Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd
[1998] FCA 1523
•2 NOVEMBER 1998
FEDERAL COURT OF AUSTRALIA
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 861 of 1995
BETWEEN:
KIMBERLY-CLARK AUSTRALIA PTY LIMITED
APPLICANTAND:
AND BETWEEN:
AND:
ARICO TRADING INTERNATIONAL PTY LIMITED
FIRST RESPONDENTARIE KLIGER
SECOND RESPONDENTFRANCISCO MARTIN OTERO TRADING AS KOALA NAPPY EXPRESS
THIRD RESPONDENTARICO TRADING INTERNATIONAL PTY LIMITED
CROSS-CLAIMANTKIMBERLY-CLARK AUSTRALIA PTY LIMITED
CROSS-RESPONDENTJUDGE:
DOWSETT J
DATE OF ORDER:
2 NOVEMBER 1998
WHERE MADE:
SYDNEY
UPON THE UNDERTAKING TO THE COURT OF THE FIRST AND SECOND RESPONDENTS:
(a)to trade in respect of the BABY SITTER Diapers (as referred to in the orders of Burchett J dated 16 and 25 September 1998) only in the normal course; and
(b)not to dispose of their assets other than in the ordinary course of business.
THE COURT ORDERS THAT:
Order 1 made by Burchett J on 16 September 1998 (as varied on 25 September and 23 October 1998) is further stayed until the determination of the appeal from the judgment of Burchett J given on 8 September 1998 in proceedings no NG 1051 of 1998 in the Federal Court of Australia.
Paragraph 1 of the respondents’ notice of motion dated 14 October 1998 is stood over in so far as it relates to order 7 and 8 made by Burchett J on 16 September 1998.
The time for the first and second respondents to comply with orders 3 and 4 made by Burchett J on 16 September 1998 is extended to 7 December 1998.
The time for the third respondent to comply with orders 2 and 3 made by Burchett J on 25 September 1998 is extended to 7 December 1998.
The respondents’ costs of the notice of motion dated 14 October 1989 are to be costs in the appeal.
Liberty to apply is granted on 2 days notice.
The applicant is granted liberty to apply for a security or cash deposit in respect of the continued sale or exploitation of BABY SITTER diapers from the date of these orders until the determination of the appeal from the judgment of Burchett J given on 8 September 1998 in proceedings no NG 1051 of 1998 in the Federal Court of Australia.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 861 of 1995
BETWEEN:
KIMBERLY-CLARK AUSTRALIA PTY LIMITED
APPLICANTAND:
AND BETWEEN:
AND:
ARICO TRADING INTERNATIONAL PTY LIMITED
FIRST RESPONDENTARIE KLIGER
SECOND RESPONDENTFRANCISCO MARTIN OTERO T/AS KOALA NAPPY EXPRESS
THIRD RESPONDENTARICO TRADING INTERNATIONAL PTY LIMITED
CROSS-CLAIMANTKIMBERLY-CLARK AUSTRALIA PTY LIMITED
CROSS-RESPONDENTJUDGE:
DOWSETT J
DATE:
2 NOVEMBER 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application to stay orders made by Burchett J pursuant to reasons for judgment published on 8 September 1998. The proceedings arose out of alleged breaches of a patent held by the applicant. There was a cross-claim for revocation of that patent. It is not necessary to go into the nature of the patent in detail save to say that it was for a particular form of diaper containing a pocket. Such a product is to be distinguished from a diaper without a pocket. There is to be an appeal against his Honour’s decision, and this is an application for a stay pending determination of that appeal.
The first respondent’s business, prior to the commencement of these proceedings, included the wholesale supply of both types of diaper together with other products, in particular tissues for wiping and cotton buds. The business of wholesaling tissues and cotton buds has been discontinued since the commencement of these proceedings, that aspect of the business being transferred to a company which, I infer, is associated with the first respondent.
The business currently conducted by the first respondent is the wholesale supply of the two forms of diaper to which I have referred. I infer from the evidence that it has one substantial client, the retailing organisation commonly known as “Big W”. I am willing to infer that the arrangements by which they supply to Big W are, in effect, critical to their current operation. The evidence on this subject was not as cogent as I would have expected, and I endorse the criticisms made of the respondent’s material by the applicant. The court was entitled to rather more detail than was provided. However, it is clear that the first respondent’s business is on a quite small scale compared with that of the applicant.
The application for a stay has three aspects. The first is for a stay of the injunction made by Burchett J restraining the first respondent from continuing to supply products which infringe the applicant’s patent. The second aspect of the application relates to certain mechanical orders made by his Honour to facilitate the calculation of damages and/or the taking of accounts. The third aspect of the application relates to the question of costs of the proceedings.
The argument before me has focussed on the first aspect, that is the injunction restraining the first respondent from continuing to stock and supply products in breach of the applicant’s patent. As I have said, the supply of the offending diapers constitutes a substantial part of the first respondent’s business, and the contract with Big W itself constitutes a substantial (I would suspect, crucial) aspect of that business. It is true that the trading arrangements with Big W were entered into after these proceedings were commenced, but nonetheless the first respondent was not then restrained from such supply, an application for an interlocutory injunction having failed.
It is a natural result of their trading throughout the period during which the proceedings were continuing that they have developed relations with suppliers. In the absence of any evidence that the applicant would suffer significant adverse consequences as a result of the first respondent continuing to trade pending the appeal, and in the light of the evidence which strongly suggests that if the first respondent were to be restrained, its business would collapse, I think it appropriate that pending the resolution of the appeal, the injunction restraining them from supplying diapers with pockets be stayed.
That stay should be at a price. It is largely because the first respondent has put its financial viability in issue that I am granting the stay. However the fact that their financial viability is in issue raises the question of whether the respondents will be able to meet any money judgment against them in favour of the applicant with respect to trading prior to the judgment and between now and the resolution of the appeal.
With respect to prospective trading, the position of the applicant ought be protected as far as possible. The respondents offer an undertaking not to dispose of any of their assets other than in the usual course of business pending the resolution of the appeal. That is, for the moment, adequate. However if further information were available as to the likely quantum of any claim likely to arise from the first respondent’s trading between now and the resolution of the appeal, I would be inclined to order a cash deposit or other security.
The best course for the moment is to note the undertaking and to grant to the applicant liberty to apply as it may be advised for such security or cash deposit at some time in the future. A stay should be granted upon those conditions.
As to the orders concerning the mechanics of the calculation of amounts owing pursuant to the judgment, I do not understand the respondents to persist in that aspect of the application, but in any event there is no basis for a stay of those orders. As to the application for a stay of the order as to costs, the costs have not been taxed, and the application therefore appears to be premature. In the circumstances, I will stand that aspect of the application over to be brought on by either party on two days notice in writing to the other.
I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.
Associate:
Dated: 27 November 1998
Counsel for the Applicant: Ms Goddard Solicitor for the Applicant: Sprusons Counsel for the Respondent: Dr Bennet & Ms Howard Solicitor for the Respondents: Banki Haddock Fiora Date of Hearing: 2 November 1998 Date of Judgment: 2 November 1998
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