FEDERAL COURT OF AUSTRALIA

Elevate Brandpartners Ltd v Hammond [2019] FCA 1103

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ interlocutory application filed on 3 June 2019 is dismissed as against the third respondent.

2.    The first, second and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019.

3.    On the respondents referred to in Order 2 complying with it, the applicants’ interlocutory application filed on 3 June 2019 will be dismissed as against them.

4.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from the transcript)

STEWART J:

Introduction

1    This judgment concerns interlocutory relief relating to trade mark and copyright infringement, misleading representations and the prevention of possible harm in the form of contractual liability to a third party.

2    The first applicant, Elevate Brandpartners Ltd, is a company registered in the United Kingdom and is the majority shareholder in the second applicant, Quayeyeware Pty Ltd (Quay). Quay is an Australian proprietary company.

3    Quay markets and sells stylish sunglasses worldwide, mostly online. To that end it is the registered owner of the following word trade marks for goods and services including, amongst other things, “sunglasses”, “eyeglasses”, “product design” and “retailing and wholesaling of goods including online”: QUAY, QUAY EYEWEAR, QUAY AUSTRALIA and Q/A.

4    Quay also asserts that it is the owner of copyright in various photographs of models wearing Quay sunglasses that were professionally produced for its advertising campaigns.

5    The first, second and third respondents, being Ms Hammond, Mr Hammond and their son Zak Hammond, respectively, are the shareholders of and in control of the fourth respondent, Dream Bandits Australia Pty Ltd. Dream Bandits markets and sells, online, a range of lingerie.

6    Before me, the applicants move on an interlocutory application by which they seek interlocutory orders pending further order of the Court or determination of the principal proceedings. The orders that they seek may be summarised as follows:

    under s 126 of the Trade Marks Act 1995 (Cth) that the respondents be restrained from using any of the Quay trademarks in any online or public forum in relation to any of the goods and services for which those marks are registered, which is to include those marks used in combination with the “@” or “#” symbol in front of them;

    under s 115 of the Copyright Act 1968 (Cth) that the respondents be restrained from using any photograph or other material in which the second applicant owns the copyright;

    under s 234 of the Australian Consumer Law that the respondents be restrained from making certain representations which link their business, Dream Bandits, to the business of the second applicant;

    that Ms Hammond, be restrained from using any photograph of Ms Kylie Jenner, or her name, on Instagram or any other online or public forum, including by the use of it in combination with the “@” or “#” symbol in front of it, and includes “kylie jenner” being represented as one word;

    that the respondents to this application pay the applicants’ costs.

Background

7    Ms and Mr Hammond started the business of Quay as a partnership in 1999. They subsequently incorporated Quay. In 2009, their son Zak joined them as a director of Quay. From that year, Quay branched into marketing in the United States. By 2013, Quay’s sunglasses were being photographed on the faces of international celebrities including Lady Gaga, Beyoncé and Jennifer Lopez. At that time and thereafter, the Hammonds used social media, and in particular Instagram, to market Quay’s products including by contracting “influencers” to promote those products. Influencers are celebrities with a substantial presence on social media who have the ability to influence potential buyers of a product by promoting or recommending the product on social media. This in turn enables them to sell their use or endorsement of products to the traders of those products for substantial sums.

8    Ms Hammond started Quay’s Instagram account in 2013 with no experience in social media marketing. She quickly learned how to use Instagram and grew the number of Quay’s Instagram “followers” to around 850,000. It was not disputed by either party to these proceedings that the online social media marketing of Quay’s products lead to its very substantial success in Australia and abroad.

9    That success enabled the Hammonds to sell approximately 65% of the shares in Quay to Elevate in August 2016 for, I was told, a very substantial sum of money. Since then, the Hammonds have continued to own approximately 35% of the shares in Quay.

10    A shareholders’ deed between the Hammonds, Elevate and Quay continues to govern the relationship between the shareholders of Quay, and Quay. Under the deed, Ms Hammond has continued to be a director of Quay. Ms Hammond continued to be employed by Quay in an executive position until August 2017.

11    Quay sells its products in 35 countries and has over 3,000 points of distribution. It also currently has nine company-owned stores in the United States. In 2018, Quay sold approximately 2 million sunglasses worldwide through online sales, its own branded stores and through third parties. It now has approximately 1.7 million followers on Instagram.

12    In late 2018, the Hammonds incorporated Dream Bandits and in early 2019 began a process towards the launch of Dream Bandits products for sale on the internet. It is their activities in relation to that product launch, both in the lead up to and following the launch, that give rise to the principal proceedings and this interlocutory application.

13    In the principal proceedings, Elevate and Quay assert:

    claims of breaches of the shareholders deed by the Hammonds including by enticing an employee away from Quay to Dream Bandits;

    a claim of tortious interference by Dream Bandits in Quay’s contractual relations with that employee;

    a claim that Ms Hammond is in breach of her director’s duties;

    a claim that the Hammonds and Dream Bandits have infringed Quay’s trademarks;

    a claim that Ms Hammond has infringed Quay’s copyright; and

    a claim that the Hammonds and Dream Bandits have in the course of trade and commerce engaged in conduct that is misleading or likely to mislead contrary to s 18 of the Australian Consumer Law and made false and misleading representations contrary to ss 29(1)(g) and (h) of the Australian Consumer Law.

14    The representations complained of include that Dream Bandits’ products have the sponsorship or approval of Quay and that, in connection with the supply and promotion of Dream Bandits’ products, Quay and its products, image and branding are designed and controlled by the Hammonds.

The principles for interlocutory injunctive relief

15    Before dealing with the particular conduct complained of giving rise to the claim for interlocutory relief, it is convenient to identify the pertinent principles that govern the granting of such relief.

16    It is trite that the relevant test for interlocutory injunctive relief is that there is a serious issue to be tried and that the balance of convenience favours granting the relief.

17    It is sufficient, in being required to show a serious question to be tried, “that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 at [65] per Gummow and Hayne JJ.

18    Gleeson CJ and Crennan J in Australian Broadcasting Corporation v O’Neill at [19] said that:

[I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of the injunction.

19    The question of irreparable harm is one of the matters that is ordinarily addressed in the court’s consideration of the balance of convenience: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [61] per Dowsett, Foster and Yates JJ.

20    In considering the balance of convenience (and the justice of the case) the court is involved in the exercise of a discretionary judgment. In forming that judgment, the court is required to assess and compare the prejudice and hardship likely to be suffered if an injunction is granted with that which is likely to be suffered if one is not granted: Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 3) [2011] FCA 1019 at [18] per Foster J.

The undertakings

21    Shortly before the interlocutory application was due to be heard, the respondents proffered undertakings to Quay and to the Court ostensibly dealing with all but one of the applicants’ grounds of complaint, namely that concerning the use of the photograph and name of Kylie Jenner (the Kylie Jenner issue). I will return to that matter, but in the meanwhile will consider the other matters in light of the proffered undertakings.

22    The undertakings emphasise that they are given on a “no admissions basis”. It was explained that they were proffered in order to avoid the argument because, as it was submitted on behalf of the respondents, there was in effect nothing substantial at stake for either the applicants or the respondents in the conduct complained of and that the interlocutory application was a waste of time.

23    During the course of argument, Senior Counsel for the applicants identified what he submitted were deficiencies in the undertakings, and some debate ensued between him, Senior Counsel for the respondents and the Court on those matters. Senior Counsel for the respondents, during the course of argument, accepted that there may be some merit with regard to some of the identified deficiencies and said that amendments to the undertakings would be considered.

24    The following day, amended undertakings were proffered on the basis that if they were accepted by the Court signed versions will be executed within 24 hours.

25    The operative part of the undertaking proffered on behalf of Ms Hammond is in the following terms:

5.    On a no admissions basis, I give the following undertakings to the Second Applicant and to the Court in relation to the Interlocutory Application:

(a)    While the Second Applicant holds any registered trade marks (the Trade Marks), I will not use or cause the Fourth Respondent to use, as trade marks, those Trade Marks in a manner that amounts to infringement under the Trade Marks Act 1995 (Cth), including in any public forum (including but not limited to Instagram or Facebook) in connection with the Fourth Respondent;

(b)    While the Second Applicant owns copyright in images or other material (of which I am expressly aware or ought reasonably to be aware) (the Copyright Material), I will not publish or cause the Fourth Respondent to publish the Copyright Material including in any public forum (including but not limited to posting any of that Copyright Material on Instagram or Facebook);

(c)    To the extent that the Second Applicant first publicly uses particular product names for its sunglasses and frames (Product Names) before the Fourth Respondent publicly uses a new product name for its products, I will not knowingly use or cause the Fourth Respondent to use those Product Names for any of the Fourth Respondent’s products;

(d)    Within seven days of signing this undertaking, I will cause the Fourth Respondent to remove two of the titles of its product labels, namely “Just Sayin” and “Crazy Love”;

(e)    Save for retaining the freedom for myself, my husband (Allen Hammond), my son (Zak Hammond) and the Fourth Respondent to use, including in any public forum, words to the effect that Allen Hammond, Zak Hammond and I (either individually, collectively or in any combination) are the founders of and were until about 15 June 2016 the creative talent behind the Second Applicant, I will not refer to or cause the Fourth Respondent to refer to the Second Applicant and its trade marks in any future promotion of the Fourth Respondent in any public forum (including but not limited to Instagram or Facebook), including using tags or links such as “#” and “@” in combination with references to the Second Applicant;

(f)    I undertake to deliver up to HWL Ebsworth, the solicitors for the Second Applicant, within 7 days of the date of this undertaking, any photographs or other material I hold and in which I am aware that the Second Applicant owns the copyright, save for any photographs or other material which I hold the use of which by me is not an infringement of copyright.

26    The undertakings proffered by the other respondents are in materially the same terms.

27    Although Zak Hammond has proffered an undertaking, during the course of argument Senior Counsel for the applicants accepted that on the evidence Zak Hammond has not personally been involved in any of the conduct that is complained of. In the circumstances the applicants did not press for any relief against Zak Hammond in his personal capacity, and I do not see any need or basis for his undertaking to be accepted by the Court.

The trade mark infringement claim

28    The applicants’ complaint with regard to trademark infringement is the use by the respondents of Quay’s word marks, identified above, in combination with the “@” and “#” symbols on Instagram and other social media posts by one or more of the respondents in combination with the promotion of Dream Bandits.

29    In my view, the combination of paragraphs 5(a) and 5(e) of the undertakings adequately deals with this issue. By those paragraphs, the respondents undertake not to use the trademarks in connection with Dream Bandits or the promotion of Dream Bandits, including by the use of those marks in combination with tags or links such as “@” and “#”.

The copyright infringement claim

30    The applicants’ complaints with regard to copyright infringement is the use by the respondents of photographs of Quay sunglasses on models in the promotion of Dream Bandits. The respondents’ principal objection to any relief in relation to copyright infringement is that, so it was submitted on their behalf, the applicants have not proved that they own the copyright in the photographs in question.

31    In that regard, the affidavit of Jodi Bricker, the Chief Executive Officer of Quay since January 2019, under the heading “Images owned by Quay” identifies a number of photographs. She then explains that Quay “stores the photographs which it owns” within a number of databases. The implication is that the photographs she is referring to include the photographs previously listed, and that Quay owns the photographs. Ms Bricker also explains that to the extent that the affidavit refers to matters that pre-date her involvement with Quay, the information regarding such matters has been obtained by her review of the books and records of Quay.

32    Whilst it is true, and I understand this to have been accepted on behalf of the applicants, that the evidence of ownership of the copyright in the photographs, as opposed to ownership of the photographs themselves, is not as strong as what might be required for final relief – in particular because it might conceivably be that the photographers in each case actually own the copyright in the absence of evidence of contractual terms by which the photographs were taken and made available for use by Quay in its marketing campaigns – in my view it is sufficient to present a triable issue for the purposes of interlocutory relief. That is in particular because the weakness in the evidence, such as it is, appears to most likely arise from oversight or infelicity in drafting and there is nothing to contradict the inference of copyright ownership that I am asked to draw. If the true position was to the contrary, Ms Hammond might have been able to say so from her involvement in arranging photoshoots for Quay when she still worked there.

33    That means that the relief in respect of copyright infringement remains in issue. In my view, paragraph 5(b) of the undertakings adequately deals with the applicants’ concerns.

The ACL contravention claim

34    The applicants’ complaints with regard to representations made by the respondents, in alleged contravention of the Australian Consumer Law, concern the implications arising from conduct by the respondents. That conduct includes statements to the effect that the Hammonds are the founders of and the “creative genius” behind Quay in circumstances where there is an implication, or at least no clarification to the contrary, that that is in the present and not only in the past. Such statements have been made in the context of the launch of the Hammonds’ new brand, Dream Bandits. The conduct also includes the use of Quay’s trademarks, usually in combination with the “@” and/or “#” symbols, in the same Instagram and other social media posts that promote Dream Bandits.

35    The representations that are said to be implied from the complained of conduct include that the Dream Bandits products have the sponsorship or approval of Quay and that Quay and its products, image and branding are designed and controlled by the Hammonds, or at least Ms Hammond.

36    In my view, paragraph 5(e) of the undertakings adequately deals with the applicants’ concerns. It reserves to the Hammonds the right to speak of their historical role behind Quay, which the applicants do not oppose, whilst at the same time undertaking not to make the association and control representations that are complained of.

The Kylie Jenner issue

37    The remaining issue, in respect of which no undertakings are proffered, is that of the use of the photograph and name of Kylie Jenner.

38    The evidence describes Ms Jenner as “an American model and influencer who has 137 million Instagram followers”. In April 2017, Quay concluded an agreement with Kylie Jenner Inc, a company representing Ms Jenner. Jenner Inc is the “Lender” in the contract and Ms Jenner is the “Talent”. The contract describes Ms Jenner as “a top model and celebrity in the entertainment industry whose endorsement is of commercial value”.

39    In exchange for a significant sum of money, Jenner Inc agreed that Ms Jenner would endorse Quay’s products in certain specified ways during a digital marketing campaign over a nine month period spanning 2017 and 2018. The endorsement included a licence to use images of Ms Jenner including those to be taken at a photoshoot to be arranged for the purpose of preparing materials for the marketing campaign.

40    The photoshoot took place at a time when Ms Hammond was still in an executive position at Quay.

41    Ms Hammond explains in her affidavit that at the conclusion of the photoshoot Ms Jenner took a “selfie” of the two of them on Ms Hammond’s mobile phone. Immediately thereafter, Ms Jenner orally agreed, on Ms Hammond’s request, that Ms Hammond could post the photograph on her personal Instagram account.

42    The photograph itself shows the arm of Ms Jenner extending, in a familiar way, towards the camera and thereby confirms that Ms Jenner was the photographer. There can thus be no doubt that the photograph was taken with her consent, and its un-posed familiarity and informality would suggest that it was not intended to be anything more than a modern-day photographic equivalent of what was once an autograph.

43    In those circumstances, the evidence is that Ms Hammond owns the photograph and she has the consent of Ms Jenner to post it to her personal Instagram account.

44    Thereafter, Ms Hammond did just that. The consequence is that that post is still available on that account and, the evidence shows, the photograph appears on Ms Hammond’s Instagram page with a number of other photographs of the type that one would ordinarily expect to see on a private Instagram page. Some of those include, for example, a handsome Staffordshire Terrier which appears to be the family pet.

45    The applicants complain that, at least arguably, Quay may be in breach of its agreement with Jenner Inc by Ms Hammond posting that photograph on Instagram, and maintaining it there, at a time when she is a director of Quay. That concern arises from the clauses of the contract that bring Quay’s licence to use those photographs to an end and by which Quay promised to “immediately cease any use of the Endorsement and the Marketing Materials in any form”.

46    Ms Hammond explains that she first posted the photograph in about April 2017. She then re-posted it on 27 May 2019. She has not received any complaint from Ms Jenner or her management about any misuse or unauthorised use of the photograph, and the applicants have not said that they have received any complaint.

47    I note that at least one post of the photograph by Ms Hammond includes within it “@kyliejenner” – which I understand tags Ms Jenner so as to notify her account of the post. It also includes “#kyliejenner” which I am told is a hashtag which will allow anyone searching for “#kyliejenner” on Instagram to find Ms Hammond’s post. From this I infer that if Ms Jenner or her management are meticulous in protecting the use of her image, as the applicants’ case presumes that they are, this post is likely to have come to their attention. The absence of any complaint over the last two years is therefore of some significance.

48    In any event, it seems to me that the prospects of Quay being liable to Jenner Inc for Ms Hammond’s private use of the photograph in the circumstances in which it was taken when the only link by which Quay might be liable for that use is the fact of Ms Hammond being a non-executive director of Quay to be particularly remote. It is doubtful that the applicants’ case on the present evidence rises to being a triable issue.

49    Moreover, I do not consider that the balance of convenience favours the granting of any injunctive relief in relation to Ms Hammond’s use of the photograph. The claim of an infringed right is extremely weak, there is little prospect of harm to the applicants, and granting an injunction would intrude on Ms Hammonds’ personal freedom and control over her Instagram account.

Conclusion

50    In the circumstances, I make the following orders:

(1)    The applicants’ interlocutory application filed on 3 June 2019 is dismissed as against the third respondent.

(2)    The first, second and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019.

(3)    On the respondents referred to in Order 2 complying with it, the applicants’ interlocutory application filed on 3 June 2019 will be dismissed as against them.

(4)    Costs reserved.

Associate:

Dated:    16 July 2019