FEDERAL COURT OF AUSTRALIA

Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik [2002] FCA 624

COSTS – issues won and lost by both parties – ‘losing’ party not paying all costs of ‘winning’ party.

Trade Marks Act 1995 (Cth)

Trade Practices Act 1974 (Cth)

Cretazzo v Lombardi (1975) 13 SASR 4   referred to

Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201   referred to

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261   referred to

Australian Trade Commission v Disktravel [2000] FCA 62   referred to

Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425    referred to

Anheuser-Busch, Inc v Budějovický Budvar, Národní Podnik & Ors

NG 194 of 1998

ALLSOP J

15 MAY 2002

SYDNEY

THE COURT:

1.       DECLARES that the first respondent has, by distributing, offering for sale and selling in Australia beer packaged in containers bearing a front label displaying, on a band on that label, the words BUDWEISER BUDVAR, examples of which are Exhibits GRB 11 and GRB 12 (also being Exhibits TH 10 and TH 11) in these proceedings:

(a)        infringed Registered Trade Marks No 163032 BUDWEISER and No 366841 BUDWEISER KING OF BEERS;

(b)        engaged in conduct which contravenes ss 52, 53(c) and 53(d) of the Trade Practices Act 1974 (Cth); and

(c)        engaged in conduct which constitutes passing-off.

2.         ORDERS that the first respondent, whether by itself, its servants and agents, be restrained from:

(a)        importing, advertising, promoting, distributing, offering for sale or selling in Australia beer packaged in containers bearing labels displaying the words BUDWEISER BUDVAR, examples of which are Exhibits GRB 11 and GRB 12 (also being Exhibits TH 10 and TH 11) in these proceedings;

(b)        importing, advertising, promoting, distributing, offering for sale or selling in Australia beer packaged in containers bearing the label which is Exhibit TH 101 in these proceedings;

(c)        promoting or advertising beer in Australia by means of invoices in the form of Exhibit TH 7 in these proceedings, or by means of other stationery with a border in the form of or substantially in the form of the invoice, a copy of which is Exhibit TH 7 in these proceedings, or by means of the point of sale material found within a catalogue, an example of which is Exhibit TH 12 in these proceedings.

3.         NOTES the permanent undertaking to the Court by the first respondent, without admissions, that it will not, whether by itself, its servants and agents, without the licence of the applicant:

(a)        export to Australia or sell, offer for sale, distribute, promote or advertise in Australia, beer in packaging under the mark BUDWEISER BUDVAR, examples of which are Exhibits GRB 6, GRB 7, WLM 5 and NRS 7 or any point of sale or other promotional materials to be used in marketing beer in such packaging; or

(b)        knowingly assist or authorise any person to import beer in such packaging into Australia or to sell, offer for sale, distribute, promote or advertise such beer in Australia.

4.         ORDERS that the first respondent's Amended Cross-Claim be dismissed.

5.         ORDERS that the proceedings be otherwise dismissed.

6.         ORDERS that the first respondent pay seventy per cent (70%) of the costs of the applicant of the whole proceedings.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 5 April 2002 I published my reasons in this matter.  The parties asked me during the hearing to allow them time, after publishing my reasons, to deal, between themselves, with the form of orders and the question of costs.  The parties have been able to agree a form of orders which they are content reflect my reasons.  With some textual amendment, I am content to make those orders.  The parties have not been able to agree the question of costs.  I deal with costs in these reasons.

2                     I have been provided with helpful submissions from both sides.  I have considered them carefully.  Two affidavits from the solicitors have been filed dealing with specific aspects of the procedural history of the matter.  I do not need to refer to these in detail.

3                     I previously indicated to the parties that I would look at the matter as a whole, that is without differentiation between the application and the cross-claim.  I thought this appropriate to avoid potential difficulty, and therefore further cost, in distinguishing between the two in respect of any given item of cost.  This is especially so given the significant overlap of issues.  The parties agreed with this approach.

4                     The burden of the applicant’s position is that it won, and it wants all of its costs, or, at most, a discount of 10%.

5                     There are powerful considerations weighing heavily against overly enthusiastic attempts to divide up a case by issues and examine the ‘score’ by reference to an issue count.  I refer to Cretazzo v Lombardi (1975) 13 SASR 4, 15;  Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201;  Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261;  and Australian Trade Commission v Disktravel [2000] FCA 62.  There is a powerful consideration that parties should not be dissuaded from litigating all issues, not unreasonably raised, in furtherance of their claim or defence and that the ‘loser’ should not anticipate an ability to fund its position out of issues won.  Apart from anything else, this could lend an additional complexity to litigation which would be undesirable.  On the other hand, a powerful point was made by Wilcox J in Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425, 430 that a realisation in parties that the loss of issues may have cost consequences, may, with the cost of litigation so high, encourage the parties to choose their fields of battle with some care.

6                     However, nothing in the above cases is to be taken as a rule to be applied irrespective of the evident fairness in a particular case.  Further, the questions as to who is the ‘loser’ and who is the ‘winner’ are not always easy to identify and can be bound up with an analysis which involves looking at the issues.

7                     It is appropriate here to remind oneself of the application and the orders claimed in it.  Declarations and orders were sought in connection with the Trade Marks Act 1995 (Cth), the Trade Practices Act 1974 (Cth) and the law of passing-off, by reference to the use of specific marks:

(a)               BUDEJOVICKY; and/or

(b)               BUDVAR; and/or

(c)               BUDWEISER; and/or

(d)               BUDEJOVICY BUDVAR; and/or

(e)               BUDBRÄU; and/or

(f)                BUDWEISER BUDBRÄU; and/or

(g)               BUDWEISER BUDVAR

8                     Other more general orders were sought, but there was no order directed specifically at the labels which are reflected in Exhibits GRB 11, GRB 12, TH 10, TH 11 and TH 101.

9                     Nevertheless, the pleading directed itself to the bottles and cans complained of:  see para 13 of the Third Further Amended Statement of Claim (3^rd FASC).

10                  It is plain that the applicant did lose on a central issue, or central issues, put forward by it – the illegitimacy of the ‘Budějovický Budvar’ mark and the marks ‘Budějovický’ and ‘Budvar’ split up in the way (unsuccessfully) contended for by the applicant.  In one sense, it only won because of the phrase ‘Budweiser Budvar’ on the strip on the labels and because of the persistence by the first respondent in relation to the stationery and point of sale material.

11                  However, the applicant was fully entitled to press those matters, and to do so required it to bring forward the reputation evidence and much of the expert evidence which was led.  Also, it was entitled to have the question of infringement of the First Label Bottle and Can as defined in para 13 of the 3^rd FASC determined in the light of the cross-claim.  It was also entitled to lead and press all of its reputation evidence in favour of an order with the qualifying effect referred to in [247] of the main judgment, even if I had been of the view that the first respondent had made out the good faith defence under s 122 of the Trade Marks Act.

12                  Just as it can be said by the first respondent that the applicant lost a major battle in the case, the applicant can say that to win the issues it did, required much of the evidence from the ‘Budějovický Budvar’ battle.  It may be that if the first respondent had chosen not to press the ‘Budweiser Budvar’ issue and the stationery issue it would have had (subject possibly to the cross-claim in relation to the First Label Bottle and Can) a comprehensive victory; but it did press those issues.  In consequence, the applicant was entitled to press its rights, and obliged to prove the facts necessary to succeed in that respect.

13                  I think it likely that if the case had only been about the strip and the stationery just as much vigour would have been put into the case by the applicant.  I say this because of the evidence of the value of the brand ‘Budweiser’ and the capacity for erosion of that value by unauthorised use by others.  Some of the evidence led would not have been necessary.  Parts of the expert reports would have not been needed.  Significant parts of the legal debate would not have been needed.  It would have been a simpler case, though equally hard fought.

14                  I should also say that the applicant persisted in allegations of the involvement of the first respondent with the importation of the first label beer.  There was no foundation for this.  However, the cross-claim obliged the applicant to press the question of infringement in relation to the first label beer.

15                  I find it difficult not to be affected by the fact that it is plain from the pleadings, the evidence and the conduct of the hearing that the preponderance of energy and commercial concern was directed at an issue (the main mark – ‘Budějovicky Budvar’) won by the first respondent.  Nevertheless, as I said, the ‘mere’ use of ‘Budweiser’ on the coloured strip and the persistence in the desire to use stationery and point of sale material which involved infringement were, together, or individually, always likely to lead to full blown litigation.

16                  Considering all the submissions of the parties, and trying fairly to make one order which justly reflects the appropriate costs burden for litigation of this size and character, in my view, the first respondent should pay some costs of the applicant.  I do not, on reflection, think it appropriate (as I had expressed at a hearing on costs) for there to be no order as to costs.

17                  What the sum or proportion should be, is one not capable of mathematical precision.  Weighing all the submissions of the parties carefully, and giving full weight to the success of the first respondent, but recognising the entitlement of the applicant to press for the removal of ‘Budweiser Budvar’ from the coloured strip and for the non-use of the stationery and point of sale material and the difficulty in disentangling all the evidence, I think that the first respondent should pay seventy per cent (70%) of the costs of the applicant.

Associate:

Dated:              15 May 2002