Swimsuit Copyright Fight: Seafolly Pty Limited v Fewstone Pty Ltd [2014] FCA 321

Tuesday 8 April 2014 @ 1.30 p.m. | IP & Media

Leading swimwear brand Seafolly has emerged as the victor in a long-running Federal Court battle with surfwear designer, manufacturer and retailer, City Beach.  On 1 April 2014, Justice Dodd-Streeton found that City Beach had infringed Seafolly’s copyright in three of its designs from the summer 2010-2011 range.  City Beach must now pay Seafolly over $250,000 in damages and must immediately hand over any remaining stock to Seafolly.  According to The Australian, this was not the first time Seafolly has claimed that City Beach has ripped off its designs, with a similar complaint in 2007 being settled out of court.

An Intellectual Property Partner from K&L Gates, Johnathan Feder, who represented Seafolly in the case, told 7News the decision was important given the changing fashion climate:

“It's pretty common place now for fashion companies to go out overseas and to copy other people's products, and I think that this case shows that this is something that the court won't stand for.”

Facts

Seafolly claimed that two of its prints – the English Rose artwork and the Covent Garden artwork had been reproduced in a material form in a substantive part of two City Beach prints.  It also claimed its Senorita embroidery had been reproduced by City Beach.  Seafolly’s artwork was created for it’s 2010 range by an external design company, Longina.  Seafolly embarked on an extensive marketing campaign for its range that featured model Jess Hart in the English Rose bikini.

City Beach denied that it had infringed Seafolly’s copyright, arguing that there was not sufficient similarity between the different prints, and that no substantial part of the work had been taken.  City Beach acknowledged at trial that it had purchased an example of each of the items in question, although it did not reference this in earlier affidavits.  In emails to its design company, 2Chillies, it sent photographs of the Seafolly prints as "references", along with a few other styles.  Various designs were then sent back and forth between members of the City Beach team and 2 Chillies.  At one point, the bikini being designed was referred to as a “Seafolly knock off”, which City Beach argued was just “loosely talking internally instead of using the correct code number” [at 155].  2Chillies apparently raised a number of concerns throughout the process that the design was too close to Seafolly’s, and a number of changes were made to remedy this, but these were not approved by City Beach.  City Beach also sent a one piece Seafolly Senorita swimsuit to a manufacturer in China, Welon (China) Ltd.  

Decision

His Honour found that copyright subsisted in the artistic work of the prints and the embroidery, and that Seafolly had the exclusive right to reproduce it.  He turned to Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 172 FCR 580 when considering whether a “substantial part” of the artistic work had been reproduced in City Beach’s designs, and concluded that copyright in all three of the designs had been infringed.  His Honour found that City Beach had authorised 2Chillies’ and Welon’s designs, infringing sections 37 and 38 of the Copyright Act 1968, and that a reasonable person would have understood that Seafolly’s copyright was being infringed [at 497].

Costs

Seafolly elected to receive compensatory damages for lost profit.  They argued that the products were in the same market for purchase.  City Beach submitted that the parties operated in different markets, with respect to price and age group, and that there would have been no prospect of confusion as the swimwear was never sold in the same stores. According to the parties' evidence, Seafolly bikini tops sold for between $49.95 and $129.95, and City Beach separates sold for between $15 - $39.95.  His Honour decided that “a significant discount” should apply in this case, because of the price differences involved. 

However, His Honour also awarded a sum of $150,000 in additional damages against City Beach, citing City Beach’s "sending of the Senorita garment in particular" as "tantamount to an instruction to copy" [at 636].  He also criticised many of City Beach’s witnesses as "not candid or responsive" and "frequently evasive".  Lastly, he cited "general deterrence" as another reason to award the additional damages.  This suggests that the Federal Court is aware of the challenges faced by the fashion industry as it responds to increased overseas manufacturing.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

Related Articles: