OPINION | Naval architects beware! The perils of building in countries that do not respect IPR

Having designed SWATH vessels for over 30 years, we were pleased that our UK client decided to have a SWATH design for their next crewboat. Designing a SWATH is not straightforward nor is it a given that it will work. It takes many years of trial and error, understanding the structural and hydrodynamics of the hull form with endless tank testing and R&D to arrive at a design that will satisfy the SOR of a client, and work. Suffice to say, there are just a handful of naval architects and shipbuilders in the world that have successfully designed and delivered SWATH vessels.

It has taken us, at FBM and now at Ad Hoc, some 20 to 30 years of getting SWATH designs to work correctly with the benefit of years of R&D and testing. Since a SWATH design is like an F1 racing car, there needs to be balance between many different factors to make it work. If one small change occurs, without mitigation, it will upset the balance and everything will start to go wrong! Hence, because of our commitment to making sure everything is balanced, we were selected by Lockheed Martin to design their SLICE vessel (pictured) for them in 2005-2006.

SWATHs are incorrectly considered to be expensive: the difference between a SWATH and a catamaran crewboat is in the order of 10 to 20 per cent depending on the yard and its location. However, as is the case with most clients, CAPEX is key to securing the contract for build. Thus, we selected a shipyard in Asia to build our new range of Typhoon-class SWATH crewboats, our decision being influenced by the price differential between UK/EU builds and those in Asia, and the favourable exchange rate at the time.

We were of course faced with the inevitable questions from the yard during the pre-contract phase. This included questions on how the boat should be priced, as we have no knowledge of such a boat. Even questions like, “Why is there a ballast system in the boat? It is only 26 metres What is it for?”

There were many questions like this that simply proved their ignorance of SWATH designs, which in itself is nothing new as most yards do not have knowledge of such designs. But the questions were aimed at removing all things they felt were difficult to build as they also had little multihull experience. The questions also covered some items they thought unnecessary or too expensive, yet such items are an intrinsic part of a vessel’s DNA!

To quote their CEO, “I need your help to answer the question (of build price)… Could you give us some idea on the indicative price? Frankly, I find it difficult to give it due to the fact I have no experience in SWATH production… As we told you, we have no experience in building SWATH. We are not able to estimate the cost in practical terms.”

“Clearly, our spec was given to a third party and used as the basis without our knowledge or approval.”

Halfway through the build, I realised something was not right. The yard decided to shut us out of the detail design, citing drawing delays and the fact that only they knew how to do detail design and how to cut parts. I was pretty much powerless. The shipyard always has the control as it is the prime contractor and thus holds all the money. This was at a time that they also started to update our design drawings with their title bock rather than ours, and ignoring our build sequence.

The on-site client representative kept informing the yard that they cannot do this with our design drawings. “Why not?” was their reply! The relocation of a seat or a window, for example, was considered part of the work that went into their design from that moment on! The writing was on the wall, then, and their real intention became crystal clear.

A year or so later, when my UK client wanted an updated version of the SWATH crewboat to carry 24 passengers, I offered to several yards for tender. The yards included the builder of our first SWATH crewboat, and they offered, unknown to me at the time, a cobbled together version of my design – with their own title blocks – again. My client eventually informed me and we declined their bid with my official design and their copy of our design.

And then, two years later, the Taiwanese energy company issued a tender for two SWATH crewboats. Their tender specs were a carbon copy of our own specs, even with the details that my UK client asked for, and with the same minor errors we had in our spec. Clearly, our spec was given to a third party and used as the basis for a new design without our knowledge or our approval.

The yard that built the first SWATH did not ask us for a design, a move that I thought odd, but perhaps they were just going to do a repeat of the first SWATH, as that’s what the spec was anyway. However, we were approached by an Australian company to ask if I would like to bid with them, which we did, but were unsuccessful.

Later, we found out that the yard won the contract with a copy of our design adding those “minor” changes, such as a different deckhouse look, to call their own. We approached the shipyard and told them they must pay royalties for copying our design and IP. They instead answered us with silence.

So I contacted a law firm that deals with IP matters, and the yard was issued with a cease and desist notice informing them they have infringed on our IP and copyrights. Again, our pleas were answered with silence.

After some time, the yard’s lawyer eventually replied and said it is not a copy as they have done all the design work! This was grossly unethical behaviour.

“With Taiwan’s insistence on local content, every foreign naval architecture firm that ‘provides’ its design knowledge and expertise runs the risk of a possible illegal copy being made.”

The bottom line is, after some nine months with a team of experienced lawyers, they came to a conclusion and sent us the following reply:

“According to the court practice, making an actual product based on another’s copyrighted work is not infringement because such act is simply ‘exploitation’ of the work rather than ‘reproduction.’ (The exception is buildings: according to the Building Act, ‘buildings’ means structures or miscellaneous works fixed on the ground or under the ground surface, having top covers, beams, columns, or walls, and used for individuals or the public. A vessel is not considered to be a building.)

“Since the legal basis we would like to use is copyright, not patent, even if we could view the details of the actual copied SWATH vessels… and collect evidence thereof, this would not give Ad Hoc a basis for accusing the yard of infringing on ‘Ad Hoc’s copyrighted design drawings’ (copyrighted work). We still need to have the evidence showing they did make the actual SWATH vessels based on the documents plagiarising Ad Hoc’s design work…”

So, the fact that a yard with no knowledge or experience in designing and building a SWATH prior to their acquiring a copy of our design in 2015 is insufficient evidence on its own for us to state that copyright and IP laws were violated, even though it is plain and obvious to all.

With Taiwan’s insistence on local content, every foreign naval architecture firm that “provides” its design knowledge and expertise runs the risk of a possible illegal copy of the design being made, and with the the firm only finding out when it’s already too late. To make matters worse, there appear to be no local laws to protect the foreign company’s IP.

Beware East Asia. Their ethics and laws are different.