Australia: More firsts for registered designs in Australia

Introduction and Background

This article serves as something of a postscript to this author's previous writing on the decision in Key Logic Pty Ltd v Sun-Wizard Holding Pty Ltd [2021] FCA 208 (Key Logic v Sun-Wizard No. 1).¹ My previous article on Key Logic v Sun-Wizard No. 1 described a first in Australian intellectual property law in respect of registered designs and the Designs Act 2003 (Act). Namely, Key Logic v Sun-Wizard No. 1 was the first appeal to the Federal Court from a decision of a delegate of the Registrar of Designs that had gone on to be the subject of judicial determination. As such, the case was important primarily for setting out principles as to which party bears the onus of proof in such a proceeding, but was also useful for:

1. Confirming and reinforcing existing principles as to how matters such as "newness and distinctiveness" and "substantially similar in overall impression to another design" are to be looked at and assessed;
2. The application of principles of obligations of confidentiality in respect of the disclosure of a design in a commercial context.

On 8 February 2022 His Honour Justice Greenwood handed down his decision in respect of the costs of the proceeding in Key Logic Pty Ltd v Sun-Wizard Holding Pty Ltd [2022] FCA 81 (Key Logic v Sun-Wizard No. 2). The novelty (or first) in Key Logic v Sun-Wizard No. 2 is in respect of whether the Court may overturn a decision made by the delegate of the Registrar of Designs in respect of the costs of the proceeding below in IP Australia and, if so, what are the principles and considerations that the Court will have regard to in considering whether to overturn or otherwise alter a delegate's decision on costs.

As those who have read Key Logic v Sun-Wizard No. 1 or my article² from April 2021, Key Logic v Sun-Wizard No. 1 concerned an appeal to the Federal Court under s. 68(6) of the Act from a decision of the delegate of the Registrar of Designs revoking the registration of a design in respect of a product called a "solar bollard"; Design No. 201012310, Registration AU332890 S (Design). Happily for Key Logic, the outcome of the appeal was wholly successful in that the delegate's decision to revoke the registration of the Design was overturned. From that certain costs and consequences followed.

The Costs Decision - Key Logic v Sun-Wizard No. 2

Given that Key Logic was entirely successful in its appeal and the decision of the delegate of the Registrar of Designs was set aside, it should be wholly unsurprising that Sun-Wizard was ordered to pay Key Logic's costs of the Federal Court proceeding on the standard basis and to be quantified under the lump sum costs procedure provided for by Section 4 of the Federal Court's Costs Practice Note - [GPN Costs]. What was novel, however, was that in the decision below, the delegate had ordered Key Logic to pay Sun-Wizards costs of that proceeding. Key Logic, in the relief it sought in its appeal against the delegate's decision, had sought that Sun-Wizard pays Key Logic's costs of the proceeding below - effectively that the delegate's decision in respect of costs be overturned or varied. Given that no appeal to the Federal Court from a decision of a delegate of the Registrar of Designs had ever gone to trial and a determination, it should come as no surprise that such an issue had not ever been considered in the context of registered designs and the Act.

However, such matters had been considered in the context of appeals to the Federal Court from decisions of delegates of the Registrar of Trade Marks. Section 88 of the Act is in the very same terms as s. 197 of the Trade Marks Act. Section 88 of the Act provides:

Powers of Federal Court and Federal Circuit Court on hearing an appeal

On hearing an appeal against a decision or direction of the Registrar, the Federal Court or Federal Circuit Court may do any one or more of the following:

1. admit further evidence orally, or on affidavit or otherwise;
2. permit the examination and cross-examination of witnesses (including witnesses who gave evidence before the Registrar);
3. order an issue of fact to be tried as it directs;
4. affirm, reverse or vary the Registrar's decision or direction;
5. give any judgment, or make any order, that, in all the circumstances, it thinks fit;
6. order a party to pay costs to another party.

In the decision of UCP Gen Pharma AG v Mesoblast, Inc (No 2) [2012] FCA 500 (UCP) in which His Honour Jessup J accepted (at paragraph [3]) that s. 197 of the Trade Marks Act 1995 (Cth) gives the Court power to vary the award of costs of a delegate of the Registrar of Trade Marks. Jessup J stated at [3]:

One can see that Jessup J rather baldly states that he accepts the Court does have the power the vary a costs award of a delegate of the Registrar of Trade Marks by reason of that power arising under s. 197 of the Trade Marks Act - but he does not actually explain in any detail why s. 197 would have that effect. His Honour Justice Greenwood, however, in Key Logic v Sun-Wizard No. 2 goes into rather more detail as to why s. 88 of the Act (which, as already stated is in exactly the same terms as s. 197 of the Trade Marks Act) does give the Court the power to vary a decision on costs of a delegate of the Registrar. At paragraphs [6] and [8] of Key Logic v Sun-Wizard No. 2 His Honour stated:

[6] The power to award costs in all proceedings before the Court is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) (the "Court Act"). There is no need in these reasons to set out the principles governing the exercise of that power. There is no controversy between the parties as to the disposition of the costs of the Federal Court proceedings. Section 43 of the Court Act, however, does not confer power on the Court to make an order as to the costs of a proceeding before the Registrar's delegate.

[8] As mentioned, the Court set aside the decision of the Registrar's delegate. That order had the effect of setting aside the delegate's decision to order Key Logic to pay Sun-Wizard's costs of the proceeding before the delegate. Section 88(d) confers power on the Court to vary the delegate's decision (including in relation to the costs). Section 88(f) confers power on the Court to order a party to pay costs to another party. It may be that the proper construction of s 88(f) (having regard to the role of s 43 of the Court Act in relation to the costs of proceedings in the Court), is that s 88(f) includes the conferral of a power in relation to costs incurred by a party in proceedings before the Registrar's delegate. The scope of s 88(f) might become more relevant in a proceeding where the Registrar's delegate has made no order as to costs. In these proceedings, the power under s 88(d) to vary the Registrar's decision (including, in this case, the delegate's decision to award costs to Sun-Wizard), confers power to make an order as to the costs of the proceeding before the delegate. For my part, I take the view that s 88(d) of the Act is sufficiently broad to confer a general power to make an order as to the costs of the proceeding before the Registrar's delegate. That view of the scope of the power is consistent with the view expressed by Jessup J in relation to s 197(d) of the Trade Marks Act 1995 (Cth), which is in the same terms as s 88(d) of the Act, in UCP Gen Pharma AG v Mesoblast, Inc (No 2) [2012] FCA 500 at [3] ("UCP Gen Pharma AG"). The exercise of the power raises another question.

Greenwood J therefore explicitly determined that s.88(d) of the Act bestows the power on the Court to overturn or vary a decision as to costs of a delegate of the Registrar of Designs. Presumably it is the equivalent provision of the Trade Marks Act (s. 197(d)) which bestows the power on the Court to overturn or vary a decision as to costs of a delegate of the Registrar of Trade Marks.

As such, it is now made clear by Key Logic v Sun-Wizard No. 2 the source of power for the Court to overturn or vary a costs award made by a delegate of the Registrar of Designs. However, just because the Court does have the power to overturn or vary such a costs award does not mean that such will occur as a matter of course. An enquiry must be had into whether the delegate's decision on costs should not be overturned because the decision made by the delegate was properly made on the basis of the material before the delegate. In UCP Jessup J refused to interfere with the costs award of the delegate, even though Jessup J decided in favour of the appellant in overturning the delegate's substantive decision because the material and evidence that gave rise to the successful appeal was not before the delegate - rather, the appeal proceedings were decided substantially by reference to evidence to events which post-dated the evidence led before the delegate. Jessup J went on to say: "None of the facts to which I referred in my reasons of 15 March 2012 after the second sentence in paragraph 21 thereof was mentioned by the delegate; or, I would infer, was relied upon by the applicant before the delegate".³ As such, Jessup J did not hold and did not take the view that the delegate was wrong to have disposed the matter as he did on the evidence which was before him.⁴

Key Logic v Sun-Wizard No. 2 Greenwood J adopted the process followed by Jessup J in UPC so as to make a determination as to whether the delegate's decision was made on the basis of the same or similar evidence that was before the Court and which evidence was instrumental in the different determination made by the Court. In Key Logic, Greenwood J found that whilst there was some additional evidence in the form of affidavits, the evidence before him was in respect of the same matters that was before the delegate that were the subject of statutory declarations.⁵ Further, and importantly in Key Logic, Greenwood J noted that the director of Sun-Wizard (who had formerly been a director in the company in which the Design had been developed) had a direct commercial interest in seeking to invalidate the design. Further, it was noted that findings in respect of certain witnesses of Sun-Wizard and their evidence "suggest that the initial application the subject of the delegate's decision was unmeritorious and ought not to have been made".⁶ For such reasons, His Honour determined that the delegate's decision as to costs should be overturned and that Sun-Wizard should pay Key Logic's costs of the proceeding before the delegate.

Addenda

* Bennett & Philp Lawyers acted for Key Logic in the Federal Court proceeding and drew the submissions in respect of costs aspects of the proceeding.

** Perceptive readers may well have already noted that Key Logic v Sun-Wizard No. 2 was handed down on 8 February 2022, some time after Key Logic v Sun-Wizard No. 1 was delivered on 12 March 2021. Such perhaps matters not in the greater scheme of things, especially when one considers that the priority date in respect of the Design was 7 June 2010 and that design registration protection ceases after a maximum of 10 years, such that the registration of the Design actually ceased (expired) on 7 June 2020 and Key Logic v Sun-Wizard No. 1 was handed down after the registration of the Design had expired.

¹ Michael Coates, "Registered Designs in Australia - The Key Logic v Sun-Wizard Decision" published April 2021.

² Ibid.

³ UPC para. [5].

⁴ UPC para. [6].

⁵ Key Logic v Sun-Wizard No. 2 para. [17].

⁶ Key Logic v Sun-Wizard No. 2 para. [18].

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