Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3)

Link copied
Case Copied 77 min read

FEDERAL COURT OF AUSTRALIA

Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3) [2015] FCA 1422

Citation: Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3) [2015] FCA 1422
Parties: FAIRLIGHT.AU PTY LTD (ACN 104 307 888) v PETER VOGEL INSTRUMENTS PTY LTD (ACN 140 173 397) and PETER VOGEL; PETER VOGEL INSTRUMENTS PTY LTD (ACN 140 173 397) v FAIRLIGHT.AU PTY LTD (ACN 104 307 888) and KFT INVESTMENTS PTY LTD (ACN 005 144 945)
File number: VID 784 of 2012
Judge: EDMONDS J
Date of judgment: 17 December 2015
Catchwords: CONTRACT – agreement for development, manufacture and marketing of two universal instruments providing for the Applicant to supply customised hardware components and software applications and licence for First Respondent to use Applicant’s trade mark in connection with marketing and sale of instruments – whether First Respondent’s use of Applicant’s trade mark in relation to marketing and sale of products other than those the subject of the licence entitled the Applicant to withdraw the licence – whether agreement thereby terminated – whether any defence made out by First Respondent by way of acquiescence or estoppel – whether First Respondent nevertheless entitled to a perpetual licence to use the Applicant’s trade mark under the terms of the agreement – whether the First Respondent infringed the Applicant’s trade mark in contravention of the Trade Marks Act 1995 (Cth) – cross-claim: on grounds of Applicant’s alleged breach of agreements for the production of deficient software and/or delay in doing so – whether Applicant infringed First Respondent’s copyright in software developed by the Applicant – whether Cross-respondents engaged in unconscionable conduct
Legislation: Trade Marks Act 1995 (Cth) ss 20, 120, 126
Federal Court of Australia Act 1976 (Cth) s 48
Competition and Consumer Act 2010 (Cth)
Sale of Goods Act 1923 (NSW)
Copyright Act 1968 (Cth) s 115
Cases cited:

Armagas Ltd v Mundogas S.A. [1986] AC 717 cited
BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 (PC) cited
Bugatti GmbH v Shine Forever Men Pty Ltd (No 2) 105 IPR 413 referred to
Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (2011) 91 IPR 488 referred to
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 referred to
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 cited
Essington Investments Pty Ltd v Regency Property Pty Ltd (2004) NSWCA 375 cited
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 cited
OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1174 referred to
Sports Data Pty Ltd v Prozone Sports Australia  Pty Ltd (2014) 316 ALR 475 referred to
Stratton Finance Pty Ltd v Webb (2014) 314 ALR 166 cited
Vero Insurance Ltd v Kassem [2010] NSWSC 838 cited

Miller RV, Miller’s Australian Competition & Consumer Law Annotated (36th ed, Thomson Reuters, 2014)  
Dates of hearing: 1– 5 and 18 December 2014
Date of last…
CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3... and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2015] FCA 1422
Decision Date

CaseChat Overview and Summary

Fairlight.AU Pty Ltd, a company that specialised in selling audio post-production systems, sued Peter Vogel Instruments Pty Ltd (PVI) over the use of Fairlight's trademark in the marketing and sale of instruments not covered by their agreement. Fairlight argued that PVI's use of their trademark in relation to other products allowed them to terminate the agreement. PVI claimed that Fairlight had breached the agreement by not supplying sufficient hardware and software and by delaying production. PVI also argued that Fairlight had infringed on their copyright in the software developed by Fairlight. Fairlight further argued that PVI had engaged in unconscionable conduct.

The court found that Fairlight terminated the agreement because it had no further financial benefit for them. The court noted that the evidence of Steve Kepper, Fairlight's company secretary, was not presented in court, suggesting that Fairlight was avoiding cross-examination on their decision to terminate the agreement. The court concluded that the toxic relationship between the parties made it impossible to enforce specific performance of the agreement. The court also found that the relief Fairlight sought was adequate, and that damages were a more appropriate remedy. The court further found that there was a lack of mutuality between the parties, and therefore, specific performance was not appropriate.

The court dismissed PVI's cross-claim against Fairlight for breach of agreement and copyright infringement. The court also found that PVI had not engaged in unconscionable conduct. The court ordered PVI to stop using Fairlight's trademark and to deliver all products and documents bearing the trademark to Fairlight for destruction. The court also ordered PVI to pay Fairlight's costs of the proceeding. The court dismissed Fairlight's claim for specific performance of the agreement and ordered Fairlight to pay PVI's costs of their cross-claim. The court found that PVI had breached the agreement, but that Fairlight had not breached the agreement by delaying production of hardware and software. The court also found that Fairlight had not infringed on PVI's copyright in the software developed by Fairlight.

Orders

Orders of the court

4. The Respondents and each of them, whether by themselves, their servants or agents or howsoever otherwise, are restrained from:

(a) representing in the course of the First Respondent’s business and in connection with the supply or possible supply of the First Respondent’s goods or services that any such goods or services have the sponsorship or approval of the Applicant and/or from representing that the First Respondent has the sponsorship or approval of or is affiliated with the Applicant in the supply of the First Respondent’s goods or services;

(b) manufacturing, distributing, offering for sale, supplying, selling or causing to be manufactured, distributed, offered for sale, supplied or sold in Australia any goods or services for which the FAIRLIGHT trade mark is registered unless authorised by the Applicant; and

(c) using, in the course of trade and commerce, the FAIRLIGHT trade mark without the authority or consent of the Applicant.

5. The Respondents provide the Applicant with all necessary books, records and other information to enable an independent accountant of the Applicant’s choosing to calculate the profits which should be accounted to it for the First Respondent’s breach of the FAIRLIGHT trade mark and for the First Respondent to account to the Applicant for such profits within 21 days of their calculation.

6. The Respondents deliver up to the Applicant for destruction all products, materials and documents in the possession custody or control of the Respondents bearing the FAIRLIGHT trade mark or any mark that is substantially identical with or deceptively similar thereto other than CMI Products already supplied under the Agreement.

7. The First Respondent pay the Applicant’s costs of and incidental to the proceeding, as agreed or taxed.

8. The Cross-Claimant’s Further Amended Fast Track Cross-Claim filed 15 August 2014 be dismissed.

9. The Cross-Claimant pay the Cross-Defendants’ costs of that cross-claim as agreed or taxed.

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

Background

Background to the litigation

Having case managed this proceeding from the time it was transferred from the Victorian registry in April 2013 (see [13] below) including a number of interlocutory disputes, and having heard the trial of the substantive issues over six days, including the submissions of the parties, I have formed the firm view that Fairlight decided to terminate the Agreement when it did because:(1)Mr Steve Kepper had recently been brought on board as a “trouble shooter” to “sort out” the financial difficulties that Fairlight had been confronting from the time it entered into the Agreement with PVI;(2)Mr Steve Kepper quickly realised that going forward, there was nothing left in the Agreement, as then constituted, for Fairlight. Indeed, there was only further trouble ahead. Mr Fibaek, Fairlight’s Chief Technical Officer, was having continuing difficulty in supplying PVI with the hardware and software which Fairlight contracted to supply under the Agreement in the quantities, to the standards and within the times required by PVI and this had resulted in ongoing disruption to the relationship; all the instalments of $200,000 (plus GST) payable by PVI to Fairlight under the Agreement had been paid and nothing further was payable by PVI to Fairlight other than for the purchase of product and software applications under the Agreement; the “financial prop” in the form of the PVI payments, which had enabled, or at least greatly assisted, Fairlight to survive over the previous 12 to 18 months, was gone; absent the Agreement, there would be no obligation on Fairlight to develop and manufacture the product and applications for the CMI Products and the difficulties in meeting PVI’s quantity, quality and time requirements would cease to be the “running sore” they had been; a distraction which Mr Steve Kepper could well do without in his attempt to “turn the ship around”.(3)The affidavit evidence of Mr Steve Kepper was not read and no explanation was offered as to why not; after all, he was the person who purported to terminate the Agreement for the alleged breaches of it by PVI, and he had only “just come on board”. The only inference one can draw is that he was “clearing the decks” and did not want to be cross-examined on why the “clearing of the decks” included termination of the Agreement.In short, while there may have been a legal basis for the termination of the Agreement, a matter with which I deal below, I am of the firm view that it was not the alleged breaches of the Agreement by PVI which drove Mr Steve Kepper to terminate the Agreement, but his business judgment that there was nothing left in the Agreement for Fairlight which warranted it being kept on foot; only trouble lay ahead.BACKGROUND Fairlight was incorporated on 3 April 2003. Fairlight specialises in selling audio post-production systems (software and hardware), predominantly to the broadcast industry, but also to large private post-production studios. Mr George Kepper was a director of Fairlight from that time until at least 1 November 2012. Mr Kenji Fukuda was a director from 19 June 2003 until at least 1 November 2012. Mr Steve Kepper was company secretary from 5 March 2012 until at least 1 November 2012. Mr Tino Fibaek was an alternate director between 17 December 2004 and 24 August 2011.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Court would not order specific performance of the Agreement, as sought by PVI, for (at least) the following reasons:(1)There is no utility in doing so, given that the licence was withdrawn on 30 May 2012, and the Agreement consequently has no more ‘work’ to do, such that it is unclear what obligations PVI seeks to have Fairlight perform;(2)given the toxic relationship between the parties, the Agreement is not workable, and any such order would require court supervision;(3)it is not appropriate to make such an order, given that damages have been claimed as an adequate remedy, and it is inconsistent with the fact that PVI is claiming future loss by way of damages;(4)there is a lack of mutuality.CONCLUSIONS Fairlight should have the relief it seeks in its Fast Track Statement filed in accordance with the orders of Middleton J of 2 November 2012, other than the relief sought therein that it abandoned during the year. PVI must pay Fairlight’s costs of that claim, as agreed or taxed. PVI’s Further Amended Fast Track Cross-Claim must be dismissed with costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.