Appleton and Another v Harnischfeger Corporation and Another

• Jurisdiction: South Africa
• Judge: Corbett CJ, Van Heerden JA, Nestadt JA, Harms JA and Nicholas AJA
• Judgment Date: 30 September 1994
• Citation: 1995 (2) SA 247 (A)
• Docket Number: 495/92
• Court: Appellate Division

A Corbett CJ:

The First Respondent, Harnischfeger Corporation ('Harnischfeger'), a Company Incorporated in Accordance with the Laws of Delaware, United States of America, and Having Its Principal Place of Business in Milwaukee, Wisconsin, Usa, Carries on Business as a Manufacturer and Supplier of Heavy Machinery, Including Electric Mining Shovels. an Electric Mining Shovel Is a Large Machine Used for Digging B alia and Moving Earth in Open-Cast Mining Operations. One Such Machine, the P & H 2300 Electric Mining Shovel, Has Been Manufactured by Harnischfeger since the Late 1960's and Has Proved a Very Successful Product in Many Parts of the World, Including South Africa. This Machine and Other Similar Products are Sold to Mining Companies. a Major Part of C Harnischfeger's Business Is the Manufacture and Sale to Customers of Spare Parts for These Machines.

The second respondent, Harnischfeger (SA) (Pty) Ltd ('Harnisa'), is a company incorporated under the laws of South Africa and having its principal place of business in Alrode, Transvaal. It is a wholly owned D subsidiary of Harnischfeger International SA, a company incorporated under the laws of Panama and an associate company of Harnischfeger. From the late 1970's and until about 1988 Harnisa's business related solely to the manufacture and distribution of spare parts for the various Harnischfeger machines, including the 2300 Electric Mining Shovel. In about 1988 E Harnisa began manufacturing and selling complete machines as well.

The first appellant, Mr John Appleton ('Appleton'), entered the employ of Harnisa in March 1976 as a sales manager. He remained with the company until May 1989, by which time he had risen to the position of the parts and service director and his only superior in the company was the managing F director. Various disagreements between Appleton and the managing director, Mr R L Drollinger, resulted in Appleton then resigning. On 25 May 1989 he signed a letter of resignation, in which he agreed inter alia, not to take any company property with him; that all documents or other records containing company information belonged to the company and had to G be returned to the company before he left; and that he was not permitted to retain copies thereof or extracts therefrom. The letter also recorded that Appleton was not entitled to divulge any of the company's confidential information or trade secrets to any other person or company or to use any of them directly or indirectly. This letter is hereafter referred to as 'annexure E'.

H After leaving Harnisa and in October 1989 Appleton took up employment with second appellant, Bedford Mechanical and Pump Spares CC ('Bedford'), a close corporation incorporated under the laws of South Africa and having its principal place of business in Germiston, Transvaal. There is some dispute as to the nature of the business carried on by Bedford. According I to the respondents, Bedford manufactures and sells engineering parts; according to the appellants, Bedford does not manufacture, but merely buys and sells such parts. As matters have turned out nothing turns on this dispute.

In October 1991 the respondents instituted proceedings by notice of motion in the Witwatersrand Local Division in terms of which they claimed, inter J alia, orders interdicting the appellants from infringing the

Corbett CJ

A first respondent's copyright in certain engineering drawings; interdicting the appellants from committing acts of unlawful competition against the respondents and from breaching the terms of the agreement contained in annexure E by using drawings emanating from the respondents or information contained therein for the manufacture of parts and/or by disclosing to any person such drawings or information contained therein.

In the founding affidavit Mr J C Grisdale, the financial director of B Harnisa, explained that Harnischfeger had a library of many thousands of engineering drawings relating to parts for the various machines manufactured by it. These drawings had been created over the years by employees of Harnischfeger. To enable Harnisa to manufacture spare parts in South Africa, Harnischfeger had provided Harnisa with a substantial C number of such drawings, which were used in many instances to manufacture parts required by a customer.

Mr Grisdale further alleged that respondents had discovered that Appleton had copies of various drawings of Harnischfeger in his possession and that he and Bedford were using these drawings to copy parts for Harnischfeger D electric mining shovels and were selling the parts so made to customers of Harnisa at reduced prices: hence the claims of infringement of copyright and unlawful competition.

As regards the alleged infringement of copyright, the respondents limited their claim to three particular drawings relating to parts of the 2300 Electric Mining Shovel, viz (i) the intermediate hoist gear as reflected E in drawing 1N1110; (ii) the drive tumbler as reflected in drawing 4J139; and (iii) the lever-propel steering as reflected in drawing 6N525. During the hearing in the Court a quo the respondents abandoned any reliance on drawing 6N525, thus limiting their claim to the other two drawings.

In the Court a quo the matter was heard by Flemming DJP. Having heard F argument, he made an order in the following terms:

'1.

Respondents are interdicted from causing or permitting the reproduction of drawings 1N1110 and 4J139 which were identified in the papers.

2.

Respondents are interdicted from reproducing any drawing for any G part of a Harnischfeger machine otherwise than by reverse engineering in respect of such a part (for as long as reverse engineering is lawful according to statute) unless the drawing has been obtained from somebody who discloses his source of acquisition of the drawing, and the disclosure in itself or together with accompanying facts which explain the circumstances H of such acquisition, bring fair satisfaction to respondents that such drawing is in itself probably not a reproduction of a drawing of which copyright vests in first or second applicant.

3.

Respondents are ordered to pay 70% of the costs of applicants.'

('Respondents' are the present appellants and 'applicants' are the present I respondents.) The case has been reported: see Harnischfeger Corporation and Another v Appleton and Another1993 (4) SA 479 (W).

It is clear from the judgment of Flemming DJP that he granted no relief in respect of the causes of action based on unlawful competition and the agreement (annexure E). The reason for this was that there were critical J disputes of fact which could not be resolved on affidavit. The learned

Corbett CJ

A Judge refused a request for the hearing of oral evidence and held further that the 'balance of fairness' was against the grant of an interim interdict pending action.

On appeal (leave having been granted by the Judge a quo) the first point taken on behalf of the appellants was that there was no basis for the B grant of para 2 of the order of the Court a quo and that in this respect, at least, the appeal should be allowed.

It seems clear that para 2 of the order is designed to restrain copyright infringement. The language of the order itself demonstrates this; and in view of the Court's findings in regard to the allegations of unlawful competition the order could not be based upon this cause of action. Yet C respondents limited their claim of copyright infringement to (eventually) the two drawings referred to above, viz 1N1110 and 4J139, and para 1 of the order grants relief in respect thereof. Paragraph 2 of the order, which seeks to impose a restraint on the reproduction of 'any drawing for any part of a Harnischfeger machine', thus goes far beyond what was claimed by the respondents and on the papers has no foundation in fact or D law. Respondents' counsel disavowed it. Accordingly, insofar as the appeal seeks the elimination of para 2 from the order of the Court a quo it must succeed.

Appellants' counsel further submitted, on various grounds, that the respondents had failed to make out a case for infringement of copyright in E respect of drawings 1N1110 and 4J139. In order to appreciate the first of these grounds it is necessary to review historically our national copyright legislation, with particular reference to works produced or published in foreign countries.

After Union the first legislation dealing with copyright was contained in F chap IV of the Patents, Designs, Trade Marks and Copyright Act 9 of 1916. The effect of chap IV was to introduce, with certain minor changes and adaptations, the whole of the British Copyright Act of 1911 ('the British Act'), which was set out in the Third Schedule to Act 9 of 1916. This was done by s 143 which declared the British Act to be in force in the Union as from the commencement of chap IV of Act 9 of 1916, 'subject to the G modifications and additions provided by' chap IV. The British Act was divided into two main parts, Part I dealing with 'Imperial Copyright' and Part II with 'International Copyright'. Section 1 (in Part I) provided that copyright should subsist 'throughout the parts of His Majesty's dominions' to which the Act extended in every original literary, dramatic, H musical and artistic work if -

(a)

in the case of a published work, the work was first published within such dominions, and

(b)

in the case of an unpublished work, the author was at the date of the making of the work a British subject or resident within such dominions.

I Section 1 further stipulated that copyright should subsist in no other works except so far as the protection conferred by the Act was extended by an Order in Council thereunder relating to a self-governing dominion (to which the Act did not otherwise extend) and to a foreign country. This must be...