Dart Industries Inc. v Thebe Pty Ltd

[1991] FCA 930

IN THE FEDERAL COURT OF AUSTRALIA	rumwmrr w=91.
VICTORIA DISTRICT REGISTRY GENERAL DIVISION
B E T W E E N :

DART INDUSTRIES INCORPORATED AND ANOTHER

Applicants

AND

THEBE PTY LIMITED

Respondent

NORTHROP J

MELBOURNE

19 DECEMBER 1991 12 JU119B2

-COURT	OF
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EX TEMPORE REASONS FOR JUDGMENT

This application for interlocutory relief pending the hearing and determination of the claim came before the Court on Monday 16 December. After hearing certain submissions an interim order was made until 4.15 pm on 19 December, or until further order. The relevant part of the interim order was that the respondent "be restrained (whether by itself, its servants or agents or by any other means) from manufacturing or causing to be manufactured, importing or causing to be imported, advertising, offering for sale or selling or eupplying, delivering or otherwise parting with possession of any container the same as or substantially identical with the design described in Exhibit DC-3 to the Affidavit of David

Collis sworn 13 December 1991 and filed herein."

This morning submissions have been made on the question of whether there should be an interlocutory injunction in that form pending the hearing and determination of this action.

To a large extent the issues raised have been narrowed since, for the purposes of this present application, it is not disputed that the selling of the articles in question do constitute an infringement of the rights of the applicant in the articles, the rights being those which are conferred by 830 of the Desians Act 1906. The issue has been whether the interlocutory injunction, if granted, should be in the form of preventing the respondent from delivering or otherwise parting with possession of the containers except for the purpose of returning those containers which it now has in its possession or power back to its supplier in Thailand. That is the issue which has been raised.

It appears from the affidavit filed on behalf of the
respondent that the respondent has imported the offending

articles from Thailand in the normal course of its business,

Australia a very wide range of goods including plastic	that it carries on business of importing and selling in	kitchenware of the type presently in dispute, that at the time it did import these allegedly infringing articles, it did not know that they were in fact infringing the rights of the applicant and that the first they knew of this right was when one of their customers sent to it a letter written on behalf of the applicant demanding the withdrawal of the goods from sale in Australia.
One must make the comment that people who import goods into Australia are under an obligation to determine whether those goods are in conformity with the law in Australia. In my opinion, if a person imports into Australia for the purpose of sale goods which are protected in Australia by another person who has monopoly rights under the Desians Act, the person so importing is under an obligation to ascertain whether they are in breach of those monopoly rights, and if in fact they are, must suf £er the consequences of such a breach. The real problem in the present case is that immediately the respondent became aware of the complaints by the applicant it took steps to remedy any breaches of the monopoly rights of the applicant. It immediately offered undertakings to the applicant in the form set out. I leave aside the question of a time limit where it could be varied on 48 hours notice because of everything happening very quickly. The undertakings offered were:

(a)	not to place any further orders for any of the offending articles;
(b)	not to enter into any further contracts of sale of the offending articles; and
(c)	subject to checking what products, if any, are already in the course of being transported to Australia, not to import any further offending articles.

There were correspondence and conversations between the legal advisers for the applicant and the respondent, but I do not need to go into those in detail. A further undertaking was given on 16 December 1991 after the proceedings had been commenced in the following form:

"We emphasise that on Friday without even having received demands from your clients our client proffered undertakings not to:

1. Place further orders to purchase the allegedly

infringing products.

2. Import further allegedly infringing products save and except for those that might already be in shipment to our client at this present time.

3. Sell any further allegedly infringing products."

In view of the submissions made, it would seem that those
undertakings are sufficient to prevent the sale in Australia

of any of the offending articles which are imported into

Australia. This does not deal with the question of what is to	happen to those goods which have not been sold by the
respondent but are in Australia. It is these articles which the respondent now wishes to return to the manufacturer in Thailand, the reason being that there could be problems in relation to losses suffered by the respondent unless such a course can be adopted. The applicant, on the other hand, does not agree to the exporting of those goods.
In this context it is important to note that in paragraph 15 of the affidavit of Steven David Lenton sworn today, there are three classes of the infringing containers which are referred to:

"(a) The first class constitutes allegedly infringing containers already imported into Australia by Thebe and sold by it to its retail customers which have, in turn, on-sold those products to consumers.

(b)

The second class constitutes those allegedly infringing containers imported into Australia by Thebe, sold by it to its retail customers but which containers have not yet been sold.

(c)

The third class is constituted by allegedly infringing containers that have recently been imported into Australia by Thebe but which have not yet been distributed by it to its retail customers. Indeed, into this class falls a recent shipment only cleared through the Australian Customs Service last week. That shipment contains approximately 9,000 containers substantially identical to those claimed by the Applicants to infringe their design rights."

These are the three classes of goods which are in
dispute. It appears that each of those classes which, for the

purposes of the interlocutory proceedings, and the fact that

the infringement of the monopoly rights is not being disputed	for that purpose, but without making any admissions, that
could be affected by the infringement requirements of s30 of the Desians Act 1906. Paragraph 30(l)(b) provides:

"30.(1) A person shall be deemed to infringe the monopoly in a registered design if he, without the licence or authority of the owner of the design -

(a)	. . .
(b)	imports into Australia for sale, or for use for the purposes of any trade or business, any article in respect of which the design is registered and to

which the design or any fraudulent or obvious imitation of it has been applied outside Australia without the licence or authority of the person who was the owner of the registered design at the time when the design or imitation was so applied; or"

On the material before the Court, and in light of the concessions made, the Court is satisfied that all these goods which have been imported into Australia and are referred to in paragraph 15 of the affidavit of Mr: Lenton, are goods which infringe the monopoly rights of the applicants.

It is necessary then to consider whether this is a case where it is appropriate that an interlocutory injunction be granted, particularly having regard to the undertakings already given to the applicant on behalf of the respondent.

Under subsection 32B(1) of the Act, the relief that can be granted in an action for the infringement of the monopoly in a registered design includes an injunction (subject to such terms, if any, as the court thinks fit) and at the option of the plaintiff, either damages or an account of profits. This

is a case where, for the purposes of the interlocutory	injunction, it is sufficient to show that a strong case has
been made out that there is a serious issue to be tried. The question that remains to consider is the balance of convenience. It is here that the question of whether the undertakings are sufficient or whether there should be interlocutory injunctions must be decided. The undertakings given do not make specific reference to the return of the goods to Thailand. In my opinion that is an important issue.
It has been argued in the course of submissions today that an ancillary right or power that the court exercises in cases of breaches of design is an order directing the delivery up of the offending articles for their destruction or for some other way of disposing of the goods which are the subject of the action. I do not propose to refer to the text books and authorities quoted in the course of arguments, but it is my opinion that that power is in existence. It is not a power which is restricted to fraudulent conduct by a respondent, but it is a matter which normally can only be decided once the
whole action has been determined and the trial judge, in the exercise of discretion, is able to mould his orders to give effect to the findings made in that particular case.
It is argued in the present case on behalf of the respondents that by removing the goods out of Australia there can be no breach of the Desians Act, no breach of the monopoly rights of the applicant and that in any event any such breaches would be of such a small note that there should not
would weigh too much, in the balance of convenience, against be any injunction granted now in the form sought since that the respondent who could suffer substantial damages as a result of having to keep the goods in Australia.
In my opinion the existence of the power to order the delivery up of offending goods, to be destroyed, is a matter which a court can exercise. That is a matter which will need to be determined in due course. The fact that, in my
opinion, the goods are already offending in the sense that there has been an infringement under 830 of the pesians Act, of itself, is sufficient to give strong support to an argument that they should not be exported again. In any event, to direct that the goods can be returned now would be a pre- judging of what remedies should be given at the trial itself.
One is aware of the fact that in this case the undertakings were given at a very early stage. That does not mean that a person is not entitled to commence legal proceedings. A question of costs might arise at a later stage as to whether the applicant should get the whole of his costs or not, but in the way the matter has proceeded, the orders sought by the applicant are of a wider nature than those offered in the undertakings and I see no reason why the interlocutory orders should not be made in the form sought by the applicant. Accordingly the Court proposes to make the orders sought, the substantive order being that:

or until further order, the Respondent be restrained

"Until the hearing and determination of the matter herein

(whether by itself, its servants or agents or by any other means) from manufacturing or causing to be manufactured, importing or causing to be imported, advertising, offering for sale or selling or supplying, delivering or otherwise parting with possession of any container the same as or substantially identical with the design described in Exhibit DC-3 to the Affidavit of David Collie sworn 13 December 1991 and filed herein."

I certify that this and the preceding seven (7) page6 are a true copy of the Ex Tempore Reasons for Judgment of the

Honourable Mr Justice R.M.2orthrop. .I

c -

Associate:  C ~ J -

Date: Fdu-4 (W2