HOLDFAST NZ LTD V HENKEL KGAA CA CA248/04

HOLDFAST NZ LTD V HENKEL KGAA CA CA248/04 17 May 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA248/04BETWEEN HOLDFAST NZ LIMITED Appellant AND HENKEL KGAA Respondent Hearing: 13 September 2005 Court: William Young P, Chambers and Baragwanath JJ Counsel: I Finch and D L Marriott for Appellant J O Upton QC, P G Scott and K G Duckworth for Respondent Judgment: 17 May 2006JUDGMENT OF THE COURT A The appeal is allowed. B The judgment of the High Court is set aside, with liberty to apply for orders consequential on such setting aside. C The appellant is entitled to costs in the High Court to be fixed by that Court. D The respondent must pay the appellant $8,000 for the costs in this Court together with usual disbursements. We certify for two counsel.____________________________________________________________________REASONSBaragwanath J [1] Chambers J [86] William Young P [124]• AppendicesBARAGWANATH J Table of Contents Para No. Background facts [2]Holdfast's prior display cards [3]Henkel's instruction to Cipidue [6]Henkel's repackaging [8]Holdfast's copying of Loctite (Appendix 8) by Super Bonder (Appendix 11) [10]Henkel's first proceeding and Holdfast's undertaking [11]Holdfast's preparation of its Ultra Bonder (Appendix 12) [12]Holdfast's launch of Ultra Bonder [15]The second Henkel proceeding [16]The allegation of breach of copyrightCategories of copyright [17]The Cipidue drawings [18]The QuickTite packaging [29]The SuperBonder packaging [30]The decision of the High Court [32]Can copyright subsist in the Blue Image design? [33]Subsistence of copyright in Henkel's works [34]Ownership [36]Infringement [37]Discussion [40]Infringement of artistic copyright [41]The three Wham-O elements [42](i) "Substantial part" [43](ii) "Objective similarity" [52](iii) Causal connection [56](iv) Copying [57]Indirect copying as infringement of copyright [58]Proving infringement [59]The role of the appellate court [62]Application of the principles [66]Breach of an undertaking [81]Result [85] [1] The defendant (Holdfast) appeals against a judgment delivered by Harrison J in the High Court at Auckland on 5 November 2004. He held that its "Ultra Bonder" packaging infringed the artistic copyright of the plaintiff (Henkel) in Henkel's "SuperBonder" and "QuickTite" products and ordered consequential relief.Background facts[2] Henkel is a large German company and a world leader in the sale and production of adhesives including cyanoacrylate adhesives, which are commonly known as fast bonding or super glues. Holdfast is a New Zealand company which from the 1980s manufactured and sold a similar product, "FIX-IT Super Glue".Holdfast's prior display cards[3] From at least April 1999 (until May 2002) Holdfast packaged its product using a bottle contained in a cellophane blister mounted on a red, yellow and blue card reproduced as Appendix 1. Its key features were:1 The "FIX-IT Super Glue" brand across the top of the package; 2 The horizontal bands of red, yellow and blue; 3 A left hand vertical column containing two illustrations of practical uses of the product depicted in square boxes, and beneath that a list of materials that the adhesive was suitable for with a tick beside each material; 4 The blister pack attached vertically to the right hand side of the card; 5 On the rear of the card in black print were a number of illustrations of potential uses, a list of materials on which the product could be used, and instructions for use.The colour scheme of bright shades of red, yellow, blue and white corresponds to the livery of the majority of Holdfast products for the last 18 years. [4] Between May 1997 and November 2001 Holdfast also produced a display card known as "Simple Solution" (Appendix 2). It comprised a red top strip of something like quarter of its height containing the Holdfast logo and in white writing "Stick with the best"; beneath that a thin yellow strip with the words "Super Strong QUALITY Super Strong QUALITY"; and below that, bright blue occupying about three quarters of the card containing at the foot a thin red stripe and the words "SIMPLE SOLUTIONS" in white and "GUARANTEED TO WORK!!!" in yellow.[5] From December 1997 to November 2001 Holdfast produced a display card (Appendix 3) for "FIX it" Stick-it-on DOTS which was wholly blue save for white text and a thin yellow strip with the word "HARDWARE" upon it. In 1994-5 Holdfast used to label its flexible can pourer a display card (Appendix 4) with a bold red stripe above a slightly narrower bold blue with a yellow waistband. From 1996 to 2000 it used to accompany its "FAST ADY†‡rry-reinforced epoxy resin, a card (Appendix 5) comprising a relatively broader red above a rather narrower bold blue separated by a yellow waistband. Between 1996 and 2001 Holdfast employed a Fast Fix Card (Appendix 6) using a white background to set-off letters of another colour.Henkel's instruction to Cipidue[6] In 1999 Henkel decided to repackage its cyanoacrylate adhesives and one of its strategic business units undertook market research in Germany for that purpose. The research led Henkel to select a blue colour which it wished to use internationally to secure uniformity and recognition of brand identity. Henkel commissioned an Italian design company, Cipidue, to design the new packaging. [7] It may be inferred from Cipidue's specimen drawings that it either designed or was instructed as to the inclusion of dimensions and shape of a card on which a bottle was mounted in a blister pack. To allow it to be hung on a nail or hook it contained a horizontal oblong hole with a smaller semicircle cut out of its top; those elements did not differ from Holdfast's Fix-It Super Glue (Appendix 1). It was of a basic blue colour. Cipidue responded with a series of drawings of the new packaging which Henkel called its Blue Image design. An example is reproduced as Appendix 7.Henkel's repackaging[8] From 1999 the Blue Image design packaging was used in the launch of Henkel's cyanoacrylate adhesives in various countries under five brand names: SuperAttak (Appendix 8) (Italy and Nordic countries); SuperBonder (Appendix 9)(South and Middle America 2000); QuickTite (Appendix 10) (North America and Asia/Pacific including Australia in September 2001); Super Glue (Spain, Belgium, France); and Loctite (various countries mainly in combination with SuperBonder, QuickTite and SuperAttak). [9] As part of its launch Henkel exhibited its cyanoacrylate adhesives using the Blue Image design packaging at trade fairs around the world. One was at Chicago in 2001 where Henkel displayed its Loctite SuperAttak product in the Blue Image design packaging (Appendix 8).Holdfast's copying of Loctite (Appendix 8) by Super Bonder (Appendix 11)[10] The Managing Director of Holdfast, Mr Henderson, attended the Chicago fair and took home a sample of the Loctite SuperAttak products. Having decided that it would alter the packaging of its Fix-It Super Glue product, Holdfast copied the SuperAttak packaging (Appendix 8) incorporating the Blue Image design and launched a new range of cyanoacrylate adhesive under the name Super Bonder (Appendix 11) which employed the copied packaging.Henkel's first proceeding and Holdfast's undertaking[11] Henkel, which had decided to launch its product in New Zealand under the name Loctite/QuickTite, issued proceedings against Holdfast alleging breach of copyright related to its Blue Image design. The parties settled the proceedings by Holdfast's undertaking that it would stop using packaging which incorporated Henkel's Blue Image design. Mr Henderson later acknowledged that the Super Bonder packaging had been copied from Henkel's Loctite SuperAttak packaging, but asserted that it retained key features from the prior Holdfast Fix-It Super Glue packaging (Appendix 1).Holdfast's preparation of its Ultra Bonder (Appendix 12)[12] Mr Henderson gave a designer a sample of Holdfast's offending Super Bonder packaging (Appendix 11) with instructions to use it as a start point to produce new packaging for the renamed Ultra Bonder. He directed that it be quite different from Henkel's Blue Image design and retain the key features of the Holdfast livery. [13] Mr Henderson described as follows the changes from the offending Super Bonder (Appendix 11) to the Ultra Bonder packaging (Appendix 12) challenged in the present proceeding:30.1 While the overall colour scheme of red, yellow and blue (the Holdfast livery) were retained, the overall appearance was changed to more of a 50/50 red/blue mix with yellow highlights, with the inclusion of a large red arrow motif on the lower one third of the card; 30.2 The list of uses was moved to two columns towards the bottom of the card, and the ticks from the FIX-IT packaging were reintroduced; 30.3 The white fuzz around the brand name was replaced with a bold white outline and a light blue fuzz and the style of fuzz was also changed with the result being a very distinctive and prominent brand name that forms the focal point for the packaging; 30.4 Each of the variants in the ULTRA BONDER range now has a solid yellow band across the card approximately one third of the way down, the same as they did on the FIX-IT SUPER GLUE packaging; 30.5 The white stripes have been removed from adjacent to the product; 30.6 The variant type such as "power liquid" or "easy brush" has been moved to a position two thirds of the way down in the centre of the card; 30.7 Later versions of the packaging have replaced the Holdfast logo with the Gorilla logo in accordance with our corporate policy.[14] Having finalised the packaging Mr Henderson sent a copy to the New Zealand General Manager of Henkel who did not reply. He also took the advice of Holdfast's patent attorneys who advised that the new packaging would not infringe Henkel's copyright.Holdfast's launch of Ultra Bonder[15] In August 2002 Holdfast launched its cyanoacrylate adhesive under the name Ultra Bonder. Its packaging was in the form shown in Appendix 12. Its features included:• predominantly red, yellow, blue and white colouring;• the location of the product itself in a cellophane blister on the right lower portion of the card;• the inclusion of two illustrations in square boxes on the left hand side of the card;• a yellow horizontal band including key performance features;• a vertical list of suitable materials in highlighted boxes; and• the HOLDFAST (later Gorilla) logo in the top left corner of the card.The second Henkel proceeding[16] On 30 October 2002 Holdfast received from Henkel's patent attorney a letter complaining of breach of copyright. The present proceeding was served in May 2003. In response to Holdfast's assertion of an independent creation defence Henkel abandoned a claim for summary judgment and the case proceeded to trial over three days in September and October 2004. Henkel claimed breach both of undertaking and of artistic copyright.The allegation of breach of copyrightCategories of copyright[17] Henkel pleaded that copyright in the Blue Image design existed as an artistic work and alternatively as a compilation and therefore a literary work under the Copyright Act 1994. An alternative claim to literary copyright was rejected by Harrison J and was not pursued on appeal.The Cipidue drawings[18] Before us Mr Upton QC advanced Henkel's claim for artistic copyright in terms of the Cipidue drawings which he submitted were the basis of the design on the packaging of its own products "SuperBonder" (Appendix 9) and "QuickTite" (Appendix 10). It was not pleaded that Holdfast breached the copyright in the SuperAttak package (Appendix 8) which Holdfast had originally copied or any drawing immediately underlying it. [19] Section 14 of the Copyright Act 1994 provides:14 Copyright in original works(1) Copyright is a property right that exists, in accordance with this Act, in original works of the following descriptions: (a) artistic works:[20] Section 2 defines "artistic work" as follows:artistic work—(a) Means— (i) A graphic work, photograph, sculpture, collage, or model, irrespective of artistic quality;"Graphic work" is defined in turn in s 2 as follows:(a) any painting, drawing, diagram, map, chart, or plan; and (b) any engraving, etching, lithograph, woodcut, print, or similar work:[21] Henkel pleaded:14 THE Plaintiff is the owner of the copyright in the following original artistic works as defined in section 2 of the Copyright Act 1994, ("the artistic works") produced for the manufacture of the Blue Image design: a) consisting of: (i) selection and layout (ii) colours (iii) instructionsof the product known as "SuperBonder". b) consisting of: (i) selection and layout (ii) colours (iii) instructions of the product known as "QuickTite". 15. THE artistic works were made in Italy and/or the Federal Republic of Germany by employees of the Plaintiff in the course of their employment by the Plaintiff or by third parties commissioned to carry out such works.[22] While not expressly pleaded, it was submitted by Henkel that Appendix 9 and Appendix 10 are indirect copies of the original Cipidue drawings in which it possessed copyright; and alternatively copies of drawings deriving from the Cipidue drawings that were not produced but must be inferred both to have existed and to have been the subject of copyright in Henkel. Since the Cipidue drawings were relied upon by Henkel in evidence and in argument in the High Court, I am prepared to assume that the pleading embraces them or may be amended to do so. [23] Henkel's claim in respect of the so-called "Blue Image design" is that:The Defendant's product reproduces the following aspects of the Blue Image design: i) red and blue card with blister pack. ii) the card having a red horizontal stripe on the top with the majority of the rest of the card being blue. iii) writing in white at the top right hand corner within the red horizontal stripe. iv) the name of the product being below the red horizontal stripe. The first name of the product being in red block letters – the second name in blue block letters. All the letters flashed with white. v) a yellow horizontal stripe extending across the card from the left below the second red horizontal stripe with white writing at the top left of the yellow stripe and with red writing describing the product within the yellow stripe. vi) a blister pack containing the product. vii) two photographs vertically positioned on the left side of the card.viii) the words no clog cap or thin nozzle or non drip formula in yellow writing and a yellow arrow to the right of the cap of the product. ix) the words SUPER GLUE in white writing on a red stripe. x) the weight of the product in white writing at the bottom of the packaging. xi) the words Power Liquid in white writing with blue flashing and the words high performing formula in the middle of the packaging; or xii) the words Power Gel in white writing with blue flashing; or xiii) the words Precision Liquid in white writing with blue flashing; or xiv) the words Easy Brush in white writing with blue flashing. xv) where the cyanoacrylate adhesive is contained in a squeezable tube the weight is 3 grams. xvi) where the cyanoacrylate adhesive is contained in a packaging featuring the words Easy Brush the weight is 5 grams. xvii) where the cyanoacrylate adhesive is contained in a squeezable tube the tube is predominantly blue with the first name and second name of the product lengthwise and the first name in red and the second name in blue writing all flashed in white. xviii) where the cyanoacrylate adhesive is contained in a bottle the bottle is predominantly blue with the first name and second name of the product horizontally and the first name in red and the second name in blue writing all flashed in white. xix) where the cyanoacrylate adhesive is contained in a bottle or a tube the housemark is in white writing on a red stripe. xx) where the cyanoacrylate adhesive is contained in a bottle the words SUPER GLUE appear below the name of the product.[24] It is convenient to clear away at this stage the alternative claim to copyright in drawings other than the Cipidue drawings. I refer briefly to each. Henkel's pleadings appear to assert that the Blue Image design used in the both the QuickTite and the SuperBonder packaging was the subject of copyright. [25] Copyright can exist in a series of drawings: Merchant Adventurers Ltd v M Grew & Co Ltd [1972] Ch 242, 255. But where it is alleged that copyright has been infringed in relation to one of a series of drawings, each drawing must be considered on its own: UPL Group Ltd v Dux Engineers Ltd [1989] 3 NZLR 135, 143.[26] Consequently, where copyright in a particular part of a series of drawings is allegedly infringed, whether there has actually been copying can be established only by comparison between the infringing article and the particular drawing in the series. The immediate question is whether Henkel can establish that the whole of its Blue Image design has been infringed when any specific drawings of QuickTite and SuperBonder packaging deriving from them have not been produced. [27] It appears from the affidavits of Mr Martinez and Mr Vandepaepeliere that the Blue Image design is a series of designs for Henkel and its adhesive ranges. They assert that the QuickTite and SuperBonder packaging had its genesis in the Blue Image design. [28] Since Henkel has copyright in the Cipidue drawings underlying its Blue Image design, it may be argued in law that it also has copyright in unidentified drawings from which the QuickTite and SuperBonder packaging derived. Whether that has been established in fact is a matter of inference from the whole of the evidence.The QuickTite packaging[29] The QuickTite packaging first appeared in early 2002. According to Neil Watkins, the National Business Manager for Selleys New Zealand (a division of Orica New Zealand Limited), the sample artwork for the QuickTite packaging was "supplied" to Selleys in about January 2002. The artwork itself was not produced, but it may be inferred that it would have been a drawing similar to the actual package which was produced. It is arguable that such (inferred) drawing is sufficiently different from any of the Cipidue drawings to amount to an original artistic work. The first issue is as to ownership of the copyright in the inferred drawing. We were not referred to evidence on this point. It cannot be assumed that it was necessarily an employee of Henkel or someone commissioned by it. Mr Upton asked us to infer that the formatting (artistic work) came from Germany. Given that the product itself was made in Ireland I am not prepared to draw that inference. The claim based on an inferred QuickTite drawing must fail on the basis that Henkel has not proved ownership of the copyright in such drawing.The SuperBonder packaging[30] The Henkel SuperBonder packaging is at Appendix 9. But there is no evidence as to who created any drawing underlying that packaging. The claim based on an inferred SuperBonder drawing must fail on the same grounds as the QuickTite claim. [31] I return to the claim based on the Cipidue drawings.The decision of the High Court[32] Harrison J correctly directed himself as to the four elements which a plaintiff who alleges breach of copyright must establish:• a work in which copyright can subsist;• that copyright does subsist;• the plaintiff owns the copyright; and• it has been infringed by the defendant. See P S Johnson & Associates Ltd v Bucko Enterprises Ltd [1975] 1 NZLR 311, 375. He considered each in turn.Can copyright subsist in the Blue Image design?[33] The Judge recorded that Mr Upton QC, for Henkel confirmed that the artistic work consisted of basic drawings or diagrams of the packaging. He recorded an acknowledgement of Mr Finch for Holdfast that colour can constitute a significant component of an artistic work: Bonz Group (Pty) Ltd v Cooke [1994] 3 NZLR 216, 226-7 Tipping J. The Judge recorded the evidence of the art director of Cipidue, an Italian design company, that in 1999 his company was instructed to develop packaging for Henkel's super glue line of adhesives. He and his team developed original drawings including the packaging in Appendix 7. He accepted that the definition of "drawing" includes words and figures explaining the significance ofcertain lines: AHI Operations Ltd v New Lynn Metalcraft Ltd (No. 1) (1982) 1 NZIPR 381. While Cipidue did not produce any drawings specifically for a SuperBonder or QuickTite product the Judge was satisfied that their packaging was a development or modification of the Blue Image design in which copyright can subsist.Subsistence of copyright in Henkel's works[34] The Judge correctly directed himself that the initial question is whether Henkel's drawings are original to or originated from their maker Cipidue. To qualify as original the work must originate from its maker. Copyright aims to protect the fruits and labours of the copyright owner and not the ideas behind it: Frank M Winstone (Merchants) Ltd v Plix Products Ltd [1985] 1 NZLR 376, 379. It is the manner of expression which the law protects: University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601, 608-9, Peterson J, applied inWham-O Manufacturing Co v Lincoln Industries Ltd [1984] 1 NZLR 641 (CA) at 644. Hence Henkel's reliance in the drawings. The labour, skill and capital of a maker must sufficiently vest in the product a character or quality which the raw materials or component parts did not possess: MacMillan & Co Ltd v Cooper (1923) 40 TLR 186 (HL) at 188 per Lord Atkinson applied in Wham-O at 664. Sufficiency means that the extent of skill or labour devoted to production of the work is more than minimal: Glogau v Land Transport Safety Authority [1997] 3 NZLR 353, 358, Gallen J, upheld on appeal [1999] 1 NZLR 261 at 270. [35] The evidence of Cipidue's art director, Mr Martinez, as to originality was not challenged by Holdfast. The Judge was prepared to infer that the respective drawings on the SuperBonder and QuickTite packages were developments of Cipidue's design and he concluded that it was immaterial that no intermediate drawing had been produced.Ownership[36] The party commissioning drawings is their owner (s 21(3)). The evidence that Henkel had commissioned and paid for the Cipidue work was unchallenged.Infringement[37] The Judge directed himself according to the statement by this Court inWham-O:complete identity is not required to constitute infringement. To amount to infringement by reproduction: (a) The reproduction must be either of the entire work or of a substantial part. (b) There must be sufficient objective similarity between the infringing work and the copyright work, or a substantial partthereof. (c) There must be some causal connection between the copyright work and the infringing work. The copyright must be the source from which the infringing work is derived. (emphasis added)[38] The Judge made a close comparison between Holdfast's Ultra Bonder and Henkel's QuickTite packages. But I have rejected Henkel's claim to ownership of copyright in any underlying QuickTite drawings. The true comparison must be with the Cipidue drawings and since the Judge did not make that comparison we must do so . It is nevertheless convenient to recount the Judge's approach. [39] The Judge correctly recognised that general resemblance is not sufficient to establish a substantial reproduction: Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd (No. 2) [1985] 2 NZLR 143 at 157. Having reproduced Henkel's pleadings he described the distinct developments of the Blue Image design packaging. He recorded the evidence of Mr Roband, a graphic designer with two years experience, and of Associate Professor Costley supporting the respective cases of Henkel and Holdfast. The Judge concluded:[45] To my eye the similarity in use of colour between the packaging is overwhelming. The defining feature of both packages is the predominance of an identical deep blue colour. It occupies more of the Blue Image design, for these purposes the QuickTite package, than the Ultra Bonder, the bottom of which also features a chevron (the bent bar of an inverted V) shaped red area. Both packages are distinctive for a red stripe along the top. [46] The brand name for each package is in lower case (except for the first letters of the two words). In both the first part is in red, and the second in blue. The letters are surrounded with a white border, which is more distinct for the Blue Image design package. Each features a red and yellow strip below the brand name, although their orders are reversed. The word "SUPER GLUE" is written in white across each red strip, but different words appear on the yellow strip. Each features a yellow arrow pointing towards the tip of the product, accompanied by the words "THIN NOZZLE", also in yellow. [47] I also agree that a number of the other similarities identified by Mr Roband are present such as the placement of two explanatory photographs on the right hand side of the package, the list of materials with which the product works, the location of the weight of the product, and the placement, colouring and size of the dispensers themselves. [48] In my judgment Holdfast's Ultra Bonder is a reproduction of a substantial part of the Blue Image design used to package Henkel's QuickTite; the objective similarity between the two is plain. I am satisfied that Holdfast has taken the essence of the Blue Image design in its Ultra Bonder package. [56] the evidence of a causal connection between the two works is overwhelming [59] While I am conscious that Mr Upton did not expressly suggest to Mr Henderson in cross-examination that he had access to and copied Henkel's Super Bonder or QuickTite packaging, I have no difficulty in finding to that effect. Henkel's SuperBonder was on the retail market in 2000 and its QuickTite was supplied to Australasian trade buyers in August 2001; Ultra Bonder was produced in August 2002. The specific similarities between QuickTite and Ultra Bonder which I have summarised are too close to defy an explanation of coincidence. This conclusion is confirmed by Ms Towes' equivocal evidence about whether she had access to the QuickTite packaging when redesigning the Ultra Bonder. I am satisfied that Mr Henderson gave her both Holdfast's Super Bonder and Henkel's SuperBonder or QuickTite packaging for the purpose of performing her redesign brief. [60] Accordingly, I am satisfied that Holdfast has infringed Henkel's copyright in the Blue Image design for its QuickTite packaging in manufacturing and offering its Ultra Bonder product for sale.Discussion[40] The real issue in this case is whether Holdfast's Ultra Bonder package in fact infringed Henkel's artistic copyright in the Cipidue drawings.Infringement of artistic copyright?[41] Laddie, Prescott and Vitoria, The Modern Law of Copyright and Design (3ed 2000) states:4.32 copyright law does not protect [artistic works] unless they are original the expression 'original artistic works' is a composite phrase: it is originality pertaining to artistic matters which counts, and that only4.33Originality corresponds to the independent skill and labour that the author has undertaken in creating his work and which justifies its protection by the law. Since the law does not concern itself with trifling matters it follows that a certain minimum of originality is required if the work is to receive even minimal protection, that is, slavish copying in toto. More extensive protection requires a greater degree of originality4.34 Essentially the point is that the author is not entitled to be protected against copying save of that which is his work. Part of what is present in the first artefact may not be the work of the first artist at all, but may have derived by him from an antecedent sourceThe three Wham-O elements[42] To prove that copyright has in fact been infringed the plaintiff must establish the three Wham-O elements ([37] above). I consider them in turn.(i) "Substantial part"[43] In L B (Plastics) Limited v Swish Products Limited [1979] RPC 551, 622 Lord Wilberforce stated that:Substantiality [is] a question of quality rather than quantityAnd that the focus is on whether the defendant:copied those things which give it specific individuality.[44] There is no need for them to be a substantial part of the defendant's work:Warwick Film Productions Ltd v Eisinger [1969] Ch 508, approved by Lord Millett in Designers Guild v Russell Williams (Textiles) Ltd [2001] 1 WLR 2416 (HL) at [38]. Lord Millett also said:An action for infringement of artistic copyright is not concerned with the appearance of the defendant's work but with its derivation. The copyright owner does not complain that the defendant's work resembles his, his complaint is that the defendant has copied a substantial part of the copyright workHe added:[41] Once the judge has found that the defendants' design incorporates features taken from the copyright work, the question is whether what has been taken constitutes all or a substantial part of the copyright work. This is a matter of impression, for whether the part taken is substantial must be determined by its quality rather than is quantity. It depends on its importance to the copyright work. It does not depend upon its importance to the defendants' work, as I have pointed out. The pirated part is considered on its ownThere is no need to look at the infringing work for this purpose.To be substantial:there must be certainty in the subject matter of the monopoly given by copyright in order to avoid [in]justice to the rest of the world:Baigent and Leigh v The Random House Group Ltd [2006] EWHC 719 (Ch) at [155] per Peter Smith J[45] In that recent decision concerning the book The Da Vinci Code the English High Court dismissed a claim for alleged breach of copyright. The Judge accepted the defence submission that:if what is asserted to be infringed is so general that it cannot be certain that would lead to a conclusion that it is such a level of abstraction that no protection should be afforded to it.The authorities relied on include Green v Broadcasting Corporation of New Zealand[1989] 3 NZLR 18 (PC).[46] In principle, the greater a party's reliance on what in the law of passing off has been called "the common things of life" the more distinctive must be its collocation of such items to establish the originality that justifies copyright (cf in the sphere of trademark law Kerly On Trademarks (14th ed) at 465-6; see 10 th ed at 598-9 applied in Penfolds Wines (NZ) Ltd v Pacific Vineyards Ltd (1979) 1 NZIPR 242, 251). [47] So in Designers Guild Lord Hoffmann said at [25]:certain ideas expressed by a copyright work may not be protected because, although they are ideas of a literary, dramatic or artistic nature, they are not original, or so commonplace as not to form a substantial part of the work.[48] In Wham-O this Court stated at 666-7:It is important to bear in mind especially in the context of the present case that it is not necessary for a plaintiff to establish a sufficient degree of similarity between the copyright work and the alleged infringing work, each taken as an entirety. It is sufficient to establish that such similarity exists between a substantial part of the copyright work and the alleged infringing work. See: Francis Day & Hunter Ltd v Bron [1963] Ch 587, 614; Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, 277. Useful discussion of the question of substantiality may also be found in Cornish on Intellectual Property (1981) p 347; and in Lahore, Intellectual Property Law in Australia (1977) paras 1111 and 1112.It cited Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, 293 per Lord Pearce:The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement. It is this, I think, which is meant by one or two judicial observations that 'there is no copyright' in some unoriginal part of a whole that is copyright. They afford no justification, in my view, for holding that one starts the inquiry as to whether copyright exists by dissecting the compilation into component parts instead of starting it by regarding the compilation as a whole and seeing whether the whole has copyright. It is when one is debating whether the part reproduced is substantial that one considers the pirated portion on its own. (emphasis added)[49] There is however to be asked the question whether: insofar as his own work derives from the claimant's work at all, that material was not originated by the authority of the claimant's work or that, to the extent that it was, its degree of originality is too modest to count as 'substantial'Laddie & ors at 3.58.[50] In Francis Day & Hunter Ltd v Bron [1963] 1 Ch 587, 618 Lord Upjohn considered that there could be a situation where:A defendant might in theory go into the witness-box and say that he deliberately made use of the plaintiff's work, but that it is not an infringement, either because he did not make use of a substantial part of the plaintiff's work, or that, though the plaintiff's work has been utilised, he has been able to alter it that it cannot be properly be described as a reproduction.The point is discussed by Louise Longdin in Opinion [2005] EIPR 283 commenting on University of Waikato v Benchmarking Services (2004) 8 NZBLC 101,561. [51] It is no excuse for a defendant that while it has admittedly used the plaintiff's work, it has altered it in such a way that it cannot properly be called a reproduction of the plaintiff's work (L B (Plastics) Ltd v Swish Products Limited [1979] RPC 551, 622, Lord Wilberforce; compare Francis Day & Hunter Ltd v Bron at 618):The adoption of modifications does not reduce the extent of the reproduction to anything less than substantial.But the question of substantiality remains.(ii) "Objective similarity"[52] This is a purely objective question for the court which views essentially the same issue as (i) from another angle. The test is whether there is a sufficient degree of objective similarity, the similarity being caused by the taking of a substantial part of the copyright work (Laddie & ors, para 3.129; see also Inglis v Mayson(1983) 3 IPR 588, 605).[53] Where the plaintiff states that copyright is claimed in a collection of individual features, none of which on their own would attract copyright, the plaintiff has to show that:The defendant must have used the same or a substantially similar arrangement or collocation of individual features. If the defendant has copied the individual features but has made its own arrangement of them, this will not represent an infringement. That is because the plaintiff has no monopoly in the individual features as such but only in their arrangement or collocation. (Bonz Group (Pty) Ltd v Cooke [1994] 3 NZLR 216, 220 (HC); see alsoFrancis Day & Hunter Ltd v Bron [1963] Ch 587, 618)[54] Consequently, if a defendant were to select a collection of features from the plaintiff's work and use them in a work, so long as the defendant arranges and uses the features differently from the plaintiff, the defendant has not breached the plaintiff's copyright. [55] The principle that copyright seeks to protect the physical manifestation of an idea, not the idea itself, is analysed by Laddie & ors:4.45 The principle is surely as follows. One enquires: to what extent do the claimant's work and the defendant's work have matter in common, being matter which the claimant originated and the defendant copied? If that common pattern is detailed enough and original enough to have been capable of standing as an original artistic work in its own right, the defendant's work is a plagiarism; it must be, because the common pattern forms part of the claimant's work, was created by him and, therefore, what the defendant has copied is itself an original work. Otherwise, the defendant has only copied the general idea; this too must be so because if all that the defendant copied and the claimant originated is something which is too abstract or vague to count as a 'work' in the first place, the claimant can scarcely complain of the reproduction of a substantial part of his work. The conceptual distinction is therefore quite simple and follows from the fact that what the Act [Copyright, Designs and Patents Act 1988 (UK)] protects is an original copyright work, not a general idea or principle. Protection ceases as soon as what is taken is too general to be a work.(iii) Causal connection[56] In the present case, where the prior copying of Appendix 9 is undisputed, I find it unnecessary to consider (iii) causal connection separately. If (i) and (ii) are established causal connection must follow. The opposite is also the case.(iv) Copying[57] A fourth issue is whether the drawings were copied by Holdfast. There is no suggestion that they were directly copied, but copying is frequently indirect: see s 29(2) and Copinger and Skone James on Copyright (15th ed Vol 1) at [7-15]. Indirect copying is of course wrongful. So in this case one takes each of the Cipidue drawings, considers what of them has been taken by the Holdfast package, and considers whether what has been taken constitutes all or a substantial part of the copyright work. As Chambers J observes, because of the way the case was run before him that is a comparison which Harrison J did not undertake.Indirect copying as infringement of copyright[58] Copyright in an artistic work can be infringed by copying it in the form of the three-dimensional object, whether directly (from the artistic work itself) or indirectly (copying an object itself made from the artistic work): see Copinger and Skone James, at [7-55]; Laddie & ors, at 3.126.Proving infringement[59] Where there is indirect copying the infringed work is compared with the copyright work and not the indirect source. The House of Lords in King Features Syndicate Inc v O and M Kleeman Ltd [1941] AC 417 determined that the infringing article, a Popeye brooch and toy which the defendant copied from licensed Popeye merchandise, had to be compared with the cartoons from which the licensed Popeye merchandise derived. Lord Wright stated that the test (at 435-436):to be applied is purely visual, the sketch and the brooch being comparedoculis subjecta fidelibus. It is not material that the respondents were stealing the idea of "Popeye, the Sailor," or availing themselves for commercial profit of the popularity acquired by that figure. The appellants' copyright is in the actual sketch, not in the idea. There would be no infringement if the respondents had independently produced a similar figure without copying the sketch directly or indirectly. The question is whether there was copying of the actual sketch. (emphasis added)[60] Thus, it is the copyright artistic work, and not the physical form derived from that work that is compared to the infringing article even where the defendant copied from the physical form and not the drawings (i.e. the original source). [61] That is why infringement of copyright can occur where the infringing copy was made from an indirect source, in this case packaging and any drawing that preceded it. However, proof of infringement of copyright must be established by comparison of the allegedly infringing copy and the original source (the Cipidue drawings).The role of the appellate court[62] The importance of careful focus on the precise issues is illustrated by the litigation at three levels in Designers Guild v Russell Williams (Textiles) Ltd [1998] FSR 803 (Collins J); [2000] FSR 121 (CA); [2000] 1 WLR 2416 (HL). The litigation concerned two patterns of fabric, each involving indistinctly drawn vertical stripes with superimposed flowers which, in places, allowed the colour of the stripes to show through (a "resist" effect). The plaintiff's fabric was called Ixia and the defendant's Marguerite. The trial Judge's finding that the defendant had copied the plaintiff's fabric was not challenged on appeal. The second issue was whether the copying had been of the whole or of a substantial part of the artistic work constituted by the fabric design. The trial Judge considered that:It is the combination of the flowers and the stripes, the way in which they related to each other, they way in which they were painted, and the way in which there was a "resist" effect which makes the overall combination the copying of a substantial part.[63] The Court of Appeal was struck by the dissimilarity of the two designs. It found that the only similarities between the works were the idea of combining stripes and flowers and the use of three similar painting techniques. They considered that:The designers of Marguerite certainly copied the idea of Ixia, they also adopted the same techniques but they did not copy a substantial part of the expression of the idea.[64] The House of Lords restored the High Court decision, observing that the Court of Appeal had conducted an impermissible examination of its own of facts which it had been the province of the trial judge to find. [65] In this case because the Judge did not take each of the Cipidue drawings, consider what of them has been taken by the Holdfast packaging, and consider whether what has been taken constitutes all or a substantial part of the copyright work, this Court must undertake that task. The issue is whether Holdfast took a substantial part of Henkel's Cipidue drawings.Application of the principles[66] I have said that (i) substantial part and (ii) objective similarity view essentially the same question from different angles. Those issues relate to (iv) whatever was impermissibly copied. It is convenient now to consider them together. [67] It is the Cipidue drawings and not the later expression with which the Holdfast products are to be compared. While it may be arguable in law that there should be inferred in fact the existence of a Henkel drawing on which a claim could be based, in the absence of any evidence as to the authorship of intermediate drawings I have declined to find that they both existed and were commissioned by Henkel. [68] I am satisfied that Henkel must fail even if it had been the owner of copyright in intermediate drawings. Henkel's case may be put at its highest by assuming (contrary to [60]) that it is not the Cipidue drawings, but a presumed drawing from which derived the design on its SuperAttak (Appendix 8) (infringed by Holdfast's Super Bonder Appendix 11), which should be examined to determine whether Holdfast's Ultra Bonder (Appendix 12) adopted any substantial part. [69] The dominant components of that formulation by Henkel of its Blue Image design are the common form elements of a glue bottle affixed to a card of a dominant blue primary colour with pictures of two uses and a list of applications. None of these is original. Holdfast's Appendix 3 was essentially solid blue. Nor is the thinred strip at the top. Each was used by Holdfast prior to Henkel's retainer of Cipidue, Cipidue's preparation of its SuperAttak (Appendix 8) and the evolution of Henkel's SuperBonder (Appendix 9) and QuickTite (Appendix 10). Certainly the use of red for the first word "Ultra" (and "Super") is followed by a blue for the second word "Bonder" employed in each and those words appear on a white background. But the use of a white background to set-off letters of another colour is unoriginal as appears from the Holdfast Fast Av‘8h qƒ ‚qˆprqir‡rr ((%hq! 6ƒƒrqv‘%The aping of Henkel's broad white background to the red and blue letters in Holdfast's offending "Super Bonder" card has gone from the Ultra Bonder card Appendix 12; its surround is a narrow white. "Bonder", in the sense of that which holds together, is a relatively new noun. It appears in the Merriam-Webster On-line Dictionary although not in the Oxford. But Henkel did not suggest that its use was original. There is a yellow arrow pointing to the glue bottle in Appendix 9 and also in the Ultra Bonder card Appendix 12. [70] By themselves the features of blue and red colour lettering on white background and yellow arrows are unoriginal. The remaining question is whether taken together they and the other features of Henkel's SuperBonder card constitute a distinctive pattern of such originality as to give rise to a copyright which Holdfast has infringed. [71] In my view Harrison J erred in failing to identify and apply the principle that there must be certainty in the subject matter of the monopoly. [72] Each of the elements of Henkel's design is part of the common things of life and therefore requires relatively distinctive treatment for that collocation to give rise to copyright. [73] Holdfast originally did intentionally appropriate both Henkel's SuperAttak collocation and the name SuperBonder to save time and effort and it was to be used in a similar fashion to Henkel's. Such conduct clearly infringed Henkel's copyright in the collocation. The facts are striking, both by reason of Holdfast's initial pirating of Henkel's copyright in Henkel's SuperBonder collocation and then by reason of Holdfast's risky decision to give the designer a sample of that very packaging as astarting point for a new design. Notwithstanding the evidence of substantial expenditure of time and effort by the designer to come up with a novel product, Holdfast's conduct of using Henkel's work as the starting point exposes Holdfast to risk of the comment of Goff LJ in Elanco Products Ltd v Mandops (Agrochemical Specialists) Ltd [1980] RPC 213, 228:having started off on the wrong foot by making a deliberate copy, did not sufficiently cure the position by working from that copy instead of starting from scratch.[74] I have analysed both Henkel's pleaded claim ([23] above) and not only the Cipidue drawings (including Appendix 7) which are in law the true comparators with Holdfast's Ultra Bonder (Appendix 12) but also Henkel's Super Attack (Appendix 8), SuperBonder (Appendix 9) and QuickTite (Appendix 10) on each of which at various stages Henkel has relied. That has been necessary in order to make a series of what are in truth jury judgments required by the Judge's failure to remove from the collocation matters of no originality. They include essentially all the factors which Henkel pleaded so that it is only their collocation, which Appendix 11 had infringed, that could be said to be original. I have particularly considered the error of the Court of Appeal in Designers Guild. [75] Despite the original piracy and the supply of Henkel's work to Holdfast's designer I have concluded that such features in the Holdfast design are similar to those in the Cipidue drawings and in Henkel's Appendices 8-10 were either previously used by Holdfast or are among the "common things of life" and thus does not warrant copyright protection. In Designers Guild the trial Judge and the House of Lords agreed that the overall combination of the elements of the defendant's design entailed the copying of a substantial part. In that case there was an essential unity of concept pirated by the defendant from the plaintiff. I am satisfied that there is no such unity of theme that could justify categorising Holdfast's selection of common form elements as pirating Henkel's design. [76] I add that in "Vagueness in the Scope of Copyright" (2005) 121 LQR 657 Michael Spence and Timothy Endicott criticised the Law Lords' discussion inDesigners Guild of the issue of what constituted a substantial part. They argue that the approach adopted is imprecise as coming close to eliding the copying andsubstantiality requirements, tending to render nugatory the substantiality enquiry. They observe at 671 that:Ideas which are of sufficient particularity that they may be said to be the work of a particular author count not as ideas but as expression.[77] Further, they suggest that whether something could be characterised as an "idea" should count as expression worth protecting and whether a particular taking should count as substantial, ought to be governed by the same considerations. They argue that courts could formulate a list of criteria to be taken into account in determining whether in the light of the overall purposes of copyright a particular use ought to count as infringing. They state:we take it as given that the purpose of copyright is both to provide an incentive for the creation, dissemination and efficient exploitation of protected works, and to provide the author of the protected work with sufficient control over its use to guard the author's expressive autonomy The goal of copyright law is to protect the author's skill and labour only to the extent necessary to achieve one of these two broader purposes. The incentive justification only requires that the scope of copyright protection be broad enough to create its incentive effect, but not so broad as to entail unnecessary monopoly costs. The copyright regime must give an author sufficient control over the use of his or her work to provide an incentive for its creation, dissemination and effective exploitation, but not a degree of control that is greater than necessary for that purpose and would unduly hamper use of the work by others. The autonomy justificationrequires that the scope of copyright protection be broad enough to give an author such control over the use of his or her work as may be necessary to recognise the author's expressive autonomy, not so broad as unduly to hamper the freedom of speech and of information enjoyed by others. As often pointed out, copyright law seen through this framework becomes an exercise in reconciling the competing interests of the owner of copyright in a work and its would-be user. This is a long way from the prima facieassumption that anything worth copying is worth protecting, and that the skill and labour of an author is worth protecting in its every manifestation. (At 672-3)[78] They cite with approval the Canadian decision U & R Tax Services Ltd v H & R Block Canada Inc (1995) 62 CPR. (3d) 257 at 268 per Richard J outlining a list of factors that have been taken into account by the courts in determining questions of substantiality:(a) the quantity and quality of the material taken;(b) the extent to which the defendant's use adversely affects the plaintiff's activities and diminishes the value of the plaintiff's copyright; (c) whether the material taken is the proper subject-matter of a copyright; (d) whether the defendant intentionally appropriated the plaintiff's work to save time and effort; and (e) whether the material taken is used in the same or a similar fashion as the plaintiff's.[79] The authors go on to argue that there should be no appeal on questions of impression but that appellate courts should establish principles for the application of the standard. [80] It is unnecessary in order to decide this appeal to offer particular comment on the opinion of Spence and Endicott. I have however tested my assessment by an application of Richard J's criteria. While (e) is satisfied and Holdfast had previously infringed (d), my judgment on (a)-(c) confirms the result which I have reached by conventional criteria.Breach of an undertaking[81] Henkel submits that Holdfast in a letter dated 29 July 2002 gave an undertaking which provided:Without admission of any liability, Holdfast hereby undertakes to immediately cease use of packaging which incorporates the Blue Image design. Holdfast will also agree to destroy packaging and/or promotional materials which incorporate the Blue Image design.[82] Any contract is to be construed within its factual matrix. The crucial question is what is meant by "the Blue Image design". I am prepared to assume that implicit in the settlement agreement expressed in this undertaking is a promise by Holdfast not to breach Henkel copyright by future materials employing the Blue Image design. But I am satisfied that it can only be a reference to the design in which Henkel has the copyright which it was common ground Holdfast had then infringed and that the undertaking goes no further than that.[83] In short, I construe the undertaking as relating to future breach of Henkel copyright and attaching penal consequences to such breach, not as contractually extending Henkel's right to protection. [84] There being no breach of copyright there was therefore no breach of the undertaking.Result[85] I would allow the appeal and set aside the judgment of the High Court.CHAMBERS J Table of Contents Introduction [86]The copyright works [87]The Cipidue drawings [92]The QuickTite packaging [100]The SuperBonder packaging [109]Breach of undertaking [113]Introduction[86] I agree with the decision Baragwanath J proposes. I have decided to express my reasons separately as I prefer to decide the case on somewhat narrower grounds than Baragwanath J. As well, my reasons can be shortly stated.The copyright works[87] It is, of course, of the essence of a claim for copyright that the plaintiff identify the work which he or she contends has been wrongfully copied. In this case, Henkel KGaA claimed that the works were the packaging for its "SuperBonder" product and the packaging for its "QuickTite" product. It asserted that these were either literary works or artistic works for the purpose of the Copyright Act 1994.[88] Harrison J, in the decision under appeal, rejected Henkel's cause of action based on "infringement of copyright in literary works". Henkel has not cross-appealed against the judge's finding in that regard. On the "artistic work" cause of action, His Honour held that "the Blue Image design incorporating the SuperBonder and QuickTite packaging [was] a new graphic work" and as such was an artistic work for the purpose of the Copyright Act 1994: HC AK CIV-2003-404-002641 5 November 2004 at [13]-[15]. The terms of that finding were not what Henkel had pleaded. Henkel had not pleaded that "the Blue Image design" was the copyright work, because a design as such cannot be a work. A work must exist in some material form. That material form may incorporate design, but the design concept cannot incorporate the material form and itself constitute the copyright work. It was the judge's concentration on the so-called "Blue Image design" rather than on the material form which might have incorporated that design concept which led, in my respectful view, to error. [89] On the appeal before us, Mr Upton QC, for Henkel, strove to uphold the judge's findings in most respects. He recognised that the Blue Image design itself could not amount to a copyright work. He identified three works which, he submitted, were artistic works copied by Holdfast NZ Ltd: (a) The first in time were the Cipidue drawings. (b) The second was the QuickTite packaging – or, more accurately, as Mr Upton accepted, the drawings and instructions underlying that packaging. (c) The third was the SuperBonder packaging, or, once again more accurately, the drawings and instructions underlying it. [90] Of these, the "work" on which Mr Upton concentrated was the first. Indeed, to a considerable extent, Mr Upton jettisoned reliance on the QuickTite and SuperBonder packaging, as he developed his argument that Holdfast had breached Henkel's copyright by copying Henkel's SuperAttak packaging, which in turn was developed from the original Cipidue drawings. I shall return to that topic later.[91] Henkel's claim for breach of copyright must be considered on a work by work basis. Any global approach based on each work exhibiting features of the so-called Blue Image design is erroneous.The Cipidue drawings[92] Mr Finch, for Holdfast, took as his first point that Henkel had never pleaded that the work in respect of which its copyright was breached was the Cipidue drawings. Mr Finch pointed to Henkel's second amended statement of claim, which had referred only to the packaging for QuickTite and SuperBonder. He also submitted that the judge's finding as to what constituted the artistic work was limited to the QuickTite and SuperBonder packaging (at [15]), albeit in the erroneous form that it was "the Blue Image design incorporating the SuperBonder and QuickTite packaging" that was said to be the artistic work. Mr Finch submitted that it was not therefore open to Henkel to claim that the Cipidue drawings constituted the artistic work which had been wrongfully copied. Mr Finch further submitted that this was a case in which Henkel had been "constantly moving the goalposts". Indeed, he commented that Henkel's case had moved even from its written submissions filed in advance of the hearing before this court. He said that Henkel's arguments were internally inconsistent. For some purposes, Henkel wanted to rely on the Cipidue drawings, while for other purposes they attempted to link the argument back to the QuickTite and SuperBonder packaging (presumably because that was, whether rightly or wrongly, what had been pleaded). [93] Mr Upton in reply submitted that the "pleadings [were] wide enough to cover the Cipidue drawings". He said that Henkel had always contended "that the Cipidue drawings were the underlying copyright work". He also said that the Cipidue drawings were in evidence, with the consequence that no prejudice could arise from the state of the pleadings. [94] I think Mr Finch's submissions are sound. The pleadings clearly were limited to the QuickTite packaging and the SuperBonder packaging, and perhaps by inference to the drawings underlying them. But those underlying drawings (themselves referred to only by inference) were not the Cipidue drawings. There arevery significant differences between the form of the QuickTite and SuperBonder packaging and the Cipidue drawings. [95] I am left with the clear view that Henkel's case has been bedevilled by confused thought. What seems to have happened is that the case was first mounted on an assumption that Henkel could establish copying of the QuickTite packaging and the SuperBonder packaging. At trial, however, it must have dawned on counsel, perhaps as a result of Holdfast's counsel's cross-examination or opening address, that there were significant difficulties in relying on copyright in the QuickTite and SuperBonder packaging. For a start, Henkel had failed to call any evidence to prove what the drawings underlying the packaging were and to show how the Cipidue drawings had evolved to them. At that point, much fudging of the case seems to have occurred. Henkel's counsel may have realised that an amendment to the pleadings was required, but may have considered that an application to amend at that late stage had little chance of success. I may be wrong in that surmise – but what is clear is that there is considerable strength in Mr Finch's submission that Henkel's case throughout has been a movable feast. [96] In my view, it is not open to Henkel on appeal to attempt to change the thrust of its case. There can be no doubt that the thrust did change – perhaps in response to Mr Finch's written submissions filed in advance of the appeal. Mr Upton before us attempted to put the Cipidue drawings at the forefront of his argument. That had never been pleaded. Contrary to Mr Upton's submissions, I find that the pleadings were not "wide enough to cover the Cipidue drawings". [97] I also observe that, even now, Mr Upton has failed to identify which of the Cipidue drawings is the artistic work which Holdfast is alleged to have copied. Each of the drawings is a separate work. [98] Even had the Cipidue drawings or one or more of them been pleaded and even if Henkel had been proved to own the copyright in them, I would not have found that Henkel had established infringement of that copyright. Obviously, there was no direct copying of the Cipidue drawings, as, until this litigation, Holdfast had never seen them. Indirect copying will suffice: Copyright Act, s 29(2), and seefurther Garnett, Davies & Harbottle Copinger and Skone James on Copyright (15ed 2005) at [7-15] and Frankel and McLay Intellectual Property in New Zealand (2002) at [5.11.2]. Where indirect copying is alleged, the comparison required to determine whether the copyright work has been infringed must be made "between the alleged infringement and the original work": Copinger at [7-15] and Wham-O MFG Co v Lincoln Industries Limited [1984] 1 NZLR 641 at 666 (CA). Harrison J never undertook that comparison, because, of course, it had not been pleaded that Holdfast had breached Henkel's copyright in the Cipidue drawings themselves. But had the comparison been undertaken, it is clear that Henkel could not have established that "a substantial part" of any of the drawings had been copied. Holdfast's packaging is not objectively similar to the original Cipidue drawings. They had been substantially developed and altered by the time the QuickTite and SuperBonder packaging was prepared. [99] On that ground as well, therefore, I would hold that Henkel did not establish that Holdfast had infringed Henkel's assumed copyright in the Cipidue drawings.The QuickTite packaging[100] Henkel's claim based on the QuickTite packaging – or its underlying artwork should have failed for two independent reasons. [101] First it should have failed for the reason given by Baragwanath J at [29]. Henkel did not prove that it owned the copyright in the inferred drawing. With respect, Harrison J fell into error on this question because of his failure correctly to identify the works in question. When discussing ownership of copyright in "the SuperBonder and QuickTite packaging", he concentrated on who had prepared the Cipidue drawings. But there can be no doubt that at the very least those drawings were substantially modified and developed. What was not established was who did that development and modification. [102] Secondly, the claim should also have failed because Henkel did not prove that Holdfast had copied the QuickTite packaging when preparing its new Ultra Bonder packaging. The Ultra Bonder packaging was finalised in mid-August 2002.At that date Henkel had not launched its new QuickTite product. That did not occur until September/October 2002, according to Paul O'Reilly, the Manager, Consumer Adhesives, Henkel New Zealand Limited. Mr O'Reilly accepted in cross-examination that Holdfast's Ultra Bonder had come first. He also accepted that the old QuickTite packaging had not incorporated the Blue Image design. [103] Harrison J found that Holdfast had copied the QuickTite packaging. He appears to have based this finding on the fact that QuickTite "was supplied to Australasian trade buyers in August 2001". Although the judge does not expressly so state, his reasoning must have been that in some way Mr Henderson got hold of the QuickTite packaging from one of those "Australasian trade buyers" and must then have passed that packaging on to Karen Towes, who designed the artwork and packaging for Holdfast's new Ultra Bonder product in August 2002. Ms Towes's denials of having previously seen the QuickTite packaging were obviously not accepted by the judge. [104] It had never been put to Mr Henderson at trial that he had seen the QuickTite packaging or that he had given it to Ms Towes. Nor did Mr Upton put that to Ms Towes, although following cross-examination, the judge did. Before us, Mr Upton did not seek to support the judge's reasoning on this topic. Rather, Mr Upton summarised his argument on infringement in the following way:The respondent's case is that the appellant by copying the Loctite SuperAttak packaging incorporating the Blue Image design has directly copied that packaging and therefore indirectly copied the underlying original drawings in which copyright resides. From s 29(2) it is irrelevant whether the packaging is a copyright work or not.[105] That is to say, Henkel's argument now is that what was actually copied was the SuperAttak packaging but what was indirectly copied was "the underlying original drawings", namely the Cipidue drawings. [106] I have real difficulties with the judge's findings of fact concerning copying of the QuickTite packaging. I have not been able to find the evidence to the effect that "[Henkel's] QuickTite was supplied to Australasian trade buyers in August 2001". Mr O'Reilly gave evidence that "the QuickTite cyanoacrylate adhesives for theAustralian and New Zealand market [were] first presented to certain trade buyers by Selleys in September and October 2001". He did not say, however, what the get-up of the product was at that time, and he certainly accepted in cross-examination that the first time the Blue Image design appeared on QuickTite packaging released to the market was September/October 2002. It seems, with respect, unfair to make findings against Mr Henderson and Ms Towes given the following circumstances: (a) There is no evidence as to the QuickTite get-up when presented to "certain trade buyers" in September and October 2001. It would be unsafe to draw an inference that the get-up was the same as when the product was eventually launched a year later. (b) It was not put to Mr Henderson that he had somehow acquired QuickTite packaging and given it to Ms Towes. (c) Mr Upton never put to Ms Towes that she had had the QuickTite packaging when designing the Ultra Bonder packaging, presumably because that was not part of Henkel's case. While it is true, as the judge said, that Ms Towes, when questioned by the judge, was initially unsure of what Henkel packaging she had when redesigning the Ultra Bonder packaging, she nonetheless said on no fewer than three occasions after that that she had not seen the QuickTite packaging before. [107] There is, of course, a ready explanation for what is said to be the similarity between the QuickTite packaging and Holdfast's Ultra Bonder packaging. Ms Towes did have Holdfast's Super Bonder packaging and there is no dispute that that packaging was a copy of Henkel's SuperAttak packaging. There are close similarities between the SuperAttak packaging and the later QuickTite packaging. One would expect them to be similar, given that Henkel had in 1999 decided to repackage its cyanoacrylate adhesives on a global level and indeed had gone to Cipidue in Italy to create a design – the Blue Image design – to be used on products worldwide.[108] There is, therefore, a ready explanation for similarity, if such there be. SuperAttak is what was copied, if anything. That is how Mr Upton approached this case at trial and before us. The difficulty is that that is not, for some reason, the way in which the case was pleaded. For some reason, the judge appears to have ignored the SuperAttak packaging when trying to account for why, in his view, the Ultra Bonder packaging incorporated so many features of the Blue Image design.The SuperBonder packaging[109] Henkel's claim based on the SuperBonder packaging – or its underlying artwork – should also have failed for the reason given by Baragwanath J at [30]. As with the QuickTite packaging, Henkel failed to prove that it owned the copyright in the inferred drawing. [110] I would not have ruled this claim out for the second reason given when discussing the QuickTite packaging. Although once again it appears not to have been Henkel's case that Mr Henderson acquired SuperBonder packaging (as opposed to SuperAttak packaging), there was some evidence from which the judge could have concluded that Ms Towes did have an example of Henkel's SuperBonder packaging. Although again she was asked nothing about this by Mr Upton, the following exchange did take place between her and the judge:Your Ultra Bonder packaging has the same words against the red strip although slightly smaller [compared with the QuickTite packaging]?Yes it does. How do you account for that similarity?As I said, I haven't seen this QuickTite product before. I believe the only version of the Henkel product we had was the SuperBonder product.[111] That answer was not taken further. It is in fact equivocal. It is possible that Ms Towes meant that she in effect had a version of Henkel's packaging by reason of having Holdfast's Super Bonder packaging, which was, as she knew, a direct copy of Henkel packaging.[112] I can take this no further, as Mr Upton did not join issue with Mr Finch before us as to whether the Henkel SuperBonder packaging had been copied. Rather, Mr Upton's approach was the different one set out at [104] above.Breach of undertaking[113] Henkel's third cause of action was for "breach of undertaking". More accurately the claim should simply be considered as a breach of contract claim, as the undertaking referred to was not an undertaking given to the court. It was no more than a promise given by a party to a contract of partial settlement. [114] In July 2002, Henkel's solicitors, then known as Baldwin Shelston Waters but now known as Baldwins, wrote to Holdfast complaining about Holdfast's "Super Bonder" product, which had gone on sale in New Zealand in May 2002. At that time, Henkel did not sell a product under the trade mark "Superbonder" in New Zealand, although it had sold a cyanoacrylate adhesive under the mark "SuperBonder" in South and Central America since 1999. Henkel's complaint was not limited to the name Holdfast had chosen for its new product; Henkel was also concerned with what it said was copying of its "Blue Image design", in which Henkel claimed it owned the copyright. Baldwins in their latter gave a description of the Blue Image design's features. [115] Baldwins' letter concluded with the following demands:Accordingly we require that your company: 1. Immediately discontinue use of the get-up; brand SuperBonder and the Blue Image design; 2. Immediately and destroy on oath or deliver up to us all promotional material, packaging and goods carrying the offending get-up. This also includes all such materials, packaging and goods that have not actually been sold by the parties to whom you have distributed them; also it requires that you notify appropriate directories and the like in which offending promotional material appears; 3. Immediately provide details of the quantities and values of the offending goods which you have already distributed;4. Pay an appropriate sum by way of damages or an account of profits arising from the offending activity, the amount to be mutually agreed; 5. Agree to meet our client's reasonable costs in bringing this matter to your attention and settling it in a satisfactory fashion; 6. Provide written undertakings regarding your future activity in a form to be mutually agreed.[116] James and Wells, Holdfast's patent attorneys, responded by letter dated 29 July 2002. That letter was marked "without prejudice except as to costs". Because of later events to which I shall come, the letter was admissible in this proceeding. It is clear from the letter that James and Wells were still trying to ascertain what the facts of the matter were. Based on the facts as they believed them to be, Holdfast was prepared to meet only two of the six Henkel demands – 1 and 2 – and then only in modified form. Holdfast was prepared to give the following undertaking:Without admission of any liability, Holdfast hereby undertakes to immediately cease use of packaging which incorporates the Blue Image design. Holdfast will also agree to destroy packaging and/or promotional materials which incorporate the Blue Image design.[117] Although that undertaking substantially met demands 1 and 2, it did not completely. Holdfast did not agree to discontinue use of the "brand SuperBonder" (cf demand 1). Nor did Holdfast agree to deliver up packaging and promotional material incorporating the Blue Image design (cf demand 2, first sentence). Nor did Holdfast agree to the demand contained in demand 2, second sentence. As to demand 6, James and Wells said:You have asked for written undertakings in a form to be mutually agreed. Please let us know if there is anything additional you require in this regard.[118] Baldwins' reply, dated 31 July, did not engage with the detail of James and Wells's letter of 29 July. Despite James and Wells having asked Baldwins to advise immediately if they disputed any aspect of the fact summary contained in the 29 July letter, Baldwins said nothing. Nor did Baldwins respond to James and Wells's enquiry as to the appropriate form of any additional undertaking regarding "future activity" (as had been sought in demand 6). The reply was in bald terms to the effect that the proposal was "unacceptable", with no reasons given.[119] Henkel then commenced a proceeding. In that proceeding, Henkel applied for an interlocutory injunction. That application was due to have a first call in the High Court on 8 August 2002. On 7 August, James and Wells wrote to Baldwins reoffering the undertaking quoted at [116] above. A further interim undertaking was also offered. (Its terms do not matter, as Henkel has never alleged that the second undertaking was breached.) In return for those two undertakings, Holdfast sought that the application for an interlocutory injunction be withdrawn. Henkel agreed. As a consequence, the application did not proceed. [120] In my view, this undertaking, when viewed in context, did not cover anything beyond the packaging Holdfast was then using for its new "Superbonder" product. It agreed that it would "immediately cease [using]" that packaging and would destroy that packaging and promotional materials referring to it or similar to it. There is no dispute that Holdfast did cease using its SuperBonder packaging and it did destroy the existing packaging and promotional materials relating to it in August 2002. Holdfast did not promise anything beyond that; in particular, it did not accede to Henkel's demand 6, namely undertakings regarding "future activity", although it offered to consider that topic, an offer never taken up by Henkel. [121] What Henkel now attempts to do is use the undertaking relating to the Superbonder packaging Holdfast had been using at the date of the undertaking for a quite different purpose. Henkel is trying to treat it as an undertaking for "future activity" (as had been sought under demand 6). Henkel's rights, however, so far as Holdfast's new "Ultra Bonder" packaging is concerned, must stand or fall on its right to copyright, not on this undertaking. [122] Harrison J upheld the contract claim in a single sentence. He said at [61]:It must follow from my finding of Holdfast's breach of copyright that it is in breach of this undertaking[123] With respect, it did not follow from the breach of copyright that Holdfast must be in breach of its undertaking. Even had I been prepared to find that Holdfast's new Ultra Bonder packaging had breached Henkel's copyright, I would not have found a breach of that undertaking. That undertaking must be clearly seenin its factual matrix. It must be interpreted in light of the letter and demands to which it was responding. It was given in circumstances of urgency where Holdfast's advisers were uncertain about the extent of Henkel's intellectual property rights. All they knew for certain was that Mr Henderson, in having the Superbonder packaging prepared, had copied the SuperAttak packaging, a clearly wrongful act which had immediately to be remedied by an undertaking to cease using and to destroy its SuperBonder packaging. Holdfast fulfilled that undertaking.WILLIAM YOUNG P[124] I agree that the appeal should be allowed. In light of the careful judgments of Chambers and Baragwanath JJ, I can express my reasons for this conclusion shortly. [125] On evidence as led and the exhibits as produced, the best argument available to Henkel at trial was that Holdfast's Ultra Bonder packaging (appendix 12) involved the indirect copying (via the SuperAttak packaging which is appendix 8) of the relevant underlying Cipidue drawing (appendix 7). I consider this the best case available because: (a) Holdfast undoubtedly did copy appendix 8 when it produced its Super Bonder packaging (appendix 11) and the Super Bonder packaging formed part of the design path for the Ultra Bonder packaging (appendix 12) in issue in this appeal. (b) The only Cipidue drawing which was relevantly product specific was appendix 7. [126] In his judgment, Baragwanath J has addressed this and related issues (see [68]). I agree with his conclusion that Holdfast's Ultra Bonder packaging (appendix 12) is not a breach of copyright in either the SuperAttak packaging (appendix 8) or the underlying underlying Cipidue drawing (appendix 7). Accordingly, I regard Henkel's best case on the facts as failing on the facts. In anyevent, such a case was never pleaded. The pleadings instead focused on the SuperBonder and QuickTite packaging and the underlying drawings. [127] Henkel's case was not assisted by its failure to address in detail the design path which led to the SuperBonder and QuickTite packaging (appendices 9 and 10). I am certainly prepared to infer that there must have been drawings from which the packaging was immediately derived. It is, however, a striking feature of the case that these drawings were not produced. This renders impossible any comparison between them and the allegedly infringing Holdfast Ultra Bonder packaging (appendix 12). But there are other problems for Henkel. We do not know who owns the copyright in these drawings. It is quite likely that copyright was held by the Henkel subsidiary companies which produced the products in question. Further, there is no appropriate evidential basis for finding a causal connection between these drawings and Holdfast's Ultra Bonder packaging (appendix 12). Contrary to the finding of the Judge, but in conformity with the approach of Chambers J, I can see no evidential basis for the conclusion that Holdfast copied Henkel's QuickTite packaging. Further, given the ambiguities in the evidence and the fact that counsel for Henkel never suggested to the primary Holdfast witness that he had Henkel's SuperBonder packaging, I have come to the same conclusion in relation to that packaging. [128] That leaves the possibility of a claim based on the Cipidue drawing. None of them is a direct precursor to the SuperBonder and QuickTite packaging as produced. On the other hand, that packaging would appear to have been derived from them. Contrary to the view of Chambers J, I think that Henkel's pleading does encompass a claim that Henkel's copyright in the Cipidue drawings was breached. [129] However I am satisfied that this claim also fails. (a) For reasons already given, Henkel did not prove that Holdfast copied the Henkel SuperBonder and QuickTite packaging.(b) As already noted, a claim that Holdfast indirectly copied the Cipidue SuperAttak drawing (appendix 7) by copying the SuperAttak packaging (appendix 8) fails on the facts and in any event was not pleaded. (c) That leaves in issue whether Holdfast indirectly copied the other Cipidue drawings through its initial copying of the SuperAttak packaging (appendix 8). On this point, the conclusion reached by Baragwanath J in relation to the comparison exercises he has carried out and my conclusion in relation to the Ultra Bonder packaging (appendix 12) and the Cipidue SuperAttak drawing (appendix 7) applya fortiori to this aspect of the case; this because the other Cipidue drawings which were produced do not resemble the Ultra Bonder packaging any more than the SuperAttak packaging (appendix 8) and its underlying Cipidue drawing (appendix 7) do. [130] The final issue in the case relates to the undertaking. For the reasons given by Chambers J, I am satisfied that that claim, too, must fail.Solicitors: James & Wells, Auckland, for the Appellant Baldwins, Wellington, for the RespondentIndex to Appendices1 Holdfast's Fix-It Super Glue packaging 1999-2002 2 Holdfast's display card "Simple Solutions" 1997-2001 3 Holdfast's display card for Fix-It Stick-it-on Dots 1997-2001 4 Holdfast's display card for flexible can pourer 1994-1995 5 Holdfast's display card for Fast Av‘ ((%!6 Holdfast's display card for Fast Av‘ ((%!7 Loctite SuperAttak: Cipidue drawing 8 SuperAttak packaging 9 Loctite SuperBonder packaging 10 Selleys' QuickTite packaging 11 Holdfast's Super Bonder packaging 12 Holdfast's Ultra Bonder packagingAppendix 1 Red Blue Yellow WhiteAppendix 2 Red Yellow Blue WhiteAppendix 3 Blue Yellow WhiteAppendix 4 Blue Yellow Red WhiteAppendix 5 Blue Yellow White RedAppendix 6 Blue White Yellow RedAppendix 7 Blue White Red Yellow Appendix 8 White Yellow Red BlueAppendix 9 Yellow White Blue Red Appendix 10 Yellow White Red BlueAppendix 11 White Blue Yellow Red Appendix 12 White Yellow Blue Red