FEDERAL COURT OF AUSTRALIA

Xiamen Huadian Switchgear Co Ltd v Powins Pty Ltd (No 2) [2022] FCA 1458

ORDERS

PENAL NOTICE

If you, Powins Pty Ltd or Gelpag Electrics Pty Ltd:

(a)    refuse or neglect to do any act within the time specified in this Order; or

(b)    disobey the Order by doing an act which the Order requires you to abstain from doing,

you will be liable to imprisonment, sequestration of property, or any other action the Court may determine.

If any person who knows of this Order does anything to assist Powins Pty Ltd or Gelpag Electrics Pty Ltd in disobeying the Order as specified above, they will also be liable to imprisonment, sequestration of property, or any other action the Court may determine.

THE COURT DECLARES THAT:

1    By making the representations in paragraphs 5(a) - 5(d), each of the respondents has:

(a)    contravened ss 18, 29(1)(a), 29(1)(g), and 29(1)(h) of the Australian Consumer Law that is Schedule 2 to the Competition and Consumer Act 2010 (Cth) (ACL); and

(b)    engaged in the tort of passing off.

2    Each of the respondents has infringed Australian Trade Mark Registration No. 1148294 (VEP Registration) owned by the applicant by their use of the mark VEP and the mark VEP-VX5.

3    The second respondent threatened to contravene ss 18, 29(1)(a), 29(1)(g) and 29(1)(h) of the ACL, engage in the tort of passing off, and infringe the VEP Registration, by filing Australian Trade Mark Application No. 1996289 “GELPAG VEP”.

4    The respondents threatened to contravene ss 18, 29(1)(a), 29(1)(g) and 29(1)(h) of the ACL, and engage in the tort of passing off, by filing Australian Trade Mark Applications Nos. 1996288 “GELPAG AMS”, 1996290 “GELPAG MSA” and 1996287 “POWINS AMS”.

THE COURT ORDERS THAT:

5    Each of the respondents, whether itself or by its officers, employees, agents or related entities (or their respective officers, employees or agents), be restrained from, without Huatech’s express prior written consent:

(a)    representing through advertising material or promotional pamphlets or emails to consumers in Australia to the effect that any switchgear panel product not produced by, acquired from or endorsed by the applicant or its authorised distributor (Unauthorised Switchgear Panel):

(i)    originates from the same manufacturer as any of the switchgear panel products manufactured by the applicant and sold by or on behalf of the applicant in Australia since around 2007 (Huatech Switchgear Panels), including by reference to or use of the name or brand “AMS” or “MSA” in connection with any switchgear panel product;

(ii)    is the same product as any Huatech Switchgear Panel, including by reference to or use of the name or brand “AMS” or “MSA” in connection with any switchgear panel product; or

(iii)    is an updated model or version of any Huatech Switchgear Panel, including by reference to or use of the name or brand “AMS” or “MSA” in connection with any switchgear panel product;

(b)    representing through advertising material or promotional pamphlets or emails to consumers in Australia to the effect that any vacuum circuit breaker product not produced by, acquired from or endorsed by the applicant or its authorised agent (Unauthorised Circuit Breaker):

(i)    originates from the same manufacturer as any of the vacuum circuit breaker products manufactured by the applicant and sold by or on behalf of the applicant in Australia since around 2007 (Huatech Circuit Breakers), including by reference to or use of the name or brand “VEP” in connection with any vacuum circuit breaker;

(ii)    is the same product as any Huatech Circuit Breaker, including by reference to or use of the name or brand “VEP” in connection with any vacuum circuit breaker; or

(iii)    is an updated model or version of any Huatech Circuit Breaker, including by reference to or use of the name or brand “VEP” in connection with any vacuum circuit breaker;

(c)    representing through advertising material or promotional pamphlets or emails to consumers in Australia to the effect that Gelpag GmbH (or alternatively, Gelpag Advanced Technology GmbH or the second respondent), or any company related to or affiliated with either of the respondents, was at any time the manufacturer of, and further or alternatively is the owner of the intellectual property rights in or relating to, any Huatech Switchgear Panel or any Huatech Circuit Breaker;

(d)    representing to consumers in Australia to the effect that the respondents, individually or collectively, have the sole authority, or alternatively authority, of the manufacturer of any Huatech Switchgear Panel or any Huatech Circuit Breaker already installed in Australia, to sell or provide servicing, spare parts and operational testing for either of those products;

(e)    otherwise using the mark AMS or MSA through advertising material or promotional pamphlets or emails in connection with the promotion, offering for sale or sale of switchgear panels in Australia;

(f)    infringing Australian Trade Mark No. 1148294, including by importing, selling, offering for sale, distributing, advertising or promoting vacuum circuit breakers (or goods of the same or similar description) under or by reference to the mark “VEP”, “POWINS VEP”, “GELPAG VEP”, “VEP-VX5”, or any other mark that is substantially identical or deceptively similar to the mark “VEP”;

(g)    otherwise using the mark VEP in connection with the promotion, offering for sale or sale of vacuum circuit breakers in Australia; or

(h)    otherwise representing that either of the respondents, their business, or their goods, are associated with the applicant, the applicant’s business, or goods provided by the applicant, or have the sponsorship, licence or approval of applicant.

6    Within 21 days of this Order, the respondents deliver up to Huatech’s solicitors for destruction all materials within their possession or control which contain any of the representations set out in paragraph 5 but excluding:

(a)    any tender or contractual documentation; or

(b)    any documents required to be maintained by the respondents for the purpose of accurately maintaining their financial records or for complying with their statutory reporting or record-keeping obligations;

provided that copies of any such documentation retained by the respondents be provided to Huatech’s solicitors.

7    Within 28 days of this order, the respondents/cross-claimants cause a notice in the form of Annexure A to be sent via email to:

(a)    any person to whom the 2019 Announcement (Schedule 3 to the Second Further Amended Statement of Claim [2FASOC]) was sent between 1 February 2019 and the date of this Order;

(b)    any person to whom the New Powins Switchgear Brochure (Schedule 4 to the 2FASOC) was sent between 1 February 2019 and the date of this Order;

(c)    each party to (other than an employee of Powins) a Representative Customer Communication (Schedule 11 to the 2FASOC);

(d)    any other person to whom either of the respondents/cross-claimants has sent any communication relating to medium voltage switchgear panels or vacuum circuit breakers containing the marks AMS, MSA or VEP in the period between 1 February 2019 and the date of this Order.

8    Within 28 days of this Order or in the next edition following expiry of that period, the respondents/cross-claimants cause to be published at their expense a one-page advertisement in the form of Annexure A in the “Switchgear” section of Industrial Electrix magazine.

9    Within 28 days of this Order, the respondents/cross-claimants cause a notice in the form of Annexure A to be displayed (for a period of no less than 12 months) on:

(a)    the web page that is, at the date of this Order, hosted at the URL www.powins.com.au/mv-switchgear.php;

(b)    the LinkedIn page of Dean van Wijk.

10    Within 28 days of this Order, the respondents/cross-claimants cause a notice in the form of Annexure B to be displayed (for a period of no less than 12 months) on each of the web pages that are, at the date of this Order, hosted at the URLs:

(a)    www.powins.com.au;

(b)    www.powins.com.au/products.php.

11    Within 35 days of this Order, the respondents/cross-claimants file and serve an affidavit deposing to the steps they have taken to comply with paragraphs 6, 7, 8, 9 and 10.

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

ANNEXURE A

Federal Court Ordered Notice

Powins Pty Ltd and Gelpag Electrics Pty Ltd (Powins Companies) have been ordered by the Federal Court of Australia to publish this notice.

In proceedings brought by Xiamen Huadian Switchgear Co Ltd (Huatech) against the Powins Companies relating to the promotion and sale of medium voltage switchgear and vacuum circuit breakers, the Federal Court of Australia has found that the Powins Companies:

    engaged in misleading or deceptive conduct and made false or misleading representations contrary to the Australian Consumer Law that is Schedule 2 to the Competition and Consumer Act 2010 (Cth);

    engaged in passing off; and

    infringed Huatech's registered “VEP” trade mark (No. 1148294).

Powins was a non-exclusive distributor of Huatech's medium-voltage switchgear panels and vacuum circuit breakers (Huatech Products) between February 2016 and February 2019. The Huatech Products have been sold to Australian customers since at least 2007 under the marks AMS and VEP. In the period since its distribution arrangements ended, Powins has promoted and sold a different range of medium voltage switchgear panels and circuit breakers (New Powins Products), including by reference to the marks AMS, VEP, and MSA, and by reference to the thousands of Huatech Products previously installed in Australia.

The New Powins Products are not the same as, nor an updated model or version of, the Huatech Products, and they do not originate from the same manufacturer as the Huatech Products. During the period from February 2019 to July 2019, the Powins Companies did not have a type tested medium voltage switchgear or vacuum circuit breaker product at all, but sought to rely on the type testing completed on the Huatech Products.

The Court found that Huatech is the true owner of the AMS trade mark in relation to switchgear and circuit breakers.

The Powins Companies are not, and have not at any time since February 2019 been, authorised by Huatech to sell, or provide servicing, spare parts and operational testing for the Huatech Products. Prior to February 2019, the Powins Companies had not installed any medium voltage switchgear panels in Australia other than the Huatech Products. The Huatech Products continue to be available in Australia via authorised channel partners.

A copy of the Court's decision can be accessed here. A copy of the Court's orders can be accessed here [Insert link to declaratory and injunctive relief orders].

ANNEXURE B

Federal Court Ordered Notice

Powins Pty Ltd and Gelpag Electrics Pty Ltd (Powins Companies) have been ordered by the Federal Court of Australia to publish this notice.

In proceedings brought by Xiamen Huadian Switchgear Co Ltd (Huatech) against the Powins Companies relating to the promotion and sale of medium voltage switchgear and vacuum circuit breakers, the Federal Court of Australia has found that the Powins Companies:

    engaged in misleading or deceptive conduct and made false or misleading representations contrary to the Australian Consumer Law that is Schedule 2 to the Competition and Consumer Act 2010 (Cth);

    engaged in passing off; and

    infringed Huatech's registered “VEP” trade mark (No. 1148294).

For more information, please click here [Insert link to notice on MV switchgear page].

REASONS FOR JUDGMENT

HALLEY J:

INTRODUCTION

1    On 29 September 2022, I delivered my reasons for judgment in the substantive proceedings brought by the applicant, Xiamen Huadian Switchgear Co., Ltd, against the respondents, Powins Pty Ltd and Gelpag Electrics Pty Ltd, and made orders that the parties provide agreed draft declarations and orders to give effect to those reasons and in the absence of agreement provided for the parties to file submissions.

2    On 30 November 2022, with the consent of the parties, I made an order that the determination of the declarations and other non-pecuniary relief sought by the applicant would be determined on the papers.

3    The parties have filed competing submissions on the form of the declarations and other non-pecuniary relief that should be granted by the Court to give effect to the reasons for judgment.

4    Subject to the four issues that I address below, the parties have reached agreement on the wording of the declarations to be made, the form of the injunctions to be granted and the scope of the orders to made for corrective advertising and delivery up of offending material.

MATTERS FOR RESOLUTION

5    First, the applicant seeks the inclusion of the following paragraph in the corrective advertising orders:

The Court found that the Powins Companies were seeking to leverage off and obtain the benefit of the goodwill and reputation that Huatech had established in its AMS and VEP branded products with customers and end users in Australia, and that the Powins Companies’ conduct constituted a conscious and contumelious disregard for Huatech’s rights.

(additional paragraph)

6    The applicant submits that it is necessary to include the additional paragraph in the corrective advertising orders in order to inform the market adequately of the conduct, which was not limited to misleading and deceptive conduct and was sufficient to warrant the award of exemplary damages.

7    I do not accept that it is necessary or appropriate to include the additional paragraph in the corrective advertising orders.

8    As Tamberlin J explained in Australian Competition and Consumer Commission v On Clinic Australia (1996) 35 IPR 635 (On Clinic) at 640:

The purpose of corrective advertising is to protect the public interest. Corrective advertising is intended to dispel incorrect or false impressions which may have been created as a result of deceptive or misleading conduct. It is not intended to be punitive.

9    I am satisfied that the inclusion of the paragraph sought by the applicant in the corrective advertising orders would be unnecessarily punitive and the orders proposed by the respondents are otherwise sufficient to ensure that:

(a)    the relevant market is informed of the outcome of the litigation so that those in the market have a broad understanding of how the Court has approached the contravening conduct: Australian Competition and Consumer Commission v Tel.Pacific Limited [2009] FCA 279 at [15] (Gordon J) cited with approval in Australian Competition and Consumer Commission v Boost Tel Pty Limited [2010] FCA 701 at [116] – [117] (Siopis J); and

(b)    the correction is sufficient to remind the public at large about the consequences of engaging in misleading and deceptive conduct: Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1; [2003] FCAFC 289 at [53] (Stone J).

10    Second, if the additional paragraph is not included in the corrective advertising orders the applicant seeks a declaration in these terms:

A principal objective of the passing off was to seek to persuade customers and end users that the switchgear panels and circuit breakers Powins offered for sale since around March 2019 were the same products as the switchgear panel and vacuum circuit breaker products manufactured by the Applicant (Huatech) and sold by or on behalf of Huatech in Australia since around 2007 (Huatech Products) and that they were manufactured by the same company, when that was untrue. The Respondents were seeking to leverage off and obtain the benefit of the goodwill and reputation that the Applicant had established in the AMS and VEP branded Huatech Products with customers and end users in Australia.

(proposed declaration)

11    The applicant submits that it is necessary to characterise the infringing conduct in the terms set out in the proposed declaration. The applicant contends that such a characterisation would do more to mitigate the damage caused to Huatech’s goodwill and reputation by showing that the infringement was the result of a deliberate appropriation of Huatech’s goodwill and reputation.

12    I do not accept that it is necessary or appropriate to make a declaration in those terms. There must be a practical purpose in the Court’s decision to make a declaration: S & V Nominees Pty Ltd (in liq) v Rabobank Australia Ltd (No 2) [2011] FCA 1039 at [6] (Besanko J). It would be inappropriate for a court to grant a declaration for the purpose of clarification of reasons for judgment of a court: Mees v Roads Corporations [2003] FCA 410 at [8] (Gray J). As submitted by the respondents, the paragraph that the applicant seeks to include is a finding of fact made by the court in its reasons for judgment.

13    Third, the respondents seek the inclusion of the following words at the conclusion of the delivery up of offending material order:

…and not disclosed or provided by them to any person other than Huatech’s solicitors except with the written consent of the Respondents (which may be given by their solicitors) or further order of the Court.

14    The effect of the proposed wording is to prohibit “them”, that is, Huatech’s solicitors, from disclosing the offending material that has been delivered up to them by the respondents to any person other than “Huatech’s solicitors” except with the written consent of the respondents or an order of the Court. I do not accept that it is necessary or desirable that such words be added to the delivery up of offending material order. The material is expressly provided for the purposes of destruction and there are existing non-publication orders that have been made in this proceeding on 10 December 2021 with respect to documents before the Court. If necessary, the parties can approach the Court to seek any necessary variation to those non-publication orders to extend them to documents that have not otherwise been before the Court.

15    Fourth, the applicant seeks the following additional declarations that are not opposed by the respondents:

The Second Respondent threatened to contravene sections 18, 29(1)(a), 29(1)(g) and 29(1)(h) of the ACL, engage in the tort of passing off, and infringe the VEP Registration, by filing Australian Trade Mark Application No. 1996289 “GELPAG VEP”.

The Respondents threatened to contravene sections 18, 29(1)(a), 29(1)(g) and 29(1)(h) of the ACL, and engage in the tort of passing off, by filing Australian Trade Mark Applications Nos. 1996288 “GELPAG AMS”, 1996290 “GELPAG MSA” and 1996287 “POWINS AMS”.

16    I am satisfied that the proposed additional declarations declare rights by declaring contraventions or unlawful conduct and it is appropriate that they be made.

DISPOSITION

17    Declarations and orders for non-pecuniary relief will be made in the form agreed by the parties, subject to the resolution of the four outstanding matters as I have explained above.

18    There will be no order as to costs with respect to the making of the declarations and the orders for non-pecuniary relief. The extent of the disagreement was relatively minor, neither the applicant nor the respondents has been wholly successful and the parties have otherwise worked collaboratively and effectively to reach agreement on the form of the declarations and orders.

Associate:

Dated:    5 December 2022