“Imitation is a kind of artless flattery” wrote Eustace Budgell in the newspaper The Spectator in October 1714.
300 years later, imitation is still a kind of artless flattery. It will also be illegal if it infringes someone’s copyright rights – as the High Court recently found in Sealegs International Limited v Zhang  NZHC 1724 (12 July 2018) (Sealegs). (For those unfamiliar, Sealegs is the designer and manufacturer of an amphibious boat system of the same brand name.)
Sealegs alleged the defendants had infringed its copyright rights by appropriating the design arrangement of components that comprised the essential core of the Sealegs retractable leg system for small boats. After careful and expert analysis, the court agreed and found most of the defendants liable for infringement of Sealegs’ copyright rights – despite the defendants having apparently undertaken a fair amount of their own design work.
Sealegs is not the first case in which defendants have been found liable for ‘imitation’ despite having undertaken design work themselves. In Oraka Technologies Limited v Geostel Vision Limited  NZCA 111 (18 April 2013), for example, the Court of Appeal found the third defendant, Napier Tool & Die Limited, liable for infringement of copyright in a cup assembly incorporated in an asparagus spear grading machine developed by a Mr Schwarz. It is clear from the decision that the infringing cup assembly was not a ‘slavish’ copy and that the defendants had undertaken a certain amount of design work themselves. Despite this, the parties’ experts all accepted that the infringing cup assembly resembled “a second generation model of the [plaintiffs’] cup assembly” and thus the court reached its decision.
Another example is Steelbro NZ Ltd v Tidd Ross Todd Ltd  NZCA 486 (2 November 2007). In this case, Steelbro sought to overturn a decision of the High Court which found Steelbro liable for infringing Tidd Ross Rodd’s copyright rights in the design of a sideloader. At  of the decision, the Court of Appeal stated:
“In fairness, there is no question Steelbro did a great deal of work itself. In the classic economist’s phrase “it built a better mousetrap”. Nevertheless, an inference of copying was possible, indeed probable, unless Steelbro could negative it by establishing that the similarity was not due to the copying.”
Steelbro could not negative the inference of copying and consequently the Court of Appeal upheld the High Court’s decision.
Although the Sealegs, Oraka and Steelbro decisions traverse different types of products, they all have one thing in common: the application of the legal principle that the fact the infringer has added separate original work to an infringing copy, perhaps enhancing the product in the process, does not make it any the less an infringement. In other words, if you improve, modify or enhance someone else’s existing product you won’t necessarily escape infringement.
The take-home for businesses then is this: when it comes to designing a product, or even a logo, start with a blank sheet of paper, because if you are challenged you should be able to demonstrate an independent design path from start to finish. If you cannot show such a path you risk foundering just as those in Sealegs did.
This article first appeared in the Waikato Business News.
Intellectual property and investment mythology
Intellectual property (IP) is an important consideration for investors when considering whether to invest in a business.