strongcast did not itself/himself contravene s 18(1) of the ACL, is either Mr Comino or Strongcast a "person involved" within the meaning of s 2(1) of the ACL in contravention by the other Respondent?

i.    Is AVI entitled to an order under s 232(6)(b) of the ACL that Mr Comino transfer all rights, title and interest in each of the Designs to Cimberio?

N.2.     Legal principles

467 Section 18(1) of the ACL provides:

(1)     A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

468 Section 4(1) of the ACL provides:

(1) If:

(a)     a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b)     the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

469 In order to determine whether conduct has contravened s 18(1) it is necessary to consider “whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is likely to be misleading or deceptive”: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41 (in the context of the predecessor provision to s 18(1) of the ACL, being s 52 of the former Trade Practices Act 1974 (Cth) (TPA)).

470 Whether silence is sufficient to constitute conduct that is misleading or deceptive turns on whether the circumstances are such as to give rise to a reasonable expectation that if some relevant fact exists, it will be disclosed: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [18]-[19], citing Demagogue at 41.

471 In identifying the principles to be applied in addressing misleading and deceptive conduct by silence in commercial dealings in the context of the former s 52 of the TPA, French CJ and Kiefel J stated in Miller at [20]:

In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.

(Footnotes omitted)

472 At the same time, their Honours made clear in Miller at [22] that:

However, as a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. Yet that appears to have been, in practical effect, the character of the obligation said to have rested upon Miller in this case.

N.3.     Liability

N.3.1.     Submissions

473 The applicants submit that each of the following representations were made by Mr Comino, on his own behalf, and on behalf of Strongcast, by silence:

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

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

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

(together, Representations)

474 The applicants submit that the requisite legitimate and reasonable expectation arose from the background to the Distribution Agreement and the following specific matters:

(a) the Cimberio markings and confidentiality statement on each of the design drawings provided to the respondents;

(b) the absence of any application by the respondents for design rights, or communication of any such intention, despite being provided with designs from Cimberio for five years;

(c) the explicit statements in the Distribution Agreement that limited the use that Strongcast could make of the C6827 Design Drawing and that they did not own that or such designs;

(d) the express refusal to grant Strongcast ownership of the C6827 Design Drawing in the course of the negotiations leading up to the entry into the Distribution Agreement.

475 Next, the applicants submit that each of the Representations was as to a future matter for the purposes of s 4(1) of the ACL and the respondents have not led any evidence to the effect that they had reasonable grounds for making the Representations.

476 Finally, the applicants submit that if Mr Comino or Strongcast had informed AVI that they intended to use the C9746 Design Drawing for the purpose of registering designs it would not have provided the drawing to them on 24 January 2018.

477 The respondents advance the following principal submissions in response to the s 18 ACL claim advanced by AVI.

478 First, the respondents submit there was no common assumption or practice established between AVI and the respondents that gave rise to the reasonable expectation alleged by the applicants. They submit that the Representations are verbose and complex such that the Court would conclude they could not sensibly arise from silence and none of the matters relied upon by the applicants, either individually or collectively, form a sound basis for concluding that AVI had a “reasonable expectation” of positive disclosure prior to sending the 24 January 2018 email.

479 Second, the respondents submit that none of the Representations are representations as to a future matter. They submit that each is framed by reference to an existing contemplation or intent, not the doing or refusing to do of a particular act.

480 Third, the respondents accept that if the Court finds one or more of the Representations were made, then they were made in trade or commerce and they were misleading, deceptive or likely to mislead or deceive but submit that no damage or harm flowed from the making of the Representations.

481 Fourth, the respondents submit that AVI has not identified any facts or matters in support of the allegation that either Mr Comino or Strongcast was a “person involved” for the purposes of the ACL.

N.3.2.     Consideration

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

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

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

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

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

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

N.4.     Relief

N.4.1.     Submissions

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

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

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

N.4.2.     Consideration

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

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

O.     Patent Validity Andinvalidity and Infringement

O.1.     Factual background

O.1.1.     757 Patent

493 Mr Comino was the patentee of the 757 Patent that expired on 18 July 2024.

494 The 757 Patent concerned a bracket that is used for holding pipes “such that inlet and outlet pipes may be aligned by the bracket and then joined via an intermediate component” such as a water meter.

495 On 16 June 2017, the 757 Patent was filed.

496 On 20 July 2017, the 757 Patent was open for inspection.

497 On 9 January 2018, the 757 Patent was certified.

O.1.2.     AVI Inground Water Meter Assembly

498 AVI has supplied a product to customers in Australia called the “INGROUND WATER METER ASSEMBLY” by reference to the product codes AVMB-2BSP/TD8 and AVMB-1BSP/TD8 (Inground Water Meter Assembly). AVI is not licensed by either of the respondents to sell the Inground Water Meter Assembly.

499 AVI advertised and offered the Inground Water Meter Assembly online (lnground Water Meter Assembly Brochure).

500 The Inground Water Meter Assembly with product code AVMB-2BSP/TD8 was advertised and offered for sale in the Inground Water Meter Assembly Brochure with 2 QLD Ball Valves.

501 The Inground Water Meter Assembly with product code AVMB-1BSP/TD8 is advertised and offered for sale in the Inground Water Meter Assembly Brochure with 1 QLD Ball Valve.

O.1.3.     AVI Brackets

502 In the period between 28 July 2020 and 3 September 2021, AVI sold, offered to sell, kept for those purposes and imported the First AVI Bracket.

503 From 27 May 2021, AVI sold, offered to sell, kept for those purposes and imported the Second AVI Bracket.

504 From approximately May 2021, AVI has sold, offered to sell, kept for those purposes and imported the Third AVI Bracket into Australia.

O.2.     Construction of terms in dispute in the 757 Patent

O.2.1.     The claims made in the 757 Patent

505 The following claims are made in the 757 Patent:

CLAIMS:

1. A bracket for holding pipes, the bracket comprising:

an elongate base comprising:

an upper side;

an underside which is adapted for mounting on a surface;

fasteners located at opposing longitudinal edges of the base and configured for a housing to be releasably fastenable thereto; and

apertures configured to receive surface engaging fasteners therethrough,

pipe receiving members located at opposing sides of the upper side of the base, each pipe receiving member being configured to receive a respective pipe, whereby pipes are alignable above a longitudinal axis of the base and joinable via an intermediate component locatable substantially centrally over the base, wherein a footprint of the bracket has a width similar to that of the pipes and intermediate component but whereby the pipes and intermediate component do not overlap the opposing longitudinal edges of the base.

2. The bracket of claim 1, wherein the fasteners comprise snap fit tabs configured for releasably fastening the housing to the bracket.

3. The bracket of claim 1 or claim 2, wherein the housing comprises side walls that are configured to define an enclosure around the bracket when the housing is fastened to the bracket and a lower edge of the side walls is complementary to the longitudinal edges of the bracket, wherein a substantially continuous barrier around the bracket is provided when the housing is fastened to the bracket.

4. The bracket of claim 3, wherein the side walls of the housing taper outwardly.

5. The bracket of any one of claims 1 to 4, wherein the pipe receiving members comprise clamping members, each clamping member comprising clamping jaws configured to receive and clamp the pipe therebetween.

O.2.2.     Relevant principles

506 The principles for construction of patents are well settled.

507 The construction of claims made in a patent is a matter of law and a task for the Court: Décor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385; [1988] FCA 682 at 400. The Court may, however, be assisted by evidence from a skilled person: Jupiters Ltd v Neurizon Pty Ltd (2005) 65 IPR 86; [2005] FCAFC 90 at [67] (Hill, Finn and Gyles JJ).

508 The words used in a patent specification are to be given the meaning which a normal person skilled in the art would attach to them, having regard to their own general knowledge and to what is disclosed in the body of the specification as a whole: Décor Corp at 391; GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Ltd v Generic Partners Pty Ltd (2018) 264 FCR 474; [2018] FCAFC 71 at [106] (Middleton, Nicholas and Burley JJ).

509 It should be read in a practical and common sense way and given a “purposive” construction. The specification is to be read through the eyes of the skilled addressee with practical knowledge and experience in the field of work in which the invention was intended to be used and a proper understanding of the purpose of the invention: GlaxoSmithKline at [106]. It is necessary to apply a generous measure of common sense in construing claims made in a patent: Ranbaxy Laboratories Ltd v Astrazeneca AB (2013) 101 IPR 11; [2013] FCA 368 at [108] (Middleton J).

510 It is not permissible to narrow or expand the boundaries of monopoly as fixed by the words of a claim by adding to those words glosses drawn from other parts of the specification, although terms in the claim which are unclear may be defined by reference to the body of the specification: Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588; [1961] HCA 91 at 610 (Menzies J); Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1; [2001] HCA 8 at [15] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ); Jupiters at [67](iv) (Hill, Finn and Gyles JJ).

511 A construction according to which the invention will work is to be preferred to one according to which it will not: Martin v Scribal Pty Ltd (1954) 92 CLR 17; [1954] HCA 48 at 97; Becton Dickinson Pty Ltd v B Braun Melsungen AG [2018] FCA 1692 at [75]. At the same time, however, to be valid, a patent claim must provide a “workable standard suitable to the intended use”: Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253; [1980] HCA 9 at 274. A claim which is a model of verbal or grammatical clarity may nevertheless fail for lack of clarity if it leaves the definition of the boundaries of the invention uncertain or variable: Albany Molecular Research Inc v Alphapharm Pty Ltd (2011) 90 IPR 457; [2011] FCA 120 at [174].

O.2.3.     Integer 1.1

512 This integer is “a bracket for holding pipes”.

513 The issue to be resolved is the meaning of “holding pipes” in this integer.

514 The experts do not agree on how the skilled addressee would construe what is conveyed by “holding” pipes on a bracket for the purposes of construing the integer. Mr Smerdon considers “holding” would be understood to mean “resting the pipes in position”. In contrast, Mr Hunter considers that “holding” would be construed as meaning “holding securely so that the pipes do not fall off the bracket when it is vertically mounted.”

515 The applicants submit that Mr Hunter is impermissibly adding words to the integer by reading the integer as “holding securely” and reading the integer by reference to the preferred embodiment of the 757 Patent, being claim 5.

516 The applicants contend, consistently with the evidence of Mr Smerdon, that this integer should be construed as holding the pipes in their direction of travel. They submit that this construction of “holding” is supported by the statements in the specification of the 757 Patent published by the Australian Patent Office on 20 July 2020 (757 Patent Specification) that (a) where the pipes must be “held fast”, in contrast to being “held” or “received”, then gripping or clamping  should be used, (b) where clamping is required it is explicitly claimed such as in dependent claim 5, and (c) in embodiments of the invention in which the pipe receiving members do not grip, but only hold the pipes, it would generally, but significantly not always, be necessary to use fasteners such as pinch nuts.

517 The respondents, principally by reference to the evidence of Mr Hunter, contend that the integer should be construed as a claim that the pipes are securely held. They submit that as a matter of English language, “holding” means more than simply “resting” an item in a cradle, (b) a distinction is drawn in claim 1 between “receiving” and “holding” a pipe, (c) the 757 Patent Specification makes plain that “holding” means more than “resting” and there are no embodiments in which the pipes and intermediate component merely “rest” in position, and (d) claim 5 provides for a particular form or type of gripping, being clamping.

518 I accept, as submitted by the respondents, that as a matter of English language “holding” means more than simply “resting” an item in a cradle.

519 I do not consider, however, for the following reasons that this integer, and claim 1 more generally, requires the pipes to be securely fastened in such a manner so as to prevent them from falling away from the bracket when the bracket is subject to its intended use that is, applications where the bracket is mounted vertically on a wall, as well as in-ground installations where the bracket is horizontal.

520 Read as a whole, the 757 Patent Specification discloses three discrete concepts. A broad concept of “holding”, a narrower concept of “gripping”, and a further narrower concept of “clamping”.

521 The integers for the bracket for holding pipes in claim 1 include an elongate base with fasteners located at opposing longitudinal edges of the elongate base and configured for a housing to be reasonably fastenable and apertures configured to receive surface engaging fasteners. The reference to fasteners located at opposing longitudinal edges of an elongate base certainly suggests a claim beyond simply “resting” the pipes in position but the nature of the fasteners is not identified other than that they be configured in a way that a housing can reasonably be fastened to them and the base is to include apertures through which “surface engaging fasteners” could be received.

522 In claim 2, the fasteners are identified as “snap fit tabs” configured for “releasably fastening” the housing to the bracket, and in claim 5, the “pipe receiving members” are stated to be “clamping members” that comprise “clamping jaws” that have been configured to “receive and clamp the pipe”.

523 The 757 Patent Specification otherwise makes clear that the various claimed embodiments of the 757 Patent involve different fastening techniques. In some embodiments, the pipe receiving members may be provided in the form of “gripping members” which are stated to “hold and actively grip the pipes” and, in such embodiments, it is not necessary to use pinch nuts or similar components “in order for the bracket to securely hold the pipes, both in alignment for joining by the intermediate component and thereafter”: 757 Patent Specification at [0011]. In addition, in some embodiments, the “gripping members” may be clamping members that have been configured to clamp the pipe: 757 Patent Specification at [0012].

524 Further, a court cannot import into a claim features of a preferred embodiment that are not expressly referred to in the claim: Jupiters at [67](iv).

525 Significantly, and consistently with a broad interpretation of “holding” in integer 1.1, the invention is described at [0031] of the 757 Patent Specification as a bracket for “holding pipes in alignment and which is configured for a housing to be releasably fastenable thereto” with each pipe receiving member being “configured to receive a respective pipe, whereby pipes are alignable above a longitudinal axis of the base and joinable via an intermediate component locatable substantially centrally over the base”.

526 Moreover, the contrast between the methods by which the pipes are attached in different embodiments of the 757 Patent is highlighted in the following paragraphs of the 757 Patent Specification . It is stated at [0035] that in embodiments where “the pipe receiving members do not grip the pipes … it would generally be necessary to use fasteners such as pinch nuts, and the like, to fasten the pipe to the bracket via its pipe receiving members in a conventional manner.” In similar terms, it is stated at [0051], that in some embodiments “it may be advantageous for the pipe receiving members to grip the pipes, and the pipe receiving members are thus provided in the form of gripping members” and the term “grip a pipe” is to be understood “to mean that the gripping member of the bracket grasps or seizes the pipe firmly and holds it fast” without the need for pinch nuts or similar components to, “in effect, cause the piping to grip the bracket”. Finally, at [0066], it is stated that in some embodiments, the gripping members may be clamping members that are configured to receive and clamp the pipe, for example, by the use of “clamping jaws”.

527 For the foregoing reasons, I am satisfied that “holding” is to be construed for the purposes of embodiments in claim 1 as providing a mechanism whereby the pipes will remain in position and not move if the bracket is placed on a level horizontal surface without the use of gripping members.

O.2.4.     Integer 1.4

528 This integer is “an underside which is adapted for mounting on a surface”.

529 The issue to be resolved is what is required for an underside to be adapted for mounting on a surface.

530 Mr Smerdon considers that this integer means that the underside of the base must have something added to it which enables the base to be firmly fixed to the mounting surface.

531 Mr Hunter considers that “adapted to” means “made suitable for” and therefore what is required is that the underside of the bracket is made suitable for mounting on a surface. He considers this integer is satisfied if the shape of the underside of the base matches the shape of the mounting surface, by way of example, if both are flat or planar.

532 In my view, it is sufficient if the underside is “adapted” in the sense of being suitable for mounting on a surface. Hence, the underside of the base would be adapted for mounting on a flat surface, such as a wall or level ground, if it was flat or planar. I do not accept that it would be necessary in order to satisfy this integer that there be something “added” to enable the base to be firmly fixed to the mounting surface.

O.2.5.     Integer 1.5

533 This integer is “fasteners located at opposing longitudinal edges of the base”.

534 The issue to be resolved is the meaning of “longitudinal edges”.

535 Neither Mr Smerdon nor Mr Hunter considers that the longitudinal edges of the base should be construed as the longitudinal edge extremities.

536 Mr Smerdon considers the longitudinal edges to be the “predominant longitudinal edges of the base” as represented in the red lines in the diagram below:

537 The applicants submit that the longitudinal edges should be construed as the area “on or at close proximity to the longitudinal edge”.

538 Mr Hunter considers the longitudinal edges to be the “longitudinal edge regions” as represented in the blue shading in the diagram below:

539 I do not accept that the integer can be rewritten to encompass “longitudinal edge regions”. Both a straightforward reading that gives effect to a plain English interpretation of the words and a common sense purposive approach makes plain that the fasteners are located along the longitudinal edges rather than the lateral edges. The precise distance of the fasteners from the “longitudinal edge” extremity is not a necessary inquiry, unless the distance was so great that the fasteners were located more in the centre, rather than along the longitudinal edges.

540 The principal difficulty with the “longitudinal edge region” approach is that it obscures and largely renders meaningless the distinction between fasteners located along the longitudinal edge and the lateral edge of the base. The blue shading applied by Mr Hunter would equally capture fasteners located along the lateral edges of the base, except to the extent that the fasteners were implausibly located immediately under the valves and the pipes. Such a location would in all likelihood preclude them from being capable of having any practical operation because they could not be readily accessed.

O.2.6.     Integer 1.7

541 This integer is “pipe receiving members located at opposing sides of the base, each pipe receiving member being configured to receive a respective pipe”.

542 The issue to be resolved with this integer is what is encompassed by “receiving” a pipe in the context of the construction of “holding pipes” in integer 1.1.

543 Mr Hunter considers that the pipe receiving members need to “hold the pipes securely”. Mr Smerdon considers that it is sufficient for the pipe to “rest on” the pipe receiving members, unless the intended use requires the pipes to be held securely, in which case the pipe receiving members that “receive and clamp the pipe” as described in claim 5 would be used.

544 In my view, this integer requires something more than simply allowing a pipe to “rest on” the pipe receiving members. Such an interpretation would deprive the integer of any relevant meaning. Any planar or flat surface would satisfy the requirement, at least for a pipe laid horizontally, to be a pipe receiving member that allowed a pipe to “rest on” it. The integer requires the receiving member to be “configured to receive a respective pipe”. At a minimum, this requires the pipe to remain in position, at least on a horizontal plane, by reason of the manner in which the pipe receiving member has been “configured”.

545 At the same time, being configured to receive a respective pipe does not carry with it any requirement that the pipe be held securely in the sense that it will remain in place if the base is attached to a vertical surface, such as a wall.

O.2.7.     Integer 1.9

546 This integer is “wherein a footprint of the bracket has a width similar to that of the pipes and intermediate component”.

547 The issue to be resolved with this integer is the meaning of “similar”.

548 Both Mr Hunter and Mr Smerdon agree that “similar” should be construed to mean “the same or almost the same”.

O.2.8.     Integer 4.1

549 This integer is “side walls of the housing taper outwardly”.

550 The issue to be resolved is the meaning of “taper outwardly”.

551 Mr Smerdon considers that “taper outwardly” could mean that the housing could taper outwardly from base to top, or from top to base. Mr Hunter considers that “taper outwardly” means from bottom to top, and that a taper from top to bottom would be an “inward taper” and in any event would not allow the invention to work.

552 Textually, it would appear plain that for side walls of an object to “taper outwardly” it must rise from a base at an angle greater than 90 degrees so that the top of the base of the object would be larger in surface area than the base of the object. Conversely, if side walls of an object were to “taper inwardly” then they would have to rise from a base at an angle less than 90 degrees so that the top of the base of the object would be smaller in surface area than the base of the object.

553 Figure 9 of the 757 Patent Specification shows the following embodiment of the patent, showing a “taper outwardly” of the side walls of the housing:

554 Moreover, Mr Hunter gave evidence, which I accept, that if the side walls of the housing tapered inwardly, and the intermediate component width was the same as, or almost the same as, the footprint of the bracket, then the side walls would likely interfere with the intermediate component.

P.     Issue 10: Patent Invalidity

P.1.     Overview

555 The parties agreed that the following issues arise for determination with respect to the patent invalidity claims advanced by the applicants:

a.    Are one or more of claims 1-4 of the 757 Patent invalid for contravening section 40 of the Patents Act?

b.    Are any of the claims 1-4 invalid for want of novelty and/or lack of innovative step in light of one or more of the Draper Catalogue, the Draper Products, US 400 and/or the US 548?

556 The applicants contend that each of the Asserted Claims (being claims 1-4) of the 757 Patent is invalid and should be revoked, as each lacks clarity, support and/or sufficiency under s 40(2)(a) or 40(3) of the Patents Act; and lacks novelty and/or an innovative step over the publicly available prior art.

P.2.     Invalidity under s 40 of the Patents Act

P.2.1.     Relevant principles

557 Section 40 of the Patents Act relevantly provides:

Specifications

…

Requirements relating to complete specifications

(2)    A complete specification must:

(a)    disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art; and

(aa)    disclose the best method known to the applicant of performing the invention; and

(b)    where it relates to an application for a standard patent — end with a claim or claims defining the invention; and

(c)    where it relates to an application for an innovation patent — end with at least one and no more than 5 claims defining the invention.

(3)    The claim or claims must be clear and succinct and supported by matter disclosed in the specification.

(3A)    The claim or claims must not rely on references to descriptions, drawings, graphics or photographs unless absolutely necessary to define the invention.

(4)    The claim or claims must relate to one invention only.

558 The relevant principles with respect to the sufficiency of a specification for a patent were summarised by Burley J in TCT Group Pty Ltd v Polaris IP Pty Ltd (2022) 170 IPR 313; [2022] FCA 1493 at [152]-[157]. The summary included a reference to observations that his Honour had made in Merck Sharpe & Dohme Corporation v Wyeth LLC (No 3) 155 IPR 1; [2020] FCA 1477 at [524]–[526] concerning the introduction of the current form of s 40(2)(a) into the Patents Act, the relevant secondary materials and the relationship that it bears to equivalent provisions in European and United Kingdom law including the manner in which the requirement under s 40(2)(a) has been applied in the United Kingdom:

[524]    In Mentor Corp v Hollister Inc (No 2) [1992] 7 WLUK 465; [1993] RPC 7 at 14, the Court of Appeal (per Lloyd LJ, with whom Stuart-Smith and Scott LJJ agreed) endorsed a passage from Aldous J at first instance (Mentor Corp v Hollister Inc [1991] 3 WLUK 167 FSR 557 at 562) who said:

The section requires the skilled man to be able to perform the invention, but does not lay down the limits as to the time and energy that the skilled man must spend seeking to perform the invention before it is insufficient. Clearly there must be a limit. The subsection, by using the words “clearly enough and completely enough”, contemplates that patent specifications need not set out every detail necessary for performance, but can leave the skilled man to use his skill to perform the invention. In so doing he must seek success. He should not be required to carry out any prolonged research, enquiry or experiment. He may need to carry out the ordinary methods of trial and error, which involve no inventive step and generally are necessary in applying the particular discovery to produce a practical result. In each case, it is a question of fact, depending on the nature of the invention, as to whether the steps needed to perform the invention are ordinary steps of trial and error which a skilled man would realise would be necessary and normal to produce a practical result.

[525]    In Novartis AG v Johns & Johnson Medical Ltd [2010] EWCA Civ 1039; [2011] E.C.C. 10 , Jacob LJ said at [74]:

The heart of the test is: Can the skilled person readily perform the invention over the whole area claimed without undue burden and without needing inventive skill?

[526]    In Terrell on the Law of Patents (19th ed, Sweet & Maxwell, London, 2020), at page 404 the learned editors (Sir Colin Birss et al) propose as a convenient summary of the elements of this aspect of classical insufficiency the following passage provided by Kitchin J (as his Lordship then was) in Eli Lilly v Human Genome Sciences [2008] 7 WLUK 978 RPC 29 at [239]:

The specification must disclose the invention clearly and completely enough for it to be performed by a person skilled in the art. The key elements of this requirement which bear on the present case are these:

(i)    the first step is to identify the invention and that is to be done by reading and construing the claims;

(ii)    in the case of a product claim that means making or otherwise obtaining the product;

(iii)    in the case of a process claim, it means working the process;

(iv)    sufficiency of the disclosure must be assessed on the basis of the specification as a whole including the description and the claims;

(v)    the disclosure is aimed at the skilled person who may use his common general knowledge to supplement the information contained in the specification;

(vi)    the specification must be sufficient to allow the invention to be performed over the whole scope of the claim;

(vii)    the specification must be sufficient to allow the invention to be so performed without undue burden.

559 The Full Court made plain, however, in Warner-Lambert Co LLC v Apotex Pty Ltd (No 2) (2018) 129 IPR 205; [2018] FCAFC 26 at [113] (Jagot, Yates and Burley JJ) that the law in relation to the former s 40(2)(a) of the Patents Act, which provided that the complete specification must “describe the invention fully”, was stated authoritatively in Kimberly-Clark. The Full Court considered that there was no reason to expand the relevant question as framed in Kimberly-Clark at [25] to include any notion of “undue burden” and to do so would be inconsistent with the High Court’s caution expressed in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274; [2004] HCA 58 at [63]-[67] against adopting uncritically post-1977 United Kingdom cases, particularly in relation to patent specifications.

560 In Kimberly-Clark, the High Court identified the relevant question for sufficiency at [25] as follows:

… will the disclosure enable the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty?

(Footnote omitted)

561 The statements of principle in the United Kingdom authorities can, however, relevantly inform and provide guidance in answering the relevant question as formulated in Kimberly-Clark at [25]. It is apparent from the language adopted in the sections and also from the Second Reading Speech and the Explanatory Memorandum, that the intention of parliament in amending s 40(2)(a) and (3) of the Patents Act was to align the law in relation to these requirements with that of the United Kingdom and Europe and it was appropriate for the Courts in this country to have regard to that law in considering the requirement for “support”: Merck at [511]-[514]; [544].

562 The terms of a patent specification may be so ambiguous that its proper construction may not be discernible and the patent may therefore be declared void. In Martin at 59, Dixon CJ endorsed the following test for ambiguity provided by Lord Parker in Natural Colour Kinematograph Co Ltd (In liquidation) v Bioschemes Ltd (1915) 32 RPC 256 at 269:

Further, though it may be true that in construing an instrument inter partes the Court is bound to make up its mind as to the true meaning, this is far from being the case with a Specification. It is open to the Court to conclude that the terms of a Specification are so ambiguous that is proper construction must always remain a matter of doubt, and in such a case, even if the Specification had been prepared in perfect good faith, the duty of the Court would be to declare the Patent void. Once again, though the Court may consider that the meaning of the Specification is reasonably clear, yet if the Specification contain statements calculated to mislead the persons to whom it is addressed, and render it difficult for them without trial and experiment to comprehend in what manner the patentee intends his invention to be performed, these statements may avoid the Patent. The above principles may be thought to bear somewhat hardly on patentees and their agents. A person may arrive at a valuable invention without adequately comprehending the particular point in which the invention is new or valuable, and a patent agent may be insufficiently instructed by his principal, and, however carefully he may consider the terms of the Specification he is employed to draw, he may quite easily fail to anticipate the points which may be raised, if and when the validity of the Patent comes in issue.

(Footnotes omitted)

563 Section 40(3) of the Patents Act requires that the claim or claims must be “supported by matter disclosed in the specification”. The support condition requires that the claims defining the 757 Patent should themselves be supported by what appears in the specification: Miele & Cie KG v Bruckbauer [2025] FCA 537 at [407] (Rofe J).

564 As Rofe J observed in Miele at [409], both Burley J in Merck and Nicholas J in ToolGen Incorporated v Fisher (No 2) [2023] FCA 794 at [394]–[395] and Calix Ltd v Grenof Pty Ltd (2023) 171 IPR 582; [2023] FCA 378 at [126] agreed that the following approach articulated by Aldous J in Schering Biotech Corp’s Application [1993] RPC 249 at 252–3, broadly encapsulated the support obligation under s 40(3) of the Patents Act:

Thus to decide whether the claims are supported by the description it is necessary to ascertain what is the invention which is specified in the claims and then compare that with the invention which has been described in the specification. Thereafter the court’s task is to decide whether the invention in the claims is supported by the description. I do not believe that the mere mention in the specification of features appearing in the claim will necessarily be a sufficient support. The word “support” means more than that and requires the description to be the base which can fairly entitle the patentee to a monopoly of the width claimed. This approach is I believe consistent with the decision of the European Patent Office’s Technical Board of Appeals in the Biogen case T301/87 of 16 February 1989*. They said: “The scope of protection in the claims must be fair having regard to the way in which the invention is described and having regard to the information which the skilled person has been given in the description as to how the invention can be carried out”.

(Citations omitted.)

P.2.2.     Submissions

565 The applicants advanced three submissions in support of its contention that the 757 Patent was invalid and should be revoked because it lacked clarity, support and/or sufficiency. A fourth submission advanced by the applicants in their written submissions does not arise because the respondents do not contend that a “recess” or “circular insert” is an “aperture”.

566 First, the applicants submit that Integer 1.9 is fatally unclear, and for that reason each of claims 1 to 4 should be held to be invalid for lack of clarity for the purposes of s 40(3) of the Patents Act. They submit that there is clearly no workable standard in claim 1 because Integer 1.9 refers to a footprint of a bracket with a width that is “similar” to “the pipes and intermediate component”. The applicants submit that on the respondents’ proposed construction, in order to determine how wide a person could design a bracket to avoid infringement:

the person would need to go to paragraph 36 of the specification, and make a list of each of the intermediate components in that paragraph, and research the widest publicly available component for sale within each category in paragraph 36. The person would then need to identify the widest of each of those (of which there will likely be hundreds across dozens of brands), and then ensure that the width of his or her bracket was not “similar” to the width of such component. Even after all that research, speculation, and hypothesis, there is still no certainty for the would-be competitor. What may have been a non-infringing bracket yesterday, may be infringing the next day. Further, Mr Hunter didn’t even undertake that process. He merely assumed that a ball valve would be the widest on the list, without even knowing the width of each of the other components. Even with the short-cuts Mr Hunter seeks the Court to take, his construction is hopelessly at large, with the result is one could never be certain of the boundaries to the claimed invention.

567 Second, the applicants submit that integer 1.9, the “footprint of the bracket” being “similar” integer, is also invalid for want of sufficiency and support because there is no teaching or disclosure of there being a footprint of a bracket being similar to that of the pipes and the intermediate component, as required by s 40. They submit that there is no figure or embodiment shown in the 757 Patent where there is similarity between the bracket’s width and the width of the intermediate component.

568 Third, the applicants otherwise submit that if Mr Hunter’s evidence that the “longitudinal edge” in claim 1 means a “longitudinal edge region”, then claim 1 must be invalid for want of support and lack of sufficiency. They submit there is no teaching or disclosure of how the boundaries for such an edge region are to be drawn, where it may start, end, or what it may encapsulate. Given my rejection of Mr Hunter’s evidence of a “longitudinal edge region” this submission is moot.

569 The respondents advance the following submissions in answer to the three issues advanced by the applicants.

570 First, the respondents submit that the insurmountable difficulty with the applicants’ first issue is that both Mr Hunter and Mr Smerdon agree that the word “similar” means “the same or almost the same”, and Mr Hunter then construes integer 1.9 in the context of the 757 Patent as a whole, having regard to that meaning of “similar”. They submit that the intention of the invention is to cater for a wide variety of intermediate components, of a wide range of shapes and sizes. They submit that a third party would be aware whether the selection of any one or more parts for use as an intermediate component with the infringing bracket (the size of which they will plainly already have in mind) will fall within the scope of that integer.

571 Put differently, the respondents submit that all this integer is intended to convey is “one doesn’t need to know with precision what the intermediate component is save for the fact that, when you have the footprint of the brackets versus the footprint of the pipes in the intermediate component, there can’t be any encroaching”. They submit that if the diameter of the chosen component was not “similar” to the footprint of the bracket, then the integer would not be taken. Relatedly, they rely on Mr Hunter’s evidence that the integer should be construed as specifying that the “width of the intermediate component should be ascertained by considering the largest possible intermediate component which is intended to be fitted”.

572 The respondents submit that Mr Hunter expressly drew attention to figure 4 of the 757 Patent Specification and acknowledged that it did not show an embodiment where the footprint of the intermediate component was “similar” with the footprint of the bracket. They submit that the intermediate component that is depicted in figure 4 is a water meter, but the 757 Patent Specification does not explain why the inventor decided to show an embodiment by reference only to a water meter. In any event, they submit that it is clear from the embodiments referred to in the 757 Patent Specification that a wide variety of differently sized intermediate components is otherwise contemplated beyond water meters.

573 Second, the respondents submit that the applicants lead no evidence regarding the suggestion of “undue burden”, and so there is no evidence in support of their allegations of an absence of sufficiency and support for integer 1.9. They submit that the 757 Patent Specification refers at [0036] to the different types of components which could comprise “intermediate components”, which constitutes, in the context of the specification as a whole, sufficient disclosure of how the invention works, applying Mr Hunter’s construction of integer 1.9.

574 Third, the respondents submit that the applicants’ reliance on Mr Smerdon’s evidence that the “longitudinal edge region” construction advanced by Mr Hunter would “not be sufficiently clear” is misplaced. They submit that Mr Smerdon changed his view on the construction of this integer during the course of the expert conclave and now holds the view that the “longitudinal edge” is an area (or region) in “close proximity” to the longitudinal edge which aligns with Mr Hunter’s view of an “edge region”. They submit that this evidence plainly falls short of the applicants discharging their onus to establish lack of sufficiency or support.

P.2.3.     Consideration

575 It is convenient to address the applicants’ sufficiency and support complaints with respect to integer 1.9 together.

576 Both Mr Hunter and Mr Smerdon gave evidence that they understand the use of the word “similar” in integer 1.9 where it is stated “wherein a footprint of the bracket has a width similar to that of the pipes and intermediate component” to mean “the same or almost the same”.

577 In my view, Mr Hunter erroneously applied “the same or almost the same” approach to the concept of a “width similar” in integer 1.9 to contend that, when read as a whole, the integer should be construed as specifying that the “width of the intermediate component should be ascertained by considering the largest possible intermediate component which is intended to be fitted”. There are at least three profound difficulties with this construction.

578 First, the approach necessarily caused Mr Hunter to contend that figure 4 in the 757 Patent Specification was not in fact a specific embodiment of the invention because it did not provide an example of an intermediate component that was the “same or almost the same” width of the footprint of the bracket. The contention was expressly contrary to the opening sentences of the 757 Patent Specification at [0074] in which it was stated:

Specific embodiments of the present invention will now be described with reference to the accompanying drawings. Referring firstly to Figures 1 to 4, shown is a bracket 10 for holding pipes in the form of valves 12A and 12B in alignment.

579 Figure 4 in the 757 Patent Specification is reproduced below:

580 Two valves are depicted in figure 4 at 12A and 12B and an intermediate component in the form of a water meter is depicted at 18. The width of the water meter in figure 4 is clearly not the same width as the footprint of the bracket and Mr Hunter accepted that, on his approach to “similar”, the water meter was not “almost the same width” as the bracket.

581 Second, if the width of the bracket was to be ascertained by considering the “largest possible intermediate component” this would give rise to an indeterminate and necessary inquiry as to what was the largest possible intermediate component for each of the intermediate components identified in the 757 Patent Specification at [0036].

582 The 757 Patent Specification at [0036] provides:

The pipes retained by the bracket are joinable or joined via an intermediate component. The intermediate component may be any ancillary item that can be used to join pipes, although use of the bracket would typically only be commercially justifiable when the intermediate component is of the type likely to need to be replaced or maintained periodically. Examples of intermediate components for use with the bracket of the present invention include water or gas meters, water or gas control valves (e.g. pressure reducing valves, tempering valves, ball valves, thermal mixing valves and check valves), compression unions, barrel unions, meter couplings, irrigation services and controls, and stop cocks.

583 As the applicants submit, if the largest possible intermediate component construction was accepted, it would mean that, in order to determine how wide a person could design a bracket to avoid infringement, a person would need to undertake all the steps identified by the applicants in their submission quoted at [563566] above, but even then would still not be certain of the boundaries of the claimed invention.

584 Third, and relatedly, integer 1.9 is principally directed at the width of the bracket, that is the invention the subject of the 757 Patent, not the width of the intermediate components that can be attached to the invention. It seeks to provide a clear demarcation of the boundaries of the invention, in part, by teaching that the footprint of the bracket has a width similar to that of the pipes and the intermediate component. The skilled addressee with practical knowledge and experience in brackets holding pipes with intermediate components would readily appreciate that the broad range of components identified in the 757 Patent Specification at [0036] would be of very different widths, both between components and within classes of components. Such a person would also recognise that the cost of producing bespoke different sized moulds to accommodate all the different widths of intermediate components would be commercially prohibitive. Both Mr Hunter and Mr Smerdon agreed that it would potentially be likely to cost at least $100,000 to produce each mould. Further, such a person would also recognise in the context of the 757 Patent Specification as a whole that for the invention to work effectively given the housing to be placed on top of the bracket, as depicted in figure 9 of the 757 Patent Specification, the width of the intermediate component could not extend beyond the footprint of the bracket.

585 Given this context, the skilled addressee, in my view, would not be provided with any workable standard for determining infringement nor any teaching or disclosure by which the width of the bracket could be ascertained. As drafted, integer 1.9 is inherently circular. The width of the bracket is to be ascertained by reference to a broad range of different intermediate components with “similar” widths to that of the bracket. This correlation necessarily means that until one knows the width of the broad range of intermediate components, it is not possible to ascertain the width of the bracket. It is necessary to start with the bracket not the intermediate components to ascertain the width of the bracket. The position would have been very different if the dimensions of the bracket were defined by reference to linear measurements expressed as a range or with specific values. This would have provided a specific teaching of the dimensions of the base and thus provide the skilled addressee with a workable standard.

586 For these reasons, I am satisfied that the integer 1.9 is invalid for want of clarity, sufficiency and support under s 40(2)(a) and 40(3) of the Patents Act and the 757 Patent is thereby invalid and should be revoked.

P.3.     Invalidity for want of novelty or lack of an innovative step

P.3.1.     Overview

587 The applicants contend that each of the Asserted Claims lacks novelty and/or an innovative step over each of the Draper Catalogue, the sale of the Draper Products themselves, US Patent No. 3,913,400 (US 400) and US Patent No. 4,809,548 (US 548).

588 US 400 was published on 21 October 1975 and US 548 on 7 March 1989. US 400 is entitled “Plastic meter box” and discloses a “plastic meter box” having an “improved base plate structure” to avoid damage. US 548 is entitled “Meter Boxes and Mounting Therefor” and discloses a meter box with a “collar” (or housing) that is releasably connected with the base.

589 As a threshold issue the respondents submit that neither the Draper Catalogue nor the Draper Products have been properly proven to have been made publicly available, or published, before the priority date. They submit that it is trite law that acts of prior publication must be strictly proven, citing Aspirating IP Limited v Vision Systems Limited (2010) 88 IPR 52; [2010] FCA 1061 at [200] (Besanko J). They submit that there is only a pre-publication “proof” of the Draper Catalogue in evidence and the only evidence that the Draper Products were sold to the two specified customers, Elster Metering Pty Ltd and Humes Limited, were invoices produced by Ms Ellis. They submit that Ms Ellis does not suggest that she had any involvement in the supply of the Draper Products to those customers and has only had access to past invoices. They also submit that Ms Ellis confirmed in cross-examination that Draper Enterprises had other records which could establish the veracity of her claims that the Draper Catalogue was sent to customers, but the applicants failed to adduce these records into evidence.

590 The applicants submit that the Draper Catalogue was publicly available from at least January 2015. They submit that as explained by Ms Ellis, the manager of Draper, the Draper Catalogue depicts the Draper Products (as relied on by the applicants as prior art) in the same form as they were sold in the Draper Catalogue in 2015. They submit that the evidence of Ms Ellis and Mr Nicholls establishes that the Draper Catalogue was mailed and emailed to several of Draper’s customers in Australia and New Zealand from that date onwards. They submit that Mr Nicholls’ evidence also establishes that the Draper Catalogue was also available in person for pick-up at the Auckland warehouse and on display from early February 2015.

591 I accept, as the respondents submit, that prior publication must be “strictly proven”, but I am nevertheless satisfied that having regard to the affidavit and cross-examination evidence of both Mr Nicholls and Ms Ellis that publication of the Draper Catalogue and the sale of the Draper Products has been established.

592 Mr Nicholls gave evidence in cross-examination that the proof of the Draper Catalogue in evidence was the final version that was printed, he recalls sending out that version of the Draper Catalogue, the last time he saw the Draper Catalogue was when he was working for Draper Enterprises in 2019 and he recalls that Draper had a different catalogue before 2015 and then from 2015 the Draper Catalogue was used.

593 Further, I accept the evidence of Ms Ellis that invoices were sent and the Draper Products, subsequently depicted in the Draper Catalogue, were shipped, including the DRA 500 “sliding cradle”, to Elster Metering in Queensland in April 2013, and to Humes in Auckland in October 2014.

594 Ms Ellis gave evidence that she had worked at Draper Enterprises “every day of the week” since she was twelve, other than a short period when she was on maternity leave, and following her grandfather’s retirement had managed the company. She gave evidence that she had access to past invoices for products sold by Draper Enterprises to companies based in Australia and New Zealand and the invoices were created and retained in the ordinary course of business. In particular, she gave specific and plausible evidence, consistent with a genuine independent recollection of Draper Enterprises sending products to Humes. She explained that that the reference to DRA400 products in an invoice to Humes was an error and should have been a reference to the DRA500 product depicted in the Draper Catalogue because the DRA500 code was not in the Draper Enterprise system at that time, the placement of “zzzz” in front of the code indicated it was not the correct code, the DRA400 product was not sold separately, and the DRA400 would not fit the DRA78 base (being the base depicted in the invoice).

595 Further, I am satisfied that the invoices are business records of Draper Enterprises and are admissible to prove the supply of the Draper Products to Elster Metering and Humes of items subsequently depicted in the Draper Catalogue, in particular the DRA500 sliding cradle.

596 Finally, I note that public availability in New Zealand is sufficient; the definition of “prior art base” in the Patents Act includes in relation to deciding whether an invention does or does not involve an inventive step information in a document publicly available outside the patent area:  sch 1 of the Patents Act.

P.3.2.     Submissions

597 The applicants concede that on their construction of the Asserted Claims, the Asserted Claims are not anticipated by any of the Draper Catalogue, the Draper Products, US 400 and/or US 548. They submit, however, if the Court were to adopt Mr Hunter’s proposed constructions for several of the claim integers, particularly on his infringement analysis, then those “missing” integers must also be present in one or all of the prior art documents.

598 The applicants submit that, to the extent that the Court finds that any of the claim integers in the 757 Patent are not present in the prior art documents, then as explained by Mr Smerdon, any such differences do not make a substantial contribution to the working of the claimed invention, and thus the Asserted Claims are invalid for want of an innovative step.

P.3.3.     The Draper Catalogue and Draper Products

599 Mr Smerdon and Mr Hunter agree that integer 1.6 – “apertures configured to receive surface engaging fasteners therethrough” is not taken by the Draper Catalogue and the Draper Products because each of the eight apertures in the base of the Draper bracket are utilised for holding the cradle in place and are therefore not available to be used for fasteners to affix the bracket to a vertical surface. Given my conclusion that apertures in the AVI Brackets cannot simply be repurposed or drilled to receive surface engaging fasteners, then this integer cannot be found in the Draper Catalogue and the Draper Products on that basis. Nor do I accept Mr Smerdon’s contention that because securing brackets to walls is a common practice and an installer can simply drill holes in a bracket and affix it to a wall with self-tapping screws that the integer does not provide a substantial contribution to the working of the claimed invention. As Mr Hunter explained, the drilling of apertures in a bracket is an additional time-consuming step and drilling holes into a bracket made from plastic leads to a risk of cracking or breaking of the bracket. I accept that integer 1.6 describes an important feature of the working of the invention which is not present in the Draper Catalogue and the Draper Products.

600 Whether integer 1.5 – “fasteners located at opposing longitudinal edges of the base and configured for a housing to be releasably fastenable thereto” is taken by the Draper Catalogue and the Draper Products turns on whether the snap fit tabs are releasably fastenable. Mr Smerdon contended that the “fasteners are releasable to a certain extent”, largely on the basis that he had been able to release them himself on some four occasions, and his characterisation of them as “annular snap fit fasteners”. Mr Hunter stated that the fasteners in the base of the Draper bracket were “one-way interference pegs” and in response to Mr Smerdon’s characterisation of the fasteners stated:

I’ve designed snap fits, hundreds of them, in my life, your Honour, and there’s no way I would call that a snap fit. A snap fit is a particular form of fastener which has an arm. I can show you an example on my briefcase if you want to, but it has a plastic arm which springs in and snaps back to make its connection. This is a fastener which has a barbed portion. That barbed portion, once it goes in the hole, it deforms in an engineering sense what we call plastically, which means that’s irreversible deformation. So once it has gone in the hole, it has completed changed its characteristics and it’s not – it doesn’t recover itself back into its original state, which is what a snap fit does.

601 In turn, Mr Smerdon responded that this described what he would call a cantilever snap fitting in contrast to an annular snap fitting. Mr Smerdon, however, subsequently agreed that the following description that he gave in his affidavit evidence of a snap fit tab for the purposes of claim 2 was consistent with Mr Hunter’s definition of a “cantilever snap fit tab”:

Snap fit tabs are very common at July ’16. Snap fit tabs consist of a protrusion that is shaped so that the tab flexes away from the mating part as it is joined, but then snaps back into a recess opening or another protrusion into the mating part to hold the two parts together when they are in the final assembled position.

602 It is not entirely clear whether Mr Smerdon was thereby accepting by that agreement that the snap fit tabs he had described in his affidavit evidence contained “barbed portions” that gave rise to “irreversible deformation” once they had been placed in a hole. In any event, I am more persuaded by Mr Hunter’s evidence based on his experience and observation of the characteristics of the fasteners in the Draper bracket that they were not relevantly “releasably fastenable” and therefor integer 1.5 was not taken by the Draper Catalogue and the Draper Products.

603 I am otherwise satisfied that Integer 2.1 follows integer 1.5 with respect to “releasably fastenable’ and is therefore not taken and claims 3 and 4 turn on whether claim 1 is taken (as a whole).

604 Given these findings it follows that not all of the integers of claims 1 to 4 were disclosed in the Draper Catalogue and the Draper Products. It is not necessary to address the other integers in claims 1 to 4, most of which Mr Smerdon and Mr Hunter agreed were taken by the Draper Catalogue and the Draper Products.

605 For the foregoing reasons, I am not persuaded that the Asserted Claims lack novelty and/or an innovative step over either of the Draper Catalogue or the sale of the Draper Products themselves.

P.3.4.     US 400 and US 548

606 I am satisfied that integer 1.6 – “apertures configured to receive surface engaging fasteners therethrough” is not taken by US 400 or US 548.

607 Mr Smerdon and Mr Hunter agreed that integer 1.6 was not taken by either US 400 or US 548 because the apertures in the base were disclosed as drain holes.

608 Further, as for the Draper Catalogue and the Draper Products,  I do not accept Mr Smerdon’s contention that because securing brackets to walls is a common practice and an installer can simply drill holes in a bracket and affix it to a wall with self-tapping screws that the integer does not provide a substantial contribution to the working of the claimed invention. Again, as Mr Hunter explained, the drilling of apertures in a bracket is an additional time-consuming step and drilling holes into a bracket made from plastic leads to a risk of cracking or breaking of the bracket. I accept that integer 1.6 describes an important feature of the working of the invention which is not present in the US 400 or US 548 patents.

609 Further I am satisfied that integer 1.9 – “wherein a footprint of the bracket has a width similar to that of the pipes and intermediate component” is also not taken by US 400 and US 548. The applicants accept that both Mr Smerdon and Mr Hunter agreed, although for different reasons, that this integer was not taken but submitted that if the respondents’ construction for infringement in which one “can simply hypothesise a ball valve (or a meter) that is “similar” to the width of the bracket” in US 400 and US 548 is accepted then the integer would be taken. As I explain at [575]-[586] above, I do not accept that construction of integer 1.9.

610 As to integer 1.5 – “fasteners located at opposing longitudinal edges of the base and configured for a housing to be releasably fastenable thereto” it is necessary to address US 400 and US 548 separately.

611 I am satisfied that integer 1.5 is not taken by US 400.

612 Both Mr Smerdon and Mr Hunter agree that the plastic rivets in US 400 “fixedly” secure the base and therefore do not “releasably fasten” the base and housing. Mr Smerdon suggests that US 400 discloses that other means of fastening “such as clips, nuts and bolts, etc” can be used in place of rivets which would then enable the housing to be “releasably fastenable”. As Mr Hunter responded, however, it cannot be said that the base comprised these other means of fastening. Nor is it apparent how, at least nuts and bolts, could be characterised as “releasably fastenable”. I am therefore satisfied that integer 1.5 is not taken by US 400.

613 I am satisfied, however, that integer 1.5 is taken by US 548. Both Mr Smerdon and Mr Hunter agree that integer 1.5 is taken by US 548 because snap tabs that act as fasteners are located at opposing longitudinal edges that are described in the specification of US 548 as “releasable connectors”.

614 Given integers 1.5, 1.6 and 1.9 are not taken by US 400 and integers 1.6 and 1.9 are not taken by US 548, it is not necessary to consider the derivative claims 2 to 4.

615 For the foregoing reasons, I am not persuaded that the Asserted Claims lack novelty and/or an innovative step over either US 400 or US 548.

Q.     Issue 11: Patent – infringement

Q.1.     Overview

616 The parties agreed that the following issues arise for determination with respect to the claims advanced by the applicants for patent infringement:

a.    From what date, was Strongcast provided with an exclusive licence (as defined by the Patents Act) to the 757 Patent by Mr Comino?

b.    Do the First AVI Bracket, the Second AVI Bracket and/or the Third AVI Bracket fall within the scope of each of the integers of claims 1 and 2 of the 757 Patent?

c.    Does the AVI Water Meter Assembly (which is supplied with First AVI Bracket, the Second AVI Bracket and/or the Third AVI Bracket) fall within claims 3 and 4 of the 757 Patent?

d.    If any infringement is found by the Court, to what relief are the Respondents entitled, and from what date, (including whether the Respondents are entitled to "additional damages")?

Q.2.     Grant of exclusive licence to Strongcast

Q.2.1.     Submissions

617 The applicants submit that that Strongcast was not validly an exclusive licensee until March 2022, and therefore does not have standing to seek relief for infringement prior to this date. Additionally, due to the provisions of the Designs Amendment (Advisory Council on Intellectual Property Response) Act 2021 (Cth), the applicants further contend that Strongcast is not entitled to pecuniary relief for sales prior to 10 March 2022.

618 The respondents submit that it is not disputed that Strongcast had standing as an exclusive licensee from 10 March 2022 to sue for patent infringement and given Mr Comino also sues for patent infringement, if AVI engaged in infringing conduct before 10 March 2022, then Mr Comino has standing with respect to those infringements.

Q.2.2.     Consideration

619 Given that Mr Comino was entitled to sue for any patent infringement that might have occurred prior to 10 March 2022, this issue might only be relevant to the extent that Strongcast, rather than Mr Comino, sought pecuniary relief for sales prior to 10 March 2022. As I have concluded that there has been no infringement of the 757 Patent, the issue of pecuniary relief does not arise.

Q.3.     Infringement of claims 1 and 2 of the 757 Patent

Q.3.1.     Overview

620 There are four integers in issue as to whether each of the First AVI Bracket, the Second AVI Bracket and the Third AVI Bracket infringed claims 1 and 2 in the 757 Patent. For integers 1.4, 1.5 and 1.10 the issue is the same for each of the AVI Brackets. For integer 1.6, however, it is necessary to consider each of the AVI Brackets separately.

Q.3.2.     Integer 1.4

621 This integer is “underside which is adapted for mounting”.

622 Mr Smerdon and Mr Hunter agree that the underside of each AVI Bracket is substantially flat or planar.

623 Given, my conclusion at [532] above that it is sufficient for the underside to be flat or planar, at least for mounting to a wall or flat ground, for this integer to be satisfied, it follows that this integer is taken by each of the AVI Brackets.

Q.3.3.     Integer 1.5

624 This integer is relevantly “fasteners located at opposing longitudinal edges of the base … housing to be releasably fastenable thereto”.

625 Two infringement issues arise with this integer.

626 First, whether the AVI Brackets are located on the longitudinal edges of the base. The respondents submit, relying on Mr Hunter’s longitudinal edge region theory and Mr Smerdon’s concession that the fasteners in the AVI Brackets were located in an area where the longitudinal edge region and the lateral edge region overlapped, that this issue is clearly taken.

627 I do not accept that submission. As I explain at [536]-[537] above, the longitudinal edge region construction is not correct. It is readily apparent from a visual inspection of each of the AVI Brackets that the fasteners are located along the lateral edges of the base, not the longitudinal edge. Further, Mr Hunter acknowledged in cross-examination that the fasteners in the AVI Brackets were “on or in very close proximity to the lateral edges”.

628 Second, whether the housing is releasably fastenable. Given there is no dispute that the fasteners in the AVI Brackets are “snap fit fasteners” this issue was taken by each of the AVI Brackets.

629 Given my conclusion that the fasteners in the AVI Brackets were located along the lateral edges, not the longitudinal edge of the bracket, integer 1.5 is not taken.

Q.3.4.     Integer 1.6

630 This integer is “apertures configured to receive surface engaging fasteners therethrough”.

631 The issue for determination is whether apertures, that is holes that have been drilled in the AVI Brackets, have been “configured” to receive surface engaging fasteners.

632 Mr Hunter considers that each of the AVI Brackets have at least four apertures that could be used to receive surface engaging fasteners. Mr Smerdon accepts that it is “possible” that these apertures could be used for that purpose but considers it is unlikely that they would be given their location on the brackets.

633 The First AVI Bracket has 16 apertures of which eight are filled with plugs that secure the pipe receiving cradle to the base. Of the remaining eight apertures, four are located in the centre of the base and four are located at the top and bottom centre of the base (two at each end). The four apertures located at the top and bottom of the base are located under the pipe receiving cradle and cannot be accessed unless the cradle is unclipped from the base.

634 Mr Hunter agreed in his oral evidence that it would have been preferable if the apertures had been configured to receive surface-engaging fasteners for them to have been placed towards the corners rather than the centre of the base of the bracket but maintained that even if they were located in the centre they were “still configured to receive” the fasteners. Mr Smerdon considered that if the apertures were intended to be used for the purpose of mounting the bracket to a wall he would have expected that they would have been mounted closer to the outside edge of the periphery of the bracket. Both Mr Smerdon and Mr Hunter agreed that it was important that the load of the weight of the bracket was spread uniformly over the mounting surface and this was achieved by making the bracket’s mounting area as large as possible by placing the fasteners in the corners of the bracket.

635 When pressed about the use of the four apertures in the centre of the bracket to receive surface-engaging fasteners Mr Smerdon responded, “It wouldn’t be wise but someone could do it” and “It is possible. I would expect that someone who is trained: an installer, for example, would look at those and go, ‘That’s not going to work’.”

636 Mr Smerdon and Mr Hunter agreed that there were four apertures in the centre part of each of the First AVI Bracket and the Third AVI Bracket that could be used for fastening the bracket to a vertical surface. They agreed that for the Second AVI Bracket there were eight holes at each end of which two holes could be used for wall mounting, thus in total of four holes that could be used for fastening the bracket to a vertical surface.

637 The Second AVI Bracket also had 16 apertures in the same locations as the First AVI Bracket. Unlike the First AVI Bracket, however, all eight of the central apertures were filled with plugs that were used to mount the pipe receiving cradle to the base of the Second AVI Bracket. The only four apertures that could potentially be used to mount the Second AVI Bracket to a vertical surface were the four apertures located at the top and bottom of the base that were located under the pipe receiving cradle and that could not be accessed unless the cradle was unclipped from the base.

638 Mr Hunter suggested that an installer could unclip the pipe receiving cradle and then affix the bracket to the wall through the four available apertures and then reattach the cradle to the bracket. Mr Smerdon considered that it was “tenuously possible” that those four apertures could be used to affix the bracket to a wall with fasteners but stated “an installer would have to realise that those apertures are there, hidden behind the cradle, and then they would have to take the cradle off, which is going to be an additional step for the installer.” When pressed further, Mr Smerdon stated “I would say they’re available, but they’re not intended.”

639 Mr Hunter otherwise agreed with Mr Smerdon, that the four potentially available apertures were not in a position that was optimal for affixing a bracket to a wall and still not as good as putting the apertures nearer to the corners of the bracket.

640 The Third AVI Bracket had the same 16 apertures as the First and Second AVI Brackets, and like the Second AVI Bracket, the plugs fixing the pipe receiving cradle to the bracket also used 12 of the apertures leaving only the four apertures located at the top and bottom of the base that were located under the pipe receiving cradle that could potentially be used to mount the Third AVI Bracket to a vertical surface.

641 Unlike the other brackets, however, the Third AVI Bracket also has four additional apertures in the centre of the base into which screws had been placed to lock the sliding rails in the cradle in place on the bracket.  Mr Hunter suggested that these screws could be replaced with longer fasteners that could be used to both keep the sliding rails of the cradle in place and affix the bracket to a vertical wall. Mr Hunter agreed that using a longer fastener in place of the existing screws would be adding something to the product, but then also said that such an addition would also be necessary for the First and Second AVI Brackets if they were to be affixed to a wall.

642 Mr Smerdon considered that because the screws were already in place and performing the function of securing the cradle to the base, “the intention of those apertures is for the purpose of putting fasteners through to secure the cradle to the base.”

643 The question of whether the AVI Brackets were configured to receive surface engaging fasteners therethrough is not answered by considering mere possibilities or speculation. Applying a practical and common sense approach and a “purposive” construction and a generous measure of common sense it is readily apparent for the following reasons that none of the apertures in any of the AVI Brackets were configured to receive surface engaging fasteners.

644 First, none of the apertures were located at the corners of the bases of the AVI Brackets. Both Mr Smerdon and Mr Hunter agreed this was the preferable place to place fasteners to secure a bracket to a vertical surface because it would provide the greatest surface area. In particular, the four apertures located in the centre of the First AVI Bracket, that were not used to fix the pipe receiving cradle to the base would have produced almost the least surface area possible.

645 Second, the apertures were located in four groups of four along the centre of each bracket for the purpose of providing holes into which plugs holding the pipe receiving cradle in place could be inserted. The only four apertures not used for that purpose in the Second and Third AVI Brackets were located under the cradle and could not be accessed unless the cradle was removed.

646 Third, the apertures were of exactly the same size and provided alternative or additional apertures for securing pipe receiving cradles. It is significant that in the First AVI Bracket, eight of the 16 apertures were used to secure the cradle in place and in the Second and Third AVI Brackets 12 of the 16 apertures were used to secure their respective cradles in place.

647 Fourth, the suggestion that the apertures in the Third AVI Bracket could also be used by removing the existing screws securing the cradle and replacing them with longer fasteners to enable the bracket to be fixed to a wall only serves to highlight that the bracket was not configured, in any meaningful sense, to be affixed to a vertical surface.

648 For the foregoing reasons, I am satisfied that integer 1.6 was not taken.

Q.3.5.     Integer 1.9

649 This integer is “wherein a footprint of the bracket has a width similar …”

650 It was common ground that a range of intermediate components of different widths could be used with the AVI Brackets.

651 The respondents submit that the integer is taken by the AVI Brackets if Mr Hunter’s construction is adopted by the Court.

652 Given my rejection of Mr Hunter’s construction that one can, in effect, simply hypothesise a ball valve with a “similar” width to the bracket in the 757 Patent and exclude the pipes from consideration, it necessarily follows that this integer is not taken as the integer is unclear and thus invalid under s 40(3) of the Patents Act.

Q.4.     Infringement of claims 3 and 4 of the 757 Patent

653 The respondents contend that the AVI Water Meter Assembly, which is supplied with each of the AVI Brackets, infringes claims 3 and 4 of the 757 Patent.

654 The issue to be determined is whether the AVI Water Meter Assembly falls within the scope of each of the integers of claim 3 and/or claim 4.

655 Mr Smerdon agrees with Mr Hunter that the AVI Water Meter Assembly takes integer 3.2 – “wherein the housing comprises side walls that are configured to define an enclosure around the bracket when the housing is fastened to the bracket’; integer 3.3 – “and a lower edge of the side walls is complementary to the longitudinal edges of the bracket”, and integer 3.4 – “wherein a substantially continuous barrier around the bracket is provided when the housing is fastened to the bracket.”

656 Mr Smerdon also agrees with Mr Hunter that integer 4.2 – “wherein the side walls of the housing taper outwardly” is taken by the AVI Water Meter Assembly.

657 I accept the evidence of Mr Hunter and Mr Smerdon that the AVI Water Meter Assembly takes each of integers 3.2, 3.3, 3.4 and 4.2 of the 757 Patent, as demonstrated in the figure below of the AVI Water Meter Assembly:

658 Mr Smerdon does not agree with Mr Hunter, however, that the AVI Water Meter Assembly takes integer 3.1 – “The bracket of claim 1 or claim 2” or integer 4.1 – “The bracket of claim 3”.

659 Given the cross referencing in integers 3.1 and 4.1, the determination of whether the AVI Water Meter Assembly infringes claim 3 or claim 4 turns on whether “a bracket” within claims 1 and 2 is taken by the AVI Water Meter Assembly.

660 In the light of my conclusion that integers 1.5, 1.6 and 1.9 are not taken it follows that a “bracket” within claims 1 and 2 is not taken by the AVI Water Meter Assembly and therefore the AVI Water Meter Assembly does not infringe claim 3 or claim 4 of the 757 Patent.

Q.5.     Relief

661 The respondents seek both pecuniary and injunctive relief.

662 The respondents accept that injunctive relief would have been otiose as the 757 Patent was to expire on 18 July 2024 but submit that an award of additional damages would have been warranted because (a) AVI had known of the existence of the 757 Patent since late 2016, (b) AVI advertised the AVI Water Meter Assembly by reference to the 757 Patent, being a product that it then sourced from Strongcast, thereby developing trade in respect of the product before replacing the Strongcast product with the infringing AVI Water Meter Assembly, and (c) AVI misled the respondents into believing that it would continue to source its water meter assembly product from Strongcast when it had different commercial intentions.

663 If I had otherwise determined that AVI had infringed the 757 Patent, I would not have made an award of additional damages. I accept the submission made by the applicants that they had a compelling non-infringement position, namely that the fasteners for the AVI Water Meter Assembly were on the lateral not the longitudinal edges of the base.

664 As the Full Court stated in Oxworks Trading Pty Ltd v Gram Engineering Pty Ltd (2019) IPR 215; [2019] FCAFC 240 at [73] (McKerracher, Burley and O’Bryan JJ):

A competitor may take the patent, examine the scope of the claims, and endeavour to produce something that does not fall within them. Often, infringement cases are determined by having regard to contestable constructions of the claims. The fact that an alleged infringer fails to defend its reasonably arguable view as to the correct construction of the claim, and continues to produce infringing products in the face of that view, may result in an award for damages, but would not of itself trigger an entitlement to additional damages within s 122(1A) of the Patents Act.

R.     Disposition

665 The parties are to seek to agree and provide the Court with draft orders, or if not agreed competing orders, to give effect to these reasons, including as to costs by 14 August 2025.

666 The proceedings are otherwise to be listed for case management on 18 August 2025 for the purpose of making directions for the determination of the quantification of damages in NSD 1337/2021 and resolving any outstanding issues in relation to the orders necessary to give effect to these reasons, including as to costs.

Associate:

Dated:    30 July 2025

SCHEDULE OF PARTIES