Weller v Smith
[2016] FCCA 2822
•4 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WELLER & ANOR v SMITH | [2016] FCCA 2822 |
| Catchwords: CONSUMER LAW – Misleading and deceptive conduct – Passing off – adoption of trade indica – deceptively similar name – use of applicants’ photgraphs TRADE MARKS – Application for cancellation and removal from register. |
| Legislation: Copyright Act 1968, ss. 10, 31(1)(b), 32(1), 32(2), 35(2), 36, 115(4) Competition and Consumer Act 2010, ss. 18, 29 Trade Marks Act 1995, ss. 17, 41, 42, 57, 88, 190 |
| Cases cited: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd, (2007) 157 FCR 564 Autodesk Australia Pty Limited v Cheung (1990) 94 ALR 472 Autodesk v Yee (1996) 68 FCR 391 Columbia Pictures Industries Inc v Luckins (1996) 34 IPR 504 Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373 Interfirm Comparison (Aust) Pty Limited v Law Society of New South Wales (1975) 6 ALR 44 Microsoft Corporation v Goodview (2000) 49 IPR 578 Milpurrurru & Ors v. Indofurn Pty Ltd & Ors (1994) 130 ALR 659 Raben Footwear v Polygram Records (1997) 75 FCR 88 Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 Sony Computer Entertainment Aust Pty Ltd v Stirling [2001] FCA 1852 Verrocchi v Direct Chemist Outlet Pty Ltd (2015) 228 FCR 189 Vertical Leisure Limited & Anor v Skyrunner Pty Ltd & Anor [2014] FCCA 2033 |
| First Applicant: | JOHN NEVILLE WELLER |
| Second Applicant: | JAKE HENRY WELLER |
| Respondent: | IAN SMITH |
| File Number: | BRG1053 of 2014 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 6 and 7 August 2015 |
| Date of Last Submission: | 7 August 2015 |
| Delivered at: | Brisbane |
| Delivered on: | 4 November 2016 |
REPRESENTATION
| Counsel for the Applicants: | Mr Musgrave |
| Solicitors for the Applicants: | Bennet & Philp Lawyers |
| The Respondent appeared in person. |
ORDERS
THE COURT DECLARES THAT:
the conduct of the Respondent, whether by himself, his servants or agents or otherwise howsoever in manufacturing, importing, advertising, offering for sale, distributing, supplying or selling jelly wrestling mix or jelly wrestling crystals howsoever described (“Infringing Jelly Wrestling Product”) within Australia:
(a)under the name “Crazy Town Brisbane”; and/or
(b)by reference to the Photographs (as that word is defined in paragraph 12 of the Statement of Claim in these proceedings)
constitutes conduct which:
(c)is misleading and deceptive or likely to mislead and deceive in contravention of s.18 of the Australian Consumer Law; and
(d)is a contravention of s.29 of the Australian Consumer Law.
the conduct of the Respondent whether by himself, his employees or agents or otherwise howsoever in manufacturing, importing, advertising, offering for sale, distributing, supplying or selling Infringing Jelly Wrestling Product within Australia:
(a)under the name “Crazy Town Brisbane”; and/or
(b)by reference to the Photographs (as that word is defined in paragraph 12 of the Statement of Claim in these proceedings)
constitutes passing-off by the Respondent of his business and the Infringing Jelly Wrestling Product as being the business and/or product of, or related to, or licensed by, or having authorisation of or a connection with, the First and Second Applicants.
the Respondent has infringed the First and Second Applicants’ copyright rights in the Photographs.
THE COURT ORDERS THAT:
Pursuant to s.88 of the Trade Marks Act 1995 (Cth) the Register of Trade Marks is to be rectified by the cancellation and removal of Trade Marks Registration number 1524385 and 1525084;
The Respondent is restrained, whether by his servants and agents or otherwise howsoever, from manufacturing, distributing, promoting, offering for sale or selling in Australia or causing or permitting (directly or indirectly) to be manufactured, distributed, promoted, offered for sale or sold in Australia Infringing Jelly Wrestling Product by reference to any of:
(a)the name “Crazy Town”; or
(b)the name “Crazy Town Brisbane”; or
(c)any name which may be deceptively similar or confusingly similar to the names “Crazy Town” or “Crazy Town Brisbane”; or
(d)the Photographs.
The Respondent is restrained, whether by himself, servants or agents or otherwise howsoever, from reproducing, using, publishing or communicating in any form, without the licence of the First and Second Applicants, the whole or a substantial part of any of the Photographs.
Within 14 days of the date of this order the Respondent is to change the eBay store name of any eBay store name operated by the Respondent to some other name that does not contain the words “Crazy” and “Town” in combination.
Within 14 days of the date of this order the Respondent deliver up on oath to the First and Second Applicants or their duly authorised agent, for destruction under supervision, all goods and any hard copy documents and materials of any description whatsoever in his possession, power, custody or control bearing any of the Photographs.
Within 14 days of the date of this order the Respondent must delete all depictions of or references to the Photographs on any electronic data storage system of any description under the control of the Respondent or any of his servants or agents.
Within 30 days of the date of this order the Respondent is to provide to the Applicants a signed statutory declaration attesting to the actions taken by the Respondent in compliance with orders 7 to 9 inclusive above.
The Respondent pay to the Applicants:
(a)compensatory damages in the sum of $7,350; and
(b)additional damages in the sum of $20,000.
THE COURT DIRECTS THAT:
By 4.00pm on 25 November, 2016 the applicants file and serve short minutes of order and written submissions in support thereof relating to the questions of :
(a)pre and post judgment interest on the awards of damages; and
(b)costs.
By 4.00pm on 9 December, 2016 the respondent file and serve short minutes of order and written submissions in reply to the applicants’ submissions.
THE COURT FURTHER ORDERS THAT:
The questions of pre and post judgment interest on the awards of damages herein and costs be adjourned to a date to be fixed pending the delivery of submissions pursuant to orders 13 and 14 hereof, and thereafter judgment on those issues.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG1053 of 2014
| JOHN NEVILLE WELLER |
First Applicant
| JAKE HENRY WELLER |
Second Applicant
And
| IAN SMITH |
Respondent
REASONS FOR JUDGMENT
(As Corrected)
1.Since January, 2008 the applicants, in the course of a business commenced by them in partnership, have marketed and sold goods within the party supply industry by reference to the unregistered trade mark and registered business name “Crazy Town Parties”. They have also provided party hire services.
2.One of the products that the applicants have promoted and sold since January, 2008 is a substance sold in crystalline form which, once hydrated, is used for “jelly wrestling” for entertainment purposes. The applicants promoted their business and the jelly wrestling product through the use of certain photographs published, amongst other places, on the internet. They claim to be holders of the copyright in three particular photographs that form the subject matter of these proceedings. A facsimile of each photograph is appended to these reasons.
3.The applicants allege that Mr Smith has:
a)infringed, or authorised the infringement of, the applicants’ copyright in the photographs in breach of s.36 of the Copyright Act 1968 (Cth) by using the photographs without the permission of the applicants;
b)committed the tort of passing off by use of the name “Crazy Town Brisbane” and the photographs, or each of the name and the photographs separately, to sell a product in competition with the applicants’ jelly wrestling product;
c)contravened ss.18 and 29 of the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth) by use of the name “Crazy Town Brisbane” and the photographs, or each of the name and the photographs separately, to sell a product in competition with the applicants’ jelly wrestling product.
4.The applicants claim:
a)after signifying an election to do so at the commencement of the proceedings, compensatory damages for breach of copyright;
b)alternatively, compensatory damages for passing-off and the contraventions of the Australian Consumer Law;
c)additional damages pursuant to s.115(4) of the Copyright Act because the infringements were committed by Mr Smith:
i)in flagrant disregard of the applicants’ copyright;
ii)knowing that copyright subsisted in the photographs;
iii)knowing that he did not have a license or authority from either of the applicants to reproduce any of the photographs;
iv)knowing that his acts constituted infringement of the applicants’ copyright in the photographs; and
v)with the intention that substantial benefit would accrue to him by reason of the infringements, namely trading in competition with the applicants using the applicants’ get-up;
d)declaratory orders, injunctions and orders as to the delivery up of infringing material;
e)an order under s.88 of the Trade Marks Act 1995 (Cth) that certain trademarks registered to Mr Smith be cancelled.
5.Mr Smith opposes the relief sought by the applicants. He asks that the application be dismissed.
6.Mr Smith appeared for himself at the trial of these proceedings. His written evidence was not particularly helpful. He cross-examined both of the applicants and one of their witnesses Ms Clare Allen. He was cross-examined by counsel for the applicants.
The Applicants and their business
7.In approximately January, 2008 the applicants commenced a business under the business name Crazy Town Parties. The business name was registered with an Australian Business Number in April, 2008. The ABN was cancelled in August, 2009. In March, 2011, the business name Crazy Town Parties was again registered with the state registration authority responsible for such registrations. It was allocated a business number and the first applicant was registered as the business owner. That registration expired in March, 2014, but before it expired, on 21 March, 2014 the trading name Crazy Town Parties was registered to both applicants in partnership under the names J. Weller and J. N. Weller. The applicants were given another Australian Business Number for the business Crazy Town Parties. That registration is due to expire on 21 March, 2017.
8.Crazy Town Parties offers party goods for sale and it also hires party equipment. The applicants also provide the services of staff to set up and supervise the use of some of the goods that they hire. The primary target market for the business is young adults of high school and university ages.
9.Since the inception of their business, the applicants have offered jelly wrestling products for hire and sale. They would hire wading pools and set up a “wrestling pool” by supplying jelly crystals that would be put into the wading pool and hydrated ready for the applicants’ customers to use.
10.In his written evidence John Weller describes the applicants’ jelly wrestling product as follows:
11. Crazy Town Crystals are a crystal like substance which, once hydrated, are used for jelly wrestling matches. The Crazy Town Crystals are added to a wrestling pool, which is simply a child’s wading pool, water is added to the crystals and then customers hold a wrestling competition in the crystals. The jelly crystals are slippery and so customers slip and slide in the pool whilst trying to hold each other down as part of the wrestling match. The jelly crystals are not actually jelly crystals in the way of edible jelly, but are known as jelly crystals because once water is added they mimic the look of chunky jelly that is usually made for human consumption. Whilst the Crazy Town Crystals are non-toxic, they are not the same composition of the edible jelly crystals and the instructions state that they are not recommended for consumption. Jelly crystals are also referred to as jelly mix, jelly formula, jello crystals and jello.
11.The applicants’ evidence is that they commenced developing their jelly wrestling product in 2008. They took some time to do so. In his evidence John Weller explained that:
We wanted the colour to be contained within the crystals because we believed it would be a better quality product. We slowly developed better and better techniques to add the colour to the crystals so that they would hold a very rich, bright colour as the crystals expanded into the jelly like substance that people wrestle in. We worked hard on this because we found that adding the colour and water to clear crystals does not give them anywhere near as rich a colour as our mix offered. Our crystals held their colour as they set so we got a bright red jelly while the main competing product in the Australian market place at that time looked a weak pink colour.
12.In April, 2009 the applicants commenced selling jelly wrestling “packages” across Australia. They sold the jelly wrestling crystals product on its own, as well as part of a package that was accompanied by a wading pool. They invested time and money in developing the product as explained above and by securing reliable manufacturing of their jelly wrestling product in China.
13.For the purposes of the business, the applicants took a number of photographs to be used for promotional purposes. Photograph number 1 in the appendix to these reasons is a photograph of the applicant John Weller and his then partner Shelly May in a wading pool of the applicants’ red jelly wrestling product. The applicants gave evidence, which I accept, that Photo 1 has been used as the main image for promoting the applicants’ products since very soon after it was taken. It has been used extensively on the various websites and social media sites operated by the applicants for their business. It is the main image applied to the various packaging of the applicant’s jelly wrestling product from time to time. The applicants assert that Photo 1 had accrued: “a high level of brand awareness for Crazy Town Parties.”
14.John Weller gave unchallenged evidence that he invested considerable time into researching and developing the packaging for the jelly wrestling crystals product. Initially that packaging took the form of a 2.2l plastic bucket with a tamper preventative lid. Photo 1 was used on a sticker that was placed on the plastic bucket. An image of the plastic bucket, which itself displayed a reproduction of Photo 1, was used on the various internet websites operated by the applicants, including eBay.com.au, to advertise the jelly wrestling crystals product.
15.In June, 2014 after the redevelopment of the product packaging, the applicants changed the packaging for their jelly wrestling product. Photo 1 was again used, and is still used, on that packaging. The applicants assessed that using Photo 1 would assist people who recalled their previous packaging to recognise the new packaging and thereby link the product to Crazy Town Parties.
16.I am satisfied by the evidence that the applicant Jake Weller took Photo 1 on 10 January, 2009 at the home of the applicants’ brother Kurt Weller in Bald Hills, Queensland. Photo 1 was taken so that it could be used for promotional purposes for the applicants’ business.
17.I am satisfied that photograph numbered 2 in the appendix to these reasons was taken by the applicant John Weller on 10 January, 2009. It depicts the second applicant, Jake Weller, lying in a jelly wrestling pool with two young women. The applicants also took a number of other photographs on that day with the intention that they might be used for promotional purposes for the business.
18.Further, on or about 14 July, 2012 Jake Weller attended a party with John Weller where an inflatable pool filled with the applicants’ jelly wrestling crystal product was set up. At that party John Weller took photographs of Jake Weller in a wading pool filled with the applicants’ jelly wrestling product. There was a particular photograph taken on that day of Jake Weller with two young women in the jelly wrestling pool. One of the women did not want her face shown in any promotional photograph and so, John Weller edited the photograph so that she was shown with a different face. That photograph is photograph 3 in the appendix to these reasons.
19.I am satisfied that from January, 2009 Photo 1 has been used as the main image for Crazy Town Parties and has been used prominently to market both Crazy Town Parties products and services and specifically the applicants’ jelly wrestling crystals product. I find that:
a)Photo 1 is the main photo used for packaging of the applicants’ jelly wrestling crystals product. Photo 1 was the main image used on:
i)the plastic bucket packaging for the applicants’ jelly wrestling crystals product from January, 2009 to June, 2014;
ii)the current packaging for the applicants’ jelly wrestling crystals product since June, 2014.
b)an image of the packaging showing Photo 1 has also been used as a main image displayed on listings under the applicants’ eBay seller account since a date prior to 28 December, 2012;
c)prior to 3 March, 2009 John Weller uploaded Photo 1 to the Crazy Town Parties website for display on that site. It was, for a time, the most prominently displayed picture on the Crazy Town Parties website as it was the main cover image on the Crazy Town website home page and the first thing seen by visitors to the Crazy Town Website. It was also used as the cover image on the jelly wrestling pages within the Crazy Town Parties website.
d)In October, 2010 the applicants created or caused to be created and published on the internet the website Photo 1 was displayed on that website until that website was discontinued in late 2013.
e)A photo of the packaging of the applicants’ jelly wrestling crystals product including Photo 1 was placed on hotfrog.com.au business directory on 18 November, 2010.
f)In July, 2012 the website was created by the applicants. Photo 1 has been the most prominently displayed photograph on that website. It is used as the cover photo for the home page and various other pages on the site. The image is the first thing visitors to the website see.
g)Photo 1 has been used as the applicants’ header image on Google+ since 6 July, 2012.
h)A poster containing Photo 1 and a photo of the packaging depicting Photo 1 was displayed on the Crazy Town Parties Facebook page on 21 March, 2011.
i)The photo of the packaging with Photo 1 was Crazy Town Parties’ Facebook profile picture from 17 July, 2012.
j)Photo 1 was used as the cover photo on the applicants’ Crazy Town Parties Vic Facebook page from 28 March, 2012.
k)Photo 1 was displayed on the applicants’ “Jello Wrestling Supply” Facebook page on 25 June, 2013. The image has been used as the Facebook cover photo on that page since 13 June, 2014.
l)Photo 1 has been displayed on Crazy Town Parties’ Pinterest account since approximately 10 June, 2014.
m)Photo 1 has been used on car magnets, on jellowrestlngsupply.com business cards, on posters displayed at universities and TAFES around south east Queensland, on fliers handed out at “schoolies week”, on fliers dropped in letterboxes, on posters displayed on jumping castles and other inflatables, on posters displayed on A-frame signs, on lawn signs, on jellowrestlingsupply.com competition flyers distributed at a music festival in the USA; and
n)Photo 1 has been used on various other websites, including dudeiwantthat.com, awesomeinventions.com, affluentaspirations.com, and justalittlenerdy.com to help promote “jello wrestling events” and direct traffic to the applicants amazon.com listing where the applicants’ jelly wrestling crystals product is available for sale.
20.I find that Photo 2 and Photo 3 have also been used to promote Crazy Town Parties and the applicants’ jelly wrestling crystals product in that:
a)Prior to January, 2011 John Weller caused Photo 2 to be displayed on the jelly wrestling page of the Crazy Town Parties website.
b)In about July, 2012 John Weller caused Photo 3 to be displayed on both the crazytownparties.com and jellowrestlingsupply.com websites.
c)In about July, 2012 John Weller caused Photo 3 to be:
i)used on webnetwork.com.au directory;
ii)used as the profile picture on the Jello Wrestling Supply Facebook page on 29 May, 2013;
iii)displayed on the applicants’ Jello Wrestling Supply Pinterest account in March, 2014.
iv)used as the profile picture for the applicants’ “Mr Jello Wrestling” YouTube account.
d)Photo 2 has been used on Facebook, business cards, large magnets for vehicles, and posters pinned to public noticeboards at universities in Australia and the United States of America;
e)Photo 3 has been used by various other websites connected to the applicants, including – dudeiwantthat.com, coolshityoucanbuy.com, affluentaspirations.com to help promote “jello wrestling events” and direct traffic to the Crazy Town Parties’ amazon.com listing where the applicants’ jelly wrestling crystals product is available for sale; and
f)Photo 2 and Photo 3 have also been used from time to time as supporting images for listings on the Crazy Town Parties’ eBay.com.au, amazon.com store and fishpond.com store accounts.
21.The applicants’ hire their products in the South East Queensland area – as far north as Rainbow Beach, as far west as Toowoomba and as far south as Tweed Heads. The size of some of the equipment the applicants’ hire through the business necessitates transport by trailer and that limits the geographical reach of the business. However, from 27 October, 2010 to late 2013 the applicants sold products and hired equipment within Victoria as well as South East Queensland.
22.Moreover, because of the nature of the equipment that the applicants hire, it is necessary for the equipment to be set up by people with the requisite knowledge to safely set it up and for users to be supervised when using the equipment. In their evidence, the applicants refer to events requiring set-up or supervision as “Crazy Town Parties” or a “CTP party”. The applicants provide, through the business, the necessary set-up and supervisory services.
23.The applicants advertise their business. The “Crazy Town Parties” name is prominently advertised at each CTP party. The advertising at a CTP Party includes displaying the Crazy Town Parties name on:
a)the delivery van, trailers and cars which are used to deliver the equipment to the CTP Party;
b)on A-Frame signs displayed at the CTP Party;
c)equipment hired at the CTP Party;
d)t-shirts worn by Crazy Town Parties staff members at the CTP Party; and
e)on business cards, business card sized magnets and Facebook cards which are handed out at the CTP Party.
24.As will already be apparent, the applicants utilise the internet to sell their products. They do so using the websites CrazyTownParties.com, jellowrestlingsupply.com, glowpartyworld.com, amazon.com and eBay.com.au. The applicants’ evidence is that purchases are made online from around the world. According to the evidence of John Weller, which I accept, the majority of sales are made to purchasers within Australia and the United States of America but the applicants’ jelly wrestling crystals product has also been sold into New Zealand, Canada, Mexico, South Africa and South Korea.
25.I accept John Weller’s evidence that the Crazy Town Parties name is advertised by Crazy Town Parties directly and also by other organisations without a request for advertisement from Crazy Town Parties.
26.I am satisfied that since January, 2008 Crazy Town Parties has advertised the Crazy Town Parties name by applying it to:
a)the website CrazyTownParties.com;
b)the YouTube channel crazytownparties;
c)the eBay page crazytownpartiesstore;
d)the Facebook page twitter page at twitter.com/crazytownparty;
f)the Pinterest account at pintrest.com/crazytownparty; and
g)advertising within Goodlife Gyms;
h)a steel banner attached to the fence in sponsorship of the Caloundra Australian Football club;
i)flyers distributed in letter boxes in the Sunshine Coast and Brisbane areas;
j)the Crazy Town products sold by the applicants;
k)posters at the University of Queensland St Lucia Campus, the Queensland University of Technology campuses at Gardens Point, Kelvin Grove, and Carseldine, the University of the Sunshine Coast and the TAFE Mountain Creek and Bracken Ridge campuses;
l)magnets, bumper stickers, large window stickers, and banners on cars, vans and trailers;
m)entries in printed directories for the following areas:
i)Sunshine Coast Local Directory;
ii)Gold Coast Local Directory;
iii)Yellow pages Brisbane Area Directory;
n)T-shirts;
o)online directories at the following websites:
i)Startlocal.com.au;
ii)Nearyouau.com;
iii)Localsearch.com.au;
iv)Hotfrog.com.au;
v)Truelocal.com.au;
vi)Yellowpages.com.au;
vii)Activeactivities.com.au;
viii)Localbusinessguide.com.au;
ix)lbizprofile-au.com;
x)Fishpond.com.au;
xi)Tuugo.biz;
xii)Dianping.com;
xiii)Plantminer.com.au;
xiv)Aussiepages.com.au;
xv)Weekendnotes.com;
xvi)Brisbane.cracker.com.au;
xvii)Rankedbyreview.com.au;
xviii)Webnetwork.com.au;
xix)Aussieweb.com.au;
xx)Pinkpages.com.au;
xxi)Yelp.com.au;
xxii)Cataustralia.com; and
xxiii)Store-finder.com.au.
27.From 2008 the applicants have paid for google advertising (google adwords) to help promote the Crazy Town Parties brand and products. Once the applicants’ website began to rank well of its own accord the applicants’ reduced the amount of google advertising. That was a sign of the popularity and reputation of the applicants’ Crazy Town Parties website.
28.The applicants’ business has been promoted through traditional media channels. In evidence is a copy of an article published in the Sunshine Coast Daily printed newspaper on 29 November, 2011. A copy of the article was put onto the newspaper’s website on 30 November, 2011.
29.As part of the promotion of their business, the applicants respond to opportunities to market and sell their product. For example, in November, 2014 the applicants opened a temporary store under a 4-week contract at Surfer’s Paradise on the Gold Coast, Queensland where they sold and promoted their products to school leavers during what has come to be known as “schoolies week”.
30.According to the applicants’ evidence, which I accept, their business has grown such that what started off as a part-time venture designed to secure a modest supplementary income for the applicants has now grown into a full-time occupation for both. John Weller commenced to work in the business full-time in November, 2010 and the Jake Weller did the same in April, 2012.
The Respondent
31.Mr Smith gave evidence that he has extensive experience in “polymer products” and has invested considerable time and effort into the development of the products that he sells. He too, sells a product which is marketed for the purposes of recreational jelly wrestling. He claims that his product does not compete with the applicants’ product because the products are very different in nature. He says that he does not sell “the potassium based garden crystals product offered for sale on other [internet web]sites”. Mr Smith’s contention is that the applicants’ jelly wrestling crystals product is a “potassium based garden crystals product” whereas his product is not.
32.On 7 November, 2012 Mr Smith applied to register the trade mark JELLY WRESTLING MIX WITH SLIPPERY SLIME filed in respect of retailing of goods (by any means) in class 35. The trade mark was assigned application number 1524385 and it was accepted for registration and entered on the register on 19 September, 2013.
33.I am also satisfied that on 11 November, 2012 Mr Smith applied to register the trade mark JELLY JELLO WRESTLING SUPPLIES filed in respect of retailing of goods (by any means) in class 35. The trade mark was assigned application number 1525084 and it was accepted for registration and entered on the register on 12 July, 2013.
The Alleged Infringements
34.I am satisfied that on or about 20 March, 2013 Jake Weller was looking at eBay.com.au on the internet and he discovered that a seller by the name of crazytownbrisbane was selling a jelly crystal product for jelly wrestling. The listing was accompanied by an image that was the same as Photo 2. Jake Weller describes it as a “display photograph on the eBay listings”. The listing he found was for:
Jelly Wrestling Mix Pro jelly jello Party Fun For All Make 150L
35.The listing carried eBay item identifier number 261187552245.
36.Jake Weller considered that the product so advertised and listed was equivalent to the applicants’ jelly wrestling crystal product and thus competed with the applicants’ product. Jake Weller was also concerned by the use of the name crazytownbrisbane as the seller ID and also very concerned by the use of Photo 2 to advertise the sale of Mr Smith’s product. He brought those matters to John Weller’s attention.
37.On 20 March, 2013 Jake Weller made a copy of the listing by taking a screen shot of the jelly crystal advertisement on the Seller ID: crazytownbrisbane page on eBay.com.au. He sent the holder of the crazytownbrisbane account an email asking it to stop using Photo 2 and stop using the crazytownbrisbane name. He concluded his email by saying: “Provided your listings are removed we will not take any further action regarding the infringements”.
38.Jake Weller never received a response to the email he sent to the Seller ID: crazytownbrisbane eBay.com.au account. However, when Jake Weller later checked the crazytownbrisbane eBay account and its advertisements on eBay he saw that it had appeared to have stopped using Photo 2 and the listings had been removed.
39.Mr Smith admits that he was the person operating Seller ID: crazytownbrisbane on the website eBay.com.au. He denied that he was conducting any type of business by doing so. However, whether what he was doing amounted to the operating of a “business” is not to the point. On his own evidence, he was selling his jelly wrestling product for the purpose of profit on the eBay.com.au website. On Mr Smith’s eBay listing, the image of Photo 2 has been superimposed across the centre of the image of the word: “crazytownbrisbane”. In the bottom right hand corner appears the word “MRjellyKing”.
40.As at March, 2013 John and Jake Weller did not sell their products on eBay.com.au using a Seller ID that used the words Crazy Town Parties or any combination of them. They were selling their products using a Seller ID that had been set up by Jake Weller some years earlier, namely Jayka86.
41.In May, 2014 the applicants moved from using the Seller ID: Jayka86 for selling their products on eBay.com.au to using a new account, namely Seller ID: crazytownpartiesstore. They also set up an eBay.com.au “store” although when that was set up is not clear. The store name was, or was changed to, “Crazy Town Parties”.
42.On 14 October, 2014 Jake Weller received a message sent through eBay.com.au to the effect that a complaint had been made regarding Crazy Town Parties’ use of the eBay account crazytownpartiesstore. Relevantly, the message provided:
We have received a notice of infringement from Ian Smith, a participant in our Verified Rights Owner (VeRO) program, stating that your eBay User ID, crazytownpartiesstore, and Store Name, Crazy Town Parties, infringes AU intellectual property rights of passing off. eBay takes no position regarding the validity of this claim, but we take appropriate action when we receive such a notice.
Because of this notice, you need to change your eBay User ID within 3 business days from the date of this email…
If you do not change your eBay Store name we will be required to change it for you…
If you have any questions about this matter, please contact the VeRO member at:
43.Jake Weller replied on 14 October, 2014 stating that the applicants had operated a business in Australia under the name Crazy Town Parties for seven years and asking for information on how the applicants had infringed Mr Smith’s rights.
44.On 15 October, 2014 Jake Weller received an email reply from eBay.com.au which amongst other things, stated:
I can understand your concern regarding this matter as you have operated your store under this name for many years. We have sent you this request to change your User ID and Store Name because we have been served with a legal notice from Ian Smith, which states that they are infringing on their intellectual property rights. As such, if you are unable to change your User ID and Store Name within 3 business days, we will be required to change them for you.
Because we are not experts in this rights owner’s intellectual property, if you have questions about what type of infringement has occurred, we ask that you contact Ian Smith directly at [email protected]
45.Jake Weller replied on 16 October, 2014 to eBay.com.au and said:
I am writing to inform you that we have contacted our lawyers Bennett and Philp regarding this matter. We will be taking action and they will be in contact with Mr Ian Smith early next week. I ask that you please do not change our store name until our lawyers have had time to make appropriate contact with Mr Smith.
We consider this an unjustified threat as we believe that we have first use rights in Australia to the name Crazy Town Parties. We have had a registered business name since 2008 and have operated the website for 6 to 7 years. If you change our name without our permission we believe this will harm our business and as such we will be looking to take action against all parties embroiled in the matter.
46.Ebay.com.au did not change the user account name for crazytownpartiesstore or the store name.
47.In the meantime, on 14 October, 2014 at the instigation of the applicants, a friend of the applicants, Clare Allen, sent an eBay message to crazytownbrisbane asking crazytownbrisbane whether its product was the same product as that on the crazytownparties.com website, that is to say, the applicants’ product. On the same day she received a message from the account crazytownbrisbane but which was signed as “MRsmiFFY” which stated that:
I have no association with the website you mention must be FAKE
My product is genuine jelly jello wrestle MIX with Australian (TM) only available on eBay from crazytownbrisbane and jellywrestlefactoryaustralia manufactured for jelly wrestling.
I can only imagine the bulk red jelly you mention is the potassium based polymer water crystal some shady carictors are trying to sell as jelly wrestling mix package which is actually a cheap garden water crystal often disguised by them adding red powder food dye sold in 1.8kg bags with fake labels with no (TM).
48.On 15 October, 2014 Ms Allen responded to that message and asked: “What is the difference between yours and the fake one on that website?” On 16 October, 2015 she received a response offering to give her a free sample of jelly products. That message had a signature of crazytownbrisbane.
49.On 16 October, 2014 John Weller asked Ms Allen to purchase jelly crystals from the crazytownbrisbane account on eBay.com.au. With her sister’s permission, she did so using her sister’s eBay account. She purchased eBay item number 261621956856 with the title, “Jelly Jello Wrestling Mix With Slippery Slime The Worlds Best Wrestle Product” from the crazytownbrisbane account on eBay.com.au.
50.After the purchase Ms Allen received a receipt to say that payment had been processed and that payment had been made to Ian Smith with a contact email of [email protected]. She had the purchase delivered to her house.
51.On 20 October, 2014 Ms Allen received a package in the mail which she believed was her purchase from the crazytownbrisbane seller on eBay.com.au. She took that package to the first applicant John Weller where he opened the package in company with Jake Weller. Video footage was taken of the package and its contents. The video recording is in evidence. So too is the package and its contents. I have inspected the package and its contents.
52.Upon opening the package, John and Jake Weller found a white crystal type substance packaged in three generic clip seal bags. Each bag was wrapped in “bubble wrap”. Each clip seal bag had an image affixed to it. The image measures approximately 36mm x 25mm. In a separate clip seal bag, itself also enclosed in “bubble wrap”, were three 50ml bottles of “Queen” “Pillar Box Red” food colouring. On each bottle was affixed an image measuring approximately 36mm x 25mm. The images on the three bags of crystal type substance are identical to each other. The images affixed to the bottles of food colouring are different to the images affixed to the bags of crystals, but they are identical to each other.
53.The image on the bottles of food colouring are images of Photo 2. Across the middle of each image in two lines of text has been superimposed the words “PROFESSIONAL JELLY WRESTLING MIX”. In the bottom right corner of each image appears the word: “MRjellyKing”.
54.In his written evidence, John Weller said (at paragraph 93 of his affidavit filed on 28 April, 2015:
The presentation of the material by the Respondent is poor, in my opinion, and indeed, as can be seen on the film referred to at paragraphs 91 and 92 above one of the bottles of dyes was leaking and my mother had red food dye on her hands from merely pulling one of the bottles of food dyes out of the bubble wrap. I consider that the presentation of the material is poor quality and the images (the Jake Photo 1) that are attached to the food dyes are all stuck to the bottles in different ways and are a very poor quality print.
55.Having viewed the video footage and inspected the package myself, I agree with John Weller’s assessment.
56.On 23 October, 2014 a further letter was sent to Mr Smith by the applicants’ lawyers after they became aware of use of Photo 2 and Photo 3.
57.On 24 November, 2014 Ms Allen, again using her sister’s eBay account, sent a request to eBay to determine the address or other details of the account holder for the eBay User ID crazytownbrisbane. On 25 November, 2014 she received a response from eBay.com.au which indicated that the person Ian Smith had the eBay User ID crazytownbrisbane and that he had been a “member” since 24 November, 2012. Mr Smith’s evidence confirms the results of Ms Allen’s enquiry.
58.Mr Smith did not cease use of the Photographs until December, 2014 and did not cease sale of Jelly Crystals under the name Crazy Town Brisbane until April, 2015.
Do the products compete with each other in the same market?
59.The applicants argue that their product and Mr Smith’s product compete with each other. Prima facie, that is a logical conclusion given that each is sold as a medium in which interested people might engage in jelly wrestling. Neither product is sold for any other purpose. Both are formulated for the jelly wrestling market. There are some differences: the applicants’ are coloured by the addition of colour in a way that, according to the evidence, is designed to make the product more attractive to purchasers and superior to Mr Smith’s product which is coloured by the addition of food colouring only; Mr Smith’s product has the addition of a second polymer to increase its overall slipperiness.
60.Mr Smith contends that the products do not compete with each other in the same market. He suggested that his product was an Australian manufactured, sodium based product consisting of two polymers whereas the applicants’ product was a potassium based single polymer manufactured in China for the gardening or horticultural industry. According to Mr Smith, the addition of a second polymer, described as a “slime polymer”, meant that Mr Smith’s product was substantially different to that of the applicants’. According to Mr Smith, that is a significant point of distinction from the applicants’ jelly wrestling crystals product. He argued that the use of the word “mix” in his product’s description indicated that it was a combination of two polymers, not one as was the applicants’ product. Mr Smith suggested, without any evidence to prove it to be so, that his product produced a medium that was slipperier, “severely slippery” as he put it, than the applicants’ product. He also pointed out that his product and that of the applicants were packaged differently. Jake Weller accepted in cross-examination that the two products felt slightly different.
61.John Weller conducted a comparison between the two products following the trap purchase. His evidence was that the two products hydrated at approximately the same rate, and when fully hydrated were very similar in appearance, save for the colour.
62.Notwithstanding the points of distinction highlighted by Mr Smith, I find that Mr Smith’s product and the applicant’s jelly wrestling crystals product compete in the same market because both products:
a)have the same or similar appearance (although the applicants’ product is coloured and Mr Smith’s product is not coloured in the absence of the addition of food colouring);
b)are hydrated in the same way;
c)are used for recreational jelly wrestling; and
d)were advertised for sale and sold for the same price and in the same quantities.
63.Additionally, both Mr Smith’s product and the applicant’s jelly wrestling crystals product were advertised in the same categories in eBay, namely the “Home & Garden/Parties. Occasions/Games” category. That Mr Smith used the photographs that were used by the applicants to sell their product suggests strongly, in my view, that the products compete in the same market.
Copyright in the photographs
64.A photograph, whether the work is of artistic quality or not, is an artistic work for the purposes of the Copyright Act: s.10, definition of artistic work.
65.Copyright subsists in an unpublished photograph that is authored by an Australian citizen or a person resident in Australia: s.32(1) of the Copyright Act.
66.Copyright subsists in a published photograph where relevantly, the first publication of the work took place in Australia, or the author of the work was an Australian citizen or a person resident in Australia at the time when the work was first published: s.32(2) of the Copyright Act.
67.Subject to the provisions of the Copyright Act, the author of an artistic work is the owner of any copyright subsisting in the work: s.35(2) of the Copyright Act.
68.John Weller was the author of Photo 2 and 3. He was an Australian resident when he took the photographs. They were first published in Australia. I am satisfied that copyright subsists in Photo 2 and 3. I am satisfied that the first applicant John Weller is the owner of the copyright subsisting in those photographs.
69.Jake Weller was the author of Photo 1. He was an Australian resident when he took the photograph. It was first published in Australia. I am satisfied that copyright subsists in Photo 1. Notwithstanding the minor editing of that photograph by John Weller, I am satisfied that the second applicant Jake Weller is the owner of the copyright subsisting in that photograph.
Infringement of Copyright
70.Copyright, in relation to an artistic work, is the exclusive right to:
a)to reproduce the work in a material form;
b)to publish the work; and
c)to communicate the work to the public.
s.31(1)(b) of the Copyright Act.
71.The copyright in an 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 authorises the doing in Australia of, any act comprised in the copyright: s.36(1) of the Copyright Act.
72.Mr Smith admits that he reproduced Photo 1 and Photo 2 on his eBay.com.au listing for the purposes of advertising his jelly wrestling product. He used Photo 2 from at least March, 2013. The evidence satisfies me that Mr Smith on an unknown date but after he was put on notice of the applicants’ rights in Photo 2, also used Photo 1 and Photo 3.
73.There is evidence from a solicitor of the results of various searches she has done of Mr Smith’s eBay.com.au listings. Those searches demonstrate that Mr Smith used Photo 1 and Photo 3 in October and December, 2014 on his eBay.com.au listings. He continued to use those photographs after the applicants had, by their lawyers, sent him a cease and desist letter in respect of all photographs on 23 October, 2014.
74.Mr Smith also used Photo 2 on the bottles of food colouring that the applicants received in the trap purchase.
75.Photo 2 and Photo 3 were taken by John Weller. John Weller had not given Mr Smith any permission to use them. Photo 1 was taken by Jake Weller. He had not given Mr Smith any permission to use it.
76.Despite his unauthorised use of the photographs, Mr Smith contended that he had not infringed the applicants’ copyright in the photographs for two reasons. First, he said that he was given the photographs by “a seller”, a claim repeated in his Patent & Trade Mark Attorney’s response of 22 December, 2014 (exhibit 4) to the applicants’ claims in these proceedings. He also said that they were sent to him “by someone”. In addition, he claimed that a photographer “that took photos of jelly wrestling on a regular basis for magazines” also sent him some photographs in exchange for some free “slime”. It was unclear from Mr Smith’s evidence if that was the same person as the person later described by Mr Smith in his evidence as “some dude that was….photographer”.
77.Second, Mr Smith disputed the applicants’ claims to have authored the photographs because his sister had conducted a search of the internet search engine Google for “copyright free photo images jelly wrestling” and the search result revealed Photo 3. He contended that he did not know that copyright subsisted in the photographs and he had not intentionally infringed the applicants’ copyright.
78.However, I reject Mr Smith’s claims about how he came to possess the photographs. His evidence about who gave him the photographs was vague at best. He called no evidence from any other person to support his claim that he had been given the photographs by a photographer. The applicants’ evidence on the other hand was precise and credible.
79.The internet based search for copyright free photo images conducted by Mr Smith’s sister does not assist his case. Mr Smith’s sister did not give evidence in the proceedings. His evidence about what she did was also vague at best. In any event, the search was conducted after Mr Smith had used the photographs for his own purposes. He did not conduct the search prior to his use of the photographs.
80.Moreover, the applicants led evidence that a search conducted by them of the Internet search engine “Google” for “copyright free photo images jelly wrestling” revealed a disclaimer to the effect that the images “may be subject to copyright”.
81.I am satisfied that the applicants have never given Mr Smith permission to use the photographs. I am satisfied that Mr Smith knew that the applicants were claiming to be the copyright owners in Photo 2 from March, 2013 and that the applicants were the copyright owners in the other two photographs from October, 2014.
82.I accept the applicants’ submission that Mr Smith has marked the copies of Photo 2 that was attached to the bottles of food colouring received by the applicants in the trap purchase with the words “Crazy Town Brisbane” and that marking is not found on the image of Photo 2 revealed from the Google search.
83.In summary, I find that:
a)Jake Weller has copyright ownership of Photo 1;
b)John Weller has copyright ownership of Photo 2 and Photo 3; and
c)Mr Smith has infringed copyright in each of the photographs by his reproduction of them.
Misleading or deceptive conduct
84.At the trial of these proceedings, the applicants, by their counsel, made it clear that the applicants’ claims concerning misleading and deceptive conduct and passing-off were alternative claims to the claim based upon copyright infringement. I have found that claimed proved and intend to award damages in respect of it. However, in the event that my determination about that is erroneous, it is necessary to consider and make findings about the applicants’ alternative claims.
85.In Verrocchi v Direct Chemist Outlet Pty Ltd (2015) 228 FCR 189 Middleton J recorded:
Whilst there is a great deal of practical coincidence between the tort of passing off and contravention of the misleading or deceptive conduct provisions, the two claims have distinct premises. The former is designed to protect the goodwill or reputation of traders and the latter is designed to protect consumers. Nonetheless, the Applicants acknowledge that if they fail to establish a breach of the TPA or ACL, they will also fail to establish passing off.
86.According to s.18(1) of the Australian Consumer Law (Competition and Consumer Act 2010 – Schedule 2A) a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
87.Further, a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation: s.29(1) of the Australian Consumer Law.
88.The applicants contend that the use by Mr Smith of the applicants’ photographs and the use of the word “crazytown” in his eBay.com.au Seller ID and the use of the words “Crazy Town” on his eBay listings has the real potential to convey to a consumer that he or his product had the sponsorship or approval or performance characteristics, of the applicants’ product and business.
89.In Verrocchi v Direct Chemist Outlet Pty Ltd (above) Middleton J also said:
58. There is no dispute that the principles applicable to s 52 of the TPA and s 18 of the ACL are the same. The applicable principles relevant to a case regarding the alleged taking of the trade indicia (including a trading name) of a trade rival are set out in S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354; (‘S & I Publishing’) at FCR 362–3 per Hill, Nicholson and Emmett JJ, adopting with approval what Hill J said in Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 at 440-441. The relevant principles were restated in S & I Publishing as follows
1. There will be no contravention of s 52 unless the error or misconception which occurs results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible.
2. Conduct will be misleading and deceptive if it leads into error.
3. Conduct will be likely to mislead or deceive if there is a “real or not remote chance or possibility” of misleading or deceiving regardless of whether it is less or more than 50 per cent.
4. Conduct causing confusion or uncertainty in the sense that members of the public might have cause to wonder whether the two products or services might have come from the same source is not necessarily misleading and deceptive conduct.
5. In a case such as the present, an applicant must establish that it has acquired the relevant reputation in the name or get-up such that the name or get-up has become distinctive of the applicant’s business or products.
6. Conduct may be misleading or deceptive or likely to mislead or deceive notwithstanding that the corporation said to engage in that conduct acted honestly and reasonably and did not intend to mislead or deceive. Logically, a finding that conduct had been intentionally engaged upon will be irrelevant in determining whether that conduct is misleading or deceptive. It may perhaps be imagined that conduct engaged upon with the intent to mislead or deceive may fail in its purpose and not be found misleading or deceptive. Nevertheless, where the intention to mislead or deceive is found, it logically would be likely that a court would more easily find that the conduct was misleading or deceptive.
7. In many cases it will be necessary to consider the class of persons to whom the representation was directed...
8. There is no proposition of law to the effect that intervention from erroneous assumption between conduct and misconception destroys the necessary chain of causation with the consequence that the conduct cannot be regarded as likely to mislead or deceive.
9. The test of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective one for the court to determine. It is ultimately a question of fact.
(citations omitted)
59. Justice Greenwood (with whom Tracey J agreed) in Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 (‘Bodum’) identified other principles to be applied under s 52 of the TPA in the context of a trade indicia (as opposed to a trade name) case, as follows (from [202]-[209]):
[202] …[A] rival trader is entitled to enter the market and copy precisely the product of another and seek to take some of its market share (in the absence of any infringement of a formal intellectual property right), so long as the rival does not mislead or deceive the public or pretend, by conduct, that its goods are the goods of another…
[203] Whether impugned conduct conveys the making of a representation is a question of fact to be determined having regard to all the contextual circumstances within which something was said or done. When that assessment is being made in the context of conduct said to involve representations to the public at large (or a section of the public) such as prospective retail buyers of a product sold by a respondent rival trader, s 52 must be regarded as contemplating the effect of the impugned conduct on reasonable members of the class of prospective buyers or ordinary members of that class…[S]o far as the remarks relate to deception:
The usual manner in which ordinary people behave must be the test of what … deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men [and women] considered in the mass affords the standard.
[emphasis added]
[204] In order to test whether a misconception has arisen or might arise among members of the relevant cohort by reason of the impugned conduct, the inquiry is to be made notionally of the hypothetical individual excluding “assumptions by persons whose reactions are extreme or fanciful”…The question is “whether the misconceptions, or deceptions, alleged to arise, or to be likely to arise, are properly to be attributable to the ordinary and reasonable members of the class of prospective purchasers”…The issue is not whether the impugned conduct simply causes confusion or wonderment but whether the conduct is or is likely to mislead or deceive.
[205] …In determining whether a contravention of s 52 has occurred, the focus of the inquiry is whether a not insignificant number within the class or cohort have been misled or deceived or are likely to be misled or deceived by the respondent’s alleged conduct, whether in fact or by inference...
…
[210] In assessing the character of the conduct in question, against the background of all of the contextual circumstances, conduct which misleads a consumer such that he or she opens negotiations or invites approaches under some mistaken impression of a trader’s connection or affiliation with another, may be engaging in misleading or deceptive conduct even if the true position emerges before the transaction is concluded.
(citations omitted and emphasis in original)
90.As I have set out above, the applicants’ have extensively advertised their business name Crazy Town Parties both on the internet and elsewhere since January, 2008.
91.Since 2008 the applicants have used promotional photographs to promote the sale of their jelly wrestling crystals product and the promotion of the Crazy Town Parties business. The photographs in the appendix to these reasons have been used as I have set out above.
92.The evidence demonstrates that Photo 1 has been used as the main promotional photograph for the applicants’ jelly wrestling crystal product and the business Crazy Town Parties since January, 2009. Since that time Photo 1 has been used as the image on the front of the packaging (in its various forms) for the applicants’ jelly wrestling crystal product. That photograph was used on the new packaging when the packaging of the applicants’ jelly wrestling crystal product changed in June, 2014. John Weller gave evidence, which I accept, that he did that because that photo was considered important to alert consumers to the origin of the goods.
93.The evidence demonstrates that the applicants have taken much time and expended much effort to create both the applicants’ jelly wrestling crystals product and the Crazy Town Parties business.
94.The business is not insubstantial. According to the evidence, in the period from January, 2008 to April, 2015 the businesses income from the sale of products was over $173,000 of which over $135,000 was directly from the sale of the applicants’ jelly wrestling crystal product. Over the same period, the income derived from the hire of party equipment under the Crazy Town Party name was over $500,000.
95.I am satisfied, and I find, that the applicants’ have a substantial reputation in the name Crazy Town Parties, the ebay.com.au Seller ID crazytownpartiesstore and the photographs in the appendix to these reasons in the Australian marketplace. I am satisfied that the names and the photographs are distinctive of the applicants’ business.
96.Mr Smith does not admit any similarities between the names Crazy Town Parties or crazytownpartiesstore and crazytownbrisbane. However Mr Smith’s own conduct falsifies his argument. In particular the applicants point to the position Mr Smith adopted in respect of marketing via eBay. As I have already recorded on 14 October, 2015 the applicants received a message sent from the administrators of eBay which relevantly stated: “we have received a notice of infringement from Ian Smith… stating that your eBay user ID, crazytownpartiesstore, and store name, Crazy Town Parties, infringes AU intellectual property rights of passing off”.
97.The conduct by Mr Smith in making that complaint to eBay concerning the applicants’ use of the word “crazytown” or “Crazy Town” demonstrates that Mr Smith viewed the names as deceptively similar. By his conduct Mr Smith admits that the name Crazy Town Brisbane or crazytownbrisbane is deceptively similar to the name Crazy Town Parties or crazytownpartiesstore.
98.In any event, a comparison of the applicants’ business name Crazy Town Parties with Mr Smiths’ name Crazy Town Brisbane reveals obvious similarities. The most obvious is the use of the words “Crazy Town”. I accept that they are the prominent words in the two names and that those words are distinctive in the context of the products. The eBay Seller ID names used by the applicants and the respondent have the same similarities.
99.The only two differences between the names used by the applicants and Mr Smith are the use of the word Brisbane in substitution to the word Parties. That is to say, a geographical location has been substituted for a descriptive reference to where goods sold under the names are used (at parties).
100.I find that the name Crazy Town Brisbane is deceptively similar to the name Crazy Town Parties. The name crazytownbrisbane is deceptively similar to crazytownparties and crazytownpartiesstore. I am satisfied that having regard to the applicants’ reputation in the name Crazy Town Parties, consumers will likely be led into error when seeing Mr Smith selling substantially identical product to that of the applicants’ using the name “Crazy Town”, “Crazy Town Brisbane” or “crazytownbrisbane”.
101.Mr Smith does not admit adopting the name Crazy Town Brisbane from the applicants. He claims that he coined the eBay ID himself. But I reject his claim about that. He had another eBay Seller ID available to him that he could, and did, use to sell his jelly wrestling product. Moreover, his adoption of the name Crazy Town Brisbane for selling products that competed with that of the applicants’ in conjunction with the applicants’ photographs tend against a finding that Mr Smith came up with the name himself.
102.By:
a)selling his jelly wrestling product using the eBay.com.au Seller ID: crazytownbrisbane;
b)placing the name crazytownbrisbane on the applicants’ photographs as set out earlier in these reasons; and
c)otherwise using the applicants’ photographs as described above to sell his jelly wrestling product;
I am satisfied that Mr Smith has represented, or is likely to be taken to be representing, to consumers that:
d)his jelly wrestling product is that of the applicants, when it is not;
e)his jelly wrestling product had the sponsorship or approval of the applicants when they do not;
f)his jelly wrestling product was offered for sale by him with the licence or consent of the applicants when it is not;
g)there is a business relationship between Mr Smith and the applicants when there is not;
h)he has the sponsorship of or approval of or an affiliation with the applicants when he does not;
i)the photographs were taken by Mr Smith when they were not; and
j)the photographs depict his jelly wrestling product when they do not.
103.Mr Smith, with respect to him, did not seem to understand the nature of the applicants’ case made against him for misleading and deceptive conduct and passing-off. He argued that his product was not a “crystal” but rather was a mixture of two sodium based polymers. He was at pains to point out the applicants’ product was what might be termed a “crystal” and that is was a potassium based product used in the horticultural and domestic gardening markets. However, his argument did not come to grips with the applicants’ case, namely that the misleading conduct about which the applicants complained was his use of the word “crazytown” or the words “Crazy Town” in the circumstances I have recounted above. As the applicants put it in submissions: “That one product is labelled as a crystal and the other is not, is ultimately irrelevant. The question is not whether consumers would see the Respondent’s product as a jelly crystal. The question is whether the consumer would see that there is a connection between the Applicants’ product and the Respondent’s product.”
104.The evidence demonstrates that at the time Mr Smith used the name “crazytownbrisbane” as his Seller ID on eBay.com.au he also used another Seller ID to sell the same products. That Seller ID was jellywrestlefactoryaustralia. Whilst Mr Smith denies trading as the business name Jelly Factory Australia, there is evidence that on 14 October, 2014 Mr Smith sent a message to Ms Allen (set out above) stating relevantly “my product is genuine jelly jello wrestle MIX with Australian (TM) only available on eBay from crazytownbrisbane and jellywrestlefactoryaustralia”. The evidence establishes that eBay ID jellywrestlefactoryaustralia was effective from 26 August, 2011 and thus current at the time he adopted the Seller ID crazytownbrisbane. Mr Smith offered no explanation as to why he chose to establish the second Seller ID with the word “crazytown” in it, rather than simply use his other Seller ID.
105.I am satisfied that Mr Smith engaged in the offending conduct in the course of his engaging in trade or commerce. I reject his evidence that he was not engaged in selling his product using the Seller ID “crazytownbrisbane”, or the photographs, for the purpose of making profit.
106.Having regard to the matters set out earlier concerning the circumstances in which I have found Mr Smith has used the photographs and the word “crazytown”, I am satisfied that the representations I have set out above were untrue.
107.I am satisfied that Mr Smith has contravened s.18 of the Australian Consumer Law in that by using the word “crazytown” as part of the word “crazytownbrisbane” he engaged, in trade or commerce, in misleading and deceptive conduct or conduct that was likely to mislead or deceive.
108.I am also satisfied that Mr Smith has contravened s.29 of the Australian Consumer Law in that by using the word “crazytown” as part of the word “crazytownbrisbane” he, in trade or commerce, in connection with the supply or possible supply of goods or in connection with the promotion of the supply of goods made a false or misleading representation that his jelly wrestling product had sponsorship, or approval of the applicants, or that it had the performance characteristics of the applicant’s’ jelly wrestling crystals product. Further he made a false or misleading representation that he has a sponsorship, approval or affiliation with or by the applicants.
109.Mr Smith claims that he has not engaged in deceptive or misleading conduct since the packaging and contents of his product differ from that of the applicants. However, as the applicants point out, neither the contents nor the packaging of Mr Smith’s product is shown on his eBay advertisements. When his eBay listings used the infringing images, his eBay listings depicted the applicant’s product. In my view, the packaging and contents of Mr Smith’s jelly wrestling product do not distinguish his product from the applicants product.
110.It is significant here that Mr Smith has not only adopted a deceptively similar name to that of the applicants but rather he has adopted use of, not one, but all three of the Photographs. It is also significant that those three photographs are used as promotional photographs for the applicants competing product.
Passing Off
111.In Bodum v DKSH Australia Pty Limited (above) at [212], Greenwood J cited with approval the following statement about the elements of the tort of passing off by Lord Oliver in Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 at 406:
7 The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. ... Thirdly, he must demonstrate that he suffers... damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.
112.For the reasons I have already given, I am satisfied that the applicants have established a goodwill or reputation attached to both their jelly wrestling crystals product and the name Crazy Town Parties. The name and the consistent use of Photo 1 to promote the applicants’ jelly wrestling crystals product lead me to conclude that those words and the image are more than likely to be recognised by the public as distinctive specifically of the plaintiff’s goods or services.
113.For the reasons I have given above, the applicants have demonstrated that Mr Smith has, by the use of the word “crazytown” and the infringing photo (particularly Photo 1) misrepresented to the public which is likely to lead the public to believe that his jelly wrestling product is a product of the applicants or the business Crazy Town Parties.
114.For the reasons I have given below, I am satisfied that the applicants have established that their business reputation has been damaged by Mr Smith’s conduct.
115.I am satisfied that the applicants have established that Mr Smith has engaged in the tort of passing-off by passing-off his jelly wrestling product as that of the applicants.
Relief
116.The applicants seek damages for infringement of the copyright in each of the photographs. No attempt was made to differentiate between the first applicant and the second applicant in respect of the relief that is claimed in the proceedings notwithstanding that each was the copyright owner in respect of different photographs. Ordinarily, “where a number of people join together as applicants… in the one action and successfully prosecute for separate remedies for invasions of their separate rights, the order of the Court would normally specify separate judgments in favour of each applicant, assessed according to the loss and damage which each suffered”: Milpurrurru & Ors v. Indofurn Pty Ltd & Ors (1994) 130 ALR 659 at 688. The applicants here have conducted the case on the basis that they operated the Crazy Town Parties business in partnership and presumably they were joint owners of the copyright in each of the photographs. I have approached the assessment of compensation on that basis notwithstanding that I have found that each applicant owned the copyright in different photos.
117.Whilst the applicants also seek compensatory damages for the tort of passing off and the contravention of the ACL, they do so only in the alternative to the claim for damages for infringement of copyright. They are quick to point out that they accept there can be no “double dipping”. In the words of the applicants’ submissions: “That is, if damages are awarded pursuant to the Copyright Act there can be no entitlement to damages for the same conduct for breaches of the Australian Consumer Law or passing off.”
118.The applicants seek damages for:
a)lost profit;
b)damage to reputation;
c)additional damages pursuant to s.115(4) of the Copyright Act.
119.The assessment of damages in a case such as the present is art more than science. The purpose of an award of damages is to compensate the applicants for the loss which they have suffered as a result of the respondents’ infringement. The authorities demonstrate that the assessment of damages can be approached in a number of different ways. Sometimes, a royalty may provide the appropriate measure of damages: Interfirm Comparison (Aust) Pty Limited v Law Society of New South Wales (1975) 6 ALR 445 at 446 although reference to a royalty does not provide the appropriate measure of damages where the evidence suggests the copyright owner would not have granted a licence to use the infringing works: Aristocrat Technologies Australia Pty Limited (ACN 001 660715) v D.A.P. Services (Kempsey) Pty Limited (in liquidation)(ACN 055 803 542) [2007] FCAFC 40 at [27]; Columbia Pictures Industries Inc v Luckins (1996) 34 IPR 504 at 509 (Tamberlin J); Autodesk Australia Pty Limited v Cheung (1990) 94 ALR 472 at 476 – 477 (Wilcox J); Microsoft Corporation v Goodview (2000) 49 IPR 578 at [55].
120.The evidence here is that the applicants would not have granted Mr Smith a licence to use the photographs. A royalty will not provide the appropriate measure of damages in this case.
121.Another approach is to examine the sales that on the evidence were lost to the copyright infringer: Vertical Leisure Limited & Anor v Skyrunner Pty Ltd & Anor [2014] FCCA 2033 at [20], Aristocrat [2007] FCAFC 40; (2007) 157 FCR 564 at [37]; Sony Computer Entertainment Aust Pty Ltd v Stirling [2001] FCA 1852 per Emmett J at [8].
122.The applicants must prove their loss on the balance of probabilities and with as much precision as the subject matter reasonably permits. However, given the nature of the infringements alleged, the assessment of damages in cases such as the present can be difficult. Nonetheless, if a court finds that damage has occurred it must do its best to quantify the loss, even if some degree of speculation and guesswork is involved: Vertical Leisure Limited & Anor v Skyrunner Pty Ltd & Anor [2014] FCCA 2033 at [22], Aristocrat [2007] FCAFC 40; (2007) 157 FCR 564 per Black CJ and Jacobson J at [35]; Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 57 ALR 167 at [183], per Sheppard, Morling & Wilcox JJ.
123.There is evidence before me that Mr Smith has made a number of sales of his jelly wrestling product since he began using the infringing photographs. The revenue to Mr Smith from those sales made via eBay was, I am satisfied, $713.38. The sales took place in the period from February, 2013 to 28 November, 2014. Those sales represent, in my view, sales that were likely lost to the applicants.
124.It is appropriate, in my view, to assess compensation for loss of profits by reference to the sales made by Mr Smith. However, the applicants, had they made the sales, would have incurred the costs of purchasing their product to onsell to their customers. There is no evidence before me of the applicants’ profit margin in respect of their jelly wrestling crystal product. To assess damages at the amount received by Mr Smith from his sales would be to ignore the costs that would necessarily be incurred by the applicants to supply their product to their customers. Taking those matters into account and doing the best I can with the evidence I have, I assess their general damages for loss of profits at $350.00.
Loss of Reputation - compensatory damages
125.The applicants also seek damages on the basis that, as a result of Mr Smith selling and offering for sale his jelly wrestling product using the applicants’ livery there has been damage to the reputation and goodwill generated by the applicants in their business and the copyright works.
126.It is clear from the evidence that the applicants have heavily advertised their business using the infringed photographs since 2008 and have put considerable effort into the development of both the jelly wrestling crystals product and the business Crazy Town Parties.
127.The evidence establishes that by using the applicants’ get-up, Mr Smith sold his jelly wrestling product to the public. In at least one respect, Mr Smith’s product was, I find, an inferior product to the applicants’ jelly wrestling crystal product. It was inferior in that the colour of Mr Smith’s product, once hydrated, was poorer than the colour of the applicants’ product. The colour added to Mr Smith’s product was food colouring supplied separately from the jelly wrestling product and was to be added to the product by the end-user. The applicants’ product did not use a separate food colouring that was added to the product by the end user. I accept the applicants’ claim that their product had a superior colour which was richer and generally more attractive than the colour produced in the way provided for Mr Smith’s product.
128.Further, Mr Smith’s product was poorly packaged and presented. I have described above the appearance of the packaging and the accompanying food colouring earlier in these reasons. That presentation stands in stark contrast to the packaging employed by the applicants as revealed by exhibit 1. As John Weller described in his evidence, that packaging is colourful, engaging and professional looking. It gives the product within it an air of quality that packaging in a ziplock sandwich bag cannot impart (even when double bagged).
129.I am satisfied that the sale and supply of Mr Smith’s aesthetically inferior product in inferior packaging by reference to the Crazy Town Parties name and more particularly the infringed photographs was likely to damage the reputation enjoyed by the Crazy Town Parties name and the applicants’ jelly wrestling crystal product. The photographs depict a strong vibrant colour to the jelly wrestling medium. A product which is of a poorer appearance to that in the photographs but which is sold by reference to the photographs is likely, in my view, to damage the reputation of the applicants’ business, jelly wrestling crystal product and substantially diminish the utility of the Photographs for marketing purposes.
130.In my view, having regard to the matters set out above, the appropriate award of damages under this head is $7,000.00.
Additional Damages
131.The applicants submit that a substantial award of additional damages pursuant to s.115(4) of the Copyright Act is warranted.
132.Imposing additional damages upon a person who infringes another’s copyright involves both an element of penalty: Autodesk v Yee (1996) 68 FCR 391 at 394 and deterrence: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd, (2007) 157 FCR 564 at [116]. As put by Rares J in Aristocrat (referring to the equivalent of the present s.115(4)(b) of the Copyright Act):
There is a need to deter and punish those who act or seek to act as Vidtech and Mr Parry were proved to have done. … One of the important purposes served by the power to award additional damages granted in s 115(3)(b) is that market practices of the kind engaged in by Vidtech and Mr Parry can be firmly discouraged. In a case like the present where precision of assessment of damage or profit is impossible but substantial, deliberate and flagrant infringement has been proved, a substantial sum of additional damages should be awarded.
133.The discretion to award damages pursuant to s.115(4) of the Copyright Act is broad and should not be fettered in any arithmetic or mechanical way: Raben Footwear v Polygram Records (1997) 75 FCR 88 at 104.
134.I have been taken to a schedule of cases in which additional damages have been awarded for copyright infringement. I have taken those cases and the awards set out therein into consideration.
135.It is appropriate to take into account Mr Smith’s financial circumstances. However, he has not put any evidence about that before me.
136.I find that Mr Smith’s infringements were flagrant. I reject Mr Smith’s denials that he did not know that he could not use the photographs at issue. The products sold by Mr Smith in the trap purchase were sold with almost exact reproductions of the applicants’ photographs, but with Mr Smith’s eBay Seller ID crazytownbrisbane added to the photographs. I am satisfied that the addition of that identifier to the photographs was a knowing attempt to usurp to himself the work of the applicants.
137.Downloading or copying images from webpages on the internet is an easy thing to do. There is a need to send a clear message that doing so and using the images so obtained for commercial gain is, to adapt the words of Burchett J in Autodesk (above) at 394 “piracy” and that an infringer ought to be treated accordingly. There is a clear need for deterrence to prevent similar infringements of copyright.
138.Mr Smith continued to infringe the applicants’ copyrights despite being put on notice of the applicants’ rights, first in 2013 and again in October, 2014. I have set out the relevant facts earlier in these reasons. There is an imperative to impose a sanction which will have both a general and a specific deterrent effect.
139.Additionally, when he had the opportunity to do so, Mr Smith disparaged the applicants by referring to them as “shady carictors (sic)” and suggesting that the applicants’ website was fake and their product inferior.
140.I accept the applicants’ submission that this is a case where it is appropriate that a substantial award of additional damages be made to “mark the Court’s recognition of the opprobrium attached to the defendants conduct”: Vertical Leisure Limited & Anor v Skyrunner Pty Ltd & Anor [2014] FCCA 2033 at [38].
141.I assess the additional damages to which the applicant is entitled at $20,000.00.
Mr Smith’s Trademark
142.The applicants seek orders pursuant to s.88 of the Trade Marks Act 1995 for removal of the Respondent’s Trade Marks;
143.I am satisfied that on 7 November, 2012 Mr Smith applied to register the trade mark JELLY WRESTLING MIX WITH SLIPPERY SLIME filed in respect of retailing of goods (by any means) in class 35. The trade mark was assigned application number 1524385 and it was accepted for registration and entered on the register on 19 September, 2013.
144.I am also satisfied that on 11 November, 2012 Mr Smith applied to register the trade mark JELLY JELLO WRESTLING SUPPLIES filed in respect of retailing of goods (by any means) in class 35. The trade mark was assigned application number 1525084 and it was accepted for registration and entered on the register on 12 July, 2013.
145.Section 88 of the Trade Marks Act 1995 provides:
88 Amendment or cancellation—other specified grounds
(1) Subject to subsection (2) and section 89, a prescribed court may, on the application of an aggrieved person or the Registrar, order that the Register be rectified by:
(a) cancelling the registration of a trade mark; or
(b) removing or amending an entry wrongly made or remaining on the Register; or
(c) entering any condition or limitation affecting the registration of a trade mark that ought to be entered.
(2) An application may be made on any of the following grounds, and on no other grounds:
(a) any of the grounds on which the registration of the trade mark could have been opposed under this Act;
(b) an amendment of the application for the registration of the trade mark was obtained as a result of fraud, false suggestion or misrepresentation;
(c) because of the circumstances applying at the time when the application for rectification is filed, the use of the trade mark is likely to deceive or cause confusion;
(e) if the application is in respect of an entry in the Register—the entry was made, or has been previously amended, as a result of fraud, false suggestion or misrepresentation.
Note 1: For prescribed court see section 190.
Note 2: For file, registered owner and this Act see section 6.
146.This Court is a Court prescribed by s.190 of the Trade Marks Act.
147.For the purposes of s.88(2)(a) of the Trade Marks Act, it is relevant to set out s.57 of that Act:
57 Registration may be opposed on same grounds as for rejection
The registration of a trade mark may be opposed on any of the grounds on which an application for the registration of a trade mark may be rejected under this Act, except the ground that the trade mark cannot be represented graphically.
148.Section 41 of the Trade Marks Act provides for the circumstances when an application for registration of a trade mark must be rejected. However, the applicants point out that the relevant version of s.41 to which regard must be had for the purposes of s.88(2)(a) of the Act is that version which applied when registration of the relevant trade mark was sought. So much follows, in my view, from the text, and context, of s.88(2)(a) of the Act.
149.Relevantly, in November, 2012 when Mr Smith applied for the registration of his trade marks, s.41(2) was in the following terms:
41 Trade mark not distinguishing applicant’s goods or services
…
(2) An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered (designated goods or services) from the goods or services of other persons.
Note: For goods of a person and services of a person see section 6.
(3) In deciding the question whether or not a trade mark is capable of distinguishing the designated goods or services from the goods or services of other persons, the Registrar must first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons.
(4) Then, if the Registrar is still unable to decide the question, the following provisions apply.
(5) If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods or services:
(a) the Registrar is to consider whether, because of the combined effect of the following:
(i) the extent to which the trade mark is inherently adapted to distinguish the designated goods or services;
(ii) the use, or intended use, of the trade mark by the applicant;
(iii) any other circumstances;
the trade mark does or will distinguish the designated goods or services as being those of the applicant; and
(b) if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods or services—the trade mark is taken to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons; and
(c) if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods or services—the trade mark is taken not to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons.
Note 1: For goods of a person and services of a person see section 6.
Note 2: Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8).
(6) If the Registrar finds that the trade mark is not to any extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons, the following provisions apply:
(a) if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it does distinguish the designated goods or services as being those of the applicant—the trade mark is taken to be capable of distinguishing the designated goods or services from the goods or services of other persons;
(b) in any other case—the trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons.
Note 1: Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate:
(a) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or
(b) the time of production of goods or of the rendering of services.
Note 2: Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8).
150.Finally, s.17 of the Trade Marks Act provides:
17 What is a trade mark?
A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.
Note: For sign see section 6.
151.In Verrocchi v Direct Chemist Outlet Pty Ltd (above) at [103] Middleton J summarised the relevant approach as:
[103] The proper test for assessing the inherent capacity of the registered trade mark to distinguish the designated services for the purposes of s 1(3) still remains that articulated by Kitto J in Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55; (1964) 111 CLR 511. Recently the High Court in Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48 at [59] recently endorsed the test, and in so doing made the following observations:
The principles settled by this Court (and the United Kingdom authorities found in this Court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a “direct reference” to the relevant goods (prima facie not registrable) or makes a “covert and skilful allusion” to the relevant goods (prima facie registrable). When the “other traders” test from [Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 (‘Du Cros’)]... is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, “inherent adaption to distinguish” requires examination of the word itself, in the context of its proposed application to particular goods in Australia.
152.The words of each of Mr Smith’s trade marks are, as Mr Smith conceded in cross-examination, directly descriptive of the product to which he applied them. The words of the trade marks are ordinary dictionary terms. As the facts of the present case indicate, the applicants have used the words “jelly” and “wrestling” in connection with their own product well before registration of the trade mark. I accept the applicants’ evidence that the words contained within Mr Smith’s trade mark are common within the jelly wrestling industry and should be available for all traders to use in any combination. They are words of description. The explanation of the practical difference between a word making some “covert and skilful allusion” to the goods (prima facie registrable) and a word having a “direct reference” to goods (prima facie not registrable) given by the High Court in Cantarella Bros Pty Ltd (above) at [50] – [52] is instructive in the present context and leads to a conclusion that the words of Mr Smith’s trade mark are words expressive of the nature and quality of the product he sells. They are not words of distinction.
153.In my view, neither of Mr Smith’s trade marks are prima facie registrable and for that reason the Trade Marks should be cancelled under s.88(1)(a) of the Trade Marks Act.
154.Further, s.42 of the Trade Marks Act provides:
42 Trade mark scandalous or its use contrary to law
An application for the registration of a trade mark must be rejected if:
(a) the trade mark contains or consists of scandalous matter; or
(b) its use would be contrary to law.
155.The applicants argue that the use by Mr Smith of his marks will contravene s.18 of the Australian Consumer Law which prohibits misleading and deceptive conduct (or conduct which is likely to mislead or deceive). They further argue that the use of the marks will amount to passing-off.
156.I accept the applicant’s argument that the potential exists for the public to be misled or deceived into believing that the applicant has a monopoly in the provision of the goods and services the subject matter of the registration. That potential arises by virtue of the descriptive nature of Mr Smith’s trade marks. The registration gives Mr Smith the exclusive right to use, as a mark, descriptive words which indicate a monopoly.
157.I am satisfied that the use of Mr Smith’s registered trade marks will, of necessity, be misleading. By the use of the marks, Mr Smith will mislead the consuming public into believing that Mr Smith is the only provider of the goods and services the subject matter of the registration. I accept that to permit continued registration of Mr Smith’s trade marks will permit continued impairment to the consumer market for these products and services.
Conclusion
158.The applicants have succeeded in establishing the copyright infringements alleged by them, that Mr Smith engaged in misleading and deceptive conduct and that he contravened s. 29 of the Australian Consumer Law and that he engaged in passing off his product as that of, or associated with, the product of the applicant. There should be declarations concerning those matters as sought by the applicants.
159.There should also be an award of damages as I have outlined above. The damages should attract pre and post judgment interest, although no submissions have been made to me about the basis upon which interest might be calculated. I will provide directions for the parties to file further written submissions dealing with the interest of pre and post judgment interest.
160.The applicants seek their costs of the proceedings. Costs ordinarily ought to follow the event. It is difficult to see why that should not be the case here. The proposed orders suggested by the applicants foreshadowed that they may seek orders for costs on something other than the ordinary basis. It is appropriate, then, that both the applicants and the respondent have the opportunity to make further submissions about the basis upon which costs ought to be assessed, if there is to be an order that the respondent pay the applicant’s costs of the proceedings. I will make directions to facilitate those submissions.
161.I make the declarations, orders and directions set out at the commencement of these reasons.
I certify that the preceding one hundred and sixty-one (161) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 4 November, 2016.
Date: 4 November, 2016
Appendix A
Photo 1
Appendix A
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Appendix C
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Correction
Citation number changed from [2016] FCCA 2827 to [2016] FCCA 2822
Key Legal Topics
Areas of Law
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Commercial Law
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Intellectual Property
Legal Concepts
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Breach
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Damages
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Remedies
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Reliance
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