Brother Industries, Ltd v Dynamic Supplies Pty Ltd
[2007] FCA 1694
•9 November 2007
FEDERAL COURT OF AUSTRALIA
Brother Industries, Ltd v Dynamic Supplies Pty Ltd [2007] FCA 1694
INJUNCTIONS – restraining orders to be formulated with precision.
Federal Court of Australia Act 1976 (Cth)
Federal Court Rules 1979 (Cth)Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 considered
Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 considered
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 cited
MacLean v Shell Chemical (Australia) Pty Ltd (1984) 2 FCR 593 citedBROTHER INDUSTRIES, LTD AND BROTHER INTERNATIONAL (AUST) PTY LTD (ACN 001 393 835) v DYNAMIC SUPPLIES PTY LTD (ACN 064 793 862)
NSD 50 OF 2005TAMBERLIN J
9 NOVEMBER 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 50 OF 2005
BETWEEN:
BROTHER INDUSTRIES, LTD
First Applicant/First Cross-RespondentBROTHER INTERNATIONAL (AUST) PTY LTD
(ACN 001 393 835)
Second Applicant/Second Cross RespondentAND:
DYNAMIC SUPPLIES PTY LTD
(ACN 064 793 862)
Respondent/Cross-Claimant
JUDGE:
TAMBERLIN J
DATE OF ORDER:
9 NOVEMBER 2007
WHERE MADE:
SYDNEY
THE COURT:
Declaratory relief
1.DECLARES that the respondent has infringed each of the following Australian registered trade marks:
(a)Australian registered trade mark No. 440897;
(b)Australian registered trade mark No. 479964;
(c)Australian registered trade mark No. 479966,
(together the Brother Trade Marks) by the importation, distribution, offer for sale and sale of non‑branded OEM printer drum units manufactured by the first applicant, in boxes to which the Brother Trade Marks and the model number DR200 were applied without the first applicant’s licence, authority or consent (the Infringing Units).
1A.DECLARES that the respondent has infringed the Brother Trade Marks by the sale of the Infringing Units together with invoices to which the Brother Trade Marks had been applied without the licence, authority or consent of the first applicant.
2.DECLARES that the importation, distribution, offer for sale and sale by the respondent of the Infringing Units constituted:
Amisleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) (the Act); and
Bthe making of false representations in contravention of section 53(a), (c), (ea) and (g) of the Act that:
(i)the Brother Trade Marks were used with the first applicant’s licence or authority;
(ii)the units in the boxes were of the composition, style and model of genuine Brother DR-200 units; and
(iii)the units attracted the same warranty as genuine Brother DR-200 units; and
Cpassing off by the respondent of the Infringing Units:
(i) as and for printer drum units in respect of which the Brother Trade Marks were used with the licence or authority of the applicants;
(ii)as and for printer drum units of the composition, style or model as the printer drum units in respect of which the Brother Trade Marks were used with the licence or authority of the applicants;
(iii) as and for printer drum units which are subject to the same warranty as printer drum units in respect of which the Brother Trade Marks were used with the licence or authority of the applicants.
Injunctive relief
3.ORDERS that the respondent, whether by itself, its officers, employees or agents or otherwise however, permanently be restrained from infringing any of the Brother Trade Marks by importing, distributing, offering for sale, selling or otherwise dealing in the course of trade with:
(a)any goods in respect of which any of the Brother Trade Marks are registered; and
(b)goods of the same description as any of the goods in respect of which any of the Brother Trade Marks are registered,
in packaging to which any one or more of the Brother Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Brother Trade Marks have been applied without the licence or authority of the first applicant.
3A.ORDERS that the respondent, whether by itself, its officers, employees or agents or otherwise however, permanently be restrained from selling any such goods as described in paragraph 3 above together with invoices to which the Brother Trade Marks have been applied without the licence or authority of the first applicant.
4.ORDERS that the respondent, whether by itself, its officers, employees or agents or otherwise however, permanently be restrained from:
(a)representing that OEM printer drum units imported, offered for sale or sold by it bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them;
(b)representing that OEM printer drum units imported, offered for sale or sold by it are of the composition, style or model of printer drum units which bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them;
(c)representing that OEM printer drum units imported, offered for sale or sold by it are subject to the same warranty as printer drum units which bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them.
5.ORDERS that the respondent, whether by itself, its officers, employees or agents or otherwise however, permanently be restrained from:
(a)passing off OEM printer drum units imported, offered for sale or sold by it as and for printer drum units which bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them;
(b)passing off OEM printer drum units imported, offered for sale or sold by it as and for printer drum units of the composition, style or model of printer drum units which bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them;
(c)passing off OEM printer drum units imported, offered for sale or sold by it as and for printer drum units which are subject to the same warranty as printer drum units which bear the Brother Trade Marks by or with the licence or authority of the applicants or either of them.
Quantum
6.ORDERS that the respondent pay to the first applicant damages in an amount to be assessed, or, at the first applicant’s election, an account of profits, for the respondent’s infringement of the Brother Trade Marks.
7.ORDERS that the respondent pay to the applicants damages in an amount to be assessed, or, at the applicants’ election, an account of profits, for passing off.
8.ORDERS that the respondent pay to the applicants damages under s 82 of the Act in an amount to be assessed.
9.ORDERS that the respondent pay the applicants compensation under section 87 of the Act in an amount to be assessed.
Delivery Up
10.ORDERS that the respondent deliver up on oath to the applicants’ solicitors for destruction under supervision:
(a)all packaging in the possession, power, custody or control of the respondent:
(i)in which non‑branded OEM printer drum units were imported, distributed, offered for sale or sold by the respondent; and
(ii)on which any one or more of the Brother Trade Marks has been applied;
(b)all documents and materials, including materials which are or which are capable of being stored, generated or transmitted via any electronic media, in the possession, power, custody or control of the respondent bearing any of the Brother Trade Marks relating to any of the importation, distribution, offer for sale or sale by the respondent of non‑branded OEM printer drum units in packaging on which any one or more of the Brother Trade Marks was applied.
Cross Claim
11.ORDERS that the cross claim be dismissed.
Costs
12.ORDERS that the respondent pay the applicants’ costs of the applications in proceedings no. NSD 50 of 2005 and NSD 202 of 2005, those costs to be taxed and paid on a basis to be determined by the Court.
13.ORDERS that the respondent pay the applicants’ costs of the cross claim, those costs to be taxed and paid on a basis to be determined by the Court.
Directions for the further conduct of the proceeding for the determination of quantum
In paragraph 14 of these Orders, the Units means non‑branded OEM printer drum units imported, distributed, offered for sale or sold by the respondent under or by reference to any one or more of the Brother Trade Marks, whether on packaging, invoices or howsoever otherwise, including, but not limited to, units sourced from Discover Group in 2003.14.ORDERS that within 21 days of the date of these Orders, the respondent file and serve an affidavit to the best of its knowledge, information or belief, setting out, and exhibiting all relevant supporting documentation in its possession, power, custody or control:
(a)the total quantity of the Units imported or acquired by it;
(b)the total quantity of the Units it has distributed, sold or supplied;
(c)the full details of each person or company (including contact names, full address and corporate and business details) to which it has distributed, sold or supplied the Units;
(d)the prices at which it has supplied each the Unit, including full details of all charges, GST and any discounts or rebates;
(e)examples of each type of advertising, promotional, marketing or sales materials or documents (including any invitations to treat or offers for sale whether in hard copy or electronic form) used by the Respondent in relation to the Units;
(f)details of the extent and manner of the distribution by the Respondent of the materials and documents referred to in (e).
15.STANDS OVER the proceeding until a date to be arranged with the Associate to Justice Tamberlin:
(a)for directions and to obtain a date for hearing on the issue of costs; and
(b)for further directions on the issue of pecuniary relief.
16.ORDERS that, in relation to the question of costs of this application relating to the form of orders, there be no order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 50 OF 2005
BETWEEN:
BROTHER INDUSTRIES, LTD
First Applicant/First Cross-RespondentBROTHER INTERNATIONAL (AUST) PTY LTD
(ACN 001 393 835)
Second Applicant/Second Cross-RespondentAND:
DYNAMIC SUPPLIES PTY LTD
(ACN 064 793 862)
Respondent/Cross-Claimant
JUDGE:
TAMBERLIN J
DATE:
9 NOVEMBER 2007
PLACE:
SYDNEY
REASONS FOR JUDGMENT ON ORDERS
On 26 September 2007 I delivered Reasons for Judgment in this matter, and I directed the applicants to bring in Draft Short Minutes of Order to formulate the appropriate final orders giving effect to my reasons.
I have now received submissions from the parties in relation to the form of the orders. As a result of constructive discussions which took place between the parties prior to this hearing, there remains only one order in dispute, namely order 3 proposed by the applicants (“Brother”).
Order 3 proposed by Brother reads:
‘… the respondent, whether by itself, its officers, employees or agents or otherwise however, permanently be restrained from infringing any of the Brother Trade Marks by importing, distributing, offering for sale, selling or otherwise dealing in the course of trade with:
(a) any goods in respect of which any of the Brother Trade Marks are registered; and
(b)goods of the same description as any of the goods in respect of which any of the Brother Trade Marks are registered,
under or by reference to any one or more of the Brother Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Brother Trade Marks without the licence or authority of the first applicant.’
I have added emphasis to the above passage to highlight those parts of the proposed order with which the respondent (“Dynamic Supplies”) does not agree.
Dynamic Supplies submit that Brother’s proposed order 3 is broader than the Court’s reasons, which related to the counterfeit packaging in which certain products manufactured by Brother were packaged. The expressions “under or by reference to” and “without the licence or authority of the applicant”, it is said, lack clarity, are ambiguous and do not enable Dynamic Supplies to identify the conduct which is prohibited.
In support of this submission, Dynamic Supplies referred to the recent decision in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146. In that case, the Full Court at [104] accepted the proposition that injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether their conduct falls within the scope of the injunction. This is because failure to comply with the terms of a court order may give rise to contempt proceedings in which determination of questions of construction of the terms of the injunction is not appropriate since ambiguity or uncertainty may be a defence in such proceedings: see ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 259 (per Lockhart J); MacLean v Shell Chemical (Australia) Pty Ltd (1984) 2 FCR 593 at 599 (per Toohey J). Similar remarks were made by a Full Court of this Court in Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 at 574-575, where the Court adopted the principle that injunctive relief should be based upon the specific case alleged and proved against the defendant, and indicate in clear terms the conduct enjoined so that he or she knows what is expected to be done.
Dynamic Supplies contends that order 3, as framed by Brother, would prohibit it from engaging in parallel importation of genuine Brother DR-200 printer drum units packaged in genuine Brother boxes if Brother did not want to project those goods from another country into Australia. Quite apart from the difficulty for Dynamic Supplies establishing that Brother in fact intended to project the sale of its goods into Australia, such a finding, it is said, would run contrary to the settled law that there is no prohibition against parallel importation. With Brother acknowledging that the order it proposed was not intended to cover parallel importation, Dynamic Supplies submits that the pleadings, the trial, the course of evidence and the Court’s decision did not, and should not now in effect, enjoin it from any such parallel importation of genuine goods genuinely packaged.
Dynamic Supplies also submits that the Court’s decision was based on the limited evidence placed before it, and that as a consequence there is no basis on which it can order the relief sought in Brother’s proposed order because the breadth of such relief would, in effect, relate to an entirely different case. As a matter of practical illustration, Dynamic Supplies says that the breadth of the proposed order would require it to break not only the boxes in which the printer drum units are transported, but also the aluminium bags in which they are packaged, in order to ascertain whether the goods are being dealt with “under or by reference to” Brother’s registered Australian trade marks. To remedy this, Dynamic Supplies suggests that this phrase should be replaced with the phrase “in packaging to which”, thereby clarifying that it is the packaging which is the subject of the restraining order, and not also the goods transported inside. For the same reasons, it also suggests that the words “have been applied” should precede “without licence or authority”.
Contrary to Dynamic Supplies’ position, Brother says that the breadth of its proposed order 3 is appropriate when one has regard to the need for the Court to express disapproval of the original breach and deter future breaches, the need to effectively monitor the situation, and the wide powers of the Court under the Federal Court of Australia Act 1976 (Cth) and Federal Court Rules 1979 (Cth). Brother submits that the case was not solely about packaging but also involved considerations of infringement and misleading conduct in relation to printer drum units to which Brother’s registered Australian trade marks had been wrongly applied. It says the expression “under or by reference to” is neither vague nor ambiguous, and that the Court should be wary to make orders that are too precise in expression because this would be conducive to evasion. Brother concludes that, on these matters alone, Dynamic Supplies should be restrained from dealing with any and all units to which the Brother’s trade marks have been wrongly applied.
However, Brother also points to the conduct of the case by Dynamic Supplies, and emphasises the way in which Dynamic Supplies gave broad denials which were ultimately proven wrong, made baseless allegations against Brother, was unsuccessful in its counter-claim and refused at the time to give any undertaking not to repeat the conduct. On the basis of these considerations, and on the fact the Dynamic Supplies now seeks a narrowing of the proposed orders because it does not wish to bear the burden of properly inspecting the goods it imports, Brother invites the inference that there is a real threat that other or further breaches will be committed by Dynamic Supplies unless it is restrained.
CONSIDERATION
The decision of 26 September 2007 essentially turned on the use of counterfeit packaging. While it is reasonably clear that dealing in counterfeit Brother units, if it occurred, would infringe Brother registered Australian trade marks, I do not consider it necessary or appropriate to frame the injunction in a way that discourages such anticipated future infringement. The case did not involve counterfeit products, and therefore restraining orders should not be made in relation to counterfeit products. I do not infer from Dynamic Supplies’ conduct of its case and the other matters raised by Brother that there is sufficient threat to warrant a restraining order of a pre-emptive nature. In my view, these matters are not sufficient grounds on which to anticipate a threat to commit further breaches. Rather, I anticipate that these proceedings and their outcome will deter Dynamic Supplies from committing any further breaches in the future.
Although I decline to make order 3 in the exact form proposed by Brother, I do accept Brother’s submission that the practical difficulties raised by Dynamic Supplies in relation to inspection of the products it imports are not insuperable. For example, random sampling could be used to check the products and thereby monitor compliance. In addition, greater care should be taken by Dynamic Supplies to verify the integrity and authenticity of the source from which the Brother products are obtained. These are measures which Dynamic Supplies would do well to incorporate into its usual business practice as part of its bona fide compliance with the orders attaching to these reasons.
As noted by Lockhart J in ICI Australia 38 FCR at 259, it is imperative that restraining orders are precisely formulated because contempt proceedings with serious consequences can flow from a failure to comply with such orders. In the light of this, and having regard to my earlier reasons in this matter, I consider that the words “under or by reference to” proposed by Brother are too extensive in their reach because they are capable of including conduct beyond that in respect of which specific findings have been made.
I therefore consider that the orders proposed by Brother are appropriate, with the exception of proposed order 3, for which Dynamic Supplies’ proposed order 3 should be substituted.
In relation to the question of costs of this application relating to the form of orders, I note there have clearly been constructive discussions between the parties in relation to the form of the proposed orders. I therefore consider there should be no order as to costs.
I direct the parties to come before me for further directions in this matter at a time to be arranged with my associate.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate:
Dated: 9 November 2007
Counsel for the Applicant: Mr R Macaw QC and Ms J Baird Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Mr G Clarke SC and Mr M Wise Solicitor for the Respondent: Home Wilkinson Lowry Date of Hearing: 5 November 2007 Date of Judgment: 9 November 2007
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