FEDERAL COURT OF AUSTRALIA
Deckers Outdoor Corporation Inc. v Farley (No 2) [2009] FCA 256
INTELLECTUAL PROPERTY– whether marks appearing on the Respondents’ products were deceptively similar to the Applicant’s trade mark – whether cancellation of registered trade mark under s 88 of the Trade Marks Act 1955 (Cth) could operate retrospectively.
Copyright Act 1968 (Cth) ss 14, 31, 32, 35, 36, 37, 38, 74, 77(2) and 115(4)
Fair Trading Act 1999 (Vic) ss 9 and 12
Federal Court of Australia Act 1976 (Cth) s 31A
Trade Marks Act 1955 (Cth) ss 10, 20, 88, 120(1) and 228
Trade Practices Act 1974 (Cth) ss 52 and 53
Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483
Australian Securities and Investments Commission v Reid [2005] FCA 1275
Australian Woollen Mills Ltd v F.S. Walton & Co Ltd (1937) 58 CLR 641
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397
Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1
De Cordova v Vick Chemical Co. (1951) 68 RPC 103
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
E. & J. Gallo Winery v Lion Nathan Pty Limited (No 2) (2008) 78 IPR 334
EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277
Faessler v Neale (1994) 29 IPR 1
Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372
Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410
PZ Cussons (International) Ltd v Rosa Dora Imports Pty Ltd (2007) 74 IPR 372
Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1
Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365
Re Rysta Ltd’s Application (1943) 60 RPC 87
Roland Corporation v Lorenzo & Sons Pty Ltd (1991) 33 FCR 111
Second Sight Ltd v Novell UK Ltd [1995] RPC 423
Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 483
Sports Break Travel Pty Ltd v P & O Holidays Ltd (2000) 50 IPR 51
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354
TGI Friday’s Australia Pty Ltd v TGI Friday’s Inc (1999) 45 IPR 43
The Polo/Lauren Company LP v Ziliani Holdings Pty Ltd (2008) 75 IPR 143
Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361
White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298
Wingate Marketing Pty Limited v Levi Strauss & Co (1994) 49 FCR 89
VID 1022 of 2007
TRACEY J
24 MARCH 2009
MELBOURNE
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 1022 of 2007 |
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DECKERS OUTDOOR CORPORATION INC. Applicant/Cross-Respondent
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AND: |
LEAH JANE FARLEY First Respondent
DUSIA PTY LTD ACN 119 500 186 Second Respondent
LEONID MYKHALOVSKYI Third Respondent
HEPBOURNE PTY LTD ACN 080 453 247 Fourth Respondent/Second Cross-Claimant
VLADIMIR VAYSMAN Fifth Respondent/First Cross-Claimant
JOSEF VAYSMAN Sixth Respondent/Third Cross-Claimant
POLINA VAYSMAN Seventh Respondent/Fourth Cross-Claimant
MILLHOUSE PTY LTD ACN 111 765 505 Eighth Respondent
DIANNE SOMMER Ninth Respondent
SANDY HAZENDONK Tenth Respondent
HGU PTY LTD ACN 121 922 754 Eleventh Respondent
FEDIA PTY LTD ACN 119 500 444 Twelfth Respondent
TASKINC PTY LTD ACN 121 919 926 Thirteenth Respondent
OTK INTERNATIONAL PTY LTD ACN 119 498 001 Fourteenth Respondent
GIHAN EZZAT Fifteenth Respondent
JOANNE STRICKLAND Sixteenth Respondent
VERNON PTY LTD ACN 123 047 138 Seventeenth Respondent
RASTOV PTY LTD ACN 119 498 547 Eighteenth Respondent
VICTORIA VAYSMAN Nineteenth Respondent
OLIVER DOEDERLEIN Twentieth Respondent
MARGARIT PEDROTTI Twenty-First Respondent
SAMBA ENTERPRISES PTY LTD ACN 111 968 935 Twenty-Second Respondent
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JUDGE: |
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DATE OF ORDER: |
24 MARCH 2009 |
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WHERE MADE: |
MELBOURNE |
THE COURT ORDERS THAT:
1. Paragraph 48 of the Fourth Respondent’s defence be struck out.
2. Paragraph 48 of the Fifth Respondent’s defence be struck out.
3. Paragraph 48 of the Sixth Respondent’s defence be struck out.
4. Paragraph 48 of the Seventh Respondent’s defence be struck out.
5. Paragraph 49 of the Nineteenth and Twenty-Second Respondents’ defence be struck out.
6. Pursuant to s 31A(1) of the Federal Court of Australia Act (Cth) there be judgment for the Applicant against each of the Fourth, Fifth, Sixth, Seventh, Nineteenth and Twenty-Second Respondents upon the Applicant’s claim of infringement of its registered trade mark numbered 785466.
7. Otherwise the Applicant’s motion of which notice was given on 28 August 2008 be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 1022 of 2007 |
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BETWEEN: |
DECKERS OUTDOOR CORPORATION INC. Applicant/Cross-Respondent
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AND: |
LEAH JANE FARLEY First Respondent
DUSIA PTY LTD ACN 119 500 186 Second Respondent
LEONID MYKHALOVSKYI Third Respondent
HEPBOURNE PTY LTD ACN 080 453 247 Fourth Respondent/Second Cross-Claimant
VLADIMIR VAYSMAN Fifth Respondent/First Cross-Claimant
JOSEF VAYSMAN Sixth Respondent/Third Cross-Claimant
POLINA VAYSMAN Seventh Respondent/Fourth Cross-Claimant
MILLHOUSE PTY LTD ACN 111 765 505 Eighth Respondent
DIANNE SOMMER Ninth Respondent
SANDY HAZENDONK Tenth Respondent
HGU PTY LTD ACN 121 922 754 Eleventh Respondent
FEDIA PTY LTD ACN 119 500 444 Twelfth Respondent
TASKINC PTY LTD ACN 121 919 926 Thirteenth Respondent
OTK INTERNATIONAL PTY LTD ACN 119 498 001 Fourteenth Respondent
GIHAN EZZAT Fifteenth Respondent
JOANNE STRICKLAND Sixteenth Respondent
VERNON PTY LTD ACN 123 047 138 Seventeenth Respondent
RASTOV PTY LTD ACN 119 498 547 Eighteenth Respondent
VICTORIA VAYSMAN Nineteenth Respondent
OLIVER DOEDERLEIN Twentieth Respondent
MARGARIT PEDROTTI Twenty-First Respondent
SAMBA ENTERPRISES PTY LTD ACN 111 968 935 Twenty-Second Respondent
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JUDGE: |
TRACEY J |
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DATE: |
24 MARCH 2009 |
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PLACE: |
MELBOURNE |
REASONS FOR JUDGMENT
1 The Applicant (“Deckers”) and its predecessors in business have designed, manufactured, marketed and sold sheepskin footwear under the “UGG” brand for over twenty years. This footwear was marketed and sold in Australia and in a number of foreign countries.
2 Deckers is the owner of two Australian registered trade marks which incorporate the letters “UGG”. One of those trade marks includes the word “australia” in lower case letters and what has been referred to as a “sun device” logo.
3 Deckers also claims to be the owner of copyright subsisting as original literary and/or artistic works in the sun device logo as depicted in Australian trade mark no. 785466 and the text and artistic works that appear on its marks, tags, labels, packaging, and in the care instruction card and the information booklet which are attached to or are enclosed with its “UGG” footwear products.
4 In 2003 Deckers became aware that “counterfeit” UGG footwear products were being advertised and sold in Australia and overseas. Investigations suggested that the counterfeit products were being manufactured in Melbourne. Deckers sought and obtained an order from this Court which authorised its representatives to search a factory in Roper Street Moorabbin (“the Moorabbin factory”). Deckers also applied for orders restraining Vladimir Vaysman, Victoria Vaysman and Hepbourne Pty Ltd from manufacturing, selling or offering for sale sheepskin products which bore the words “Ugg” or “Ugg Australia” or the sun device. The proceeding was discontinued after Deckers entered into a settlement agreement with Vladimir Vaysman, Victoria Vaysman and Hepbourne Pty Ltd. Those Respondents consented to orders (which were made by the Court in March 2004) restraining them, inter alia, from manufacturing or advertising footwear or accessories which bore the words “Ugg” or “Ugg Australia” or the sun device.
5 Subsequently Deckers filed a further claim in which it alleged that Vladimir Vaysman, Victoria Vaysman and Hepbourne Pty Ltd had breached the settlement agreement. Josef Vaysman was joined as a Respondent to this proceeding. On 10 June 2005, Deckers, Vladimir Vaysman, Victoria Vaysman, Hepbourne Pty Ltd and Josef Vaysman entered into another settlement agreement pursuant to which those Respondents undertook, inter alia, that neither they nor any entity controlled by them would use the word “Ugg” to describe or offer for sale sheepskin products in any manner whatsoever.
6 Towards the end of 2007 Deckers became aware that counterfeit UGG footwear was again being advertised and sold in Australia and overseas. Those involved in the marketing were using the internet (including eBay) to promote and sell the footwear. Deckers applied for and was granted search orders on 12 November 2007 and 11 December 2007. The search orders were executed on various premises in the Melbourne metropolitan area. A large quantity of footwear which bore the UGG brand was discovered. The principal place of manufacture was the Moorabbin factory at which Josef Vaysman was found to be present. Polina Vaysman was present for most of the time during which the searches were conducted. On 13 November 2007, Vladimir Vaysman was summoned to the factory by Josef Vaysman who would not permit the search to commence until Vladimir Vaysman arrived. When Deckers’ solicitors returned to the Moorabbin factory on 12 December 2007, the independent solicitor called Vladimir Vaysman and waited for him to arrive before he allowed the search to commence.
7 The number of Respondents to the proceeding expanded progressively following the examination of documents which were seized under the search orders. The Respondents included companies which had leased premises at which the footwear was manufactured and stored and those directly involved in the manufacture and marketing of products which bore the UGG logo.
8 By its Further Amended Statement of Claim dated 13 March 2008 Deckers pleaded various causes of action against 22 Respondents. Subsequently Deckers settled its claims with a number of these Respondents and discontinued its proceeding against them. Of the remaining Respondents most did not file Defences and, on 10 October 2008, summary judgment was entered against those Respondents pursuant to Order 35A rule 3(2) of the Federal Court Rules 1979 (Cth) (“the Federal Court Rules”).
9 The Fourth, Fifth, Sixth, Seventh, Nineteenth and Twenty-Second Respondents filed Defences. The Fifth Respondent is Vladimir Vayman and the Fourth Respondent is Hepbourne Pty Ltd, a company controlled by him. The Sixth, Seventh, Nineteenth and Twenty-Second Respondents are, respectively, Josef and Polina Vaysman (“the Vaysmans”), Victoria Vaysman and a company controlled by her, Samba Enterprises Pty Ltd. The same submissions were advanced on behalf of both Victoria Vaysman and Samba Enterprises Pty Ltd.
10 By an Amended Notice of Motion dated 28 August 2008, Deckers applied for summary judgment against those Respondents under section 31A of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”)in respect of the following claims:
· Declaratory and injunctive relief for infringement of one of its registered trade marks under ss 120(1) and 228 of the Trade Marks Act 1995 (Cth) (“the Trade Marks Act”);
· Declaratory and injunctive relief for infringement of copyright under ss 36, 37 and/or 38 of the Copyright Act 1968 (Cth) (“the Copyright Act”) in respect of the original literary and/or artistic works in the sun device logo as depicted in Australian trade mark no. 785466 and the text and artistic works that appear on its marks, tags, labels, packaging, and in the care instruction card and the information booklet which are attached to or are enclosed with its “UGG” footwear products;
· Declaratory and injunctive relief for passing off;
· Declaratory and injunctive relief for breaches of ss 9 and 12 of the Fair Trading Act 1999 (Vic) (“the Fair Trading Act”)and (if necessary) ss 52 and 53 of the Trade Practices Act 1974 (Cth)(“the Trade Practices Act”);
· A declaration of liability to pay compensatory damages (the quantum of which is to be determined at trial); and
· Additional (non compensatory) damages for alleged flagrant copyright infringement under s 115(4) of the Copyright Act.
SECTION 31A OF THE FEDERAL COURT ACT
11 Section 31A of the Federal Court Act was introduced to extend “the power of the court to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases”: see Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at 406 [124] (per Gordon J) (quoting from the Second Reading Speech of the Minister on the Migration Litigation Reform Bill 2005 (Cth)). The section empowers the Court to give summary judgement in favour of an applicant if it is satisfied that the respondent “has no reasonable prospect of successfully defending the proceeding or [a] part of the proceeding”: see s 31A(1)(b). A defence may have no reasonable prospect of success notwithstanding that it is not “hopeless” and not “bound to fail”: see s 31A(3).
12 Plainly, s 31A was, as Lindgren J held in White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298 at 310 [54], designed “to lower the bar for obtaining summary judgment” from the level that had been fixed by the High Court in Dey v Victorian Railways Commissioners (1949) 78 CLR 62at 91-2 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130. Although the standard which must be met by an applicant who seeks summary judgment under the Federal Court Act has been expressed in a variety of different ways, where, as here, an application is made under s 31A, the Court is required to give close attention to the statutory language and to apply that test to the exclusion of all others. As Kenny J said in PZ Cussons (International) Ltd v Rosa Dora Imports Pty Ltd (2007) 74 IPR 372; [2007] FCA 1642 at [13]:
“The key is to address the statutory question. That is, under s 31A, in order to grant summary judgment, I must be satisfied that the respondents have no reasonable prospects of success in defending the infringement claim. As s 31A(3) makes clear, this does not mean that I must be satisfied that their defence is hopeless or bound to fail.”
13 In the main, Deckers prosecutes its summary judgment application on the basis of pleaded facts and evidence as distinct from issues of law. In these circumstances the Court is required to form the necessary judgment on the basis of the pleadings and the evidence tendered by Deckers and to consider whether the evidence “reasonably excludes the possibility that facts essential to the success of the ….. defence will be able to be established”: see Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [20].
14 It will be convenient to deal with the relevant pleadings when each of the causes of action is considered.
15 Deckers relied on a series of affidavits and on oral evidence which had been given in related contempt proceedings.
16 The Vaysmans, Vladimir Vaysman, Hepbourne Pty Ltd, Victoria Vaysman and Samba Enterprises Pty Ltd did not file any answering affidavits. Vladimir Vaysman and Hepbourne Pty Ltd did not appear to oppose Deckers’ application.
THE RELATED CONTEMPT PROCEEDINGS
17 By Notice of Motion dated 11 January 2008 Deckers sought declarations that Hepbourne Pty Ltd, Vladimir Vaysman and the Vaysmans were in contempt of Court because, inter alia, they had contravened injunctions which had been granted against them in November 2007 and sought declarations that Victoria Vaysman was in contempt of Court because, inter alia, she had breached the orders which had been made in the 2003 proceeding. Some of the evidence relied on in the contempt proceeding was also relied on by Deckers, without objection, for the purpose of supporting its present summary judgment application. The contempt proceeding and the summary judgment application were heard consecutively.
18 Where a charge of contempt of Court is brought in a principal proceeding which has not been heard and determined and it would be necessary, in the contempt proceeding, to determine major questions which also arise in the principal proceeding, the normal and proper course is to adjourn the hearing of the contempt proceeding until after the hearing of the principal proceeding: see Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 at 489-490; Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129 at 138. Insofar as I could judge at the time at which I determined that the hearing of the contempt charges should proceed before the determination of the principal proceeding, the charges raised issues which were quite different from those which would arise in the action in which damages, declarations and other remedies are sought.
19 I was, in any event, persuaded that, in the circumstances of the present case, it was necessary to proceed to deal with the contempt charges in order to protect Deckers’ rights and the public interest in ensuring that the Court’s orders were observed. In Morgan’s case Barwick CJ (at 489) recognised that it may, in such circumstances, be appropriate to depart from the general rule. There was evidence before the Court which suggested that the Court’s orders, made in March 2004 and the undertakings given by some of the Respondents in June 2005 had been contravened during 2007 and that that contravention persisted even after the first of the search orders was executed in November 2007.
20 The Vaysmans (supported by Victoria Vaysman and Samba Enterprises Pty Ltd) contended that confusion was likely to arise if the civil standard of proof were to be applied to the summary judgment application and the criminal standard was applied in the contempt proceeding.
21 I accept that the potential exists for different findings to be made, especially in relation to disputed facts, in the event that differing evidentiary standards are applied by the Court. For this reason I propose to apply the criminal standard in determining the present application. I note that a similar course was followed by Lander J in Australian Securities and Investments Commission v Reid [2005] FCA 1275 at [17]-[19].
the trade mark
22 Deckers is the registered owner of Australian trade mark numbered 785466. That trade mark is registered in respect of “footwear, including boots, shoes, and clogs”. The trade mark has been registered since 12 February 1999. The trade mark includes the letters “UGG” below which appears the word “australia”. Below “australia” appears the “sun device” logo. Each of the six Respondents to the s 31A application admit that Deckers is the registered owner of this trade mark.
23 Deckers also claims to be the owner of Australian trade mark numbered 1077762. That mark is constituted by the letters “UGG”. Deckers has elected not to press its claim for infringement of this trade mark if it succeeds in its summary judgment application in relation to trade mark number 785466.
24 Deckers alleges against each of the six Respondents that he, she or it has imported, manufactured, sold and/or distributed footwear, boxes, leaflets and pamphlets bearing the trade mark numbered 785466. It is alleged that each of the six Respondents has, thereby, infringed or been a joint tortfeasor in the infringement of the trade mark by using a mark or marks which are substantially identical and/or deceptively similar to the trade mark in connection with the footwear in respect of which the mark is registered.
25 Each of these allegations is denied by Vladimir Vaysman, Hepbourne Pty Ltd and the Vaysmans in their Defences. They contend, further, that, at all material times, the mark has wrongly remained on the register and should be cancelled for reasons advanced in their Cross-Claims. Victoria Vaysman filed an agreed statement of facts in relation to contempt charges levelled against her. Save for referring to that statement, she and Samba Enterprises Pty Ltd denied the allegations of trade mark infringement.
26 Deckers’ rights in relation to the registered trade mark are protected by various provisions of the Trade Marks Act. Section 20 provides:
“(1) If a trade mark is registered, the registered owner of the trade mark has, subject to this Part, the exclusive rights:
(a) to use the trade mark; and
(b) to authorise other persons to use the trade mark;
in relation to the goods and/or services in respect of which the trade mark is registered.
(2) The registered owner of a trade mark has also the right to obtain relief under this Act if the trade mark has been infringed.
…”
27 By s 120(1) it is provided that a registered trade mark will be infringed if a “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.” Section 10 provides that a trade mark will be deceptively similar to a registered trade mark “if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.” Section 228 extends trade mark protection to goods exported from Australia.
28 Deckers relied on extensive evidence from Respondents who had been involved in the marketing of footwear which had been manufactured at the Moorabbin factory. Footwear found at the factory, labels, pamphlets and boxes were also tendered in evidence.
29 Leah Farley, Dianne Sommer, Gihan Ezzat and Joanne Strickland each swore affidavits and each was cross-examined. Each was a Respondent in the proceeding. Each had entered into an agreement with Deckers pursuant to which she agreed to pay compensation to Deckers and Deckers agreed to discontinue the proceeding against her. It was suggested to each witness during cross-examination that she had implicated the Vaysmans in the production and distribution of UGG footwear in order to secure favourable terms of settlement. Each of these four witnesses gave evidence confidently. The detail of their accounts was not seriously challenged. Indeed, most of it was corroborated by photographic evidence, by the observations made by others, and by material found at the Moorabbin factory and at a stall, conducted by Josef Vaysman, at the Victoria Market. I consider each of these witnesses to be a truthful witness and I accept the evidence given by them.
30 Leah Farley first became involved in the distribution of UGG products in December 2005. She was contacted by Vladimir Vaysman (the Fifth Respondent and son of the Vaysmans). He wanted her to sell the UGG products on eBay. She agreed. Vladimir Vaysman provided her with stock. The boots and the boxes in which they were packaged bore the “UGG australia” logo. The soles of the boots contained the word “UGG” adjacent to the sun device. Initially the boots were delivered to Ms Farley by Vladimir Vaysman.
31 From about June 2007 Ms Farley attended on a daily basis at the Moorabbin factory to collect boots for sale on eBay. One or other of the Vaysmans would usuallyanswer the door when she attended. She observed the Vaysmans engaged in the manufacture of the boots, either operating machinery or gluing Ugg australia labels on the boots. She saw Polina Vaysman cutting sheepskin pieces on a cutting machine. She observed Polina Vaysman giving bags of bootsto persons who Vladimir and Polina had advised her were selling Ugg branded boots at the Victoria Market.
32 Gihan Ezzat was approached by Victoria Vaysman in 2005 and asked to offer UGG branded footwear on eBay using eBay trading names operated by Ms Ezzat. She agreed. Initially, she was not involved in the packaging and despatch of boots to purchasers. In late 2006 Vladimir Vaysman and Victoria Vaysman commenced delivering UGG boxed products to Ms Ezzat so that she could despatch them to purchasers. During 2007 Victoria Vaysman asked Ms Ezzat to box the boots and agreed to pay her for performing that service. Ms Ezzat agreed. About the same time Victoria Vaysman told Ms Ezzat that the business had become so busy that neither she nor Vladimir Vaysman was able to continue delivering boots to her home. Victoria Vaysman told her that she would have to pick up stock from the Moorabbin factory. When Ms Ezzat attended the factory she observed people engaged in the manufacturing of footwear. She met and spoke to the Vaysmans, Vladimir Vaysman and Victoria Vaysman during these visits to the Moorabbin premises.
33 Joanne Strickland became involved in the marketing of UGG products in about mid-2006 when she was approached by Ms Farley. Ms Farley invited her to sell boots on eBay during busy periods. She did so between July 2006 and September 2006 and again between July 2007 and November 2007. During 2007 she attended at the Moorabbin factory. She dealt with Vladimir Vaysman and observed Josef and Polina Vaysman engaged in the manufacture of footwear. She also saw and spoke to Polina Vaysman during some of these visits.
34 Dianne Sommer was approached by Victoria Vaysman early in 2006 and invited to sell “genuine “UGG Australia” boots” on eBay. Ms Sommer agreed to do this. Initially, Ms Sommer was not responsible for the despatching of footwear which she had sold on eBay. She supplied a list of names and addresses of purchasers to Victoria Vaysman and the orders were met. Between March and August 2006 Ms Sommer did not seek to sell UGG products on eBay. In mid-August 2006 she was contacted by Vladimir Vaysman and invited to resume offering UGG products on eBay using her eBay trading name. He told her that once a sale had been made it would be necessary for her to come to the Moorabbin factory to collect the footwear and send it to the purchaser. She agreed to do this. During her visits to the factory she met the Vaysmans and Vladimir Vaysman. In Vladimir’s absence, Polina Vaysman provided Ms Sommer with the boxed footwear. Ms Sommer observed Polina Vaysman sewing UGG australia labels on the heels of the footwear.
35 In the agreed statement of facts, Victoria Vaysman agreed that she had recruited Ms Sommer and Ms Ezzat to “act as her agents in promoting, advertising, offering for sale and selling on the internet sheepskin footwear under or by reference to the names “UGG Australia” and/or the UGG Logo … and/or the Sun Device … and personally delivered such footwear to them.”
36 Mr Anthony Watson, a solicitor acting on behalf of Deckers, attended the Moorabbin factory on 13 November 2007 and 12 December 2007. He was involved in the execution of the search orders which had been made by the Court. During the 12 December 2007 search he observed that there were approximately 200 pairs of finished and partly constructed sheepskin footwear marked with the UGG logo, the word “australia” and the sun device on the premises. On the heels there was a cloth label on which the letters UGG appeared above the word “australia”. On the soles the letters “UGG” appeared next to the sun logo. Adjacent to the letters “UGG” on both the heels and the soles appeared the symbol ®. This is the recognised symbol which the registered owner of a trade mark in Australia is entitled to place next to representations of its registered mark: cf s 151(5) of the Trade Marks Act.
37 Mr Josef Vaysman admitted in cross-examination that he was in charge of the Moorabbin factory when Mr Watson attended. Mr Vaysman also admitted that UGG branded footwear was manufactured at the Moorabbin factory. He specifically admitted gluing soles bearing the UGG branding on one pair of boots and to providing footwear products to a man who was later observed to be conducting a stall at the Victoria Market at which boots bearing the UGG mark were being offered for sale. Mr Vaysman also admitted that he knew that boots bearing the UGG labelling were being provided to various people (including Farley and Sommer) who were then selling them on the internet. He further admitted knowing the approximate prices at which the boots were sold on the internet.
38 This evidence satisfies me, beyond reasonable doubt, that the Vaysmans were actively involved in the manufacture, packaging and distribution of boots which had on their heels the “UGG australia” label and on their soles had embossed the letters “UGG” and the sun device. They packed the boots in boxes which had on one panel the “UGG australia” logo and, on an adjacent panel, the sun device. The boxes contained pamphlets and care labels which had on them the “UGG australia” logo.
39 I am also satisfied that Victoria Vaysman was an active participant in the marketing of these items. She did this by her own exertions and by recruiting others to sell the boots by advertising them for sale on eBay. She also gave instructions to those whom she recruited as to how the sales should be undertaken.
40 Deckers’ case, insofar as it involves the allegation that the Respondents have infringed its registered trade mark number 785466, turns on the similarities between the registered trade mark and the marks appearing on the products made by the Vaysmans. It is alleged that the marks appearing on the “counterfeit” products were substantially identical or deceptively similar to the registered trade mark.
41 Each of the Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd submits that the three elements of the registered trade mark (the letters “UGG”, the word “australia” and the “sun device”) do not all appear together on any of the boots or packaging made or used by the Respondents. The letters “UGG” appear above the word “australia” on a label attached to the heel of the boots. The letters “UGG” and what Deckers claimed to be a representation of the sun logo are embossed on the soles of the boots. The letters “UGG” appear above the word “australia” on one panel of the boxes. The sun logo appears separately on an adjacent panel. The care instruction card and the information booklet which were included in each box each had on the front page the letters “UGG” and the word “australia” underneath. They contend that the mark, absent the sun device, cannot be deceptively similar to the registered trade mark. Similarly it is said that the sun device, appearing separately, cannot be regarded as being deceptively similar to the registered mark.
42 In order to determine whether the marks appearing on the boots manufactured by the Vaysmans and on the boxes, pamphlets and cards were deceptively similar to the registered trade mark it is necessary for the Court to have regard to all of the surrounding circumstances, including the circumstances in which the marks were used, the circumstances in which the goods were bought and sold and the characteristics of the persons who might be expected to be purchasers of the footwear: see Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 383. A visual comparison of word marks is necessary but not decisive: Wingate Marketing Pty Limited v Levi Strauss & Co (1994) 49 FCR 89 at 104-5. In making the comparison the Court is concerned to form a judgment about whether there is a real risk that customers might be confused as to the provenance of the goods on the assumption that the customers may have only an “imperfect recollection” of the registered mark: see Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1979] RPC 410at 423; Re Rysta Ltd’s Application, (1943) 60 RPC 87 at 108. See generally: Shanahan’s Australian Law of Trade Marks and Passing Off (4th ed) at 253-265.
43 Victoria Vaysman and Samba Enterprises Pty Ltd submit that, where an element or feature of a trade mark is “inherently non distinctive” or lacks “any capacity to distinguish”, that feature, appearing alone, will not attract statutory protection. This is particularly the case, so it was contended, where the element is a word: see Sports Break Travel Pty Ltd v P & O Holidays Ltd (2000) 50 IPR 51; [2000] FCA 924 at [23].
44 These submissions may have had some attraction had the word “australia” appeared separately on the boots or elsewhere. It did not. Wherever it appeared it appeared in lower case under the capital letters “UGG” (with the middle G larger than either of the other two letters) and, on the boots, and the boxes closely adjacent to the sun device.
45 A consumer examining the boots and the boxes would not see any element of the registered trade mark in isolation. They would be conscious of the appearance of each element. In De Cordova v Vick Chemical Co. (1951) 68 RPC 103 at 105-106 the Privy Council observed that:
“… a mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features. The identification of an essential feature depends partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it.”
This passage was quoted with approval by the Full Court in Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 at 20 [84]. Their Lordships also observed (at 106) that:
“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.”
46 Having regard to the whole of the circumstances (including a visual comparison of the registered trade mark with the devices appearing on the products manufactured and/or distributed by the Respondents), I am left in no doubt that there exists a real likelihood of confusion and deception as to the provenance of the boots. There is a remarkable visual similarity between the lettering and other parts of the registered trade mark and the marks used by the Respondents. The impression created and, in my view, intended to be created, is that the boots were manufactured by Deckers, the owner of the registered trade mark. This conclusion is further supported by the use of the symbol ® next to the letters UGG. This is plainly an attempt to suggest that the boots had been manufactured by the owner of the registered trade mark.
47 The six Respondents also claim that registered trade mark number 785466 has wrongly remained on the Register of Trade Marks at relevant times and that it should be cancelled for various reasons which appear in the Cross-Claim of Vladimir Vaysman, Hepbourne Pty Ltd and the Vaysmans.
48 They rely on s 88 of the Trade Marks Act which relevantly provides:
(1) Subject to subsection (2) and section 89, a prescribed court may, on the application of an aggrieved person or the Registrar, order that the Register be rectified by:
(a) cancelling the registration of a trade mark; or
(b) removing or amending an entry wrongly made or remaining on the
Register; or
(c) entering any condition or limitation affecting the registration of a trade mark that ought to be entered.
(2) An application may be made on any of the following grounds, and on no other grounds:
(a) …
(b) …
(c) because of the circumstances applying at the time when the
application for rectification is filed, the use of the trade mark is likely
to deceive or cause confusion …
The Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd contend that there is, at least, a reasonable prospect that they will be successful in establishing that the trade mark should be cancelled by order of the Court.
49 This argument can only succeed if the Court were to make orders, on the Cross-Claim, cancelling the trade mark’s registration and if those orders operated retrospectively so that the trade mark was treated as not being registered, at least, since 2005. The Respondents were unable to point to any authority which supported the proposition that an order, made under s 88, had other than prospective effect.
50 Ordinarily, orders made by a Court, under power conferred by legislation, will operate prospectively. If the legislature wishes the Court to have power to make orders with retrospective effect it expressly so provides: see, for example, s 16(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The Trade Marks Act itself provides for certain orders, made by the Registrar, to have retrospective effect: see ss 79 and 98. No equivalent provisions are to be found in s 88.
51 There are good reasons why the cancellation of the registration of a trade mark should only operate prospectively. Were it otherwise the integrity of the Register would be compromised. Those who rely on it to determine whether or not a particular trade mark was registered and protected under the Trade Marks Act could not be certain that a particular registration might not subsequently be cancelled to their detriment.
52 Such considerations influenced the decision of Flick J in E. & J. Gallo Winery v Lion Nathan Pty Limited (No 2) (2008) 78 IPR 334; [2008] FCA 1005.
53 In that case his Honour had determined to exercise the power conferred on the Court by s 101(2) of the Trade Marks Act to direct the Registrar to remove a trade mark from the register on the ground of non-use. The parties disagreed as to whether the order for removal should operate prospectively or should be made effective from an earlier date on which the 3 year non-use period had concluded. His Honour determined that the order should operate prospectively. His Honour’s first reason (at [7]) for rejecting the invitation to make the order retrospective in effect was that:
… there is considered to be a significant public interest in maintaining the integrity of the Register established pursuant to s 207 of the Act. That public interest may be prejudiced if it is subject to orders of this Court ordering the Registrar to remove a mark as from a date which may in some cases be years prior to the date of delivery of judgment. Such orders, if made, may only be productive of considerable uncertainty.
54 His Honour also noted the absence of any specific provision in s 101 allowing for the retrospective operation of orders and, in this regard, compared that section with ss 79 and 98. In my view these considerations have equal force in relation to orders made under s 88. Orders made under it do not operate retrospectively.
55 I am fortified in coming to this conclusion by the decision of Lightman J in Second Sight Ltd v Novell UK Ltd [1995] RPC 423. His Lordship there considered the operation of s 32(1) of the Trade Marks Act 1938 (UK) which like s 88, provided for expunging entries on the register, inter alia, on the grounds that they had been made “without sufficient cause” or that they “wrongly remain[ed] on the register …” He held (at 429) that he could “find neither in the language used nor in principle any grounds upon which it can sensibly be held that such a determination under an application under … section 32 can have any retrospective effect …”
56 If the Vaysmans succeed, at trial, on their Cross-Claim founded on s 88, any orders will be prospective in nature. Such a favourable outcome for them can and will have no bearing on the question of whether or not they infringed Deckers’ trade mark in the period between 2005 and 2007. That trade mark was registered under the Trade Marks Act at all relevant times and was protected by the provisions of that Act.
57 The Respondents provided no evidence which assisted their opposition to Deckers’ application for summary judgment.
58 The pleadings and the evidence establish, in my view, that the Respondents have no reasonable prospects of defending Deckers’ trade mark infringement claim.
59 Deckers is entitled to summary judgment on its claim that Hepbourne Pty Ltd, Vladimir Vaysman, the Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd infringed its trade mark numbered 785466 on multiple occasions in 2005, 2006 and 2007.
COPYRIGHT CLAIMS
60 Deckers claim that the six Respondents have infringed its copyright in the following works:
· The artistic works comprised in the sun device;
· The artistic works comprised in the logo which is comprised of the three elements (the letters “UGG”, the word “australia” and the sun device);
· The literary works comprised in the text of the “UGG australia” information booklet;
· The literary works comprised in the text of the “UGG australia” care instruction card; and
· The artistic works comprised in the photographs set out in the “UGG australia” information booklet.
61 Deckers pleads its case by reference to a number of provisions of the Copyright Act. It contends that, pursuant to s 35(6) of the Copyright Act it is the owner of the copyright subsisting in artistic works made by its employees. By s 31(1)(b), it is provided that the owner of copyright subsisting in artistic works has the exclusive right to reproduce those works in material form. By s 36 such copyright is infringed by a person who reproduces those works in material form in Australia, or authorises such reproduction. Sections 37 and 38 provide for infringement by selling or offering for sale, or importing for sale, any article if the person knew or ought reasonably to have known that the making of the article would have constituted an infringement if it had been made in Australia. Section 14 provides that a reproduction of a substantial part of a copyright work is sufficient to constitute an infringement of that work.
62 Deckers pleads that the Respondents have infringed and/or authorised the infringement of these copyright works by, without its licence or authority:
· Reproducing or substantially reproducing the copyright works or a substantial part of them in a material form or authorising such conduct; and
· Importing for sale, selling, or by way of trade, offering and/or exposing for sale or exhibiting in public, the Respondents’ products which feature the copyright works in circumstances where the Respondents knew or ought reasonably to have known that the making of the infringing products, had they been made in Australia by the Respondents, would have constituted an infringement of the copyright works.
63 Each Respondent denies each of these allegations. Each also objects that Deckers has failed to identify with particularity the precise literary and/or artistic works in which it alleges copyright subsists and, for each copyright work, the basis on which it claims the copyright is owned by it. The Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd also contend that the words UGG australia do not constitute original literary works in which copyright is capable of subsisting under s 32(1) of the Copyright Act. A similar complaint is made in relation to the sun device. The Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd also plead a defence based on s 77 of the Copyright Act.
64 The six Respondents also raise an issue which is common to their defences of the copyright claim and the causes of action in passing off and contraventions of the Fair Trading Act and the Trade Practices Act. It is that the name “UGG” is generic in Australia with respect to sheepskin footwear and that, accordingly, Deckers has no reputation in Australia in the name “UGG” in respect of such footwear.
65 Deckers supports its application for summary judgment on the copyright aspects of its case by reference to the affidavits of Robert Bergstrom and Cristina Trayfors and the statutory declaration of Constance Rishwain. None of these witnesses was cross-examined.
66 Ms Rishwain has been employed by Deckers since January 1995. She has held various senior management positions. She deposed that the sun device was created by an employee of Deckers’ predecessor during the course of that employee’s employment, in 1996. Despite searches she has been unable to discover the original drawings and she was unable to discover the name of the employee who created the sun device.
67 Ms Rishwain recalled that an employee of Deckers created the logo which contains the three elements. The drawing was created during the course of the employee’s employment by Deckers. Again, she has been unable to find the original drawings and does not know the identity of the employee who created the logo.
68 Mr Bergstrom deposed that he wrote the text which appears on the “UGG australia” care instruction card in 2004. He also wrote the text which appears in the “UGG australia” information booklet (save for some passages which appear on page 7). He did so in 2006. He wrote both texts whilst employed by Deckers and in the course of his employment by Deckers.
69 Ms Trayfors is a freelance photographer who was engaged, in 2004 and 2008, by Deckers to take a number of photographs featuring its UGG australia footwear range. These photographs were used by Deckers to advertise and promote its UGG australia footwear. She took the photographs which appear in the “UGG australia” information booklet. She had assigned all of her copyright rights in the photographs to Deckers.
70 The Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd accept that the evidence of Mr Bergstrom establishes that Deckers owns the literary works comprising a majority of the information booklet and the care instruction card. They contend, however, that Deckers has failed to establish its ownership of the copyright subsisting in the other works and, in particular, the sun device and the logo. As a result, they contend that there is a factual dispute as to the ownership of the copyright works. Deckers acknowledges that its evidence on this point would be stronger if it were able to identify the employees whom it is said created the sun device and the “UGG australia” logo. It, nonetheless, submits that the affidavit evidence is the best evidence available to it and that it goes sufficiently far as to establish that the material subject to the copyright claim was created by persons employed by it in the course of their employment. Deckers also relies on the failure of the Respondents to suggest that they would be in a position to contradict this evidence in any way.
71 Were the “ownership” issue the only factual dispute involved in the copyright claims, I would be disposed to make an order under s 31A of the Federal Court Act. Ownership of the literary works is not disputed. The evidence that employees of Deckers created the artistic works in the course of their employment would be sufficient even though Deckers is unable to identify them. There are, however, other issues which, in my view, give rise to factual disputes which should be resolved at trial.
72 Deckers correctly points out that it does not contend that the words UGG australia constitute a literary work. They do, however, submit that the sun device and the Ugg australia logo (which includes the sun device) have sufficient substance to constitute a work in which copyright can subsist for purposes of s 32 of the Copyright Act. They rely on the decision of Pincus J in Roland Corporation v Lorenzo & Sons Pty Ltd (1991) 33 FCR 111.
73 One of the issues in Roland Corporation was whether or not there could be copyright in two devices – one which bore some resemblance to the letter “R” and one which bore some resemblance to a lower case letter ‘b’. Pincus J rejected a submission by the Respondent that copyright could not subsist in the devices because they were “merely depictions of single letters.” In doing so his Honour drew a distinction between simple letters and careful representations of letters in the form of a device. He said (at 114) that:
“It seems clear that a mere random collection of letters of the alphabet could not be copyright and presumably a mere random scribble could not be either, but the devices with which I am concerned are by no means random and were plainly drawn with care, to obtain an effect. It is true that they are relatively simple and their simplicity will produce the result that only an exact or fairly exact copy will infringe; …”
His Honour was dealing with two separate devices which resembled letters. He was not concerned with a device which did not resemble a letter or a composite logo which incorporated that device together as with the letters “UGG” and the word “australia”. Nonetheless, it is clear that, even in that comparatively simple case, questions of impression and degree arose in the course of the making of a final determination. Moreover, it was necessary to form a judgment as to whether the alleged copies were “exact or fairly exact.” When such an issue arises in the course of a summary judgment application it will be extremely difficult to conclude that the Respondents have no reasonable prospect of persuading the Court that the relevant words and devices cannot attract copyright protection. Such difficulty is manifest in the case such as the present where the Applicant alleges that its copyright has been infringed by the reproduction of elements of its logo but that reproduction does not present the logo in its composite form.
THE DEFENCES UNDER S 77(2) OF THE COPYRIGHT ACT
74 I turn next to defences, under s 77 of the Copyright Act, on which some of the Respondents seek to rely. Relevantly, ss 74 and 77(2) of that Act provide:
(1) In this Division:
corresponding design, in relation to an artistic work, means visual features of shape or configuration which, when embodied in a product, result in a reproduction of that work, whether or not the visual features constitute a design that is capable of being registered under the Designs Act 2003.
(2) For the purposes of subsection (1):
embodied in,in relation to a product, includes woven into, impressed on or worked into the product.
77 Application of artistic works as industrial designs without registration of the designs
(1) …
(2) It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which:
(a) products made to the corresponding design are first sold, let for hire or offered or exposed for sale or hire; or
(b) a complete specification that discloses a product made to the corresponding design is first published in Australia; or
(c) a representation of a product made to the corresponding design and included in a design application is first published in Australia;
by embodying that, or any other, corresponding design in a product.”
75 The operation of s 77 was considered by Rares J in The Polo/Lauren Company LP v Ziliani Holdings Pty Ltd (2008) 75 IPR 143. His Honour explained (at 162-163) the purpose served by ss 74 and 77(2) by reference to a report by the Australian Law Reform Commission and to an Explanatory Memorandum presented to Parliament:
“The amendments came about following concerns raised in the Australian Law Reform Commission’s Report No 74, Designs: see the revised explanatory memorandum accompanying the Designs (Consequential Amendments) Bill 2003 circulated by the authority of the Parliamentary Secretary to the Minister for Industry, Tourism and Resources in the Senate. The revised explanatory memorandum said:
The broad policy is that artistic works commercially exploited as three-dimensional designs should generally be denied copyright protection. However, artistic works exploited as two-dimensional designs continue to receive copyright protection (and may have dual protection if registered as a design). The ALRC supported the policy underlying sections 74 to 77 and the level of protection but recommended amendments to give more clarity and legal certainty.
The amendments are to:
· clarify the meaning of the term “work of artistic craftsmanship”;
· amend the definition of “corresponding design” to deal with certain technical difficulties ...’
The revised explanatory memorandum also said that one purpose of the proposed amendment to the definition of “corresponding design” was to remove the anomalous protection afforded to utilitarian three-dimensional articles such as pump parts. Those were not registrable as designs because they constituted a method or principle of construction, but the drawings for those pump parts were entitled to copyright protection. Another purpose of the amendments was to focus on the three-dimensional aspects of a design: see para 11 of the revised explanatory memorandum. The revised explanatory memorandum explained the reason for adding a new definition of “embodied in” in s 74(2) was to address the previous exclusion of a design consisting solely of features of two-dimensional pattern or ornamentation applicable to the surface of an article: see para 13. It went on to say that the amendments to s 74 were intended to clarify that visual features could be embodied in a product by being woven into, impressed on or worked into the product. The revised explanatory memorandum continued (paras 15, 16):
... That is, a “corresponding design” can include artistic works exploited in products such as tapestries, knitted items and carpets. ... For example, artistic works will not have copyright protection (when used as a design) if a corresponding design is not registered but is industrially applied – unless they are works of artistic craftsmanship, buildings or models of buildings.
Under the amended definition, artistic works exploited in two dimensions as visual features of pattern or ornamentation will remain excluded from the definition of “corresponding design” and therefore retain copyright protection.”
76 It appears to be accepted by all parties that the defence provided by s 77(2) can apply to three dimensional representations of a work in which it is said that copyright subsists. This is because of the reference to features of “shape or configuration” in the definition of “corresponding design” in s 74 of the Copyright Act. There is no agreement, however, as to the items of present concern to which a s 77 defence might be relevant. Deckers submits that the defence could only apply to the three dimensional impression of the sun device on the soles of the boots. Victoria Vaysman and Samba Enterprises Pty Ltd contend that the defence also has the potential to apply to the raised tags on the heels of the boots.
77 The Vaysmans’ submissions seem to go even further and admit the possibility of the defence being available in respect of representations of the sun device and the logo on boxes, care tags and information booklets. The representations of the sun device and elements of the logo on these materials are in two dimensional form and it may, therefore, be doubted that a defence under s 77(2) is available in respect of these representations: see Polo/Lauren at (162-165).
78 For a defence to be made good under s 77(2) it will also be necessary for the Respondents to establish that one or more of the conditions, prescribed by s 77(2), have been satisfied. Whether or not they have been satisfied will be a matter for evidence at trial.
79 It is, therefore, not possible to conclude that the Respondents have no reasonable prospect of mounting a successful defence under s 77 of the Copyright Act, at least in respect of the three dimensional representations of the sun device and elements of Deckers’ logo.
80 Deckers’ application for summary judgment in relation to the copyright claim must, therefore, fail.
Substantial reputation
81 Deckers pleads that it “has established a substantial reputation in Australia and throughout many countries of the world as the original and exclusive designer, manufacturer, wholesaler and retailer of the Ugg Products by reference to the Trade Marks and the Copyright Works.” Although the association of Ugg boots with Deckers is a matter of some relevance to its claim of infringement of copyright, the principal relevance of the issue arises in relation to other pleaded claims. Its causes of action in passing off and contraventions of ss 52 and 53 of the Trade Practices Act and s 9 of the Fair Trading Act are founded, in part, on this asserted reputation.
82 The Respondents deny that Deckers enjoys any such reputation. Their defences assert that the word “UGG” is understood in Australia as being a generic term which applies to a particular style of sheepskin footwear and is widely used by traders to describe that style of footwear.
83 In order for Deckers to make good its claim of passing off it must show that the registered trade mark and the copyright works had come to be regarded by the public as referring to the Applicant’s Ugg boots and no others. In Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7, in a passage which has been referred to with approval by two Full Courts of this Court, Lord Oliver identified three elements which have to be demonstrated in order for an applicant to succeed in a passing off action. They are:
“(1) that the trader’s get-up, including any brand name, is recognised by the public as distinctive specifically of the plaintiff’s goods;
(2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff’s goods (whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, eg by means of a brand name which is in fact the plaintiff’s);
(3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods is the same as the source of those offered by the plaintiff.”
see Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369 and TGI Friday’s Australia Pty Ltd v TGI Friday’s Inc (1999) 45 IPR 43 at 50.
84 In order to make good its claims under the Trade Practices Act and the Fair Trading Act Deckers must establish that it is associated in the minds of members of the public with Ugg boots bearing the registered trade mark and the copyright works. Unless and until it does so it will not be able to establish that the impugned conduct of the Respondents was likely to mislead or deceive such persons: see Faessler v Neale (1994) 29 IPR 1 at 8.
85 In Vieright the Full Court observed (at 373) that:
“The settled course of authority holds that, as in the passing off claim, the essential question here is largely one of fact is, in all the circumstances, the respondent’s conduct likely to mislead? In the present kind of case, it will usually be the situation that if a passing off claim is established, it will be so by reason of a finding of a misrepresentation of the type discussed in the authorities. Such a misrepresentation will usually constitute a contravention of s 52, and possibly s 53 of the Trade Practices Act. Conversely, if no misrepresentation is found, it will usually follow that the Trade Practices Act claim will also fail.”
86 Whether or not Deckers has the substantial reputation which it claims is plainly a matter for evidence including, perhaps, expert evidence: see EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277 at 285; and cf Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397.
87 Deckers acknowledges that it has not presented any such evidence on the present application. It seeks to overcome this deficiency by submitting that the evidence which it has called supports the conclusion that the Respondents have deliberately been involved in the copying of its products and that this is sufficient to establish that the Respondents intended and expected to benefit from Deckers’ reputation in the get-up of its products. In some cases it will be appropriate to reason that a deliberate decision, by a person, to adopt the brand name or get-up used by a competitor, has been taken because the brand name or get-up is well and favourably known in the market place and that there is a public awareness that the competitor is the manufacturer of the goods in question. This, in turn, may support an inference that the use of the brand name or get-up is likely to mislead the public. In Australian Woollen Mills Ltd v F.S. Walton & Co Ltd (1937) 58 CLR 641 at 657 Dixon and McTiernan JJ said:
“But the examination made of the respondent’s motives and good faith seems to us to leave the question of infringement and passing off very much in the same position as it stood in without it. The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public. But the practical application of the principle may sometimes be attended with difficulty.”
The conclusion is not, however, inevitable. These inferences, may be displaced by evidence. As Weinberg and Dowsett JJ said in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 388:
“Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor’s get-up, it is a reasonable inference that he or she believes that there will be market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was “fitted for the purpose and therefore likely to deceive or confuse …”. Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing.” (Emphasis added).
88 In the absence of any contradictory evidence Deckers will, at trial, have a strong argument that the Respondents used the sun device and elements of the logo in order to suggest that the counterfeit boots were manufactured by Deckers. At this stage, however, it is not possible to conclude that the Respondents have no reasonable prospect of defending this aspect of Deckers’ claims of passing off and contraventions of the Trade Practices Act and the Fair Trading Act.
89 There are, additionally, issues relating to jurisdiction and the personal and accessorial liability of the individual Respondents which arise in relation to these causes of action and which will need to be dealt with at trial.
90 Deckers’ application for summary judgment on these claims must be refused.
DAMAGES CLAIMS
91 Deckers seek a declaration that the Respondents are liable to pay compensatory damages in respect of the pleaded infringement of its rights. It concedes that the quantum of that damage is a matter which must await trial. I have held that Deckers is entitled to summary judgment in relation to the infringement of its trade mark. To the extent that there is, before the Court, evidence relating to damage suffered by Deckers, that evidence is not directed specifically to damage flowing from the trade mark infringements. It is not, therefore, possible to determine that any specific damage has been suffered by reason of the trade mark infringement. It is not, therefore, appropriate to make a declaration of the kind sought by Deckers. It will, of course, be open to Deckers, at trial to call evidence as to the damages (if any) it has incurred as a result of the trade mark infringement and to seek compensatory orders.
92 Having regard to the findings which I have made, the issue of damages being awarded for flagrant copyright infringement does not arise at this stage.
COSTS
93 Deckers has succeeded in obtaining summary judgment in respect of its claim of trade mark infringement but has otherwise been unsuccessful. My provisional view is that Deckers should pay two thirds of the represented Respondents’ costs of its application. If any party wishes to contend that there should be a different order as to costs that party should file and serve written submissions which stipulate the alternative order proposed and short reasons why such orders should be made on or before 31 March 2009 and any submissions by any other party in response should be filed and served on or before 7 April 2009.
PRO BONO COUNSEL
94 The Vaysmans, Victoria Vaysman and Samba Enterprises Pty Ltd were represented by counsel who offered their services under O 80 of the Federal Court Rules. The quality of their submissions, both written and oral, was of a high order. They were of great assistance to the Court. The willingness of counsel to act on a pro bono basis reflects well on them and the Bar of which they are members.
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I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey. |
Associate:
Dated: 24 March 2009
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Counsel for the Applicant: |
Mr E Heerey |
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Solicitor for the Applicant: |
Middletons |
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Counsel for the Sixth and Seventh Respondents: |
Mr T Cordiner |
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Counsel for the Nineteenth and Twenty-Second Respondents: |
Mr M Strang and Ms S Thompson |
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Date of Hearing: |
28 August 2008, 1 October 2008 |
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Written Submissions: |
24 October 2008 |
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Date of Judgment: |
24 March 2009 |
