Dexion Europe Ltd. v Universal Storage Systems (Pty) Ltd. (500/2000) [2002] ZASCA 97; [2002] 4 All SA 67 (SCA) (6 September 2002)

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[2002] ZASCA 97
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Dexion Europe Ltd. v Universal Storage Systems (Pty) Ltd. (500/2000) [2002] ZASCA 97; [2002] 4 All SA 67 (SCA); 2003 (1) SA 31 (SCA); 2002 BIP 186 (SCA) (6 September 2002)

Reportable
Case No 500/2000
In
the matter between:
DEXION EUROPE LIMITED
Appellant
and
UNIVERSAL STORAGE SYSTEMS
(PROPRIETARY) LIMITED
Respondent
Coram: HARMS, SCHUTZ, SCOTT, CAMERON JJA and HEHER AJA
Heard: 26 AUGUST 2002
Delivered: 6 SEPTEMBER 2002
Subject: Copyright infringement; indirect copying of technical
drawings.
JUDGMENT
HARMS JA/
HARMS
JA:
[1] This judgment is about copyright
infringement. The appellant (‘Dexion’) is the owner of the
copyright in four technical drawings.
They reflect different parts
of Dexion’s Speedlock racking system. A racking system consists of
uprights or legs bolted to footplates.
The uprights are connected to
each other by means of horizontal beams. Diagonal bracing elements
between beams provide the necessary
stability of the racks. Pallets
or shelves can then be placed on the beams in order to store goods.
The advantage of the Speedlock
system is that it is an interlocking
system and attaching the beams to the uprights does not require
bolting or welding. At the
extremities of each beam there are beam
end connectors with a number of protruding hooks and these fit into
coffin-shaped holes in
the uprights during erection of the racks.
[2] The respondent (‘Universal’) produced the Speedlock system in
terms of a sub-licence from Dexion’s licencee, to whom I
shall
refer as ‘Brazier’, until the termination of the sub-licence
during 1993. Universal at the time sought a direct licence
from
Dexion and when it transpired that it would not get one, it decided
on a new business strategy of producing a racking system
that would
be interchangeable and compatible with the Speedlock system. Legal
advice was obtained and Universal was informed of
the copyright
implications and, particularly, the right to design a system by way
of reverse engineering. Universal returned all
drawings in its
possession, instructed its regular toolmaker to manufacture new
tools, thereafter returned the Dexion tooling to
Brazier and
proceeded to market its ‘new’ racking system as the Unirack
system.
[3] Copyright protection is accorded to original artistic works
(Copyright Act 98 of 1978 s 2(1)(e)). Drawings, including drawings
of a technical nature, irrespective of their artistic quality, are
considered to be artistic works (s 1 sv ‘artistic work’ and
‘drawing’). Copyright in an artistic work vests in the author
the exclusive right of ‘reproducing the work in any manner or
form’
(s 7(a)) and this includes the right to convert the drawing into a
three-dimensional form (s 1 sv ‘reproduction’ par
(b)). An
exception exists in relation to this latter right:
‘
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 the authorized reproductions primarily have a
utilitarian purpose and are made by an industrial
process.’
(S 15(3A)(a). The numbering of the proviso has been omitted for the
ease of reading.)
[4] Universal did not dispute Dexion’s copyright in the drawings
and the issue was consequently limited to that of copying.
Copying
is not a term used in the Act but it is understood that
‘reproduction’ requires copying. In order to establish copying,
a two-stage inquiry is conducted. It has to be established whether
there is the necessary degree of objective similarity between
the
original work and the alleged infringement; then it must be
established that the similarity is causally connected to the original
work. The causal connection can either be direct or indirect. See
Galago Publishers (Pty) Ltd and Another v Erasmus
1989 (1) SA
276
(A) 280B-D.
[5] The effect of this, in general terms, is that copyright in a
technical drawing is not infringed by a three-dimensional version
of
the drawing, which has no causal connection with the drawing. It is
also not infringed if the version is reproduced from an authorised
reproduction (reverse engineering). Even if the owner of the
copyright made three-dimensional versions (as defined in the proviso)
available to the public, third parties are not entitled to make
three-dimensional copies by reference to the drawings. In other
words, the drawings may not be used, directly or indirectly, to
produce copyright-free three-dimensional ‘reproductions’. An
example of such indirect copying would be the instance where the
third party uses tools that were made from the drawings to make
its
version. The same would apply if the third party were to produce its
own set of tools by copying tools produced from the copyright
owner’s
drawings. In this event the tools can be likened to negatives of
photographs: making a photo from a negative infringes
the copyright
in the photo.
[6] Objective similarity in not seriously in dispute although, as
counsel for Universal pointed out, the similarities are in part
due
to commonplace or generic elements and that there are some design
differences between the two systems.
[7] I then turn to consider the causal connection. Dexion’s
principal case as pleaded and presented in the court below in this
regard was one of direct infringement: Universal had possession of
its drawings and it used them in designing the Unirack system.

Dexion ultimately had to concede that the evidence did not establish
direct infringement and before us reliance was placed solely
upon
indirect infringement: Universal, so it was contended, used tooling
derived from Dexion’s tooling, which in turn was derived
from the
Dexion drawings, thereby copying the drawings indirectly. No
reliance was placed on subconscious copying, something raised
in
Francis Day & Hunter Ltd and Another v Bron and Another
[1963] Ch 587
(CA). Universal’s principal case as pleaded was a
reliance on reverse engineering under s 15(3A)(a) but its reliance on
reverse
engineering was too highly pitched and in the end it had to
be content with a finding in the Court below (per Goldblatt J) that
only
the footplate is protected by the provision.
[8] It is convenient to deal with the footplate first. The only
aspect of the exception in dispute is whether the footplate was
reproduced from an authorised reproduction. Dexion mounted a muted
attack on the finding of the Court below to the contrary. The
undisputed evidence of Mr Jones, an employee of Universal, was that
he handed a specimen of the Dexion footplate to a toolmaker with
an
instruction to manufacture tooling for making similar footplates.
That was done. In any event, Dexion’s expert, Dr Nurick,
testified
that the information on the relevant drawing was not sufficient to
enable one to make a footplate; a specimen of the Dexion
footplate
was required in order to do that. I am satisfied that there is no
merit in the attack.
[9] Concerning indirect copying, Goldblatt J held that because it had
not been pleaded, Dexion could not rely thereon. Since indirect
copying is not a cause of action but simply a method of establishing
copying, this finding cannot be upheld. The learned Judge further
held that a reproduction of Dexion’s tooling could not have
amounted to an infringement of copyright because the tooling would
have been a three-dimensional reproduction of the authorised
reproduction, ie, the original tooling. This finding is in conflict
with the exposition of the law in the earlier part of this judgment.
He also held that although tools are a means whereby a
three-dimensional
reproduction of a drawing can be produced, the
tools do not reproduce the drawings. As mentioned, depending on the
evidence, tools
can be a ‘negative’ of the drawing and an
intermediate element in the indirect copying of the drawing.
Additionally, the finding
fails to take account of the fact that the
racking elements, and not the tooling, were made available to the
public as required by
s 15(3A)(a).
[10] In the light of these problems in the approach of the learned
Judge, it is necessary to reconsider the evidence relating to
indirect infringement. I will assume for purposes of this judgment,
although there is no evidence to that effect, that the Dexion
tools
were derived from the copyright drawings in issue. Dexion relied on
circumstantial evidence to establish copying of its tooling:
Universal was in possession of some Dexion tools; when the
sub-licence was cancelled, Universal refused to return the tools
immediately
and undertook to redeliver them once its new tooling was
available; and Universal used the same toolmaker who had made the
tooling
for its Dexion product. These are material and weighty facts
and we were referred to cases (
Solar Thomson Engineering Co Ltd v
Barton
[1977] RPC 537
(CA) and
Frank M Winstone (Merchants)
Ltd v Plix Products Ltd
5 IPR 156
, a judgment of the Court of
Appeal of New Zealand) where indirect copying was found on ‘weaker’
facts. However, cases have to
be decided with reference to their own
facts and evidence of similarity, striking or otherwise, with or
without evidence of access
by the alleged infringer does not dispose
of the case in favour of the copyright owner (cf
Kambrook
Distributing v Haz Products and Others
(1986 WLD) per Kriegler J
reported in Stranex
Judgments on Copyright
243 277-278).
[11] The drawing relating to the bracing shows a standard lip channel
with two holes at each end. How such a drawing can be said
to be an
original work is not entirely clear (cf
Jacana Education (Pty) Ltd
v Fransden Publishers (Pty) Ltd
[1997] ZASCA 109
;
1998 (2) SA 965
(SCA) 969C-G).
In any event, Universal uses the same type of channel, cuts it into
suitable lengths and punches a 10 mm hole at
each end. Since the
channel is generic, Universal simply purchases it and does not roll
it. The only tool required is a 10 mm punch
to form the hole. There
is no evidence that Universal ever had a Dexion punch or that any
tooling was made for producing these holes
with reference to a Dexion
tool. One would have thought that 10 mm punches are quite common in
any engineering workshop.
[12] Another drawing relates to the beam connector. It shows in
detail the form and dimensions of the hooks. The hooks made by
Universal, although they are intended to and do perform the same
function, differ somewhat from those shown in the drawing. In order
to make the Dexion hooks, a punch and die are required. Universal
uses a punch and pressure pad and no dies. Since there is no
explanatory evidence on the matter, it is somewhat difficult to
envisage how it can be said that the Universal tooling is a copy
of
the Dexion tooling. (I will revert to the evidence on how
Universal’s replacement tooling was made.)
[13] The fourth drawing depicts the upright. The upright consists of
a generic metal channel section, which, in plan view, has a
bottle or
wide-mouth flask shape. Universal used this section for the
manufacture of another racking system prior to the conclusion
of the
sub-licence. It requested Dexion for drawings of its tools in order
to roll this section (an indication that the tooling
was not
necessarily derived from the product drawings). The drawings
supplied by Dexion for this purpose could not be used with
Universal’s equipment and they were returned and Universal
continued to use its existing tooling. The other aspect of the
drawing
is the coffin shaped holes. These clearly require a punch to
be formed. The holes used by Universal, as noted by Dr Nurick, are
somewhat differently shaped and can best be described as having a
coffin-shape adapted to accommodate not only the Dexion type of
hook
but also a button-like hook.
[14] Jones was responsible for the design of the new tools and he
gave the necessary instructions to the toolmaker (who has since
died). It was not necessary to make new punches for everything
because existing punches used for another product were available.
He
did not provide the toolmaker with any Dexion tooling to copy or use
in the manufacture of the new tools. Instead he gave him
his own
sketches of how he expected the tooling to be made. Certain of the
dimensions are well known and standard in the art. He
worked
backwards from those dimensions and through trial and error increased
the size of the hook until it fitted. The tool drawing
for punching
the upright was one Jones had made personally some years earlier
without Dexion’s tooling or drawings.
[15] Jones was not taken to task by the cross-examiner on this
evidence because the cross-examiner was still attempting to establish
direct copying and to show that reverse engineering had not taken
place. The Court below did not make any adverse credibility finding
against Jones and it was not argued that his evidence should have
been rejected. It was never put or suggested to Jones that the
Dexion tooling had been copied. It is manifestly unfair to argue a
case on inferences from some facts and ignoring unchallenged
direct
evidence to the contrary. To accept Dexion’s argument would amount
to an implicit rejection of Jones’s evidence even
though the
submission was not foreshadowed during the trial. The circumstances
of this case do not justify a departure from the
rule that the
witness’s attention has to be drawn to the imputation which will be
made during argument, a rule which has generally
been adopted by our
courts. See
President of the Republic of South Africa and Others
v South African Rugby Football Union and Others
2000 (1) SA 1
(CC) 36J-38C (par 61-65) and cases there quoted. I consequently
agree with Goldblatt J that, since the issue was not properly dealt
with in evidence and was not canvassed with Jones, Dexion cannot
succeed on this ground.
[16] Dexion relied, in addition to its copyright claim, on a
contractual claim. In reciting the facts I intend to continue to
ignore
the history of the different companies, their name changes,
liquidations and compromises and to simplify the matter. Dexion
licensed
Brazier exclusively during 1971 to manufacture and sell the
Speedlock system in South Africa. Brazier was entitled to appoint
‘contract
manufacturers, distributors or agents’ subject to
Dexion’s prior approval. Any such appointment had to contain for
the benefit
of Dexion two provisions, namely a right of quality
control and the right to effect changes to the design, specifications
or standards.
On the valid termination of the licence, Brazier was
obliged to ‘ensure that all its contract manufacturers distributors
and agents’
cease to manufacture the licensed components.
[17] The sub-licence between Brazier and Universal likewise imposed a
duty on Universal, on termination, to cease manufacturing the
licensed components. Dexion alleges that it is the beneficiary of
this obligation and that it is entitled to enforce it. Goldblatt
J
held that this clause in the sub-licence governed the relationship
between Brazier and Universal and was inserted for the benefit
of
Brazier only. In addition, he held that there was no evidence that,
if the agreement were one for the benefit of Dexion, Dexion
had
accepted the benefit. I agree with these findings. The position as
between Dexion and Universal is similar to that between
a landlord
and a sub-tenant. Without a term (express or tacit) to the contrary,
the landlord cannot rely on the term of the sub-lease
in order to
evict the sub-tenant but has to rely on ownership. Apart from this,
I even have some reservations about Brazier’s
ability to rely on
the provision because, absent any protectable interest, such as
copyright or confidential information, the clause
may be no more than
a bare covenant not to compete (
Super Safes (Pty) Ltd and Others
v Voulgarides and Others
1975 (2) SA 783
(W) 785D-F).
[18] The appeal is dismissed with costs.
____________________
L T C HARMS
JUDGE OF APPEAL
AGREE:
SCHUTZ JA
SCOTT
JA
CAMERON
JA
HEHER
AJA