Federal Court of Australia

Maxim Media Inc. v Nuclear Enterprises Pty Ltd [2024] FCA 1443

ORDERS

THE COURT ORDERS THAT:

1.    The application for interlocutory relief is refused.

2.    The proceeding be referred to the National Operations Registrar for allocation to a docket judge.

3.    The proceeding be listed for a case management hearing on a date and time to be advised to the parties.

4.    Within five business days of the date of this order, the parties file and serve short written submissions limited to two pages in relation to costs of the application for interlocutory relief.

5.    Liberty to apply.

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

REASONS FOR JUDGMENT

ROFE J:

1.    Introduction

1    This proceeding was commenced on 30 September 2024, when the applicants, Maxim Media Inc. and Maxim Inc. (together, Maxim) filed their originating application. The respondents to this proceeding are Nuclear Enterprises Pty Ltd (Nuclear) and Mr Michael Ronald Downs. Mr Downs is the sole director, shareholder, and secretary of Nuclear.

2    In my capacity as a duty judge, I listed the matter for a case management hearing on 4 October 2024 and made various orders, including that the matter be listed before me as duty judge for interlocutory hearing on 18 November 2024.

3    In its originating application, Maxim applied for the following interlocutory relief:

Claim for Interlocutory Relief

The Applicants also claim the following interlocutory relief:

1. Upon the Applicants giving the usual undertaking as to damages, an order that, until further order, the Respondents, whether by themselves, the First Respondent’s officers or employees, the Respondents’ agents, or otherwise howsoever, be restrained, without the licence or authority of the Applicants from:

a. using as a trade mark the word "MAXIM" in Australia or any trade mark that includes the word "MAXIM" or a trade mark that is deceptively similar to the word "MAXIM" in relation to the publication of a magazine or a website on or in relation to men's lifestyle, interests and popular culture, or in relation to tour operations or travel services, or in relation to model management or model booking services;

b. publishing, selling, or distributing MAXIM Magazine in Australia;

c. operating the domain names www.maxim.com.au and www.destinationmaxim.com.au;

d. operating any social media pages under the MAXIM name and the Destination Maxim name or derivatives thereof; and e. authorising any other person to do any of the aforesaid acts.

2. Costs.

3. Such further or other orders or relief as the Court considers appropriate.

4    Maxim’s concise statement dated 30 September 2024 raises the following grounds for relief:

28. In accordance with the terms of the License, Maxim is the owner of the 2020 TM and the 2023 TM.

29. Further or alternatively, Maxim holds the 2020 TM and the 2023 TM on constructive trust for the First Applicant.

30. Pursuant to s 120(1) and /or s 120(2) of the Trade Marks Act 1995 (Cth) (the TMA), Nuclear has infringed and continues to infringe the 2020 TM and the 2023 TM.

31. Alternative to Maxim's ownership of the 2020 TM and the 2023 TM, the said trade mark registrations are liable to be cancelled under s 88(1)(a) of the TMA on the basis that their applications could have been opposed on the grounds of opposition under ss 42(b), 58, 59, 60, 62(b) and 62A of the TMA, and / or under s 88(1)(c) of the TMA, because of circumstances applying at the time of this application, the use of the trade marks the subject of the 2020 TM and the 2023 TM would be likely to deceive or cause confusion.

32. Maxim is aggrieved by the 2020 TM and the 2023 TM because:

a. their registration was obtained in breach of Maxim's contractual rights; and b. any use by Maxim of the trade mark "MAXIM" or "Maxim-derivative" trade marks in relation to printed and online magazines or similar goods or services in Australia risks infringing the 2020 TM and the 2023 TM.

33. By its use of the Trade Marks and its conduct in continuing to publish, sell, and distribute the National Edition and operate the National Website without Maxim's authority, licence, or consent, Nuclear has engaged in misleading or deceptive conduct or conduct that is likely to mislead or deceive in contravention of s 18(1) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the ACL).

34. By its conduct described in the preceding paragraph, Nuclear has and is making a false or misleading representation that the National Edition and the National Website published by it has the sponsorship or approval of Maxim and/ or that Nuclear has the sponsorship, approval or an affiliation with Maxim in contravention of ss 29(1)(g) and / or 29(1)(h) of the ACL.

35. By its conduct described in paragraph 33 above, Nuclear is misrepresenting to the public that a connection exists between Maxim and Nuclear and thereby constitutes the tort of passing off.

36. Mr. Downs is a joint tortfeasor in the trade mark infringement described in paragraph 30 above by reason of his position as the sole director, secretary and shareholder of Nuclear and his conduct as the managing director of Nuclear Media in procuring and / or directing Nuclear to infringe the 2020 TM and the 2023 TM.

37. Mr. Downs was involved in Nuclear’s contraventions of the ACL within the meaning of "involved" in s 2 of the ACL by aiding, abetting, counselling, or procuring, or being, in any way, directly or indirectly, knowingly concerned in, or party to, the contraventions.

38. Mr. Downs is a joint tortfeasor in the passing off described in paragraph 35 above by reason of his position as the sole director, secretary and shareholder of Nuclear and his conduct as the managing director of Nuclear Media in procuring and / or directing Nuclear to commit the tort of passing off.

5    I note at the outset that Maxim has proffered the following undertaking if the interlocutory relief sought is granted or any interlocutory undertaking is given by the respondents:

[to] submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court as it may direct) to any person (whether or not that person is a party) affected by the operation of the order or undertaking or any continuation (with or without variation) of the order of the undertaking; and

… to pay the compensation referred to … [above] to the person or persons affected by the operation of the order or undertaking.

6    For the reasons that follow, I am satisfied that Maxim has established a prima facie case, however, I am not satisfied that the balance of convenience favours the grant of an injunction.

2.    Evidence

7    Maxim relies on:

(1)    two affidavits of Nicholas Shane Norman affirmed on 26 September 2024 and 14 November 2024;

(2)    two affidavits of Jessica Anne Tomlinson affirmed on 30 September 2024 and 12 November 2024; and

(3)    the affidavit of Stefano Alfredo Mazzeo affirmed on 12 November 2024.

8    A third affidavit of Ms Tomlinson was filed after the interlocutory hearing on 20 November 2024.

9    Nuclear and Mr Downs rely on:

(1)    the affidavit of Lottie Cabassi-Power affirmed on 11 November 2024; and

(2)    the affidavit of Michael Downs affirmed 12 November 2024; and

(3)    the affidavit of Hannah Leuchars affirmed 17 November 2024.

3.    Background

10    Maxim is a United States of America (US) based multimedia business which publishes, promotes, and distributes ‘MAXIM Magazine’, a ‘men’s lifestyle magazine’. Maxim licenses its trade mark portfolio to publishers internationally who utilise the ‘Maxim’ logo and brand.

11    In the US, Maxim’s predecessor in business was Alpha Media Group Inc. Maxim Media Inc. purchased the MAXIM business from Alpha in 2014, with the intellectual property rights in the MAXIM magazine being transferred to Maxim Media Inc.

3.1    Trade mark and domain name registrations

12    Alpha was the registered owner of Australian Trade Mark Registration No. 797233 for the word ‘Maxim’ in Class 16 with a priority date of 15 June 1999 (the 233 Registration). The Register of Trade Marks was never updated to record that the 233 Registration had been assigned to Maxim. The 233 Registration expired on 23 December 2019.

13    Nuclear is the registered owner of Australian Trade Mark Registrations:

    2061987 for the word ‘MAXIM’ in Classes 9, 16 and 41, with a priority date of 9 January 2020 (the 2020 TM); and

    2386402 for ‘DESTINATION MAXIM’ in Classes 9, 16, 39 and 41, with a priority date of 6 September 2023 (the 2023 TM),

(together, the Nuclear TMs).

14    In July 2024, Maxim Media Inc. filed the following Australian Trade Mark Applications:

    2476131 for the word ‘MAXIM’ in Class 16, with a filing date of 8 July 2024;

    2468466 for the word ‘MAXIM COVER GIRL’ in Class 41, with a filing date of 24 July 2024; and

    2468465 for the word ‘MAXIM’ in Classes 9, 25, 35, 38, 39, 40, 41, 44, with a filing date of 24 July 2024,

(together, the Maxim Registrations).

15    Nuclear is the registered owner of the domain name www.destinationmaxim.com.au since about 2022. Evidence was not provided as to the registered owner of the domain name www.maxim.com.au, however it was common ground between the parties that the respondents operate the webpages available at both the domain names www.destinationmaxim.com.au and www.maxim.com.au. The respondents also operate several social media pages under the MAXIM name.

3.2    Licence

16    On 2 May 2011, Alpha and Nuclear entered into a written licence agreement (the Licence).

17    Amongst other things, under the terms of the Licence, Alpha granted to Nuclear:

    the exclusive right to publish and distribute the MAXIM Magazine (the National Edition) and operate the domain name and website associated with MAXIM Magazine (National Website) in Australia and New Zealand (clause 2(a) of the Licence); and

    an exclusive licence to use as a trade mark “Maxim” and other trade marks used in connection with the business (Licensed Marks), but for only the purpose of publishing the National Edition and operating the National Website (clause 2(b) of the Licence).

18    Clauses 5(a)–(b) of the Licence states:

(a) Licensee shall print, publish and promote al Licensee's expense. twelve (12) monthly issues of the National Edition per License Year and shall update the National Website at least monthly after the National Website is launched estimated to be no later than July 18, 2011. Licensee shall be entitled, in addition, to publish one (or more) "special edition" of the National Edition during each License Year. The title of the National Edition shall be "Maxim Australia".

Licensee shall use a domain name for the National Website approved by the Company (which shall be owned by the Company if it includes "Maxim"), shall create links to other Maxim websites determined by the Company and shall report to the Company all website usage information including audited and unaudited hits, website visits, clicks, click throughs, unique visitors, page views and page impressions. Licensee shall adopt and maintain the style, content and editorial direction of the National Website consistent with the Company's branding and content guidelines, as amended by the Company from time to lime on notice to Licensee.

(b) The Company shall furnish the Material for the National Edition and National Website to Licensee in the form of high-resolution electronic graphic images and page layout files via the Company's iBase System (and/or FTP, as necessary). The Company agrees to (i) make reasonable efforts to obtain foreign publication rights; to the Restricted Material for publication in the National Edition and the National Website as well as any other website specific content at Licensee’s expense and (ii) advise Licensee in writing as to those parts of any issue of the Magazine that are deemed to be Restricted Material. Licensee agrees that it will not publish any Material, which the Company advises Licensee, in writing, constitutes Restricted Material.

19    Clause 6(e) of the Licence required Nuclear to cause the National Edition and the National Website to contain the following statement:

The name “Maxim”, the logo thereof (and the names of any departments or columns that have been registered as trademarks in the Territory) are registered trademarks of Alpha Media Group Inc., which trademarks have been licensed in Australia to Nuclear media and Publishing.

20    Clause 6(f) of the Licence states:

Licensee acknowledges that the Company is the sole and exclusive owner or licensee of the registrant of the entire right, title and interest in and to the Trademarks and controls the necessary rights to the Material. Licensee agrees that it will not, during the Term of this Agreement and thereafter claim, register or attempt to register any mark or domain name that includes the name "Maxim" or attack the title of the Company or the registrant in and to the Trademarks or Material or take any action or omission that may lessen, impair, or tend to impair the title of the Company in and to the Trademarks or Material or attack the validity of this Agreement. In connection with the use of the Trademarks, Licensee shall not, in any manner, represent that it has any ownership in the name “Maxim”, the logo, or any other Trademarks and Licensee’s use shall not create in Licensee’s favor any right, title or interest in or to the Trademarks, and all uses of the same by the Licensee shall inure to the benefit of the Company.

21    Clause 6(g) of the Licence states:

With respect to each and every use of the Trademarks by or for Licensee, Licensee’s use and employment of all such Trademarks shall be solely as authorized and contemplated herein. Additionally, Licensee, in regard to all such uses shall present, use and publish the Trademarks in a manner which at all times reflects the high standard of use of the Trademarks by the Company in the Magazine and its Website. In any case where the Company, in its sole judgment, may determine that the Trademarks or any one of the Trademarks is used or portrayed by Licensee in a manner which undermines or detracts from the value, renown, and/or standards with which the Trademarks have come to be associated, then the Company, upon written notice, shall have the right to require Licensee to promptly after, revise or correct any such use or portrayal, and Licensee shall promptly revise or correct such use or uses.

22    Clause 6(i) of the Licence expresses:

Licensee agrees to procure such registrations, or similar filings or recordings, as may be required by law in the Territory to constitute the Company as the owner of such Trademarks and Licensee as the registered user thereof during the Term of this Agreement. Licensee shall provide the Company with a copy or each document relating to such registrations, filings and recordings. All fees and expenses incident lo such registrations, filings, or recordings and to securing any required validation, authorisation, or other governmental approvals or this Agreement in the Territory shall be borne by Licensee.

23    Clause 7 of the Licence provides:

(a) The Term of this Agreement shall commence as or the date stated on its first page hereof and, unless earlier terminated pursuant to the terms thereof, shall continue in force until the end of the Third License Year. Licensee shall have the option to renew this Agreement, on the same terms and conditions, for one (1) additional two (2)-year Term as follows: Licensee shall notify the Company of its desire to renew the Agreement for such further Term by written notice to the Company given not less than one hundred and eighty (180) days prior to the conclusion of the prior Term. Provided the Licensee is not in default under this Agreement on the date that notice is given and the date the renewal Term commences, and provided that Licensee has consistently maintained the editorial standards set forth herein and the reputation and image of the Magazine, and provided that the Licensee has met the minimum performance thresholds listed in Exhibit 1, the Agreement will be renewed, commencing upon the conclusion of the prior Term.

(b) Notwithstanding the provisions of Section 7(a), either party may terminate this Agreement upon written notice to the other party, effective on the date specified in such notice:

(i) If the other party shall default in the performance of any of the covenants or conditions of this Agreement and shall fail to remedy such default and adopt reasonable measures to prevent reoccurrence of such default within thirty (30) days after receipt from the other party of written notice selling forth, in reasonable detail, the alleged default and the intention of the party serving the notice to terminate this Agreement, or …

24    Clause 8 of the Licence specifies certain rights and duties which are said to subsist after termination of the Licence, stating:

(a) Upon any termination of this Agreement, all rights and licenses herein granted lo Licensee shall terminate and revert to the Company and the Company shall have the right, alone or jointly with another person, firm, or corporation or through another licensee, to publish in the Territory and in the English language an edition or editions of the Magazine without compensation of any kind to Licensee and Licensee shall take no action lo impair the right or the value of the right of the Company or anyone designated by the Company to so publish.

(b) Upon any termination of this Agreement, Licensee shall (i) immediately cease publication, distribution and sale of the National Edition and lake down the National Website, (ii) promptly return to the Company all Material, (iii) immediately cease using "Maxim" (or any other former or current title of the National Edition approved by Company), the Material, Trademarks, and any titles or materials incorporating such title or Tn1dcmai-ks or Materials, and (iv) promptly execute such documents and make such filings , registrations, and recordings as are necessary to (x) transfer hack to the Company all right, title and interest in all licenses, copyrights, trademarks, domains, and other proprietary rights hereunder granted to Licensee (y) confirm the transfer to the Company of any right Licensee may have in copyrights secured pursuant to this Agreement, and (z) take such action as may be required to make public the fact that Licensee is no longer authorized to use the Trademarks and Material.

(c) Upon any termination of this Agreement pursuant to paragraph 7 (c) (iv), the Company hereby undertakes to hold the Licensee indemnified with respect to any monies due to the advertisers, subscribers, and users. Licensee shall remain liable and shall promptly pay to the Company any moneys due or accrued and shall refund to advertisers, subscribers and users and hold the Company indemnified with respect to refunds of prepaid amount; except as set forth above in this Section.

(d) Licensee acknowledges that its failure to cease publication, distribution, or sale of the National Edition or the National Website, or failure to furnish the Company with a list of the names, addresses and email addresses of subscribers to and advertisers in the National Edition and the National Website, or to cease use of the Trademarks and Material upon the termination of this Agreement will remit in immediate and irremediable damage to the Company and that there is no adequate remedy at law for such failure to cease such publication, distribution, sale or use. Licensee agrees that, in the event of any such failure, the Company shall be entitled to equitable relief by way of temporary and permanent injunctions and such other and further relief as any court with jurisdiction may deem just and proper.

25    Clause 14 of the Licence details the governing laws according to which the Licence is to be enforced and interpreted:

(a) This Agreement shall be governed by interpreted and enforced exclusively according to the laws of the State of New York, United States of America applicable to agreements made and to he performed therein.

(b) The Company and Licensee each hereby submit to the jurisdiction of the Federal and State courts of the State of New York in the City of New York. Such courts shall be the sole and exclusive forum for the resolution of all disputes relating to this Agreement, except with respect to equitable relief sought by the Company pursuant to this Agreement which may be sought in any appropriate jurisdiction. Process may be served upon the parties (i) by any means permitted by law, (ii) pursuant to the notice provisions set forth in Section 11 of this Agreement and (iii) by international postal courier service such as Federal Express or similar service.

(c) The parties agree any judgment (including any default judgment) of the New York State or federal courts shall be enforceable by any court or other agency anywhere in the Territory (including Australia or New Zealand) having jurisdiction over the subject matter thereof.

26    Clause 22 of this Licence details the sections which shall survive termination:

The provisions of Sections 3, 4(a), 4(b), 5(j), 6(f), 6(g), 8, 9, 10(a), 10(b), 12, 14, 17, 21 and this Section 22 shall survive the termination of his Agreement.

27    Under clause 7 of the Licence, both Nuclear and Maxim could terminate the Licence in the event of default. Maxim could also terminate the Licence if Nuclear failed to pay any fee owed under the Licence. Following termination, the rights granted under the Licence revert to Maxim, and it then has the sole right to publish the National Edition. Further, Nuclear was required, upon termination, to immediately stop publishing the National Edition, take down the National Website, and cease using the Trade Marks and transfer any rights in the Trade Marks and any domain names to Maxim.

3.3    Conduct

28    As noted earlier, in 2014, Maxim Media Inc. purchased the MAXIM business from Alpha.

29    By letter dated 10 December 2015, Maxim informed the respondents of the assignment to Maxim of all rights and title of Alpha under the Licence and noted that the Licence continued until 1 May 2016 on identical terms (save for the annual licence fee, which was reduced from US$60,000 to US$40,000). The respondents noted their acceptance of the assignment of the Licence to Maxim Inc. by signing the letter.

30    Mr Downs’ evidence was that whilst Alpha was a party to the Licence, Nuclear was given access to a “MAXIM portal” via which Nuclear was provided with magazine content which meant that Nuclear only had to provide some local Australian content, not an entire magazine’s worth of content. According to Mr Downs, Nuclear’s access to the MAXIM portal ceased soon after Maxim took over from Alpha.

31    Following the expiry of the Licence on 1 May 2016, Nuclear continued to publish and distribute the National Edition and operate the National Website. Nuclear paid an annual sum of US$40,000 to Maxim until July 2023. There was no written agreement extending the term of the Licence beyond 1 May 2016, or a new written agreement governing the ongoing relationship between Maxim and Nuclear.

32    In Maxim’s concise statement in reply dated 6 November 2024, it asserts that:

2. The License continued indefinitely on the terms contained in the License, as amended by the 10 December 2015 letter, by reason of the conduct of the parties in continuing to act as though the License bound them. That conduct included:

a. Nuclear publishing and distributing the National Edition in Australia and New Zealand and Nuclear operating the National Website under the Maxim Magazine mast-head and the MAXIM trade mark;

b. Nuclear continuing to pay the annual licence fee under the License as reduced by the 10 December 2015 letter from 2016 until July 2023 (noting it has not paid a licence fee in 2024);

c. each edition of the National Edition (other than those since the Applicants’ termination in July 2024) containing notices that “MAXIM” and the Maxim logo are registered trade marks of Maxim Media Inc., and used under licence; and

d. Maxim having oversight of and reviewing the National Edition from time to-time.

33    On 4 December 2023, Mr Norman, the Vice President of Operations of Maxim wrote to Mr Downs, Managing Director of Nuclear, stating “our licence agreement expired in 2016. Since that time we’ve been operating without a written agreement. We will need a written agreement starting on 1 January 2024” and giving notice to Nuclear that the annual licence fee would be increased to US$350,000 from 1 January 2024. Nuclear says that this proposed fee exceeds the amount of money that Nuclear makes from the MAXIM publication annually. Following several negotiations, Nuclear informed Maxim on 5 July 2024 that it did not agree to pay the increased licence fee, and nor did it pay the US$40,000 licence fee for the year 2024.

34    Maxim purported to terminate the Licence on 24 July 2024.

35    Nuclear has continued to publish the National Edition and operate the National Website and several accompanying social media pages since the purported termination.

3.4    Destination MAXIM and Global PR

36    Since 2018, Nuclear has developed a tour program known as ‘Destination MAXIM’ where models pay for flights, accommodation, photoshoots and food in exchange for a feature in the Australian or New Zealand publications, and related social media exposure.

37    In or around September 2018, Nuclear hosted the first Destination MAXIM tour in Thailand. On 13 September 2018, Scott Lehmann, an employee of Maxim, contacted Mr Downs of Nuclear asking for an outline of the September 2018 “model trip” and stating he wants “to see if we could create something similar in the US”.

38    In order to solicit models, Nuclear had an engagement with a third-party company, known as Global PR. Global PR operates by soliciting female models for a fee.

39    Maxim submits that, through its practice of soliciting models for payment, Nuclear may cause irreversible reputational damage to the MAXIM brand both in Australia and internationally.

4.    Alleged breach of Licence

40    Maxim submits that the events that led to its purported termination of the Licence revealed several breaches of the Licence by Nuclear. For the purposes of this interlocutory application, it is sufficient to describe the conduct Maxim purports breached the terms of the Licence.

41    Maxim alleges that Nuclear breached various clauses of the Licence by:

(1)    registering the Nuclear TMs and the domain name www.destinationmaxim.com.au;

(2)    allowing the 233 TM registration to lapse;

(3)    failing to pay licence fees under the Licence;

(4)    continuing to publish the National Edition and operate the National Website;

(5)    failing to uphold the standards and policies adopted by Maxim which Nuclear is required to follow by establishing a new program, named ‘Destination MAXIM’ which solicits models to pay Nuclear to attend overseas photoshoots and to be featured in the ‘Destination MAXIM’ sections of the National Edition; and

(6)    failing to uphold the standards and policies adopted by Maxim which Nuclear is required to follow by engaging Global PR to assist in soliciting models to pay to appear in photoshoots.

42    Nuclear denies that the Licence continued on the same terms after its expiry in May 2016.

5.    Principles

43    The principles applicable to the grant of interlocutory relief are well-known. There are two primary inquiries.

44    First, whether the applying party has a prima facie case in the sense of “a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”; this does not necessarily mean that they must establish that they are more probable than not to succeed at trial: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19] (per Gleeson CJ and Crennan J), [65] (per Gummow and Hayne JJ).

45    Second, whether the inconvenience or injury the applying party would be likely to suffer if an injunction were refused outweighs the injury the respondent would suffer if the injunction were granted: O’Neill at [65] (per Gummow and Hayne JJ), citing Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622–3 (per Kitto, Taylor, Menzies and Owen JJ).

46    Consideration of the two chief inquiries are interrelated because “an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even” and “[a] more doubtful claim (which nevertheless raises ‘a serious question to be tried’) may still attract interlocutory relief if there is a marked balance of convenience in favour of it”: Bullock v The Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464 at 472 (per Woodward J, Smithers and Sweeney JJ agreeing at 467 and 469).

47    Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party’s case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief — especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate: Warner-Lambert Co LLC v Apotex Pty Ltd (2014) 106 IPR 218 at [70] (per Allsop CJ, Jagot and Nicholas JJ).

48    Injunctions are discretionary remedies and as such, discretionary considerations may be taken into account prior to such relief being granted. One discretionary factor relevant to the analysis is whether the applicant will suffer irreparable harm for which damages are not an adequate remedy. Prior authorities have considered this to be an additional third requirement to the two main inquiries: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 (per Mason ACJ); O’Neill at [19] (per Gleeson CJ and Crennan J). It is sometimes expressed as a component of the second inquiry, namely where the balance of convenience lies.

49    Further, delay by an applicant in seeking the injunction is an important discretionary consideration, as is the likely practical adequacy of any undertaking as to damages which the applicant may give: Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing NSW Ltd (1987) 76 ALR 633 at 638–9 (per Bowen CJ, Beaumont and Foster JJ).

6.    Submissions

6.1    Maxim’s submissions

6.1.1    Prima facie case

50    Maxim’s concise statement dated 30 September 2024 and concise statement in reply dated 6 November 2024 raise several grounds for relief. These grounds can be separately distilled into the following causes of action against the respondents:

(1)    breach of contract;

(2)    trade mark infringement under ss 120(1) and 120(2) of the Trade Marks Act 1995 (Cth);

(3)    cancellation of the 2020 TM and the 2023 TM; and

(4)    contraventions of ss 18, 29(1)(g) and/or 29(1)(h) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the ACL) and passing off.

6.1.1.1    Breach of contract

51    By failing to pay the Licence fee for 2024 and by continuing to publish the National Edition and the National Website despite the purported termination, Maxim contends that Nuclear contravened the terms of the Licence. For this reason, Maxim submits that it has a clear case of breach of contract, which it intends to press at trial.

52    Maxim contends that clause 14(b) of the Licence gives this Court jurisdiction to hear this application as it carves out and excludes applications brought for equitable relief, which may be brought in any appropriate jurisdiction.

53    Maxim advances that Nuclear was never the owner of the Nuclear TMs, and that Alpha was the first to use and first to register the MAXIM mark in relation to publications in Australia. Alpha sold the business under the MAXIM trade mark and assigned the MAXIM trade mark registration and all rights in the word mark MAXIM to Maxim.

54    Maxim further submits that Nuclear was licensed to use the MAXIM mark for the purpose of publishing the National Edition and operating the National Website in Australia pursuant to the Licence. Nuclear paid a licence fee to do so, and Nuclear was subject to the control and oversight by Maxim both contractually and factually. Maxim submits that, as such, Nuclear used the ‘MAXIM’ trade mark as an authorised user under s 8 of the Trade Marks Act.

55    Maxim submits that, as a result of the termination of the Licence, Nuclear now has no right to use the Nuclear TMs, nor to publish the National Edition. Further, Nuclear obtained the Nuclear TMs in breach of the Licence in circumstances in which it is not the owner of the word mark “MAXIM” or any trade mark containing that word.

6.1.1.2    Trade mark infringement

56    Maxim submits that the applications for the Nuclear TMs were made by an entity other than the true owner, which can be rectified by the Court imposing a constructive trust on the applications and the subsequent 2020 TM and 2023 TM from the date on which Nuclear lodged the applications and additionally or alternatively rectify the Register through substitution of Maxim’s name. Maxim cited the cases of Edwards v Liquid Engineering 2003 Pty Ltd [2008] FCA 970 at [65] (per Gordon J) and Figgins Holdings Pty Ltd v Registrar of Trade Marks (1995) 59 FCR 147 at 149 (per Sundberg J), wherein a constructive trust was held to apply over trade mark registrations.

57    Maxim argues that, if the Court finds that Maxim is the beneficial owner of the Nuclear TMs, it will be entitled to assert claims against Nuclear for its unauthorised, infringing use under s 120 of the Trade Marks Act and hence submits that it has a strong prima facie case for trade mark infringement under pursuant to this section.

6.1.1.2.1    Trade mark cancellation

58    In the alternative, Maxim submits that the Nuclear TMs are liable to be cancelled under s 88(1)(a) of the Trade Marks Act on the basis that Nuclear’s application to register the marks could have been opposed on the grounds of opposition under ss 42(b), 58, 59, 60, 62(b), and 62A of the Trade Marks Act.

59    Further, Maxim submits that cancellation could be based on s 88(1)(c) of the Trade Marks Act as the use of the Nuclear TMs would be likely to deceive or cause confusion because of circumstances applying at the time of this proceeding, namely, that Nuclear is not the owner of the Nuclear TMs. Maxim contends that Nuclear’s representation that it is the owner of the Nuclear TMs would deceive or confuse consumers into believing that it is the true owner of the marks.

60    Maxim argues that its case on ownership of the Nuclear TMs is sufficient to satisfy the Court that it has a prima facie case for establishing the grounds of opposition under ss 58, 59, 79 of the Trade Marks Act. At this interlocutory stage, Maxim has not sought any interim relief with respect to cancellation of the Nuclear TMs.

6.1.1.3    Australian Consumer Law

61    Maxim submits that the relevant consumer, on viewing the National Edition and the National Website, would be misled or deceived into perceiving that Nuclear, its business, and its publications are related or associated with Maxim and its publications, and/or have the licence, sponsorship, or approval of Maxim, and/or are affiliated with the business of Maxim.

62    Maxim notes that since 2011 until October 2024, the National Edition has contained a statement that it is published under licence of Maxim, which has a wide global presence, thereby associating the National Edition with the global MAXIM brand. In addition, as of 21 October 2024, the National Website contained a statement (the Statement) that read:

MAXIM is the largest men’s magazine brand in the world. With international editions in over 25 European and Asian countries and an extensive following in the United States, MAXIM continues to reach guys globally and creatively.

63    Further, Maxim notes that the National Website contains a link to terms and conditions and privacy policies, which redirects the user to Maxim’s US website at www.maxim.com/termsconditions/ and www.maxim.com/privacy-policy/.

64    Maxim submits that consumers would perceive that Nuclear has an affiliation or licence with Maxim in circumstances where it in fact does not. Maxim argues that this is problematic because of the conduct of Nuclear in breaching the policies of Maxim, and it may cause difficulties for Maxim to identify a future publisher of the National Edition and the National Website.

6.1.1.4    Passing off

65    Maxim contends that the same impugned conduct in relation to its case under contraventions of the ACL gives rise to a prima facie case for the tort of passing off.

6.1.1.4.1    Estoppel

66    The respondents assert that the conduct which Maxim complains of is conduct in which Maxim has acquiesced and is now estopped from impugning.

67    Maxim asserts that there is no evidence or basis from which to infer that Maxim clearly and unequivocally represented to Nuclear that Nuclear is permitted to engage in uncontrolled use of the MAXIM brand in this jurisdiction, at least upon payment of an annual fee of USD$40,000, citing the cases of Legione v Hateley (1983) 152 CLR 406 at 435–7 (per Mason and Deane JJ) and Foran v Wight (1989) 168 CLR 385 at 410–11 (per Mason CJ).

68    Further, Maxim notes that it would have been unreasonable for Nuclear to assume that it could engage in the uncontrolled use of the MAXIM brand in light of its representations to the public in the magazine that it publishes the National Edition pursuant to a licence from Maxim.

6.1.2    Balance of convenience

69    Maxim argues that its prima facie case is very strong and therefore that the granting of relief weighs heavily in its favour. It submits that the interlocutory relief sought would stop Nuclear and Mr Downs’ infringing and contravening conduct, thereby protecting Maxim’s rights and commercial interests and consumers against deception or confusion.

70    Maxim submits that if interlocutory relief is not granted, the inconvenience to it would be substantial. Maxim would suffer reputational damage and would be prevented from identifying a publisher in Australia who will comply with its policies and submit to the oversight provisions contained in the Licence.

71    Maxim points to the respondents’ conduct as effectively free-riding off its reputation in the MAXIM mark, and effectively shutting out Maxim from the Australian market. Further, Maxim notes that Nuclear publishes nine other national titles across Australia and New Zealand, such that the business and livelihood of the respondents would not be at serious risk if the interlocutory relief were granted.

72    With respect to the inadequacy of damages, Maxim submits that, whilst it may be possible to measure damages by sales of the National Edition and by assessing the traffic to the National Website, the measure of ongoing reputational harm is not so easily measured. It gave as an example the damage to its reputation by the Destination MAXIM solicitation of models, in contravention of its no solicitation policy. Maxim contends that the damage that Maxim is likely to suffer is immeasurable and can only be remedied by the granting of the interlocutory relief sought.

6.1.3    Discretionary factors

73    Maxim notes that its purported termination of any Licence was in July 2024, and this proceeding was commenced in September 2024. In these circumstances, Maxim submits that this short period does not constitute any delay that would support the defence of laches.

74    Further, Maxim submits that even if the Court were to find delay, Nuclear was not prejudiced from any delay.

75    As to an allegation that Maxim had abandoned its rights to the 233 Registration, Maxim rejects the proposition that its conduct rose to anywhere near the level of abandonment of their trade mark rights in Australia. It notes that abandonment is difficult to prove and requires evidence that Maxim had an intention to abandon its marks, which it did not.

6.2    Respondents’ submissions

6.2.1    Prima facie case

76    The respondents contend that no prima facie case can be made out in respect of breach of contract, trade mark infringement under s 120 of the Trade Marks Act, or contraventions of the ACL or the alleged tort of passing off.

77    Further, the respondents note that Maxim has not adduced any evidence which could establish a prima facie case against Mr Downs. Maxim submits that the mere fact he is the sole director of Nuclear is not sufficient basis, citing the case of JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625 at [333]–[352] (per Bennett, Greenwood and Besanko JJ).

78    In JR Consulting, the Full Court held at [352] that for a director to be liable as a joint tortfeasor “the director must be shown to have directed or procured the tort and the conduct must, clearly enough, go beyond causing the company to take a commercial or business course of action or directing the company’s decision-making”. Maxim submits that there is no evidence of such matters in this case, nor is there any evidence that Mr Downs was “involved” in the impugned conduct, within the meaning of s 2 of the ACL.

6.2.1.1    Breach of contract

79    The respondents highlight that the Licence expired on 1 May 2016, and hence any alleged breaches of contract raised by Maxim since that time would necessarily be breaches of an implied licence by conduct (Alleged Licence). What precisely the terms of the Alleged Licence are is not clear according to the respondents. The respondents submit that the parties’ conduct post-May 2016 was inconsistent with the terms of the Licence, suggesting that the Alleged Licence does not have the same terms as the expired Licence. The respondents submit that the evidence adduced by Maxim fails to establish any prima facie case as to the terms of the Alleged Licence, far less any breach of such terms. The evidence of Mr Downs and Mr Norman is that both understood the Licence to terminate on 1 May 2016, and that they had been operating since then without a written agreement between them.

80    The respondents submit that it is not clear that they have been bound by any contractual terms and it is plain that they have not been bound by the terms of the Licence. This is because both parties have conducted themselves in a manner entirely at odds with the Licence. The respondents point to the absence of the MAXIM portal since shortly after the expiry of the Licence, and the Destination MAXIM programme.

81    Further, the respondents submit that the existence of implied licences by conduct are rare and to be proved, require evidence which positively indicates that both parties consider themselves bound, citing Ying Mui Pty Ltd v Hoh (No 3) (2017) 349 ALR 296 at [152], [156]–[157] (per Vickery J). Given the paucity of evidence regarding the Alleged Licence, the respondents submit that Maxim are alleging breaches of the Licence, which terminated more than eight years ago.

82    In the alternative, if Maxim establish a breach of the terms of the Licence, the respondents contend that this will not necessarily entitle them to injunctive relief. This is because injunctive relief is a discretionary remedy. Further to this point, the respondents submit that, if the only prima facie case that Maxim can establish is a technical breach — this would not entitle them to injunctive relief, citing Wilson Parking Australia v Rush [2008] FCA 1601 at [40] (per Jessup J) and ASIC v Mauer-Swisse Securities Ltd [2002] NSWSC 741 at [10] (per Palmer J).

83    The respondents also emphasise that the effect of clause 14(a) of the Licence is that the Licence is governed by the law of the State of New York in the US. As such, this would ordinarily necessitate expert evidence on the laws of New York to interpret the agreement and establish its enforceability. The respondents note that no such evidence has been adduced and the enforceability of certain clauses of the Licence are also in doubt.

6.2.1.1.1    Estoppel and acquiescence

84    The respondents contend that much of the conduct about which Maxim complains is conduct to which Maxim has acquiesced and from which it is now estopped (either by convention or in equity) from impugning. In particular, the respondents assert that the parties have transacted on “an agreed or assumed state of facts, which both will be estopped from denying”, citing Con–Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244 (per Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ).

85    The particular assumed state of facts in this case is said to be that Nuclear is permitted to engage in uncontrolled use of the MAXIM brand in this jurisdiction, at least upon payment of an annual fee of USD$40,000. Further, even if this assumption was not held by Maxim, the respondents submit it is sufficient, to establish an estoppel by convention, if this assumption was held by the respondents “and acquiesced in by” Maxim: Republic of India v India Steamship Co Ltd (No 2) (The “Indian Grace”) [1998] AC 878 at 913 (per Steyn LJ), cited with approval in Ryledar Pty Ltd v Ephoric Pty Ltd (2007) 69 NSWLR 603 at [198] (per Mason P, Tobias JA and Campbell JA) . Further, “if an estoppel by convention is established it applies permanently according to its terms”, such that it cannot be “terminated” by the estopped party: Bannon v Nauru Phosphate Royalties Trust [2018] VSC 532 at [113], [120] (per McDonald J).

6.2.1.2    Trade mark infringement

86    The respondents submit that the trade mark infringement case is exceedingly weak for several reasons.

87    First, neither Maxim entity is the registered owner of any trade marks for MAXIM in Australia, thus the applicants lack standing to sue for trade mark infringement.

88    Second, the respondents contend that Nuclear has a complete defence to the allegations of trade mark infringement based on its ownership of the Nuclear TMs under s 122(1)(e) of the Trade Marks Act. The respondents note that Maxim does not seek a final order at the interlocutory hearing of this application that the Nuclear TMs be removed from the Register.

89    The respondents say that it follows that Nuclear cannot, by its use of the Nuclear TMs in advance of trial, engage in any act of trade mark infringement, as cancellation does not have retrospective effect, citing my observations in FanFirm Pty Limited v Fanatics, LLC [2024] FCA 764 where I held at [314] that “whilst the registration is extant, it operates to provide the respondent with a defence under s 122(1)(e)”. That being so, the respondents contend that it is untenable for the applicants to assert that the conduct in which Nuclear is presently engaging involves trade mark infringement.

90    Third, the respondents submit that Maxim’s reliance upon their pending trade mark applications is immaterial to the question of whether injunctive relief should be issued, as these applications do not allow Maxim to bring a claim under s 120 of Trade Marks Act.

91    Fourth, the respondents submit that the attempt by the applicants to assert an entitlement to injunctive relief based on a constructive trust over the Nuclear TMs must be rejected. The Full Court in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379 at [32] (per Greenwood, Jagot and Beach JJ) clarified that

[o]nly a person claiming to be an owner may apply for registration. That claim may be justified at the time the application is made based on either alternative source of ownership. But if the claim is not justified at that time, ss 58 and/or 59 are available grounds of opposition.

92    The respondents assert that, if as Maxim alleges, Nuclear was not the owner of the Nuclear TMs at their respective filing dates, then each of those trade marks is invalid and liable to be removed under ss 58 and/or 59 of the Trade Marks Act. Those marks cannot, instead, be asserted by the applicants against the respondents on the basis of a constructive trust. The Edwards and Figgins authorities pre-date the decision of the Full Court in Pham Global. The respondents submit that the Full Court in Pham Global at [47] expressly held that the assertion of a constructive trust “cannot cure the fact that [a person], who did not own the mark, made the application” and that “to talk of a constructive trust over the application, as distinct from the mark, lacks conceptual coherence”.

93    The respondents further note that, even if Maxim could assert a constructive trust over the Nuclear TMs, those trade marks would then be vulnerable to being removed pursuant to s 88(2)(c) of the Trade Marks Act. If the owner of a trade mark fails to exercise control over those who use that mark (including any licensee), such that the trade mark fails “to identify the registered owner as the source of the goods”, this will give rise to a likelihood of deception or cause confusion, within the meaning of s 88(2)(c) of the Trade Marks Act: Health World Ltd v Shin-Sun Australia Pty Ltd (2008) 75 IPR 478 at [180] (per Jacobsen J).

94    Finally, the respondents also contend that neither of the Maxim entities are an “aggrieved person” under s 88 of the Trade Marks Act. The respondents contend that there were no “contractual rights” benefiting the applicants when Nuclear applied for the Nuclear TMs and Maxim had otherwise abandoned the MAXIM brand in Australia.

6.2.1.2.1    Abandonment

95    The respondents assert that, at trial, they intend to argue that Maxim had abandoned the MAXIM brand by, at the latest, 2019, such that the applicants lost any rights they may previously have enjoyed in the MAXIM brand and Nuclear is the true owner of MAXIM brand in Australia.

96    In support of this claim, the respondents draw attention to the fact that the Maxim exercised no oversight over the manner in which Nuclear published the National Edition from 1 May 2016 (if not earlier) to 24 July 2024 (the date Maxim purportedly terminated the Alleged Licence). Only one example in the years between 2011 and 2024, was relied upon where Maxim requested pre-publication material relating to the National Edition. Mr Downs’ evidence was that was the only occasion when such a request occurred, with Maxim failing to respond to Nuclear’s requests for approval.

97    Additionally, the respondents note that, instead of exercising or asserting any rights in the MAXIM brand in Australia, Maxim allowed the 233 Registration to lapse in 2019. The 233 Registration was removed from the Register on 23 December 2019. Then, on 11 April 2022, the first applicant applied for an international application for the MAXIM brand (IR 1675226), which designated Brazil, Canada, Switzerland, European Union, UK, Indonesia, India, Japan, Republic of Korea, Mexico, New Zealand, Serbia, Russian Federation, Singapore, Türkiye, Trinidad and Tobago, being all the Madrid Protocol territories in which a MAXIM branded magazine is published, except Australia.

98    It was not until 8 July 2024, in response to this dispute, that the first applicant sought for the registration of the mark ‘MAXIM’ in Australia.

99    The respondents contend that it can be “inferred from the facts” that Maxim had abandoned the MAXIM brand in Australia. They made no use of that brand, allowed Nuclear to engage in wholly uncontrolled use of that brand, allowed the 233 Registration to lapse, and then subsequently sought international trade mark protection in every country in which a MAXIM magazine was published, and only belatedly, Australia.

6.2.1.3    Australian Consumer Law and passing off

100    The respondents submit that there are four fundamental difficulties with Maxim’s allegations of passing off and contraventions of the ACL.

101    First, Maxim cannot establish that they enjoy any reputation in Australia in the MAXIM brand as they have never used that brand in Australia. Rather, the user of that brand has, at all relevant times, been Nuclear. The uncontrolled use of the MAXIM brand in Australia by Nuclear means that it fails “to identify” Maxim “as the source of the goods”: Health World Ltd v Shin-Sun Australia Pty Ltd (2008) 75 IPR 478 at [180] (per Jacobson J).

102    Second, to the extent that the MAXIM brand indicates commercial origin in Australia, it functions to indicate that the National Edition originates from Nuclear.

103    Third, the evidence adduced by Maxim cannot establish any international reputation enjoyed by Maxim, which might be sufficient to ground an allegation of misleading or deceptive conduct or passing off. The evidence fails to establish any awareness or reputation, by Australian consumers, of the MAXIM brand outside of Australia.

104    Finally, to the extent that the Statement referred to above at [62] refers to discrete conduct, this cannot provide a basis for an injunction restraining the use of the MAXIM brand generally. This statement has been removed from subsequent editions of the National Edition and the online link to the terms and conditions of Maxim has been disabled.

6.2.2    Balance of convenience

105    The respondents submit that, in contrast to most interlocutory applications, Maxim here calls upon this Court to grant interlocutory relief which would upend the status quo, rather than preserve it. Nuclear has been selling the National Magazine in Australia since 2011 without interruption or oversight by Maxim. This magazine has a regular following, with regular advertisers and numerous subscribers and is published on a monthly basis.

106    The relief sought seeks to bring this lengthy course of commercial conduct to an end and to prevent Nuclear from using the Nuclear TMs, which have been registered and used for many years.

107    The respondents assert that the purpose of interlocutory relief is to “protect the court’s process from frustration”, citing Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238, at [44] and [49] (per Dowsett, Foster and Yates JJ). The relief sought would not achieve that purpose, but instead, it would upend the status quo and effectively destroy the respondents’ business. The fact that an injunction would alter the status quo, rather than preserve it, has been held to be a factor against the award of interlocutory relief in many cases.

108    The respondents contend that the grant of interlocutory relief would occasion immediate and irrecoverable damage to them, and also third parties. That alleged damage includes:

    damage to revenue in the range of $20,000 to $40,000 a month;

    loss of full-time employees;

    loss of relationships with freelancers;

    loss of annual subscribers, some of whom would not return;

    refunds to advertisers and models in the range of $40,000 to $50,000;

    the forfeiting of hard-won retail positioning in stores; and

    loss of relationships with advertisers, some of whom would not return.

109    Notably, such damage would be also occasioned to employees, and third parties such as freelancers, advertisers and subscribers.

110    With respect to the alleged damage faced by Maxim if the injunction were not granted, the respondents submit that the evidence as to actual or potential damage to Maxim’s reputation is thin and does not rise above bare assertions and oblique references.

111    The respondents note that Maxim does not point to any aspect of the National Editions of July, August or September 2024 that it would have changed if it had oversight over them. Further, as to the Destination MAXIM brand and its model recruitment business, the respondents note that the evidence indicates a previous endorsement of this business model by Maxim and the generation of revenue via model payments. At the very least, Maxim has had knowledge of the program since 13 September 2018 and has taken no action.

112    Further, the respondents contend that judicial commentary on the inadequacy of damages in trade mark cases do not assist Maxim, with Maxim having relied upon Samsung at [63] (per Dowsett, Foster and Yates JJ) and RB (Hygiene Home) Australia Pty Ltd v Henkel Australia Pty Ltd (2021) 162 IPR 496 at [106] (per Halley J). The respondents submit that those cases both concerned alleged infringements of intellectual property rights by competing products. Contrastingly, this case concerns a dispute over the rights in one brand. Further, the respondents cite Katzmann J’s observation in Organic Marketing Australia Pty Limited v Woolworths Limited [2011] FCA 279 at [70]–[71]:

Although it is accepted that trade mark damages can be hard to quantify, there is no doubt that a trade mark is an economic asset: it is a piece of property and is inextricably associated with use in trade. Damage to it sounds in money, in lost revenue or capital value to the owner. It is not like a case of disclosure of confidential information, for example, where the harm is non-financial. ...

[T]he court has mechanisms for assisting the assessment of damages, such as discovery and the taking of accounts. Damages are therefore an adequate remedy, or at least a sufficiently adequate remedy to weigh against the grant of an injunction.

6.2.2.1    Delay

113    The respondents contend that there has been extraordinary delay by Maxim in seeking interlocutory relief. They further submit that this delay should be considered by reference to the conduct which Maxim asserts to cause them irreparable damage. The respondents contend that Maxim has failed to take any timely action in an attempt to prevent the conduct from continuing.

114    First, damage is said to arise from Nuclear’s dealings with Global PR, as well as Global PR’s soliciting of models for a fee. However, Mr Norman became aware of those dealings in 2022, and raised a concern with Mr Downs, but did not further pursue the matter. Second, damage is said to arise from the fact that Nuclear is operating “without any oversight”. However, the respondents submit that this has been the case since at least May 2016, and simply reflects the status quo.

115    The respondents further draw attention to the fact that Maxim asserts that it became aware of the Nuclear TMs in June 2024 — yet, it delayed the commencement of this proceeding until 30 September 2024, three months later. During that time, Nuclear published three National Editions and, in that period, Maxim did not seek interlocutory relief.

116    The respondents assert that this delay strongly tells against the grant of interlocutory relief and that Maxim should not expect such delay to be accepted in circumstances where “it takes such a serious step as seeking to invoke the judicial process in order to obtain urgent interlocutory relief against others”, citing Katz J’s observations in Showcorp Pty Ltd v James Barton Ashcroft [2001] FCA 1396 at [73]–[74].

6.2.2.2    Lack of utility in relief sought

117    The respondents submit that the interlocutory relief Maxim seeks would restrain Nuclear from using the Nuclear TMs and would not remedy Maxim’s ability to identify a new publisher in Australia who will submit to its oversight requirements or to operate in the Australian market.

118    The respondents propose that, irrespective of whether Nuclear is restrained, the reality is that the Nuclear TMs will remain on the Register of Trade Marks in Nuclear’s name until trial. The respondents contend that it is inherently improbable that a prospective publisher of the National Magazine would enter into an arrangement with Maxim, and commence publishing such a magazine, in circumstances where: (i) Maxim does not own any registered trade marks, but merely holds the pending applications; (ii) Nuclear will remain, on the Register, as the registered owner of the Nuclear TMs, and (iii) this litigation will remain ongoing.

119    Consequently, the respondents contend that the fact that the grant of an injunction would achieve no significant utility is a matter that weighs against the grant of such relief when considering the balance of convenience.

7.    Consideration

7.1    Prima facie case

120    As noted earlier, Maxim asserts the following causes of action against the respondents:

(1)    breach of contract;

(2)    trade mark infringement under s 120(1)–(2) of the Trade Marks Act; and

(3)    contraventions of ss 18, 29(1)(g) and/or 29(1)(h) of the ACL and passing off.

121    Several impediments stand in the way of Maxim succeeding at trial. These impediments are not insurmountable, but they affect the strength of Maxim’s prima facie case. They include the following matters.

7.1.1    Breach of contract

122    Whilst the parties appear to have been operating pursuant to a licence agreement of some sort after the expiry of the Licence in May 2016, it is not clear what the terms of that Alleged Licence are. There is no written agreement between the parties, as the Licence, as amended by the December 2015 Letter, expired in May 2016. That appears to be common ground.

123    What is not common ground are the terms of the Alleged Licence (if any), which is to be implied, and which has purportedly governed the parties’ conduct since the expiry of the Licence in May 2016, and the effect of the terms of the Licence said to survive the termination.

124    Nuclear continued to publish the National Edition and the National Website following the expiry of the Licence, and to pay an annual licence fee until July 2023. This provides some support for the notion that there was an implied agreement of some kind in place, being the Alleged Licence. Where a wholly written contract has expired but the parties’ conduct suggests that there was an agreement to continue dealing on the same terms, a contract may be implied on those terms (save as to duration and termination): Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165 at [178] (per Gordon J); Brambles Ltd v Wail (2002) 5 VR 169 at [54]–[62] (per Winneke P, Charles and Batt JJA). However, what the terms of any such implied agreement are, and whether New York law permits an implied agreement by conduct is by no means clear, and as such, these issues are matters for trial.

125    Maxim contends that, in breach of the Licence, Nuclear has allowed the 233 Registration to lapse, registered the Nuclear TMs, failed to pay a licence fee and continued to publish the National Edition and Website.

126    Clause 22 of the Licence provides that a number of clauses of the Licence (including clause 6(f)) shall survive the termination of the Licence. Pursuant to clause 6(f), Nuclear acknowledged that Maxim “is the sole and exclusive owner or licensee of the registrant of the entire right title and interest in and to the Trade Marks”, and Nuclear agreed that it “would not, during the term of the Licence and thereafter claim, register or attempt to register any mark or domain name that includes the name ‘Maxim’”. Nuclear relies on a distinction between expiry and termination to submit that, as the Licence term expired in May 2016, rather than being terminated, the survival provision is not engaged. For the purposes of this application, I do not accept that clause 22 does not operate. The other terms of the Licence do not support a construction that once, the Licence expires, the licensee is free to use the Trade Marks in any manner they wish.

127    For example, the Licence granted an exclusive right and licence to use the mark ‘MAXIM’ in the defined territory for the term of the Licence, which was defined as being an initial term of three years and one renewal term of two years. Except for the rights specifically granted to the licensee, all rights in and to the mark ‘MAXIM’ were reserved to the licensor. From the outset it was contemplated that the Licence would expire at the end of the term. There is nothing in the Licence to suggest that the icensor would not retain ownership of the trade mark ‘MAXIM’ once the Licence expired.

128    The respondents contend that many of the post-expiration restrictions in the Licence may be unenforceable as unreasonable restraints of trade. However, I do not consider that the clauses relating to the ownership of the trade marks the subject of the Licence and the right to use them in the defined territory fall into this class.

129    The respondents made no argument that this Court lacked jurisdiction to hear the interlocutory application. However, whether the Licence was governed by the laws of New York goes to the issue of whether certain clauses within the Licence or Alleged Licence are enforceable. There is also a question as to whether New York law permits an implied agreement by conduct.

130    Nuclear has continued to publish the National Edition and the National Website without paying any licence fee since June 2023. Nuclear applied for the Nuclear TMs in breach of clause 6(f) of the Licence. I consider that Maxim has a prima facie case for breach of contract in respect of these matters at least.

7.1.2    Trade mark infringement

131    Maxim’s ability to bring a successful claim under s 120 of the Trade Marks Act is contingent upon it being the true owner of the Nuclear TMs in Australia, and it obtaining ownership of the Nuclear TMs. Maxim contends that the Court should impose a constructive trust on the Nuclear TMs from the date on which Nuclear lodged the applications, and additionally or alternatively, rectify the Register through substitution of Maxim’s name.

132    Neither Maxim entity is the registered owner of any trade mark registrations to ground its allegations of trade mark infringement, its 233 Registration having lapsed in 2019. Instead, Maxim’s trade mark infringement case is based on the 2020 TM and 2023 TM being held on constructive trust for it by reason of the respondents’ breach of clause 6(f) of the Licence, which are clauses said to survive termination according to clause 22 of the Licence.

133    Maxim has several pending trade mark applications which are not yet granted. These applications cannot form the foundation for an allegation of trade mark infringement.

134    Even if Maxim is ultimately successful in obtaining registration of the trade mark applications, and ownership of the Nuclear TMs, Nuclear contends that it has a complete defence to the allegations of trade mark infringement based on its ownership of the 2020 TM at the time of the allegedly infringing conduct under s 122(1)(e) of the Trade Marks Act. An applicant seeking relief for trade mark infringement must establish that they are the registered owner of the trade mark in question. As expressed by Nicholas J in Dunlop Aircraft Tyres Ltd v Goodyear Tire and Rubber Company (2018) 134 IPR 22 at [208], a “person who was once, but is no longer, the registered owner of the mark because the trade mark has been cancelled at, or prior to, the time of judgment in the proceeding has no entitlement to relief for trade mark infringement”. This similarly applies to cases where a person was never the registered owner of a mark. Ownership of a registered trade mark is a fundamental requirement for standing of the statutory cause of action. The Maxim Registrations give rise to an inchoate right, but not a right of ownership over a registered trade mark, and not a right to sue for infringement.

135    In any event, until such time that Maxim is successful in cancelling Nuclear’s 2020 TM, I consider that the registration of the Nuclear TMs operates for the purposes of this application to provide the respondents with a defence to infringement under s 122(1)(e) of the Trade Marks Act. Whether a defence founded upon s 122(1)(e) operates if a constructive trust is found in respect of the mark relied upon for the defence is a question for trial.

136    There is a question as to whether a constructive trust might be ordered in Maxim’s favour so that a valid trade mark infringement claim would be made out. There is diverging authority on whether a constructive trust may be ordered in relation to a trade mark registration. The respondents relied upon the Full Court’s decision in Pham Global to submit that a constructive trust could not cure the deficiency in this case that Maxim is not the registered owner of the 2020 TM and the 2023 TM.

137    The respondents contend that, even if Nuclear was not the owner of the 2020 TM at its filing date, then the trade mark is invalid and liable to be removed under ss 58 and/or 59 of the Trade Marks Act. As the Full Court in Pham Global noted at [32], if the respondent is not the owner of the mark at the time of filing the application, the assignment provisions of the Trade Marks Act do not assist because they authorise the assignment of the mark and thus pre-suppose that the applicant owns the mark. In relation to an asserted constructive trust, the Full Court said at [47] that it could not cure the fact that the applicant for the registration did not own the mark, and thus did not have a legal or equitable interest in the mark. As such if the respondents were not the owner of the 2020 TM at the time the application for the 2020 TM was filed, that registration is not capable of being the subject of a constructive trust in favour of Maxim, and hence assigned to Maxim.

138    The Full Court in Pham Global did not expressly consider Gordon J’s decision in Edwards, where her Honour found that the respondents held the trade marks on constructive trust and ordered that the Register of Trade Marks be rectified and amended for certain entries which were wrongly made. Nor did the Full Court in Pham Global consider Figgins or Kenny J’s reasons in Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527, where her Honour expressed at [127] that a registration for a design application could be held on constructive trust.

139    In Edwards, the precise situation Gordon J considered was whether a constructive trust could arise over trade mark applications and registrations in a situation where the first applicant was employed by the predecessor in interest of the respondent, and hence, was an agent that should have been acting on behalf of the respondent.

140    On appeal, the Full Court in Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd [2009] FCAFC 7 (per Tamberlin, Sundberg and Besanko JJ) did not cavil with Gordon J’s finding that a party held a trade mark on constructive trust for another in whose name the application should have been made. As such, this appears to be an area where the Full Court authorities on this subject are in divergence.

141    In Figgins, Sundberg J found that Figgins held the trade mark applications on trust for the respondents and directed the Registrar of Trade Marks to register the trade mark application in the names of the second and third respondents. In this case, the applicant had agreed to assign the application for registration of the trade marks to the second and third respondents, with the Court determining whether it had power to order the Registrar of Trade Marks to amend the names of the owners on the Register for a trade mark application.

142    In Foster’s, Kenny J held that one entity, FGL, was a constructive trustee for another related entity, FAL, of the design registration applications and the design registrations until the execution of an assignment of rights. It was held in this case that FGL did not misrepresent its entitlement to be registered, since its entitlement was as constructive trustee for FAL. FGL and FAL in the relevant period were members of the same corporate group, Foster’s Group.

143    In Pham Global, Mr Pham, the sole director of Insight Radiology, filed for a trade mark in his own name. This trade mark application was found by the Full Court not to be held on constructive trust, with the Full Court also placing an emphasis on the fact that a trade mark application gives rise to an inchoate right as opposed to a proprietary right, such that a constructive trust could not be made out over such a right: Pham Global at [47] (per Greenwood, Jagot and Beach JJ).

144    More recently, in Pleash (Liquidator), in the matter of SFG Relocations Pty Ltd v Fourie (No 3) [2024] FCA 583, Stewart J held that registered trade marks could be held on constructive trust in circumstances where transferee companies received the trade marks in knowing receipt of property in breach of trust or breach of fiduciary duty.

145    At this interlocutory stage, it is not necessary to determine whether such a constructive trust will be found over the 2020 TM and the 2023 TM. I am satisfied, however, that Maxim has an arguable case with respect to establishing that Nuclear holds the Nuclear TMs on constructive trust for Maxim.

146    This in turn may give rise to a claim in trade mark infringement under s 120 of the Trade Marks Act. The next issue then which arises is whether such a constructive trust could overcome the statutory defence under s 122(1)(e) of the Trade Marks Act and whether Maxim has abandoned the MAXIM brand and trade mark in Australia. These defences present another hurdle to Maxim’s prima facie case, lowering its probability of success to make out a successful claim in trade mark infringement.

147    As such, I accept that Maxim does have a prima facie case against Nuclear for trade mark infringement, although this case is extremely weak. This is particularly so as Maxim is not the registered owner of the trade marks, and faces both statutory and common law defences and requires the Court make a finding that the Nuclear TMs are presently held on constructive trust in its favour.

7.1.3    Australian Consumer Law and passing off

148    With respect to its case under the ACL and passing off, Maxim is required to provide that its reputation and goodwill in Australia was so extensive such that Nuclear’s conduct would give rise to a representation in the Australian market likely to convey to ordinary and reasonable male consumers that Nuclear’s publications are associated in some way with Maxim and its publications.

149    Maxim relies upon its global reputation in the name “MAXIM” and its publications. The evidence does not establish whether Maxim enjoys any such reputation, and the extent of any reputation in Australia. Nuclear contends that any reputation in Australia in the name “MAXIM” is attributable to Nuclear, as it has at all relevant times used the MAXIM brand in Australia and published the National Edition. However, Nuclear’s use of the MAXIM brand was for a period as the authorised licensee of the international brand in Australia, albeit the duration of that Licence is an issue in dispute.

150    The Statement, which is allegedly a misleading representation that was published in the National Editions between May 2015 and October 2024 (above at [62]) has been removed, alongside the terms and conditions which linked back to Maxim’s US publications.

151    As such, on the evidence before me, there is a weak prima facie case of a contravention under the ACL and in the tort of passing off.

7.1.4    Accessorial liability of Mr Downs

152    No prima facie case against Mr Downs is made out on the evidence before me. For Mr Downs, as director of a Nuclear, to be jointly liable with Nuclear, it must be shown that he directed or procured the tort, and had a close personal involvement and must be “so personally involved in the commission of the unlawful act that it is just that [he] should be rendered liable”: JR Consulting at [342] (per Bennett, Greenwood and Besanko JJ); Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc (2020) 385 ALR 514 at [136]–[138] (per Nicholas, Yates and Burley JJ). There is no evidence at this interlocutory stage which indicates this level of involvement on the part of Mr Downs.

7.1.5    Other matters

153    The respondents argue that Maxim abandoned the MAXIM brand in Australia, including the 233 Mark. The high point of this contention is the lapsing of the 233 Mark and Maxim’s international application, IR 1675226, which omitted to designate Australia but included every other country in which a Maxim branded-magazine was published.

154    Abandonment requires that an intention to abandon be established. This is a high threshold which I do not consider has been met on the evidence filed on this application. This will again be a matter for trial.

155    Further, the respondents advance that Maxim has acquiesced in certain conduct, which it is now estopped from impugning in this proceeding. Counsel for the respondents did not seek to persuade me that they would prevail on this point at this interlocutory stage, but simply that it is an arguable point which may be made out, ultimately disentitling the applicants from the relief they presently seek. On the evidence before me, I do not consider that any estoppel has been made out, and as such this will be another matter to be considered at trial.

7.1.6    Conclusion on strength of prima facie case

156    As the above shows, these issues present substantial hurdles to Maxim’s case, although they are not entirely insurmountable ones. It is clear that on the evidence before me that determining any of these issues with precision and clarity is not possible. All remain issues for trial. However, at this stage, these issues impact on the sufficient likelihood of success to justify in these circumstances the imposition of an injunction: O’Neill at 82 (per Gummow and Hayne J). Additionally, how strong the probability of success needs to be in order to make out a prima facie case depends upon the nature of the rights Maxim asserts and the practical consequences that flow from the order it seeks: Beecham at 622 (per Kitto, Taylor, Menzies and Owen JJ).

157    There are serious obstacles to Maxim’s claims for relief and whether there is a serious question to be tried or prima facie case. While these obstacles may be overcome and Maxim has some possibility of success at trial, these factors undermine the strength of any case Maxim may have against Nuclear. As noted above at [47], the strength of Maxim’s case is also one factor for consideration in whether to grant interlocutory relief.

158    In these circumstances, I consider that there is, at best, a weak prima facie case against the respondents on the material presently before the Court. I turn to consider the next factor, the balance of convenience.

7.2    Balance of convenience

159    I am not satisfied that the balance of convenience in this case favours the grant of an interlocutory injunction as sought by Maxim for the following reasons.

160    First, I accept that the injunction would disrupt, rather than preserve, the status quo. Nuclear has been publishing and selling the National Magazine monthly in Australia since 2011 without interruption. The magazine has a regular following, with approximately 30,000 monthly readers and an additional number of digital subscribers. An injunction would bring that lengthy conduct to a halt in the interim before trial.

161    Second, the weak prima facie case made out by Maxim weighs heavily against the grant of the interlocutory relief sought by it, in circumstances where the status quo is to be disrupted and there is the potential for significant detriment to the respondents.

162    Maxim’s contention that the damage caused by the respondents’ conduct is irremediable and causes reputational harm to the MAXIM brand must be weighed against the detriment and inconvenience the respondents would suffer. Assertions were made that Nuclear’s engagement of Global PR and its Destination MAXIM programme would irremediably damage Maxim’s reputation in Australia. Evidence of the nature and extent of the purported harm to Maxim caused by Nuclear was not before the Court. On the other hand, Maxim has had notice of Nuclear’s conduct in relation to Destination MAXIM for some years and has failed to take action to prevent the continuation of the Destination MAXIM programme and to stop Nuclear’s continuing relationship with Global PR and its practice of soliciting models.

163    The respondents also contend that they will suffer irremediable and irrecoverable damage if an injunction is granted which would prevent them from continuing to publish the National Edition and operate the National Website. This purported damage would include:

    damage to revenue in the order of $20,000 to $40,000 a month approximately;

    loss of full time employees;

    loss of relationships with freelancers;

    loss of annual subscribers, some of whom would not return;

    refunds to advertisers and models in the range of $40,000–$50,000;

    loss of relationships with advertisers, some of whom would not return; and

    third parties such as freelancers, advertisers and subscribers would also suffer harm.

164    Maxim notes, however, that Nuclear publishes nine other titles across Australia and New Zealand which are alternative revenue streams. The respondents’ counsel, Mr Creighton-Selvay, submitted that his instructions were that it was not economically feasible for the respondents to publish only the New Zealand Maxim magazine and not the Australian one. Further, no documents have been provided by Nuclear to enable assessment of the likely extent of any financial damage to Nuclear.

165    Maxim also submits that it is being shut out from the Australian market while Nuclear is continuing its publication of the National Edition and National Website. Whilst this may be the case, Maxim had until recently granted Nuclear a licence to utilise the MAXIM brand in Australia for an annual payment of US$40,000, with little to minimal oversight by Maxim over Nuclear’s operations. As such, the inconvenience to Maxim of being presently ‘shut out’ from the Australian market is marginal when considering its prior position. As I accept Nuclear’s submission that, whilst this litigation is on foot and ownership of the Nuclear TMs is in dispute, it is unlikely that Maxim would be able to find a replacement publisher. If an injunction were granted, it is likely neither party would be able to publish a National Edition in the interim, which may cause lasting harm to whichever party is ultimately successful at trial.

166    Balancing these competing considerations and weighing the potential harm to Maxim’s reputational damage, alongside the potential harm to the respondents, I consider that the balance of convenience weighs against the imposition of an injunction.

167    I consider that the other discretionary factors also tend against the grant of an injunction. The grant of an injunction would occasion greater detriment to the respondents and third parties than to Maxim. The potential loss of full-time employees, along with the financial repercussions of refunds to advertisers, models and potentially to subscribers outweighs the purported harm to Maxim’s reputation.

168    Maxim’s delay in bringing proceedings and the lack of utility of the proposed injunction further tip the balance of convenience in the respondents’ favour.

169    With respect to delay, Maxim was aware of Nuclear’s dealings with Global PR in 2022, in particular the soliciting of models for a fee, when they first raised the issue with Mr Downs in 2018, but did not pursue the matter any further.

170    It took Maxim three months to commence proceedings since becoming aware of the 2020 TM. Maxim could have applied to the Court for urgent interlocutory relief much sooner. Instead, since June 2024, Nuclear has published the July, August and September National Editions, with this proceeding commencing only on 30 September 2024.

171    Maxim’s delay in this case gave Nuclear the opportunity to continue publishing several National Editions. While this delay does not arise to a level of unreasonable delay which would disentitle Maxim to injunctive relief, this delay in combination with the other relevant factors does weigh against the grant of an injunction in this case.

172    Further, as discussed above at 6.2.2.2, if the injunction was to be granted, that would restrain Nuclear from using its registered trade marks, but it would not give Maxim any valid trade mark registrations or valid trade mark rights. Therefore, Maxim would be very unlikely to find a prospective alternative publisher whilst the Nuclear TMs are still registered in the name of Nuclear, and the ownership issues are unresolved. In this sense, it is unlikely that the grant of injunctive relief would assist Maxim to enter the Australian market in this period before trial. As such, the lack of utility of this injunctive relief also directs against the grant of an interlocutory injunction.

173    As I noted at the first case management hearing, given the number and complexity of the issues raised, I considered that this matter was more appropriate for an expedited hearing than an interlocutory injunction application. I remain of that view.

8.    Disposition

174    For the reasons outlined above, I will not grant the interlocutory injunction sought.

175    The proceeding will now be referred to the National Operations Registrar for allocation to a docket judge.

176    The parties sought to be heard on the issue of costs. I will make orders allowing the parties to file brief submissions on costs limited to two pages, within five business days of the publication of these reasons.

177    Counsel for the respondents noted the respondents’ preference that the matter be listed for an expedited trial. That will be a matter for the docket judge.

Associate:

Dated:    13 December 2024