The perils of copyright reliance for industrial designs

10 June 2024

The New Zealand Copyright Act 1994 section 75 provides limited rights in an artistic work that has been “applied industrially”. Few, if any, other countries extend copyright to such works and the provision creates redundancy, complexity, and risk.

It is statutorily redundant because protection is also available under the Designs Act 1953 and, as the recent High Court decision in Technopak v Monzeal has again laid bare, there are dangers in relying on copyright to protect innovative industrial machinery.1

The facts
Two former employees of Technopak Ltd, a manufacturer of automated bag-filler machines, formed their own company, Monzeal, to compete with their former employer.

Technopak accused them of infringing copyright in their CAD models and drawings for 10 different parts or assemblies of the machinery; by correspondence beginning in August 2012, and through an infringement proceeding in the High Court commenced six years later.

Issues for decision

The key issues to be decided were whether:

  1. copyright subsisted in Technopak’s designs, and
  2. Monzeal had infringed the copyright, in particular whether:2
    • there were objective similarities between the two sets of designs,
    • there was a causal connection between them, and
    • Monzeal’s designs substantially reproduced Technopak’s designs.

The decision

Relying upon precedents from the Court of Appeal, the High Court noted that:

  1. there is a correlation between the “originality” of a design and the scope of copyright protection which should be afforded to it,3
  2. an analysis of objective similarity must consider the extent to which the claimed copyright work was commonplace or dictated by functional constraints,4 and
  3. where the level of originality and/or objective similarity is low, small differences are enough to rebut an inference of copying.5

The High Court accepted that copyright subsisted in Technopak’s designs and acknowledged that there were visual similarities between the two design offerings.

But it held that there was: 

  1. insufficient objective similarity, as the differences between the designs were quantitatively and qualitatively significant when assessed from the perspective of an engineer faced with the relevant functional constraints;6
  2. no causal connection, as the evidence showed that the defendants had followed an independent design path;7 and
  3. no reproduction of a substantial part of Technopak’s designs, as there were:
    • limited similarities between the Designs after disregarding those dictated by functional constraints, and
    • numerous differences.8

Hence, copyright had not been infringed:

[250] There is some merit in the defendants’ submission that Technopak has selected a small number of drawings from thousands in an attempt to establish copying. I am satisfied that the defendants followed an independent design path to arrive at the Monzeal designs and that any similarities between the designs arise because of functional constraints…

[252] I find that the defendants have not infringed Technopak’s copyright. Technopak is not therefore entitled to any relief.

Chapman Tripp comment
The High Court’s judgment makes a careful distinction between:

  1. the idea, concept, and function underpinning the various components of the bag-filler machines, and
  2. the particular expression of the idea embodied in the designs.

Only the latter is subject to copyright (or registered design rights). The former is the domain of patent rights.

The High Court avoided the mistake of conflating originality and novelty, made by the same Court in Sealegs v Zhang9 and criticized by the Court of Appeal:10

[106] The Judge did not approach the issue of originality by making an assessment of the extent of the skill and labour which had been expended in the creation of the identified copyright work, namely the sequence of the collocation of known components. Rather, apparently treating novelty and originality as synonymous, he seized on the description of the Sealegs design as “unique”…

[124] In our view the Judge erroneously approached the issue of originality in the collocation of common features by reference to the criteria for patentability, coupled with his assessment of the commercial success of [the] invention.

The judgment is the latest in a series of decisions highlighting the limitations of copyright for protecting industrial machinery - particularly in restraining competition from former employees and consultants.

It also illustrates a potential lack of awareness of other forms of intellectual property (IP) protection which are often more suitable. Had Technopak protected their innovations by way of patents and/or registered designs, the outcome may have been different. They would not have been required to prove the existence or ownership of their exclusive rights, or a causal connection (i.e., copying).

And a patent, unlike copyright or design registration, can give broader rights to the concept behind the innovative machinery.

Reliance on copyright to protect innovations may also forgo valuable rights outside New Zealand. In Australia, for example, there is no infringement of copyright in a design after the design has been applied industrially.11

The Ministry of Business, Innovation and Employment (MBIE) has embarked on a review of the Copyright Act but progress seems to have stalled.12 It is time to restart the engine and to harmonise our copyright regime with those of New Zealand’s major trading partners.

1. Technopak Ltd v Monzeal Ltd [2024] NZHC 1420 (31 May 2024).
2. Wham-O Manufacturing Co v Lincoln Industries Ltd [1984] 1 NZLR 641 (CA) at 666.
3. At [52], citing Oraka Technologies v Geostel Vision Ltd [2013] NZCA 111, at [130]-[132].
4. At [98], citing Zhang v Sealegs International Ltd [2019] NZCA 389, at [164].
5. At [98] and [109], citing UPL Group Ltd v Dux Engineers Ltd [1989] 3 NZLR 135 (CA), at 145.
6. At [112], [149], [173], [194], [207], [226], and [238].
7. [115], [154], [174], [195], [209], and [227].
8. At [118], [155], [210], and [228].
9. Sealegs International Ltd v Zhang [2018] NZHC 1724
10. Zhang v Sealegs, above n 3.
11. Copyright Act 1968 (Cth), s 77.
12. Ministry of Business, Innovation & Employment.  Issues Paper: Review of the Copyright Act 1994. November 2018.