Design registration protects the appearance of a product (in contrast to a patent, which protects functional aspects). Infringement of a design registration is concerned with, inter alia, using, making, selling or offering for sale a product which is identical to, or substantially similar to the registered design. However, the Australian Designs Act 2003 (Cth) includes provisions in section 72 for a “spare parts” defense against infringement. This section provides that a person does not infringe a registered design if the person uses, or authorises another person to use, a product:

• in relation to which the design is registered and which embodies a design that is identical to, or substantially similar in overall impression to, the registered design;
• which is a component part of a complex product; and
• the use or authorisation of which is for the purpose of the repair of the complex product so as to restore its overall appearance in whole or in part.

In GM Global Technology Operations LLC v S.S.S. Auto Parts Pty Ltd [2019] FCA 97, the court considered, for the first time, the scope of this spare parts defense.

While the outcome is encouraging for makers and sellers of spare parts, there are also cautionary tales regarding policies and procedures to ensure, as far as possible, that those parts are intended only for use in repairs.

The story behind this case is one of cars, and in particular the ‘up-spec’ or enhancement of standard vehicles, in this case Holden Commodores, Special Vehicles (HSV) and VE Commodores. Holden (GMH) has numerous registered designs covering vehicle parts such as bonnets, radiator grilles, lamps and fascias. In 2013, GMH learnt that SSS Auto Parts was importing and selling replica HSV and VE parts, without use control or limitation. SSS’s defence to the ensuing infringement action was that the parts were intended for use in repairs, and therefore their use was exempt from infringement.

The judgement is a long and somewhat entertaining read, with GMH requesting a finding on each of 1300 transactions in relation to the parts. Fortunately, in the words of Justice Burley at paragraph 5: “…that eye watering prospect was reduced…” to a few sample transactions.

In summary, the judge found that the onus was on GMH (the owner of the registered designs) to establish that SSS knew, or ought to have known, that the parts were not intended for the purposes of repair. It was not sufficient that they might not be used for repairs. This is an onerous requirement for the design owner, who has limited knowledge of the intentions of the potential infringer. Although there were a few instances in which GMH succeeded in their action (for example, SSS’s sale to ‘Instinct Vehicle Enhancements’, which according to the judge should have indicated an intent to use other than for repair), Justice Burley indicated that overall there was no evidence to suggest that SSS intended to sell the parts for other than its usual business of repair.

As an aside, this case also serves as a reminder to design registration owners to certify their registered designs before enforcement. SSS was successful in counterclaiming for unjustified threats in some instances, as the relevant design registrations asserted by GMH had not been certified prior to sending letters of demand.