Further to the earlier article regarding trade mark infringement in respect of aftermarket parts in the automotive industry, this article will look at design infringement that often occurs in the market. In the automotive industry, it is common for car enthusiasts to buy standard vehicles that have the appearance of an enhanced model so they can ‘up-spec’ or modify their car. Original Equipment Manufacturers (OEM) are particularly wary of enthusiasts buying the cheaper standard model and then upgrading it with specific parts designed for the top of the range model.
A registered design protects the visual appearance of a product, such as its shape, configuration, patter or ornamentation. To be eligible for design protection, a design must new and distinctive. In contrast a patent which gives inventors exclusive rights to devices, methods and processes that have a use or function, design registration focuses on the visual form applied to the product such as shape, configuration, pattern and ornamentation. This means that a competitor might copy the functional use of a product, but could not replicate its visual appearance (provided it is not patented).
Section 71 of the Designs Act 2003 (Cth) (the Act) states that an infringing act occurs if, without the appropriate authority, a person deals in certain ways with a product that embodies (or substantially embodies) a registered design.
As a way of overcoming the practical issue where original products must be repaired or replaced, the law provides for an exception known as the ‘repair defence’ under section 72 of the Act. The repair defence is a complete defence to a claim of design infringement, if the purpose of using the design is to repair a product. It only applies to complex products, which must contain two or more replaceable component parts. The use of the part must restore its overall appearance in whole or part. Repair in this context can mean restoring or replacing damaged parts, replacing incidental items when restoring the component part, or carrying out maintenance on the complex product.
Recently, the repair defence was tested successfully in GM Technology Operations LLC v SSS Auto parts Pty Ltd (2019) 139 IPR 199. In this case, GM Global Technology Operations (Holden) sought an injunction against SSS Auto Parts (SSS) for the sale of spare Holden parts to second hand owners to be used to repair Holden Commodores. The claim was made on the basis that SSS was importing these parts for a purpose other than repair. It was claimed that SSS had constructive knowledge that these parts would infringe Holden’s design registration. The Court found that even if there was a dual purpose to a spare part (i.e. for repair and enhancement of a vehicle), this would not exclude the repair defence. Thus, if a part is capable of being used for more than one purpose, a permitted repair purpose and a prohibited purpose, this would be permitted as long as the importer or seller does so, on the assertion that it would be used for repairs. The immediate question then becomes the intent of the importer or seller, not the customer who acquires the part. Unless SSS had actual or constructive knowledge that the parts would not be used for repair purposes by the customer, they could not be held to have infringed section 71 of the Act. The Court did find, in a small number of cases, that SSS had infringed section 71 because, in those instances, the customer expressly told SSS that it was not going to use the part for repairs. In summary, the onus is on the plaintiff to prove that the importer or seller knew or ought to know that the parts were going to be used for a purpose other than repairs. In determining knowledge, a court will look at factors such as business hierarchy, the business model, interactions with customers and management’s interaction with staff.
Now that the scope of the ‘repair defence’ has been defined, spare part dealers can have the confidence of knowing how far the repair defence applies in relation to the sale of spare parts. Importers and sellers of spare parts in the automotive aftermarket should still be wary, especially when staff are interacting and making sales with customers. For OEMs, noting what the ‘repair defence’ entails, you can adjust your design protection strategy accordingly.
HWL Ebsworth’s Intellectual Property team can help you improve and strengthen your design protection strategy in other areas as well such as lodging a Notice of Objection with the Australian Border Force, allowing them to seize counterfeit goods imported by a third party at customs. The imported goods must be in breach of goods you have copyright in or which have a registered trade mark.
This article was written by Helen Kavadias, Partner and Daniel Cacaj, Graduate.
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