Australian Football League v Hard on Sport
[2012] VSC 475
•12 OCTOBER 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
technology engineering and construction list (intellectual property)
No. 05146 of 2012
| AUSTRALIAN FOOTBALL LEAGUE (ACN 004 155 211) | First Named Plaintiff |
| and | |
| ESP MERCHANDISE PTY LTD ACN 119 725 469 | Second Named Plaintiff |
| v | |
| HARD ON SPORT PTY LTD ACN 126 339 642 | First Named Defendant |
| and | |
| DAVID SUMIGA | Second Named Defendant |
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JUDGE: | VICKERY J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 9 OCTOBER 2012 | |
DATE OF JUDGMENT: | 12 OCTOBER 2012 | |
CASE MAY BE CITED AS: | AUSTRALIAN FOOTBALL LEAGUE & ORS v HARD ON SPORT & ORS | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 475 | |
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PRACTICE AND PROCEDURE - application to set aside or discharge Anton Piller order - claim that applicant wrongfully obtained order - whether material non-disclosure - whether duty of candour on ex parte application met - test of materiality - whether and what order should be made to safeguard rights of the parties pending the trial.
TORT - inducing breach of contract – mental element – evidence of state of mind of Defendants - Anton Piller order discharged in part.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr E Heerey | Middletons |
| For the Defendants | Mr D Crennan | Piper Alderman |
HIS HONOUR:
On 10 September 2012 I made a Search order (also known as an Anton Piller order, after Anton Piller KG v Manufacturing Processes Ltd)[1] in favour of the Plaintiffs directed to the Defendants (the “Anton Piller Order”). The order generally followed the Form 37BA Search Order format and was made ex parte and in camera pursuant to Rule 37B.02 of the Supreme Court General (Civil Procedure) Rules 2005 having regard to the practice note governing search orders.
[1]Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55.
The Anton Piller Order was executed on 11 September 2012 at the premises of the First Defendant at 11-15 Westwood Drive, Ravenhall, and at the premises of the Second Defendant at 13 Wattlepark Street, Caroline Springs.
The return date for the Anton Piller Order was extended to 9 October 2012, when the Defendants were represented by counsel.
There were two groups of applications before the Court on the return date:
(a)an application by the Plaintiffs for interlocutory injunctions pending a trial restraining the Defendants from dealing with merchandise which are claimed to infringe the intellectual property rights of the Plaintiffs and certain administrative orders arising from the execution of the Anton Piller Order; and
(b)an application by the Defendants to set aside or discharge the Anton Piller Order and delivery up of the items seized pursuant to its terms, and consequential relief.
Background
The first plaintiff (the “AFL”) is an incorporated body which administers and promotes the professional league and competition for Australian football known since 1897 as the Victorian Football League and since 1990 as the Australian Football League (the “AFL Competition”).
The AFL Competition currently comprises eighteen participating clubs, namely:
Adelaide Football Club, Brisbane Lions Australian Football Club, Carlton Football Club, Collingwood Football Club, Essendon Football Club, Fremantle Football Club, Geelong Football Club, Gold Coast SUNS, GWS Giants, Hawthorn Football Club, North Melbourne Football Club, Melbourne Football Club, Port Adelaide Football Club, Richmond Football Club, St Kilda Football Club, the Sydney Swans, the West Coast Eagles and the Western Bulldogs (the “AFL Clubs”).
Australian football is one of the most popular sports in Australia, and attracts a very large number of supporters throughout the country who follow the AFL Competition and support a favoured AFL Club.
The following may described as the relevant “meat-pie” statistics:[2] in 2011, there were approximately 800,000 registered participants playing the sport in Australia. An additional 45,000 registered participants play Australian football in countries outside of Australia. In 2011, the national television audience of AFL matches was approximately 4.7 million each week. The AFL Grand Final is estimated to attract a worldwide broadcast audience of over 30 million people. An aggregate of 6.763 million people in 2005, 6.736 million in 2006, 7.05 million in 2007, 7.082 million in 2008, 6.985 million people in 2009, 7.147 million people in 2010 and 7.139 million people in 2011 attended matches conducted by the AFL.
[2]“Meat pie” statistics was a phrase coined by Heerey J in the trial of Henderson v Amadio Pty Ltd [1995] FCA 1029. It was used as a means to describe the statistics thought to be important to be gathered from AFL Grand Final football matches conducted each year (eg. the number of meat pies consumed on the day).
I accept that by reason of the popularity of Australian football, the AFL Competition and AFL Clubs, there is demand amongst AFL Supporters for memorabilia relating to the AFL Competition and AFL Clubs and their players (“AFL Players”), particularly memorabilia signed by AFL Players, including signed guernseys, shorts, football boots and other playing apparel, posters, prints, cards, photographs, lithographs and plaques, many of which are placed in frames for hanging on walls (“AFL Memorabilia”).
The second plaintiff (“ESP”) is an incorporated company. As part of the AFL’s licensing program, it licenses the use of AFL Trade Marks and AFL photographs to two licensees who produce AFL Memorabilia for AFL Clubs. One of those licensees is ESP, which, along with a second licensee, Sport Entertainment Products Pty Ltd (“SEP”), produces these products.
The First Defendant (“HOS”) is an incorporated company. HOS is a wholesaler of memorabilia products for a range of sports, including Australian football.
The Second Defendant (“Mr Sumiga”) is the managing director of HOS. He commenced in the business of selling AFL memorabilia in about 2004. Initially he sought autographs of popular AFL Players on team jumpers. There were others conducting similar businesses. Mr Sumiga sells products on the web on (“eBay”) or trades with other traders in the business.
There is strong evidence that Mr Sumiga currently conducts his business and trades through HOS and that he is the sole director and secretary and a 50% shareholder of HOS. I also accept that there is strong evidence which points to Mr Sumiga having effective control of HOS and that he is the controlling mind and will of HOS.
Until August 2012, Mr Sumiga operated his business from his home at 13 Wattlepark Street, Caroline Springs. Following entry into a lease on 7 July 2012, commencing in mid-August 2012 the business was re-established at large showroom premises at 11-15 Westwood Drive, Ravenhall, where it was conducted at the time of the making of the Anton Piller Order on 10 September 2012.
The business of HOS was conducted openly. In or about mid-August 2012 Mr Sumiga arranged for signage to advertise the business to be placed on all of the windows of the premises which was visible to passing traffic. The principal sign, which was placed in a prominent position, contained the words: “HARD ON SPORT” and “Licensed authentic memorabilia”. The door was open to attract customers.
Principles on Which an Anton Piller Order May be Granted
It is appropriate to begin with the decision of the Court of Appeal in Anton Piller KG v Manufacturing Processes Ltd.[3] Lord Denning MR said of the relief which was sought in that case:
... It seems to me that such an order can be made by a judge ex parte but it should only be made where it is essential that the plaintiff should have inspection so that justice can be done between the parties: and when, if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed ... and so the ends of justice be defeated: and when the inspection would do no real harm to the defendant or his case. [4]
[3]Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55, 61.
[4]Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55, 61 with whom Shaw LJ agreed.
In the same case Ormrod LJ stated the essential pre-conditions for the making of such an order:
There are three essential pre-conditions for the making of such an order, in my judgment. First, there must be a strong prima facie case. Secondly, the damage , potential or actual, must be very serious for the applicant. Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made. [5]
[5]Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55, 62 with whom Shaw LJ agreed.
In the more contemporary Australian case of Microsoft Corp v Goodview Electronics Pty Ltd, [6] Branson J in the course of rejecting an application for an Anton Piller order, in a carefully reasoned judgment, outlined the heavy burden to be discharged by an applicant for an ex parte Anton Piller order before such an order will be made. These included establishing that:
(a) there is a strong prima facie case;
(b) the applicants are at risk of serious damage;
(c)there is clear evidence that the respondents have in their possession incriminating documents, material or goods; and
(d)there is a high risk that, unless such an order is made, the respondents will destroy evidence or remove it from the jurisdiction.
[6]Microsoft Corp v Goodview Electronics Pty Ltd (1999) AIPC 91 - 489.
The Evidence in Support of the Application for the Anton Piller Order
On the application for the Anton Piller Order, the AFL and ESP read evidence on affidavit to the following effect:
(a)Since the 1970s, the AFL Clubs have vested the AFL with the control of merchandising and ownership of related intellectual property, and the AFL have licensed the use of such intellectual property by AFL Clubs and other licensees approved by the AFL from time to time;
Trade Marks
(b)The AFL owns a total of 278 registered trade marks relating to the AFL Competition and the AFL Clubs (“AFL Trade Marks”), including the word AFL, the full and shortened name of each AFL Club (for example COLLINGWOOD FOOTBALL CLUB and COLLINGWOOD MAGPIES), the nickname of each AFL Club (for example MAGPIES) and images of the AFL premiership cup and the Brownlow Medal, each of which is registered in respect of a broad range of goods and services, including:
(i)in class 16: paper, cardboard, posters, printed matter, albums, autograph books, photographs, mounted photographs (for all trade marks listed above);
(ii)in class 20: picture frames, works of art, signboards, display boards, display stands and show cases (for the AFL trade mark only);
(iii)in class 25: Clothing, leisure wear, sportswear, uniforms, shirts, sports shirts, jumpers, sweaters, guernseys, jerseys (for all trade marks listed above); and
(iv)in class 42: wholesaling, retailing and supply of photographs, clothing, souvenirs, wall hangings (for the AFL trade mark only).
(c)Full details of the registration of each of the AFL Trade Marks were set out in an exhibit Annexure A. An example is depicted below, which comprises a trade mark accompanied by the registered word: “V”. The Trade mark was registered in class 16 on 2 April 1975 with the owner registered as “Australian Football League”.
A further example is depicted below, which comprises a trade mark accompanied by the registered words: “Collingwood Football Club Est 1892”. The Trade mark was registered in classes 16 and 25 on 30 August 1991 with the owner again registered as “Australian Football League”.
(d)Under s 20 of the Trade Marks Act 1995 (Cth) (the “TMA”), the AFL has the exclusive right to use and authorise other persons to use the AFL Trade Marks in relation to the goods and services in respect of which those trade marks are registered;
Copyright
(e)The AFL owns copyright subsisting in numerous photographs of AFL Players (“AFL Photographs”) as artistic works within the meaning of ss 10 and 32 of the Copyright Act 1968 (the “CA”), which were taken by persons who are employees or contractors of the AFL and which the AFL makes available for licensed use including by way of advertisements on webpages at the following internet addresses:
(i) where prints of AFL Photographs are available to consumers for personal and private use only; and
(ii)commercial.aflphotos.com.au, where photographs are made available to commercial enterprises for licensed use, each of which bear a notice stating “All contents © 2012 AFL Media. All Rights Reserved”;
(f)Relevant AFL Photographs, the photographer who took the photograph and other relevant particulars, were identified in an exhibit Annexure B. An example is depicted below, which features a photograph of Luke Hodge of the Hawthorn Football Club taking a mark, as photographed by Darrian Traynor of Slattery Media Group, a contractor of the AFL:
(g)AFL Media is a business division of and trading name utilised by the AFL. Wherever the agency relating to a photograph is identified in Annexure B as "AFL Media", copyright subsisting in such photographs is owned by the AFL;
(h)Wherever the photographer or agency relating to a photograph is identified in Annexure B as "GSP Images" or "Slattery Media Group", copyright subsisting in such photographs is owned by or has been assigned to the AFL pursuant to an AFL Images Agreement between the AFL and Geoffrey Slattery Publishing Pty Ltd (the “GSP Agreement”);
(i)The GSP Agreement is in writing and has an express term to the following effect:
4.1Copyright in all Images taken pursuant to this Agreement shall be owned by and vest in the AFL. GSP agrees to perform all further acts necessary to assure to the AFL its right, title and interest to the Images taken pursuant to this Agreement during the Term and to complete any outstanding assignments of such copyright to the AFL at the end of the Term.
(j)Pursuant to s 31(1)(d) of the CA, as the owner of copyright in each AFL Photograph, the AFL has the exclusive right to reproduce it or a substantial part of it in material form;
AFL Player Contracts
(k)Each current AFL Player has signed a standard form tripartite contract with the AFL and his AFL Club (a “Standard Playing Contract”), which includes recitals and terms recording acknowledgements by and obligations on the AFL Player to the following effect:
(i)a recital that the AFL Club relies to a large extent for its continuing viability on amounts distributed to it by the AFL as part of the annual distribution of part of the operating surplus of the AFL, together with monies raised from sponsors of the AFL Club (Recital D);
(ii)a recital that the success of the AFL in conducting the AFL Competition is fundamental to the success of the AFL Club and the AFL Club’s capacity to meet the reasonable financial demands of its Players (Recital F);
(iii)a recital that the AFL, the AFL Club and all Players are bound to observe and implement the relevant provisions of the Collective Bargaining Agreement 2007-2011 (the “CBA”) (Recitals I and J);
(iv)a term expressly incorporating the terms and conditions of the CBA (Clause 2); and
(v)a term obliging each AFL Player not to enter into any negotiations, contract, agreement, arrangement, understanding or option which would prevent the Player from complying with any of the provisions of the Standard Playing Contract, provided that the Player may engage in commensurate secular employment or business (Clause 4.6).
(l)The CBA includes obligations on each AFL Player to the following effect:
(i)That a Player may use his own Image or license the use of his own Image (defined to include a Player’s name, photograph, likeness, reputation and identity) provided that such use does not use AFL Intellectual Property (defined to include all registered and unregistered trade marks and brand names and other intellectual property of the AFL and each of the AFL Clubs, including all playing uniforms, on-field uniforms and all photographs taken under AFL media accreditation) without the consent of the AFL or the relevant AFL Club and provided that he does not use other AFL property (including, without limitation, playing and on field uniforms) without the consent of the AFL (Clause 21.1(a)(iv) and (v));
(ii)That the AFL Licensing and Marketing Operational Guidelines contained in Schedule E set out in further detail the way in which Players, the AFL, AFL Clubs and their respective sponsors may use a Player’s Image in accordance with the CBA, and the AFL Players agree to comply with those Guidelines in Schedule E (Clause 21.6);
(iii)The AFL shall continue to be solely responsible for licensing and marketing of AFL branded products and services featuring AFL Intellectual Property only (Clause 22.1);
(iv)In respect of products and services branded with a combination of AFL Intellectual Property and Player Image, the parties shall create a dual licensing arrangement between them and work together to identify business opportunities for exploiting such products and services, and the AFL shall administer such dual licensing arrangements and the parties will negotiate in good faith for an equitable revenue split, related to various levels of revenue and taking into account the costs associated with AFL’s administration of these arrangements and the historical levels of return to the Players (Clause 22.2);
(v)That all Licensing Activities (defined as all AFL product sales, sales promotions, advertising and endorsement arrangements) remain centralised through the AFL Licensing Department (Schedule E Part A item 1 and Part B definition of Licensing Activities);
(vi)A “user pays” system will apply to pass on revenue from the AFL Licensing Activities to the AFL Players’ Association (AFLPA) and ultimately to the Players, and this arrangement provides the opportunity for all Players to participate in AFL Licensing/Marketing (Schedule E Part A item 2);
(vii)The AFL and the AFLPA acknowledge and agree that it is to the mutual advantage of both parties that:
(1)the parties work together in a co-operative and constructive manner to maximise the revenues generated from Licensing Activities involving the use of Player Images (Schedule E Part A item 5(i) and Part B definition of Image);
(2)each party has a role in establishing, maintaining and improving the commercial relationship with businesses seeking to hold or holding licences to market products involving the use of Player Images (Schedule E Part A item 5(iii).
(viii)Players have the opportunity to submit applications, and the AFL will consider such applications, for an AFL licence to manufacture, sell, and/or distribute a Player based memorabilia product (which application must be in the standard form required by the AFL from time to time), provided that such application does not pertain to the Brownlow or Grand Final medals, and the AFL will not unreasonably withhold its approval of such applications and will consider certain factors in assessing applications (Schedule E Part C item 4(a));
(ix)The parties agree to work collaboratively in attempting to increase the revenues derived from the use of Player Image in Licensing Activities (Schedule E Part C item 5);
(x)Players shall not use any AFL property (in particular, playing and on field uniforms or AFL intellectual property (logos, designs etc) in any promotional activity without the consent of the AFL which shall not be reasonably withheld (Schedule E Part C item 6(c));
(xi)Players shall not “pass off” their association with their AFL Club in their personal promotional activities (Schedule E Part C item 6(d));
(xii)If a Player seeks consent from the AFL to use AFL property or intellectual property in the Player’s personal promotional activities, a written request for consent shall be forwarded to the AFL Licensing Manager in the form set out in Appendix D to the CBA, in which case the AFL will negotiate with the Player or their representative a fee to be payable to the AFL, and the AFL reserves the right to reject the request, and approvals will be required at each stage by all parties and the AFL reserves the right to reject materials submitted (Schedule E Part C item 6(e));
(xiii)Players will assign any copyright they may hold in or in connection with any AFL Licensing Activity or promotional activity to the AFL (Schedule E Part C item 6(g); and
(xiv)Player signatures for memorabilia with be covered as negotiated (Schedule E Part C item 6(i)).
(m)From around 1998 to 2005, Elite Sports Properties Holdings Pty Ltd, a shareholder of ESP, was authorised by the AFL to produce all AFL Memorabilia. This licence was assigned to ESP in or around 2005;
(n)From around 2005 to 31 October 2011, ESP was authorised by the AFL to produce all AFL Memorabilia;
(o)Effective from 1 November 2011 to 31 October 2013, the AFL has currently authorised two licensees to produce AFL Memorabilia, namely:
(i) the second plaintiff (ESP); and
(ii) Sport Entertainment Products Pty Ltd ACN 125 102 212 (SEP).
(p)AFL Memorabilia produced pursuant to the licences are referred to as “Authorised AFL Memorabilia”;
(q)Since 1 November 2011, each AFL Club is entitled to choose between ESP and SEP to produce Authorised AFL Memorabilia for its Club. In addition to producing licensed memorabilia for AFL Clubs, ESP is granted a licence to produce licensed memorabilia featuring the AFL Trade Marks and AFL Photos with respect to the AFL Competition premiers and Brownlow Medallist each year (the “Premier Memorabilia Program”);
(r)In September 2011, the then current players of the Geelong Football Club signed agreements with ESP to the effect that:
(i) ESP would pay each player $7,000;
(ii)each player would sign a certain number of memorabilia as specified by ESP; and
(iii)each player declared that he had not and would not in the future sign any unlicensed memorabilia or product that its intended or likely to be sold as part of a memorabilia offering for commercial sale commemorating the 2011 Grand Final or Brownlow medal.
(s) For the 2012 AFL Competition:
(i)the following AFL Clubs nominated ESP to produce Authorised AFL Memorabilia: Adelaide, Brisbane Lions, Collingwood, Fremantle, Geelong Cats, GWS, Melbourne, Port Adelaide, Sydney Swans and West Coast Eagles; and
(ii)the following AFL Clubs nominated SEP to produce Authorised AFL Memorabilia: Carlton, Essendon, Gold Coast Suns, Hawthorn, North Melbourne, Richmond, St Kilda and Western Bulldogs;
(t)There have been substantial promotion and sales of Authorised AFL Memorabilia for many years;
(u)As a result of the long and substantial sales and promotion of Authorised AFL Memorabilia, AFL Supporters associate memorabilia signed by AFL Players and/or bearing AFL Trade Marks with the AFL and perceive it to be Authorised AFL Memorabilia;
(v)Sales of Authorised AFL Memorabilia provide an important stream of revenue for the AFL, which in turn contributes to the funds required by the AFL and AFL Clubs to conduct the AFL Competition and to promote Australian football.
The AFL and ESP supported their application for the Anton Piller Order with an affidavit (the “Principal Affidavit”) filed by Christopher Round (“Mr Round”), solicitor for the Plaintiffs and a partner of Middletons, solicitors.
In his Principal Affidavit, Mr Round said that he met with a Mr Scott Davidson (“Davidson”), Director of ESP, on the afternoon of 7 September 2012. Davidson told Mr Round what follows in paragraphs 22 - 41, which Mr Round believed to be true and correct.
The memorabilia market in Melbourne has a number of unlicensed suppliers of memorabilia that use AFL Images and AFL Trade Marks and engage directly with players or through their management companies to secure signatures outside of the conditions of the current AFL Commercial Operations Guidelines. The obtaining of these signatures is done without the knowledge or approval of the AFL.
Davidson has received information from a retailer that has previously traded in both Official AFL Memorabilia and unauthorised AFL memorabilia (the “Informant”). Davidson said that he believed that the information given to him by the Informant was true and correct. The Informant made available to both ESP and the AFL information regarding the production, warehousing and supply of unlicensed memorabilia and how such product is being integrated with officially licensed products to confuse and pass off a level of authenticity on the unlicensed products.
The Informant told Davidson that when he telephones SEP to make an order of Official AFL Memorabilia, he is told to go to HOS to purchase these products. The Informant usually deals with Matt Owen at SEP who is a sales representative and Tom Cashion who is an accounts manager. Therefore almost all of the Informant's purchases go via HOS. There can be a delay of 6 to 8 weeks in obtaining product if that product is ordered from SEP. The produce is instantly available if purchased from HOS.
Davidson believed that HOS was selling unauthorised AFL products for AFL Clubs which have agreements with ESP.
HOS was managed by Mr Sumiga. In the past fortnight, Mr Sumiga had opened a new premises at 11-15 Westwood Drive, Ravenhall Vic 3023. Until he opened the new premises, Mr Sumiga formerly traded from his house at 13 Wattlepark Street, Caroline Springs, from a bungalow at the back of the house and from his garage.
Mr Sumiga dealt directly with the Informant as he does with other retailers of memorabilia.
The Informant told Davidson that the new HOS premises was a massive storage facility. The premises are on the second level up a flight of stairs. When the Informant attended the HOS premises, Mr Sumiga was setting up and hanging pictures on the walls. The Informant believed that the HOS premises was set up for business. There is also a media room, where HOS was trying to sell product. Mr Sumiga also has a store room full of pallet racking which is full of product stacked floor to ceiling.
Mr Sumiga was a passionate Collingwood supporter and has a large amount of Collingwood memorabilia for sale even though Collingwood is an ESP Club. All of this product is unauthorised AFL memorabilia.
While visiting HOS, the Informant was offered not only products from the Club Memorabilia Program but also unlicensed products, some of which were of a similar design to Official AFL Memorabilia.
The Informant knew that ESP was the licensee that represented a number of clubs including Collingwood, Geelong and West Coast Eagles. On sighting product that was not Official AFL Memorabilia, the Informant notified ESP.
The Informant stated that HOS has 30,000 to 40,000 pieces of memorabilia on site. The Official AFL Memorabilia program only sells 7,000 to 10,000 pieces of year. While HOS also deals in memorabilia for other sports, its stock holding is 90% AFL products.
The Informant told Davidson that Mr Sumiga had been an autograph collector for a long time and he would invite players around to his home to sign autographs. Mr Sumiga would put up an amount of funds that was given to a contact at each club. Mr Sumiga would pay each member of a club to sign unauthorised AFL memorabilia. In these circumstances the players were acting outside the terms of their playing contract and collective bargaining agreement as they are not permitted to create unauthorised AFL memorabilia. The Informant says that Mr Sumiga has asked each player that has come to his home to sign a wall in the house. That wall of signatures remains at his premises.
The Informant said that Mr Sumiga offered to sell him Official AFL Memorabilia for $180 or the unlicensed look-alike version for $150. This is part of the business model of HOS. It results in Official AFL Memorabilia being sold side by side with unofficial memorabilia. The public doesn’t know the difference when the products are sold side by side together in retail stores, however one product is licensed and one is not. The funds generated by the sale of the unlicensed product is not going to the AFL, ESP or the ESP Clubs.
Davidson also told Mr Round that, as a major supplier of both Official AFL Memorabilia and unauthorised memorabilia, HOS and Mr Sumiga were both aware of the processes involved in the production of Official AFL Memorabilia and the obligations of players, the AFLPA and AFL Clubs regarding signing memorabilia.
Davidson told Mr Round that after the 2010 Collingwood premiership win, ESP could not sell much Official AFL Memorabilia as the Collingwood players had signed so many unauthorised products. All of this unauthorised product was signed in breach of the collective bargaining agreement.
Davidson told Mr Round that ESP had projected sales of $1.4 million of Official AFL Memorabilia at wholesale prices. ESP only sold about $900,000 at wholesale and much of that was sold to the Collingwood Football Club. Collingwood is still holding thousands of dollars worth of this product as there is so much unauthorised memorabilia in the marketplace.
In 2011, ESP made an arrangement with the Geelong players that they would receive a payment and they would refuse to sign all unauthorised memorabilia. ESP has sold $950,000 at wholesale prices and has sold it all. Given this was the third Geelong premiership there was not the pent up demand for product as there had been for Collingwood product in 2010, yet ESP sold more Geelong product in 2011. The creation of unauthorised AFL memorabilia by HOS was directly impacting on the revenue generated by ESP, the AFL and the AFL Clubs, in particular the Collingwood Football Club which is an ESP Club.
The Informant also said that HOS has boxes of 2012 football jumpers signed by each member of West Coast Eagles, Adelaide Crows, Collingwood and Hawthorn waiting to see which of those teams wins the 2012 AFL Premiership. The intention was for the signed jumpers to be released as unauthorised memorabilia shortly after the 2012 AFL Grand Final. None of West Coast Eagles, Adelaide Crows or Collingwood are SEP Clubs. ESP has exclusive rights over Premier Memorabilia.
The Informant also said that the signed jumpers were procured by one or more players of those AFL clubs outside the process set out in the AFL Commercial Operations Guidelines. The Informant said that HOS has friendly AFL player managers that use the players they manage to procure the signatures.
The Informant also said that if a search order was issued, Mr Round could expect to find the following at premises of HOS:
(a)Product that does not have the Authentication Certificate and the AFLPA Hologram. All of this product is unauthorised;
(b)Product from each of the 10 ESP clubs, most of which does not have the Authentication Certificate and the AFLPA Hologram and is therefore unauthorised;
(c)Loose signed jumpers from the top 8 teams ready for framing, all of which is unauthorised; and
(d)Products created prior to 1 November 2011 that does not have Authentication Certificate and the AFLPA Hologram and is unauthorised.
Mr Round also swore that he would also expect to find Official AFL Memorabilia at the HOS premises as well as the unauthorised memorabilia, and that he was able to tell whether an item is not Official AFL Memorabilia if it does not include:
(a) an Authentication Certificate;
(b) an AFLPA Hologram; or
(c)relates to an ESP Club and does not contain the Authentication Certificate or an AFLPA Hologram.
The above was incorporated in substance in Mr Round’s Principal Affidavit relating to his conversation with Davidson on 7 September 2012. Mr Round also gave evidence in his Principal Affidavit that whether or not a particular club wins the premiership, HOS can still sell the jumpers in its possession as unlicensed memorabilia. For example a signed Collingwood jumper is worth $300 even if Collingwood do not win the premiership. However those jumpers are worth $2000 each if Collingwood wins the premiership. This was also true of the West Coast Eagles jumpers.
The Informant also took photographs at the premises of HOS. These were exhibited to the Principal Affidavit of Mr Round. The photographs were marked by Mr Round and displayed the following at the HOS premises at Ravenhall:
(a)Collingwood Legendary leaders. (The Informant told Mr Round that Mr Sumiga has 100 of these pieces that have each been signed by every living Collingwood captain. Collingwood is an ESP Club and therefore this is unlicensed memorabilia. The Informant said that these signings were done in the last few weeks).
(b)Collingwood wall of frames. (The Informant told Mr Round that each of these are unlicensed AFL memorabilia as Collingwood is an ESP Club).
(c)Collingwood wall of jumpers. (The Informant told Mr Round that each of these are unlicensed AFL memorabilia as Collingwood is an ESP Club).
(d)West Coast Eagles 2006 premiership team. (The Informant told Mr Round that this is unlicensed AFL memorabilia as SEP was only contracted to create memorabilia from 1 November 2011. West Coast Eagles is also an ESP Club).
An example of the photographs taken at the HOS premises drawn from the exhibit Annexure C is depicted below.
This item comprises of the Luke Hodge photograph earlier referred to which has been apparently signed by the player and includes an image of the Hawthorn Football Club logo which in turn has been registered as a trade mark in favour of the AFL as owner. The trade marked image is visible in the background on the top left-hand corner of the framed montage.
The relevant registered trade mark is depicted immediately below with the framed and signed photograph following.
The Court was in a position to examine the photographs of the HOS premises taken by the Informant at the time of considering the application for the Anton Piller Order. Although the evidence of Mr Round provided in his principal Affidavit was very largely hearsay, and indeed double hearsay, the weight of the evidence was significantly strengthened by the direct evidence provided by the photographs of the interior of the HOS premises as described. This reinforced the effect and thrust of the hearsay evidence provided.
Copyright Infringement
The AFL alleges that by making Unauthorised AFL Memorabilia incorporating AFL Photographs, HOS and/or Mr Sumiga have reproduced substantial parts of the AFL Photographs without the AFL’s licence and thus infringed the AFL’s copyright in those AFL Photographs within the meaning of ss 36(1) and 14 of the CA.
Examples of copyright infringement relating to Unauthorised AFL Memorabilia known to the Plaintiffs were set out in the exhibit Annexure C.
Pursuant to s 10 of the CA “artistic work” includes a photograph “whether the work is of artistic quality or not”. The Plaintiffs took the Court to a photograph of Luke Hodge of the Hawthorn football club which captured the instant of a spectacular mark. This photograph is depicted earlier in these reasons. To some, no doubt, this would be regarded as having artistic quality, either on the part of the footballer or the photographer or both. To others it would merely be the skilful, and perhaps lucky, recording of a remarkable sporting event. However, for the purposes of the CA it does not matter.
It is further alleged that, HOS and/or Mr Sumiga have infringed the AFL’s copyright in AFL Photographs within the meaning of s 38 of the CA by selling or by way of trade offering for sale Unauthorised AFL Memorabilia incorporating AFL Photographs without the AFL’s licence, in circumstances where HOS and/or Mr Sumiga knew or ought reasonably to have known that the making of such Unauthorised AFL Memorabilia incorporating AFL Photographs constituted an infringement of the AFL’s copyright in AFL Photographs.
The case as it stood against HOS and/or Mr Sumiga in relation to the alleged copyright infringements at the time of the issue of the Anton Piller Order was sufficiently compelling to grant the order on the evidence which was then before the Court. It was a strong prima facie case.
Further, the case advanced by Mr Sumiga in his responding affidavit did not advance any defence to the copyright case. In essence it focussed on the relationships that Mr Sumiga had developed with AFL Players of note such as Chris Judd of West Coast and Nathan Buckley, Peter Daicos and Bob Rose of Collingwood, coaches of AFL Clubs such as Mick Malthouse and Mark “Bomber” Thompson, and other well known AFL football entities such as Lou Richards, Murray Weideman, Des Tuddenham, Len Thompson, Neil Mann and others.
However, the consent and participation of AFL Players and others in Sumiga’s enterprise, affords no defence on the face of it to AFL’s breach of copyright claim.
The fact remains that there is no evidence to this point that the AFL as a corporation consented to or licensed the use of its copyright in the relevant merchandise to HOS or Mr Sumiga. Indeed the evidence is that it did not so consent or licence its use.
Trade Mark Infringements
The AFL further alleges in its Statement of Claim that from a time presently unknown, HOS and Mr Sumiga have procured the creation of, kept, distributed and sold memorabilia which is not authorised by the AFL, including:
(a)guernseys bearing AFL Trade Marks which were applied without the AFL’s consent;
(b)guernseys shorts, football boots and other playing apparel signed by current AFL Players;
(c)guernseys, shorts, football boots and other playing apparel signed by current or former AFL Players placed in frames bearing trade marks which are substantially identical with or deceptively similar to AFL Trade Marks including “AFL”, AFL club names, club nicknames, club logos and/or images of the AFL premiership cup or Brownlow or Norm Smith medals;
(d) posters, prints, cards, photographs, lithographs and plaques:
(i)incorporating reproductions of substantial parts of AFL Photographs; and/or
(ii)signed by current AFL Players; and/or
(iii)placed in frames bearing trade marks which are substantially identical with or deceptively similar to AFL Trade Marks including “AFL”, AFL club names, club nicknames, club logos and/or images of the AFL premiership cup and/or Brownlow and/or Norm Smith medals.
(referred to as “Unauthorised AFL Memorabilia”).
Examples of Unauthorised AFL Memorabilia presently known to the Plaintiffs were set out in the exhibit Annexure C.
By dealing in the course of trade in Unauthorised AFL Memorabilia bearing AFL Trade Marks, it is alleged that HOS and/or Sumiga have infringed the AFL’s exclusive rights under ss 20 and 120 of the TMA.
The case as it stood against HOS and/or Mr Sumiga in relation to the alleged Trade Mark infringements at the time of the issue of the Anton Piller Order was also sufficiently compelling to grant the order on the evidence which was then before the Court and was a strong prima facie case.
HOS and Mr Sumiga did not advance any case which would amount to a factual defence of the AFL Trade Mark infringement case.
Reference, however was made to Arsenal Football Club PLC v Reed (“Arsenal Football”).[7] The facts bore similarities to the case at hand. The claimant, Arsenal Football Club (“Arsenal”), had registered its name, nickname and two devices as trade marks in several classes. The defendant, Mr Reed, sold football souvenirs and memorabilia from a stall outside the Arsenal ground, which bore signs identical to Arsenal's registered trade marks, although they came from unofficial sources. Arsenal sued Mr Reed for, inter alia, trade mark infringement under s 10(a) of the Trade Marks Act 1994 (UK).[8]
[7]Arsenal Football Club PLC v Reed (2003) 57 IPR 336.
[8] Arsenal Football Club PLC v Reed (2003) 57 IPR 336.
At trial, the judge ruled that Mr Reed’s use of the marks was not a trade mark use in the sense of indicating the origin of the goods sold. Rather his use of the signs would be viewed by the relevant public to denote support for or loyalty or affiliation to the Arsenal club.
However, the ruling of the trial judge was reversed by the Court of Appeal (UK). It was accepted on the appeal that Mr Reed was the self-employed proprietor of a wholesale and retail football merchandise business. Among the articles that he sold were souvenirs and memorabilia likely to appeal to Arsenal fans. Such were found to include articles bearing the trade marks arsenal, arsenal gunners and various device marks. Mr Reed accepted that he had, without Arsenal's consent, used in the course of trade, signs identical to the registered trade marks relied on by Arsenal in relation to the goods for which they were registered. However, he denied infringement. He asserted that there could be no infringement if the use complained about was not trade mark use, and his use was not trade mark use.[9]
[9] Arsenal Football Club PLC v Reed (2003) 57 IPR 336, 339 [10].
In allowing the appeal Aldous LJ said that the trade marks as applied to Mr Reed’s merchandise could be considered as “badges of allegiance” but they could also designate origin of the goods to a substantial number of consumers, resulting in an trade mark infringement. Aldous LJ explained his conclusion as follows:
I accept the judge's finding that the trade marks upon the goods are considered to be badges of allegiance, but all the evidence suggests that the trade marks do also designate origin of the goods to a substantial number of consumers. As to Mr Reed's use I accept that he does differentiate his goods from official goods, but his goods marked with the trade marks were identical to those emanating from Arsenal and therefore his use of the word Arsenal would, absent an explanation carry the same inference as similar use of the trades mark by Arsenal. Certainly the evidence suggests that that would be the inference that consumers would draw, particularly those that received the goods as a present. In my view the evidence is all one way, namely that use of the trade mark on goods such as scarves and hats, whether by Arsenal or others does denote origin. [10]
[10] Arsenal Football Club PLC v Reed (2003) 57 IPR 336, 351-352 [69].
Although the point remains clearly arguable in Australia, the case of the Defendants if they were to press the issue at trial, faces the persuasive precedent of the Court of Appeal (UK) in Arsenal Football.
Inducing Breach of Contract
The AFL and ESP allege that at all material times, HOS and/or Mr Sumiga knew that procuring AFL Players to sign memorabilia which was intended for commercial sale without the AFL’s authorisation would result in those Players breaching their contractual obligations to the AFL and/or (in the case of 2011 Geelong players) to ESP.
An alternative allegation is made that HOS and/or Mr Sumiga:
(a)knew that there was a substantial prospect that procuring AFL Players to sign memorabilia which was intended for commercial sale without the AFL’s authorisation would result in those Players breaching their contractual obligations to the AFL and/or (in the case of 2011 Geelong players) to ESP;
(b)proceeded to procure such conduct without caring whether or not a breach would occur; and
(c)were thus wilfully blind or recklessly indifferent to the possibility that procuring such conduct would result in those Players breaching their contractual obligations to the AFL and/or (in the case of 2011 Geelong players) to ESP.
In the circumstances it is alleged that, by procuring AFL Players to sign memorabilia which was intended for commercial sale without the AFL’s authorisation, HOS and Mr Sumiga have induced each of those AFL Players to breach their contractual obligations to the AFL and/or (in the case of 2011 Geelong players) to ESP.
However, on the return of the Anton Piller Order on 9 October 2012, on hearing the submissions of Mr Crennan of counsel, who appeared for the Defendants, I am persuaded that the evidence was not sufficiently strong to justify the issue of a search order to the extent that it was founded solely on the cause of action of inducing breach of contract, and for this reason the Anton Piller Order ought to be discharged insofar as it related to such property.
As observed in Hospitality Group v Australian Rugby,[11] a case referred to on the return date by Mr Heerey of counsel who appeared for the Plaintiffs, the gravamen of the tort of inducing breach of contract is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it were a separate ingredient of the tort, it is in fact no more than an aspect of intention. The requirement that the alleged tortfeasor have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Both the intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the state of mind of the alleged tortfeasor: All State Life Insurance Co v ANZ Banking Group Ltd.[12]
[11]Hospitality Group v Australian Rugby (2001) 110 FCR 157, 127.
[12]All State Life Insurance Co v ANZ Banking Group Ltd (1995) 58 FCR 26, 43.
As to knowledge of the relevant contract, the question will always be whether the alleged wrongdoer had sufficient knowledge of its terms or effect to appreciate that his conduct in relation to a party to it, if acted upon by that party, would result in an interference with the contractual rights of the other party to the contract.
In this application, the evidence thus far is very limited as to Mr Sumiga’s knowledge in this respect. It was limited to the following in Mr Round’s Principal Affidavit, namely that: Davidson told Mr Round that, as a major supplier of both Official AFL Memorabilia and unauthorised memorabilia, “HOS and Mr Sumiga were both aware of the processes involved in the production of Official AFL Memorabilia and the obligations of players, the AFLPA [the AFL Players Association] and AFL Clubs regarding signing memorabilia”.
In my opinion, possession of alleged knowledge of the obligations of players, the AFLPA and AFL Clubs regarding signing memorabilia, falls well short of providing knowledge as to what those obligations were.
Further, a close examination of the CBA insofar as it includes reference to the use by AFL Players of their signatures is not entirely clear, and on one view of the contract pressed by Mr Crennan, does not have the effect of regulating this area of their conduct at all. Reference is made to the definition of “Image” on page 5 of the CBA, which is in the following form: “Image includes a Player’s name, photograph, likeness reputation and identity”. This definition on its own may well include a player’s signature. However, the position is blurred by what appears in Schedule E Part C item 6(i) which was referred to by Mr Crennan on behalf of the Defendants on the return date. The section provided in relation to Player signatures:
(i) Promotion of the game – no charge
(ii) Memorabilia – as negotiated
(iii)Original signature (including fax or scanned signature or any other such reproduction).
Whatever the effect of this provision, it serves to emphasise that the AFL Player Collective Bargaining Agreement is capable of different constructions in relation to the contractual obligations of AFL Players with regard to the use of their signatures.
As the evidence stands, it is entirely unclear what Mr Sumiga’s knowledge of the CBA was at the relevant time, let alone what interpretation he placed upon the provisions within the contract relating to the use of AFL Payer signatures.
Further, the evidence relied upon by Mr Sumiga and HOS included AFL Players regularly offering their signatures for application to HOS merchandise. Without further knowledge, such conduct could represent to any party in the position of Mr Sumiga that they were contractually free to do so, and militates against him knowingly inducing them to breach any contract with the AFL or ESP.
In addition, the Court was invited to take judicial notice of what was said to be the regular conduct of AFL Players, particularly following a spectacular win, doing the rounds of the ground and signing items of memorabilia offered by devoted followers of the successful team. In the absence of direct evidence on the point, and not professing to be an expert on the subject, I decline to accept the invitation to take notice of this claim from the bar table. Nevertheless, in deference to the knowledge and experience of all parties who appeared before me and to the equally powerful dictates of the real world which cannot be ignored, I am prepared to accept that it is conceivable that such a body of evidence does exist, although it plays no part in the present reasoning.
In any event, the evidence of Mr Sumiga’s knowledge of the contractual arrangements between AFL Players and both the AFL and ESP which is presently before the Court, is double hearsay. Further, it provides no factual foundation as to the basis on which it is said that Mr Sumiga, in his own right and as the person attributed to having the mind and knowledge of HOS, was aware of the processes involved in the “production of Official AFL Memorabilia and the obligations of players, the AFLPA and AFL Clubs regarding signing memorabilia”.
Misleading Conduct in Breach of s 18 of the Australian Consumer Law
It is further alleged by the AFL that by dealing in the course of trade in Unauthorised AFL Memorabilia signed by AFL Players and/or bearing AFL Trade Marks, HOS and/or Mr Sumiga have misrepresented that such Unauthorised AFL Memorabilia is Authorised AFL Memorabilia, in breach of s 18 and/or 29(1)(g) of the Australian Consumer Law as set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the “ACL”).
Examples of misrepresentations relating to Unauthorised AFL Memorabilia known to the Plaintiffs were set out in the exhibit Annexure C.
The case as it stood against HOS and/or Mr Sumiga in relation to the alleged misleading conduct at the time of the issue of the Anton Piller Order was also sufficiently compelling to grant the order on the evidence which was then before the Court and was a strong prima facie case.
This remains the position following the hearing on the return date and a consideration of the evidence relied upon by the Defendants.
Passing Off
Finally, it is alleged by the AFL and ESP that by dealing in the course of trade in Unauthorised AFL Memorabilia signed by AFL Players and/or bearing AFL Trade Marks, HOS and/or Mr Sumiga have passed off Unauthorised AFL Memorabilia as and for Authorised AFL Memorabilia, causing damage to the business of AFL and ESP.
Examples of passing off relating to Unauthorised AFL Memorabilia known to the Plaintiffs were also set out in the exhibit Annexure C.
For the reasons earlier expressed in relation to the misleading conduct claim, the evidence presented under this head was also sufficiently strong to make the Anton Piller Order sought and was a strong prima facie case.
Again this remains the position following the hearing on the return date and a consideration of the evidence put on by the Defendants.
Relief Sought
The AFL and ESP seek the following final relief at trial:
(a) By reason of the alleged unlawful conduct described above, it is claimed that:
(i) the AFL and ESP have suffered loss and damage; and
(ii) HOS and Mr Sumiga have made profits;
(b)Both interlocutory and final injunctions because, unless restrained by order of the Court, HOS and Mr Sumiga will continue their unlawful conduct.
It is also claimed that Mr Sumiga incurs liability as an accessory in respect of the conduct of HOS for the following reasons:
(a)Insofar as Mr Sumiga did not personally commit the trade mark infringement or engage in passing off, he had control over and knowledge of the relevant conduct of HOS, and knowledge of the AFL’s proprietary rights, such that he:
(i) directed or procured the infringing conduct of HOS;
(ii) was involved in invading the AFL’s rights;
(iii) had a close personal involvement in the infringing acts of HOS;
(iv) made the tort of HOS his own; and/or
(v) used HOS as an instrument of his own wrong.
In relation to the alleged copyright infringements, it is claimed that insofar as Mr Sumiga did not personally commit those infringements, he nevertheless sanctioned, approved and/or countenanced and thus authorised the reproduction by HOS of substantial parts of the AFL Photographs without the AFL’s licence, such that Mr Sumiga in his personal capacity has also infringed the copyright in those AFL Photographs within the meaning of ss 36(1) and 14 of the CA, and the AFL is entitled to injunctive relief and damages (including additional damages) or an account of profits against Mr Sumiga under s 115 of the CA and conversion or detention in relation to the infringing copies under s 116 of the CA.
It is then put that Mr Sumiga is a joint tortfeasor in the trade mark infringement and/or passing off committed by HOS, and the AFL is entitled to injunctive relief and damages or an account of profits against him.
Finally it is claimed that Mr Sumiga aided, abetted, counselled, procured, induced or was directly or indirectly knowingly concerned in the contravention by HOS of ss 18 and/or 29 of the ACL, within the meaning of s 232(1) of the ACL, and the Plaintiffs are entitled to injunctive relief and damages against Sumiga under ss 232 and 236 of the ACL and the definition of “involved” in s 2 of the Act.
Disclosure to the Court When an Anton Piller Order Sought
Reference is made to Practice Note No 6 of 2010 issued by this Court in relation to search orders.[13] The Chief Justice authorised the issue of this Practice Note, effective as of 3 May 2010. The Practice Note supplements Order 37B of Chapter I of the Rules relating to Search orders. It is noted that Order 37B has been made as part of an endeavour to harmonise Court Rules and orders in such applications across the Supreme Courts of all other States and Territories and the Federal Court.
[13]Practice Note No 6 of 2010 (2010) 26 VR 712.
The Practice Note addresses (among other things) the Court's usual practice relating to the making of a search order and the usual terms of such an order. However, it is also noted that while a standard practice has benefits, the Practice Note and the example form of order contained in Form 37BA cannot limit the judicial discretion to make such order as is appropriate in the circumstances of the particular case.
In Anton Piller KG v Manufacturing Processes Ltd Ormrod LJ, with whom Shaw LJ agreed, emphasised that an order in the nature of an Anton Piller was at the “extremity” of the court’s powers. Such orders would rarely be made, and only when there was no alternative way of ensuring that justice was done to the applicant.[14]
[14] Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 at 62.
It is in recognition of the extraordinary nature of the remedy which could carry with it consequences which could prove to be quite extreme for a respondent, that a number of protections are built in to the Practice Note, the standard of proof and the common law practice which supports Order 37B, and the safeguards contained in the standard form Order in Form 37BA.
Paragraph 19 of the Practice Note is one such protection of immediate relevance. It provides:
19.An applicant without notice for a search order is under a duty to the Court to make full and frank disclosure of all material facts to the Court. This includes disclosure of possible defences known to the applicant and of any financial information which may cast doubt on the applicant's ability to meet the usual undertaking as to damages from assets within Australia.[15]
[15]Practice Note No 6 of 2010 (2010) 26 VR 712 [19].
This reflects the common law as it has been applied to Anton Piller orders, ever since the decision in Anton Piller KG v Manufacturing Processes Ltd,[16] and in applications for ex parte injunctive relief generally.
[16]Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55.
In Liberty Financial Pty Ltd v Scott Weinberg J usefully gathered key authorities on the point. [17]
[17]Liberty Financial Pty Ltd v Scott [2002] FCA 345.
In Thermax Limited v Schott Industrial Glass Limited Browne-Wilkinson J set aside an Anton Piller order in circumstances where material facts known to the plaintiff had not been disclosed to the Judge who granted the order. [18] On this his Lordship said:
... As time goes on and the granting of Anton Piller orders becomes more and more frequent, there is a tendency to forget how serious an intervention they are in the privacy and rights of defendants...In my judgment the rule of full disclosure to the court is almost more important in Anton Piller cases than in other ex parte applications. [19]
[18]Thermax Limited v Schott Industrial Glass Limited [1981] FSR 289.
[19]Thermax Limited v Schott Industrial Glass Limited [1981] FSR 289.
In Columbia Picture Industries Inc v Robinson Scott J spoke of the requirement that affidavits in support of Anton Piller orders should err on the side of excessive disclosure. His Lordship said:
... In the case of material falling into the grey area of possible relevance, the judge, not the plaintiffs' solicitors, should be the judge of relevance. [20]
[20]Columbia Picture Industries Inc v Robinson [1987] 1 Ch 38, 77.
The relevant principle as it was stated in Tate Access Floors Inc v Boswell is this:
No rule is better established, and a few more important, than the rule, 'the golden rule', that a plaintiff applying for ex parte relief must disclose to the court all matters relevant to the exercise of the court's discretion whether or not to grant relief before giving the defendant an opportunity to be heard. If that duty is not observed by the plaintiffs, the court will discharge the ex parte order and may, to mark its displeasure, refuse the plaintiff further inter partes relief even though the circumstances would otherwise justify the grant of such relief: see Brink's Mat Ltd v Elcombe[1988] 1 WLR 1350 and Behbehani v Salem (Note) [1989] 1 WLR 723. [21]
[21]Tate Access Floors Inc v Boswell[1991] Ch 512, 532-533.
Weinberg J in Liberty Financial Pty Ltd v Scott[22] also made reference to Brink's-MAT Ltd v Elcombe (“Brinks”).[23] As his Honour Weinberg J observed, in Brinks, Ralph Gibson LJ dealt, in the context of a Mareva injunction, with the principles which determine whether there has been material non-disclosure, and what consequence the Court should attach to any failure to comply with the duty to make full and frank disclosure. His Lordship observed that it was the duty of the applicant to make disclosure of all material facts. He said that the material facts were those which it was material for the judge to know in dealing with the application as made. Materiality was to be decided by the court, and not by the assessment of the applicant or his legal advisers. The applicant must make proper inquiries before making the application, and the duty of disclosure applied not only to material facts known to him or her, but also to any additional facts which could have been ascertained if reasonable inquiries had been made. Whether a fact not disclosed was of sufficient materiality to justify or require the immediate discharge of a Mareva injunction without examination of the merits depended upon the importance of the fact. Whether the non-disclosure was innocent, or deliberate, was an important consideration, but not decisive. It was not for every omission that the injunction would be automatically discharged.
[22]Liberty Financial Pty Ltd v Scott [2002] FCA 345.
[23]Brink's-MAT Ltd v Elcombe [1988] 3 All ER 188.
An Australian case on point is Milcap v Coranto.[24] Like the present case, Davies J dealt with an application to set aside an Anton Piller order on the basis of non-disclosure that his Honour had previously made. His Honour set aside the order, and in so doing observed that:
When an ex parte order is sought, the person seeking the order must be frank and disclose to the court all the matters which, if put before the court, might have an effect upon the court's decision. The facts that should be disclosed go both to matters of liability and matters of discretion. If a fact is material in that it would be a matter to be taken into account by a court in the making of the decision to grant an injunction or in the formulation of the order that is made, it is a matter that ought to be disclosed. [25]
[24]Milcap v Coranto (1995) 32 IPR 34.
[25]Milcap v Coranto (1995) 32 IPR 34, 35.
It is important to note, however, that in Brinks Balcombe LJ agreed with Ralph Gibson LJ that notwithstanding that an ex parte injunction had been obtained without full disclosure, the Court had a discretion to continue it, or to grant a fresh injunction in its place. To similar effect were the observations of Slade J who said:
Particularly in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one. While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be taken to extreme lengths. [26]
[26] Brink's-MAT Ltd v Elcombe [1988] 3 All ER 188, 194.
In 1997, Goldberg J decided Dart Industries Inc v David Bryer & Associates Pty Ltd (“Dart Industries”) where the respondents to an Anton Piller order, on the return date following its execution, similar to the present case, sought its discharge on the basis of material non-disclosure and delivery up of the things seized under the order. [27] Goldberg J analysed the issue in the following terms:
It is clear that material non-disclosure does not mean that discharge of the order follows as a matter of course. On the facts before me, it is denied that there was material non-disclosure and this issue needs to be investigated further. However I consider it premature for this issue to be finally determined at this early stage. There is a balance to be achieved between giving parties the opportunity for urgent interlocutory hearings and leaving for later determination issues which do not have any urgency in relation to their determination. I would accept the tentative view expressed by Sir Nicolas Browne-Wilkinson VC in Tate Access Floors Inc v Boswell (supra) at 534 that investigations of the circumstances in which an ex parte Anton Piller order was granted should be restricted to those cases where there has been a serious failure to make a material disclosure (cf: (1993) 109 LQR 432, 438). In Dormeuil Frères SA v Nicolian Ltd[1988] 1 WLR 1362 the Vice-Chancellor said at page 1369:
"In my judgment, save in exceptional cases it is not the correct procedure to apply to discharge an ex parte injunction on the grounds of lack of full disclosure at the interlocutory stage of the proceedings. The purpose of interlocutory proceedings is to regulate the future of the case until trial. Where an Anton Piller order has been made ex parte, in the vast majority of cases the order has been executed before the inter partes hearing. Setting aside the Anton Piller order cannot undo what has already been done. As to the injunction contained in the ordinary Anton Piller order, that is directed to last only until the inter partes hearing of the motion. The correct course, as the Court of Appeal decisions show, is to regulate the matter for the future on the basis of the evidence before the judge on the inter partes hearing. The sole relevance of the question 'Should the ex parte order be set aside?' is, so far as I can see, to determine the question whether the plaintiff is liable on the cross-undertaking in damages given on the ex parte hearing. That is not an urgent matter. It is normally much better dealt with at the trial by the trial judge who knows all the circumstances of the case and is able, after cross-examination, to test the veracity of the witnesses."
In my opinion those observations apply with equal force to the matters presently before me. [28]
[27]Dart Industries Inc v David Bryer & Associates Pty Ltd (1997) 38 IPR 389; (1997) FCA 481.
[28] Dart Industries Inc v David Bryer & Associates Pty Ltd (1997) 38 IPR 389; (1997) FCA 481, 419–420.
Although a contrary approach was taken in Ali and Fahd Stobokski Group Ltd v Moneim,[29] Goldberg J in Dart Industries considered that the judge in that case took the view that exceptional facts were involved.
[29]Ali and Fahd Stobokski Group Ltd v Moneim[1989] 1 WLR 710, 722.
Applying these principles, Goldberg J in Dart Industries, having regard to the nature of the allegations of material non-disclosure before him, considered it more appropriate that the application based on those allegations be put over to the trial of the proceeding.
The Defendants relied upon a number of matters said to have given rise to a breach of the duty to the Court to make full and frank disclosure of all material facts at the time when application was made ex parte for the Anton Piller Order on 10 September 2012. It was submitted that each of these matters justified the Court exercising its discretion to discharge the orders then made and directing that the goods seized pursuant to those orders being delivered up to the Defendants and that this should be done.
The fact that Mr Davidson appears to have accessed Mr Sumiga’s Facebook sites prior to making the application which showed Mr Sumiga with well known AFL players and AFL memorabilia was not addressed during the application. However, I am not satisfied that this amounted to a non-disclosure which was relevantly material. The fact that Mr Sumiga may have associated with well known AFL players in the context of him dealing with AFL memorabilia could not have amounted to a defence to the claims made against the Defendants by the Plaintiffs being the AFL and ESP. Indeed it is difficult to conceive of the manner in which the material could be logically relevant to any defence to the claims which are made.
In his Principal Affidavit in support of the Plaintiff’s ex parte application for the Anton Piller Order, Mr Round said, amongst other things:
The AFL believes that if Hard On were put on notice regarding this proceeding that the Signed Jumpers and the other unofficial AFL memorabilia would disappear. This belief is based on the following factors (among others):
(a)the clandestine manner in which Hard On and Sumiga have procured the unauthorised signatures of AFL players;
(b)the fact that these signatures were obtained in circumstances where Hard On and Sumiga, as suppliers of Official AFL Memorabilia, were aware that the signatures were procured without the authorisation or approval of the AFL, SEP, ESP or the AFLPA and without any documentation of the signatures’ authenticity;
(c)the fact that large volumes of unauthorised AFL memorabilia has been kept in storage at a residential premises.
[Emphasis by underlining added]
However, the evidence which the Defendants said was available to the Plaintiffs and not advanced was that at the time of making the application HOS was operating a well signed business open to the public and with floor to ceiling windows the length of the building exhibiting sporting memorabilia and there was no element of clandestine conduct involved in his business. Mr Crennan referred to a photograph of the external features of the HOS premises which appeared to be plainly visible from the adjacent public thoroughfare.[30]
[30]Exhibit “DS3”.
I do not accept that this is a material non-disclosure. I take Mr Round’s evidence to mean that the Plaintiffs asserted that HOS and Mr Sumiga operated in a clandestine manner in securing unauthorised signatures of AFL Players to their merchandise, that is that this was not authorised by the AFL or ESP and they were not requested to provide their consents. This was the thrust of the case put by the Plaintiffs in relation to the use of AFL Player signatures. Further, although reference to the signage on the HOS premises was not specifically alluded to in the Plaintiffs’ application, a fair inference could be drawn from the evidence as a whole that HOS and Mr Sumiga were in fact openly offering their goods for sale to the public as an essential component of their business operation.
The fact that Mr Mike Fitzpatrick, Chairman of the AFL and dual premiership captain for Carlton had signed approximately 120-130 items of memorabilia or merchandise for the Defendants was also not brought to the attention of the Court at the time of the application. This fact bears upon the issue as to whether Mr Sumiga, and through him HOS, had relevant knowledge of the contractual arrangements between AFL Players and the AFL as to the use of player signatures in association with AFL Memorabilia. In my opinion, the evidence was relevant to this issue and was at the disposal of the AFL, but was overlooked in the making of the application, insofar as the application was founded upon an allegation of inducing breach of contract in relation to the use of player signatures. Accordingly, this provides a ground for setting aside the Anton Piller Order in relation to property seized which was taken solely because it fell within the claim for inducing breach of contract. This ground supplements the findings as to the paucity of evidence on the relevant intention of the Defendants, which I have earlier described and which leads to the same conclusion.
The Defendants also placed reliance on the proposition that an applicant for an Anton Piller order must not rely on “general statements and the mere exhibiting of numerous documents”: see Siporex v Condel Commodities.[31] Although the general force of the direction may be accepted, it did not apply to the manner in which the case was advanced by the Plaintiffs on the application in relation to the material presented.
[31]Siporex v Condel Commodities [1986] Lloyds Rep 428, 437.
The Defendants submitted that the following was not put to the Court on the application and amounted to a material non-disclosure: the fact that the AFL memorabilia market is widespread, there are between 30-50 participants in that market as at 2012 and eBay searches reveal over 20,000 AFL memorabilia items for sale. However, the fact in issue, assuming it was squarely before the Court at the time of the application, could not have amounted to a defence to the claims made against the Defendants or indeed been of material assistance to them. Again it is difficult to conceive of the manner in which such material could be logically relevant to any defence to the claims which are made. Even on the question of the exercise of the Court’s discretion, the fact that the conduct of the Defendants, if illegal, was part of a widespread industry engaging in similar conduct, would not have advanced their case on the application.
Reference was also made by the Defendants to the fact that the “Informant” is a direct competitor in the market place and that a failure to refer to this in the application amounted to a further material non-disclosure. Mr Round in his Principal Affidavit made the following reference to the Informant: “Davidson has received information from a retailer that has previously traded in both Official AFL Memorabilia and unauthorised AFL memorabilia (Informant). Davidson believes that the information given to him by the Informant is true and correct“. However, Mr Sumiga in his affidavit identified the Informant as Mr Barry Kirkwood. He presented detailed evidence known to him that Mr Kirkwood was in fact openly, actively and currently trading in AFL memorabilia. Whether or not Mr Kirkwood is currently conducting these activities in the manner described by Mr Sumiga was not the subject of evidence put forward by the AFL or ESP on the hearing of the application. Equally, however, there is no evidence that the Plaintiffs had any or any precise knowledge of these matters and no evidence as to what investigations ought to have been undertaken or were capable of being undertaken to gain such knowledge. Accordingly, I am not satisfied that there was any material non-disclosure of the matters relating to Mr Kirkwood referred to by Mr Sumiga. Any issue as to the credibility of the Informant’s information provided to Mr Davidson, if there be an issue, should be left to the trial.
The Defendants also made reference to the pleaded case on inducement of breach of contract and submitted that it does not establish a “strong prima facie” case as there is no explicit prohibition on players signing memorabilia or merchandise in the documents referred to in the pleadings or relied on in Mr Round’s affidavit of 10 September 2012. To this may be added the allied submission of the Defendants to the effect that there was no evidence before the Court that past players who were not party to the Collective Bargaining Agreement (CBA) were contractually obligated to do or not do anything with respect to AFL memorabilia or merchandise. They submitted that these matters were not brought to the attention of the Court at the time of the making of the application.
The details of the CBA were not brought to the attention of the Court at the time of the making of the application. Because of the uncertainties arising from the construction of this agreement which have been earlier considered, in my view it was incumbent upon the Plaintiffs to have drawn this to the attention of the Court before it made the Anton Piller Order. Again this provides a ground for setting aside the Anton Piller Order in relation to property seized which was taken solely because it fell within the claim for inducing breach of contract. This finding supplements the findings as to the paucity of evidence which I have earlier made and leads to the same conclusion.
However, I am not satisfied that the Plaintiffs’ omissions relating to the presentation of their cases on inducing breach of contract on the hearing of the application should result in the orders made on 10 September 2012 in this proceeding being discharged in toto. Although had this been the only basis on which they had advanced their application for an Anton Piller Order, more than likely, this would have been the result, if the application had been presented as it was on the issue. Reference in this regard is made to: Garrard v Email Furniture Limited;[32] and Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd.[33]
[32]Garrard v Email Furniture Limited (1993) 32 NWSLR 662, 678.
[33]Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1998) 20 FCR 540, 543.
Consequently, the Defendants are entitled to orders discharging the Anton Piller Order made 10 September 2012 insofar as it related to property which was directed to be seized and which was solely referable to the claim for inducing breach of contract. The Defendants are further entitled to delivery up of any seized goods which fell squarely within this category.
Balance of Convenience
In relation to the causes of action pressed by the AFL and ESP on the return date to justify the continuation of the interlocutory injunction and the other interlocutory relief sought, other than the case founded upon inducing breach of contract, I am satisfied that in each case on the evidence presently before me there is a strong prima facie case.
Further, Mr Round has sworn that he has been told by Simon Clarke of the AFL and Scott Davidson of ESP that if the Signed Jumpers were to be released into the market place after this year's Grand Final, it will have a devastating impact on the likely revenues to be gained from the Premier Memorabilia Program conducted by the AFL. Consumers, he says, “don't appreciate the difference between Official AFL Memorabilia and unofficial AFL memorabilia especially where the two are sold side by side in the one retail outlet”.
Mr Round also says that sales of Official AFL Memorabilia are likely to be affected indirectly. He says that he is instructed by Simon Clarke that the value of Official AFL Memorabilia depends greatly on the rarity of the signatures affixed to the products in question. Accordingly, suppliers of Official AFL Memorabilia limit the numbers of each product produced under the Memorabilia Licenses. The proliferation of unauthorised AFL memorabilia bearing signatures of AFL players dilutes the value of Official AFL Memorabilia and the attractiveness of such memorabilia to consumers who collect this merchandise. The presence of unauthorised AFL memorabilia in the market will therefore harm sales and revenue which ought to flow to ESP, the AFL and by extension to the AFL Clubs, and also harms the revenue distributed back to grassroots football.
He says that Australian football supporters who wish to purchase Official AFL Memorabilia knowing that the funds from their purchase will go back to the game and their AFL Club are misled when they purchase unofficial AFL memorabilia. He says on the other hand, no funds from unofficial AFL memorabilia go back to the AFL and by extension to the AFL Clubs. The funds are usually distributed to the players who sign the unofficial AFL memorabilia outside the terms of the official process, the person who arranged for the creation of the product and the retail outlet that distributes the product.
Mr Round says that Davidson has told him that consumers don't easily recognise the difference between Official AFL Memorabilia and unofficial memorabilia especially where they are designed to look the same.
He says further that given their value they would not be destroyed but they would turn up on eBay, local club football nights or rogue retail outlets where they would be sold over the next couple of years. The sales of products through these more underground channels are likely to be undocumented and critical evidence against the Defendants will therefore be lost. The sales of these products would impact on the Official AFL Memorabilia program.
Mr Round concluded that if the Anton Piller Order was not made, he was instructed that the AFL would suffer significant prejudice in the operation of the Official AFL Memorabilia program and that the best opportunity to sell Official AFL Memorabilia under the Premier Memorabilia Program will be immediately following the AFL Grand Final on 29 September 2012. Accordingly, he says that if the order was not made and the Signed Jumpers are sold as unauthorised AFL premiership memorabilia, the AFL will suffer irreparable harm in the form of lost royalties. He says further that ESP will also lose significant revenue as the Signed Jumpers are for three of its clubs plus it has the exclusive rights over the Premier Memorabilia Program.
On this basis I further conclude that the Plaintiffs are at risk of serious damage, which cannot be adequately compensated by damages, unless appropriate orders are made to preserve the position prior to the trial.
There is clear evidence that the Defendants, prior to execution of the Anton Piller Order, had in their possession merchandise which they could not offer for sale in their business without infringing the property rights of the AFL and ESP. Given the demonstrable nature of the breaches of the law involved as revealed by the evidence which is presently before the Court, I conclude that there is a high risk that, unless the injunctive and other relief sought on the return date is granted and the Defendants are appropriately restrained by Court order, they would be likely to continue with the sales of the illicit merchandise, including the items seized pursuant to the Anton Piller Order. In these circumstances there is a risk that the value of the intellectual property of the Plaintiffs is likely to be diminished, such that damages against the Defendants would not be an adequate remedy.
These findings are made on the present state of the evidence, without further investigation, and are made solely for the purposes of determining the applications for interlocutory relief sought by both parties.
Against this the Defendants say that there would be a substantial detriment to them if injunctive relief was granted as their cashflow would be stifled. To this I would add that their reputation may well have been damaged having regard to the publicity already generated by the action.
Mr Sumiga says that if interlocutory injunctions are granted, which have the effect that HOS will not be able to supply significant volumes of valuable merchandise to the market place, particularly in the lead up to Christmas, its business will be substantially damaged if not wholly destroyed.
In this regard he estimates the value of the stock taken pursuant to the Order to be in the vicinity of $400,000-$500,000. The 300 Collingwood jumpers he says are worth approximately $600 each. The 300 Geelong jumpers he says are worth about the same. In addition, there is significant framed material which sells for a great deal more. Mr Sumiga says further that the match worn jumpers could be worth several thousand dollars each. There are match worn jumpers of Chris Judd, Nick Maxwell and Scott Pendlebury. That stock, he says, represents approximately $200,000-$250,000 of lost profit.
Further, as a consequence of the order in this proceeding, he says that he has been unable to compete with the 20,000 items on eBay and he has also been unable to compete with a competitor, Barry Kirkwood.
Mr Sumiga claims that it is critical that he have that stock back as soon as possible. He swore in his affidavit that: “With the end of the AFL season, the interest in AFL memorabilia will decrease quite significantly. There will be end of season fund raising nights in the next few weeks, but apart from some limited interest around Christmas, there will be little interest in AFL memorabilia within a few weeks, and that will not revive until the start of the season next year”.
Balancing these factors I have come to the conclusion that the outcome should be that the interlocutory injunctions sought by the AFL and ESP should be granted, with an appropriate exclusion in respect of property that is claimed to be the subject of the cause of action of inducing breach of contract and which is confined to claims under that cause of action.
In this exercise I have taken into account the facility offered by the Court for a speedy trial of the action, which will be set down to commence on 3 December 2012 and be concluded before the Christmas shopping season closes and well before the next AFL football season commences in 2013. In this way, the financial and business risk to the Defendants will be minimised, should they be successful at trial. They will also be protected by the undertaking as to damages given on behalf of both Plaintiffs, in circumstances where their financial capacity to meet any such claim was not the subject of challenge.
Orders
Consistently with these reasons, I make the following orders:
Interlocutory injunction
1.The Defendants and each of them, whether by themselves, their servants, agents or howsoever otherwise, be restrained until the trial of the proceeding or further order from procuring the creation of, keeping, distributing, offering for sale or selling memorabilia which is not authorised by the AFL, including:
(a)guernseys bearing AFL Trade Marks which were applied without the AFL’s consent;
(b)guernseys, shorts, football boots and other playing apparel signed by current or former AFL Players placed in frames bearing trade marks which are substantially identical with or deceptively similar to AFL Trade Marks including “AFL”, AFL club names, club nicknames, club logos and/or images of the AFL premiership cup or Brownlow or Norm Smith medals;
(c) posters, prints, cards, photographs, lithographs and plaques:
(i)incorporating reproductions of substantial parts of AFL Photographs; and/or
(ii)placed in frames bearing trade marks which are substantially identical with or deceptively similar to AFL Trade Marks including “AFL”, AFL club names, club nicknames, club logos and/or images of the AFL premiership cup and/or Brownlow and/or Norm Smith medals.
Search Orders (pronounced on 9 October 2012)
2.By 10 October 2012, the independent solicitors deliver to the Plaintiffs' solicitors:
(a)all of the things retained pursuant to undertaking (3) given by the independent solicitors in Schedule B to the search order of Justice Vickery made on 10 September 2012 (Search Order) save that the Plaintiffs shall return to the Defendants from who premises such goods were obtained any irrelevant documents, within 7 days of receipt of the above listed things; and
(b)the keys to the locks to the storage unit rented by the independent solicitors at Kennards Self Storage located at 159 Racecourse Road, Flemington, Victoria (Storage Facility).
3.The independent solicitors be otherwise released from undertaking (3) given in Schedule B to the Search Order.
4.The Plaintiffs' solicitors keep secure each thing delivered up to them pursuant to paragraph 1 of this order and they only use these things for the purposes of this proceeding. The Plaintiffs' solicitors are permitted to make copies of any documents or photographs of any things (as the case may be) and may disclose to the Plaintiffs any information that is acquired from reviewing these things and provide the Plaintiffs with copies of such documents or photographs.
5.Until trial or further order of the Court, the Plaintiffs' solicitors are to retain the keys to the locks to the Storage Facility.
Discharge of the Anton Piller Order in Part and Delivery Up
6.It is ordered that the Search order made on 10 September 2012 be discharged insofar as it relates to property of the Defendants which is solely referable to the cause of action alleged against them confined to inducing breach of contract.
7.Any property seized pursuant to the Search order which falls within the category described in the immediately preceding order be delivered up forthwith by the Plaintiffs to the Defendants.
8.The parties are to consult together with a view to arriving at agreement as to which items of property fall within the class of property to be delivered up by the Plaintiffs to the Defendants. In the event that agreement is not able to be achieved, any party is at liberty to apply to the Court for a direction as they may be advised.
Further directions
9. The Defendants file and serve any defence on or before 23 October 2012.
10. The plaintiffs file and serve any reply on or before 30 October 2012.
11.The proceeding be referred to a Mediator to be agreed between the parties or in default of agreement to be appointed by the Court, such mediation to take place by 20 November 2012.
12.Subject to the terms of this order, the solicitor for the Plaintiffs shall, after consultation with all parties, deliver to the Mediator a copy of this order, all pleadings (including requests for and further particulars) and a copy of any other relevant information, and take all steps necessary to ensure that the mediation commences as soon as practicable.
13.The mediation shall be attended by those persons who have the ultimate responsibility for deciding whether to settle the dispute and the terms of any settlement and the lawyers who have ultimate responsibility to advise the parties in relation to the dispute and its settlement.
14.The Mediator not later than 21 November 2012 report back to the Court whether the mediation is finished.
15.There be mutual discovery in accordance with Annexure B of TEC SOP 3 by 9 November 2012, with lists of documents to be provided in accordance with that procedure by that date and with mutual inspection of documents to be arranged immediately after.
16.All evidence in chief at the trial is to be on affidavit. Any further affidavits and exhibits to be relied upon by any party at the trial are to be filed and served by 23 November 2012.
17.The trial is listed to commence on 3 December 2012 on an estimate of 8 sitting days.
18.Save for 25% of the costs of the Defendants of and incidental to this application which shall be taxed in default of agreement and paid by the Plaintiffs, the costs of the parties of and incidental to this application be reserved.
19.Liberty be reserved to any party to this proceeding or to any person affected by this order to apply as they may be advised.
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CERTIFICATE
I certify that this and the 43 preceding pages are a true copy of the reasons for judgment of Vickery J of the Supreme Court of Victoria delivered on 12 October 2012.
DATED this 12th day of October 2012.
Associate
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