Here’s why you need a cheap and cheerful contract that sets out who owns what in your collaborative project.

Yesterday, His Honour Justice Halley of the Federal Court of Australia went to the considerable effort of issuing a whopping 666-paragraph decision about what can happen when you don’t bother.

The judgment provides a glimpse into the dramatic world of plumbing product design. I love it when tradies say things like “Just give it a few mill”. Someone really has this time.

What happened?

The case involved a tangled web of claims and counterclaims between several companies and individuals over the ownership and use of valves, brackets and water meter assemblies.

At the heart of the dispute were allegations of design and copyright infringement. But there were side plates of breach of confidence, misleading and deceptive conduct under the ACL and the validity and infringement of a patent for a pipe bracket.

The proceedings stemmed from a breakdown in relationships between the parties, who included an Italian manufacturer, its Australian distributor, a local designer and related companies. These parties had previously collaborated on the design and distribution of the plumbing goodies.

The main issue revolved around who was entitled to be registered as the owner of two valve designs. The Court had to decide who owned those designs, whether they were infringed or invalid, whether copyright in a key design drawing was infringed by including them in the design applications, whether misleading things were said while all this was happening and whether a patent for a bracket was valid or infringed. That’s just about every type of IP claim you can imagine. Poor old trade marks missed out.

Both sides brought in a small army of factual and expert witnesses, and the Court was asked to untangle years of collaborative product development, emails and design drawings.

Who won and why?

The Italians won and the local guy lost:

• Designs: The Italians were at least co-designers of the disputed valve designs, and the local designer held his interest in the design registrations on constructive trust for them.
• Design Infringement: The Italians did not infringe the registered designs by selling their own ball valves. Their products were not “identical or substantially similar in overall impression” to the registered designs.
• Copyright: The local designer infringed the Italians’ copyright in a key design drawing by using it as part of the design application, and by sharing it with third parties without permission. The Court also found breaches of confidence in the way the drawing was used.
• Consumer Law: The respondents engaged in misleading or deceptive conduct under the ACL by failing to disclose their intention to use the design drawing for registration purposes.
• Patent: A patent owned by the local designer for a pipe bracket was invalid for lack of clarity and for lack of novelty or innovative step. And even if the patent had been valid, the Italians’ products would not have infringed it.
• Breach of Contract: To balance all of that out a tiny bit, the Italians lost on claims for breach of contract and inducing a breach of contract. This was because the relevant agreement did not extend to the disputed design drawing.

Take home points

IP rights in collaborative projects can of course be complex to carve up, particularly before they’ve been created and proved their value. But the effort is worthwhile.

If you’re working with others on product development, get your IP and confidentiality arrangements stitched up in writing – it’s usually cheap to do. And don’t assume you can use collaboratively produced design drawings for any purpose you like.

Courts are willing to impose tough outcomes, including constructive trusts and orders for transfer of IP rights, where they find sharp practice or breaches of confidence.

For those interested, the case citation is Watson Webb Pty Ltd v Comino [2025] FCA 871.