Henley Constructions Pty Ltd v Henley Arch Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Henley Constructions Pty Ltd v Henley Arch Pty Ltd [2023] FCAFC 62

Appeal from: Henley Arch Pty Ltd v Henley Constructions Pty Ltd [2021] FCA 1369
File numbers: VID 737 of 2021
VID 164 of 2022
Judgment of: YATES, ROFE AND MCELWAINE JJ
Date of judgment: 28 April 2023
Catchwords:

TRADE MARKS – appeal – where primary judge found that the respondent’s registered trade mark HENLEY was valid and infringed by the first appellant – whether primary judge erred in finding that HENLEY was capable of distinguishing the respondent’s services under s 41 of the Trade Marks Act 1995 (Cth) (the Trade Marks Act) – where primary judge found that HENLEY was not inherently distinctive – where primary judge found that s 41(6) was satisfied – no error established in finding that s 41(6) was satisfied

TRADE MARKS – infringement – substantial identity –whether primary judge erred in finding that HENLEY CONSTRUCTIONS is substantially identical to the respondent’s registered composite mark comprising the words HENLEY and PROPERTIES with device elements – error established – appeal allowed in part

TRADE MARKS – infringement – deceptive similarity – whether primary judge erred in finding that certain marks used by the first respondent are deceptively similar to the respondent’s registered marks – no error established

TRADE MARKS – infringement – use as a trade mark – whether primary judge erred in finding that the first appellant had used certain signs as trade marks – whether primary judge failed to have regard to the setting in which each sign was used – no error established

TRADE MARKS – infringement – prior use defence – whether primary judge erred in finding that the first appellant had not established a defence under s 124 of the Trade Marks Act – where primary judge found that the respondent’s use of the infringed marks HENLEY COLLECTION, HENLEY RESERVE and HENLEY ESSENSE was use of HENLEY based on s 7(1) of the Trade Marks Act – where primary judge found that the first appellant had not used HENLEY CONSTRUCTIONS prior to the respondent’s first use of HENLEY – error established – appeal allowed in part

CONSUMER LAW – misleading and deceptive conduct – false or misleading representations – whether primary judge erred in finding that the first appellant had contravened the Australian Consumer Law and the Trade Practices Act 1974 (Cth) – whether primary judge erred in finding that the respondent had a relevant reputation – whether primary judge erred in finding that the building and construction industry is a national industry – whether primary judge erred in finding that there to be evidence of consumer confusion – no error established

TRADE MARKS – relief – whether primary judge erred in directing the question of an account of profits be determined separately after all other relief – where trial set down on all issues – no error established

TRADE MARKS – cross appeal – whether primary judge erred in finding that the first appellant’s…

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Details
Case
[2023] FCAFC 62
Decision Date

CaseChat Overview and Summary

In this case, Henley Constructions Pty Ltd (the first appellant) and Henley Constructions Pty Ltd (the second appellant) appealed against the decision of the primary judge in Henley Arch Pty Ltd v Henley Constructions Pty Ltd (No 2) [2022] FCA 231 (the Liability Judgment). The respondent, Henley Arch Pty Ltd, is a builder of homes in several states of Australia. It has used a number of trade marks in the promotion of its business, including the word HENLEY. The first appellant, Henley Constructions Pty Ltd, is a property developer focusing on the construction of residential unit blocks in and around suburban Sydney. It used a number of signs and devices, including the words HENLEY and HENLEY CONSTRUCTIONS. The primary judge found that the first appellant’s use of each of the signs and devices noted above infringed each of the registered marks. The primary judge rejected the appellants’ defences to infringement, including those raised by their cross-claim. However, the primary judge was not persuaded that the first appellant’s use of the telephone number 1300HENLEY, or its use of number plates incorporating the element HENLY or HNLY, involved trade mark use.

The legal issues in the appeal related to the validity and infringement of the respondent’s registered trade mark HENLEY, and the appellants’ prior use defence. The court was required to decide whether the primary judge erred in finding that the word HENLEY was capable of distinguishing the respondent’s services under s 41 of the Trade Marks Act 1995 (Cth). The court was also required to decide whether the primary judge erred in finding that the first appellant had not established a defence under s 124 of the Trade Marks Act. In addition, the court was required to decide whether the primary judge erred in finding that the first appellant’s use of 1300HENLEY was not use as a trade mark.

The court found that the primary judge did not err in finding that the word HENLEY was capable of distinguishing the respondent’s services under s 41 of the Trade Marks Act. The court found that the primary judge did err in finding that the first appellant had not established a prior use defence under s 124 of the Trade Marks Act. The court found that the primary judge did not err in finding that the first appellant’s use of 1300HENLEY was not use as a trade mark.

The court allowed the appeal in part, and allowed the cross-appeal. The court ordered that the parties bring in agreed orders giving effect to these reasons for judgment. In the event that the parties cannot agree on the orders to be made, the court ordered that each party serve on the other a draft of the orders the party proposes, supported by written submissions not exceeding three pages; and that within a further seven days, each party serve on the other party responding submissions not exceeding two pages. The court ordered that the question of the orders to be made in this appeal be determined on the papers.

Orders

Orders of the court

1. Subject to Orders 2 to 4, the parties bring in agreed orders giving effect to these reasons for judgment.

2. In the event that the parties cannot agree on the orders to be made:

(a) within 10 days of the date of these orders, each party serve on the other a draft of the orders the party proposes, supported by written submissions not exceeding three pages; and

(b) within a further seven days, each party serve on the other party responding submissions not exceeding two pages.

3. At the time of service referred to in Order 2, the parties provide copies of the served documents to the Chambers of each member of the Full Court.

4. Subject to further order, the question of the orders to be made in this appeal be determined on the papers.

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

Background

Background to the litigation

We have concluded that the cross-appeal succeeds, and the appeal succeeds in part. BACKGROUND The respondent is a builder of homes in Victoria, South Australia, Queensland and New South Wales. Since 1989, it has used a number of trade marks in the promotion of its business. From 1989 until about 2005, it used the following marks (which the primary judge called the Initial Henley Devices): From about 2005, it used the following marks (which the primary judge called the 2005 Henley Devices): From about 2017, it used the following marks (which the primary judge called the 2017 Devices): The respondent is the registered owner of the following trade marks, which compromise or include the word HENLEY (the registered marks): It will be observed that the registered marks can be classified according to their registration dates. Trade mark 1152818, trade mark 1152819, and trade mark 1152820 (respectively, the 818 mark, the 819 mark, and the 820 mark) were registered with effect from 18 December 2006. Trade mark 1806558, trade mark 1806561, and trade mark 1806570 (respectively, the 558 mark, the 561 mark, and the 570 mark) were registered with effect from 2 November 2016 (together, the 2016 registered marks). The significance of this classification is relevant to the application of the appellants’ defence under s 124 of the Trade Marks Act. It will also be observed that, other than the 818 mark, the registered marks are word marks. The 818 mark is a composite mark comprising the words HENLEY and PROPERTIES, represented in a particular stylised form and arrangement with device elements (which the primary judge called the “HENLEY PROPERTIES” Device Mark). Henley Constructions is a property developer focussing on the construction of residential unit blocks in and around suburban Sydney. It is also involved in the construction of commercial units and private homes (including home renovations). In conducting its business, Henley Constructions used a number of signs and devices. These include the words HENLEY and HENLEY CONSTRUCTIONS, and the following logos (the Henley Constructions logos): (a)the first Henley Constructions logo:(b)the second Henley Constructions logo:(c)the third Henley Constructions logo: Henley Constructions has used other signs and devices, such as: (a)the domain name henleyconstructions.com.au;(b)the domain name Henleygallery.com.au;(c)the name THE HENLEY DISPLAY GALLERY;(d)the name HENLEY BUILT;(e)crane signage using the word HENLEY; and(f)various hashtags in social media, specifically #henleyconstructions, #henleygallery, and #henley. The primary judge found that Henley Constructions’ use of each of the signs and devices noted in [17] and [18] above infringed each of the registered marks. In doing so, he rejected the appellants’ defences to infringement, including those raised by their cross-claim. However, the primary judge was not persuaded that Henley Constructions’ use of the telephone number 1300HENLEY, or its use of number plates incorporating the element HENLY or HNLY, involved trade mark use.THE PRIMARY JUDGE’S REASONS

Evidence

Evidence Before The Court

The primary judge published comprehensive reasons for judgment (1005 paragraphs comprising 289 pages). The following is a summary of those reasons, which provides the necessary context in which to understand the issues raised in this appeal.The evidence After making some introductory remarks (including identifying the registered marks and other marks used by the respondent), the primary judge surveyed the evidence adduced by the respondent (at J[17] – [176]) and the evidence adduced by the appellants (at J[177] – [351]). His Honour made a number of important findings in respect of the adoption of the name HENLEY CONSTRUCTIONS. The thrust of the evidence given by Mr Sarkis and his wife, Vanessa Sarkis, was that “in or around June or July 2006” or “on or around 10 September 2006” (the evidence given by Mr Sarkis and Mrs Sarkis varied in this detail), Mr Sarkis and Mrs Sarkis discussed Mr Sarkis’s ambition to own a construction company that would become Australia’s biggest builder and developer. Mrs Sarkis offered to come up with some company names for the soon-to-be established company that was to fulfil this ambition. After initially coming up with a large list of names, Mrs Sarkis arrived at a shortened, handwritten list comprising: (a)“Belcorp D’s/C’s”; (b)“Henley D’s/C’s”; (c)“Cordell D’s/C’s”; (d)“Meridian C’s”; (e)“Walford C’s/D’s”; (f)“Bel C’s”; and (g)“Denoble D’s/C’s”. It is not in dispute that the reference to “D’s” in the list was to “Developments” and the reference to “C’s” was to “Constructions”. Mrs Sarkis gave evidence as to how she arrived at these names. The primary judge did not accept the truthfulness of that evidence. It is not necessary to descend to the detail of the primary judge’s findings with respect to Mrs Sarkis’s choice of names other than for “Henley D’s/C’s”. It is sufficient to record that, on all the evidence, the primary judge was satisfied that, in 2006, Mrs Sarkis conducted Google searches of names already used in the construction industry and then assessed if adding the words “Developments” or “Constructions” meant that they were available names to register as company names with the Australian Securities and Investments Commission (ASIC). Mr Sarkis gave evidence that he did not undertake any research of who his competition was likely to be in the building industry. However, after canvassing and considering the views of others, he decided to select “Henley Constructions” as the name for his company. Paragraph 30 of Henley Constructions’ Amended Defence alleged that Mr Sarkis’s chose the corporate name “Henley Constructions Pty Ltd” in good faith. The particulars to that paragraph stated: Mr Sarkis chose the name “Henley Constructions” due to his pre-existing fondness of the male name “Henley”. This fondness includes the fact that Mr Sarkis has mentioned to his wife prior to the Selection Date that if they had a son he would like to call him “Henley Joseph Sarkis”.

Decision

Reasons for decision

In separate reasons for judgment (Henley Arch Pty Ltd v Henley Constructions Pty Ltd (No 2) [2022] FCA 231 (CJ or the costs judgment)), the primary judge decided that the appellants should pay the respondent’s costs on an indemnity basis, and as a lump sum, from 11.00 am on the second business day after the “2019 Offer” was served on the appellants. The “2019 Offer” was a formal offer of compromise made by the respondent on 26 November 2019 pursuant to r 25.14(3) of the Federal Court Rules 2011 (Cth), which provides: (3)If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:(a)before 11.00 am on the second business day after the offer was served—on a party and party basis; and(b)after the time mentioned in paragraph (a)—on an indemnity basis.Note 1: Costs on an indemnity basis is defined in the Dictionary.Note 2:The Court may make an order inconsistent with these rules—see rule 1.35. The 2019 Offer was in these terms: 1. You consent to orders being made in the proceeding as follows: (a)The Respondents, whether by themselves, their directors, officers, employees or agents or otherwise, be restrained from using as a trade mark, without the licence or authority of the Applicant, the following signs:(i)Henley; and/or(ii)Henley Constructions; and/or(iii)Henley Constructions Pty Ltd; and/or(iv)1300 HENLEY; and/or(v) and or(vi)any other sign that is substantially identical, or deceptively similar, to “HENLEY”, in the course of trade in relation to building or construction services.(b)The claim and cross-claim be otherwise dismissed with no order as to costs.2.The applicant authorises the Respondents, up until 31 May 2020 and not beyond, to use:(a) Henley; and/or(b) Henley Constructions; and/or(c) Henley Constructions Pty Ltd; and/or(d) 1300 HENLEY; and/or(e) the course of trade in relation to building or construction services, provided only that the Respondents will otherwise undertake all steps necessary and as expeditiously as possible to rebrand their business to a name that does not include “HENLEY” or any word that is substantially identical, or deceptively similar, to “HENLEY”.This offer of compromise is open to be accepted for 14 days after service of this offer of compromise.(Original emphasis.) The primary judge was persuaded that r 25.14(3) was satisfied. At CJ[34], his Honour said: 34I find that the 2019 Offer of compromise was a genuine offer in the context of the proceeding, and ultimately judgment was more favourable for Henley Arch than the terms of the 2019 Offer. This is so because the offer gave up any claim to legal costs, had no injunction based on the ACL claim and contained a six-month transition period for the Respondents to stop using the impugned signs as a trade mark in respect of building or construction services. This is in contrast to the findings in the Liability Judgment, wherein I found that Henley Constructions infringed Henley Arch’s intellectual property rights with respect to a number of its trade marks, and found that Henley Arch was entitled to injunctions against Henley Constructions due to its contraventions of ss 18 and 29 of the ACL. Further, I ordered that the Respondents pay the Applicant’s costs of and incidental to the hearing of liability on the claim, and the costs of and incidental to the cross-claim. Henley Arch clearly obtained a judgment that was more favourable than the state of affairs in the 2019 Offer. As such indemnity costs should be awarded against the Respondents from 11am on the second business day after the 2019 Offer was served on the Respondents pursuant to r 25.14(3).

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.