Profet Pty Ltd t/as Bo-Bangles v Youngdown Pty Ltd

[1997] FCA 1556

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 95  of   1997

BETWEEN:

PROFET PTY LTD T/AS BO-BANGLES
APPLICANT

AND:

YOUNGDOWN PTY LTD
FIRST RESPONDENT

SUNGATE PTY LTD
SECOND RESPONDENT

JUDGE:

FINN J

DATE OF ORDER:

5 DECEMBER 1997

WHERE MADE:

CANBERRA

THE COURT ORDERS THAT:

1. An order restraining the respondents and each of them from selling, offering for sale, supplying, offering to supply, marketing or advertising their products in the form of exhibits “CC10”, “CC11” and “CC12” to the affidavit of Catherine Cocker sworn 3 December 1997 in contravention of section 52 and/or 53(c) of the Trade Practices Act.

   
   
   

2. An order restraining the respondents and each of them from selling, offering for sale, supplying, offering to supply, marketing or advertising bears under the name “DOORKNOB ZOO” or any other similar phrase.

1. An order restraining the respondents and each of them from passing off their ‘DOORKNOB ZOO” bears as those of the applicant’s by selling, offering for sale, supplying, offering to supply, or marketing or advertising those bears in the form of exhibits “CC10”, “CC11” and CC12” to the affidavit of Catherine Cocker sworn 3 December 1997.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 95 of 1997

BETWEEN:

PROFET PTY LTD T/AS BO-BANGLES
APPLICANT

AND:

YOUNGDOWN PTY LTD
FIRST RESPONDENT

SUNGATE PTY LTD
SECOND RESPONDENT

JUDGE:	FINN J
DATE:	5 DECEMBER 1997
PLACE:	CANBERRA

REASONS FOR JUDGMENT

Having already made orders in this matter, I now provide my reasons for so doing. The applicant’s claim was for interlocutory injunctive relief in respect of an alleged passing-off and contraventions of s 52 and 53(c) of the Trade Practices Act 1974 (Cth). The respondents, Youngdown Pty Ltd (“Youngdown”) and Sungate Pty Ltd (“Sungate”), did not seriously contest that the applicant, Profet Pty Ltd (“Profet”), had established that there was in this a serious question to be tried. Nor, as I will indicate, could they have. Rather their defence of the claim focussed on the considerations relevant to the exercise of a discretion to grant or refuse an interlocutory injunction.

Before turning to those considerations, I need outline briefly the factual setting of the claim.  I should add that the respondents elected not to put on any evidence notwithstanding that, given short service of the application, a request for an adjournment for that purpose would have received favourable consideration.

The Factual Setting

1. Profet is (inter alia) an importer and wholesale distributor of what, for convenience, I will call novelty items.  One such item of sale is a toy bear designed to hang from a door knob and marketed under the name “Bear with me - Door Knob Bears”.  Characteristically the bear wears an item of clothing and carries a brief message of some variety.

1. Sungate operates a chain of discount stores, primarily in Queensland, under the name “Crazy Clark’s”.  Youngdown operates about forty retail outlets in New South Wales and the Australian Capital Territory.

1. Profet supplies or has supplied its bears to some number of the major retail outlets in Australia in the last two years, including Myer/Grace Bros, David Jones and Teddy Bear Shops.  It likewise has supplied approximately 1200 specialty stores.  It presently is supplying the Target chain of stores on a trial basis.

1. In December 1996 the two respondents marketed versions of the door knob bear that were virtually identical in design, packaging and name as Profet’s.  That led to proceedings in this court in that month.  On 23 December 1996 undertakings having the effect of restraining orders were given by the respondents.  Those proceedings were settled in August 1997 without admission of liability.

1. Though there is some dispute as to when Profet again became aware of renewed marketing of a door knob bear by the respondents - albeit of a variant on their previous product - it received from its Queensland agent on about 20 November a “Crazy Clark’s Giant Christmas Catalogue” which exhibited (amongst other things) a door knob bear which again is not dissimilar in appearance from Profet’s.  It is marketed under the name “Doorknob Zoo”.  A number of these were tendered as were samples of Profet’s product.

1. At approximately the same date Profet received letters from two retailers discontinuing purchases of its bears.  The reason given in both instances was the appearance of the significantly cheaper product of the respondents in the market and consumer inability/unpreparedness to differentiate between the products.  In one such letter the retailer in question considered the products to be the same until they were subjected to “closer inspection”.  I set out the terms in full of the other letter (omitting formal parts):

Re: Door Knob Bears - Krazy Clark

I wish to advise you that I am unable to sell your Door Knob Bears as, while I understand that these are not your product as I originally thought, my customers can not differentiate between the two.  The likeness is too close and I am constantly being told that Krazy Clark has these at $5.95.

As my door knob bear sales have dropped considerably because of this I would like to ask you to take back my recently received delivery.

I regret the necessity to do this as this was a good line.

The Claim for Injunctive Relief

Whether Profet will in the event be able to establish (as it claims) that its product, marketed under a name using the word “Door Knob”, has a distinctive association with its business, or whether, as the respondents in contrast allege, the case is merely one of competitors using the same descriptive words (in each case along with others) for a like product and for that reason possibly causing some confusion amongst consumers, there is no doubt that there is a serious question to be tried here.  I have recently considered the significance of the contrasting positions of the parties in a like context in Burica Pty Ltd v Tops to Bottoms (Australia) Pty Ltd, unreported, 24 October 1997.  I will not here reiterate the basis of the positions taken by them.  Suffice it to say they identify the rival arguments in the serious question that arises in this case.

The burden of the respondents’ resistance to the applicant’s claim for injunctive relief related, as I noted at the outset, to the discretion to be exercised in the award or refusal of the remedy.  It was claimed that -

1. Profet, having knowledge (at least from August 1997) that the respondents intended to market their product, stood by till December before they instituted this proceeding;

1. the respondents have been in the market since August, so that if the status quo was to be maintained that should be with their being able to continue to sell their product;

1. Profet’s case was not a strong one and in any event damages were an adequate remedy, the more so because there was no real evidence of detriment to Profet from their actions; and

1. the balance of convenience was against the award of interlocutory injunctive relief.

I am unable to accept any of the above.  Whatever view I might have taken to some at least of them had the respondents given evidence in support of their contentions, I am left simply with the applicant’s evidence.

It is the case that in late August Profet was informed that the respondents “were sourcing similar and competing product” to Profet’s;  that Profet protested this at the time; but that the respondents continued to assert their right so to do, denying they were infringing intellectual property rights of Profet.  I have no actual evidence that the product there referred to is precisely the same as that in this proceeding - though I have been asked to infer it was.  Neither, though, do I have any evidence of the scale or otherwise of the respondent’s activities in selling its competing product from August 1997 onwards.  Such may well have been derisory.

I do not, in the circumstances, consider that Profet should be shut out from injunctive relief simply because it failed to act until it began to experience adverse effects from the respondents’ actions.  Given the history of this matter, it cannot be said that the applicant has so conducted itself as to have acquiesced in the respondents’ conduct.  And I have no evidence of detriment suffered in consequence of Profet’s alleged delay in acting - if it properly can be characterised as such on the slender evidence before me.  The case is not one in which alleged delay alone would be sufficient to justify refusal of an interlocutory injunction.

On the question of injury to Profet, the evidence does establish that it is at Christmas and to a lesser extent at Easter, that significant returns are had on the sale of these bears.  It is unsurprising that when the respondents first sought to enter this market in 1996 they apparently did so in December.  The applicant’s evidence is that it did not, in November 1997, enjoy comparable gross sales to the preceding two years;  it has had supply arrangements to two retailers discontinued;  and it is apprehensive as to the likely fate of its trial with the Target chain which is now aware of the competition and has asked to be advised on the action Profet was taking to protect its product.

Though not extensive there is adequate evidence for present purposes of injurious consequences flowing from, and to be apprehended from, the respondents’ activities.

If, as the applicant alleges, its distinctive association with its product as named and presented is being misused by the respondents, such a case would not be one in which the respondents should, at the price of paying damages, be entitled to continue to misuse that association as a springboard to the establishment of their own product in the market.  Damages would not be an appropriate remedy if Profet could make out its case.

On the evidence before me I am not able to gauge the strength or otherwise of that case other than to say that I have some evidence in the letters of the two retailers of a distinctive association of Profet’s product with its business.  Again I note there is no evidence from the respondents disputing such an association.

Given the injury that could accrue to Profet if the respondents were to be allowed to persist in their actions, and the absence of any evidence of significant adverse consequences if injunctive relief was granted, the balance of convenience would seem clearly to favour of granting that relief.

Accordingly in all of the circumstances I concluded that the case was an appropriate one in which limited interlocutory relief was appropriate and ordered accordingly.

Those orders were:

1. An order restraining the respondents and each of them from selling, offering for sale, supplying, offering to supply, marketing or advertising their products in the form of exhibits “CC10”, “CC11” and “CC12” to the affidavit of Catherine Cocker sworn 3 December 1997 in contravention of section 52 and/or 53(c) of the Trade Practices Act.

   
   
   

2. An order restraining the respondents and each of them from selling, offering for sale, supplying, offering to supply, marketing or advertising bears under the name “DOORKNOB ZOO” or any other similar phrase.

1. An order restraining the respondents and each of them from passing off their ‘DOORKNOB ZOO” bears as those of the applicant’s by selling, offering for sale, supplying, offering to supply, or marketing or advertising those bears in the form of exhibits “CC10”, “CC11” and CC12” to the affidavit of Catherine Cocker sworn 3 December 1997.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn

Associate:

Dated:            12 December 1997

Counsel for the Applicant:	DB Studdy
Solicitor for the Applicant:	Clayton Utz
Counsel for the Respondent:	J Harris
Solicitor for the Respondent:	David Greenstein & Associates
Date of Hearing:	5 December 1997
Date of Judgment:	5 December 1997