Surge Licensing Inc. v Pearson, D.

[1990] FCA 705

I .

705 / 9 0 -

JUDGMENT NO. . ........ . .-M 1 :

JN THE FEDERAL COURT OF AUSTRAL18 ) NO. VG 192 of 1990
FEW SOUTH WALES DISTRICT REGISTRY )

GENERAL DIVISION 1

*

BETWEEN: SURGE LICENSING INC. & ANOR

Applicants ' .

m:  DAPHNE PEARSON & OR$

. .

Respondents I ~

, .~

FEDZRAL COURT OF

AUSTRWA

?RINCIPAL	L.,.
HEQISTRY	' I
..

EX TEMPORE JUDGMENT

L

EINFELD SYDNEY 24 OCTOBER 1990

The applicants seek various forms of relief under the Trade Practices Act in the light of the sale and promotion by the respondents of some T-shirts bearing the images of the well known fictional cartoon characters, the Teenage Mutant Ninja Turtles. Passing off is also alleged.

The applicants come to the Court today to seek an adjournment of the matter. Counsel frankly admits that the reason for the adjournment is the failure of his side of the record to prepare its case adequately for today. This is said to arise from certain occurrences that have taken place inside the firm of solicitors who represent the applicant. Although events are identified which perhaps might have been said to have contributed to the failure to prepare the case, they do not

excuse the failure. In fact, the explanation overall is quite unsatisfactory. The case was listed for today as long ago as 5

September. The events to which counsel has referred which include the death of a partner of the firm instructing him do not allow for the fact that in the intervening six weeks it would have been possible, notwithstanding that and other problems that arose, to have identified what were the real issues between these parties and to have addressed those issues.

As it turns out, both on the pleadings and in the discussion which has taken place in Court this morning, it seems clear that all or virtually all of the evidence which has been placed before the Court already on behalf of the applicants asserts matters which are not in dispute. The respondents do not dispute that they are the people responsible for the marketing of the T-shirts. They do not dispute that the applicants have an apparently exclusive licence to market or sub-license the Teenage Mutant Ninja Turtles and various products which take advantage of their profile in the community, and seek to expand and promote that profile commercially. It is obvious that the

potentially, to generate some profits.	marketing of the T-shirts would be likely, at least
The dispute between the parties seems to relate to whether these T-shirts in fact mislead or deceive anyone and various matters that arise from that context, including passing off. It is clear that it will therefore be necessary for the applicants to lead evidence that the Turtles have a reputation in the community which in some way is affected by these T- shirts.
Apart from the establishment of this aspect of liability, the case is essentially about damage, which effectively means money in the context of this matter. The respondents say that they have only in fact marketed these T-shirts for one week, during which time no market was developed or at any rate no substantial activity occurred which enabled them to quantify the market that would have existed if they had continued their sales.
The applicants gave the usual undertaking as to damages when an undertaking was given by the respondents at an earlier stage in the proceedings not to continue to market their T-shirts pending this litigation. I have given consideration to the question of whether as a condition of the adjournment, I should release the respondents from this undertaking. If this were done, I have also considered requiring that the proceeds of the
some identifiable account, perhaps even in Court, so that it sales of the T-shirts thereby permitted should be lodged in
would not be possible for the respondents to dissipate the proceeds in the event that they were required to pay the damages at the end of this case.
However, I have come down against that course of action for a number of reasons. One of the more important is that I would thereby in effect be increasing the possible damages which the applicants would suffer if they are successful in the case, and would merely transfer from the applicants to the respondents that increase in damages. At the present time, such damage as is being suffered from the non-promotion or sale of the product is being sustained by the respondents who have given a voluntary undertaking not to sell or promote the T-shirts pending this litigation. They agree that their present loss is not quantifiable or large. There seems no particularly good reason why I should transfer the loss from one party to the other, as it were, by way of penalty for the circumstances that now exist.
This course was also not urged on me by the respondents, perhaps because at least within a reasonable time frame, the Turtles will retain their popularity and whatever profits the respondents can make will still be available to them if they are successful in this case.
The second problem with my projected course is that the T-
to be marijuana. The type of exercise which I am discussing is shirts themselves portray the Turtles smoking what is admitted

entirely discretionary. I do not think that I need say more than that where a discretion is at stake, it would be unusual to exercise it in a way which might have the effect of promoting the smoking of a prohibited drug in any part of the community whilst it remains illegal. The fact that these T- shirts are likely to have greater popularity with young people merely emphasises that conclusion.

The question therefore turns out to be whether the applicants make out a case for an adjournment. On the merits of the application, that question has to be answered in the negative. The case was given priority when it was last listed for directions because the applicants were seeking to interfere with the freedom of commercial enterprise. This is an important part of our society and should not be restricted unless a serious case is made out that granting the freedom to one would impinge unjustly upon someone else. In a free society rights are rarely absolute and almost always involve a consideration of the effect of one person's freedoms on others. In this case, the applicants argue that the respondents are infringing their legal entitlements by exercising this particular freedom of commercial activity.

It is not seriously disputed that there has been ample time in the period since the matter was fixed for the applicants to prepare their case, yet not all the desired interlocutory steps have been taken, especially discovery which would enable the

applicants to quantify their case on damages. As it turns out,	it does not appear that discovery in that regard would reveal
very much if the respondents1 contention is correct that they were marketing the T-shirts only for one week in one or two places.
However, the interests of the finality and comprehensive nature
of litigation is an important public interest. When court time
is used, public expense is involved. Conducting a court case which does not properly embrace all the matters in dispute between the parties so as finally to dispose of all the issues and resolve them does not serve the public interest at all. In this particular case, it may even increase the amount of the litigation rather than dispose of it, an unattractive prospect at a time when the costs of litigation are under serious public examination because they have reached the stage of exorbitance. That calls for a major effort to be made by all parties involved to ensure that whatever costs are involved, and however large they are, they should at least go towards disposing of the litigation completely and finally.
If I were to embark upon the litigation now without the applicants having an opportunity to present their case fully, I would merely be adding to the costs without being able to ensure that the litigation was finally resolved and the dispute between the parties finally answered. For that reason, I intend to grant the adjournment.
The applicants will pay the respondents' costs of the
adjournment on a solicitor and client basis. The matter will be fixed for hearing on Friday 16 November at 10.00 am. My associate will draw the attention of the parties to the practice note concerning the filing of a set of Judge's copy documents which was ignored in this case as well and must not be ignored for the hearing on 16 November.
I will list the matter for further directions at 9.30 a.m. on Friday November 2, the costs of which directions hearing will be paid by the applicants and will be for the purpose of ensuring that the matter will be reading for hearing on 16 November.
[ discussion ]
I think the parties ought to discuss the issue of what interlocutory steps need to be taken and prepare a timetable. This may be presented to my associate for my approval by not later than 4 pm on Friday 26 October and, if the parties are not otherwise advised, it may be assumed that that timetable will be ordered. In the meantime, the respective mutual undertakings of the parties will continue.

I cert~fy that this and the

preced~ng pcges are a true copy of the

Re~sons for Judgment herem of his Honour