What you need to know
- The Federal Court has rejected a claim for copyright infringement brought by State of Escape in relation to its neoprene tote bags on the basis that the bag is not an "artistic work" within the meaning of the Copyright Act 1968.
- While the Court found that the respondent had engaged in misleading and deceptive conduct in relation to how it promoted its own neoprene tote bags, State of Escape failed to establish that the similarities between the bags were sufficient to contravene the Australian Consumer Law.
- This case is a useful reminder of the limitations of copyright law when asserted in relation to consumer products.
What you need to do
- When asserting copyright claims, conduct careful diligence to confirm that copyright subsists in the relevant material before instigating legal proceedings.
- If developing a new product which incorporates functional elements, consider registering a design under the Designs Act 2003 prior to launch rather than relying on copyright to enforce your rights. Australian law does not recognise unregistered design rights.
State of Escape has manufactured and sold a range of tote bags since 2013. The bags are made from perforated neoprene and incorporate sailing rope detailing and handles.
In 2015, the respondent, Ms Schwartz, began selling her own range of perforated neoprene tote bags under the Chuchka brand.
Chuchka sourced its bags from a supplier on Alibaba. The supplier promoted its products using images of the State of Escape bag (SOE Bag). Furthermore, the Court found that Ms Schwartz was aware of State of Escape's products – and had in fact purchased a bag – prior to ordering its own bags from its supplier and beginning to sell them in Australia.
Was the bag an artistic work?
The key issue in this case was whether or not copyright subsisted in the SOE Bag. Under the Copyright Act 1968, copyright only subsists in certain subject matter, including artistic works. An artistic work is defined to mean, relevantly a "work of artistic craftsmanship".
State of Escape argued that its bag was a work of artistic craftsmanship because it was not simply a utilitarian article – instead, it embodied a design philosophy focused on simplicity, beauty and originality and various elements of the bag (eg, the sailing rope) served a purely aesthetic function.
Chuchka argued that the SOE Bag, while elegant, incorporated elements of conventional tote bags and was manufactured using basic and well-known techniques. Furthermore, many of the choices made in designing the bag were guided by functional rather than aesthetic considerations.
The Court found that, while the SOE Bag was a work of craftsmanship, it was not a work of artistic craftsmanship. Following previous cases, Justice Davies held that the question of whether or not the bag was a work of artistic craftsmanship turned on the extent to which its form was unconstrained by functional considerations. Justice Davies considered that many of the design choices made in creating the bag were not merely matters of visual appeal but also resolved functional issues in the design of the bag. For example, the sailing rope detailing reinforced and protected the corners of the bag and helped maintain its overall shape.
As a result, Justice Davies concluded there was no copyright in the SOE Bag for Chuchka to infringe.
Infringement
In case she was wrong on this point, Justice Davies went on to consider whether, if copyright had in fact subsisted in the SOE Bag, Chuchka had infringed that copyright.
State of Escape alleged that Chuchka had infringed copyright both directly, by using images of the SOE Bag to prepare mock-ups for the supplier and images of the Chuchka bags in advertising, and indirectly, by importing the bags into Australia in circumstances where Chuchka ought to have known that, if made in Australia by Chuchka, the manufacture of the bags would have constituted an infringement.
In terms of direct infringement, Justice Davies found that the Chuchka bags reproduced a substantial part of the SOE Bag because, despite minor differences, they incorporated the essential elements of the SOE Bag (eg, the inclusion of perforated neoprene, press studs, rope and a removable pouch). State of Escape therefore would have been successful in this claim.
Justice Davies also concluded that State of Escape would have been successful in establishing indirect infringement because, knowing of the SOE Bag, Ms Schwartz failed to make enquiries of her supplier to confirm the images on its website could be used as the basis for her designs. This also disqualified Chuchka from being able to rely on a defence of innocent infringement.
Misleading or deceptive conduct
State of Escape also brought claims against Chuchka under the Australian Consumer Law and for passing off.
Chuchka admitted to making representations when promoting its bags that were likely to be misleading (eg, its product was the "original" neoprene tote) and did not oppose relief being granted to address those claims (to be determined at a subsequent hearing).
However, it denied that its conduct in selling and promoting the bags in and of itself constituted misleading or deceptive conduct of passing off.
Justice Davies agreed, finding that there was insufficient evidence to establish that State of Escape had a reputation in the design of its bag independent of its brand. Furthermore, Justice Davies considered that the ordinary reasonable consumer would not be misled into believing that the Chuchka bags were State of Escape products – the Chuchka bags were clearly labelled as Chuchka bags and were sold at a much lower price point than the SOE Bag.
Authors: Ray Cheng, Graduate; Ted Talas, Lawyer; and Anita Cade, Partner.
