Schultz v Butt

• Jurisdiction: South Africa
• Judge: Corbett JA, Hoexter JA, Boshoff JA, Nicholas AJA and Nestadt AJA
• Judgment Date: 16 May 1986
• Hearing Date: 10 March 1986
• Court: Appellate Division

Nicholas AJA:

This is an appeal against a judgment of MULLINS J in the Eastern Cape Division which is reported as Butt v E Schultz and Another 1984 (3) SA 568 (E).

Mr Hugh Butt (the applicant in the Court a quo and the present respondent) is a farmer and boat builder of Kenton-on-Sea, near Port Alfred. Mr Dennis Schultz (the respondent in the Court a F quo and the present appellant) is a boat builder of Port Alfred.

During the years 1954 - 1978 Butt developed the design of the hull of a catamaran-type ski-boat. First he created a concrete "plug" which embodied the shape of the hull in the inverted position. From the plug he made a mould by applying to it successive layers of glass fibre reinforced plastic (commonly G called "fibre glass") and resin until the required thickness was achieved. Hulls could be made as required from the mould.

Butt constructed his first plug and made his first mould in 1955. The boats made from hulls cast from this mould being unsatisfactory, he made a new mould in about 1959. From this he started making hulls which he sold under the name of H "Butt-Cat". The design was modified in 1964 and again in 1974 and 1978. In the latter year he constructed a new plug, from which he made two moulds, one of which he called his No 1 mould. About 75% of the Butt-Cat hulls now produced are made from the No 1 mould. Over the years the development of the Butt-Cat hull has taken a great deal of time, trouble and money. Butt has had to make numerous experiments and to draw I heavily on his experience as a seaman.

He has built up an extensive business in the manufacture and sale of Butt-Cat hulls, selling them to customers in many parts of the Republic and South West Africa and as far afield as the Comoro Islands in the Indian Ocean. In the years 1981, 1982 and 1983 respectively, he sold 25, 15 and 16 Butt-Cat hulls, making J an average profit of about R1 500 on each one.

Nicholas AJA

A During 1983 Schultz and his father approached Butt with a request that he sell them a mould which he was not using, in order (so they said) to build themselves one boat for their private use. Butt had doubts about this because he knew that the Schultzes had from time to time manufactured boats for sale, and he refused to sell.

B In August 1983 Butt received information that Schultz had constructed a mould from a Butt-Cat hull, and was using it to make hulls for boats which he was selling in competition with the Butt-Cat. On 24 August 1983, Butt's attorneys made these allegations in a letter to Schultz and stated:

"Your dishonest action aforesaid is clearly calculated to cause C damage to our client and as such constitutes wrongful and unlawful competition with our client."

They called upon him to comply with certain demands. In a reply dated 5 September 1983 Schultz's attorneys wrote inter alia:

"Our client denies absolutely the contents of your letter and takes the strongest exception to the suggestion that his action has been dishonest.

Our client has filed the design of his boat hull, the window D structure and the Super 20 Boat in the Designs Office in Pretoria and you are referred to the application Nos 830645/6/7."

At the beginning of September, Butt examined a boat named "Bon Voyage 3" which had reportedly been manufactured by Schultz. With slight differences its hull was identical with the E Butt-Cat hull and it was obvious to him that it was a copy. Later that month, a photograph was taken of Schultz's mould at his premises: it was substantially identical with the Butt-Cat mould. He learned that Schultz had acquired a complete Butt-Cat hull from one Beary to whom Butt had sold it as a reject in 1982 because the finish was unsatisfactory, and it was clear to him that Schultz had made his mould from this hull and was F using it to make boats for sale.

Arising out of the letter from Schultz's attorneys, dated 5 September 1983, Butt caused a search to be made of the Designs Register. It appeared from the reports received that Schultz had on 1 August 1983 made three applications for registration G of a design, in each of which he made a declaration that:

"The applicant claims to be the proprietor of the design and that to the best of his knowledge and belief the design is new and original."

The first application (No 83/0645) was in respect of a "Boat hull", and it was stated that:

"The novelty claimed resides in the shape and/or configuration H of a boat hull substantially as shown in the representation..."

The second (No 83/0646) was in respect of a "Window structure for a boat". The third (No 83/0647) was in respect of a "Boat", it being stated that:

"The novelty resides in the shape and/or configuration of a I boat substantially as shown in the representation."

The representation showed a boat which was a composite of the hull shown in the representation of a boat hull in application No 83/0645 and the window structure represented in application 83/0646. Registration of all three designs was effected on 4 August 1983.

A comparison of drawings prepared from the Butt-Cat hull with J the representations of the hull in application No 83/0645 showed that the designs were identical.

Nicholas AJA

By notice of motion dated 26 October 1983 Butt launched an A application against Schultz, in which the Registrar of Designs was joined as second respondent, claiming cancellation by the Registrar of the registration of designs Nos 83/0645 and 83/0647, and an interdict and ancillary relief against Schultz. The Registrar of Designs did not oppose the application but B abided by the decision of the Court.

Originally Butt's claim for relief by way of interdict was based on passing off and "unlawful competition and for unlawful interference with my trade". In January 1984 leave was granted to Butt to supplement his founding affidavit and to amend the notice of motion so as to claim relief for breach of copyright C in the Butt-Cat hull.

In his answering affidavit Schultz admitted that he had used the Butt-Cat hull which he had obtained from Beary to construct from it a mould which he used to create hulls for boats which he named "Supercats". He claimed, however, that he had made modifications to the Butt-Cat hull, spending 600 man hours "re-working" it and employing labour and materials which he D valued at R16 000.

Judgment was delivered on 26 April 1984. In the judgment, MULLINS J referred to the modifications which Schultz alleged he had made but considered them to be the result of simple operations which did not affect the design of the hull as a whole. He said (at 580B - D):

"All these modifications... had as their starting point a E mould which itself had been constructed from one of applicant's hulls. It does not require much imagination to appreciate the saving to first respondent in time, labour, and money by reason of his using one of applicant's hulls as a plug. First respondent admits that building a plug is a laborious process, whether it is being built from scratch or whether it is being redesigned. Even if he had one of applicant's hulls available, from which he could take measurements, the construction of a plug would still be the F vital starting point of the construction process. The using of applicant's hull as a plug from which to commence his construction process, and thereby avoiding the necessity to design his own hull, amounts in my view to unfair competition, against which applicant is entitled to be protected."

The learned Judge found further that Schultz's conduct in using a Butt-Cat hull in order to produce hulls, whether or not with the adaptations or modifications effected by him, constituted G an infringement of the copyright which Butt had in the Butt-Cat plug, moulds and hull. He also found in Butt's favour in respect of the claim for cancellation of the registration of designs Nos 83/0645 and 83/0647. The cause of action based on passing off was abandoned and it was not dealt with in the H judgment. An order was granted as follows:

"1.

The first respondent (ie Schultz) is interdicted and restrained

(a)

from using

(i)

any catamaran hull, with or without adaptations or modifications, manufactured by applicant; or

(ii)

any mould, with or without modifications, made from a catamaran hull manufactured by I applicant

for the purpose of manufacturing catamaran hulls in the course of first respondent's trade or business

(b)

from selling or otherwise disposing of in the course of trade any catamaran boat or hull presently in his possession manufactured from any hull or mould referred J to in para (a) above.

Nicholas AJA

2.

A The first respondent is ordered to deliver to the deputy sheriff for destruction any moulds or hulls presently in his possession which have been manufactured, with or without adaptations or modifications, from a catamaran hull manufactured by applicant.

3.

It is declared that the catamaran moulds and hulls B presently manufactured by first respondent in the construction of boats marketed by him under the name of "Supercat" infringe the copyright in such mould and hull, which copyright vests in the applicant in terms of the provisions of the Copyright Act 98 of 1978 as amended by Act 66 of 1983.

4.

C Second respondent is directed in terms of s 10 (2) of the Designs Act 57 of 1967 to cancel in his register the registration in the name of first respondent of a boat hull and boat registered on 4 August 1983 under Nos 83/0645 and 83/0647 respectively.

5. (a)

First respondent is ordered to pay the costs D of application, such costs to include the costs of two counsel, and the reserved costs of the postponements on 31 October 1983, 24 November 1983 and 6 December 1983.

(b)

Leave is granted to first respondent, if so advised, to re-open the issue of the costs E of the aforesaid postponements on...