FEDERAL COURT OF AUSTRALIA

Natural Floor Covering Centre Pty Ltd v Monamy (No 4)

[2006] FCA 1197

INTELLECTUAL PROPERTY – trade marks and trade names – similar marks and goods and services of the same description – substantial identity

CONTEMPT OF COURT – disobedience of court orders – construction of order - where respondent unrepresented at previous hearing and limited reopening sought

PRACTICE - judgments and orders – construction and interpretation – contempt proceedings – use of surrounding circumstances - where respondent unrepresented at previous hearing and limited reopening sought

Held – that there was a reasonable doubt that the respondent’s use of the mark was a use that was the same or substantially identical with the registered marks of the applicant and accordingly the previous finding that the respondent was guilty of contempt of court on that basis should be vacated.

Athens v Randwick City Council (2005) 64 NSWLR 58 followed

Natural Floor Covering Centre v Monamy (No 3) [2006] FCA 602 referred to

Smith v The New South Wales Bar Association (1992) 176 CLR 256 followed

The Shell Co of Australia Limited v Esso Standard Oil (Australia Limited) (1963) 109 CLR 407 applied

NATURAL FLOOR COVERING CENTRE PTY LTD (ACN 001 211 392) v DENNIS MONAMY

NSD 1658 OF 2005

RARES J

29 MAY 2006

SYDNEY

THE COURT ORDERS THAT:

1. The finding that Charge 2 is proven beyond reasonable doubt be vacated.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1                     This matter is before me today for the making of orders and sentence following the earlier reasons which I have given finding the offences alleged in the statement of charge to have been proved beyond reasonable doubt.

2                     When the matter was returned this morning the respondent was represented by Mr Webb SC and Mr Altan. They have submitted that I should revisit the finding I made in my judgment delivered on 12 May 2006, Natural Floor Covering Centre Pty Ltd v Monamy (No 3) [2006] FCA 602, on the basis that the reformulated charge has elevated the sign depicted in order 1 made by Wilcox J on 15 December 2005 to the status itself of the trademarks, the protection of which was understood to be the object of order 1.

3                     The respondent has referred to the phrasing of the handwritten heads of agreement reached in the mediation between the parties on 12 December 2005 and in particular to par 1 which reads:

‘Permanent injunction against respondent restraining his use of the applicant's registered trademarks and the applicant's guide to estimating on the respondent's website.’

4                     The respondent submits that a reasonable construction of order 1 would involve the use of the well developed concepts of ‘substantial identity’ and ‘deceptive similarity’ over many years of trademarks law under various statutes, including the concepts in ss 10 and 120 of the Trademarks Act 1995 (Cth). Against that background the respondent submits that order 1 made on 15 December 2005 was clearly intended to protect the registered trademarks numbered 981970 and 1013021 from infringement by the use of signs, symbols or devices that were the same or substantially identical with those marks.

5                     The respondent submits that when one has regard to the fact that the concept employed by the parties in their consent orders eschewed the broader concept of deceptive similarity as explained in The Shell Co of Australia Limited v Esso Standard Oil (Australia Limited) (1963) 109 CLR 407, it is at least open to raise a reasonable doubt as to whether what the respondent did, as previously found by me (in Natural Floor Covering Centre Pty Ltd v Monamy (No 3) [2006] FCA 602 at [12]) was in fact a use that was the same or substantially identical with either of the registered marks. (The respondent does not accept that that finding was one which should have been arrived at on the facts, but has left such rights as he may have to deal with that matter to be the subject of an appeal rather than seeking leave to reopen generally.)

6                     Today is the first occasion on which I have had the benefit of representation of the respondent by counsel. Until now, effectively, the case has proceeded with the respondent acting for himself. The question of whether the Court should allow a limited reopening of the kind sought by the respondent has been discussed in a number of authorities. In Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265 Brennan, Dawson, Toohey and Gaudron JJ dealt with the question where, as here, judgment has been given. I have made a finding of guilt on charge 2, but no orders have been entered.

7                     Their Honours pointed out that the power of the court to set aside or vary such a judgment, reflected in the analogue of O 35 r 7(1), was discretionary and existed up until the entry of judgment. Their Honours said that it was a power that was exercised having regard to the public interest in maintaining the finality of litigation and that if reasons for judgment had been given the power was only exercised if there was some matter calling for review. There may be, their Honours pointed out, more or less reluctance to exercise the power depending on whether there is an avenue of appeal. Their Honours approved the statement that where there had been judgment in a case, but the order had not been entered, the power would not ordinarily be exercised to permit a general reopening. However they made clear that that was a general statement only and, once the matter had been reopened, the nature and extent of the review had to depend upon the error or omission which led to the step being taken.

8                     In this case the error that is posited is that there was a factor overlooked by me in a construction of the order that might give rise to a reasonable doubt as to whether there had been a breach of it as I found. I am of the opinion that in the circumstances of the proceedings, the respondent has shown that there is a matter calling for review (Smith v New South Wales Bar Association (1992) 176 CLR at 265 and Texas Company (Australasia) Limited v The Federal Commissioner of Taxation (1940) 63 CLR 382 at 457 per Starke J). Accordingly, in my view, it is appropriate for me to consider the argument now raised by the respondent for the purposes of reconsidering my finding, particularly as the respondent has sought to limit the basis of the review, notwithstanding that he maintains a position of wishing to challenge the factual findings that I have made in the event that an appeal is taken.

9                     In construing orders which are sought to be made on the subject of findings of contempt where later contraventions are alleged, it is permissible to have regard to any judgment given by the court pronouncing the orders and other relevant surrounding circumstances (Athens v Randwick City Council (2005) 64 NSWLR 58).

10                  One of the surrounding circumstances in this case is the fact that there were heads of agreement made between the parties prior to the formulation of the consent orders accepted by the solicitor then acting for the respondent. There does appear to be a variance between what is in the heads of agreement and the consent orders made by Wilcox J on 15 December 2005, although, as the applicant points out, the provisions of the heads of agreement ought to be read as a whole. Secondly, the applicant points to the fact that the consent orders specifically identify a particular sign as being agreed to be one the use of which is prohibited as an aid to the construction which would support the finding that I have made.

11                  The respondent referred to the decision of Windeyer J in the Shell Co of Australia Limited v Esso Standard Oil (Australia Limited) (1961) 109 CLR at 414-415, where his Honour considered the concept of ‘substantial identity’ within the meaning of the then Trademarks Act 1955 (Cth) and the decided cases on those words, both here and in England, in contradistinction to the other concept used in the legislation of ‘deceptive similarity’. He explained that the task was to compare side by side the similarities and differences noted and the importance of those assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from that comparison. He said that the judgment ought to be by eye alone for the purposes of determining substantial identity, but noted that in an animated depiction where matters do not stand still fleeting glimpses of substantial identity were not enough, although the position may be different with regard to deceptive similarity. Since order 1 does not refer to the latter concept I need not deal with it.

12                  Given that these are proceedings which are criminal in nature in which the liberty of the subject is in issue, it seems to me that I should err on the side of caution in construing order 1. Having now had the benefit of the argument put by the respondent, I am of opinion that the words ‘substantially identical’ as used in that order could be construed as denoting the concept in s 120 of the Trademarks Act 1995 (Cth) and as expounded in judicial decisions and that it is a reasonable construction of order 1 to read it in the way submitted by the respondent today. That is so even though this is not necessarily the only construction that one would make. That is to say, the parties were identifying a limited legal concept as defining the extent of the protection that the order was seeking to give to the applicant's two trademarks and they accepted that the particular depiction, included as part of order 1, was an infringement of them. While that is not, for the reasons I have given in my earlier judgements, the construction which I would place on the words, I am not satisfied beyond reasonable doubt, having now reflected upon the new argument put by the respondent through his counsel today, that that is the only way one would read the consent orders in light of the heads of agreement which the respondent signed on 12 December 2005.

13                  The applicant urged that findings I had made in Natural Floor Covering Centre Centre Pty Ltd v Monamy (No 3) [2006] FCA 602 at [12] in any event precluded the respondent having success on the reopening. This was because I found that by causing the animation to produce in sequence what was ultimately the shape that amounted to the spiral or cover-roll design and then the words ‘Simply Natural Floorcoverings’, the respondent had used and displayed a sign on his website in contravention of order 1 as charged in amended charge number 2.

14                  As I understand it though, the respondent's contention really goes to the fact that charge number 2 elevates the sign depicted in order number 1 into a mark in itself that was capable of protection. I am of opinion that the order is capable of being read in the sense that the respondent has advocated today, although that is not the way I, myself, would read it for the reasons I have given earlier.

15                  However, I think that I ought to find that the charge number 2 has not been proved beyond reasonable doubt because of the difference in interpretation which order 1 made by Wilcox J could give rise to having regard to the heads of agreement. I therefore vacate my finding that charge 2 has been proved beyond reasonable doubt and I will enter a judgment of not guilty on that count.

Associate:

Dated: 31 August 2006