D12.1 Introduction

Date Published

The rights granted to a owner by a design are personal property and like other types of proprietary rights, are capable of assignment, licensing and of devolution by operation of law (Designs Act 2003 (Cth), s 10 and s 11). Moreover the Designs Act 2003 recognizes that proprietary rights may subsist in an application before grant and that these rights may be dealt with in the same way as other proprietary rights (see s 30). This part relates to recordal of changed rights and entitlements.

It should be noted that a court can issue an order for rectification of the Register in the case of:

  • an omission of an entry from the Register
  • an entry wrongly made in the Register
  • an error or defect in an entry in the Register, or
  • an entry wrongly existing in the Register
    (see s 120).

Consequently where the Registrar declines to make an amendment to, or entry in, the Register, the remedy for the relevant party is to seek rectification of the Register under s 120.

D12.1.1 Effect of Registration

A owner may deal with the design, subject only to the rights appearing on the Register (s 12(1)). However, the Register is not definitive proof of ownership of rights. Rather, as is specified by s 118(1), the Register is prima facie evidence of any particulars registered in it.

In Stack v Brisbane City Council [1999] FCA 1279 (15 September 1999), dealing with the corresponding provision in the Patents Act, the court stated:

'38 The underlying policy of the Act is to deal with ownership of a patent by registration of the original grant and by registration of any subsequent dealings in or with the patent in the Register. The scheme is to treat the registered proprietor as the owner of the patent subject to any interests in it created by the owner and registered in the Register and thereby to ensure some certainty and finality as regards title to patents: Stack v the State of Queensland (1996) 68 FCR 247 at 251-2 citing with approval Martin and the Miles Martin Pen Coy Ld v Scrib Ld (1950) 67 RPC 127 at 133. Registration in the Register, while prima facie evidence of any particulars registered in it (s 195) and prima facie evidence of entitlement to ownership of the patent says nothing as to the validity of the patent.

39 Disputes as to ownership of patents and interests held in or over them are to be resolved primarily, but not exclusively, in proceedings for rectification of the Register between the rival claimants to the property interests; s 192. Such proceedings assume the continued existence of the patent, with patent rights being held by those properly entered in the Register.'

The Designs Act 2003 does not set up a registration system that recognizes caveats – or any other procedure for notifying interested parties as a condition precedent to the registration of an interest. Neither does the Register provide a system of title by registration. Rather the Register is a system of Registration of interests of which the Registrar has been notified; upon the receipt of evidence sufficient to satisfy the Registrar of the existence of the interest that is to be registered, that interest must be entered in the Register.

Evidence cannot satisfy the Registrar of the existence of an interest if it is incomplete or misleading to the public. For example, if evidence in support of a request to register a license comprises a copy of a licensing agreement with the termination date blanked out, the license should not be registered; to record a license with a time limitation but no detail of the limitation would be misleading to the public.

Under s 111(3) of the Designs Act 2003, all documents filed in connection with the registration of prescribed particulars must be available for inspection at the Designs Office. Thus the Register gives a member of the public the means of access to the details of the registrations and details of any assignments, licenses, mortgages, etc.

D12.1.2 Consequence of Not Registering

Section 12 of the Designs Act 2003 provides:

'(1) The registered owner of a registered design may, subject to any rights appearing in the Register to be vested in another person, deal with the registered owner’s interest in the design as absolute owner of it, and give good discharges for any consideration for any such dealing.

(2) However, subsection (1) does not protect a person who deals with the registered owner of a registered design otherwise than as a purchaser in good faith for value and without notice of any fraud on the part of the registered owner.

(3) Equities in relation to a registered design may be enforced against the registered owner except to the prejudice of a purchaser in good faith for value. '

The 'registered owner' is defined in s 14(1) as the person who 'is entered in the Register as the registered owner of the design' at the relevant time. Thus the person registered as the registered owner may deal with the design as its absolute owner. If a prior assignment or interest has not been entered on the Register, the registered owner is still able to pass good title in, or grant a valid interest over the design – at the expense of the prior unregistered dealing.

Example Scenario

Under equivalent provisions in the Patents Act, no attempt was made to register a prior assignment (from a trustee in bankruptcy) of an applied for patent for several years. When registration was eventually sought, the assignment could not be registered because a subsequent assignment from the registered proprietor had been registered in the mean-time. The resolution of such situations can only occur by way of an application under s 120 for rectification of the Register, where a court can determine the equitable interests in the design.

The equivalent of s 12 of the Designs Act 2003 (s 189 of the Patents Act) was discussed in 'Using Intellectual Property as a Security' Australian Intellectual Property Journal Vol 7, page 135, Aug 1996, where it was argued:

‘... s 189(1) is also relevant to conflicts between two unregistered interests. Under s 189(1), the holder of a subsequently arising interest is entitled to deal with the patent as the “absolute owner” of the patent. Although absolute owner is not defined, it presumably means free of prior interests (unless, of course, they are registered). In consequence, the subsequently created interest will always prevail over the prior unregistered interest, even if the subsequent interest does not itself ever get registered. The result is a curious perversion of the usual priority rules. Under s 189(1), priorities between successive unregistered interests in patents are resolved in favour of the last to be created interest. As a result the only way to prevent an interest in a patent being defeated by a subsequent interest, registered or unregistered, is to register the interest promptly after creation.’

The failure to record an assignment (or any other registrable matter) is at the assignee’s peril. The only remedy available to a person who fails to record their interest, if that interest is affected by the subsequent registration of another interest, is to take action before the courts to establish that they indeed have an equitable interest, and seek to have the Register rectified; the Registrar is unable to otherwise take any action to record the earlier interest.

Note that recommendation 100 of the ALRC report recommended against the Registrar having the power to make such a rectification.

Other issues resulting from non-registration are:

  • a document which has not been registered is not admissible in any proceedings in proof of the title to a design or to an interest in a design unless the court or tribunal otherwise directs or the proceedings are for an order for rectification or to enforce an equity (s 119). A court has the power to admit an unregistered instrument (Martin Engineering Co v Matflo Engineering Pty Ltd (1987) AIPC 90-430)
  • situations can arise where an equitable owner wishes to take infringement proceedings. As the right to take action for infringement belongs solely to the registered owner of the design, the equitable owner cannot bring the action in their name. However they can bring the action in the name of the registered owner if they provide the registered owner with appropriate indemnities (Stack v Brisbane City Council (1996) 35 IPR 296.)

D12.1.3 Knowingly or Recklessly Making False Entries

As a reflection of the importance of maintaining the integrity of the Register, s 131 of the Designs Act provides:

'(1) A person commits an offence if:
The person makes an entry, or causes as entry to be made, in the Register; and
The person knows that, or is reckless as to whether, the entry is false.

Maximum penalty: Imprisonment for 12 months'

'(2) A person commits an offence if:
The person tenders a document in evidence; and
The person knows that, or is reckless as to whether, the document falsely purports to be a copy of or extract from an entry in the Register.

Maximum penalty: Imprisonment for 12 months'

Consequently, entries in the Register should only be made on the basis of appropriate consideration and justification.

Recklessly has been held to ‘mean something more than mere negligence or inadvertence. .... means deliberately running an unjustifiable risk’ Reed (Alber E) & Co Ltd v London and Rochester Trading Co Ltd [1954] 2 Lloyd’s Rep 463. ‘Knowingly’ may refer either to an intentional untruth, or wrong fact. It probably requires a mental element, not merely that the facts are untrue. Section 131 is a penal provision of the Act. Where such a situation exists, s 131 does not provide a mechanism for rectification of the Register. However, the facts that would support an action under s 131 would almost certainly support a separate application for rectification of the Register.

Note that this provision is not limited to employees of the Designs office. It covers actions by persons generally (such as someone providing the Registrar with false or misleading information to a support a request to make an entry in the Register).