What you need to know
- On 7 February 2019, the Federal Court handed down its decision in a dispute between two distributors of solar bollard products.
- The Federal Court found that the respondents engaged in copyright infringement and misleading and deceptive conduct by producing and distributing an "Evaluation Document" which claimed to compare the applicant's solar bollard lighting towers with the respondents' "Sun Wizard" products.
- The Court found that Blue Groper and its director sought to gain a commercial advantage by falsely representing that the applicants' current solar bollard product had several design deficiencies. These deficiencies were only present in an earlier version of the applicants' product and not in the model they were selling at the time.
- The Court has awarded declaratory and injunctive relief.
What you need to do
- Before engaging in any form of comparative advertising, ensure you are careful to correctly describe the competitor products.
- Resist any temptations to include photographs or other information about competitor products in advertising which may lead consumers to make false comparisons between products.
- Ensure any product images used in quotations or for advertising purposes are used with the permission of the copyright owner.
Background
The Evaluation Document at the centre of this case was created in 2016. However, the following earlier events are relevant to its creation:
- From 2005 to 2013, Key Logic and its subsidiary Key Wholesalers (together, the applicants) and Exlites were in the business of designing, manufacturing and selling solar bollard light towers.
- In August 2013, Mr Arieni, who was at various times a director of Exlites, Key Logic and Key Wholesalers, took photos of a Model 1 solar bollard which had been damaged by flood waters.
- In 2015, Mr Arieni supplied Model 3 solar bollards for installation on the RAAF Base in Darwin.
The creation of the Evaluation Document
In early 2016, Mr Brownrigg contacted Mr Scutter, the second respondent and director of Blue Groper. Mr Brownrigg worked for Broadspectrum, the current Royal Australian Air Force (RAAF) Base contractor. Mr Brownrigg enquired about the type and quality of the solar bollards which were then installed at the Base.
On 13 April 2016, Mr Scutter prepared the Evaluation Document. The document compared the "current bollard", referring to the applicants' product, with the respondents' Sun Wizard products. The document identified that there were a number of deficiencies with the applicants' bollard and included photos of the damaged Model 1 solar bollard as alleged proof of this. The photos included were those taken by Mr Arieni in 2013, and were provided to Mr Scutter by Mr Fry, the director of Karmic Lighting and a former director of Exlites.
Mr Scutter sent the Evaluation Document to Mr Brownrigg and a number of other contractors.
Copyright infringement
The applicants claimed copyright infringement in relation to the two photographs taken by Mr Arieni in 2013, which were included in the Evaluation Document.
Ultimately, the respondents conceded subsistence and ownership of copyright in Key Logic and that:
- Mr Fry's act of emailing the two photographs to Mr Scutter was copyright infringement by Karmic Lighting;
- Mr Scutter's reproduction of those photographs in the Evaluation Document was copyright infringement by Blue Groper; and
- each email that Mr Scutter sent attaching the Evaluation Document was further copyright infringement by Blue Groper.
Personal liability for copyright infringement
The Court found both Mr Scutter and Mr Fry liable for copyright infringement as joint tortfeasors with their companies. The Court concluded that each of the directors acted as an agent for their company and performed or did all of the acts which constituted the infringements, given that:
- in Mr Fry's case, he must have known that he had no claim to any copyright in the photos;
- in Mr Scutter's case, he must have been on notice that his copying and sending of the photographs may have infringed the rights of any of the applicants; and
- both Mr Fry and Mr Scutter undertook all of the acts which constituted the infringement.
There was no evidence that Mr Scutter had positive knowledge that he may infringe the applicants' copyright. However, the Court confirmed that no such evidence was necessary.
Authorisation
The Court also found that Mr Fry and Karmic Lighting authorised Blue Groper and Mr Scutter to reproduce the photographs in the Evaluation Document, as:
- Mr Fry was aware of the purpose of the Evaluation Document and how it would be distributed;
- Mr Fry would obtain a commercial advantage in assisting Blue Groper and Mr Scutter, as they were distributors of Karmic Lighting's products; and
- Mr Fry took no steps, reasonable or otherwise, to prevent or avoid the infringing acts.
Contraventions of the Australian Consumer Law
The Court found that Blue Groper and Mr Scutter contravened the Australian Consumer Law (ACL).
This followed the respondents conceding that the Evaluation Document contained misleading or deceptive representations. The representations were that the applicants' current solar bollards were the same model as those depicted in the photographs (when in fact they were an earlier model), featured the same design deficiencies and that the damage depicted in the photograph was damage caused in ordinary operating conditions.
The Court found that the sending of the Evaluation Document to Mr Brownrigg and others amounted to misleading or deceptive conduct. The Court also found that the representations amounted to false or misleading representations about goods and services. This was because the representations misstated the standard, quality, characteristics and performance of the applicants' current solar bollard lights.
The Court did not accept the applicants' claims against Mr Fry and against Karmic Lighting, noting that there was no evidence that Mr Fry was aware that the photographs were to be used as they were.
Relief
The Court awarded the following relief:
- injunctions restraining the respondents from repeating their conduct contravening the ACL and infringing copyright;
- declarations of conduct in breach of the ACL and copyright infringement; and
- a mandatory injunction requiring that the respondents publish a corrective notice.
The applicants' claims for monetary damages were abandoned during the course of the trial.
Authors: Ivy Keane, Lawyer; and Anita Cade, Partner.
