Van der Merwe and Another v Els and Another (3279/08) [2008] ZAWCHC 31; 2008 BIP 404 (C) (4 June 2008)

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[2008] ZAWCHC 31
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Van der Merwe and Another v Els and Another (3279/08) [2008] ZAWCHC 31; 2008 BIP 404 (C) (4 June 2008)

Reportable
in
the high court of South Africa
(cape
of good hope provincial division)
Case
No 3279/08
In
the matter between:
Philipus
van der merwe Applicant
Malan
conradie Applicant
and
jannie
els First Respondent
h
cat catamaran cc
Second Respondent
judgment
delivered: 4 june 2008
Griesel
J:
Introduction
This
is an application for an interdict to restrain alleged unlawful
com­petition on the part of the respondents. The applicants
base
their claim squarely on the principles laid down in the well-known
case of
Schultz v Butt
,
1
in that the present case also con­cerns the copying of the hull
of a cata­maran and the applicants also claim that such
copying
amounts to unlawful com­petition.
The
two applicants, Mr Philipus van der Merwe and Mr Malan Con­radie,
have been in partnership since approximately 2004. Conradie
is a
boat designer, with a diploma in mechanical engineering as well as a
certificate in small boat design. Van der Merwe is financing
the
partnership. The first respondent, Mr Jannie Els, is a boat builder
and is the sole member of the second respondent, H Cat
Catamaran CC
(
H Cat
).
Another
person featuring prominently in the present litigation – albeit
not as a party thereto – is Prof. Dr-Ing. K G W
Hoppe
(
Prof Hoppe
), a naval architect and former professor in the
Department of Mechanical Engi­neering at the University of
Stellenbosch. During
the late 1970’s he developed a hydrofoil, a
‘wing-like structure which is installed under water and which is
similar to an
aircraft wing’. It is used largely on catamarans and
sub­stantially enhances the performance of those vessels. He
also designed
hulls to be used in conjunction with these hydrofoils.
The resultant product became known as
Hysucat
, an acronym for
Hydrofoil-Supported Catamaran
, which is used to define a new
type of high speed small craft. In 1983 the Hysucat technology –
comprising both the hydrofoil
system and the hull design – was
patented inter­nationally by Prof Hoppe, as inventor. Such
patents were assigned to the
University of Stellenbosch. The patents
in question expired after 20 years, i.e. in 2003, since when Prof
Hoppe has continued improving
and refining his designs. (In the
meantime, in 1999, Prof Hoppe retired from academic duties at the
university in order to devote
his time and effort to further
development of foil assisted boats and to conduct practical design
applications for the international
mari­time industry through
his close corporation, Foil Assisted Ship Tech­nologies CC
(
FASTcc
).
2
It
is evident from the relevant patent claims and specifications,
3
extending over some 12 closely-typed columns and illustrated by
numerous drawings and sketches, that the Hysucat design is by no
means a simple one. It is this system that has been utilised – by
Prof Hoppe and various others – in the subsequent design
and
development of Hysucats of varying lengths and sizes, ranging from
5,5 meters to 45 meters.
The
present case concerns the alleged unlawful copying by the
respondents of a 25 foot Hysucat. The applicants claim that in June
2007 Els made a mould from one of their 25 foot Hysucats, after
which Els, through his CC, started manu­facturing its own 26
foot
H Cat
range of boats from such moulds. H Cat
also started advertising its own boats, using photo­graphs of
one of the applicants’
products as well as the applicants’ logo.
The
relief claimed by the applicants in their notice of motion (as
amended) is for an order interdicting the respondents –
‘
2.1 From
copying or using for the purpose of manufacturing catamarans, any
hull, deck or part of a 25 foot hydrofoil supported catamaran
(“Hysucat”), with or without adaptations or modifications,
manu­factured by the applicants;
2.2 From
using any mould, with or without modifications, made from any 25 foot
Hysucat hull or deck or other part manufactured by
the applicants,
for the purpose of manufacturing catamarans in the course of their
trade or business;
2.3 From
selling or otherwise disposing of in the course of trade or business
any 25 foot Hysucat or part thereof presently in their
posses­sion,
manufactured from any hull, deck, part or mould referred to in
sub­paragraphs 2.1 and 2.2 above.
2.4 From
using any photograph, drawing, or other image or representation of
any boat manufactured by the applicants to advertise or
in any way
promote their range of catamarans or any other product; and
2.5 From
using on any advertisement, website, or other advertising medium or
for any marketing or promotional purposes any photographs,
drawings,
logos or other images produced by or for the applicants and in
respect of which the applicants own the copyright.
3. Directing
the respondents to remove from their website all photo­graphs,
drawings, logos or other images produced by or for
the applicants and
in respect of which the applicants own the copyright.’
The
relief claimed in paragraphs 2.4, 2.5 and 3 above, based on breach
of copyright and passing off, was conceded by the respon­dents
and an order in respect thereof has already been granted by consent
on 14 March 2008 by Hlophe JP on the occasion when the matter
was
postponed for the hearing of argument in respect of the further
claims set out above. It accordingly requires no further
consideration
herein, save insofar as it may have a bearing on the
question of costs, to which question I shall revert at the end of
this judgment.
With
regard to the balance of the relief claimed, Els admits that he is
manufacturing and marketing 26 foot Hysucats under the name
H Cat
.
He denies, however, that he is doing so using one of the applicants’
moulds, alleging instead that he had obtained the right
from one
Hans Weg­muller.
Before
considering the competing con­tentions of the parties in more
detail, it is necessary to refer briefly to some of the
relevant
factual backg­round.
Factual
background
The
design and development of the 25 foot Hysucat is shrouded in
confusion and controversy. At different stages of the proceedings,
‘design rights’ and ‘ownership’ in respect of the relevant
moulds have been asserted by or attributed to a variety of persons.
Els, in turn, also appears to be ambiva­lent as to his authority
for the right to manu­facture his boats.
What
does appear to be common cause is that the mould for a 22 foot
Hysucat, originally designed by Prof Hoppe, was used to produce
mouldings for the extended 25 foot Hysucat. The design and
manufacture of the latter boat came about during 2004, when Conradie
was approached by one Gary Vos, a boat builder, who wanted Conradie
to build a 25 foot Hysucat for him (Vos). Vos made his moulds
of the
22 foot boat available to Conradie for this purpose. (Vos had
earlier, in 1995, contracted with Prof Hoppe to design the
hull of a
22 foot catamaran.) In terms of their agreement, Conradie could use
Vos’s moulds in the construction of moulds for
a 25 foot
catamaran, in return for which Conradie would build and deliver to
Vos, free of charge, a 25 foot catamaran.
At
more or less the same time, Van der Merwe also ordered a Hysucat
from Conradie. Because Conradie did not have tooling or moulds
for a
25 foot boat, it was agreed that Van der Merwe would fund the
development of moulds for a new 25 foot boat. Conradie would
be in
charge of the design and management of the boats and both of them
would then have the right to sell products off the set
of moulds
developed in the course of the production process. (This arrangement
appears to form the basis of the alleged partnership
between the
applicants alluded to by Van der Merwe.)
The
hull of the 25 foot vessel was also designed by Prof Hoppe, which
design was ‘developed by Conradie working in association
with Prof
Hoppe’, according to Van der Merwe. Conradie designed the top deck
of this particular model of Hysucat. The applicants
claim that this
entailed ‘a careful and time consuming process of trial and error
in the period between 2004 up to the present
day’. In the process,
various changes to the original design were made on the advice of
Prof Hoppe, which changes were ‘of
considerable signifi­cance
for the design of the vessel’.
Over
the course of the next few years, the applicants contracted with
various boat builders to build a total of twelve 25 foot Hysucats,
apparently utilising the new moulds produced by Conradie. Els and
his former company were responsible for the construction of seven
of
these boats, four of which were produced pursuant to a written
agreement, entered into between Van der Merwe in his personal
capacity (as ‘developer’) and Els ‘and all associated
companies’ (as ‘boatyard’) in February 2007. The stated
purpose
of the agree­ment was ‘to set the rules of the Joint
Venture on the development, marketing and building of the 250 Flyer’
(as the 25 foot Hysucat was referred to). In terms of the agreement,
Els would be permitted to produce boats from the moulds of
the ‘250
Flyer’, which moulds would remain the property of Van der Merwe.
Els would pay Van der Merwe R10 000 for each
of the first ten
finished boats and R20 000 each for a further 20 boats. The
moulds could not be duplicated without the consent
of Van der Merwe.
According
to Van der Merwe, Els ‘dis­regarded’ their agreement, with
the result that Van der Merwe cancelled the agreement
during June
2007. Pursuant to such cancel­lation, and by agreement with Els,
Van der Merwe removed the moulds from Els’ premises.
Subsequently,
during July 2007 Els,
on behalf of
H Cat,
entered into two separate agreements with Prof Hoppe’s FASTcc, the
effect of which was that the two entities would cooperate
on the
design and manufacture of a 22 foot as well as a 26 foot Hysucat.
These agreements, however, were cancelled by Prof Hoppe
during
January 2008 by reason of alleged ‘non-performance’ by Els.
In
the light of the factual disputes on the papers, counsel for the
applicants applied, at the commencement of the argument before
me,
for the referral of certain issues to oral evidence in terms of rule
6(5)(
g
). Counsel for the respondents, however, resisted this
suggestion, submitting that the matter was capable of resolution on
the papers
as they stand. I accordingly proceed to consider the
matter on the papers before me.
Discussion
The
core issue in dispute in this matter relates to the element of
unlawfulness (or wrongfulness) of the respondents’ conduct.
In
this regard, counsel for the applicant submitted that the
fundamental issue for decision was ‘whether he (Els) had authority
to copy the hull of the 25 foot Hysucat’. If that were the true
question, the answer would be simple because, as pointed out
by
Nicholas AJA in
Schultz v Butt,
4
‘
Anyone
may ordinarily 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.’
Nicholas
AJA went on to state, however, that the question to be decided in
that case was not ‘whether one may lawfully copy the
product of
another but whether A, in making a substantially identical copy, with
the use of B’s mould, of an article made by B,
and selling it in
competition with B, is engaging in unfair competition’.
5
That question was answered in the affirm­ative against the
following factual back­ground:
During
the years 1954 to 1978 Butt developed the design of a hull of a
catamaran type ski boat. Over more than 20 years the development
of
the Butt-Cat hull took ‘considerable expenditure of time, labour
and money’.
6
Butt
had, on the basis of this investment, ‘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’.
7
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 refused to
sell, because he had doubts about the good faith
of the Schultz’s.
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.
At
more or less the same time, Schultz made application in the Designs
Office to register the design of the hull in his own name.
In
these circumstances, the court held:
8
‘
There
can be no doubt that the community would condemn as unfair and
unjust Schultz' 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.’
Counsel
for the applicants relied heavily on that judgment in support of
their present claims. In my view, such reliance is misplaced.
As
pointed out by Dean,
9
the decision in
Schultz v Butt
‘has given recognition to a
remedy of unlawful competition of very limited scope in the field of
the copying of three dimensional
utilitarian objects’. He submits
that the case falls far short of giving a general remedy of unlawful
competition for restraining
reverse engi­neering of
technological products.
Dean
refers, furthermore, to the significance of the amend­ment of
the
Copyright Act 98 of 1978
, more particularly the introduction of
s 15(3A)
, which reads as follows:
‘
(3A)(a)
The copyright in an artistic work of which three-dimensional
reproductions were made available, whether inside or outside
the
Republic, to the public by or with the consent of the copyright
owner (hereinafter referred to as authorized reproductions),
shall
not be infringed if any person without the consent of the owner
makes or makes available to the public three-dimensional
reproductions or adaptations of the authorized reproductions,
provided â€“
(i) …
(ii) the
authorized reproductions primarily have a utilitarian purpose and
are made by an industrial process.’
Dean
accordingly submits, rightly in my view, that this section appears to
have
reduced
the scope for arguing that reverse engineering of
technological objects constitutes unlawful com­petition.
10
A
similar conclusion was reached by Plewman JA in
Premier Hangers v
Polyoak (Pty) Limited,
11
where he said the following, with reference to
s 15(3A):
‘
The
introduction of
s 15(3A)
to the
Copyright Act 98 of 1978
in 1983
authorising “reverse engineering” under given conditions also
serves as an example of an ongoing common thread in intellectual
property legislation favouring a freedom to copy works which have
been permitted to pass into the public domain.’
12
He
further emphasised ‘the intricacies of the inter­relationship
between the protection afforded industrial designs in the [Designs]
Act and the equivalent forms of protection afforded by copyright, on
the one hand, and patent protection on the other’.
13
He pointed out ‘that the absence (or expiration) of statutory
protection is regarded as opening the field to competition by copying
or imitating and that this is quite legitimate.’
14
He concluded as follows:
‘
Thus
it appears to me that in our law, as in many of the foreign systems
to which Ms Fellner
15
refers, where statutory protection can be claimed but is not, or
where statutory protection expires or is lost, anyone is free
to
copy.’
16
In
the light of these
dicta
from
Premier Hangers
,
together with the amendment of the
Copyright Act referred
to above,
it appears that the ‘remedy of very limited scope’ created by
Schultz v Butt
has been diluted even further. The inference
seems irresistible, as submitted by counsel for the respondents,
that the legal landscape
has changed quite considerably since
Schultz v Butt
was decided more than twenty years ago. After
all, how can the
boni mores
denounce as unlawful conduct that
is specifically authorised by the legislature in
s 15(3A)
of
the
Copyright Act?
17
Quite
apart from the foregoing considerations, I am of the view that the
present case is in any event distinguish­able on
its facts from
Schultz v Butt
:
First,
on the applicants’ own version, their investment in time, money
and effort in developing the 25 foot boat is significantly
less than
that of Mr
Butt
. As a fact, it was Prof Hoppe – and not the
applicants – who had dedicated ‘the greater part of [his]
working life over the
past 30 years [to] improving and perfecting
the Hysucat designs, involving considerable expertise, time and
financial commitment
on his part’.
18
The 25 foot hull itself was designed by Prof Hoppe.
19
At best for the applicants, Conradie merely worked ‘in association
with Prof Hoppe’ in evolving the existing 22 foot hull into
the 25
foot one.
20
In these circumstances, there is limited, if any, scope for the
applicants to seek protection against alleged un­lawful
competition
in circum­stances where the product in question is
for all practical purposes the intellectual property of someone
else.
Second,
the whole Hysucat design which, until 2003, had been pro­tected
by registered patents, passed into the public domain
after that
date, thereby opening the field to com­petitors freely to
reproduce the items previously protected by such patents.
21
Third,
unlike Mr Butt, who had built up an ‘extensive business’ in the
manufacture and sale of Butt-Cat hulls, the applicants’
partnership has never produced the 25 foot boats on a commercially
sustainable basis. Thus, Van der Merwe concedes that ‘in recent
years the market (for Hysucats) has been dominated by competitors to
Conradie’s business, which has now ceased manufacturing
these
boats’.
22
Later, however, he states:
‘
Although
we have struggled to obtain the finances and a suitable builder
necessary to produce the 25 foot Hysucat on a large-scale
commercial
basis, we have now reached the point where we are satisfied that we
have developed the design to the point where it
is sufficiently
effective to sustain a commercially successful product.
We have
secured the necessary finances and wish to proceed with the process
of manufacturing and marketing the 25 foot Hysucat on
a large
scale.’
It
is apparent from these statements that the present application is not
directed at protecting the existing goodwill developed and
built up
over many years in relation to a particular product; instead, it aims
at preventing a competitor from trading in a market
in which the
applicants would like to become active. This is not, in my view, the
aim and purpose of the aquilian action based on
unlawful
com­petition.
23
Fourth,
Dean
24
summed up the effect of
Schultz v Butt
as follows:
‘
The
unfairness and wrongfulness in the
Schultz
case in fact lies
in the undue benefit which Schultz made of the expertise, effort and
financial outlay of Butt and it is this
principle which ought to
apply in the area of the copying of three-dimensional technological
objects.’
On
the evidence before me, I am unable to reach a similar conclusion
with regard to the respondents’ conduct. In a nutshell, I am
not
per­suaded that the respondents, in copying the Hysucat hull, are
deriving ‘undue benefit’ from the ‘expertise, effort
and
financial outlay’ of the applicants.
It
follows that the application for a final interdict falls down over
the first hurdle, namely the requirement of a clear right.
The
applicants have not even managed to surmount the lesser hurdle for
an interim interdict, sought in the alternative, namely
a ‘prima
facie right, though open to some doubt’. On the applicants’ own
papers, therefore, the application must fail.
Costs
As
mentioned earlier, the relief initially claimed was wider than that
presently before me. The respondents have in effect conceded
that
the applicants were entitled to an order restraining passing off and
infringement of their copyright and an order to that
effect was
granted by agreement on 14 March 2008, when the matter was postponed
for argument regarding the remainder of the relief
claimed. Thus the
applicants were substantially successful in pursuing the relief
granted by agreement. They were, how­ever,
wholly unsuccessful
with regard to the relief pursued subsequent to that date. In these
circumstances, the applicants are entitled
to a costs order in their
favour up to the date of the consent order, but they are liable for
the respondents’ costs incurred
subsequent to that date.
Order
The
following order is accordingly issued:
1. The
application is dismissed.
2. The
respondents are ordered, jointly and severally, to pay the
applicants’ costs incurred up to and including 14 March 2008.
3. The
applicants are ordered, jointly and severally, to pay the
respondents’ costs incurred subsequent to the aforesaid date.
B
M Griesel
Judge of the High Court
1
1986
(3) SA 667
(A).
2
See:
http://www.hysucraft.com/Default.aspx
(accessed on 2 June 2008).
3
Record
pp 203–211. See also:
http://www.google.com/patents?id=aVQwAAAAEBAJ&printsec=abstract&zoom=4&dq=Hysucat
(accessed on 2 June 2008).
4
At
681B.
5
At
681D–E.
6
At
683H.
7
At
675I–J.
8
At
683H–I.
9
O
H Dean ‘Reproduction of Three Dimensional Utilitarian Objects –
Copyright Infringement and Unlawful Com­petition’ (1990)
1
Stell
LR
49 at 64.
10
Dean
op
cit
at 64.
11
[1996] ZASCA 119
;
1997
(1) SA 416
(A).
12
At
424C–D.
13
At
423B.
14
At
423D–E.
15
The
future of legal protection for industrial design – a report
commissioned by the Common Law Institute of Intellectual Property
and the Intellectual Property Unit
Queen
Mary College, London, 1985.
16
At
424I–J.
17
Cf
Dean
op
cit
at
64–65.
18
Record
p 12 para 22.
19
Para
The hull of the 25 foot vessel was also designed by Prof Hoppe, which design was ‘developed by Conradie working in association
with Prof Hoppe’, according to Van der Merwe. Conradie designed the top deck of this particular model of Hysucat. The applicants
claim that this entailed ‘a careful and time consuming process of trial and error in the period between 2004 up to the present
day’. In the process, various changes to the original design were made on the advice of Prof Hoppe, which changes were ‘of considerable
significance for the design of the vessel’.
above.
20
Id.
21
Para
above. See also
Lewis
Berger & Sons Ltd v Svenska Ojeslageri Aktiebolaget
1959
(3) SA 604
(T) at 612A–C;
Letraset
Ltd v Helios Ltd
1972 (3) SA 245
(A) at 249E–F.
22
Record
p 16 para 42.
23
See
2(2)
Lawsa
2 ed (2003)
s.v.
Competition
para 263.
24
Op
cit
at
65.