HopgoodGanim Lawyers has successfully represented Digga Australia Pty Ltd (Digga) in a Federal Court appeal regarding copyright/design overlap of a 4-in-1 bucket earth moving accessory. The appeal is one of only two significant decisions in this area of law in the 2007/2008 year.

The Copyright Act 1968 provides a defence to what would otherwise be an infringement of copyright where an artistic work has been produced in a three-dimensional form and sold commercially. In that case it is not an infringement of the copyright in that artistic work for any other person to reproduce the work by producing their own version of the three dimensional product.

Prior to 17 June 2004 the exception to infringement did not specifically apply to the reproduction of an artistic work by plan-to-plan copying for the purpose of producing noninfringing, three-dimensional products. From 17 June 2004 the Copyright Act was amended to also except from infringement the act of making a plan-to-plan reproduction of the artistic work if it is in the course of producing a threedimensional product.

Both Digga and Norm Engineering Pty Ltd (Norm) manufacture equipment and accessories for earth moving applications. Norm developed a '4-in-1 bucket', an attachment for bobcats. Norm's bucket comprised five key components which enabled the bucket to perform cutting, pulling, scraping material, loading, clasping or holding actions with hydraulic rams. Digga produced a bucket with components that were similar to the Norm bucket.

Digga admitted that it had referenced the Norm bucket as a source of ideas for its design of an equivalent bucket and consequently created two-dimensional drawings after its examination of the Norm bucket. Using these two dimensional drawings, Digga manufactured the three dimensional Digga 4-in-1 bucket. Norm issued proceedings in the Federal Court claiming that when Digga produced the two-dimensional drawings for its bucket and manufactured the three-dimensional Digga bucket, it had reproduced Norm's artistic works for which copyright existed, therefore infringing Norm's copyright in the two-dimensional drawings.

At the trial Justice Greenwood found that Digga had reverse engineered a Norm bucket by reproducing four components of Norm's drawings by creating its own drawings and producing the Digga bucket.

His Honour found that copyright existed in Norm's drawings for the four components - the pivot arms, inside mounting bracket, outside mounting bracket and front assembly and that copyright had been infringed by Digga. He also found that the drawings for pivot arms did not come within the definition of design under the copyright / design overlap provisions and therefore Digga was not entitled to rely upon the defence to infringement under those provisions for that particular component.

For the remaining three components, His Honour found that the copyright / design overlap provisions did apply and therefore Digga's reproduction through manufacture of a three-dimensional bucket was not an infringement. However, His Honour did find that Digga's creation of drawings for the purpose of producing their three-dimensional bucket did infringe Norm's copyright prior to 17 June 2004. For the infringement by the plan-to-plan copying His Honour awarded nominal damages to Norm of $100 per drawing - a total of $300 in damages.

For the infringement by Digga of the pivot arms drawings His Honour awarded damages in the amount of $80,000 to Norm. His Honour also ordered that Digga not produce any bucket incorporating the pivot arm design in the future and that it deliver up any drawings it possessed of the pivot arm mechanism.

Digga appealed against the decision of Greenwood J on all matters in which he had found infringement by Digga but its principal ground of appeal was that the drawings of the pivot arms were subject to the copyright/design overlap provisions and therefore an exception to infringement. Justices Lindgren, Bennett and Logan of the Full Court of the Federal Court of Australia allowed Digga's appeal regarding the pivot arms.

The Full Court found that the pivot arm drawings did fall within the exception to copyright infringement provided by the copyright/design overlap provisions and therefore that His Honour Justice Greenwood should not have found that Digga had infringed Norm's copyright by reproduction of the pivot arm drawings in a three-dimensional object.

However, the Full Federal Court did uphold Justice Greenwood's decision that the plan-to-plan copying of each of the four components of Norm's 4-in-1 bucket by Digga was an infringement of Norm's copyright prior to 17 June 2004. This is the first occasion on which a court has expressly confirmed that plan to plan copying does not fall within the copyright/design overlap provisions excepting infringement.

Therefore, the Full Federal Court ordered an additional $100 in nominal damages for the pivot arm drawing infringement 2 June 2008 but set aside the order for $80,000 in damages for the pivot arm reproduction. Early in proceedings, prior to commencement of the trial, Digga had made an offer to settle the proceedings in which Digga agreed to pay Norm a total of $5,000 and to cease further production of the Digga bucket. The Full Federal Court found that Digga's offer represented a better outcome for Norm than they had ultimately achieved at the end of Digga's appeal.

Because Norm was ultimately awarded only $400 in damages and no orders were made restraining Digga from producing the Digga bucket, the Court followed the Rules of the Federal Court and gave Digga its costs of the trial and of the appeal on an indemnity basis. This case now stands as authority for a successful appellant getting its costs of both the trial and the appeal on an indemnity basis where there has been an earlier offer better to the other party than the outcome on appeal.

This was a great outcome for Digga because its original position to produce the three dimensional 4-in-1 bucket was vindicated and it is now free to continue production of the 4-in-1 bucket. The outcome was even more favourable for Digga as it will receive a substantial contribution from Norm towards costs of the trial and appeal which costs exceeded $500,000.

Norm pursued a costly and lengthy proceeding resulting in an award of $400 in damages but was ordered to pay Digga's costs which will likely be a sum in the hundreds of thousands.

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