In 2011 G-Star sued JeansWest for copying its popular “Elwood” style of jeans. JeansWest called its style of jeans the “Dean Biker”.

G-Star initially released the Elwood in 1996. In 2005 G-Star went on to design an “anniversary” version of the popular Elwood jean.

JeansWest gave evidence that its Australian arm did its design work and that often involved travelling to Europe and elsewhere and purchasing items which it would then send to JeansWest’s manufacturers in China along with design instructions.

JeansWest’s evidence on whether JeansWest Australia had purchased the Elwood jean overseas and then copied it was unclear.

Regardless, once the design of the Dean Biker was complete, JeansWest Australia ordered 374 pairs from its Chinese manufacturer and instructed that 63 of these be air freighted to New Zealand, the balance to Australia. JeansWest released the Dean Biker in January 2010.

374 was a small order for JeansWest and the small release of the Dean Biker style was claimed by JeansWest to be a “talker” designed to test market interest.

G-Star, on the other hand, argued that the relatively small release was to avoid being detected by G-Star and/or to test whether G-Star would sue.

G-Star did sue. In 2013 the case was heard before Justice Heath in the High Court. Justice Heath made a declaration that JeansWest had infringed G-Star’s copyright in the Elwood jeans and issued a permanent injunction.

Damages of $325 were awarded as well as costs on a 2B basis, with a 25% uplift and certification for second counsel. Justice Heath declined to make any additional damages award.

JeansWest appealed that decision, G-Star cross-appealed and the Court of Appeal released its decision on 17 February.

Seven issues

There were seven issues before the Court of Appeal in JeansWest Corporation (New Zealand) Limited v G-Star Raw C.V. and G-Star Australia Pty Limited [2015] NZCA 14.

The issues of primary and secondary infringement, damages and injunction are the most interesting of the seven.

Although JeansWest’s evidence on this point was unclear, the Court of Appeal found there were sufficient similarities between the design drawings and the jeans to infer that copying had occurred.

Primary and secondary infringement

One of the key issues was whether JeansWest had engaged in primary or secondary infringement of copyright, and whether that had been properly pleaded. The Court of Appeal ruled that both primary and secondary infringement were pleaded.

In order to have engaged in primary infringement, JeansWest had to have copied or issued copies to the public.

This was relevant because JeansWest was not the designer or manufacturer of the jeans and had therefore not itself copied the jeans. It imported them from its Australian counterpart. Having sold the jeans in New Zealand, JeansWest was a primary infringer because selling constituted issuing copies to the public.

In order to have engaged in secondary infringement, JeansWest had to know or had reason to believe that the jeans were infringing copies.

The word “know” means actual knowledge, but having reason to believe involves constructive knowledge. The Court of Appeal found that such a finding is appropriately imputed if a party wilfully closes its eyes to the obvious or wilfully fails to make those inquiries an honest and reasonable person in the circumstances will make.

JeansWest Australia, and thus by imputation JeansWest New Zealand, knew the Dean Biker was a copy of G-Star’s Elwood design and JeansWest New Zealand had to accept the legal consequences of JeansWest Australia’s decision to import the jeans into New Zealand.

JeansWest Australia had assumed New Zealand copyright law was the same as Australian law. It did not obtain the advice or make the inquiries necessary to inform itself as to the different copyright position in New Zealand.

The Court of Appeal found that as a substantial New Zealand retailer, JeansWest New Zealand ought reasonably, in the circumstances, to have informed itself about the copyright position in New Zealand before importing the Dean Biker jeans into New Zealand and selling them here. JeansWest was found liable for secondary infringement.

Damages

Justice Heath awarded G-Star $325, equating to the profit JeansWest had made on selling the copied jeans.

The Court of Appeal traversed previous damages awards in New Zealand and Australia for copyright infringement:

• Wellington Newspapers Limited v Dealers Guide Limited [1984] 2 NZLR 66 (CA) – $7,500;
• The Callista Group Limited v Zhang HC Auckland CIV-2003-404-5127, 11 July 2005 – $150,000;
• World TV Limited v Best TV Limited HC Auckland CIV-2005-404-1239, 6 September 2006 – $15,000;
• Venus Adult Shops Pty Limited v Fraserside Holdings Limited [2006] FCAFC 188, (2006) 157 FCR 442 – $85,000;
• Aristocrat Technologies Pty Limited v DAP Services (Kempsey) Pty Limited (in liq) [2007] FCAFC 40, (2007) 71 IPR 437 – AUD$200,000;
• Norm Engineering Pty Limited v Digga Australia Pty Limited [2007] FCA 761, (2007) 162 FCR 1 – AUD$19,450;
• Review Australia Pty Limited v New Cover Group Pty Limited [2008] FCA 1589, (2008) 79 IPR 236 – AUD$50,000;
• Elwood Clothing Pty Limited v Cotton On Clothing Pty Limited [2009] FCA 633, (2009) 81 IPR 378 – AUD$150,000; and
• Seafolly Pty Limited v Fewstone Pty Limited [2014] FCA 321, (2014) 106 IPR 85 – AUD$150,000.

The Court of Appeal placed this case in the same bracket of severity as Norm Engineering Pty Limited v Digga Australia Pty Limited (AUD$19,450) and Review Australia Pty Limited v New Cover Group Pty Limited (AUD$50,000) and awarded $50,000 in damages.

Injunction

Justice Heath had made an order restraining JeansWest from copying the copyright works and from selling, manufacturing, importing or otherwise disposing or dealing with the infringing Dean Biker jeans.

However, both parties agreed that as the Elwood design was launched in March 1996, copyright in the design had expired.

This is because once certain copyright works are industrially applied, the life of their copyright is reduced to 16 years, rather than the usual 50 years after the death of the author. It was therefore incorrect to award an injunction beyond March 2012 because the Elwood design was no longer protected by copyright.

End result

JeansWest’s appeal was dismissed, except for the permanent injunction point.

G-Star’s cross-appeal was allowed. JeansWest was liable for primary infringement of the copyright works and $50,000 of additional damages was awarded to G-Star, together with interest and costs.

It is now open to JeansWest to seek leave to appeal to the Supreme Court.