Federal Court of Australia

Victoria’s Secret Stores Brand Management LLC v ePharmacy Group Pty Ltd [2023] FCA 921

ORDERS

BY CONSENT, THE COURT ORDERS THAT:

1.    Subject to any further order or direction of a judge of the Court, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground set out in s 37AG(1)(a) of the Act, unless authorised by either of the applicants, publication or other disclosure of the information in the following documents is prohibited for a period of 10 years:

(a)    confidential annexures EJW-13 (first full paragraph on p 294 and all of p 312) and EJW-16 (italicised text on pp 321 to 322, the first full paragraph on p 322 and all of pp 324 to 332) to the affidavit of Elisabeth Jane White sworn on 25 November 2022;

(b)    confidential annexures JB-2, JB-6, JB-7, JB-13 and JB-14 to the unsworn affidavit of Jeffrey Braden, contained in confidential annexure EJW-27 to the second affidavit of Elisabeth Jane White sworn on 25 November 2022;

(c)    confidential annexures JB-2, JB-6, JB-7, JB-13 and JB-14 to the affidavit of Jeffrey Braden sworn on 30 November 2022;

(d)    confidential annexure A to the orders of the Court made on 1 December 2022.

2.    The proceeding otherwise be dismissed.

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

REASONS FOR JUDGMENT

KATZMANN J:

1    In this proceeding, two companies in the Victoria’s Secret group (the applicants), both incorporated in the United States of America, claim that four Australian companies and two individuals (the respondents) have infringed certain Australian registered trade marks owned by the first applicant (Victoria’s Secret Brand Management, LLC) and contravened the Australian Consumer Law by supplying, distributing, advertising, offering for sale, selling and/or trading in counterfeit fragrance products carrying those marks.

2    The originating application included a claim for an interlocutory injunction, which was supported by a number of affidavits. Several annexures to these affidavits were marked “confidential”. The matter first came before the Court on 25 November 2022. On that date Nicholas J (as duty judge) made an interim suppression order under s 37AI of the Federal Court Act 1976 (Cth) (FCA Act) prohibiting the publication or other disclosure of the information contained in the confidential annexures until 29 November 2022. On 29 November 2022 the order was extended to 1 December 2022.

3    On 1 December 2022 Nicholas J dismissed the application for the interlocutory injunction after being informed that all stock of the applicants’ fragrance products has been removed from sale in Australia and certain undertakings were given to the Court. The effect of those undertakings was that all such goods would be recalled and a moratorium would be imposed on the importation and supply of such goods pending until the final determination of the proceeding or further order. The same day Nicholas J made a further interim order prohibiting the publication or other disclosure of the information in the affidavits until further order.

4    The interim orders covered the following documents:

(a)    confidential annexures EJW-13 and EJW-16 to the affidavit of Elisabeth Jane White sworn on 25 November 2022;

(b)    confidential annexures JB-2, JB-6, JB-7, JB-13 and JB-14 to the unsworn affidavit of Jeffrey Braden, contained in confidential annexure EJW-27 to the Ms White’s second affidavit sworn on 25 November 2022;

(c)    confidential annexures JB-2, JB-6, JB-7, JB-13 and JB-14 to the affidavit of Mr Braden sworn on 30 November 2022; and

(d)    confidential annexure A to the orders made by Nicholas J on 1 December 2022.

The documents in (b) and (c) are identical. Confidential annexure A to the orders made on 1 December 2022 consists of certain images appearing in, and other information taken from, the confidential annexures to the affidavits.

5    Ms White is a partner of Baker McKenzie, the applicants’ lawyers. Mr Braden holds the title of Director of Brand Protection for Victoria’s Secret & Co (VS&Co), the second applicant.

6    The interim order reflected the terms of an inter partes confidentiality regime the parties had put in place in which access to the documents and the information in them was restricted to people who had provided confidentiality undertakings in an agreed form.

7    The proceeding was subsequently docketed to me.

8    On 20 July 2023 I was informed that the proceeding had settled and invited to make orders by consent. Those orders included orders the effect of which would make the interim orders final. But no such order can be made without taking into account the fact that “a primary objective of the administration of justice is to safeguard the public interest in open justice”: FCA Act, s 37AE. Furthermore, the Court is required to specify the duration of the order: FCA Act, s 37AJ(1). Consequently, I directed the applicants to file evidence and submissions in support of the application. On 4 August 2023 the applicants filed a third affidavit from Ms White. Having read the evidence and submissions I am prepared to accede to their application.

9    Section 37AF relevantly provides that the Court may make a suppression order or non-publication order, on grounds permitted under Pt VAA of the Act, prohibiting or restricting the publication or other disclosure of “information that relates to a proceeding before the Court” and which “comprises evidence or information about evidence” or “information lodged with or filed in the Court”: see FCA Act, s 37AF(1)(b)(i) and (iv). Each of the italicised terms in the preceding sentence is defined in s 37AA. A “non-publication order” means an order that prohibits or restricts the publication of information but does not otherwise prohibit or restrict the disclosure of information. A “suppression order” means an order that prohibits or restricts the disclosure of information by publication or otherwise. “Information” includes any document. In the event that the Court is satisfied that such an order should be made, the Court is obliged to ensure that the period during which the order is to operate is “no longer than is reasonably necessary to achieve the purpose for which it is made”: FCA Act, s 37AJ.

10    The grounds upon which such an order can be made are listed in s 37AG.

11    The information the subject of the application answers the description in s 37AF(1)(b)(i) and (iv). The information is of two types. The bulk of the information is information used by the applicants to distinguish between genuine and counterfeit goods (confidential counterfeit indicia), which relates to the applicants’ current products and processes, The second type consists of sales figures derived from the applicants’ business in Australia (sales figures document). Ms White deposed (on information and belief) that the documents in question contain information which is confidential and commercially sensitive to the applicants and is not in the public domain. The source of her information is Mr Braden.

12    The ground upon which the order is sought is the first of the grounds appearing in s 37AG, namely, that “the order is necessary to prevent prejudice to the proper administration of justice”.

13    Confidential annexures JB-6, JB-7, JB-13 and JB-14 contain information regarding VS&Co’s manufacturing and design specifications, quality control procedures, and features used by the applicants to distinguish genuine Victoria’s Secret manufactured products from counterfeit products. Ms White deposed that:

Specifically, these documents identify specific elements of product packaging, labelling, and the marks of manufacturing tools and processes which are unique to genuine Victoria’s Secret products. The documents contain a comparative analysis of these features by reference to the products the subject of these proceedings. Victoria’s Secret uses its knowledge of these details to distinguish between genuine and counterfeit products. That is, these elements are markers that are present in genuine goods but not in counterfeit goods, or that are present in counterfeit goods but not in genuine goods, and so their presence or absence indicates whether a product is genuine or counterfeit.

14    Confidential annexures EJW-13 and EJW-16 are letters from Baker McKenzie to the lawyers for the respondents, which include some of the same information.

15    Ms White deposed, again based on what Mr Braden told her, that the applicants have in place “strict internal and external confidentiality controls” to protect the confidentiality of the confidential counterfeit indicia, reflecting its “highly commercially sensitive nature” and its critical importance to VS&Co’s anti-counterfeiting program. Ms White went on to say:

If this information were to be disclosed, it would provide manufacturers, importers, distributors and/or suppliers of counterfeit Victoria’s Secret products with a “roadmap” to evade detection. Such disclosure would be commercially damaging to Victoria’s Secret, as it would render Victoria’s Secret's anti-counterfeiting measures potentially futile as Victoria’s Secret could not rely upon the key indicia used by VS&Co to identify fake products. Once this information became known, or even available, to counterfeiters, it could never again be relied on to distinguish real products from counterfeits … As long as this information does not become available or known to counterfeiters, it can be used to identify counterfeits for many years.

16    Confidential annexure JB-2 is the sales figures document. It records retail sales figures for the Vitoria’s Secret business in Australia for every month from February 2017 to November 2022. The figures are reproduced in pp 121 to 123 of confidential annexure EJW-27.

17    Ms White deposes, again on the basis of what she was told by Mr Braden, that Victoria’s Secret does not publish country-specific sales figures and has internal controls in place which restrict access to, and circulation of, documents relating to its confidential financial information including sales figures. She says that disclosure of the information would give any actual or potential competitor an unfair commercial advantage in the Australian market and therefore have a detrimental effect on the applicants’ commercial operations in Australia. Moreover, as the sales figures are broken down by month, “a competitor could understand the annual sales patterns of the business, which would allow them to plan and tailor their own operations to take market share from Victoria’s Secret”. By combining this information with information publicly available on the internet, a competitor would be able to understand what marketing and sales techniques had worked for Victoria’s Secret in Australia. That would allow the competitor to compete with Victoria’s Secret without having to do its own market research.

18    Mr Braden’s affidavit confirms what Ms White says about the contents of the confidential annexures to his affidavit.

19    Perram J summarised the principles to be applied when the Court is considering whether to make such a suppression order in Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17 at [8]–[9]. This summary was cited with approval by the Full Court (Perram, Pagone and Bromwich JJ) in Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47 at [4].

20    In short, a suppression order pursuant to s 37AG(1)(a) is not to be made lightly. The order must be necessary to prevent prejudice to the proper administration of justice, not merely convenient or even desirable, and “‘necessary’ is a strong word”: Hogan v Australian Crime Commission (2010) 240 CLR 651 at [30]. No balancing exercise is involved. The mere fact that information relevant to a proceeding is not in the public domain will rarely be a sufficient basis to suppress its publication: Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [9] (Edelman J).

21    Here, the evidence does not merely reveal that the information in question is not in the public domain. It also discloses that the information is of a commercially sensitive nature such that, if it were disclosed, there is a real, not fanciful, risk that the applicants’ competitors would use the information to damage the Victoria’s Secret business in the market in which it operates. I take into account the objective of safeguarding the public interest in open justice. Even so, as I observed in a similar situation in Australian Competition and Consumer Commission v Origin Energy Electricity Ltd [2015] FCA 278 at [148]:

It is not in the interests of the administration of justice that the proceedings “become a vehicle for advantaging or prejudicing trade rivals”: Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [23]. It is in the interests of the proper administration of justice that the value of confidential information not be destroyed or diminished. Otherwise, the parties and members of the public might lose confidence in the Court and the Court’s processes “might open the way to abuse”: Australian Broadcasting Commission v Parrish (1980) 29 ALR 228; (1980) at 230; 43 FLR 129 at 134.

22    In these circumstances I am satisfied that it is necessary in the interests of justice to make an order preventing the publication or other disclosure of the information.

23    The remaining question is over which period of time the order should operate in order to prevent prejudice to the proper administration of justice. The agreed period is 10 years. On this question the applicants’ submissions are silent, save to refer to an order of this duration having been made in Porter v Dyer [2022] FCAFC 116; 402 ALR 659 (Besanko and Abraham JJ).

24    Porter v Dyer concerned an appeal from a judgment in which an injunction had been granted to restrain counsel from acting for a defendant in a defamation suit. The basis for the injunction was the existence of a real possibility that confidential information, being information disclosed in confidence to senior counsel for the purpose of obtaining legal advice, would be misused (Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641). At first instance, the primary judge decided to prohibit the disclosure of certain documents and parts of documents because “disclosure of the material is reasonably likely to result in the disclosure of the confidential information and privileged communications which the applicant disclosed to the Court in order to obtain the relief sought, being relief intended to prevent the possible disclosure or use of the information” (see Porter v Dyer at [6]).

25    In their reasons on the appeal, Besanko and Abraham JJ did not explain why they had settled on 10 years and it may be accepted that the determination of the duration of the order will often be based on instinct or impression. In the present case, I take into account the fact that the duration of the order is the subject of an agreement and that the applicants have proposed that the period be subject to the capacity of a judge to vary it at any time. In the circumstances and, having regard to the information itself, I consider the period to be an appropriate one.

Associate:

Dated:    7 August 2023

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