FEDERAL COURT OF AUSTRALIA

Digitrex (Aust) Pty Ltd v EMT Aust Enterprise Pty Ltd

[2004] FCA 1027

PRACTICE AND PROCEDURE – failure to comply with orders – application for default judgment pursuant to O 10 r 7 – whether substantive claims made out

Trade Marks Act 1995 (Cth) ss 120(1) and (2)

Federal Court Rules O 10 r 7(1)(b)

Australian Securities Commission v Macleod (1994) 130 ALR 717  followed

Cooper Engineering Company Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536  cited

In the Matter of an Application by the Pianotist Company Ltd for the Registration of a Trade Mark (1906) 23 RPC 774  followed

Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388  cited

DIGITREX (AUST) PTY LIMITED AND ANOR v EMT AUST ENTERPRISE PTY LIMITED

N 2198 OF 2003

STONE J

9 AUGUST 2004

SYDNEY

THE COURT DECLARES THAT:

1.                  The respondent has infringed Australian Trade Mark No 891347 (‘the Digitrex Mark’) by:

(a)    using as a sign the word ‘DIGITEX’ on or in relation to electric goods including home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens and air conditioners;

(b)   using as a sign the logo depicted below (‘The DIGITEX Logo’) on or in relation to electric goods including home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens and air conditioners. The Digitex Logo is:

2.                  The respondent has infringed Australian Trade Mark No 941333 (‘the Advertising Mark’) by:

(a)    using as a sign the word DIGITEX on or in relation to electric goods including home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens and air conditioners;

(b)   using as a sign the Digitex logo on or in relation to electric goods including home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens and air conditioners;

(c)    using the internet website and domain name known as ‘www.mydigitex.com.au’.

THE COURT ORDERS THAT:

3.                  The respondent by itself, its servants, agents or otherwise be permanently restrained from using as a sign the word DIGITEX or the Digitex Logo or any other sign that is substantially identical with or deceptively similar to either the DIGITREX Mark or the Advertising Mark on or in relation to the advertising, sale, offering for sale, distribution, promotion, importation, or hire of any electric goods including home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens and air conditioners, or in or as the internet address for any website promoting or referring to any such products.

4.                  The respondent by itself, its servants, agents or otherwise be permanently restrained from using in trade or commerce in relation to the distribution, advertisement, promotion, importation, offering for sale or hire in Australia the word DIGITEX or the Digitex Logo or any word or logo deceptively similar to either the DIGITREX Mark or the Advertising Mark thereto or in relation to any of: home entertainment products, televisions, DVD players, VCR players, audio systems, speakers, refrigerators, microwave ovens or air conditioners bearing, or in or as the internet address for any website promoting or referring to any such products.

5.                  The respondent, by itself, its servants, agents or otherwise be permanently restrained from using the website and domain name ‘www.mydigitex.com.au’.

6.                  The respondent withdraw trade mark application 929737 for DIGITEX and device and trade mark application 951983 for DIGITEX and device.

7.                  The respondent deliver up on oath, within fourteen (14) days, all products and materials in the respondent’s possession, custody or control that bear the Digitex name or the Digitex logo or any other sign that is substantially identical with or deceptively similar to either the DIGITREX Mark or the Advertising Mark.

8.                  The applicants have leave to apply to the Court within 28 days from the date of this order to have the matter listed for the determination of the quantum of damages payable to the applicants by the respondent.

9.                  The respondent pay the applicants’ costs of these proceedings.

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

REASONS FOR JUDGMENT

Factual background

1                     This proceeding concerns the respondent’s use of the brand name ‘DIGITEX’ and associated logo which the applicants claim are deceptively similar to the registered trade marks owned by the applicants. 

2                     The first applicant is the sole distributor in Australia of the second applicant’s products.  It is the owner of registered Australian Trade Mark No. 891347 for the mark, ‘DIGITREX’ in class 9 for electric products (the ‘Digitrex Mark’).  The second applicant is the owner of registered Australian Trade Mark No. 941333 (‘the Advertising mark’) for ‘DIGITREX’, as depicted below, in class 35 for a variety of uses including advertising, business management, promotion and personnel recruitment:

These marks were registered effective from 9 October 2001 and 28 January 2003 respectively. 

3                     The applicants’ goods, bearing the trade marks described above, have been imported into and distributed in Australia since March 2002.  The applicants claim that since at least April 2003, the respondent has been distributing and selling electrical goods under the name of ‘Digitex’ and under the logo depicted in connection with the trade mark applications referred to below (‘the Digitex logo’).  They also claim that the respondent has been advertising such products on the internet under the domain name ‘www.mydigitex.com.au’, using the Digitex logo. The respondent has made the following trade mark applications: 

·                    the Digitex Trade Mark Application No. 929737 which depicts the Digitex logo thus:

and

·                    the Digitex Trade Mark Application No. 951983 which depicts the Digitex logo thus:

Procedural background

4                     This proceeding was commenced by application and statement of claim filed on 2 December 2003.  On 13 February 2004 the respondent filed a defence.  On 4 February 2004 I ordered the respondent to provide its list of categories of documents for discovery by 20 February 2004.  The respondent did not comply and on 9 March 2004 the time was extended to 17 March, although the list was not provided until 23 March 2004.  The applicant alleged that the categories were too broad and attempted to agree narrower categories with the respondent but was not able to evoke a response.  While this was no doubt irritating and involved the applicant in unnecessary expense, difficulties of this kind are regrettably not uncommon.

5                     In April 2004, however, the applicants became aware of an open letter from the respondent, presumably to its customers, dated 6 April 2004.  The letter, signed by Trung Dinh, commercial manager, states that the manager is writing ‘in regards to our change of company name’.  It advises that the change in the company’s name from that of the respondent to ‘Luxon Electronics Pty Ltd’ ‘will slowly take place over the next two weeks’.  It contains further advice about invoices, statements and other documents that is not relevant here. 

6                     On 19 April 2004 the applicants’ solicitors wrote to the solicitors for the respondent seeking clarification of the proposed change.  Having had no response, other than that the respondent’s solicitors were seeking instructions, the applicants wrote again on 28 April saying that they had not received an adequate response to their request of 19 April.  They stated:

‘We have already informed you of your client’s “change of company details”, so called, as set out in our fax of 19 April.  We note that in fact the letter sent to the trade is misleading in that the change is not merely a change in name but in fact appears to be a transfer of the business to a new corporate entity operating from the same premises.  In that regard, we require your response to the following questions:

(a)    Has your client ceased or is it planning to cease the importation or sale of “DIGITEX” products in Australia?

(b)   Is Luxon importing or selling or planning to import or sell “DIGITEX” branded products in Australia?

(c)    It appears that Luxon has been or is being structured to take over the business of your client.  Is this correct?  If so, it would appear that Luxon is a proper party to the proceedings.  Kindly state what the true relationship is between Luxon and your client?  Has there been a sale, or other transfer, of assets or funds from one to the other?  If your client fails to provide a clear and adequate response we [will] be obliged to take such interlocutory steps as are appropriate to ascertain the true position.’

7                     The letter also refers to trade mark applications made by Luxon in classes 9 and 11 in respect of categories of goods that are virtually the same as those sold by the respondent and by the first applicant.  It mentions a note on the website of Strathfield Car Radios, the respondent’s primary customer, advising that its stocks of ‘Digitex’ products are becoming limited.  The letter continues

‘If it is the case that ‘DIGITEX’ brand is being discontinued then we wonder if you might indicate whether your client would consent to the injunctions sought in our clients’ application and whether its parent and Luxon would provide corresponding undertakings. 

We seek your urgent substantive responses to the above queries and our letters of 6 April 2004 and 19 April 2004 by no later than 1.00 pm Friday, 30 April 2004.’

8                     The applicants did not receive any response to this letter and on 13 May 2004 I ordered that the respondent provide a written response within 7 days.  The respondent did not comply with that order.  On 21 May 2004 the respondent’s solicitors filed a notice of ceasing to act and provided an address for service for the respondent. 

9                     On 24 June 2004 I ordered that if the respondent did not reply to the letter within 7 days its defence filed on 13 February 2004 was to be struck out.  To date the respondent has still not replied to the letter of 28 April and accordingly the defence has been struck out. 

Notice of motion

10                  On 14 July 2004 the applicants filed the notice of motion that is presently before me.  They seek, pursuant to O 10 r 7(1)(b) of the Federal Court Rules, various orders against the respondent.  Order 10 r 7(1)(b) states:

‘(1)      if a party fails to comply with an order of the Court directing the party to take a step in the proceeding, the Court may:

(a)…

(b)   if the party is a respondent – give judgment or an order against the party.’

11                  The applicant accepts that in seeking final judgment against the respondent under O 10 r7(1)(b) in the circumstances described above it must, as Drummond J held in Australian Securities Commission v Macleod (1994) 130 ALR 717 at 721:

‘support its motion for judgment with material in legally admissible form sufficient to prove not only that the court has jurisdiction in the matter and that the circumstances are such as to justify the grant of this discretionary remedy, but also all the facts necessary prove its entitlement to the relief claimed under the judgment applied for.  An application for “judgment”, rather than for “an order”, pursuant to O 10 r 7(1)(b) is an application for final rather than interlocutory relief.  It is therefore a proceeding which constitutes a “trial” within the meaning of that term in O 1, r 4.  It follows that all facts must be proved by direct, as to opposed to hearsay, evidence …’

12                  The respondent’s letter of 6 April (see [5] above) created considerable uncertainty as to the proper course of these proceedings.  The applicants have provided company searches showing that Luxon Electronics Pty Ltd is a corporate entity separate from the respondent.  The statement that only a change of name was involved required explanation and it was reasonable for the applicants to expect answers to the questions in their letter of 28 April.  The fact that the respondent’s solicitors had ceased to act increased the applicant’s difficulties in making contact with the respondent.  The respondent’s failure to acknowledge the 28 April letter and the consequent striking out of the respondent’s defence raise real doubts as to whether the respondent had abandoned this proceeding.

13                  In the circumstances I am satisfied that the respondent’s failure to comply with orders made in this matter especially in relation to its failure to respond to the letter of 28 April is such that, providing that the applicants can support their claims in the manner described by Drummond J, this is an appropriate matter for the exercise of the Court’s jurisdiction under O 10 r 7(1)(b); Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 395-6. 

14                  Before turning to the substantive claims made by the applicants I should indicate that I am satisfied by affidavits of service filed by the applicant that the respondent has been served with copies of all relevant documents at two addresses namely, the address for service provided by its former solicitors in their notice of ceasing to act and the registered office of the respondent company, and that it has been notification of the hearing of the notice of motion today.  The respondent did not appear at the hearing of the notice of motion. 

Breach of s 120 of the Trade Marks Act 1995 (Cth)

15                  In seeking relief under the notice of motion the applicants have specifically confined their claim to the allegations of breach of s 120(1) and (2) of the Trade Marks Act 1995 (Cth) (‘Act’) which (excluding notes) is as follows:

‘(1)      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.

(2)       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:

(a)        goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or

(b)        services that are closely related to registered goods; or

(c)        services of the same description as that of services (registered services) in respect of which the trade mark is registered; or

(d)        goods that are closely related to registered services.

However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.’

16                  On the basis of affidavit evidence submitted by the applicants I am satisfied that the following is an accurate account of the facts relevant to this application.

17                  As noted above in [2]-[3], the first applicant is the exclusive distributor of the second applicant’s products in Australia and since March 2002 the applicants’ goods bearing the relevant trade marks have been imported into and sold in Australia.  The respondent does not have a registered trade mark but uses the word DIGITEX and the Digitex logo as its sign to distinguish its goods and services from those provided by other persons. 

18                  In an affidavit sworn on 15 July 2004 Themis Papas, an investigator employed by Trade Mark Investigation Services, states that on 18 April 2004 he saw at the Strathfield Car Radios store in Campbelltown, New South Wales, a display area containing ‘DIGITEX’ branded 68 cm televisions, a 108 cm projection television branded ‘DIGITEX’ and a number of stereos also branded ‘DIGITEX’.  Annexed to his affidavit are a number of photographs supporting the claims made.  Evidence was also provided of the use of the word ‘digitex’ and the digitex logo in connection with the sale of such products at Strathfield Car Radios taken from its website.  The website also contained advertisements for DVD amplifier and speaker packs and portable stereo CD boom box.  I am satisfied by the evidence provided by the applicant that the respondent uses the sign to distinguish its goods and services in the course of trade from those of others. 

19                  I am also satisfied that the applicants have made out their complaint that the DIGITEX sign is substantially identical or deceptively similar to the trade marks of the applicants.  In fact the point was made again and again both from the bar table and on the bench when the words ‘digitex’ and ‘digitrex’ were confused. 

20                  In his written submissions Mr J M Hennessy, who appeared for the applicants, referred to the ‘rules of comparison’ listed by Parker J in In the Matter of an Application by the Pianotist Company Ltd for the Registration of a Trade Mark (1906) 23 RPC 774 at 777.   Lord Parker’s remarks were quoted by the High Court in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538:

‘You must take the two words.  You must judge of them, both by their look and by their sound.  You must consider the goods to which they are to be applied.  You must consider the nature and kind of customer who would be likely to buy those goods.  In fact, you must, consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks.  If, considering all those circumstances, you come to the conclusion that there will be a confusion – that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be confusion in the mind of the public which will lead to confusion in the goods – then you may refuse the registration, or rather you must refuse the registration in that case.’

21                  The words used by the respondent and the words in the applicants’ trade marks are extremely similar and, when used in respect of similar types of products, I have no doubt they would be confusing. 

22                  I am satisfied that this confusion is such that the use by the respondent of its sign is a breach of s 120 of the Act, and that the declarations sought in the notice of motion to this effect should be made.  I am also satisfied that orders restraining the respondent from using the Digitex name and associated logo in the manner in which it has been doing should be made.  In addition, I propose to allow the applicant 28 days within which to apply to have this matter listed for the determination of the quantum of damages payable to the applicants by the respondent.  The respondent should pay the applicants’ costs.

Associate:        

Dated:              12 August 2004