Cantarella Bros Pty Limited v Modena Trading Pty Limited (No 2)

[2013] FCA 130

FEDERAL COURT OF AUSTRALIA

Cantarella Bros Pty Limited v Modena Trading Pty Limited (No 2) [2013] FCA 130

Citation:	Cantarella Bros Pty Limited v Modena Trading Pty Limited (No 2) [2013] FCA 130
Parties:	CANTARELLA BROS PTY LIMITED ACN 000 095 607 v MODENA TRADING PTY LIMITED ACN 140 018 015
File number:	NSD 113 of 2011
Judge:	EMMETT J
Date of judgment:	25 February 2013
Legislation:	Australian Consumer Law Trade Practices Act 1974 (Cth)
Cases cited:	Calderbank v Calderbank [1975] 3 WLR 586
Date of hearing:	21 February 2013
Place:	Sydney
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	12
Counsel for the applicant:	M Green
Solicitor for the applicant:	Clayton Utz
Counsel for the respondent:	CL Cochrane
Solicitor for the respondent:	Corrs Chambers Westgarth

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 113 of 2011

BETWEEN:	CANTARELLA BROS PTY LIMITED ACN 000 095 607 Applicant
AND:	MODENA TRADING PTY LIMITED ACN 140 018 015 Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	25 FEBRUARY 2013
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1.The Respondent has infringed Australian registered trade mark 829098 (ORO) by using the sign ORO as a trade mark in Australia upon and in relation to goods consisting or derived from coffee, coffee essences, or coffee extracts, including in physical relation to those goods, including point-of-supply advertising and merchandise, within class 30 of the Register.

2.The Respondent has infringed Australian registered trade mark 878231 (CINQUE STELLE) by using the sign CINQUE STELLE as a trade mark in Australia upon and in relation to goods consisting or derived from coffee, coffee essences, or coffee extracts, including in physical relation to those goods, including point-of-supply advertising and merchandise, within class 30 of the Register.

THE COURT ORDERS:

3.That the Respondent whether by itself, its directors, servants, agents or otherwise be restrained from:

a.importing into Australia without first notifying the Applicant of the proposed date of any such import, in writing (no less than 7 days’ notice of the approximate arrival date in Australia), coffee and coffee related products under or by reference to the sign ORO;

b.selling, providing, advertising (including by way of point-of-supply or upon merchandise) and offering for sale in Australia coffee and coffee related products under or by reference to the trade mark ORO;

c.importing into Australia without first notifying the Applicant of the proposed date of any such import, in writing (no less than 7 days’ notice of the approximate arrival date in Australia), coffee and coffee related products under or by reference to the sign CINQUE STELLE;

d.selling, providing, advertising (including by way of point-of-supply or upon merchandise) and offering for sale in Australia coffee and coffee related products under or by reference to the trade mark CINQUE STELLE;

4.That the Respondent deliver up to the Applicant or securely destroy all packaging which contains coffee or coffee related products in possession or control of the Respondent (at the date upon which these orders are entered) on which any of the signs ORO or CINQUE STELLE still appear and which have not otherwise been irreversibly and permanently redacted within 14 days of these Orders being entered;

5.That the Respondent provide the Applicant with an affidavit verifying that Order 4 has been complied with in full within 21 days of these Orders being entered.

6.That the Respondent deliver up to the Applicant or securely destroy all point of sale material, point-of-supply material, business stationery, business cards, art work or other document (that might be made publicly available) bearing any of the signs CINQUE STELLE or ORO in the possession or control of the Respondent and which have not otherwise been irreversibly and permanently redacted within 14 days of these Orders being entered.

7.That the Respondent provide the Applicant with an affidavit verifying that Order 6 has been complied with in full within 21 days of these Orders being entered.

8.That the Respondent remove from its website pictures of all products sold by it under the trade marks CINQUE STELLE or ORO together with all references to the trade marks CINQUE STELLE and ORO within 7 days of these Orders being entered.

9.That the Respondent provide the Applicant with an affidavit verifying that Order 8 has been complied with in full within 21 days of these Orders being entered.

10.That the Respondent pay 90 per cent of the the Applicant's costs of the Application and 100% of the applicant’s costs of the Cross Claim.

11. That the Application be otherwise dismissed.

12.That the Cross Claim be dismissed.

13.That upon the Respondent giving the usual undertaking as to damages and also undertaking to prosecute any appeal diligently and expeditiously, Orders 3 to 9 be stayed until the determination of the Respondent’s stay application.

14.That the Applicant file and serve any affidavits upon which it wishes to rely in connection with the respondent’s stay application by 28 February 2013.

15.That the Respondent to file and serve its notice of appeal by 7 March 2013.

16.That the Respondent’s stay application be listed for hearing before the Duty Judge on a date after 7 March 2013 to be arranged with the Registry.

THE COURT NOTES THAT:

17.Nothing in these orders is taken to prevent the respondent using the phrase “QUALITÀ ORO”.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 113 of 2011

BETWEEN:	CANTARELLA BROS PTY LIMITED ACN 000 095 607 Applicant
AND:	MODENA TRADING PTY LIMITED ACN 140 018 015 Respondent

JUDGE:	EMMETT J
DATE:	25 FEBRUARY 2013
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 13 February 2013, I published my reasons and directed the parties to bring in short minutes to reflect my conclusions.  I also invited the parties to make submissions on the question of costs.  Following extended oral argument, orders have now been formulated that I am satisfied reflect my conclusions.  However, questions as to costs remain. 

2. Cantarella seeks an order that Modena pay its costs on a party-party basis up to and including 14 December 2011 and on the indemnity basis after that time.  Modena opposes any order for costs on the indemnity basis and contends that, having regard to the findings and conclusions that I have made, Cantarella should have only 75 per cent of its costs of the proceeding including the cross-claim.

3. The basis for Cantarella’s claim for costs on the indemnity basis is a compromise offer made by it to Modena on 23 November 2011.  After referring to the issues raised by the pleadings and the evidence that had been filed in affidavit form at that stage, Cantarella offered to settle the proceeding.  The letter ended by saying that it was made in accordance with the principles in Calderbank v Calderbank [1975] 3 WLR 586, on the basis that if the offer were not accepted within 21 days, the letter would be relied upon in support of an order for full indemnity.

4. The offer was not accepted and there has been no evidence put before the Court as to any subsequent communications between the parties.  An inference can be drawn that there had been some attempted compromise in that, as I indicated in my reasons, there was a change in the packaging used by Modena, in so far as its use of the sign Oro has for some time been only in conjunction with the word qualità.  In any event, whatever communications may have passed between the parties, the offer was not accepted. 

5. The substance of the offer made in the letter 23 November 2011 was as follows:

   (a)       Modena will undertake to the Court that it will not:

   ·sell, promote or offer for sale any coffee or coffee related products under or by reference to either or both of the Trade Marks, otherwise than as indicated below;

   ·manufacture or cause to manufacture, distribute or display any promotional material on which appears either or both of the Trade Marks;

   ·promote on its website any coffee or coffee related product on which appears either or both of the Trade Marks;

   ·          use on or in relation to its website either or both of the Trade Marks; or

   ·seek to expunge or assist any other person to seek to expunge either of the Trade Marks.

   (b)Modena will within 14 days of the date of settlement and release being executed, remove from display and destroy all promotional material bearing the Trade Marks.

   (c)Modena will take the following steps in relation to existing packaging of Modena’s products:

   ·In relation to Caffè Molinari 1kg bags of beans, use of the mark Oro will only occur where it is qualified by the word qualità but the mark Cinque Stelle will be removed from the packaging and the mark Oro where it is used without the qualifying word qualità will be removed.

   ·In relation to Caffè Molinari Cinque Stelle 3kg canisters, the Cinque Stelle mark will be removed entirely from each canister.

   ·In relation to Caffè Molinari beans and ground coffee in 250g containers, the mark Cinque Stelle will be removed entirely from each canister.

   ·In relation to any other products, the mark Oro will not be used unless it is qualified by the word qualità and the mark Cinque Stelle will not be used even if qualified by the word qualità.

   ·Modena may sell existing stocks bearing the marks Cinque Stelle or Oro within 3 months from the date of settlement, provided that, within 7 days of settlement, Modena provides a statutory declaration by one of its directors setting out the quantity of stock remaining on hand, together with identification of any stock already purchased and exported from Italy, in each case identifying the product size.

   (d)The parties will enter into mutual releases.

   (e)Each party will bear its own costs of the proceeding.

   (f)The proceeding will be discontinued.

6. Cantarella accepts that it must demonstrate that Modena’s rejection of its offer was unreasonable before it is entitled to an order for indemnity costs.  In considering whether it was unreasonable not to accept an offer, the matter of unreasonableness is to be judged by reference to the circumstances facing the offeree at the time of the offer.  There is no presumption that the ultimate success of the offeror in the proceeding will necessarily render the rejection of the offer unreasonable.

7. Cantarella contends that it was unreasonable for Modena not to accept its offer for the following reasons:

   ·When the offer was made, Modena was in a position to know the case that it had to meet and had had a sufficient opportunity to explore its own case.

   ·21 days was a reasonable period for Modena to consider the offer in all of the circumstances.

   ·Cantarella’s prospects of success at the date of the offer were no different from those at the final hearing and Modena’s prospects on its cross-claim were no different.

   ·          The offer was clearly expressed and was not subject to any ambiguity.

   ·The offer reflected a genuine compromise, in that Cantarella was offering to forgo any costs and afforded Modena an opportunity of disposing of stock that Cantarella asserted was infringing stock.

   ·The offer expressly foreshadowed a claim for indemnity costs if it were not accepted.

8. Modena contends that there were several aspects of the offer that made its rejection not unreasonable.  They may be summarised as follows:

   ·While the offer contemplated that Modena could use the mark Oro qualified with the word qualità, it expressly excluded that concession in relation to the mark Cinque Stelle, which went beyond the injunctions claimed by Cantarella and the injunctions that I have ordered.

   ·The offer contemplated undertakings that would prevent Modena from selling products bearing the Trade Marks outside Australia.

   ·The offer contemplated the removal and destruction of all promotional material bearing the Trade Marks in circumstances where marking of the Trade Marks was a viable alternative.

   ·Cantarella’s letter sought to justify its offer by two factual conclusions said to have been based on the evidence already filed.   First, Cantarella asserted that the evidence exhibited to an affidavit filed on behalf of Modena did not show widespread use of the Trade Marks in Australia by other traders.  Modena says that the findings that I have made indicate that it was not unreasonable for Modena to take a different view of that evidence.  Secondly, Cantarella asserted that the Trade Marks had been registered since 2000 and that the evidence showed clearly significant use over a lengthy period of time.  Modena contends that my findings indicate that it was not unreasonable for it take a different view of that evidence.

   ·Cantarella’s offer also called for an undertaking to the Court by Modena not to seek to expunge or assist any other person to seek to expunge the Trade Marks, which went beyond any order sought or made. 

9. An element of compromise in the offer was the forgoing of any claim for damages.  However, I concluded that the evidence did not support an award of damages against Modena.  The result, in that regard, was no more favourable to Cantarella than the offer. 

10. The only real extent to which the result is more favourable than the compromise proposed is in relation to the disposal of existing stock and costs.  Those matters are not insignificant.  However, in the light of the matters referred to above, I am not persuaded that it was unreasonable in all of the circumstances for Modena not to accept the offer.

11. In addition to its claims for infringement of the Trade Marks, Cantarella also made claims under the Trade Practices Act 1974 (Cth) and the Australian Consumer Law, as well as for passing off.  In addition, Cantarella claimed damages in respect of its infringement claim.  All of those claims were unsuccessful. 

12. Evidence was adduced as to the claims for misleading and deceptive conduct and for passing off and those matters were addressed in the trial.  The claims for passing off and misleading and deceptive conduct were separately addressed in written and oral submissions and submissions were made on the question of damages.  In all of the circumstances, I do not consider that it is appropriate that Cantarella recover the whole of its costs of the proceeding.  The appropriate order is that Modena pay 90 per cent of Cantarella’s costs of the proceeding and that it pay 100 per cent of Cantarella’s costs of the cross-claim.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 25 February 2013