MELBOURNE: The enduring legal battle between Melbourne clothing company Elwood and Cotton On has finally drawn to a close with the retail chain ordered to pay nearly $300,000 in damages.
The judgement was as a result of a copyright infringement case brought by Elwood owner Andy Gillott last year in relation to a range of its T-shirt and swing ticket designs.
The case has shuffled between the federal court and the appeals court with the full federal Court overturning the trial judge's initial finding that a T-shirt and swing ticket design, which Cotton On employees admitted to copying from designs released by Elwood, did not constitute an infringement of copyright.In a judgement released last month, trial judge Justice Gordon ordered Cotton On to pay Elwood damages in the sum of $280,000 and pay the costs incurred by Elwood in seeking damages.
The case concerned an original T-shirt design, known as 'NewDeal' and a unique label design known as 'Vintage Sport Swing Tag' which was used on a range of its garments.
Cotton On released a similar T-shirt to the 'NewDeal' design in three different styles, as well as a swing tag similar to the 'Vintage Sport Swing Tag' design. Cotton On designers gave evidence at the trial that they had "made reference to" the two designs when they created the Cotton On T-shirts and swing tag.
Furthermore, the evidence led at trial revealed that these employees were told to use the Elwood Clothing garment and swing tag in order to design something that was "the same, but different".
Trial judge Justice Gordon found the 'NewDeal' design and the 'Vintage Sport Swing Tag' design were protectable under copyright law as artistic works, but rejected Elwood Clothing's submissions that the Cotton On garment and label designs substantially reproduced the two designs.
However Elwood Clothing, represented by Middletons, appealed these findings to the Full Federal Court of Australia who unanimously upheld the appeal.
Elwood had originally sought $403,569 being the lost profit on sales - involving 28,000 units based on a profit margin on wholesale sales of $12.88 per unit - and a further $200,000 for damages to reputation.
However Justice Gordon found it was difficult to conclude that Elwood's sales would have matched Cotton On's - particularly as Elwood sold its T-shirts for a retail price of $50 and Cotton On sold its by offering two for $30.
In releasing his damages finding, Justice Gordon said there were a number of reasons in support of Elwood's damages claim including the fact Cotton On's infringement was "flagrant" and that despite being put of noticed o the infringing act, Cotton On continued to manufacture the garments until all were sold.
The judge also noted there was a need to deter similar infringements of copyright.
"The respondent, a large clothing manufacturer and retailer, knew that the design would be a winner. Its method of 'designing' garments was to employ 'shoppers' who travelled the world buying garments which they then 'copied'. If the applicant's copyright was infringed, then there is a public interest in deterring that method of 'designing'," he said.