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[1986] ZASCA 47
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Schultz v Butt (327/84) [1986] ZASCA 47; [1986] 2 All SA 403 (A) (15 May 1986)
327/84
IN
THE SUPREME COURT OF SOUTH AFRICA (
APPELLATE DIVISION)
In the matter between:
DENNIS JOHN GEORGE SCHULTZ Appellant
AND
HUG
H STANLEY BUTT
Respondent
CORAM
: CORBETT, HOEXTER, BOSHOFF, JJA, NICHOLAS et NESTADT, AJJA
HEARD
: 10 March 1986 DELIVERED: 16 May 1986
J U D G E M E N T
NICHOLAS, AJA
This is an appeal against a judgment of MULLINS J
in
2
in the Eastern Cape Division which is reported as Butt
v
Schultz and Another
1984 (3) SA 568
(.ECD
Mr. Hugh Butt (the applicant in the Court a quo
and
the present respondent) is a farmer and boat builder
of Kenton-on-Sea, near Port Alfred. Mr. Dennis Schultz
(the respondent in the Court a
quo
and the present appel
lant) is a boat builder of Port Alfred.
During the years 1954-1978 Butt developed the
design
of the hull of a catamaran-type ski-boat. First
he created a concrete "plug" which embodied the shape of
the hull in the inverted position. From the plug he made
a mould by applying to it successive layers of glass fibre
reinforced plastic (commonly called "fibre glass") and
resin.......
3
resin until the required thickness was achieved.
Hulls
could be made as required from the mould.
Butt constructed his first plug and made his
first
mould in 1955. The boats made from hulls cast
from this mould being unsatisfactory, he made a new mould
in about 1959. From this he started making hulls which
he sold under the name of "Butt-Cat". The design was
modified in 1964 and again in 1974 and 1978. In the lat-
ter year he constructed a new plug, from which he made
two moulds, one of which he called his No. 1 mould.
About 75% of the Butt-Cat hulls now produced are made from
the No, 1 mould. Over the years the development of the
Butt-Cat hull has taken a great deal of time, trouble and
money......
4
money. Butt has had to make numerous experiments and
to
draw heavily on his experience as a seaman.
He has built up an extensive business in the
manufacture and sale of Butt-Cat hulls, selling them to
customers in many parts of the Republic and South-West
Africa and as far afield as the Comoro Islands in the
Indian Ocean. In the years 1981, 1982 and 1983 respec-
tively, he sold 25, 15 and 16 Butt-Cat hulls, making an
average profit of about Rl 500,00 on each one.
During 1983 Schultz and his father approached
Butt
with a request that he sell them a mould which he
was not using, in order (so they said) to build themselves
one boat for their private use. Butt had doubts about
this.......
5
this because he knew that the Schultz's had from time to
time manufactured boats for sale, and he refused to sell.
In August 1983 Butt
received information that Schultz had constructed a mould from a Butt-Cat hull,
and was using it to make hulls
for boats which he was selling In competition
with the Butt-Cat. On 24 August 1983, Butt's attorneys made these a negations in
a
letter to Schultz and stated -
"Your dishonest action aforesaid is clearly calculated to cause damage to our
Client and as such constitutes wrongful and unlawful
competition, with our
Client."
They called upon him to comply with certain demands. In a reply dated 5
September 1983 Schultz's attorneys wrote
inter alia:
"Our........
6
"Our client denies absolutely the contents of your letter and takes
the strongest exception to the suggestion that his action has been
dishonest.
Our client has filed the design of his boat hull,the window structure and the
Super 20 Boat in the Designs Office in Pretoria and
you are referred to the
Application Nos. 830645/6/7."
At the beginning of September, Butt examined a boat named "Bon Voyage 3"
which had reportedly been manufactured by Schultz. With slight
differences its
hull was identical with the Butt-Cat hull and it was obvious to him that it was
a copy. Later that month, a photograph
was taken of Schultz's mould at his
premises: it was substantially identical with the Butt-Cat mould. He learned
that Schultz had
acquired a complete Butt-Cat
hull.....
7
hull from one Beary to whom Butt had sold it as a reject in 1982 because
the finish was unsatisfactory, and it was clear to him that
Schultz had made his
mould from this hull and was using it to make boats for sale.
Arising out of
the letter from Schultz's attorneys, dated 5 September 1983, Butt caused a
search to be made of the Designs Register.
It appeared from the reports received
that Schultz had on 1 August 1983 made three applications for registration of a
design, in
each of which he made a declaration that
"The applicant claims to be the proprietor of the design and that to the best
of his knowledge and belief the design is new and original."
The .
8
The first application (No 83/0645) was in respect of a "Boat
Hull", and it was stated that
"The novelty claimed resides in the shape and/or configuration of a boat hull
substantially as shown in the representation ..."
The second (No 83/0646) was in respect of a "Window Structure for a Boat".
The third (No 83/0647) was in respect of a "Boat", it being
stated that
"The novelty resides in the shape and/or configuration of a boat
substantially as shown in the represen-
tation."
The representation showed a boat which was a composite of the hull shown in
the representation of a boat hull in Application No 83/0645
and the window
structure represented ....
9
presented in Application 83/0646.
Registration of all
three designs was effected on 4 August 1983.
A comparison of drawings prepared from the Butt-
Cat hull with the representations of the hull in Applica-
tion No 83/0645 showed that the designs were identical.
By notice of motion dated 26 October 1983
Butt
launched an application against Schultz, in
which the
Registrar of Designs was joined as second respondent,
claiming cancellation by the Registrar of the registra-
tion of Designs Nos 83/0645 and 83/0647, and an interdict
and ancillary relief against Schultz. The Registrar of
Designs did not oppose the application but abided by the
decision of the Court.
Originally......
10
Originally Butt's claim for relief by way of interdict was based on
passing off and "unlawful competition and for unlawful interference
with my
trade." In January 1984 leave was granted to Butt to supplement his founding
affidavit,and to amend the notice of motion
so
as to claim relief for breach of copyright in the Butt-Cat hull .
In his answering affidavit Schultz admitted that he had used the Butt-Cat
hull which he had obtained from Beary to construct from
it a mould which he used
to create hulls for boats which he named "Supercats". He claimed, however, that
he had made modifications
to the Butt-Cat hull, spending 600 man hours
"re-working" it and employing labour and materials which he valued at
R16000.
Judgment
11
Judgment was delivered on 26 April 1984. In the judgment,
MULLINS J referred to the modifications which Schultz alleged he had made
but
considered them to be the result of simple operations which did not affect the
design of the hull as a whole. He said (at 580
B-D):
"All these modifications ... had as their starting point a mould which itself
had been constructed from one of applicant's hulls.
It does not require much
imagination to appreciate the saving to first respondent in time, labour, and
money by reason of his using
one of applicant's hulls as a plug. First
respondent admits that building a plug is a laborious process, whether it is
being built
from scratch or whether it is being redesigned. Even if he had one
of applicant's hulls available, from which he could take measurements,
the
construction
of......
12
of a plug would still be the vital starting point of the
construction process. The using of applicant's hull as a plug from which
to
commence his construction process, and thereby avoiding the necessity to design
his own hull, amounts in my view to unfair competition,
against which applicant
is entitled to be protected."
The learned judge found further that Schultz's conduct in
using a Butt-Cat hull in order to produce hulls, whether or not with the
adaptations or modifications effected by him, constituted
an infringement of the
copyright which Butt had in the Butt-Cat plug, moulds and hull. He also found in
Butt's favour in respect
of the claim for cancellation of the registration of
Designs Nos 83/0645 and 83/0647 The cause of action based on passing off was
abandoned
13
abandoned and it was not dealt with in the judgment.
An order was granted as follows:
"1. The first respondent. (i.e.Schultz) is interdicted and
restrained
(a) from using
(i) any catamaran hull, with or without
adaptations or modifications, manu-
factured by applicant; or (ii) any mould, with or without modifications,
made from a catamaran hull manufactured
by applicant
for the purpose of manufacturing catamaran hulls in the course of first
respondent's trade or business
(b) from selling or otherwise disposing of in
the course of trade any
catamaran boat or
hull presently in his possession manufac-
tured from any hull or mould referred to in paragraph (a) above.
2. The first respondent is ordered to deliver to the deputy sheriff for
destruction any moulds or hulls presently in his possession
which
have
been......
14
been manufactured, with or without adaptations or modifications, from a
catamaran hull manufactured by applicant.
3. It is declared that the catamaran moulds and hulls presently manufactured
by first respondent in the construction of boats marketed
by him under the name
of "Supercat" infringe the copyright in such mould and hull, which copyright
vests in the applicant in terms
of the provisions of the
Copyright Act 98 of
1978
as amended by Act 66 of 1983.
4 . Second respondent is directed in terms of section 10(2) of the Designs
Act No 57 of 1967 to cancel in his register the registration
in. the name of
first respondent of a boat hul1 and boat registered on 4th August 1983 under Nos
83/0645 and 83/0647 respectively.
5. (a) First respondent is ordered to pay the costs
of application, such costs to include the costs of two counsel, and the
reserved costs of the postponements on 31st October, 1983,
24th November 1983
and 6th December 1983.
b)......
15
(b) Leave is granted to first respondent, if so advised,to
re-open the issue of the costs of the aforesaid postponements on notice
to the
applicant and the Registrar within 14 days of the date of delivery of this
judgment, and thereafter to set the matter down
for further argument in regard
to such costs."
With the leave of the Court a
quo
, Schultz now appeals against the
whole of the order.
UNFAIR COMPETITION
As a general rule, every person is entitled
freely to carry on his trade or business in competition with his rivals. But the
competition
must remain within lawful bounds. If it is carried on unlawfully, in
the sense that it involves a wrongful interference with another
'
s rights
as a trader, that constitutes
an.....
16
an
injuria
for which the Aquilian action lies if it has
directly resulted in loss. (See Matthews and Others v
Young
,
1922 A.D. 492
at 507;
Geary & Son (Pty) Ltd v. Gove
1964(1) SA 434 (A) at 440-441
In order to succeed in an action
based on unfair
competition, the plaintiff must establish all the requi-
sites of Aquilian liability, including proof that the de-
fendant has committed a wrongful, act. In such a case,
the unlawfulness which is a requisite of Aquilian liability
may fall into a category of clearly recognized illegality,
as in the illustrations given by CORBETT J in
Dun
and
B
radstreet (Pty
)
Ltd v S.A.
Merchants
Combined Credit
Bureau(Ca
p
e)(Pty)Ltd
.1968 (1) SA 209 (C) at 216 F-H, namely,trading in contravention
of.....
17
of an express statutory prohibition; the making of
fraudulent misrepresentations by the. rival trader as
to his own business; the passing off by a rival trader
of his goods or business as being that of his competitor;
the publication by the rival trader of injurious false-
hoods concerning his competitor's business; and the em-
ployment of physical assaults and intimidation designed
to prevent a competitor from pursuing his trade. But it
is not limited to unlawfulness of that kind. In Dun and
Bradstreet
(supra) at 218 CORBETT J referred to the fact
that in the cases of Ge
ary & Son (Pty) Ltd v. Gove
(
supra
) and
Combrinck v. De Kock
5 SC 405
emphasis was
placed upon criteria such as fairness and honesty in com-
petition......
18
Petition and said:
"Fairness and honesty are themselves somewhat vague and elastic terms but,
While they may not provide a scientific or indeed infallible
guide in all cases
to the limits of lawful competition, they are relevant criteria which have been
used in the past and which, in
my view, may be used in the future in the
development of the law relating to competition in trade."
See also
Stellenbosch Wine T
r
ust Ltd and A
nothe
r v Ond
e
Me
ester Group Lt
d, 1972(3) SA 152(C) at 161 G-H. In judging of fairness
and honesty, regards is had to
boni mores
and to the general sense of
justice of the community (Cp.
Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn
Ghwano and Another
1981(2) SA 173{T) at 188-189 and the cases there cited,
and
Lorimar Productions Inc & Others v Sterling Clothing
Manu
fa
cturers (Pty) Ltd
1981(3) SA 1129(T) at 1152 - 1153).
Van
19
Van der Merwe and Olivier,
Die Onregmatige Daad in die
Suid-Afri
k
aanse Reg
, 5th ed., p. 58 note 95, rightly emphasize that
""die regsgevoel van die gemeenskap' opgevat moet word as die regsgevoel van die
gemeenskap se regs-beleidmakers, soos wetgewer en regter."
While fairness and
honesty are relevant criteria in deciding whether competition is unfair, they
are not the only criteria. As pointed
out in
Lorimar Productions
(
ubi
cit
), questions of public policy may be important in a particular case,
e.g., the importance of a free market and of competition in our
economic
system.
In the present case it seems that MULLINS J's
conclusion that Schultz's conduct amounted to unfair
competition was based, in part, on the application
of principles extracted from
dicta
in the English cases
of
20
Saltman Engineering Co Ltd v. Campbell
E
ngineering
Co Ltd
(1948) 65 RPC 203
(CA) at 215, and Terrapin Ltd
v. Builders' Supply Co (Hayes) Ltd
1960 RPC 128
, which
were quoted and applied in
Harvey Til
i
ng Co (Pty) Ltd v
.
Ro
d
omac (P
ty
) Ltd &
An
other
1977 (1) SA 316
(T).
The English judgments applied the broad prin-
ciple
of the English law of equity that he who has re-
ceived information in confidence shall not take unfair
advantage of it. In
Dun and Bradstreet
(supra) it was
held at 213-215 that the equitable cause of action based
on breach of confidence which is available in England
does not exist in our law; but that does not mean that
the misuse of confidential information in order to ad-
vance.......
21
vance
one
's own business interests and
the expense of a competitor's may not constitute a wrong-
ful act in the context of an action for unlawful compe-
tition. See Dun and Bradstreet (supra)at 221 C-E;
L
td & Anothe
r and compare
Stellenbosch Wine Trust v. Oude
Meester Group Ltd
(
supra
)at 162. See also Pr
ok Africa ( Pty ) Ltd A
n
other
v
NTH (Pty) Ltd
&
Others
1980 (3) SA 687(W)
at 696.
In the case of Harvey Tiling (supra), it is clear
that, although there was no clear statement in the sum-
mons to that effect, the cause of action was unfair comr
petition. The first defendant, Rodomac, manufactured a
tile in competition with that manufactured by the plain-
tiff ,Harvey Tiling. The second defendant, Roux, had
been......
22
been employed as Harvey Tiling's works manager, but left
its service and became a 33 3% shareholder and managing
director of Rodomac. The plaintiff's case as alleged
in the summons was that Rodomac was manufacturing tiles
according to a process that was the same as Harvey Tiling's
process, and that the two defendants had always used and
were using Harvey Tiling's know-how which they had wrong-
fully misappropriated. It was in these circumstances
that counsel on both sides were agreed that the legal
principles which were applicable were those stated in the
English cases. (See p. 321 G).
MULLINS J stated the following as a test
of
confidentiality: "Information reasonably useful
to a
competitor.....
23
competitor, i.e., to gain an advantage over the holder of
such information, may generally be regarded as confidential " and added,
"I
consider that the same considerations apply to cases where trade information is
obtained from sources other than through an employee."
(See at 577 B-C) . Having
quoted from the judgment of LORD GREENE MR in the
Saltman Engineering
case, he indicated that he was "applying these principles to the present
case".
In my opinion, the learned judge erred in this regard. Where nothing is said
between the parties to a communication in regard to confidentiality,
the
criterion referred to will be relevant to the question whether
it was confidential. But it is of the essence that the communication should
be of secret or private matters. To
be confidential, the information must
"have
24
"have the necessary quality of confidence about it, namely, it
must be something which is not public
property and public knowledge."
(per LORD GREENE M.R. in the
Saltman
Engineering
case at
p.
215).
The design of the Butt-Cat hull was in the public
domain: there was
nothing confidential about it..
In my view, therefore, the decision of the Court
a
quo cannot be sustained insofar as it is based on the
misuse of confidential
information.
That, however, was not the only basis of MULLINS
J's
decision. He said at 579 D-F:
"Admittedly in the
Dun and Bradstreet
case the information was
distributed by the plaintiff to its clients on a
confidential
And at 580 E-F:
25
confidential basis. I do not regard this however as the sole
rati
o
deci
-
dendi
of the judgment. The sale of an object
such as a boat inevitably releases the design thereof, and in
casu
the
hull, to the purchaser. This does not entitle the purchaser or anyone else, in
my view, to make a mould therefrom and to copy
that hull for commercial
purposes. A rival manufacturer is entitled to examine hulls designed by his
competitors , and to incorporate
in his
own design what he regards as the
most desirable features thereof. He may not, however, in my view, copy such
hull, the product of
another's inventiveness and experience, in a manner which
does not require him to apply his mind to such design or to exercise his
own
inventiveness and experience, even if he only uses it as a starting point and
makes modifications thereto."
"There......
26
"There is no question of granting applicant a monopoly in
regard to the design of his hull . Anyone is entitled to design
a
hull
with similar features. What applicant is entitled to be protected against is the
use by first respondent of applicant's hull.
as a start
i
ng point
.
First respondent must start from the beginning, not on the second or third rung
of the ladder. Applicant is not entitled to be protected
against another person
evolving his own design similar to that of applicant, or even against the
copying of his design, but he is
entitled to be protected against the use of one
of his hulls to form a mould, with or without modification. See
Callman
on
Unfair Competition
para 4.60."
Counsel for Schultz submitted that the main question in the appeal was
whether the copying of something which was not protected by
the
Copyright Act,
the
Patents Act or the
Designs
27
Designs Act can be unfair or unlawful.
If that would be the
main question the answer would be clear. Anyone may ordinary make anything
produced by another which is in the
public domain: One may freely and exactly
copy it without his leave and without payment of compensation. So, In
Steers
v Roge
rs
10 RPC 245
(H.L.), where LORD HERSCHELL LC, having said (at p 251)
that a patent does not confer upon the patentee a right to manufacture according
to his invention, continued:
"That is a right which he would equally effectually have if there were no
Letters Patent at all - only in that case all the world
would equally have the
right. What the Letters Patent confer is the right to exclude others from
manufacturing in a particular way.
and from using a particular invention."
See.....
28
See also
John Wa
d
dington Ltd v. Arthur E Harris
(Pty) Ltd
1968 (3) SA 405
(T) at pp 407-408.
But the question to be decided in this case is
not
whether one may lawfully copy the product of another
substantially but whether A, in making a identical copy, with the use of
B's mould, of an article made by B, and selling it in com
petition with B, is engaging in unfair competition.
This question has not arisen in any previous
case in
South Africa. Nor do cases decided in England
provide any assistance, since it appears that English law
does not recognize an independent tort of unfair compe-
tition. (See the judgment of POWELL J sitting in the
Supreme Court of New South Wales which is included in the
report......
29
report of
Cadbury-Schweppes (Pty) Ltd v. The Pub
S
quash Co Ltd
1981 RPC 429
(PC) at pp 461-464). Some guidance is however
to be obtained from the decision of the United States Supreme Court in
International News Serv
i
ce v. The
As
sociated Press
[1918] USSC 194
;
(1918)
248 U.S. 215
, a case which was considered by CORBETT J in
Dun &.
Bradstree
t (
supra
) at pp 219-221. In that case the Court held by a
majority that it constituted unfair competition in trade for the defendant news
agency to appropriate news gathered by the plaintiff news agency for the purpose
of selling it to the defendant's clients . PITNEY
J, who wrote the opinion of
the Court, said at 239-240:
"The right of the purchaser of a single newspaper to spread knowledge
of
30
of its contents gratuitously, for any legitimate purpose not unreasonably
interfering with complainant's right to make merchandise
of it
,
maybe
admitted,; but to transmit that news for commercial use, in competition with
complainant - which is what defendant has done,
and seeks to justify - is a very
different matter. In doing this defendant, by its very act, admits that -it is
taking material that
has been acquired by complainant as the result of
organization and the expenditure of labor, skill , and money, and which is
salable
by complainant for money, and that defendant in appropriating it and
selling it as its own is endeavoring to reap where it has not
sown, and by
disposing of it to newspapers that are competitors of complainant's members is
appropriating to itself the harvest of
those who have sown. Stripped of all
disguises, the process amounts to an unauthorized interference ....
31
terference with the normal operation of complainant's
legitimate business precisely at the point where the
profit is to be reaped, in order to divert a material portion of the profit
from those who have earned it to those who have not; with
special advantage to
defendant in the competition because of the fact that it is not burdened with
any part of the expense of gathering
the news. The transaction speaks for
itself, and a court of equity ought not to . hesitate long in characterizing it
as unfair competition
in business. "
A - reversal of this approach occurred
in two cases decided in 1964:
Sears, Roebuck & Co v
.
3tiffel Co
[1964] USSC 68
;
376 U.S. 225
and
Compco
Corporation v. Day-Brite Lighting Inc
376 U.S. 234.
In
Sears
the
question was whether a State's unfair competition law
can......
32
can, consistently with the federal patent laws, impose
liability for or prohibit the copying of an article which is protected by
neither
a federal patent nor a copyright. It was stated in the opinion of the
Court (pp 231-232):
"In the present case the 'pole lamp' sold by Stiffel has been held not to be
entitled to the protection of either a mechanical or
a design patent . An
unpatentable article, like an article on which the patent has expired, is in the
public domain and may be made
and sold by whoever chooses to do so. What Sears
did was to copy Stiffel's design and to sell lamps almost identical to those
sold
by Stiffel. This it had every right to do under the federal patent laws.
That Stiffel originated the pole lamp and made it popular
is immaterial.
'Sharing in the goodwill of an article unprotected by patent or trade-mark
is......
33
is the exercise of a right possessed by all - and in the free
exercise of which the consuming public is deeply interested'... To allow
a State
by use of its law of unfair competition to prevent the copying of an article
which represents too slight an advance to be
patented would be to permit the
State to block off from the public something which federal law has said belongs
to the public."
What the Court decided was a constitutional question. It did not deal at all
with the question whether Sears's conduct amounted to
unfair competition. The
case has therefore no bearing on the present problem.
The way in which unfair copying had been
dealt with
in Western European countries is of
interest
34
interest. Some examples are given in Christine
Feliner,
The Future of Legal Protection for Industrial Designs
(ESC Publishing
Limited, Oxford, 1985):
"319 On 9 November 1978 a plaintiff com
plained to the Court of Appeal
at
Ghent about slavish copying of his
advertisements for carpets. He
did
not allege copyright infringement,
but said that he had originated
the
theme of bare feet on a carpet sug
gesting a feeling of pleasant
comfort,
and had used and developed this theme
for many years at
considerable cost.
The defendant had, the Court found,
taken care to avoid
confusion but
had taken advantage of this original
'theme', and there was
substantial
similarity of presentation. An
injunction was granted, based
entirely
on the 'parasitic' exploitation of
the investment and ideas of
another.
Confusion was not necessary "
A......
35
"471. A further recognised type of un
fair competition is
the direct mis
appropriation ('unmittelbare Leis-
tungsubernahme') of the
work of another
by using his artefact as a mould or
prototype for the
competitor's own
product. This principle was used
to combat pirate record
pressing be
fore the existence of 'mechanical
copyright' in records.
Recent examples
include the copying of a plastic
boat by using the
competitor's boat
as a mould and the copying by direct
casting of
carefully selected sets
of 'off the peg' false teeth. The
unfairness here
resides in the
method
of copying; the defendant is taking
the
fruits of the plaintiff's money,
skill and labour intact, without
in
vesting any of his own. Where this
is not the case, the action will
not
lie "
See also Van Heerden en Neethling, O
nregmatige Mededinging
, pp.
144-145.
Fellner
36
Fellner (op.
cit
p. 200) refers to the ways in which
"foreign jurisdictions selectively control slavish imitation through their
unfair competition
laws", saying:
"In the absence of specific industrial property rights, by no means all
copying is prohibited; but where it is felt to be 'unfair',
the law will provide
a remedy. As well as the fact of copying, the judge can consider the scale of
the plaintiff's initial investment,
the originality and commercial success of
his product, the ease with which it
was copied, the technical and commercial
feasibility of
product differentiation,
and the economic sense or nonsense of requiring investment in redesigning a
satisfactory product from scratch. He can also scrutinise
the behaviour of the
parties, taking account, for example, of any unfairness in the way information
was obtained,
impropriety
37
impropriety of motive, and dubious marketing practices,
including public deception. His aim is to reach a decision which is fair as
between the parties while paying due regard to the public's interest in free, as
well as fair, competition. In certain jurisdictions
at least he can grant a
remedy which is tailored to the facts, such as a limited injunction or damages
only."
In my view the principles enunciated in the
Inter
-
the principles na
tional News Service
case, and appearing from the
passages
quoted from Fellner,are generally in accordance with the
broad equitable approach adopted by South African courts
in unfair competition cases.
The question then is, what is the result of
the
application of these principles to Schultz's
conduct?
In.....
38
In the American case of
American Safety Table Co Inc
v.Schrei
ber
(1959) 269 F 2
nd
255, it was said at 271-272:
"...(At) first glance it might seem intolerable that one manufacturer should
be allowed to sponge on another by pirating the product
of years of invention
and development without licence or recompense and reap the fruits sown by
another. Morally and ethically such
practices strike a discordant note. It cuts
across the grain of justice to permit an intruder to profit not only by the
efforts of
another but at his expense as well."
However
,
this initial response to the problem was curbed in deference
to the greater public good:
"For imitation is the life blood of competition. It is the unimpeded
availability of substantially equi-valent units that permits
the normal
operation
39
operation of supply and demand to yield the fair price society
must
pay for a given commodity
Unless such duplication is permitted, competition may be unduly curtailed
with the possible resultant development of undesirable monopolistic
con-
ditions. The Congress, realizing
such possibilities, has therefore confined and limited the rewards of
originality to those situations and circumstances comprehended
by our patent,
copyright, and trademark laws. When these statutory frameworks are inapplicable,
originality
per se
remains unprotected and often unrewarded. For these
reasons and with these limitations the bare imitation of another's product,
without
more, is permissible. And this is true regardless of the fact that the
courts have little sympathy for a wilful imitator."
One's initial response to
Schultz's conduct in the present case is no different. There can be no doubt
that the
community would condemn as unfair and unjust
Schultz
40
Schultz's conduct in using one of Butt's hulls (which
were
evolved over a long period, with considerable expenditure
of time, labour and money) to form a mould with which to
make boats in competition with Butt. He went further.
Having trespassed on Butt's field, he added impudence to
dishonesty by obtaining a design registration in his own
name for the Butt-Cat hull, with the object no doubt of
forbidding the field to other competitors.
In South Africa the legislature has not limited
the
protestion of the law in cases of copying to those who
enjoy rights of intellectual property under statutes.
The fact that in a particular case there is no protection
by way of patent, copyright or registered design, does not
license.......
41
license a trader to carry on his business in unfair com-
petition with his rivals. In my view there is not in
the present case any sufficient countervailing public in-
terest to displace one's initial response to Schultz's
methods of competition.
In my opinion,therefore, MULLINS J was right in
his conclusion that Schultz's conduct amounted to unfair
competition, against which Butt was entitled to be protect-
ed.
INFRINGEMENT OF COPYRIGHT
It is common cause that Butt is the "author" of
the Butt-Cat hull and that he is a "qualified person" in
terms of
s. 3(1)
of the
Copyright Act, No 98 of 197
In......
42
In terms of s. 2(1)(c) of the Act, "artistic works" are
eligible for copyright if they are original. Prior to the amendment of s.
1(1)
of the Act by s. 1(a) of the
Copyr
i
ght Amendment Act
, No 66 of
1983 (which came into force on 17 October 1983) "artistic work" was defined as
meaning
inter alia
:
"(c) Works of artistic craftmanship not falling within either paragraph (a)
or (b)."
By the amendment a new paragraph (c) was substituted, namely,
" (c) works of artistic craftmanship, or works of craftmanship of a technical
nature, not falling within either paragraph (a) or (b)
" .
It is common cause that the Butt-Cat hull is a
"work.......
43
"work of craftmanship of a technical nature" falling with-
in para (c). As such it became eligible for copyright
for the first time on October 1983.
It was submitted on behalf of Schultz that
-
(a)......
44
(a) The 1983 amendment did not create copyright retro
spectively.
Consequently there was no copyright in
the Butt-Cat plug, mould and hulls because they had been made before 17 October
1983.
(b) In any event, there could have been no infringement
of copyright before
17 October 1983.
(c) By virtue of s. 43(a)(ii) of the Act, there was no copyright in the Butt-Cat
plug, mould and hulls because such copyright did
not subsist prior to 11
September 1965.
Schultz's counsel did not press submission (a)
with any conviction. .. That was not surprising in view of the provisions of s.
43
of the Act:
"43. This Act shall apply in relation to
works made before the
commencement
of this Act as it applies in relation
to works made
thereafter,: provided that -
(a) nothing in this Act con-
tained shall -
(i)
(ii) be construed as creating any
copyright which did not sub
sist
prior to 11 September
1965 "
It . . . .
45
It follows that if the substituted para (c) of the defini-
tion of "artistic work" had been included in the definition
of that expression in the 19 78 Act, there could have been no doubt
that it would have operated retroactively: And the mere
fact that it was substituted by amendment in 1983 cannot
have a different result.
Butt's counsel did not quarrel with submission
(b).
Clearly any copying by Schultz before 17 October
1983 was not an infringement because prior to that date
no copyright existed in respect of works of craftmanship
of a technical nature, and there is nothing in the 1983
amendment which makes conduct unlawful which was lawful
when it was committed.
In.......
46
In regard to submission (c): if the hull
acquired
by Schultz from Beary was made from a mould or plug created
prior to 11 September 1965, Butt had no copyright there-
in. The probability is, however, that the Beary hull was
made from the plug and mould which Butt created in 1978.
The 1978 plug was "original" , not, it is true, in the sense
of being the first work of that type which was created, but
in the copyright sense of originating from the author.
Even though it was developed from and resembled the ori-
ginal plug, it was in itself a "work of craftmanship of a
technical nature", in which Butt owned the copyright.
In terms of s. 7 of the Act, copyright in an
artistic......
47
artistic work vests in the owner of ,the copyright the
exclusive right
inter
alia of reproducing the work in
any manner or form, and of making an adaptation thereof
It is clear that Schultz infringed that right subsequent-
ly to 17 October 1983, and consequently a declaratory
order in ,terms of para 3 of the order made by the Court
a quo was properly granted.
CANCELLATION OF REGISTERED DESIGN
In terms of s. 10(2) of the Designs Act, No
57 of
1967,
"10(2) At any time after a design
has been registered any person interest-
the ed may apply to the court for cancellation
of the registration of the design on any of the following grounds,
namely,
(a)........
48
(a)
that the
design was not new or original;
(b)
that the
applicant for registration was,not the proprietor; or
(c)
that the application was in fraud of the
proprietor,
In Design No 83/0647, the
boat is represented in
plan, side and front views:
49
Dennis John George SCHULTZ
3 Sheets Sheet No 1
830647
SEE ORIGINAL JUDGMENT SKETCH
Plan View
The novelty, claimed resides in the shape and/or
configuation of a boat: substantially as shown in the representation
Dennis John George SCHULTZ
3 Sheets
Sheet No 2
50
The novelty claimed resides in the shape and/or configuration of a boat
'substantially as shown in the representation.
830647
SEE ORIGINAL JUDGMENT SKETCH
Side View
APPLICANTS PATENT ATTORNEYS
51
Dennis John George SCKULTZ
3 Sheets Sheet No 3
83064
SEE ORIGINAL JUDGMENT SKETCH
Front View
The novelty claimed resides in the shape and/or configuration of a boat
substantially as shown in the representations
ADAMS ADAMS APPLICANTS PATENT AT.
52
Design No 83/0645 is for a boat hull, which is the same as
the hull of the boat represented in Design No 83/0647.
Design No 83/0646 is for a window structure for a boat,
which is the same as the window structure represented in
Design No 83/0647.
It is conceded that the registration of Design
No
83/0645, in respect of a boat hull, was properly cancel-
led on the ground that the Design was not new or original at
the effective date. In my opinion the registration was also
liable to cancellation on grounds (b) and (c). Butt, not
Schultz, was the author of the design and hence the pro-
prietor within the definition in s. 1(1) of the Act.
Schultz's declaration that he was the proprietor was to
his......
53
his knowledge untrue and he made it with the
intention
of procuring a registration to which he was not entitled.
The registration of Design No 83/0646 was
not
attacked and no order was made in regard
thereto.
In regard to Design No 83/0647, cancellation
of
registration was claimed on the ground that it
was not new
or original.
In terms of s. 4(2) of the Act, a design shall
be
deemed to be a new or original design if, on or be
fore the date of application for registration thereof,
such design or a design not substantially different there-
from was not;"(a) used in the Republic".
The general concept of a "design" was
discussed
in......
54
in the judgment of this Court in
Homecraft Steel
Industries
(Pty)Ltd
(
Pty) Ltd
&
Another
:
v S M Hare &
Son
[1984] ZASCA 36
;
1984 (3). SA 681{A)
at pp 690 D - 692 H. As
appears therefrom, the elements of design are pattern,
shape, configuration or ornamentation; and for the exter-
nal appearance of
any
article to be registrable as a design there must
be something special, peculiar, distinctive, significant or striking about its
pattern,
shape, configuration or ornamentation, something which catches the eye
-and in this sense appeals to the eye - and which distinguishes
the article from
others of its type and class. * Moreover, the proviso to the definition of
"design" excludes
from consideration (i) any feature in so far as such
feature
is dictated solely by the function which the article is in-
tended......
55
tended to perform and (ii) any method or principle of
construction. As was observed in that case (at p, 692 D) -
"The visual criterion is, of course, of cardinal importance not only in
determining whether a design meets the requirements of the
definition, but
also in deciding questions of novelty and infringement."
The question whether a design is novel and original is thus a question of
fact to be decided by the eye, upon comparison between the
registered design and
an alleged anticipation.
What has to be considered here is a comparison
between Design No 83/0647 and the design of a boat which differs only in respect
of
the window structure.
It......
56
It may be accepted for the purposes of the
present
case that the design of Schultz's window structure was new
or original. But that is not sufficient to justify a
Registered
finding in his favour. . In
Clarke's
Design
(1896) 13
A
RFC 351, LINDLEY LJ said at 360 lines 28-30:
"Where a design is composed of old parts and is registered, the design, as
one whole, is what is protected; not the design for some
or one of the component
parts taken separately from any of the others, and it is not necessary to
distinguish what is old from what
is new."
Compare what CHITTY J said in
Walker & Co v A G Scott & Co
(1892) 9 RPC 482
at p. 485 lines 50-55:
"The design may be valid within the Act although all the parts are old except
some particular part only which is new
or......
57
or original. The novelty or originality of the particular
part may be sufficient to impart the character of novelty and originality
to the
whole."
Where the novel part of a design is nothing more than an ordinary trade
variant, it is
insufficient to impart that character. See
Phillips v
Harbro R
ub
ber
Co
(1920) 37 RPC 233
at p. 240 lines
31-36. LORD MOULTON said (ubi cit at lines 9-13):
"The working world, as well as the trade world, is entitled at its will to
take, in all cases, its choice of ordinary trade variants
for use in
any
particular instance, and ... no registration of a design can prevent an
ordinary workman from using, or not using trade knowledge
of this kind."
The window structure of a sea-going ski boat
is
the......
58
the equivalent of the wheel-house of a larger boat - its
function is to provide some protection to the occupants against wind and
spray. Basically its design is determined by that function,
and variants are
matters of taste or choice in the trade. That such variants are numerous is
evident from the copies of illustrations
from publications annexed to Schultz's
affidavit.
In my opinion, Schultz's window structure is no more than an
ordinary trade variant of window structures in common use in the boat-building
trade. As such, its introduction cannot make the design of the boat new or
original. If it were otherwise, one would have the absurd
position that anybody
could obtain registration of the de-
sign.......
59
sign of a boat comprising a Butt-Cat hull and a variant of a
window structure. The observations of ASTBURY J in
Allen West & Co Ld v
British Westinghouse Electric, and Manufacturing Company Ld
(1916) 33
RFC
157 are apposite. The learned judge said at p. 162 lines 27-40:
"The encouragement given by the Patent Law to those who produce new and
use-ful inventions, and by the law relating to Designs to
those who produce new
and original Designs, is primarily to advance our industries, and keep them at a
high level of competitive
progress; but in administering these provisions it is,
I think, most/important to bear in mind the fact that they are not intended,
and
ought not to be allowed, to paralyse or impede the natural and normal growth and
development of the manufactures which they are
intended to benefit. I think this
case ought to be
determined ....
60
determined upon the question whether the difference in the
registered Design of the right-angled finger support is or is not sufficient
to
make it an original Design within the meaning of the Act, or, whether, on the
contrary, it is not an ordinary and natural alteration
of the shape of a known
article for the purpose of fitting it into a case or apparatus in which it is
desired that it shall work.."
and at p. 164 line 4 6 to p. 165 line 15:
"In
Le May v Welch
(L.R. 28 CD. 34) Lord Justice BOWEN said:-'It is
not every mere difference of cut,' - he was speaking of collars -'every change
of
outline, every change of length, or breadth, or configuration, in a simple
and most familiar article of dress like this, which constitutes
novelty of
Design. To hold that would be to paralyse industry and to make the Patents,
Designs and Trade Marks
Act
a trap to catch honest
traders
61
traders.' There must be, not a mere novelty of outline, but a substantial
novelty in the Design having regard to the nature of the
article. Lord Justice
FRY said:- 'It has been suggested by Mr
Swinfen Eady
that unless a Design
precisely similar, and in fact identical, has been used or been in existence
prior to the Act' - prior to the
date of registration I think it ought to be -'
the Design
will
be novel or original. Such a conclusion would be a very
serious and alarming one, when it is borne in mind that the Act
may
be
applied to every possible thing which is the subject of human industry, and not
only to articles made by manufacturers, but to
those made by families for their
own use. It appears to me that such a mode of interpreting the Act would be
highly unreasonable,
and that the meaning of the words "novel or original" is
this, that the Design must either be substantially novel or substantially
original,
having
62
having regard to the nature and character of the
subject-matter to which it is to be applied,"
My conclusion is that Design No 83/0647 was not novel or original, and that
MULLINS J was correct in ordering the cancellation of
the registration.
FORM OF ORDER
It was submitted on behalf of Schultz that paras 1 and 2 of the order made by
the Court
a
quo
were too wide.
I agree that the order should be
amended to make it clear that the interdict relates solely to the Butt-Cat hull
(which was the only
hull in issue in the application), and that the order for
delivery up in para 2 should relate solely to the period after 17 October
1983.
In
63
In the result the appeal will be dismissed except insofar as
it relates to the amendments of the order. This is a matter which occupied
very
little time at the hearing of the appeal, and I do not think that Schultz's
limited success in this regards calls for any special order in regard to
costs.
The following order is made:
1. Paragraphs 1 and 2
of the order of the Court a
quo
are amended to read:
"1. The first respondent is interdicted and restrained (a) from using
(i) any Butt-Cat hull, with or without adaptations or modifications,
manufactured by applicant; or (ii) any mould, with or without
modification .....
64
modifications, made from such hull manufactured
by
applicant
2.
for the purpose of manufacturing catamaran hulls in the course of first
respondent's trade or business.
(b) from selling or otherwise
disposing, of in the course of trade any catamaran boat or hull presently in his
possession manufactured
from any hull or mould referred to in paragraph (a)
above. The first respondent is ordered to deliver up to the Deputy Sheriff for
destruction any moulds or hulls presently in his possession which have since 17
October 1983 been manufactured, with or without adaptations
or modifications
from a Butt-Cat hull manufactured by applicant."
2. Save as aforesaid the appeal is dismissed with costs, including the costs
of two counsel.
CORBETT,JA HOEXTER, JA BOSHOFF, JA NESTADT, AJA
Concur
H C NICHOLAS, AJA