Myosa Pty Ltd v Resmed Limited
[2017] FCA 1187
•5 October 2017
FEDERAL COURT OF AUSTRALIA
Myosa Pty Ltd v Resmed Limited [2017] FCA 1187
File number(s): QUD 395 of 2017 Judge(s): GREENWOOD J Date of judgment: 5 October 2017 Catchwords: PRACTICE AND PROCEDURE – consideration of an application by the respondent to dismiss the applicant’s proceeding pursuant to s 31A(2) of the Federal Court of Australia Act 1976 and r 26.01(1)(a) of the Federal Court Rules 2011 – consideration of an application to strike out the applicant’s statement of claim in the principal proceeding – consideration of the basis upon which an order for costs ought to be made in exercise of the discretion under s 43 of the Federal Court of Australia Act 1976 Legislation: Federal Court of Australia Act 1976, s 31A(2), s 43
Federal Court Rules 2011, r 26.01(1)(a)
Cases cited: Spencer v The Commonwealth (2010) 241 CLR 118 Date of hearing: 4 October 2017 Date of last submissions: 4 October 2017 Registry: Queensland Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 27 Counsel for the Applicant: D Shavin QC; D B Larish Solicitor for the Applicant: Bennett & Philp Lawyers Counsel for the Respondent: EJC Heerey QC Solicitor for the Respondent: DLA Piper Australia
Table of Corrections 9 October 2017 The representation for Counsel and Solicitor has been transposed as follows:
Counsel for the Applicant: D Shavin QC; D B Larish
Solicitor for the Applicant: Bennett & Philp Lawyers
Counsel for the Respondent: EJC Heerey QC
Solicitor for the Respondent: DLA Piper Australia
ORDERS
QUD 395 of 2017 BETWEEN: MYOSA PTY LTD ABN 48 605 327 124
Applicant
AND: RESMED LIMITED ABN 30 003 765 142
Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
5 OCTOBER 2017
THE COURT ORDERS THAT:
1.The interlocutory application of the respondent filed on 25 August 2017 is dismissed.
2.The respondent, Resmed Limited, pay the costs of the applicant, Myosa Pty Ltd, of and incidental to the application on an indemnity basis.
3.Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, the reasons for judgment in support of these orders are made and published from Chambers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GREENWOOD J:
These proceedings are concerned with an interlocutory application filed by the respondent in the principal proceeding, Resmed Limited (“RL”), for an order that the application brought by Myosa Pty Ltd (“MPL”) be summarily dismissed under s 31A(2)(b) of the Federal Court of Australia Act 1976 (Cth) (the “Act”) and/or r 26.01(1)(a) of the Federal Court Rules 2011 (the “Rules”) on the basis that the applicant has “no reasonable prospect of successfully prosecuting the proceeding”.
In the alternative to that order, RL sought an order that the statement of claim be struck out under r 16.21(1)(e) of the Rules.
The application was returnable yesterday morning. The application was dismissed with an order that RL pay the costs of MPL of and incidental to the application and that those costs be paid on an indemnity basis. As to the costs order, I gave ex tempore reasons. As to the dismissal of the application, I said that I would publish reasons, later. These are those reasons.
Yesterday morning I asked counsel for RL whether RL intended to press for an order that the proceeding be summarily dismissed. I suggested to RL’s counsel that having regard to material and particularly the affidavit of Ms Nicole Louise Murdoch, affirmed 25 September 2017, it seemed clear enough that RL would not be able to satisfy the tests set out in Spencer v The Commonwealth (2010) 241 CLR 118. In particular, the observations of French CJ and Gummow J at [22] to [25] are important. So too are the observations of Hayne, Crennan, Kiefel and Bell JJ at, particularly, [59] and [60]. These observations of French CJ and Gummow J on matters of high level principle at [25] should be noted:
Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
There is no suggestion that there is binding authority of the High Court which is an answer to the contended claim of the applicant. In addition, it should be noted that Hayne, Crennan, Kiefel and Bell JJ observed at [60] that “full weight must be given to the expression [‘no reasonable prospect’] as a whole”. The Federal Court may only exercise power under s 31A “if, and only if, satisfied that there is ‘no reasonable prospect’ of success”. Their Honours also said, “[o]f course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly”: [60].
In response to my question, counsel for RL said that the application to dismiss MPL’s application summarily would not be pressed. The election not to press that part of the application seemed to follow as a matter of course in the sense that the application had no prospects of success whatsoever. I will return to that aspect of the matter later in these reasons.
RL, however, pressed that part of the application for an order that the statement of claim be struck out as failing to disclose a reasonable cause of action.
As to that, the statement of claim asserts that MPL is the owner of the registered trade mark “Myosa” having a priority date of 1 December 2014. The Myosa trade mark (1661673) is registered in Classes 10, 41 and 44 in these terms (para 3):
… class 10 intra‑oral appliances and devices, including mandibular advancement splints (a medical device) and other intra‑oral appliances and devices used to treat sleep disorders, class 41 education and training services relating to snoring and sleep disorders including such services associated with the use of medical devices for snoring and sleep disorders and class 44 medical and medical assistance services including such services for the treatment of snoring and sleep disorders and use of medical devices for snoring and sleep disorders.
MPL says that since 2015 it has used the “Myosa” trade mark to promote a range of intra‑oral appliances used to treat and control sleep disorders. It says that it possesses a reputation in its name and the “Myosa” trade mark within Australia in the field of the treatment and control of sleep disorders: para 6. At paras 8 and 9, it says this:
8.From a date not presently known to the Applicant but believed to be in early 2017 the Respondent has promoted and marketed and continues to promote and market the Respondent’s products and services by reference to the Myosa Trade Mark.
Particulars
The best particulars which the Applicant can provide until the completion of discovery and other interlocutory steps are:
(a)the Respondent’s website at Myosa.resmed.com, a copy of the leading page of which appears as Annexure A;
(b)the Respondent’s Twitter account postings, a copy of which appears as Annexure B,
each of which is accessible to Australian consumers.
At the trial the Applicant will rely upon all instances of the use of the Myosa Trade Mark in connection with the promotion, marketing and provision of the Respondent’s products and services.
9.The conduct pleaded in paragraph 8:
(a)constitutes use of the Myosa Trade Mark or a sign which is deceptively similar thereto; and
(b)in respect of the provision of education and training services relating to snoring and sleep disorders, being services in respect of which the Myosa Trade Mark is registered.
Having regard to those matters, MPL pleads that, in the premises, RL has infringed the Myosa trade mark pursuant to s 120(1) of the Trade Marks Act 1995 (Cth) (“TMA”).
In addition, MPL says that by reason of the matters pleaded, the conduct of RL will and is calculated to cause persons involved with the treatment, control and management of sleep disorders and consumers affected by those conditions to believe that RL’s products and services have been provided by or under the authority of or are connected in the course of trade or commerce with MPL or have the sponsorship or approval of MPL when that is not so.
MPL also pleads a cause of action based upon a contravention of s 18 of the Australian Consumer Law.
As to the trade mark issue, the pleading asserts direct infringement by RL on the footing that it has engaged in conduct of using, in the course of trade, the Myosa trade mark in connection with the Class 41 services for which the mark is registered, without the authority of MPL.
It can be seen from the particulars to para 8 that reliance is placed upon the contended fact that RL’s website “Myosa.resmed.com” is accessible to Australian consumers. The essential contention of RL is that MPL has failed to identify any conduct of RL which could amount to use of a trade mark to distinguish any services provided in the course of trade, in Australia, for the purposes of ss 4, 17 and 120(1) of the TMA and that MPL’s case does not identify any conduct of RL which could amount to conduct in contravention of s 18 of the Australian Consumer Law. The essential point is that Annexure A to the statement of claim shows only part of the front page of the website myosa.resmed.com and a more complete analysis of the website shows that the services on offer through that website are limited to services provided in the United Kingdom and, in particular, clinics in London, Harwell, Cardiff and Abingdon. Similarly, the Facebook and YouTube pages connected to the webpage are said to suggest that the relevant business operates in the United Kingdom, showing an address in Oxfordshire. These submissions fundamentally went to the application for summary dismissal of the proceeding. However, the statement of claim relies upon conduct said to be conduct of RL in promoting and marketing RL’s products and services by reference to the Myosa trade mark by reason of the website “Myosa.resmed.com”, said to be a website of RL.
The affidavit relied upon by MPL to resist the summary dismissal application is the affidavit of Ms Murdoch affirmed 25 September 2017. In that affidavit, Ms Murdoch says that she entered the domains “resmed.com” and “resmed.com.au” into a browser which reveals that interrogating those websites re‑directs the inquirer to the website “resmed.com/au/en/consumer.html”, otherwise described as the “ResMed website”. Ms Murdoch says that by clicking on the box on the ResMed website “Find a Resmed accredited outlet near you” Australian internet users using the ResMed website are able to find Australian locations supplying ResMed products and in order to purchase products a user selecting particular products, through links on the ResMed website, is taken to a contact page which provides an Australian telephone number. Ms Murdoch says that there is a direct link between the ResMed website and myosa.resmed.com and those links are said to operate in this way. First, the ResMed website contains a link to a ResMed YouTube page. Second, clicking on that link takes the inquirer to the relevant YouTube page where a number of videos can be examined. Two videos published on 23 February 2017 are entitled “Why do we snore?” and “What is OSA?”. Third, both videos are said to encourage users to visit myosa.resmed.com by including, above a ResMed trade mark, the text “visit myOSA.resmed.com”.
The myosa.resmed.com website contains the word MYOSA both in the domain name and on the website itself and it is correct to say that on the website pages “MYOSA” is featured prominently. It provides the user with educational material through a series of links to articles relating to snoring and sleep disorders.
MPL says that the educational material on myosa.resmed.com is accessible to Australian internet users, based on the material deposed to by Ms Murdoch supported by her annexures. MPL says that Australian internet users with an Australian email address ending in “.com.au” are able to both subscribe to obtain new product alerts, blog articles and download an eBook. Ms Murdoch downloaded the eBook on offer. Australian internet users taking that step receive an email to their address entitled “Thank you for downloading our CPAP Travel Guide”. It contains a link to the “myOSA blog” which in turn provides further educational material and offers products for sale. Ms Murdoch received an email, in Australia, at her email address thanking her for downloading the CPAP Travel Guide.
MPL says that interrogating resmed.com and/or resmed.com.au, through a browser, takes Australian internet users, by re‑direction, to the ResMed website as earlier described and that by following the links which are said to be a “direct link”, an Australian internet user is taken from the ResMed website to the sub‑domain “myosa.resmed.com” and by clicking various links the Australian internet user is taken to the YouTube pages and videos encouraging Australian internet users to visit myosa.resmed.com. RL says that these direct links are tenuous and the video information on the ResMed YouTube page contains many videos and only two of those from 23 February 2017 have been selected from many others. These other videos, inconveniently for MPL, it is said, do not encourage Australian internal users to visit myosa.resmed.com.
RL says that the entity providing services is not RL but is, in fact, an entirely different entity and even when the email dated 22 September 2017, page 603 of Ms Murdoch’s affidavit, is carefully considered, one can see that it comes from ResMed UK not RL.
Nevertheless, the contention in the statement of claim is that RL is an entity which is engaging in the conduct of promoting and marketing services falling within the scope of the Class 41 services, in the course of trade, by reference to the trade mark “Myosa” and it does so by use of a website described as “Myosa.resmed.com”, and that website is accessible to Australian consumers. The contention that RL is engaged in that particular conduct will either be made good or not at the trial when findings of fact are made. RL might prove that it has nothing to do with the “Myosa.resmed.com” website, in all the relevant senses that matter in addressing the question of whether statements made or material available on a particular website evidence infringing conduct on the part of RL, in Australia. At the moment, the statement of claim pleads that RL is engaging in infringing conduct in connection with use of the trade mark in respect of the provision of Class 41 services by reason of the particularised website. RL says that it is not so engaged, but that is simply part of the factual and legal enquiry to be undertaken at trial. The pleading pleads a cause of action. It is either good or bad and that will turn on the ultimate findings of fact. The issue for the pleading is whether it frames material facts which assert a cause of action which might be made good or not. The role of the pleading is to frame material facts which enable evidence to be called probative of those facts. That is all that is necessary subject to whatever position is taken by RL in the defence which might broaden the issues. A reply will, obviously enough, be put on and once the pleadings are closed, the pleadings will frame the issues which will determine material relevant for discovery.
The question of whether there is any relationship of any relevance between RL and the operation of the website “Myosa.resmed.com” is in part, at least, laid to rest (at least for present purposes) by reason of a letter the solicitors for RL, DLA Piper Australia, wrote to the solicitors for MPL, Bennett & Philp, on 27 July 2017. That letter was written in response to a letter from Bennett & Philp to RL dated 13 July 2017. In the Bennett & Philp letter, complaints are made about the contended conduct of RL in relation to material appearing on the “myosa.resmed.com” sub‑domain of the “resmed.com” domain. That letter asserted trade mark infringement, among other things. In the response of 27 July 2017, DLA Piper Australia said that RL declined to provide the undertakings sought in the letter of 13 July 2017 and added this observation:
However as a gesture of good faith, our client [RL] is willing to temporarily [take] down its website located at myosa.resmed.com pending the resolution of this matter.
[emphasis added]
That proposition was put by DLA Piper Australia on the footing that making the offer did not constitute an admission of any of the allegations made by MPL, nor a concession as to the validity of the trade mark registration. It would seem that in the defence, there will be a cross‑claim for cancellation of the trade mark. In any event, for present purposes, there could be very little doubt that RL, through its lawyers, who have carefully turned their mind to the question, are making it plain to MPL that RL’s website located at myosa.resmed.com could be taken down by RL pending the resolution of the matter. Thus, there can be little doubt that RL is in a position to assert control over the sub‑domain, which the lawyers describe as, so far as RL is concerned, “its website located at myosa.resmed.com”. Thus, there would seem to be some obvious coherence in MPL pleading that conduct of RL is occurring by reason of things going on through the sub‑domain “Myosa.resmed.com”.
MPL says that after discovery it will give full particulars of all of the conduct it relies upon but for present purposes it relies upon things occurring through and in connection with the website “Myosa.resmed.com”. Taken in connection with the links, the material suggests that an Australian internet user can start with that sub‑domain and pursue and obtain access to the materials in the way described by Ms Murdoch.
Accordingly, the application to strike out the statement of claim was dismissed.
Because there never was any prospect of success in relation to para 1 of the interlocutory application and para 2 of the application has been unsuccessful, the question of costs of and incidental to the application arose for disposition. Plainly enough, MPL should have those costs. However, I exercised the discretion under s 43 of the Act to order that those costs be paid on an indemnity basis. That followed for two reasons, principally. First, para 1 of the application demonstrably failed to satisfy the Spencer tests. Second, no attempt had been made to ventilate, inter‑parties, the criticisms RL made of the statement of claim. I have no doubt that had RL launched a frontal attack on the pleading in correspondence, solicitors and counsel for MPL would have responded with a synthesised version of Ms Murdoch’s affidavit and a synthesised explanation of why the pleading pleads a cause of action bearing a relationship to the sub‑domain, “myosa.resmed.com”. Of course, RL would have been entirely familiar with such a notion because its solicitors had already been instructed as at 27 July 2017 that RL could, and would be willing to, temporarily take down its website located at “myosa.resmed.com”.
I am satisfied that a very substantial body of costs could have been avoided by an orthodox exchange between the solicitors in which criticisms of the pleading could and should have been put to the solicitors and counsel for MPL. Section 37M of the Act expresses in contemporary language what has been the practice on this topic at least for decades. The practice for decades has been to plainly identify the criticisms in a pleading so that the pleader might take steps to take account of the criticisms and if necessary take steps to plead any relevant further matters. This has been done over time so as to avoid unnecessary costs being incurred if a perceived problem can be identified plainly and then addressed equally plainly. In modern times, this approach is called the “overarching purpose” and now s 37M(1) of the Act says that the overarching purpose of civil practice and procedure provisions (like strike‑outs and summary dismissals) is to facilitate the just resolution of disputes according to law and “as quickly, inexpensively and efficiently as possible”. The parties are to act consistently with the overarching purpose and must conduct the proceeding consistent with that purpose. In this case, RL simply made an application for summary dismissal and, in the alternative, a strike‑out of the pleading without discharging the statutory obligation in s 37N of the Act having regard to s 37M.
The interests of justice require that the costs to be paid by RL on an indemnity basis.
I certify that the preceding twenty‑seven (27) numbered paragraph are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 5 October 2017
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