Nokia Corporation v Liu

Case [2009] FCAFC 138

FEDERAL COURT OF AUSTRALIA

Nokia Corporation v Liu [2009] FCAFC 138

INTELLECTUAL PROPERTY – Infringement of trade mark – common practice to split hearings on liability and relief – scope of damages assessment not limited to infringements proved at liability hearings stage

PRACTICE AND PROCEDURE – construction of consent orders – evidence of surrounding circumstances admissible – context includes well accepted practices adopted in trade mark infringement litigation

COSTS – trademark infringement claim - whether court should otherwise order under Federal Court Rules O 62 r 36A given judgment less than $100,000 – prescribed courts for purposes of Trade Mark Act – costs where hearing on liability and damages assessment split - cost containment principle applied to assessment of damages – nominal damages awarded for infringement – no order as to costs of assessment proceedings

Trade Marks Act 1995 (Cth) ss 133-137, 120(1), 120(2)
Federal Court of Australia Act 1976 (Cth) ss 32AB(6), 43(2)
Copyright Act 1968 (Cth) s 131D
Federal Court Rules O 62 r 36A, O 58 r 18, O 82

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 cited
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 cited
Repatriation Commission v Nation (1995) 57 FCR 25 cited
Athens v Randwick City Council (2005) 64 NSWLR 58 cited
Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90 cited
Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 applied
Kirkpatrick v Kotis [2004] NSWSC 1265 applied
Ho v Grigor [2006] FCA 417 cited
A G Spalding & Bros v A W Gamage (1913) 30 RPC cited
LED Builders Pty Ltd v Eagle Homes Pty Ltd (No 3) (1996) 36 IPR 293 cited

National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199 applied
Aktiebolaget Manus v R J Fullwood & Bland Ltd (1949) 66 RPC 285 distinguished
Sun Microsystems Inc v Amtec Computer Corp Ltd [2006] FSR 35 cited
Independiente Ltd v Music Trading-on-Line (HK) Ltd [2007] FSR 21 cited
Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 784 cited
General Tire and Rubber Company v Firestone Tyre and Rubber Company Ltd [1976] 93 RPC 197 cited
Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293 cited
House v The King (1936) 55 CLR 499 cited
Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 cited
Collier Constructions Pty Ltd v Foskett Pty Ltd (1992) 33 FCR 591 cited
Shahid v Australian College of Dermatologists (No 2) [2008] FCAFC 98 cited

Kerly’s Law of Trade Marks and Trade Names, Ch 19 (14th ed, 2005)

NOKIA CORPORATION v ALBERT LIU

No VID 90 of 2009

FINN, SUNDBERG AND EDMONDS JJ
2 OCTOBER 2009
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 90 of 2009
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

NOKIA CORPORATION
Appellant
AND:

ALBERT LIU
Respondent

JUDGES:

FINN, SUNDBERG AND EDMONDS JJ

DATE OF…

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Nokia Corporation v Liu [2009] FCAFC 138
Case
[2009] FCAFC 138
Decision Date

CaseChat Overview and Summary

In the case of Nokia Corporation v Liu, Nokia Corporation, a Finnish company involved in the manufacture and distribution of mobile phones and accessories, sought legal action against Mr Liu for trademark infringement. The dispute centred around allegations that Mr Liu manufactured and sold goods bearing Nokia’s trademarks without authorisation. The primary instance of infringement mentioned in the case involved the sale of a mobile phone and accessories through Mr Liu’s eBay store, along with a consignment of goods seized by Australian Customs. Nokia filed its claim on 26 March 2008, and Mr Liu consented to an interlocutory injunction preventing Customs from releasing the seized goods. The case led to consent orders on 4 June 2008, which included Mr Liu admitting to trademark infringement and agreeing to restrain from future infringements, deliver up goods for destruction, provide detailed supplier information, and make a full discovery of all infringing activities.

The court needed to determine whether the primary judge had correctly interpreted the Federal Court Rules regarding the assessment of costs in cases where a monetary judgment is less than $100,000. The central issue was whether the consent orders limited the scope of the assessment of damages and whether these orders complied with the requirements of Order 62 Rule 36A(1) of the Federal Court Rules. Specifically, the court needed to assess whether the consent orders adequately addressed the costs of the proceedings and whether the primary judge had erred in his interpretation of these rules.

The court concluded that the primary judge had indeed erred in his appreciation of the circumstances and the application of Order 62 Rule 36A(1). The distinctive nature of the case and the specific consent orders required a different approach to cost assessment. The court found that the consent orders did not appropriately address the costs of the proceedings as mandated by the rules, particularly in relation to the assessment of damages. Consequently, the court allowed the appeal in part, varying the consent orders to ensure compliance with the Federal Court Rules regarding cost assessment. The revised orders stipulated that Mr Liu would pay Nokia’s costs up until the hearing of the assessment of damages, at a reduced rate specified in Order 62 Rule 36A(1). The court did not make any order regarding the costs of the assessment of damages on 11 December 2008.

Orders

Orders of the court

1. The appeal be allowed in part and that Order 2 of the orders under appeal be varied to provide as follows:

2. Subject to any order previously made by the Court the respondent pay the applicant:

(a) the applicant’s costs of the proceeding including reserved costs to the date of the consent orders of 4 June 2008; and

(b) the applicant’s costs of the proceeding including reserved costs from that date until the 11 December 2008 hearing of the assessment of damages at the reduced rate specified in O 62 r 36A(1) of the Federal Court Rules.

3. There be no order as to costs of the assessment of damages on 11 December 2008.

Note:

Background

Background to the litigation

We are satisfied that the primary judge erred in both of these matters although the substantive effect of them in the outcome of the appeal is minor. BACKGROUND Nokia, a company incorporated in Finland, manufactures, distributes and sells mobile phones and accessories. It instituted the present proceedings on 26 March 2008. Put shortly, para 4 of its Statement of Claim alleged that, without its licence or authority, the respondent, Mr Liu, manufactured or caused to be manufactured, goods bearing one or more of four of Nokia’s Australian registered trademarks which goods were imported, advertised and sold in Australia. The paragraph particularised two instances of the infringements alleged, these being (i) a “trap purchase” of a mobile phone and accessories bearing one or more of the infringing trademarks, the purchase having been made on 30 October 2007 from Mr Liu’s “eBay store”; and (ii) a quantity of mobile phones and accessories, again bearing offending marks, which were seized by the Australian Customs Service on 19 February 2008 as a part of a consignment of goods addressed to Mr Liu. The particulars otherwise referred generally to acts of manufacture, etc of offending items “[from] a date unknown … to the date of the issue of the Application”: subparas 4(a) and 4(d). The circumstances in which discovery was ordered will be mentioned later. It will be necessary to return below to the trap purchase. Paragraph 4 concluded with the statement:The Applicant cannot until after discovery give full particulars of all the aforesaid acts of the Respondent, but at the trial of this action the Applicant will rely upon and claim relief in respect of all such acts. The immediate impetus to the initiation of the proceedings was provided by the Customs seizure and the provisions of the Trade Marks Act 1995 (Cth) regulating the consequences of such a seizure: see s 133 – s 137. An interlocutory injunction was sought in the Application to restrain Customs from releasing the seized goods to Mr Liu. On 11 April 2008, Mr Liu consented to that interlocutory injunction. The consent orders of that day envisaged that an application for summary judgment would be set down for hearing on 13 June 2008. On 4 June 2008 further consent orders were made. It is necessary to set out the terms of these orders in some detail. They provided, relevantly, that:THE COURT ORDERS BY CONSENT THAT:1.By his importation into Australia of the items listed in Annexure A hereto each bearing one or more of the following Australian registered trade marks:(a) Australian Registered Trade Mark No. 458364 for NOKIA in class 9;(b)Australian Registered Trade Mark No. 490781 for NOKIA AND DEVICE in class 9;(c)Australian Registered Trade Mark No. 808735 for NOKIA in class 16;(d)Australian Registered Trade Mark No. 867057 for NOKIA in classes 9, 18, 25, 38, 41 and 42,(together referred to as “the Nokia Trade Marks”) without the licence or authority of the Applicant, the Respondent has infringed the Nokia Trade Marks and each of them.BY WAY OF FINAL JUDGMENT UNDER PARAGRAPHS 1, 3 AND 4 OF THE APPLICATION HEREIN THE COURT ORDERS BY CONSENT THAT:2.The Respondent be restrained whether by himself, his employees or agents or otherwise howsoever from infringing any of the Nokia Trade Marks and in particular from using the Nokia Trade Marks or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks in the course of trade on or in relation to:(a)any of the goods in respect of which the Nokia Trade Marks are registered (“the Nokia Registered Goods”);(b) goods of the same description as any of the Nokia Registered Goods; or(c)services that are closely related to any of the Nokia Registered Goods,not manufactured or provided by or under the authority of the Applicant or otherwise procuring or inducing any other person to do any of the acts specified in this paragraph (2).3.Within seven (7) days of the date of these orders, the Respondent deliver up on oath to the Applicant or its duly authorised agent for destruction under supervision all goods in the possession, power, custody or control of the Respondent, his employees or agents or otherwise howsoever to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks has been applied without the licence or authority of the Applicant.…THE COURT FURTHER ORDERS BY CONSENT THAT:5.Within seven (7) days of the date of these orders, the Respondent file and serve on the Applicant an affidavit setting out (and exhibiting all relevant supporting documentation (including, but not limited to, any purchase orders, invoices and receipts) in the possession, power and control of the Respondent whether by himself, his employees or agents) the full details of the supplier of each product that the Respondent has purchased, imported, distributed and sold to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar thereto has been applied without the licence or authority of the Applicant, such details to include full address, email address, telephone number, corporate and business details.6.Within fourteen (14) days of the service of these orders upon him, the Respondent make discovery verified by affidavit to the Applicant in respect of all purchases and sales by him or on his behalf of all items bearing the Nokia Trade Marks, or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks, without the licence or authority of the Applicant.7.The Respondent pay the Applicant damages for infringement of the Nokia Trade Marks, to be assessed together with interest thereon, or, at the option of the Applicant, the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks and pay the Applicant the amount found to be due on the taking of such account, together with interest thereon.8.The Respondent pay the Applicant’s costs of the proceeding to date. The Annexure A referred to in para 1 of the orders listed the items that were seized by Customs.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

FINN, SUNDBERG AND EDMONDS JJ
Our conclusion is founded on the distinctive circumstances of this case and upon the error we perceive his Honour to have made in his appreciation of them. It is necessary for us to emphasise that we should not be taken as suggesting either that O 62 r 36A(1) has no role to play where a monetary judgment of less than $100,000 is awarded in combination with other relief such as an injunction: see Shahid v Australian College of Dermatologists (No 2) [2008] FCAFC 98 at [14]; or that the splitting of proceedings between liability and damages will necessarily immunise the liability component from O 62 r 36A(1).CONCLUSION We will order that the appeal be allowed in part and that order 2 of the orders under appeal be varied to provide as follows:2.Subject to any order previously made by the Court the respondent pay the applicant:(a)the applicant’s costs of the proceeding including reserved costs to the date of the consent orders of 4 June 2008; and (b)the applicant’s costs of the proceeding including reserved costs from that date until the 11 December 2008 hearing of the assessment of damages at the reduced rate specified in O 62 r 36A(1) of the Federal Court Rules.3.There be no order as to costs of the assessment of damages on 11 December 2008. Finally, while Nokia realised its principal purpose in the appeal (which was to secure a finding that order 1 of the consent orders did not constitute a limitation upon the scope of assessment of damages mandated by order 7), it has had quite minor success from the appeal itself. In the circumstances we consider it appropriate to make no order as to the costs of the appeal.

Ratio Decidendi

Legal Principle Established

Established by: FINN, SUNDBERG AND EDMONDS JJ

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