G-STAR RAW C.V V JEANSWEST CORPORATION (NEW ZEALAND) LIMITED HC AK CIV 2011-404-003243

G-STAR RAW C.V V JEANSWEST CORPORATION (NEW ZEALAND) LIMITED HC AK CIV 2011-404- 003243 [4 September 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2011-404-003243[2012] NZHC 2262UNDER The Copyright Act 1994IN THE MATTER OF Copyright infringementBETWEEN G-STAR RAW C.VFirst PlaintiffAND G-STAR AUSTRALIA PTY LTDSecond PlaintiffAND JEANSWEST CORPORATION (NEWZEALAND) LIMITEDDefendantHearing: 27 February 2012Counsel: D L Marriott for plaintiffsC L Elliott for defendantsJudgment: 4 September 2012JUDGMENT OF ASSOCIATE JUDGE ABBOTTThis judgment was delivered by me on 4 September 2012 at 10.30am,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors:I Finch, James Wells Lawyers, Private Bag 11907, Ellerslie, Auckland 1051A Johnson, Martelli McKegg, PO Box 5745, Auckland 1141Counsel:D L Marriott, Park Chambers, PO Box 5844, Wellesley Street, AucklandC Elliott, Shortland Chambers, PO Box 4338, Auckland 1140[1] This case concerns a dispute between the manufacturer and distributer of a range of clothing and accessories marketed under the brand G-Star (the plaintiffs) and a clothing retailer (the defendant).[2] The first plaintiff owns copyright in a design for denim jeans referred to asthe Elwood Design, marketed generally under the label "G-Star". The secondplaintiff has the right to distribute jeans of that design in New Zealand. Thedefendant imports and sells a style of jeans known as "Dean Biker Slim" (to which Iwill refer as the Jeanswest jean). The plaintiffs say that the design of the Jeanswest jean infringes the first plaintiff's copyright.[3] The defendant has applied for further particulars of the plaintiffs' claims, foran order that the plaintiffs answer interrogatories, and for security for costs. Prior to the hearing the parties reached agreement on terms for disposing of the application for security. This judgment addresses the remaining aspects of the application, which are opposed.Background[4] The first plaintiff is a manufacturer and merchant of clothing. It carries on business internationally. The second plaintiff is a wholesaler of clothing and accessories, operating in Australia and New Zealand. It is the exclusive distributorof the first plaintiff's "G-Star" branded products in Australia and New Zealand.[5] The first plaintiff owns copyright in an original design for denim jeansidentified as "5620 Elwood" and known as the Elwood design (the copyright works).The plaintiffs say that the Elwood design was created for the first plaintiff in August 1995 by a contracted designer, Mr Pierre Morisset. The original drawings no longer exist but copies are annexed to the statement of claim.[6] The plaintiffs say that the Jeanswest jean reproduces a collocation of four out of five distinct design features of the Elwood design, which together comprise a substantial part of the Elwood design.[7] The plaintiffs claim that the defendant has profited from the alleged breach of copyright (through sales of the infringing Jeanswest jean) and that they have suffered damage to their reputation and goodwill as a consequence of the infringing jean having been sold for a lower price than G-Star jeans manufactured according to the Elwood design. They also claim that jeans made according to the Elwood design are internationally recognised (more than 10 million garments made according to the design having been sold worldwide), that the Jeanswest jean is a flagrant and close copy of the Elwood design, and that the extent of the copying was such that the defendant knew it was infringing copyright and was attempting to trade on the international repute of the Elwood design. For those reasons they also seek additional damages under s 121(2) of the Copyright Act 1994.[8] In addition to seeking an enquiry as to damages (or, at their election, an account of profits) and additional damages under s 121(2), the plaintiffs seek orders that the defendant and related parties be restrained from any further reproduction of the Elwood design and from any further commerce in the Jeanswest jean, and that all offending product and promotional material be delivered up to them.[9] The defendant contends that the plaintiffs have failed to provide adequate particulars of the alleged copyright works, but has filed a statement of defence denying that the Jeanswest jeans were copied from the alleged copyright works, or from any G-Star jeans embodying those works. It also pleads that it has sold no more than 63 pairs of the Jeanswest jeans in New Zealand.Copyright considerations underlying both aspects of the application[10] It will assist understanding of the arguments to set out briefly the relevant legal elements of a claim for infringement. The starting point is that a person can infringe copyright in a design directly or indirectly. It will be direct if the design drawing is copied. It will be indirect if a product made from the design drawing is copied, but in this case the alleged infringing copy must reproduce a substantial part of the drawing.11 Brendan Brown, Delia Browne and Clive Elliott Copyright and Design (looseleaf ed, LexisNexis) at[2053].[11] Next, copyright is only available in original works. A work is not original if it is a copy of another work, or to the extent that it is a copy of another work.2 Thus, a portion of a work that has been copied from another source will not be original, and if a defendant has copied only that portion (or those portions, if more than one) that have come from another or other sources, the defendant cannot be said to have taken a substantial part of the work in which copyright is being claimed.3[12] A plaintiff claiming infringement must prove objective similarity between the copyright work and the allegedly infringing copy, and that the defendant had accessto the plaintiff's copyright work or productions from it.4 If the defendant had access, and therefore opportunity to copy, and there is a sufficient similarity between the works to support an inference, the court may be able to conclude that there was indeed copying.5 If the inference is available, it is then for the defendant to rebut it.6[13] The defendant's application is premised on the proposition that it isfundamental to this legal test for the plaintiffs first to identify where specific copyright resides in the two-dimensional drawings and how it has been embodied in the articles allegedly produced from them, and then to give evidence of thedefendant's access to it either in the drawings or in the articles, before the defendant can assess what it has to rebut.The present applications[14] The parties have attempted to reach agreement on the various aspects of thedefendant's application. Shortly before the hearing the defendant filed an amendedapplication setting out the matters still in dispute. Under that amended application it seeks in relation to particulars and interrogatories:2 Copyright Act 1994, s 14(2); see also Brown, Browne and Elliott, above n 1, at [2067].3 Brown, Browne and Elliott, above n 1, at [2067].4 L B (Plastics) Ltd v Swish Products Ltd [1979] RPC 552 (HL) at 619.5 Henkel KGaA v Holdfast New Zealand Ltd [2006] NZSC 102, [2007] 1 NZLR 577 at [43].6 L B Plastics, above n 4, at 571; Whangapirita v Allflex New Zealand Ltd (1995) 5 NZBLC 103,733(HC).(a) Further particulars of the copyright works (contending that the plaintiffs have not identified all the significant design features of the copyright works); and(b) Answers to interrogatories in respect of the pleading in four paragraphs in the statement of claim:(i) With reference to paragraph 2 (the allegation that the second plaintiff carries on business in New Zealand), identifying the nature and extent of the second plaintiff's business activities inNew Zealand in relation to jeans embodying the Elwood design (by reference to all manifestations of jeans embodying the Elwood design, either as style no. 5620 or otherwise, and containing one or more of the specified design features); and(ii) With reference to paragraph 5 (the allegation that the first plaintiff is the owner of copyright in original drawings for the Elwood Design), identifying the copyright works and constituent parts, and the extent to which copyright is said to subsist either in the whole or in parts of the works; and(iii) In relation to paragraph 8 (the allegation that the copyright works have a number of distinctive features, and the listing of the five most significant ones), whether the plaintiffs rely on any other features; and(iv) In relation to paragraph 10 (the allegation that the defendant sold the Jeanswest jeans for a lower price than the G-Starjeans, causing a diminution in the plaintiffs' reputation andgoodwill), identifying all sales of jeans embodying the Elwood design (whether identified as style no. 5620 or otherwise, and containing one or more of the five specified design features) by reference to the product name or other unique identifier.[15] The essential questions that need to be determined on these aspects of the application are:(a) Whether the plaintiffs have identified with sufficient clarity the significant features of the copyright works they are relying upon.(b) Whether it is necessary for the plaintiffs to identify the extent of thesecond defendant's business activities in New Zealand, and whether itneeds to provide any further information as to the extent to which jeans made in accordance with the Elwood design are commercially available.[16] In addition to these matters in respect of the applications for particulars and interrogatories, the defendant has also sought leave to seek extension to the agreed terms for security for costs, directions for trial, and confidentiality in respect of sales information.The application for particulars[17] The defendant seeks further particulars of the plaintiffs' pleading (inparagraph 8.1.1 of the amended statement of claim) that the original drawings depict"a garment which has a number of distinct design features/elements", and identifyfive which are said to be the most significant. The defendant seeks an order that theplaintiffs specify "all significant features/elements relied upon".[18] Paragraph 8.1.1 reads:The Copyright Works depict a garment which has a number of distinct design features/elements. The most significant of these are:8.1.1.1 The oval shaped knee pads;8.1.1.2 The horizontal stitching running across the back of each knee;8.1.1.3 The straight line of double stitching coming from the hip to the crotch, diagonally across the front of the thigh of each leg;8.1.1.4 The circle shaped stitching on the back of the jeans (the "saddle pad"); and8.1.1.5 The heel guards at the rear of each leg.[19] This pleading is one of several particulars of the plaintiffs' pleading inparagraph 8 of the amended claim as to the manner in which the Jeanswest productinfringes the first plaintiff's copyright in the original drawings.[20] The plaintiffs' case is that these five particular features are, qualitatively, thefive key design elements (referring to affidavit evidence provided by the designer, Mr Morisset), that four of these five key elements are reproduced in the Jeanswest product (paragraph 8.1.2 of the amended statement of claim), and that taken together they amount to a substantial part of the design (the copyright works) (paragraph 8.1.3 of the amended statement of claim).[21] Counsel for the defendant submitted that the defendant was entitled to know whether the plaintiffs were limiting themselves to these features or intended to rely on other features (given the open-ended wording of clause 8.1.1).[22] I accept the submission of counsel for the plaintiffs that clause 8.1.1 must be read in context and together with the other particulars. I accept that when the particulars are read together there can be no real uncertainty as to the nature of theplaintiffs' case:(a) The design features identified in paragraph 8.1.1 are the most distinctive, but not necessarily the only, design features of the copyright works;(b) The four of these features that are present in the Jeanswest product, as they appear in the photographs of the Jeanswest product annexed to the statement of claim, together comprise a substantial part of the copyright works, sufficient to constitute infringement of the copyright.[23] Counsel for the defendant referred to the need in copyright cases for precise identification of features of the copyright works allegedly copied. He submitted that this was particularly so where copying of a substantial part as distinct from thewhole of the works is alleged.7 He also referred to this need being particularly acute in industrial and commercial copyright cases where general resemblance (comparison on the basis of less than specific particulars) can be an unsatisfactory test because such general resemblance could be due to subject matter or design common in the market place.8[24] Whilst accepting those points, I find that the existing pleadings, as confirmed by counsel for the plaintiffs in submissions and as recorded above, provide the defendant with sufficient particulars to understand the claim being advanced against it. The plaintiffs have still to prove those matters of pleading but that is a separate matter.The application for interrogatories[25] The defendant's interrogatories have two primary purposes. The first is toinvestigate the plaintiffs' claim to copyright by reference to the specific designfeatures in the drawings in which copyright is said to reside and the extent to which those features have been embodied in its (G-Star) jeans (as distinct from features which have been derived from another source or are common in the fashion jean market).9 The second is to establish which of these jeans (in other words, which specific three-dimensional articles having the features in which the two-dimensional copyright works reside) are available commercially in New Zealand, so that there is a basis for the necessary causal connection between them and the Jeanswest jeans.[26] Counsel for the defendant argued that copyright could only be established through jeans made from the design as the plaintiffs acknowledge that the original drawings have been lost and that the detail sought by the interrogatories was necessary to enable the defendant to prepare its defence both on originality and on access. He submitted that it was recognised that three-dimensional products may differ from drawings,10 so that all potentially available products had to be considered when assessing access both to ensure that the particular products were in fact7 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd (No.2) [1985] 2 NZLR 143 (HC) at 155.8 Beckmann v Mayceys Confectionary Ltd (1995) 3 NZIPR 543 (CA) at [5] and [10].9 Factors identified in Henkel, above n 5, at [41] as material to the scope of the protection that may bewarranted and to the degree of substantial similarity that the plaintiffs will need to show.10 Brown, Browne and Elliott, above n 1, at [2071].available at relevant times and that they did in fact have the copyrighted features,and to assist in establishing what the current "state of the art" was in relation tofashion jeans (he referred to evidence from the plaintiffs to the effect that some of the G-Star jeans had some but not all of the five key design elements of the Elwood design).[27] In answer, counsel for the plaintiffs argued that the required comparison was between the features of the drawings (the copyright works) and the infringing product. He submitted that it was established law that as the originals have been lost comparison can be to the copy drawings (under the best evidence rule).11 He noted that the defendant has not pleaded affirmatively that the design of the Jeanswest jean had been arrived at independently or by copying from sources other than theplaintiffs' design. He said that the plaintiffs had made clear that they were suing inrespect of the collocation of the four specified design elements in the Jeanswest jean, and other manifestations of G-Star jeans were not relevant.[28] I am not persuaded that the interrogatories are necessary. The plaintiffs do not need to prove copying directly. They can rely on similarity to the copyrightworks and the defendant's ability to have access to jeans which embody the works. Addressing first the question of similarity, the existing pleading does not makeexplicit that the plaintiffs' case is confined to the four key design features pleaded inparagraph 8.1.2. However, I record the submission of counsel for the plaintiffs that although the plaintiffs contend that they may be entitled to copyright in more than the five key features pleaded in paragraph 8.1.1, they are not relying on any other than the four features pleaded in paragraph 8.1.2 (taken together) and the collocation of those four features in the Jeanswest jean. They say that that is a substantial part of the copyright works.[29] I also record that, although the plaintiffs' case is based on indirect copying ofthe identified features of the copyright works from jeans embodying those features, they reserve their position on direct copying if that emerges from discovery. Counsel for the plaintiffs conceded that if the plaintiffs were to allege such copying they would provide particulars of all features of the copyright works.11 Ibid.[30] On that basis I accept that other manifestations of the design features in G- Star jeans (not comprising all four design features in the collocation) are not relevant and that the defendant has all that it needs to respond to the allegation that the Jeanswest jean reproduces a substantial part of the design. I consider, however, that the plaintiffs should re-plead their claim so that their reliance on the collocation of the four features is made explicit.[31] I turn now to address the defendant's wish to have the plaintiffs identify all jeans embodying any of the alleged copyright features on the market and sold in New Zealand. The plaintiffs have already provided confidential sales figures for their products since 2006, evidencing their business presence wholesaling jeans embodying the Elwood design in New Zealand. However, the defendant wants the plaintiffs to identify every jean sold that embodies any element of the design. The primary reason for this request is to allow the defendant to investigate evidence to rebut any inference as to copying that the Court may otherwise be able to draw from similarity and the general availability of the jeans.[32] Again I am not persuaded that the information sought is necessary. The plaintiffs contend that jeans with all of the four features are available not just in New Zealand but also worldwide. Until they have discovery from the defendant they will not know the genesis of the Jeanswest jean. They are entitled, however, to rely on that general evidence as a basis for the inference of copying. It will be a matter for the Court at trial to decide whether it is a sufficient basis.[33] Counsel for the defendant argued that the defendant was entitled to advance a defence on the basis that the features were present in other forms in the marketplace,including in the plaintiffs' own products. However, it is in a position to advance thatargument without need for this information (based on the genesis of the Jeanswest jean).[34] Counsel also argued that the drawings were relatively simple (schematic) in nature, and the jeans produced from them would almost certainly vary, even slightly, from season to season. He submitted that the interrogatories should allow the defendant to investigate all of the design variables, again both to challengeoriginality and to show the "state of the art" within the industry. The superficialattraction of this argument is again answered by the fact that the defendant will be able to advance this argument, if it is valid, on the basis of its knowledge of the genesis of the Jeanswest jean. I do not accept that the plaintiffs should be put to the time and expense of answering interrogatories which appear to me to be fishing forchinks in the plaintiffs' case.[35] Counsel for the plaintiffs acknowledged that the interrogatories could have some relevance if the defendant pleads specifically to the genesis of the Jeanswest jean. Counsel did not expand on this point in the hearing. I note it to make it explicit that the point has not been determined.Confidentiality[36] The evidence filed for this application includes confidential sales information. At the request of both parties I direct, pursuant to High Court Rule3.12, that access to the Court file is to be restricted to the parties' legal advisers pending further order of the Court.Security for costs[37] The plaintiffs have agreed to provide security, and the parties have agreed to an amount for initial security. The defendant asks that this aspect of its application be adjourned with leave to the defendant to seek an increase in the agreed sum in the future.[38] The plaintiffs do not oppose further consideration of security as such, but seek a direction that the defendant bring the matter back before the Court only after approaching them to see if agreement can be reached.[39] The application for security is adjourned accordingly, with leave to the defendant to bring it back before the Court if the parties are unable to reach agreement, and on filing and service of a memorandum setting out the amount of further provision sought, supported by an affidavit setting out the grounds on whichit is sought and what attempts have been made to reach agreement, including theplaintiffs' response. On receipt of such memorandum the registrar is to list theapplication for mention in the next available chambers' list. The plaintiffs are to fileand serve a memorandum and any affidavit in response within five working days ofservice of the defendant's memorandum and affidavit.Decision[40] For the reasons I have given, the defendant's application seeking furtherparticulars and interrogatories is dismissed, and the application with respect to security for costs is adjourned.[41] As the successful party, the plaintiffs are entitled to costs on a scale 2B basis together with any disbursements as fixed by the registrar.Case management directions[42] The defendant has applied for this matter to be dealt with under the Fast Track Pilot and for a trial date to be allocated. The plaintiffs say there is no need for any particular urgency, given that counsel for the defendant has indicated that the product line has been removed from the New Zealand market.[43] The registrar is to list the proceeding for an early case management conference. I see no reason for the Court not to allocate a trial date at that conference, allowing sufficient time for completion of all interlocutory steps. The plaintiffs are to file their memorandum at least three working days ahead of the conference. The defendant is to file its memorandum at least two working days in advance. As well as the usual case management matters, the memoranda should address the number and nature of likely witnesses and whether there are any issues arising from the fact that the parties or their parent companies are located overseas.____________________Associate Judge Abbott