Is copying another’s product legal?

This question was answered “no” in the case of Lumen Australia Pty Ltd v Frontline Australasia Pty Ltd [2018] FCA 1807but the answer may be different in other circumstances.

The facts

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:

  1. 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).
  2. 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.
  3. Lumen was awarded about $140,000 against both Frontline and Vision for the lost sales of its parts.
  4. 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.

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.

Liability limited by a scheme approved under Professional Standards Legislation

© Margaret Ryan, Melbourne, Australia, 2018

The Internet is not the Wild West – (although it can seem to be)

Some people seem to think that no laws apply to the Internet – or that anything that appears on the Internet is free to be copied and used however they like. This is not true.

Much of the material on the Internet is protected by copyright laws, both in Australia and around the world. Certain material, especially if posted on social media sites, may be designed or intended to be shared, such as funny cat videos and other memes. But this is not true of everything on the Internet.

Some websites, such as Shutterstock, permit downloading of images and videos for a fee. Other websites are essentially advertisements for their business and may also enable sales through the website. These businesses would not expect that material on their website could be copied and used, for example, by a rival trader.

Even material intended to be shared on social media may not be able to be re-purposed. A funny cat video shared by the cat’s owner cannot normally be taken and incorporated in a compilation of cat videos on a YouTube channel without permission.

An example of unlawful copying from the Internet, with expensive consequences, was the case of Henley Arch Pty Ltd v Del Monaco [2019] FCCA 3848 (13 November 2019). A photo was taken of a floor plan of a Henley Arch project home found on the Henley Arch website by either Mr Del Monaco or a friend. Mr Del Monaco then emailed the image to his builder and instructed them to prepare plans and build a house in accordance with the floor plan.

The photo, the further plans and the house were all infringements of Henley Arch’s copyright in the floor plan (copyright in a 2D drawing can be infringed by a 3D building). Mr Del Monaco was held to have authorised the plans and building the house and so had infringed Henley Arch’s copyright. He was ordered to pay compensation of $42,000 plus $4,800 in interest. He also had to pay $40,000 in “additional damages” which the Judge ordered to show her condemnation of all persons who consider it “’all right’ to appropriate copyright”. Mr Del Monaco is also likely to be required to pay a portion of Henley Arch’s legal costs.

Downloading an image or other copyright material from the Internet can seem so simple and easy. However, if this is done to save time and money instead of seeking the permission of (and possible payment to) the copyright owner, this can have very serious consequences, especially if the material is then exploited commercially.

This article provides general information only, and is not intended as legal advice specific to your circumstances. Please seek the advice of a lawyer if you have any particular questions.

© Margaret Ryan, Melbourne, Australia, 2020
Liability limited by a scheme approved under Professional Standards Legislation