Avond Pty Ltd v Havelock Holdings Pty Ltd
[1989] FCA 290
•8 Feb 1989
JUDGMENT No. d..%..~,.-%?-
IN THE FEDERAL COURT ) LIMITED DISTRIBUTION OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) GENERAL DIVISION ) NO. WAG 8 OF 1989 B E T W E E N : AVOND PTY. LTD.
Applicant
and
HAVELOCK HOLDINGS PTY. LTD.
Flrst Respondent
and
NORNAN HESLINGTON
Second Respondent
and
DOWN UNDER PLASTICS
Third Respondent
HINUTE OF ORDER
JUDGE MAKING ORDER: LEE J.
DATE OF ORDER: 8 FEBRUARY 1989 WHERE MADE: PERTH
THE COURT ORDERS THAT:
Upon the directors of the applicant providing an undertaking as to damages in the usual form in addition to the undertaking provlded by the applicant -
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FEDERAL AUSTRALIA couA
PRINCIPAL
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RE6ISTRY
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The first and second respondents, by themselves or by their servants or agents, be restrained from engaging in advertising or offering or exposlng for sale or distribution the Flybuster fly trap, identified as a product made by or on behalf of the first respondent and that they be restrained from selling or distributing that product.
The first respondent be restrained from manufacturing or delivering any previously manufactured artlcles of the Flybuster fly trap for or on behalf of the first and second respondents until the hearing of thls application for interlocutory relief.
Note: Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT ) LIMITED DISTRIBUTION OF AUSTRALIA 1 WESTERN AUSTRALIA 1
DISTRICT REGISTRY 1 GENERAL DIVISION
1 NO. WAG 8 OF 1989 B E T W E E N : AVOND PTY. LTD.
Applicant
and
HAVELOCK HOLDINGS PTY. LTD.
First Respondent
and
NORMAN HESLINGTON
Second Respondent
and
DOWN UNDER PLASTICS
Third Respondent
CORAM: LEE J.
DATE : 8 FEBRUARY 1989
EX TEMPORE REASONS FOR JUDGMENT
This is a motion for an urgent interlocutory injunction.
The application was filed and served yesterday. In response to
appeared by counsel and seek to have the hearing of the motion the motion for interlocutory relief the respondents have all adjourned for no less than 10 days. The applicant does not oppose an adjournment of the motion, but seeks an interim injunction pending the hearing of the application for interlocutory relief. The applicant contends that there is a sufficient ground of urgency and sufficient strength in its case to permit the Court to so act.
1 propose to treat the application for interim relief in a similar manner to an ex parte application. Notwithstanding that the three respondents have appeared on the application, their counsel are without complete instructions in consequence of the short service. Although I have had the benefit of the submissions of counsel, it is appropriate to regard the application as being conducted ex parte and to apply similar principles to it. It is, therefore, necessary for the applicant to show some circumstance of urgency, an issue fit to be tried and a balance of convenience in its favour. The applicant must also run the risk of any injunctive relief being discharged in the event that there has been non-disclosure or incomplete disclosure of a matter that may have been material to the grant of that injunction. (See Town and Country Sport Resorts (Holdings) Pty. Ltd. v. Partnership Pacific Limited, Unreported (Federal Court of Australia, Full Court, 23 September 1988.)
The applicant's statement of claim is supported by an
affidavit as to material facts. The elements of the claim are
that the applicant enjoys the benefit of a registered design in
that registration have been breached by the production of a respect of a fly trap and an allegation that rights that go with product that amounts to a use of that design without authority or licence from the applicant, such production having been carried out on behalf of the first respondent by the third respondent.
In addition, it is claimed that the applicant is the owner of copyright in advertising material that has been part of the promotion of the applicant's product.
There is also a pleading that the first respondent has been involved in the commission of the tort of passing off in that the first respondent has sought to obtaln a commercial benefit from the efforts of the applicants by covering itself in the cloth of the applicant in displaying its wares to consumers.
There is a further pleading under the Trade Practices Act 1974 that there has been a contravention of s.52 of the Trade Practices Act 1974 by the first respondent, a trading corporation, in that the first respondent has engaged in conduct in trade or commerce that is misleading or deceptive. The alleged conduct is a combinat~on of the first respondent's activities - the production of a fly trap; the type of advertising engaged in which, it is alleged, uses a substantial part of the advertising content and format used by the applicant and the use of words which imply that certain qualities attach to the first respondent's product - all of which may cause the public to be misled as to the producer and quality of the item the first respondent offers for sale.
In addition, the applicant relies upon an allegation that the first and second respondents have contravened 5.53 of the Trade Practices Act 1974 in so far as there have allegedly been representations that the product offered for sale by the first respondent possesses certain qualities.
The applicant relies upon matters deposed to in the affidavit of Mr Alec Falkson to support its clalms that there has been a breach of the registered design. The affidavit also states that the second respondent threatened to copy the applicant's fly trap and that shortly thereafter a fly trap was placed on the market by the first respondent. The applicant contends that the style of the first respondent's product displays an obvious attempt to copy the product of the applicant with minor differences.
There is also evidence adduced in that affidavit of a financial impact on the applicant as a result of the first respondent's advertising of its product. It is alleged that trade personnel have been misled as to the source of the advertised product.
The alleged activities of the first and second respondents have taken place in the following circumstances. On the one hand the applicant has been conducting a trading activity that is apparently profitable and successful and on the other hand the first respondent desires to enter into trade in competition with the applicant by selling a product of similar design.
When considering the grant of interim injunctive relief as opposed to full or flnal injunctive relief, what will best provide for the maintenance of the status quo untll further order may be a governing element. It may be, and I think perhaps in this case it is so, that damages will not necessarily be an adequate remedy. I think I may take note at this stage that the second respondent has not been registered as a director of the first respondent, but according to the affidavit filed by the applicant the second respondent has been, for some time, a director of the first respondent. That may raise a question of the conduct of that corporation and perhaps raise a question as to whether it will have an abil~ty to meet damages. In any event, its history and financial status are unknown.
In addition, there is the public interest to be considered in so far as the pleadings of breaches of ss.52 and 53 of the Trade Practices Act 1974 ralse matters which transcend the interests of the applicant and its financial concerns. Damages may not be relevant in any sense to the public interest which, in certain cases, may be better served by the status quo being maintained until the matter is determined.
The next matter I may consider is that no undertaking
has been offered by the first respondent other than a belatedindication through counsel that there would be an offer not to advertise its product pending the hearing of the application for
interlocutory relief.
After having regard to those matters it is necessary to turn to the balance of convenience.
The applicant has an operating business that has been trading for some time. The respondent is seeking to start in the field. To deny an ~njunction in the face of evidence of the prospect of financial impact, given that there has been demonstrated a serious question to be tried under s.52 of the Trade Practices Act 1974 and perhaps under the Designs Act 1906, would be to cause the applicant to suffer harm that it would not otherwise suffer if the status quo were maintained.
Even if the applicant's argument were to fail in respect of the alleged Infringement of its proprietary rlghts under a registered design, the case that the applicant makes out by its affidavit in respect of a breach of 5.52 of the Trade Practices Act 1974 in respect of conduct of the first respondent in trade or commerce which is alleged to be misleading, is a case that is definitely arguable.
The nature of the alleged contravention of s.52 of the Trade Practices Act 1974 involving misleading conduct in the get-up, presentation and advertising of the first respondent's product is such that it would result in there being orders made to prevent the first respondent receiving any advantage from such a contravention. That would necessarily require, as the position stands at the moment, by way of interim rellef that injunctions be given to prevent such conduct belng repeated and to hold back any benefit resulting from that conduct either by sale or distribution of the fly trap. The ground for the injunction would not be
an infringement of a registered design. limited to the prospect that it may be shown that there has been Against that the respondent may have expended funds in its efforts to commence this aspect of its business. But it has done so for a purpose and has done so with notice of the applicant's contentions and of the fact that the applicant may seek an injunction to protect its position.
Before the advertising took place on 21 January 1989, which really launched thls product for the first respondent, correspondence had been directed to the first respondent by the applicant drawlng attention to the appllcant's rights and indicating its contentions. Wlth notice of the appllcant's contentions the first respondent was prepared to advertise and go ahead and incur expense.
There may be harm suffered by the appllcant in respect of whlch damages cannot be measured. In addition to a downturn in trade because of the impact that has been made by the advertising of the other product and a damage to reputation that may occur and loss of sales that may occur, there may also be impact on the potential growth of the appllcant's business if distributors, who would otherwise have been attracted to expanding the applicant's
business, are lured by the flrst respondent's advertising and representations instead. These distributors and others in the trade represent lost potential. That element 1s something that may be beyond quantification by way of damages.
I am of the oplnlon that I should grant interim relief to the applicant and propose to make the following order subject to the directors of the appllcant company provldlng an undertaking as to damages in the usual form in additlon to the undertaking provided by the applicant.
I will order that the first and second respondents, by themselves or by their servants or agents, be restrained from engaging in advertising, or offering or exposing for sale or distribution, Flybuster fly trap identified as a product made by or on behalf of the first respondent and that they be restrained from selling or distributing that product.
And in addition I propose to order that the first respondent be restrained from manufacturing or delivering any previously manufactured articles of the Flybuster fly trap for or on behalf of the first and second respondents until the hearing of this application for interlocutory relief which I now set for Tuesday, 21 February at 4.15 p.m.
I now make some directions in respect of the hearlng of the interlocutory relief application:
1. The applicant to flle any further affidavits upon whlch it wishes to rely by Friday, 10 February 1989;
2. The respondents to file any affidavits upon they wish to rely by Friday, 17 February 1989;
3. The application for interlocutory relief will be listed for hearing on Tuesday, 21 February 1989 at 4.15 p.m.; and
4. Costs of the motion will be reserved to await
the outcome of the hearing of the interlocutory relief application.
I certify that the preceding
eight (8) pages are a true copy of the
Reasons for Judgment of hls HonourJustice Lee.
Associate: &c, LOdCy~
Counsel for the Applicant: Mr R. Bower
Solicitors for the Applicant: Messrs Corser and Corser
Counsel for the First and Second Respondents: Mr L. Durand
Sollcltors for the First and Second Respondents: Messrs Durand &
CO.
Counsel for the Thlrd Respondent: Mr P. Arns
Solicitors for the Third Respondent: Gllmours
Date of Hearing: 8 February 1989 Date of Judgment: 8 February 1989
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