Paramount Pictures Corporation v Hasluck

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FEDERAL COURT OF AUSTRALIA

Paramount Pictures Corporation v Hasluck [2006] FCA 1431

TRADE MARKS – infringement – assessment of damages – compensatory damages – exemplary damages not available – heads of compensatory damages – loss of sales – trade mark proprietor accustomed to receive royalties or licence fees rather than proceeds of sale of product – absence of evidence as to royalties or licence fees – evidence within the knowledge of the applicants – inappropriateness of speculation or guess work in assessment of damages under this head – devaluation of product – absence of any principled explanation of market devaluation mechanism – necessity for rational approach to devaluation assessment – loss of reputation – absence of evidence of loss of reputation – no rational basis upon which loss of reputation could be inferred

Trade Marks Act 1995 (Cth) ss 120, 126
Federal  Court of Australia Act 1976 (Cth) s 51A(1)

Colbeam Palmer Ltd v Stock Affiliates Pty Ltd(1968) 122 CLR 25 cited
Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383 cited
Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251 cited
Nominet UK v Diverse Internet Pty Ltd (No 2) (2005) IPR 131 cited
LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24 cited
Adidas-Salomon AT v Turner (2003) 58 IPR 67 cited
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 cited
Sony Computer Entertainment Australia Ltd v Stirling [2001] FCA 1852 cited
General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197 cited
Winning Appliances Pty Ltd v Dean Appliances Pty Ltd  (1995) 32 IPR 65
AG Spalding & Bros  v AW Gamage Ltd [1918] 35 RPC 101 cited
Draper v Trist and Tristbestos Brake Linings, Ld [1939] 56 RPC 429 cited
Alexander & Co v Henry & Co [1895] 12 RPC 360 cited
GEC Marconi v BHP (2003) 201 ALR 55 cited
Walker v Citigroup [2005] FCA 1866 cited

Kerly’s Law of Trade Marks and Trade Names (13th Edition, London, Sweet & Maxwell, 2001)

PARAMOUNT PICTURES CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, DISNEY ENTERPRISES, INC, UNIVERSAL CITY STUDIOS, LLLP AND COLUMBIA PICTURES INDUSTRIES, INC v ELVA HASLUCK AND GARY HASLUCK
WAD 288 OF 2005

FRENCH J
2 NOVEMBER 2006
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 288 OF 2005

BETWEEN:

PARAMOUNT PICTURES CORPORATION
First Applicant

TWENTIETH CENTURY FOX FILM CORPORATION
Second Applicant

DISNEY ENTERPRISES, INC
Third Applicant

UNIVERSAL CITY STUDIOS, LLLP
Fourth Applicant

COLUMBIA PICTURES INDUSTRIES, INC
Fifth Applicant

AND:

ELVA HASLUCK
First Respondent

GARY HASLUCK
Second Respondent

JUDGE:

FRENCH J

DATE OF ORDER:

2 NOVEMBER 2006

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The second respondent is to pay to each of the applicants damages in the sum of $1,635 comprising:

(a)       nominal damages of $500 for loss of sales;

(b)       damages of $1,000 for devaluation of product;

(c)prejudgment interest of $135 calculated at 6% from 1 May 2005 to 1 November 2006.

2.The…

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Details
Case
[2006] FCA 1431
Decision Date

CaseChat Overview and Summary

The applicants in this case, Paramount Pictures Corporation, Twentieth Century Fox Film Corporation, Disney Enterprises, Inc, Universal City Studios, LLLP, and Columbia Pictures Industries, Inc, were the registered proprietors of various trade marks in Australia, covering motion picture films and related technology. They brought proceedings against Mrs Elva Hasluck and her son, Gary, alleging that the Haslucks had infringed their trade marks by importing and selling DVDs bearing these marks. The applicants sought declarations, injunctions, orders for the delivery up and destruction of infringing articles, and damages. The Haslucks did not defend the action and, by consent, were restrained from further infringing conduct. The Court was tasked with determining the amount of damages to be awarded to the applicants.

The key legal issues before the Court were the quantum of damages to be awarded to the applicants for the infringement of their trade marks by the Haslucks. Specifically, the Court had to consider whether the applicants were entitled to nominal damages for loss of sales, damages for devaluation of their product, and pre-judgment interest. Additionally, the applicants claimed exemplary damages, which the Court had to determine were not available under the Trade Marks Act 1995.

In its decision, the Court found that the applicants were entitled to nominal damages of $500 for loss of sales and $1,000 for devaluation of their product. However, the Court was not satisfied that there was any basis for a finding that the applicants had suffered any loss of reputation as a result of the infringing conduct. The Court also concluded that exemplary damages were not available under the Act. Consequently, the Court awarded each applicant damages in the sum of $1,635, comprising nominal damages of $500, damages of $1,000, and pre-judgment interest of $135. The Court further ordered that the Haslucks pay half the applicants’ costs of the assessment of damages, to be taxed as one set.

The final orders of the Court were that the Haslucks were to pay each of the applicants damages in the sum of $1,635, comprising nominal damages of $500 for loss of sales, damages of $1,000 for devaluation of product, and pre-judgment interest of $135. Additionally, the Haslucks were to pay half the applicants’ costs of the assessment of damages, to be taxed as one set.

Orders

Orders of the court

1. The second respondent is to pay to each of the applicants damages in the sum of $1,635 comprising:

(a) nominal damages of $500 for loss of sales;

(b) damages of $1,000 for devaluation of product;

(c) prejudgment interest of $135 calculated at 6% from 1 May 2005 to 1 November 2006.

2. The second respondent is to pay half the applicants’ costs of the assessment of damages, to be taxed as one set.

Background

Background to the litigation

In this case I propose to award damages under the first head at a nominal level of $500 for each applicant and under the second head at $1,000 for each applicant. I am not satisfied that there is any basis for a finding that the applicants have suffered any loss of reputation as a result of the infringing conduct. Factual and procedural background The applicants also claimed exemplary damages. For the reasons set out below, exemplary damages are not available under the Act. The applicants, Paramount Pictures Corporation (Paramount), Twentieth Century Fox Film Corporation (Fox), Disney Enterprises, Inc (Disney), Universal City Studios, LLLP (Universal) and Columbia Pictures Industries, Inc (Columbia) are the registered proprietors of a number of trade marks in Australia. The trade marks are name trade marks and are as follows: Each of the classes for which the trade marks are registered cover motion picture films, video cassettes, DVDs or related technology. It is not necessary for present purposes to set these out in detail. On 7 October 2005 the applicants commenced proceedings against Mrs Elva Hasluck and her son, Gary. They alleged that the Haslucks had infringed their trade marks by importing and selling DVDs bearing them. They sought declarations and injunctions and orders for the delivery up and destruction of infringing articles. They also claimed damages and other relief. The action was not defended. On 8 November 2005 Lee J made orders by consent granting injunctions against the Haslucks to restrain them from further infringing conduct, orders for the delivery up of items bearing the infringing marks and an order for costs. The orders continued as follows: ’10.The Second Respondent acknowledges to the Court that his conduct as set out in the Statement of Claim filed in this proceeding on 31 October 2005 is a breach of the Applicants’ trade mark rights under the Trade Marks Act 1995.11.The proceeding be otherwise dismissed except as to damages payable by the Second Respondent which is to be determined by the Court. 12.The Applicants file an application for an assessment of damages and affidavits in support by 22 November 2005.13.The Second Respondent file affidavits in response by 6 December 2005.14.The matter be adjourned to 10.15am on 14 December 2005 at which point one item to be considered is whether there should be a direction under O 38.’ The orders made on 8 November 2005 were varied by Lee J on 14 December 2005. The time for filing an application for assessment of damages was extended to 15 December 2005. The time for Mr Hasluck to file affidavits in response was extended to 27 January 2006. A motion for the matter to be listed for assessment of damages before a judge was filed on 1 May 2006. On 7 June 2006 the assessment of damages was set down for hearing on 26 July 2006 and directions given for the filing of affidavits. Service of the orders on Mr Hasluck together with an explanatory letter was also directed. Subsequently, the solicitors for the applicants wrote to the Court seeking a relisting of the assessment hearing date on the basis that they had been instructed to file additional affidavit material. The application was relisted to 4 September 2006. Mrs Hasluck wrote to the Court on 11 August 2006 by way of a plea in mitigation for her son.

Evidence

Evidence Before The Court

The acknowledgment set out in par 10 of the consent order made on 8 November 2005 stands as an admission by Mr Hasluck of the allegations made against him in relation to the infringement of trade marks by reference to the various DVDs mentioned in par 16 of the amended statement of claim. I do not consider, however, that it stands as an admission of the characterisations of his conduct offered in support of the claim for exemplary damages. The evidence The evidence begins with affidavits of the applicants’ solicitors relating to the delivery up by Mr Hasluck of DVDs bearing infringing trade marks. DVDs were delivered in a box to the office of Minter Ellison in Perth on 22 December 2005. They were sent to the office of Minter Ellison in Sydney and from there handed over for examination to Michael Kerin, the Director of Operations of the Australian Federation against Copyright, Theft Limited (AFACT). There were 62 DVDs delivered up. Mr Kerin deposed, in an affidavit sworn on 24 July 2006, that AFACT is a corporation formed in Australia and established by the Motion Picture Association of America Inc (MPA). It was formed to protect the interests of the film industry in Australia, particularly in relation to the protection of trade mark and copyright rights of the member film studios. The organisations whose interests are represented within Australia by AFACT include the applicants. Mr Kerin’s duties as Director of Operations cover the gathering and collating of evidence relating to infringement of copyright and trade marks concerning films owned and/or distributed by members of the MPA and the various Australian distributors represented by AFACT. His duties extend to the examination and review of DVDs to determine whether they are authorised copies or infringements. Mr Kerin deposed that since joining AFACT he has undergone specialised training in relation to the process of film reproduction and print presentation of the VCDs and DVDs containing MPA members’ products. He has visited duplication facilities in Australia and observed the full process of film reproduction and print presentation. He stated that “genuine product” is stamped at the time of production with certain code numbers identifying the factory as well as the specific machine used in its production. He has also examined large quantities of DVDs during his training and in the course of his work at AFACT. He claims an ability to make “judgmental statements” in relation to their “integrity”. Precisely what that means was not explained. He also claims to be “adept at recognising unauthorised copies of optical discs (DVDs) and other related material”. Mr Kerin examined the 62 DVDs contained in the box which was delivered to Minter Ellison in Perth and ultimately to him in Sydney. He observed that many of their covers contained errors including spelling mistakes. Their packaging and the DVDs themselves bore inferior quality printing, not consistent with legitimately produced products. None of the DVDs he examined featured what he called an “IFPI stamped code”. He said that all DVDs legitimately produced by the applicants bear such a code on the disc. He concluded that all of the DVDs contained in the box were pirate copies.

Decision

Reasons for decision

FRENCH J
No logical basis has been shown for the inference that the reputation of the applicants in the market place for their products has been adversely affected. Where purchasers knew they were buying pirated copies, to suggest that the trade mark owner’s reputation is thereby diminished, is a little like suggesting that a person who is the victim of a robbery is thereby lowered in the esteem of the community. In my opinion a more rigorous and principled approach is required before damages under this head are awarded. I do not consider that even nominal damages should be allowed on this basis. Conclusion For the preceding reasons I will award each of the applicants damages under the following heads: 1. Nominal damages of $500 in respect of royalty loss.2. Damages of $1,000 in respect of product devaluation. I will also allow pre-judgment interest at the rate of 6% per annum from 1 May 2005 to 1 November 2006. This amounts to $135 in respect of each of the applicants. The interest amount is awarded under s 51A(1) of the Federal Court of Australia Act 1976 (Cth) and follows the usual practice of adopting rates of interest applied in the relevant State Supreme Court: GEC Marconi v BHP (2003) 201 ALR 55; Walker v Citigroup [2005] FCA 1866. As to costs, having regard to the applicants’ lack of success on the question of exemplary damages and the unnecessarily protracted presentation of evidence in this case, I will order, against the second respondent, half of the costs of the assessment of damages. That is to be taxed as one set.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH J

Full text does not contain this section.