FEDERAL COURT OF AUSTRALIA

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280

ORDERS

THE COURT ORDERS THAT:

    Within 7 days, the parties bring in minutes of orders to give effect to these reasons.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

A.    INTRODUCTION

1    The applicant (Playgro) is the registered owner in Australia of a trade mark consisting of the word ‘PLAYGRO’, registered in relation to games and playthings (in class 28), and several trade marks consisting of the device mark

registered in relation to games and playthings, including toys (in class 28).

2    The first respondent, Playgo Art & Craft Manufactory Limited (Playgo Craft) and the second respondent, Playgo Toys Enterprises Limited (Playgo Enterprises) are companies incorporated in Hong Kong. They are members of the Playgo group of companies (Playgo group) which designs, manufacturers, distributes and wholesales children’s toys. Playgo Craft is the holding company for the intellectual property of the group. Playgo Enterprises is responsible for the distribution and wholesale of the group’s products. Playgo Craft is the registered owner in Hong Kong and China of a trade mark consisting of the device mark

(Playgo Device Mark), registered in relation to various goods in class 28, including toys. The Playgo group uses the device mark in red with white text.

3    During 2013 and 2014, Playgo Enterprises sold and delivered in China toys bearing the Playgo Device Mark to Myer Pty Ltd (Myer) (which operates a department store business in Australia) and to a subsidiary of Woolworths Limited (Woolworths) (which operates a supermarket business in Australia), for sale to customers in Australia. Myer, Woolworths and Big W (which is associated with Woolworths) then offered for sale and sold the toys to customers in Australia.

4    Playgro contends that the respondents have infringed its trade marks contrary to s 120(1) of the Trade Marks Act 1995 (Cth) (the Act) by using as a trade mark the Playgo Device Mark in relation to playthings. Playgro contends that the Playgo Device Mark is substantially identical with, or deceptively similar to, Playgro’s trade marks, and that the respondents used the Playgo Device Mark in Australia when toys bearing that mark were sold in Australia by the retailers.

5    In the alternative, Playgro contends that Playgo Enterprises had a common design with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, such that Playgo Enterprises is a joint tortfeasor in infringing sales of those goods by Myer.

6    The respondents deny infringement of Playgro’s trade marks and contend that:

(a)    they have not engaged in any conduct in Australia amounting to infringing ‘use’ of the relevant trade marks;

(b)    there was and is no joint tortfeasorship or common design between Playgo Enterprises and Myer to infringe Playgro’s trade marks in Australia; and

(c)    in any event, the word mark ‘PLAYGO’ and the Playgo Device Mark are not substantially identical with, or deceptively similar to, Playgro’s trade marks, so that they do not infringe those marks.

7    Thus there are three main questions to be determined:

(a)    Is the Playgo Device Mark substantially identical with, or deceptively similar to, Playgro’s trade marks?

(b)    Did the respondents ‘use’ as a trade mark the Playgo Device Mark in Australia?

(c)    Did Playgo Enterprises have a ‘common design’ with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, such that Playgo Enterprises is a joint tortfeasor in infringing sales of those goods by Myer?

There was no issue that the toys sold under the Playgo Device Mark were playthings and thus fall within the goods in respect of which the Playgro trade marks described in sub-paragraphs (a) to (c) of paragraph [27] below were registered.

8    For the reasons that follow, my conclusions in summary are:

(a)    The Playgo Device Mark is not ‘substantially identical’ with the Playgro trade marks, including the word mark ‘PLAYGRO’. However, the Playgo Device Mark is ‘deceptively similar’ to the relevant Playgro trade marks.

(b)    The respondents ‘used’ as a trade mark the Playgo Device Mark in relation to playthings in Australia.

(c)    It follows that the respondents infringed the Playgro trade marks described in sub-paragraphs (a) to (c) of paragraph [27] below contrary to s 120(1) of the Act.

(d)    In light of these conclusions, it is unnecessary to determine Playgro’s alternative, joint tortfeasor case. However, in my view, Playgo Enterprises did not have a ‘common design’ with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, and therefore Playgo Enterprises was not a joint tortfeasor in infringing sales by Myer.

B.    PLEADINGS AND THE COURSE OF THE TRIAL

9    Playgro’s pleading at trial was its Amended Fast Track Statement, and the respondents’ pleading was their Amended Fast Track Response. Playgro also filed a Fast Track Reply.

10    It was common ground that Playgro is and was at all material times incorporated in Australia, and that the respondents are and have been at all material times incorporated in Hong Kong.

11    In paragraph 10 of its pleading, Playgro sets out three trade marks which it alleges were registered in the name of Playgro Australia Pty Ltd (PAPL), namely:

(a)    Number 740357, being word ‘PLAYGRO’ in relation to instructional and teaching materials (in class 16) and games and playthings (in class 28);

(b)    Number 954929, being the device mark set out in paragraph [1] above, in relation to (among other things) games and playthings including toys, plush toys, dolls and accessories for such goods; bouncers (in class 28);

(c)    Number 970023, being the same device mark, in relation to (among other things) games and playthings including educational games and toys for babies and children; soft and stuffed toys; toys that attach to prams, strollers, cots and other articles; plastic toys; jigsaw puzzles; activity centres; play mats and floor gyms; bouncers and rockers; gymnastic and sporting articles (in class 28).

12    In paragraph 11 of Playgro’s pleading, it is alleged that in August 2004, PAPL assigned all rights in the three trade marks to Playgro.

13    In paragraph 12 of Playgro’s pleading it is alleged that three additional trade marks have been registered in the name of Playgro:

(a)    Number 1149144, being the device mark set out in paragraph [1] above, registered in relation to (among other things) teething toys, rattling toys, musical toys, sound and music activated toys, bath toys, entertaining, mechanical and educational toys, musical mobiles and activity gyms (in class 28);

(b)    Number 1330413, being the word ‘Playgro’, registered in relation to certain goods and services in class 35. It does not appear that these include toys;

(c)    Number 1330416, being the device mark set out in paragraph [1] above, registered in relation to certain goods and services in class 35. Again, it does not appear that these include toys.

14    In paragraph 14 of Playgro’s pleading it is alleged that since at least 26 September 2014, the respondents have, without the licence of Playgro, manufactured, advertised and supplied for sale in Australia children’s toys under or by reference to the word mark ‘PLAYGO’ or the Playgo Device Mark. Paragraph 15 alleges that infringing products have been offered for sale and sold in at least Woolworths, Big W and Myer stores in Australia. The pleading then sets out, in paragraph 16, a photograph of packaging for a toy ‘My Tea Party’ which has the Playgo Device Mark on it, and was allegedly purchased from Myer, and for a toy ‘My Wiggly Caterpillar’ which has the Playgo Device Mark on it and was allegedly purchased from Woolworths. Paragraph 17 alleges that infringing products sold in Australia at Woolworths stores have included the following statement on their packaging:

PLAYGO™ is a trade mark of

PLAYGO ART & CRAFT MANUFACTORY LIMITED

Copyright ©

Manufactured by PLAYGO TOYS ENTERPRISES LIMITED

…

Packed for Woolworths Limited

15    Paragraph 19 of Playgro’s pleading contends that the respondents have, by using the word mark ‘PLAYGO’ and the Playgo Device Mark in relation to the products referred to earlier in the pleading, infringed Playgro’s trade marks contrary to s 120(1) of the Act. More detailed contentions are then set out in relation to ‘use’ of a trade mark; substantial identity; and deceptive similarity.

16    Paragraphs 36-40 of Playgro’s pleading set out its alternative case, based on joint tortfeasorship. Playgro alleges that at all material times, Playgo Enterprises has known that Myer conducts business in Australia as a large department store and that Myer Sourcing Asia Limited (MSAL) (a company incorporated in Hong Kong) is an agent engaged by Myer to act as its buying office in Hong Kong and China. Playgro alleges that on or about 19 March 2013, Playgo Enterprises entered a supply agreement with Myer. Playgro alleges that, in accordance with the supply agreement, between August 2013 and October 2014, Myer placed orders through its agent MSAL with Playgo Enterprises for certain products; Playgo Enterprises supplied those products to Myer via its agent MSAL; and Myer offered for sale and sold those products in Australia. In the circumstances, it is alleged, Playgo Enterprises has acted in a common design with Myer to supply for sale in Australia toys under or by reference to the name ‘PLAYGO’. It follows, Playgro contends, that Playgo Enterprises is liable as a joint tortfeasor in Myer’s offering for sale and sale of such products in Australia, which have infringed Playgro’s trade marks contrary to s 120(1) of the Act.

17    Playgro seeks the relief set out in its Amended Originating Application, including:

(a)    a declaration that the respondents have infringed Playgro’s trade marks by advertising and supplying for sale in Australia games and playthings under or by reference to the name ‘PLAYGO’;

(b)    further or alternatively, a declaration that Playgo Enterprises is a joint tortfeasor in Myer’s offering for sale and sale of such products in Australia, which have infringed Playgro’s trade marks;

(c)    an injunction restraining the respondents from infringing Playgro’s trade marks;

(d)    an order requiring the respondents to take all practical steps to recall any games or playthings bearing the name ‘PLAYGO’ from any wholesale and retail customers to whom the respondents have supplied such products;

(e)    at Playgro’s election, damages or an account of profits; and

(f)    delivery up to Playgro of certain games and playthings.

18    By way of response, the respondents contend in paragraph 11 of their pleading that:

(a)    neither of the respondents has at any time in Australia manufactured, advertised or supplied for sale children’s toys under or by reference to the word mark ‘PLAYGO’;

(b)    neither of the respondents has at any time in Australia manufactured, advertised or supplied for sale children’s toys under or by reference to the Playgo Device Mark;

(c)    further, since about 24 November 2014, no children’s toys have been sold or supplied in Hong Kong or China by either of the respondents under or by reference to the word mark ‘PLAYGO’ or the Playgo Device Mark, to any person for offer for sale or sale in Australia.

19    The respondents also allege, in paragraph 12 of their pleading, that any children’s toys bearing the word mark ‘PLAYGO’ or the Playgo Device Mark offered for sale or sold in Australia:

(a)    had such marks lawfully applied to them in Hong Kong or China (pursuant to trade marks described in the pleading);

(b)    were purchased in Hong Kong on ‘FOB’ (Free on Board) terms from Playgo Enterprises by purchasers who were companies registered in Hong Kong;

(c)    were purchased on terms that full right and title to and control over such products was obtained by the purchasers in China, and any property and title in such products passed to the purchasers in China;

(d)    were delivered by Playgo Enterprises in China to such purchasers (or to their designated consignees).

20    The respondents deny that they have infringed Playgro’s trade marks (paragraph 19 of their pleading) and provide specific responses to Playgro’s contentions regarding ‘use’ of a trade mark; substantial identity; and deceptive similarity.

21    In relation to the joint tortfeasorship case, the respondents admit many of the facts alleged, but deny the alleged common design and deny that Playgo Enterprises is liable as a joint tortfeasor.

22    The trial was on all issues other than questions as to the nature or quantum of any pecuniary relief.

23    Evidence was by affidavit and none of the deponents was required for cross-examination.

24    Playgro relied on the following affidavits:

(a)    affidavit of Ms Robynne Sanders (a solicitor) dated 7 September 2015;

(b)    affidavit of Ms Sanders dated 4 December 2015.

25    The respondents relied on the following affidavits:

(a)    affidavit of Ms Ya Ling Connie Lin (a director and shareholder of several companies in the Playgo group) dated 9 October 2015;

(b)    affidavit of Ms Miu Sim Frances Kwan (the sales manager of Playgo Enterprises) dated 9 October 2015;

(c)    affidavit of Ms Kwan dated 7 December 2015;

(d)    affidavit of Ms Anne Makrigiorgos (a patent and trade mark attorney) dated 12 October 2015.

C.    FACTS

26    The following facts are drawn from the affidavits. As noted above, there was no cross-examination of the deponents.

Playgro’s trade marks

27    Playgro is the registered owner of the following trade marks in Australia:

(a)    Number 740357, which consists of the word mark ‘PLAYGRO’. The trade mark is registered in relation to, among other things, games and playthings (in class 28).

(b)    Number 954929, which consists of the device mark set out in paragraph [1] above. The trade mark is registered in relation to, among other things, games and playthings including toys, plush toys, dolls and accessories for such goods; bouncers (in class 28).

(c)    Number 970023, which consists of the device mark set out in paragraph [1] above. The trade mark is registered in relation to, among other things, games and playthings including educational games and toys for babies and children; soft and stuffed toys; toys that attach to prams, strollers, cots and other articles; plastic toys; jigsaw puzzles; activity centres; play mats and floor gyms; bouncers and rockers; gymnastic and sporting articles (in class 28).

(d)    Number 1149144, which consists of a device mark similar to or the same as that set out in paragraph [1] above. The trade mark is registered in relation to, among other things, teething toys, rattling toys, musical toys, sound and music activated toys, bath toys, entertaining, mechanical and educational toys, musical mobiles and activity gyms (in class 28).

(e)    Number 1330416, which consists of a device mark similar to or the same as that set out in paragraph [1] above. The trade mark is registered in relation to certain goods or services in class 35. These do not appear to include toys.

28    The evidence did not deal with trade mark number 1330413.

Playgo group

29    The Playgo group is a Hong Kong based group of associated companies under the common ownership and control of Ms Lin and Mr Lau Yuk Fai (referred to as ‘Jacky Lau’). The group has been involved in the design, manufacture, distribution and wholesale of games, playthings and toys for children in Hong Kong since the early 1980s.

30    The name ‘Playgo’ was devised by Mr Jacky Lau in or around 1994 and, since then, most of the companies in the group have included the word ‘Playgo’ as part of their name. He devised the name ‘Playgo’ as a name which would be easy for Westerners to read and remember. He came up with the name by combining the words ‘play’ and ‘go’. He decided to combine these two words in the name because the group’s products are toys for children to ‘PLAY’ with, and he wanted the name to evoke the phrase, ‘Let’s GO and play!’. Since around May 1994, the Playgo group has continuously designed, manufactured, distributed and wholesaled the group’s products under or by reference to the name ‘Playgo’.

31    Playgo Craft is a Hong Kong company. It was incorporated in March 2000 and is the holding company for the intellectual property of the Playgo group.

32    Playgo Enterprises is also a Hong Kong company. It was incorporated in December 2012 and is responsible for the distribution and wholesale of the Playgo’s group’s products to its customers.

33    The companies in the Playgo group include Playgo Craft, Playgo Enterprises and Tai Way (Shing Kee) Toys Company Limited (Tai Way).

34    In 1994, Playgo Limited, a company in the Playgo group, applied to register the word ‘PLAYGO’ as a trade mark in China for various goods in class 28. Registration was granted in 1996. In June 2009, Playgo Limited assigned all its right, title and interest in the trade mark to Playgo Craft.

35    In 1994, the Playgo group devised a new mark for use in relation to the group’s products, consisting of a stylised version of the ‘PLAYGO’ mark whereby the letter ‘O’ was replaced by a bear device followed by 2 horizontal stripes:

In 1996, Playgo Limited applied to register this device as a trade mark in China. Registration was granted in 1997. In June 2009, Playgo Limited assigned all its right, title and interest in the trade mark to Playgo Craft. From 1994 to around 2003, the Playgo group designed, manufactured, distributed and wholesaled its products under or by reference to the Playgo bear device set out above.

36    In around 2003, the Playgo group devised a further mark for use in relation to the group’s products, consisting of a variant of the bear device whereby the letter ‘G’ was no longer included in the mark:

In 2003, Playgo Limited filed an application to register this device as a trade mark in Hong Kong. Registration was granted in June 2004. In October 2008, Playgo Limited assigned all its right, title and interest in the trade mark to Playgo Craft. From around 2003 to around 2006, the Playgro group designed, manufactured, distributed and wholesaled the group’s products under or by reference to the bear device set out above.

37    In around 2006, the Playgo group devised a further mark for use in relation to its products:

In 2006, Playgo Limited applied to register this device as a trade mark in Hong Kong. Registration was granted in 2007. In October 2008, Playgo Limited assigned all its right, title and interest in the trade mark to Playgo Craft. The Playgo group also applied to register this mark as a trade mark in China, and this was granted. From around 2006 to late 2012, the Playgo group designed, manufactured, distributed and wholesaled the group’s products under or by reference to the bear device set out above.

38    In around September 2012, the Playgo group devised the Playgo Device Mark (set out in paragraph [2] above) for use in relation to its products. The device was created with the intention of placing more emphasis on the word ‘Playgo’ in the group’s branding.

39    On 17 September 2012, Playgo Craft filed an application to register the Playgo Device Mark as a trade mark in Hong Kong in relation to various goods in class 28. Registration was granted on 16 October 2013.

40    On 19 September 2012, Playgo Craft filed an application to register the Playgo Device Mark as a trade mark in China in relation to various goods in class 28. Registration was granted on 7 April 2014.

41    Since around January 2013, the Playgo group has designed, manufactured, distributed and wholesaled the group’s products under or by reference to the Playgo Device Mark. The Playgo group uses the device in red with white text in relation to its products.

42    The Playgo group’s products are manufactured in China by Tai Way at a factory located in Dongguan city in the Guangdong province (the Dongguan factory). The products are packaged and labelled by Tai Way at the Dongguan factory at the order and direction of Playgo Enterprises. The Playgo Device Mark is applied to the products by Tai Way at the factory under the authorisation of Playgo Craft and at the direction of Playgo Enterprises. The group’s products are normally packaged in standard packaging boxes which are sold to the group’s customers. Some customers provide specific directions in respect of the labelling they require to appear on the packaging of the group’s products.

43    Playgo Enterprises distributes and wholesales the group’s products to toy buyers and retailers. Playgo Enterprises does not sell the group’s products directly to consumers.

44    The Playgo group also designs and manufactures ‘private label’ games, playthings and toys for distribution and wholesale to customers who market, distribute and sell the games, playthings and toys under the customers’ own marks or brands.

45    The Playgo group promotes the group’s products at international toy fairs, at the Playgo group showrooms in Hong Kong, and via the Playgo group’s website. The website is not targeted at Australian consumers and none of the group’s products is offered for sale on the website. The servers for the website are based in Hong Kong.

46    Neither Playgo Craft nor Playgo Enterprises, nor any other company in the Playgo group has, at any time, manufactured, advertised, promoted, sold or offered for sale the Playgo group’s products in Australia.

Myer

47    Since around 2009, the Playgo group has been selling goods to Myer. Before Playgo Enterprises was incorporated in December 2012, another company in the group transacted with Myer.

48    Ms Kwan gave evidence in her affidavit that, to her knowledge, Myer is a large department store in Australia.

49    Myer obtains supply of goods from different vendors around the world for sale of these goods in Australia. Myer has engaged MSAL, a company incorporated in Hong Kong, as its buying office and agent in Hong Kong and China.

50    Myer placed purchase orders through MSAL with Playgo Enterprises. The purchase orders were subject to, among other things, the terms of:

(a)    a supply agreement between Myer and Playgo Enterprises dated 19 March 2013 (the Supply Agreement); and

(b)    a vendor registration/maintenance form (Vendor Registration Form).

51    Myer and MSAL provide the following standard shipping procedures and terms for overseas vendors, such as Playgo Enterprises:

(a)    MYER International Supply Chain Delivery and Shipping Merchandise to Myer Supplier Information Package dated September 2011 (Supplier Information Package); and

(b)    Standard Operating Process issued by MSAL (MSAL SOP).

52    Clause 12.1 of the Supply Agreement states:

Subject to clause 12.2, 12.3 and 12.4 and unless otherwise agreed:

(a)    property in the Goods passes to the Purchaser on delivery to the Delivery Address or collection by the Purchaser or is [sic] agent pursuant to clause 10.7; and

(b)    risk in the Goods passes to the Purchaser when the Purchaser or the Purchaser’s agent takes physical Possession of the Goods at the Delivery Address.

53    ‘Delivery Address’ is defined in clause 38 of the Supply Agreement as:

The Purchaser’s nominated freight forwarders unless otherwise specified by the purchaser in writing to the Supplier, including in an Order.

54    Clause 36 of the Supply Agreement provides that:

… the laws of the State of Victoria and the Commonwealth of Australia govern these Terms and Conditions.

55    The evidence included samples of the Vendor Registration Forms of Playgo Enterprises with Myer. The forms provided that Playgo Enterprises had offered ‘FOB’ (Free on Board) as the payment terms. A copy of a document titled ‘Incoterms 2010’ published by the International Chamber of Commerce was in evidence. This explains that under ‘FOB’ or Free on Board terms, the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered; the risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

56    The Supplier Information Package provides that:

All suppliers from China and Hong Kong are required to deliver goods to one of our three overseas hubs – Hong Kong, Shenzhen or Shanghai for consolidation …

57    The Supplier Information Package also provided the name and contact information of the freight forwarder for suppliers from China and Hong Kong. Cargo Services (China) Limited (Cargo Services) was the freight forwarder in Shenzhen nominated by Myer.

58    The first affidavit of Ms Kwan sets out the usual sequence of events from holding a sales meeting to the actual delivery of goods to Myer during 2013 and 2014. The quotations provided by Playgo Enterprises referred to the port of Yantian, which is situated in the city of Shenzhen, as the port of shipping. When ordered goods were ready for shipment, Playgo Enterprises contacted Cargo Services to arrange for container space to be booked. Playgo Enterprises arranged the transport of the goods from the Dongguan factory to the port of Yantian. Playgo Enterprises prepared a packing list and commercial invoice, which were required for delivery with the goods to Shenzhen, pursuant to the Supplier Information Package. Upon receipt of the goods for Myer at Yantian, Cargo Services issued a forwarder’s cargo receipt. This is an official document from the freight forwarder to confirm its receipt and Playgo Enterprises’ delivery of the goods to Myer. Playgo Enterprises then issued an invoice to Myer and sent the invoice, together with the packing list and the forwarder’s cargo receipt, to Cargo Services, which in turn transferred the full set of documents to Myer for Myer’s settlement of the invoice.

59    On 17 September 2014, an employee of the firm of solicitors acting for Playgro purchased from the Myer store in Melbourne city a children’s toy, ‘My Tea Party’. The toy is exhibit “RLS-8” to the first affidavit of Ms Sanders. It bears the Playgo Device Mark and includes the following statement on its packaging:

PLAYGOTM is a trademark of

PLAYGO ART & CRAFT MANUFACTORY LIMITED

Copyright ©

Manufactured by PLAYGO TOYS ENTERPRISES LIMITED

…

60    Ms Kwan says in her affidavit that she believes the exhibit is one of the Playgro group’s products, ‘My Tea Party’, which was sold and delivered to Myer three times: in February 2014, April 2014 and May 2014. She produces the documentation for the sale of goods delivered in May 2014 by way of example and states that the goods sold in February and April 2014 were sold on the same terms. The documents indicate that the goods were shipped by sea from Yantian, China to Australia and that the sale of goods was on ‘Incoterms: FOB Yantian’. The documents include the freight forwarder’s receipt issued by Cargo Services to confirm acceptance of the goods on behalf of Myer. The sale of goods was subject to the Supply Agreement and the other documents referred to in paragraphs [50] and [51] above.

61    On 12 May 2015, an employee of the firm of solicitors acting for Playgro purchased from the Myer store in Melbourne city a children’s toy, ‘My Toaster’. The toy is exhibit “RLS-10” to the first affidavit of Ms Sanders. It bears the Playgo Device Mark on its packaging. It also has the following statement on its packaging:

PLAYGOTM is a trademark of

PLAYGO ART & CRAFT MANUFACTORY LIMITED

Copyright ©

Manufactured by PLAYGO TOYS ENTERPRISES LIMITED

…

62    Ms Kwan gives evidence in her affidavit that she believes exhibit “RLS-10” is one of the Playgo group’s products, ‘My Toaster’, which was sold by Playgo Enterprises to Myer in around August 2013 or February 2014. Annexed to her affidavit are documents which are relevant to the sale of that product to Myer in August 2013. The terms of sale of the goods delivered in February 2014 are the same as for the goods delivered in August 2013, as all the sales of goods to Myer were subject to the Supply Agreement and other documents referred to in paragraphs [50] and [51] above. The documents relating to the sale of goods in August 2013 indicate that the goods were shipped by sea from Yantian, China to Australia. The sale of goods was on ‘Incoterms: FOB Yantian’. The documents also indicate that the freight forwarder was Cargo Services. The freight forwarder’s receipt issued by Cargo Services confirms acceptance of the goods on behalf of Myer.

63    Also on 12 May 2015, the employee from Playgro’s solicitors took photographs of other ‘PLAYGO’ branded products available at the Myer store in Melbourne city (annexure “RLS-12”). The photographs show several other children’s toys bearing the Playgo Device Mark available for sale.

64    In her affidavit, Ms Kwan says that the photographs appear to show the following Playgo group products, some of which bear the Playgo Device Mark:

(a)    My Tea Party 17 pcs;

(b)    My Toaster;

(c)    Deluxe Kettle;

(d)    Table Set for Four;

(e)    My Blender;

(f)    My Mixer.

65    Ms Kwan says that without viewing the tracking number on the underside of the products, she is unable to identify with certainty the sales documentation relevant to these products. Notwithstanding this, based on her review of the photographs, the Playgo group’s sales records, and having regard to the terms of the Supply Agreement and the other documents referred to in paragraphs [50] and [51] above, and the nature of the dealings between Playgo Enterprises and Myer to date, she believes that:

(a)    the products were manufactured in China at the Dongguan factory;

(b)    the products were sold by Playgo Enterprises to Myer pursuant to the terms of the Supply Agreement and the other documents listed in paragraphs [50] and [51] above;

(c)    the products were probably delivered by Playgo Enterprises to Myer’s nominated freight forwarders, Cargo Services, at Yantian, China in the period January to October 2014; and

(d)    the goods were sold to Myer on ‘FOB’ terms and delivered as required to Myer’s nominated forwarder in accordance with the terms and conditions set by Myer or MSAL.

66    The essential facts relating to sales by the Playgo group to Myer, and sales by Myer to customers, can be summarised as follows:

(a)    in the period (at least) August 2013 to October 2014, Playgo Enterprises sold children’s toys bearing the Playgo Device Mark to Myer;

(b)    the goods were manufactured by Tai Way, a member of the Playgo group, on behalf of Playgo Enterprises, in China;

(c)    the goods were delivered to Cargo Services, Myer’s freight forwarder, in China;

(d)    property in the goods, and risk, passed to Myer upon delivery to Cargo Services in China;

(e)    Myer offered for sale and sold the goods to customers in Australia.

67    Further, it is to be inferred from the facts and matters set out in paragraphs [47] to [65] above that, when Playgo Enterprises sold its products to Myer, it knew that the goods were to be offered for sale and sold to customers in Australia.

Woolworths and Big W

68    Since at least 7 March 2013, the Playgo group has sold children’s toys to Woolworths (H.K.) Sales Limited (WSL), a company incorporated in Hong Kong. WSL is a wholly-owned subsidiary of Woolworths.

69    Since that date, the sale of the Playgo group’s products by Playgo Enterprises to WSL has been subject to:

(a)    the WSL Trading Terms, signed by Playgo Enterprises on 7 March 2013 (Trading Terms); and

(b)    the WSL Standard Operation Procedures for Quality Assurance (WSL SOP).

70    Clause 3 of the Trading Terms states:

Title and Risk

Subject to clause 5, title and risk in the Goods passes to [WSL] on delivery of the goods.

71    Prior to 2014, Playgo Enterprises sold products to WSL in packaging branded with Woolworths’ private label mark ‘Tinkers’. These products did not contain the Playgo Device Mark or the statement set out in paragraph [14] above on their packaging.

72    In 2014, Playgo enterprises sold the following products to WSL, which bore the Playgo Device Mark on their packaging:

(a)    My Wiggly Caterpillar;

(b)    Step by Step Activity Walker;

(c)    Jamming Fun Music Table.

73    The purchase orders, invoices and packaging lists for sales of these products by Playgo Enterprises to WSL state that the sale and delivery of the products by Playgo Enterprises to WSL was on ‘Incoterms: FOB Yantian’ or ‘Incoterms: FOB Shekou’. Yantian and Shekou are both ports in the city of Shenzhen in China. In most cases, the purchase orders state that the consignee of the goods was Woolworths International Logistics, with its address being 3 City View Road, Pennant Hills, New South Wales, Australia. In some cases the consignee is named as Big W, a division of Woolworths International Logistics, at the same address. The “Destination” specified in the purchase orders varies, but in each case it is a place in Australia.

74    Playgo Enterprises only delivered the ‘My Wiggly Caterpillar’ products bearing the Playgo Device Mark to WSL in June 2014. Playgo Enterprises has not sold or delivered ‘My Wiggly Caterpillar’ products to WSL since that date.

75    The ‘My Wiggly Caterpillar’ products sold by Playgo Enterprises to WSL in June 2014 (an example of which is exhibit “RLS-33” to Ms Sanders’ second affidavit) contained the following statement on their packaging:

PLAYGO™ is a trademark of

PLAYGO ART & CRAFT MANUFACTORY LIMITED

Copyright ©

Manufactured by PLAYGO TOYS ENTERPRISES LIMITED.

FLAT A, 15/F, BLOCK 1, TAI PING INDUSTRIAL CENTRE,

57 TING KOK ROAD, TAI PO, NEW TERRITORIES, HONG KONG.

TEL: (852) 3443 3000 FAX: (852) 2377 1732

E-MAIL: info@playgo.com.hk

www.playgo.com.hk

All rights reserved.

Packed for Woolworths Limited

1 Woolworths Way Bella Vista

NSW 2153 Australia

www.woolworths.com.au

…

76    However, the ‘Step by Step Activity Walker’ and the ‘Jamming Fun Music Table’ products sold by Playgo Enterprises to WSL in 2014 did not contain that statement on their packaging.

77    Since November 2014, to the best of Ms Kwan’s knowledge, all ‘Step by Step Activity Walker’ and ‘Jamming Fun Music Table’ products sold by Playgo Enterprises to WSL have been sold under the Playgo ‘bear mark’ set out in paragraph [37] above and not the Playgo Device Mark. Further, the products do not have the statement set out in paragraph [75] above on their packaging.

78    Playgro’s evidence included a page from a Big W catalogue for a sale running between 26 June and 9 July 2014 (annexure “RLS-13” to Ms Sanders’ first affidavit; exhibit “RLS-34” to her second affidavit is the actual catalogue). Big W is a retailer associated with Woolworths. The page offers products which are in fact Playgo products, but they are described as ‘Playgro’ products.

79    Ms Kwan says that the two toy products appearing on the page from the catalogue and described as ‘Playgro’ products are the ‘Step by Step Activity Walker’ and the ‘Jamming Fun Music Table’ products which were sold by Playgo Enterprises to WSL in 2014. She says that on around 17 June 2014, she was provided with a copy of the published 2014 Big W catalogue, which contains the page which appears as annexure “RLS-13”. When she saw the catalogue, she realised there had been a mistake and immediately emailed WSL to notify it of the mistake. On 19 June 2014, she received a response from WSL, advising that the relevant persons had been informed about the mistake in the catalogue.

80    Playgro’s evidence included the Woolworths Christmas Gift Guide for 2014 (exhibit “RLS-35” to Ms Sanders’ second affidavit). This includes a picture of the toy, ‘My Wiggly Caterpillar’, indicating that the product was offered for sale by Woolworths in Australia in or about Christmas 2014. (In relation to this exhibit, an order was made pursuant to s 136 of the Evidence Act 1995 (Cth) that its use be limited to showing that that product was offered for sale by Woolworths in Australia in or about Christmas 2014.)

81    The essential facts relating to sales by the Playgo group to WSL, and sales by Woolworths or Big W to customers, can be summarised as follows:

(a)    during 2014, Playgo Enterprises sold children’s toys bearing the Playgo Device Mark to WSL, a wholly-owned subsidiary of Woolworths;

(b)    some of the goods also bore the statement set out in paragraph [75] above;

(c)    the goods were manufactured in China and delivered to WSL in China;

(d)    property in the goods, and risk, passed to WSL upon delivery in China;

(e)    the goods were then transported to Australia on behalf of WSL or Woolworths;

(f)    Woolworths and Big W offered for sale and sold the goods to customers in Australia.

82    Further, it is to be inferred from the facts and matters set out in paragraphs [68] to [80] above that, when Playgo Enterprises sold its products to WSL, it knew that the goods were to be offered for sale and sold to customers in Australia.

Playgo Craft’s trade mark application

83    On 22 April 2013, Playgo Craft applied to register the Playgo Device Mark as a trade mark in Australia (application number 1552960). Registration was sought in relation to the following goods:

Class 28: Toys, games and playthings; battery-powered toy vehicles; education toys; toy musical instruments; children’s multiple activity toys; plastic toys; toy telephones featuring ringing sounds and other play functions; toy radios featuring sounds for play activity and other play functions; electronic games and amusement apparatus other than for use with television receivers; video game machines and hand held video game machines (other than those adapted for use with television receivers)

84    In or around March 2014, Playgro first became aware of Playgo Craft’s application for a trade mark in Australia, during a regular review by Playgro’s solicitors of the Australian Trade Mark Journal of recently accepted Australian trade marks.

85    On 21 March 2014, Playgro filed a notice of objection in respect of Playgo Craft’s trade mark application.

86    Between August and November 2014, there was correspondence between Playgro and the Playgo group or their lawyers concerning infringement claims.

87    In November 2014, Playgo Enterprises and Playgo Craft decided that Playgo Enterprises would cease distributing and wholesaling the Playgo group’s products under or by reference to the Playgo Device Mark to buyers and retailers whom Playgo Enterprises believed would import the group’s products into Australia, in order to resolve the dispute between Playgro and the Playgo group on a commercial basis.

88    Since 24 November 2014, Playgo Enterprises has not distributed or sold the Playgo group’s products under or by reference to the Playgo Device Mark to any buyers or retailers who import the Playgo group’s products into Australia. Playgo Enterprises has, since that date, distributed and sold some of the group’s products to buyers and retailers who import products into Australia under or by reference to the bear device set out in paragraph [37] above.

89    On 18 March 2015, Playgo Craft withdrew its application for a trade mark in Australia.

Evidence relating to confusion or potential confusion

90    Playgro relied on the page from the Big W catalogue, described in paragraph [78] above, as an instance of confusion between the trade marks.

91    Playgro’s evidence included an extract from the website www.gumtree.com.au (accessed on 6 August 2015) offering for sale a second hand ‘Playgo play mat’ which is in fact a ‘PLAYGRO’ branded product (annexure “RLS-14” to Ms Sanders’ first affidavit). Playgo Craft and Playgo Enterprises have no relationship with the company that operates the website, or with the people seeking to sell items on the website, and do not list their products for sale on the website. Members of the public can seek to sell items on the website.

92    The respondents’ evidence included the fact that, on 11 September 2015, two principals at the firm of patent and trade mark attorneys acting for the respondents attended a Myer store. They located the toy department within the store and spent 10 to 15 minutes walking around the department. The toy department was divided into sections catering for children of different ages. Toys for babies and toddlers were in one area, toys for young children were in another area, and toys for older children were in another area. Items sold under a common brand tended to be displayed together. Playgro’s branded toys were in the baby and toddler section and the respondents’ toys were in the area for young children. Accordingly, the shelves on which Playgro’s toys were displayed were physically separate from shelves displaying the respondents’ toys. They were separated by about 10 to 15 metres. All of the respondents’ toys were located in two ‘bookcases’. The bookcases did not bear the ‘PLAYGO’ brand. Other bookcases displaying branded toys bore the brand in the panel at the top. The respondents’ toys displayed in this section were:

(a)    My Tea Party;

(b)    Table Set For Four;

(c)    Deluxe Kettle;

(d)    My Mixer;

(e)    My Cleaning Trolley;

(f)    Gourmet Kitchen Appliances;

(g)    Chef's Collection Metal Cookware;

(h)    High Tea Cake Set for Two.

93    Of these, the only items bearing the Playgo Device Mark were ‘My Tea Party’, ‘Deluxe Kettle’ and ‘My Mixer’.

94    The respondents’ evidence also included a search of the Australian Trade Marks Office database, ATMOSS using the word ‘PLAY’ as a part word in class 28. The search disclosed 275 registered trade marks in Australia using the word ‘PLAY’ as a part word in class 28 as at October 2015. These included: PLAYSKOOL, PLAYBOY, PLAYMOBIL, PLAY-DOH, PLAYMATES, PLAYSTATION, PLAYLIFE, PLAYTIME, and PLAY ARTS.

D.    SUBSTANTIAL IDENTITY AND DECEPTIVE SIMILARITY

95    As noted in paragraph [7] above, there are three main questions to be determined:

(a)    Is the Playgo Device Mark substantially identical with, or deceptively similar to, Playgro’s trade marks?

(b)    Did the respondents ‘use’ as a trade mark the Playgo Device Mark in Australia?

(c)    Did Playgo Enterprises have a ‘common design’ with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, such that Playgo Enterprises is a joint tortfeasor in infringing sales of those goods by Myer?

96    There was no issue that the toys sold under the Playgo Device Mark were playthings and thus fall within the goods in respect of which the Playgro trade marks described in sub-paragraphs (a) to (c) of paragraph [27] above were registered. They may also fall within the goods in respect of which the trade mark described in paragraph [27](d) was registered, but no submissions were specifically directed to this question. I will therefore proceed on the basis that the relevant trade marks are those described in paragraph [27](a)-(c) above.

97    The first issue to be addressed is whether the Playgo Device Mark is substantially identical with, or deceptively similar to, the Playgro trade marks described in paragraph [27](a)-(c). Although Playgro’s pleading alleges infringement both by the use of the word mark ‘PLAYGO’ and the Playgo Device Mark, Playgro’s submissions focus on infringement by use of the Playgo Device Mark. This reflects the way the goods were packaged and presented to customers. In light of the focus of Playgro’s submissions and the way the goods were packaged and presented, I will address the issue of substantial identity and deceptive similarity primarily by reference to the Playgo Device Mark.

Applicable principles

98    Section 120(1) of the Act provides:

A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

Playgro relies only on s 120(1); it is therefore unnecessary to consider s 120(2) or 120(3).

99    The expression “registered trade mark” is defined in s 6 of the Act as meaning “a trade mark whose particulars are entered into the Register under this Act”. The expression “trade mark” is defined in s 17 as follows:

A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

100    The word “sign” is in turn defined in s 6 as follows:

sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.

101    Section 10 of the Act provides the following definition of “deceptively similar”:

For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.

102    To determine substantial identity, the trade marks are compared side by side, noting their similarities and differences. The importance of these should be assessed, taking into account the essential features of the earlier trade mark and the total impression of resemblance or dissimilarity that comes from the comparison: see Shell Company of Australia Limited v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407 (Shell) at 414-415 per Windeyer J; Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107 at [38] per Black CJ, Sundberg and Finkelstein JJ. In Shell, Windeyer J said at 414:

In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. “The identification of an essential feature depends”, it has been said, “partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it”: de Cordova v Vick Chemical Co. [(1951) 68 RPC 103, at p 106]. Whether there is substantial identity is a question of fact: see Fraser Henleins Pty Ltd v Cody [(1945) 70 CLR 100], per Latham CJ [at pp 114, 115], and Ex parte O'Sullivan; Re Craig [(1944) 44 SR (NSW) 291], per Jordan CJ [at p 298], where the meaning of the expression was considered.

As noted by Nicholas, Yates and Wigney JJ in Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2016] FCAFC 22 at [92], although the appeal against Windeyer J’s judgment in Shell was upheld, nothing was said by the Full Court of the High Court to cast doubt on Windeyer J’s exposition of the test of ‘substantial identity’ or ‘deceptive similarity’.

103    In determining whether trade marks are deceptively similar, the Court must avoid a side-by-side comparison: see Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 at 658 per Dixon and McTiernan JJ; Shell at 415 per Windeyer J. In Shell, Windeyer J said at 415:

On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question. The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of trade mark law. It is between, on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant’s television exhibitions. To quote Lord Radcliffe again: “The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him … It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole”: de Cordova v Vick Chemical Co [(1951) 68 RPC, at p 106].

104    Thus the comparison is made from the stand-point of an ordinary person’s imperfect recollection (of an applicant’s mark) and impression (of a respondent’s mark).

105    In relation to the comparable provisions of earlier legislation, it was said: “It is not necessary, in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough – for there must be a real, tangible danger of its occurring … it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source”: Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592 at 595 per Kitto J, affirmed at 608 by Dixon CJ, McTiernan, Webb, Fullagar and Taylor JJ. See also Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [43], [50] per French J (as his Honour then was), Tamberlin J agreeing at [104].

106    In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods: Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592 at 595; Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50], [104].

107    The respective trade marks are to be compared both visually and aurally: Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 105 per Sheppard J, Wilcox J agreeing at 116.

108    In Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107, Black CJ, Sundberg and Finkelstein JJ said at [39]:

Section 10 of the Act provides that a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion. No intention to deceive or cause confusion is required: Re Bali Brassiere Co Inc's Trade Mark (1968) 118 CLR 128 at 139. The distinction between “likely to deceive” and “likely to cause confusion” lies not in some element of culpability in the user to be inferred from the word “deceive”, but in the effect of the mark on prospective purchasers. In Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410 at 423 Richardson J, in the New Zealand Court of Appeal, said:

“‘Deceived’ implies the creation of an incorrect belief or mental impression and causing ‘confusion’ may go no further than perplexing or mixing up the minds of the purchasing public ... Where the deception or confusion alleged is as to the source of the goods, deceived is equivalent to being misled into thinking that the goods bearing the applicant’s mark come from some other source and confused to being caused to wonder whether that might not be the case.”

See also Parker-Knoll Ltd v Knoll International Ltd [1962] RPC 265 at 273-274 per Lord Denning; General Electric Co v General Electric Co Ltd [1973] RPC 297 at 334 per Lord Diplock (with which compare his Lordship’s opinion in Berlei (UK) Ltd v Bali Brassiere Co Inc [1968] RPC 426 at 433); D R Shanahan, Australian Law of Trade Marks (2nd ed, 1990), p 168.

109    After quoting from Windeyer J’s judgment in Shell, Black CJ, Sundberg and Finkelstein JJ continued (at [41]-[42]):

41    Whether one device mark “resembles” another involves an assessment of the visual impression made by the two marks when compared. In contrast, the likelihood of deception or confusion involves an assessment of what would be the probable visual impression on customers or potential customers which would be produced as a result of the “notional normal and fair use” of the marks: see Gardenia Overseas Pty Ltd v Garden Co Ltd (No 2) (1994) 29 IPR 485 at 493. …

42    As Dixon and McTiernan JJ said in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 659, whether a mark is deceptively similar to another depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs. In many cases it is a question to which different answers can reasonably be given. …

Application of principles to present case

110    In relation to ‘substantial identity’, Playgro submits that the later trade mark ‘PLAYGO’ differs only from the earlier trade mark ‘PLAYGRO’ by the absence of the letter ‘R’. Compared visually, Playgro submits, the later trade mark ‘PLAYGO’ has a total impression of resemblance to the earlier trade mark ‘PLAYGRO’.  It submits that careful visual inspection is required to discern that the letter ‘R’ is missing in the later ‘PLAYGO’ mark. Also, Playgro submits, the later ‘PLAYGO’ mark takes the essential PLAY feature of the earlier mark and makes only a subtle change to the GRO feature of the earlier mark. Playgro submits that the background shape of the Playgo Device Mark is unremarkable and plays no significant distinguishing role.

111    Further, Playgro submits that, compared aurally, the later trade mark ‘PLAYGO’ has a total impression of resemblance to the earlier trade mark ‘PLAYGRO’, given that: the two words rhyme with each other when pronounced; the two words both begin with the syllable PLAY; the second syllable of each word begins with the letter ‘G’; the second syllable of each word ends with an ‘OH’ sound; and careful listening is required to discern the absence of the ‘R’ sound in the later ‘PLAYGO’ mark.

112    In my view, on a side-by-side comparison, the Playgo Device Mark is not ‘substantially identical’ with the Playgro trade marks, including the word mark ‘PLAYGRO’. The visual appearance of the Playgo Device Mark, with its red background and white letters, is distinct from the word mark ‘PLAYGRO’ and the other Playgro trade marks. Further, the Playgo Device Mark is made up of two common English words, ‘play’ and ‘go’, which appear on separate lines in the device; this gives the device a distinct appearance to the word ‘PLAYGRO’ and the other Playgro trade marks. In light of my conclusion, below, regarding deceptive similarity, it is unnecessary to consider the issue of ‘substantial identity’ in relation to the word mark ‘PLAYGO’ as distinct from the Playgo Device Mark.

113    I turn, then, to consider the issue of deceptive similarity. The respondents make the following submissions:

(a)    The Playgro device marks are visually distinguished by the oval or football shaped background, as well as the font and shape of the word ‘PLAYGRO’. The Playgo Device Mark is different, as it contains the word in capitals and split as two words in white text on a red triangular background. These elements are most likely to be recalled.

(b)    Any conceptual similarities derived from a common element are strongly diminished by the presentation and additional elements of the respective marks. Commonality of idea is not sufficient in itself to create a deceptive resemblance between the marks.

(c)    The respondents rely on the evidence regarding the store visit to a Myer store described in paragraph [92] above and submit that the different ways in which Playgro’s and the respondents’ products are sold, marketed or presented by Myer – being different trade context or usage – reduces any scope for confusion.

(d)    The respondents also rely on the results of the search of the Australian Trade Marks Office database ATMOSS described in paragraph [94] above and submit that it is a crowded field for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark. Even small differences in the other elements of a mark are sufficient in such a crowded market to distinguish the goods. They make any confusion unlikely when considering word marks alone, let alone considering the visual and other differences between the Playgo Device Mark and Playgro’s trade marks.

114    In my view, the Playgo Device Mark is deceptively similar to the three Playgro trade marks described in paragraph [27](a)-(c) above. Taking into account the notional consumer’s imperfect recollection of the Playgro trade marks, it is significant that: the first syllable ‘PLAY’ in each of the marks is identical; the last syllable in each of the marks is almost identical and visually and phonetically very similar (that is, ‘GRO’ and ‘GO’), varying only in the presence or absence of the letter ‘R’; and the marks, when considered as a whole, look and sound very similar. The context includes the fact that people who purchase children’s toys include those who purchase them occasionally (for example, as presents for friends or family). Such purchasers may well have an imperfect recollection of the word mark ‘PLAYGRO’ or the Playgro device marks when they come to purchase a toy on another occasion. They may not walk around all sections of a toy department, but rather focus on the relevant age bracket. Given these matters, I consider there to be a real, tangible danger of confusion occurring; I think that a number of customers would be caused to wonder whether it might not be the case that the two products come from the same source.

115    The respondents rely on the oval shaped background of the Playgro device marks. In my view, notwithstanding the difference in shape, there is nevertheless a real, tangible danger of confusion given the imperfect recollection of the notional consumer, the similarity of the words, and the context described in the preceding paragraph. In any event, the Playgro trade marks include the word mark ‘PLAYGRO’ and it is sufficient if the Playgo Device Mark is deceptively similar to that trade mark.

116    While it is true that the Playgo Device Mark uses white text on a red background, with ‘PLAY’ and ‘GO’ presented in two separate lines, in my view, there is nevertheless a real, tangible danger of confusion between the Playgro trade marks and the Playgo Device Mark, taking into account the imperfect recollection of the notional consumer and the context described in paragraph [114] above.

117    In my view, the fact that there are other trade marks for goods in class 28 containing ‘PLAY’ as part of the word, does not assist in resolving the matter. Accepting that it is a crowded market for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark, and therefore more attention than usual may be paid to the second syllable, there is nevertheless a closer degree of similarity between the trade marks in issue here and the marks referred to in paragraph [94] above. In the present case, the second syllable of each mark (‘GRO’ and ‘GO’ respectively) is visually and phonetically very similar, while in the other cases (for example, PLAYSKOOL and PLAYBOY) the second syllable is quite different.

118    In reaching the conclusion that the Playgo Device Mark is deceptively similar to the relevant Playgro trade marks, I have not relied on the page from the Big W catalogue, described in paragraph [78] above. While it is true that, on this page, certain Playgo products were incorrectly described as ‘Playgro’ products, this may be no more than a typographical error or a mistake as to the true brand of the relevant products. Neither the Playgo Device Mark nor the word ‘PLAYGO’ appear on the goods as seen in the catalogue. In my view, unlike evidence of actual confusion among customers, this evidence does not assist in applying the relevant test, which is concerned with whether there is a real, tangible danger of confusion and with whether the respondents’ use of the Playgo Device Mark will cause customers to wonder whether it might not be the case that the two products come from the same source. Further, I have not relied on the extract from the website www.gumtree.com.au described in paragraph [91] above. In my view, this evidence is too slight to be of assistance.

119    In light of my conclusion regarding deceptive similarity of the Playgo Device Mark, it is unnecessary to consider this issue in relation to the word mark ‘PLAYGO’.

120    In summary, my conclusions on this issue are:

(a)    The Playgo Device Mark is not ‘substantially identical’ with the Playgro trade marks, including the word mark ‘PLAYGRO’.

(b)    However, the Playgo Device Mark is ‘deceptively similar’ to the relevant Playgro trade marks.

E.    USE OF PLAYGO DEVICE MARK IN AUSTRALIA

121    The next issue is whether the respondents used as a trade mark the Playgo Device Mark in relation to goods in respect of which the relevant Playgro trade marks are registered (namely, playthings) in Australia. It is accepted by Playgro that, although s 120(1) of the Act does not refer expressly to use in Australia, standard principles of statutory interpretation require that, prima facie, s 120(1) of the Act be interpreted as referring to use in Australia. That prima facie operation of the provision is implicitly confirmed, and extended, by s 4 of the Act, which provides:

4    Application of Act

This Act extends to:

(a)    Christmas Island; and

(b)    Cocos (Keeling) Islands; and

(c)    Norfolk Island; and

(d)    the Australian continental shelf; and

(e)    the waters above the Australian continental shelf; and

(f)    the airspace above Australia and the Australian continental shelf.

122    The issue arises in circumstances where Playgo Enterprises sold and delivered children’s toys bearing the Playgo Device Mark to Myer and WSL in China, for sale to customers in Australia, and Myer, Woolworths and Big W then offered for sale and sold the toys to customers in Australia. The relevant facts are set out in Section C, above, and summarised in paragraphs [66]-[67] (in relation to Myer) and paragraphs [81]-[82] (in relation to Woolworths and Big W). There is no relevant distinction, for the purposes of this issue, between the facts relating to Myer, on the one hand, and those relating to Woolworths and Big W, on the other.

123    The applicant’s submissions can be summarised as follows:

(a)    It is well established that an overseas manufacturer which places (whether by itself or through an authorised user) a trade mark on goods which are then offered for sale and sold in Australia is a user of that trade mark in Australia: E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 (Gallo) at [46]-[47], [52] per French CJ, Gummow, Crennan and Bell JJ.

(b)    The issue most often arises in the following contexts:

(i)    where a foreign trade mark owner is seeking to establish ownership of the trade mark on the basis that it was the first user of the trade mark in Australia: see, for example, Re the registered trade mark ‘Yanx’; ex parte Amalgamated Tobacco Corporation Limited (1951) 82 CLR 199 (Yanx);

(ii)    where a foreign trade mark owner is defending an application to remove the registration of its trade mark under s 92(4)(b) of the Act (and its predecessors) on the basis that it has not used the trade mark in Australia within the relevant three year period: see, for example, Estex Clothing Manufacturers Pty Limited v Ellis and Goldstein Limited (1967) 116 CLR 254 (Estex) and Gallo.

(c)    In Estex, women’s garments were manufactured in London by Ellis & Goldstein Limited (Ellis) and sold to Australian retailers for sale to customers in Australia. The sales took place through buyers or buyer’s agents located in London. Estex argued that because the sale of the goods took place in London, the property passed there to the buyer, who in some cases was the London buying agent, and that therefore there was no use of the trade mark by Ellis in Australia (see at 266). Windeyer J rejected this argument (at 266-267):

As a proposition of law it is no doubt perfectly correct that the goods when sold and delivered in London no longer belonged to the manufacturer. But when it is said that a trade mark is used to distinguish the goods of one man from those of another, that abbreviated statement obviously does not refer to the goods of the owner of the mark in the sense of goods which he owns or possesses. After the goods have been sold by him his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connexion in the course of trade between them and him, the registered proprietor of the mark. The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods. The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his products. Goods remain in the course of trade so long as they are upon a market for sale. Only when they are bought for consumption do they cease to be in the course of trade. The concepts upon which the case turns are economic, commercial, business concepts concerning the marking and marketing of goods, rather than the provisions of the Sale of Goods Act concerning the passing of property.

(d)    Estex appealed unsuccessfully to the Full Court of the High Court. Barwick CJ, McTiernan, Taylor and Owen JJ stated, in relation to the Trade Marks Act 1955 (Cth) (at 271):

By the Act a trade mark means “a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person” and “use” in s 23 must be understood in this context. Its denotation is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer.

(e)    In Gallo, a United States company (Gallo) was defending its Australian trade mark registration of ‘BAREFOOT’ (in respect of wines) against an application by an Australian company (Lion Nathan) to remove the mark from the register under s 92(4)(b) of the Act, on the basis that the mark had not been used in Australia by its owner for a three year period. Before the relevant period, wine bearing the registered trade mark was sold by a United States licensee of the trade mark to a company in Germany. There was no evidence of the consignment’s exact trajectory thereafter, except that some of the wine from that consignment was eventually sold to a Victorian liquor wholesaler (Beach Avenue) who imported it into Australia. Beach Avenue proceeded to sell 41 bottles of the wine under the registered trade mark during the relevant three year period. French CJ, Gummow, Crennan and Bell JJ (Heydon J agreeing) held that the concept of ‘use’ of a trade mark must be understood in the context of s 17 of the Act, which describes a trade mark as a sign used, or intended to be used, to “distinguish” the goods of one person from the goods of others (at [41]). Their Honours rejected Lion Nathan’s contention that it was a necessary condition to establish a use in Australia that an overseas manufacturer knowingly “projects” his goods into the course of trade in Australia (at [49]). Their Honours explained that this contention misreads the judgment in Estex, and confirmed that Estex was authority for “the proposition that the foreign owner of an Australian trade mark uses it in Australia when he sells goods for delivery abroad to Australian retailers and those retailers import them into Australia for sale and there sell them” (at [49]). In a key passage, their Honours held (at [51]-[52]):

51    The capacity of a trade mark to distinguish a registered owner’s goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries.

52    An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia. This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption [Estex (1967) 116 CLR 254 at 266-267]. As affirmed by Gummow J in Wingate Marketing Pty Ltd v Levi Strauss & Co [(1994) 49 FCR 89 at 136], “whilst a trade mark remains on goods, it functions as an indicator of the person who attached or authorised the initial use of the mark”. During the trading period, the trade mark functions as an indicator of the origin of the goods, irrespective of the location of the first sale.

(f)    The High Court’s consideration of ‘use’ of a trade mark in Gallo relied on several authorities which considered the concept of ‘use’ of a trade mark in contexts other than removal for non-use, including Shell (an infringement case); Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330 at 341 (an infringement case); Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 688 (a case for registration of a permitted user); and Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 105 at 136 (an infringement case).

(g)    The approach of the High Court in Gallo reflects the scheme of the Act, which contains many references to the concept of ‘use’ of a trade mark. Some of those references to ‘use’ are addressed to use by certain persons in certain contexts, but many of the other references to use do not apply to any particular person or context.

(h)    The Act contemplates three types of person who ‘use’ a trade mark which is registered or pending registration: the owner (which includes a pending applicant for registration); a person whose use is “controlled” and thus “authorised” by the owner, whose use is taken to be use by the owner and who has certain rights of enforcement; and other persons whose use is not “controlled” and thus not “authorised” by the owner, which may include infringers under s 120 or persons who do not infringe because they are using a mark which has been applied to the goods or services by or with the consent of its owner.

(i)    Various provisions of the Act give meaning to the concept of ‘use’ of a trade mark, without distinguishing between these three types of persons: ss 7(1), 7(2), 7(4), 7(5), 9, 17, 18. This is consistent with the well-established proposition that use of a trade mark is to be determined objectively: Gallo at [33].

(j)    The correct approach is that of the High Court in Gallo, which first analysed objectively whether there was ‘use’ of the ‘BAREFOOT’ trade mark in Australia constituted by the local retailer’s sale to local consumers of ‘BAREFOOT’ branded bottles: Gallo at [28]-[29]. The High Court then analysed whether the registered owner at the relevant time was using the trade mark in that transaction in Australia, notwithstanding that he had no direct involvement in or knowledge of that transaction.

(k)    The word ‘use’ appears in both ss 92(4)(b) and 120 and ought to be construed the same way in each of those sections: see, eg, Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J. Indeed, given the number of times and contexts in which the word ‘use’ appears in the Act, it is vital that it be given a consistent construction.

(l)    Estex and Gallo make clear that the sales in Australia by Myer and Woolworths of toys bearing the Playgo Device Mark amounted to ‘use’ of that trade mark by the foreign manufacturer (Tai Way) which applied that trade mark to those toys and the foreign supplier of the goods bearing the trade mark (Playgo Enterprises). Further, the use of the mark by each of Tai Way and Playgo Enterprises was controlled and thus authorised by Playgo Craft: s 8 of the Act. Such authorised use by each of Tai Way and Playgo Enterprises is thus deemed to be use by Playgo Craft: s 7(3).

(m)    At all material times, the respondents knew that they were manufacturing and supplying goods bearing the Playgo Device Mark to Myer and WSL for sale in Australia.

124    The respondents’ submissions can be summarised as follows:

(a)    The applicant’s case has the effect that a foreign company that disposes of goods bearing its own brand, in a foreign jurisdiction, no matter to whom, no matter the context, and no matter how long ago, and who:

(i)    does not offer to sell its goods in Australia;

(ii)    does not market or advertise its goods in Australia;

(iii)    does not import its goods into Australia;

(iv)    does not sell or trade its goods in Australia; or

(v)    does not have any presence in Australia,

nevertheless ‘uses’ its trade mark in Australia for the purposes of infringement under s 120(1) of the Act, if a third party (not the foreign company) does any of these things in Australia with goods bearing its mark. This should be rejected. Such alleged ‘use’ by the foreign company is no more than theoretical and notional; it is not real or substantial. The foreign company is not putting its goods in the Australian market; the third party is.

(b)    The Act does not have extra-territorial operation so as to make an overseas manufacturer liable for infringement under the Act, when it has not engaged in any conduct in Australia which could amount to infringing use of the trade mark in Australia as proscribed by s 120(1).

(c)    No binding authority holds that an overseas manufacturer which simply places a trade mark on goods “which are then offered for sale and sold in Australia” (by another person) is a user of that trade mark in Australia for the purposes of determining trade mark infringement.

(d)    Legislation is presumed not to have an extraterritorial effect and “read as being prima facie restricted in [its] operation within territorial limits”: Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309 at 363 per O’Connor J; Pearce and Geddes, Statutory Interpretation in Australia (8th ed, 2014), [5.9]-[5.11]; Acts Interpretation Act 1901 (Cth), s 21(1)(b). By s 4, the Act extends to Australian territorial limits. It has no operation beyond those limits.

(e)    The use of the trade mark proscribed by s 120(1) of the Act must be use within the jurisdiction, namely in Australia: Burrell and Handler, Australian Trade Mark Law (Oxford, 2010), p 320. “Trade mark rights are territorial. An infringing act committed outside the United Kingdom cannot be sued upon as infringement of a United Kingdom registered trade mark”: Kerly’s Law of Trade Marks (14th ed, 2005), pp 395-396. Any consideration of ‘use’ under the Act must be read subject to this fundamental territorial limitation.

(f)    Yanx was a proprietorship case. Estex concerned the ‘use’ of the mark in the context of a non-use removal application (not infringement). There were clear findings or concessions to the effect that the registered proprietor had relevantly used the mark in Australia to defeat the non-use application (see at 266, 270-271). Gallo also considered use of a trade mark in the context of a non-use removal application: see Gallo at [52].

(g)    In Badische Anilin und Soda Fabrik v Basle Chemical Works, Bindschedler [1898] AC 200, a patent infringement case, the House of Lords decided unanimously that a foreign manufacturer in Switzerland was not liable for patent infringement of an English patent where he had posted goods to an English buyer, as the sale and delivery took place in Switzerland, so the English court had no jurisdiction, and the English patent legislation had no operation upon the Swiss defendant (see at 205 per Lord Halsbury, at 206 per Lord Hershell). Notwithstanding that it was a patent infringement case, the observations in Badische apply to the alleged infringing use in this case.

(h)    Only usage “in the course of trade” can amount to trade mark use. The course of trade encompasses the acts of merchandising, advertising and promotion, making offers, selecting, distributing, selling, hiring, leasing, letting out for public use, exporting, importing, repairing, processing, maintenance, servicing – all the operations of a commercial character by which a trader provides to customers for reward some kind of goods or services: see Lahore, Patents, Trade Marks & Related Rights, vol 1A, at [60,130] and the cases there referred to.

(i)    The applicant confuses and conflates ‘use’ of a trade mark in Australia by the proprietor of the mark sufficient to support or maintain registration of the mark, and ‘use’ of the mark by a third party sufficient to form a basis for an infringement claim. It confuses the issue of who is entitled to the benefit of representations regarding the origin of goods communicated by a trade mark, and who is responsible for making such representations each time they are made.

(j)    The High Court in Gallo held that an overseas manufacturer who has registered a trade mark in Australia and who places the trade mark on the goods could be said to be a “user of the trade mark” when the goods are offered for sale and sold in Australia: see Gallo at [51]-[52]. The use of a trade mark in relation to goods in the course of trade comprises a representation that the goods originate from the owner of the mark. The owner of the mark makes the representation when it applies the mark to the goods. After the owner of the mark disposes of the goods, the representation may be repeated each time that the goods are offered for sale or dealt with in the course of trade. However, the owner of the mark is not the person who is repeating the representation. It is not responsible for when and where the representation is repeated, nor the context in which it is repeated. While the owner of the mark is entitled to the benefit of goodwill that might accrue as a result of the representation, it is not making it.

(k)    It cannot, in principle, be the case that every foreign company throughout the world is liable for trade mark infringement in Australia if its marked goods are present in Australia in the course of trade, no matter how long the chain is of international trade and commerce. That would make them hostages to the actions of others, even where there is no suggestion of vicarious or contributory liability and even if they are unaware of such conduct in Australia.

(l)    Gallo should be confined to non-use cases. First, the case is expressed to be only a statement of what constitutes ‘use’ to defeat an application to remove a registered trade mark under ss 92 and 100 of the Act: see Gallo at [51]-[53]. Secondly, there are implications in the Act that ‘use’ of a trade mark is different in non-use infringement contexts. Sections 92 and 100 (for non-use) focus on the use of the Australian registered trade mark, not use as a trade mark of a sign as in s 120. Non-use is dealt with in Part 9 of the Act; infringement in Part 12. Sections 7(1), 7(3) and 8 are apt for non-use analysis but not for infringement. Thirdly, the issues that must be resolved in a case in which the registered proprietor of a trade mark wishes to preserve its trade mark registration are very different to the issues that must be resolved if it wishes to establish that a third party is liable for infringement.

(m)    A principled justification for a different conception of ‘use’ in proprietorship/non-use cases and infringement cases is that in the former cases the person has registered a trade mark in Australia and has an intention to use the trade mark. That person has sought the protection of the Act for its commercial activities in Australia. It is therefore entitled to the protection of the Act and its benefits, by a broad view of its use of the mark. On the other hand, a person who is completely outside Australia and engaged in commercial activity outside Australia should not be subject to the burden of the Act which would be imposed if the Act operated extra-territorially, so as to make liable a person in a foreign country for infringement.

(n)    Absurd consequences would follow in the context of parallel imports if the applicant’s case on ‘use’ were accepted: see, eg, Fender Australia Pty Ltd v Bevk (1989) 25 FCR 161. If the concept of ‘use’ for the purposes of infringement were exactly the same as ‘use’ for the purposes of a proprietorship/non-use action, it would follow (in that case) that the US manufacturer was infringing the Australian trade mark, even though it did nothing but manufacturer and sell ‘FENDER’ guitars in the US under its own trade mark.

125    In my view, for the reasons that follow, the respondents used as a trade mark the Playgo Device Mark in relation to playthings in Australia.

126    The starting place for consideration of the issue is the text of s 120(1) of the Act (see paragraph [98] above) and the concepts it embodies. Putting to one side ‘substantial identity’ and ‘deceptive similarity’, which have been discussed above, central concepts are ‘use’ and ‘use as a trade mark’. The latter element expressly brings in the definition of “trade mark” in s 17 of the Act (see paragraph [99] above).

127    The concept of ‘use’ of a trade mark was considered in Estex. The basic facts in Estex are set out in the judgment of Windeyer J at first instance at pp 255-257. The respondent, Ellis, was a public company which manufactured in England women’s garments. It did not itself sell its goods by retail. Its goods were marketed by being sold to buyers for the retail trade, both in the United Kingdom and elsewhere. It sold goods for export to various places, including Australia. It was the registered proprietor of two trade marks in Australia comprising the word ‘EASTEX’ in respect of outer clothing for women and the word ‘EASTEX’ followed by ‘Range 52’ in respect of complete articles of clothing. The dresses it sold bore its trade mark, either ‘EASTEX’ or ‘EASTEX Range 52’ on labels sown inside the garment and on tied-on tags. Windeyer J found (at 256) that: “There can be no doubt at all that the use of the trade mark on garments and on tags in this way was for the purpose of indicating, and did and does indicate, that goods bearing the marks are the product of a particular manufacturer.” The applicant (Estex) was a company incorporated in New South Wales. It made and sold women’s clothing under the name ‘Estex’. Ellis commenced proceedings in the Supreme Court of New South Wales against Estex alleging infringement of its trade mark and seeking an injunction to restrain it from using the name ‘Estex’. Estex commenced two motions against Ellis seeking removal of its trade marks pursuant to s 23(1)(b) of the Trade Marks Act 1955 (Cth) upon the grounds of non-use during the relevant periods. The proceedings before Windeyer J comprised these two motions. The infringement proceeding was adjourned pending the determination of the two motions. Section 23(1)(b) provided:

(1)    Subject to this section and to section ninety-three of this Act, the High Court or the Registrar may, on application by a person aggrieved, order a trade mark to be removed from the Register in respect of any of the goods in respect of which it is registered, on the ground— …

(b)    that, up to one month before the date of the application, a continuous period of not less than three years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of the trade mark in relation to those goods by the registered proprietor or a registered user of the trade mark for the time being.

128    Windeyer J said (at 258) that the use which s 23(1)(b) postulated was: (1) use of the mark in good faith; (2) use of it by the registered proprietor; (3) use of it as a trade mark in relation to goods of the class for which it is registered; and (4) use of it in Australia. His Honour then said: “The central issue in the case is whether or not anything which occurred in the relevant periods amounted to a use of the mark in Australia by the respondent.”

129    Windeyer J found (at 264) that Ellis had from time to time sent women’s garments of its manufacture to Grace Bros Pty Limited, Sydney, and that it had also on occasions sent such garments to other retail houses in Australia. His Honour said (at 264) that the practice of several well-known leading retail stores in Australia which import goods from London was to buy through buyers or buying agents there who place their orders for them. After detailing the transactions established by Ellis’s evidence (at 264-265), His Honour summarised the position (at 266):

All the sales I have mentioned were in fact concluded in London. The goods were ordered in London by someone there, either someone from one of the regular London buying agents or some other representative of the Australian customer. The orders were accepted by the respondent in London and payment was made in London. Delivery was in each case made by the respondent as directed – to a shipping agent, or in some other way including direct despatch by air, for onward movement to the Australian retail house to which the goods were to go. However they went, the goods left the respondent's premises addressed to an intended Australian destination. …

I am satisfied too that the goods bore, as the respondent’s goods at this time always did, an “EASTEX” sewed-on label and “EASTEX” tags. There is no reason to suppose that any of the goods so sent to Australia did not arrive here. There is every reason to believe they did. There is indeed positive and unchallenged evidence by affidavit that goods ordered from the respondent in fact arrived in Australia and were during the relevant periods offered for sale and sold by Australian retail houses with, as one would expect, their “EASTEX” marks and tags still on them.

130    Windeyer J then set out (at 266) the argument put by Mr Franki QC for Estex:

Mr. Franki for the applicant really could not dispute any of this; what he says, however, is that because the sale of the goods took place in London, the property passed there to the buyer, who in some cases was the London buying agent, and that therefore there was no use of the trade mark by the respondent in Australia. The respondent, he said, had parted with its goods. It had delivered them to some stipulated place somewhere in or near London; where they went or what was done with them thereafter by the buyer who then owned them, was a matter beyond the control of the respondent, a matter with which it was no longer concerned. The respondent, he said, entered into no transaction in Australia.

131    In the next paragraph, at pp 266-267, Windeyer J rejected this argument. Although most of the paragraph is quoted above, I set out the full paragraph here for ease of reference and to add emphasis to certain parts:

All this is true enough. But I think that to insist on it is to misapprehend the present case. As a proposition of law it is no doubt perfectly correct that the goods when sold and delivered in London no longer belonged to the manufacturer. But when it is said that a trade mark is used to distinguish the goods of one man from those of another, that abbreviated statement obviously does not refer to the goods of the owner of the mark in the sense of goods which he owns or possesses. After the goods have been sold by him his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connexion in the course of trade between them and him, the registered proprietor of the mark. The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods. The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his products. Goods remain in the course of trade so long as they are upon a market for sale. Only when they are bought for consumption do they cease to be in the course of trade. The concepts upon which the case turns are economic, commercial, business concepts concerning the marking and marketing of goods, rather than the provisions of the Sale of Goods Act concerning the passing of property.

(emphasis added)

132    I note that most of this passage was quoted by French CJ, Gummow, Crennan and Bell JJ (Heydon J agreeing) in Gallo at [46]. Their Honours also said (at [48]) that in dismissing appeals from the judgment of Windeyer J, the Full Court said nothing to detract from Windeyer J’s analysis of use.

133    The judgment of Windeyer J was affirmed by the Full Court of the High Court (Barwick CJ, McTiernan, Taylor and Owen JJ). After summarising the conclusion of Windeyer J, the Full Court set out the appellant’s argument (at 271):

However, counsel for the appellant contends that this view is erroneous. He points out that the sales which it is proved were made by the respondent to the several Australian retail houses were made in England, the goods, in each instance, were the subject of an f.o.b. contract and, presumably, the property in them passed upon shipment in London. That being so, it is said, there was no act of the respondent in Australia which can be said to constitute a use by it in Australia of the mark. For this proposition we were referred to the decision in Badische Anilin und Soda Fabrik v. Basle Chemical Works, Bindschedler [[1898] AC 200] where it was held that a manufacturer in Switzerland who sold and delivered in that country to an English trader goods manufactured according to an invention the subject of English letters patent had not thereby infringed the rights of the holder of the patent by using or vending the patent in England.

134    I note that Badische Anilin und Soda Fabrik v Basle Chemical Works, Bindschedler [1898] AC 200 is also relied upon by the respondents in the present proceeding.

135    The Full Court rejected these submissions. The Court said (at 271) (although most of this passage is quoted above, I set out the full passage for ease of reference and to add emphasis to certain parts):

But to apply the reasoning in that case in solving the problem in the present case would be to misconceive the significance of the word “use” when it is used in relation to a trade mark.

By the Act a trade mark means “a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person” and “use” in s 23 must be understood in this context. Its denotation is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer. Indeed, in this case, the respondent is the only person who has the right to use the mark and the retailer to whom the goods have been sold for re-sale does not, in any relevant sense, use it.

(emphasis added)

136    In Gallo, French CJ, Gummow, Crennan and Bell JJ said (at [49]) that the reference to “projects” in the above passage reflected the facts of the case, and it was not suggested that what was sufficient in that case was necessary in every case. Their Honours affirmed the observation of Aickin J in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 688 that Estex was authority for “the proposition that the foreign owner of an Australian mark uses it in Australia when he sells goods for delivery abroad to Australian retailers and those retailers import them into Australia for sale and there sell them”.

137    Central to the reasoning of both Windeyer J and the Full Court in Estex was that the word ‘use’ was to be understood in the context of the definition of a trade mark which, under the Trade Marks Act 1955, meant a mark used or proposed to be used in relation to goods “for the purpose of indicating … a connexion in the course of trade between the goods and a person who has the right … to use the mark”. Once the word ‘use’ was understood in this sense, it followed that the overseas manufacturer continued to use its trade mark after property in the goods had passed to the Australian retailers, so long as the goods remained in the course of trade.

138    The definition of “trade mark” in s 17 of the current Act is not expressed in the same terms, yet the essential function of a trade mark remains the same. This was explained by French CJ, Gummow, Crennan and Bell  J in Gallo (at [42]):

Whilst that definition [in s 17 of the Act] contains no express reference to the requirement, to be found in s 6(1) of the Trade Marks Act 1955 (Cth), that a trade mark indicate “a connexion in the course of trade” between the goods and the owner, the requirement that a trade mark “distinguish” goods encompasses the orthodox understanding that one function of a trade mark is to indicate the origin of “goods to which the mark is applied”. Distinguishing goods of a registered owner from the goods of others and indicating a connection in the course of trade between the goods and the registered owner are essential characteristics of a trade mark. There is nothing in the relevant Explanatory Memorandum to suggest that s 17 was to effect any change in the orthodox understanding of the function or essential characteristics of a trade mark.

(footnotes omitted)

139    Although Estex and Gallo were concerned with applications for the removal of registered trade marks for non-use, the consideration of ‘use’ of a trade mark in the passages referred to in paragraphs [127]-[138] above does not appear to be limited to that context, and seems equally applicable to an infringement context. This is consistent with the principle of statutory construction that words used consistently should be construed consistently, unless there is good reason to do otherwise: Queensland v Forst (2008) 168 FCR 532 at [41] per Black CJ, citing Craig, Williamson Pty Ltd v Barrowcliff [1915] VLR 450 at 452 per Hodges J; Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J (with whom Barwick CJ and Jacobs J agreed).

140    Turning to the concept of ‘use as a trade mark’, this was discussed by the Full Court of this Court in Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107. In that case, which concerned alleged infringement of a trade mark, Black CJ, Sundberg and Finkelstein JJ said (at [19]):

Use “as a trade mark” is use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods ... That is the concept embodied in the definition of “trade mark” in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else.

This passage was approved by French CJ, Gummow, Crennan and Bell JJ in Gallo (at [43]). See also Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2016] FCAFC 22 at [112]-[118] per Nicholas, Yates and Wigney JJ.

141    In Ward Group Pty Ltd v Brodie & Stone plc (2005) 143 FCR 479, which concerned alleged infringement of a trade mark, Merkel J considered whether the advertising and sale of certain products on the internet constituted a use of a mark in Australia. His Honour found that the website proprietors’ advertising on the internet of products for sale was a marketing of those products to the world at large; and that it was not specifically targeted or directed at, or specifically intended to be acted upon by, consumers in Australia (at [37]). His Honour concluded that the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded; however, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction, then there is likely to be a use in that jurisdiction when the mark is downloaded (at [43]). While this case is concerned with the particular issues that arise in connection with the internet, it reinforces that ‘use’ may in some circumstances require that conduct be directed towards a particular jurisdiction.

142    In the present case, the Playgo Device Mark was applied to children’s toys by Tai Way at the Dongguan factory under the authorisation of Playgo Craft and at the direction of Playgo Enterprises. The toys, with the Playgo Device Mark, were sold by Playgo Enterprises to Myer and WSL in China, for sale to customers in Australia. It is to be inferred that when Playgo Enterprises sold its products to Myer and WSL, it knew that the goods were to be offered for sale and sold to customers in Australia. Applying the concepts of ‘use’ and ‘use as a trade mark’ discussed above, the respondents used as a trade mark the Playgo Device Mark in Australia in that it was used as a ‘badge of origin’ to indicate a connection in the course of trade between the goods and the respondents. The respondents did not cease to use the Playgo Device Mark upon sale and delivery of the goods to Myer and WSL in China; rather, the mark was being used by the respondents so long as the goods were in the course of trade and it was indicative that they were the respondents’ products. The goods remained in the course of trade until their ultimate sale to customers in Australia.

143    The facts of this case are materially the same as those in Estex. In each case, a foreign company affixed a trade mark overseas, sold and delivered the goods with that mark to an Australian retailer overseas, and the goods were (to the knowledge of the overseas company) to be sold to customers in Australia. Although it is true that in Estex, the foreign company was the registered proprietor of the trade mark in Australia, that fact does not appear to have played a part, or at least a significant part, in the reasoning of Windeyer J or the Full Court of the High Court in support of the conclusion that the foreign company used the trade mark in Australia.

144    The respondents submit that the Act does not have extra-territorial operation so as to make an overseas manufacturer liable for infringement under the Act, when it has not engaged in any conduct in Australia. But the conclusion in paragraph [142] above does not depend on the Act having extra-territorial operation. Rather, it is based on an understanding of what amounts to ‘use’ of a trade mark in Australia.

145    The respondents submit that the owner of a mark makes a representation when it applies the mark to goods; after the owner of the mark disposes of the goods, the representation may be repeated each time the goods are offered for sale, but the owner of the mark is not the person who is repeating the representation. This submission is inconsistent with Windeyer J’s consideration of ‘use’ in Estex at pp 266-267, set out in paragraph [131] above, and with the reasons of French CJ, Gummow, Crennan and Bell JJ in Gallo at [51]-[52], set out in paragraph [123](e) above.

146    The respondents submit that it cannot, in principle, be the case that every foreign company throughout the world is liable for trade mark infringement in Australia if its marked goods are present in Australia in the course of trade, no matter how long the chain is of international trade and commerce. In the present case, however, the respondents were aware that the goods were to be offered for sale and sold to customers in Australia. It is not necessary to consider whether a foreign company would be liable for infringement if this were not the case.

147    For these reasons, I conclude that the respondents used as a trade mark the Playgo Device Mark in relation to playthings in Australia. It follows from the conclusions in the preceding section and this section of these reasons that the respondents infringed the Playgro trade marks described in paragraph [27](a)-(c) contrary to s 120(1) of the Act.

F.    JOINT TORTFEASOR CASE

148    In light of the conclusions set out above, it is unnecessary to consider Playgro’s alternative, joint tortfeasor case. However, as this was the subject of detailed submissions, it is appropriate that I express my views on this issue.

149    Playgro contends that Playgo Enterprises had a ‘common design’ with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, such that Playgo Enterprises is a joint tortfeasor in the infringing sales of those goods by Myer. The joint tortfeasor case was pursued only in relation to the sales to Myer, not those to WSL.

Applicable principles

150    The liability of a joint tortfeasor was considered in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574. Brennan, Dawson and Toohey JJ said (at 580):

As was said in The Koursk [[1924] P 140 at 159-160], for there to be joint tortfeasors “there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage”. Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort.

151    In the same case, Gummow J said (at 600):

In England, Australia and New Zealand, criteria for the identification of joint tortfeasors are to be found in expressions used in The Koursk. Scrutton LJ there spoke of “two persons who agree on common action, in the course of, and to further which, one of them commits a tort”, saying that in such a case there is one tort committed by one of them “in concert with another”. Sargant LJ accepted the proposition that persons are joint tortfeasors when their “respective shares in the commission of the tort are done in furtherance of a common design” so that those who “aid or counsel, direct, or join” in commission of the tort are joint tortfeasors.

(footnotes omitted)

152    In Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1, which involved allegations of copyright infringement, Tamberlin J said (at [135]-[136]):

135    The authorities indicate that in order to make out a case of joint tortfeasor liability on the basis that copyright infringement is a statutory tort, it is necessary to establish that there has been a common design by the respondents to participate in or induce or procure another person to commit an act of infringement. In WEA International Inc v Hanimex Corp Ltd (1987) 17 FCR 274 at 283, Gummow J points out that in circumstance where two or more persons assisted or concurred in or contributed to an act causing damage this is not of itself sufficient to found joint liability and there must also be some common design. In other words, there must be something in the nature of concerted action or agreed common action. It is not necessary that there must be an explicitly mapped out plan with the primary offenders. Tacit agreement between the parties is sufficient: see Unilever plc v Gillette (UK) Ltd [1989] RPC 583 at 609 per Mustill LJ; Molnlycke AB v Procter & Gamble Ltd [1992] 1 WLR 1112; [1992] RPC 21 at 29 per Dillon LJ (with whom Leggatt LJ agreed). In Intel Corp v General Instrument Corp (No 2) [1991] RPC 235 at 241, Aldous J stated that:

that capacity to control will not establish a common design. It is the extent of the control actually exercised or the involvement which is relevant and, in particular, whether it amounts to a common design to do the acts complained of.

136    The relevant authorities were considered by the High Court in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 580-581, where the joint judgment referred to the necessity for two or more persons to act in concert in committing the tort. At 600, Gummow J cited with approval the comment of Sargent LJ in The Koursk [1924] P 140 at 159-60 that persons are joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a “common design” so that those who aid or counsel, direct or join in the commission of the tort are joint tortfeasors.

153    See, on appeal, Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 at [87] per Branson J, [173] per Kenny J. In Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2016] FCAFC 22, Nicholas, Yates and Wigney JJ set out the above passage from Universal Music v Cooper and said (at [142]):

We respectfully agree with Tamberlin J’s summary of the authorities. We would add that it is not necessary that the parties to the common design intend to infringe. As Mustill LJ (with whom Ralph Gibson and Slade LLJ agreed) observed in Unilever plc v Gillette (UK) Ltd [1989] RPC 583 at 602, it is not necessary to show “a common design to infringe ... it is enough if the parties combine to secure the doing of acts which in the event prove to be infringements”: see also Unilever v Chefara Properties Ltd [1994] FSR 135 at 138.

See also Caterpillar Inc v John Deere Ltd (1999) 48 IPR 1 at [21]-[25] per Carr, Sundberg and Kenny JJ.

154    In Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135 at 138, Glidewell LJ said: “In order to show infringement by common design it is necessary for the plaintiff to show some act in furtherance of the common design – not merely an agreement.”

Application of principles to present case

155    Playgro relies on the following facts and matters to establish a common design and, in consequence, joint tortfeasorship:

(a)    At all material times, Playgo Enterprises knew that Myer conducted business in Australia as a large department store and that MSAL was an agent engaged by Myer to act as its buying office in Hong Kong and China.

(b)    Playgo Enterprises entered into the Supply Agreement with Myer.

(c)    In accordance with the Supply Agreement, between August 2013 and October 2014, Myer placed orders through its agent MSAL with Playgo Enterprises for the products which are exhibits “RLS-8” and “RLS-10” and the products seen in annexure “RLS-12” (see paragraphs [59], [61] and [63] above); Playgo Enterprises supplied those products to Myer via its agent MSAL; Myer offered for sale and sold in Australia the products which are exhibits “RLS-8” and “RLS-10”; and Myer offered for sale in Australia the products seen in annexure “RLS-12”.

156    Playgro contends that, in the circumstances, Playgo Enterprises acted in a ‘common design’ with Myer to offer for sale and sell in Australia children’s toy products under or by reference to the name ‘PLAYGO’.

157    In light of my conclusion in Section D above, I will assume for present purposes that the offering for sale and sale by Myer of children’s toys bearing the Playgo Device Mark constituted an infringement of the relevant Playgro trade marks: see Paul’s Retail Pty Ltd v Lonsdale Australia Ltd (2012) 294 ALR 72 at [65]-[66] per Keane CJ, Jagot and Yates JJ.

158    Nevertheless, in my view, the facts do not establish that Playgo Enterprises and Myer engaged in a ‘common design’ to offer for sale and sell toys bearing the Playgo Device Mark. The relationship between Playgo Enterprises and Myer was merely that of vendor and purchaser. The Supply Agreement appears to be a standard agreement for the sale and purchase of goods; there are no special features which involve Playgo Enterprises in the process of offering for sale and sale of the goods to customers. The facts do not indicate that Playgo Enterprises played any role in the offering for sale or sale of the goods to customers. It is true that Playgo Enterprises sold goods bearing the Playgo Device Mark to Myer, and knew that they were to be offered for sale and sold to customers in Australia. Nevertheless, in my view, that is insufficient to amount to a ‘common design’ because Playgo Enterprises did not engage in any acts in furtherance of the alleged common design. At most, Playgo Enterprises facilitated the infringement by selling the goods to Myer; but mere facilitation is not enough to establish joint tortfeasorship.

159    For these reasons, I conclude that Playgo Enterprises did not have a ‘common design’ with Myer to supply ‘PLAYGO’ branded toys for sale in Australia, and therefore Playgo Enterprises was not a joint tortfeasor in infringing sales by Myer.

G.    CONCLUSION

160    For the reasons set out in Sections D and E, I conclude that the respondents infringed the Playgro trade marks described in sub-paragraphs (a) to (c) of paragraph [27] above contrary to s 120(1) of the Act.

Associate:

Dated:    22 March 2016