Otter Products, LLC v Haydon
[2021] FCCA 2012
•17 August 2021 and Corrigendum 15 September 2021
Federal Circuit Court of Australia
Otter Products, LLC v Haydon [2021] FCCA 2012
File number(s): MLG 1326 of 2021 Judgment of: JUDGE BAIRD Date of judgment: 17 August 2021 and
Corrigendum 15 September 2021Catchwords: INTELLECTUAL PROPERTY – trade marks - infringement – summary judgment – infringement of five Australian registered trade marks – non-compliance with Court orders – where Respondent has participated in proceeding intermittently – where Respondent has no reasonable prospect of successfully defending the claim – where Respondent continued selling products bearing infringing trade marks after notice – inquiry ordered for compensatory damages – Respondent’s conduct is such justify an award of additional damages – Court gives summary judgment. Legislation: Federal Circuit Court of Australia Act 1999 (Cth) ss 17A, 77
Federal Circuit Court Rules 2001 (Cth) r 13.07
Trade Marks Act 1995 (Cth) ss 7, 9, 20, 120, 126
Cases cited: CPL Notting Hill Pty Ltd v Microsoft Corporation (No 2) [2019] FCA 223
Ellis v Wadjemup Trading Pty Ltd ATF Wadjemup Unit Trust Trading As Rottnest Express & Ors (No.3) [2018] FCCA 3075
Henley Arch Pty Ltd v Del Monaco [2019] FCCA 3848
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60, [2008] 167 FCR 372
PositiveG Investments Pty Ltd as Trustee for the PositiveG Trust v Li [2020] FCCA 2548
Ritter & Ritter & Anor [2019] FCCA 782
Shell Co of Australia Ltd v Esso Standard Oil (Australia Ltd) (1963) 109 CLR 407
Number of paragraphs: 62 Date of last submission/s: 17 August 2021 Date of hearing: 17 August 2021 Place: Sydney Solicitor for the Applicant: Stephen Marcus Stern, Corrs Chambers Westgarth Respondent: Peter Haydon ORDERS
MLG1326 of 2021 BETWEEN: OTTER PRODUCTS, LLC
Applicant
AND: PETER HAYDON
Respondent
order made by:
JUDGE BAIRD
DATE OF ORDER:
17 AUGUST 2021
THE COURT NOTES THAT:
These orders have been amended pursuant to r 17.05(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2001 (Cth) on 15 September 2021.
THE COURT:
1.ORDERS the Respondent be restrained, whether by himself or by his employees or agents, from infringing any of the Otter Products Trade Marks (as depicted in the Schedule to this order) by using any of them or any name(s), word(s), mark(s), sign(s) or device(s) which are substantially identical with or deceptively similar to any of the Otter Products Trade Marks in the course of trade on or in relation to:
(a)any of the goods in respect of which the Otter Products Trade Marks are respectively registered as set out in the Schedule (Otter Products Registered Goods);
(b)(b) goods of the same description as any of the Otter Products Registered Goods; or
(c)(c) services that are closely related to any of the Otter Products Registered Goods,
not manufactured or provided by or under the licence or authority of the applicant, Otter Products, LLC, or otherwise procuring or inducing any other person to do any of the acts specified in this paragraph 1.
2.DECLARES the Respondent has infringed the Otter Products Trade Marks by the offering for sale and selling of mobile telephone cases to which the Otter Products Trade Marks had been applied without the licence or authority of Otter Products.
3.ORDERS the Respondent deliver up on oath to Otter Products or its solicitors in Australia for destruction under supervision, all goods (including but not limited to mobile phone cases and the said mobile phone cases’ packaging) in his or his employees’ or agents’ possession, power, custody or control, to which any of the Otter Products Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any of those Trade Marks has been applied without the licence or authority of Otter Products, and deliver up to the solicitors copies of all relevant documents whether in hard copy or soft copy form relating to any of the purchase and sale of such goods, and any goods of the same description that have been sold by him or his agents or employees prior to today.
4.ORDERS the Respondent deliver up on oath to Otter Products or its solicitors for destruction under supervision, all catalogues, price lists, brochures and other documents and materials (including materials which are or which are capable of being stored, generated or transmitted via any electronic media) in his or his employees’ or agents’ possession, power, custody or control, bearing any of the Otter Products Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any of those Trade Marks without the licence or authority of Otter Products.
5.ORDERS the Respondent pay to Otter Products, an account of profits made by the Respondent, or, at Otter Products’ election, damages suffered by Otter Products as a result of the Respondent’s infringing conduct, pursuant to s 126(1)(b) of the Trade Marks Act 1995 (Cth), together with interest, and that there be an inquiry as to damages or an account of profits for such quantum.
6.ORDERS the Respondent pay to Otter Products additional damages pursuant to s 126(2) of the Act in the amount of $15,000.7.ORDERS the Respondent pay Otter Products interest pursuant to s 77 of the Federal Circuit Court of Australia Act 1999 (Cth) from the date of judgment at such rate as is fixed by the Rules of the Court.
8.ORDERS the Respondent pay to Otter Products its costs of this proceeding up to and including the hearing on 17 August 2021, in accordance with the scale amount in Part 1 Schedule 1 of the Federal Circuit Court Rules 2001 (Cth), and:
(a)DIRECTS Otter Products provide to the Chambers of Judge Baird and serve on the Respondent a schedule of its calculations of its costs by 5pm 24 August 2021;
(b)DIRECTS the respondent provide to the Chambers of Judge Baird and serve on the respondent any submissions on the calculation of costs by 31 August 2021; and
NOTES, by consent, the Court will determine the amount of such costs on the papers pursuant to r 15.03 of the Rules.
9.DIRECTS by 5 October 2021, Otter Products file and serve any evidence on which it intends to rely on the issue of damages or an account of profits.
10.DIRECTS by 26 October 2021, the Respondent file and serve on Otter Products any evidence on which he intends to rely on the issue of damages or an account of profits.
11.DIRECTS by 9 November 2021, Otter Products file and serve any evidence on which it intends to rely in reply on quantum, and make its election as between damages and account of profits.
12.LISTS the hearing of the enquiry as to damages or an account of profits, and determination of quantum, on a date to be advised administratively by the Court after consultation with the parties, such date being after 15 November 2021, and DIRECTS that hearing be conducted by MS Teams or such other electronic means as the Court advises.
Federal Circuit and Family Court of Australia
(DIVISION 2)
Otter Products, LLC v Haydon [2021] FCCA 2012
File No: MLG1326/2021
OTTER PRODUCTS, LLC
Applicant
And
PETER HAYDON
RespondentBEFORE: JUDGE BAIRD
DATE: 15 September 2021
MADE AT: SYDNEY
corrigendum
In the course of reviewing for publication my ex tempore judgment delivered on 17 August 2021 in this proceeding, and the orders I made on that day, I have identified that I slipped into error in awarding additional damages under s 126(2) of the Trade Marks Act 1995 (Cth) (TM Act).
Subsection 126(2) of the TM Act provides in part:
A court may include an additional amount in an assessment of damages for an infringement of a registered trade mark, if the court considers it appropriate to do so having regard to:
(a) the flagrancy of the infringement; and …
all other relevant matters.
As the wording of s 126(2) makes clear, it is only when the Court undertakes an assessment of damages that the Court may “include an additional amount”. Thus, if it considers appropriate having regard to the specified factors listed in s 126(2), an additional amount of damages may be awarded as part of the Court’s task in undertaking “an assessment of damages”, which “damages” must mean damages under s 126(1) of the TM Act. The discretion to award an additional amount under s 126(2) is by its terms undertaken in the context of the “assessment of damages” awarded under s 126(1) of the TM Act.
At the hearing on 17 August 2021, the applicant expressly reserved to itself its election under s 126(1)(b) of the TM Act, sought orders for an inquiry as to damages or an account of profits, and a timetable for the filing and service of evidence on the issue of quantum, the making of its election, and that the hearing of the inquiry as to damages or an account of profits, and determination of quantum be set down. I accepted the applicant’s submissions and accordingly made orders in terms of paragraphs 5, 7, and 9 to 12. As at 17 August 2021, and as at today, the Court has not undertaken any assessment of damages.
I slipped into error in that on 17 August 2021, on the summary judgment application I prematurely awarded additional damages under s 126(2) of the TM Act. I did so in circumstances where the Court’s power to award additional damages under s 126(2) of the TM Act in this proceeding is yet to be enlivened. This is because first, the applicant has yet to make an election pursuant to s 126(1)(b) of the TM Act between damages and an account of profits; secondly, if the applicant elects to pursue damages, an inquiry as to damages has yet to be undertaken; and thirdly, the Court has yet to undertake the assessment of any damages.
The equivalent provisions in the Copyright Act 1968 (Cth), ss 115(2) and (4), were considered by O’Callaghan J in CPL Notting Hill Pty Ltd v Microsoft Corporation (No 2) [2019] FCA 223 at [49]-[50], and see the cases there cited by his Honour. The word “additional” describes that the discretionary amount included in the assessment of damages is “additional” to the damages awarded under s 126(1), which damages are compensatory.
In the circumstances I notified the parties of the above and that I proposed to set aside paragraph 6 of the Orders made 17 August 2021, and invited them to indicate whether they sought to be heard before I did so. Neither party indicated they wished to be heard.
Accordingly, pursuant to r 17.05(2)(c) and (h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), I set aside paragraph 6 of the Orders made 17 August 2021, and provide this corrigendum to my judgment of 17 August 2021, with publication of my reasons.
I certify that the preceding eight (8) numbered paragraphs are a true copy of the corrigendum to the reasons for judgment herein of Judge Baird. Deputy Associate:
Dated: 15 September 2021
REASONS FOR JUDGMENT
(ex tempore, revised from transcript)Judge Baird
The applicant, Otter Products, LLC, pursuant to orders of the Court made 5 August 2021 and by submission to this Court, seeks summary judgment or, alternatively, default judgment against the respondent, Mr Peter Haydon, in relation to Otter Products’ claim in this proceeding for infringement of five Australian registered trade marks.
Otter Products seeks summary judgment pursuant to s 17A(1) of the Federal Circuit Court of Australia Act 1999 (Cth) and r 13.07 of the Federal Circuit Court Rules 2001 (Cth).
Rules 13.07(1) and (2) read together provide, relevantly, that if, in a proceeding there is evidence of the facts on which the claim is based, and either: (i) there is evidence given by a party or by some responsible person that the opposing party has no answer to the claim; or (ii) the Court is satisfied that the opposing party has no reasonable prospect of defending the claim, then the Court may give judgment on that claim and may make any orders or directions that the Court considers appropriate.
Otter Products submits that there is evidence of facts on which the claim is based, and there is evidence given by a party or some responsible persons that Mr Haydon has no reasonable prospect of successfully defending the claim.
Whilst Otter Products seeks in the alternative default judgment on the question of liability, I am satisfied that it is appropriate to give summary judgment in the circumstances and on the evidence read on Otter Products’ application.
Procedural history
This proceeding was commenced by application and statement of claim, both dated 21 June 2021 and filed on that day. In the course of the procedural steps in this proceeding I was satisfied that Mr Haydon was made aware of the proceeding; he has appeared on at least two of the case management hearings in this proceeding and is present today.
I am satisfied that the pleading, the orders which Otter Products seeks today, and the substance of the evidence relied on in support of the application for summary judgment have been brought to Mr Haydon’s attention.
Whilst Mr Haydon appeared at the directions hearing on 14 July 2021, and today, Mr Haydon had not by 6 July 2021 filed a notice of appearance. I note that on 6 July 2021 I was satisfied that there had been attempts of service and it was appropriate to order substituted service, which I then did in Chambers. Mr Haydon then appeared on 14 July 2021.
On 14 July 2021, I made orders that Mr Haydon file and serve points of defence and an affidavit made by him disclosing the details of all the purchases and the sales of mobile phone cases which bore or were offered for sale under, or by reference to, the ‘Otter Products Trade Marks’ as defined in the statement of claim, which sales and purchases were made by Mr Haydon after 22 June 2018, and attaching to the affidavit copies of all relevant documents relating to such purchases and sales. Whilst I ordered that the matter then be referred to mediation, Mr Haydon did not comply with the orders for the filing of a defence and an affidavit.
The matter was relisted before me on 5 August 2021 when I made orders in effect for discovery, and varied the 14 July 2021 orders by extending the time by which Mr Haydon was to file points of defence and an affidavit for a further seven days from 5 August 2021. No such defence or affidavit has been filed.
Overview of Otter Products claims
In the substantive case brought by Otter Products it seeks relief in respect of Mr Haydon’s alleged infringement of five trade mark registrations, being trade marks in respect of various goods in class 9 of the Register. Each of the trade marks is set out in annexure A to these reasons. For convenience, I will refer to them together as the Otter Products Trade Marks.
The Otter Trade Marks are registered, in the case of the ‘Defender Series Trade Mark 1665815’ (see annexure A), in respect of “protective covers and cases for personal electronic devices, namely, cell phones”, and in respect of the other four trade mark registrations, in respect of, relevantly, “protective cases for handheld electronic devices, namely, portable music players, portable video players, cell phones and computers”.
On the evidence I am satisfied that Otter Products is the owner of the Otter Products Trade Marks. I am satisfied that Otter Products is and was at all material times a company incorporated in Colorado, USA, and that it sells mobile phone cases under and by reference to the Otter Products Trade Marks.
Further, on the evidence I am satisfied that the respondent, Mr Peter Haydon, until 31 July 2021 operated three retail premises in Queensland in the locations of Booval, Capalaba and Toowong trading under the registered business name Technology Traders.
Otter Product alleges that that from a date unknown to Otter Products, but at least it appears for some time, Mr Haydon has, without the licence or authority of Otter Products, offered for sale, supplied and sold mobile phone cases bearing one or more of the Otter Products Trade Marks from those three retail outlets trading under the business name Technology Traders.
Thus, in this proceeding Otter Products has alleged in its statement of claim that Mr Haydon has advertised for sale, offered for sale and sold from the three retail stores various mobile phone cases bearing one or more of the Otter Products Trade Marks, which trade marks were not applied by or with the licence or authority of Otter Products.
Otter Products alleges that Mr Haydon, by his continued marketing and sale, up to at least, until 20 July 2021, and I consider it is reasonable to infer, up until 30 July 2021, has infringed and is continuing to infringe and intends to continue to infringe the Otter Products Trade Marks in contravention of s 120(1) of the Trade Marks Act 1995 (Cth) (TM Act).
Otter Products claims that it has requested Mr Haydon to cease his conduct, and Mr Haydon has neglected, refused or failed to do so and will, unless restrained by this Court, continue to do the infringing acts.
Otter Products claims that it has sustained loss and damage by reason of Mr Haydon’s acts and conduct, and that it will continue to suffer such loss and damage, unless the acts and conduct are restrained. Otter Products also alleges that Mr Haydon has made profits by those aforesaid wrongful acts, and unless restrained by the Court will continue to do so.
Otter Products further claims that the conduct of Mr Haydon is such as to entitle Otter Products to an order for additional damages under s 126(2) of the TM Act, and particularises that, notwithstanding a letter of demand being delivered by hand to Mr Haydon at the Capalaba store on 27 May 2021, and a second letter of demand being sent via mail on about 2 June 2021, Mr Haydon failed to stop marketing and selling the products after being informed of his infringement and, further, that on 27 May 2021 Mr Haydon admitted to the agent of Otter Products in words to the effect, “I know these products are counterfeit”. I note that today in Court Mr Haydon has denied that he said those words.
Summary judgment principles
The principles guiding the exercise of summary judgment have been set out in a number of cases, including Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; [2008] 167 FCR 372 at [124] to [132], and in this Court are conveniently summarised in, inter alia, Ritter & Ritter & Anor [2019] FCCA 782 at [4] to [13] by Judge Obradovic, and also by Judge Lucev in Ellis v Wadjemup Trading Pty Ltd ATF Wadjemup Unit Trust Trading As Rottnest Express & Ors (No.3) [2018] FCCA 3075 at [2] to [11]. I have referred to those principles in PositiveG Investments Pty Ltd as Trustee for the PositiveG Trust v Li [2020] FCCA 2548 at [19] to [24] in the context of infringement of intellectual property rights, as follows (emphasis in original):
[19]Section 17A of the Act empowers the Court to give judgment for one party against another party, as I have said, in relation to any part of a proceeding if the Court is satisfied that, in this case, the Respondent party has no reasonable prospect of successfully defending the proceeding.
[20]Although there is no defence filed in this proceeding, I note that section 17A(3) of the Act provides that a defence need not be hopeless or bound to fail for it to have no reasonable prospect of success.
[21]The provisions of the Act are in the same terms as s.31A of the Federal Court of Australia Act 1976 (Cth), and the approach taken in cases concerned with that section are generally seen as apposite to s.17A of the Act.
[22]In sum, these principles relevantly provide:
(a)the test is less stringent than applicable under earlier regimes. The power to order summary judgment should, however, be exercised with caution;
(b)the assessment of reasonable prospects involves identifying the pleaded cause of action, including the pleaded facts, and any supporting evidence together with the facts, if any, pleaded;
(c)the moving party bears the onus of persuading the Court that the Respondent has no reasonable prospects of success; and
(d)the exercise of the power requires a practical judgment by the Court as to whether, in this case, the Respondent, has more than a fanciful prospect of success. This may be a judgment of law or of fact or of mixed law and fact.
[23]The concept of “no reasonable prospect of success” is a different concept to “no real prospect of success” and encompasses defences that need not be hopeless or bound to fail. The inquiry is directed to whether there is no reasonable prospect of defending the proceeding, not an inquiry directed to whether a certain concluded determination should be made that the defence would necessarily fail.
[24]Further, in discerning whether a real issue of fact exists such as to preclude summary judgment, the Court must draw all reasonable inferences in favour of the non-moving party. I note also, in Jefferson Ford, Gordon J’s observation that the word “may” in “the Court may give summary judgment” is used in an empowering sense rather than as denoting the exercise of a discretion, c.f. Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 at [28]-[31]; Nichol v Discovery Africa Ltd; Van Den Bergh v Discovery Africa Ltd [2016] FCAFC 182; (2016) ALR 594.
I note in the present case that Mr Haydon has not filed a defence.
Relevant provisions of the TM Act
Section 120(1) of the TM Act provides:
(1)A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
By section 7(4) of the TM Act:
“Use of a trade mark in relation to goods” means use of the trade mark upon, or in physical or other relation to, the goods (including second-hand goods).
Also relevant are the rights conferred on the registered owner of a registered trade mark under s 20 of the TM Act, including, under subsection (1):
(a)the exclusive rights to use the trade mark; and
(b)to authorise other persons to use the trade mark in relation to the goods;
in respect of which the trade mark is registered.
By subs 20(2), the registered owner of a trade mark also has the right to obtain relief under the TM Act if the trade mark has been infringed.
Section 9 defines when a trade mark is taken to be applied to, and in relation to, any goods. Section 9(1) of the TM Act provides:
For the purposes of this Act:
(a)a trade mark is taken to be applied to any goods, material or thing if it is woven in, impressed on, worked into, or affixed or annexed to, the goods, material or thing; and
(b) a trade mark is taken to be applied in relation to goods or services:
(i)if it is applied to any covering, document, label, reel or thing in or with which the goods are, or are intended to be, dealt with or provided in the course of trade; or
(ii)if it is used in a manner likely to lead persons to believe that it refers to, describes or designates the goods or services; and
(c)a trade mark is taken also to be applied in relation to goods or services if it is used:
(i)on a signboard or in an advertisement (including a televised advertisement); or
(ii)in an invoice, wine list, catalogue, business letter, business paper, price list or other commercial document;
and goods are delivered, or services provided (as the case may be) to a person following a request or order made by referring to the trade mark as so used.
Section 126 of the TM Act sets out the relief that a Court might grant in an action for infringement of a registered trade mark. Section 126 of the TM Act provides:
(1)The relief that a court may grant in an action for an infringement of a registered trade mark includes:
(a)an injunction, which may be granted subject to any condition that the court thinks fit; and
(b) at the option of the plaintiff but subject to section 127, damages or an account of profits.
(2)A court may include an additional amount in an assessment of damages for an infringement of a registered trade mark, if the court considers it appropriate to do so having regard to:
(a) the flagrancy of the infringement; and
(b) the need to deter similar infringements of registered trade marks; and
(c) the conduct of the party that infringed the registered trade mark that occurred:
(i) after the act constituting the infringement; or
(ii)after that party was informed that it had allegedly infringed the registered trade mark; and
(d) any benefit shown to have accrued to that party because of the infringement; and
(e) all other relevant matters.
In short, the relief includes injunctions, at the option of the plaintiff damages or an account of profits, and where damages are awarded, an additional amount having regard to the flagrancy of the infringement, the need to deter similar infringements of registered trade marks and the conduct of the party that infringed the registered trade mark that occurred after the act constituting the infringement or after the party was informed that it had allegedly infringed the registered trade mark.
Evidence on the summary judgment application and Consideration
In respect of the allegedly infringing products there are in evidence before me trap purchases of examples of the products that were being sold by Mr Haydon through each of his stores at Booval, Capalaba and Toowong. In relation to these products, images of the products that have been purchased are in evidence, and, as I have already said, by its statement of claim Otter Products claims that Mr Haydon has infringed each of the Otter Products Trade Marks as set out in s 120(1) of the TM Act.
Trap purchases were undertaken by Mr Adam Williams and Mr Francis McCarthy on behalf of Otter Products of mobile phone cases sold by Mr Haydon from his Capalaba store since at least 21 April 2021, from his Booval store since at least 5 June 2021, and from Mr Haydon’s Toowong store since at least 7 June 2021. Affidavits made by Mr Williams and Mr McCarthy are in evidence before me today. The evidence also shows that sales continued at least up until 20 July 2021.
Copies of the photographs of the purchases made by Mr Williams and Mr McCarthy in evidence were also sent to Otter Product’s brand protection manager, Mr John McKinney, who is resident in Colorado, USA.
Mr McKinney has made an affidavit read today, and emails have been tendered in evidence that:
(a)Mr McKinney is experienced by extensive training and his work over the last decade, to be able to identify a wide range of indicators that identify products which are infringing the Otter Products Trade Marks. That is, he can distinguish between genuine products bearing the Otter Products Trade Marks and counterfeits;
(b)during the 11 years spent with Otter Products as a brand protection manager he has reviewed thousands of what he describes as counterfeit “OtterBox” products for authentication purposes; and
(c)Mr McKinney has inspected the photographs of the purchases by Mr Williams and Mr McCarthy from Mr Haydon’s retail stores of mobile phone cases bearing one or more of the Otter Products Trade Marks, and he gives evidence of respects in which each of the products has labels that have not been applied by or with the licence of Otter Products.
I am satisfied that the products purchased on behalf of Otter Products from Booval, Capalaba and Toowong stores operated by Mr Haydon were not products and packaging to which Otter Products Trade Marks were applied by or with the licence or authority of Otter Products. That is, the trade marks there purporting to be Otter Products Trade Marks were applied without the licence or authority of the owner of the trade marks, Otter Products.
I am satisfied having regard to the Otter Products Trade Marks, the scope of their registrations, and the evidence of Mr McKinney, when read with the evidence of Mr Williams and Mr McCarthy, that in the present case the evidence is overwhelming that Mr Haydon has:
(a)offered, for the purposes of sale, trade or business,
(b)sold or otherwise disposed of; and
(c)offered to sell or dispose of in Australia,
mobile phone cases bearing one or more trade marks substantially identical with various of the Otter Products Trade Marks, which trade marks were not applied by or with the licence of Otter Products, and that Mr Haydon did so from each of his Capalaba, Booval and Toowong stores.
I find that the trade marks that have been applied to the products sold by Mr Haydon are substantially identical with one or more of the registered Otter Products Trade Marks. In so finding, I have borne in mind and applied the established case law as to substantial identity. I consider for the purposes of summary judgment that it suffices to refer to the classic statement of Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Australia Ltd) (1963) 109 CLR 407, at 415, which has been restated and approved many times in the courts, including in this Court:
In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. “The identification of an essential feature depends”, it has been said, “partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it”. Whether there is substantial identity is a question of fact. Judging by the eye alone, as I think is proper for the determination of substantial identity, …
I find that Mr Haydon has dealt in the course of trade with products that fall within the description of the goods for which the Otter Products Trade Marks are registered, which dealings are infringing.
I am satisfied that the infringements continued at least until 20 July 2021.
Summary relief on liability
For these reasons, I conclude that Otter Products is entitled to injunctive relief in respect of each of the products and the corresponding registered Otter Trade Marks it seeks.
Further, I conclude that it is appropriate that Otter Products obtain the declaration of infringement that it seeks in the present proceeding, and in the draft orders that have been proposed to the Court.
Quantum and conduct of Mr Haydon
I am persuaded that there have been sales by Mr Haydon, and that there have been sales over a period of time, of products having the marks applied to them that are evidenced on what I will call the Williams and McCarthy purchases. Before me, there is evidence of products that had been in the possession of Mr Haydon that were delivered up to Otter Products’ solicitors shortly after the purchase of Mr Haydon’s business on about 31 July 2021, which delivered up products have the same trade marks as on the Williams and McCarthy purchases. The evidence establishes that some 500 products were delivered up.
I do not have before me, however, any evidence of the quantum of any compensatory damages claimed, or of any profits that Mr Haydon has obtained from dealing in the products that I have found infringe the Otter Products Trade Marks.
In these circumstances, Mr Stern, solicitor appearing for Otter Products, has sought orders for an inquiry as to damages or an account of profits, and that the Court order Mr Haydon pay Otter Products such amount of profit or, at Otter Products’ election, damages as a result of the infringing conduct, further to that inquiry.
Whilst I am conscious that such a step or inquiry will incur further costs and expense in the proceeding, and may lead to a further hearing, in the present case I am not dissuaded that it is not appropriate to order an account and/or an inquiry, cognisant though I am of the additional cost and, of course, the additional time that will be expended by the Court and the parties.
Additional damages
Otter Products also seeks an award of additional damages pursuant to s 126(2) of the TM Act. In this regard, it is relevant to make the following observations of Mr Haydon’s conduct:
(a)there is evidence before me that Mr Haydon had been selling mobile phone cases and related products to which had been applied one or more of the Otter Products Trade Marks in alleged infringement of the Otter Products Trade Mark rights in 2015, and 2016, however that matter was not pursued by Otter Products at that stage;
(b)Mr Haydon was served on 27 May 2021 with a letter of demand dated 20 May 2021, and at that time a request for delivery up of allegedly infringing products was made by Otter Products’ agent, but Mr Haydon refused to remove all of the allegedly infringing Otter Products Trade Marks from offer for sale – although some 20 boxes were handed to Otter Products’ agent;
(c)Mr Haydon continued to sell products I have found infringed the Otter Trade Marks after being served with a letter of demand, noting that a second letter of demand was also sent to Mr Haydon by email;
(d)thus, Mr Haydon was first notified of Otter Products’ rights and its concerns that the mobile phone products he was offering for sale were an infringement of its registered trade marks in about October 2015, and in respect of this proceeding Mr Haydon was notified again of Otter Products’ rights in the Otter Products Trade Marks, and its recent concerns that the mobile phone cases that Mr Haydon was selling in 2021 infringed those trade marks by notice in late May and again in June 2021, but notwithstanding those notifications, Mr Haydon did not stop dealing in the products.
As I have said, on 21 June 2021, Otter Products commenced this proceeding. After attempts at service, pursuant to my order allowing substituted service, on 6 July 2021 the Court confirmed that the Court documents (application, statement of claim, and genuine steps statement) had been served by at least 28 June 2021.
On the evidence it appears that, notwithstanding Mr Haydon appearing in Court on 14 July 2021, as late as 20 July 2021, Mr Haydon was continuing to sell the products which Otter Products alleged infringed its registered trade marks.
In sum, even after:
(a)being told to cease selling alleged counterfeit Otter Products mobile phone case products in about 2015;
(b)receiving a letter of demand in May 2021, and again in June 2021;
(c)being served with the Court documents in this proceeding no later than 28 June 2021;
(d)attending a case management conference in this proceeding before me on 14 July 2021; and
(e)being ordered to make an affidavit disclosing details of all purchases and sales of mobile phone cases which bore, or were offered for sale and sold under or by reference to the Otter Products Trade Marks,
Mr Haydon has wilfully and deliberately and flagrantly disregarded those notifications and continued in his course of conduct, at least up until the sale of his business.
In PositiveG I set out the principles relating to the award of additional damages at [95] and [96]:
[95]The principles relating to the award of additional damages have been set out in many cases in the Federal Court and relied on in this Court in intellectual property proceedings. Whilst these have particularly been in relation to copyright and trade mark infringement, the same principles are relevant to design infringement. I have found useful the discussion of such damages in the decision of Bromwich J in the trade mark and copyright matter of Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 63; [2017] 122 IPR 279 at [74] and following.
[96]I referred to his Honour’s discussion and the cases to which he refers, in my decision in this Court in Henley Arch Pty Ltd v Del Monaco [2019] FCCA 3848. For convenience, I will adopt what I there said at [102]‑[105], noting that in Henley Arch I was concerned with infringement of copyright, and circumstances where the respondent in that case ultimately did appear, and it was not established that he was a serial offender, or a competitor, or, indeed, conducting an infringing business in infringing products in the course of his ordinary business. In the present case the Respondent is trading in competing products. As I said in Henley Arch [at [102] – [103]] …
In sum, as I continued in PositiveG at [96] referring to my earlier decision in Henley Arch at [102]-[103], the following principles may be summarised from the authorities. First, it is not necessary that any amount of additional damages be proportionate to any award of compensatory damages. Secondly, an award of additional damages involves an element of penalty. Thirdly, part of the functions of an award of additional damages is to mark the Court’s disapproval or opprobrium of the infringing conduct. … Fifthly, conduct that may properly be seen as flagrant includes conduct which involves a deliberate and calculated infringement, a calculated disregard of an applicant’s rights, or a cynical pursuit of benefit.
In Henley Arch I then stated at [104] to [105]:
[104]Perram J in Halal Certification Authority v Scadilone Pty Limited [2014] FCA 614; (2014) 107 IPR 23, observed that if additional damages are appropriate, the amount of damages to be awarded must operate as a sufficient deterrent to ensure that the conduct will not occur again. It should also be noted that, whilst additional damages encompass, they are not the same as aggravated or exemplary damages at common law. Further, as Bromwich J in Geneva observed, at [80] (referring to Truong), specific deterrence has a role to play, including general deterrence.
[105]It is not always the case, however, that additional damages must be given, nor that they be such as to be given in an award and an amount as claimed by an applicant. I adopt what Bromwich J said in Geneva at [82]:
Additional damages may be seen as encompassing broad concepts not always readily amenable to precise measurement or quantification. This includes having regard to capturing aspects of loss that have not been able to be ascertained because of the imperfect nature of litigation and evidence gathering in reflecting all aspects of wrongdoing and the total damaging effect of infringing or contravening conduct. It also entails giving a dollar figure to otherwise intangible considerations of punishment, giving effect to judicial disapproval and sanction and future-looking considerations of specific and general deterrence.
In the present case, as I have already indicated, Mr Haydon has intermittently participated in the proceeding. The present is a case of not only a single default, however, but one where Mr Haydon has signalled by his inaction, and by statements from the Bar table, particularly given that he is in the course of going into bankruptcy, that he is not in a position to participate in the proceeding. This is a case where the evidence is that Mr Haydon has ignored the notifications of Otter Products’ rights and Otter Products’ attempts to engage with him in 2015 and more recently in 2021 and during the proceeding.
It is also clear from the evidence that only some of Mr Haydon’s sales have been identified, and that there may be difficulties in identifying the whole of those sales, not the least of which because Mr Haydon is in the process of putting himself into bankruptcy.
In these circumstances, and having regard to the principles and considerations to which I have drawn attention in early cases, including Henley Arch, I am persuaded that it is appropriate to award additional damages. Having regard to the whole of the circumstances, and Mr Haydon’s conduct I have summarised above, I am persuaded that it is appropriate to award additional damages in the amount of $15,000. I am not here making a question of relationship between compensatory damages or additional damages, but I am satisfied today that this amount is appropriate.
Additionally, as I have indicated, Otter Products has the opportunity to obtain compensatory damages and/or an account of profits and to make such inquiries as it can.
I wish to say in relation to the amount of additional damages that whilst Mr Haydon might consider that the amount is substantial in his present circumstances, it is important to note that additional damages plays a part in expressing the Court’s disapproval and a level of its opprobrium in relation to conduct of persons who are found to have infringed a species of intellectual property, in the present case, trade marks. The signal that the Court gives by an award of additional damages is also a signal to others in the marketplace that infringement of trade mark registrations is conduct of which the Court expresses its disapproval.
I wish, however, to say that in determining the amount of additional damages I have also had regard to the facts of Mr Haydon’s appearance on 14 July 2021, and his appearance today, and noting that Otter Products did not ask for any specific amount of additional damages that might be awarded, also having regard to the realities of the present circumstances.
In sum, I am satisfied it is appropriate to order the permanent injunction, as I have foreshadowed. I am also persuaded it is appropriate to make the declaration sought. I will make orders accordingly.
Costs and interest
I note that Otter Products also seeks costs and interest. However, I am not provided with any interest calculations, and so I am not in a position to order any pre-judgment interest amount.
Whilst I would assume that Otter Products may seek interest pursuant to s 77 of the Act it might be unnecessary to so make an order. For clarity and future certainty, however I am prepared now to order interest on the amount of the compensatory damages, if any, and/or an account of profit awarded under s 126(1) of the TM Act. It is not appropriate that interest be awarded under the amount of additional damages.
Finally, Otter Products seeks its costs. I am not persuaded that this is an appropriate case to depart from the events-based costs under the Rules. I am prepared to make a costs order in accordance with Schedule 1, Part 1 of the Rules. However, I have not been assisted by the provision by the applicant of any calculation of costs whether by reference to the Schedule, or otherwise. Rather than take up more time today, I will make orders for the applicant to submit a calculation by reference to Schedule 1, Part 1, and allow time for Mr Haydon to make submissions on that calculation should he wish to.
I will now make orders reflecting these reasons.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Judge Baird. Associate:
Dated: 17 August 2021
Annexure A
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