Interlego A.G. v Panda Toys Australia Pty Ltd

[1994] FCA 1111

IN THE FEDERAL COURT OF AUSTRALIA )

-GISTRY	)	No. NG 815 of 1992
1

Between:

Applicant

And :  PANDA TOYS AUSTRALIA PTY

Respondent

\ LIBRARY 1

EINPELD a SYDhlEY 6 APRIL 1994

The action is brought by Lego Australia Pty Limited and its international arm or parent company Interlego A.G. (together, Lego). They seek first a declaration that Panda Toys Australia

Pty Ltd (Panda) has infringed Lego's monopoly in an Australian registered design for a piece of Lego which is described in the proceedings as an "angle piece". They ask second for an injunction preventing Panda fromthe importing, selling, offering or advertising for sale, distributing or otherwise dealing in the angle piece and any sets of plastic toy building blocks similar to Lego bearing the mark "Basic" as in "Basic Sets". The application also seeks an Anton Piller order for the delivery up of all the pieces and basic sets in Panda's possession and damages or an account of profits plus interest. An Anton Piller order issued subsequently ex parte has apparently achieved the result sought in that connection and I am advised today that it

matter to be litigated will be the declaration of patent	is unlikely that any damages would now be sought. Hence the
infringement and a permanent injunction. On 6 November 1992, Justice Gummow pronounced an interlocutory injunction to the same or similar effect as the permanent injunction now soushf and that
interlocutory injunction pertains up to this ver$'day. ~ndhed,

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in proceedings subsequently commenced, Lego sieeke ; ordeki, that

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Panda has committed a contempt of those orders dnd those contempt	j.
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of court proceedings are still pending. 1 $ :

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Panda has given notice of a motion for two orders. One is that the company be granted leave to carry on these proceedings by its agent, Stefanos Leonidas Doukolianos, and I have had the benefit of Mr Doukolianos' submissions on the motion today and on a previous occasion. The second order sought is that the proceedings be transferred to Melbourne.

This application for the first order is made necessary by the provisions of Order 9, rule 1(3), which provides relevantlythat:

A corporation may not without the leave of the court or a judge enter an appearance or defend any

proceeding except by a solicitor.

In Simto Resources Limited v Normandv Ca~ital Limited & Ors,

[l9931 11 ACLC 856, Justice French in a judgment handed down on 29 June 1993 denied a company leave to proceed with such lay representation. His Honour held that it was proper, indeed inevitable, that the discretion to give the leave sought should be exercised in favour of a company where there was sufficient reason. He applied the reasoning of Smithers J in the Full Court in Molnar Enaineerina Ptv Limited v Burns [l9841 3 FCR 68 which held that in weighing up the arguments for the exercise of the discretion in favour of the leave against the problem of the court being left without expert legal assistance, regard must be paid to the nature of the particular case.

~t might be observed that in modern times there has developed a community concern at the monopoly exercised by lawyers in relation to proceedings in court. The context in which that discussion generally takes place is whether access should be given to persons with training in advocacy, the rules of evidence and court procedures who are perhaps not qualified lawyers, not of comparing lawyers with individual lay persons without any training at all. It is not necessary to emphasise that the Court would be placed in an impossible position if all proceedings before it were conducted by untrained people trying to present complex and difficult issues of legal principle and evidence.

The Court will obviously be sympathetic in a case where the reason for the absence of representation is impecuniosity. That

motion an affidavit which explained that his company has already	is in fact this case. Mr Doukolianos filed in support of his
expended very substantial legal fees in conducting its defence. It seems from the court record that he has had no less than four firms of solicitors representing him since the case was commenced at the end of 1992. He says that this has already cost him something of the order of $100,000, although he agreed in evidence that he can only produce documentation showing that an amount of about $50,000 has been expended. Nonetheless I accept that Panda is a relatively small enterprise and even $50,000 would make a considerable hole in its liquid financial resources.
In his affidavit, Mr Doukolianos says that Panda is not insolvent but the costs that he has had to pay have substantially depleted the company's finances. He did not say in the affidavit but did say in the witness box that, if the case was moved to Melbourne as the second part of the motion seeks, the company probably would have representation. That is where he lives and that is where he has had most of his solicitors or the most recent of his solicitors. But he said that if the case is to be heard in Sydney, he would not have legal representation, not so much because of the legal costs which would presumably be the same, but because it would be difficult for him to give instructions to newly retained solicitors to enable them to become familiar with the case without having to fly up and down to Sydney from Melbourne.
In view of the fact that the case is virtually ready for hearing both on the principal application and the contempt matter, it
whether in Sydney or in Melbourne, would be able to gain a fairly seems that a solicitor now being instructed in the matter,
informed view about the proceedings by reading the documentation that has already been filed. Certainly that is the case in relation to the alleged infringing use of the word "Basic". So far as the angle piece is concerned, some verbal explanation would probably be necessary, as I myself found when the matter was brought before me for the Anton Piller order, butthe matter would be within a relatively small compass in evidentiary terms. The solicitor for Lego argued that the proof of the case would be somewhat more difficult than the mere presentation of the actual factual evidence. This is because the use of the word "Basic" is open to the suggestion, amongst other things, of being a descriptive word rather than a word in which intellectual property might subsist, and the angle piece involves a somewhat careful and well explained approach to its importance in sets of Lego. Certainly that position supports Lego's opposition to the first part of the motion. But for those reasons and others, there is no doubt that the Court would be assisted in its resolution of this matter by Panda being legally represented. This is not to say that Doukolianos does not have a considerable grip on the matters in issue, as appeared in his exchanges with me during the hearing of the motion.
I have been made aware of very recent efforts by Lego to settle
these proceedings. It will have been obvious from my outline of the facts that settlement of this case is highly desirable and the correspondence which has recently been exchanged between the
manifest and patent. In substance, Lego seeks only that the word parties, which has been shown to me, makes that even more
"Basic" be replaced by some other word and points to the fact that Panda has already used the word "Classic" in some of its products. Lego says that it would be content if a label was affixed over the word "Basic" with such a word or with another word which Panda itself could choose. So far as the angle piece is concerned, Lego points to the fact that Panda has already been able to produce or manufacture a piece which serves the same or a similar purpose as the allegedly offending piece without infringing Lego's rights. Lego would be happy in those
circumstances for a permanent injunction blocking the use of the existing piece and the use of the word "Basic" but otherwise would withdraw the contempt proceedings and pay its own costs.
The only response to that letter came from Mr Doukolianos personally yesterday. Although saying that his company had "paid considerable consideration to the contents" of the offer and that his company has, "long been interested in settling these proceedings", he says unfortunately that the proposals are not acceptable. In amplification of that position today, Mr Doukolianos has informed me that his offer of settlement would be that all proceedings be withdrawn and that they be allowed to go on with the marketing of the products which are at the present time subject to the interlocutory injunction pronounced by Justice Gummow.
There are a number of problems with the application for leave to carry on the proceedings by Mr Doukolianos. The first is that there is reason to doubt that the company's financial position
course of the proceedings that, apparently at the instruction of is as stark as he would wish me to believe. He said during the
one of his former lawyers, he travelled not long ago to Greece for some 30 days for the purpose of gathering and bringing back to Australia a number of Lego pieces which were needed for the court proceedings. His product is actually manufactured, apparently, by a parent or associated company, Panda Toys in Greece, or a similar name.
It is completely beyond me as to why it was necessary for him to go to Greece to collect this material when by a simple description of the pieces required, the company in Greece could have sent them here. Panda Australia paid for this journey, and has also paid, presumably, for his trips to Sydney for these proceedings. Whilst that is not at all a matter for criticism, and I am grateful that he has done the Court the honour of attending the hearings, the fact is that it would really be one more trip for the hearing which would now be required. On the evidence I think it is unlikely that another fare for Mr Doukolianos to come to Sydney, with perhaps one witness, would be so expensive as to cause Panda particularly great financial embarrassment.
The major question that arises concerns the lawyers. It was strange to me that Mr Doukolianos went so far as to say that if the hearing was in Sydney he would have to be without lawyers but if it was in Melbourne he would be able to have lawyers. There is no reason to believe that the cost of engaging lawyers in
Melbourne, or at least those that he most recently had appear to lawyers in Melbourne. He does not at the moment have lawyers in Sydney would be significantly different to the cost of engaging
have withdrawn from the proceedings on the ground that their fees, as agreed, had not been paid. In the circumstances Mr Doukolianos' argument that he would have to have lawyers in &@th
Melbourne and Sydney strikes me as being unusual and unlikely. I can understand that if he were new to this case, and if he were not as familiar with the issues and with the English language as he clearly is, he may need the comfort of lawyers closer to home to assist him in dealing with lawyers interstate. But that is
not this case.
Mr Doukolianos has had lawyers in Sydney before and it seems that
the reason why they have withdrawn from the case has been the failure to pay their fees, not difficulty in communication. With modern forms of technology available and with the considerable amount of documentation that has already accumulated in this case, there seems no reason to believe that lawyers instructed in Sydney would have any difficulty in communicating with Mr Doukolianos or he with them. I, therefore, find it difficult to accept that this option is quite as stark as he suggests. Moreover, there is a considerable query about where Panda's costs of these proceedings are coming from. Statements from the bar table and to some extent from the witness box by Mr Doukolianos show that at least some of the costs of these proceedings have been supplied or are promised by Panda Greece. Indeed, a subpoena and a notice to produce issued on behalf of Lego against Panda designed to obtain information like this have gone substantially unanswered although it became clear in the course
of the hearing that documents were available which answered those sought in those court processes. It is a matter of some
disturbance that these matters were not produced as required and at the required time and I 'find it very difficult to imagine that this was accidental or resulted from misunderstanding. I even sat in Melbourne on one occasion when I was there on another case to receive documents that ought have been costly to transport to Sydney. Moreover, it has appeared from the nature of statements made by Mr Doukolianos in the course of these proceedings that the reason why he cannot accept and has not accepted Lego's fairly generous offer to settle the case in the recent correspondence was because Panda Greece is unwilling to allow him to do so for whatever reason.
In those circumstances there is every reason to believe that all the shots are not being called from the officers of Panda Australia in Melbourne. There seems no reason to conclude in favour of Panda that financial difficulty is what is motivating the application for leave to appear by an agent. The case as generally outlined on behalf of Lego is of some difficulty. Many patent cases are, especially when they deal with relatively fine differences between the product sought to be protected and those sought to be prevented from distribution. Such a case is not a suitable case for permitting a company that could afford, on its own admission, to have legal representation not to do so. I think I should follow the approach of Justice French in Simto pesources and refuse the leave sought.
matter to Melbourne. This case, as I have said, is virtually The second matter sought in the motion is the transfer of the
ready for hearing. Although Mr Doukolianos says that he believed that an early application was made by solicitors then representing his company for the transfer of the matter to Melbourne, it seems from the court records and from the recollections of Lego's representatives that no such application was ever made in open court. I can find no reference to the matter in any of the records taken either when the proceedings

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were being heard by Justice Gummow or by me, and I have no
independent recollection of any such application.

Therefore, it must be taken that the application to transfer the matter to Melbourne first became public, so far as notice to Lego and to the Court is concerned, in the motLon filed in the proceedings dated 11 March 1994 which I am presently discussing. In general terms, this Court should hear cases at the most convenient place, taking into account all the relevant matters that surround it. Justice Gummow in cvcles and Wheelman Pty

~ t e d v Beltec Cor~oratio~ [l9881 80 ALR 279 held in substance

that the "ordinary courseu was to have the proceedings heard in the place of commencement of the proceedings and that where a party sought a change in that position a form of onus applied to satisfy the Court that there were circumstances favouring the change. His Honour said that he did not consider the matter only to be one of the balance of convenience.

With great respect, I should have thought that in many cases that would be a somewhat too restrictive way to look at the matter.

In National Mutual Holdinas Ptv Limited v Centurv Cor~oration

[l9881 19 FCR 155, a Full Court of this Court consisting of Bowen

CJ Woodward and Lockhart JJ described the balance of convenience at 162 as generally;

. . . . . a relevant consideration, but not necessarily

determinative of each case.

Saying that "[tlhere is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere" the Full Court indicated that the power and direction conferred on the court or a Judge by section 48 of the Federal Court Act, which talks of the Court sitting at the "proper place" for hearings, is in terms

..... w h o l l y u n f e t t e r e d . I t shou ld be e x e r c i s e d

flexibly h a v i n g regard t o the c i r cums tances o f the

p a r t i c u l a r c a s e . I t would be r e g r e t t a b l e and unwise

i f the Court were to c i r cumscr ibe the general power

c o n f e r r e d by S 4 8 w i t h inf lexible r u l e s or impose

i n e l a s t i c c o n s t r a i n t s upon i t s exercise. As the power

may be e x e r c i s e d s u b j e c t t o c o n d i t i o n s , the Court o r

a judge i s i n a p o s i t i o n to mould o r d e r s under the

s e c t i o n t o t a k e account o f the many and v a r i e d

c i r cums tances t h a t a r i s e i n p a r t i c u l a r c a s e s .

Their Honours went on:

The Court m u s t , however, be s a t i s f i e d , a f t e r

c o n s i d e r i n g a l l r e l e v a n t m a t t e r s ,	t h a t	there	i s sound
r eason	to d i r e c t	t h a t the proceed ing be	conducted or

con t i nued e l s ewhere . . . . .

than its commencement place. Their Honours said:

On the one hand, i f the p a r t y who commenced the proceed ing chose t h a t p l a c e c a p r i c i o u s l y the Court

would be j u s t i f i e d i n g i v i n g n o we igh t t o the choice

o f p l a c e . A t the other end o f the s c a l e , a proceed ing

may have c o n t i n u e d ' f o r some t i m e a t the p l a c e o f

commencement w i t h many s t e p s h a v i n g been t a k e n there,

f o r	example,	f i l i n g	o f	p l ead ings	and	a f f i d a v i t s ,
d i s c o v e r y and	i n s p e c t i o n .	Due	we igh t	would	be	g i ven

by the Court t o such m a t t e r s b e f o r e d i r e c t i n g t h a t the

proceed ing shou ld c o n t i n u e a t a d i f f e r e n t p l a c e .

Their Full Court stated the ultimate test as follows:

where can the c a s e be conducted or con t i nued mos t

s u i t a b l y b e a r i n g i n mind the interests o f a l l the

p a r t i e s , the e n d s of j u s t i c e i n the d e t e r m i n a t i o n o f

the i s s u e s be tween them, and the mos t e f f ic ient

a d m i n i s t r a t i o n o f the Cour t .

When this motion was filed together with the affidavit in support, the argument was that three of the witnesses from whom affidavits have been filed on behalf of Panda would be unavailable or embarrassed, i.e. inconvenienced, by having to come to Sydney. They were Mr George Allegos who told Mr Doukolianos that

. . . . . he was an e x t r e m e l y b u s y man and would f i n d i t

e x t r e m e l y d i f f i c u l t	t o be	a b s e n t	from	h is	who le sa l e
b u s i n e s s ;

Mr Tony Dask, who said that

. . . . . he was an e x t r e m e l y b u s y man i n his own handyman

b u s i n e s s . H i s b u s i n e s s would be s e r i o u s l y a d v e r s e l y

a f f e c t e d i f he had t o go t o Sydney;

Mr Arthur Indoudis who told Mr Doukolianos:

..... t h a t by his going t o Sydney his c u r r e n t

employment may be placed i n jeopardy.

However, there was filed on the motion an affidavit by the managing director of Leg0 Australia, Mr James Peddie, who deposed to his legal advice that the affidavits of Allegos, Dask and Indoudis would not be cross-examined on and that in the circumstances it would not be necessary for them to come to

Sydney. He also pointed out that since the commencement of these proceedings, his company has retained Mr Aldo Nicotra of Blake Dawson Waldron as its principal solicitor and Mr Alan Robertson as counsel who has appeared for the company since the proceedings commenced. He statedthat his company would encounter additional financial expense if Mr Nicotra and Mr Robertson had to conduct this case in Melbourne. His uncontradicted assertion was that Lego's only desire, so far as the evidence presently filed on behalf of Panda is concerned, would be to cross-examine

Mr Doukolianos himself and the expert retained by the respondent,

a Mr Peter Bailey. For its part Lego would wish to call Mr Peddie himself and their expert, Professor Car1 Neilson, both of whom are resident in Sydney.

I must certainly take into account that the Lego companies are very substantial enterprises and that there is a significant imbalance in these terms between them and Panda. On the other hand, the case is virtually ready for hearing and I have already f~xed 5 and 6 May for the hearing of thls matter in Sydney. It

is true that I did indicate that if it were helpful and necessary

I would be prepared to take the evidence of some of the witnesses

in Melbourne on those days, to save the witnesses the inconvenience and Panda the expense of their coming to Sydney. I am still prepared to db that but it does not now seem as if that is nearly as serious a matter as it once appeared to be, as the only witnesses who would be likely to be giving oral evidence for Panda would be Mr Doukolianos and Mr Bailey. As to whether their evidence should be taken in Melbourne, I should have regard to the fact that Mr Doukolianos is Panda's managing director who

would presumably wish to be present during the whole of the hearing as a necessary person to instruct lawyers. As I have pointed out, he has in fact sought leave to conduct the case himself. In making a comparison between the inconvenience of having Mr Bailey in Sydney as opposed to taking all Legors lawyers plus its managing director and its expert to Melbourne,

the balance, even allowing for the difference in the size of the companies, is heavily in favour of the matter being heard in Sydney.

In all these circumstances, it seems to me that the application to move the matter to Melbourne does not have merit. It has been brought too late to encourage the exercise of the court's discretion to do so. I therefore refuse that application as well. Accordingly, the motion is dismissed.

[DISCUSSION]

I order that Panda pay Lego's costs of the motion.

I cer!i:y that this and t h e + \ r f 4 { d

precscl!ng pnges Ere a true copy of the

Reasors . Justicc for Einjcld J u d g r n e ~ ~ i ~ H o n o u r

.

Asscciate