Arrowcrest Group Pty Ltd v DTM Racing Wheels Pty Ltd

[2003] FCA 1443

FEDERAL COURT OF AUSTRALIA

Arrowcrest Group Pty Ltd v DTM Racing Wheels Pty Ltd [2003] FCA 1443

INTELLECTUAL PROPERTY – DESIGNS – application for injunctive relief claiming infringement of applicant’s monopoly in registered design – application for account of profits in respect of infringement – permanent injunction granted and account of profits ordered.

Designs Act 1906 (Cth) ss 26(3), 30, 32B

Malleys Ltd v J W Tomlin Pty Ltd (1961) 180 CLR 120 cited

ARROWCREST GROUP PTY LTD v DTM RACING WHEELS PTY LTD, THOMAS LEE, STARCORP HOLDINGS PTY LTD AND EVOLUTION RACING WHEELS PTY LTD

No S 238 of 2002

LANDER J
ADELAIDE
23 SEPTEMBER 2003

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 238 OF 2002

BETWEEN:

ARROWCREST GROUP PTY LTD
APPLICANT

AND:

DTM RACING WHEELS PTY LTD
FIRST RESPONDENT

THOMAS LEE
SECOND RESPONDENT

STARCORP HOLDINGS PTY LTD
THIRD RESPONDENT

EVOLUTION RACING WHEELS PTY LTD
FOURTH RESPONDENT

JUDGE:

LANDER J

DATE OF ORDER:

25 SEPTEMBER 2003

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

1.A declaration that Registered Design Number 146825 (‘the Design’) is valid and the applicant is the registered owner of the Design. 

2.A declaration that the first and fourth respondents have infringed the monopoly of the applicant in the Design. 

3.The first and fourth respondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from importing, selling, offering or keeping for sale:

3.1  wheels bearing all of the markings ‘JWL VIA 695 KG’, ’18 x 8JJ’ and with the marking ‘JAPAN’ erased;

3.2  wheels of any diameter and bearing all of the markings ‘JWL VIA 695 KG’, and with the marking ‘JAPAN’ erased;  and

3.3  wheels of any diameter designated or described from time to time as AKT-1137, as shown in the annexures to this order.

4.The first and fourth respondents, whether by themselves, their servants or agents or otherwise, be permanently restrained from importing, selling, offering or keeping for sale, or otherwise supplying, copying, applying to any article an obvious imitation of the Design. 

5.The first and fourth respondents deliver to the applicant a schedule setting out the person or persons to whom any of the wheels described in orders 3.1 to 3.3 above have been sold or supplied and the date of the sale or supply within five business days of the service of the order of the Court.

6.The first and fourth respondents deliver up to the applicant at 28 Sheffield Street, Woodville North, SA, 5012 at the respondents’ cost, 364 wheels described in orders 3.1 to 3.3 above or such number as remain in the possession, custody or power of the first and/or fourth respondent within five business days of the service of the order of the Court. 

7.A declaration that the first respondent has made a profit by infringing the monopoly of the applicant in the Design assessed in the sum of $1218.19.

8.A declaration that the fourth respondent has made a profit by infringing the monopoly of the applicant in the Design assessed in the sum of $4714.20.

9.The first respondent pay to the applicant the amount of $1218.19.

10.The fourth respondent pay to the applicant the amount of $4714.20.

11.The cross claim of the first, second and fourth respondents (collectively ‘the respondents’ be dismissed.

12.The respondents pay the applicant’s costs of the claim and cross claim on a solicitor own client basis but excluding costs which are unreasonably incurred or are of an unreasonable amount to be agreed or taxed from 6 September 2003 but otherwise on a party and party basis.

13.Liberty to the applicant to apply in the event that the respondents have sold more than 36 wheels of the type described in orders 3.1 to 3.3 above to vary the account of profit assessed herein.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 238 OF 2002

BETWEEN:

ARROWCREST GROUP PTY LTD
APPLICANT

AND:

DTM RACING WHEELS PTY LTD
FIRST RESPONDENT

THOMAS LEE
SECOND RESPONDENT

STARCORP HOLDINGS PTY LTD
THIRD RESPONDENT

EVOLUTION RACING WHEELS PTY LTD
FOURTH RESPONDENT

JUDGE:	LANDER J
DATE:	23 SEPTEMBER 2003
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1. These proceedings were listed for trial today.  When the matter was called on none of the respondents appeared.  I was informed that the first, second and fourth respondents' solicitors had written to the applicant's solicitors advising that the first, second and fourth respondents would not appear today.  I was also advised by counsel for the applicant, Mr Robertson, that the applicant and the third respondent had settled the matters of disputation between them and a deed of settlement had been entered into.  The deed of settlement was confidential but Mr Robertson offered to show me the deed if I required.  In my opinion, having regard to the way in which this matter has proceeded, there was no need for me to acquaint myself with the details of the settlement between the applicant and the third respondent. 

2. The applicant's proceedings against the respondents seek permanent injunctions against each of them for infringement of the applicant's monopoly in a design.  They also seek an account of profits and an order compelling the respondents to deliver up all of the ‘infringing wheels’ which are said to constitute infringement of the applicant's design.

3. The respondents have brought a cross‑claim against the applicants and in that cross‑claim have asserted that there was a previous registered design which makes the applicant's registered design not new or original.  The respondents are seeking to have the applicant’s design expunged from the register of designs.  They have also sought relief under the Designs Act 1996 (Cth) (the Designs Act) for rectification by the removal from the register of designs the applicant's registered design.  Of course, the respondents did not attend today to prosecute the cross‑claim and in due course it will be necessary to dismiss those proceedings.

4. The applicant went about proving its case by tendering a number of affidavits and exhibits upon which it relied.  I admitted all of those affidavits subject to various exceptions where the evidence contained in the affidavits was inadmissible.  I have had regard to the contents of those affidavits in making the factual findings which follow. 

5. The applicant is a registered corporation.  On 19 September 2001 it applied in application number 2926/2001 for a monopoly in the features and shape of the configuration of the front face of a vehicle wheel shown in the accompanying representation to the registrar of designs.

6. It obtained a design by registration of 11 February 2002. Initially, the term of the registration was for a period of one year. I am satisfied that the applicant was the registered owner of the design over the relevant period. The applicant proved its entitlement to the design by relying on the certificate of registration which of course is prima facie evidence of the facts stated in the certificate and of the validity of the registration: s 26(3) of the Designs Act.

7. The first respondent and the fourth respondents are registered corporations.  The second respondent was the sole director of the first respondent from 20 January 2001 until 21 May 2002 and thereafter a director of the first respondent.  The second respondent was also a shareholder in both the first and the fourth respondents. 

8. The applicant contends that the fourth respondent imported a number of wheels which infringed the monopoly owned by the applicant in the design.  There is no dispute on the pleadings that the fourth respondent imported 400 wheels into Australia.  So much is admitted in par 6 of the fourth respondent's defence.  It is also not disputed that at the time of the importation of the wheels and at any other relevant time the fourth respondent did not have a licence from, or the authority of, the applicant to import the wheels.

9. It is the applicant's case that the 400 wheels which were imported by the fourth respondent infringe the monopoly in the registered design.  The applicant contends that the fourth respondent sold the infringing wheels in Australia.  Again, there is no dispute on the pleadings that the fourth respondent sold 36 wheels to the first respondent.  So much is admitted in par 6 of the fourth respondent's defence.  The applicant established that the fourth respondent sold the 36 wheels to the first respondent.  It has also established that the first respondent in turn sold eight of the wheels to the third respondent.  Again so much is admitted on the first respondent's pleadings. 

10. Thus, the applicant has proved that the fourth respondent imported 400 wheels, 36 of which it sold to the first respondent, which in turn sold eight wheels to the third respondent. 

11. The applicant has established that none of the first, third or fourth respondents had authority or licence to sell a wheel which was of the design owned by the applicant. 

12. The applicant further contends that the second respondent has also sold wheels in Australia which infringe the applicant's design and that he did so without the licence or authority of the applicant.  The applicant has proved that the second respondent owns 10 of the 30 issued shares in the first respondent and owns 400 of a thousand issued shares in the fourth respondent.  However, in my opinion, the applicant has not established any other conduct on the part of the second respondent which would indicate some separate right in the applicant against the second respondent. 

13. Section 30(1)(a) of the Designs Act provides:

    ‘Infringement of monopoly in designs

    30.(1)       A person shall be deemed to infringe the monopoly in a registered design if he, that person, without the licence or authority of the owner of the design:

    (a)applies the design or any fraudulent or obvious imitation of it to any article in respect of which the design is registered.’

14. It is the applicant's case that the first, second and fourth respondents have infringed the monopoly in the applicant's registered design because they have, without the applicant's licence or authority, applied a fraudulent or obvious imitation of the design to the 400 wheels which were imported and to the wheels which were subsequently sold.  The applicant has established the necessary chain of proof to show importation by the fourth respondent and a transaction between the fourth and first respondents and a subsequent transaction between the first and third respondents.  In my opinion, the applicant has established that the first and fourth respondents have applied at least an obvious imitation of the design to those wheels.  An obvious imitation is one which is ‘not the same but a copy apparent to the eye, notwithstanding slight differences’:  Malleys Ltd v JW Tomlin Pty Ltd (1961) 180 CLR 120 at 127. It is not necessary for the purpose of these proceedings for me to find that the infringement also included a fraudulent imitation of the design.

15. I am satisfied on the evidence of Mr Richard Catt, who is a registered patent attorney, that there has been an obvious imitation of the applicant's design.  In my opinion, the applicant has made out its case that there has been an infringement of its monopoly by the first and fourth respondents.  I am not satisfied on the evidence that it has established any separate infringement by the second respondent.  In those circumstances the applicant is entitled to injunctive relief against the first and fourth respondents but not the second respondent.

16. Section 32B of the Designs Act provides that ‘the court may grant in an action or proceeding for the infringement of a monopoly in a registered design an injunction’. In my opinion, it would be appropriate to make orders for injunctions against the first and fourth respondents in relation to the wheels already imported and in relation to the importation or sale of any further wheels which would infringe the applicant's registered design. I will hear the applicant further in relation to the precise relief which is to be sought and I invite the applicant to bring in short minutes of the proposed orders.

17. The applicant has also sought an account of profits. An account of profits is open to an applicant again under s 32B(1) of the Designs Act. In my opinion, the applicant is entitled to an account of profits in relation to the importation of the various wheels. As against the fourth respondent, the account of profits would have regard to the purchase and importation of 400 wheels and the sale of 36 of those to the first respondent. The customs document shows that the cost of the 400 wheels was $USD16 800, which at the appropriate exchange rate at the appropriate time amounts to $AUD30 042.13. That computes to $75.11 per wheel. The 36 wheels were sold at a price of $206.06 to the first respondent. The profit on that sale was $130.95, or a total of $4714.20. The applicant is entitled to an account of profits as against the fourth respondent in the sum of $AUD4714.20.

18. In relation to the first respondent, it purchased 36 wheels at a figure of $7418.18 and sold those wheels in the sum of $8636.37.  It made a profit of $1218.19, and again I am satisfied that the applicant ought to have an account of profits in the amount of that sum. 

19. The applicant therefore is entitled to the appropriate declarations and injunctions and an account of profits in the sums to which I have referred.  The applicant would also be entitled to have the cross‑claims dismissed for want of prosecution by the respondents. 

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Associate:

Dated:             9 December 2003

Counsel for the Applicant:	Mr I Robertson
Solicitor for the Applicant:	Corsoff Cudmore Knox
No appearance for respondents.
Date of Hearing:	23 September 2003
Date of Judgment:	23 September 2003