ABB LTD & ORS V NZ INSULATORS LTD HC AK CIV-2004-404-4829

ABB LTD & ORS V NZ INSULATORS LTD HC AK CIV-2004-404-4829 20 September 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2004-404-4829BETWEEN ABB LIMITED Plaintiff AND ABB INDUSTRY PTE LIMITED Second Plaintiff AND ABB STOTZ-KONTAKT-GMBH Third Plaintiff AND NEW ZEALAND INSULATORS LIMITED Defendant Hearing: 15 November-9 December 2005 Appearances: L L Stevens QC and A Paterson for Plaintiffs J E Hodder and N Wood for Defendant Judgment: 20 September 2006 at 2:30 pmRESERVED JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtney on 20 September 2006 at 2:30 pm pursuant to Rule 540(4) of the High Court Rules Registrary/Deputy Registrar 20 September 2006Solicitors: Markitlaw, P O Box 25203, St Heliers Fax: (09) 575-4636 – A Paterson Chapman Tripp, P O Box 993, Wellington Fax: (04) 472-7111 – J Hodder / N WoodCounsel: L L Stevens QC, P O Box 357, Auckland Fax: (09) 366-0779Table of ContentsPara No.Introduction [1]Issues [4]The S91and the BM [ 9]Breach of ss 9 and 10 Fair Trading Act 1986 – Misrepresentation as to Same Commercial OriginNature of claim and principles to be applied [21]Was the appearance of the BM likely to mislead or deceive? [28]Was the manner in which the BM was marketed and distributed likely to mislead and deceive? [41]Conclusion as to misrepresentation as to commercial origin under under ss 9 and 10 FTA [52]Passing Off [54]Is there goodwill in the S91 and, if so, who owns it? [56]Deception [77]Damage [83]Breach of ss 9 and 10 Fair Trading Act 1986 – Misrepresentation as to Suitability for PurposeNature of claim [87]Representations to Energy Safety Service [89]What representations were made? [101]How mcbs operate [107]Was the BM equivalent to the S91, suitable for use in New Zealand and did it have a 3kA rating? [115]Conclusion on misleading and deceptive conduct in relation to safety and suitability of BM [136]Breach of CopyrightBasis of claim [137]Owner of copyright [140]Copyright in the labelling of the S91 [152]The technical drawings [163]Are words and figures part of the drawings [166]Are the drawings sufficiently original to constitute original artistic works? [177]Has there been an infringement of the copyright in the drawings? [192]Expiry of copyright in the drawings [199]First Affirmative Defence to Breach of Copyright Claims – Estoppel [202]The alleged representation [203]Authority to make representations [214]Inducement / Reliance [218]Conclusion on affirmative defence of estoppel [229]Second Affirmative Defence to Breach of Copyright Claim – Breach of Copyright by SGIND [230]Design of S91 legs before 2004 [232]Design of S91 legs used after 2004 [237]Counterclaim – Unjustified Copyright Proceedings [249]Injunctive Relief [257]Restraining NZI from manufacturing, importing, distributing and selling the BM [258]Delivery up of remaining BM units [267]Confidentiality of Desto's drawings [270]Other circumstances precluding injunctive relief [273]Conclusion as to injunctive relief [277]Declaratory Relief [278]Damages [281]Failure to mitigate loss [290]ABB's unlawful conduct [294]Non-S91 losses [298]Other aspects of damages [301]Conclusion [304]Introduction[1] This is a case about miniature circuit breakers (mcbs). These devices have been used in New Zealand since the 1980s to replace rewireable fuses in switchboards. They protect the switchboard and electrical appliances against faults in the electrical circuitry. [2] Until January 2004 the New Zealand market for mcbs was dominated by a product known as the S91. I refer to the S91 loosely as an ABB product. All of the plaintiffs are part of the ABB group of companies. The S91 was designed by the third plaintiff (Desto), manufactured by the second plaintiff (SGIND) and is currently distributed by the first plaintiff (ABB NZ). [3] Between 1990 and 2004 the S91 was distributed by the defendant (NZI) under an agreement with SGIND. That agreement was terminated at the instigation of ABB NZ, which wanted to take over the distribution role. Because the S91 was such a profitable product and represented a significant part of its business, NZI decided to source an mcb of its own and compete with ABB NZ for the New Zealand market. It engaged a Chinese manufacturer to produce a copy of the S91 under NZI's own brand name, Base Mount (BM). Since the BM's introduction in January 2004 it has dominated the market.Issues[4] The plaintiffs allege that, by manufacturing and marketing the BM, NZI: a) Breached ss 9 and 10 Fair Trading Act 1986 (FTA) by misrepresenting that the BM and S91 have the same commercial origin; b) Passed off the BM as the S91 and as having the same commercial origin; c) Breached ss 9 and 10 FTA by representing that the BM is equivalent to the S91 and suitable for its purpose; and d) Breached the plaintiffs' copyright in the S91.[5] NZI accepts that the BM was a virtually identical copy of the S91 but otherwise denies the alleged breaches. [6] In relation to the breach of copyright claim NZI also raises the following: a) An affirmative defence of estoppel, based on an alleged representation by the sales manager of ABB NZ that there was no copyright in the S91; b) An affirmative defence of inequitable conduct by SGIND, namely breach of NZI's own copyright in the design of the legs attached to the S91 which, it says, should preclude any equitable or discretionary relief; and c) A counterclaim for unjustified copyright proceedings. [7] Each plaintiff has different interests and losses for which it seeks protection and compensation. In the event that the plaintiffs succeed, the appropriate remedy will depend on which cause or causes of action are successful. As a result, this judgment deals with the liability issues and remedies other than damages. However, since some quantum evidence was adduced (and with counsels' agreement) I will express some preliminary views on certain issues that are relevant to quantum. This is done, obviously, without the benefit of full submissions on the issue and is no more than an indication of my impression of the evidence. [8] Before I consider the substantive issues I will describe the history of the S91 and BM.The S91 and the BM[9] The mcb is what is known in the industry as a low-voltage product. It is installed in switchboards, either to replace the traditional rewireable fuse (plugged into the base, which previously held the fuse) or in new installations (plugged into a base designed for that purpose). The advantage of the mcb is that it can easily be reset rather than having to be replaced. It is designed to last the lifetime of the building and was described in evidence as a "fit and forget" device.[10] Desto designed the S91 over several years from about 1978 to1986 to replace its existing mcb, the S901. The S901 had a short circuit capacity of 1.5kA and Desto perceived that, with the increase in the volume and type of household appliances, a higher short circuit capacity would be needed. The S91 was sold commercially from 1986. [11] In 1989, a new European standard, the IEC 60898, was introduced. In order to comply with the new standard Desto had to modify the S91. These modifications are the subject of the breach of copyright claim. [12] NZI had manufactured the original S901 under licence. In 1990 it obtained an exclusive distributorship of the S91. The S91 was sold complete with legs that allowed the unit to be plugged into a base. NZI had manufactured the legs for the S901 and continued to do so for the S91. It assembled and sold the complete unit in a distinctive blue and white blister pack. The S91 was popular and reliable. The evidence was that it virtually sold itself and had nearly 100% of the market. [13] About October 2002 ABB NZ decided that it would take over the distribution of the S91. Mr Gobbie, the ABB NZ sales manager, referred to both the desire to build up the company's other low voltage products on the back of the successful S91 and dissatisfaction with NZI's performance as a distributor. However, I find that the former was the true reason. The evidence did not show that NZI had failed in its role as distributor. [14] At ABB NZ's instigation, SGIND gave notice of termination. It was agreed that NZI would cease distributing the S91 on 31 December 2003. NZI decided to source its own mcb. It had a strong distribution network, built up over many years. But it realised that if it were to compete with ABB NZ it would need an alternative product to offer its customers as soon as its distributorship came to an end. Although it enjoyed strong loyalty from its customers, if customers were forced to buy the S91 from ABB NZ because NZI could not supply an alternative, inertia was likely to make recapturing them later difficult. [15] NZI engaged a Chinese manufacturer, Jiakong, to make an exact copy of the S91, save that the new product was to be marked with the letters "BM" instead of "S91". It sent samples of the S91 to Jiakong along with technical specifications anddrawings. Its instructions were recorded in a letter from NZI's chief executive, Robin Heron, to its Chinese agent 9 December 2002:We would require the product to be exactly the same as the samples. The only thing not required is the 'picoSTOTZ' wording on the side. The coloured writing depicts the amperage i.e. 32 amp – red, 40 amp – orange, etc.[16] The technical information accompanying that instruction included a specification stating:The circuit breaker must be certified as conforming to the requirements of AS/NZS4898:1997 (IEC 898) for single pole circuit breakers with a rated voltage of 240V 50HZ and have minimum short circuit capacity of 3,000 amps[17] The other technical information comprised a technical data sheet. This replicated and elaborated on some of the information on the first sheet. It also included a photograph of an mcb with the NZI logo on it. These data sheets were prepared by Mr Phillips, NZI's quality assurance manager. However, I am satisfied that the data sheet was essentially a copy of the S91 data sheet and that the photograph was taken from a set of photographs of the S91 but doctored to remove the ABB markings and, instead, display the NZI logo. [18] The AS/NZS 4898:1997 that NZI wanted the BM to comply with provided for various tests to determine compliance. Mr Phillips planned for NZI to carry out most of these tests itself. However, it did not have the capability to undertake one of the specified short circuit tests. NZI made inquiries of Industrial Research Ltd (IRL) in New Zealand about having that company carry out those tests but eventually decided that Jiakong should do them. [19] Jiakong sent samples of the new mcb in early September 2003. Mr Phillips' own testing of those samples produced poor results, although he said that this was not unexpected, given that it was mid-way through the development process. The results of NZI's tests were conveyed to Jiakong in a letter from Mr Quinlan (probably drafted by Mr Phillips) 24 September 2003. The letter set out a number of improvements that NZI required before it would agree to production of the product. [20] Production began in about October 2003. There were some difficulties and NZI was sufficiently concerned that Mr Heron and Mr Quinlan went to China tocheck that the problems were under control. However, they were satisfied with progress and the first shipment arrived in mid-December 2003.Breach of ss 9 and 10 Fair Trading Act 1986 – Misrepresentation as to Same Commercial OriginNature of claim and principles to be applied[21] The plaintiffs say that NZI misrepresented to wholesalers, retailers and the public that the BM had the same commercial origin, nature and characteristics as the S91. They rely on the physical appearance of the BM and on the way that NZI marketed and distributed the BM. [22] The plaintiffs allege breaches of both ss 9 and 10 FTA, which provide:9 Misleading and deceptive conduct generallyNo person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.10 Misleading conduct in relation to goodsNo person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for a purpose, or quantity of goods.[23] The only significant difference is the use of "likely" in s 9 as opposed to "liable" in s 10. Mr Hodder submitted that there was no material difference between them and, further, it would be perverse if a breach of s 10, which attracts a criminal sanction, could be more readily made out than s 9, which does not. He relied onMarcol Manufacturers Limited v Commerce Commission [1991] 2 NZLR 502 at 508. [24] However, in the context of this case, I prefer the approach taken by Anderson J in Sound Plus Limited v Commerce Commission [1991] 2 NZLR 329 at 332-333 where he considered that the ordinary meaning of "liable" merely contemplates the possibility of doing something. In comparison "likely" carries the connotation of being probable. For the reasons I will come to I have found that there was conduct that would satisfy s 9 i.e. be likely to mislead or deceive. It is therefore unnecessary to go further and consider the same conduct in the light of s 10.[25] The general principles applicable to a claim for misleading and deceiving conduct are discussed in Taylor Bros Limited v Taylors Group Limited [1988] 2 NZLR 1 at 28. However, in a case such as this, where the general nature of the complaint is similar to an allegation of passing off, I am assisted by Fisher J's decision in Tot Toys Limited v Mitchell [1993] 1 NZLR 325. Fisher J observed at 367 that for a case brought under the FTA but akin to passing off, the plaintiff must prove that the goods or services in question have an existing reputation which, in the minds of the customer, is associated with a particular name, mark or get-up, that the defendant's conduct was committed in a trade context and that the conduct caused or is likely to cause customers to be misled or deceived over the implications of that name, mark or get-up. [26] Mr Hodder submitted that, while there may be some differences between the requirements of passing off at common law and those of ss 9 and 10 FTA, such differences were immaterial in the context of allegations of misrepresentation as to commercial origin. However, the plain words of ss 9 and 10 suggest a wider application than is available under a passing off cause of action. This was the conclusion that Fisher J came to in Tot Toys and I respectfully agree with him. [27] In this case I particularly note that the plaintiff need not prove source motivation by purchasers i.e. that purchasers were motivated to buy because of their belief as to the commercial source of the product. Nor is a plaintiff required to show a reputation belonging to either it or the goods.Was the appearance of the BM likely to mislead or deceive?[28] In approaching this question I am assisted by Gault J's comments in Allied Liquor Merchants Limited & Ors v Independent Liquor (NZ) Limited (1989) 3 TCLR 328 at 334 regarding the effect of similar labelling:That requires consideration of the nature and make-up of the purchasing public, that is the relevant section of the public to whom the product will have an appeal and, any particular characteristics of that section. It involves consideration of the nature of the product and the circumstances of trade through which the product passes. That extends to the manner of marketing where considerations of conduct in the context of telephone orders, self- service purchasing and the like may be appropriate. The appeal of the label must be considered with reference to its visual impact and, where oral ordering is involved, how it will be referred to and the likely impact of that. The nature of the goods and the price give rise to considerations as towhether purchasing is likely to be careless or deliberate. In short it is necessary to take into account all of the circumstances likely to influence in the course of trade, the impressions conveyed by the label.[29] I need, first, to describe the S91. It presents as a grey plastic oblong box approximately 6 cm high, 1.7 cm wide and 5.5 cm deep. Attached to the narrow back face of the unit are the metal legs that plug into a fuse base. The manufacturer's logo, "ABB" in stylised letters, is engraved on one side of the unit in the bottom right-hand corner. [30] The appearance of the front face was referred to by both parties as the labelling. About half-way up the face there is a black toggle switch. Immediately above that is a coloured band on which the amperage of the unit is shown in negative detail. A different colour is used for each amperage. [31] Above the coloured band are the following details:ABB S91 C25 (or whatever the relevant rating is) 240V 3kA[32] Until late 2003 the "NZI" logo appeared in the top left-hand corner where the letters "ABB" now appear. The "NZI" logo was also engraved in the side prior to 2003. [33] I turn now to consider the appearance of the BM. Its physical dimensions and general appearance are identical to that of the S91. The layout of the labelling, the typeface, colour scheme and coloured band are also identical. The only difference is that the letters "NZI BM" appear in place of "ABB S91". On the side the logo "NZI" replaces "ABB". [34] Prior to 2004 NZI distributed the S91 in a distinctive blue and white blister pack with the "NZI" logo and the words "NZ Insulators Ltd" printed prominently on it. NZI now uses the same packaging for the BM. The front face and engraved side of the unit is visible through the clear plastic cover of the pack.[35] I accept the plaintiff's assertion that the section of the public at which the BM is aimed includes wholesalers, retailers and individuals. Wholesalers and retailers can be expected to have a good degree of trade and product knowledge, particularly as they are in direct contact with suppliers such as NZI. Individuals may be registered electricians, who also can be expected to have a reasonable degree of knowledge about the products that are on offer. However, they may also be do-it- yourself home handy-persons. These people will not be as knowledgeable and are likely to rely on what they are told by the retailer. [36] Both the wholesaler/retailer and the individual electrician were represented among the witnesses who gave evidence, but there was no example of a home handy-person. Nearly all of the industry witnesses who gave evidence about how S91s were viewed within the industry said that the term "S91" was frequently used in a generic fashion. It was my strong impression that, because of its domination of the market, the S91 was the only mcb most, if not all, of the witnesses had ever seen and, therefore, they had nothing to compare it with. I am satisfied from the evidence that both before and after January 2004 the term "S91" was well recognised either as the name of the product itself or as a generic term referring to any plug-in mcb. [37] The first impression a purchaser of the BM would have is the distinctive blue and white blister pack. However, a purchaser needs to know the rating of the unit he or she is buying and so will immediately look through the clear plastic cover for that information. The information that is essential to a purchaser, i.e. the amperage, appears on the coloured band. One's eye is drawn naturally to the coloured band and print. Once a purchaser has seen the information there I think it unlikely that he or she would go further to inspect the manufacturer's mark on the side, which has no colour or relevant information. [38] This view is supported by the evidence of the electricians called by the plaintiffs and defendant, Messrs Cullum, Wilding, Males and Dyson. It was clear that they had no idea who manufactured the S91. They were either under the (incorrect) impression that NZI was the manufacturer or simply did not know (and clearly did not care) who the manufacturer was, notwithstanding the fact that the manufacturer's mark had been engraved on the side throughout the period they had been buying mcbs.[39] The similarity between the products is heightened by the use of the same blister pack as had always been used to package the S91. The risk of confusion might have been reduced had either the BM label or the blister pack been noticeably different. But the combination conveyed the very strong impression that the product inside the pack was the same as that which had always been sold in that way by NZI. Indeed the use of the identical blister pack increased the already high likelihood that prospective purchasers would be misled into thinking that the BM had originated from the same source as the previous S91. [40] I am satisfied that the close similarity in appearance of the BM to the S91 made it very likely that prospective purchasers, especially among the individual users, would be misled into thinking that the BM originated from the same commercial source as the S91.Was the manner in which the BM was marketed and distributed likely to mislead and deceive?[41] The plaintiffs point to the same trade pricing and part numbers, the illustration of the S91 in its product booklet, and use of the same or essentially the same distribution channels as amounting to misleading and deceptive conduct. However, the defendant rejects these suggestions. It says that it had fairly, accurately and more than sufficiently indicated itself as the commercial source of the BM. It rejected evidence relating to the part numbers and product descriptions being used by wholesalers on the basis that it had no control over how the wholesalers chose to describe or arrange stock. Nor did it accept as having any relevance the evidence of sample purchases made on behalf of the plaintiffs from various wholesalers. [42] I do not regard the use of the same distribution channels as a basis for alleging misleading and deceptive conduct. NZI was entitled to conduct its business using its existing network of wholesalers and retailers. I do, however, consider that the manner in which NZI went about other aspects of its distribution of the BM meant that prospective customers were likely to be misled into thinking that the BM was in fact the same product as NZI had previously sold, namely the S91.[43] When NZI began distributing the BM to its wholesaler clients in January 2004 it advised its customers by a fax sent in mid-January 2004 that it was no longer stocking the S91:Please be advised that although New Zealand Insulators are no longer able to supply the ABB S91 plug-in MCB, we do have an equivalent available. The descriptions are: MCB Base Mount 6A 3ka NZI part number: 631302 MCB Base Mount 10A 3ka NZI part number: 631310 MCB Base Mount 16A 3ka NZI part number: 631329 MCB Base Mount 20A 3ka NZI part number: 631337 MCB Base Mount 25A 3ka NZI part number: 631361 MCB Base Mount 32A 3ka NZI part number: 631345 Please note the NZI Part Numbers and pricing still remain the same.NZI are still the only supplier of the NZI safety bases to go with Plug-In Breakers.We look forward to your continued support. Give our Customer Service Team a call if you wish to discuss/clarify any of the above.[44] In addition, its area managers made a point of personally advising the wholesalers with whom they dealt that NZI was now stocking its own brand of mcb rather than the ABB brand. While I accept this evidence, I do not consider that these measures were sufficient to reduce the risk of confusion and deception created by the virtually identical appearance of the BM to the S91 and the similarities in the marketing of the two products. [45] Unless the individual to whom that advice was conveyed passed it on to staff and customers there was no means by which those purchasing the BM mcb were likely to identify any difference. There was no evidence that NZI had implemented any particular system or instruction to those actually selling the product to draw the purchaser's attention to the change. Relying on one fax sent when many people would have been on holiday and oral advice by the area managers was not an effective way of combating the misleading effect of the appearance of the BM. [46] It was clear that the wholesalers themselves did not always ensure that the information was disseminated to its counter staff. One branch manager (Mr Law) had not seen the flyer in 2004 nor been told by an NZI representative of the change.[47] The plaintiffs called various loss adjusters who had made sample purchases. This evidence showed that purchasers requesting a S91 after January 2004 were quite likely to be sold a BM without any comment or explanation. The loss adjusters' requests for a S91 were met with the unexplained supply of a BM. They made a point, after the BM had been selected, of asking the shop assistants whether the product was in fact an S91 and the true position was usually identified then. I am satisfied, however, that most purchasers would not make that specific inquiry. The retail price of $22.50 meant that an mcb was not a significant purchase and I consider it unlikely that a buyer would pause to examine a product that looked and cost the same as the S91 and was offered by the shop assistant in response to a request for the S91. [48] I do not accept Mr Hodder's submission that the questions asked by the loss adjusters were leading or that it was unsurprising that, in response to a request for a S91, they were led to boxes of BM mcbs. The evidence showed that the shop assistants themselves did not realise that the brand of mcb being stocked was not the S91. [49] The response from the wholesalers to the new product was positive. However, I was satisfied from the evidence that this attitude was substantially due to the fact that the new BM product looked the same as the S91, was packaged the same way and that the parts numbers and prices were the same. It was clear that the wholesalers were influenced in their view of the change by the ease with which it could be achieved administratively as well as by the appearance of the product itself. I consider that charging the same price was particularly likely to encourage a belief that the product was either the same or emanated from the same commercial source. A difference in the price would have made it more likely that both retailers and individual purchasers would pause to consider the possibility that the two products, while virtually identical in appearance, might not, in fact, be the same. The cost of producing the BM was substantially less than the cost of the S91 and NZI could have passed its saving on, using the reduced price as a point of difference. I am satisfied that it suited NZI to keep the price the same because that added to the ease with which the BM could be absorbed into its customer's systems. [50] The plaintiffs' private investigator and loss adjusters also gave evidence about the display presentation of mcb products by various wholesalers and retailersaround New Zealand. Photographs of display bins showed a variety of labels. Invariably the display bins comprised open cardboard boxes printed on both the outside and on the inside rear face (visible on display) with the blue and white "NZI" logo. On the front face of the boxes was a white printed label, which showed the amperage of the units within and either "S91" or "BM". In several photographs there are boxes side by side, one labelled "BM" and the other "S91" but the evidence was that even boxes labelled "S91" contained BM units. [51] There is one final factor. After unsatisfactory attempts to produce a 40A BM, NZI decided not to include the 40A unit in its range. Instead, after 1 January 2004 it simply sold the 40A S91 breakers, showing the units on invoices as being "MCB Base Mount 40A 3kA". Mr Stevens QC (as he then was) submitted that further confusion was created by this decision. I agree that this treatment of a genuine ABB product would create confusion in the mind of prospective buyers (and not just uninformed individuals) as to whether the S91 and the BM were made by the same manufacturer or, indeed, were the same product.Conclusion as to misrepresentation as to commercial origin under ss 9 and 10 FTA[52] I am satisfied that the appearance of the BM coupled with the manner in which it was distributed made it highly likely that individuals (whether electricians or home handy-persons) purchasing mcbs would be misled into thinking that the BM was the same product as the S91. I have no doubt that in many instances that likelihood was realised. I also think that, notwithstanding NZI's fax and oral advice, it was likely that many wholesalers and retailers were similarly misled. [53] NZI chose, for commercial gain, a course that carried a very high risk of misleading prospective buyers. However, I stop short of finding that it deliberately set out to mislead and deceive as that is not required to establish a breach of ss 9 or 10.Passing Off[54] I deal next with the claim in passing off, since it is based on allegations similar to those just considered. The plaintiffs assert that they have goodwill in the S91, represented by the design and get-up of the product and that the S91 isassociated with a particular source, namely them. They say that NZI misrepresented to the purchasing public, wholesalers and retailers that the BM is from the same commercial source as the S91. [55] The requirements for passing off are conveniently identified in Reckitt & Colman Products Limited v Borden Inc [1990] RPC 341 at 406 per Lord Oliver of Aylmerton (applied in Tot Toys) at 334: a) A goodwill or reputation attached to the plaintiff's goods in the mind of the purchasing public by association with the identifying "get-up" (whether a brand name, trade description or features of labelling or packaging); b) A misrepresentation by the defendant to the public (whether intentional or not) leading or likely to lead the public to believe that the goods offered by it are those of the plaintiff. In relation to this requirement, it does not matter whether the public is aware of the plaintiff's identity as manufacturer or supplier provided that they are identified with a particular source, namely the plaintiff; and c) Damage sustained by the plaintiffs by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of its goods is the same as the source of those offered by the plaintiff.Is there goodwill in the S91 and, if so, who owns it?[56] SGIND and Desto say that they established goodwill in the S91 in New Zealand in the mind of the purchasing public, wholesalers and retailers by association with the identifying design and get-up of the S91. [57] NZI denies that any goodwill attaches to the S91 because: a) The features relied on by the plaintiffs are functional and cannot constitute get-up for the purposes of a passing off action; b) There is no evidence that the purchasing public purchases the S91 because of its source.[58] On the question of get-up, NZI says that the dimension and shape of the S91 is dictated largely by the need for it to be inserted into the NZI-designed fuse bases, that the colour scheme is commonplace in the industry and that the plastic moulding is a standard, non-flammable material used in most circuit breakers. In Tot Toys v Mitchell [1993] 1 NZLR 325 Fisher J considered whether, in a passing off action, a plaintiff could rely on features which either formed part of the product itself or were functional in the sense of serving the object for which the product was designed as constituting get-up. This question reflects the statement as to the meaning of get-up by Fletcher Moulton LJ in Williams (J B) Co v H Bronnley & Co Limited (1909) 26 RPC 765 (CA) at 773:The get-up of an article means a capricious addition to the article itself, - the colour, or shape, it may be, of the wrapper, or anything of that kind; but I strongly object to look at anything, that has a value in use, as part of the get- up of the article. Anything which is in itself useful appears to me rightly to belong to the article itself.[59] However Fisher J also considered other decisions which suggested the contrary position, including F Hoffmann-La Roche & Co AG v DDSA Pharmaceuticals Limited [1972] RPC 1 and Reckitt & Colman Products Limited v Borden Inc. He concluded at 338:I do not think that it could now be seriously contested that at least where the features relied upon are non-functional in the sense that I suggested earlier, they may for passing off purposes form part of the very product itself and may involve shape as well as surface markings and coloursI reject the defendant's submission that get-up cannot reside in features of the product itself and that passing off may not be committed by the mere act of copying a rival's product In my view the true position is the intermediate one that the copying of a functional feature can support a passing off action but only in the limited sense that qualifying get-up can include the capricious way in which an essentially utilitarian objective has been expressed. The capricious form of expression could be regarded as part of the eligible get-up even though it achieves an essentially utilitarian endAnd at 341:For those reasons I accept the plaintiffs' submission that it is possible for functional aspects of an article to qualify as get-up for passing off purposes so long as the particular design or expression of those aspects is capricious. The capricious choice of the way in which an essentially functional or utilitarian feature is expressed qualifies for get-up for passing up purposes if it is that capricious form of expression, and not the functional feature per se, which is the distinguishing feature in the minds of the public. Conversely,even the form in which a functional feature is expressed may fail to qualify for passing off protection if its selection has been dictated by cost, ease of production, utility to the consumer or other rational reason. It will be convenient to refer to the former as "capricious" and the latter as "non- capricious".[60] In this case I accept that the shape, dimensions and colour of the plastic moulding of the S91 are functional features that cannot be viewed as get-up. The shape and dimension of the S91 is dictated by the size and lay-out of internal components. The grey plastic moulding is one commonly used in the industry and could not rightly be described as a capricious choice in any way. [61] However, I consider that the colour scheme and form of labelling adopted by SGIND should be regarded as part of the get-up. I have already considered the labelling in some detail. The choice of the colours and the arrangement of them in combination with the printed information on the label did not constitute a purely functional feature and should be regarded as get-up. [62] NZI submits further that, even if the appearance of the S91 does constitute get-up, the plaintiffs must prove (which they have not) that those features are recognised by the purchasing public as indicating the commercial source of the product. This requirement was expressed by Jacob J in Hodgkinson & Corby Limited & Anor v Wards Mobility Services Limited [1995] 22 FSR 169 at 178 as the plaintiff showing that the public is "moved to buy by source", this expression having been taken from the decision in Crescent Tool v Kilborn & Bishop (1917) 247 F 299 at 300-301:it is apparent that it is an absolute condition to any relief whatever that theplaintiff in such cases show that the appearance of his wares has in factcome to mean that some particular person – the plaintiff may not be individually known – makes them, and the public cares who does make them, and not merely for their appearance and structureThe critical question of fact at the outset always is whether the public is moved in any degree to buy the article because of its source and what are the features by which it distinguishes that source. Unless the plaintiff cananswer this question he can take no step forward (emphasis added)[63] Both the plaintiffs and NZI called witnesses from the electrical industry to give evidence about how the S91 was viewed:• Scott Cullum, an electrician of eight years experience, said that he was aware of ABB but to the best of his knowledge had not used an ABB mcb. He thought that the mcbs he had bought over the years were all the same. This, of course, had to be incorrect because until 2004 the only mcb he was likely to have purchased was the S91.• Michael Wilding, an electrician with over 25 years experience, said that until he was asked to examine a selection of mcbs he had not been aware that there had been a change of manufacturer. He believed that NZI was the only manufacturer of mcbs in New Zealand. He was aware of ABB as a very big company but did not know that it manufactured mcbs. This of course was also incorrect; clearly Mr Wilding must have been using the S91 for most of his working life in New Zealand.• Steven Males, an electrician with over 20 years experience, said that he had always assumed that the mcbs he had purchased over the course of several years had all been made by the same manufacturer. When purchasing, he would not ask for a particular brand, just a plug-in mcb of the required rating.• Philip Rae, the Henderson branch manager of J A Russell Electrical Limited for the last five years, said that he believed the S91 to be the product name for the NZI plug-in mcb. He was aware of some people in the industry who refer to a plug-in mcb as a "S91". He did not recall stocking an ABB mcb. This must have been wrong because prior to 2004 J A Russell Limited stocked the S91.• Peter Law, a branch manager for J A Russell Electrical Limited for over six years, said that in his branch he sold "NZI S91 mcbs" and had done for the six-and-a-half years he had been a branch manager. Until being interviewed, he had believed that NZI was the only distributor of plug-in mcbs in New Zealand.• Mr Offord was NZI's Area Manager for the Southern Region since 2003 and a former electrician with 11 years experience. He said thatwhen advised of the change from S91s to BM mcbs, wholesalers did not regard it as significant. Under cross-examination, he volunteered that, even today, wholesalers still refer to mcbs by the name "S91".• Ms Hart, NZI's Northern Area Manager for the past five years, also volunteered that wholesalers still referred to mcbs as S91s.• Mr Prince, a registered electrician since 1963 and former chief electrical inspector for the Hutt Valley Energy Board, said he was not familiar with the term S91 and did not personally use it.• Mr Miles, a retired electrical sales representative, and Mr Woolliams, a J A Russell Electrical Limited branch manager, said that the term "S91" was used generally to mean plug-in mcb. [64] The evidence I have referred to shows that "S91" is a recognised name in both the wholesale and retail electrical supply industries. Even some witnesses who said they did not personally use that expression nevertheless acknowledged that others used it generically. I have already observed that this is probably due to the fact that the S91 had a virtual monopoly on the mcb market here so the S91 was the only mcb most, if not all, of the witnesses had ever seen. [65] On these facts I am satisfied that the plaintiff has established that there was goodwill in the name and appearance of the S91. However, there is a real contest as to who owns that goodwill. [66] Mr Stevens submitted that as NZI was only associated with the S91 product by virtue of the distributorship agreement, as a matter of law, any goodwill generated during the course of the distributorship would accrue to SGIND as the licensor rather than to NZI as the licensee. This proposition rather overstates the law as it is explained in Gromax Plasticulture Limited v Don & Low Nonwovens Limited [1999] RPC 367 at 388 and at paragraph 3-119 of Wadlow: The Law of Passing Off (3ed 2004) which makes it clear that the position of a licensor is not to be taken as weakened nor that of the licensee enhanced by the normal activities of the licensee during the course of the license; whether goodwill in the brand rests with the licensee or licensor is, in the end, a question of fact.[67] Shortly after the Gromax decision was delivered, the UK Court of Appeal considered the issue of ownership of goodwill as between the foreign publisher of posters and its UK distributor in Scandecor Development AB v Scandecor Marketing & Anor [1999] FSR 26. Although factually complicated, the Court made a number of statements which can be generally applied to this type of case. First, it observed the "local" nature of goodwill, with the result that a business carried on locally (in that case in the UK) would normally attach to that business. However, the Court accepted that in some cases it would be both legally and factually possible for an overseas business to acquire goodwill locally by the supply of products or services through a subsidiary, agent or licensee. Whether this has happened is a question of fact. In deciding that question, what matters is with whom those trading in the local territory associate with the name or get-up. [68] The Court particularly observed that in the commercial reality of the marketplace (which is what really counted on the issue of entitlement to goodwill), the overseas company had neither business in the UK nor had ever exercised control over any relevant business activities there to which its goodwill could attach. Evidence of the retailers called by the local distributor showed that they all associated the brand name with the local company with which they dealt and with whose services they were satisfied. Although some knew that the products were made overseas they were more interested in the quality, price and service offered by the local supplier than the original source. The result of the factual enquiry inScandecor was that the local goodwill in the name was found to belong to the local distributor. [69] This approach was followed in Medgen Inc v Passion For Life Products Limited [2001] FSR 30 where the contest over goodwill was between a US manufacturer and its UK distributor. In that case the manufacturer did not carry on any business in the UK and the packaging did not refer to it. The whole business of marketing and sale of the product was carried out by the distributor. The packaging and advertisements referred only to the distributor and the wholesale and retail trade would only know the distributor as the source of the product. It was to the distributor that traders would go in the event of a problem. In particular, there was no evidence that retail traders either knew or cared that the plaintiff had developed and manufactured the product. The purchasing members of the public would,similarly, have been concerned only with the quality of the product and would contact the defendant in order to purchase more. There was no evidence that they would be concerned as to who was responsible for the development or manufacture of the product. In these circumstances, the goodwill in the brand name and packaging belonged to the local distributor. [70] I therefore turn to consider the issue on the facts of this case. The plaintiffs say that they retained control over the S91, were responsible for the quality, reliability and suitability of the product and warranted to NZI that the S91s supplied would meet quality and performance specifications. The S91 has been a resounding success in New Zealand and its domination of the market here must be attributable mainly to the quality of the product itself which is the result of the extensive design and development work undertaken by Desto and the obviously reliable manufacturing processes adopted by SGIND. [71] Additionally, although ABB NZ had not been associated with the S91 prior to January 2004 it had had a long-term presence in New Zealand and in relation to electrical appliances and installations. It has been registered in New Zealand since 1933 and currently employs nearly a thousand people throughout the country. It traded under the name Brown Boveri & Co until the late 1980s and that name was well recognised in the New Zealand market. [72] The plaintiffs say that, in comparison, NZI's various activities during the term of the agreement such as visiting wholesalers and replenishing stock were merely incidental to its distributorship and could not independently give rise to any goodwill. This was particularly so in light of NZI's own evidence that the S91s "sold themselves". [73] NZI's response was that, even if goodwill did exist in the S91 prior to January 2004, it was the owner of any such goodwill because it had distributed, marketed and sold the S91 in New Zealand up to that time, to the exclusion of everyone else, including the plaintiffs. It says that on the evidence, NZI was viewed in New Zealand as the commercial source of the S91. [74] Neither Desto nor SGIND has or ever had any business in New Zealand. Although present in the New Zealand market ABB NZ had no association with theS91 prior to January 2004. The packaging only ever referred to NZI. Distribution was always conducted by NZI. It was to NZI that customers came if there were problems with the S91. NZI says that it is relevant that the S91 was a replacement model for the S901, which it had manufactured and sold in New Zealand for nearly 20 years prior to the introduction of the S91. NZI also points to the evidence that there are many wholesalers who actively choose not to purchase from ABB. Mr Hodder submitted that this attitude was the antithesis of goodwill and to be contrasted with positive preference most wholesalers have for dealing with NZI. [75] The evidence of the various managers and electricians varied as to how ABB and its product, the S91, were viewed in the market. Wholesalers recognise the ABB brand, though those called to give evidence for NZI did not necessarily have a positive view of ABB NZ as a company because it was regarded as a company that undercut wholesalers by selling directly to their customers. On the other hand electricians (and presumably members of the public) tended to have a low level of appreciation or interest in the manufacturer of the S91. However, it seemed clear that, overall, both types of customers associated the S91 with NZI and viewed it as the responsible entity. Probably without turning their minds to whether NZI actually manufactured the product or not, its customers clearly expected that NZI would take responsibility for any problems or defects in the product. The circumstances are very similar to those in Medgen. [76] The distribution agreement between SGIND and NZI was silent as to the treatment of goodwill accrued over the course of the contract. In light of the evidence I have discussed, I find that the goodwill in the S91 in the New Zealand market prior to January 2004 belonged to NZI. It follows that the plaintiffs have failed to make out a case of passing off against NZI.Deception[77] In case I am wrong in my conclusion regarding the ownership of goodwill, I go on to consider the other requirements for a passing off action. The first is deception, i.e. whether NZI has induced members of the public to falsely believe that the BM is the S91.[78] Further, the deception relates not only to NZI's immediate customers (the wholesalers) but from the ultimate customers, those who purchase from the wholesalers: Plix Products Limited v Frank M Winstone (Merchants) Limited (1984) 1 TCLR 176 at 208; Frank M Winstone (Merchants) Limited v Plix Products Limited[1985] 1 NZLR 376 at 381. [79] There need not be deliberate deception on NZI's part and the plaintiffs' case did not go so far as to suggest that, even though NZI had deliberately set out to produce an exact copy of the S91. In determining the likelihood of customers being deceived it is relevant to have regard to the circumstances in which the product will be sold including whether the product is of a type and cost likely to prompt enquiry over source, whether the product will be sold with packaging or labelling which could distinguish it, whether the anticipated buyer is likely to be discerning and whether retailers themselves would be likely to present and represent the product in a way such as to distinguish or confuse: Tot Toys v Mitchell at 343, D N Russell & Co Limited v Everiss & Shirley (1984) Limited (1989) 3 TCLR 340 at 344; Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 at 199. [80] NZI asserts that it sufficiently identified itself as the commercial source of the BM through its fax in January 2004 and oral advice from its representatives. However, as I have already found, neither of these steps was sufficient to overcome the effect caused by the appearance of the BM and NZI's marketing of it. There were likely to be many amongst the wholesalers who were not advised; the initial recipient of the fax might not have passed the information on and others may have been away on holiday and simply missed the change. Further, NZI's fax would not have been received by the ultimate purchasers of mcbs, such as Mr Wilding. So the change would only become known to them if the wholesalers chose to pass on the information. Not only was this unlikely to happen because the wholesalers themselves did not regard the change as significant in any way, but there was no evidence that any wholesalers actually did so. [81] It is clear from the evidence that a significant factor for the wholesalers that NZI supplied was the fact that there was no apparent difference between the S91 and the BM. The product arrived in the same distinctive blister pack as had always been used. The change in manufacturer is not immediately apparent from a casual glance at the outside of the pack. The appearance of the product itself is virtually identical.[82] In relation to the ultimate consumers of the product it is likely that there was, and would continue to be, a mistaken belief that the mcbs being sold by NZI in its distinctive blue and white blister pack were from the same source. I think it likely that most electricians purchasing a mcb are interested solely in obtaining the correct amperage. The amperage is prominently displayed on the distinctive coloured band above the black toggle in both the S91 and BM. The fact that some witnesses clearly did not appreciate there had been a change in manufacturer confirms this. My own inspection of the exhibits suggests that the appearance and get-up is so similar that only the most perceptive and interested customer would stop to wonder whether the replacement of the "picoSTOTZ" with the "NZI" logo and the replacement of "S91" with "BM" signified a change in manufacturer, even though the "NZI" logo was still prominent on the packaging. Overall, I think that most buyers would believe that the BM and the S91 had come from the same source.Damage[83] The plaintiffs say that customers have bought the BM mcbs in the mistaken belief that they were the same product as NZI sold prior to the termination of distributorship i.e. the S91. Had they been properly advised as to the nature and risks involved in the BM it is likely they would have bought ABB's product. The nature of risks referred to were essentially that the BM was a cheap Chinese copy and not as reliable as the S91. Later in this judgment I find that the BM does not have the short circuit capacity its label states and nor does it comply with the Electricity Regulations 1997. Without traversing the reasons for that finding at this stage I simply proceed to consider the issue of damage on the basis of those findings. [84] The plaintiffs must prove that customers would have purchased the S91 but for NZI's deception i.e. did the mistaken belief engendered by the appearance of the BM mcb cause or contribute to the decision of customers to purchase that product? This is commonly referred to as source motivation. In Tot Toys Fisher J expressed the position as follows:It has always been accepted that the cause of action [passing off] requires the Court to be satisfied not only that the plaintiff's goods will have a protectable reputation with respect to which the defendant has or will deceive the relevant public but also that as a result of that deception damage has been or will be caused to the plaintiff's business, reputation or goodwill. If in an alleged diversion of trade case the customer would have purchasedthe defendant's product with or without any deception on the defendant's part, that nexus is lacking. In that situation it will not be the passing off which has caused the damage to the plaintiff; it will be conventional market forces. That approach is, I think, implicit in the countless judicial formulations of diversion passing off which invariably require a causative chain linking the defendant's deception to injury to the plaintiff via the public's treatment of the plaintiff's mark or get-up as a badge of origin e.g.Jarman & Platt Limited v I Barget Limited [1977] FSR 260 at 273; Star Industrial Co Limited v Yap Kwee Kor at 269; Reckitt & Colman at 406, 407, 416. In Jarman, for example, Megaw LJ said at 273: "A manufacturer may be responsible for 90 percent of the sales to the public of a particular type or style of goods. That does not, in itself, begin to prove that a substantial number of the members of the public who buy those goodsdo so because they know of, or have any interest in, the particular source of the goods; or that they are attracted to buy those goods because of their knowledge or belief that they emanate from a particular source – a particular maker." (emphasis added)[85] As I have already noted NZI's strength lay in its well established network of wholesale and retail clients. It was clear from the evidence that NZI had very substantial support from these customers. I have found that because of the close similarity in appearance, both in the product itself and in the packaging, buyers of the BM mcb would not have stopped to consider whether the same manufacturer had been involved in both products or not. [86] However, it was clear from the evidence of both wholesalers and electricians purchasing as individuals that they expect and assume that the mcbs purchased perform to the stated rating and comply with the relevant safety regulations. The electricians said that they would not purchase a mcb that did not do so and the wholesalers said that, conversely, they would not wish to sell a non-compliant mcb. While it is clear that there was substantial trust in NZI by its customers I am satisfied that had these customers been told specifically that the BM did not comply with the Electricity Regulations 1997 they would not have continued to purchase it. Therefore if ABB had owned the goodwill in the S91, it would have succeeded in proving damage to its business through NZI's sale of the BM.Breach of ss 9 and 10 Fair Trading Act 1986 – Misrepresentation as to Suitability for PurposeNature of claim[87] This cause of action alleges misrepresentations by NZI about the performance and suitability of the BM. The misrepresentations are said to have been made to wholesalers, retailers and the public through the appearance of the BM and also through NZI's conduct in marketing and distributing it. It is alleged that misrepresentations were made to the Energy Safety Service (ESS) through letters written on behalf of NZI. [88] The pleadings asserted a number of specific misrepresentations. However, in closing these had been simplified to the alleged misrepresentations that the BM: a) Was equivalent in nature, characteristics, and suitability for purpose as the S91; b) Was suitable for use as a plug-in circuit breaker in New Zealand; and c) Had a short circuit capacity of 3kA.Representations to Energy Safety Service[89] Before I consider the alleged misrepresentations, I deal with the position of the ESS. The plaintiffs allege that the affected section included not only retailers, wholesalers and members of the public but also the ESS, which is a government agency operating as part of the Ministry of Consumer Affairs. It is responsible for safety issues relating to gas and electricity appliances and installations. It oversees, amongst other things, the safety requirements of the Electricity Act 1992 and has the power to investigate possible breaches of that Act insofar as they relate to safety issues. [90] The ESS became involved at the instigation of the plaintiffs' solicitor, who wrote in June 2004 asserting that the BM mcb did not comply with the relevant standards, that it may constitute a significant electrical hazard and may pose a significant risk to property and people. The ESS made enquiries of NZI, buteventually advised that it was satisfied NZI was taking responsible steps in relation to the issues the plaintiffs had raised. [91] Neither counsel made submissions as to whether a representation to the ESS was capable of amounting to misleading and deceptive conduct for the purposes of ss 9 and 10; they appeared to assume that it was. However, to my knowledge there is no previous case involving a governmental agency that is alleged to have been the object of a misleading and deceptive misrepresentation. [92] Looking at the purpose of the FTA, which is to ensure disclosure of accurate information about goods and services for the benefit of consumers, it is difficult to see why a governmental agency undertaking a statutory investigation should be viewed as a section of the public capable of being misled or deceived for the purposes of ss 9 and 10 FTA or the response of the company being investigated capable of constituting such conduct. [93] It is possible that misrepresentations made to the ESS may, indirectly, affect consumers. Indeed, that is the essence of the plaintiffs' case on this aspect. However, the ESS is not the intended object of the consumer protection provided by the FTA. It has investigative and prosecutorial functions. It would be inappropriate to impose a civil liability under ss 9 and 10 for conduct that occurs during an investigation. I do not accept that the ESS, in the circumstances of this case, is a section of the public for the purposes of ss 9 and 10. Therefore, I do not accept that the alleged misrepresentations made to the ESS can form the basis of a claim against NZI by the plaintiffs. [94] In case I am wrong in this conclusion I go on to consider Mr Hodder's submission that, on the basis of the evidence, NZI had been honest and forthcoming with the ESS and there was no serious question of it having been misled or deceived. [95] In response to the ESS enquiry NZI provided a supplier declaration in relation to the BM products rated 6-32kA. The declaration referred to the basis for compliance with Regulation 69, which requires that electrical appliances must be "electrically safe" (I discuss Regulation 69 in more detail later). These were the test report in Chinese received in January 2004, NZI's own internal quality procedures and the Chinese type test report received in about June 2004. In cross-examinationMr Phillips, who had signed the declaration, conceded that during testing a 6A BM had ignited and that neither the original Chinese report nor the subsequent type test results showed short circuit testing of the 6A BM. [96] While the situation was portrayed by NZI as being one in which the quality of the BM was steadily improving as Jiakong became more skilled at manufacturing it, it is difficult to ignore the fact that the documents used as the basis for the supplier declaration did not, at least in relation to the 6A BM, support the declaration. Neither the declaration nor Mr Phillips' covering letter suggested that the 6A BM had not passed the short circuit testing that even NZI viewed as necessary. [97] In addition, by the time Mr Phillips completed the supplier declaration and sent it to the ESS he was aware of short circuit testing of the BM product carried out by Industrial Research Limited (IRL) in Christchurch. Mr Phillips prepared a document headed "Circuit Breaker Testing" dated 8 June 2004 on the basis of the IRL research. In it Mr Phillips stated:The outcome of the short circuit testing done by Industrial Research Limited is that the range of plug-in MCBs manufactured by Jiakong fail the 3,000A short circuit test requirements of AS/NZS3298. However, the failures indicate that the circuit breakers would be not [sic] be hazardous in use In my view at present – and further analysis and reports are awaited to confirm or deny this – causes of the failures are that the contacts of the Jiakong breakers were slow moving compared with ABB's and the arc chute material was inferior. This allows a greater amount of energy to be dissipated in the breaker, causing more damage We are now faced with either getting Jiakong to improve the product, while fending off ABB's action against us, or re-rating the breakers from 3kA rating to 2 or 2.5kA, which they are likely to meet as is. It is very questionable if the re-rated breakers would be accepted by the market. We could submit a further three 32 breakers for the 3,000A test in the hope that they would pass, but, in my view, it is unlikely that they would. A possible step in assisting Jiakong to improve the product would be to hybridise some breakers by using ABB parts in Jiakong breakers and having them tested. We would then have a better idea of what we need them to do – I have in mind the arc chute ceramics particularly. However, the testing would cost about $3,000 per set of trials.[98] It is impossible to reconcile the views expressed by Mr Phillips in this internal document with the implicit message of his letter 23 June 2004 to the ESSand his supplier declaration of compliance. I can only conclude that Mr Phillips did not genuinely think that the BM, in the state it was in June 2004, did comply with Regulation 69, yet he conveyed an entirely contrary message to the ESS. In my view, his letter 23 June 2004 and the supplier declaration was likely to mislead and deceive. [99] The other allegation relating to the ESS is that some time after the letter on 23 June 2004, NZI misrepresented to the ESS that it had modified the BM mcbs so that they complied with AS/NZS4898:1997. In January 2005 Mr Phillips wrote to the ESS. He referred to the fact that the ceramic material had been changed as a result of an earlier unsatisfactory test result, but that further testing by IRL had not shown the mcbs to be satisfactory and that Jiakong was continuing to work on improvements. [100] I think that this letter fairly puts the position as it existed at that time. There is certainly sufficient information in it to put the ESS on notice that the BM did not, at that time, comply with the testing regime set out in the Standard. I do not consider that this letter was misleading or deceptive.What representations were made?[101] NZI conceded in its pleadings, to which it was held at trial, that the S91 has a rated short circuit capacity of 3kA, is suitable for use as a plug-in circuit breaker, is reliable and provides the required protection of property and people. Therefore the issues are whether NZI misrepresented the BM as also having these attributes. [102] NZI accepted that it had made representations about the BM but maintained that the representations were not those alleged by the plaintiffs. It maintained that its representations were at a lower level, namely that the BM was essentially safe and reliable though not the exact equivalent of the S91 in terms of performance; specifically that the BM was: a) Suitable for use as a reliable plug-in mcb to replace rewireable fuses; b) Able to prevent damage to property or persons from a short circuit current of up to 3kA;c) Generally compliant with New Zealand safety requirements, i.e. "electrically safe"; d) In NZI's opinion, equivalent in relation to the above aspects to the S91 and that NZI had reasonable grounds for holding that view; and e) Supported by NZI who was the relevant commercial source for the BM. [103] As I have already found, NZI went to some trouble to ensure that the BM mcb was identical in appearance to the S91. Apart from the necessary changes from "NZI S91" to "NZI BM" and the replacement of the "ABB" logo with the "NZI" logo, the appearance of the two products went beyond mere similarity and were identical. Further, I find that NZI deliberately encouraged its wholesale customers to think that there was virtually no difference in the products and reassured them that this was the case through retaining the same part numbers and price. [104] The second factor to consider is the term "3kA" printed on the BM label. It is clear from Marcol v Commerce Commission that a label is in itself capable of amounting to a representation. The evidence called from those working in the industry was clear that the expression "3kA" is understood to mean that a mcb will safely disconnect the circuit with up to and including 3,000A of fault current. There is no doubt in my mind that this is what the rated capacity means to those purchasing mcbs. I find that printing "3kA" on the label of each unit amounted to a representation to that effect. [105] Finally, the fax sent in January 2004 specifically said that the mcb that would replace the S91 would be "an equivalent". In ordinary language "equivalent" has the meaning of being equal or virtually identical. I think that this was precisely the message that NZI intended to convey through its fax. I therefore find that the representations that NZI made through the appearance of the BM mcb and through its own conduct were those asserted by the plaintiffs, namely that it: a) Was equivalent in nature, characteristic, and suitability for purpose as the S91; b) Was suitable for use as a plug-in circuit breaker in New Zealand; andc) Had a short circuit capacity of 3kA. [106] I deal with these representations together because they overlap considerably. Before I do so, I briefly describe the function and operation of mcbs generally because that is necessary in order to understand some of the issues that arise.How mcbs operate[107] In a typical electrical installation sub-circuits supply current to either a single appliance or to a group of appliances such as lights or power points. Each sub- circuit has a separate mcb to provide over-current protection. The amount of current flowing through each sub-circuit is measured in amperes (amps). This depends on the nature of the appliance. The abbreviation "kA" is used to represent 1000 amps; for example, 3kA would represent 3000 amps. [108] The mcb has two main functions. First, it provides thermal overload protection. Thermal overload occurs when there is a gradual increase in current, which can result in wire and insulation overheating. This can be caused through overloading by using too many appliances on one sub-circuit. [109] The second main function is short circuit protection. A short circuit is a sudden, high increase in current. It occurs when the live conductor either within the switchboard or within a cable accidentally contact either the neutral conductor or any other earth metal. It can be caused by accidentally drilling through a cable during building work. Both thermal overload and short circuits have the potential to cause fire or electric shock. [110] Mcbs are manufactured in various ratings to suit the various currents found in the sub-circuits. They are designed to "trip" at a predetermined level of current. Internal components known as the magnetic tripping element and the thermal tripping element sense whether the electric current entering the mcb exceeds its rating. If it does, those components cause the mcb to trip, by forcing the current along a conductive path. This process creates an arc, with the attendant explosion of gases. The current is then split into smaller pieces and effectively "broken". Theelectrical supply to the sub-circuit is disconnected and the button on the top of the circuit breaker pops up. It can be reset simply by pushing the button back in. [111] The time within which a mcb is designed to trip in the event of a given level of current is referred to as the tripping characteristic. It was described in evidence as a current versus time function; the greater the current the quicker the mcb should trip. Some of the modifications to the S91 were made to ensure that it had the new tripping characteristic required by the IEC 6898. [112] Mcbs fall within the Electricity Regulations 1997 made pursuant to the Electricity Act 1992. Regulation 69 requires all electrical fittings and appliances to be "electrically safe", which means that there is no significant risk of injury or death to any person, or of damage to any property, as a result of the use of them. [113] However, the Electricity Regulations do not actually identify any means for determining whether an electrical fitting is safe. There exists an Australian/New Zealand standard for electrical installations and fittings, AS/NZS 3000, but that does not apply specifically to mcbs. [114] The AS/NZS 4898:1997 (superseded in August 2004 by AS/NZS 60898.1:2004) does apply specifically to mcbs. It requires mcbs to be designed so that in normal use their performance is reliable and without danger to the user or surroundings. In general, compliance is checked by carrying out a series of specified tests. For present purposes the relevant tests are the over-current tripping characteristic tests and the over-current short circuit tripping tests.Was the BM equivalent to the S91, suitable for use in New Zealand and did it have a 3kA rating?[115] All parties agreed that for the BM to be suitable for use as a plug-in circuit breaker it had to comply with Regulation 69 Electricity Regulations 1997, which required it be "electrically safe" i.e. it would not create significant risk of injury or death to any person, or of damage to any property. [116] The plaintiffs say that, in order to satisfy Regulation 69 the BM must comply with AS/NZS 4898:1997. As soon as they became aware of the BM the plaintiffsembarked on a series of tests to establish that the BM did not comply. The plaintiffs' tests focused on the three major functions of the mcb and therefore tested thermal overload, magnetic tripping and short circuit capacity. They say that sufficient numbers of BM samples tested did not comply to infer that the BM is not electrically safe. [117] Although NZI also conducted tests, it did not make any serious effort to suggest that the BM complied with the AS/NZS 4898:1997 testing regime and nor, on the evidence, could it have. However, Mr Hodder submitted that the BM could be, and was, "electrically safe" without complying with the Standard. [118] I agree that compliance with AS/NZS 4898:1997 is not a requirement of Regulation 69. Regulation 69 requires compliance with AS/NZS 3000 but does not refer to AS/NZS4898:1997. No doubt compliance with the Standard would demonstrate compliance with Regulation 69 but that is not the only possible means of doing so. [119] However, the testing is not irrelevant. There is no reason that it, as well as the factors relied on by NZI, should not all go towards my assessment of whether the BM mcb is electrically safe for the purposes of Regulation 69. It is also relevant in determining whether the BM has a short circuit capacity of 3kA, as was represented. I deal with that issue first. [120] Initial testing was undertaken in early to mid-2004. It seems clear that the samples that were tested came from the first batch of BM mcbs supplied by Jiakong. These samples failed most of the tests. Because NZI had instigated modifications to overcome some of the problems identified with the early batch, the plaintiffs arranged for further tests to be undertaken on the later batches. Compliance had improved. However, there were still failures, particularly in the area of short circuit capacity. [121] NZI's own short circuit testing by Doctor Zhou of IRL showed similar poor results. Some tests were in accordance with AS/NZS 4898:1997 and some were evaluative tests only. In all of the tests, however, there were failures in response to the 3kA current. There were also failures at lower levels in tests involving 500A and 1.5kA current.[122] Mr Carstedt, an engineer from an Australian laboratory, Testing & Certification Australia (TCA), said that the results of the tests indicated that the mcbs repeatedly failed to meet the safety, reliability and performance requirements of the standard, and may be hazardous when used. The high failure rate that he observed was outside the failure rate permitted by the test standard to which the tests were conducted. He concluded that the BM is not fit for purpose. [123] Mr Gilbert Dix, a New Zealand consulting engineer, performed similar tests at the laboratory at IRL. The short circuit tests produced poor results; of the 24 mcbs tested, 14 failed to comply. [124] Mr Browne and Dr Zhou, both engineers called by NZI, expressed the view that none of these failures would have presented a safety issue in that none would have started a fire or caused damage to people or property but merely result in the mcb having to be replaced. [125] This approach does raise the question of what amounts to a failure in short circuit testing. The AS/NZS 4898:1997 requires the mcb being tested to successfully interrupt a series of short circuits. The essence of NZI's evidence seemed to be that provided the unit being tested successfully interrupted one short circuit or alternatively failed altogether and did not pass any current then no issue of safety arises. However, I think that the meaning of the rating must be looked at in the context of the manner in which mcbs are used in New Zealand. It was perfectly clear that these units are expected to provide long-term service. This must mean that a unit should be able to respond to a short circuit current on more than one occasion. In relation to the representation as to rating I consider that the statement "3kA" on the label conveys to those working in the industry that the unit will perform in this way. It follows that a mcb that can only be relied to respond once and thereafter will need to be replaced is not providing the short circuit protection as that is understood in the industry. [126] Mr Hodder criticised TCA's test results because of doubts as to the condition of the samples that were tested, which might have been affected by movement during the journey to TCA. He also pointed out that the samples tested had come from batches released on to the market before May 2004 and so could not be safely viewed as representative of the quality of later batches. However, the consistency ofthe results obtained by TCA, Mr Dix and IRL suggest that performance of the BM mcb generally under short circuit testing was unsatisfactory. [127] I therefore find that the various test results do show that the BM cannot be relied upon to interrupt a 3kA current in a long-term situation, which is what the rating conveys to those purchasing such products. The results are also particularly concerning because they suggest that the BM is unreliable even at a much lower current. I therefore find that the representation that the BM could interrupt a 3kA current was not supportable. [128] I turn now to the issue of safety and suitability. NZI strongly resisted the suggestion that the poor test results in any way showed that the BM was unsafe. Mr Hodder sought to go behind the bare test results by looking at the mode of failure in each case. The majority of samples that failed had simply failed to latch at all and were therefore not subjected to the actual test. Mr Hodder submitted that this mode of failure signalled a quality issue rather than a safety issue. [129] However, Mr Carstedt did not accept that the failure to latch was not a safety issue. He explained that in failing to latch, an mcb with a damaged internal mechanism having a low insulation resistance due to sooting and internal component damage or dislodgement creates a potential hazard because the line side or one terminal of the mcb remains energised, waiting for suitable conditions for a leakage current to commence flowing. The hazard exists because the mcb is no longer able to stop that current flow. [130] Mr Dix also rejected the proposition that the failure to trip at low values of overload did not amount to a safety hazard. His reason was that any overheating of electrical cables and terminals can cause a hot spot and an electrical insulation fault which may, in turn, provide a source for ignition of a fire. [131] NZI's second, related, proposition was that the inability of the BM to successfully interrupt a current at 3kA was not relevant to determining whether it was electrically safe or not because it was never likely to encounter a current of that level in any event. Mr Browne said that, in normal practice, one would not expect a short circuit in a single-phase domestic installation to carry a current of more than about 1kA, so the probability of a 3kA fault occurring on a domestic switchboard isnearly non-existent. Further, since faults in domestic installations do not normally occur at the switchboard but at equipment connected to the circuit, the actual fault would be even further reduced because a single-phase fault at a distance from the transformer (which is usually the case in domestic installations) approaches 50% of the three-phase fault level. Therefore, since a maximum fault current of more than 1kA would not normally be expected in normal service, an mcb with a short circuit breaking capacity of 1500A should be adequate to provide the necessary short circuit protection. Mr Browne concluded by saying that:Protecting up to 3kA simply bears no relation to the maximum fault current that could reasonably be expected to ever occur in a domestic installation.[132] On this point Mr Hodder also submitted that if there was any doubt about the safety of the BM one could reasonably expect a higher level of problems reported, given that thousands of BMs had been sold in the last 18 months or so. [133] Mr Wilding, an electrician, said that he had tested for short circuit protection in houses and had found examples of 3kA current and higher. Mr Oliver also gave evidence that this level of current could be expected to occur often, though I give this evidence less weight because it was not based on direct experience. However, I consider that it is overstating the position to say that a 3kA current is unlikely ever to occur in a domestic situation. Mr Wilding's unchallenged evidence suggests that prospective fault currents at that level do exist in New Zealand homes. [134] Further (and as importantly), it seemed to be generally accepted that over the last 20-30 years the prospective fault current in domestic situations has increased due to the volume and nature of electrical appliances being installed. Indeed, this was the very reason that Desto developed the S91. Mr Browne pointed out that changes in efficiency and moves to limit the amount of energy being used might prevent the same level of increase continuing. However, this must be viewed against the fact that an mcb installed either in a new or existing installation is intended to last for the life of the building. Even allowing for greater efficiency and possible restrictions on the use of electrical appliances such as air conditioning units, experience shows that the prospective fault level has continued to increase over the last two decades. There must be a reasonable likelihood that that will continue to be the case.[135] The BM will be purchased with the expectation that it can perform for the life of the building and it is likely that the prospective fault current in New Zealand domestic installations will increase in the future. An mcb that cannot perform at the higher level cannot be regarded as electrically safe or suitable for the purposes of Regulation 69.Conclusion on misleading and deceptive conduct in relation to safety and suitability of the BM[136] In relation to this cause of action I therefore find that: a) NZI did represent to its customers and to the purchasing public that: i) The BM had a rated short circuit capacity of 3kA; ii) Was electrically safe within the meaning of the Electricity Regulations 1997; and iii) Was suitable for use as a plug-in circuit breaker in New Zealand. b) None of these representations were true. The only recognised means of determining the rated short circuit capacity of a mcb is by reference to the short circuit testing provided for under AS/NZS 4898:1997 which requires a unit to successfully interrupt a short circuit on successive occasions. Testing of numerous BM samples by both Desto and NZI showed that the BM cannot reliably do this. The fact that a BM sample can interrupt a short circuit of 3kA on one occasion is insufficient. c) I prefer the evidence of the plaintiffs' witnesses on the issue of safety and suitability. I consider that, on the evidence, it is likely both now and in the future that mcbs used in New Zealand will encounter short circuit currents of 3kA. An inability to respond to that prospectivefault long-term means that the units are not suitable for use in New Zealand and nor can they be regarded as safe.Breach of CopyrightBasis of claim[137] The plaintiffs say that it has copyright in the labelling of the S91 and in four technical drawings showing modifications to the S91. The elements required to establish a breach of copyright were identified in Beazley Homes Limited v Arrowsmith [1978] 1 NZLR 394 at 400, citing P S Johnson & Associates Limited v Bucko Enterprises [1975] 1 NZLR 311 at 315: a) The existence of a work or works in which copyright may subsist; b) That copyright does in fact subsist in the work or works; c) That the plaintiff is the owner of that copyright in New Zealand; and d) That the defendant has infringed the copyright. [138] Under the Copyright Act 1994 copyright attaches, among other things, to original artistic works. The plaintiffs claim that the labelling and the technical drawings are original artistic works. Originality for this purpose refers to the skill and labour used in the production of the work; it is not the thought or idea that must be original but the expression of them. Thus, a work may be original even though the idea for it has been drawn from existing material. The concept is encapsulated in Peterson J's judgment in University of London Press Limited v University Tutorial Press Limited [1916] 2 CH 601 at 608 – 609:The word "original" does not in this connection mean that the work must be the expression of original or inventive thought. Copyright acts are not concerned with the originality of ideas, but with the expression of thought, and, in the case of "literary work", with the expression of thought in print or writing. The originality which is required relates to the expression of the thought. But the Act does not require that the expression must be in an original or novel form, but that the work must not be copied from another work – that it should originate from the author.[139] However, the actual level of skill and labour needed to produce an original work is not determined by any particular test; a low level is sufficient and it is aquestion of fact. In Land Transport Safety Authority of New Zealand v Glogau[1999] 1 NZLR 261 at 271, the Court of Appeal, after citing Lord Reid in Ladbroke (Football) Limited v William Hill (Football) Limited [1964] 1 All ER 465 at 468- 469, said:Where the originality is low, it is to be expected that anything other than almost exact reproduction will not support an inference of copying amounting to infringement, whereas where there is a higher degree of originality in the work an inference of copying will more readily be drawn even where the degree of similarity is less. In this way the reward in the scope of protection will tend to be related to the degree of originality. Retaining a low threshold for protection therefore presents no real harm. Further, there is to be kept in mind that independent work not derived from the copyright work, no matter how close it might be because of the incorporation of unoriginal work, will not infringe.Owner of copyright[140] I deal first with the question whether SGIND and ABB NZ have standing to bring their claims. By virtue of ss 120 and 123 an action for infringement of copyright can only be brought by the owner or an exclusive licensee of the copyright. It is essential that a plaintiff has the right to sue when proceedings are issued: Copinger and Others: Copinger and Skone James on Copyright (15ed 2005) para 22-31. It is not disputed that if copyright does exist in the labelling or the drawings, then Desto has standing to sue, as owner. SGIND and ABB NZ assert their right on the basis that they are, and were at the relevant time, exclusive licensees. [141] "Exclusive licence" is defined in s 2 of the Copyright Act as meaning:a licence in writing, signed by or on behalf of a copyright owner, authorising the licensee, to the exclusion of all other persons (including the copyright owner), to exercise a right that would otherwise be exercisable exclusively by the copyright owner.[142] The transfer of the S91 distributorship to ABB NZ was effected informally between SGIND and ABB NZ. Desto was not involved at all. NZI argues that SGIND was not an exclusive licensee and nor did it have any right to grant ABB NZ an exclusive licence; as a result, neither has standing to sue. [143] SGIND had assumed the rights and obligations of its predecessor under a licence agreement with Desto. That agreement conferred a non-exclusive right tomanufacture, assemble, use, sell or otherwise dispose of various products, including mcbs. It also allowed the licensee to grant sub-licences to companies in certain countries, but New Zealand was not one of them. I therefore accept that under the terms of the written agreement that existed in 2003 SGIND was not an exclusive licensee and nor did it have the power to grant an exclusive licence to ABB NZ. [144] However, SGIND and ABB NZ rely on a letter from Desto 5 October 2005 as constituting an exclusive licence to SGIND to export the S91 to New Zealand and to ABB NZ to sell the S91, effective from 1 January 2004. Desto wrote:This letter serves to confirm that since 1 January 2004 we granted to: 1) ABB Limited (New Zealand) the exclusive right to import into New Zealand, from ABB Industry PTE Limited, and to use, promote, sell, distribute or otherwise dispose of the S91 mcbs within New Zealand. 2) ABB Industry PTE Limited the exclusive right to export to New Zealand the S91 mcbs for the purpose of the S91s to be used, marketed, promoted, sold, distributed or otherwise disposed of by ABB Limited (New Zealand) within New Zealand No other company, including ABB STOTZ-KONTAKT GmbHhas the right to do so. These exclusive rights in relation to New Zealand can be terminated by us on ninety days written notice. In all other respects: A Our licence agreement dated 24 November 1995, as assigned to ABB Industry PTE Limited. (Consequent on re- organisation of the ABB Singapore companies on 29 December 200 [sic]; andB Our licence agreement LA dated 19 March 2003 with Pt ABB Installation Materials; remain in full force and effect.[145] It was apparent from the cross-examination of Mr Gobbie that this letter, written only months before the trial, was initiated by ABB NZ's solicitor. Mr Hodder submitted that it should be viewed as an attempt to belatedly patch up an obvious hole in the plaintiffs' case and that its retrospectivity could not affect NZI. The plaintiffs protested that the letter did no more than record an earlier agreement and that the definition of "exclusive licence" in the Copyright Act 1994 does not require the record of the agreement to be executed at the same time as the agreement.[146] Mr Stevens submitted that NZI could not challenge the status of the letter because it had not asserted that it was a sham, nor cross-examined the signatories to the letter on that basis and that there could be no half-way house between a sham and characterisation of a transaction according to the true nature of the legal arrangements actually entered into. He said that the only two options are a sham and the characterisation of the transaction according to the true nature of the legal arrangements actually carried out: Husqvarna Forest & Garden Limited v Bridon NZ Limited [1997] 3 NZLR 215 at 218 citing NZI Bank Limited v Euro National Corporation Limited [1992] 3 NZLR 528 at 539 per Richardson J. [147] I do not accept this submission. My enquiry is simply to discover what was agreed between the parties prior to ABB NZ assuming the distributorship. I cannot be hampered in forming my own view as to the status of this letter by whatever approach the defendant took in cross-examination. [148] I was not referred to a single contemporaneous document indicating that the transfer of the distributorship to ABB NZ was the subject of any communication by or to Desto. Nor did any witness give evidence of discussions with Desto personnel regarding the termination of the NZI distributorship and granting of it to ABB NZ. Mr Huber's evidence seemed uncharacteristically coy on this issue:NZI had an exclusive licence to distribute the S91 mcbs within New Zealand from the predecessor of SGIND. That ended as of 31 December 2003. So Desto considered it appropriate from that date to grant the exclusive licences to SGIND and ABB New Zealand as confirmed in Desto's letter to SGIND, ABB NZ and PT ABB of 5 October 2005.[149] Mr Huber did not say when Desto formed the view that it would be appropriate to grant the exclusive licences referred to in its 5 October 2005 letter, even though the plaintiffs knew that this issue was being raised by NZI. Significantly Desto's letter 5 October 2005 did not refer at all to the licence agreement 23 November 1995, although it would have significantly altered the rights conferred under it. [150] I do not accept that the letter does record an earlier agreement. I conclude that when the proceedings were issued there was no agreement between Desto and either SGIND or ABB NZ relating to the exclusive distributorship of the S91. Theonly company standing to sue for breach of copyright in the S91 up to October 2005 was Desto. [151] I have no doubt that once the parties turned their minds to the issue, they did form a genuine intention that both SGIND and ABB NZ would have exclusive licences in respect of the S91 in New Zealand. That intention was given effect to by the October 2005 letter; after that date SGIND and ABB NZ both acquired the status of exclusive licensees. However, that does not assist them in this proceeding.Copyright in the labelling of the S91[152] Evidence about the labelling of the S91 was given by Mr Lim Say Leong, a director of SGIND, who has had responsibilities for product marketing at SGIND since 1986. [153] When the S91 was first manufactured in the late 1980s it had black toggles and black print on its face. When SGIND took over the manufacturing process in 1990 it introduced coloured toggles, with a different colour for each ampere rating. The colour code was based on that used in the British and Australian standards for rewirable fuses and which appeared on the fuse wire cards. [154] SGIND subsequently produced a second range of S91. The objective was a user-friendly, yet unique, colour code for the S91. The evidence was unclear as to when this was range was introduced, but it must have been during 1990 at the earliest. This new labelling has been used continuously ever since. It is the form that I have described above, namely black toggles with a coloured band above on which the amperage appears in negative detail and the other details appearing above that in the same coloured print. [155] SGIND says that it was the addition of the coloured band across the front with the ampere rating on it, in particular, that was new and unique. I am satisfied, despite NZI's contrary suggestion, that the concept of the colour code was the idea of SGIND personnel. SGIND manufactures millions of mcbs each year either itself or through licensees. All carry this same colour code. I am satisfied that this concept is used only by ABB companies and their licensees.[156] In order to advance a claim for breach of copyright the plaintiffs must be able to identify a work or works in which copyright can exist. "Artistic work" is defined in s 2 of the Copyright Act 1994:Artistic work – (a) Means - i) A graphic work, photograph, sculpture, collage or model, in respect of artistic quality[157] There is no reason in principle that the expression of a particular labelling concept should not constitute an artistic work. Further, the selection of colour might constitute a component of that artistic work: Ladbroke (Football) Limited v William Hill (Football) Limited; Coogi Australia Pty Limited v Hysport International Pty Limited (1998) 157 ALR 247 at 266. However, the mere specification of colour to be used in manufacturing the label cannot attract copyright, as there is nothing that can be identified as the original artistic work for that purpose. [158] The plaintiffs must identify the subject matter of the claim. However, I was not shown any drawing or graphic design or other object that could be said to be the original example of the labelling concept. Given the nature of the labelling it may be that there was no such work, but merely a specification to be implemented in production. The plaintiffs have failed to identify any subject matter in which copyright could subsist. As a result, this cause of action must fail. [159] In case I am wrong in this conclusion, I record my view that the labelling of the S91 would have attracted copyright, had it been recorded in an original work such as a graphic design. [160] Mr Hodder submitted that the elements relied on by the plaintiffs were not sufficiently original to attract copyright. He said that the elements other than the coloured band had always been used and there was nothing distinctive or unique about colour code because it came from the existing British and Australian standards. Further, he said that the addition of a coloured band to the labelling was too trifling and insufficiently original to give rise to any copyright interest, either alone or in combination with the other aspects of the labelling.[161] The idea of using different colours to signify the ampere rating was not new. However, before 1990 it was expressed through the use of coloured toggles. SGIND looked for a new way of expressing the idea. In its search for a user-friendly solution, which would also differentiate its product in the market place, it combined a well-known colour code with the rating in a band across the front of the product. This enabled buyers to locate and identify the desired ampere rating at a glance. I consider that the combination of colour selection, placement of the current band and printing across the band were all sufficiently different from both the previous labelling and the labelling used by other manufacturers to constitute original expression of an existing idea. Had SGIND produced an original graphic design showing this concept I would have been satisfied that it attracted copyright. [162] Further, had there been subject matter in which copyright subsisted, NZI would have infringed it by its labelling of the BM. It is obvious from a visual comparison of the BM and the S91 that NZI adopted an identical form of labelling, merely replacing "ABB S91" with "NZI BM". The colours adopted for the various ratings are identical and the typeface of the printing is identical. The placement and size of the band and use of negative detail on the BM are identical.The technical drawings[163] It was not disputed that Desto would have held the copyright in the original S91 design. But that expired some years ago. Its present claim relates instead to four technical drawings that modified the original design. The main issue is whether the modifications are sufficiently different to attract fresh copyright. [164] The drawings of the original designs were not produced. Mr Hodder submitted that it was therefore impossible to compare the original drawings with the modifications to which copyright is now claimed. I note that a plaintiff need not produce the original work in which copyright is claimed provided that it can satisfy the Court as to the existence and configuration of the original material: Wham-O Mfg Company v Lincoln Industries [1984] 1 NZLR 641 at 650, citing Lucas v Williams & Sons [1892] 2 QB 113 at 116 and P S Johnson & Associates v Bucko Enterprises at 316. The position must surely be the same in relation to the comparison between the original work and the derivative work in question.[165] Evidence about the changes to the original design was given by Mr Peter Huber, who is a Manager in the Technology and Transfer Department and responsible for all technology transfer world-wide for Desto. He has worked for Desto since 1976 and holds an engineering degree. He was deeply involved in the development of the S91. I am satisfied from Mr Huber's description of the design process and the differences between the original design and later drawings as to what changes were made. I am therefore satisfied that the four technical drawings in which copyright were claimed, coupled with Mr Huber's evidence, is sufficient for me to consider the question whether the modifications support the claim to copyright.Are words and figures part of the drawings?[166] The changes described by Mr Huber are sometimes evident only from words or figures noted on the drawing, rather than from the drawing itself. Before I consider whether the drawings differ sufficiently from the original design to justify fresh copyright protection I need to determine whether I can take account of those words and figures. [167] In Wham-O at 654 (decided under the Copyright Act 1962) the Court of Appeal held that words and figures do form part of a technical drawing:The statutory definition of "drawing" in s 2 "includes any diagram, map, chart or plan" and each of these in ordinary experience conveys the concept of drawn lines in combination with words and figures. Words and figures are an integral part of drawings of the kind referred to.[168] The Privy Council took a different view in Interlego AG v Tyco Industries Inc(1989) AC 217, which involved a claim in respect of technical drawings that modified the original design of the well-known "Lego" toy. The alterations to the drawings themselves were visually insignificant; the essence of the modifications was to be found in the apparently minor changes to dimensions and tolerances shown on the drawings. The Privy Council held at 256 that it was the visual features alone that determined whether it was an original artistic work and that there was no alteration of visual significance that would justify describing the drawings as original.[169] In Husqvarna at 220-221, Smellie J referred to Interlego but distinguished it, observing that the approach in Interlego required qualification in the New Zealand context and citing the passage in Wham-O reproduced above. [170] Mr Hodder launched an outright attack on the decisions in Wham-O andHusqvarna, asserting that neither is good law any longer. His submission was essentially that Wham-O and Interlego were decided on virtually identical definitions of "drawing", so there was no real basis for distinguishing Interlego. Secondly, "drawing" is now a sub-category of "graphic work" which implies that the focus of this category is on the visual aspect. [171] It is true that the definitions of both "artistic work" and "drawing" in the UK and New Zealand legislation were virtually identical. In Interlego the relevant statutory provision was the UK Copyright Act 1956 and in New Zealand the Copyright Act 1962. Under both Acts copyright subsisted in original "artistic work". "Artistic work" and "drawing" were defined identically as: "artistic work" means a work of any of the following descriptions, that is to say, - (a) the following, irrespective of artistic quality, namely paintings, sculptures, drawings, engravings, models and photographs "drawing" includes any diagram, map, chart or plan.[172] However, although both courts were considering an identical definition, the Privy Council did not actually analyse that definition. In comparison, the Court of Appeal in Wham-O considered that the words "diagram, map, chart or plan" usually convey the concept of drawn lines in combination with words and figures. I respectfully agree with this; invariably a diagram, map, chart or plan comprises both drawn lines and words or figures. In everyday language a drawing is understood to be a picture comprising only drawn lines. The fact that the definition of drawing includes items which do comprise both drawn lines and words or figures must mean that "drawing" has its everyday meaning, except to the extent that it includes diagrams, maps, charts or plans. [173] In addition, in Husqvarna, Smellie J was dealing with the Copyright Act 1994, which introduced the new concept of "graphic work" as a form of "artistic work" for which copyright could be obtained. Section 14 Copyright Act 1994provides that copyright exists in original works of, amongst other things, "artistic works". For convenience I repeat the full definition in s 2:Artistic work a) Means – i) A graphic work, photograph, sculpture, collage or model, irrespective of artistic quality[174] Graphic work is defined as:Graphic work includes – a) Any painting, drawing, diagram, map, chart or plan[175] Mr Hodder submitted that the introduction of "graphic work" as a type of artistic work implies that the focus is on the visual aspect only. But given my earlier conclusion that, in ordinary language, a diagram, map, chart or plan comprises both line drawings and words or figures, the term "graphic work" cannot be restricted in this way. Further, in everyday language "graphic" itself includes visual images in combination with text. The New Shorter Oxford English Dictionary (4ed 1993) definition of "graphic" includes:The technical use of diagrams and figures as an aid to mathematical calculation or to engineering or architectural design. Design and decoration that involves typographic elements; the production of pictures, diagrams, etc in association with text.[176] I consider that the approach taken in Wham-O and Husqvarna was right. I note also that, although highly persuasive, Interlego was an appeal from the Hong Kong Court of Appeal, and not binding on Smellie J, who was therefore entitled to follow Wham-O. Therefore, I proceed to consider the issue of originality on the basis of the drawings as they appear in full, including the works and figures on them.Are the drawings sufficiently original to constitute original artistic works?[177] The changes to the S91 were prompted by the introduction of the international standard IEC 60898, which required the S91 to have different tripping characteristics. Mr Huber said that the design and development required took a number of years. Because of the complexity of the process, the changes could not all be made at once. The effect of each change had to be determined before anotherchange was made. Otherwise the designer would not know what the effect of an individual change was. So design changes were formulated, tested and implemented one by one. Mr Huber estimated the number of working hours required for this design work was about one-and-a-half years. [178] Mr Huber said that the modifications affected the thermal and magnetic tripping, as well as the short circuit behaviour of the product. They were crucial, both individually and collectively, to the effective working of the device and that it was only the combination of the changes that made it possible for the product to satisfy the IEC standard. [179] The internal components of the S91 are tiny and operate virtually simultaneously at high temperatures. I accept that apparently slight changes in design may have a significant effect. I also accept that these changes may not be readily apparent to the naked eye. I approach the question of whether they are sufficiently original by reference to whether they would appear significant to an engineer experienced in the design and production of mcbs; it is to such a person that the changes were addressed. [180] NZI maintains that there is insufficient difference between the original design and the modifications to justify viewing the modified drawings as original artistic works. Mr Hodder emphasised the unfairness of allowing a designer to perpetuate copyright in a product by continuing to make minor alterations, pointing out that this was precisely what the time limits under s 75 Copyright Act 1994 were intended to address. [181] This issue of originality in the context of modifications to engineering drawings was considered in Husqvarna. Smellie J held that the extensive changes made in subsequent drawings were sufficient to regard the later drawings as original. He relied on a passage from an earlier edition of Copinger & Skone James on Copyright. I do likewise, though referring to the 15 th edition at para 3-134:Successive revisions to a complete work, as in the case of revisions to an author's manuscript, may of course result in separate copyright works if the revisions are the product of new skill and labour. The important issue is usually the originality of later versions, although copyright continues to subsist in the earlier versions, whatever use is made of the material contained in it. The issue as to the originality of later versions, or whether the claimant has identified the correct work to rely on, used frequently to arise in relationto revisions of engineering drawings. One question is whether it is only the revision rather than the whole of the revised drawing, which is entitled to the newly created copyrightWhether it is so entitled to copyright depends on whether there has been the addition of some element of material alteration or embellishment which suffices to make the totality of the work an original work. This is a matter of fact and agree; even an alteration or addition which is quantitatively small may, if material, suffice to create an original work.[182] I therefore turn to consider whether the modifications were sufficient to make each drawing an original work. Mr Brown said that adjusting the design of a mcb so that it conformed to the new requirements was not difficult and did not amount to a material change in the design of the mcb; once a basic design for a range of circuit breakers was established it was not difficult to adjust it to obtain different tripping characteristics. However, under cross-examination he acknowledged that, while bringing the S91 into compliance with IEC 60898 would have been reasonably straightforward, achieving compliance with a number of standards, each with different requirements, would take a long time. [183] Mr Browne has vast experience with mcbs and, in general, was knowledgeable and helpful. However, I accept Mr Stevens' submission that his experience in the actual design of mcbs was limited and now several decades old; his expertise seemed to relate to the testing of mcbs rather than their design. [184] Mr Fifield was also called by NZI to comment on design aspects of mcbs. However, his lack of qualifications and experience in this area meant that his view did not assist me. [185] The plaintiffs' engineering consultant, Mr Oliver, was not asked to express a view on the changes to the S91 design. As a general observation I found Mr Huber, although strictly a witness of fact, to be straightforward and with the best grasp of the design issues. I am satisfied that Desto did devote substantial time and effort to the modifications. However, I also need to be satisfied that the modifications were sufficiently different to be regarded as original. [186] Drawing GH SO90 3201 – Steel core in coil: This drawing relates to the change in the steel core of the coil. Mr Huber said that the drawing showed a change to the dimension of the steel core in the coil, which he described as being "optimised" to provide the necessary area for the magnetic field lines. He did not specify exactly how the dimension had been optimised. In cross-examination heconfirmed that while the new diameter was shown on the drawing the length was not. He acknowledged that the main change was not actually shown on the drawing. The other change did appear to be minor and not accorded real significance even by Mr Huber. I am not persuaded that this drawing was significantly different from the previous design to render this drawing an original artistic work. [187] Drawing GH SO90 4501 – Changes to dimension and length of moving contact: Mr Huber said there were two changes, the total length of the moving contact was increased through the increase of several dimensions and the right hand end of the moving contact horn was shortened and a 45º angle introduced. I am satisfied that these changes to the moving contact were sufficient to render this drawing an original artistic work. [188] Drawing GH SO90 4526 – Anchor plate: this drawing shows a change to the angle of the "leg" of the anchor plate with it touching and tripping the latch. In the previous design the "leg" had been straight. After the change it had a bend in it of 11º. Mr Hodder pointed to cross-examination in which Mr Huber confirms that a photograph of a 1990 S91 also showed a slight bend at the end of the anchor plate, but I accept Mr Huber's explanation that this was likely to be the result of the tolerances allowed for in the earlier design, which is a different thing to the angle which is actually part of the design. Notwithstanding Mr Brown's view of this change as minor I am satisfied that there was a change to the design sufficient to justify fresh copyright. [189] Drawing GH SO90 7801 – U-bar: this drawing shows a change to one leg of the U-bar so that it is 0.4 mm out of parallel with the other leg of the U-bar. Mr Huber said that one of the problems in modifying the U-bar was the possibility that during short circuit tests particles of material would be distributed in the contact area. This might result in the moving contacts coming into contact with such particles during the test and making connection with the fixed contact. If that happened the particle would melt and the moving and fixed contacts would be welded together. This would result in a failure on that test. But by twisting the U- bar 0.4 mm Desto could be sure that this would be avoided.[190] This change was first shown on a drawing in 1994. Mr Huber agreed that a S91 manufactured in 1990 and produced in evidence also had a twist though not to the same extent. Mr Browne said that the changes are minor and not material to the design. Mr Huber's response was that whether to twist the U-bar and the degree of twist was not a simple decision and involved both manufacturing issues and consideration of whether such a change would have an adverse effect on the operation of the toggle and on the thermal tripping of the mcb. [191] Mr Hodder submitted that it must be questionable that anyone could actually identify the difference in the twist between the 1990 and 2003 mcb with the naked eye. But I accept Mr Huber's explanation as to the thought and care required to produce the modification which would avoid the problems he identified. It is true that the dimensions involved are very small. But I accept that to the production engineer who would receive the drawing the change was a significant one and justifies viewing the drawing as an original artistic work.Has there been an infringement of the copyright in the drawings?[192] I have found that copyright existed in three of the four technical drawings. The plaintiffs allege infringement of the copyright by reproduction, which is a form of copying. "Copy" is relevantly defined in the Copyright Act 1994 as including the making of a copy in three dimensions of a two-dimensional work. Under s 29(2) the infringement must relate "to the work as a whole or any substantial part of it". [193] The test as to whether there has been an infringement of a substantial part of Desto's work is whether NZI has incorporated in the BM a substantial part of the work and skill used by Desto to create the drawings: Designers Guild Limited v Russell Williams (Textiles) Limited [2000] 1 WLR 2416. [194] Mr Hodder submitted that the incorporation of such changes has not been sufficiently proven. It points particularly to the absence of the revised moving contact from the BM. [195] Mr Hodder also submitted that, to the extent that any renewed copyright arises out of changes to dimensions, there can be no infringement because any such instructions would be literary works rather than artistic works. The making of the three-dimensional article from written instructions cannot be a reproduction for thepurposes of the definition of "copying" in s 2 of the Act. However, this submission cannot stand against my conclusion that the drawings are to be regarded as original artistic works inclusive of words and figures on them. That being the case, production of a three-dimensional model virtually identical to those dimensions must constitute an infringement of the copyright. [196] Mr Browne said that he had noted the absence of the moving contact from a sample provided to him by NZI's solicitors. However, he referred to only one sample and was not specific as to what it was. Mr Huber gave evidence of his comparison between the BM and the S91. He specifically compared the two mcbs to identify whether the BM incorporated the modifications made to the S91 during the 1990s, which I have discussed above. His examination showed that all of the BM had the same dimensioned anchor plate, U-bar and core as the modified S91. All but the C6 BM mcb had the same dimensioned moving contact. [197] I accept Mr Huber's evidence about the comparison between the two products. Unlike Mr Browne, he was specific about the various ratings of the BM and S91 products he had compared. I am satisfied that the BM incorporated exactly the modifications to the anchor plate and u-bar and, in all but the C6 rating, the BM also incorporated the modified moving contact. [198] This level of incorporation of the modifications was sufficient to infringe the copyright enjoyed by Desto in the three drawings.Expiry of copyright in the drawings[199] Section 75 provides (in the circumstances of this case) that the making of any object in three dimensions will not infringe copyright in an artistic work if, when the copy is made, the artistic work has been applied industrially in New Zealand or in any other country more than 16 years beforehand. Under s 75(4) an artistic work is applied industrially if more than 50 copies in three dimensions are made of the work for the purposes of sale or hire. [200] Mr Huber described the process within Desto for the confirmation and release of new design drawings. There was inevitably delay between finalising the drawings within the Desto design and development team and releasing them to SGIND for production purposes. Typically there was quite a lead time which involved testing ofmodifications before new design drawings were released and then some further delay after the drawings were released before full-scale production began at SGIND. As a result, the copyright that I have held subsists in the three drawings will have commenced, at the earliest, on the date they were received by SGIND, since no production could have been undertaken prior to that date. [201] The evidence was that SGIND had received the drawings between 12 May – 12 July 1994. There was no firm evidence as to when the various modification were incorporated into the S91. It is impractical to ascribe different copyright periods to each of the modifications. I propose to treat the start of the copyright period for the purposes of s 75(4) as being 12 May 1994, being the earliest date of receipt of the drawings. The consequent expiry of copyright is on 12 May 2010.First Affirmative Defence to Breach of Copyright Claims – Estoppel[202] NZI alleges that in August 2003 Mr Gobbie represented to Messrs Heron and Quinlan that there was no subsisting copyright in the S91 and that it relied on this representation in deciding, proceeding and continuing to have the BM manufactured and in promoting and distributing it. It says that, consequently, the plaintiffs are estopped from asserting copyright in the S91. In order to succeed on this point NZI must prove a representation either by ABB NZ or its agent, show that the representation was intended to induce NZI to act to its detriment and that it did so act.The alleged representation[203] The representation relied on is alleged to have been made at a meeting at ABB's offices on 22 August 2003 at which Messrs Gobbie, Heron and Quinlan were present. NZI had requested the meeting to discuss the buy-back of ABB NZ stock still held by NZI. By this time NZI had paid Jiakong a deposit. Tooling and samples were expected within the following months. Mr Heron said that he went to the meeting with the intention of keeping NZI's plans about the BM a secret and deliberately did not mention it. [204] Messrs Heron and Quinlan's evidence about what was said was broadly consistent. Mr Heron said:I asked him [Mr Gobbie] why nobody but ABB or General Electric made a plug-in mcb product like the S91. Mr Gobbie replied that it was a dying product because it was only used in the replacement market, and he also said that the cost of setting up would probably put people off I was interested to see what information I could get out of Mr Gobbie regarding any intellectual property impediments there might be if anybody apart from ABB wanted to manufacture the S91, so I probed him a bit further by asking broadly whether there were any other reasons why nobody could make it Mr Gobbie volunteered to me that there were no patents or copyrights oranything like that for the S91, and then he added the words "especially in New Zealand".[205] Mr Heron made the following note in his diary, probably on the flight back from Auckland:Interesting comments re – no copywrite [sic] or patents.[206] At some time during the following week Mr Heron made a specific file note about the meeting:When asked about the plug-in Trevor said he believed there were only two major suppliers worldwide – ABB and GEL. He said the countries they were sold in were AU/NZ/UK/Belgium and SA. Said ABB sell over 1,000,000 units in UK per annum. When asked why others had not manufactured a plug-in he said: Its [sic] basically seen as a dying product as it's only used in the replacement market. Also to get tooling made would make it prohibitive. Asked him if there was any reason others couldn't do this – he replied No, there is no patent or copywrite [sic] especially for NZ and if there was it would have run out years ago.[207] Mr Quinlan's evidence was:I remember Robin asked Mr Gobbie if there was any reason that others could not manufacture a plug-in circuit breaker. He said there was not, and in particular that there was no patent or copyright – especially in New Zealand – and any such copyright would have run out years ago.[208] Mr Gobbie did not recall making these statements, saying that, had the issue of intellectual property rights been raised, he would have been suspicious. However, under cross-examination he could not go so far as to actually deny making statements of the kind alleged.[209] I am satisfied that there was a discussion of the general nature described by Messrs Heron and Quinlan. I accept that Mr Heron's notes made within days of the meeting accurately reflect what was said. Both had reason to recall such a discussion. Mr Gobbie on the other hand, clearly regarded the issue of the S91 as being dead as between ABB NZ and NZI. It is unlikely that he attributed any significance to this part of the discussion, so it is not surprising that he does not recall it. [210] However I am not satisfied that Mr Gobbie's comments were specifically directed to the S91 in the way that Mr Heron suggests. Mr Heron said that he specifically asked about the S91. However, his file note refers only to "a plug-in" rather than the S91 specifically and Mr Quinlan's evidence was, similarly, that Mr Gobbie had asked about "a plug-in circuit breaker". [211] I must be satisfied that the statements Mr Heron elicited from Mr Gobbie were clearly related to the S91, as opposed to a mcb generally, which anyone could have freely made and sold. Further, I doubt that Mr Heron appreciated the different nature of patent and copyright. [212] Given that Mr Heron was taking care not to arouse Mr Gobbie's suspicion I think it unlikely that he would have mentioned the S91 by name; I am sure that had he done so Mr Gobbie's interest would have been aroused since he was well aware that all the S91s sold in New Zealand were manufactured by SGIND and he had been instrumental in ensuring that ABB NZ had the sole right to supply it here. I am satisfied that the questions asked and answers given related to mcbs generally, rather than the S91 in particular. As a result I find that the representation, as it is alleged, has not been proven. [213] Notwithstanding this conclusion I find that this defence would fail in any event for the reasons that I briefly consider next.Authority to make representations[214] Mr Gobbie is and was, at the relevant time, the New Zealand Sales Manager of ABB NZ with specific responsibility for dealing with matters relating to the S91. He therefore had the actual authority to make representations on behalf of ABB NZabout that product. However, Mr Hodder submitted that Mr Gobbie also had ostensible authority to bind both SGIND and Desto. To do so, NZI needs to prove that those companies represented or permitted it to be represented that ABB NZ had the authority to act on their behalf: New Zealand Tenancy Bonds Ltd v Mooney & Horner [1986] 1 NZLR 280 at 283; Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 at 305 (CA). [215] The only ground offered to support NZI's assertion was the fact that by August 2003 NZI was dealing solely with ABB NZ in relation to the S91, an arrangement made the previous year with SGIND. Only SGIND had a formal relationship with NZI in relation to the S91. However, it had been agreed at a meeting on 31 October 2002 between representatives of NZI (including Mr Heron) and SGIND (Mr Sher) that ABB NZ would negotiate the buy-back of residual ABB stock with NZI. [216] In making that arrangement SGIND represented to NZI that ABB NZ had the authority to act on its behalf in relation to the S91. The meeting at which the alleged representation was made was certainly within the scope of that authority. While Mr Gobbie may not have had actual authority to make statements on behalf of SGIND about the intellectual property aspects of the S91, I am satisfied that SGIND had conferred on him the ostensible authority to do so. [217] However, the fact that SGIND had authorised ABB NZ to take over its dealings with NZI could not affect Desto. There is no evidence that Desto played any part in those arrangements or had any other dealing or communication that could have led NZI to think that Mr Gobbie was authorized to speak for it. Whatever assumptions Mr Heron may have made about Mr Gobbie's authority, they cannot have been based on any act by Desto.Inducement / Reliance[218] In order to establish an estoppel based on Mr Gobbie's statements NZI would also need to prove that the statement was made with the actual or presumed intention of inducing NZI to rely on it and with the result that it did so rely: Spencer Bower and Other, Spencer Bower: The Law Relating to Estoppel by Representation (4ed 2004) at V.1.1.[219] NZI does not assert actual intention so the test is whether it was reasonable for NZI to have relied on what Mr Gobbie said. Mr Hodder, relying on the statement of Lord Esher in Seton, Laing & Co v Lafone (1887) 19 QBD 68 at 72 – 73 (CA), submitted that the question was whether it was reasonable as a matter of business for NZI to do what it did as a result of its belief in Mr Gobbie's statement. [220] Mr Hodder said that only ABB (the name used in a loose sense to refer to the plaintiff companies) could know whether it had copyright in the S91 since only it knew when it had started production of it, and was therefore seized of a special and unique knowledge about the S91. Mr Hodder submitted that, in those circumstances, where a senior executive of ABB NZ who is under no duty to say anything volunteers that copyright has expired, it is reasonable for the representee to take that comment for the truth. [221] Mr Hodder also submitted, in reliance on Hedley Byrne & Co Limited v Heller Partners Limited [1964] AC 465 (HL) at 486 per Lord Reid, that where Mr Gobbie, under no obligation to do so, chooses to express a view he must be taken to have accepted the responsibility for the correctness of it. [222] I do not accept that the meeting at which this discussion took place falls within the circumstances envisaged by Hedley Byrne. There was nothing either in the general circumstances of the meeting or in what was said to make Mr Gobbie think that information he might give would be relied on. This position was quite the opposite; Mr Gobbie believed that NZI had no further interest in the S91. The relationship between the parties was such that Mr Gobbie clearly did not envisage that NZI would have been relying on anything he said about it. By Mr Heron's own admission the matter was approached deliberately so as not to arouse Mr Gobbie's suspicions. In these circumstances it was not reasonable for NZI to have relied on any statement Mr Gobbie made to continue with so significant a course. [223] Nor do I consider that NZI would have relied on any such representation to its detriment. NZI asserts that it relied on Mr Gobbie's statement in "deciding, proceeding and continuing to have manufactured, to promote, distribute and to sell the BM mcbs." Alteration of position is fundamental to proof of reliance and positive action is not always necessary; refraining from taking steps to protect the representee's position may also suffice: Hutton v Royal Exchange AssuranceCorporation [1971] NZLR 1045 at 1060. However, estoppel by misrepresentation ceases to operate as soon as the representee is placed in as advantageous a position as it would have occupied had the representation not been made: De Renzy v Ahlfeld Bros (1891) 9 NZLR 94. [224] By September 2004, when proceedings were issued containing, for the first time, the assertion of copyright in the S91, NZI was in the position it would have been in had it been advised earlier of the plaintiffs' claim to copyright. As to the nature of the detriment required, the learned authors of Spencer Bower Estoppel by Representation express the following view at para V.5.5:Although the legal burden lies on the representee of proving that he has been disadvantaged, the court is necessarily speculating on the balance of probabilities, and if the representee establishes that he would have had a real chance of protecting or improving his position, and (it is submitted) that he would have taken it, the evidential burden may then, it seems, shift on to the representor of proving (again on the balance of probabilities) that the representee would not have succeeded. The first task of the court is to determine whether the representation caused the inactivity, the second task is, nonetheless, to assess on the evidence available, whether, on the balance of probabilities, had the inactivity not been caused, the representee would be in a better position. It should, therefore, be at least necessary to identify what the representee would have done and prove that he would have done it.[225] Mr Heron gave evidence that, had he been told that ABB did assert copyright in the S91, he would have taken legal advice and would not have proceeded. NZI did not call evidence from its solicitors as to the legal advice that might have been given. However, on the information then available it is unlikely that any solicitor could have given firm advice as to the risk of a breach of copyright. As Mr Hodder has submitted, the only parties with firm knowledge on that issue were the plaintiff companies themselves and NZI would not have enquired of them, for obvious reasons. [226] The most reliable guide to what would have happened is NZI's actual response when the proceedings were issued in September 2004. Mr Heron was advised by NZI's solicitors that copyright in industrial objects such as the S91 lasts for only 16 years. He therefore could not see any basis on which the plaintiffs could assert copyright in the S91, as he knew that it had first been produced more than 16 ago.[227] Had Mr Gobbie asserted in the apparently casual conversation in August 2003 that the ABB Group still enjoyed copyright in the S91, and had Mr Heron sought legal advice, I am quite sure that the advice and Mr Heron's response to it would have been as he described in his evidence. NZI would have been assessing the risk that it might be breaching the copyright against its own knowledge of how long the S91 had been on the market. It would have been doing so without knowledge of the modifications now claimed by Desto to have been done to the original design. I am satisfied that NZI would not have been deterred from its course. [228] I have come to this view solely on the evidence I have referred to. However, it accords with my general view that NZI was not risk averse and was unlikely to have been overly cautious about the risk that it was taking in copying the S91. According to Mr Heron, NZI did not seek legal advice about the implications of copying the S91 before embarking on that course. Had it done so it is quite likely that he would have been warned about the risks of breaching the FTA, even if the position regarding copyright in the S91 could not be established.Conclusion on affirmative defence of estoppel[229] I have found that, although Mr Gobbie made general statements about the rights of third parties to make and sell mcbs in New Zealand, he did not make the specific representation alleged. Even if I were wrong in my conclusion as to the representation made by Mr Gobbie, I am satisfied that NZI could not establish an estoppel against any of the ABB companies because: a) Mr Gobbie had no authority either actual or ostensible to make statements about the S91 on behalf of Desto. Desto, the owner of the alleged copyright, is not bound by anything Mr Gobbie said; b) It was not reasonable for NZI to rely on what Mr Gobbie said in refraining from taking steps to halt production of the mcbs because the statements were made in circumstances in which Mr Gobbie could not possibly have thought that he was being relied on for the correctness of the information he volunteered; andc) NZI did not, in fact, rely on anything Mr Gobbie said. Had Mr Gobbie said that copyright did still attach to the S91 design I am satisfied that any legal advice NZI obtained would have led it to the conclusion that Mr Gobbie was wrong and it would not have been deterred from its course.Second Affirmative Defence to Breach of Copyright Claim – Breach of Copyright by SGIND[230] NZI claims that it designed the legs used to plug the S91 into a base and that SGIND is now in breach of that copyright. A claim for equitable relief for breach of copyright may be defeated by showing that the plaintiff itself has breached some duty owed to the defendant, although that result is not inevitable; the Court must consider all the relevant circumstances in determining whether the defence should succeed; Marshall Futures Limited (in liq) v Marshall [1992] 1 NZLR 316 at 331. [231] Throughout the period that NZI distributed the S91 it also manufactured the legs. It claims that its employee Mr John Bain, drew the original design for them. Since January 2004 SGIND has manufactured the legs for the S91. NZI asserts that SGIND has been using Mr Bain's design and that, consequently, the plaintiffs should be deprived of the equitable relief they seek. SGIND denies this and says that it designed the legs used throughout the whole period the S91 has been distributed in New Zealand.Design of S91 legs before 2004[232] Mr Bain was the only witness with direct knowledge of the design of the legs used in New Zealand. It was accepted that he had designed the legs for the S901 (the predecessor of the S91). Mr Bain said that he also drew the design for the S91 legs 1990 and produced a drawing dated 12 February 1990. Soon afterwards he amended the original S901 tooling drawings for use in manufacturing the S91 legs. He also produced those drawings, with the modifications evident. It was put to Mr Bain in cross-examination that his drawing 12 February 1990 was a tool-making drawing rather than a design drawing but he rejected that.[233] Mr Bain said that he produced his design using samples provided by SGIND, together with outline drawings and (possibly) drawings of the two plastic mouldings of the S91 case. NZI did not produce these drawings, though Mr Bain said that he had located the drawings of the plastic mouldings, which he gave to NZI's management. There was no explanation as to why they were not produced at trial but Mr Bain was not seriously challenged on this point and I accept his evidence. [234] Mr Bain described the differences between his design of the S901 legs and his design for the S91 legs. He said that the changes were not complex but could clearly be seen; one of the holes in the S901 leg was moved slightly and reduced in size, pegs on the S901 legs were modified so they no longer extended into the case of the new S91 and the shape of the S91 leg was altered so as to fit into a groove introduced in the S91. Mr Bain estimated that drawing the new design and amending the tooling drawings took less than eight hours. [235] Mr Lim Say Leong rejected Mr Bain's claim. He said that knowledge of the internal workings and parts of the S91 was critical to designing the legs, in particular the design of the screw for fixing the legs on to the fixed contact required serious consideration by the designer because a simple "three-hole" on the fixed contact could result in obstruction or interference with the internal components of the S91. The length of the screw would be the crucial consideration. Mr Lim Say Leong pointed to Mr Bain's failure to refer in his brief to basic principles of design, which would have been considerations in designing the legs. [236] I am not persuaded that designing the legs for the S91 was beyond Mr Bain, who had competently designed the original S901 legs with minimal input from Desto. SGIND's and Desto's design process is a sophisticated one, suited to a large multi-national group that produces millions of units each year for distribution world- wide. It was clear that Mr Huber and Mr Lim Say Leong genuinely hold the view that such a process is essential for successful design. But in New Zealand successful design is frequently achieved in modest circumstances and I accept Mr Bain's evidence as to the nature of his drawing 12 February 1990 and the circumstances in which he produced it.Design of S91 legs used after 2004[237] Since January 2004 SGIND has manufactured the legs used on the S91. The design drawing it uses was produced by its employee, Mr Xue, on 28 August 2002 and is numbered SGS 909 4514. Mr Lim Say Leong said that this drawing related to an earlier drawing by Desto, GHS 090 4514 produced on 13 February 1992, which showed the design of the legs by SGIND. [238] Mr Xue said in his brief that the Desto drawing was not suitable to give to toolmakers because it was not available in a CAD-CAM version. That was why he produced his drawing. He also said that when he prepared his drawing SGS 090 4514 on 28 August 2002 he had not seen Mr Bain's drawing. Mr Xue's English was poor but he was not challenged on his statement that he did not have Mr Bain's drawing when he produced his own. [239] This therefore leaves the question whether the Desto drawing GHS 909 4514 produced on 13 February 1992 was, itself, based on Mr Bain's drawing or created independently of it. Mr Lim Say Leong gave evidence that SGIND designed legs to use with the S91 over a period of years. But although SGIND actually undertook the design work, the internal procedures of the ABB Group required all such work to be sent to Desto, which owned the intellectual property in the design. Desto would issue the necessary drawings and send them to SGIND for use in production. Mr Huber explained that any design by SGIND had to be approved by Desto because SGIND does not have the facilities to carry out the necessary tests to confirm the design change. [240] He produced three drawings, which he said evidenced the progression of the design from 1985 through to the completed design in about 1989. The three drawings all related to aspects of the fixed contact. They were created by Desto in 1985 and 1986 and received by SGIND in May 1987 (in the case of two of the drawings) and in February 1989 (in the case of the third). Mr Lim Say Leong also produced three post-production drawings of the legs. One of these was the drawing GHS 090 4514, created by Desto on 13 February 1992, to which I have referred earlier. The drawing showed four different views of the legs. Mr Lim Say Leong said that this drawing related to the plug pin (legs) when it was first designed by SGIND.[241] Mr Huber said that the most important thing was how the connection affected the product internally. He also said that the S91 was tested (as were all ABB products) in their final form which, in the case of the S91 meant the mcb with the legs and base. [242] Mr Lim Say Leong said that SGIND would have provided NZI with assembly drawings of the S91 to enable it to modify its production toolings of the S901 so as to manufacture the legs for the S91. As the design of the legs for the S91 had been completed in about September 1989 assembly drawings would have been provided to NZI soon after that. There is no documentary record of that being done. However, this is not necessarily determinative because, as a matter of company policy, SGIND routinely destroys documents after a certain period. [243] On 6 February 1992 SGIND's predecessor faxed a letter to Desto, attaching a copy of Mr Bain's drawing 12 February 1990. It said "Pls [sic] be informed that we are ready to send you the drawing via airmail Pls [sic] look into it". None of the witnesses knew why SGIND had sent Mr Bain's drawing to Desto. The copy of the drawing is endorsed with handwritten changes identified as having been made by a Mr Sellner, who was involved in the design of the legs at Desto. In addition to his hand-written changes, Mr Sellner also endorsed on the drawing the number GHS 090 4514. This was a reference to the drawing created by Desto on 13 February 1992 and which related to the first design of the legs by SGIND. [244] It is inherently unlikely that, having already been through the process of designing its own legs for the S91 for use in other countries Desto would need or want to copy Mr Bain's drawing. This is all the more so given the clearly genuine attention to process and detail that is a feature of the Desto design and development team. The most probable explanation is that there had been changes to the S91 which, in turn, required re-consideration of the design to the legs. I think that the most likely reason for sending the drawing to Desto was to allow Desto to check that the design NZI had been using was suitable in light of modifications undertaken since the S91 was originally designed. [245] Mr Lim Say Leong also produced an engineering change notice ECN No. 02025 dated 22 October 2002 which he said was an internal document issued by SGIND to advise production units within SGIND of changes in a product design.The engineering change notice referred to the drawing SGS 090 4514, being the same reference as appeared in Mr Xue's 2002 drawing. Mr Lim Say Leong gave evidence that this drawing SGS 090 4514 was related to document GHS 090 4514. The second drawing was produced on a CAD system to speed up production time. I accept Mr Lim Say Leong's evidence that the Desto drawing GHS 090 4514 was related to Desto's own design of the legs and was not produced in reliance on Mr Bain's drawing. [246] Significantly, the engineering change notice included the following description of changes:To create new Base Product with ABB logoto create new FGGJF0915004.W/ABB logo and pins for NZ market. To release new drawing of Terminal Pin for NZI version To release new drawing for packing label printing on NZI/ABB logo and pins product. (emphasis added)[247] Finally, I compare the drawing produced by Mr Xue, which SGIND is currently using to produce the legs for the S91. Mr Xue's drawing SHS 909 4514 is very similar in both layout and substance to the earlier Desto drawing GHS 090 4514 though with some apparent changes in measurements. Neither appear particularly similar to Mr Bain's drawing. [248] I accept that SGIND and Desto had produced a design prior to February 1990 for use in S91s sold other than in New Zealand and that the Desto drawing SGS 090 4514 was based on this design and was produced independently of the Mr Bain's drawing. I therefore find that the 2002 drawing produced by Desto for the purposes of manufacturing the pins for the S91 to be sold in New Zealand was not produced by reference to Mr Bain's drawing. There is, therefore, no breach of copyright by SGIND.Counterclaim – Unjustified Copyright Proceedings[249] NZI counterclaims under s 130 Copyright Act 1994 which provides that where a person brings proceedings alleging an infringement of copyright, the Courtmay make a declaration that the proceedings were unjustified and order the payment of damages for any loss suffered as a result of the proceedings. [250] Under s 130(2) this relief is not available if a breach of copyright is proven. Nor will it apply if the plaintiff (even if unsuccessful) can show that it acted in the genuine belief, based on reasonable grounds and after receiving legal advice, that there had been or might have been an infringement of its copyright: Heinz Watties (NZ) Limited v Effem Foods Pty Limited & Anor (2001) 7 NZBLC 103,437 at 103,433. [251] NZI asserts that the plaintiffs had no reasonable grounds on which to bring the breach of copyright proceeding and points to a number of reasons for this. First, it says that the plaintiffs are estopped from asserting such ownership. Mr Hodder did not elaborate on this ground in submissions but I infer that it relates to the alleged representation by Mr Gobbie. I have already found that there is no basis for this allegation. Further, in the case of SGIND and Desto, there were reasonable grounds on which to believe that any statements Mr Gobbie had made were not made with their authority. I would therefore not regard this first point as one which would justify an order under s 130. [252] Secondly, it is said that SGIND and ABB NZ had no standing to sue as they were not exclusive licensees. I found that this was the case, at least prior to October 2005. However, Desto always had the right to sue, so NZI would have incurred the costs connected with the breach of copyright claim in any event. I doubt that these proceedings would have been significantly shorter had Desto alone sued. This is an aspect more appropriately dealt with in the context of costs rather than relief under s 130. [253] The third ground was what Mr Hodder described as the shifting allegations against NZI. The original statement of claim filed in September 2004 alleged ownership of copyright without any particularisation. That allegation was abandoned in April 2005 in favour of an allegation that Desto had been required to materially change the S91 design in relation to its tripping characteristics. However, that allegation was also abandoned and in September 2005 the plaintiffs alleged a material re-design of the S91 between November 1991 and July 1995. Desto did notproduce the documents forming the basis of its current copyright claim until September 2005. [254] One can sympathise with NZI's undoubted frustration at these changes. However, because Desto has succeeded in its copyright proceedings they cannot be said to have been unjustified. Nor, for the reasons just discussed do I see any basis for an order under s 130 against SGIND or ABB NZ. [255] Mr Hodder's next point was that during discovery ABB did not produce the original copyright works. However, I have found that this fact did not affect my assessment of the copyright claim. [256] Finally, Mr Hodder relied on the fact that in answers to interlocutories served in February 2005 ABB NZ confirmed that the S91 had first been industrially applied in late 1986, which meant that any copyright relating to it had expired. This ground however ignores the real basis for the plaintiffs' claim to copyright which is the modifications to the S91. I have already held that copyright subsists in the drawings relating to those modifications until early 2010.Injunctive Relief[257] The plaintiffs seek wide-ranging injunctive relief in relation to both the FTA and the breach of copyright causes of action. Injunctive relief is available under the FTA and in equity for breach of copyright. The specific terms of the injunctions sought are the similar for both types of claims. NZI says that the injunctive relief sought is excessive and designed to remove competition from the market.Restraining NZI from manufacturing, importing, distributing and selling the BM[258] The main aspect of injunctive relief sought is an order that NZI cease having the BM manufactured and importing, distributing and selling it. In relation to the FTA cause of action Mr Hodder correctly submitted that the jurisdiction is limited to granting an injunction "restraining a person from engaging in conduct that constitutes or that would constitutea contravention of any of the provisions of Part I".[259] Mr Hodder submitted that the relevant contravention could only be the misleading and deceptive conduct in which NZI had engaged, not the actual selling of the BM. Therefore any injunctive relief must be limited to restraining that conduct. [260] I accept that an injunction granted under the FTA must relate to the misleading and deceptive conduct that has been found. However, I do not accept that the misleading and deceptive conduct in this case excluded the selling of the BM. My finding as to NZI's misleading and deceptive conduct was based in part on the way the BM was packaged and displayed for retail purposes and the retail price charged for it. It would be artificial to say that these aspects of NZI's conduct are unrelated to the act of sale. An injunction that related to the misleading and deceptive conduct that I have found would preclude the manufacturing and sale of the BM in its current form, including its current labelling and packaging. [261] Mr Hodder also submitted that if injunctive relief were to be granted in respect of the FTA claim the contravention would be adequately remedied by an order requiring NZI to include in its packaging a recommendation that the BM be used solely to replace rewireable fuses while advising that, although the BM should stop a circuit current of up to 3kA, there is no representation that it would necessarily remain functional after interrupting such current. [262] I do not accept that this would be an appropriate course. I have found that both the manufacture of NZI and its manner of packaging and distribution amounted to misleading and deceptive conduct. The main reasons that these aspects were likely to mislead and deceive is that they bore a striking resemblance to the S91 and that counter staff dealing with the purchasing public were clearly ill-informed as to the difference between the two products. I think it unlikely that a relatively complicated caution printed on the packaging would sufficiently detract from the obvious similarities between the products. [263] In addition to the substantive matters that led to my finding as to misleading and deceptive conduct I also take into account the following. First, although there was no attempt in this case to obtain interim relief, nor has there ever been, to my knowledge, an offer for NZI to modify the labelling or packaging of the BM so as todifferentiate it from the S91 even though it must have been obvious that there was a serious risk of the purchasing public being misled by the similarity in the appearance of the BM. Secondly, there was no evidence of any further effort by NZI to ensure that prospective purchasers realised that the BM was a different product from the S91. Although one might think, given the apparently close relationship between wholesalers and NZI, that knowledge of this difference would have become widely known amongst the suppliers, the evidence of the sample purchases by loss adjusters shows that this has not happened. [264] In the absence of injunctive relief I have no confidence that NZI will do other than maintain its current position. On the facts I am presented with I consider that injunctive relief is justified. [265] In relation to the breach of copyright claim Mr Hodder submitted that there could be no objection to the manufacturing, importing, distribution and sale of the BM if the BM infringes any copyright. This submission seemed to signal the possibility of introducing a new BM with different labelling and the relevant components re-designed independently of their existing S91 counterpart. [266] I can, of course, deal only with the BM as it was referred to in the proceeding. At this stage that is the only BM product that exists. I accept that NZI may seek to re-design the BM and would be entitled to call such a product by the same name. When I refer to relief in this case I can refer only to the BM in its current form.Delivery up of remaining BM units[267] The plaintiffs also seek, as terms of an injunction, an order that all BM units within NZI's power, possession or control be delivered up to ABB or be destroyed. Mr Hodder submits that this is unwarranted because the units could be legitimately sold if sufficient indication as to their commercial origin is added, for example, by way of additional labelling. While this would resolve the issues that arise under the FTA as to whether such an injunction were even available, the BM units will still be in breach of Desto's copyright. No amount of relabelling can overcome that. [268] If I were considering injunctive relied on relation to the FTA claim alone I would not grant the order sought for the reasons that Mr Hodder has raised. But asthe internal workings of the BM units themselves are in breach of the plaintiffs' rights I need to consider whether such an order should be made in any event. [269] Mr Hodder relies on s 134 Copyright Act 1994, which requires that, in considering whether to make an order for the delivery up of infringing copies of articles, the Court must have regard to whether there other remedies that would adequately compensate the copyright owner and protect its interests. He submitted that damages for past infringements and injunctive relief against future infringements make an order for delivery up unnecessary. There is merit in this submission. However, I have serious reservations about NZI's acceptance that it cannot use the BM in its current form. It has shown itself to be willing to breach its commercial obligations for profit. It is clearly willing to take risks that, in my view, prudent business people would not take. The plaintiffs are entitled to the certainty of knowing that there will be an end to the ongoing infringement and I consider that an order for delivery up is an appropriate way of ensuring this.Confidentiality of Desto's drawings[270] Mr Hodder raised two further issues relevant to the scope and appropriateness of perpetual injunctive relief for infringement of the copyright. The first is that Desto has claimed confidentiality in respect of the drawings that are the subject of the copyright claim and have only permitted NZI's counsel and experts to inspect them. NZI complains that it will not be in a position to know what it must not copy in the future unless it is able to see those drawings. [271] Secondly, copyright in respect of these drawings will expire in 2010, after which anyone in the market may benefit from Desto's original design. Mr Hodder submitted that the public policy objective associated with the expiry of copyright (not to stifle competition) will be thwarted if Desto is entitled to retain confidentiality over the drawings. [272] Mr Hodder did not provide any authority for these propositions and I do not accept them. Desto has no obligation to disclose its drawings. The fact that others may copy the S91 design after 2010 does not produce a corresponding right to access the drawings themselves.Other circumstances precluding injunctive relief[273] Finally, Mr Hodder also submitted that there were circumstances that should preclude injunctive relief for breach of copyright. First, Mr Hodder submitted that the damage done was very slight and capable of being adequately compensated by damages. [274] First, he pointed out that breach of copyright related only to a few of the internal components of the S91 and was minor, considering that the rest of the S91 was not protected by copyright. I do not accept this argument. It is true that the copyright refers only to a few modified components. However, I accept the evidence adduced by Desto that these modifications were functionally significant to the S91. [275] Nor do I not accept that the breach of copyright would be adequately compensated by a small monetary payment (Mr Hodder suggested about $10,000). The breach of copyright has enabled NZI to produce a product that, on its face, complies with the relevant standards in the same way as the S91 and apparently achieves the same level of safety and reliability as the S91. The danger for Desto is that confusion between the reliable S91 and the less reliable BM risks affecting its reputation. The question is not one of money alone. [276] Mr Hodder submitted further that equitable relief ought to be refused because it had taken the plaintiffs 20 months since the BM was first sold to even produce the copyright material on which they rely. Mr Hodder submitted that the drawings were not discovered during the initial discovery process and that the plaintiffs failed to particularise and substantiate the copyright issues. I have some sympathy with this submission. A plaintiff who wishes to assert its copyright and protect it can reasonably be expected to identify the subject matter of the copyright and take steps promptly. While this is a justifiable point to make it is outweighed by the issues that I have already considered.Conclusion as to injunctive relief[277] I have reached the conclusion that injunctive relief is appropriate. Although there are some minor differences between the forms of injunction sought in relation to the FTA and the breach of copyright claims it is appropriate to grant only one injunction in a single form.Declaratory relief[278] The plaintiffs also seek declaratory relief. They seek a declaration that NZI has misled and deceived wholesalers, retailers and members of the purchasing public. In relation to the breach of copyright claim they seek a declaration that NZI has breached the copyright in the S91. [279] The plaintiffs did not make submissions in relation to the declaratory relief sought, presumably because of Mr Stevens' indication that a judgment on liability alone was being sought at this stage. Mr Hodder made brief submissions. While accepting that the Court has jurisdiction to grant declaratory relief in respect of the breach of copyright cause of action, he submitted that there was conflict regarding such relief in relation to contraventions of the FTA, referring to Real Estate Institute of New Zealand (REINZ) Inc v Lehmann (1995) 6 TCLR 638 at 641 and Commerce Commission v Telecom Mobile Limited [2004] 3 NZLR 667. I do not, however, need to resolve this issue because, regardless of jurisdictional position, I would not grant the declarations sought. Such relief would be neither necessary or appropriate. [280] The fact of NZI's contravention of the FTA and its breach of copyright will be apparent from my judgment. Past losses resulting from NZI's conduct can be compensated through damages. Future infringements will be prevented by the injunctive relief I have granted. Declaratory relief will therefore will serve no purpose.Damages[281] Although there was evidence adduced as to the calculation of damages it was agreed between counsel that the final assessment of damages should await the outcome of this judgment. It seems possible that further evidence might be needed and there should be specific submissions directed towards the damages calculation. I therefore do not make any finding as to the quantum of damages at this stage. I did, however, agree that I would make some observations on matters that might assist the parties. [282] The plaintiffs' case on quantum is essentially that NZI had no legal means by which it could have entered the mcb market in January 2004. As a result, it wasreasonable to expect that the S91 would have continued to dominate the market and that the losses suffered by the plaintiffs as a result of NZI's conduct would more or less equate to the sales of the BM product since January 2004. [283] NZI's position is that there were means by which it could have entered the market in January 2004 with an alternative mcb that did not infringe any of the plaintiffs' rights or contravene the FTA. Mr Hodder submitted that NZI was committed to competing in the market and had more than a year from the termination of its contract in October 2002 to find an alternative product. So the outcome for the plaintiffs would have been the same because, as a result of its superior distribution network, NZI's alternative product was likely to have dominated the market. [284] There were only two alternative scenarios advanced by NZI as to how it could have sourced a new mcb without attracting liability. The first was to commission the design and manufacture of a completely new mcb that was either different from the S91 or a copy of the S91 but with sufficiently different features so as to avoid any liability. This scenario depended mainly on the evidence of Mr Fifield. Mr Fifield qualified with a New Zealand certificate in mechanical engineering through Wellington Polytechnic and the Central Institute of Technology in 1994. The company he consults to provide product design services, including conceptual design, prototyping, testing and managing the manufacturing process. [285] Mr Fifield described the design process and concluded that three to six months would be needed to produce a final design. A further 18 to 21 months would be needed to get to the stage where production was under way. In cross-examination Mr Fifield acknowledged that his company's main area of work was mechanical design engineering. He was not a qualified electrical engineer. He did not have a working knowledge of AS/NZS 4898 or IEC 60898. He had no previous involvement in the design, manufacture or testing of mcbs. [286] Although I accept that Mr Fifield's opinions were genuine I do not accept that the commissioning and production of a entirely new mcb by early 2004 was a realistic prospect. The difficulties that NZI encountered in producing an exact replica of the S91 shows that any attempt to design and manufacture a new product from scratch within the same period would have been hopeless. Mr Heronacknowledged in cross-examination that NZI had neither the time nor resources to develop a new mcb itself. [287] The alternative scenario was that NZI might have sourced an existing competing product from overseas. The only such product suggested in evidence was the General Electric mcb, which is not available in New Zealand. However, General Electric already has a distributor in New Zealand. Approaching General Electric with a suggestion that it effectively bypass its existing distributor in favour of NZI in respect of a single product would have been commercially unrealistic. No evidence was called from either General Electric or its New Zealand distributor to suggest that they might have agreed to this course. Further, an approach to General Electric or its distributor ran the risk of alerting them to a possible new opportunity in the market, thereby creating a third competitor which would not be to NZI's advantage. [288] Mr Hodder also submitted that there should be an allowance made for the possibility of General Electric or its New Zealand distributor introducing the General Electric mcb. However, I would need some evidential foundation on which to conclude that this was a possibility. Clearly, General Electric had not considered that a worthwhile proposition prior to 2004, presumably because of the domination of the S91 in the market. There is no reason to think that the change in distributorship of the S91 would in itself either create a better opportunity for General Electric or cause General Electric to think that it might do so. [289] On the evidence adduced (subject of course to submission on the point) I can see no realistic prospect that NZI could have come into the market in early 2004 or, indeed later in 2004 with an alternative, legitimate product.Failure to mitigate loss[290] Mr Hodder pointed to Mr Gobbie's statement in his evidence that he decided not to push the sale of the S91 until after samples of the BM had been tested. However, Mr Gobbie did go on to say that two further flyers were sent to wholesale branches in February and March 2004 and that he rang a number of wholesale branch staff.[291] I do not accept, in the circumstances, that ABB NZ conducted itself so as to amount to an actual failure to mitigate its loss. However, Mr Hodder's second submission under this head was that ABB's damages should be reduced for its failure to raise its copyright claim earlier. Allegations of infringement of copyright were first made in August 2004. He submitted that had the copyright drawings been disclosed earlier NZI would probably have discontinued its infringing conduct. I have already found that this would not have happened. [292] I am quite satisfied that NZI would not have accepted any assertion by Desto as to subsisting copyright in respect of the S91. Its response when the allegations were made and supported by reference to drawings is the best guide; throughout the trial NZI steadfastly resisted any suggestion of subsisting copyright. [293] Mr Hodder also submitted that the plaintiffs' failure to seek interim relief to preserve its position should result in a reduction in damages. I do not accept this submission because the damages sought by the plaintiffs equate to NZI's profit on the BM which, it says, has been wrongly obtained at the plaintiffs' expense. Had interim relief been granted then NZI would not have had that profit in any event. To reduce the damages on this account would unjustifiably benefit NZI. For the same reason I do not accept Mr Hodder's submission that the plaintiffs should have utilised the mechanism in Part VII Copyright Act 1994 which permits the owner of a copyright work to request the Chief Executive of the Customs Service to detain pirated copies of imported copyright works at the border. Once again, had this been done it would have deprived NZI of the profit that is now being sought by way of damages.ABB's unlawful conduct[294] NZI also maintains that as ABB had, apparently, not given the required supplier declaration of compliance under Regulation 101A Electricity Regulations 1997 it was unlawfully selling its S91 mcbs and, as a result, should not be entitled to damages for its lost opportunity to sell the product into the market. [295] In cross-examination Mr Gobbie referred to his understanding that the Australian and New Zealand standard operates in both countries and therefore theS91 was accepted in both countries. He did not mention the Trans-Tasman Mutual Recognition Act 1997 (TTMR Act) but Mr Hodder submitted that that was the basis for Mr Gobbie's belief. Mr Hodder, however, rejected the idea that the TTMR Act 1997 could assist. Section 10(1) provides that goods produced or imported into an Australian jurisdiction that may be lawfully sold in Australia may, by virtue of the TTMR Act, be sold in New Zealand without the need to comply with the requirements relating to sale imposed by New Zealand law. [296] Mr Hodder submitted, because the S91 was produced in Indonesia and imported into New Zealand, s 10 did not apply. However, it was implicit in Mr Gobbie's evidence that the S91 was sold in Australia. I consider that the meaning of "goods" in s 10 is goods of a particular type not the specific goods in question. Therefore, if the S91 were sold in Australia and complied with Australian requirements it was unnecessary for it to comply with the New Zealand requirements. [297] Section 11 does not alter that position. It provides that nothing in s 10 affects the operation of New Zealand laws that regulate the manner of the sale of goods in New Zealand or the manner in which sellers conduct their business. I do not accept that the requirement to provide a supplier declaration under Regulation 101A falls into this category.Non-S91 losses[298] Part of ABB NZ's claim was for losses relating to lost sales on low-voltage products other than the S91. This claim is based on the fact that ABB NZ's objective in taking over the S91 in New Zealand was its perceived opportunity to increase the sale of other ABB low-voltage products. ABB NZ asserts that it could reasonably have anticipated increased sales of those other products had it been able to market the S91 without interference from the BM. [299] Mr Hodder rejected this part of the claim on the basis that such losses are too remote and could not be said to have been caused by NZI's breaches. He pointed out that NZI had not actually prevented ABB NZ from attempting to establish a presenceamongst wholesalers or non-wholesalers for its other low-voltage products and that its failure to succeed in doing so reflects its capacity to market itself and its product effectively rather than the stifling effect of the BM product. [300] This issue was not the subject either of extensive submissions by Mr Hodder nor of any reply by Mr Stevens on the basis that my decision would deal primarily with liability issues. I therefore do not reach any view on it. However, I do indicate my preliminary impression that there was insufficient evidence on which to base this head of damage.Other aspects of damages[301] Mr Hodder raised in his submissions a number of other aspects relating to the plaintiffs' claim for damages. These included whether damages should be available at all on the basis that NZI did not know and had no reason to believe that copyright subsisted in the work when it produced the BM, that damages under the FTA should be reduced to reflect the true level of causation and whether there was any basis for the punitive damages sought [302] In addition, the plaintiffs sought as a possible alternative to elect an accounting of profit rather than damages. [303] I leave all of these issues, which were not dealt with at all in the plaintiffs' submissions, to be determined as part of a quantum assessment at a later stage.Conclusion[304] I have found that: a) NZI is liable under ss 9 and 10 FTA for misrepresentations as to the commercial origin of the BM arising from the appearance of that product coupled with the manner in which it was distributed; b) The passing off claim fails because, although there is goodwill in the S91, ownership of it rests with NZI, which was most closely associated with it prior to 2004;c) NZI is liable under ss 9 and 10 FTA for misrepresentations that the BM was equivalent to the S91, suitable for use as a plug-in circuit breaker in New Zealand and had a short circuit capacity of 3kA. This is primarily because, based on testing done by all of the parties and the evidence as to the prospective fault current to be expected in New Zealand, the BM does not comply with Regulation 69 Electricity Regulations 1997; d) In relation to the breach of copyright claim: i) Only Desto has standing to sue; ii) There is no copyright in the labelling; iii) There is copyright in three of the four technical drawings relied on; and iv) The BM represented an infringement of a substantial part of those three drawings. e) The affirmative defence of estoppel to the breach of copyright claim fails because Mr Gobbie did not make the representations alleged to have been made; f) The affirmative defence of breach of copyright by SGIND fails because I have found that SGIND itself designed the legs used on the S91 after 2004; and g) The counterclaim for unjustified copyright proceedings fails because, in Desto's case, it has succeeded in its claim for breach of copyright. As a result, it would be inappropriate to grant relief under s 130 in respect of SGIND and ABB NZ since the costs would have been incurred in any event. [305] In relation to the relief sought I have found that:a) Injunctive relief is appropriate and I grant an injunction on the following terms: i) NZI shall cease manufacturing the BM and cease importing, distributing and selling it in its current form; ii) NZI shall deliver up to the plaintiffs all BM units in its power, possession or control; iii) NZI shall deliver up to the plaintiffs a list of all third parties to whom it has sold the BM in its current form; iv) NZI shall deliver up to the plaintiffs all advertising and promotional material containing illustrations or references to the BM together with all designs and specifications of the BM within its power, possession or control; v) NZI shall remove any reference to the BM in its current form from its website; and vi) NZI shall require Jiakong to deliver to Desto the tooling and moulds used to produce the BM in its current form. [306] In relation to the claim for declaratory relief, I find that such relief is inappropriate and decline to grant it. [307] I make no finding as to damages, since that issue, by agreement, will await a further hearing. However, I have made certain observations which may assist the parties in that regard. [308] Parties may apply for costs by way of memoranda as follows: a) On behalf of the plaintiffs by 20 October 2006 b) On behalf of the defendant by 3 November 2006c) On behalf of the plaintiffs in reply by 10 November 2006. ____________________ P Courtney J