Caterpillar Inc v Sun Forward Pty Ltd

[1996] FCA 983

CATCHWORDS

SUMMARY JUDGMENT - application for summary judgment under O 20 r 1 in respect of the applicants’ claims against the respondent for infringement of its trade mark in respect of Caterpillar “Logger” boots; infringement of its copyright in a bulldozer device stamped on the heel of the boots; passing off of the respondent’s “GAT-TANK” footwear for Caterpillar footwear and misleading and deceptive conduct.

SUMMARY JUDGMENT - trade mark infringement - inappropriate to grant application for summary judgment having regard to factual conflict as to origin of boots the subject of complaint which is not able to be resolved on the affidavit material and complex questions of construction of Trade Marks Act 1995 (Cth).

SUMMARY JUDGMENT - copyright infringement - whether the respondent had the requisite knowledge, for the purposes of s 37 the Copyright Act 1968 (Cth), that importation into Australia for the purpose of trade of Caterpillar boots bearing the applicants’ bulldozer device would infringe the applicants’ copyright.

SUMMARY JUDGMENT - passing off - applicants establish reputation in words “CAT” and “Caterpillar” as applied to footwear - whether respondent’s “GAT-TANK” footwear likely to be associated with the applicants’ “CAT” footwear - clear inference that similar get-up adopted deliberately to falsely create impression “GAT” shoe associated with the applicants’ footwear - registration of “GAT-TANK” as a trade mark no bar to a claim of passing off.

SUMMARY JUDGMENT - approach to be taken by the Court - text of O 20 r 1 not to be fettered by restrictions applicable to traditional summary judgment rules - relevance of case management system provided for by O 10 - O 20 r 1 not an alternative to trial, but rather an expeditious means of resolving litigation where an applicant can clearly demonstrate there is no real defence to the claims made by it - whether appropriate for Court to give summary judgment in respect of part of a case, when other causes of action are only suitable to be resolved by trial.

Federal Court Rules - O 10, O 20 r 1
Copyright Act 1968 (Cth) - s 37
Trade Marks Act 1995 (Cth) - ss 120, 123
Trade Practices Act 1974 (Cth) - ss 52, 53

Cases Considered

Australian Woollen Mill Ltd v F S Walton & Co Ltd (1937) 58 CLR 641
Bell v Clare (1989) 23 FCR 274
Burswood Management Ltd v Burswood Casino Motel/Hotel Pty Ltd (1985) 7 FCR 186
Central Equity Ltd v Central Corporation Pty Ltd (1995) 17 ATPR 41-443
Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1986) 12 FCR 375
Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302
Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388
Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240

CATERPILLAR INC and DESERT STORM MANAGEMENT PROPRIETARY LIMITED v SUN FORWARD PTY LTD
VG 185 OF 1996

DRUMMOND J
MELBOURNE
8 NOVEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA                 No VG 185 of 1996
VICTORIA DISTRICT REGISTRY  
GENERAL DIVISION  

BETWEEN:CATERPILLAR INC

First Applicant

AND:DESERT STORM MANAGEMENT PROPRIETARY LIMITED

(ACN 003 356 474)

Second Applicant

AND:SUN FORWARD PTY LTD

(ACN 064 840 115)

Respondent

CORAM:Drummond J

DATE:8 November 1996

PLACE:Melbourne

REASONS FOR JUDGMENT

The applicants, by motion on notice, seek final judgment in the action pursuant to O 20 r 1 the Federal Court Rules.

By the amended application, the first applicant seeks a range of orders against the respondent in respect of conduct by the respondent allegedly infringing its trade mark rights and its copyright. In addition, both applicants allege that the respondent’s conduct constitutes passing off and an infringement of ss 52 and 53(a), (c) and (d) the Trade Practices Act 1974 (Cth) and they claim relief to which they say
such conduct also entitles them.

In identifying the approach the Court should take to an application under O 20 r 1, counsel for both parties relied on a number of decisions under Supreme Court Rules permitting summary judgment; neither counsel was able to find any decision of this Court on the proper approach to such an application.

Order 20 r 1 is in materially different terms from the traditional form of Supreme Court rule governing summary judgment, such as O 14 r 1 of the old Rules of the Victorian Supreme Court and O 18 r 1 the Rules of the Queensland Supreme Court, which are modelled on the original English Order XIV, in that the Federal Court rule is not subject to any of the express (though qualified) limits contained in the traditional form of rules on the range of causes of action in which summary judgment can be given and on the time within which such relief can be sought.  Of the Queensland rule, the High Court said, in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99: “The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried”. The Court referred, as authority for this proposition, to an early High Court case and two turn of the century English decisions on rules based on the original English Order XIV.

In applying provisions of the Federal Court Rules roughly cognate with traditional procedural rules, it is necessary to keep in mind what was said by Wilcox and Gummow JJ in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at
394-395:

“¼  this Court has a system of case management which is different from the procedures adopted in any of the Divisions of the High Court Judicature ¼

¼From that circumstance we extract two propositions.  First, the fundamental differences in procedure render inapplicable most, if not all, of the principles evolved by the English courts in relation to their own procedures.  Secondly, the existence of a case management system within this Court is the backdrop against which the relevant rules must be considered and applied.”

Their Honours went on to observe that O 10 was the foundation of the Court’s case management system.  That order makes it clear that it is a central feature of the procedures of this Court that the conduct of an action is not left to the parties, but is very much subject to the detailed control of the Court.  As part of this approach, reflected in provisions such as O 10 r 1(2)(h) and (i), the Court will endeavour to identify and limit judicial determination to the real issues in dispute, with a view to ensuring the most expeditious and economical disposition of the case.

It follows that, from the existence within the procedures of this Court of the case management system, that it is the text of O 20 r 1 which must govern the outcome of the present application:  there is no justification for importing into the Federal Court rule all the detailed restrictions that the cases identify as applicable to the traditional summary judgment rules.  But O 20 is not intended to provide an alternative to trial as the ordinary method of resolving litigation in the Court:  see Bell v Clare (1989) 23 FCR 274 at 280. Its function is limited to providing an expeditious means of resolving litigation where the applicant can clearly demonstrate that there
is no real defence to particular claims made by it.

The first applicant, a United States corporation, is registered as the owner of five trade marks in respect of certain goods included in Class 25, which goods include, in particular, boots and shoes.  The marks are:  the word mark “CAT”; a stylised version of the word “CAT” in which the base of each of the three letters is truncated, with the space so left being largely filled by a triangle device (“the CAT/triangle mark”); the word mark “Caterpillar”; a version of the word “Caterpillar” with the truncations and triangular device I have referred to incorporated in the first three letters of that word (“the Caterpillar/triangle mark”); and the word mark “Walking Machines”.

In early 1993, a principal of the second applicant, Mr John McNickle, became the exclusive distributor in Australia of footwear manufactured overseas under licence from the first applicant bearing one or more of these trade marks.  On 8 February 1994, Mr McNickle transferred his business to the second applicant, a company he controls.  Mr McNickle, and then the second applicant, have imported into Australia a wide range of boots and shoes all marked, with the authority of the first applicant, with various of these five trade marks.  Some are designed for use as work boots and shoes, but part of the range is sold by the second applicant as recreational and fashion footwear.  Each style of boot or shoe is sold under a name unique to that style.  These style-names include the names of a number of the States of the United States and other place names in both the United States and England.  Other styles bear names suggestive of the outdoors and of ruggedness,
such as Typhoon 6", Typhoon 8" (numerical designations which appear to indicate the distance between the base of the heel and the top of the ankle piece) and Challenger 8".

One part of this case focuses on a particular “Caterpillar” boot called the “Logger” boot.  This is a heavy duty ankle-length boot.  However, Mr McNickle has not aimed this particular style at the Australian work-boot market, rather has he marketed it as a fashion item, particularly for persons in the 15 to 25 year age group.  A typical “Logger” boot bears, in addition to other markings, all the registered trade marks I have referred to other than the “Caterpillar” word mark.  Where each of the four marks on the boot appears, it is accompanied by the symbol “®”.

The applicants complain of the respondent’s conduct in importing into and selling in Australia “Logger” boots made by a Taiwanese manufacturer, Long Shoe, who, until 31 December 1993, had the authority of the first applicant to manufacture, among other things, that particular style of boot and to mark it with the first applicant’s registered trade marks.  The evidence indicates that, as from 31 December 1993, the licence previously granted by the first applicant to Jerryco Footwear Inc, under which it was authorised to procure the manufacture and distribution of footwear bearing the first applicant’s trade marks, was terminated by the first applicant.  Under its agreement with the first applicant, Jerryco was authorised to distribute footwear bearing the first applicant’s marks in various parts of the world.  Caterpillar, Jerryco and Long Shoe had, in early 1993, entered into an agreement under which Long Shoe was authorised to manufacture Caterpillar
branded footwear for sale solely to Jerryco.  In terms of Long Shoe’s agreement, its authority to manufacture the footwear so marked, terminated on 31 December 1993, upon termination of Jerryco’s agreement with the first applicant.  From 1 January 1994, the Wolverine Work and Outdoor Footwear Group, a United States corporation, was given a licence by the first applicant to procure the manufacture of and to distribute worldwide footwear bearing the first applicant’s marks.

Although Jerryco’s licence and thus its own authority from the first applicant came to an end on 31 December 1993, for some months thereafter Long Shoe manufactured a total of 20,858 “Logger” boots marked with the first applicant’s marks, effectively with the authority of the first applicant.  That came about because an English company, Overland Shoes Ltd, which had been appointed by Jerryco in 1991 to distribute Caterpillar marked footwear in Europe, had, prior to 31 December 1993, placed orders with Long Shoe for “Logger” boots to meet orders which Overland had accepted from its European customers.  In February 1994, at Overland’s request, Wolverine authorised Long Shoe to manufacture for delivery to Overland the “Logger” boots necessary to meet the orders placed by Overland with Long Shoe prior to 31 December 1993.  Wolverine’s authorisation required Long Shoe to ship all the boots manufactured by it under this dispensation by 1 May 1994.  The evidence indicates that Long Shoe did not comply with this deadline, but Overland nevertheless accepted 17,194 pairs of the total of 20,858 “Logger” boots the subject of Overland’s pre-31 December 1993 orders to Long Shoe.  It is common ground that Overland did not accept 3,664 pairs of “Logger” boots from the 20,858 that it requested Long Shoe to deliver to it under the special arrangement with Wolverine.  The applicants make no complaint about the “Logger” boots accepted by Overland under the Wolverine dispensation to Overland and Long Shoe:  some of these boots, in fact, were delivered by Overland to the second applicant.

The respondent asserts that an unidentified part of the “Logger” boots imported by it were from the 3,664 pairs of boots of which Overland refused to accept delivery and that the balance of the “Logger” boots imported by the respondent were “Logger” boots made by Long Shoe prior to 31 December, ie, while its agreement with Jerryco and the first applicant was still on foot, on the instructions of Jerryco’s intermediary, Nova Footwear Co Limited, but which the respondent says were never delivered to that intermediary.

The “Logger” boots imported by the respondent and the boxes in which they were sold by the respondent are, for all practical purposes, identical in appearance to the “Logger” boots and their boxes which were imported by the second applicant under the authority of the first applicant.  The second applicant became aware, in mid 1995, of the respondent’s activities in this regard as a result of telephone calls from the second applicant’s retailers who were approached by the respondent and offered “Logger” boots at about half the price charged by the second applicant.  On 12 July 1995, Mr McNickle met a principal of the respondent, Mr Shih Shui Ko, who appears to use the name Kaleb Ko in the course of the respondent’s business.  Mr McNickle described what took place at this meeting and how he made it clear to Mr Ko that he objected to Mr Ko being involved in the sale within Australia of Caterpillar branded footwear, given that he held exclusive rights for the
distribution of such goods here.  In the course of this meeting, Mr Ko showed Mr McNickle a “Logger” boot.  Mr McNickle says:  “I visually inspected it and confirmed that it was identical with the Caterpillar branded Logger boot sold by” the second applicant.  It appears that the “Logger” boots which the respondent showed to various of the second applicant’s retailers in mid 1995 were samples only and it was not until late 1995 that the respondent was able to supply “Logger” boots to retail outlets.  Mr McNickle described purchasing, about this time from a retail shop in Sydney, a pair of “Logger” boots, not imported by the second applicant.  He described making arrangements with one of his retailers to supply him with the second applicant’s “Logger” boots at a sufficiently low price to enable that retailer to match the price at which a competitor was selling “Logger” boots apparently supplied by the respondent.  The evidence is unclear as to the volume of “Logger” boots sold by the respondent within Australia, but it does establish that by late 1995/early 1996 the respondent was selling “Logger” boots marked with the first applicant’s marks to a number of retail stores in the Sydney area, including one in which the respondent’s principals had an interest.

As a result of information received by Mr McNickle in mid November 1995, the second applicant took action that brought about the seizure by Customs pursuant to s 103 the Trade Marks Act 1955 (Cth) of a consignment of 672 pairs of “Logger” boots made by Long Shoe imported by the respondent.  The present proceedings, in so far as relief in respect of trade marks infringement is claimed, are brought by the applicants pursuant to the statutory scheme under which Customs seized this consignment of “Logger” boots that is now contained in Part 13 the Trade
Marks Act 1995 (Cth).

There is a dispute of fact as to the origin of the “Logger” boots marked with the first applicant’s marks which have been imported into and sold within Australia by the respondent and which include the consignment of “Logger” boots seized by Customs.  In his affidavit, Mr Pen-Hsiang Sun, a principal of the respondent, sets out information he has obtained from Long Shoe and says, in effect, that the only “Logger” boots the respondent has imported is a total of 3,662 pairs which Mr Sun asserts is made up of an unspecified part of 3,682 pairs of Caterpillar footwear which he says Long Shoe had completed but not delivered to Nova, the intermediary of the first applicant, prior to 31 December 1993 and which, by inference, was never delivered to that intermediary, together with a further unspecified part of the 3,664 pairs made by Long Shoe after 31 December 1993, at Overland’s request pursuant to the Wolverine agreement, but of which Overland refused to take delivery.  Mr Sun exhibits seven invoices and packing lists from Long Shoe evidencing the purchase by the respondent or by a company associated with the respondent’s principals from Long Shoe of a large number of items of footwear.  One of the invoices is dated 17 January 1996, four are dated 8 February 1996 and two are undated.  One is incomplete and a second may be a copy of one of the other invoices.  It is not possible to identify from these documents how many pairs of footwear they cover.  Mr Sun says that the information he has received from Long Shoe is to the effect that the 3,664 pairs of Caterpillar footwear manufactured by Long Shoe for Overland, of which Overland did not take delivery, consist of Caterpillar footwear “of various styles, sizes and colours”, ie, that they were not
confined to “Logger” style footwear.  Mr Sater, of Overland, who filed an affidavit on behalf of the applicants, says that all of the Caterpillar boots which Overland ordered from Long Shoe pursuant to the Wolverine agreement consisted of “Logger” boots.  The applicants dispute what the respondent says about only importing Caterpillar marked footwear from Long Shoe which formed part of the residue of the Overland order made by Long Shoe in early 1994 or part of the footwear made by Long Shoe for Nova before 31 December 1993, but never delivered to Nova.  Mr McNickle refers to defects in a pair of “Logger” boots bought by a consumer from a store carrying “Logger” boots supplied by the respondent which he says are unusual in boots manufactured under authority from the first applicant, an authority which involves the particular manufacturer meeting the first applicant’s quality control requirements.  Mr McNickle and others of the deponents relied on by the applicants give further evidence in support of the applicants’ contention that the respondent has imported into Australia “Logger” boots manufactured, in all probability by Long Shoe, subsequent to 31 December 1993 and which do not form part of the residue of “Logger” boots made by Long Shoe for Overland not accepted by Overland pursuant to the Wolverine agreement.

The applicants contend, on two separate bases, that the marks applied to the “Logger” boots which were imported into and sold within Australia by the respondent were not applied with the authority of the first applicant as owner of those registered marks.  Firstly, the applicants assert that these “Logger” boots, imported into Australia by the respondent, were manufactured by Long Shoe in circumstances in which there is no factual basis for the respondent’s contention that
the various Caterpillar trade marks which the boots bear were applied to them with the authority of the first applicant, either under the Jerryco agreement or under the Wolverine dispensation agreement with Overland. Secondly, the applicants say that even if any of the “Logger” boots imported for sale by the respondent were manufactured by Long Shoe before 31 December 1993 under its agreement with Jerryco and the first applicant or after that date, but under the Wolverine dispensation, ie, in circumstances in which Long Shoe placed the Caterpillar marks on them with the first applicant’s authority, the respondent still made a use of those trade marks that is sufficient for the purposes of s 120(1) the Trade Marks Act 1995 and so infringed various of the first applicant’s marks. The applicants reject the respondent’s contention that, if it be the case that the marks were applied to boots made by Long Shoe, either pre-31 December 1993 or under the Wolverine dispensation, there can be no use of the first applicant’s marks capable of falling within the proscription created by s 120, since all the respondent has done is to engage in parallel importing by importing genuine Caterpillar boots bearing the first applicant’s marks. The applicants further dispute the respondent’s contention that, in that event, the marks were applied to the “Logger” boots imported and sold by the respondent “with the consent” of the first applicant as the registered owner of the mark so as to entitle the respondent to rely on s 123 to answer the allegations of trade mark infringement. The applicants contend that rejection of the respondent’s arguments as to the non-application of s 120 to its dealing with the “Logger” boots in question and to its entitlement to rely on s 123 must necessarily follow from the limited authority Long Shoe had to place the first applicant’s marks on “Logger”

boots manufactured by it under its contract with Jerryco, which expired on 31 December 1993, and the limited authority Long Shoe effectively had from the first applicant to place the marks on the 20,858 pairs of “Logger” boots that Long Shoe made for Overland under the Wolverine agreement:  it is said that the first applicant’s consent to the application of its marks by Long Shoe to the boots was limited, in the former case, by the contractual arrangements to a consent to place the marks on boots to be made for and to be sold to, and only to, Jerryco (or at its direction) and, in the second case, to consent to place the first applicant’s marks on the “Logger” boots solely for the purpose of making and delivering boots to Overland under the Wolverine dispensation agreement.

Determination of the applicants’ claim for relief in respect of trade mark infringement, on the first basis relied on by the applicants, involves the resolution of the factual conflict as to the origin of the “Logger” boots imported by the respondent that I have referred to. I do not accept that that can properly be done on the affidavit material. Although the applicants have filed much evidence in support of their contention as to the origin of the “Logger” boots imported and sold by the respondent, I do not think it is proper to resolve this conflict, on the affidavits, given what Mr Sun has to say on the basis of information provided to him by Long Shoe, which is supported by some documentary material. Nor do I think it appropriate to attempt to resolve the difficult questions of construction of ss 120 and 123 the Trade Marks Act 1995 thrown up by the first applicant’s claim for summary judgment for alleged trade mark infringement, on the alternative basis relied upon.

I am not therefore prepared to grant the application for summary judgment in respect of the action, in so far as it is based upon trade mark infringement.  Anticipating the possibility that I may reach this conclusion on this part of the claim in the motion, the applicants, by their counsel, stated that they would accept, as a condition of the grant of relief in respect of their claims in passing off and pursuant to the Trade Practices Act 1974 (Cth) in respect of the “GAT” marked footwear imported and sold by the respondent and a condition of relief in respect of their claims based on breach of copyright in respect of the “Logger” boots imported and sold by the respondent, that they discontinue their claims for relief in respect of trade mark infringement and under the Trade Practices Act in respect of the sale by the respondent of the “Logger” boots.

I turn now to the applicants’ claims in respect of copyright.

There is stamped into the side of the heel of each Caterpillar “Logger” boot a depiction, in elevation, of a bulldozer fitted with a blade, in association with the symbol “©”. There is detailed and undisputed evidence that this device was created by employees of the first applicant in circumstances in which any copyright in the two-dimensional representation of this device so created would have vested in that applicant. It is, in my opinion, quite clear - and again this was not disputed by the respondent - that the device is an “artistic work” within the meaning of that term in s 10 the Copyright Act 1968 (Cth) and thus a work in relation to which copyright subsists.

The first applicant relies on s 37 the Copyright Act to make out its claims for relief based on infringement of copyright. Section 37 the Copyright Act provides:

"Subject to section 44A, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, without the licence of the owner of the copyright, imports an article into Australia for the purpose of:

(a)selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article;

(b)distributing the article:

(i)for the purpose of trade; or

(ii)for any other purpose to an extent that will affect prejudicially the owner of the copyright; or

(c)by way of trade exhibiting the article in public;

if the importer knew, or ought reasonably to have known, that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of the copyright."

The respondent seeks to answer the claim in respect of breach of copyright solely by asserting that it did not have the knowledge which it must be shown to have if its importation into Australia of “Logger” boots stamped with this bulldozer device is to constitute an infringement of the first applicant’s copyright.

This, on the evidence before me, is a hopeless contention in respect of any importations of “Logger” boots by the respondent bearing the bulldozer device after receipt by it of the facsimile of 11 July 1995 from the then solicitors for the second applicant.  I have referred briefly to the evidence relied on by the applicants
showing the importation of some “Logger” boots by the respondent prior to that date, as well as the importation of “Logger” boots by the respondent subsequent to that date, including the importation of the consignments now under Customs seizure.  Mr Sun himself asserts that the entirety of Caterpillar marked footwear which the respondent has imported, which either consists of or includes “Logger” boots bearing the bulldozer device, are covered by the Long Shoe invoices, at least five of which evidence purchases by the respondent in January and February 1996.

By its solicitors’ letter of 11 July 1995, the second applicant advised the respondent as follows:

"We act for Custom Originals [ie, the second applicant], the licensed importer of ‘Caterpillar’ footwear and are instructed that your company has imported a large quantity of ‘Caterpillar’ products.  Further, we are advised that you have offered to sell ‘Caterpillar’ footwear to some of our client’s existing retailers.

On the information available to us you are in breach of the intellectual property rights attached to the footwear as to copyright, design and trade mark. Those rights, by agreement, are vested in our client. Also, based on the same information, you are in breach of the Trade Practices Act as to unfair practices including parallel importing.

As a result our client intends to immediately take the following action:-

1.Report your company’s breach of the intellectual property rights to ‘Caterpillar’ of Peoria, Ill. U.S.A.;

2.Report your company’s breach of those rights to Wolverine Inc. of the U.S.A. which has the global licence for Caterpillar footwear;

3.Report your company’s activities to the Trade Practices Commission;

4.Seek an injunction to prevent the sale and distribution of the footwear held by you unless you immediately:-

a)issue an undertaking in writing directly to our client that you will cease all commercial activity in connection with that footwear;

b)agree to meet with the managing director of our client, namely Mr John McNickle, to discuss the matter.

(Our client’s facsimile number is [phone] and telephone number is [phone].

5.Unless you comply with (a) and (b) above, take proceedings against your company for general damages and loss of profits.

If our client has not received the undertaking referred to in 3(a) above and spoken with you or a director of your company by 11.00a.m. today, then our client will take all necessary proceedings against your company to protect its interests and this without further notice to you."

Although it is the first applicant who owns copyright in the artistic work reproduced on the heel of each “Logger” boot and the letter of 11 July 1995 was written on behalf of the second applicant, the terms of that letter are plainly such as to put the respondent on notice that any further importation of the “Logger” boots so marked would involve the respondent in a breach of the first applicant’s copyright.

The undisputed evidence clearly establishes that the respondent imported the “Logger” boots for each of the purposes listed in sub-paragraphs (a), (b) and (c) of s 37. In Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240 at 257, von Doussa J said:

"‘Knowledge’ for the purposes of s 37, refers to notice of facts such as would suggest to a reasonable person having the ordinary understanding expected of persons in the particular line of business that a breach of copyright was being committed ¼

By virtue of the Copyright Amendment Act 1991 (Cth), s 3, it is no longer necessary to establish actual knowledge. Constructive
knowledge is sufficient.  Knowledge of the law is not required.  It is sufficient that there be actual or constructive knowledge that intellectual property rights would be infringed, without knowing the precise nature of those rights ¼”

This issue did not arise for consideration in the appeal from this decision, reported at King v Milpurrurru (1996) 136 ALR 327. No one associated with the respondent put any evidence before the Court to suggest any lack of knowledge of the kind referred to in the section by the respondent after receipt of the second applicant’s letter of 11 July 1995. The undisputed evidence as to what took place at the meeting of 12 July 1995 between Mr McNickle and Mr Ko serves only to emphasise that at all times subsequent to mid July 1995, the respondent, by its principals, acted with full knowledge that any subsequent importation into Australia by it of Caterpillar boots bearing devices in which the first applicant possessed copyright would necessarily infringe that copyright if the importation was for the purpose of trade.

So far as the first applicant’s claims in copyright are concerned, it matters not whether the “Logger” boots in question were made by Long Shoe before 31 December 1993 under its agreement with Jerryco and the first applicant or whether they were part of the Overland production run made by Long Shoe in early 1994 under the Wolverine dispensation agreement and so may arguably be marked with the first applicant’s marks with its authorisation or whether those “Logger” boots were produced by Long Shoe (or anyone else) in circumstances in which the first applicant gave no authority for them to be marked with the applicants’ marks which they do bear. When the respondent imported the “Logger” boots seized by Customs, it did so, well knowing from the letter of 11 July 1995 that if it were, after that date, to make such a boot in Australia bearing the bulldozer device, it would necessarily infringe the first applicant’s copyright because it would not have the authority of the first applicant, as owner of the copyright in the bulldozer artistic work, to reproduce that device in a marking on the boot, ie, to reproduce it in a material form: see s 21(3)(a) the Copyright Act.

The next matter for consideration is the applicants’ claim that the respondent is passing off Long Shoe’s “GAT-TANK” footwear for Caterpillar footwear.

In Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731, the Advocaat case, Lord Diplock, at 742, identified the five elements which must be present to create a valid cause of action in passing off as follows:

“(1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.”

This statement of principle is authoritative in Australia:  see Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 308-309.

Caterpillar Inc is the recently adopted new name of Caterpillar Tractor Co, an old established United States corporation.  I accept the undisputed evidence from the applicants that, for many decades, the applicant has been well known in many parts of the world, including Australia, primarily by reason of its manufacture and sale of heavy earth moving machinery.  The evidence also establishes that, for many years, the first applicant has licensed the use of its trade marks in the clothing market and that, in 1988, the first applicant commenced to licence the use of its trade marks in the footwear market.  The evidence establishes that substantial sales have been made in recent years of footwear so marked by the organisations that have had the first applicant’s licences to market that footwear to numerous countries in Asia and Europe and elsewhere in the world, including Australia.

The evidence also shows that Mr McNickle, and subsequently the second applicant, have each year substantially increased the total numbers of Caterpillar footwear sold in Australia under the exclusive Australian licences they have held since the beginning of 1993 and that such sales generate a large income for the second applicant:  the turnover of the business, which Mr McNickle commenced in early 1993 and which is now conducted by the second applicant, has increased from nil to approximately $6M in 1995.  Mr McNickle says that almost all of the second applicant’s turnover is generated by sales of Caterpillar branded footwear, with the “Logger” boot providing about 10% of all Caterpillar footwear sales.  The confidential exhibits also show substantial expenditure by the second applicant on the promotion and advertising of its Caterpillar footwear in Australia, in which extensive use is made of each of the various trade marks I have referred to.

Mr McNickle describes his adoption of a careful marketing strategy designed to ensure a steady increase, in the long term, of sales of Caterpillar branded footwear in Australia, which involves a restriction by the second applicant on the number and kind of retail outlets which the second applicant is prepared to supply with that footwear.  As I have indicated, it is a strategy which appears to be successful.  The second applicant’s strategy also includes the maintenance by it of a high level of inventory and arrangements for ensuring retail outlets can be supplied very quickly to enable them to meet an order by a particular customer which they themselves may not have in stock.

I accept that each applicant has within Australia an established and valuable reputation or intangible property right in each of the words “CAT” and “Caterpillar”, as applied to footwear, that extends beyond the first applicant’s proprietary rights created by the trade mark registrations themselves.  Those words had, by the time the respondent introduced “GAT” footwear into trade in Australia, become distinctive of footwear connected with the first applicant and with the second applicant, given that it has the exclusive Australian distribution rights for the first applicant’s footwear, even though the consuming public may be unaware of the identity of either applicant.  See Central Equity Ltd v Central Corporation Pty Ltd (1995) 17 ATPR 41-443 at 40,996. The respondent has not suggested the contrary.

I turn next to the issue of misrepresentation.

“GAT” both sounds and looks like “CAT”.  It can readily be accepted that consumers are, for this reason, likely to assume that “GAT-TANK” footwear is associated with the traders who produce and market “CAT” footwear.

In order to determine whether the respondent has misrepresented the “GAT-TANK” footwear as Caterpillar footwear, it is also necessary to say something about the get-up in which each is marketed.  I take the Caterpillar “Logger” boots as typical of the way Caterpillar footwear is marketed in Australia.

I have already described the application of the Caterpillar registered trade marks to the “Logger” boot.  The outside face of the tongue of the “Logger” boot is also marked with a label consisting of the words “CAT^®”, “Timber” and “Team”.  The word “CAT” in this label is printed in capital letters; the other two words in the label are, apart from their initial capital letters, printed in lower case letters.  The three words in the label are arranged vertically, with the topmost word, “CAT”, offset to the right above the word “Timber”, with that word, in turn, being offset to the right above the word “Team”.  The three words are printed on the black background of the label, but are all enclosed in a white border.  A tag attached to the boot, as part of the get-up under which it is sold, contains the phrase “CAT Timber Team”, which also appears on the tongue of the boot, once in the form of a reproduction of that label and a second time in a different style of print; the tag also prominently features the registered mark “Walking Machines^®”.

In addition to the label and the tag attached to the “Logger” boot and the Caterpillar trade marks, which I have already described, the other get-up in which it is marketed includes the cardboard box in which the “Logger” boots are sold.  “Logger” boots imported by the second applicant appear to have been sold, at different times, in different cartons.  Examples of two of these cartons are contained in exhibits JLM9 and JLM16.  The former carton is prominently marked with the Caterpillar/triangle registered trade mark, the Walking Machines registered trade mark and, on the top and at each end of the box cover, a representation of the “CAT Timber Team” label that also appears on the tongue of the boot.  The cover of this box also incorporates the CAT/triangle registered mark in a device printed on the box-cover identifying the contents as “a licenced (sic) product of Caterpillar Inc”.  The main artwork on the box-cover consists of a reproduction of an old photograph of a steam engine and crew hauling a trailer piled with tree trunks.  The box included in the latter exhibit is different in both shape and appearance.  On the top of the cover, there is a reproduction of a photograph of part of a large earthmoving machine with caterpillar tracks prominently marked with the CAT/triangle device the subject of one of the registered trade marks; part of this box-cover’s ends and one side of the box is marked with diagonal black and yellow stripes.  The cover of the box is prominently marked with the Caterpillar/triangle, the CAT/triangle and the Walking Machines registered trade marks.  The cover is also marked on each edge with the device also appearing on the other box, that identifies the contents as licensed products of Caterpillar Inc.

The applicants, by their amended pleading delivered in late September 1996, complained of the sale by the respondent of the “GAT-TANK” footwear as involving passing off.  In making this complaint, the applicants relied, in part, on the fact that the respondent sold this footwear in a get-up which was deceptively similar to the get-up in which the second applicant markets the first applicant’s “Logger” boots.  Affidavit material was subsequently filed on behalf of the respondent.  However, the respondent adduced no evidence at all touching on the decisions that resulted in the production of the boxes in which the GAT shoes are sold or, indeed, any evidence identifying the source of these boxes.

The get-up in which the “GAT” shoe is marketed has marked similarities to the get-up in which the applicants’ “Logger” boots are sold:

(1)The expression “GAT Walking Stage” appears on each end of the GAT shoe box and on tags attached to some of the GAT footwear, all within a border and in layout and printing similar to the way the “CAT Timber Team” phrase appears in the label on the tongue of the “Logger” boot, on tags attached to that boot and also on the end and top of one of the “Logger” box covers.

(2)Not only is “GAT” similar both visually and aurally to “CAT”, but “GAT Walking Stage” also readily evokes the Caterpillar “Walking Machine” trade mark that is incorporated in the “Logger” get-up.  The use of the phrase “walking stage”, as

descriptive of “GAT” footwear, is an unusual use of language, just as the use by Caterpillar of the phrase “walking machine” in the same context is an unusual use of language:  this further increases the likelihood of a consumer wrongly connecting “GAT” footwear so marketed with the applicants’ footwear.

(3)The adoption of a tank as the device accompanying the words “GAT-TANK” in the label on the tongue of the “GAT” shoe in evidence and also printed on the side of the GAT shoe boxes readily evokes “Caterpillar” in that the tank is obviously fitted with caterpillar tracks:  the adoption of the tank device was not intended to distinguish “GAT-TANK” footwear from the applicants’ footwear, rather was it intended to achieve the opposite result.

(4)The “GAT” shoe in evidence has the tank device stamped on the side of the heel in the same position in which the bulldozer device is stamped on the “Logger” boot, a further suggestion to consumers that they come from the same source.

It is true, as the respondent contends, that the applicants have not put on any evidence to explain how the get-up in which the GAT shoe and the “Logger” boot are marketed contributes to the attractiveness to customers of each product.  But it is easy, in the absence of any explanatory evidence from the respondent, to
infer from the similarities in the two get-ups that they were adopted deliberately to falsely create the impression that the GAT shoe was associated with the applicants’ footwear.

The second applicant markets in Australia quite a wide range of Caterpillar footwear.  The “GAT” shoe in evidence is similar to the “Woodstock” style of shoe in the “Caterpillar” range.  I have referred to the numerous features of the “GAT” shoe get-up which I consider are designed to suggest a connection with the applicants’ products.  The likelihood of the ordinary customer wrongly making such a connection is increased by the fact that the applicants do market in Australia a large range of footwear, so that there is every likelihood that the ordinary customer, on seeing the “GAT” shoe and box, would readily infer that the “GAT” shoe is yet another shoe in the “Caterpillar” range.

The combination of the words “GAT-TANK” and the tank device was in fact registered by Long Shoe as a trade mark in respect of footwear in Class 25.  This registration was effected on 21 April 1994, ie, soon after Long Shoe’s permission to manufacture footwear marked with the Caterpillar trade marks had come to an end.  No explanation is offered for the timing of this registration or for the choice of the words and the device that were so registered.  While this mark remains registered, Long Shoe can lawfully make (and the respondent can sell) footwear bearing this trade mark.  But Long Shoe and the respondent have gone beyond this by adopting and using a get-up for the Long Shoe footwear that, in addition to incorporating Long Shoe’s registered trade mark, also incorporates the other
features which, with this mark, play a part in creating the impression that “GAT-TANK” shoes are associated with the applicants’ footwear.  The marketing by the respondent of shoes in these circumstances can amount to passing off, notwithstanding the fact that they bear Long Shoe’s registered trade mark:  see Shanahan, Australian Law of Trade Marks and Passing-Off, 2nd Ed, at pp 407-408.

The only evidence the respondent put before the Court in answer to the claim for summary judgment in passing off was evidence by Mr Ko as follows:

“3.Sun Forward has not sold any GAT-TANK shoes directly to the public.  All of the GAT-TANK shoes bought by Sun Forward have been sold to retailers or are still in stock.  Sun Forward has not offered, and does not offer, GAT-TANK shoes for sale to the public.

4.When I approached shoe retailers and offered to sell GAT-TANK shoes to me (sic), I showed them samples of GAT-TANK shoes and told them that they were samples of GAT-TANK shoes.  I do not recall ever showing any packaging to these retailers ¼”

In so far as there is implicit in this statement the proposition that the respondent has not misled the retailers, the only persons with whom it has directly dealt, into thinking that its “GAT” shoes are connected with the applicants’ footwear, that is no defence to the applicants’ claims against the respondent for passing off:  the inference can readily be drawn from the markings on the “GAT” shoes and from the get-up in which they are marketed by the respondent’s retailers, who include a store with which the principals of the respondent are associated, that the respondent intended that consumers who purchased from those retailers would be misled into
thinking that the “GAT” shoes are connected with the applicants’ footwear.  See Shanahan, supra, at 382-383.

The respondent is selling footwear in circumstances which show it is engaged in deliberately seeking to misrepresent it to consumers as a “Caterpillar” shoe.  It can readily be inferred that damage is likely to result therefrom to the applicants:  see Australian Woollen Mill Ltd v F S  Walton & Co Ltd (1937) 58 CLR 641 at 657. It is easy to infer that the applicants have already suffered damage from the respondent’s sale of GAT-TANK footwear: it is likely that some custom has been lost to them in so far as some consumers are likely to have bought “GAT-TANK” shoes in the belief they were buying well-known “Caterpillar” footwear and that, if they had known the true position, they would have rejected the “GAT-TANK” shoes and insisted on “Caterpillar” footwear.

For reasons similar to those which in my opinion entitle the applicants to the judgment they seek in respect of the respondent’s conduct in passing off “GAT-TANK” footwear for “Caterpillar” footwear, I think they are also entitled to judgment against the respondent on the ground that that same conduct amounts to conduct infringing ss 52 and 53(c) and (d) the Trade Practices Act (although I do not think the evidence justifies a finding that the respondent’s conduct infringes s 53(a)). Cf Burswood Management Ltd v Burswood Casino Motel/Hotel Pty Ltd (1985) 7 FCR 186 at 191 and Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1986) 12 FCR 375.

“CAT”, as applied to footwear, is well-established in the market as identifying footwear connected with the applicants.  The adoption of the word “GAT” by Long Shoe and its use by the respondent in marketing footwear, in a market in which “CAT” footwear is well known, calls for explanation, if there is any innocent explanation.  The respondent, although able to enlist extensive co-operation from Long Shoe in providing evidence, has not attempted to explain why Long Shoe chose to manufacture footwear under the name “GAT-TANK”.  Nor has the respondent attempted to put any evidence before the Court to explain why it itself has chosen to market footwear under that name.  The inference that the respondent, by marketing the “GAT-TANK” footwear, sought to benefit from and thereby injure the business and goodwill of the applicants in “CAT” footwear is irresistible.

The applicants are entitled now to relief in respect of the passing off of the “GAT-TANK” footwear for their footwear.  The circumstances of the case are such as, in my opinion, probably entitles them to orders for delivery up of the offending articles since the respondent could not lawfully sell the “GAT-TANK” footwear without re-branding it and re-packaging it.  Cf Wadlow, The Law of Passing-Off, 2nd Ed, para 8.56.  I will make orders for delivery up of the “GAT-TANK” footwear unless the respondent, by 22 November 1996, makes application to the Court and shows cause why such orders should not be made.

The respondent submits that the Court should not give summary judgment in respect of part of a case, when other causes of action can, or are only suitable to be, resolved by a trial.  I do not consider, for the reasons given, that any such limitation should be placed on the relevantly unfettered power conferred by O 20, r 1 by the adoption of a general rule that the discretion to give summary judgment should ordinarily be exercised against the applicant in such a case.  In my opinion, this Court should not approach a claim for summary judgment on part of the case with a predisposition not to grant it, save in exceptional circumstances.  A broader approach that takes account of all relevant circumstances of the particular case is appropriate.  If, eg, summary determination of some of an applicant’s claims is not likely to have any significant impact on containing the costs of, and time needed to resolve, other claims, which will themselves have to be determined before, in practical terms, the whole dispute between the parties is likely to be resolved, that would be a good discretionary reason for refusing summary judgment on some only of an applicant’s claims.  Here, I consider that the applicants have made out a clear entitlement to judgment now on their claims in copyright in respect of the respondent’s importation for sale of “Logger” boots and in respect of the respondent passing off Long Shoe’s “GAT-TANK” footwear for “Caterpillar” footwear.  Moreover, a decision now on those claims will effectively determine whether the respondent can continue to carry on its business of selling “Logger” boots imported by it and of selling “GAT-TANK” footwear.  In view of the conditions to which the applicants indicated they were prepared to submit in return for judgment now on their copyright and passing-off claims, the summary judgment to which I think the applicants are entitled will therefore settle the dispute between the parties.

I certify that this and the preceding 28 pages are a true copy of the reasons
for judgment herein of the Honourable Justice Drummond.

Associate:
Date:  8 November 1996

Counsel for the applicants:  Mr D Shavin QC and Ms E Strong

Solicitor for the applicants:  Freehill Hollingdale & Page

Counsel for the respondent:  Mr A Ogborne

Solicitor for the respondent:  Kenneth K S  Wee

Date of Hearing:  29 October 1996