Absence of Design Path Ultimately Unravels Copyright Defence

Copyright lawyerAlex McDonald, Copyright Lawyer, Auckland

Copyright infringement cases typically throw up a series of hurdles for a plaintiff to successfully cross before securing judgment. The knowledge that the plaintiff’s failure to pass a single hurdle will generally result in defeat can offer irresistible temptations to a defendant to challenge a plaintiff’s claim. Cost and expedience however dictate that full-scale copyright trials come to court relatively infrequently. The decision in Inverness Medical Innovations, Inc v MDS Diagnostics Ltd CIV 2007-404-748 provides an example of one that did. The 169 page decision of Justice Woodhouse, complete with illustrations, provides compelling reading of the unfolding of a number of defences not uncommonly brought in copyright infringement cases together with useful judicial guidance on a number of points.

Inverness Medical Innovations, Inc v MDS Diagnostics Ltd

The case concerned drawings of pregnancy testing devices claimed as artistic works in terms of s14(1) Copyright Act 1994. The plaintiffs claimed that the sale and importation by the first defendant (MDS) of various devices infringed the plaintiffs’ copyright in its drawings. In essence, that the MDS devices sold to MDS by an American company were copied either directly from drawings contained in patents belonging to the plaintiffs or indirectly, by copying from the plaintiffs’ products which were made from the copyright drawings.

The key issues for determination at trial were:

Did the plaintiffs own the copyright works?

Did copyright subsist in each copyright work?

Did the MDS devices infringe at least a substantial part of the copyright work either directly or indirectly?

The question of ownership required an examination of historical agreements forming part of the plaintiffs’ alleged chain of title to copyright in the drawings for the plaintiffs’ devices as well as a consideration of Chinese law concerning a particular work created on commission from a Chinese national. The Court appeared to have little difficulty in determining that none of the issues raised by MDS in respect of copyright ownership had the effect of derailing the plaintiffs’ claim.

Likewise the issue of whether copyright in fact subsisted in the plaintiffs’ drawings, although contested on the basis of pre-existing works, did not appear to trouble the Court unduly.

Expert Evidence of Copying

The more central issue of whether the MDS devices copied the plaintiffs’ drawings required an examination of the similarities and differences between the plaintiffs’ copyright works and the MDS devices much of the evidence apparently coming from experts.

The Court cited (at [167]) guiding principles from Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416; [2001] 1 All ER 700 (HL) including the following passage:

An action for infringement of artistic copyright, however, is very different. It 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 all or a substantial part of the copyright work. The reproduction may be exact or it may introduce deliberate variations—involving altered copying or colourable imitation as it is sometimes called. Even where the 2 copying is exact the defendant may incorporate the copied features into a larger work much and perhaps most of which is original or derived from other sources. But while the copied features must be a substantial part of the copyright work, they need not form a substantial part of the defendant’s work (seeWarwick Film Productions Ltd v Eisinger [1967] 3 All ER 367, [1969] Ch 508). Thus the overall appearance of the defendant’s work may be very different from the copyright work. But it does not follow that the defendant’s work does not infringe the plaintiff’s copyright.

MDS was handicapped in denying copying by a “prominent feature” of the case being a “complete absence of evidence from the defendants of anything remotely approaching an independent design trial for the MDS product” ([172]). Apparently undeterred, the expert evidence of MDS centred on identifying differences between the plaintiffs’ drawings and the MDS devices “many of which were small differences of dimension or product fabrication detail” ([180]).

By contrast, the plaintiffs’ expert evidence, which the Court preferred, focused on identifying the “core essence” of the copyright works in question and whether it had been taken by MDS. In accepting this evidence the Court (at [182]) correctly characterised the central role of a suitably qualified expert (“the kind of person to whom the drawing is addressed”) as being to identify whether the actual dimensions and relationships visually depicted in the drawings are sufficiently important to be a “substantial part” for the purposes of copying.

Idea v Expression of the Idea

The plaintiffs’ copyright works were created against a background of scientific and technological development and research involving immunoassays and “lateral flow technology” which led to the filing of various patents. The MDS devices were not identical in appearance to the plaintiffs’ copyright works. MDS argued that the plaintiffs were illegitimately using copyright to protect concepts in expired patents and that the design of its product was dictated by the nature of the underlying concept. This is the idea v expression of the idea argument that pervades many copyright disputes. Justice Woodhouse outlined the ambit of the principle by citing the careful explanation on the subject given in Copinger and Skone James on Copyright (15th ed, Sweet and Maxwell Ltd, 2005 para. 7-13):

As with all such general statements of principle, however, it must be treated with caution and not taken too far. It is not a correct statement of English law that because a copyright work contains the expression of an idea it may be copied; nor that if there is only one way of expressing an idea, then that way cannot be the subject of copyright; nor that where the expression of an idea is inseparable from its function, it forms part of the idea and is not entitled to copyright protection. The correct position is that although copyright cannot prevent the copying of a general idea, where the idea has been worked out in detail in the form of writing, drawings, etc. it will be an infringement if the labour which went into the expression of the idea is appropriated. In such a case, it is not the idea which has been copied but its detailed expression. Thus the law of copyright is concerned not with originality of ideas but with the original expression of thought (in the case of a literary work, for example, the expression in writing). The originality which is required, and thus the protection conferred, relates to the expression of thought. In each case, it will be a matter of degree whether the line which divides the copying of an idea from copying of its expression has been overstepped… (emphasis added)

The Court identified the “general idea” underlying the plaintiffs’ copyright works by an exercise in abstraction. Taking from the graphic “use of lines” in the plaintiffs’ product (the expression) a concept stripped down broadly to require a pregnancy test indicating whether a result is positive and whether it is negative and further, whether the test has been operated properly by having some form of control. Having strictly confined the “idea” in this manner, the Court concluded (at [193]) that the similarities between the plaintiffs’ copyright works and the MDS devices were more likely to be the result of copying than coincidence; the similarities not being in respect of common place or unoriginal features.

Design Constraints

That left the issue of whether the relevant features of the MDS devices had been arrived at, not through copying, but because they were dictated by constraints of a technical or scientific nature; constraints arising from the underlying science. Using a not uncommon approach, the defendants adduced a large body of documentary evidence relating to pregnancy testing products of third parties with the aim of demonstrating that design constraints had dictated a similar product design outcome. Justice Woodhouse was not persuaded, stating:

[232] … In essence, the defendants‘ argument asks the Court to draw an inference, favourable to the defendants, simply from the existence of these other documents. Numbers of these documents certainly appear to disclose similarities comparable to those I have identified. However, I am not satisfied that I can draw any reliable conclusion from these documents which would support the defendants‘ case. The existence of these documents, all of which, on the face of them, were created well after Antipathy’s pioneering work, does not indicate that there were design constraints. The existence of these documents also does not indicate that features of the strips or cases which I have identified as relevant could be described as “common place”, in the sense that that expression is used in copyright cases.They may be prevalent because there has been a great deal of copying from Unipath. Much of thedefendants‘ case in this context essentially invited speculation. This evidence does not assist the defendants, either in respect of design constraints or in the broader context I have just touched on.

The Court went on to determine that in fact some of the examples of pregnancy testing product of third parties in fact pointed to an absence of relevant design constraints in that they illustrated alternative design solutions.

Ultimately, in the absence of evidence of a credible independent design path, all of MDS’s defences failed.

Specific Acts of Infringement

In discussing MDS’s liability for authorising copying Justice Woodhouse applied a territorial restriction observing that infringement under s16(1)(b)(i) Copyright Act 1994 is directed to authorising another person to make a copy in New Zealand. While MDS could not be held liable for authorising an overseas entity to copy the work overseas its sale of the infringing product in New Zealand was no less an infringement for being “issuing to the public”. In determining, in the context of liability for secondary infringement by importation, whether MDS had “reason to believe” that the products were infringing, detailed knowledge of the market acquired by the managing director of MDS and the product similarities even to the casual observer were held to meet the required threshold.

Director’s Liability

In considering the liability of the second defendant, a director of MDS (Dr Appana), the Court declined to apply authority establishing the circumstances in which an officer of a corporation is personally liable for the torts of a corporation. Instead Justice Woodhouse (at [292]) adopted themore straightforward route of determining that Dr Appana’s conduct constituted “authorising another to issue to the public” (s16(1)(b)(i)).

Damages

Finally Justice Woodhouse considered that in determining damages (agreed by the parties to be assessed on a royalty basis) that 4-5% was a fair “arms’ length” royalty rate and that an apportionment, on the basis that only part of the MDS devices infringed, was not warranted.

Conclusion

Not uncommonly for practitioners, issues of copyright infringement will be raised in situations where the prospective defendant’s product is not identical to the work relied on by the copyright owner. Superficially, the products in contention can appear to have significant differences. Inverness provides an illustration to practitioners of the significant adverse inference likely to be drawn from the absence of a documented and/or otherwise cogently explained independent design path by an alleged infringer. Further, the need to be alert to the risk that an altered copy having an appearance which may superficially be differentiated from the copyright works in question is no less a copy fo rthe purposes of assessing copyright infringement. Expert evidence at an early stage is often advisable to identify whether the underlying “core essence” of a copyright work has been taken. In addition, that the existence of other products in the market similar in appearance can provide false comfort that a product does not constitute copyright infringement. Finally that the risk that liability for copyright infringement will be visited upon directors of limited liability companies in appropriate circumstances is now well established in New Zealand.

Alex McDonald, Copyright Lawyer, Auckland

 

Absence of Design Path Ultimately Unravels Copyright Defence

Copyright lawyerAlex McDonald, Copyright Lawyer, Auckland

Copyright infringement cases typically throw up a series of hurdles for a plaintiff to successfully cross before securing judgment. The knowledge that the plaintiff’s failure to pass a single hurdle will generally result in defeat can offer irresistible temptations to a defendant to challenge a plaintiff’s claim. Cost and expedience however dictate that full-scale copyright trials come to court relatively infrequently. The decision in Inverness Medical Innovations, Inc v MDS Diagnostics Ltd CIV 2007-404-748 provides an example of one that did. The 169 page decision of Justice Woodhouse, complete with illustrations, provides compelling reading of the unfolding of a number of defences not uncommonly brought in copyright infringement cases together with useful judicial guidance on a number of points.

Inverness Medical Innovations, Inc v MDS Diagnostics Ltd

The case concerned drawings of pregnancy testing devices claimed as artistic works in terms of s14(1) Copyright Act 1994. The plaintiffs claimed that the sale and importation by the first defendant (MDS) of various devices infringed the plaintiffs’ copyright in its drawings. In essence, that the MDS devices sold to MDS by an American company were copied either directly from drawings contained in patents belonging to the plaintiffs or indirectly, by copying from the plaintiffs’ products which were made from the copyright drawings.

The key issues for determination at trial were:

Did the plaintiffs own the copyright works?

Did copyright subsist in each copyright work?

Did the MDS devices infringe at least a substantial part of the copyright work either directly or indirectly?

The question of ownership required an examination of historical agreements forming part of the plaintiffs’ alleged chain of title to copyright in the drawings for the plaintiffs’ devices as well as a consideration of Chinese law concerning a particular work created on commission from a Chinese national. The Court appeared to have little difficulty in determining that none of the issues raised by MDS in respect of copyright ownership had the effect of derailing the plaintiffs’ claim.

Likewise the issue of whether copyright in fact subsisted in the plaintiffs’ drawings, although contested on the basis of pre-existing works, did not appear to trouble the Court unduly.

Expert Evidence of Copying

The more central issue of whether the MDS devices copied the plaintiffs’ drawings required an examination of the similarities and differences between the plaintiffs’ copyright works and the MDS devices much of the evidence apparently coming from experts.

The Court cited (at [167]) guiding principles from Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416; [2001] 1 All ER 700 (HL) including the following passage:

An action for infringement of artistic copyright, however, is very different. It 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 all or a substantial part of the copyright work. The reproduction may be exact or it may introduce deliberate variations—involving altered copying or colourable imitation as it is sometimes called. Even where the 2 copying is exact the defendant may incorporate the copied features into a larger work much and perhaps most of which is original or derived from other sources. But while the copied features must be a substantial part of the copyright work, they need not form a substantial part of the defendant’s work (seeWarwick Film Productions Ltd v Eisinger [1967] 3 All ER 367, [1969] Ch 508). Thus the overall appearance of the defendant’s work may be very different from the copyright work. But it does not follow that the defendant’s work does not infringe the plaintiff’s copyright.

MDS was handicapped in denying copying by a “prominent feature” of the case being a “complete absence of evidence from the defendants of anything remotely approaching an independent design trial for the MDS product” ([172]). Apparently undeterred, the expert evidence of MDS centred on identifying differences between the plaintiffs’ drawings and the MDS devices “many of which were small differences of dimension or product fabrication detail” ([180]).

By contrast, the plaintiffs’ expert evidence, which the Court preferred, focused on identifying the “core essence” of the copyright works in question and whether it had been taken by MDS. In accepting this evidence the Court (at [182]) correctly characterised the central role of a suitably qualified expert (“the kind of person to whom the drawing is addressed”) as being to identify whether the actual dimensions and relationships visually depicted in the drawings are sufficiently important to be a “substantial part” for the purposes of copying.

Idea v Expression of the Idea

The plaintiffs’ copyright works were created against a background of scientific and technological development and research involving immunoassays and “lateral flow technology” which led to the filing of various patents. The MDS devices were not identical in appearance to the plaintiffs’ copyright works. MDS argued that the plaintiffs were illegitimately using copyright to protect concepts in expired patents and that the design of its product was dictated by the nature of the underlying concept. This is the idea v expression of the idea argument that pervades many copyright disputes. Justice Woodhouse outlined the ambit of the principle by citing the careful explanation on the subject given in Copinger and Skone James on Copyright (15th ed, Sweet and Maxwell Ltd, 2005 para. 7-13):

As with all such general statements of principle, however, it must be treated with caution and not taken too far. It is not a correct statement of English law that because a copyright work contains the expression of an idea it may be copied; nor that if there is only one way of expressing an idea, then that way cannot be the subject of copyright; nor that where the expression of an idea is inseparable from its function, it forms part of the idea and is not entitled to copyright protection. The correct position is that although copyright cannot prevent the copying of a general idea, where the idea has been worked out in detail in the form of writing, drawings, etc. it will be an infringement if the labour which went into the expression of the idea is appropriated. In such a case, it is not the idea which has been copied but its detailed expression. Thus the law of copyright is concerned not with originality of ideas but with the original expression of thought (in the case of a literary work, for example, the expression in writing). The originality which is required, and thus the protection conferred, relates to the expression of thought. In each case, it will be a matter of degree whether the line which divides the copying of an idea from copying of its expression has been overstepped… (emphasis added)

The Court identified the “general idea” underlying the plaintiffs’ copyright works by an exercise in abstraction. Taking from the graphic “use of lines” in the plaintiffs’ product (the expression) a concept stripped down broadly to require a pregnancy test indicating whether a result is positive and whether it is negative and further, whether the test has been operated properly by having some form of control. Having strictly confined the “idea” in this manner, the Court concluded (at [193]) that the similarities between the plaintiffs’ copyright works and the MDS devices were more likely to be the result of copying than coincidence; the similarities not being in respect of common place or unoriginal features.

Design Constraints

That left the issue of whether the relevant features of the MDS devices had been arrived at, not through copying, but because they were dictated by constraints of a technical or scientific nature; constraints arising from the underlying science. Using a not uncommon approach, the defendants adduced a large body of documentary evidence relating to pregnancy testing products of third parties with the aim of demonstrating that design constraints had dictated a similar product design outcome. Justice Woodhouse was not persuaded, stating:

[232] … In essence, the defendants‘ argument asks the Court to draw an inference, favourable to the defendants, simply from the existence of these other documents. Numbers of these documents certainly appear to disclose similarities comparable to those I have identified. However, I am not satisfied that I can draw any reliable conclusion from these documents which would support the defendants‘ case. The existence of these documents, all of which, on the face of them, were created well after Antipathy’s pioneering work, does not indicate that there were design constraints. The existence of these documents also does not indicate that features of the strips or cases which I have identified as relevant could be described as “common place”, in the sense that that expression is used in copyright cases.They may be prevalent because there has been a great deal of copying from Unipath. Much of thedefendants‘ case in this context essentially invited speculation. This evidence does not assist the defendants, either in respect of design constraints or in the broader context I have just touched on.

The Court went on to determine that in fact some of the examples of pregnancy testing product of third parties in fact pointed to an absence of relevant design constraints in that they illustrated alternative design solutions.

Ultimately, in the absence of evidence of a credible independent design path, all of MDS’s defences failed.

Specific Acts of Infringement

In discussing MDS’s liability for authorising copying Justice Woodhouse applied a territorial restriction observing that infringement under s16(1)(b)(i) Copyright Act 1994 is directed to authorising another person to make a copy in New Zealand. While MDS could not be held liable for authorising an overseas entity to copy the work overseas its sale of the infringing product in New Zealand was no less an infringement for being “issuing to the public”. In determining, in the context of liability for secondary infringement by importation, whether MDS had “reason to believe” that the products were infringing, detailed knowledge of the market acquired by the managing director of MDS and the product similarities even to the casual observer were held to meet the required threshold.

Director’s Liability

In considering the liability of the second defendant, a director of MDS (Dr Appana), the Court declined to apply authority establishing the circumstances in which an officer of a corporation is personally liable for the torts of a corporation. Instead Justice Woodhouse (at [292]) adopted themore straightforward route of determining that Dr Appana’s conduct constituted “authorising another to issue to the public” (s16(1)(b)(i)).

Damages

Finally Justice Woodhouse considered that in determining damages (agreed by the parties to be assessed on a royalty basis) that 4-5% was a fair “arms’ length” royalty rate and that an apportionment, on the basis that only part of the MDS devices infringed, was not warranted.

Conclusion

Not uncommonly for practitioners, issues of copyright infringement will be raised in situations where the prospective defendant’s product is not identical to the work relied on by the copyright owner. Superficially, the products in contention can appear to have significant differences. Inverness provides an illustration to practitioners of the significant adverse inference likely to be drawn from the absence of a documented and/or otherwise cogently explained independent design path by an alleged infringer. Further, the need to be alert to the risk that an altered copy having an appearance which may superficially be differentiated from the copyright works in question is no less a copy fo rthe purposes of assessing copyright infringement. Expert evidence at an early stage is often advisable to identify whether the underlying “core essence” of a copyright work has been taken. In addition, that the existence of other products in the market similar in appearance can provide false comfort that a product does not constitute copyright infringement. Finally that the risk that liability for copyright infringement will be visited upon directors of limited liability companies in appropriate circumstances is now well established in New Zealand.

Alex McDonald, Copyright Lawyer, Auckland