Jackel International Limited v Jackel Pty Ltd

[2011] FCA 1516

FEDERAL COURT OF AUSTRALIA

Jackel International Limited v Jackel Pty Ltd [2011] FCA 1516

Citation:		Jackel International Limited v Jackel Pty Ltd [2011] FCA 1516
Parties:		JACKEL INTERNATIONAL LIMITED, SANGENIC INTERNATIONAL LIMITED and MAYBORN ANZ PTY LTD (ACN 154 703 134) v JACKEL PTY LTD (ACN 128 984 707), JACKEL TRADE MARKS PTY LTD (ACN 129 846 690) and JACKEL ANZ PTY LIMITED (ACN 133 251 546)
File number:		VID 1467 of 2011
Judge:		DODDS-STREETON J
Date of judgment:		23 December 2011
Catchwords:		TRADE PRACTICES – Application for interim or interlocutory relief to restrain respondents from making allegedly false representations regarding ownership of trade marks and associated reputation and goodwill – Respondents made representations to retailers and wholesalers – Whether distribution arrangement between applicants and respondents – Whether serious question to be tried that respondents’ use of the marks constituted use by the applicants and the respondents’ representations misleading – Whether balance of convenience favours grant of injunction
Legislation:		Competition and Consumer Act 2010 (Cth) Schedule 2 items 18 and 29
Cases cited:		Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 cited Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 cited
Date of hearing:	22 December 2011
Date of last submissions:	22 December 2011
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	71
Counsel for the Applicants:	Ms E Strong SC with Mr L Merrick
Solicitor for the Applicants:	Corrs Chambers Westgarth
Counsel for the Respondents:	Mr I Horak
Solicitor for the Respondents:	Chrysiliou Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1467 of 2011

BETWEEN:

JACKEL INTERNATIONAL LIMITED
First Applicant

SANGENIC INTERNATIONAL LIMITED
Second Applicant

MAYBORN ANZ PTY LTD (ACN 154 703 134)
Third Applicant

AND:

JACKEL PTY LTD (ACN 128 984 707)
First Respondent

JACKEL TRADE MARKS PTY LTD (ACN 129 846 690)
Second Respondent

JACKEL ANZ PTY LIMITED (ACN 133 251 546)
Third Respondent

JUDGE:	DODDS-STREETON J
DATE OF ORDER:	23 DECEMBER 2011
WHERE MADE:	MELBOURNE

UPON THE APPLICANTS BY THEIR COUNSEL undertaking:

(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and

(b)       to pay the compensation referred to in (a) to the person there referred to,

THE COURT ORDERS THAT:

1.Pursuant to r 1.39 of the Federal Court Rules, the time for service of the Applicants’ application for interim relief and the affidavits in support of that application under r 17.01(2) of the Federal Court Rules be abridged to one day.

2.Until further order, the Respondents and each of them be restrained, whether by themselves, their employees, agents or officers or otherwise howsoever, from (in any manner whatsoever):

(a)representing to retailers and wholesalers that the Second Respondent is the owner of:

(i)Australian registered trade marks 1107062 and 1108075 for the words CLOSER TO NATURE (the Closer to Nature Marks);

(ii)745372 for the word SANGENIC (the Sangenic Mark).

(b)representing to retailers and wholesalers that the Respondents (or any of them) are the owners of the goodwill and reputation associated with the Closer to Nature Marks and the Sangenic Mark in Australia;

(c)representing to retailers and wholesalers that the Respondents (or any of them) have the right to take legal action to prevent third parties (including the Applicants) from using the Closer to Nature Marks and the Sangenic Mark in Australia;

(d)representing to retailers and wholesalers that the Respondents (or any of them) have the right to continue to use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012;

(e)representing to retailers and wholesalers that the Applicants do not have the right to use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012; or

(f)making any representation to the same or similar effect as the representations set out in paragraphs (a) to (e) above to retailers and wholesalers.

3.By 4.00pm on 29 December 2011, the Respondents file and serve an affidavit setting out the names and contact details of all people and/or business to which they have made representations of the type referred to in order 2.

4.Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth), confidential annexures MS-15 and MS-16 to the affidavit of Mark Stanworth sworn 20 December 2011 and annexure KC-4 to the affidavit of Kerry Chrysiliou sworn on 21 December 2011 be placed in a separate envelope in the Court’s file marked “Confidential” which is not to be opened without an order of the Court or a Judge.

5.The Applicants have leave to file and serve an amended Fast Track Statement and an amended Fast Track Application on or before 6 January 2012.

6.The Respondents file any Fast Track Cross-claim and a Fast Track Response by 6 February 2012.

7.The proceeding be set down for a scheduling conference on a date to be fixed.

8.Costs be reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1467 of 2011

BETWEEN:

JACKEL INTERNATIONAL LIMITED
First Applicant

SANGENIC INTERNATIONAL LIMITED
Second Applicant

MAYBORN ANZ PTY LTD (ACN 154 703 134)
Third Applicant

AND:

JACKEL PTY LTD (ACN 128 984 707)
First Respondent

JACKEL TRADE MARKS PTY LTD (ACN 129 846 690)
Second Respondent

JACKEL ANZ PTY LIMITED (ACN 133 251 546)
Third Respondent

JUDGE:	DODDS-STREETON J
DATE:	23 DECEMBER 2011
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. This is an urgent application for interim or interlocutory relief restraining the respondents from continuing to make allegedly false representations about the ownership of trade marks and their associated reputation and goodwill, and seeking that the persons to whom such representations have been made be identified.

2. The applicants rely on the:

   1.Affidavit of Mark Stanworth sworn on 20 December 2011.

   2.Affidavit of Matthew Swinn sworn on 21 December 2011.

   3.Affidavit of Teresa Thompson sworn on 19 December 2011.

   4.Written submissions dated 20 December 2011.

3. The application was opposed.  The respondents rely on the:

   1.Affidavit of Kerry Chrysiliou sworn on 21 December 2011.

   2.Written submissions dated 21 December 2011.

4. The applicants, Jackel International Limited, Sangenic International Limited and Mayborn ANZ Pty Ltd, by a Fast Track Application dated 19 December 2011, seek final relief pursuant to ss 232, 234 and 236 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (“ACL”) in relation to alleged contraventions of ss 18 and 29 of the ACL.

   BACKGROUND AND EVIDENCE

   Applicants’ evidence

5. Mark Stanworth, Chief Financial Officer of the Mayborn Group Limited (“Mayborn Group”) and a director of each of the applicants, deposed that the first applicant, Jackel International Limited (“Jackel International”), and the second applicant, Sangenic International Limited (“Sangenic”), are incorporated in the United Kingdom.  Jackel International is a supplier, distributor and wholesaler of baby care products known as “CLOSER TO NATURE” products, while Sangenic is a supplier, distributor and wholesaler of associated baby care consumable products (“Sangenic products”).  The third applicant, Mayborn ANZ Pty Ltd (“Mayborn ANZ”), is an Australian wholly‑owned subsidiary of the parent company (Mayborn Group) of the first and second applicants.

6. Mr Stanworth deposed that the Mayborn Group is one of the world’s leading baby feeding suppliers, supplying products in over 40 countries, and is a brand leader in the United Kingdom with a market share of approximately 3.7%.  From 1 May 2012, Mayborn ANZ will promote, distribute and sell both the CLOSER TO NATURE and Sangenic products in Australia.

7. The respondents are three Australian companies, Jackel Pty Limited, Jackel Trade Marks Pty Ltd, and Jackel ANZ Pty Limited (“Jackel ANZ”), of which Sandra Archer is the director, secretary and sole owner.

8. Mr Stanworth deposed that Jackel International owns the following Australian registered trade marks for the words “CLOSER TO NATURE”:

   (a)1107062 in classes 10 and 11; and

   (b)1178075 in classes 10, 11 and 21.

9. The “CLOSER TO NATURE” trade marks were registered in 2006.

10. The second applicant, Sangenic, owns the Australian registered trade mark no 745372 for the word “SANGENIC” in classes 16 and 21 (“SANGENIC MARK”).

11. The SANGENIC MARK was registered in 1997.

12. Mr Stanworth deposed that the Mayborn Group has worked with the first and third respondents, Jackel Pty Ltd and Jackel ANZ, largely on an informal basis, from the mid‑1980s.

13. Jackel Pty Ltd from 2006, and Jackel ANZ from 2008, were Australian distributors of the first applicant’s CLOSER TO NATURE products.  Jackel Pty Ltd, from the late 1990s to 2008, and thereafter Jackel ANZ, were also Australian distributors of the Sangenic products.  A distribution agreement between Sangenic and Jackel Pty Ltd was executed in July 2001 (“the Sangenic Distribution Agreement”).  Nevertheless, Mr Stanworth deposed that prior to that time, without any formal agreement, initially the first respondent and subsequently the third respondent were distributors of Mayborn Group products.

14. Mr Stanworth deposed that the Sangenic Distribution Agreement expired in 2005 but the arrangements continued informally.  In October 2011, Jackel International and Sangenic terminated the distribution arrangements with Jackel Pty Ltd and Jackel ANZ with effect from 30 April 2012.

15. Mr Stanworth deposed that since 2006, the CLOSER TO NATURE products bearing the “CLOSER TO NATURE” marks have been extensively promoted, distributed and sold throughout Australia on Jackel International’s behalf by the respondents (Jackel Pty Ltd and Jackel ANZ).  Since 1990, the Sangenic products, bearing the SANGENIC MARK, had also been promoted, distributed and sold in Australia on Sangenic’s behalf by the relevant respondents.  The applicants’ products sold in Australia had also been branded with a mark “TOMMEE TIPPEE” in conjunction with the marks at issue.

16. Mr Stanworth deposed that the products had been widely advertised under their respective marks and had become widely and favourably known in the minds of retailers, wholesalers and the general public.  They had acquired a substantial and valuable reputation throughout Australia, such that persons intending to acquire CLOSER TO NATURE and Sangenic products intended to acquire products which were manufactured with the relevant applicants’ authority, in reliance on their reputation.

17. Teresa Thompson, the General Manger of the third applicant, Mayborn ANZ, has been employed in the baby products industry or related areas for some years.  She was employed by the Mayborn Group to oversee the Group’s Australian operations and became, on about 9 December 2011, General Manager of Mayborn ANZ, which will be responsible for the promotion, distribution and sale of Mayborn Group products in Australia from 1 May 2012.

18. Ms Thompson deposed: 

    11Until recently, the Mayborn Group has distributed products in Australia through local distributors, Jackel Pty Limited and subsequently Jackel ANZ Pty Limited.

    12I have been informed by Peter Dowson, the Legal and Commercial Director of the Mayborn Group, and I believe that on about 21 October 2011, the Mayborn Group terminated its distribution arrangements with Jackel Pty Limited, with the termination to take effect from 30 April 2012.

    13The Mayborn Group wanted to take over the distribution of its products in Australia so that it could build its market share in Australia by introducing a more comprehensive product range and by ensuring that the promotion of the product range to retailers and to consumers was as effective as possible.

    14I have been informed by Mario Mathuranayagam of Target, Adam Smith of Coles, Jessica Donovan of Babies'R'Us, Elise McNeil of Big W and Sue Maclaine of Woolworths and I believe, that Jackel Pty Limited intends to continue to offer baby care products in Australia.

19. Ms Thomson deposed that, in her experience, brand recognition was important to the success of the baby products industry in Australia and consistent branding was important.  The Australian market was extremely competitive.  Baby products are sold through a number of retail channels but there are five top retailers accounting for most sales, the most important of which is Target, through which Mayborn Group sales have been approximately $800,000 per annum.

20. Ms Thompson deposed that the baby products industry in Australia was small, closely connected and well informed.

21. Retailers typically (although not always) conduct an annual range review in December or June, and inform suppliers next month of their decisions.  The range reviews are complex processes and there is opportunity to negotiate at that time.  There is a six month lead time for a supplier’s new products, so that the supplier would typically deliver new products in May/June for a launch in July, if informed of its allocation in February.

22. Ms Thompson deposed that in the present case, Mayborn Group intended to make existing products available from 1 May 2012.  Mayborn Group has initially focussed on the top five retailers for its Australian entry.

23. Ms Thompson deposed to her negotiations and correspondence with the Target store buyer in November 2011, who was interested in the “CLOSER TO NATURE” range, but, on 18 December 2011, told Ms Thompson that he had received information from “Jackel Australia” and would not engage in further discussions until the applicants’ right to use the CLOSER TO NATURE and SANGENIC brands was sorted out.

24. Ms Thompson deposed that Target’s refusal to deal with Mayborn Group was likely to cause very significant damage, which was difficult to quantify and related to both existing and new product ranges.  Damage to the relationship with Target was likely to have significant and long term negative effects on Mayborn Group’s reputation and plans to enter Australia, and could give opportunities to competitors.

25. Ms Thompson deposed to negotiations with other retailers, such as Babies R Us and Woolworths, who advised her that the respondents had informed them that the applicants had no right to use the brands and that “Jackel” owned the CLOSER TO NATURE and SANGENIC marks.

26. Ms Thompson deposed to Mayborn Group’s potential loss of opportunity due to retailers’ refusals to deal with it, which was pressing in the Christmas period, loss of goodwill if Mayborn Group were seen as an unreliable or a risky supplier, and loss of its very large investment in entering the Australian market with rebranded products, including hiring staff, extensive consumer research and arrangements for printing packaging and product testing.

    Respondents’ evidence

27. Kerry Chrysiliou, a patent attorney and the solicitor for the respondents, deposed that Jackel Trade Marks Pty Limited was the registered proprietor of several trade mark registrations in Australia including or consisting of TOMMEE TIPPEE in various classes.  It is also an applicant for registration of several other such trade marks.

28. Ms Chrysiliou deposed that Jackel Pty Ltd is a substantial corporation.  Pacrim Commercial Pty Ltd (“Pacrim”), its predecessor in title, and other companies in the Jackel Australia Group, have rights in or have commissioned designers to design new products.

29. Ms Chrysiliou deposed that Paul Turner, a director of Jackel Pty Ltd, informed her that Jackel ANZ sources its existing products worldwide and has them shipped to Australia or New Zealand.  Jackel ANZ selects fully made up products in some cases and in other cases has products adapted or selects parts to be assembled.

30. Since about 2008, Jackel ANZ and Pipsan Operations Pty Ltd (a company under the same control as Jackel Pty Ltd) dealt with Product Marketing Mayborn Ltd in China to obtain product, and in some cases required no changes but in other cases redesigned it or made substantial changes.

31. Ms Chrysiliou deposed that Mr Turner also told her that Jackel Pty Ltd sourced product from Sangenic but required packaging changes to be made for its TOMMEE TIPPEE range.  Mr Turner also stated that there was a procedure for preparing packaging and artwork for products sourced from Product Marketing Mayborn Ltd, whereby Jackel Pty Ltd received proofs and gave final approval.

32. Ms Chrysiliou deposed that Jackel Pty Ltd has ranges of products in large retail stores, including Coles and Woolworths, and its TOMMEE TIPPEE trade mark has a valuable and favourable reputation in the Australian market in respect of baby products.  It has been presented with the words “CLOSER TO NATURE” as a sub‑brand.  If consumers saw the trade mark “CLOSER TO NATURE” on a product without TOMMEE TIPPEE, it would cause them to believe that it was associated with the respondents.

33. Ms Chrysiliou deposed:

    24.I am informed by both Paul Turner and Sandy Archer of JPL that they fear and suspect that Mayborn ANZ Pty Limited (Mayborn Australia) is making the following false representations to JPL’s customers, including supermarket customers to the effect that:

    24.1JPL has always been a mere distributor of the Applicants, when this is contrary to fact and when there has never existed any agreement between the parties, let alone a distributorship agreement.

    24.2The Applicants are entitled to terminate the distributorship agreements.

    24.3The Applicants are entitled to replace JPL’s goods which have the words CLOSER TO NATURE or SANGENIC with those of the Applicant on the shelves of JPL’s customers.

    24.4JPL cannot sell any CLOSER TO NATURE or SANGENIC goods after 30 April 2012, not even those goods which JANZ has purchased from PMM for JPL.

    25.I am further informed by Paul Turner and Sandy Archer, who are both familiar with the market and operations of the Respondents, that they believe that because of the abovementioned representations that if retailers stock the Third Applicant’s products under the name CLOSER TO NATURE or SANGENIC that retailers are likely to see the products having the same sub-brand as JPL’s products (which have developed an association with the Respondents) and this is likely to result in direct loss of shelf space for goods sold by the Respondents.

34. Ms Chrysiliou further deposed:

    27.I am informed by Sandy Archer and do believe that the Respondents are concerned that if the Court makes orders preventing them from making the representations alleged that the Applicant will be in a position to assert to retailers that the Respondent does not have an interest in the CLOSER TO NATURE and SANGENIC (unregistered) trade marks.  I am informed by Sandy Archer, and do believe, that the Respondents maintain that they have an interest in the CLOSER TO NATURE and SANGENIC (unregistered) trade marks through use in Australia.

    28.I am aware that the Second Respondent has filed a trade mark application for the TT CTN Composite Mark under No. 1462889.  This is consistent with the form used by the Respondents since at least 2009.  A printout of an extract of No, 1462889 is included in Exhibit KC-3.  

1. Ms Chrysiliou deposed that Mr Turner denied that the respondents had entered a distributorship agreement with the applicants, and deposed that the respondents had an interest in the unregistered trade marks “CLOSER TO NATURE” and “SANGENIC”.

   DISCUSSION

2. The applicants alleged that from mid December 2011, the respondents wrote to or communicated with customers and prospective customers including major retailers and wholesalers, claiming that the second respondent, Jackel Trade Marks Pty Ltd, is the owner of the CLOSER TO NATURE and Sangenic Marks.  Central to the applicants’ complaint was the letter of Ms Archer to BabyCo dated 13 December 2011, which stated:

   JTM [Jackel Trade Marks Pty Ltd] is the owner of the Australian Marks [the Closer to Nature Marks and the Sangenic Mark, among others].

   Each of JTM and JPL [Jackel Pty Ltd] has acquired a substantial reputation in Australia in relation to goods sold by JPL under the Australian Marks ... Goods sold by JPL under the Australian Marks distinguish the goods or services of JPL from other goods or services promoted, sold or distributed by persons other than JPL or JTM.

   Each of JTM and JPL understands that Mayborn has communicated an intention to enter the Australian market and sell goods similar to the goods sold and distributed by JPL in Australia, under marks, names or style including some or all of the words "Tommee Tippee", "Closer to Nature" and "Sangenic". Each of JPL and JTM believe that any such action will infringe the rights of each of JTM and JPL in the Australian Marks, and cause deception and confusion in the marketplace. Each of JTM and JPL will take such action as is necessary to restrain any action which will result in or is likely to result in any infringement of the Australian Marks or otherwise likely to mislead or deceive in breach of section 18 and other provisions (sic) the Competition and Consumer Act 2010 or the corresponding law of any state or territory. Use of the Australian Marks, or any mark, name or style derived from words included in the Australian Marks, by anyone other than JPL or JTM will constitute misleading or deceptive conduct or passing off, or both, entitling JPL or JTM, or both, to seek orders for an injunction, as well as damages, accounting of profits and other relevant statutory remedies.

3. Ms Archer also wrote to Ms Thompson, foreshadowing possible legal action against her if she were involved in any attempt to “use or exploit” marks including the words CLOSER TO NATURE or SANGENIC in Australia or New Zealand.

4. The applicants submitted that the communications to retailers and wholesalers, illustrated by the letter to BabyCo, contained representations that:

   (a)Jackel Trade Marks Pty Ltd is the owner of the Closer to Nature Marks and the Sangenic Mark;

   (b)The Respondents are the owners of the goodwill and reputation associated with the Closer to Nature Marks and the Sangenic Mark in Australia;

   (c)The Respondents have the right to take legal action to prevent third parties (including the Applicants) from using the Closer to Nature Marks and the Sangenic Mark in Australia;

   (d)The Respondents have the right to continue to use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012; and

   (e)The Applicants do not have the right to the use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012,

   (together, the “representations”).

5. The applicants submitted that the representations were made in trade and commerce and were false, as the applicants owned the marks and the associated goodwill and reputation, had not authorised the respondents to take any legal action to enforce rights in the marks, and the respondents had no right to use the marks after 30 April 2012 or to prevent the applicants from doing so.

6. The applicants contended that the conduct was misleading and deceptive or likely mislead or deceive.  It thus contravened s 18 of the ACL and amounted to false representations regarding the existence of rights in the marks, in contravention of s 29(1)(m) of the ACL.

7. In the fast track application, the applicants seek final relief by way of permanent injunctions, declarations, a correction and damages.

8. The applicants seek interim and interlocutory relief as follows:

   2.Until further order, the Respondents and each of them be restrained, whether by themselves, their employees, agents or officers or otherwise howsoever, from (in any manner whatsoever):

   (a)representing to retailers and wholesalers that the Second Respondent is the owner of:

   (i)Australian registered trade marks 1107062 and 1108075 for the words CLOSER TO NATURE (the Closer to Nature Marks);

   (ii)745372 for the word SANGENIC (the Sangenic Mark).

   (b)representing to retailers and wholesalers that the Respondents (or any of them) are the owners of the goodwill and reputation associated with the Closer to Nature Marks and the Sangenic Mark in Australia;

   (c)representing to retailers and wholesalers that the Respondents (or any of them) have the right to take legal action to prevent third parties (including the Applicants) from using the Closer to Nature Marks and the Sangenic Mark in Australia;

   (d)representing to retailers and wholesalers that the Respondents (or any of them) have the right to continue to use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012;

   (e)representing to retailers and wholesalers that the Applicants do not have the right to use the Closer to Nature Marks and the Sangenic Mark after 30 April 2012; or

   (f)making any representation to the same or similar effect as the representations set out in paragraphs (a) to (e) above to retailers and wholesalers.

   3.By 4.00pm on 29 December 2011, the Respondents file and serve an affidavit setting out the names and contact details of all people and/or business to which they have made representations of the type referred to in order 2.

9. The principles relevant to a grant of interlocutory relief are well established.  The Court must determine:

   (a)whether the applicants have shown that there is a serious question to be tried; and

   (b)whether the balance of convenience favours the grant of an injunction.

10. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, Gummow and Hayne JJ stated (at 81 to 82):

    The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd.  This court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries, and continued:

    The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

    By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.  That this was the sense in which the court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument.  With reference to the first inquiry, the court continued, in a statement of central importance for this appeal:

    How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.

    (citations omitted)

11. The respondents submitted that there was either no serious question to be tried, or alternatively, that it was very weak.

12. First, they contended that Jackel Pty Ltd, which was party to the Sangenic Distribution Agreement, was not, as the applicants asserted, the first respondent, despite bearing the same name.  Rather, it was the company now called Pacrim.  As the solicitor for the respondents described Pacrim as a “predecessor in title to the first respondent” and as a member of the respondents’ “group”, in my view, any difference in identity was of little weight in the present context.

13. The respondents further submitted that there was no evidence that an informal distribution agreement or agreements on the terms of the Sangenic Distribution Agreement applied between the relevant parties before and after the term of the Sangenic Distribution Agreement in relation to all three registered trade marks.  The respondents submitted, in that context, that the identity of the corporate parties, particularly the respondents, was unclear, and there was no evidence that any particular respondent was bound either by the Sangenic Distribution Agreement or pursuant to any novation or assignment of rights thereunder.  Further, there was no detailed evidence of how or why the respondents had continued to conduct themselves on the same alleged basis or with what entity, and no detailed evidence of the degree of control exerted by the relevant applicant (which must be, in each case, the registered owner of the relevant trade mark) sufficient to conclude that it constituted use of the trade mark by the relevant applicants.

14. The applicants did not, however, contend that rights under the Sangenic Distribution Agreement were assigned, but rather that its terms reflected the distribution agreements in place both before and after its execution.  The terms of the Sangenic Distribution Agreement relevantly included the following:

    BACKGROUND:-

    A        Sangenic supplies the Products.

    BSangenic wishes to appoint the Distributor as its sole distributor for the Products in the Territory.

    …

    DEFINITIONS

    In this Agreement (unless the context requires otherwise) the following expressions shall have the following meanings:-

    …

    “Intellectual Property Rights”  patents, trade marks, service marks, trade names, brand names, copyright, right in a design, know-how, confidential information and all or any other intellectual property rights whether or not registered or capable of registration and whether subsisting in the Territory or any other part of the world together with any or all goodwill relating to [sic] attached thereto

    …

    2        APPOINTMENT OF THE DISTRIBUTOR

    2.1Sangenic hereby appoints the Distributor as its sole distributor for the resale of the Products in the Territory, and the Distributor agrees to act in that capacity, subject to the terms and conditions of this Agreement.

    …

    12TRADE MARKS, TRADE NAMES, INTELLECTUAL PROPERTY MATTERS

    12.2The Distributor shall not register, use or permit the use of any of the Intellectual Property right used by Sangenic in relation to the Products without the prior written consent of Sangenic and in particular (but without limitation) shall not without the prior written consent of Sangenic use in connection with any Product any of the Intellectual Property Rights used by Sangenic in relation to the Products in conjunction with the name of the Distributor or with any trade name used by the Distributor.  The Distributor hereby acknowledges that it shall not acquire any rights in respect of the Intellectual Property Rights and that all such rights and goodwill are, and shall remain, vested in Sangenic (or in any company or person to which Sangenic may assign any or all of them at any time).

    12.3The Distributor shall not use in the Territory any trade marks or trade names so resembling the Intellectual Property Rights of Sangenic as would be likely to cause confusion or deception.

    12.4The Distributor shall not without the written consent of Sangenic cover, obscure or in any way alter any distinctive mark forming part of or impressed on or affixed to the Products received by the Distributor from Sangenic and any of the Products which shall have been so covered obscured or altered without such consent shall not be sold.

    …

    12.7Upon termination of this Agreement for any reason whatsoever the Distributor shall immediately cease to use all Intellectual Property Rights of Sangenic in any manner whatsoever (including without limitation on stationery or vehicles) for which consent was granted by Sangenic and shall return to Sangenic free of any charge all printed matter displaying such Intellectual Property Rights in the Distributor’s possession.

15. Mr Stanworth clearly deposed that from the 1990s to about 2008, the first respondent distributed Sangenic products on behalf of the second applicant (which owns the SANGENIC MARK), that the Sangenic Distribution Agreement was then executed, and, when it expired in 2005, the distribution arrangements continued on the same basis.  In 2008, the role of distributor was taken over by the third respondent for or on behalf of Sangenic informally, but consistently with the arrangements in the Sangenic Distribution Agreement.

16. Mr Stanworth deposed that the “CLOSER TO NATURE” brand was introduced only in 2006, and that Mayborn has distributed its products through the first and third respondents; that the “CLOSER TO NATURE” marks have been used throughout Australia by and on behalf of the first applicant; that since at least the mid 1980s, Mayborn Group has worked with the first and third respondent (initially with the first respondent until 2008) without any formal agreement in place; and that Mayborn Group acted as designer, manufacturer, procurer and supplier of Mayborn products to the first respondent or third respondent (depending on the date), which “acted as a distributor of those products”.

17. Mr Stanworth deposed that the only “selection” made by the respondents was deciding which items of the range to sell in Australia and New Zealand and, consistently with that, the first respondent requested and was supplied with “CLOSER TO NATURE” products until 2006 when the third respondent took over as distributor on Mayborn Group’s behalf.

18. Mr Stanworth deposed that the packaging of the products was always designed by Mayborn, adapted for the Australian market and approved by the relevant respondents.

19. The respondents did not dispute that the relevant applicants were owners of the CLOSER TO NATURE registered trade marks since 2006 and the SANGENIC registered trade mark, and did not dispute that various respondents had dealt with Mayborn products bearing those marks (as well as the second respondent’s TOMMEE TIPPEE Australian registered trade mark), but asserted that this did not amount to use of the registered trade marks (or corresponding common law trade marks) by the trade mark owners, because there was no distribution agreement and no evidence of control.  Thus, the relevant respondents owned the common law marks and obtained a reputation therein, such that the applicants’ proposed use of their registered trade marks would amount to passing off, to which trade mark registration was no answer.

20. Ms Chrysiliou, in that context, deposed on information and belief that no respondent at any time had a distributorship agreement with any of the applicants.

21. In so far as the above assertion related to the corporate identity of the first respondent, which was, on the respondents’ own evidence, the successor in title to the entity party to the Sangenic Distribution Agreement, it was unpersuasive.

22. In so far as the respondents generally denied any distribution agreement, that was clearly inconsistent with a number of items bearing the applicants’ registered trade marks, which were in, or admitted into, evidence without objection.  They clearly identified the first applicant as owner of the CLOSER TO NATURE trade mark and the second applicant as the owner of the SANGENIC trade mark.

23. The packaging on a Sangenic re-fillable cassette and Sangenic nappy disposal system, purchased by a solicitor for the applicants, stated:

    Sangenic International Limited retains all intellectual property rights to this product, packaging and printed or electronic media, including all two and three dimensional designs, graphic images, logos and text.

    TOMMEE TIPPEE is a registered trade mark of Jackel International Limited.
    SANGENIC is a registered trade mark of Sangenic International Limited.
    HYGIENE PLUS and NAPPY WRAPPER are trade marks of Sangenic International Limited.

24. The packaging on two medium flow teats and a Closer to Nature bottle, purchased by a solicitor for the applicants stated:

    Tommee Tippee® is a registered Trade Mark of Jackel Trade Marks Pty Limited…
    CLOSER TO NATURE® is a registered Trade Mark of Jackel International Limited.
    EASI-VENT and ADVANCE-FLO are Trade Marks of Jackel International Limited.
    ©2010 Distributed by Jackel ANZ Pty Limited.

25. Further, an oral health item exhibited to Ms Chrysiliou’s affidavit identified CLOSER TO NATURE as a registered trade mark of the first applicant, and stated that it was “distributed by” the third respondent.  Its packaging was consistent with the applicants’ claims.

26. I am satisfied that there is a serious question to be tried.  While, unsurprisingly at this stage, the applicants’ evidence is not fully developed, it nevertheless amounts to a strong case that distribution agreements, whether formal or not, were in place between applicants who own the relevant registered trade marks and relevant respondents or their predecessors in title, that the applicants have supplied the products without input from the respective respondents (other than for the latter’s selection from the range), and have designed the packaging (albeit approved by the respondents), such that the respondents’ use of the marks would be use by the applicants, which accrued reputation and goodwill to the latter.

27. I am also satisfied that, contrary to the respondents submissions, the letter dated 13 December 2011 contains, on a fair reading, the representations alleged by the applicants, and that on the basis of the matters above, there is a serious case to be tried that they are misleading, even, in one sense, on the respondents’ case, due to the omission of any reference to the applicants’ ownership of the registered trade marks and the lack of any indication that the letter referred only to a common law mark.  The phraseology of the letter, in my view, clearly suggested that the marks in question were registered trade marks.

28. I am also satisfied that the balance of convenience favours the grant of an injunction, as if it were denied and the applicants succeeded, they are likely to suffer the extensive, significant and to some extent unquantifiable detriment to which Ms Thompson deposed, including loss of the opportunity to launch operations in the Australian market as planned, loss of expenditure for that purpose and loss of reputation for reliability.

29. On the hand, if an injunction is granted but the respondents succeed, they would merely be required to desist from making the relevant representations.

30. If the injunctive relief were granted and the respondents were ultimately held to be entitled to make the representations, any deleterious effect of a short term interim restraint on them from doing so would be greatly outweighed by the prejudice likely to be incurred by the applicants, as deposed to by Ms Thompson, if the injunction were not granted, and the respondents continued to make the representations and the applicants ultimately succeeded in their claims.

31. The respondents submitted that the applicants could, if an injunction were granted, assert that they have the exclusive right to the “CLOSER TO NATURE” and “SANGENIC” unregistered marks when that was a matter not finally determined, yet the respondents would be prevented from disputing such assertions.

32. Any assertions which the applicants may make while an injunction is in force are, however, a matter of speculation, and indeed, the assertions apprehended by the respondents would be inconsistent with the applicants’ case, as they do not assert that they currently have exclusive rights in relation to the marks.  Rather, they acknowledge the relevant respondents’ entitlement to continue to deal in the market with the products and marks as their distributor until April 2012.

1. The respondents also asserted that they were “in the market and held the status quo, being use in the market place”, and that the injunctive relief would displace the status quo.  Again, the injunctive relief would not, on the evidence, in any way impede the respondents’ entitlement to continue to deal with the products and marks in the market place in the short term, as the applicants do not dispute their entitlement to do so under a distribution agreement (the existence of which the respondents dispute) until April 2012.

2. Further, in my opinion, the relief sought in the proposed order for the respondents to identify all persons to whom the representations have been made should likewise be granted, as the relief will otherwise be of unduly limited value.  Albeit such relief is mandatory in character, the same considerations apply (Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 at 73). The evidence, which the respondents did not deny, indicated that the respondents have contacted an indefinite number of unknown parties whose identity the applicants will otherwise be unable to ascertain.

3. The applicants proffered an undertaking in the following terms:

   (a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and

   (b)to pay the compensation referred to in (a) to the person there referred to.

4. In his affidavit, Mr Stanworth stated:

   44I am authorised on behalf of the applicants to, and do hereby, offer to provide the usual undertaking as to damages as a condition of the relief sought by the applicants.

   45I will be wiring $50,000 Australian dollars to the trust account of the Applicants’ solicitors in support of this undertaking on Tuesday 20 December 2011 (UK time).

   CONCLUSION

5. In my opinion, injunctive and interim relief should be granted in the terms sought, and upon the undertaking proffered, by the applicants.

I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton.

Associate:

Dated:       23 December 2011