Sunbeam Corporation Ltd v Breville Pty Ltd
[2006] FCA 1808
•20 December 2006
FEDERAL COURT OF AUSTRALIA
Sunbeam Corporation Ltd v Breville Pty Ltd [2006] FCA 1808
SUNBEAM CORPORATION LTD v BREVILLE PTY LTD
NSD 2444 OF 2006ALLSOP J
20 DECEMBER 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2444 OF 2006
BETWEEN:
SUNBEAM CORPORATION LTD
ApplicantAND:
BREVILLE PTY LTD
Respondent
JUDGE:
ALLSOP J
DATE OF ORDER:
20 DECEMBER 2006
WHERE MADE:
SYDNEY
UPON the Applicant undertaking by its Counsel:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and
(b)to pay the compensation referred to in (a) to the person there referred to,
THE COURT ORDERS THAT:
1.The Respondent keep true and separate accounts in respect of:
(a) the quantity of Kinetix blenders the subject of this proceeding (Kinetix blenders) imported by the Respondent;
(b) the quantity of Kinetix blenders sold by the Respondent;
(c) the landed cost to the Respondent of those blenders;
(d) the name and address of each retailer to whom the Respondent sells or distributes a Kinetix blender; and
(e) the date or dates of each sale or distribution; and
(f) the selling price of each blender sold.
2.The Respondent affix opaque stickers on all Kinetix blender packaging so as to obscure the word “patented” wherever appearing on the packaging in respect of:
(a) all stock currently in the Respondent’s possession, custody, power or control; and
(b) all stock currently en route to the Respondent from the manufacturer.
3.The Respondent take all steps feasible as promptly as possible to affix the stickers described in paragraph 2 above to the packaging of the Kinetix Blenders that have been supplied and are still in retail stores so as to obscure the word “patented” appearing on the packaging.
4.The Respondent amend its website to remove all references to the word “patented” and “patent” in respect of the Kinetix blender and to substitute the words “patent pending” (if any words are substituted).
5.The Respondent take all steps feasible to remove the swing tags from Kinetix blenders from models on retail display as far as can be done as promptly as possible.
6.The Respondent ensure that Kinetix Blenders produced and packaged in future will not be sold or distributed by the Respondent with a swing tag, packaging or other material packed with the Kinetix Blenders referring to the blender or the technology used in the blender as “patented” (unless or until a patent is granted).
7.Until such time as a relevant patent is entered on the Australian Register of Patents, the Respondent must not in any future promoting or advertising in Australia of the Kinetix Blenders otherwise use the word “patented” or “patent” without the word “pending” immediately after it.
8.The Respondent write to Standards Australia requesting that all references to “patented” and “patent” in respect of the Kinetix blender which appears on its website be amended to read “patent pending” or be removed.
9.The Respondent will commence forthwith to, and in any event within 5 business days will, within 5 business days, write to all retailers to whom Kinetix blenders have been supplied formally request that until further notice all Kinetix Blender swing tags on public display on which the word ‘patented’ is printed be promptly and permanently removed from public display;
10.The Respondent write to eBuy appliances requesting that all references to “patented” in respect of the Kinetix blender which appears on its website at be amended to read “patent pending” or be removed.
11.The Applicant pay the Respondent’s costs of the hearing on 19 December 2006.
THE COURT DIRECTS THAT:
12. The Applicant file and serve a statement of claim by 3.00 pm on 22 December 2007.
13. The Respondent file and serve its defence and any cross-claim by 11 January 2007.
14. The Applicant file and serve any reply to the Respondent’s defence, and its defence to any cross-claim, by 18 January 2007.
15. The parties exchange categories of discovery in by 16 January 2007.
16. The parties settle agreed categories of discovery by 18 January 2007.
17. Each party provide verified lists of discovery to the other party by 1 February 2007.
18. The Applicant file and serve any additional evidence in chief by 11 January 2007.
19. The Respondent file and serve evidence in answer and any evidence in chief on the cross-claim by 25 January 2007.
20. The Applicant file and serve evidence in reply and any evidence in answer on the cross-claim by 8 February 2007.
21. All issues relating to the quantum of any pecuniary relief be heard separately from and subsequently to the determination of all other issues in dispute in this proceeding (including any cross-claim).
22. A directions hearing be listed for a date to be fixed by, or in a manner determined by, the Duty Registrar.
23. The parties have liberty to apply:
(a) to the Duty Registrar forthwith for the purposes of order 22;
(b) otherwise, on 3 days’ notice.
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
NSD 2444 OF 2006
BETWEEN:
SUNBEAM CORPORATION LTD
ApplicantAND:
BREVILLE PTY LTD
Respondent
JUDGE:
ALLSOP J
DATE:
20 DECEMBER 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
These are reasons in two applications heard yesterday, those applications being an application to set down a hearing for interlocutory relief on Thursday or Friday of this week; and, secondly, to adjourn any such hearing until the respondent is ready to participate in that hearing. The first application was brought by the applicant, the second by the respondent.
I have read the material placed before me yesterday. I think on balance that it would be an injustice to require the respondent to be ready to participate in such a hearing this week. I do not think that the interests of justice require it.
The dispute concerns the relative merits of food blenders. The respondent has made claims in its advertising to the effect that its new blender is technically superior to all other blenders including the applicant's. The applicant and the respondents are the market leaders in blenders. The Christmas buying season is upon us all. Indeed in significant respects it may in substance have already passed in some significant respect for the purchasing of items of this kind however the evidence would indicate that the period for purchasing this kind of equipment will proceed at an elevated state until February.
The applicant became aware of the respondent's new blender in about July 2006. It saw a technical specification in September 2006. In early November 2006 the applicant saw the claims for superiority being made by the respondent. The applicant then conducted in-house tests which it said revealed the falsity of the respondent's claims. This occurred before 8 November 2006. It enabled the applicant to prepare some comparative marketing of its own. The respondent thereafter began extensive advertising of the new blender including advertising on television. All this advertising was being monitored by the applicant.
During November it became evident to the applicant that the respondent's advertising and sales were having a significant commercial effect. At this point, towards the end of November 2006, the applicant's managers approached the Chief Executive Officer of the applicant to seek permission to commence legal proceedings. A letter of demand was sent by the solicitors for the applicant to the respondent on 6 December 2006. In that letter detailed complaints were made about the advertising and the promotion of the respondent's blender. It is unnecessary to set out in detail those claimed falsities. It is sufficient to say that they were numerous and by and large related to the performance of the respondent's blender and what the applicant said was the relative inaccuracy of the statements made in promoting it.
The respondent was given seven days to undertake in writing to:
“Immediately cease and for ever refrain from engaging in conduct that conveys or causes to be conveyed all the representations set out in the previous two pages of the letter, on product packaging, on publications including advertising materials, product brochures and trade materials and in media advertising and to immediately remove or cause to be removed all advertising material, product brochures, point of sale materials including swing tags and jug inserts and the like from public display.”
In the absence of those undertakings it was said that interlocutory relief would be pressed. No scientific material was provided with that letter.
Six days later, the respondent's solicitors indicated that they were taking instructions and asked for time until the end of the week, that is 15 December 2006. The applicant's solicitors thereafter indicated that their view was that the respondent had had sufficient time and that an answer should be provided by 13 December 2006. No answer was provided by 13 December and on 14 December 2006, that is Thursday last week, by the respondent. An ex parte application was made to the duty judge, Stone J, who made orders granting short service of the application. Her Honour suggested that I might deal with the directions hearing the following day given that I was the duty judge this week. I did so.
In the material that was served in support of the interlocutory relief on Thursday evening was a draft affidavit of Dr Stephen Morris who is a research scientist employed by the CSIRO and a consultant specialising in horticultural and related food crops, particularly the transport, storage and marketing of post harvest produce. He was also the managing director of a private independent laboratory facility in Sydney. He has academic qualifications in science and agriculture and his PhD is from the School of Food, Science and Technology, University of New South Wales.
His draft affidavit served on the respondent recounted the tests that he had made on the relevant blender. He was engaged by Freehill Hollingdale and Page on 5 and 6 December 2006. Between 7 and 13 December 2006 he conducted tests in the presence of solicitors from Freehills. His draft affidavit of 14 December 2006 was the first scientific basis given to the respondent of the foundation of the claims of falsity. The respondent was not previously told of the existence of the independent expert until they received the draft affidavit.
The respondent has sought to obtain independent assistance since last Friday and has not been able to do so and anticipates that it will not be able to do so until early in the new year. The applicant says, with some justification, that the respondent should have scientific or at least technical material to back up the claims that it is making. That may be so but I think it is unrealistic to expect that it can be placed before the Court in answer to the specific findings of an independent expert within a matter of days. That I do not think would be fair either to the respondent or the Court.
The applicant says that it will suffer irreparable harm unless orders are made restraining conduct immediately. I do not think that is correct on the material. There is an offer to keep careful accounts which will be the subject of audit in due course. The width of the powers or the Court in ordering corrective advertising and reaching into the market both at a consumer level and a retailer level is such that the Court has within its power, if there has been misleading and deceptive conduct, the power to take steps to ensure that lost sales are recompensed to the applicant and that the public is told with crystal clarity that they have been misled by the respondent, if that is the case. Therefore I propose to adjourn the interlocutory hearing in relation to the performance issues until the New Year.
There is also a claim that the respondent has falsely indicated that its product is the subject of a patent. No basis has been put forward by anyone including counsel for the respondent to justify those matters. A later affidavit has been forwarded to me after yesterday's hearing indicating that this occurred without intention to mislead. I would have assumed that until proven otherwise that this occurred without intention to mislead the public. Nevertheless, as far as possible, that conduct should be rectified and the affidavit that was sent to me, which I assume was sent to the applicant together with orders I indicated yesterday, will cure that matter.
Therefore for all those reasons I propose to make the following orders upon the usual undertaking as to damages given by the applicant through its counsel.
UPON the Applicant undertaking by its Counsel:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and
(b)to pay the compensation referred to in (a) to the person there referred to,
THE COURT ORDERS THAT:
1.The Respondent keep true and separate accounts in respect of:
(a)the quantity of Kinetix blenders the subject of this proceeding (Kinetix blenders) imported by the Respondent;
(b) the quantity of Kinetix blenders sold by the Respondent;
(c)the landed cost to the Respondent of those blenders;
(d)the name and address of each retailer to whom the Respondent sells or distributes a Kinetix blender; and
(e)the date or dates of each sale or distribution; and
(f)the selling price of each blender sold.
2.The Respondent affix opaque stickers on all Kinetix blender packaging so as to obscure the word “patented” wherever appearing on the packaging in respect of:
(a)all stock currently in the Respondent’s possession, custody, power or control; and
(b) all stock currently en route to the Respondent from the manufacturer.
3.The Respondent take all steps feasible as promptly as possible to affix the stickers described in paragraph 2 above to the packaging of the Kinetix Blenders that have been supplied and are still in retail stores so as to obscure the word “patented” appearing on the packaging.
4.The Respondent amend its website to remove all references to the word “patented” and “patent” in respect of the Kinetix blender and to substitute the words “patent pending” (if any words are substituted).
5.The Respondent take all steps feasible to remove the swing tags from Kinetix blenders from models on retail display as far as can be done as promptly as possible.
6.The Respondent ensure that Kinetix Blenders produced and packaged in future will not be sold or distributed by the Respondent with a swing tag, packaging or other material packed with the Kinetix Blenders referring to the blender or the technology used in the blender as “patented” (unless or until a patent is granted).
7.Until such time as a relevant patent is entered on the Australian Register of Patents, the Respondent must not in any future promoting or advertising in Australia of the Kinetix Blenders otherwise use the word “patented” or “patent” without the word “pending” immediately after it.
8.The Respondent write to Standards Australia requesting that all references to “patented” and “patent” in respect of the Kinetix blender which appears on its website be amended to read “patent pending” or be removed.
9.The Respondent will commence forthwith to, and in any event within 5 business days will, within 5 business days, write to all retailers to whom Kinetix blenders have been supplied formally request that until further notice all Kinetix Blender swing tags on public display on which the word ‘patented’ is printed be promptly and permanently removed from public display;
10.The Respondent write to eBuy appliances requesting that all references to “patented” in respect of the Kinetix blender which appears on its website at be amended to read “patent pending” or be removed.
11.The Applicant pay the Respondent’s costs of the hearing on 19 December 2006.
THE COURT DIRECTS THAT:
12. The Applicant file and serve a statement of claim by 3.00 pm on 22 December 2007.
13. The Respondent file and serve its defence and any cross-claim by 11 January 2007.
14. The Applicant file and serve any reply to the Respondent’s defence, and its defence to any cross-claim, by 18 January 2007.
15. The parties exchange categories of discovery in by 16 January 2007.
16. The parties settle agreed categories of discovery by 18 January 2007.
17. Each party provide verified lists of discovery to the other party by 1 February 2007.
18. The Applicant file and serve any additional evidence in chief by 11 January 2007.
19. The Respondent file and serve evidence in answer and any evidence in chief on the cross-claim by 25 January 2007.
20. The Applicant file and serve evidence in reply and any evidence in answer on the cross-claim by 8 February 2007.
21. All issues relating to the quantum of any pecuniary relief be heard separately from and subsequently to the determination of all other issues in dispute in this proceeding (including any cross-claim).
22. A directions hearing be listed for a date to be fixed by, or in a manner determined by, the Duty Registrar.
23. The parties have liberty to apply:
(a) to the Duty Registrar forthwith for the purposes of order 22;
(b) otherwise, on 3 days’ notice.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop J. Associate:
Dated: 16 January 2007
Counsel for the Applicant: Mr R Cobden SC Solicitor for the Applicant: Freehills Counsel for the Respondent: Mr R Rothnie Solicitor for the Respondent: Arnold Bloch Leibler Date of Hearing: 20 December 2006 Date of Judgment: 20 December 2006
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