iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd
[2022] FedCFamC2G 1052
Federal Circuit and Family Court of Australia
(DIVISION 2)
iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd [2022] FedCFamC2G 1052
File number(s): SYG 3343 of 2019 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 16 December 2022 Catchwords: PRACTICE AND PROCEDURE – Intellectual property – application for summary judgment and default judgment – whether respondents in default – whether respondents have no reasonable prospects of successfully defending the claims made against them – whether applicants have proved damages – declarations and injunctions granted – proceeding listed for further submissions on damages and costs. Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, ss 2, 18(1), 29(1)(a), 29(1)(g)
Copyright Act 1968 (Cth) ss 10(1), 13, 30, 31, 32, 35, 37, 38, 92, 115, 119, 196
Evidence Act 1995 (Cth) ss 4(1), 59, 75
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 143
Federal Court of Australia Act 1976 (Cth) s 31A
Trade Marks Act 1995 (Cth) ss 6(1), 7(4), 9(1)(c), 17, 20(1), 20(2), 120(1), 120(2), 122(1)(e), 122A(1), 126, 132, 133
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.06, 13.04(2), 13.05(2)(c), 13.05(2)(d), 13.10
Federal Court Rules 1979 (Cth) O 35A, r 3(2)
Federal Court Rules 2011 (Cth) r 16.02(1)(d)
Cases cited: Angelo Mitanis & Anor v Pioneer Concrete (Vic) Pty Ltd & Ors [1997] FCA 1040
Ashby v Commonwealth of Australia (No 3) [2012] FCA 788
Australasian Performing Right Association Limited v Escape Bar & Night Club Pty Limited & Anor [2017] FCCA 2690
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427
Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L. (No 4) [2012] FCA 1323
Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352
Australian Securities Commission v MacLeod & Ors (1994) 130 ALR 717
Baffico v YMCA of Great Lakes Inc [2014] NSWCA 61
Bruce v Odhams Press Ltd [1936] 1 KB 697
Christian v Société des Produits Nestlé SA (No 2) [2015] FCAFC 153
Coca-Cola Co v All-Fect Distributors Ltd (1999) 47 IPR 481
Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union v Stanwell Corporation Ltd (No 2) [2014] FCA 593
Fish & Fish Ltd v Sea Shepherd UK [2015] UKSC 10
Fokas v Mansfield as Trustee of the Bankrupt Estate of Maria Fokas (No 2) [2020] FCA 30
Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 63
Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614
Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc [2020] FCAFC 235
Home Grown Brands Australia Pty Ltd v Sperling Enterprises Pty Ltd [2021] FCCA 1597
Keller v LED Technologies Pty Ltd [2010] FCAFC 55
Letang v Cooper [1965] 1 QB 232
Macquarie Bank Limited v Seagle [2005] FCA 1239
Macquarie Bank Limited v Seagle [2008] FCA 1417
Malouf v Malouf (1999) 86 FCR 134
Paramount Pictures Corporation v Hasluck [2006] FCA 1431
Penthouse Publications Ltd v McWilliam [1991] NSWCA 222
Phonographic Performance Ltd v Maitra (1998) 41 IPR 225
Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166
Przybylowski v Australian Human Rights Commission (No 2) [2018] FCA 473
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 3) [2021] FCCA 1277
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963) 109 CLR 407
WD & HO Wills (Aust) Ltd v Rothmans Ltd (1956) 94 CLR 182
Woolworths Limited v BP plc (No 2) (2006) 154 FCR 97
Division: General Number of paragraphs: 240 Date of last submission/s: 14 October 2022 Date of hearing: 27 September 2022 Place: Sydney Counsel for the Applicants: Ms F St John Solicitor for the Applicants: Gilbert + Tobin The Fifteenth, Sixteenth, and Twentieth Respondents: Appeared in person, with the assistance of an interpreter The Fourth, Fifth, Sixth, Seventh, Eleventh, Twelfth, Thirteenth, and Fourteenth Respondents: No appearance by, or on behalf of, the Fourth, Fifth, Sixth, Seventh, Eleventh, Twelfth, Thirteenth, and Fourteenth Respondents ORDERS
SYG 3343 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: INOVA PHARMACEUTICALS (AUSTRALIA) PTY LTD ACN 617 871 539
First Applicant
INOVA PHARMACEUTICALS (SINGAPORE) PTE. LIMITED UEN 200617543H
Second Applicant
AND: LETOS GROUP PTY LTD ACN 623 106 561
Fourth Respondent
LIYAN LIANG
Fifth Respondent
C&J AUS GROUP PTY LTD ACN 617 599 961 (and others named in the Schedule)
Sixth Respondent
order made by:
JUDGE MANOUSARIDIS
DATE OF ORDER:
16 DECEMBER 2022
THE COURT DECLARES THAT:
1.By selling at least 13,886 units of cardboard packages (purported Dermatix packages), each of which featured the name “Dermatix”, and each of which contained:
(a)a 15g tube that included the name “Dermatix” (purported Dermatix tube); and
(b)a leaflet which also included the name Dermatix (purported Dermatix leaflet),
the fourth respondent, Letos Group Pty Ltd:
(c)infringed, within the meaning of s 120(1) of the Trade Marks Act 1995 (Cth) (TM Act), the second applicant’s registered trade marks DERMATIX (no.96006), INOVA PHARMACEUTICALS (no. 1187326), and INOVA (nos. 1452317 and 1615930) (Trade Marks);
(d)infringed, within the meaning of s 38 of the Copyright Act 1968 (Cth) (Copyright Act), the second respondent’s copyright (the Copyright) in the literary and artistic work that was embodied in or otherwise formed part of the packaging, tube, and leaflet which the purported Dermatix packages, purported Dermatix tubes, and purported Dermatix leaflets respectively replicated;
(e)engaged in conduct that:
(i)was misleading or deceptive, or that was likely to mislead or deceive in contravention of s 18(1) of Schedule 2 (ACL) to the Competition and Consumer Act 2010 (Cth), and
(ii)conveyed false or misleading representations, in contravention of s 29(1)(a) and s 29(1)(g) of the ACL; and
(f)committed the tort of passing off.
2.The fifth respondent, Liyan Liang:
(a)is liable as a joint tortfeasor for Letos Group Pty Ltd’s infringement of the Trade Marks, infringement of the Copyright, and commissions of the tort of passing off; and
(b)is a person involved, within the meaning of s 2 of the ACL, in Letos Group Pty Ltd’s contraventions of s 18(1), and s 29(1)(a) and s 29(1)(g) of the ACL.
3.By selling at least 2,728 purported Dermatix packages, each of which contained a purported Dermatix tube, and a purported Dermatix leaflet, the sixth respondent, C & J Aus Group Pty Ltd:
(a)infringed the Trade Marks, within the meaning of s 120(1) of the TM Act;
(b)infringed the Copyright, within the meaning of s 38 of the Copyright Act;
(c)engaged in conduct that:
(i)was misleading or deceptive, or that was likely to mislead or deceive in contravention of s 18(1) of the ACL, and
(ii)conveyed false or misleading representations, in contravention of s 29(1)(a) and s 29(1)(g) of the ACL; and
(d)committed the tort of passing off.
4.The seventh respondent, Taiyi Chang:
(a)is liable as a joint tortfeasor for C & J Aus Group Pty Ltd’s infringement of the Trade Marks, infringement of the Copyright, and commissions of the tort of passing off; and
(b)is a person involved, within the meaning of s 2 of the ACL, of C & J Aus Group Pty Ltd’s contraventions of s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL.
5.By selling at least 16,622 purported Dermatix packages, each of which contained a purported Dermatix tube and a purported Dermatix leaflet, the eleventh respondent, Jun Wei Pty Ltd:
(a)infringed the Trade Marks, within the meaning of s 120(1) of the TM Act;
(b)infringed the Copyright, within the meaning of s 38 of the Copyright Act;
(c)engaged in conduct that:
(i)was misleading or deceptive, or that was likely to mislead or deceive in contravention of s 18(1) of the ACL, and
(ii)conveyed false or misleading representations, in contravention of s 29(1)(a) and s 29(1)(g) of the ACL; and
(d)committed the tort of passing off.
6.Each of the twelfth respondent, Ningning Wei, and the thirteenth respondent, Li Bin:
(a)is liable as a joint tortfeasor for Jun Wei Pty Ltd’s infringement of the Trade Marks, infringement of the Copyright, and commissions of the tort of passing off; and
(b)is a person involved, within the meaning of s 2 of the ACL, in Jun Wei Pty Ltd’s contraventions of s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL.
7.By selling at least 259 purported Dermatix packages, each of which contained a purported Dermatix tube and a purported Dermatix leaflet, the fourteenth respondent, FY Health Pty Ltd:
(a)infringed the Trade Marks, within the meaning of s 120(1) of the TM Act;
(b)infringed the Copyright, within the meaning of s 38 of the Copyright Act;
(c)engaged in conduct that:
(i)was misleading or deceptive, or that was likely to mislead or deceive in contravention of s 18(1) of the ACL, and
(ii)conveyed false or misleading representations, in contravention of s 29(1)(a) and s 29(1)(g) of the ACL; and
(d)committed the tort of passing off.
8.Each of the sixteenth respondent, Mingfang Xue, and the twentieth respondent, Yuan He:
(a)is liable as a joint tortfeasor for FY Health Pty Ltd’s infringement of the Trade Marks, infringement of the Copyright, and commissions of the tort of passing off; and
(b)is a person involved, within the meaning of s 2 of the ACL, in FY Health Pty Ltd’s contraventions of s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL.
9.By selling at least 3,701 purported Dermatix packages, each of which contained a purported Dermatix tube and a purported Dermatix leaflet, the twentieth respondent, Yuan He, trading as “FY Trading”:
(a)infringed the Trade Marks, within the meaning of s 120(1) of the TM Act;
(b)infringed the Copyright, within the meaning of s 38 of the Copyright Act;
(c)engaged in conduct that:
(i)was misleading or deceptive, or that was likely to mislead or deceive in contravention of s 18(1) of the ACL, and
(ii)conveyed false or misleading representations, in contravention of s 29(1)(a) and s 29(1)(g) of the ACL; and
(d)committed the tort of passing off.
THE COURT ORDERS THAT:
10.Whether by themselves, their employees, or their agents, each of:
(a)Letos Group Pty Ltd;
(b)Liyan Liang,
(c)C & J Aus Group Pty Ltd
(d)Taiyi Chang,
(e)Jun Wei Pty Ltd,
(f)Ningning Wei,
(g)Li Bin,
(h)FY Health Pty Ltd,
(i)Mingfang Xue, and
(j)Yuan He
are permanently restrained from supplying, offering to supply, offering for sale or selling, offering to distribute or distributing, offering to make available or making available, or otherwise dealing in or enabling others to deal in products associated with the name of “Dermatix”, including products with batch number 992207142, not supplied to them by the applicants (iNova) or by iNova’s distributor, in each case into, in, or from Australia, without the prior written consent of iNova.
11.Each of:
(a)Letos Group Pty Ltd;
(b)Liyan Liang,
(c)C & J Aus Group Pty Ltd
(d)Taiyi Chang,
(e)Jun Wei Pty Ltd,
(f)Ningning Wei,
(g)Li Bin,
(h)FY Health Pty Ltd,
(i)Mingfang Xue, and
(j)Yuan He
deliver up to iNova, or otherwise destroy, at iNova’s election, any item in its, or his, or her possession or control, that features the name “Dermatix” or “iNova”.
12.iNova has leave to file and serve further evidence in support of their claim for damages.
13.Costs are reserved.
14.The proceeding be listed at 9:30 am on 23 February 2023 for the purpose of hearing submissions on damages and costs.
THE COURT NOTES THAT:
15.Declarations 1 and 2, and orders 10 and 11 (to the extent they apply to Letos Group Pty Ltd and Liyan Liang), are made pursuant to s 143 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), and r 13.10 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules).
16.Declarations 3-9; and orders 10 and 11 (to the extent they apply to C & J Aus Group Pty Ltd, Taiyi Chang, Jun Wei Pty Ltd, Ningning Wei, Li Bin, FY Health Pty Ltd, Mingfang Xue, and Yuan He), are made pursuant to r 13.05(2)(c) and (d) of the GFL Rules.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
introduction
By an application in a proceeding filed on 14 March 2022 the applicants apply for orders under s 143 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFC Act) and r 13.10 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules), or, in the alternative, default judgment under r 13.05(2)(c) and (d) of the GFL Rules.
To be in a position to consider and determine the application in a proceeding, it will be necessary to set out the claims the applicants made at the time they commenced this proceeding, and to describe the course of the proceeding up to the day on which the applicants filed their application. It will also be necessary to describe what occurred at the hearing of the application, because three of the respondents, who are not legally represented, appeared and made submissions at the hearing, and I granted them leave to file documents after the hearing. After I complete these tasks I will set out the structure of the applicants’ submissions, identify the relevant principles that apply to applications for summary judgment and default judgment, and identify the elements of each cause of action on which the applicants rely.
I will then consider the extent to which summary judgment should be granted, or orders for default judgment made, in relation to the causes of action the applicants propound against each of the respondents against whom the applicants seek relief. In relation to each cause of action against whom the applicants apply for summary or default judgment, I will:
(a)determine whether the respondent is a party in default;
(b)however (a) is determined:
(i)determine whether the amended statement of claim sufficiently pleads a cause or causes of action;
(ii)assuming (i) is answered in the affirmative, determine whether there is evidence to support the elements of the causes of action on which the applicants rely; and
(iii)however (ii) is determined, and assuming (i) is answered in the affirmative, assess on the basis of the matters alleged in the amended statement of claim, and on the basis of the evidence, the damages, including additional damages, that should be awarded.
applicants’ claims at commencement of proceeding[1]
[1] In this and the following sections of my reasons, unqualified statements of fact in relation to the applicants’ claims are to be read as statements of alleged facts.
The first and second applicants (applicants) commenced this proceeding on 19 December 2019 by applying ex parte for orders in relation to conduct the applicants alleged infringed their respective rights as licensee and owner to use certain registered trade marks and copyright, and in relation to conduct the applicants alleged constituted passing off, misleading or deceptive conduct, and misrepresentations.
The registered trade marks the applicants alleged were infringed include the name “DERMATIX”, being a registered trade mark the applicants use or have licenced to be used in connection with the sale in Australia of a non-prescription topical scar reduction gel (Dermatix products or genuine Dermatix products). The Dermatix products are sold in 15g tubes (Dermatix product tubes) that are included in cardboard packaging featuring blue and yellow artwork; and each Dermatix product is sold with a Dermatix product leaflet. The copyright the applicants alleged was infringed subsists in the literary and artistic artwork that is embodied in or otherwise forms part of the Dermatix product tubes, packaging, and leaflets. The conduct (infringing conduct) the applicants alleged constituted the infringement of the trade marks and copyright consisted in the unauthorised sale of products (purported Dermatix products) in tubes and packaging that replicate the Dermatix product tubes and Dermatix packaging, together with leaflets that replicate the Dermatix product leaflets.
The applicants named the following eight persons as having engaged in, or as having been involved in, the infringing conduct:
(a)The first respondent (Baxi Health PL). The applicants alleged it operated a gift shop from which, on or about 2 August 2019, it sold two purported Dermatix products.[2] The second respondent (Kang) is the sole director of Baxi Health PL, and the third respondent (Ma) is the secretary of Baxi Health PL.[3] (These three respondents form part of what I will later refer to as the “Baxi/Health More parties”. The applicants do not apply for any orders against these parties because they have settled their claims against them.)
(b)The fourth respondent (Letos Group PL). The applicants alleged it supplied purported Dermatix products to PY Green Health Pty Ltd (PY Green Health PL), which in turn operated a gift shop from where purported Dermatix products were purchased on or about 8 August 2019.[4] The fifth respondent (Liang) is the sole director and secretary of Letos Group PL. (I will collectively refer to Letos Group PL and Liang as the Letos Group parties.)
(c)The sixth respondent (C & J Aus PL). The applicants alleged it issued an invoice to Letos Group PL dated 13 May 2019 recording the sale of 1,080 items described as “Dermatix 15G” at a unit price of $29, totalling $31,320.[5] The seventh respondent (Chang) is the sole director and secretary of C & J Aus PL.[6] (I will collectively refer to C & J Aus PL and Chang as the C & J Aus parties.)
(d)The eighth respondent, Huang Xin (Xin). The applicants alleged Xin imported a shipment of purported Dermatix products that had been seized by the Australian Border Force (ABF).[7] The applicants do not seek summary or default judgment against Xin.
course of proceeding
[2] K Messiter affidavit 16.12.2019, [33]
[3] M J Williams affidavit 16.12.2019, [19]
[4] M J Williams affidavit 16.12.2019, [26]; K Messiter affidavit 16.12.2019, [35]
[5] M J Williams affidavit 16.12.2019, [30]; exhibit MJW-1, page 74
[6] M J Williams affidavit 16.12.2019, [30]
[7] M J Williams affidavit 16.12.2019, [35]-[39]; K Messiter affidavit 16.12.2019, [37]
Orders made on 18 December 2019
On 18 December 2019 Judge Baird made orders (18 December 2019 Orders) that included an order restraining each of the eight respondents from dealing with or destroying any product associated with the name “Dermatix”, and an order that each respondent provide a Norwich Pharmacal affidavit.[8] By 23 December 2019 the applicants served the 18 December 2019 Orders on Baxi Health PL, Kang, Ma, Letos Group PL, and Liang, and they attempted to serve the orders on C & J Aus PL, Chang, and Xin.[9] On 22 January 2020 Judge Baird made orders extending the time for service of the 18 December 2019 Orders on Chang and Xin, and extending the time by which Chang and Xin could file a Norwich Pharmacal affidavit. On 13 August 2020 Judge Baird made an order for substituted service on the C & J Aus parties of all documents that had been filed in the proceeding up to that date by permitting service via email and WeChat; and these documents were served in the way authorised by the order for substituted service.[10]
[8] Being an affidavit of the sort the House of Lords in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 held a court exercising equitable jurisdiction had power to order a person who might reasonably be supposed to know of the identity of tortfeasors to disclose his or her knowledge.
[9] M J Williams affidavit 22.01.2020
[10] M J Williams affidavit 11.03.2022, [15(b)]
By 14 January 2020 Baxi Health PL, Kang, Ma, Letos Group PL, and Liang each filed a notice of address for service; and Kang, Ma, and Liang each made a Norwich Pharmacal affidavit. Kang made an affidavit on 14 January 2020,[11] and Ma made an affidavit on 14 January 2020.[12] Liang made two affidavits, one on 15 January 2020 on her own behalf,[13] and one on 17 January 2020, in her capacity of director and secretary of Letos Group PL.[14]
[11] Exhibit A
[12] Exhibit B
[13] Exhibit D
[14] Exhibit E
In his affidavit (Ma affidavit) Ma deposed that Health More Sydney Pty Ltd (Health More Sydney PL) was the only supplier of purported Dermatix products to Baxi Health PL; and Health More Sydney PL purchased purported Dermatix products from seven entities, one of which was Letos Group PL.[15] Xin Chen (Chen) was the sole director of Health More Sydney PL, and Ma held 49% of its shares.[16] On each of 24 and 28 January 2020 the applicants’ lawyers sent correspondence to each of the suppliers identified in the Ma affidavit (other than Letos Group PL) in which they were notified of this proceeding, and requested they provide interim undertakings and information.[17]
[15] M J Williams affidavit 22.01.2020, [18]
[16] M J Williams affidavit 22.01.2020, [17]
[17] M J Williams affidavit 07.02.2020, [16]
Orders made on 30 January 2020
On 30 January 2020 Judge Baird ordered that Health More Sydney PL and Chen be joined as the ninth and tenth respondents respectively, that documents the applicants had filed in support of the 18 December 2019 Orders, together with other documents, be served on Health More Sydney PL and Chen, and that the matter be listed before Judge Baird on 7 February 2020. On that day her Honour made orders that included an order restraining Health More Sydney PL and Chen from dealing with or destroying any product under the name of Dermatix, and an order that Ma, in his capacity as general manager of Health More Sydney PL, and Chen each make a Norwich Pharmacal affidavit.
On 17 February 2020 Ma, in his capacity as general manager of Health More Sydney PL, filed a Norwich Pharmacal affidavit (second Ma affidavit).[18]
[18] Exhibit C
The Norwich Pharmacal affidavits Liang made revealed that Jun Wei Pty Ltd (Jun Wei PL) was the supplier of purported Dermatix products to Health More Sydney PL; Jun Wei PL and C & J Aus PL were the sole suppliers of purported Dermatix products to Letos Group PL; at some point Jun Wei PL ceased supplying purported Dermatix products directly to Health More Sydney PL, and Letos Group PL supplied purported Dermatix products to Health More Sydney PL; and the purported Dermatix products Health More Sydney PL purchased from Letos Group PL were physically supplied by Jun Wei PL to Health More Sydney PL and to other customers.[19] Ningning Wei (Wei) is the sole director, secretary, and shareholder of Jun Wei PL; and Lin Bin (Bin) (with Wei), is a controlling mind of Jun Wei PL.[20]
[19] M J Williams affidavit 24.04.2020, [12]
[20] M J Williams affidavit 24.04.2020, [11]
Orders made on 29 April 2020
On 29 April 2020 Judge Baird ordered that Jun Wei PL, Wei, and Bin be joined as the eleventh, twelfth, and thirteenth respondents respectively (Jun Wei parties); and that the Jun Wei parties be restrained from dealing with or destroying any product under the name of Dermatix, and an order that they each provide a Norwich Pharmacal affidavit. Judge Baird also ordered that the applicants file and serve a statement of claim.
The statement of claim
On 27 May 2020 the applicants filed a statement of claim. It would be convenient to summarise the material allegations in narrative form.[21]
[21] All references, express or implied, to time are to be understood to be a time that is relevant to the applicants’ claims.
The applicants
The first applicant (iNova Australia) is a company within the global network of iNova companies, and an affiliate of the second applicant (iNova Singapore). iNova Australia is a supplier of non-prescription pharmacy products and prescription medicines in Australia under licence from iNova Singapore. iNova Singapore owns intellectual property, including trade marks, relating to the business of iNova as conducted by the global network of iNova companies; and it licences intellectual property, including trade marks, to iNova Australia.
The 13 respondents
Each of Baxi Health PL (the first respondent), Health More Sydney PL (the ninth respondent), Letos Group PL (the fourth respondent), C & J Aus PL (the sixth respondent), and Jun Wei PL (the eleventh respondent) is a company involved in the supply of non-prescription pharmacy products and cosmetics in Australia:
(a)Kang (the second respondent) is the sole director of Baxi Health PL, and is personally involved in the day to day management of Baxi Health PL.
(b)Ma (the third respondent) is the husband of Kang. Ma is the secretary of Baxi Health PL, and is personally involved in the day to day management of Baxi Health PL. Ma is also the general manager, and is involved in the day to day management of Health More Sydney PL.
(c)Liang (the fifth respondent) is the sole director and secretary of Letos Group PL.
(d)Chang (the seventh respondent) is the sole director and secretary of C & J Aus PL, and is personally involved in the day to day management and activities of C & J Aus PL.
(e)Xin (the eighth respondent) is a person involved in the importation of products into Australia.
(f)Wei (the twelfth respondent) is the sole director and secretary of Jun Wei PL.
(g)Bin (the thirteenth respondent) is personally involved in the day to day management of Jun Wei PL.
iNova Products, Dermatix
Since around 2006 affiliates within the iNova group, including iNova Australia and iNova Singapore, have marketed and sold a range of non-prescription pharmacy products and prescription medicines in over 20 countries across Asia, Africa, and Australasia.
Since around October 2017 iNova Australia has managed and operated the iNova business in Australia, including the supply and sale of a number of pharmaceutical products, including Dermatix products. Dermatix is a non-prescription topical scar reduction treatment gel. It contains the active ingredient polysiloxane for the reduction of the size and appearance of scars, particularly when used post-operatively by patients (the Intended Purpose); and is registered on the Australian Register of Therapeutic Goods by the Therapeutic Goods Administration, as a Class 1 medical device (No. 230601).
Dermatix products are manufactured in the United States of America by Hanson Medical, Inc. (Hanson), in accordance with the requirements and guidelines of the US Food and Drug Administration, and in compliance with ISO 13485:2016 (the Compliance Standards). iNova Singapore holds an exclusive supply arrangement with Hanson for the supply of Dermatix products in the Australian market; and since 2017 iNova Australia has been the sole authorised importer of Dermatix products into Australia.
Dermatix products have been sold, distributed, and promoted in Australia under the brand “DERMATIX” since at least around 2006. This included sales to the three major pharmaceutical wholesalers in the Australian market, being API, Sigma, and Symbion; sales to the authorised resellers H&S International and Top Warehouse; and sales to Australian gift shops that specialise in packing and sending goods overseas for buyers based in Australia. The Dermatix products are sold in distinctive 15g tubes in cardboard packaging featuring the blue and yellow imagery as follows:
As a consequence of these matters iNova Australia and iNova Singapore have had and have established a substantial reputation in Dermatix products in Australia.
Dermatix trade marks
iNova Singapore is and at all relevant times has been the registered proprietor of the following trade marks (iNova Trade Marks):
(a)DERMATIX - No. 960006, priority date 25 April 2003, (class 5);
(b)INOVA PHARMACEUTICALS - No. 1187326, priority date 13 July 2007 (classes 5, 41 and 44);
(c)INOVA - No. 1452317, priority date 5 October 2011, (classes 5 and 41); and
(d)INOVA - No. 1615930, priority date 7 April 2014, (classes 5, 16, 41 and 44).
Since around October 2017 iNova Singapore has licenced iNova Australia to use the iNova Trade Marks; and at all material times each iNova Trade Mark has been used in relation to the Dermatix products.
iNova Logo
Further, the following logo (iNova Logo) has and is used in connection with the Dermatix products.
iNova Singapore is the owner of the unregistered trade mark rights in the iNova Logo in Australia.
iNova Copyright Works
The packaging of, and advertising material for, Dermatix products includes, and has included works (iNova Copyright Works) comprising of the iNova Logo, literary works embodied in the packaging of Dermatix products, and on the Dermatix product tubes, external cardboard packaging and product inserts, being detailed product claims and descriptions, and the artistic works embodied in the packaging of the Dermatix products, including on the Dermatix product tubes, external cardboard packaging and product inserts, being the artwork, design elements and layout of the packaging and the illustrations and photographs on the product inserts.
Each of the iNova Copyright Works constitutes a literary work, or an artistic work within the meaning of the Copyright Act 1968 (Cth) (Copyright Act); and was made by persons who were, at the time it was made, qualified persons within the meaning of s 32(4) and s 92 of the Copyright Act. For these reasons, each of the iNova Copyright Works is an original artistic or literary work which copyright subsists, within the meaning of s 32 and s 10(1) of the Copyright Act, and iNova Singapore is the owner of the copyright in the iNova Copyright Works.
Conduct of Baxi Health PL, Health More Sydney PL, Kang, Ma, and Chen
From a date unknown to the applicants, but at least since around August 2019, each of Baxi Health PL and Health More Sydney PL offered for sale, sold, supplied, and otherwise distributed purported Dermatix products (Baxi Health purported Dermatix products).[22] That allegation is based on the evidence contained in paragraphs 8, 9, 10, and 11 of the affidavit of Mr Duthie, a business development manager employed by iNova Australia. Mr Duthie deposes as follows:
[22] Statement of Claim , [35]
(a)On 2 August 2019 “two tubes of suspected counterfeit Dermatix” products (Baxi Health samples) “were purchased from a gift shop” in Hurstville. Mr Duthie himself did not buy the Baxi Health samples. Another person did, and that person gave them to Mr Duthie.
(b)On his return to the iNova offices Mr Duthie caused photographs to be taken of one of the Baxi Health samples, which Mr Duthie identified as “Sample #2”. The package of Sample #2 contains the following words and numbers:[23]
LOT
992207142
MFG 2018.08EXP 2021.07
(c)Mr Duthie completed a form titled “Suspected counterfeit – Collection of information”, and described the number “992207142” as a “Batch number”.
(d)Mr Duthie does not say anything about whether he completed a form in relation to the other Baxi Heath sample, and, if he did not, the reasons for his not doing so.
[23] B Duthie affidavit 16.12.2019, [10]; exhibit BD-1
The packaging and branding of the Baxi Health samples are substantially similar to the packaging and branding of Dermatix products; they reproduce the iNova Trade Marks and the iNova Logo; and they reproduce the iNova Copyright Works.[24] Further, the Baxi Health samples were not genuine Dermatix products manufactured and supplied by Hanson to iNova Singapore, or distributed in Australia by iNova Australia.[25] This last allegation is based on the evidence of Mr Campbell, the quality manager employed by iNova Australia.[26] Mr Campbell, in his affidavit made on 16 December 2019, deposes as follows:
(a)On 6 August 2019 Mr Duthie sent to Mr Campbell two samples of suspected counterfeit Dermatix products that “he instructed were purchased from a shop in Hurstville operated by” Baxi Health PL. One sample was in a tube, and “was marked with batch number 99196207” (which Mr Campbell identifies as “Baxi Sample 1”), and the other sample, which included a tube and carton, “was marked with batch number 992207142” (which Mr Campbell identifies as “Baxi Sample 2”). Mr Campbell “caused complaint number QE-003641 to be opened”.[27]
(b)On around 6 August 2019 Mr Campbell arranged for the two Baxi Health samples to be sent to Hanson for visual inspection, and for testing.[28]
(c)On 26 September 2019 Hanson confirmed that one of the two Baxi Health samples Mr Campbell sent to Hanson - Baxi Sample 2 - was counterfeit; and also sent a report of the results of a gas chromatography mass spectrometry analysis (GC analysis) Hanson had undertaken of Baxi Sample 2. That showed that Baxi Sample 2 did not match the chemical profile of the control Dermatix product and, for that reason, is counterfeit.[29]
(d)Mr Campbell understands that Hanson “has also caused FTIR [that is, a Fourier Transform Infrared Spectroscopy] analysis of the Baxi Health Samples to be conducted, but as at the date of this affidavit, Mr Campbell had not received a copy of that FTIR report”. Apart from this evidence, Mr Campbell says nothing about the outcome of his request that the sample bearing batch number 99196207 be tested.
[24] Statement of Claim , [36]
[25] Statement of Claim, [37]
[26] D Campbell affidavit 16.12.2019
[27] D Campbell affidavit 16.12.2019, [18]
[28] D Campbell affidavit 16.12.2019, [19]
[29] D Campbell affidavit 16.12.2019,[18]-[20], [24]-[25], Confidential Exhibit DC-2, 2-21, 31-44
In deposing to these matters Mr Campbell referred to emails and other documents contained in “Confidential Exhibit DC-2”. The basis on which Mr Campbell claims these documents are confidential is that they contain “details of Hanson Medical’s observations”, and these should not be revealed “to avoid the information being used by a manufacturer of counterfeit Dermatix to frustrate further investigations of suspected counterfeits”.[30] Only a small number of documents that have been included in “Confidential Exhibit DC-2” can reasonably be said to contain “details of Hanson Medical’s observations”.
[30] D Campbell affidavit 16.12.2019, [20]
In the course of selling, supplying, and otherwise distributing the Baxi Health purported Dermatix products, Baxi Health PL and Health More Sydney PL offered for sale, sold, supplied, and otherwise distributed purported Dermatix products; they represented to purchasers and potential purchasers in Australia that the Baxi Health purported Dermatix products were genuine Dermatix products originating from iNova Australia; and that Baxi Health PL and “Health More Sydney” received and retained revenues from the sale and distribution of Baxi Health purported Dermatix products.[31] The applicants rely on Mr Duthie’s purchase of the Baxi Health samples. Mr Duthie, however, does not in his affidavit of 16 December 2019 refer to the purchase of any products from Health More Sydney PL; and although Mr Duthie deposes to obtaining products from PY Green Health PL, there is nothing in his affidavit that suggests any relationship between Health More Sydney PL and PY Green Health PL. This, however, does not require any further consideration because, as I note later, the applicants have consented to the proceeding being dismissed against each of Baxi Health PL, Health More Sydney PL, Kang, Ma, and Chen (the Baxi/Health More parties) on the basis of those parties having consented to an order prohibiting them from dealing with Dermatix products without the consent of the applicants.
[31] Statement of Claim, [38]
The conduct of Baxi Health PL and Health More Sydney PL:[32]
(a)constitutes their using in Australia, or their authorising the use in Australia, of trade marks that are substantially identical to the iNova Trade Marks, either:
(i)in relation to goods or services in respect of which the iNova Trade Marks are registered; or
(ii)in relation to goods of the same description as that of the goods in respect of which the iNova Trade Marks are registered, or services that are closely related to these goods, or in relation to both such goods and services; and
(b)therefore, constitutes the infringement by Baxi Health PL and Health More Sydney PL of the iNova Trade Marks within the meaning of either or both of s 120(1) or s 120(2) of the Trade Marks Act 1995 (Cth) (TM Act).
[32] Statement of Claim, [49] – [52]
Further:
(a)by engaging in the conduct in relation to the Baxi Health purported Dermatix products, each of Baxi Health PL and Health More Sydney PL has, in trade or commerce, made the following representations (Authenticity Representations) to purchasers and potential purchasers concerning the Baxi Health purported Dermatix products that:[33]
[33] Statement of Claim, [60]
(i)they are genuine Dermatix products;
(ii)they were made or supplied on behalf of iNova Australia or with the licence, sponsorship, or approval of iNova Australia;
(iii)they are of the same chemical composition, standard, quality, and value as the Dermatix products;
(iv)they are made in the United States of America or elsewhere, in each case according to the relevant quality and regulatory standards for these types of products, including the Compliance Standards; and
(v)they have the features and benefits when used for the Intended Purpose;
(b)each of the Authenticity Representations is and was false, and therefore misleading or deceptive, because the Baxi Health purported Dermatix products:[34]
[34] Statement of Claim, [61]
(i)are not genuine Dermatix products;
(ii)were not made or supplied on behalf of iNova Australia or with the licence, sponsorship, or approval of iNova Australia;
(iii)are not of the same chemical composition, standard, quality, and value as the Dermatix products;
(iv)are not made in the United States of America or elsewhere, in each case according to the relevant quality and regulatory standards for these types of products, including the Compliance Standards; and
(v)they do not have the features and benefits when used for the Intended Purpose;
(c)therefore, by making the Authenticity Representations Baxi Health PL and Health More Sydney PL:
(i)each engaged in conduct that was or is misleading or deceptive or is likely to mislead or deceive, in contravention of s 18 of Schedule 2 (ACL) to the Competition and Consumer Act 2010 (Cth);[35] and
(ii)each made false representations in connection with the supply or possible supply of goods or services or in connection with the promotion of the supply or use of goods or services in contravention of s 29(1)(a) and 29(1)(g) of the ACL.[36]
[35] Statement of Claim, [62]
[36] Statement of Claim, [63]
Kang and Ma authorised, directed or procured, or entered into a common design or participated with, Baxi Health PL in relation to Baxi Health PL selling, supplying, and otherwise distributing purported Dermatix products; and Chen and Ma authorised, directed or procured, or entered into a common design or participated with, Health More Sydney PL in relation to Health More Sydney PL selling, supplying, and otherwise distributing purported Dermatix products.[37] For these reasons:
(a)each of Kang and Ma is liable as joint tortfeasor for Baxi Health PL’s infringement of the iNova Trade Marks; and Ma and Chen each is liable as a joint tortfeasor for Health More Sydney PL’s infringement of the iNova Trade Marks;[38]
(b)each of Kang and Ma aided, abetted, counselled and procured; was directly or indirectly knowingly concerned in; or was a party to, the conduct by which Baxi Health PL contravened s 18, s 29(1)(a), and s 29(1)(g) of the ACL and, for that reason, is each a person involved in Baxi Health PL’s contraventions of s 18, s 29(1)(a), and s 29(1)(g) of the ACL;[39]
(c)each of Chen and Ma aided, abetted, counselled and procured; was directly or indirectly knowingly concerned in; or was a party to, the conduct by which Health More Sydney PL contravened s 18, s 29(1)(a), and s 29(1)(g) of the ACL and, for that reason, is a person involved in Health More Sydney PL’s contraventions of s 18, s 29(1)(a), and s 29(1)(g) of the ACL.[40]
[37] Statement of Claim, [39], [40]
[38] Statement of Claim, [53]
[39] Statement of Claim, [64]
[40] Statement of Claim, [64]
The applicants also allege on the basis of the same, or substantially on the same, alleged facts that:
(a)each of Baxi Health PL and Health More Sydney PL committed the tort of passing off,[41] and infringed the copyright in the iNova Copyright Works in Australia within the meaning of s 37 and s 38 of the Copyright Act;[42]
(b)that each of Kang and Ma is liable as a joint tortfeasor in relation to Baxi Health PL’s commission of the tort of passing off,[43] and infringement of copyright;[44] and
(c)each of Chen and Ma is liable as a joint tortfeasor in relation to Health More Sydney PL’s commission of the tort of passing off,[45] and infringement of copyright.[46]
[41] Statement of Claim, [72]-[74]
[42] Statement of Claim, [80]-[84]
[43] Statement of Claim, [75]
[44] Statement of Claim, [85]
[45] Statement of Claim, [75]
[46] Statement of Claim, [85]
Conduct of Letos Group PL, Liang, C & J Aus PL, Chang, Jun Wei PL, Wei, and Bin
From a date unknown to the applicants, but since at least 2 January 2019, each of Letos Group PL, C & J Aus PL, and Jun Wei PL have offered for sale, sold, supplied, and otherwise distributed purported Dermatix products in Australia. That allegation is based on four items of evidence.[47] The first is the affidavit of Mr Duthie, to which I have already referred, in which Mr Duthie deposes as follows:
(a)On 8 August 2019 Mr Duthie purchased from a gift shop in Burwood three tubes contained in replica Dermatix packages (PY Green samples). Mr Duthie was given a receipt issued by “Py Green Health Pty Ltd” which recorded the sale of three products described as “Dermatix Silicone Gel 15g” for $92.70.[48]
(b)A representative of PY Green Health PL provided to Mr Duthie an invoice issued by Letos Group PL to PY Green Health PL recording the sale of 1,080 units of “Dermatix Gel 15G”.[49]
(c)On his return to iNova’s office Mr Duthie completed a form titled “Suspected counterfeit – Collection of information” in relation to the PY Green samples. Next to “batch number” Mr Duthie included the number “992208889”; but this was an error. Mr Duthie has annexed photographs of the PY Green samples which show the number “992207142”.[50]
[47] Statement of claim, [41]
[48] B Duthie affidavit 16.12.2019, [13]; exhibit BD-1
[49] B Duthie affidavit 16.12.2019, [16]; exhibit BD-1
[50] B Duthie affidavit 16.12.2019, [14]
The second is the Norwich Pharmacal affidavit Liang made on 15 January 2020,[51] where Liang deposes as follows:
[51] Exhibit D
(a)At the time Judge Baird made the 18 December 2019 Orders neither Liang nor Letos Group PL have possession, custody, or control of any “Dermatix Products”.
(b)The purported Dermatix products Letos Group PL held before the 18 December 2019 Orders were known as “Dermatix Silicone Gel for scar reduction 15 g Gel”. Letos Group PL purchased these “Dermatix Gel” products via a mobile application called “WeChat”, and sometimes over the telephone, from two suppliers - C & J Aus PL and Jun Wei PL.
(c)Neither Letos Group PL nor Liang kept any of the “Dermatix Gel” products referred to in (b) on premises they controlled. Suppliers of the purported Dermatix products would contact Letos Group PL by WeChat, and sometimes by telephone, to enquire whether Letos Group PL would like to order a certain quantity of “Dermatix Gel”. Letos Group PL, in turn, would ask its existing customers on WeChat whether they would like to purchase the same quantity of product. Once Letos Group PL had received an order from its existing clients, Letos Group PL would purchase the “Dermatix Gel” products from its suppliers.
(d)Letos Group PL purchased the following “Dermatix Gel” products (LG Dermatix Gel products):
Date of order Purchased from Quantity Amount paid (including GST) 02/01/2019 Jun Wei PL 1,944 $49,960.80 05/01/2019 Jun Wei PL 240 $6,120 15/01/2019 Jun Wei PL 660 $16,830 28/01/2019 Jun Wei PL 324 $8,262 19/02/2019 C & J Aus PL 248 $6,448 07/05/2019 Jun Wei PL 120 $3,360 13/05/2019 C & J Aus PL 1,080 $31,320 17/05/2019 Jun Wei PL 570 $16,245 20/05/2019 Jun Wei PL 2,280 $63,840 30/05/2019 Jun Wei PL 100 $2,760 30/07/2019 Jun Wei PL 1,080 $28,944 19/08/2019 Jun Wei PL 700 $18,760 27/08/2019 C & J Aus PL 1,400 $37,800 26/10/2019 Jun Wei PL 800 $21,440 Total purchased $312,089.80 (e)Letos Group PL sold the following LG Dermatix Gel products:
Date of order Sold and delivered to Quantity Amount received (including GST) 02/01/2019 Health More Sydney PL 1,944 $50,544 15/01/2019 Green Chamber Pty Ltd 240 $6,168 15/01/2019 Ovvo International Holding Pty Ltd 660 $16,962 28/01/2019 NIP Group Holdings Pty Ltd 324 $8,359.20 19/02/2019 Aumake Australia Pty Ltd 248 $6,497.60 14/05/2019 PY Green Health PL 1,080 $31,860 17/05/2019 S & Y International Trading Pty Ltd 510 $14,535 20/05/2019 S & Y International Trading Pty Ltd 60 $1,710 20/05/2019 Health More Sydney PL 2,280 $64,524 30/05/2019 Green Chamber Pty Ltd 100 $2,800 05/07/2019 Yoto Pty Ltd 120 $3,396 30/07/2019 Health More Sydney PL 1,080 $29,376 19/08/2019 Health More Sydney PL 700 $19,040 27/08/2019 Health More Sydney PL 1,400 $38,080 26/10/2019 Health More Sydney PL 800 $21,600 Total sold $315,451.80
The third item of evidence is the second Ma affidavit.[52] That shows that Jun Wei PL supplied 7,804 units of purported Dermatix products to Health More Sydney PL.
[52] Exhibit C
The fourth item of evidence on which the applicants rely is the letter dated 29 May 2020 from the lawyers for the Letos Group parties to the lawyers for the applicants.[53] The letter attached an English translation of WeChat exchanges between Liang and Chang which refer to orders and payment of “Dermatix Gel”. The letter also gave bank account details Chang provided to Liang for payment of C & J Aus PL invoices, these being to an account named “Heng Sheng Australia”.[54]
[53] Exhibit MJW-8, pages 2-18
[54] Exhibit MJW-8, pages 17
In around August 2019 Xin imported, or caused to import, counterfeit Dermatix products into Australia (Xin counterfeit Dermatix products).[55] The applicants rely on a number of items of evidence. The first is a set of documents in relation to the importation of suspected counterfeit Dermatix products.
(a)First, there is a notice of objection iNova Australia lodged with the chief executive officer of Customs pursuant to s 132 of the TM Act listing classes of products in relation to which it held trade marks, and which appears on the ABF website.
(b)Second, there is an email the Intellectual Property Rights Enforcement (IPRE) section of the ABF sent on 7 August 2019 to Ms Messiter, attaching photos of “possible trademark infringing goods that are attempting to be imported into Adelaide via Air cargo”. The email requests Ms Messiter to advise whether she believes the goods may be infringing.[56]
(c)Third, there is an email IPRE sent to Ms Messiter on 8 August 2019 confirming that IPRE will be looking to seize “the goods” and that, once IPRE “have commenced that process” Ms Messiter will receive a seizure notice.[57]
(d)Fourth, there are two seizure notices issued by the ABF notifying iNova Australia that on 13 August 2019 goods had been seized pursuant to s 133 of the TM Act. Each notice describes the goods that were seized as follows:[58]
648 silicone gels bearing Dermatix, a sign that is substantially identical or deceptively similar to a trade mark notified by iNova Pharmaceuticals (Singapore) Pte. Limited.
[55] Statement of Claim, [42]
[56] K Messiter affidavit 16.12.2019, [38]; exhibit KM-1, page 24
[57] K Messiter affidavit 16.12.2019, [38], exhibit KM-1, page 23
[58] K Messiter affidavit 16.12.2019, [39], exhibit KM-1, page 25
A second item of evidence is that given by Ms Messiter, who deposes that on 27 August 2019 she instructed her employed trade mark attorney to request ABF provide photos of the seized goods. The ABF did so by IPRE sending an email on 30 August 2019 attaching “all available images related to the subject seizure of goods bearing Dermatix trademarks”. [59] Ms Messiter further deposes as follows (emphasis added):[60]
I inspected the photos . . . and it is apparent to me that the Dermatix-branded products imported in the Seized Shipments bear the same batch number (992207142) as the counterfeit tube of the Baxi Sample and of the PY Green Sample. Because of the common batch number between the Seized Shipments, the counterfeit Baxi Sample and the PY Green Health samples, and the fact that the Seized Shipments were sent from Hong Kong by an exporter that is not an authorised reseller of Dermatix, I have formed the view, although those products are either still in the possession of ABF, or destroyed, that they were counterfeits identical to the Baxi Sample and of the PY Green Sample.
[59] K Messiter affidavit 16.12.2019, [40], exhibit KM-1, page 33
[60] K Messiter affidavit 16.12.2019, [41]
A third item of evidence in relation to the allegations that Xin imported or caused to be imported the Xin counterfeit Dermatix products is paragraphs 35-38 of the affidavit of the lawyer for the applicants, Mr Williams, made on 16 December 2019. Mr Williams deposes as follows:
At around 9 am on 10 October 2019, I attended the addresses of one importer listed in the ABF Seizure Notices, being Ying Wang of . . . . , to deliver a letter of demand in relation to the importation of counterfeit Dermatix with batch number 992207142. At that address, a man who identified himself as Alex Liu answered the door and advised me that Ying Wang was his wife.
At around 12.35pm that day, I attended Ms Wang’s workplace with Mr Liu. Mr Liu informed me that he would be seeking legal advice. I left my details with Ms Wang and Mr Liu to contact me with further information available about the seized shipments of counterfeit Dermatix.
On 16 October 2019, I received a phone call from Mr Liu during which words, including the following, were spoken:
Liu said:I can send you the details of the guy I’m importing for. I did it to help him as a friend. He didn’t tell me what it was for.
I said: How did this come about?
Liu said: I did it as a favour for a friend.
I said: Who paid for it?
Liu said: He paid for it. He promised to pay me postage.
I said: How many times have you done this?
Liu said: First time for him. Nott [sic] for anyone else.
I said: Who is importing it?
Liu said: When he asked me, I planned to go back to China. So I put it in my wife’s name, and the names of her parents, my parents-in-law.
I said: Where is the friend?
Liu said: I think he is in China at the moment. He used to live in New South Wales. Not sure what suburb. We talked through WeChat. I haven’t seen him for a couple of years. He got in contact recently because he wanted me to import a customs parcel. I don’t know why he wanted me to do it.
I said: Did he give you a forwarding address for the shipments?
Liu said: No, not yet. I told him it was seized by Customs. When I was in China, my wife got the notice, and I passed it on to him and said it was up to him what to do. He said you don’t need to do anything. Let the parcel go.
On 17 October 2019 Mr Williams received the following email from Mr Liu:[61]
The contact info for Huang Xin is: Wechat ID: aniuaqing
I’m working over time these days & came back very late last night, sorry for the late email.
Please contact me should I can [sic] be of any assistance.
[61] M J Williams affidavit 16.12.2019, [38]; exhibit MJW-1, page 97
Mr Williams also deposes that inquiries into Xin have not identified any further information that would allow the applicants to seek further information in relation to the importation of counterfeit Dermatix products, or issue a demand to Xin.[62]
[62] M J Williams affidavit 16.12.2019, [39]
The packaging and branding of the LG Dermatix Gel products are substantially similar to the packaging and branding of genuine Dermatix products; they reproduce the iNova Trade Marks, the iNova Logo, and the iNova Copyright Works; but the LG Dermatix Gel products were not genuine Dermatix products manufactured and supplied by Hanson to iNova Singapore, or distributed in Australia by iNova Australia.[63] The applicants rely on the following evidence Mr Campbell gives in his affidavit:
(a)On 14 August 2019 Mr Duthie provided to Mr Campbell three samples of suspected counterfeit Dermatix products Mr Duthie instructed Mr Campbell he had purchased from a shop in Burwood called PY Green Health PL (this being the “PY Green samples” I identify above).[64]
(b)On 14 August 2019 Mr Campbell “caused Case #3 to be opened in respect of the PY Green Health Samples”, and on or around 15 August 2019 he caused “one of the PY Green Health Samples to be posted to Hanson Medical for visual inspection and testing”.[65]
(c)On 26 September 2019 Hanson confirmed the PY Green sample Mr Campbell had sent was “not legitimate Dermatix”.[66]
(d)Also on 26 September 2019 Mr Campbell received the results of a GC analysis in relation to the second of the Baxi Health samples to which I have already referred, and also in relation to one of the PY Green samples. The results showed that the PY Green sample that had been analysed (as with the second of the Baxi Health samples) did not match the chemical profile of the control Dermatix product and, for that reason, is counterfeit.[67]
(e)On around 13 September 2019 Mr Campbell arranged for one of the PY Green samples to be provided for testing at a facility operated by Macquarie University, Sydney. Macquarie University provided a report on 15 November 2019.[68] The report revealed that the PY Green sample consists of a different compound from that of “legitimate Dermatix” products, and that the most likely chemical composition of the PY Green sample is polyethylene propylene which is not an ingredient of “legitimate Dermatix” products; and the results of Macquarie University’s GC analysis are consistent with the results of the GC analysis Hanson conducted. [69]
[63] Statement of Claim, [43], [44]
[64] D Campbell affidavit 16.12.2019, [21]
[65] D Campbell affidavit 16.12.2019, [22]
[66] D Campbell affidavit 16.12.2019, [23]
[67] D Campbell affidavit 16.12.2019, [24]
[68] D Campbell affidavit 16.12.2019, [26]
[69] D Campbell affidavit 16.12.2019, [26]
In the course of selling, supplying, and otherwise distributing the LG Dermatix Gel products, Letos Group PL, C & J Aus PL, and Jun Wei PL: imported or caused to be imported purported Dermatix products into Australia; offered for sale, sold, supplied, and otherwise distributed purported Dermatix products in Australia; represented to purchasers and potential purchasers in Australia that the LG Dermatix Gel products were genuine Dermatix products originating from iNova Australia; and received and retained revenues from the sale and distribution of the LG Dermatix Gel products.[70] Further, because of these matters:
(a)Xin authorised the use in Australia of trade marks that are substantially identical to the iNova Trade Marks;[71]
(b)Liang authorised, directed or procured, or entered into a common design or participated with, Letos Group PL in relation to Letos Group PL importing or causing to be imported purported Dermatix products into Australia, selling, supplying, and otherwise distributing purported Dermatix products in Australia, representing to purchasers and potential purchasers in Australia that the LG Dermatix Gel products were genuine Dermatix products originating from iNova Australia, and receiving and retaining revenues from the sale and distribution of the LG Dermatix Gel products;[72]
(c)Chang authorised, directed or procured, or entered into a common design or participated with, C & J Aus PL in relation to C & J Aus PL importing or causing to be imported purported Dermatix products into Australia, selling, supplying, and otherwise distributing counterfeit Dermatix products in Australia, representing to purchasers and potential purchasers in Australia that the LG Dermatix Gel products were genuine Dermatix products originating from iNova Australia, and receiving and retaining revenues from the sale and distribution of the LG Dermatix Gel products;[73]
(d)Wei and Bin directed or procured, or entered into a common design or participated with, Jun Wei PL in relation to Jun Wei PL importing or causing to be imported purported Dermatix products into Australia, and selling, supplying, and otherwise distributing the LG Dermatix Gel products.[74]
[70] Statement of Claim, [45]
[71] Statement of Claim, [54]
[72] Statement of Claim, [46]
[73] Statement of Claim, [47]
[74] Statement of Claim, [48]
The conduct of Letos Group PL, C & J Aus PL, and Jun Wei PL:[75]
(a)constitutes their using in Australia, or their authorising the use in Australia, of trade marks that are substantially identical to the iNova Trade Marks, either:
(i)in relation to goods or services in respect of which the iNova Trade Marks are registered; or
(ii)in relation to goods of the same description as that of the goods in respect of which the trade marks are registered, or services that are closely related to these goods, or in relation to both such goods and services; and
(b)therefore, constitutes the infringement by Letos Group PL, C & J Aus PL, and Jun Wei PL of the iNova Trade Marks within the meaning of either or both of s 120(1) or s 120(2) of the TM Act.
[75] Statement of Claim, [55]-[59]
Further:
(a)by engaging in the conduct in relation to the LG Dermatix Gel products, each of Letos Group PL, C & J Aus PL, and Jun Wei PL has, in trade or commerce, made representations to the effect of the Authenticity Representations;[76]
(b)by engaging in the conduct in relation to the Xin counterfeit Dermatix products Xin has, in trade or commerce, made representations to the effect of the Authenticity Representations;[77]
(c)each of the Authenticity Representations is false;[78]
(d)therefore, by making the Authenticity Representations each of Xin, Letos Group PL, C & J Aus PL, and Jun Wei PL:
(i)engaged in conduct that was or is misleading or deceptive or is likely to mislead or deceive, in contravention of s 18 of the ACL;[79] and
(ii)each made false representations in connection with the supply or possible supply of goods or services or in connection with the promotion of the supply or use of goods or services in contravention of s 29(1)(a) and 29(1)(g) of the ACL.[80]
[76] Statement of Claim, [66]
[77] Statement of Claim, [66]
[78] Statement of Claim, [67]
[79] Statement of Claim, [68]
[80] Statement of Claim, [69]
Liang, Chang, and both Wei and Bin, respectively authorised, directed or procured, or entered into a common design or participated with, Letos Group PL, C & J Aus PL, and Jun Wei PL in relation to Letos Group PL, C & J Aus PL, and Jun Wei PL selling, supplying, and otherwise distributing LG Dermatix Gel products.[81] For these reasons:
(a)each of Liang, Chang, and both Wei and Bin is respectively liable as joint tortfeasor for Letos Group PL’s, C & J Aus PL’s, and Jun Wei PL’s infringements of the iNova Trade Marks;[82] and
(b)each of Liang, Chang, and both Wei and Bin respectively aided, abetted, counselled and procured; was directly or indirectly knowingly concerned in; or was a party to, the conduct by which each of Letos Group PL, C & J Aus PL, and Jun Wei PL contravened s 18, s 29(1)(a), and s 29(1)(g) of the ACL and, for that reason, is each a person involved in Letos Group PL’s, C & J Aus PL’s, and Jun Wei PL’s contraventions of s 18, s 29(1)(a), and s 29(1)(g) of the ACL.[83]
[81] Statement of Claim, [46]-[48]
[82] Statement of Claim, [59]
[83] Statement of Claim, [70]-[71]
The matters on which the applicants rely for alleging that, Chang, Liang, and Wei are respectively liable as joint tortfeasors for Letos Group PL’s, C & J Aus PL’s, and Jun Wei PL’s infringements of the iNova Trade Marks, and as persons involved in these companies’ contraventions of the ACL, is they are the sole director of Letos Group PL, C & J Aus PL, and Jun Wei PL respectively. That is supported by evidence. The basis on which the applicants allege Bin is liable as a joint tortfeasor in Jun Wei PL’s infringing conduct, and is a person involved in Jun Wei PL’s contraventions of the ACL, is that Bin was involved in the day to day management of Jun Wei PL. The applicants rely on two items of evidence. The first is Bin and Wei shared the same address and have signed the same bond form relating to a shared tenancy.[84] Second, they rely on the following evidence contained in the Norwich Pharmacal affidavit Nguyen made:[85]
By way of background, I was introduced to FY Trading by Lin Bin, the Thirteenth Respondent, who I know as ‘Eric’. I have known Eric for about 3 years and we had a business relationship in terms of buying and selling Daigou items to each other. That arrangement included bulk buying of numerous products such as formulas and vitamins, including Dermatix. My understanding is that Li Bin had other suppliers and customers.
Broadly speaking, when Eric was aware that I (or Mediconsul NSW or Mediconsul International) had purchased a particular product, including Dermatix, it was commonplace for Eric or one of his delivery staff (which I call ‘runners’) to pick up particular products (including parts of batches of products I have purchased) from my pharmacies in order for Eric to on-sell to other parties. We agreed a price for any product he picked up. Eric would then pay me back via, in effect, a running trading account he had with me. I would usually take either a written note of the amount owed for the stock picked up or an IOU slip from Eric. I trusted Eric to take only an amount of product he could on-sell and to pay me back at the price we had agreed for that stock in due course. Eric did not tell me to whom any stock he picked up from me was sold. Whilst I don't recall the specific instances of this practice in relation to batches of Dermatix I had purchased, I expect that Eric did pick up and on-sell some of the Dermatix I purchased. In the searches I have conducted in preparing this affidavit I have not located any records of notes regarding Dermatix or IOU slips from Eric.
I recall having a phone call with Eric about the purchase of 600 units on about 18 December 2018. As Dermatix is a small product, by way of context, about 300 units of Dermatix would fit inside a box about the size of an esky. I recall that the units were delivered to my pharmacy. I paid $15,840.00 for those units from one of my personal bank accounts on 6 January 2019 on behalf of Mediconsul International. . . .
[84] AWS, [139], referring to M J Williams affidavit 12.08.2020, [16], [17]
[85] Exhibit F, [31]-[33]
The applicants also allege on the basis, or substantially on the basis, of the same alleged facts that:
(a)each of Xin, Letos Group PL, C & J Aus PL, and Jun Wei PL committed the tort of passing off,[86] and infringed the copyright in the iNova Copyright Works in Australia within the meaning of s 38 of the Copyright Act;[87] and
(b)each of Liang, Chang, and both Wei and Bin are liable as joint tortfeasors respectively in relation to Letos Group PL’s, C & J Aus PL’s, and Jun Wei PL’s commission of the tort of passing off,[88] and infringement of copyright.[89]
[86] Statement of Claim, [76]-[78]
[87] Statement of Claim, [86]-[89]
[88] Statement of Claim, [79]
[89] Statement of Claim, [91]
Defences filed
On 26 June 2020 the Baxi/Health More parties filed a defence; and the Letos Group parties filed a defence on 29 June 2020.
In their defences the Letos Group parties make a number of admissions, including the following:
(a)Between 2 January 2019 and 26 October 2019 Letos Group PL offered for sale and sold to its customers 11,546 units of products each with an external packaging bearing the name “Dermatix”.[90]
(b)Liang was the sole director and secretary of Letos Group PL, and was managing Letos Group PL’s day to day activities.
[90] Letos Group Defence, [17(a)]
The Letos Group parties, however, do not admit that the LG Dermatix Gel products Letos Group PL sold were counterfeit; and Liang pleads the following affirmative defences:[91]
[91] Liang Defence, [17]
(b)at all material times and whilst performing her duties as Letos’s [sic] sole director and secretary, honestly believed that the Dermatix Gels referred to in paragraph 17(a) of this Defence were genuinely sourced and held locally in Australia by Letos’s [sic] suppliers, being the Sixth Respondent (“C&J Aus”) and the Eleventh Respondent (“Jun Wei”);
(c)at all material times she did not have prior knowledge or suspicion that any or all of the Dermatix Gels were counterfeits;
(d) she had made enquiries with Letos’s [sic] suppliers C&J and Jun Wei as to the source of the Dermatix Gels;
(e) she had compared Dermatix products sold by different retail and online stores on the internet and was always under the honest belief that the market price for each Dermatix product was within the range of $28.00 to $39.00 or thereabouts;
(f)she honestly believed that:
(i) the prices Letos paid to C&J and Jun Wei for the purchase of the Dermatix Gels were genuine wholesale prices which were not suspiciously low; and
(ii) Jun Wei had sourced the Dermatix Gel directly from legitimate channels with connections to the legitimate manufacturer in the United States of America;
(g) she had caused Letos to purchase other products from C&J and Jun Wei in the past and had satisfied itself that they were genuine products sourced from overseas and in Australia;
(h) due to Letos’s [sic] established business ties with C&J and Jun Wei and the mutual trust between them, she had no reason to doubt the authenticity of the Dermatix Gels she had caused Letos to purchase from them;
(i) she never caused Letos to take physical possession of or inspected the Dermatix Gels;
(j)she did not, in her own personal capacity as well as in the capacity of Letos’s [sic] sole director and secretary, have the intention to cause any injury to the Applicants;
(k) she immediately caused Letos to cease purchasing and offering for sale, selling, supplying or otherwise distributing (“On-Selling”) any Dermatix Gels on or about 28 October 2019 after receiving notice from the Applicant’s solicitor on that day that they could be counterfeits . . .
Relying on these allegations, Letos Group PL pleads a defence under s 122A(1) of the TM Act, which provides:
In spite of section 120, a person who uses a registered trade mark in relation to goods does not infringe the trade mark if:
(a) the goods are similar to goods in respect of which the trade mark is registered; and
(b) before the time of use, the person had made reasonable inquiries in relation to the trade mark; and
(c) at the time of use, a reasonable person, after making those inquiries, would have concluded that the trade mark had been applied to, or in relation to, the goods by, or with the consent of, a person (a relevant person) who was, at the time of the application or consent (as the case may be):
(i) the registered owner of the trade mark; or
(ii) an authorised user of the trade mark; or
(iii) a person permitted to use the trade mark by the registered owner; or
(iv) a person permitted to use the trade mark by an authorised user who has power to give such permission under paragraph 26(1)(f); or
(v) a person with significant influence over the use of the trade mark by the registered owner or an authorised user; or
(vi) an associated entity (within the meaning of the Corporations Act 2001) of a relevant person mentioned in subparagraph (i), (ii), (iii), (iv) or (v).
20 August 2020 Orders
On 20 August 2020 Judge Baird made orders (20 August 2020 Orders) that included an order joining FY Health Pty Ltd (FY Health PL) as the fourteenth respondent, Xiping He (Ms He) as the fifteenth respondent, Mingfang Xue (Ms Xue) as the sixteenth respondent, Mediconsul NSW Pty Ltd (Mediconsul PL) as the seventeenth respondent, Lawrence Nguyen (Nguyen) as the eighteenth respondent, and Mediconsul International Pty Ltd (Mediconsul Int PL) as the nineteenth respondent. Judge Baird also ordered that each of the additional respondents make a Norwich Pharmacal affidavit by no later than 7 September 2020.
Judge Baird made these orders on the basis of evidence contained in an affidavit Mr Williams made on 19 August 2020, which may be summarised as follows:
FY Health PL, Ms He, and Ms Xue
On 29 May 2020 the lawyers for the Letos Group parties sent a letter to the applicants’ lawyers attaching WeChat records in typewritten Chinese between Liang, on the one hand, Bin of Jun Wei PL, and Chang of C & J Aus PL “pertaining to the different accounts that my client was requested to make payment to”.[92] The letter summarised in English the effect of the Chinese writing recorded on the WeChat records. It includes a message from Liang to Bin providing an invoice from, and bank account details for, FY Health PL.[93]
[92] M J Williams affidavit 19.08.2020, [12(a)]; exhibit MJW-10, pages 5-44
[93] Exhibit MJW-8, page 4
(a)The letter from the lawyer for the Letos Group parties also identified the account details Chang provided for the payment of Jun Wei PL’s invoices. These include “Lawrencenguyen” and FY Health PL. In relation to FY Health PL the letter states that “[o]ur client suspects that this company is a supplier and either owns or leases a warehouse . . . but she does not know where it is located”.
(b)Ms He is the sole director, secretary, and shareholder of FY Health PL, and, before 1 January 2019, Ms Xue was the sole director, secretary, and 50% shareholder of FY Health PL.[94]
[94] M J Williams affidavit 19.08.2020, [11]
(c)On 1 June 2020 the applicants’ lawyers sent by courier a letter addressed to Ms He as the “Sole Director/Secretary, FY Health Pty Ltd”.[95] The letter states that FY Health PL had been identified in documents produced to this Court as being a supplier of Dermatix-branded products. The letter made a number of demands, including that FY Health PL cease supplying or offering to supply Dermatix-branded products, and that FY Health PL provide the applicants with full written details of its current and former stock of Dermatix-branded products.
[95] M J Williams affidavit 19.08.2020, [12(b)]; exhibit MJW-10, pages 45-47
(d)The applicants’ lawyers did not receive a response to their letter; and on 11 August 2020 the applicants’ lawyers sent the letter to FY Health PL to an email address, “fy. . . . @gmail.com”, identified as the email address of FY Health PL in documents the Commonwealth Bank of Australia had produced.[96]
[96] M J Williams affidavit 19.08.2020, [12(b)]; exhibit MJW-10, pages 45-47
(e)On 14 August 2020 a person identified as “Xue Fang” sent an email to the applicants’ lawyers, which stated as follows:[97]
[97] M J Williams affidavit 19.08.2020, [12(c)]; exhibit MJW-10, pages 48-49
Dear Sir /Madam
Thank you for your letter.
I am very happy to assist you with investigating possible counterfeit Dermatix products.
My company has not purchased or supplied any Dermatix-branded products for a long time, and do not hold any stock. My company and I will undertake to refrain from supplying, offering to supply, offering for sale or selling any Dermatix-branded product from now on.
We are a “Daigou” business, and deal with a lot of different products and with many businesses all the time. I will need to go through some old records to see what was supplied in the past for Dermatix-branded products. So, it would be helpful if you can let me know what products maybe have problem and when were they sold. Then, I can check records to give you more information.
Please let me know if you have any questions.
Yours sincerely
[name]
Director
FY Health Pty Ltd
(f)Mr Williams deposes that because this email was sent from an email address previously identified by the applicants to be the contact email address for FY Health PL, and because the email address is associated with the name “Xue Fang”, Mr Williams believes Xue Fang is Mingfang Xue, that is, Ms Xue.[98]
[98] M J Williams affidavit 19.08.2020, [12(c)]
(g)On 17 August 2020 one of the applicants’ lawyers sent to “Xue Fang” an email which included the following:[99]
[99] M J Williams affidavit 19.08.2020, [12(d)]; exhibit MJW-10, pages 50-52
We are concerned that, despite the language of cooperation in your email, you have not provided any information about these dealings in Dermatix-branded products, despite having had over two months to check the company’s records and obtain this information since our letter was hand delivered to FY Health Pty Ltd’s registered office on 2 June 2020. The scope of the requested information was already clear from point 3 on pages 3 to 4 of our letter- i.e. full written details of FY Health Pty Ltd’s current and former stock of Dermatix-branded products, including but not limited to copies of purchase and sales invoices.
Please ensure that we receive full disclosure of all of FY Health Pty Ltd’s dealings in Dermatix-branded products, including all records relating to the acquisition and direct or indirect sale of Dermatix-branded products by or on behalf of the company, by 5pm tomorrow, 18 August 2020.
If we do not receive this full disclosure by then, iNova will apply to the Court to join FY Health Pty Ltd and its director to the Court proceedings.
Finally, if you have a legal representative or someone assisting you, please ensure that they contact us as soon as possible.
Mediconsul PL, Mediconsul Int PL, and Nguyen
(h)The lawyers for the applicants had been corresponding with the lawyers for Mediconsul PL and its director, Mr Nguyen, and Mediconsul Int PL (Mediconsul parties) since January 2020. The applicants had issued a subpoena to Mediconsul PL which resulted in Mediconsul PL producing five documents. In an email sent to the applicants’ lawyers on 13 May 2020 the lawyer for the Mediconsul parties stated that if the applicants wanted to get anywhere “they should be pursuing the daigous [sic] or Chinese entities not the legal pharmacies - they are barking up the wrong tree and wasting time as we are buying from Australian wholesalers”.[100]
[100] M J Williams affidavit 19.08.2020, [17], exhibit MJW-10, page 59
(i)By letter dated 1 June 2020 to the lawyer for the Mediconsul parties, the applicants’ lawyers stated that further investigations made after 13 May 2020 revealed that a payment for the supply of a large quantity of suspected counterfeit Dermatix products by one of the respondents to the proceeding to another respondent in 2019 was not made to the respondent named on the purchase invoice, but to “Lawrence Nguyen”. The letter then stated that the applicants required “Mr Nguyen, Mediconsul NSW, Mediconsul International and all related or affiliated bodies corporate”, among other things, to undertake not to deal with Dermatix-branded products, and to provide the applicants with full details of their dealings with Dermatix-branded products.[101]
[101] M J Williams affidavit 19.08.2020, [17], exhibit MJW-10, pages 59-60
(j)By their lawyer’s letter dated 9 June 2020 the lawyer for the Mediconsul parties gave undertakings to the applicants’ lawyers, but denied they knowingly purchased or sold “any counterfeit pharmaceuticals relating to your client’s product”. The lawyer for the Mediconsul parties stated as follows (emphasis in original): [102]
[102] M J Williams affidavit 19.08.2020, [17], exhibit MJW-10, page 62
Any dealings it had in suspect products, which may be apparent only now with the benefit of knowledge of these proceedings and with hindsight, were very limited. We give some further information about those matters below.
However, prior to that, we wish to categorically deny the inference in the last paragraph of page 1 of your letter that my client received a payment in 2019 in relation to “a large quantity of suspected counterfeit Dermatix”.
. . . .
My client has over product 20,000 lines in its pharmacy businesses and there have been literally thousands of invoices issued over the past two years. As such it is not possible to give an account of each Dermatix-branded product that has been in its possession. Generally speaking, my client has, in the past, bought and sold Dermatix-branded products, usually through the main suppliers like API, Sigma and Symbion but also occasionally through smaller independent suppliers.
Having said this and appreciating the line of your inquiry, my client does wish to mention two particular transactions it has recently located:
On 4 January 2019, banking records indicate two sums of $46,656 and $30,000 were transferred to a ‘FY Trading’, operating in Regents Park. My client recalls that these payments were for approximately 3000 units of Dermatix. However, my client does not hold any matching invoices from the vendor, despite recalling having chased them on a number of occasions.
It does seem that these purchases from FY Trading do more or less correspond to the subsequent on-sale of product to Health More - and that is indeed my client’s recollection of what happened with this stock.
With respect to this transaction, my client can categorically confirm that it had no knowledge that these products were counterfeit (and still doesn’t). Mediconsul International, in particular, had regularly purchased baby formula and vitamins through the ‘Daigou’ channels and had never experienced any problems.
However, in an attempt to assist, my client mentions that ‘FY Trading’ were located at . . . . Regents Park NSW 2143. We also enclose an extract from the relevant bank statement depicting the transactions.
(k)By letter dated 13 July 2020 the applicants’ lawyers informed the lawyer for the Mediconsul parties that the applicants did not accept it was not possible that Mediconsul PL and Nguyen could not give an account of each Dermatix-branded product that has been in its possession; and the applicants did not accept there have been no indirect dealings in relation to such products. The applicants’ lawyer’s letter further stated the applicants obtained further information that discloses that on 4 January 2020 Nguyen paid $6,617.70 to FY Health PL. The applicants’ lawyers’ letter demanded that the Mediconsul parties provide complete disclosure.[103]
[103] M J Williams affidavit 19.08.2020, [17], exhibit MJW-10, pages 76-78
(l)Mr Williams referred to invoices purportedly issued by Mediconsul PL or Mediconsul Int PL to Health More PL that had been annexed to the second Ma affidavit. The invoices disclose the following information:
Date of invoice Issued by Quantity Amount paid (in GST) 19.12.2018 Mediconsul Int PL 600 $15,600 04.01.2019 Mediconsul Int PL 1200 $31,200 10.07.2019 Mediconsul PL 972 $26,730 06.03.2019 Mediconsul Int PL 280 $7,280 12.03.2019 Mediconsul Int PL 900 $23,400 19.03.2019 Mediconsul Int PL 900 $23,400
Service of 20 August 2020 Orders
The 20 August 2020 Orders included an order abridging time for service, and also an order that service be effected on each of FY Health PL, Ms He, and Ms Xue (FY parties) by email to “fy. . . @gmail.com”, and that, if practicable, the documents also be served on FY Health PL by serving the 20 August 2020 Orders and other documents at its registered address. The 20 August 2020 Orders were served on FY Health PL by 24 August 2020, by their being delivered to Ms He at FY Health PL’s registered address at Regents Park.[104] The documents were served on the FY parties by Mimecast at the email address on 21 August 2020.[105]
[104] S Sallesi affidavit 26.08.2020
[105] M J Williams affidavit 11.03.2022, [17]
Given I have found that the evidence supports the finding that He T/A FY Trading sold 3,701 units of purported Dermatix products, and FY Health PL sold 259 units and, for the purpose of assessing the loss the applicants suffered, the applicants have apportioned 25% of the sales to FY Health PL and He T/A FY Trading, the applicants’ damages are to be assessed on the basis that the applicants have suffered the loss of profits they would have made had they sold:
(a)25% of 3,701, namely, 925 units of genuine Dermatix products; and
(b)25% of 259, namely, 64 units of genuine Dermatix products.
What I have said in paragraph 161 of these reasons about the quantification of the loss of profits in relation to the applicants’ claims against Letos Group PL applies to the applicants’ claims for loss of profits against He T/A FY Trading and FY Health PL. I will grant the applicants leave to adduce further evidence to address those issues, if they so elect.
The applicants’ claims for damages for loss of reputation is to be assessed on the basis that all of the purported Dermatix products were counterfeit. On that basis, I assess that $2,500 and $500 would be a reasonable measure of the damage the applicants suffered to the reputation of the iNova and Dermatix names because of the infringing conduct of He T/A FY Trading, and FY Health PL respectively.
Additional damages
I make the following findings in relation to the assessment of additional damages:
(a)It is open to infer, and I find, that He T/A FY Trading, and Ms Xue, as the sole director of FY Health PL, and therefore its controlling mind, knew there was a high likelihood, if not a certainty, that the “Dermatix” name that formed part of the Dermatix products and Dermatix packaging was registered as a trade mark which neither He T/A FY Trading nor FY Health PL had a right to use. In those circumstances He T/A FY Trading’s selling of at least 3,701, and FY Health PL’s selling of at least 259 counterfeit Dermatix products manifests a flagrant disregard of the rights of the person or persons who were entitled to use the registered trade mark.
(b)The 3,701and 259 units of counterfeit Dermatix products He T/A FY Trading and FY Health PL respectively sold represents a significant volume of sales. The amount for additional damages should incorporate a significant element to deter others from engaging in similar activities.
(c)The FY parties have not complied with orders of the Court, and in particular the order that they provide Norwich Pharmacal affidavits. The conduct of the FY parties after they were informed they had allegedly infringed the iNova Trade Marks is a matter that should be the subject of additional damages.
I am satisfied it is appropriate that each of He T/A FY Trading and FY Health PL should be ordered to pay additional damages equal to 100% of the compensatory damages they may be held liable to pay.
Liability of Ms Xue, Mr He, and Ms He’s as accessories to infringement of the iNova Trade Marks by He T/A FY Trading, FY Health PL, and others
The amended statement of claim alleges that each of Ms Xue, Mr He, and Ms He authorised, directed, or procured, or entered into a common design, or participated in relation to FY Health PL’s infringing conduct.[241] The amended statement of claim does not provide particulars. It may be inferred, however, that the applicants rely on the allegations made earlier in the statement of claim about each of Ms Xue, Mr He, and Ms He:
(a)In relation to Ms He the applicants allege she was the sole director of FY Health PL from 1 January 2019, and, since 17 February 2020, the sole shareholder of FY Health PL.[242]
(b)In relation to Ms Xue the applicants allege she was the sole director of FY Health PL until 1 January 2019; a 50% shareholder of FY Health PL until 17 February 2020; and that Ms Xue was personally involved in the day to day management and activities of FY Health PL.[243]
(c)In relation to Mr He the applicants allege, among other things, that he was personally involved in the day to day management and activities of FY Health PL.[244]
[241] Amended Statement of Claim, [60]
[242] Amended Statement of Claim, [17]
[243] Amended Statement of Claim, [18]
[244] Amended Statement of Claim, [22]
Given the FY parties have not filed defences, these allegations, and in particular the allegations that each of Ms Xue and Mr He were involved in the day to day management and activities of FY Health PL is a basis for finding that they induced FY Health PL to sell on 4 January 2019 the $6,617 worth of purported Dermatix product (being approximately 259 units) and, for that reason, are liable as joint tortfeasors in relation to FY Health PL’s infringing conduct in relation to that sale. I am not satisfied that Ms He’s being the sole director is sufficient to render her liable as a joint tortfeasor in relation to FY Health PL’s sale on 4 January 2019, in circumstances where both Ms Xue and Mr He were personally involved in the day to day management of FY Health PL.
As I have already noted, the amended statement of claim also alleges that Bin, Wei, Ms He, Ms Xue, Mr He, and Nguyen authorised, directed or procured, or entered into a common design or participated with FY Health PL, He T/A FY Trading, Mediconsul PL, and Mediconsul Int PL in selling, supplying, and otherwise distributing FY Health counterfeit Dermatix products.[245] This allegation is not supported by any facts other than that each of FY Health PL, Mediconsul PL, Mediconsul Int PL, and He T/A FY Trading, dealt with purported Dermatix products. Those alleged facts, even if admitted, are incapable of supporting the allegation of common design. Thus, it is not open to the applicants to rely on this allegation of common design as a basis for rendering:
(a)Ms Xue or Ms He liable as joint tortfeasors in relation to the infringing conduct of He T/A FY Trading, Mediconsul PL, and Mediconsul Int PL, or
(b)Mr He liable as joint tortfeasor in relation to the infringing conduct of Mediconsul PL, and Mediconsul Int PL.
[245] Amended Statement of Claim, [62]
Other causes of action against the FY parties
The applicants rely on the same alleged facts and the same evidence in support of each of the other causes of action the applicants plead in the amended statement of claim; and it would be appropriate for me to state in a summary way my findings. The FY parties do not have reasonable prospects of resisting the Court making the following findings on the applicants’ remaining causes of action:
(a)In relation to the claims based on misleading or deceptive conduct and misrepresentations:
(i)By selling the counterfeit Dermatix products FY Health PL, in trade or commerce, made each of the Authenticity Representations.
(ii)Each of the Authenticity Representations was false.
(iii)Because of (i) and (ii) FY Health PL contravened s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL.
(iv)Ms Xue and Mr He aided, abetted, counselled, or procured FY Health PL’s contraventions of s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL and, for that reason, each of Ms Xue and Mr He is a person involved, within the meaning of s 2 of the ACL Act, with FY Health PL’s contraventions of s 18(1), and s 29(1)(a) and 29(1)(g) of the ACL.
(v)Because of FY Health PL’s contravening conduct, the applicants have suffered damage equal to the damage suffered because of FY Health PL’s infringement of the iNova Trade Marks.
(vi)By selling the counterfeit Dermatix products He T/A FY Trading, in trade or commerce, made each of the Authenticity Representations.
(vii)Each of the Authenticity Representations was false.
(viii)Because of He T/A FY Trading’s contravening conduct, the applicants have suffered damage equal to the damage suffered because of He T/A FY Trading’s infringement of the iNova Trade Marks.
(b)In relation to the claims based on passing off:
(i)The applicants have acquired a substantial and valuable reputation in Australia in the Dermatix products.
(ii)By selling the purported Dermatix products FY Health PL made each of the Authenticity Representations, and by doing so appropriated the benefit of that reputation.
(iii)Because of the conduct in (ii), the applicants have suffered damage equal to the damage they suffered because of FY Health PL’s infringement of the iNova Trade Marks.
(iv)Ms Xue and Mr He are each liable as a joint tortfeasor for FY Health PL’s conduct.
(v)By selling the purported Dermatix products He T/A FY Trading made each of the Authenticity Representations, and by doing so appropriated the benefit of that reputation.
(vi)Because of the conduct in (v), the applicants have suffered damage equal to the damage they suffered because of He T/A FY Trading’s infringement of the iNova Trade Marks.
(c)In relation to the claims based on copyright:
(i)The iNova Logo, Dermatix product tubes, Dermatix product packaging, and Dermatix product leaflets each (being the “iNova Copyright Works” I defined above), constituted literary or artistic works in which copyright subsists and of which iNova Singapore is the owner.
(ii)Each of the purported Dermatix products FY Health PL sold in Australia was made by reproducing the iNova Copyright Works in a material form and, for that reason, constituted an article for the purposes of s 38 of the Copyright Act.
(iii)FY Health PL ought reasonably to have known that if the purported Dermatix products it bought and sold were made in Australia, the making of these products, packaging, and leaflets would have constituted an infringement of copyright that subsists in the iNova Copyright Works.
(iv)By selling the purported Dermatix products without the licence of iNova Singapore, FY Health PL infringed iNova Singapore’s copyright in the iNova Copyright Works within the meaning of s 38 of the Copyright Act.
(v)Because of the conduct in (iv), the applicants have suffered damage equal to the damage they have suffered because of FY Health PL’s infringement of the iNova Trade Marks.
(vi)Ms Xue and Mr He are each liable as a joint tortfeasor in FY Health PL’s infringement of iNova Singapore’s copyright in the iNova Copyright Works.
(vii)Each of the purported Dermatix products He T/A FY Trading sold in Australia was made by reproducing the iNova Copyright Works in a material form and, for that reason, constituted an article for the purposes of s 38 of the Copyright Act.
(viii)He T/A FY Trading ought reasonably to have known that if the purported Dermatix products it bought and sold were made in Australia, the making of these products, packaging, and leaflets would have constituted an infringement of copyright that subsists in the iNova Copyright Works.
(ix)By selling the purported Dermatix products without the licence of iNova Singapore, He T/A FY Trading infringed iNova Singapore’s copyright in the iNova Copyright Works within the meaning of s 38 of the Copyright Act.
(x)Because of the conduct in (iv), the applicants have suffered damage equal to the damage they have suffered because of He T/A FY Trading’s infringement of the iNova Trade Marks.
relief
As against the Letos Group parties I propose to make orders pursuant to s 143 of the FCFC Act and r 13.10 of the GFL Rules, and as against the other Remaining respondents I propose to make orders pursuant to r 13.05(2)(c) and (d) of the GFL Rules.
Declarations
This Court has power to make binding declarations of right, whether or not any consequential relief is or could be claimed.[246] That power extends to making declarations when orders are made pursuant to r 13.05(2)(c) and (d) of the GFL Rules. The principles that are relevant to whether or not declarations should be made under O 35A of the old FC Rules were considered by Gordon J (when her Honour was a judge of the Federal Court) in Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2):[247]
[246] Section 141, FCFC Act
[247] Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352, at [66]-[68]
The Court has a wide discretionary power to make declarations under s 21 of the FCA. How does O 35A sit with this discretionary power? Order 35A imposes no restraints upon the relief sought. It is now established that refusals by the Courts in the past to make declarations in cases of default and deemed admissions were based on a practice, not a rule of law: Dataline at [52] – [59]; Bank of Kuwait and the Middle East v Ship MV “Mawashi Al Gasseem” (No 2) [2007] FCA 815; (2007) 240 ALR 120 at [15]
Consistent with that line of authority, it is necessary to identify considerations relevant to the exercise of the discretion to grant or not grant declarations in a case such as the present. Considerations include:
1. whether the declaration will have any utility;
2. whether the proceeding involves a matter of public interest;
3.whether the circumstances call for the making of the Court’s disapproval of the contravening conduct,
Tobacco Institute at 99-100; Australian Competition and Consumer Commission v Powerballwin.com.au Pty Ltd [2010] FCA 378 at [41] and Forster v Jododex Australia Pty Limited[1972] HCA 61; (1972) 127 CLR 421 at 437-438.
Consistent with that exercise of discretion, a further question which then arises is whether the declarations sought contain appropriate and adequate particulars of how and why the conduct complained of is a contravention of the TPA: BMW Australia Ltd v Australian Competition and Consumer Commission[2004] FCAFC 167; (2004) 207 ALR 452 at [35], applying the decision of the High Court in Rural Press Limited v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 at [90], and Australian Competition and Consumer Commission v Francis [2004] FCA 487; (2004) 142 FCR 1 at [113].
There would be utility in granting declarations that the Remaining respondents have engaged in infringing activity. I propose, however, to limit the declaration by reference to the findings I have made. That would identify more clearly the Remaining respondents’ acts that constituted their infringing conduct; it will communicate to the public the kinds of acts that constitute infringement of the iNova Trade Marks and iNova Copyright Works; and it will communicate the Court’s disapproval of the Remaining respondents’ conduct.
Injunctions and order for destruction
The granting of an injunction under s 126(1)(a) of the TM Act is discretionary. Matters that are relevant to the exercise of that discretion include the period over which the infringing conduct has taken place, the flagrancy of the infringement, and other matters which prevent the Court from being satisfied there is no substantial risk the respondent will again infringe copyright.
I am satisfied I should grant injunctions in terms of those sought by the applicants. I have found that the infringing conduct was extensive, and flagrant. That by itself is sufficient reason to find there is a tangible risk that all of the Remaining respondents will engage in infringing conduct. The risk of future infringing conduct is particularly significant in relation to the C & J Aus parties, the Jun Wei parties, and the FY parties because they failed to comply with orders of the Court, and in particular, orders that they make a Norwich Pharmacal affidavit. It is true that that the FY parties participated at the hearing of the application for summary judgment, and, after the hearing of that application, provided affidavits which purport to respond to the 20 August 2020 Orders. I have found, however, that the FY parties do not have reasonable prospects, on the material they provided after the hearing, of successfully contending that FY Health PL, Ms Xue, and Mr He, did not engage or were not involved in the infringing activity the evidence suggests they were engaged or involved in; and I am not satisfied the FY parties have given an adequate explanation why they did not make Norwich Pharmacal affidavits by or at around the time by which they were required to do so.
I am also satisfied it is appropriate to order that the Remaining respondents destroy any items they have in their possession or control that feature the name “Dermatix” or “iNova”.
Damages (including additional damages) and interest
I have found that the evidence is insufficient to enable me to assess the applicants’ damages, but I noted I would grant the applicants liberty to file further evidence to prove their damages. The only order in relation to damages I propose to make, therefore, is to grant the applicants leave to file further evidence on damages.
Costs
The applicants claim an order that the Remaining respondents pay the applicants’ costs fixed in the amount of $382,033.61 on the basis that the Remaining respondents be made jointly and severally liable to pay that amount (joint liability costs order). I do not propose to make a joint liability costs order without hearing submissions on the grounds on which the applicants seek such order; and there are a number of questions that may arise.
(a)It appears that one basis on which the applicants seek the joint liability costs order is the contention that the infringing activity of the Remaining respondents was the product of a single scheme of infringing conduct. I have found, however, that the amended statement of claim does not allege, and the evidence in any event is incapable of supporting a finding, that the infringing activities of each of the Remaining respondents were the product of a single scheme or arrangement to which all of the Remaining respondents were party.
(b)It may be the applicants seek the joint liability costs order on the ground that the Remaining respondents are equally responsible for the costs the applicants have incurred in the proceeding. Without hearing further submissions from the applicants, I would not be inclined to make a costs order on the basis that all of the Remaining respondents are equally liable to the costs the applicants have incurred in the proceeding; but I would be inclined to consider ordering apportionment between the respondents, given the different times at which and circumstances in which, particular respondents were joined.
(c)It appears that in seeking a joint liability costs order against the Remaining respondents, the applicants intend to exclude the respondents with which the applicants have settled - the Baxi/Health More and the Mediconsul parties. Assuming it is otherwise appropriate to make a joint liability costs order, a question may arise whether such costs order should be made without binding all respondents, including those with whom the applicants have settled, who ought to be jointly liable to pay the applicants’ costs.
disposition
I will make the declarations, and grant the injunctions and order for destruction, I have indicated I will make. I will grant the applicants leave to file further evidence on damages, and reserve the question for costs. I will otherwise list the matter at 9:30 am on 23 February 2023 for the purpose of receiving further evidence on damages (if the applicants elect to adduce such evidence), and hearing submissions on damages and costs.
I certify that the preceding two hundred and forty (240) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 16 December 2022
ALLEGED COUNTERFEIT DERMATIX SUPPLY CHAIN
SCHEDULE OF PARTIES
SYG 3343 of 2019 Respondents
Seventh Respondent:
TAIYI CHANG
Eleventh Respondent:
JUN WEI PTY LTD ACN 616 977 096
Twelfth Respondent:
NINGNING WEI
Thirteenth Respondent:
LI BIN
Fourteenth Respondent:
FY HEALTH PTY LTD ACN 629 197 315
Fifteenth Respondent:
XIPING HE
Sixteenth Respondent:
MINGFANG XUE
Twentieth Respondent:
YUAN HE
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