HTX International Pty Ltd v Semco Pty Ltd

[1982] FCA 248

Re: HTX INTERNATIONAL PTY. LIMITED
And: SEMCO PTY. LIMITED
No. NSW G197 of 1982
Trade mark

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Morling, J.

CATCHWORDS

Trade mark - infringement - substantial non-user of mark by applicant - substantial and continuing trade by respondent in goods using mark - lengthy delay in bringing proceedings - application for interlocutory relief - prima facie case established - balance of convenience against granting interlocutory relief - application dismissed

Trade Marks Act 1955, ss. 22, 23, 28 and 34

HEARING

SYDNEY

#DATE 12:11:1982

ORDER

1. That the application be dismissed.

2. Question of costs and further directions stood over to a date suitable to the parties.

JUDGE1

In these proceedings the applicant seeks relief against the respondent in respect of conduct said to be in breach of s.52 of the Trade Practices Act and of the applicant's registered trade mark. It is also alleged that the respondent's conduct amounts to passing off. However, in the proceedings before me today which are for interlocutory relief only, the applicant bases its claim solely on the conduct alleged to infringe its trade mark. The applicant seeks interlocutory orders restraining the respondent from advertising, promoting, displaying for sale, selling or offering for sale in trade or commerce paint or paint applicators or related items under the name "Vogart", whether it be said name or any similar name. Interlocutory relief is also sought to restrain the respondent from manufacturing, printing or causing or procuring the printing of containers, cartons, buckets or tubes bearing the name "Vogart" or any similar name used or intended to be used with the advertising, promotion, display for sale or sale in trade or commerce of paint or paint applicators.

The applicant is, and has at all times since 11 August 1977, been the proprietor of the registered trade mark "Vogart", the registered number of which is A242923 under clause 16 in respect of paint applicators for textile painting, decorating and all other goods in that clause. The trade mark was originally registered in 1970 and was assigned to the applicant in 1977. I shall refer later in these reasons to the circumstances in which the applicant markets and sells paint applicators for textile painting under this trade mark.

The respondent does not dispute that it has for some time been carrying on a business of distributing and selling, inter alia, embroidery and other products under the name "Vogart" or "Vogart Craft". These items are purchased by the respondent from an American corporation. The respondent first commenced to purchase these items during 1976 and since about the end of October 1976 it has sold Vogart items, by wholesale, to craft stores, department stores and numerous other retail outlets throughout Australia. It sells to approximately 2500 retailers. Not all of these retailers purchase Vogart items, but apparently many do. The respondent's trade in Vogart items since 1976 has been reasonably substantial and has exceeded $500,000 in value. The respondent's products are distributed through retailers, whereas the applicant's products are sold almost exclusively by direct selling methods and not by retail.

The questions for me to decide on this application are limited. First, I must determine whether the applicant has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial it will be held entitled to relief. Secondly, I must decide whether the balance of convenience lies in favour of the granting of interlocutory relief.

I am not undertaking the trial of the issues which will necessarily arise at the final hearing, and it would be inadvisable for me to express any concluded view on those matters or on the evidence presently before the Court. It is sufficient for me to say that were it not for the question of the balance of convenience, I think this would be an appropriate case for the grant of interlocutory relief. In reaching that conclusion I do not overlook the arguments advanced by Mr Simos, of Queens's Counsel for the respondent, that his client has arguable defences under ss. 22, 23, 28 and 34 of the Trade Marks Act 1955 ("the Act"). He indicated from the bar table that an application has been already made pursuant to s.34(1) of the Act seeking the registration of the mark "Vogart". The question of honest and current use will arise in respect of that application. Mr Simos also relied upon evidence elicited in cross-examination from Mr. Kelly, the general manager of the applicant. From that evidence he argues that his client has an arguable case under s.23(1)(b) of the Act for the removal of the applicant's trade mark from the register. I do not propose to refer to the detail of that evidence; it is sufficient that I indicate that, whilst it does not pursuade me that the application should be refused on the ground that a prima facie case has not been established, it does demonstrate that the applicant's right to final relief cannot be treated as being beyond all doubt.

In Caterpillar Loader Hire (Holdings) Pty Limited and Willoughby & Anor. (1981) 38 A.L.R. 394 a case involving an alleged infringement of a trade mark, the Court (Evatt, Fisher and Ellicott JJ.) said at p.397:

"Although there is authority for the proposition that, where a clear breach of the plaintiff's rights is established, questions of balance of convenience do not arise (Hampstead and Suburban Properties Ltd. v Diomedous (1969) I Ch 248; (1968) 3 All ER 545; Halsbury's Laws of England 4th ed, vol 24, para 956), we think that the better view is that the relative strength of the plaintiff's case is only one of the factors to be weighed by a judge in exercising a discretion as to whether, on the balance of convenience, an interim injunction should be granted. If a breach of the plaintiff's rights is admitted or is, in the opinion of the judge, beyond argument, the judge should no doubt only refuse interlocutory relief in special circumstances. However, the courts have deliberately taken the view that the remedy by way of interlocutory injunction should remain flexible and it would therefore be unwise to deny the possibility of special circumstances existing which could justify the refusal of such relief even though breach of the plaintiff's rights was clearly established at the interlocutory stage."

In my view therefore the fate of the present application falls to be determined on the question of the balance of convenience. The evidence shows that about September 1977 the plaintiff used the Vogart mark in what can only be described as a fairly limited way. At that time it marketed one product, a Tee Shirt painting kit under the name Vogart Kit. Thereafter it did not use the mark at all until November 1981.

I have already referred to the continued and substantial use since 1976 of the name Vogart by the respondent. When the applicant recommenced to use the mark in November 1981, it marketed a decorator embroidery painting kit containing a number of separate products which were packaged in a box displaying the Vogart mark. However, each product contained in the box, and the box itself, prominently bore the name "Hobbytex", which is the name used by the applicant to identify its wide range of products. The Vogart mark is not used in any of the applicant's other products. The applicant identifies all its products with the "Hobbytex" name.

Counsel for the applicant did not contend that the continued use of the Vogart mark by the respondent pending the final hearing would prejudice its interests, other than in the sense that no person other than it is entitled to use the mark. The case is free from other circumstances that would lead me to hold that the balance of convenience might be in favour of granting interlocutory relief.

On the other hand a considerable time has elapsed since the respondent commenced using the name Vogart. The grant of interlocutory relief would disrupt its trading, which it has carried on without interruption for six years save for a short period in 1982 to which I shall presently refer. The applicant made no complaint of the respondent's use of the Vogart name until April 1982. Mr Kelly commenced employment with the applicant in the early part of 1981 and his knowledge of events before that time was very limited. I think a fair statement of his evidence is that he himself did not become aware of the use by the respondent of the Vogart mark until after November 1981. But it does not follow that others in the company have been unaware of the respondent's use of the mark. In these circumstances I cannot ignore the fact that there has been a long period of trading by the respondent. Further, many months have elapsed since the applicant became aware of the use by the respondent of the mark and before these proceedings were commenced. The application was not filed in Court until 3 November 1982.

It is true that after some communication earlier this year between the solicitors for the parties the respondent took products bearing the offending mark off the market for a period of 2 or 3 months. However, I do not think this circumstance is of overriding importance. Certainly it does indicate that the respondent was able to restrict its trading by temporarily withdrawing such products from sale. But it does not follow that this action was not financially and commercially detrimental to it. Although it is a circumstance that I throw into the scales, it does not incline me to come to the view that the balance is weighed down in favour of the applicant.

From the respondent's point of view it seems the granting of interlocutory relief would be very inconvenient indeed. It has been distributing its products under the mark for some years. Its trading in the products is not a "new trade" in the sense in which that term was used by Brett J.A. in Plimpton v Spiller (1876) 4 Ch D. 286 at 293 referred to with approval in Beecham Group Ltd v Bristol Laboratories Pty Limited (1968) 118 CLR 618 at 621. Products of the kind sold by the respondent may become out-of-date. Indeed, Mr Mylius, the respondent's managing director, said one reason for the respondent going back into the market was the fact that it had a good deal of stock that was lying idle. If the applicant succeeds at the trial I can see no reason why an account of profits would not substantially protect it against any loss which it may sustain pending the final hearing.

Taking every consideration into account I am of the view that the balance of convenience lies against the granting of interlocutory relief. I therefore dismiss the application. I shall stand over the questions of costs and further directions to a date suitable to the parties.