Copyright owners will be celebrating after a landmark Supreme Court decision in the long-running case Ian James Burden and Others v ESR Group (NZ) Limited, issued yesterday, clarified and strengthened their rights. Bankside Associate Member and intellectual property specialist Andrew Brown KC, and Jack Oliver-Hood, were counsel for the successful appellants. Andrew Brown KC examines the case.
Background
Owners of copyright are given important exclusive rights in New Zealand, including the exclusive right to issue copies of their works to the public (known as the ‘distribution right’) and conversely to prevent the issue in New Zealand of infringing copies.
In this case, the appellants (PGT) had secured a Customs seizure and then obtained an injunction to restrain ESR Group from continuing to sell and distribute container loads of furniture (made in Vietnam) which copied and infringed PGT’s copyright furniture designs. PGT then sued to recover the profits that had been made by ESR in selling the infringing copies before the Customs seizure took effect.
Court of Appeal decision
This monetary claim was thwarted by the Court of Appeal which in a decision in July 2023 seriously narrowed the distribution right.
The Court of Appeal had held that PGT had no claim for profits in New Zealand. This was because:
- ESR’s actions in selling the infringing copies into the market in New Zealand meant that these copies were ‘in circulation’ – even though ESR’s actions were without the licence or consent of PGT and indeed without its knowledge (the ‘consent issue’). ESR’s actions were held to have exhausted the distribution right in New Zealand.
- The fact that the infringing copies of furniture had been available in Vietnam (where it was manufactured and purchased there by ESR) meant that PGT’s exclusive distribution right in New Zealand had been exhausted by this earlier sale in another jurisdiction (the ‘distribution abroad issue’).
The combined effect of the Court of Appeal’s two rulings significantly curtailed the exclusive distribution right in New Zealand.
Supreme Court judgment
In its decision on 25 March 2025, the Supreme Court overruled the Court of Appeal’s approach and restored the full and proper extent of the distribution right.
The Supreme Court has clarified that the copyright owner’s first distribution right in New Zealand is not exhausted by the issue of copies to the public outside of New Zealand. Further, the Court has held that the issue of infringing copies to the public in New Zealand is an infringement if done without the licence of the copyright owner.
The Court stated that it would be most odd under the statutory scheme if PGT’s first distribution rights in New Zealand could be taken away by an unauthorised distribution offshore.
Comment