FEDERAL COURT OF AUSTRALIA

Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 4) [2011] FCA 201

THE COURT DECLARES THAT:

1.    The second respondent has infringed Australian registered trade mark No. 930455 (“the Greg Norman Trade Mark”) by using the name “Greg Norman” as a trade mark:

(a)    on buttons, labels and swing tags affixed to clothing, including shirts, trousers and shorts, imported into Australia, offered for sale and sold by it (“infringing garments”);

(b)    in point of sale, print and online advertising of the infringing garments.

2.    The second respondent has infringed Australian registered trade mark No. 562442 (“the Shark Trade Mark”) by using it or a device substantially identical to it as a trade mark:

(a)    on the infringing garments imported into Australia, offered for sale and sold by it; and

(b)    in point of sale, print and online advertising of the infringing garments.

3.    The second respondent has, in trade and commerce, engaged in conduct which contravenes s 52 and s 53(e) of the Trade Practices Act 1974 by making false and misleading representations as to the recommended retail price of infringing garments imported, distributed for the purpose of sale in Australia, offered for sale and sold by it under and by reference to the name and trade mark “Greg Norman”.

4.    The second respondent has, in trade and commerce, engaged in conduct which contravenes s 52 and s 53(e) of the Trade Practices Act 1974 by falsely representing that the prices at which it offered to sell and sold the infringing garments are at least 40% less than the recommended retail prices of garments distributed and sold in Australia by the first applicant under and by reference to the name and trade mark “Greg Norman”.

THE COURT ORDERS THAT:

5.    The second respondent by itself, servants or agents, however, be restrained for a period of three years commencing from the date hereof from making any representation in trade or commerce as to the amount of the recommended retail price of any item of clothing offered for sale in Australia under or by reference to the name and trade mark “Greg Norman” or the Shark Trade Mark except when the amount thus represented is the recommended retail price for Australia published by or with the approval of the second applicant for that item of clothing.

6.    The second respondent deliver up to the applicants’ solicitor within five days of the date of this order all infringing garments and other materials in its possession, custody or control, including signage, point of sale materials, labels, samples advertising, brochures, pamphlets and other communications which bear or incorporate any one or more of:

(a)    the name and mark “Greg Norman”;

(b)    the Shark Trade Mark;

(c)    or any mark substantially identical with or deceptively similar to the Greg Norman Trade Mark or Shark Trade Mark

within seven days of the date of this order and that the applicants may dispose of all such garments and other materials in any manner they think fit.

7.    Within seven days of the date of this order the fifth respondent make file and serve an affidavit verifying that the second respondent has completed the delivery up required by Order 6 above.

8.    Orders 6 and 7 be stayed until the expiry of the later of:

(a)    25 days from the making of these orders; or

(b)    if an appeal be filed by the second respondent against the judgment in favour of the applicants in relation to infringement of the Greg Norman Trade Mark and the Shark Trade Mark, 28 days after the determination of that appeal contrary to the second respondent,

subject to any further order of this Court (including a Full Court).

9.    The application otherwise be dismissed.

10.    The cross-claim be dismissed.

11.    The second respondent pay eighty percent (80%) of the applicants’ party-party costs of this proceeding (including the cross-claim) as taxed or agreed.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    In my principal judgment (Sporte Leisure Pty Ltd & Ors v Paul’s International Pty Ltd & Ors (No 3) (2010) 88 IPR 242, [2010] FCA 1162) I held that the applicant was entitled to succeed in its claim against the second respondent for trade mark infringement and contraventions of s 52 and s 53(e) of the Trade Practices Act 1974 (Cth) (the Act). I further held that all other claims made in the proceeding (including the cross-claim) should be dismissed. I have now heard argument about the appropriate form of final orders.

2    The parties are in agreement as to the form that the declarations should take in light of my principal judgment. I am willing to make declarations in the agreed form.

3    The parties are also in agreement as to a form of orders for delivery up with verification. I am willing to make such orders in the form which has been agreed. The respondents have proposed that there be a stay of such orders. The applicants do not oppose a stay in the form proposed by the respondents. I am willing to grant a stay in that form.

4    I indicated in my principal judgment (at [138]) that I did not consider it appropriate to grant any injunction in relation to the second respondent’s proven acts of trade mark infringement. I do not need to repeat what I said on that question. I also indicated that an injunction in an appropriate form should be granted under s 80 of the Act restraining the second respondent from engaging in further contraventions of s 52 and s 53(e).

5    Mr Cobden SC has suggested that he was not fully heard on that question and I understand why he might say that. I have heard further submissions from him to the effect that no injunction should be granted because the applicants have not established that there is any risk that the second respondent will engage in further contraventions of the kind which were proven to have occurred. He says that the proposed declarations, which record the findings of the Court in a legally binding way, are sufficient in the circumstances.

6    In support of his submission Mr Cobden referred me to the decision of Perram J in Luxottica Retail Australia Pty Ltd v Specsaver Pty Ltd (2010) 267 ALR 721 where his Honour said at [41]:

I turn then to the question of remedy. The issue of damages has been deferred. The two immediate questions are whether there should be a permanent injunction to restrain a further breach from occurring and whether corrective advertising should be ordered. As to the first, the advertisement has now run its course; broadcasting ceased on 13 March 2010 and the internet advertisement finished on 1 April 2010 some 34 days ago. There was no evidence which suggested that a repetition was contemplated. However the terms of s 80 of the Act make plain that an injunction may be issued in respect of a past contravention and even, as subs (5) emphasises, if there is no intention on the part of the respondent to repeat the conduct. There may be circumstances when it will be appropriate to grant such an injunction where, for example, future breaches may be expected not because of deliberate conduct but rather by reason of deficient systemic controls. So too, a court may feel that there is a risk that without an injunction a respondent may be tempted into contravention. In this case, while I am of the view that Mr Hawkins, in all likelihood, knew that the advertisement was misleading, or at least knew that there was a real risk that it was, I do not think that I can deduce therefrom a future risk of repetition. It would, I think, be wrong to impose an injunction in order to punish perceived deliberate wrongdoing — this is not the point of s 80. It is, however, appropriate to grant declaratory relief in the form set out in prayer 4 of the application.

7    I agree with what his Honour said but I do not think it assists the second respondent in this case. It is clear that the Court exercises a wide discretion as to whether or not it will grant relief under s 80 in relation to a proven contravention of the Act. His Honour’s decision to refuse an injunction in that case involved the exercise of such a discretion.

8    It is not necessary for an applicant who has established that a respondent has contravened a provision of the Act to also establish that it is more likely than not that the respondent will engage in further contraventions before an injunction can be granted under s 80. There are a range of other factors which may justify the grant of such an injunction even if the Court is satisfied that there is no risk of the respondent engaging in further contraventions.

9    In the present case, however, I am satisfied that there is a risk that the second respondent will engage in further contraventions. I do not suggest that the risk of it doing so is high but nor do I consider it insignificant.

10    In coming to this view I have had regard to the lack of attention given by Mr Dwyer to the interlocutory orders made by Perram J at an earlier stage of this proceeding. Mr Dwyer failed to take reasonable steps to ensure that the information provided by him in the affidavit he made for the purpose of complying with those orders was accurate or complete. This failure was consistent with my general impression of Mr Dwyer which was that he ran the Paul’s Warehouse business in a highly disorganised manner. As I mentioned in my principal judgment (at [50]), Mr Dwyer seemed to have little understanding of the role that the various companies within the Paul’s Warehouse group played in the business carried on under that name.

11    The granting of an injunction in the present case is likely to deter the second respondent from further contravening the Act and it may also deter other retailers who are minded to engage in practices similar to those which I have found to amount to a contravention. This is another relevant consideration: see Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89 at [77]-[78] per Lindgren J.

12    In the circumstances, I propose to make an order under s 80 of the Act which operates for a period of three years from today. That is sufficient to protect the applicants and the public against the risk of any further contravention for the foreseeable future: see Australian Competition and Consumer Commission v Mailpost Australia Limited [2010] FCA 369 at [31] per Foster J.

13    I turn now to the question of costs.

14    The applicants argued that there should be an order for indemnity costs in their favour. In support of that submission the applicants relied upon what they characterised as Mr Dwyer’s breach of the interlocutory orders of Perram J which was said to involve the making of a false affidavit. They also rely upon the respondents’ rejection of an offer of settlement made by the applicants’ solicitor in a letter to the respondents’ solicitor dated 21 January 2010. They say that the order for indemnity costs should apply to costs incurred by them from 4 February 2010 which was the date until which the offer of settlement remained open for acceptance. Having considered those matters, I do not propose to make any order for indemnity costs.

15    First, Mr Dwyer’s attitude to the interlocutory orders is a matter of significant concern. However, I do not think it would be just to order indemnity costs. I am not satisfied that any failure on the part of Mr Dwyer to properly comply with Perram J’s orders lead to any additional costs being incurred, at least not of the magnitude that the applicants’ proposed costs order implies.

16    Secondly, the offer to settle relied upon by the applicants in support of their application for indemnity costs included a condition that the respondents consent to various orders some of which I have declined to grant to the applicants. Even with the benefit of hindsight, I would not characterise the respondents’ refusal to accept the applicants’ offer as unreasonable and it does not provide any proper basis for an award of indemnity costs.

17    Mr Cobden SC submitted on behalf of the respondents that there should be no order as to costs. I do not think that a “no costs” order is appropriate. After all, the applicants have succeeded in establishing that the second respondent infringed the second applicant’s registered trade marks and that the second respondent contravened s 52 and s 53(e). The applicants’ claims were hard fought all the way and Mr Cobden’s client did not offer anything before trial to which my attention has been drawn which could justify depriving the applicants of all their costs.

18    It is true that the applicants failed completely in their claims against the other four respondents. However, the circumstances in which the Paul’s Warehouse business has been conducted and the confusion surrounding the identity of the company which carried on business under that name is something for which all respondents, especially Mr Dwyer, share some responsibility.

19    Nevertheless, leaving aside the role of the other respondents, I am satisfied that a significant amount of preparation and hearing time was occupied in considering that part of the applicants’ case which asserted, at least implicitly, that the infringing goods were “counterfeit” in the sense that they were not manufactured by one of the second applicant’s authorised licensees. The evidence relied upon by the applicants in support of that assertion was considered by me in paras [81] to [90] of my reasons for decision.

20    I am satisfied that the second respondent should pay the applicants’ costs of the proceeding (including the cross-claim) subject to an adjustment in its favour to reflect the applicants’ lack of success on the point to which I have just referred. I propose to discount the applicants’ costs by 20% to reflect that lack of success. In the result, the second respondent is to pay 80% of the applicants’ party-party costs.

21    I will make orders accordingly.

Associate:

Dated:    9 March 2011