Dr Martens Australia Pty Ltd v Raben Footwear Pty Ltd

[2000] FCA 1122

FEDERAL COURT OF AUSTRALIA

Dr Martens Australia Pty Ltd v Raben Footwear Pty Ltd [2000] FCA 1122

CONTRACTS – construction – covenant not to sue – common sense meaning – implied terms – whether terminable on reasonable notice

Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 applied
Australian Blue Metal Ltd v Hughes [1963] AC 74 referred to
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 applied

Butt v M’Donald (1896) 7 QLJ 68 referred to

Clayton (Lacy) v Kynaston (1701) 12 Mod Rep 548; 88 ER 1510 applied
Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 cited

Eichholz v Bannister (1864) 17 CB(NS) 807; 144 ER 284 referred to
Hackett v Glover (1713) 10 Mod Rep 142; 88 ER 665 referred to

Haynes & Co v Lloyd & Sons [1895] 1 QB 820 cited

Hutton v Eyre (1815) 6 Taunt 289; 128 ER 1046 cited
The Law Land Company Ltd v Consumers’ Association Ltd [1980] 2 EGLR 109 applied
Martin-Baker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 556 cited

Roberts v Balfour (1891) 18 VLR 140 referred to

Staffordshire Area Health Authority v South Staffordshire Waterworks Co [1978] 1 WLR 1387 cited

Stranks v St John (1867) LR (CP) 376  cited

Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 cited
Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173 cited

DR MARTENS AUSTRALIA PTY LTD, R GRIGGS & CO LIMITED, R GRIGGS GROUP LIMITED, DR MARTENS INTERNATIONAL TRADING GmbH and DR MAERTENS MARKETING GmbH v RABEN FOOTWEAR PTY LTD, RONNY LEOPOLD LEWY and GARRY LEWY

VG 429 of 1997

JUDGE:         FINKELSTEIN J
DATE:           18 AUGUST 2000
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 429 of 1997

BETWEEN:	DR MARTENS AUSTRALIA PTY LTD R GRIGGS & CO LIMITED R GRIGGS GROUP LIMITED DR MARTENS INTERNATIONAL TRADING GmbH DR MAERTENS MARKETING GmbH Applicants
AND:	RABEN FOOTWEAR PTY LTD RONNY LEOPOLD LEWY GARRY LEWY Respondents

JUDGE:	FINKELSTEIN
DATE:	18 AUGUST 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. In the 1950s Dr Klaus Maertens and Dr Herbert Funck, each a resident of the Federal Republic of Germany, developed a new sole unit for footwear which comprised a series of separated air compartments.  They obtained the grant in England and elsewhere of letters patent for their invention.  In 1959 Wollaston Vulcanising Company Ltd, an English company established to manufacture vulcanised rubber soles, was licensed to exploit the invention by the manufacture of footwear and was granted the right to sub-license others to exploit the invention.  By a separate agreement Wollaston undertook to promote, market and sell the footwear by reference to the name “Dr Martens”, the anglicised version of Dr Maertens.  Drs Maertens and Funck were the owners of the trade mark “Dr Maertens” and since 1952 had manufactured and sold footwear under that name in various European countries.

2. Wollaston licensed a number of English companies, including R Griggs & Co Limited, the second applicant, to manufacture footwear that employed the invention.  R Griggs & Co began manufacturing that footwear in 1960.  Their footwear was sold under the Dr Martens name and, since 1961, by reference to what are known as the “Air Wair” trade marks.  One of the Air Wair marks is constituted by a ball across which are written the words “Air Wair”.  R Griggs & Co has been registered in Australia as the proprietor of that mark (trade mark 520052) since 18 April 1992. 

3. R Griggs Group Limited, the third applicant, was also licensed by Wollaston to manufacture Dr Martens footwear.  R Griggs Group claims the copyright in a logo known as the Dr Martens Air Wair logo.  This logo is a combination of the Air Wair trade mark with the addition of the words “with Bouncing soles” below the ball, following the circumference of the ball, and what is known as the Dr Martens device mark, which may be described as a rectangular representation of the words “Dr Martens” with shading on the lower half of “Martens” and an upwards curl on the last three letters.  The logo was produced by an advertising company retained by R Griggs & Co and assigned to R Griggs Group.

4. In 1983 R Griggs & Co acquired direct or indirect ownership of all the shares in Wollaston and assumed control of its operations.  In 1995 Wollaston terminated all sub-licence agreements to manufacture Dr Martens footwear, save for those granted to R Griggs & Co and R Griggs Group, the parent company of R Griggs & Co.

5. Dr Martens International Trading GmbH, the fourth applicant, and Dr Maertens Marketing GmbH, the fifth applicant, are both companies incorporated in the Federal Republic of Germany.  These companies are associated with or controlled by Dr Funck and either the estate of Dr Maertens or the late Dr Maertens’ widow, Mrs Elizabeth Maertens.  The companies are registered in Australia as the proprietors of the following trade marks:  trade mark B400023 for the word “DR MARTENS” in respect of footwear (the Dr Martens word mark) having taken the assignment of that mark from Dr Funck and Mrs Maertens on 29 November 1995; since 2 May 1997 trade mark 577199 for the word “DOC’S” in respect of clothing, head gear, clothing accessories, namely head scarfs, neck kerchiefs, shoulder scarfs, shawls, hoods, sweat bands, gloves, tights, socks and belts, and footwear, especially for children (the DOC’S mark); and since 2 May 1997 trade mark 473476 for the Dr Martens device mark. 

6. Before Dr Funck and Mrs Maertens came to be registered as the proprietors of the Dr Martens word mark, there was controversy as to the ownership of that mark.  In 1983 Figgins Holdings Pty Ltd, an Australian company, applied for the registration of the mark.  The application was opposed by Drs Maertens and Funck on the basis that Figgins Holdings was not the proprietor of the mark.  The Registrar of Trade Marks found in favour of the opponents and refused to register the mark.  From this decision an appeal was taken to the Federal Court. 

7. Before the trade mark appeal was heard, Dr Martens Australia Pty Ltd, R Griggs & Co, Dr Funck, Mrs Maertens and Wollaston (collectively ‘the Figgins applicants’) brought an action in the Federal Court against Figgins Holdings alleging that by using various Dr Martens and Air Wair trade marks and logos, and by other conduct, Figgins Holdings had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and that it was passing off its goods as and for the goods of one or other applicant.

8. Coltmans were the solicitors who had been retained to act on behalf of the opponents in the trade mark appeal and the applicants in the Figgins proceeding.  Mr Harvey, then employed by Coltmans, was the solicitor principally responsible for the conduct of each proceeding under the general supervision of Mr Watson, a partner of the firm.  In relation to the trade mark appeal, Mr Harvey required evidence to show that the Dr Martens word mark had first been used in Australia by persons other than Figgins Holdings.  He had some evidence to that effect, which was tendered at the hearing before the Registrar, but he sought further evidence to the same effect which would assist in defeating the appeal.  It was the desire for further evidence that explains how the respondents came onto the scene. 

9. For many years Ronny Lewy, the second respondent, and his brother Garry Lewy, the third respondent, carried on the business of selling footwear by retail and wholesale, under the name Raben Footwear.  In 1993 the Lewy brothers incorporated Raben Footwear Pty Ltd, the first respondent, and that company took over the operation of the business.  Raben Footwear currently operates six retail shops in Sydney.

10. While they carried on business in partnership the Lewy brothers, and later Raben Footwear, imported Dr Martens footwear from England for sale in Australia.  Their footwear was purchased from Wollaston’s licensees, including R Griggs & Co.  The Lewy brothers and then Raben Footwear extensively advertised the fact that they were selling Dr Martens footwear.  The advertisements they employed included signs on shopfront windows that used the Dr Martens word mark and the Dr Martens device mark, point of sale advertisements that used the Air Wair mark and DOC’S mark and shopping bags and leaflets that used a mark that was a combination of the Air Wair mark and the Dr Martens device mark, but were combined in a manner different from the Dr Martens Air Wair logo. 

11. Neither the Lewy brothers nor Raben Footwear had been given permission to use the trade marks and logos although R Griggs & Co and R Griggs Group were aware that those marks were being used.  Indeed Mr Shelton, the deputy chairman of R Griggs & Co and the former managing director of R Griggs Group, had visited one of the Raben Footwear stores and observed the signs on the shopfront as well as the other forms of advertising that were then on display, although he could not recall their details.

12. When Mr Harvey resolved to gather evidence to show that the Dr Martens word mark had been used in Australia before its use by Figgins Holdings, one potential source for that evidence was the Lewy brothers.  By arrangement he met the Lewy brothers at one of their stores on 28 April 1995.  He explained the nature of the proceedings in which his clients were involved and asked whether the brothers would assist by giving evidence in those proceedings.  Mr Harvey was shown around the store, and he observed the Dr Martens footwear that was on sale and noticed some of the signs and other material used to advertise that footwear.  It would have been apparent to Mr Harvey that Raben Footwear was using trade marks and logos that belonged to his clients. 

13. After the visit, during the course of which he had been promised assistance, Mr Harvey prepared a draft affidavit to be sworn by Garry Lewy.  Although his original intention had been to obtain evidence for the trade mark appeal, the draft affidavit bore the title of the Figgins proceeding.  In fact, the contents of the affidavit were such that it would provide useful evidence in either proceeding.  It is reasonable to assume that Mr Harvey intended to use the affidavit in both proceedings, notwithstanding that it bore the heading of the Figgins proceeding.

14. Mr Harvey sent the draft affidavit to Mr Blewitt of Dickson Fisher Macansh, the solicitors acting for the Lewy brothers and their company.  The following is a brief summary of the contents of that affidavit.  It began by referring to an attempt by Raben Footwear to become a distributor of Dr Martens footwear.  Then it described the nature of the Raben Footwear business.  Sample advertising material (a brochure distributed since 1990 and a shopping bag distributed since 1991) was referred to as proposed exhibits.  This was followed by a detailed discussion of the reputation of the words “Dr Martens” and “The Original Dr Martens”.  The view put forward was that those words were associated with the Dr Martens footwear that was manufactured in England.  The opinion was expressed that shoes sold by Figgins Holdings as “The Original Dr Martens” were in fact inferior quality shoes not manufactured in England by authorised Dr Martens manufacturers and that these sales would injure the goodwill and reputation of Dr Martens footwear. 

15. On 21 June 1995 Mr Blewitt spoke to Mr Harvey.  Although Mr Harvey’s file note of their conversation is brief, and his recollection of the conversation poor, it seems that Mr Blewitt said that his clients were concerned about their position because they had been using Dr Martens trade marks and logos without permission.  Two days later, on 23 June, Mr Blewitt called Mr Harvey and told him that his clients would provide the sworn affidavit “conditional upon a release from any action [against the respondents] with respect to the [Dr Martens] logos used in advertising material” referred to in the affidavit. 

16. Mr Blewitt re-engrossed the affidavit and sent it to Mr Harvey on 27 June under cover of a facsimile transmission which read:

    “We note that the draft affidavit and any final form of affidavit, is provided upon the basis that your client will not take any proceedings against Raben Footwear Pty Limited or R & G Lewy as a result of the use of the advertising referred to in the affidavit on past use of the advertising material.  Would you please confirm this in writing.”

    Later that day Mr Harvey advised Mr Blewitt that he had obtained instructions that no suit would be brought against the respondents in respect of their use of the marks and logo that would be exhibited to the affidavit and that he would confirm those instructions in writing.

17. The affidavit was sworn by Garry Lewy on 28 June before Mr Harris, an employee of Dickson Fisher Macansh, at one of the Raben Footwear stores.  Four exhibits to that affidavit were produced by Garry Lewy.  The first (GR1) was a confidential table documenting the volume of imports of Dr Martens footwear by Raben Footwear since 1994.  The second exhibit (GR2) was an advertising brochure or discount flyer from Raben Footwear which used a representation of the Dr Martens device mark and the Air Wair logo in combination.  The third exhibit (GR3) was a shopping bag containing the same combination of the Dr Martens device mark and Air Wair logo in conjunction with Raben Footwear store details and a sales sign.  The final exhibit (GR4) was a video cassette about which more will be said later.  Mr Harris had come to the store with a certificate identifying each exhibit.  A certificate was attached to each exhibit and was signed by Mr Harris presumably when the affidavit was sworn.  Mr Harris then sent the affidavit and the four exhibits to Mr Harvey.

18. Following further discussions between Mr Harvey and Mr Blewitt on 29 June, Mr Harvey sent a facsimile transmission to Mr Blewitt wherein is recorded the agreement that had been reached concerning the provision of the sworn affidavit.  The agreement is in the following terms:

    “[T]he Applicants in Federal Court Proceeding No VG443 of 1994 will not take any action against Raben Footwear Pty Ltd or Ron or Garry Lewy for the use by them of the Applicants logo and trade marks as depicted in the Exhibits attached to the Affidavit of Garry Lewy affirmed 28/6/95.  This will not apply should Raben Footwear Pty Ltd or Ron or Garry Lewy cease to purchase for retail sale or deal with in any way footwear manufactured by the Applicants or authorised representatives of the Applicants (‘Authorised Footwear’).  However, the Applicants confirm that they will not take any action against Raben Footwear Pty Ltd or Ron or Garry Lewy regarding the said use of the trade marks and logos for any period whilst Raben Footwear Pty Ltd or Ron or Garry Lewy are or were dealing with Authorised Footwear.”

19. In this proceeding the proprietors of the trade marks and the owner of the copyright in the Dr Martens Air Wair logo allege that the respondents have infringed their respective rights in respect of those marks and copyright. The applicants also contend that by using the trade marks and logo, and other advertising material, the respondents have contravened s 52 of the Trade Practices Act and have passed off their footwear as and for the footwear of the applicants or one of them.  The respondents deny all allegations of wrongdoing on their part.  One basis upon which they defend the claims is that by the agreement that is recorded in the 29 June transmission, the applicants undertook not to bring any action in respect of the respondents’ use of the trade marks and logo. 

20. The parties have agreed that the meaning and effect of the agreement, which is a matter of some controversy, should be determined before any other issue in the proceeding is set down for trial.  Orders to that effect were made pursuant to O 29, r 2 of the Federal Court Rules.  In summary, the preliminary questions that I must determine are as follows:  (1) On the proper construction of the agreement, are the respondents entitled to use the trade marks and logo otherwise than on a brochure similar to exhibit GR2, a shopping bag similar to exhibit GR3 and an advertisement similar to exhibit GR4? (2) On the proper construction of the agreement are the respondents entitled to combine any of the trade marks to create a new trade mark for use by them in advertisements? (3) Is the agreement terminable on reasonable notice? (4) Can the respondents rely upon the agreement as a defence to the claims made by R Griggs Group, Dr Martens International and Dr Martens Marketing, these companies not having been applicants in the Figgins proceeding?

21. In the formulation of the first and second questions the issue raised is whether the agreement permits the respondents to use the trade marks and logo in a particular way.  In reality, of course, the agreement is not a licence to use the relevant logo and trade marks but a covenant not to sue the respondents in the event that they make particular use of the logo and trade marks.  Nevertheless, I do not believe that my formulation of the questions will create any difficulty, provided the true nature of the agreement is always kept in mind.

22. There is a further issue that arose on the first day of the hearing that does not concern the construction of the agreement.  The applicants produced as exhibit GR4 to the affidavit of Garry Lewy a video cassette containing one 30-second advertisement entitled “Raben Footwear – Yer Actual”.  The certificate identifying the exhibit was not attached to the cassette.  The respondents said that this was not the video cassette that had been produced when the affidavit was sworn.  The respondents do not have a copy of that cassette.  However they say that it contained either three or four advertisements, being those entitled Schoolwise Streetwise, Business Man, Old Woman and Walking Shoes, and did not include the advertisement that appears on the cassette that the applicants have produced.  Before dealing with the questions of construction it is as well first to resolve the identity of the exhibit for it will have considerable bearing on other aspects of the case. 

23. Paragraph 11 of the Lewy affidavit is the only paragraph that refers to television advertisements.  That paragraph reads:

    “Now produced and shown to me and marked ‘GR4’ is a video of advertisements broadcast by television for Raben.  The advertisements were first broadcast in Sydney, Australia in December 1989.  They continue, to be broadcast on a regular basis in Sydney.”

24. The important aspects of this paragraph are as follows.  First, it is said that the video being produced contains more than one advertisement.  The exhibit “is a video of advertisements”;  “the advertisements were first broadcast in Sydney”; “They continue to be broadcast on a regular basis” (emphasis added).  Second, it is said that the advertisements were first broadcast in December 1989.  What of the exhibit that was produced by the applicants?  In two respects it does not satisfy the description that it was given in paragraph 11.  First, as I have already mentioned, the cassette contains only one advertisement.  Second, the advertisement was made in 1992 and therefore could not have been first broadcast in December 1989, or at any time thereabouts.

25. Garry Lewy produced two video cassettes which he said, according to his “best recollection”, were the advertisements that were contained in the “real” exhibit GR4.  One of those advertisements, Walking Shoes, was the only advertisement for television that was produced by Raben Footwear in 1989; Walking Shoes was produced in December 1989.  Thus Garry Lewy concludes that this advertisement must have been one that was included in exhibit GR4.  He also says that the other advertisements that I have mentioned were included in exhibit GR4 because they were those most frequently broadcast promoting Dr Martens products in the period 1990 to 1995. 

1. I should mention why the identification of the “real” exhibit is important.  The advertisement “Yer Actual” uses the word “DOC’S” in combination with Raben Footwear.  It also features the Dr Martens device mark. However, nowhere on this advertisement does the Dr Martens Air Wair logo appear.  On the other hand, a number of the advertisements which Garry Lewy says were contained in the real GR4 use the Dr Martens Air Wair logo as well as the other marks.  This Dr Martens Air Wair logo has been used a great deal by the respondents, and it does not appear in either exhibit GR2 or GR3.  Unless it is to be found in exhibit GR4, it may not be covered by the agreement.

2. I am quite satisfied that the video cassette produced by the applicants is exhibit GR4 to the Lewy affidavit.  In the first place, the applicants could only have obtained that cassette from the respondents.  If it was not delivered to Mr Harvey by Mr Harris after the Lewy affidavit had been sworn, it is by no means apparent to me on what other occasion it could have been given to him.  Neither of the Lewy brothers could adequately explain how Mr Harvey obtained possession of the cassette if it were not sent to him after the affidavit was sworn. 

3. In the second place, both Mr Harvey and Mr Watson watched the video shortly after the Lewy affidavit was sworn.  Each of them recalls that there was only one advertisement on the video.  I have no reason to doubt their evidence.

4. Finally there is the evidence of Ms Groves, a solicitor who had previously been employed by Coltmans and is now working with Deacons.  Ms Groves said that it was she that had detached the identifying certification from the video cassette for the purpose of using that cassette in other legal proceedings.  However the certificate was retained.  Ms Groves pointed to the paper attached to the adhesive tape on the certificate and also to the cardboard cover of the video cassette.  As she observed, the paper that remains attached to the adhesive tape appears to have been torn away from the cover of the video cassette when the certificate was removed. 

5. At the same time, I do not completely reject the evidence of the Lewy brothers.  It is quite possible that when the affidavit was sworn Garry Lewy produced the wrong cassette.  There were many cassettes containing advertisements that were at the store at the time.  A mistake might easily have been made.  However, I do not propose to make any finding on this issue at the present time.  The respondents have asked for leave to amend their defence to plead a rectification case to, in effect, substitute what they say is the correct video cassette for exhibit GR4.  If any amendment is allowed, it should be to the cross claim and not to the defence.  In either case, the applicants oppose the amendment.  They say they will be prejudiced if the respondents are permitted to argue that the agreement should be rectified.  I have no doubt that the respondents should be permitted to amend their pleading.  The identification of the video cassette is an issue that arose late in the proceeding.  The application for amendment is made bona fide and I do not believe that the applicants will in any way be prejudiced by the amendment.  I again draw attention to the fact that only one aspect of the dispute between the parties is presently before the Court.  The rectification case can be heard and determined along with the other matters that remain outstanding.  In the meantime I will proceed to deal with the construction questions on the assumption that the agreement will not be rectified.  In most respects a successful rectification claim will not affect my answers to the questions that have been posed.

6. Because it will have a bearing on one aspect of construction, it is important to note that the agreement is what is known as a promise or covenant not to sue, and not, as the parties have often described it, a licence, although on one view it could be a release.  Professor Glanville Williams in his book Joint Obligations (1949) gives a valuable discussion on the distinction between a release and covenant not to sue (see pp 106-107).  The general rule differentiating the two is that the release of one joint debtor discharges all, while a covenant not to sue does not:  see Hutton v Eyre (1815) 6 Taunt 289 at 294-296; 128 ER 1046 at 1048. There the principle for the rule was stated to operate on the assumption that a covenant not to sue does not put an end to the obligation, but rather acts as a bar to avoid circuity of action: see also Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 580-582, 609. The common law position has been abrogated in most States: see eg s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 3(3) of the Tortfeasors and Contributory Negligence Act 1954 (Tas), s 11(2) of the Law Reform (Miscellaneous Provisions) Act 1955 (ACT) and s 24AA of the Wrongs Act 1958 (Vic).

7. The first question then is whether the various trade marks and the logo can be used only in the same manner as on the exhibits.  What the applicants say, by way of example, is that the combined Dr Martens device mark and the Air Wair mark that is shown in exhibits GR2 and GR3 can be used only on an advertising brochure that is the same as (or perhaps substantially similar to) exhibit GR2, or on a shopping bag that is the same as (or substantially similar to) exhibit GR3.

8. The argument that the permitted use is so confined is based on the following phrase in the agreement:  “the Applicants … will not take any action against [the respondents] for the use by them of the Applicants’ logo and trade marks as depicted in the Exhibits …”.  The basis for the submission is that no action will lie for the use of the trade marks and logo “as depicted”.  It is said that this goes to the manner of the permitted use.  I do not agree.  The words “as depicted” mean “represent in drawings or colours; portray in words; describe” according to the Concise Australian Oxford Dictionary.  The promise that the applicants make is that they will not sue if the respondents use the marks “as depicted”, that is, as the marks appear in the three exhibits.  In other words, the focus of attention is on the marks and logo and not the particular form of advertisement in which they appear. 

9. I arrive at this construction by reference to the ordinary meaning of the words used in the agreement.  It is also a construction that brings about a common sense result.  Such a construction is to be preferred, even if the meaning is ambiguous.  In The Law Land Company Ltd vConsumers’ Association Ltd [1980] 2 EGLR 109 Brightman LJ said (at 112):

   “Some modification has to be made to the strict wording of the rent review clause if it is to work.  I fully recognise the strength of the arguments which have been so attractively advanced by [counsel], but they lead to a solution which, to my mind, is not practical and cannot possibly have been contemplated by the parties.  The lease is a commercial document and we have to find a commercial solution to the problem posed.”

   In Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 Lord Diplock said (at 201):

   “While deprecating the extension of the use of the expression ‘purposive construction’ from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators’ award and I take this opportunity of re-stating that if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”

10. The promise not to sue covers both the past use of the trade marks and logo as well as the future use of those marks and logo.  Subject to the applicants’ assertion that the agreement is terminable on reasonable notice, the right to use the marks and logo continues for any period whilst Raben Footwear Pty Ltd or Ronny or Garry Lewy are or were purchasing for retail sale or dealing with “Authorised Footwear”.  This might be for some time.  Could it possibly have been intended that the respondents would be permitted to use the marks or logo only on the same advertisements as constituted by the exhibits?  Or did the parties understand that those advertisements might become obsolete (if they were not already obsolete when the affidavit was sworn) and that the trade marks and logo could be used on up-to-date advertisements?  In my view, it is an inescapable conclusion that the parties had the latter position in mind.

11. The answer to the second question is equally as straightforward as, and in a sense, follows from the answer to, the first.   The Figgins applicants promised not to sue in respect of the use by the respondents of the specifically identified trade marks and logo.  Counsel for the respondents submitted that if I were to adopt a common sense construction of the agreement I would inevitably find that not only are the respondents permitted to use the precise trade marks and logo that appear in the exhibits, but they are also entitled to create new trade marks or logos by combining the specific marks and logo in such manner as they pleased.  Counsel went even further.  He said that having regard to the circumstances in which the agreement came to be executed (where the Figgins applicants knew of the extensive use made of the Dr Martens trade marks and logo), it should be construed as permitting the respondents to use any Dr Martens trade mark or logo which they had been in the habit of using before the agreement was made.  I reject each of these submissions.  Again, I find the agreement to be quite clear as regards what it is the respondents can do without the risk of action.  They can use the particular marks and logo that were displayed in the exhibits.  I do not mean to suggest that their use of those marks and logo must be absolutely identical to those appearing on the exhibits.  No doubt minor variations are permitted.  But the respondents were not granted a licence to design fresh marks or logos by combining those that were on the exhibits.  The only combination mark they are permitted to use is that which appears on exhibits GR2 and GR3.  After all, it is the applicants’ goodwill that will be injured if an inappropriate mark is developed and used in connection with Dr Martens footwear.  I do not read the agreement as one pursuant to which the applicants gave up control of the design of the trade marks and logos that could be used with their footwear.

12. The third question is whether the agreement is terminable on reasonable notice.  There is a line of authority that where a contract for an indefinite period does not confer on the parties a power to determine that contract, such a power should be inferred if the contract is of a commercial character:  Winter Garden Theatre (London) Ltd v MillenniumProductions Ltd [1948] AC 173 at 203; Martin-Baker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 556 at 578; Staffordshire Area Health Authority v SouthStaffordshire Waterworks Co [1978] 1 WLR 1387 at 1395-1397. In Australian Blue MetalLtd v Hughes [1963] AC 74 at 98 Lord Devlin, in delivering the judgment of the Privy Council, said:

    “It is true that it does not require very much to induce a court to read into an agreement of a commercial character, either by construction or by implication, a provision that the arrangements between the parties, whatever they may be, shall be terminable only upon reasonable notice.”

    Later, at 99, his Lordship said:

    “The question whether a requirement of reasonable notice is to be implied in a contract is to be answered in the light of the circumstances existing when the contract is made.  The length of the notice, if any, is the time that is deemed to be reasonable in the light of the circumstances in which the notice is given.”

    Accordingly, I will approach the applicants’ argument on the basis that ordinarily, having regard to the nature of a commercial agreement, the parties must have intended that such an agreement be terminable on reasonable notice.  This accords with the views of McHugh JA (as his Honour then was) in Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 444.

13. What assistance this provides the applicant in this case is not clear.  In the first place, the agreement here under consideration is not for an indefinite period.  The agreement comes to an end in the circumstance specified, namely when the respondents cease to purchase for retail sale or deal with “Authorised Footwear”.  The date this will occur is not certain.  But an agreement whose duration is uncertain is not an agreement for an indefinite period as contemplated by the cases.  So, the authorities on which the applicants place reliance do not support the position for which they contend.  In the second place, in order to imply a term in a contract in this class of case, even if there be a presumption in favour of it, it would still be necessary to satisfy the conditions stated by Lord Simon in BP Refinery(Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. Those conditions are that the term (1) must be reasonable and equitable; (2) must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) must be so obvious that “it goes without saying”; (4) must be capable of clear expression; (5) must not contradict any express term of the contract.

14. The first point to note is that it has never been thought that a covenant not to sue is terminable.  Historically an agreement not to sue operates as a “perpetual and absolute covenant”:  Clayton (Lacy) v Kynaston (1701) 12 Mod Rep 548 at 551; 88 ER 1510 at 1512. This is hardly a controversial view. A promises B that he will not bring action against B in exchange for valuable consideration. B supplies that consideration. Can A immediately thereafter give notice that action will be brought? It would require an extraordinary set of circumstances for such a right to be incorporated into the bargain by implication. This then brings me directly to the BP Refinery conditions.  Is it reasonable and equitable that the agreement is terminable on notice?  I think quite the opposite is true.  Having bargained to obtain the affidavit, and having been provided the affidavit, why should the Figgins applicants be permitted to revoke their promise?  Is the term necessary to give business efficacy to the bargain?  Plainly not.  The agreement is not indefinite.  It will come to an end in the circumstance mentioned.  In the meantime there is no reason why the respondents should not be permitted to use the trade marks and logo nor is there any good reason why the Figgins applicants should be permitted to bring action.  Is it so obvious that it “goes without saying” that the proposed term should be implied?  Or, to put the matter another way, is it to be supposed that the respondents would have readily agreed that their bargain should include a right that the applicants might terminate the agreement?  It seems plain to me that their answer to this would have been a loud:  “No”.

15. What I have said so far should be sufficient to dispose of the applicants’ submission.  But for the sake of completeness I should add that there is another consideration that would lead me to reject the contention that this agreement is terminable on notice.  The agreement has two aspects.  First there is a promise not to sue in respect of the respondents’ past use of the trade marks and logo.  Secondly, there is a promise not to sue in respect of their future use of the trade marks and logo.  To which promise would the suggested implied term relate?  When confronted with this question counsel for the applicants said that it would only relate to the former promises and not to the latter.  That is, counsel accepted that the promise not to bring action in respect of any past use of the trade marks and logo was absolute.  However, he argued that the promise not to sue for future use was not.  I accept the concession that the promise in respect of past use cannot be revoked.  But I cannot see any rational distinction between that promise and the promise not to sue for future use.  If one promise is absolute, so too should the other be absolute. 

16. The final question on this aspect of the case is whether R Griggs Group, Dr Martens International and Dr Maertens Marketing, who were not “parties” to the agreement of 29 June 1995, are prevented from bringing action to protect respectively their logo and trade marks.  Having regard to my earlier findings no issue arises in respect of the Dr Martens Air Wair logo, it not being covered by the agreement in any case.  Although the Dr Martens word mark and the Dr Martens device mark are now registered in the name of Dr Martens International and Dr Maertens Marketing, the applicants accept that because of the history of the ownership of marks, when the agreement was made in June 1995 the Figgins applicants (or one of them) could confer rights over those marks.  This leaves the DOC’S mark as the only mark in respect of which the agreement might not operate as a bar to the maintenance of proceedings for the reason that Dr Martens International and Dr Maertens Marketing were not parties to the agreement.

17. The entitlement of Dr Martens International and Dr Maertens Marketing to sue occupied a good deal of time during the course of the hearing.  Much of the evidence in chief and cross-examination was directed to this issue.  In the end, however, counsel for the applicants, very fairly I should say, accepted that Dr Martens International and Dr Maertens Marketing would be estopped from bringing an action in respect of the DOC’S marks because, although not parties to the agreement, they had knowledge that the agreement was made and acquiesced in its making.  This concession was based on the following evidence. 

18. There are a number of Dr Martens trade marks and trade names, plus related and associated marks that are owned by Dr Funck, the estate of Dr Maertens, Mrs Maertens and companies under the control of Dr Funck and Mrs Maertens, including Dr Martens International and Dr Maertens Marketing.  Some of the trade marks and trade names are registered in certain countries and some are not.  In 1993 or thereabouts an oral agreement was made between the owners of the trade marks and trade names on the one part (the German parties), and R Griggs & Co and R Griggs Group on the other part concerning the use of the trade marks and trade names.  According to Mr Shelton, in all material respects this agreement was in the same terms as the written agreement that replaced it in 1997. By the 1993 agreement the German parties granted to the two Griggs companies the exclusive right to use the trade marks and trade names (subject to certain immaterial exceptions) and the right to sub-license the use of those marks and names.  The agreement imposed an obligation upon the two Griggs companies to be solely responsible for, and to undertake a program in respect of, the enforcement and protection of the trade marks and trade names.  The object of the program was to eliminate counterfeit and imitation Dr Martens footwear and to ensure the reputation and goodwill of the Dr Martens name.  To carry out the enforcement program the two Griggs companies were granted a “non-limited unrestricted power of attorney” by the German parties who also promised to lend their names to, and provide assistance as requested by, the two Griggs companies in meeting their obligations under the enforcement program.  R Griggs & Co and R Griggs Group established an intellectual property department which was responsible for the enforcement program.  The Figgins proceeding was a step taken in the enforcement program.

19. The agreement with the respondents was made with the authority of Mr Shelton in his capacity as deputy chairman of R Griggs & Co and managing director of R Griggs Group and, as counsel conceded, with the knowledge and acquiescence of the German parties.  In those circumstances the concession that an estoppel now operates against the applicants who were not “parties” to the agreement is well made.

1. I would add, for the sake of completeness, that there is another basis upon which Dr Martens International and Dr Maertens Marketing would be “bound” by the agreement.  Having authorised R Griggs & Co and R Griggs Group to take steps to protect and enforce the rights in their trade marks, there is no reason to think that the agreement would not be binding upon them pursuant to the “non-limited unrestricted power of attorney” that had been granted to the two Griggs companies; the agreement being an incident of the enforcement program.  That is to say, while the parties to the agreement are the Figgins applicants, R Griggs Group and R Griggs & Co were acting as agents for undisclosed principals binding those principals to the agreement.

2. The fact that the DOC’S mark is covered by the agreement relieves the Figgins applicants from potential liability.  By covenanting not to sue in respect of the use of the DOC’S mark, the Figgins applicants impliedly promised that it was within their power to make a worthwhile promise in respect of that mark:  compare Roberts v Balfour (1891) 18 VLR 140 at 151; Hackett v Glover (1713) 10 Mod Rep 142; 88 ER 665; Eichholz v Bannister (1864) 17 CB(NS) 807; 144 ER 284; Butt vM’Donald (1896) 7 QLJ 68 at 70-71; Stranks v St John (1867) LR (CP) 376; and Haynes & Co v Lloyd & Sons [1895] 1 QB 820. If an action were now to be maintained in respect of the DOC’S mark that promise will be broken rendering the Figgins applicants liable in damages.

3. I will hear the parties on the appropriate orders to be made.

I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated:             18 August 2000

Counsel for the Applicant:	Mr P Riordan
Solicitor for the Applicant:	Middletons Moore & Bevins
Counsel for the Respondent:	Mr D Studdy
Solicitor for the Respondent:	Dickson Fisher Macansh
Dates of Hearing:	18, 19, 20 and 21 October 1999
Date of Judgment:	18 August 2000