Star Micronics Pty Ltd v Five Star Computers Pty Ltd

Re: STAR MICRONICS PTY. LIMITED and STAR MICRONICS CO. LIMITED
And: FIVE STAR COMPUTERS PTY. LIMITED (trading as COMPUTERFAIR); ALL DATA
AUSTRALIA PTY. LIMITED and GRAHAM PHILLIP O'NEILL
No. V G174 of 1989
FED No. 525
Copyright - Trade Practices - Passing Off
18 IPR 225

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J.(1)

CATCHWORDS

Copyright - whether ROM in computer printer a "computer program" within the meaning of s.10(1) of the Copyright Act 1968 (Cth) - whether computer program in ROM a literary work - whether computer program an original work.

Copyright - infringement - s.38 Copyright Act - knowledge - licence - whether express or implied licence to distribute applicants' 220v equipment in Australia.

Trade Practices - ss.52 and 53 Trade Practices Act - alleged representations as to warranty - alleged representations that 220v computer printer designed and manufactured for use with a 240v power supply.

Passing Off - whether passing off of computer printers as goods associated with the applicant - whether passing off of 220v computer printers as 240v computer printers.

Copyright Act 1968 (Cth) - ss.10(1), 31, 32, 36, 38

Copyright (International Protection) Regulations (Cth) - reg. 4

Trade Practices Act 1974 (Cth) - ss.52, 53, 55

HEARING

SYDNEY

#DATE 9:10:1990

Counsel for the applicant: Dr J. McL. Emmerson QC and

Mr B.R.S. Kendall

Solicitors for the applicant: Messrs Stephens Solicitors

Counsel for the 1st and 3rd respondents: Mr J.M. Ireland

Solicitors for the 1st and 3rd respondents: Messrs R.E. Sanders,

Simpson and Freed

ORDER

Within 21 days the parties bring in short minutes of orders which are agreed or which they propose.

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

JUDGE1

This application seeks relief against alleged breach of copyright, against statements and conduct alleged to be in breach of ss.52, 53 and 55 of the Trade Practices Act 1974 (Cth) and against conduct alleged to constitute passing off. The hearing proceeded on the issue of liability only, leaving the question of damages for future consideration. Even so, some issues of liability are still outstanding. The evidence given as to conduct said to be misleading and deceptive and in breach of the Trade Practices Act dealt with only a few transactions and may or may not be alleged to relate to other transactions which may be identified for the purposes of the claim for damages. Some of the subject printers sold were sold after the commencement of those proceedings (16 were admitted to have been sold between 9 August 1989 and 30 September 1989), and there is an issue as to the extent to which they fall within the applicants' claims. In the circumstances, it is not practicable to deal finally with all issues as to liability.

Cross-claims lodged on behalf of the first respondent were not pursued.
The applicants are Star Micronics Pty Limited ("Star Australia"), a company incorporated in and carrying on business in Australia and Star Micronics Co. Ltd ("Star Japan"), a company incorporated in and carrying on business in Japan. Star Japan is the manufacturer in Japan of a wide range of computer equipment including printers, which it distributes under the name of Star or Star Micronics. Under a Distributorship Agreement dated 18 December 1986, Star Australia has been granted by Star Japan the exclusive right to distribute in Australia Star products, one of which the Star NX-1000 printer is the subject of these proceedings. The applicants have now ceased to distribute this printer, which has been superseded.
The application was initiated by Star Australia as licensee. In accordance with s.120 of the Copyright Act 1968 (Cth)("the Act"), leave was sought and was granted on 9 August 1989 to join Star Japan as an applicant in the proceedings. Star Japan appears to have been formally joined as an applicant by the filing of an amended Application and an amended Statement of Claim on 30 August 1989.
Star Japan produced slightly different models of its NX-1000 printer, one being designed for distribution in countries such as Australia which have a 240v electricity supply, another model for Hong Kong, Singapore and other countries in southeast Asia which have a 220v power supply and another model for countries which have a 110v power supply. The printers distributed by Star Australia were the 240v models. For each area, different printers were produced for printing in black alone or in both black and other colours.
One of the allegations made in the Statement of Claim was that the 220v model of the NX-1000 printer was unsuitable for use in Australia. Breaches of s.52, s.53 and s.55 of the Trade Practices Act were alleged. Much of the affidavit evidence which was filed in the Court went to that issue. At the hearing, Dr J. Emmerson QC, with whom Mr B.R.S. Kendall of counsel appeared for the applicants, withdrew this claim, with a view to limiting the issues which needed to be resolved at the hearing.
The second respondent, All Data Australia Pty Limited ("All Data"), imported some 220v NX-1000 printers from Hong Kong and distributed them to others in Australia including the first respondent. The proceedings against All Data have been resolved by consent.
The first respondent, Five Star Computers Pty Limited under its trade name "Computerfair" carries on business as a retailer of computers and associated products. The third respondent, Mr G.P. O'Neill, is a director of Computerfair. During the course of the hearing, Mr J. Ireland, counsel for Computerfair and O'Neill, gave to the Court on behalf of his clients, without admission of liability, the following undertakings:-
"1. The first respondent undertakes to the Court that it will

permanently refrain from selling, offering or exposing for sale or distributing by way of trade without the licence of the second applicant any Star Model NX-1000 computer printer which has been manufactured by the second applicant for operation with a 220 volts mains supply.

2. The third respondent undertakes to the Court that he will permanently

refrain from causing or permitting the first respondent to sell, offer or expose for sale or distribute by way of trade without the licence of the second applicant any Star Model NX-1000 computer printer which has been manufactured by the second applicant for operation with a 220 volts mains supply."

Computerfair, which had previously been a sub-licensee of Star Australia, sold a number of the NX-1000 printers which it had obtained from All Data at prices (Colour $549, Black and White $460) which may have been less than the prices at which the printers distributed by Star Australia were sold throughout Australia. The number of the alleged infringing printers which were sold has not been determined. Mr J. Ireland, counsel for Computerfair and Mr O'Neill, admitted to the purchase by Computerfair of 71 NX-1000 printers of which 6 were used for parts or for testing. However, the quantification of the sales and the issue of damages or an account of profits have been set aside for separate determination.
It is not in dispute that the Star products are well known in Australia and have a reputation or goodwill which, in Australia, is attached to the applicants.
Copyright Claim
The computer program, the subject of copyright, was alleged by counsel for the applicants to reside inter alia in a computer chip or ROM in the printer. Claims for copyright in what was described as a gate array and in the get-up or packaging of the goods were not pursued. It is agreed that the ROM in the 220v printer and in the 240v printer were substantially identical.
The principal case put against Computerfair was that it sold without licence NX-1000 printers, each of which contained the ROM which incorporated a program the subject of copyright. Reliance was placed upon s.38 of the Copyright Act which provides, inter alia:- "38.(1) The copyright in a literary, dramatic, musical or artistic work is infringed by a person who, in Australia, and without the licence of the owner of the copyright -

(a) sells, lets for hire, or by way of trade offers or exposes for sale or hire an article; or

(b) by way of trade exhibits an article in public, where, to his knowledge, the making of the article constituted an infringement of the copyright or, in the case of an imported article, would, if the article had been made in Australia by the importer, have constituted such an infringement."

Other relevant provisions are:-

"31.(1) For the purposes of this Act, unless the contrary intention appears copyright in relation to a work, is the exclusive right -

(a) in the case of a literary, dramatic or musical work, to do all or any of the following acts:-

(i) to reproduce the work in a material form;

...

(vi) to make an adaptation of the work;

(vii) to do, in relation to a work that is an adaptation of the first- mentioned work, any of the acts specified in relation to the first- mentioned work in subparagraphs (i) to (v), inclusive; ...

36.(1) Subject to this Act, the copyright in a literary, dramatic, musical artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright."

This aspect of the case therefore was put upon the footing that the NX-1000 printers had, without the licence of Star Japan, been sold by Computerfair in Australia when, to the knowledge of Computerfair, the article had been imported into Australia by All Data and, had the article been made in Australia by All Data, its making would have constituted an infringement of Star Japan's copyright.
Licence
No evidence was called on behalf of Computerfair of any express licence to sell the 220v NX-1000 printers. Evidence was given on behalf of the applicants that Star Japan distributed its goods through exclusive distributors in each country and that, in Australia, Star Australia was the exclusive distributor and distributed through sub-distributors and authorised dealers. This fact was known to Computerfair and to Mr O'Neill as Computerfair had earlier been an authorised dealer of Star Australia.
Mr Ireland submitted that, while Star Japan did not expressly provide for distribution into Australia otherwise than through Star Australia, nevertheless the arrangements made did not prohibit such a supply. That may be so. But the question is whether Computerfair had a licence from Star Japan to sell and offer for sale the NX-1000 printers in Australia.
The evidence shows that there was no express licence from Star Japan. As to an implied licence, I conclude that it was common knowledge in the trade, and that Computerfair and Mr O'Neill knew, that Star Japan produced 240v goods for distribution in Australia, and that Star Australia was the exclusive distributor in Australia of the goods.
It follows that Computerfair, which was not authorised by Star Japan or Star Australia to do so, had no licence to distribute Star 220v equipment in Australia. See, eg., Interstate Parcel Express Co. Pty Ltd v. Time-Life International (Nederlands) B.V. (1977) 138 CLR 534; Colgate-Palmolive Ltd and Anor v. Markwell Finance Ltd and Anor (1989) RPC 497; Computermate Products (Aust) Pty Ltd v. Ozi-Soft Pty Ltd (1988) 20 FCR 46; Ozi-Soft Pty Ltd and Ors v. Wong and Ors (1988) AIPC 90-469.
Ownership
The applicants allege that the program in the ROM in the NX-1000 printer was an original literary work of which an employee of Star Japan, Mr M. Itoh, was the author and, as the program and the ROM were designed and made in the course of that employment, ownership of the copyright resides in Star Japan. Section 32 of the Act provides, inter alia:-

"(1) Subject to this Act, copyright subsists in an original literary, dramatic, musical or artistic work that is unpublished and of which the author -

(a) was a qualified person at the time when the work was made; or

(b) if the making of the work extended over a period - was a qualified person for a substantial part of that period. ...

(2) Subject to this Act, where an original literary, dramatic, musical or artistic work has been published -

(a) copyright subsists in the work; or

(b) if copyright in the work subsisted immediately before its first publication - copyright continues to subsist in the work, if, but only if -

...

(d) the author of the work was a qualified person at the time when the work was first published;

...

(4) In this section `qualified person' means an Australian citizen, an Australian protected person or a person resident in Australia."

The Copyright (International Protection) Regulations provide inter alia:-

"4.(3) Subject to these Regulations, the provisions of the Act relating to works and other subject-matter apply in relation to persons who, at a material time, are citizens or nationals of a Country specified in Part I or Part II of Schedule 1 in like manner as those provisions apply in relation to persons who, at a material time, are Australian citizens.

(4) Subject to these Regulations, the provisions of the Act relating to works and other subject-matter apply in relation to persons who, at a material time, are resident in a country that constitutes, or forms part of, the territory of a Country specified in Part I or Part II of Schedule 1 in like manner as those provisions apply in relation to persons who, at a material time, are resident in Australia."

Japan is listed in Part 1 of Schedule 1.

Accordingly, as Mr Itoh was a resident and no doubt a citizen of Japan, copyright subsists in original literary works of which Mr Itoh was the author. As the subject work was done by Mr Itoh in the course of his employment with Star Japan, copyright, if it subsists, is owned by Star Japan.
It is not in dispute in these proceedings that the source code for the NX-1000 printer was developed by Mr Itoh personally or that the object code and the ROM were produced by him or in accordance with his instructions and under his supervision. However, an issue was raised as to whether the work was an original work. Unfortunately, Mr Itoh was not called as a witness although a statement by him, which was prepared at a late stage, was tendered in evidence without objection. The submission put by Mr Ireland was that it was not proved that the works of which Mr Itoh was the author were original works. Mr Ireland submitted, for example, that as the NX-1000 printer replaced the Star NX-10 printer, the source code for the NX-1000 printer was no doubt a development of the source code of the NX-10 printer and that the source code for the NX-10 printer had no doubt been developed from another printer.
As only a fragment of the source code for the NX-1000 printer is in evidence, and as Mr Itoh did not give evidence, there is force in the submission put by Mr Ireland. However, I accept the evidence of Mr H. Nakajima that the NX-1000 printer was a sophisticated printer developed by Star Japan and significantly different from the earlier NX-10 printer. The evidence before the Court shows that the program for the NX-1000 printer was developed as an individual work by Mr Itoh. The first step was the creation of a flow-chart. A copy or portion thereof in Mr Itoh's handwriting is in evidence. Part of the source code in Mr Itoh's handwriting is also in evidence. These documents suggest original work. The work itself was complex. Mr Nakajima gave evidence that such portions of the flow charts and the source codes for the NX-10 and the NX-1000 printer as are in evidence are different and that the program for the NX-10 printer could not be used for the NX-1000 printer. Likewise, Dr K.E. Forward, a lecturer in computer engineering at the University of Melbourne, said in evidence that the object code for the NX-1000 was twice the length of the object code for the NX-10 printer, that the sequence of numbers in the two was quite different and that the object code for the NX-10 printer had been "generated" from a different set of source codes. For his part, Mr Itoh said in his statement:-

"The computer program in the Star NX-1000 printer is entirely different from the computer program in the Star NX-10 printer. The program in the NX-1000 uses a different language from that used in the NX-10, because the processor chips (CPU's) in the two printers are different. This is because the NX-1000 printer has many functions which are different from, or additional to the functions of the NX-10."

In the Computer Edge Pty Ltd v. Apple Computer Inc (1986) 161 CLR 171 ("the Apple case") at pp 182-3, Gibbs C.J. said:-

"The expression `original' in that section does not mean that the work must be the expression of original or inventive thought. `The originality which is required relates to the expression of the thought. But the Act does not require that the expression must be in an original or novel form, but that the work must not be copied from another work-that it should originate from the author': University of London Press Ltd. v. University Tutorial Press Ltd. (1916) 2 Ch, at pp 608-609, and see Sands and McDougall Pty. Ltd. v. Robinson (1917) 23 CLR 49 and Victoria Park Racing and Recreation Ground Co. Ltd. v. Taylor (1937) 58 CLR, at p 511. Originality is a matter of degree, depending on the amount of skill, judgment or labour that has been involved in making the work: See Ladbroke (Football) Ltd. v. William Hill (Football) Ltd.

(1964) 1 WLR, at pp 277-278, 282, 285; (1964) 1 All ER pp 469, 473, 475."

Applying his Honour's remarks to the facts of the case, I accept the applicants' contentions that the source code and the object code, including the program in the ROM, were original.

Literary Work

It was said by counsel for the applicants that Star Japan was the owner of the copyright in a literary work which was found in the ROM. Section 10(1) of the Act gives these definitions:-

"`adaptation' means -

...

(ba) in relation to a literary work being a computer program - a version of the work (whether or not in the language, code or notation in which the work was originally expressed) not being a reproduction of the work;

...

`computer program' means an expression in any language, code or

notation, of a set of instructions (whether with or without related information) intended, either directly or after either or both of the following:

(a) conversion to another language, code or notation;

(b) reproduction in a different material form, to cause a device having digital information processing capabilities to perform a particular function;

...

`infringing copy' means -

(a) in relation to a work - a reproduction of the work, or of an adaptation of the work, not being a copy of a cinematograph film of the work or adaptation;

...

being an article the making of which constituted an infringement of the copyright in the work, recording, film, broadcast or edition or, in the case of an article imported without the licence of the owner of the copyright, would have constituted an infringement of that copyright if the article had been made in Australia by the importer; ...

`literary work' includes -

...

(b) a computer program or compilation of computer programs; ...

`material form', in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage from which the work or adaptation, or a substantial part of the work or adaptation, can be reproduced;"

It was submitted that, if the NX-1000 including the ROM had been produced in Australia by All Data, the production of the ROM would have constituted an infringement of the copyright by amounting to a reproduction of the work in a material form or an adaptation of the work.

Counsel for Computerfair submitted that the provisions set out above, which were introduced after the decision of the Federal Court in Apple Computer Inc v. Computer Edge Pty Ltd (1984) 1 FCR 549 and before the judgment of Gibbs C.J., Mason, Wilson, Brennan and Deane JJ. in Computer Edge Pty Ltd v. Apple Computer Inc, cited above, did not encompass a case such as the present.

In the High Court, it was held by Gibbs C.J., Brennan and Deane JJ., Mason and Wilson JJ. contra, that the ROM there under consideration was not a reproduction or adaptation of a source program. Gibbs C.J. and Brennan J. also held that the program in the ROM did not constitute a literary work. That decision considered the Act in the form in which it stood prior to the amendments introduced by the Copyright Amendment Act 1984 (Cth), which introduced the amended definitions I have referred to above with respect to "adaptation", "computer program", "infringing copy", "literary work" and "material form".
It is not in dispute that both the source code and the object code are computer programs as defined in the Act. The source code was written first by Mr Itoh in Assembly language and recorded in a computer. The computer was then used to convert the Assembly language into machine-readable language. In that form, the object code, the program was recorded in a computer and a print-out in hexadecimal notation could be obtained. The next step was to transfer the program to a ROM or chip which had the capacity to receive and store the code in its memory. Mr Nakajima gave evidence that this was done by the use of equipment called a ROM Writer. However, Dr Forward gave evidence that a ROM could be manufactured with the program in it. It may well be therefore that a ROM Writer was used in the development of the subject ROM but not for the purpose of mass production.
The program was stored in the ROM in the form of electrical charges in the cells of the ROM. The term "ROM" stands for "Read Only Memory" and the ROM therefore serves as a memory bank and to provide instructions to the mini processor which controlls the operations of the printer. Apart from its use in the printer, the ROM can be drawn on, as was done by Dr Forward, to produce a print-out of the program in hexadecimal notation.
Dr Forward gave this evidence, after examining the logic boards on the 220v and 240v models of the NX-1000 printers:-
"5. The logic circuit boards contain a multi-function integrated circuit

central processing unit (CPU), a Gate Array integrated circuit, a RAM, a ROM and a power transistor Array, the individual transistors which are used to provide the relatively high driving currents required by the stepper motors which drive the platen, the carriage and the printer head. The logic circuit boards also have a number of other components such as capacitors and resistors, which do not affect the logical operation of the printer.

6. I examined the contents of the ROMS in each of the logic circuit

boards and from my examination of the contents of each of the ROMS, I have come to the conclusion that they contain a computer programme which is used to provide instructions to the micro processor or CPU, which controls the operation of the printer.

7. Each of the ROMS contains a computer program, that is normally fixed

inside the ROM at the time of the manufacture of the ROM and the only way the computer programme can now been (sic) changed is by the substitution of another ROM programme in a different way from the original ROM, or by erasing the ROM and by reprogramming it.

8. The computer programme contained in each of the ROMS is coded in

eight bit binary numbers, and each of these numbers is known as a `byte'.

9. The computer programme in each of the ROMS is relatively large, 64k

bytes (k = 1024, and there are two characters per byte, so this gives a total of just over 130,000 characters). ...

A source programme cannot be directly understood by a computer.

A source programme is therefore compiled into executable or object code which can then be understood by a computer and the computer programme in the ROM is in object code. The object code is stored in the memory cells of the ROM as an electric charge which represents binary machine code."

Mr Ireland submitted that the ROM, which stored the electrical impulses, did not contain a computer program as defined in s.10(1) of the Act. Mr Ireland relied principally upon the reasoning in the Apple case. However, the program in the ROM meets the description of a "computer program" in s.10(1) of the Act in that it is an expression in object code of a set of instructions intended to cause a device having digital information processing capabilities, the printer, to perform particular functions. The form of storage in the ROM, electrical charges, though not visible, meets the definition of "material form".
Such a computer program is a "literary work" as defined, as was held by Lockhart, Sheppard and Beaumont JJ. in Dyason and Ors v. Autodesk Inc. and Autodesk Australia Pty Ltd (unreported 14 September 1990). In the light of their Honours' respective reasons for decision, I must reject Mr Ireland's many submissions on this point, including his submission that the ROM was a mere adjunct to a mechanical contrivance and therefore not the subject of copyright, an argument referred to by Gibbs C.J. in the Apple case at p 184.
Infringement
It follows that the making of the printer, including the ROM, by All Data in Australia would necessarily have constituted an infringement of the copyright, for a replication of the ROM would have necessitated the reproduction of the computer program contained in the ROM. Mr Ireland submitted that the program in the ROM in the form of electrical charges was not a reproduction of or adaptation of the source code as originally written by Mr Itoh or of the object code as printed out in hexadecimal notation, being quite different in form. However, I do not need to decide that point. The ROM contained a computer program as defined. Replication in Australia of the ROM including the program would have constituted reproduction of the program.
Knowledge
Section 38 requires "knowledge", of which Lockhart J. said in the Apple case at p 583:-

"Knowledge of the law is not required: Sillitoe v. McGraw-Hill (The Times), January 18 1982). The knowledge is actual, not constructive, knowledge: Van Dusen v. Kritz (1936) 2 KB 176; R.C.A. Corporation v. Custom Cleared Sales Pty Ltd (1978) 19 ALR 123.

The requisite knowledge may be inferred from the relevant circumstances. In Albert v. S. Hoffnung and Co. Ltd (1922) 22 SR

(N.S.W.) 75 Harvey J. said at p 81:

"Knowledge' in the section (i.e. subs. 2(2) of the Copyright Act (I.N.P.) and 2 Geo. V.C. 46, which is substantially similar to s.103 of the Copyright Act 1968) cannot mean in my opinion any more than notice of facts such as would suggest to a reasonable man that a breach of the copyright law was being committed.'

For presently relevant purposes there is no material difference between s.103 and ss 37 and 38. See also Infabrics Ltd v. Jaytex Shirt Co. Ltd

(1978) FSR 451, R.C.A. Corporation's case (see above) and Copinger on Copyright (12th ed.) par 530.

The requisite knowledge may be inferred if the evidence leads reasonably to that conclusion. Such an inference can only be drawn after consideration is given by the court to the whole of the evidence in the case. It will be more readily drawn if there is evidence from which the court can conclude that the defendant has the knowledge and he does not deny the knowledge unless a satisfactory explanation is given for his not giving evidence denying that knowledge."

There is no evidence that Computerfair and Mr O'Neill had actual knowledge that the making of the article in Australia would constitute a breach of Star Japan's copyright and there is no evidence that such a matter was general knowledge in the computer industry. The packaging of the NX-1000 printer and the documents did not refer to copyright and no warning was given by the applicants before the proceedings were commenced, though the 16 printers sold after the institution of proceedings may be in a different position.
However, Computerfair and Mr O'Neill would have assumed that Star Japan had intellectual property rights in the NX-1000 printer and that manufacture by All Data in Australia without licence would have infringed those rights. Computerfair and Mr O'Neill did not adduce evidence to the contrary. That was sufficient actual knowledge to attract the operation of s.38. Knowledge of the law of copyright or of the precise nature of the intellectual property rights that would be infringed is not required.
Trade Practices Claims
I turn now to the claims made under s.52 and s.53 of the Trade Practices Act. As I have mentioned, the Statement of Claim was amended during the course of the hearing to limit the claims made in this respect. Even so, there is not a simple allegation that Computerfair was selling, as goods produced and distributed by Star Japan for sale in Australia, goods which were not so produced or distributed. The allegations as to representations are in substance:-

"10. The first Respondent has advertised for sale, offered for sale, supplied and sold, in trade and commerce direct to the public in Australia computer printers carrying the `Star' trademark, but which were not designed and adapted by Star Japan for operation in Australia (`the first Respondent's computer printers') and which were not supplied by the first Applicant to the first Respondent.

...

11. In the course of the conduct referred to in paragraph 10, the first Respondent has represented to the public and to its customers that:

(a) The first Respondent's computer printers as advertised for sale, supplied and sold as aforesaid, carried a warranty which was given or authorised by the first Applicant or Star Japan;

(b) the first Respondent had the capacity and ability, to provide all the necessary equipment and services for the proper maintenance of the first Respondent's computer printers, both during and after the warranty period;

(c) the first Respondent had the capacity and ability to provide to purchasers of the first Respondent's computer printers the product services and the product quality;

...

(e) the first Respondent's computer printers were designed and manufactured for use with a 240 volt power supply."

Mr S.V. Harrison gave evidence that, at the premises of Computerfair, he spoke to a salesman, Peter Smith, and was handed a dodger entitled "Star Multi-font Colour Printer NX-1000". This dodger was put out by the Star organisation and had the address and telephone number of authorised distributors in New South Wales, Queensland, Victoria, Western Australia and New Zealand printed thereon. On the front of the dodger, apparently placed with a rubber stamp or its equivalent, was the name "Computerfair" and Computerfair's address and telephone number. Mr Harrison asked Mr Smith if the printer was covered by a Star Micronics warranty. Mr Smith answered yes. On 22 March 1989, Mr Harrison purchased one of the printers from Mr Smith. On the invoice received were the words "Warranty on retail goods shall always be that as stated by the Manufacturer." The printer supplied came in the usual Star packaging. It was not until subsequently that Mr Harrison ascertained that the printer he purchased was a 220v printer.
With Star products, Star Japan did not itself give any warranty and no warranty document was included in the package. However, Star Australia in practice guaranteed Star products for 12 months from the date of sale and authorised Honeywell to repair defective products at Star Australia's expense. Goods needing repair after the 12 months period were repaired by Star Australia at the expense of the owner or dealer who returned them for repair. The evidence as to this warranty arrangement was somewhat unsatisfactory but there was put in evidence an advertisement relating to a Star product, other than the NX-1000 printer, which mentioned that the product was guaranteed for 12 months. I accept that such a practice with respect to Star products was known to the sub-distributors and authorised dealers of Star Australia. This warranty practice was not extended to the 220v products.
On these facts, I am satisfied that there was a false oral representation made to Mr Harrison that the printer carried a warranty by Star Australia or Star Japan. The printed statement on the invoice did not amount to such a representation, rather the contrary. There was no representation that Computerfair had the capacity and ability to provide all the necessary equipment and services for the maintenance of the printer, both before and after the warranty period. There was no representation as to Computerfair's capacity and ability to provide all necessary equipment and services for the maintenance of the printer. There was no express representation that the printer was designed and manufactured for use with a 240v power supply, but as Star Japan did manufacture NX-1000 printers for use with a 240v power supply and distributed those printers in Australia through its exclusive distributor, Star Australia, and as the dodger handed by Computerfair to Mr Harrison related to such printers, there was an implied representation that the printer was such a printer. That representation was false.
Subsequently, in May 1989, Mr Harrison, at the behest of Star Australia, made a trap purchase from Computerfair and, in this instance, Peter Smith when asked as to warranty wrote on the invoice "12 months warranty". That representation amounted to conduct that was misleading or deceptive notwithstanding that Mr Harrison, who knew the true facts, was not likely to be misled or deceived thereby. The representation did not suggest a warranty given by Computerfair itself, for the invoice stated that the only warranty given was the manufacturer's warranty.
Mr G.J. Watmore went to Computerfair on 22 March 1989. He also saw Mr Peter Smith and was handed the Star dodger for the NX-1000 Colour Printer. That also had the name of Computerfair and its address and telephone number stamped on the front of it by rubber stamp or like means. On this occasion also, Mr Smith wrote on the invoice "12 months warranty". On the top right hand corner of the box in which the printer was packaged, a sticker had been placed stating "220V/250V".
With this transaction also, there was a false representation that the goods carried a warranty given or authorised by Star Australia or Star Japan and a false representation that the goods were designed and manufactured for use with a 240v power supply, that being implied from the sale of the printer in Australia and being within the voltage stated on the sticker placed on the package. The representations alleged in paragraphs 11(b) and (c) of the Amended Statement of Claim were not established.
On 3 May 1989, Mr G.J. Angel purchased a black and white NX-1000 printer from a salesperson named Perry. Prior to purchasing the printer, Mr Angel was given a similar dodger for the black and white printer. The name Computerfair was stamped on this dodger, on the back page adjacent to the names of Star Micronics' dealers in Australia and in New Zealand.
Subsequently, after unpacking the printer and finding that it was produced for use with 220 volts, Mr Angel rang Star Australia. After that conversation, Mr Angel rang Computerfair and spoke to a salesperson who did not identify himself. The salesperson said that the printer was covered by a warranty by Star Micronics. Mr Angel said that he had contacted Star Micronics and been informed that the printer was not so covered. The salesperson then said that Computerfair would provide warranty cover.
On these facts, there was a false oral representation that the printer was covered by a Star Micronics warranty. There was a representation implied from the dodger and from the other circumstances I have mentioned that the printer was produced for use with a 240v power supply. The other representations alleged were not established.
These were the only transactions proved by the evidence. It appears from the way in which the argument proceeded at the hearing that counsel for the applicants may wish to contend that the findings in relation to those transactions should be applied to some or all of other transactions that have yet to be identified. However, at the present I can take that matter no further.
It was further alleged that:-

"14.The aforesaid conduct of the first Respondent referred to in paragraphs 11 and 12, constitutes conduct, in trade or commerce that has misled and deceived, or that is likely to mislead or deceive members of the public throughout Australia into the belief that the trade and business of the first Respondent:

(a) is connected in the course of trade with;

(b) is affiliated in the course of trade with;

(c) has the sponsorship or approval of the first Applicant."

The use by Computerfair of the Star Micronics' dodgers, the placing of the stamp of Computerfair thereon and the sale of Star Micronics' products in the circumstance that Star Australia was the exclusive distributor constituted facts which amounted to a sale of the goods as goods with which Star Australia was associated and, therefore, that the goods had an association with Star Australia. Because Star Australia distributed products designed for use with a 240v power supply, there was an implied representation that the goods sold by Computerfair had that characteristic, which they did not.
All the false representations I have mentioned amounted to breaches of s.52 and s.53 of the Trade Practices Act. It appears unnecessary to consider the application of s.55 of the Trade Practices Act and for the moment I make no finding thereon.
It was admitted that Mr O'Neill was a director and the general manager of Computerfair and that he had the care and control of the day-to-day operations of Computerfair. It follows that Mr O'Neill was involved in the contraventions of the Act which were based upon the handing out of the Star Micronics' dodgers and the sale of the Star NX-1000 printers without distinguishing them from the 240v printers distributed through Star Australia. However, no finding should be made against Mr O'Neill with respect to the statements as to warranty written or oral which were made by Peter Smith or Perry or over the phone for there is no evidence that Mr O'Neill gave any instruction with respect to warranty or played any part in what was said or written.
Passing Off
The applicants also rely upon the tort of passing off. For the reasons I have already given, there was a passing off of NX-1000 printers as goods associated with Star Australia and as goods distributed by Star Australia, which they were not. There was also a passing off of the NX-1000 printers as the printers which Star Japan had produced for and made available for distribution in Australia, that is to say as the Star's 240v printers, which they were not. See J. Ingram and Sons v. The India Rubber, Gutta Percha, and Telegraph Co Ltd (1902) 29 VLR 172; A.G. Spalding and Bros v. A.W. Gamage Ltd (1915) 32 RPC 273; Wilts United Dairies Ltd v. Thomas Robinson Son and Coy Ltd (1958) RPC 94; Colgate-Palmolive Ltd v. Markwell Finance Ltd, cited above.
Mr O'Neill also was personally liable for the passing off, being responsible for the day to day management of Computerfair and therefore for the sale of the NX-1000 220v printers and the distribution of the Star Micronics dodgers. I would apply the principles which were set out in my decision in Australian Performing Right Association Limited v. Valamo Pty Limited and Anor (unreported 18 July 1990).
Conclusion
I do not propose when delivering these reasons to make any formal orders but will direct that, within 21 days, the parties bring in minutes of orders which are agreed or which they propose. The orders should deal inter alia with the future conduct of the proceedings.
I take the opportunity of reiterating the view which I attempted to convey in the course of the hearing that, if the claim against Computerfair and Mr O'Neill concerns only 71 NX-1000 printers, then it scarcely seems to be a claim worth the time and expense which has been and still has to be devoted to the proceedings. A commercial solution to the litigation, rather than a legal judgment, would seem to be more appropriate.

[1990] FCA 525

09 OCTOBER 1990