Russ Berrie & Co Inc v Wayne Jacobs Playscene (Aust) Pty Ltd
[2001] FCA 942
•13 JULY 2001
Russ Berrie & Co Inc v Wayne Jacobs Playscene (Aust) Pty Ltd [2001] FCA
942
FEDERAL COURT OF AUSTRALIA
Russ Berrie & Co Inc v Wayne Jacobs Playscene (Aust) Pty Ltd [2001] FCA 942
RUSS BERRIE & COMPANY INC & ANOR v WAYNE JACOBS PLAYSCENE (AUSTRALIA) PTY LIMITED (ACN 079 040 832)
N1059 OF 2001
LINDGREN J
SYDNEY
13 JULY 2001
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1059 OF 2001
BETWEEN: RUSS BERRIE & COMPANY INC FIRST APPLICANT
RUSS AUSTRALIA PTY LIMITED (ACN 088 221 881)
SECOND APPLICANT
AND: WAYNE JACOBS PLAYSCENE (AUSTRALIA) PTY LIMITED (ACN 079 040 832)
RESPONDENT
JUDGE:
LINDGREN J DATE OF ORDER: 13 JULY 2001 WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The proceeding be fixed for final hearing on 8 August 2001.
2. The interlocutory relief sought is refused.
THE COURT NOTES THAT:
3. The respondent undertakes to the Court:
(i) not, by itself, its servants, agents or otherwise, to effect any sales after 12 midnight on 13 July 2001 of the goods referred to in paragraph 1 of the application unless those goods have attached to them a two page swing tag in the from attached to the exhibit marked "WAJ4" referred to in the affidavit of Wayne Ashley Jacobs sworn 13 July 2001 with the words "has been designed and developed in Australia" having been deleted;
(ii) to keep records and provide those records to the applicants (following a reasonable request to do so) and to the Court, which records will comprise the following particulars of sales effected by the respondent of the goods referred to in paragraph 1 of the application:
(a) the quantity of goods sold;
(b) the identity of the items sold by reference to the respondent's item numbers;
(c) the prices at which the goods are sold; and
(d) the identity of wholesale buyers of the goods, including retail stores to whom the goods are sold.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1059 OF 2001
BETWEEN: RUSS BERRIE & COMPANY INC FIRST APPLICANT
RUSS AUSTRALIA PTY LIMITED (ACN 088 221 881)
SECOND APPLICANT
AND: WAYNE JACOBS PLAYSCENE (AUSTRALIA) PTY LIMITED (ACN 079 040 832)
RESPONDENT
JUDGE: LINDGREN J DATE: 13 JULY 2001 PLACE: SYDNEY
REASONS FOR JUDGMENT
1 The reasons which I am about to give will be quite short and will not do justice to the extent of the evidence or to the detail of the submissions that have been made.
2 The applicants seek urgent interlocutory relief in relation to the marketing of certain soft animal toys by the respondent. The urgency is that there is to be a trade fair in Brisbane tomorrow and another in Melbourne commencing on 4 August 2001, at both of which the respondent intends to exhibit toys of the kind in question.
3 I am able to give a final hearing to this case on the afternoons of 8 and 9 and the whole of 10 August 2001. I will fix the case for final hearing to commence on 8 August. Accordingly, the question of interlocutory relief relates to the period from now down to judgment after that hearing. No doubt the earliness of the final hearing may take away part of the difficulty but both parties are agreed that trade fairs in the area of the marketing of children's toys, or at least those of the kind involved in this case, are quite important.
4 The first applicant is the United States parent of the second applicant, an Australian company. I need not distinguish between the applicants. The toys marketed by the applicants are designed by a Korean company associated with them. Although there are more toys in the applicants' range than those which I am about to mention, those which have featured mainly in the case are known as "Luv Pets" and the "Flapjack". The applicants have been selling the Luv Pets in Australia since February 2000 and the Flapjack since July 2000. This is not very long, but there is evidence directed to establishing the financial significance of the sales and to establishing the reputation of the applicants and of their toys.
5 The respondent imported toys on or about 22 June 2001 from a company in Hong Kong called "Tom's Toys". The respondent's toys are strikingly similar to at least some of the Luv Pets and the Flapjacks of the applicants. The respondent does not design its toys but affixes its label to them. The evidence does not establish how it comes about that the toys which the respondent has bought from Tom's Toys are so similar to those designed by the Korean company within the applicants' group. The applicants' case today is that if the respondent sells the toys it has imported it would be passing them off as the applicants' product. As well the applicants rely upon section 52 of the Trade Practices Act 1974 (Cth).
6 While the applicants' evidence of reputation does show that the applicants have spent considerable money in promoting the Luv Pets and the Flapjack, and I accept that there is a serious question to be tried as to the existence of that reputation, the evidence in this respect is not as strong as it is in many cases of the present kind. One reason for this is the shortness of the period during which the applicants have been selling their Luv Pets and Flapjacks in Australia, and another is that evidence adduced by the respondent shows that there are many soft animal toys generally similar to those of both parties to this litigation, so that those of the applicants do not enjoy that degree of distinctiveness which, for example, characterised the muppet personalities in Childrens Television Workshop Inc v Woolworths (NSW) Ltd [1981] 1 NSWR 273.
7 The two questions this afternoon are whether there is a serious question to be tried as to whether the applicants will obtain final injunctive relief, and, if so, where the balance of convenience lies. As I said, the respondent's toys are strikingly similar to those designed and marketed by the applicants. However, there are distinguishing swing tags and labels on the toys of the respective parties. Indeed, the evidence before me shows that it is a common, perhaps universal, practice in the soft toy trade for manufacturers to distinguish their own products by such devices. Although, no doubt, it is commendable that they do so, just what significance the tags have in the market is a question.
8 I do not know whether people choose by reference to particular brands. Adults might do so. I doubt that children do so. I suspect that at least children would choose according to other forms of appeal and would then be dependent upon their parents' pockets. This raises the question of price.
9 The respondent is selling at lower prices than the applicants are. The applicants say the respondent is "undercutting" them. But the applicants themselves claim that the respondent's products are of inferior quality.
10 For the purpose of today's hearing I accept that participants in the toy trade, and therefore those attending the two trade fairs which I mentioned at the outset, would distinguish the toys on the basis mentioned. Accordingly, I accept, for the purpose of today's interlocutory hearing, that those attending the two trade fairs would not be deceived into thinking that the toys marketed by the respondent are those of the applicants or that the respondent has some association with the applicants.
11 If those attending the trade fairs are not deceived, the respective parties to this application will have made all the sales, and no more than the sales, they are respectively entitled to make at those fairs, since the applicants do not this afternoon rely on copyright or any other form of intellectual property. However, that is not the end of the applicants' case: one must take into account what is likely to happen at the retail level. That is, once a company buys from the respondent at a trade fair, the goods bought will filter out to the retail level and the applicants may be denied the benefit of their reputation at that level.
12 I think that at least for some people the tags are not enough to displace what might otherwise amount to a passing off. At least that is my view at present and for the purpose of this interlocutory application only. (I take into account the applicants' submission that one is not looking just at individual toys but at a range of toys. I take into account on the other side the respondent's submission that one must bear in mind distinguishing forms of display and presentation of the toys.)
13 What I have said above indicates that I think there is a serious question to be tried, although perhaps not as serious a question to be tried as one sometimes encounters. This brings me to the issue of balance of convenience which I have also found difficult.
14 Ms Goddard of counsel for the applicants submits that since the respondent has not yet displayed at a trade fair, the status quo favours the granting of an injunction. Mr Sibtain of counsel for the respondent has proffered on behalf of his client an undertaking to the Court to keep accounts of all sales of the goods in respect of which an injunction is sought. I have taken that undertaking to include an undertaking to keep records of all sales, including quantities, identity of goods, prices and identity of buyers, and to make those records available to the applicants and to the Court.
15 While I find the question of balance of convenience difficult, it does seem to me, having regard to the early final hearing which I am able to give, to the undertaking proffered on behalf of the respondent and to another consideration which I will mention, that the interlocutory injunction should not be granted today. The other consideration is this: in assessing the balance of convenience one must inquire what the effect would be of the wrongful granting of an injunction as against the wrongful withholding of one. That is, since this is not a final hearing and no findings of fact are made, one must compare two evils, one being that I grant an injunction now and decide on the final hearing that the applicants lose, the other being that I do not grant an injunction now and decide on the final hearing that the applicants win.
16 If I grant an injunction today the respondent will be prevented from selling its goods at the two trade fairs, and I must assume for the purpose of the exercise, wrongly prevented from selling them at those two trade fairs. We would never know what sales the respondent would have effected and so there would be a difficulty in quantifying its loss. Of course the applicants have proffered the usual undertaking as to damages but my comments are directed to the quantification of those damages. If, on the other hand, an injunction is not granted this afternoon, and on the final hearing the decision is in effect that one should have been, at least we will know what sales the respondent has effected and the respondent will have to account for the profit made on those sales.
17 The considerations mentioned above persuade me that the balance of convenience favours refusing the injunctive relief sought.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Associate:
Dated: 20 July 2001
#DATE 13:07:2001
Counsel for the Applicants: Ms S J Goddard Solicitors for the Applicants: Phillips Fox Counsel for the Respondent: Mr D R Sibtain Solicitors for the Respondent: Holman Webb Date of Hearing: 13 July 2001 Date of Judgment: 13 July 2001
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