The dispute between Gram Engineering Pty Ltd and BlueScope Steel Limited is one of the more detailed Australian cases on registered design infringement, particularly because the litigation did not end with the initial finding of infringement.
The proceedings began with a dispute over the appearance of competing steel fencing panels. They ultimately involved a Federal Court trial, an appeal and cross-appeal to the Full Court, a further dispute over access to confidential financial information, and a substantial damages award.
The main issue of this case was Gram Engineering’s registered design for a symmetrical fencing panel with a distinctive six-pan sawtooth profile. BlueScope’s competing Smartascreen panel incorporated a similar overall profile, but also contained additional features such as ridges, valleys and micro-fluting.
The Federal Court found that Smartascreen was an obvious imitation of Gram’s registered design. That finding survived BlueScope’s appeal. Gram, however, was unsuccessful in establishing the more demanding allegation that BlueScope had fraudulently imitated the design.
Years later, after further proceedings concerning financial disclosure and the appropriate measure of relief, Gram was awarded more than $2 million in damages, together with pre-judgment interest.
The case illustrates how courts assess the overall visual impression of a registered design, the role of prior art in defining the scope of protection, the distinction between similarity and deliberate copying, and the evidentiary difficulties that can arise when infringement proceedings are commenced years after the relevant conduct.
Background of the dispute
Gram Engineering manufactures steel fencing products. In the early 1990s, its managing director, Robert Leslie Mann, sought to solve a familiar problem with traditional fencing panels. Many panels had a visually preferable “good side” and a less attractive reverse side, which could create disagreement between neighbouring property owners.
Mr Mann developed a fencing profile that looked substantially the same from either side. The design used a repeating sawtooth or zig-zag configuration consisting of six pans or modules.
Gram applied to register the design in February 1994. Australian Registered Design No. 121344S was registered in August 1994, and Gram began selling a product substantially embodying the design under the name GramLine in September 1995. By 2002, the GramLine range held approximately 35 to 40 per cent of the Australian fencing panel market.
BlueScope, through its Lysaght business, was also a major participant in the Australian steel fencing market.
In 2002, BlueScope launched a symmetrical fencing panel called Smartascreen. Like GramLine, Smartascreen used a repeating six-pan sawtooth profile and was designed to appear substantially the same from both sides.
The two products were not identical. Smartascreen contained what the parties described as a ridge and valley feature, together with micro-fluting across parts of the panel.
Gram nevertheless alleged that the similarities went far enough to infringe its registered design.
Although Smartascreen had been on the market since 2002, Gram did not commence proceedings until 2011.
The registered design and the prior art
An important part of the dispute concerned the extent of the monopoly created by Gram’s registration.
Because the design had been registered under the Designs Act 1906 (Cth), the infringement and relief provisions of that legislation continued to govern the dispute through the transitional provisions of the Designs Act 2003 (Cth).
BlueScope challenged the validity of the design on the basis that it was not sufficiently new or original when compared with earlier designs for roofing, cladding and other sheet products.
The Court did not accept that argument.
Jacobson J approached the design through the eyes of an “instructed” observer who understood the nature of fencing panels and the manner in which they were ordinarily used.
The Court regarded the principal visual feature as the vertically oriented six-pan sawtooth profile. The particular combination of the number of pans, their amplitude, wavelength and angles contributed to the overall appearance.
Other features, including what was described as the “sawtooth within a sawtooth” and the flanges at the ends of the panel, were treated as secondary.
Although individual elements of the design could be found in earlier products, the Court considered their particular combination to produce a sufficiently distinctive overall appearance. The design therefore survived BlueScope’s invalidity challenge.
This became important when the Court turned to infringement. The question was not whether each individual element of Gram’s design was unique. It was whether the registered combination, viewed as a whole and against the prior art, was reproduced closely enough in Smartascreen.
Was Smartascreen an obvious imitation?
Gram relied on the provisions of the 1906 Act dealing with “obvious” and “fraudulent” imitation.
An obvious imitation did not have to be identical to the registered design. The question was essentially visual. The alleged infringement had to reproduce the essential features sufficiently closely that the resemblance was apparent to the eye.
BlueScope relied heavily on the differences created by Smartascreen’s ridge and valley configuration and its micro-fluting.
Jacobson J was not persuaded that those features changed the overall impression sufficiently.
When Smartascreen was viewed as a whole, the Court considered its dominant feature to remain the repeating six-pan sawtooth profile, including the combination of its amplitude, wavelength and angles. The additional ridge, valley and micro-fluting features were comparatively minor and did not overcome the broader visual similarity.
There was also evidence that physical samples of GramLine and Smartascreen could be “nested” together, although not perfectly. The Court regarded this as further support for the closeness of their respective profiles.
Jacobson J therefore found Smartascreen to be an obvious imitation of Gram’s registered design. The Court subsequently declared that BlueScope had infringed the design by applying the imitation to Smartascreen and by selling, offering and keeping the product for sale during the recoverable infringement period.
BlueScope’s internal development documents
The factual history of Smartascreen’s development gave the case an additional dimension.
BlueScope had been concerned about the commercial success of GramLine. Internal documents recorded Gram as a significant competitor and referred to the commercial attraction of a symmetrical fencing panel that could compete directly with Gram’s product.
One internal discussion paper described the proposed BlueScope product as having a similar appearance to GramLine and indicated that it could operate as a substitute in housing developments where GramLine had been successful.
Another internal memorandum referred to the development of a “Gram look alike”.
Those documents provided considerable support for the proposition that BlueScope wanted a product capable of competing directly with GramLine.
They did not, however, ultimately establish fraudulent imitation.
Why did the fraudulent imitation claim fail?
Fraudulent imitation under the former Designs Act required more than visual similarity.
Gram needed to establish that BlueScope’s design had actually been deliberately based on or derived from the registered design. Dishonesty was not required, but there had to be sufficient evidence connecting the design process with deliberate copying.
This distinction proved important.
There was evidence that BlueScope personnel knew about GramLine. There were also internal references to developing a product which looked like Gram’s product.
The difficulty was identifying whether the individuals responsible for the relevant design drawings had actually derived their work from Gram’s registered design.
One particularly important person, Mr Field, had been involved in BlueScope’s design process and had authored the memorandum referring to a “Gram look alike”. By the time the case came to trial, his age and ill health meant that he was unable to give evidence.
Jacobson J considered that the delay in commencing the proceeding had materially complicated the evidence on this issue.
The Court was not prepared to infer deliberate copying simply because BlueScope knew of GramLine, wanted to compete with it, and ultimately produced a product with striking similarities.
Accordingly, Smartascreen was found to be an obvious imitation, but not a fraudulent imitation.
That distinction would become one of the central issues in the subsequent appeal.
The Full Court appeal
BlueScope appealed to the Full Court of the Federal Court in BlueScope Steel Limited v Gram Engineering Pty Ltd [2014] FCAFC 107.
BlueScope challenged the primary judge’s approach to the scope of the registered design and the finding that Smartascreen was an obvious imitation.
Gram filed a cross-appeal challenging the conclusion that fraudulent imitation had not been established. The Full Court dismissed both the appeal and the cross-appeal.
On obvious imitation, the Full Court confirmed that infringement required a visual comparison directed to the essential features of the design.
It rejected an overly technical approach based on measurements or a dissection of individual elements. Although differences such as the ridge and valley effect and micro-fluting were relevant, they had to be assessed as part of the overall appearance.
The Full Court agreed that the dominant impression remained the six-pan sawtooth profile.
It also accepted that the ability of the products to nest, although technically a physical rather than purely visual comparison, could assist in understanding the similarity between their respective amplitude, wavelength and angles.
Besanko and Middleton JJ did identify one error in the primary judgment. They considered that BlueScope’s commercial reason for developing Smartascreen was not relevant to the visual question of whether the product was an obvious imitation. Infringement had to be determined by comparing appearances rather than by asking why BlueScope had created the product.
That error did not change the result because it had not materially affected Jacobson J’s visual assessment.
Yates J also agreed that the appeal should be dismissed. His Honour placed particular emphasis on viewing the design as a whole and on the significance of its vertical orientation, six-pan structure and resulting symmetrical appearance.
Gram’s cross-appeal on fraudulent imitation
Gram’s cross-appeal also failed.
The Full Court agreed that the evidence did not justify interfering with the primary judge’s factual findings concerning deliberate copying.
There was no doubt that BlueScope wanted a competing symmetrical fencing product and that its research and development team was aware of GramLine. However, that did not establish the additional element required for fraudulent imitation.
The Court considered it reasonably open to the primary judge to find that some relevant drawings could have developed from BlueScope’s earlier work rather than having been copied directly from Gram’s design.
The absence of Mr Field’s evidence remained significant.
The case therefore emerged from the Full Court with the central liability finding intact. Smartascreen was an obvious imitation and infringed the registered design, but deliberate derivation sufficient to establish fraudulent imitation had not been proved. The Full Court unanimously dismissed both BlueScope’s appeal and Gram’s cross-appeal.
The dispute over BlueScope’s confidential financial information
The litigation continued after liability had been resolved.
Gram had to decide whether to seek damages for the losses it had suffered or an account of BlueScope’s profits.
BlueScope provided affidavits containing information about Smartascreen sales, revenue, costs and overheads. Some of that material was treated as commercially confidential and was initially available to Gram’s lawyers and accounting expert, but not to Gram’s own officers.
This created a practical problem. Gram argued that its managing director, Mr Mann, needed to understand the financial material before he could meaningfully instruct the legal team on whether the company should elect damages or an account of profits.
In Gram Engineering Pty Limited v BlueScope Steel Pty Limited (No 2) [2016] FCA 452, Jagot J accepted the importance of that concern.
Much of the relevant material dated from 2005 to 2010. The Court was sceptical that information of that age retained the degree of commercial sensitivity claimed by BlueScope. Some more recent information concerning freight and conversion costs raised stronger confidentiality concerns, but it remained highly relevant to Gram’s decision.
The Court concluded that the balance favoured access and indicated that disclosure should be permitted subject to appropriate confidentiality protections. The parties were given an opportunity to settle the precise undertakings that would govern access.
This procedural stage was important because it allowed Gram to make an informed choice about the form of monetary relief it would pursue.
On 4 August 2016, Gram elected to claim damages.
Assessing Gram’s losses
The damages hearing eventually resulted in Gram Engineering Pty Ltd v Bluescope Steel Ltd [2018] FCA 539.
By that stage, infringement had already been established. The remaining question was what financial loss Gram had suffered because Smartascreen had been on the market.
The recoverable infringement period ran from 16 April 2005 until the design expired on 8 February 2010. Although Smartascreen had been sold earlier, Gram’s delay in commencing proceedings meant that the limitation period prevented recovery for earlier losses.
The damages exercise was not straightforward.
It could not simply be assumed that every Smartascreen customer would otherwise have purchased GramLine. BlueScope had its own established distribution network, the Colorbond brand was commercially important to some customers, and other competing fencing profiles entered the market during the relevant period.
At the same time, the Court rejected the proposition that only a very small proportion of Smartascreen sales represented sales lost by Gram.
Smartascreen had been created specifically to compete in the market occupied by GramLine. The products offered the same key benefit of a symmetrical fence with no obvious “bad side”, and Smartascreen gave BlueScope’s branches and resellers a product capable of satisfying customers who wanted that type of fencing.
The Court therefore had to construct the counterfactual position. What was likely to have happened if Smartascreen had not been available?
Gram’s evidence was not perfect. It had not identified every reseller or provided direct evidence from customers showing that they would have bought GramLine in the absence of Smartascreen. There were also other factors affecting competition, including pricing, distribution networks, the importance of Colorbond steel and the arrival of other symmetrical fencing products.
Nevertheless, the Court was satisfied that Smartascreen had diverted a material volume of business from Gram.
Jagot J considered that a reasonable range for Gram’s lost sales was between 20 and 40 per cent of BlueScope’s Smartascreen sales. Taking the weaknesses in Gram’s evidence into account, the Court selected 25 per cent, towards the lower end of that range.
Applying that percentage to Smartascreen panels and related products produced damages of $2,078,338.
Interest and the effect of Gram’s delay
BlueScope argued that pre-judgment interest should effectively be reduced because Gram would have paid company tax on its profits and therefore would only have retained approximately 70 per cent of them.
The Court rejected that approach and calculated interest by reference to Gram’s pre-tax loss of profits.
BlueScope also relied on Gram’s delay in commencing proceedings when addressing interest.
Jagot J was not persuaded that BlueScope should receive the benefit of that delay. Gram had already suffered a significant consequence because the limitation period prevented it from recovering losses arising before 16 April 2005.
Pre-judgment interest was therefore awarded from that date through to judgment, calculated on the pre-tax loss of profits.
The final damages judgment was $2,078,338, together with pre-judgment interest.
Commercial significance
The Gram Engineering litigation demonstrates why registered design disputes cannot usually be resolved by identifying a few differences between competing products.
The Court repeatedly returned to the overall visual impression. Smartascreen contained additional features which were absent from Gram’s registration, but those features did not displace the dominant six-pan sawtooth profile that gave the products their striking similarity.
The case also shows the importance of prior art. The scope of protection was not considered in isolation. The Court first examined what distinguished Gram’s design from what had come before it and then considered whether those distinguishing features had been reproduced in Smartascreen.
There is also an important distinction between infringement and copying. Gram succeeded without proving that BlueScope had deliberately copied its registered design because obvious imitation under the 1906 Act was essentially a visual question. The more serious allegation of fraudulent imitation required evidence that the Smartascreen design had actually been based on or derived from Gram’s design. Awareness, competitive pressure and even references to a “Gram look alike” were not enough on the evidence available.
The long procedural history also highlights the consequences of delay. Gram ultimately obtained a substantial damages award, but its delay meant that part of the infringement period fell outside the limitation period. The passage of time also deprived the Court of potentially important evidence from a witness who had participated in BlueScope’s design process. That became particularly important when Gram tried to establish fraudulent imitation.
Finally, the damages decision shows that a claimant does not necessarily need to prove each individual lost sale. Where infringement and material loss have been established, the Court may assess the counterfactual commercially and draw reasonable inferences from market conditions, competition, sales figures and the characteristics of the infringing product. However, gaps in the claimant’s own evidence can still materially reduce the award. Gram argued for a greater proportion of BlueScope’s Smartascreen sales, but the deficiencies in its evidence contributed to the Court adopting the lower 25 per cent figure.
The proceedings were decided under the former Designs Act 1906 because of the date of Gram’s registration. The statutory infringement test under the current Designs Act 2003 is different. Even so, the broader lessons remain relevant for design owners and competitors: the representations used in a registration matter, prior art can materially affect the scope of protection, visual differences must be considered in the context of the design as a whole, and contemporaneous evidence can become decisive if litigation arises years after a competing product enters the market.
For businesses developing products in a crowded market, the case also serves as a reminder that design clearance should not be treated as a purely mechanical comparison. Where a proposed product has been developed with a successful competitor specifically in mind, both the design process and the records created during that process may later become important evidence.
For registered design owners, early enforcement and careful preservation of commercial evidence can be just as important as establishing infringement itself.
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