Charles Worthington Hair and Beauty Company Limited v International Hair Products Pty Ltd

[2003] FCA 490

FEDERAL COURT OF AUSTRALIA

Charles Worthington Hair & Beauty Company Limited v International Hair Products Pty Ltd [2003] FCA 490

INTELLECTUAL PROPERTY – trade mark – whether costs incurred by applicants in proceedings commenced after threats of infringement had been made by the respondent should be seen as being damages that the applicants have sustained because of the respondent's conduct under s 129(2) of the Trade Marks Act 1995 (Cth).

COSTS – whether it is appropriate to exercise the Court’s discretion to order that costs be paid by an unsuccessful party on an indemnity basis rather than the usual party and party basis where the respondent had acted in such a way as to make it necessary for the applicant to commence proceedings in respect of which the respondents may have had no defence.

Trade Marks Act 1995 (Cth) – s 129(2)

CHARLES WORTHINGTON HAIR & BEAUTY COMPANY LIMITED AND TRIMEX PTY LTD (ACN 001 198 787) v INTERNATIONAL HAIR PRODUCTS PTY LTD

N54 OF 2003

HILL J
24 APRIL 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N54 OF 2003

BETWEEN:

CHARLES WORTHINGTON HAIR & BEAUTY COMPANY LIMITED
FIRST APPLICANT

TRIMEX PTY LTD (ACN 001 198 787)
SECOND APPLICANT

AND:

INTERNATIONAL HAIR PRODUCTS PTY LTD
RESPONDENT

JUDGE:

HILL J

DATE OF ORDER:

24 APRIL 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1. The first applicant is the owner of the TAKE AWAYS trade mark in Australia in relation to "preparations for the hair including hair lotions, shampoos, conditioners, creams, oils, gels, mousse, wax and lacquers, hair colorants, hair waving preparations; cosmetic preparations for the bath, bath salts, not for medical purposes; essential oils; soap; creams and lotions for cosmetic purposes; washing preparations; cosmetics; perfumery" for the purposes of s 27 of the Trade Marks Act 1995 (Cth).

2. The respondent is not the owner of the TAKE AWAYS trade mark in Australia in relation to "hair care products" for the purposes of s 27 of the Trade Marks Act 1995 (Cth).

3. The first applicant has used the TAKE AWAYS trade mark in Australia on relevant goods prior to the priority date of the respondent’s trade mark registration 880676 (“the Respondent's registration”) and prior to any relevant use of TAKE AWAYS by the respondent and for that reason trade mark application 907702 for TAKE AWAYS in class 3 in the name of the first applicant should be registered in the first applicant's name in respect of "preparations for the hair including hair lotions, shampoos, conditioners, creams, oils, gels, mousse, wax and lacquers, hair colorants, hair waving preparations; cosmetic preparations for the bath, bath salts, not for medical purposes; essential oils; soap; creams and lotions for cosmetic purposes; washing preparations; cosmetics; perfumery".

4. The applicants have not at any time infringed the Respondent's registration.

5. The respondent had no grounds for making the threat to the second applicant referred to in paragraph 25 of the Statement of Claim on the ground that the second applicant had infringed the Respondent's registration.

6. The respondent be restrained by itself, its servants, agents or otherwise, from continuing to threaten the applicants that it will bring action against them on the ground that they have infringed the Respondent's registration.

7. The respondent pay the applicants’ costs of the proceedings on a party and party basis.  Those costs are to be agreed between the parties or if not agreed to be taxed.

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	N54 OF 2003

BETWEEN:

CHARLES WORTHINGTON HAIR & BEAUTY COMPANY LIMITED
FIRST APPLICANT

TRIMEX PTY LTD (ACN 001 198 787)
SECOND APPLICANT

AND:

INTERNATIONAL HAIR PRODUCTS PTY LTD
RESPONDENT

JUDGE:	HILL J
DATE:	24 APRIL 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The genesis of the present proceedings is a letter dated 13 March 2002 addressed to the managing director of the second applicant by the respondent International Hair Products Pty Ltd.  In that letter the respondent noted that it was the proprietor of the trade mark TAKE AWAYS (registration number 880676) in respect of class 3 goods, being hair care products and the like.  The letter claims that the addressee was infringing its trade mark and demanded undertakings inter alia not to use the mark.

2. There was for some time correspondence between the parties. In fact the respondent did not bring proceedings under s 129(5) of the Trade Marks Act 1995 (Cth) (“the Act”) which would have precluded the applicants from commencing their own proceedings. The applicants sought registration of the same mark in registration 907702 to which the respondent filed an opposition. The present proceedings were commenced by the applicants seeking in effect that the respondent remove its opposition to the applicants’ registration, declarations that the applicants are the owners of the mark and further that the mark registered by the respondent be either removed from the register or transferred to the applicants for whom it seems the respondent had been an agent.

3. Ultimately the proceedings were not contested.  The respondent claims that its failure to contest the proceedings was a result of its inability to afford to pay costs.  A solicitor, who had been initially instructed by the respondent, ceased to act.  The respondent's mark has now been removed from the register and opposition to the applicants’ mark has been removed.

4. The respondent was represented today before me by Mr Dowd, who is one of two directors of the respondent and one of two of the shareholders. The other director and shareholder is his wife. I gave leave for him to appear. He indicated to me that he has no objection to the Court granting the relief sought in paragraphs 1 to 5 of the draft Short Minutes of Order prepared by the applicants. The applicants seek additionally damages under s 129(2) of the Act, being the costs which it has incurred in the part of the proceeding as was brought under that subsection.

5. It was submitted that s 129 had, as part of its policy, the deterring of self help remedies by way of threats of infringement and that in essence the only thing a person faced with such threats could do was to commence proceedings.  So, it was submitted that the costs it incurred in so doing should be seen as being damages that the applicants have “sustained because of the [respondent's] conduct”.

6. Counsel for the applicant conceded that he had been unable to locate any case where an order of this kind had been made or find any suggestion in extrinsic material which suggested that s 129(2) might justify a cost order on a solicitor and client basis as part of the damages suffered by an applicant.

7. In my view there is no particular distinction to be drawn between s 129(2) on the one hand and other actions either at common law in tort or statutory actions such as arise under the Trade Practices Act 1974 (Cth) for damages as a result of some conduct on the part of a person who becomes a defendant in a proceeding. In none of these situations has it been suggested that the right to damages includes costs suffered in the proceedings to claim damages. In my view s 129(2) does not contemplate that a plaintiff could recover as damages the legal costs incurred in commencing proceedings against a person who has threatened that person by reference to an infringement that has been alleged.

8. The question then arises as to whether in the circumstances I should order that the applicants be entitled to indemnity costs. It is submitted for the applicants that the case of the applicants was strong. The present was a case where the applicants were clearly on the evidence the beneficial owner of the mark TAKE AWAYS in respect of hair products, yet the respondent had improperly applied for registration of a mark and had acted in such a way as to make it necessary for the applicants to commence proceedings in respect of which the respondents had no defence.

9. It was said that I should infer from the fact that the respondent had lodged an application in the circumstances of its fiduciary relationship to the applicants and that it had ultimately pulled out of the present proceedings that it had acted otherwise than in good faith or that it had no case.

10. The Court does have a discretion to order that costs be paid by an unsuccessful party on an indemnity basis rather than the usual party and party basis.  The circumstances where that discretion will be exercised are not set in stone.  The discretion the Court has is one that is to be exercised judicially.  One case where the Court will order costs to be paid on an indemnity basis is where the unsuccessful party has defended the proceedings frivolously or had absolutely no defence yet continued to litigate. 

11. The present is a case where I do not know what case the respondent might have made had the respondent sought to make out a case.  It may be that if the respondent had put on evidence its position would not be as hopeless as on the evidence of the applicants it seems to be.  On the other hand the respondents have, while putting the applicants to proof of their case, not intervened to defend the proceedings and at least to that extent have not caused the applicants more expense than would be necessary if the proceedings were to be brought at all.  I am conscious also that in that part of the proceedings in which the applicants seek declarations in respect of their own trade mark registration the evidence, while not necessarily the same particularly so far as regards the issues of beneficial ownership, will largely involve the same factual matters as would be involved in the proceedings brought in respect of the respondent's registered mark.

12. In the circumstances I do not think this is an appropriate case for the Court to make an order that costs be born on an indemnity basis and I do not propose to do so.  I would however now make orders 1 to 5 in the Short Minutes of Order which I will initial and date for the purposes of identification as well as Order 8.  I will order the respondent to pay the applicants’ costs of the proceedings on a party and party basis.  Those costs are to be agreed between the parties or if not agreed to be taxed.

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

Associate:

Dated:            20 May 2003

Counsel for the First and Second Applicant:	R Cobden
Solicitor for the First and Second Applicant:	Baker & McKenzie
Counsel for the Respondent:	K Dowd (with leave of the Court)
Date of Hearing:	24 April 2003
Date of Judgment:	24 April 2003