Unilin Beeher BV v Huili Building Materials Pty Ltd

[2006] FCA 1634

FEDERAL COURT OF AUSTRALIA

Unilin Beeher BV v Huili Building Materials Pty Ltd [2006] FCA 1634

UNILIN BEEHER BV v HUILI BUILDING MATERIALS PTY LTD, BAO JIA SUN T/AS HUILI AUSTRALIA TRADING, GONG DAO ZANG T/AS HUILI AUSTRALIA TRADING, HUILI AUSTRALIA TRADING PTY LTD, GREMOS HOLDINGS PTY LTD  AND HUILI FLOORING PTY LTD
NSD 2329 OF 2005

ALLSOP J
29 NOVEMBER 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2329 OF 2005

BETWEEN:

UNILIN BEEHER BV
Applicant

AND:

HUILI BUILDING MATERIALS PTY LTD
First Respondent/First Cross-Respondent

BAO JIA SUN T/AS HUILI AUSTRALIA TRADING
Second Respondent/Second Cross-Respondent

GONG DAO ZANG T/AS HUILI AUSTRALIA TRADING
Third Respondent/ Third Cross-Respondent

HUILI AUSTRALIA TRADING PTY LTD
Fourth Respondent/Fourth Cross-Respondent

GREMOS HOLDINGS PTY LTD
Fifth Respondent/Cross-Claimant

HUILI FLOORING PTY LTD
Sixth Respondent

JUDGE:	ALLSOP J
DATE OF ORDER:	29 NOVEMBER 2006
WHERE MADE:	SYDNEY

on the application and statement of claim

THE COURT:

1.DECLARES that the first respondent has infringed Australian Patent No 713628 (the Patent) by selling and offering for sale:

(a)the DELAY FLOOR floor panels referred to in paragraph 2(a) of the Amended Particulars of Patent Infringement, an example of which is identified as sample HBM-1 in the affidavits of Kendall Waller sworn 15 June 2006 and Hugh Mansfield-Williams sworn 12 June 2006;

(b)the STRAUSS, PRIMA and AUSLOCK floor panels referred to in paragraph 2(b) of the Amended Particulars of Patent Infringement, examples of which are identified as samples HBM-2, HBM-3 and HBM-4, respectively, in the affidavits of Kendall Waller sworn 15 June 2006 and Hugh Mansfield-Williams sworn 12 June 2006;

(c)the floor panels referred to in paragraph 2(c) of the Amended Particulars of Patent Infringement, an example of which is identified as sample GHP-4 in the affidavit of Kendall Waller sworn 15 June 2006 and as “HUILI URBAN” in the affidavit Hugh Mansfield-Williams sworn 12 June 2006; and

(d)the DIY floor panels referred to in paragraph 2(d) of the Amended Particulars of Patent Infringement, an example of which is identified as sample KW-10 and “DIY” in the affidavits of Kendall Waller sworn 13 September 2006 and Anthony Richard Smeeton sworn 13 September 2006.

2.DECLARES that the second and third respondents and each of them have infringed the Patent by:

(a)importing, selling and offering for sale the DELAY FLOOR floor panels referred to in paragraph 4 of the Amended Particulars of Patent Infringement, an example of which is identified as “DELAY FLOOR” in the affidavit of Hugh Mansfield-Williams sworn 12 June 2006; and

(b)participating in, inducing, directing and procuring the infringements of the First, Fourth and Sixth Respondents referred to in paragraph 1 above and paragraphs 3 and 5 below.

3.DECLARES that the fourth respondent has infringed the Patent by selling and offering for sale the floor panels referred to in paragraph 6 of the Amended Particulars of Patent Infringement, an example of which is Exhibit DJR-3 to the affidavit of Desmond James Ryan sworn 16 June 2006.

4.DECLARES that the fifth respondent has infringed the Patent by selling and offering for sale:

(a)the URBAN FLOORING floor panels referred to in paragraph 8(a) of the Amended Particulars of Patent Infringement, an example of which is identified as sample GHP-1 in the affidavits of Kendall Waller sworn 15 June 2006 and Hugh Mansfield-Williams sworn 12 June 2006; and

(b)the AVANTI FLOORING and BODEN FLOOR floor panels referred to in paragraph 8(b) of the Amended Particulars of Patent Infringement, examples of which are identified as samples GHP-3 and GHP-2, respectively, in the affidavits of Kendall Waller sworn 15 June 2006 and Hugh Mansfield-Williams sworn 12 June 2006.

5.DECLARES that the sixth respondent has infringed the Patent by selling and offering for sale the floor panels referred to in paragraph 10 of the Amended Particulars of Patent Infringement, an example of which is identified as “LONGER FLOORING” in the affidavits of Kendall Waller sworn 13 September 2006 and Anthony Richard Smeeton sworn 13 September 2006.

6.ORDERS that, in Australia and during the term of the Patent, the first to fourth and sixth Respondents and each of them, whether by themselves, their directors, officers, servants or agents or otherwise, be restrained from infringing the Patent, and in particular from, without the licence of the applicant:

(a)making, hiring, selling or otherwise disposing of, offering to make, hire, sell or otherwise dispose of, using or importing, or keeping for the purpose of doing any of the foregoing, the floor panels referred to in paragraphs 1, 2, 3 and 5 above;

(b)authorising, inducing, procuring or participating with any person to do any of the acts referred to in sub-paragraph (a) above.

7.ORDERS that, in Australia and during the term of the Patent, the fifth respondent, whether by itself, its directors, officers, servants or agents or otherwise, be restrained from infringing the Patent, and in particular from, without the licence of the applicant:

(a)making, hiring, selling or otherwise disposing of, offering to make, hire, sell or otherwise dispose of, using or importing, or keeping for the purpose of doing any of the foregoing, the floor panels referred to in paragraph 4 above;

(b)authorising, inducing, procuring or participating with any person to do any of the acts referred to in sub-paragraph (a) above.

8.ORDERS that, within 28 days of the date of these orders, each of the first to sixth respondents deliver up on oath to the Applicant or its nominated agent for destruction all floor panels referred to in paragraphs 1, 2, 3, 4 and 5 above in its possession, custody or power.

9.ORDERS that:

(a)the first to fourth and sixth respondents pay the applicant’s costs of the proceedings to date (including the costs of the applicant’s motion heard on 3 November 2006) on an indemnity basis;

(b)the fifth respondent pay the applicant’s costs of the proceedings to date (including the costs of the applicant’s motion heard on 3 November 2006) on a party-party basis, provided that this shall not include such costs (if any) of the case against the other respondents as may be separable on taxation from the costs of the case against the fifth respondent.

10.DIRECTS that the matter be listed on 12 December 2006 at 9.30 am for further directions for the further conduct of the proceedings.

on the amended cross-claim of the fifth respondent as cross-claimant

the court:

11.ORDERS That the cross-respondents and each of them pay the cross-claimant an amount equal to the total of all damages, costs and other sums of money the cross-claimant may be ordered by the Court to pay the applicant in these proceedings.

12.DECLARES that the cross-respondents and each of them have by the making of the first representation referred to in paragraph 15 of the amended cross-claim contravened s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW).

13.DECLARES that the fourth cross-respondent has by the making of the second representation referred to in paragraph 28 of the amended cross-claim contravened s 52 of the Trade Practices Act 1974 and s 42 of the Fair Trading Act 1987 (NSW).

14.DECLARES that in the period January 2004 to September 2005 the third cross-respondent was knowingly concerned in the contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW) by the first cross-respondent and the fourth cross-respondent.

15.DECLARES that the cross-respondents are jointly and severally liable to indemnify and keep the cross claimant indemnified in respect of any and all damages, costs and other sums of money the cross-claimant may be ordered by the Court to pay the applicant in these proceedings.

16.ORDERS that the cross-respondents pay the costs to date of the cross-claimant on an indemnity basis.

17.DIRECTS that the matter be relisted on 12 December 2006 at 9.30 am for directions as to the further conduct of the cross-claim.

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 2329 OF 2005

BETWEEN:

UNILIN BEEHER BV
Applicant

AND:

HUILI BUILDING MATERIALS PTY LTD
First Respondent/First Cross-Respondent

BAO JIA SUN T/AS HUILI AUSTRALIA TRADING
Second Respondent/Second Cross-Respondent

GONG DAO ZANG T/AS HUILI AUSTRALIA TRADING
Third Respondent/ Third Cross-Respondent

HUILI AUSTRALIA TRADING PTY LTD
Fourth Respondent/Fourth Cross-Respondent

GREMOS HOLDINGS PTY LTD
Fifth Respondent/Cross-Claimant

HUILI FLOORING PTY LTD
Sixth Respondent

JUDGE:	ALLSOP J
DATE:	29 NOVEMBER 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. These are my brief reasons for orders made pursuant to notices of motion upon which the applicant and fifth respondent, as cross-claimant, move.  There was no appearances by the first to fourth and sixth respondents.  I will deal with each motion in turn.

   The applicant’s motion

2. The applicant seeks orders pursuant to Order 35A r 3(1) of the Federal Court Rules (orders based on the default of the relevant respondents) and pursuant to s 31A(1) of the Federal Court of Australia Act 1976 (Cth) and Order 20 rule 1 of the Rules (summary judgment).

3. The notice of motion seeks declarations and orders against all respondents. 

4. The fifth respondent does not oppose the making of the orders and, in turn, seeks to pass on its liability to the first to fourth respondents.

5. There were a number of affidavits relied on in support of the notice of motion of the applicant.  They are set out in the document marked A and which is annexed hereto.  The affidavits were read and the exhibits tendered.

6. I have also been helpfully supplied with a table of evidence directing me to the various parts of the evidence and supporting the submissions as to infringement, I have marked that document “Administrative Exhibit ‘A1’” and the document will remain with the file.  I do not propose to set out the detail of it in these reasons.

7. The proceedings arise out of what the evidence discloses as the clear infringement of Australian Patent no 713628 being an invention relating to floor covering consisting of hard floor panels as well as a method for manufacturing such floor panels.

8. The various bases for the making of the orders sought against the parties are as follows:

   (a)as against the first to fourth respondents pursuant to Order 35A rule 3(2) by reason of the defaults listed in the affidavits marked 10 and 11 in Annexure A;

   (b)additionally as against the first to fourth respondents pursuant to Order 21 rule 1 and s 31A(1) by reason of the evidence of infringements and admissions (though such admissions are not essential) given in the affidavits marked 1, 2, 3, 4 and 7 in Annexure A;

   (c)additionally, as against the second and third respondents pursuant to Order 20 rule 1 and s 31A(1) by their involvement in the infringements of the first, fourth and sixth respondents as set out in the affidavit numbered 5 in Annexure A (this additional involvement as accessories is in addition to the infringements engaged in directly by the second and third respondents trading as Huili Australia Trading) which are covered by paragraphs (a) and (b) above;

   (d)as against the sixth respondent pursuant to Order 35A rule 3(2) by reason of the defaults detailed in affidavits 9 and 10 in Annexure A; and

   (e)additionally as against the sixth respondent pursuant to Order 20 rule 1 and s 31A(1) by reason of the infringements detailed in affidavits 6, 7 and 8 of Annexure A.

9. I have carefully examined the written submissions and evidence, I am satisfied that the applicant is entitled to relief claimed based on the outline set out in [8] above.

10. Annexed to the supplementary submission filed pursuant to leave I granted at the hearing the appropriate form of order has been revised and after consideration of that amendment I am prepared to make those orders.  Therefore, on the notice of motion of the applicant against the first to sixth respondents by reason of various defaults, admissions and otherwise based on the clear evidence satisfying s 31A(1) and Order 20 rule 1 I will make orders in the form suggested in the supplementary submissions.

11. The applicant seeks indemnity costs against the first to fourth and sixth respondent.  I think the clarity of the evidence supports that order.  There can have been little doubt that there was an awareness of the patents from an early date, in particular taking into account Mr Gremos’ evidence on the cross-claims.  The evidence reveals a clear basis, in my view, for indemnity costs against the first to fourth and sixth respondents. 

12. There was debate about the position of the fifth respondent.  In my view, though the fifth respondent has taken the responsible view it has not provided unequivocal undertakings and in my view the proffered order against it is appropriate.

    The fifth respondent/cross claimant’s motion

13. The fifth respondent was involved in the infringements.  However, the basis for its claim is that it was an innocent party relying on the assurances of the first to fourth respondents.  It has submitted to all the orders against it in so far as they were supported by the evidence.  They are so supported. 

14. The fifth respondent was a purchaser from all of the cross-respondents at various times of the allegedly infringing products.

15. An amended cross-claim was filed on the day of the hearing before me.  I made orders and directions that the amended document be served on the first to fourth and sixth respondents with an indication that the fifth respondent cross-claimant should make clear upon service that if the various respondents wish to come in and defend the cross claim they could.  The fifth respondent did so.  No attempt to defend the proceedings of the applicant or the cross-claim has been made by the first to fourth respondents on the sixth respondent.

16. I am satisfied that the various respondents to the cross-claim have been served with notice that the cross-claimant will seek orders and declarations against them in support of the cross claim filed against them and in support of the amended cross-claim filed in Court.

17. The notice of motion for the orders was supported by an affidavit of Mr Bill Gremos sworn 26 September 2006 together with the exhibits thereto.  Mr Gremos is the managing director of the fifth respondent.  The evidence underlying the infringement from the applicant’s motion is of course before me in this motion by the cross-claimant.

18. The affidavit of Mr Gremos recounts that he began dealing with the second and third respondents in 2003.  He was rung by them in relation to the purchasing of laminated flooring.  The second and third respondents indicated that this product could be obtained from China.  The substantive conversations in this early period were carried on with the third respondent.  During the period March 2004 to February 2005 the fifth respondent purchased quantities of laminated flooring from the second and third respondents.  Various invoices were provided in the exhibits to Mr Gremos’ affidavit.

19. In February 2005 Mr Gremos became aware that the fifth respondent was now dealing with the fourth respondent as orders placed by the fifth respondent with the second and third respondents were being invoiced by the fourth respondent.  Invoices supporting this change were exhibited to Mr Gremos’ affidavit. 

20. In March 2005 by the same process of invoicing Mr Gremos became aware that he was now dealing with the first respondent.  Orders that had been placed with the fourth respondent were now being invoiced by the first respondent.  Again invoices were exhibited by Mr Gremos’ affidavit to support this change.

21. By letter dated 20 May 2005 from an officer of the applicant, the fifth respondent became aware that the applicant claimed that its patent was being infringed by flooring purchased from the first, second, third and fourth respondents.  Mr Gremos then took immediate steps to inform the third respondent of this, to instruct his stores to cease selling the product and to recall all stocks and return all stocks to the fourth respondent. 

22. He then had a number of conversations with the third respondent in which he was assured that there would be no infringement in the future.  For instance, the third respondent said to Mr Gremos that he had spoken with the manufacturers in China and they had said that there was no problem and that they will address the issue with new product of the same quality as was previously supplied but with a different locking profile.  Mr Gremos made it clear that he did not want to buy a product which was in breach of any patent.  The third respondent reassured him that this would be all right.  From all the evidence before me it can be safely concluded that the assurances were baseless.

23. During the period June to August 2005 the third respondent came to Mr Gremos’ office and showed him samples of the new product.  Following this reassurance Mr Gremos committed the fifth respondent to further purchases from the other respondents.  These further purchases came from the first respondent.  In November 2005, upon being served with the applicant’s process in these proceedings, Mr Gremos caused all stock to be removed from sale.

24. At no time does it appear that the sixth respondent was involved in selling to Mr Gremos.

25. The amended cross-claim pleads the course of dealing, pleads various misleading representations that the flooring supplied to them would be capable of being offered for sale, pleads a condition implied by s 17(1) of the Sale of Goods Act 1923 (NSW) and a warranty implied by s 17(2) of the Sale of Goods Act. The pleading then seeks an order under s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) dealing with joint tortfeasors. Relief is sought under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) both directly for the false and misleading representations by the respondents and under s 75B of the Trade Practices Act.

26. I am satisfied from the evidence put forward by Mr Gremos that the fifth respondent is entitled to such damages as it can prove by reason of the various breaches of contract by the first, second, third and fourth cross respondents arising from the breaches of the condition and warranty implied by s 17(1) and (2) of the Sale of Goods Act and pursuant to the misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW), substantially as pleaded.

27. I am satisfied that the cross-claimant is entitled to the declarations and orders accordingly in substance sought in the amended cross-claim.

28. The clarity of the infringements and the circumstances of the misleading of Mr Gremos entitle the cross-claimant to its costs on an indemnity basis.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop J.

Associate:
Dated:       29 November 2006

Counsel for the Applicant:	Ms K Howard (SC) and Mr C Dimitriadis
Solicitor for the Applicant:	Davies Collison Cave Solicitors
Counsel for the First to Fourth Respondent /First to Fourth Cross-Respondent:	No appearance
Solicitor for the First to Fourth Respondent /First to Fourth Cross-Respondent:	No appearance
Counsel for the Fifth Respondent/Cross-Claimant:	Ms C Champion
Solicitor for the Fifth Respondent/Cross-Claimant:	Spanko Soulous & Co
Counsel for the Sixth Respondent:	No appearance
Solicitor for the Sixth Respondent:	No appearance
Date of Hearing:	3 November 2006
Date of Judgment:	29 November 2006

Annexure A