State of Escape Accessories Pty Limited v Schwartz  FCA 1606
The Australian creator of an on-trend neoprene tote bag, State of Escape Accessories Pty Ltd (State of Escape), has lost a copyright infringement claim in the Federal Court after it found that the bag did not constitute a work of artistic craftsmanship.
State of Escape was the assignee for copyright of the "Escape Bag" which was created by one of the company's directors Ms Brigitte MacGowan. In 2018, State of Escape launched proceedings against Chuchka Bags Pty Ltd (Chuchka) and its director, Stefanie Schwartz, for breach of copyright, passing off and misleading and deceptive conduct under the Australian Consumer Law.
State of Escape argued that Chuchka's bags bore a striking resemblance to the upmarket Escape Bags (consisting of perforated neoprene and sailing rope), and this had confused consumers into thinking the Chuchka totes were in some way related to or associated with State of Escape.
The matters for the Federal Court to consider were whether:
- copyright subsists in the Escape Bag as a "work of artistic craftsmanship"
- Chuchka had infringed copyright in the Escape Bag by reproducing a substantial part of the Escape Bag
- Chuchka had committed the tort of passing off
- Chuchka had engaged in misleading and deceptive conduct.
Did copyright subsist in the Escape Bag?
Applying the principles set out by the High Court in Burge v Swarbrick  HCA 17, Justice Jennifer Davies found that because central functionality was in the design of the Escape Bag, it could not be considered a work of artistic craftsmanship.
Drawing on Burge, Justice Davies concluded stating at :
It is undoubtedly a work of craftsmanship?but I am not persuaded that it is a work of artistic craftsmanship, notwithstanding its aesthetic and design qualities.
Justice Davies also noted that the bag's aesthetic and artistic expression (particularly the choice of neoprene fabric and sailing rope as handles), was constrained by its functional considerations and the choices made by the bag's designer were not determinative in this matter. Justice Davies found that the neoprene fabric coupled with the sailing rope did not go far enough to constitute artistic craftsmanship and could only be considered at its most a mere "evolution in styling".
Did Chuchka infringe State of Escape's copyright?
While there was no copyright subsisting in the Escape Bag, notwithstanding this, Justice Davies went on to note that had she found that the Escape Bag was a work of artistic craftsmanship, State of Escape would have been successful in establishing a claim of infringement under s 36 of the Copyright Act.
Justice Davies noted that had copyright subsisted, she would have ruled that Chuchka had infringed the copyright as this bag mimicked the "overall look and feel" while embodying the essential elements of the Escape Bag.
Did Chuchka commit the tort of passing off?
While Justice Davies considered that the bags had "obvious similarities", she found that confusion amongst consumers would be unlikely primarily due to the prices of the bags. The Escape Bag typically retails at around $300 while the Chuchka bags were around $109. Therefore, as the Escape Bags were not considered "impulse or casual buys" it would be reasonable to infer that customers would thoroughly assess the bags before purchasing and confusion between the two bags would be unlikely.
Did Chuchka engage in misleading and deceptive conduct?
State of Escape alleged that Chuchka used a number of misleading representations in respect of its bag such as "entirely Australian designed", "bespoke style" and "original neoprene tote bag". Chuchka admitted to making misleading representations in promoting its bag and Ms Schwartz was found to have accessorial liability in respect of the misleading conduct. Justice Davies is to rule on the damages for the misleading conduct at a later date.
This decision serves as a timely reminder that copyright protection should not be assumed and highlights the importance of ensuring proactive protection of copyright and designs. Additionally, claims of passing off and misleading and deceptive conduct can be deeply contextual and require substantial legal consideration.
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