We aren’t suggesting Justice Tracey believes Seafolly bikinis are unflattering when worn… We’re referring to his recent Federal Court decision where the designer of “White Sands” swimwear was fined $25,000 for public comments which ‘questioned’ whether Seafolly copied White Sands’ designs.
What lessons can we take from this case?
- Check your facts before you post on Facebook. An honestly held belief must not be formed recklessly.
- Make sure you have an effective deed of assignment of copyright to enforce your rights.
What’s the case about?
In early September 2010, White Sands’ designer, Leah Madden saw what she thought was “High Society Bikini” published in “The Gold Coast Panache” magazine. This bikini was actually the “Goddess” bikini by Seafolly, which she thought looked very similar to her own. This led her to question other similarities between White Sands and Seafolly designs. A few hours later, Madden posted an album on her Facebook account called “the most sincere form of flattery?” containing picture comparisons between her designs and the Seafolly range. Late, she emailed the comparison photos to journalists posing the questions “the most sincere form of flattery?” and “is it just us, or has Seafolly taken to (sic) much ‘inspiration’ from white sands”.
These acts sparked a public debate between Seafolly and Madden which played out in press releases, on Facebook accounts and within industry publications. The Facebook posts and industry publications generated sympathetic responses towards Madden.
Seafolly publicly denied copying had occurred and sent a letter of demand to Madden asking for an apology and for her to stop making further statements suggesting Seafolly had copied her. However, Madden continued to ‘question’ similarities between the White Sands and Seafolly designs. Seafolly took Madden to court, arguing misleading or deceptive conduct under the Trade Practices Act 1974 (as the conduct occurred prior to 1 January 2011 – now replaced by the Australian Consumer Law (schedule 2 to the Competition and Consumer Act 2010).
What did the Federal Court say about her comments?
Tracey J interpreted Madden’s comments to be accusations that Seafolly copied White Sands designs. Madden’s statements were considered within the context they were made. Madden’s personal conclusion that copying took place was clear from the statements she posted on both her personal, and White Sands’, Facebook page, for example:
- “Seriously, almost an entire-line ripoff of my Shipwrecked collection”; and
- “These are the ripoffs Seafolly did!”
The phrase ‘the most sincere form of flattery?’ is typically understood to mean copying which occurs as a way to pay someone a compliment. Further, other people clearly understood that Madden intended to accuse Seafolly of copying. This was evident in the titles of news articles, for example, “White Sands Swimwear Calls Seafolly Plagiarists”, and responses posted by readers of the articles.
Was there copying? What can you do if you think someone has copied?
Seafolly was able to prove no copying occurred. Some of the designs were released by March 2010, or were in a late stage of development. Others were re-worked designs from swimwear created in 2008 and 2004. The Judge considered that, even if Madden honestly believed Seafolly stole her designs, she was reckless in communicating her beliefs, because she didn’t research the accuracy of her statements.
Madden believed a buyer with a connection to Seafolly had attended a “buying appointment” meeting and sent photos of the designs to Seafolly, in order to copy her designs. Madden had posted too hastily, within a few hours from sighting the Goddess Bikini in the magazine. Tracey J pointed to a few things Madden could have done to confirm her beliefs, including:
- asking retailers when Seafolly’s designs became available for sale;
- physically examining the Seafolly garments instead of relying on photograph comparisons.
Are actions on Facebook considered conduct “in trade or commerce”?
Madden’s conduct was captured as trade or commerce, because she made statements about her competitor, which were intended to influence customers. While individuals normally aren’t captured by misleading or deceptive conduct in trade or commerce, because she made her comments via the internet, they were captured by the extended operation of s6(3) of the Trade Practices Act which covers statements made through telephonic services.
Copyright in Seafolly’s photographs? A technicality…
In addition to issues of misleading or deceptive conduct,
Seafolly argued their copyright was infringed by Madden posting of images of Seafolly garments worn by models. However, Seafolly was unable to show they held copyright in the photographs at the time Madden made her posts. Copyright was not assigned by the photographer until 6 September 2010, a few days after the relevant posts were made. No evidence was led to establish damage suffered by the photographer.
What about loss or damage?
Seafolly’s CEO gave evidence that Madden’s statements caused Seafolly to suffer economic loss and damage to its reputation: “See, I couldn’t win. Once she put that up there, I was finished anyway… the damage had been done”. However, it was clear from Seafolly’s financial accounts that their profits were unaffected. Despite lack of financial damage, the Judge ordered Madden to pay $25,000 (plus costs) to compensate Seafolly for damage to their commercial reputation, and an injunction was granted to prevent Madden from making further statements alleging copying.
A copy of the decision is available online here.