Knead (Holding) S.A.L. v Fiordelli

[2018] FCCA 1472

FEDERAL CIRCUIT COURT OF AUSTRALIA

KNEAD (HOLDING) S.A.L. & ANOR v FIORDELLI [2018] FCCA 1472

Catchwords:
PRACTICE AND PROCEDURE – application in a case – injunctive relief – whether proper service was effected upon the respondent of all relevant pleadings, evidence and orders made by the Court – whether the respondent is the owner of the business alleged to have infringed the first applicant’s copyright – whether the applicant has established a prima facie case for the relief sought – whether the balance of convenience weighs in favour of the applicant.

INTELLECTUAL PROPERTY – whether copyright subsists in a logo commissioned by the first applicant – whether the first applicant owns copyright in a logo – whether the first applicant is able to sue for any infringement of that copyright – whether the respondent may have substantially reproduced the logo – whether the respondent may have infringed the first applicant’s copyright in the logo – whether the applicant is entitled to injunctive relief – injunctive relief granted.

Legislation:

Copyright Act 1968 (Cth) s. 115

First Applicant: KNEAD (HOLDING) S.A.L.

Second Applicant: BREAKFAST & CO. S.A.L.

Respondent: LORENZO VALANTINO FIORDELLI

File Number: SYG 1264 of 2018

Judgment of: Judge Emmett

Hearing date: 6 June 2018

Date of Last Submission: 6 June 2018

Delivered at: Sydney

Delivered on: 6 June 2018

REPRESENTATION

Solicitor for the Applicants: Mr Robert Arnold
(Baker McKenzie)

No appearance by or on behalf of the Respondent

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT Sydney

SYG 1264 of 2018

KNEAD (HOLDING) S.A.L.

First Applicant

BREAKFAST & CO. S.A.L.

Second Applicant

And

LORENZO VALANTINO FIORDELLI

First Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. On 4 May 2018, the applicants filed an application seeking final relief as well as interlocutory orders, including restraining the respondent from reproducing and using a work in respect of which the first applicant had copyright and orders for the removal of, inter alia, signage that infringed the first applicant’s copyright.

2. On 15 May 2018, the following Orders were made by me:

   “1. The proceeding continue by way of pleadings.

   2. The applicants file and serve a fully particularised Statement of Claim by 22 May 2018.

   3. The respondent is to file and serve any Defence by 5 June 2018.

   4. The applicants to provide a copy of this Order to the respondent forthwith.

   5. The matter is otherwise stood over for further directions on 6 June 2018 at 9:30am, before me.

   6. In the event that there is no appearance by or on behalf of the respondent on 6 June 2018, the application for interlocutory relief filed on 4 May 2018 may proceed without further notice.”

3. A copy of those Orders was served on the respondent on 16 May 2018. 

4. In accordance with those Orders, a Statement of Claim was filed on 22 May 2018 and served upon the respondent on that date. I note the evidence of the process server that those documents were served personally on 24 May 2018 on the respondent.

5. No document has been filed by or on behalf of the respondent, either in accordance with the Court’s Orders or otherwise. To date, there has been no participation by or communication from the respondent in this proceeding.

6. The first applicant is a holding company incorporated under the laws of the Republic of Lebanon and owns intellectual property and property in respect of a franchising business in relation to Lebanese food. In particular the first applicant owns the copyright in a work described as the Logo, copy which is annexed and marked “Annexure A”. 

7. The second applicant is a company incorporated under the laws of the Republic of Lebanon and operates a Lebanese eatery franchise specialising in Lebanese food, including baked foods, in Lebanon the Middle East and Canada. The second applicant proposes to operate similar eateries in Australia using the copyright in the Logo by licence from the first applicant.

8. The applicants plead that they have engaged in extensive promotion throughout the world and sale of Lebanese baked goods in Lebanon, the Middle East and Canada using the Logo. The applicants plead that they have acquired a significant and valuable reputation and goodwill in the Logo throughout the world including Australia.

9. The applicants plead that the respondent owns a bakery located in Revesby NSW (“the Respondent’s Bakery”) which has advertised and offered for sale since early May 2018 Lebanese baked goods under the Logo, without license. A copy of the offending use of the Logo by the respondent is attached and marked “Annexure B”.

10. The first issue in considering whether the interlocutory orders sought should be made is to be satisfied as to the proper service upon the respondent of all relevant pleadings, evidence and orders made by the Court.

11. The applicants were represented by their solicitor, Mr Robert Arnold, who has taken the Court carefully through the abundance of evidence of various process servers in respect of personal service on the respondent of those relevant documents. In particular, the following affidavits of service were read deposing as to service of all pleadings, affidavit evidence filed and Orders of the Court:

    a)Joseph Khoury               sworn 10 May 2018        

    b)Behiye Kol  affirmed 10 May 2018    

    c)Joseph Khoury               sworn 16 May 2018

    d)Lynna Michelle Singh    sworn 17 May 2018

    e)2 x Behiye Kol               affirmed 17 May 2018

    f)Behiye Kol   affirmed 22 May 2018

    g)Lynda Michelle Singh    sworn 25 May 2018

12. I am satisfied on the evidence before me that personal service was properly effected on each occasion, the last of which was service on 16 May 2018 of the Orders made by me on 15 May 2018, recited in Paragraph 2 above.

13. The affidavit of Mahmoud Sobh, affirmed 8 May 2018 and served on the respondent on 10 May 2018, deposes relevantly to the creation of the Logo. Mr Sobh is the Deputy General Manager of the first and second applicants. 

14. Mr Sobh deposed that in 2011 the first applicant engaged the services of Pearlfisher, a partnership organised and existing under the laws of England, to design a new logo for its business with the main purpose of rebranding its business and achieving further international expansion.

15. The Logo was created by Pearlfisher and was the subject of a Deed of Assignment to the first applicant on 28 March 2018. Under that Deed of Assignment, Pearlfisher assigned all copyright in respect of the Logo to the first applicant, including any rights of action that may arise from any infringement of the Logo occurring before the date of the Deed of Assignment.  A copy of that Deed of Assignment was tendered and marked Exhibit 1A in this application. 

16. In the circumstances, I am satisfied that the first applicant owns the copyright in the Logo. I am also satisfied that the first applicant is able to sue for any infringement of its copyright in the Logo and in which copyright appears to subsist.

17. Comparing the Logo and the signage on the Respondent’s Bakery, I am satisfied that it is at least reasonably arguable that there is a substantial reproduction by the respondent of the Logo in the course of operation the Respondent’s Bakery.

18. The applicants also read the affidavit of Robert Anthony Arnold sworn 2 May 2018 deposing to the searches conducted by the applicants’ solicitors, Baker & McKenzie, in seeking to identify ownership in respect of the Respondent’s Bakery.

19. I also note in particular the affidavit of Mr Craig Raymond Douglas, sworn 30 April 2018, in relation to the attempts to identify the owner of the Respondent’s Bakery. Paragraphs 4 to 22 of that affidavit are as follows:

    “Lorenzo Valantino Fiordelli

    4. On 23 January 2018, I was retained by Baker & McKenzie to undertake investigations into what appeared to be Lebanese bakery opening at 106 Milperra Road, Revesby in the State of New South Wales (Revesby Address) under the name "Zaatar w Zeit". The Revesby Address consists of a service station and a number of outlets including a "Subway" restaurant that operate on shared lots on the land.

    5. At the time, Baker & McKenzie provided me with a photograph of the Lebanese Bakery at the Revesby Address taken in January 2018. Annexed and marked with the letter A (page 1) is a copy of this photograph.

    6. On 24 January 2018, at my instruction and direction, an agent named Joseph Khoury attended the Revesby Address and took a photograph of the outside of the premises where it appeared that the Lebanese bakery was to be located. Annexed and marked with the letter B (page 2) is a copy of this photograph.

    7. On 24 January 2018, I made attempts to call the mobile number identified in the photograph at Annexure A - 0452 323 232 (First Bakery Number). The First Bakery Number was not active at the time.

    8. I then conducted a Google search in respect of the First Bakery Number and found that it was used by a travel agency named "Concord Travel Agency". Annexed and marked with the letter C (page 3) is a screenshot of the website for Concord Travel Agency.

    9. Annexed and marked with the letter D (pages 4-6) is a current and historical organisation extract from the Australian Securities and Investments Commission (ASIC) for Concord Travel Agency Pty Ltd that I purchased and obtained from CITEC Confirm on 29 January 2018. CITEC Confirm is a searching service with which Nationwide Research Group has an account.

    10. The company secretary for Concord Travel Agency Pty Ltd is Lorenzo Valantino Fiordelli.

    11. On 29 January 2018 at around 1 0:00am, I called the service station at the Revesby Address, Speedway Revesby, on [phone] and had a conversation under pretext with a man to the following effect:

    I said: What's the name of the guy running the bakery?

    He said: I don't know.

    I said: Can you get him to call me back? I'm trying to sell him some fridges.

    12. At around 12:00pm, I received a call from the number 0488 080 808 (Second Bakery Number). The man identified himself as Firaz Papathopolo and we had a conversation under pretext to the following effect:

    He said: I'm the one putting the bakery together.

    I said: Let me send you some information about the fridges and other cooking equipment. Do you have an email address?

    He said: You can send it to Lorenzo [email protected].

    I said: Great. How long until you open?

    He said: I reckon we are a couple of weeks away from opening.

    13. On 29 January 2018 at around 4:30pm, at my instruction and direction, Mr Khoury attended the Revesby Address and had a conversation with Camille, an operator at Speedway Revesby to the following effect:

    Mr Khoury said: It's great that this bakery is about to open.

    Camille said: Yeah, I'm going to help run it. I hope I will get part of the ownership.

    Mr Khoury said: Who owns the bakery now?

    Camille said: A guy called Lorenzo who previously ran a travel agency, but he closed it down last year. He works with Elias, the owner of this service station right now, but he's building the bakery next door.

    Mr Khoury said: That's great. When will it open? Will it be soon?

    Camille said: A couple of weeks - we 're just waiting for a delivery of baking equipment that's late.

    14. On 1 March 2018, I am informed that Mr Khoury, at my instruction and direction, rang the Second Bakery Number and had a conversation with a man who identified himself as Lorenzo to the following effect:

    Mr Khoury said: Hi, is this Firaz?

    Mr Fiordelli said: No, this is Lorenzo.

    Mr Khoury said: Are you the guy from the bakery?

    Mr Fiordelli said: That's me, I'm the guy.

    Mr Khoury said: I have documents for you.

    Mr Fiordelli said: What's this in relation to?

    Mr Khoury said: The bakery at Revesby.

    Mr Fiordelli said: Okay, bring it around to my home address. It is 107 The Avenue in Bankstown (Bankstown Address).

    15. I am informed that Mr Khoury at my instruction and direction then attended the Bankstown Address at around 3:30pm and effected personal service of the demand letter dated 28 February 2018 addressed to Lorenzo Valantino Fiordelli (Fiordelli Demand Letter). At the time, Mr Khoury had a conversation with Mr Fiordelli to the following effect:

    Mr Khoury said: Hi, are you Lorenzo Fiordelli?

    Mr Fiordelli said: Yes.

    Mr Khoury said: You have been served with this letter.

    Mr Fiordelli said: Ok thanks.

    16. Mr Fiordelli then briefly reviewed the Fiordelli Demand Letter by flicking through it. Mr Khoury then had a conversation with Mr Fiordelli to the following effect:

    Mr Khoury said: I am willing to accept this document if you want to sign it now.

    Mr Fiordelli said: No thanks, I will need to review it and I'll take it to my solicitors.

    17. Mr Khoury then left the Bankstown Address.

    18. Annexed and marked with the letter E (pages 7-12) is a copy of the Fiordelli Demand Letter.

    19. On 6 April 2018 at about 10:30am, Mr Khoury at my instruction and direction attended the Revesby Address and took a photograph of the unopened Lebanese bakery. Annexed and marked with the letter F (page 13) is a copy of this photograph. At the time, Mr Khoury had a conversation with an employee at the Speedway Revesby to the following effect:

    Mr Khoury said: When is the bakery going to open?

    He said: I think some time this week.

    20. On 17 April 2018 at about 9:00am, Mr Khoury at my instruction and direction attended the Revesby Address and took a photograph of the Lebanese bakery that had still not opened. Annexed and marked with the letter G (page 14) is a copy of this photograph.

    21. On 21 April 2018 at about 9:20am, Mr Khoury at my instruction and direction attended the Revesby Address and took a photograph of the Lebanese bakery that had still not opened. Annexed and marked with the letter H (page 15) is a copy of this photograph.

    22. The First Bakery Number was not active until about 12 February 2018 when it directed to a voicemail service. None of my numerous attempts to call the number (including today) have resulted in anyone picking up my call.”

20. Based on that evidence, and in light of the searches conducted by Baker & McKenzie in its attempts to identify the owner of the Lebanese bakery at Revesby, I am satisfied for the purposes of this application that the respondent is the owner.

21. In considering whether the interlocutory orders seeking to injunct the respondent should be made, I am satisfied that the applicants have pleaded and established a prima facie case for the relief sought arising out of the allegation of infringement of the first applicant’s copyright in the Logo.

22. In relation to the balance of convenience, I have regard to the affidavit evidence of Mr Sobh at paragraphs 16 to 25, and paragraphs 57 to 60, as follows:

    “Zaatar w Zeit restaurants

    16. Zaatar (or Za'atar in Arabic) is a thyme-based spice mix used in traditional Middle Eastern cuisine. Zeit (in Arabic) means oil in this context.

    17. The first Zaatar w Zeit restaurant opened in Sodeco, Lebanon in 1999. Zaatar w Zeit restaurants originally specialised in traditional Lebanese dough-based foods such as manousheh (plural: manakish) which is a flat bread base with various toppings.

    18. The first franchised Zaatar w Zeit restaurant opened in Kuwait in 2003 and since then the Zaatar w Zeit restaurant chain has rapidly expanded across the Middle East and internationally. Zaatar w Zeit restaurants are now located in:

    (a) Lebanon;

    (b) Jordan;

    (c) United Arab Emirates;

    (d) Qatar;

    (e) Kuwait;

    (f) Saudi Arabia (KSA); and

    (g) Canada.

    19. There are now over 65 Zaatar w Zeit restaurants globally.

    20. With its global expansion, the menu available at Zaatar w Zeit restaurants also expanded beyond its original bakery-style offerings and now includes a wide range of foods including wraps, salads, Lebanese street food, skillets, pizza, chips and desserts. The food served at Zaatar w Zeit restaurants is authentic, fresh, modem, fast and convenient. Exhibited at pages 1 and 2 of Exhibit MS-1 is a copy of the current menu available at Zaatar w Zeit restaurants.

    21. The global expansion of the Zaatar w Zeit restaurant franchise is continuing. Knead has set out an action plan for expanding the Zaatar w Zeit franchise in Canada and Australia specifically due to the increasing numbers of Lebanese diaspora in those jurisdictions. Knead has progressed with its action plan in Canada through a self-owned structure, established as the necessary platform to franchise and launch its business; however, the business expansion plan for Australia has been suspended until matters, the subject of these legal proceedings, are resolved. Exhibited at pages 3 to 35 of Exhibit MS- I are copies of articles relating to the opening of the Zaatar w Zeit outlet in Vancouver, Canada.

    22. Knead is planning to open 30 Zaatar w Zeit restaurants in Australia within the next 5 years with plans to further expand this to over 200 Zaatar w Zeit restaurants in Australia by 2030. In North America, the Knead plans to expand the Zaatar w Zeit restaurant chain by over 400 restaurants by 2030.

    23. In relation to the countries identified in paragraph 18 above which already have established Zaatar w Zeit restaurants, the Applicants plan to expand the existing Zaatar w Zeit restaurant chain by adding a further 175 restaurants by 2030.

    24. The Zaatar w Zeit restaurant chain has been extremely successful. Exhibited at page 1 of Confidential Exhibit MS-2 are details of the Applicants' revenue generated from the Zaatar w Zeit restaurant franchise during the period of January 2014 to December 2017.

    25. At all times, the Applicants' restaurants and restaurants franchised or authorised by the Applicants have traded under the Zaatar w Zeit name and brand.

    […]

    57. I am extremely concerned about the imminent opening of the Unauthorised Bakery in Revesby, Sydney, Australia by the Respondent.

    58. I am concerned that Australian consumers are likely to be misled and believe that the Unauthorised Bakery is one of the Applicants' Zaatar w Zeit restaurants when it is not. As set out in paragraphs 53 to 55 above, consumers in Australia that have seen the Unauthorised Bakery have already contacted the Applicants indicating that they believe that it is the Applicants' restaurant that is opening in Sydney when this is not the case.

    59. As I have stated in paragraph 22 above, the Applicants have plans to launch Zaatar w Zeit restaurants in Australia in the near future. The opening of the Unauthorised Bakery will deny the Applicants' the opportunity of being the first to launch its Zaatar w Zeit restaurants in Australia. Any Zaatar w Zeit restaurants opened by the Applicants or with the Applicants' approval will lose sales to the Unauthorised Bakery, if it is opened.

    60. The Unauthorised Bakery also has the potential to severely damage the Zaatar w Zeit brand and business. The Applicants will not have control over the quality of the products or services offered by the Respondent at the Unauthorised Bakery. I am aware from my operational experience in the global food services industry that if consumers are disappointed with these products or services, this will tarnish the Zaatar w Zeit brand and they will take their business to other restaurants. I am further aware from this experience that adverse consumer experiences are also frequently shared over social media which can lead to irreversible reputational damage and lost sales globally.”

23. I accept that, if made, the orders would involve the respondent in some expense in complying, such as the costs of new signage. However, the respondent has not provided any evidence to this Court of any particular inconvenience.

24. Based on the evidence before me, the respondent’s signage appears to be a substantial reproduction of the Logo in which the first applicant’s copyright subsists. The respondent has taken no step to suggest otherwise.

25. Based on the evidence before me, I accept that the applicants will suffer cost and inconvenience if the respondent is permitted to retain and use signage involving use of the Logo, which use may be an infringement of the first applicant’s copyright.

1. Based on the evidence presently before me and in the absence of any evidence to the contrary, I am satisfied that the balance of convenience weighs in favour of the interlocutory orders sought by the applicants being made.

2. Further, I note the undertaking proffered by the applicants through their solicitor, Mr Arnold, as to damages, and I accept that undertaking. 

3. In the circumstances, I am satisfied that the following interlocutory orders should be made:

1)    The respondent be restrained until the final determination of the proceedings or until further order from:

(a) reproducing the Zaatar w Zeit Logo;

(b) taking any further action to open or operate the bakery at 106 Milperra Road, Revesby NSW or any other business under or by reference to the Zaatar w Zeit Logo; and

(c) aiding, abetting, counselling, procuring, authorising or acting in concert with any other person or entity to engage in conduct prohibited by paragraphs 1(a) and 1(b).

2)    The respondent take all necessary steps within 14 days to remove the Zaatar w Zeit Logo from all parts of the Revesby Bakery, including on the awning, as well as any signage, posters, flyers, menus, business cards, stationary or other promotional materials, until the final determination of the proceedings or until further order.

3)    The respondent ensure that the parts and materials in paragraph 2 are kept secure in the possession, custody or control of the respondent pending the final determination of the proceeding.

4)    On or before 12:00 noon on 6 July 2018, the respondent provide Baker McKenzie an affidavit which provides an inventory of all parts and materials in the possession, custody or control of the Respondent in paragraph 3 including item descriptions, quantities and current location(s).

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Emmett

Deputy Associate: 

Date: 14 June 2018

“ANNEXURE A”

“ANNEXURE B”