Australian automotive industry wins a historic test case

The Federal Court of Australia decision is set to have a major impact on the multi-billion dollar automotive sector as news of the result filters through the industry and manufacturing generally.

After two years' research, Melbourne businessman Tony Ottobre developed a new way of making LED rear lights for trucks and trailers that improved quality and halved the cost. In June 2004 he registered his designs under the federal Parliament's new Designs Act 2003. His lights were an instant hit with truck and trailer manufacturers and his sales jumped from $100,000 in 2003 to more than $12 million last year. His total sales for the five-year period topped $34 million.

His breakthrough design profoundly influenced the automotive LED (light emitting diode) industry in Australia. His Thomastown firm, LED Technologies, was the first in Australia to introduce a five-year warranty, and more recently a lifetime warranty, and derive its income solely from LED products.

In November 2006 a China-made copy of Mr Ottobre's design appeared on the Australian market, selling for about 20% less than Mr Ottobre's products. The copy had the potential to cost Mr Ottobre millions of dollars in lost sales and significantly damage the excellent reputation of his business and its products. In what was a test case, Mr Ottobre was the first businessman in Australia's multi-billion dollar automotive industry to use the Designs Act 2003 to sue an importer and distributors for copying his product and selling it in Australia.

After a two-year battle in the Federal Court of Australia and $900,000 in legal fees, Mr Ottobre late last month won a landmark decision for his business and all makers and sellers of Australian-designed goods. His win sets a precedent and - for the first time in Australian manufacturing history - protects Australian-designed automotive parts and products from predatory copycat practices.

"This has been going on for years, copies undermining the manufacture and sale of Australian-designed parts and products, costing Aussie firms hundreds of millions of dollars and thousands of jobs," Mr Ottobre said. "Someone had to take a stand. I was determined to fight for my business. It's taken two years and nearly a million dollars but we're now protected. This is a huge win not just for my business but for all makers and sellers of Aussie-designed goods."

The new Designs Act 2003 includes the important new benchmark substantially similar. "Many people in the automotive industry are under the impression you can copy someone else's product so long as at least 10% of it is different. This is not the case and has now been confirmed by this ruling."

Justice Michelle Gordon said Ren International and distributors Olsen Industries, Advanced Automotive Australia and Elecspess infringed Mr Ottobre's registered Australian designs and contravened sections of the Trade Practices Act 1974 by manufacturing, importing and selling in Australia its copy, known as the Condor model.

On February 24, 2009, Justice Gordon barred Ren International and the distributors from "directly or indirectly making, importing, selling or offering for sale" any automotive lamps that are "identical to or substantially similar in overall impression" to Mr Ottobre's registered Australian designs. She ordered Ren International and its distributors to pay LED Technologies $200,000 in damages by March 25, 2009, and awarded Mr Ottobre legal costs.

Ren International's copy is being pulled from distributors' shelves across Australia. Many more imported copies of Australian-designed parts and products are expected to come under scrutiny as news of the decision filters through Australia's automotive industry and manufacturing generally.