FEDERAL COURT OF AUSTRALIA
Facton Ltd (formerly known as G-Star Raw Denim KFT) v Seo [2011] FCA 344
Citation: Facton Ltd (formerly known as G-Star Raw Denim KFT) v Seo [2011] FCA 344 Appeal from: Facton Ltd & Ors v Chung Lim Sports Cap Pty Ltd & Ors [2010] FMCA 584 and Facton Ltd & Ors v Chung Lim Sports Cap Pty Ltd & Ors (No 2) [2010] FMCA 735 Parties: FACTON LTD (FORMERLY KNOWN AS G-STAR RAW DENIM KFT), G-STAR AUSTRALIA PTY LTD (ACN 084 011 852) and G-STAR INTERNATIONAL BV v DAVID SEO File number: VID 846 of 2010 Judge: GORDON J Date of judgment: 12 April 2011 Catchwords: EVIDENCE – expert evidence – whether specialised knowledge or expertise established to admit evidence under s 79 of the Evidence Act 1995 (Cth)
DAMAGES – infringements of trademarks and copyright – adequacy of compensatory damages, damages to reputation and additional damages pursuant to s 115 of the Copyright Act 1968 (Cth)
COSTS – requirements of O 23 of the Federal Court Rules 1979 (Cth) and Calderbank v Calderbank [1975] 3 All ER 333 – whether offer of compromise and rejection letter considered by Court in the exercise of its general costs discretion
Legislation: Copyright Act 1968 (Cth)
Copyright Amendment (Parallel Importation) Act 2003 (Cth)
Evidence Act 1995 (Cth)
Fair Trading Act 1987 (NSW)
Federal Court Rules 1979 (Cth)
Federal Court of Australia Act 1976 (Cth)
Federal Magistrates Court Rules 2001 (Cth)
Trade Marks Act 1995 (Cth)
Trade Practices Act 1974 (Cth)Cases cited: Adidas-Salomon AG v Turner (2003) 58 IPR 66
Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) (2007) 157 FCR 564
Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121
Black v Lipovac (by his next friend Lipovac) (1998) 217 ALR 386
Calderbank v Calderbank [1975] 3 All ER 333
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Elwood Clothing Pty Ltd (ACN 079 393 696) v Cotton On Clothing Pty Ltd(ACN 052 130 462) [2009] 81 IPR 378
Enzed Holdings Limitedv Wynthea Pty Limited (1984) 57 ALR 167
Facton Ltd & Ors v Chung Lim Sports Cap Pty Ltd & Ors [2010] FMCA 584
Facton Ltd & Ors v Chung Lim Sports Cap Pty Ltd & Ors (No 2) [2010] FMCA 735
Facton Ltd v Rifai Fashions Pty Ltd [2011] FCA 290
Futuretronics.com.au Pty Ltd (ACN 006 327 386) v Graphix Labels Pty Ltd (ACN 005 771 773) (2009) 81 IPR 1
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763
Grbavac v Hart [1997] 1 VR 154
House v The King (1936) 55 CLR 499
Messiter v Hutchinson (1987) 10 NSWLR 525
Pan Pharmaceuticals Limited (in liq) v Selim [2008] FCA 416
Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293
Perry v Comcare (2006) 150 FCR 319
Placer (Granny Smith) Pty Ltd v Theiss Contractors Pty Ltd (2003) 196 ALR 257
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Details
- AGLC
- Facton Ltd v Seo [2011] FCA 344
- Case
- [2011] FCA 344
- Decision Date
CaseChat Overview and Summary
In the case of Facton Ltd v Seo, the central dispute revolves around the admissibility of expert evidence, the adequacy of compensatory damages in cases of trademark and copyright infringement, and the appropriateness of costs awarded in light of offers of compromise. The matter was adjudicated in the Federal Court of Australia, where both an appeal and a cross-appeal were filed. The appellant, Facton Ltd, contested the primary judge's decision regarding the admission of evidence and the calculation of damages, while the cross-appellant, Seo, argued against the ruling on indemnity costs and the basis for expert testimony.
The legal issues at the heart of this case pertain to the threshold for admitting expert evidence under section 79 of the Evidence Act 1995, the calculation of damages for trademark and copyright infringement, and the application of the principles in Calderbank v Calderbank [1975] 3 All ER 333 when determining costs. Specifically, the court had to determine whether the expert witness, Mr. Stevan Musulin, had the requisite specialised knowledge to provide evidence on whether certain products were counterfeit. Additionally, the court had to assess whether the damages awarded were sufficient and whether the Federal Magistrate appropriately exercised their discretion in declining to award indemnity costs.
The court found that the Federal Magistrate did not err in admitting Mr. Musulin's evidence, as his role as an account manager provided him with sufficient familiarity with G-Star products to form an opinion on their authenticity. The court also concluded that the damages awarded were adequate, and there was no basis for finding that the Federal Magistrate erred in their exercise of discretion regarding indemnity costs. The court emphasised that the costs of the appeal, which far exceeded the value of the claim, were a result of the parties' conduct of the litigation, and it ordered that each party bear its own costs of the appeal and cross-appeal.
In light of these findings, the court directed that the parties prepare orders to formalise these reasons for decision by a specified date. The final orders reflect the court's determination that the appeal and cross-appeal should not have proceeded given the disproportionate costs incurred, and each party is to bear its own costs.
The legal issues at the heart of this case pertain to the threshold for admitting expert evidence under section 79 of the Evidence Act 1995, the calculation of damages for trademark and copyright infringement, and the application of the principles in Calderbank v Calderbank [1975] 3 All ER 333 when determining costs. Specifically, the court had to determine whether the expert witness, Mr. Stevan Musulin, had the requisite specialised knowledge to provide evidence on whether certain products were counterfeit. Additionally, the court had to assess whether the damages awarded were sufficient and whether the Federal Magistrate appropriately exercised their discretion in declining to award indemnity costs.
The court found that the Federal Magistrate did not err in admitting Mr. Musulin's evidence, as his role as an account manager provided him with sufficient familiarity with G-Star products to form an opinion on their authenticity. The court also concluded that the damages awarded were adequate, and there was no basis for finding that the Federal Magistrate erred in their exercise of discretion regarding indemnity costs. The court emphasised that the costs of the appeal, which far exceeded the value of the claim, were a result of the parties' conduct of the litigation, and it ordered that each party bear its own costs of the appeal and cross-appeal.
In light of these findings, the court directed that the parties prepare orders to formalise these reasons for decision by a specified date. The final orders reflect the court's determination that the appeal and cross-appeal should not have proceeded given the disproportionate costs incurred, and each party is to bear its own costs.
Orders
Orders of the court
1. The parties bring in orders to give effect to these reasons for decision by 4:00pm on 21 April 2011.
Note:
Background
Background to the litigation
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Evidence
Evidence Before The Court
This ground of appeal fails.Cross-Appeal Grounds 2, 3 and 4 – Basis of Mr Musulin’s evidence These appeal grounds can be dealt with together. They concern the evidence of Mr Stevan Musulin, an account manager with G-Star Australia Pty Ltd. In short, Mr Seo’s complaints are that the Federal Magistrate erred on two bases:1.by depriving Mr Seo of a fair trial by failing to make rulings on objections to evidence including objections to evidence sought to be adduced pursuant to s 79 of the Evidence Act (Cross-Appeal Ground 2);2.by allowing Mr Musulin to give evidence for the G-Star Companies as to whether or not a particular product was counterfeit when there was no basis of specialised knowledge or expertise established under s 79 of the Evidence Act for him to give that evidence (Cross-Appeal Ground 3) or by allowing Mr Musulin to give evidence under s 79 of the Evidence Act in re-examination on a different basis to that which had been sought in chief evidence (Cross-Appeal Ground 4). It is necessary to look at Mr Musulin’s evidence. He filed an affidavit and was subject to cross examination and re-examination. Mr Musulin’s sworn affidavit evidence was that as the account manager, he was familiar with all items distributed and sold by G-Star Australia Pty Ltd in Australia. During cross examination, he explained that, in that role, he dealt with the G-Star Products for at least eight hours a day. Mr Musulin’s evidence was that he regularly visited stalls and retail outlets throughout Australia to identify sellers of counterfeit “G-Star” branded clothing and accessories. One of those visits, a visit to Sydney’s Paddy Markets at Haymarket on 6 March 2009, is at the centre of this appeal. Mr Musulin’s evidence was he visited “Stall number 265” and noted on display approximately 50 units of “G-Star” branded items including approximately 20 units of “G-Star” branded jeans in two different styles, approximately 20 units of “G-Star” branded t-shirts in two styles and approximately 10 units of “G-Star” branded jackets in one style. He explained that he purchased one white “G-Star” t-shirt for $20.00 and one pair of blue “Elwood” denim jeans for $50.00 (defined in the affidavit as the Gas Fashion Products). I will adopt the same terminology. Mr Musulin exhibited the Gas Fashion Products and a copy of the receipt provided to him when he made the purchase. The receipt bears the name “Gas Fashion”, the date 6 March 2009 and records purchases totally $70.00. The words “Stall 265” are handwritten onto the receipt. Mr Musulin’s identification of the Gas Fashion Products as counterfeit goods is a core issue on the cross-appeal. Mr Musulin’s evidence was that he looked at the Gas Fashion Products and confirmed that they were counterfeit “as the various markings and labels on the Gas Fashion Products are not the markings and labels which are used on genuine “G-Star” Products”. During cross examination, Mr Musulin said that he formed the opinion that the Gas Fashion Products were counterfeit on 6 March 2009. Mr Musulin explained further his practice of attending a market to look for counterfeit products, identifying a stall where there was counterfeit products, purchasing the product and, if a receipt was offered, putting the receipt into the bag with the purchased products and then noting the number of the stall on his mobile phone.
Decision
Reasons for decision
Mr Seo submitted that the Federal Magistrate erred in failing to award indemnity costs to Mr Seo from 5 May 2010. Costs are in the exercise of the Court’s discretion. In order to succeed, Mr Seo must show that the Federal Magistrate made an error of the type identified in House v The King at 505. No such error was identified by Mr Seo. This ground of cross-appeal is dismissed.CONCLUSIONS This appeal and cross-appeal provide a good example of how litigation should not be conducted. The costs of the appeal (let alone the costs of the proceedings) substantially exceed the value of the claim. The parties are jointly to blame. Each party should bear its own costs of the appeal and the cross-appeal. I will direct the parties to bring in orders to give effect to these reasons for decision by 4:00pm on 21 April 2011.
Ratio Decidendi
Legal Principle Established
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