Elevate Brandpartners Ltd v Hammond

Case [2019] FCA 1103

FEDERAL COURT OF AUSTRALIA

Elevate Brandpartners Ltd v Hammond [2019] FCA 1103

File number: NSD 488 of 2019
Judge: STEWART J
Date of judgment: 27 June 2019
Date of publication of reasons: 16 July 2019
Catchwords: PRACTICE AND PROCEDURE – application for interlocutory injunctive relief – whether arguable case – whether balance of convenience favours granting of injunctions – where respondents’ proffered undertakings dealing with most of the applicants’ grounds of complaint
Legislation:

Australian Consumer Law (Schedule 2 of the Competition and Consumer Act (Cth)) s 234

Copyright Act 1968 (Cth) s 115

Trade Marks Act 1995 (Cth) s 126
Cases cited:

Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57

Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations(No 3) [2011] FCA 1019

Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238
Date of hearing: 25 June 2019
Registry: New South Wales
Division General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 50
Counsel for the Plaintiffs: S Dawson SC and M Cairns
Solicitor for the Plaintiffs: HWL Ebsworth
Counsel for the Defendants: R Newlinds SC and D G Healey
Solicitor for the Defendants: Gadens

ORDERS

NSD of 488 of 2019
BETWEEN:

ELEVATE BRANDPARTNERS LTD (UK COMPANY NUMBER 10159717)

First Applicant

QUAYEYEWARE PTY LTD (ACN 118 078 274)

Second Applicant
AND:

LINDA HAMMOND

First Respondent

ALLEN JASON RICHARD HAMMOND

Second Respondent

ZAK RILEY JOHN HAMMOND

Third Respondent

DREAM BANDITS AUSTRALIA PTY LTD (ACN 630 671 206)
Fourth Respondent

JUDGE:

STEWART J

DATE OF ORDER:

27 JUNE 2019

THE COURT ORDERS THAT:

1.The applicants’ interlocutory application filed on 3 June 2019 is dismissed as against the third respondent.

2.The first, second and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019.

3.On the respondents referred to in Order 2 complying with it, the applicants’ interlocutory application filed on 3 June 2019 will be dismissed as against them.

4.Costs reserved.

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

REASONS FOR JUDGMENT
(Revised from the transcript)

STEWART J:

Introduction

  1. This judgment concerns interlocutory relief relating to trade mark and copyright infringement, misleading representations and the prevention of possible harm in the form of contractual liability to a third party.

  2. The first applicant, Elevate Brandpartners Ltd, is a company registered in the United Kingdom and is the majority shareholder in the second applicant, Quayeyeware Pty Ltd (Quay). Quay is an Australian proprietary company.

  3. Quay markets and sells stylish sunglasses worldwide, mostly online.  To that end it is the registered owner of the following word trade  marks for goods and services including, amongst other things, “sunglasses”, “eyeglasses”, “product design” and “retailing and wholesaling of goods including online”: QUAY,…

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Details
AGLC
Elevate Brandpartners Ltd v Hammond [2019] FCA 1103
Case
[2019] FCA 1103
Decision Date

CaseChat Overview and Summary

Elevate Brandpartners Ltd brought an interlocutory application against the Hammonds and two companies, Quay and Dream Bandits, seeking various injunctive orders. The applicants sought relief in relation to the use of trademarks, photographs, and representations that linked Dream Bandits to the second applicant. The applicants also sought an injunction to restrain Ms Hammond from using a photograph of Ms Kylie Jenner and her name on Instagram. The respondents proffered undertakings dealing with most of the applicants' grounds of complaint, except for the use of the photograph and name of Kylie Jenner.

The court was required to determine whether there was an arguable case for the interlocutory injunctive relief sought by the applicants, whether the balance of convenience favoured the granting of the injunctions, and whether the proffered undertakings addressed the applicants' concerns. The court considered the strength of the applicants' claim, the likelihood of harm, and the intrusion on personal freedom and control over Ms Hammond's Instagram account. The court also examined the proffered undertakings and any deficiencies identified by the applicants.

The court found that the applicants had not established an arguable case for interlocutory injunctive relief in relation to the use of the photograph and name of Kylie Jenner. The claim of an infringed right was weak, there was little prospect of harm to the applicants, and granting an injunction would intrude on Ms Hammond's personal freedom and control over her Instagram account. The court also found that the proffered undertakings addressed most of the applicants' concerns, and the balance of convenience did not favour the granting of the injunctions. The court dismissed the interlocutory application against the third respondent and directed the first, second, and fourth respondents to file and serve signed undertakings by a specified date. The court reserved costs.

The court made the following orders: (1) the applicants' interlocutory application filed on 3 June 2019 is dismissed as against the third respondent; (2) the first, second, and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019; (3) on the respondents referred to in Order 2 complying with it, the applicants' interlocutory application filed on 3 June 2019 will be dismissed as against them; and (4) costs reserved.

Orders

Orders of the court

1. The applicants’ interlocutory application filed on 3 June 2019 is dismissed as against the third respondent.

2. The first, second and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019.

3. On the respondents referred to in Order 2 complying with it, the applicants’ interlocutory application filed on 3 June 2019 will be dismissed as against them.

4. Costs reserved.

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

Background

Background to the litigation

Before me, the applicants move on an interlocutory application by which they seek interlocutory orders pending further order of the Court or determination of the principal proceedings. The orders that they seek may be summarised as follows:·under s 126 of the Trade Marks Act 1995 (Cth) that the respondents be restrained from using any of the Quay trademarks in any online or public forum in relation to any of the goods and services for which those marks are registered, which is to include those marks used in combination with the “@” or “#” symbol in front of them;·under s 115 of the Copyright Act 1968 (Cth) that the respondents be restrained from using any photograph or other material in which the second applicant owns the copyright;·under s 234 of the Australian Consumer Law that the respondents be restrained from making certain representations which link their business, Dream Bandits, to the business of the second applicant;·that Ms Hammond, be restrained from using any photograph of Ms Kylie Jenner, or her name, on Instagram or any other online or public forum, including by the use of it in combination with the “@” or “#” symbol in front of it, and includes “kylie jenner” being represented as one word;·that the respondents to this application pay the applicants’ costs.Background Ms and Mr Hammond started the business of Quay as a partnership in 1999. They subsequently incorporated Quay. In 2009, their son Zak joined them as a director of Quay. From that year, Quay branched into marketing in the United States. By 2013, Quay’s sunglasses were being photographed on the faces of international celebrities including Lady Gaga, Beyoncé and Jennifer Lopez. At that time and thereafter, the Hammonds used social media, and in particular Instagram, to market Quay’s products including by contracting “influencers” to promote those products. Influencers are celebrities with a substantial presence on social media who have the ability to influence potential buyers of a product by promoting or recommending the product on social media. This in turn enables them to sell their use or endorsement of products to the traders of those products for substantial sums. Ms Hammond started Quay’s Instagram account in 2013 with no experience in social media marketing. She quickly learned how to use Instagram and grew the number of Quay’s Instagram “followers” to around 850,000. It was not disputed by either party to these proceedings that the online social media marketing of Quay’s products lead to its very substantial success in Australia and abroad. That success enabled the Hammonds to sell approximately 65% of the shares in Quay to Elevate in August 2016 for, I was told, a very substantial sum of money. Since then, the Hammonds have continued to own approximately 35% of the shares in Quay. A shareholders’ deed between the Hammonds, Elevate and Quay continues to govern the relationship between the shareholders of Quay, and Quay. Under the deed, Ms Hammond has continued to be a director of Quay. Ms Hammond continued to be employed by Quay in an executive position until August 2017.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Moreover, I do not consider that the balance of convenience favours the granting of any injunctive relief in relation to Ms Hammond’s use of the photograph. The claim of an infringed right is extremely weak, there is little prospect of harm to the applicants, and granting an injunction would intrude on Ms Hammonds’ personal freedom and control over her Instagram account.Conclusion In the circumstances, I make the following orders:(1)The applicants’ interlocutory application filed on 3 June 2019 is dismissed as against the third respondent.(2)The first, second and fourth respondents are directed to file and serve signed undertakings in the form of the draft undertakings furnished by them to the Associate of Stewart J by email on 26 June 2019 by noon on Monday 1 July 2019.(3)On the respondents referred to in Order 2 complying with it, the applicants’ interlocutory application filed on 3 June 2019 will be dismissed as against them.(4)Costs reserved.

Ratio Decidendi

Legal Principle Established

It is sufficient, in being required to show a serious question to be tried, “that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 at [65] per Gummow and Hayne JJ. Gleeson CJ and Crennan J in Australian Broadcasting Corporation v O’Neill at [19] said that: [I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of the injunction. The question of irreparable harm is one of the matters that is ordinarily addressed in the court’s consideration of the balance of convenience: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [61] per Dowsett, Foster and Yates JJ. In considering the balance of convenience (and the justice of the case) the court is involved in the exercise of a discretionary judgment. In forming that judgment, the court is required to assess and compare the prejudice and hardship likely to be suffered if an injunction is granted with that which is likely to be suffered if one is not granted: Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations(No 3) [2011] FCA 1019 at [18] per Foster J.The undertakings Shortly before the interlocutory application was due to be heard, the respondents proffered undertakings to Quay and to the Court ostensibly dealing with all but one of the applicants’ grounds of complaint, namely that concerning the use of the photograph and name of Kylie Jenner (the Kylie Jenner issue). I will return to that matter, but in the meanwhile will consider the other matters in light of the proffered undertakings. The undertakings emphasise that they are given on a “no admissions basis”. It was explained that they were proffered in order to avoid the argument because, as it was submitted on behalf of the respondents, there was in effect nothing substantial at stake for either the applicants or the respondents in the conduct complained of and that the interlocutory application was a waste of time. During the course of argument, Senior Counsel for the applicants identified what he submitted were deficiencies in the undertakings, and some debate ensued between him, Senior Counsel for the respondents and the Court on those matters. Senior Counsel for the respondents, during the course of argument, accepted that there may be some merit with regard to some of the identified deficiencies and said that amendments to the undertakings would be considered. The following day, amended undertakings were proffered on the basis that if they were accepted by the Court signed versions will be executed within 24 hours.