State of Escape Accessories Pty Limited v Schwartz [2020] FCA 1606

6 November 2020

Facts

The applicant, State of Escape Pty Ltd (State of Escape)is a Sydney based label designing and selling neoprene tote bags. State of Escape was the assignee of any copyright subsiding in “the Escape Bag”, which was created by one of the company’s directors Ms Brigitte MacGowan

State of Escape brought an action against Ms Stefanie Schwartz and her company Chuchka Bags Pty Ltd (Chuchka), for breach of copyright, the tort of passing off and contraventions of the Australian Consumer Law. 

State of Escape claimed that Ms Schwartz had infringed copyright in in the Escape Bag, a work of artistic craftsmanship.


Copyright issues

The copyright issues in this case were:

    • whether copyright subsists in the Escape Bag as a “work of artistic craftsmanship”;
    • whether the respondents infringed copyright in the Escape Bag by reproducing a substantial part of the Escape Bag within the meaning of s 36 of the Copyright Act 1968 (Cth) (“the Act”);
    • if the respondent had infringed copyright under s 36 of the Act, whether the Chuchka Bags were imported into or sold in Australia with the knowledge required by ss 37 and 38 of the Act;
    • whether the respondents established that they were entitled to rely on the “innocence defence” in s 115(3) of the Act; and 
    • if so, whether the conduct of the respondents warranted the award of additional damages under s 114(4) of the Act.

Was the Escape Bag a work of artistic craftsmanship? 

Justice Davies considered all of the design aspects of the Escape Bag in detail and heard two independent expert witnesses discuss the “uniqueness” of the Escape Bag. In determining whether copyright could exist in the Escape Bag as a work of artistic craftsmanship, Justice Davies applied the principles set out by the High Court in Burge v Swarbrick,1 distilling them as follows:2

(a) the phrase “a work of artistic craftsmanship” is a composite phrase to be construed as a whole: Burge at 357 [56], 360 [66]. It is not permissible to inquire separately into whether a work is: (a) artistic; and (b) the manifestation of craftsmanship;

(b) in order to qualify as a work of artistic craftsmanship under the Copyright Act, the work must have a “real or substantial artistic element”: Burge at 356 [52];

(c) “artistic craftsmanship” does not mean “artistic handicraft”: Burge at 358 [59];

(d) a prototype may be a work of artistic craftsmanship “even though it was to serve the purpose of reproduction and then be discarded”: Burge at 359 [60];

(e) the requirements for “craftsmanship” and “artistic” are not incompatible with machine production: Burge at 358–9 [59]-[60];

(f) whilst there is a distinction between fine arts and useful or applied arts, when dealing with artistic craftsmanship there is no antithesis between utility and beauty or between function and art: Burge at 359 [61];

(g) a work of craftsmanship, even though it cannot be confined to handicraft, “at least presupposes special training, skill and knowledge for itsproduction… ‘Craftsmanship’… implies a manifestation of pride and sound workmanship – a rejection of the shoddy, the meretricious, the facile”: Burge at 359 [61], citing George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 (Hensher) at 91 per Lord Simon;

(h) although the matter is to be determined objectively, evidence from the creator of the work of his or her aspirations or intentions when designing and constructing the work is admissible, but it is neither determinative nor necessary: Burge at 360 [63]–[65]. In determining whether the creator intended to, and did, create a work possessing the requisite aesthetic quality and requisite degree of craftsmanship, the Court should weigh the creator’s evidence together with any expert evidence: Burge at 360 [64] and [65]; and

(i) in considering whether a work is one of “artistic craftsmanship”, the beauty or aesthetic appeal of the work is not determinative. The Court must also weigh in the balance the extent to which functional considerations have dictated the artistic expression in the form of the work: Burge at 364 [83]–[84].

  1.  

In applying the principles, Davies J concluded that the Escape Bag is not a work of artistic craftsmanship, saying at [108]:

It is undoubtedly a work of craftsmanship but I am not persuaded that it is a work of artistic craftsmanship, notwithstanding its aesthetic and design qualities.

Davies J stressed the need to look at the bag as a whole, rather than by disintegrating the design choices made by the bag’s designer,3 and that the bag’s artistic expression was constrained by the functional considerations required when designing a bag.4


If copyright did subsist in the Escape Bag, did the respondents infringe?

After concluding that copyright did not subsist in the Escape Bag, Davies J then considered whether, in the case that copyright did in fact subsist in the bag, the respondents had infringed copyright by reproducing a substantial part. 

Davies J accepted the applicant’s evidence that there were a number of significant objective similarities between the two bags, including the materials used, the dimensions and the basic features. There was also a causal link between the two bags, as Ms Schwartz had sent her manufacturer images of the Escape Bag during the design process. 

Davies J also found that if copyright did subsist, the respondents would have infringed ss 37 and 38 of the Act by importing for sale and selling infringing copies of the Escape Bag, as the Ms Schwartz should have been on notice of the need to make inquiries as to whether copyright subsisted in the Escape Bag.5 Further, Davies J held that the respondents would not have been able to rely on the “innocent infringement” provision in s115(3) of the Act, because Ms Schwartz failed to make such inquiries.6


Result

The applicants failed to establish its claims of:

    • copyright infringement, 
    • passing off and 
    • misleading and deceptive conduct. 

However, they were successful in a claim of misleading and deceptive conduct in respect of the provisional statements and accessorial liability of Ms Schwartz on that claim.7

Damages and costs in the case will be handed down at a later date, although Davies J did not find the potential breach of copyright “flagrant” enough to award additional damages under s114(4) of the Act.