Is copying another’s product legal?
This question was answered “no” in the case of Lumen Australia Pty Ltd v Frontline Australasia Pty Ltd  FCA 1807but the answer may be different in other circumstances.
Lumen supplied Frontline with electronic automotive components for inclusion in towbar kits that were supplied by Frontline to Mitsubishi and Mazda. Frontline, for profit reasons, decided to replace these components with components made by Vision, without telling either Lumen or its customers or obtaining their approval. To facilitate this substitution, Frontline provided Vision with samples of the Lumen products (including the Engine Control Unit (ECU) which carried copyright markings) as well as Lumen engineering drawings and the Lumen installation instructions. Vision created almost identical copies and these were supplied as part of the towbar kits by Frontline to Mitsubishi and Mazda. When this substitution came to light Lumen sued Frontline and Vision.
Infringement by Frontline
This was a clear case of infringement of Lumen’s rights by Frontline. At the beginning of the trial, Frontline admitted copyright infringement in the ECU markings, engineering drawings and installation instructions, as well as breach of confidence and breach of contract with Lumen and passing off its towbar kits to its customers as still containing Lumen parts. What is significant is:
- There was no claim of infringement in the copied parts themselves. This was because there was no design registration for the Lumen parts. In addition, the Copyright Act provides that there is no copyright infringement of design drawings or the parts themselves where there is no design registration and the design of the parts is industrially applied (generally where more than 50 items are produced).
- Despite this, Lumen was able to rely on incidental copyrights – in the ECU markings, in the installation instructions and in drawings that were copied plan to plan.
- Lumen was awarded about $140,000 against both Frontline and Vision for the lost sales of its parts.
- Lumen was also awarded $500,000 against Frontline only as “exemplary damages” for passing off (which would have been the same for “additional damages” for copyright infringement). This is a very substantial amount which was intended to punish Frontline and deter it from similar conduct in future, especially because of its deliberate and involved planning of the infringement over a significant period of time.
Frontline’s conduct was intentional, extremely serious, had safety implications and covered a period of roughly three years until the substitution of the Lumen parts was discovered. $500,000 for exemplary/additional damages is at the high end for this type of damages.
Copying another’s product
Copying another’s product can be fraught with danger, especially if, as in this case, the copier owes obligations in contract or confidence to other parties. Assuming that there are no such obligations, it may be possible to copy a product, but this involves undertaking patent and design searches as well as considering precisely what is proposed to be copied to make sure that no incidental copyrights or trade marks are infringed. I can assist businesses if they wish to pursue this course. https://ipbymargaret.com.au/contact/
This blog entry provides general information only, and is not intended as legal advice specific to your circumstances. Please seek the advice of a legal professional if you have any particular questions.
© Margaret Ryan, Melbourne, Australia, 2018