Upload
dangkhanh
View
215
Download
1
Embed Size (px)
Citation preview
ESR GROUP (NZ) LIMITED v BURDEN [2017] NZCA 217 [26 May 2017]
IN THE COURT OF APPEAL OF NEW ZEALAND
CA387/2016
[2017] NZCA 217
BETWEEN
ESR GROUP (NZ) LIMITED
Appellant
AND
IAN JAMES BURDEN
First Respondent
PLANTATION GROWN TIMBERS
(INTERNATIONAL) LIMITED
Second Respondent
PLANTATION GROWN TIMBERS
(VIETNAM) LIMITED
Third Respondent
Hearing:
2 May 2017
Court:
Randerson, Harrison and Brown JJ
Counsel:
J G Miles QC and A J Pietras for Appellant
A H Brown QC, A I K Franks and J R E Wach for Respondents
Judgment:
26 May 2017 at 10 am
JUDGMENT OF THE COURT
A The application by the respondents to adduce the letter of 7 August 2014 on
appeal is granted.
B The appeal is allowed in part.
C The cross-appeal is allowed.
D The judgment in the High Court is partially set aside and amended in the
following respects:
(i) In respect of the technical drawings made up to 28 October 2003,
judgment is entered for the second respondent in substitution for the
first respondent.
(ii) In respect of the technical drawings made after 28 October 2003,
judgment is entered for the second and third respondents in
substitution for the first respondent.
E Costs in this Court are to lie where they fall.
F Any remaining question of costs in the High Court is to be determined in
that Court.
____________________________________________________________________
REASONS OF THE COURT
(Given by Randerson J)
Table of Contents
Para No
Introduction
The background facts and the findings in the High Court
The parties
Authorship and ownership of the copyright works
Copyright qualification
Copying
Secondary infringement
The importations and the Customs notice
Other conclusions in the High Court
Application to adduce further evidence on appeal
The issues on appeal
Was the Judge right to find Mr Burden was a joint author of
the technical drawings?
Did the Judge correctly find that the technical drawings were
original works for copyright purposes?
Do the technical drawings qualify for copyright under s 18(2)
of the Act?
Was the Judge correct to conclude that neither Plantation
International nor Plantation Vietnam owned or co-owned the
copyright works?
When ESR imported its goods into New Zealand did it know
or have reason to believe that the goods were infringing
copyright and, if so, what was the earliest date on which the
company had such knowledge or belief?
Did the Judge err in finding that the Customs notice and the
subsequent determinations by Customs were valid?
Summary
Result
[1]
[4]
[4]
[6]
[14]
[17]
[20]
[22]
[27]
[29]
[34]
[35]
[47]
[51]
[53]
[57]
[66]
[78]
[79]
Introduction
[1] The appellant (ESR) appeals against a judgment of Duffy J in which she
found it had infringed the copyright of the first respondent (Mr Burden) by importing
furniture into New Zealand in 2014.1 ESR was found to be liable for secondary
infringement under s 35 of the Copyright Act 1994 (the Act). This was on the basis
that the imported furniture constituted an infringing copy of Mr Burden’s copyright
work and that ESR knew or had reason to believe that the furniture was an infringing
copy at the time of importation.
[2] The second and third respondents (Plantation International and Plantation
Vietnam respectively) were joint plaintiffs with Mr Burden in the High Court but
their claims to copyright infringement were not upheld. Duffy J granted declaratory
and other relief to Mr Burden in terms we detail below.
[3] The appeal and a cross-appeal by the respondents raise issues about the
authorship and ownership of the alleged copyright works, whether there was
qualifying copyright in the work, the ability of the respondents to sue for
infringement in New Zealand and other issues relating to the seizure of ESR’s goods
after their importation into New Zealand. For reasons we detail below, the issues on
appeal are considerably narrower than those before the High Court.
The background facts and the findings in the High Court
The parties
[4] Mr Burden is an Australian citizen and the managing director of both
Plantation International and Plantation Vietnam. From the early 1990s he has been
involved in the design and manufacture of furniture. In 1998 he incorporated
Plantation International and formed Plantation Vietnam in October 2003.2 Plantation
International was incorporated in the British Virgin Islands and Plantation Vietnam
in Vietnam. At material times they undertook the design and manufacture of
1 Burden v ESR Group (NZ) Ltd [2016] NZHC 1542 [High Court judgment].
2 The evidence was that the company’s charter was signed on 12 October 2003 but an investment
licence was granted on 28 October 2003. The parties were content to adopt 28 October 2003 as
the relevant date.
furniture in Vietnam. The companies produce and sell a range of furniture including
the “Irish Coast Collection”.
[5] Copyright was claimed in the drawings underlying the furniture. At trial,
copyright was claimed in preliminary drawings made by Mr Burden and in later
more formal technical drawings. It is now accepted that the claim of copyright in the
preliminary drawings was insufficiently proved, and this judgment relates only to the
later technical drawings. The technical drawings are divided into two categories
based on whether they were created before or after 28 October 2003. This is the
assumed date on which draughtspersons employed by Plantation International
transferred to Plantation Vietnam.
Authorship and ownership of the copyright works
[6] Issues arose in the High Court as to both authorship and ownership of the
copyright works. Mr Burden described the design process as starting with his
preliminary sketch drawings followed by working drawings made by others under
his supervision. Samples were then made to test the design. Once satisfied with the
samples, more detailed technical drawings were made in an iterative process
involving a series of modifications to successive plans. Three other witnesses called
by the respondents gave evidence confirming the process. They also confirmed
Mr Burden’s evidence of his lengthy involvement in the design and manufacture of
household furniture as well as his experience, skill and ability in drawing the
designs.
[7] The Judge accepted Mr Burden’s account of the process of designing the
furniture and the preparation of the drawings. She was satisfied Mr Burden was the
author of the preliminary drawings and that the more detailed technical drawings
relied upon by the respondents had been derived from them. Duffy J expressed her
findings in these terms:
[172] Mr Burden was also adamant that he created the Irish Coast designs.
I accept his evidence. I am satisfied that the preliminary copyright works
represent Mr Burden’s expression of the heritage styles that are reflected in
those works. Once the constraints imposed by the function of each item are
put aside there would still be the design details which went to form the
essence of the Irish Coast design imagery. In this regard Mr Burden has
referenced a particular heritage look in those designs, which he has arrived at
through his own skill and labour by creating designs that allowed for the
manufacture of furniture by the flotsam method of construction to recycled
or caste-off timber, and gave a heritage style appearance to furniture
intended for modern every day household use.
[173] I find, therefore, that the artistic design work underlying the Irish
Coast Collection of furniture is Mr Burden’s original work, and that he did
not copy the Broyhill Attic Heirlooms range of furniture [as had been alleged
by ESR].3
[8] On appeal, Mr Brown QC on behalf of the respondents conceded there was
insufficient evidence to support the Judge’s finding that copyright existed in the
preliminary drawings. That was so because these drawings were no longer available
and had not therefore been produced in evidence. Counsel also accepted there was
insufficient evidence as to the content and scope of the preliminary drawings.
Nevertheless, Mr Brown submitted that the Judge’s acceptance that the technical
drawings derived from the preliminary drawings by the process Mr Burden described
supports her finding that the later technical drawings were original works in which
copyright subsisted.
[9] The relationship between Mr Burden and the two companies was significant
for both authorship and ownership of copyright. In particular, if those responsible
for preparing the drawings were employees of the respondent companies, then first
ownership of copyright would belong to the company by whom the authors were
employed at the time by virtue of s 21(2) of the Act. The evidence established that
after the incorporation of Plantation International, it employed the staff who made
the technical drawings of the designs produced by Mr Burden. Upon the
incorporation of Plantation Vietnam in 2003, staff employed by Plantation
International were transferred to Plantation Vietnam. The design and production of
furniture was then undertaken by that company in the same or similar manner to the
processes undertaken by Plantation International.
[10] As the Judge noted, none of the technical drawings relied upon by the
respondents identified Mr Burden as the author.4 Rather, the drawings identified
individuals with Vietnamese names as the authors while ownership of the drawings
3 There is no challenge on appeal to Duffy J’s finding that the drawings were not copied from the
goods of another manufacturer. 4 High Court judgment, above n 1, at [84].
was ascribed to Plantation International.5 Nevertheless, the Judge found that
Mr Burden’s evidence established that he had significant creative input into the
production of the technical drawings.6 Further, his contribution to those works was
not distinct from that of the Vietnamese draughtspersons with whom he collaborated.
She was satisfied Mr Burden’s input was sufficient for the purposes of s 6 of the Act
to qualify him as a joint author of the technical drawings with the named Vietnamese
draughtspersons. These findings are challenged on appeal.
[11] Addressing the ownership of the copyright works, the Judge found there was
no evidence Mr Burden was an employee of Plantation International as distinct from
his role as managing director. She viewed Mr Burden as no more than an officer of
Plantation International who was entitled to claim first ownership of copyright in the
drawings.7 On appeal, Mr Brown accepted that, contrary to the Judge’s
understanding, there was evidence Mr Burden was employed by Plantation
International. It followed, in terms of s 21(2) of the Act, that copyright ownership
resided in the respondent companies and not Mr Burden personally.
[12] After many changes of position the respondents’ final contention on appeal is
that in respect of the technical drawings created up to 28 October 2003 ownership
belongs to Plantation International as the employer of both Mr Burden and the
draughtspersons. In respect of copyright works created after that date, counsel
submitted that joint ownership lay with both Plantation International and Plantation
Vietnam. We revert to the ownership issues below.
[13] We record that on 10 September 2012 an exclusive licence agreement was
entered into between Mr Burden, Plantation International and Plantation Vietnam in
which Mr Burden is acknowledged to be the owner of the copyright works and the
companies are said to be licensees. The respondents acknowledge in the light of the
concession we have already mentioned that the description of Mr Burden as the
owner of the copyright cannot be sustained.
5 Or to a name by which that company was previously known.
6 High Court judgment, above n 1, at [193].
7 At [181].
Copyright qualification
[14] In terms of s 18(2) of the Act, a foreign work does not qualify for copyright
unless the author is, at the material time:
(a) a citizen or subject of a prescribed foreign country; or
(b) an individual domiciled or resident in a prescribed foreign country;
or
(c) a body incorporated under the law of a prescribed foreign country.
[15] A “prescribed foreign country” is defined by s 2 as a convention country or a
foreign country declared to be such by Order in Council under s 232 of the Act.8
ESR argued in the High Court that the respondents’ works did not qualify for
copyright purposes because Mr Burden was not an author and because the second
and third respondents were incorporated in the British Virgin Islands and Vietnam
respectively, neither of which had been included in any Order in Council under
s 232.9
[16] With reference to the second respondent Duffy J rejected this submission,
finding that s 232 is expressed in permissive terms and that the listing of the United
Kingdom in the relevant Order in Council should be read to include the British
Virgin Islands.10
Copying
[17] The Judge noted that 10 items of ESR’s “Roseberry Collection” were alleged
to have infringed the respondents’ copyright. She found that:11
The overall appearance of each item of the Roseberry Collection looks to me
to be nothing more than a three dimensional copy of the artistic works
underlying the corresponding Irish Coast item of furniture.
8 For present purposes we are concerned only with a foreign country declared to be such under
s 232. 9 See the Copyright (Application to Other Countries) Order 1995.
10 Relying on the definition of “country” in s 2 of the Act as including every territory for whose
international relations the government of that country is responsible. 11
High Court judgment, above n 1, at [205] (footnote omitted).
[18] The Judge was satisfied that ESR had reproduced a substantial part of the
copyright works and had therefore infringed copyright. That finding is not
challenged on appeal.
Secondary infringement
[19] In terms of s 35 of the Act, secondary infringement of copyright requires
proof of four elements:
(a) The importation into New Zealand of goods that are an infringing
copy of the copyright work;
(b) At the time of importation the importer knew or had reason to believe
that the imported goods were an infringing copy;
(c) The absence of a copyright licence to import the goods; and
(d) The importation is not for the importer’s private and domestic use.
[20] Elements (a), (c) and (d) were satisfied or are no longer challenged. The only
issue is item (b): whether ESR knew or had reason to believe that the goods it was
importing were infringing copies. This turned on two issues: first, the date on which
ESR first became aware that infringement was alleged, and second, how long
thereafter it was reasonable to allow for ESR to investigate before it could be said on
the evidence that ESR knew or had reason to believe that the imported items
infringed the respondents’ copyright.
The importations and the Customs notice
[21] The first material event was a notice issued by Mr Burden on 20 May 2013
under s 136(1) of the Act giving notice of his claim to copyright and requesting the
chief executive of the New Zealand Customs Service (Customs) to detain any pirated
copies of works including the Irish Coast Collection. It was not until 2014 that
containers of the infringing goods began to arrive in New Zealand. There is no
dispute that ESR was the importer. The goods were part of ESR’s Roseberry
Collection. There were four importations between 30 July and 12 September 2014.
Customs issued a series of notices under s 137(3) of the Act between 4 September
and 22 October 2014 determining that the imported goods appeared to be pirated
copies of the goods identified in the Customs notice of 20 May 2013. The
notifications — given by Customs to ESR under s 139 of the Act — stated that the
goods covered by the notices would be detained by the chief executive on terms set
out in the notices.
[22] On 7 August 2014 the respondents’ solicitors sent a letter to ESR and its
solicitors advising Customs had detained the first shipment of furniture imported on
30 July 2014 and claiming that Plantation International’s copyright had been
infringed by the imported goods. The letter was not produced in the High Court nor
referred to in submissions in that Court. We deal below with the respondents’
application to adduce this letter on appeal.
[23] The Judge accepted evidence given by a director of ESR, Ms McLennan, that
she had no actual knowledge of the respondents’ claim of copyright infringement
until about the time Customs seized the items of furniture ESR had imported into
New Zealand on or about 30 July 2014.12
The Judge considered that ESR would
have had sufficient information and time before that date to lead it to make the type
of enquiries a reasonable person would have made. She was satisfied that, by June
2014, before the first importation of Roseberry furniture, ESR had reason to believe
it had infringed the respondents’ copyright works.13
In part, the Judge relied on a
letter having been sent to ESR’s associated company, ESR Group Holdings Pty Ltd,
on 13 May 2013. The existence of this letter was referred to in the solicitors’ letter
of 7 August 2014 but was not itself in evidence. Mr Brown accepted before us that
the 13 May letter could not have been relied upon without direct evidence of its
contents.
[24] Duffy J found in the alternative that, after ESR received the solicitors’ letter
of 7 August 2014, no reasonable person could be left with any doubt that the goods
ESR had imported into New Zealand infringed the respondents’ copyright. She
therefore found that ESR was liable as a secondary infringer from June 2014 at the
earliest and, at the latest, by the time of receipt of the letter of 7 August 2014.14
12
High Court judgment, above n 1, at [254]–[257]. 13
At [260]. 14
At [263].
[25] Since there was no contest at trial that ESR had imported the Roseberry
furniture for the purpose of sale in New Zealand, the Judge found under s 141(3) of
the Act that the infringing items were pirated copies of the respondents’ copyright
works as defined by s 135 of the Act.
Other conclusions in the High Court
[26] The Judge went on to dismiss claims brought by the respondents under the
Fair Trading Act 1986. Those claims are no longer at issue. She also dismissed a
counterclaim by ESR challenging the validity of the Customs determinations in
respect of the detained furniture. The Judge determined that only Mr Burden was
entitled to relief. We summarise the relief granted in broad terms:
(a) A declaration that ESR had infringed copyright by reproducing
Mr Burden’s copyright works.
(b) A declaration that ESR’s infringing products reproduced Mr Burden’s
copyright works and therefore each was a pirated copy imported other
than for private and domestic use.
(c) An injunction restraining ESR from further importing, selling or
dealing with its infringing products or otherwise infringing the
respondents’ copyright.
(d) An order for delivery up of goods and related documents and for the
filing of affidavit evidence as to the extent of the importation.
[27] Issues relating to damages or an account of profits were reserved.
Application to adduce further evidence on appeal
[28] The respondents seek leave to adduce on appeal the letter written by its
solicitors to ESR dated 7 August 2014. The letter notified ESR that Plantation
International claimed copyright in the Irish Coast Collection of furniture; alleged
infringement by ESR through the importation of goods comprising part of ESR’s
Roseberry range of furniture; attached copies of relevant design drawings as well as
images of a large number of items in the Irish Coast collection; and invited ESR to
forfeit the furniture it had imported and to give undertakings not to infringe
Plantation International’s copyright.
[29] The letter of 7 August 2014 was also sent to ESR’s solicitors. It was
disclosed on discovery and included in the common bundle of documents produced
at trial (although apparently without all of the exhibits). It was not referred to or
produced in evidence nor mentioned in submissions. Accordingly, in terms of
r 9.5(4) of the High Court Rules 2016, the letter was not formally received into
evidence. The Judge clearly assumed the letter was in evidence because she referred
to it in her judgment.
[30] Counsel who appeared for the respondents at trial (not Mr Brown) has sworn
an affidavit in which he frankly accepts that, by oversight, the letter was not
produced or referred to at trial. He says he was distracted by other events during the
trial.
[31] The application to adduce further evidence was filed on 19 April 2017. On
26 April 2017 a direction was given that the application would be dealt with at the
hearing of the substantive appeal. ESR was advised that it could file any further
affidavits in opposition without prejudice to its opposition to the application. No
such affidavit was filed but ESR nevertheless opposed the application. It did so on
the grounds that the letter was not fresh; there was no adequate explanation for the
failure to produce the letter or refer to it at trial; the application was late; and ESR
would be prejudiced because it had no opportunity to explain what it understood
from the letter, when Ms McLennan became aware of the letter, and how long would
have been needed to investigate the matters recorded in it.
[32] We heard argument on the application during the hearing of the appeal and
allowed the letter to be produced on a provisional basis. We are satisfied it is in the
interests of justice that the application should now be formally granted. First, the
letter is plainly relevant to the issue of ESR’s knowledge of the alleged infringement.
Second, there can be no doubt ESR was aware of the letter at the time. Third, the
content of the letter cannot be challenged. Fourth, the letter was in the common
bundle but was not produced or referred to at trial through oversight. Although we
accept the explanation for this is insubstantial, there is no evidence it was
deliberately overlooked. Fifth, it was reasonable for the Judge to assume the letter
was in evidence. Sixth, we are not persuaded that ESR will be materially prejudiced
if the application is granted. The issue relating to ESR’s knowledge of the
infringement was adequately explored at trial and ESR has not taken advantage of
the invitation to file any further affidavit on this issue explaining how it would have
responded if the letter had been raised. Realistically, there was little that could have
been said in response since the letter spoke for itself and was clear in its terms.
[33] We grant the application accordingly.
The issues on appeal
[34] Against that background, the issues on appeal have narrowed to these:
(a) Was the Judge right to find Mr Burden was a joint author of the
technical drawings?
(b) Did the Judge correctly find that the technical drawings were original
works for copyright purposes?
(c) Do the technical drawings qualify for copyright under s 18(2) of the
Act?
(d) Was the Judge correct to conclude that neither Plantation International
nor Plantation Vietnam owned or co-owned the copyright works?
(e) When ESR imported its goods into New Zealand, did it know or have
reason to believe that the goods were infringing copyright and, if so,
what was the earliest date on which the company had such knowledge
or reason to believe?
(f) Did the Judge err in finding that the Customs notice and the
subsequent determinations by Customs were valid?
Was the Judge right to find Mr Burden was a joint author of the technical
drawings?
[35] The essence of the submission made by Mr Miles QC on this topic was that
Mr Burden was neither a co-author nor a co-owner of the copyright in the technical
drawings. It was submitted Mr Burden’s evidence of authorship was unreliable
because he was not named as an author on any of the relevant drawings; rather, these
identified Vietnamese draughtspersons as the authors; and ESR was entitled to rely
on the presumption under s 126(2) of the Act that the persons so named were the
authors. Finally, counsel submitted that Mr Burden’s evidence that he directed the
Vietnamese authors was insufficiently detailed to justify a finding of co-authorship.
[36] In respect of ownership, Mr Miles pointed out that Mr Burden had claimed to
be the owner of the copyright throughout the trial but that claim had now been
abandoned. Further, the licence agreement dated 10 September 2012 recorded
Mr Burden as owner and the two companies as exclusive licensees. Given the
respondents’ acceptance that this agreement was not correct, counsel submitted it
should now be recognised as a sham, designed to overcome difficulties with the two
companies suing in New Zealand or elsewhere. Finally, it was said that the Customs
notice lodged on 20 May 2013 recorded Mr Burden as the copyright owner and only
in respect of the logos for the Irish Coast Collection.
[37] ESR is entitled to be critical of the changes of stance on the respondents’ part.
However, there is no suggestion the position now taken by them was not open on the
pleadings as amended during trial. In the end, despite the presumption as to
authorship under s 126 of the Act, we are satisfied it was open for the Judge to
conclude Mr Burden played a substantial creative role in the preparation of the
technical drawings.
[38] Duffy J had the advantage of assessing Mr Burden’s evidence at trial as well
as that of the supporting witnesses. We accept the submission made by Mr Brown
that it was open to the Judge to conclude that the technical drawings were part of an
iterative process involving, in various sequences, the creation of preliminary
drawings or sketches and the making of samples followed by the preparation of
technical drawings. We have already referred at [6] and [7] above to the Judge’s
acceptance of Mr Burden’s description of the design process. The Judge also
found:15
[189] In the present case the plaintiffs contend that Mr Burden was the
creative force behind the technical copy works, which is what generates
copyright entitlement, whereas the draughtspersons did no more than place
lines on a page. Here the plaintiffs rely on Mr Burden’s evidence that he
drew concepts or scratch ups that he might leave on his desk or a drafting
board until satisfied with them, when he would then give what were
preliminary sketches to a draughtsperson to draft to scale. Mr Burden would
direct the draughtsperson as to the measurements of the height, width and
breadth of a particular item of furniture. Then the draughtsperson would
draw a dimensional drawing and return it to Mr Burden who would then pin
it on the wall, look at it and then perhaps alter some feature of the drawing to
change the appearance, giving it back to the draughtsperson to redraw as a
dimensional drawing. Once Mr Burden was finally happy with the
dimensional drawing a sample would be built, then the overall design would
be finalised and very specific technical drawings were prepared from which
the end product was produced.
[39] Duffy J accepted Mr Burden’s evidence and rejected ESR’s submissions as to
authorship:
[190] On the other hand, ESR contends that the technical copyright works
were authored by the Vietnamese artists whose names are recorded on the
relevant technical drawings. First, ESR disputes that Mr Burden “creatively
directed the artists”. I reject that submission. I accept Mr Burden’s account
of the involvement he had in the creation of the technical copyright works.
ESR has identified no reason for me to reject this account, nor do I consider
there to be any good reason for doing so. I have accepted Mr Burden’s
evidence in other respects, and I see no reason to depart from that approach
here.
[40] Dealing with a submission by ESR that any creative input by Mr Burden was
insufficient to show Mr Burden was the author of the technical drawings, the Judge
concluded:
[193] Here the processes underlying the development of the technical
copyright works resemble the processes that were followed in Cala Homes
(South) Ltd v Alfred McAlpine Homes Ltd. Mr Burden’s evidence establishes
that he, like the architect in Cala Homes (South), had significant creative
input into the production of the technical copyright works. Further his
contribution to those works is not distinct from that of the Vietnamese
15
High Court judgment, above n 1.
draughtspersons with whom he collaborated. I am satisfied, therefore, that
Mr Burden’s input is sufficient to qualify him as a joint author of the
technical copyright works with the named Vietnamese draughtspersons also
being joint authors.
(Footnotes omitted.)
[41] The view that authorship should be determined by the “pusher of the pen”
was rejected by Laddie J in the Cala Homes case referred to by the Judge:16
… to have regard merely to who pushed the pen is too narrow a view of
authorship. … It is both the words or lines and the skill and effort involved
in creating, selecting or gathering together the detailed concepts, data or
emotions which those words or lines have fixed in some tangible form which
is protected. It is wrong to think that only the person who carries out the
mechanical act of fixation is an author. There may well be skill and
expertise in drawing clearly and well but that does not mean that it is only
that skill and expertise which is relevant.
[42] Laddie J found that although the actual drafting had been undertaken by
junior employees of a drawing office, the architect claiming to be the author had
provided them with a detailed brief. Although the architect had done none of the
drawing, he was nonetheless found to be a joint author.
[43] We also accept Mr Brown’s submission that Duffy J correctly distinguished
the decision of Hillyer J in Hansen v Humes-Maclon Plastics Ltd where the prospect
of joint authorship was not addressed.17
As Duffy J found, the facts in Hansen
differed from the case before her. In the present case Mr Burden gave specific
evidence, accepted by the Judge, that he signed off on each final technical drawing
and that, although employees assisted him in producing technical drawings, the
decisions were his. He directed, and was intimately involved in, the design process
at every stage. His employees acted in accordance with his detailed directions.
[44] Mr Burden also gave evidence that it was common in producing the technical
drawings to work with copies or photocopies as the design was developed. Typically
this would proceed by printing or photocopying a drawing and then making
additions to it. It was common to go through several cycles of photocopying and
additions. We add that, although Mr Burden was unable to produce the preliminary
16
Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd [1995] FSR 818 (Ch) at 835. 17
Hansen v Humes-Maclon Plastics Ltd (1984) 1 NZIPR 557 (HC); High Court judgment, above
n 1, at [192].
drawings or sketches from which the technical drawings had later been derived, he
produced similar sketches for other products. The Judge was satisfied the
preliminary sketches for the Irish Coast Collection had been in existence.18
[45] ESR also submitted that the technical drawings were merely two-dimensional
copies of a three-dimensional prototype sample and did not qualify for copyright
purposes.19
However, we accept Mr Brown’s submission that this contention cannot
be sustained on the evidence the Judge accepted. Importantly, it is clear that the
evidence showed the technical drawings were not just two-dimensional copies of
three-dimensional samples. Rather, the dimensioning and joinery information was
added to the technical drawings after the sampling as part of the iterative process
already discussed.
[46] We are satisfied the Judge was correct to find that Mr Burden was a joint
author of the technical drawings along with the Vietnamese draughtspersons
employed by Plantation International and later by Plantation Vietnam. On the
evidence, the technical drawings constituted a work of joint authorship for the
purposes of s 6(1) of the Act on the basis that the contribution of each of the authors
was not distinct from that of the others. As we discuss shortly, this has an important
consequence for the issue of whether the technical drawings qualified for copyright
in terms of s 18(2) of the Act.
Did the Judge correctly find that the technical drawings were original works for
copyright purposes?
[47] ESR’s written submissions included an argument that the technical drawings
were not original works for copyright purposes in terms of s 14 of the Act. However,
this submission was not advanced in oral argument. We are satisfied the Judge was
correct to find that the technical drawings were original works on the evidence of
Mr Burden which she accepted. ESR accepted that the technical drawings were, in
principle, capable of attracting copyright and does not challenge the Judge’s finding
that the drawings were not works copied from others, as ESR had alleged at trial.
18
High Court judgment, above n 1, at [112]. 19
Citing the decision of Davison CJ in Wham-O MFG Co v Lincoln Industries [1984] 1 NZLR 641
(CA) at 655.
[48] Mr Brown correctly submitted that the test for originality in relation to
artistic works is a relatively low one.20
As Duffy J said:21
[75] Provided the work “was not slavishly copied from some other work”
and the author has “expended more than negligible or trivial labour skill and
judgment” in its creation, it will be considered original work. This statement
appears to me to accurately reflect New Zealand copyright law on originality
as well.
[49] We also refer to the decision of LA Gear Inc v Hi-Tec Sports plc for the
proposition that where an author produces one or more preliminary versions, the
finished product does not cease to be that person’s original work simply because the
author adapts it with minor variations or even simply copies it from an earlier
version.22
[50] In the light of the Judge’s findings on the evidence, we are satisfied that the
technical drawings reflect the original creative work of Mr Burden and the
Vietnamese draughtspersons so that copyright subsists in them.
Do the technical drawings qualify for copyright under s 18(2) of the Act?
[51] Given our finding that the technical drawings were the product of the joint
authorship of Mr Burden and the Vietnamese draughtspersons, we accept the
respondents’ submission that they qualify for copyright on the basis that Mr Burden
was, at the material time, a citizen or subject of a prescribed foreign country, namely
Australia, for the purposes of s 18(2)(a) of the Act. It does not matter that the other
co-authors do not qualify under that provision since s 18(3) provides that a work of
joint authorship qualifies for copyright if, at the material time, any of the authors
satisfies the requirements of subs (1) or (2).
[52] It was submitted for the respondents that, if we were satisfied the technical
drawings qualified for copyright purposes on the basis of Mr Burden’s citizenship of
Australia it was unnecessary for us to determine whether the British Virgin Islands
were a prescribed foreign country for the purposes of s 18(2) of the Act. Detailed
submissions on this point were presented on behalf of the respondents at the hearing
20
Citing Wham-O MFG Co v Lincoln Industries, above n 19, at 664. 21
High Court judgment, above n 1. 22
LA Gear Inc v Hi-Tec Sports plc [1992] FSR 121 (CA) at 136.
and we have since received, by leave, further submissions on this point from ESR.
The determination of this issue is not free from doubt and we have decided the better
course is to refrain from making any finding on the point. We do so because it is
unnecessary for our decision. The technical drawings qualify for copyright on the
basis we have found.
Was the Judge correct to conclude that neither Plantation International nor
Plantation Vietnam owned or co-owned the copyright works?
[53] We can deal with this issue briefly. In short, we accept the submissions made
on behalf of the respondents in support of the cross-appeal that the Judge erred in
finding that Mr Burden was the owner of the copyright in the technical drawings and
that neither of the companies were owners or co-owners thereof. Our conclusion is
that Plantation International was the owner of the copyright in the technical drawings
created in the period up to the formation of the new company on 28 October 2003.
During that period, although Mr Burden was a co-author of the drawings, he was
admittedly employed by Plantation International. It follows in terms of s 21(2) that
the first owner of the copyright in the technical drawings during this period is
Plantation International.
[54] In the period post-28 October 2003, our finding that the Vietnamese
draughtspersons were co-authors employed by Plantation Vietnam means that via the
latter group of persons ownership of the technical drawings is held by Plantation
Vietnam as their employer. It is not entirely clear on the evidence whether
Mr Burden was employed by Plantation Vietnam. The fact that he was the managing
director of Plantation Vietnam and Plantation International suggests he may have
been. On the other hand, it is clear that both companies remained in existence after
28 October 2003. In his brief of evidence Mr Burden said Plantation Vietnam was
incorporated to deal with the design, production and exportation of goods for
Plantation International, which was responsible for marketing the goods
internationally. Mr Burden personally continued to be involved in the design of the
furniture along with the Vietnamese draughtspersons who had transferred their
employment to Plantation Vietnam. On the balance of probabilities, we find that
Mr Burden was employed solely by Plantation International.
[55] In the end, whether Mr Burden was employed by both companies or solely by
Plantation International is immaterial. Either way, both companies would be
co-owners and entitled to sue in New Zealand for infringement of copyright.
[56] In terms of s 120 of the Act, an infringement of copyright is actionable by the
copyright owner. So long as the works qualify for copyright in terms of s 18 of the
Act (which we accept) it follows that both Plantation International and Plantation
Vietnam were entitled to bring proceedings in New Zealand. They are entitled to do
so whether or not the British Virgin Islands or Vietnam are prescribed foreign
countries for the purposes of s 18(2). That provision is concerned with authorship,
not ownership.
When ESR imported its goods into New Zealand did it know or have reason to
believe that the goods were infringing copyright and, if so, what was the earliest
date on which the company had such knowledge or belief?
[57] As noted at [20] above, for the purposes of secondary infringement under
s 35 of the Act, the only disputed issue is whether and when ESR knew or had reason
to believe the goods it was importing infringed copyright. This Court discussed the
issue of secondary infringement in Jeanswest Corporation (New Zealand) Ltd v
G-Star Raw C.V.23
Dealing with the question of knowledge for the purposes of
secondary infringement the Court said:
[110] The word “knows” in s 35(1)(a)(ii) and in s 36 connotes actual
knowledge, as Smellie J – in our view correctly – held in Husqvarna Forest
& Garden Ltd v Bridon New Zealand Ltd.24
On the other hand, the words
“has reason to believe” in those two provisions involve constructive
knowledge. Constructive knowledge is appropriately imputed if a party
wilfully closes its eyes to the obvious or wilfully fails to make those
inquiries an honest and reasonable person in the circumstances will make.25
(Footnotes in original.)
23
Jeanswest Corporation (New Zealand) Ltd v G-Star Raw C.V. [2015] NZCA 14, (2015) 13
TCLR 787. 24
Husqvarna Forest & Garden Ltd v Bridon New Zealand Ltd [1997] 3 NZLR 215 (HC) at 226.
This is also the view expressed in Kevin Garnett, Gillian Davies and Gwilym Harbottle (eds)
Copinger and Skone James on Copyright (16th ed, Sweet & Maxwell, London, 2011) Vol 1 at
[8-08]–[8-09]. 25
Husqvarna, above n 24, at 226; Inverness Medical Innovations, Inc v MDS Diagnostics Ltd
(2010) 93 IPR 14 (HC) at [265] citing Kevin Garnett, Gillian Davies and Gwilym Harbottle
(eds) Copinger and Skone James on Copyright (15th ed, Sweet & Maxwell, London, 2005) Vol 1
at [8-10].
[58] It is not in dispute that the material time at which knowledge is to be assessed
is at the point of importation of the goods into New Zealand.
[59] In submitting there was no proof of actual or constructive knowledge at the
time the goods were imported, ESR referred to the Customs notice dated 20 May
2013 and the subsequent notices of determination by Customs. Mr Miles rightly
pointed to some initial uncertainty in the terms of the 20 May 2013 notice. He
pointed out that Mr Burden claimed to own the copyright and submitted that, on its
face, the copyright was said to reside only in the logo of the identified works. On the
first page of the notice, it is stated:
The title of the works is as stated in the list of works attached as Schedule 1,
namely “logo”.
[60] The Customs notice produced to the Court by ESR attached images of the
products in which copyright was claimed but not the technical drawings. However,
the same images along with technical drawings were attached to the letter of
7 August 2014. The schedule also referred to copyright beyond the logos. It stated:
Copyright is claimed in the literary and artistic works and the logo shown,
including but not limited to as embodied in the Annexures to this Notice.
[61] ESR submitted confusion could have arisen from the content of the notice.
We do not accept this could have occurred at that time because, although the notice
was posted on the Customs website, the Judge accepted Ms McLennan’s evidence
she did not see it there.26
Ms McLennan could not recall when she first became
aware of it or whether this was before or after the importations. Significantly, any
lack of clarity was cured soon after the first importation of goods the following year,
as we discuss in the next section of this judgment.
[62] The first importation of goods by ESR arrived in New Zealand on 30 July
2014. Although it was not until 4 September 2014 that Customs determined under
s 137 of the Act that the goods imported on 30 July appeared to be pirated copies of
the goods to which the respondents’ Customs notice related, ESR’s solicitors had in
the meantime sent the 7 August 2014 letter both to ESR and its solicitors. At the
26
High Court judgment, above n 1, at [254].
hearing of the appeal, we floated the proposition that perhaps a period of one month
after notice of an alleged infringement was a sufficient period to enable ESR to
investigate the alleged claim and to take legal advice.
[63] However, we consider on reflection that this was rather too generous. Given
the obvious and close similarities between the ESR goods and the copyright works,
we are satisfied that a period of two to three weeks would have been more than
sufficient after receipt of the 7 August letter.
[64] Mr Brown accepted that the respondents had not established the requisite
knowledge of infringement at the time of the first importation on 30 July 2014 but
we accept his submission that, by the time of the subsequent importations on
28 August and 5 and 12 September 2014, ESR knew or had reason to believe that the
imported goods were infringing copies of the respondents’ copyright works.
[65] For completeness we note Mr Brown’s observation that there is no appeal
from the declaration made in the High Court that the infringing Roseberry products
reproduced the respondents’ copyright works. Counsel submitted that ESR’s goods
were pirated copies within the meaning of s 141(3) of the Act in any event since
knowledge of infringement was not a requirement under that section or in the
definition of pirated copy.
Did the Judge err in finding that the Customs notice and the subsequent
determinations by Customs were valid?
[66] Mr Miles submitted that the Customs notice of 20 May 2013 was
fundamentally flawed because it recorded Mr Burden as the copyright owner and
Plantation International as the exclusive licensee. It was also submitted that the
notice claimed copyright only in the logo, but we have already rejected that
criticism.
[67] While Mr Miles acknowledged the letter of 7 August 2014 claimed the
copyright was owned by Plantation International, it was submitted that ESR would
have been confused as to who owned the copyright. It was also said that ESR would
have been confused as to who had authored the technical drawings since the
Customs notice said Mr Burden was the author yet the technical drawings provided
with the 7 August letter cited only the Vietnamese draughtspersons as authors. There
could certainly have been no doubt what was alleged after the letter of 7 August.
[68] As we have already noted, the images attached to the Customs notice of
20 May 2013 identified Plantation International as the copyright owner. By the time
of the letter of 7 August 2014, the respondents’ solicitors informed ESR and its
solicitors that Plantation International owned the copyright. The attachments to the
7 August letter stated the same thing.
[69] We do not accept ESR’s submission that the Customs notice of 20 May 2013
was invalid on any of the grounds advanced. While s 136(1) of the Act provides that
a notice given under that section is to be given by the owner of the copyright, it does
not follow that an error as to ownership means the notice is invalid. The Act makes
elaborate provision for what is to happen on receipt of a notice under the section. In
particular, there are extensive provisions enabling the chief executive of Customs to
seek further information, to suspend the giving of any acceptance of the notice, and
ultimately, for application to be made to the Court for resolution of disputes. These
provisions show a clear statutory intention that any errors in the notice do not lead to
its invalidity.
[70] Under reg 4(1) of the Copyright (Border Protection) Regulations 1994 every
person giving a notice under s 136 is obliged to provide evidence in support of the
claim that the items referred to in the notice are works in which the person owns
copyright. Regulation 4(2) allows the chief executive to direct that such evidence be
given at the time the notice is given or at any subsequent time. This allows the
chief executive to clarify matters or request further evidence.
[71] In terms of s 136(3) of the Act, the chief executive is obliged either to accept
or decline the notice within a reasonable period of its receipt. Section 136A permits
the chief executive to suspend an accepted notice if satisfied that the information
held in respect of the notice is not correct or is no longer current. Before giving any
notice of suspension, the chief executive is obliged to inform the person who gave
the notice and to give an opportunity for them to respond.
[72] An accepted notice remains in force for the period specified in the notice (in
this case five years) unless it is revoked by the claimant or discharged by order of the
court under s 141 of the Act. This section provides that any person may apply to the
court for an order that a notice accepted under s 136 be discharged.
[73] Under s 137, where a notice has been accepted under s 136 and the
chief executive forms the opinion that any imported item in the control of Customs
may be a pirated copy to which the notice relates, the chief executive may conduct
an investigation. For the purposes of the investigation, the chief executive may
require the claimant or any person appearing to have an interest in the item to supply
information.
[74] Whether or not the chief executive conducts any investigation, a
determination must be made within a reasonable period as to whether the imported
goods appear to be a pirated copy. Notice of any such determination must then be
given to the claimant and any person appearing to have an interest in the item.27
Any
dispute may be determined by the court under s 141.
[75] In the present case, the chief executive issued a notice on 13 June 2013, less
than a month after the Customs notice. The 13 June 2013 notice is headed
“Copyright Notice” and lists the copyright holder as Plantation International.
Although the title of the work is listed as “logos”, the notice itself states that:
Copyright is claimed in the literary and artistic works in the literary, artistic
works, or stylised logos shown
[76] After the importations began the following year, the chief executive advised
the respondents’ solicitors on 4 September 2014 that the notices under s 136 of the
Act stating that Plantation International was the copyright owner had been accepted.
This determination is consistent with the images attached to the Customs notice of
20 May 2013 and with the attachments to the letter of 7 August 2014 from the
respondents’ solicitors. The chief executive’s advice included a determination made
under s 137(3) that the goods imported on 30 July 2014 appeared to be pirated
copies. Similar determinations followed on 17 and 22 October 2014.
27
Copyright Act 1994, s 139.
[77] For the reasons given, we are satisfied the Judge was correct to find that the
Customs notice and the subsequent determinations made by the chief executive of
Customs were valid.
Summary
[78] In summary, we have determined:
(a) The letter of 7 August 2014 may be admitted on appeal.
(b) The High Court correctly found:
(i) Mr Burden was a joint author of the technical drawings.
(ii) The technical drawings were original works for copyright
purposes.
(iii) The technical drawings qualify for copyright under s 18(2) of
the Act.
(c) The High Court was wrong to find that Mr Burden was the owner of
copyright in the drawings and that neither Plantation International nor
Plantation Vietnam were the owners of copyright.
(d) The correct position is that Plantation International was the copyright
owner in respect of the technical drawings made up to 28 October
2003 and both Plantation International and Plantation Vietnam are
co-owners in the copyright of the technical drawings made after
28 October 2003.
(e) Plantation International and Plantation Vietnam are both entitled to
sue in New Zealand for infringement of copyright.
(f) The High Court was correct to find that ESR was liable for secondary
infringement in respect of the importation of its goods into
New Zealand on 28 August and 5 and 12 September 2014 but not in
respect of the importation of goods on 30 July 2014.
(g) The High Court was correct to find that the Customs notice of 20 May
2013 and the subsequent determinations made by the chief executive
of Customs were valid.
Result
[79] The application by the respondents to adduce the letter of 7 August 2014 on
appeal is granted.
[80] The appeal is allowed in part.
[81] The cross-appeal is allowed.
[82] The judgment in the High Court is partially set aside and amended in the
following respects:
(i) In respect of the technical drawings made up to 28 October 2003,
judgment is entered for the second respondent in substitution for the
first respondent.
(ii) In respect of the technical drawings made after 28 October 2003,
judgment is entered for the second and third respondents in
substitution for the first respondent.
[83] We consider that costs should lie where they fall. We take into account that
the appellant has been partially successful and that the respondents have been
granted an indulgence by the admission of the letter of 7 August. As well, the
changes of stance by the respondents (including their persistence until shortly before
the appeal was heard that Mr Burden was the copyright owner) have added to the
costs of resolving the issues.
[84] Any remaining question of costs in the High Court is to be determined in that
Court.
Solicitors: AJ Pietras & Co, Lower Hutt for Appellant
James & Wells, Auckland for Respondents