FEDERAL COURT OF AUSTRALIA

Deckers Outdoor Corporation Inc. v Farley (No 4) [2009] FCA 369

Federal Court of Australia Act 1976 (Cth) s 31A

Deckers Outdoor Corporation Inc v Farley (No 2) [2009] FCA 256

DECKERS OUTDOOR CORPORATION INC. v LEAH JANE FARLEY, DUSIA PTY LTD ACN 119 500 186, LEONID MYKHALOVSKYI, HEPBOURNE PTY LTD ACN 080 453 247, VLADIMIR VAYSMAN, JOSEF VAYSMAN, POLINA VAYSMAN, MILLHOUSE PTY LTD ACN 111 765 505, DIANNE SOMMER, SANDY HAZENDONK, HGU PTY LTD ACN 121 922 754, FEDIA PTY LTD ACN 119 500 444, TASKINC PTY LTD ACN 121 919 926, OTK INTERNATIONAL PTY LTD ACN 119 498 001, GIHAN EZZAT, JOANNE STRICKLAND, VERNON PTY LTD ACN 123 047 138, RASTOV PTY LTD ACN 119 498 547, VICTORIA VAYSMAN, OLIVER DOEDERLEIN, MARGARIT PEDROTTI AND SAMBA ENTERPRISES PTY LTD ACN 111 968 935

VID 1022 of 2007

TRACEY J

24 APRIL 2009

MELBOURNE

THE COURT ORDERS THAT:

1.                  Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth):

(a)                it is declared that the Fourth and Fifth Respondents have breached the Second Terms of Settlement (as defined in paragraph 63 of the Further Amended Statement of Claim); and

(b)               it is ordered that the Fourth and Fifth Respondents jointly and severally pay to the Applicant the sum specified in Clause 9 of the Second Terms of Settlement (as defined in paragraph 63 of the Further Amended Statement of Claim) being $150,000.

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.

REASONS FOR JUDGMENT

1                     By an Amended Notice of Motion dated 28 August 2008 the applicant (“Deckers”) applied for summary judgment against a number of respondents to this proceeding.  Those respondents included the Fourth Respondent, Hepbourne Pty Ltd (“Hepbourne”) and the Fifth Respondent, Vladimir Vaysman (“Vaysman”).  One of the claims on which Deckers sought summary judgment against Hepbourne and Vaysman was for infringement of one of Deckers’ registered trade marks, namely, Australian trade mark numbered 785466.  I gave summary judgment, under s 31A(1) of the Federal Court of Australia Act 1976 (Cth), against Hepbourne and Vaysman upon Deckers’ claim of infringement of this registered trade mark:  see Deckers Outdoor Corporation Inc. v Farley (No 2) [2009] FCA 256.  I did so upon the basis of uncontradicted evidence of multiple infringements which occurred in 2005, 2006 and 2007 in which Hepbourne and Vaysman were directly involved.

2                     After the orders and reasons for judgment had been published on 24 March 2009, counsel for Deckers drew the Court’s attention to a related claim which it had made against Hepbourne and Vaysman.  In its Amended Notice of Motion dated 28 August 2008, Deckers had sought an order that Hepbourne and Vaysman pay it $150,000 pursuant to Terms of Settlement which had been entered into between the parties on 10 June 2005:  see [2009] FCA 256 at [5].  These Terms of Settlement compromised an earlier proceeding in which Deckers had alleged that Hepbourne and Vaysman (amongst others) had breached an earlier settlement agreement under which they had agreed to orders which restrained them, inter alia, from manufacturing or advertising footwear or accessories which bore the word “Ugg” or “Ugg Australia”.

3                     The Terms of Settlement, dated 10 June 2005, provided, in Clause 1, that Hepbourne and Vaysman (and three other respondents) undertook “that they and/or any entity owned and/or controlled by them whether legally or beneficially, will not use the names or words “Ugg”, “Ugh”, “Ug” or “Uggs”, to describe, promote, advertise, distribute, offer for sale, sell or exhibit in public, sheepskin products, whether on the internet, to retailers, wholesalers, consumers, or otherwise; whether in upper or lower case letters, whether as a trade mark or as a descriptive term or in any manner whatsoever.”  Clause 9 of the Terms provided that the respondents (including Hepbourne and Vaysman), “jointly and severally agree[d] that, if any one or more of them breache[d] clauses 1, 2 or 3 of these Terms, they will pay Deckers the sum of AU$150,000 which the Vaysmans acknowledge is a reasonable estimate of the amount for damages which have been foregone by Deckers in comprising (sic) their claims for damages in respect of the past conduct of the Vaysmans.”  The “Vaysmans” was a defined term which included Hepbourne and Vaysman. 

4                     In its Further Amended Statement of Claim Deckers alleged that Hepbourne and Vaysman had breached the Terms of Settlement and were liable to make the payment provided for in Clause 9.  In their defences Hepbourne and Vaysman admitted to being parties to the Terms of Settlement but denied having contravened the agreement and any liability for such contravention.

5                     Neither Hepbourne or Vaysman appeared at any of the hearings in which Deckers’ Amended Notice of Motion was considered.  Nor did they make any written submissions or participate in any other way during the hearings.

6                     Counsel for Deckers submits that summary judgment should also have been entered against Hepbourne and Vaysman on its claim for payment of $150,000 under the Terms of Settlement.  He did so on the basis that the trade mark which had been the subject of the favourable summary judgment order incorporated the word “UGG”.  The infringing conduct involved the manufacture of sheepskin footwear at a factory in Moorabbin.  Hepbourne was the registered proprietor of the factory.  Vaysman was the sole director of Hepbourne at relevant times.  The word “UGG” appeared on the soles of the footwear and on a cloth label which was attached to the heels.  The footwear was marketed on the internet, at market stalls and otherwise.  Vaysman was actively involved in the marketing of the footwear.  Among other things he recruited sales assistants to sell the footwear using the internet and oversaw their packaging and freight-forwarding activities.  Such conduct, it was contended, also necessarily contravened Clause 1 of the Terms of Settlement thereby giving rise to Deckers’ asserted entitlement to payment in accordance with Clause 9.

7                     I accept these submissions.  Deckers is entitled to a declaration that Hepbourne and Vaysman have breached the Terms of Settlement and an order that they jointly and severally pay it $150,000.  Orders will be made accordingly.

Associate:

Dated:         24 April 2009