Xiamen Huadian Switchgear Co Ltd v Powins Pty Ltd

[2022] FCA 1159

FEDERAL COURT OF AUSTRALIA

Xiamen Huadian Switchgear Co Ltd v Powins Pty Ltd [2022] FCA 1159  

File number(s):

NSD 717 of 2020

Judgment of:

HALLEY J

Date of judgment:

29 September 2022

Catchwords:

INTELLECTUAL PROPERTY – application for declarations and injunctions in relation to alleged misleading or deceptive conduct and false or misleading representations pursuant to ss 18 and 29 of the Australian Consumer Law (ACL), trade mark infringements pursuant to s 120 of the Trade Marks Act 1995 (Cth) (TM Act) and passing off – where applicant is manufacturer of switchgear panels and circuit breakers (Applicant’s Products) emblazoned with product name (Applicant’s Marks) – where first respondent was a non-exclusive distributor of Applicant’s Products – where first respondent has since begun promoting and selling switchgear panels and circuit breakers (Respondents’ Products) emblazoned with allegedly similar product name to Applicant’s Marks (Respondents’ Marks) – whether representations about Respondents’ Products were made by respondents – whether making those representations was misleading or deceptive conduct or false or misleading – where Applicant’s Marks had acquired significant reputation in Australia as a result of sale and promotion of Applicant’s Products – where representations were made and were false and misleading – passing off established – where Respondents’ Marks are deceptively similar to Applicant’s Marks – application granted

DAMAGES – where applicant seeks relief by way of prohibitory injunctions, corrective advertising, declarations and exemplary damages – where appropriate to order prohibitory injunctions, corrective advertising and declarations given nature and extent of breaches of ACL, passing off and TM Act – whether respondents’ conduct showed conscious and contumelious disregard for applicant’s rights – where respondents’ conduct deliberate, sustained and occurred after the receipt of demands from applicant that it cease – where respondents’ conduct flagrant and brazen – where award of exemplary damages for respondents’ passing off necessary to punish respondents’ conduct

INTELLECTUAL PROPERTY – cross-claim by respondents for breach of ss 18, 22 and 29 of ACL, unconscionable conduct in equity and breach of contract – where applicant made publications in response to respondents’ infringing conduct – where certain representations arose from publications – inferences arising from representations not misleading or deceptive – where respondents have not established any entitlement under ACL to recover any loss or damage – whether applicant breached express term of confidentiality in sales contract or implied term of good faith in distribution agreement – no breach of contract established – cross-claim dismissed

Legislation:

Australian Consumer Law in Schedule 2 to the Competition and Consumer Act 2010 (Cth) ss 18, 21, 22, 29, 232

Federal Court of Australia Act 1976 (Cth) s 21

Trade Marks Act 1995 (Cth) ss 120, 122

Trade Practices Act 1974 (Cth) s 54

Trade Marks Act 1955 (Cth) s 66

Cases cited:

AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273

Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (No 2) [2021] FCAFC 180

Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (2020) 156 IPR 413; [2020] FCA 1530

AMI Australia Holdings Pty Ltd v Bade Medical Institute (Australia) Pty Ltd (No 2) (2009) 262 ALR 458; [2009] FCA 1437

Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212

Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37

Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544; [2018] FCAFC 235

Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ASAL 55-053; [2000] FCA 1885

Australian Securities and Investments CommissionvKobelt (2019) 267 CLR 1; [2019] HCA 18

Australian Competition and Consumer Commissionv Lux Distributors Pty Ltd [2013] FCAFC 90

Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493

Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329; [2004] FCA 693

Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635

Australian Competition and Consumer Commission v QuantumHousing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40

Australian Competition and Consumer Commission vTPGInternet Pty Ltd (2020) 278 FCR 450; [2020] FCAFC 130

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54

Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641

Birmingham Vinegar Brewing Co Ltd v Powell [1897] AC 710

BLH Engineering & Constructions Pty Ltd v Pro 3 Products Pty Ltd (2015) 114 IPR 105; [2015] FCA 833

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60

Cadbury Schweppes Pty Ltd v Pub Squash Co Ltd (1980) 32 ALR 387; [1980] 2 NSWLR 851

Calidad Pty Ltd v Seiko Epson Corp (No 2) (2019) 147 IPR 386; [2019] FCAFC 168

Campomar Sociedad, Limitada v Nike InternationalLimited (2000) 202 CLR 45; [2000] HCA 12

Claremont Petroleum NL v Cummings (1992) 110 ALR 239

Coca-Cola Co v All-Fect Distributors Ltd (t/as Millers Distributing Co) (1999) 96 FCR 107; [1999] FCA 1721

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605; [1998] HCA 42

Commonwealth Bank of Australia Limited v Amadio (1983) 151 CLR 447; [1983] HCA 14

ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302

Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd [1952] HCA 15; (1952) 86 CLR 536

DC Payments Pty Ltd v Next Payments Pty Ltd (2016) 51 VR 151; [2016] VSC 315

Del Casale v Artedomus (Aust) (2007) 165 IR 148; [2007] NSWCA 172

Faccenda Chicken Ltd v Fowler [1987] Ch 117

Facton Ltd and Others v Rifai Fashions Pty Ltd and Another (2012) 199 FCR 569; [2012] FCAFC 9

Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd (2016) 118 IPR 239; [2016] FCA 235

Foster v ACCC (2006) 149 FCR 135; [2006] FCAFC 21

General Electric Co (of USA) v General Electric Co Ltd [1972] 1 WLR 729

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82

GM Holden Ltd (ACN 006 893 232) and Others v Paine and Others (2011) 281 ALR 406; [2011] FCA 569

Gold Titan Pty Ltd v Lopez [2021] FCA 918

Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1

Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc (2020) 385 ALR 514; [2020] FCAFC 235

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd (2018) 264 FCR 422; [2018] FCAFC 105

ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248

Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111

In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (2020) 377 ALR 116; [2020] FCA 193

Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326

Jones v Dunkel (1959) 101 CLR 298

Knott Investments Pty Ltd v Winnebago Industries Inc (2013) 211 FCR 449; [2013] FCAFC 59

Kraft Foods Group Brands LLC v Bega Cheese Ltd (2020) 377 ALR 387; [2020] FCAFC 65

Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1; [2015] FCA 825

Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1

Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110; [2002] FCAFC 197

Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; [2010] FCAFC 21

Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50

Payne v Parker [1976] 1 NSWLR 191

PepsiCo Australia Pty Ltd (t/a Frito-Lay Australia) v Kettle Chip Co Pty Ltd (1996) 135 ALR 192

Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379; [2017] FCAFC 83

RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164

Re An Application by the Pianotist Co Ltd for the Registration of a Trade Mark (1906) 23 RPC 774

Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491

Review Australia Pty Ltd v New Cover Group Pty Ltd (2008) 79 IPR 236; [2008] FCA 1589

Ricegrowers Ltd v Real Foods Pty Ltd (2008) 77 IPR 32; [2008] FCA 639

Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203

Sanders v Snell (1997) 73 FCR 569

Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549; [2002] FCAFC 157

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177

Taleb and Another v GM Holden Ltd (ACN 006 893 232) and Others (2011) 286 ALR 309; [2011] FCAFC 168

Transerve Pte Ltd v Blue Ridge WA Pty Ltd [2015] FCA 953

Unilever Australia Ltd v Karounos (2001) 113 FCR 322; [2001] FCA 1132

Valve Corporation v Australian Competition and Consumer Law (2017) 258 FCR 190; [2017] FCAFC 224

Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89

World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181

XL Petroleum (N.S.W.) Proprietary Limited v Caltex Oil (Australia) Proprietary Limited (1985) 155 CLR 448

Division:

General Division

Registry:

New South Wales

National Practice Area:

Intellectual Property

Sub-area:

Trade Marks

Number of paragraphs:

664

Date of hearing:

6-17 December 2021
30 March 2022

Counsel for the Applicant:

Mr BA Mee with Mr AS Vial

Solicitor for the Applicant:

Spruson & Ferguson Lawyers

Counsel for the Respondents:

Mr NM Cooke

Solicitor for the Respondents:

Redmond + Redmond Lawyers

ORDERS

NSD 717 of 2020

BETWEEN:

XIAMEN HUADIAN SWITCHGEAR CO., LTD

Applicant

AND:

POWINS PTY LTD ACN 603 450 148

First Respondent

GELPAG ELECTRICS PTY LTD ACN 631 001 333

Second Respondent

AND BETWEEN:

POWINS PTY LTD ACN 603 450 148

First Cross-Claimant

GELPAG ELECTRICS PTY LTD ACN 631 001 333
Second Cross-Claimant

AND:

XIAMEN HUADIAN SWITCHGEAR CO., LTD

First Cross-Respondent

GELPAG ELECTRICS PTY LTD ACN 631 001 333
Second Cross-Respondent

ORDER MADE BY:	HALLEY J
DATE OF ORDER:	29 SEPTEMBER 2022

THE COURT ORDERS THAT:

1.The parties provide agreed draft declarations and orders, including as to costs and prohibitory injunctions, to give effect to the reasons for judgment delivered today and, in default of agreement, each party file and serve written submissions (limited to 10 pages), draft declarations and orders, including as to costs and prohibitory injunctions,  it proposes should be made, including as to costs, and any affidavit evidence in support of those draft declarations and orders on or before 27 October 2022.

2.The applicant file and serve written submissions on damages, including exemplary damages and any account of profits (limited to 10 pages), and any affidavit evidence in support of those submissions on or before 10 November 2022.

3.The respondents file and serve written submissions on damages, including exemplary damages (limited to 10 pages), and any affidavit evidence in support of those submissions on or before 8 December 2022.

4.The proceeding be listed for a hearing on damages, including exemplary damages, and any account of profits and to the extent that it is not the subject of consent orders, declarations and all other orders, including as to costs and prohibitory injunctions, to give effect to the reasons for judgment delivered today at 10.15 am on a date in February 2023 that is convenient to the Court and the parties (February 2023 Hearing).

5.The amended cross-claim be dismissed.

6.The respondents/cross-claimants are to pay the costs of the applicant/cross respondent.

7.The matter is to be listed for a case management conference at 9.30 am on Thursday 6 October 2022 to consider what if, any, further orders and directions may be required to facilitate the efficient conduct of the February 2023 Hearing.

8.The parties are granted liberty to apply on three days’ notice.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

TABLE OF CONTENTS

INTRODUCTION	[1]
EVIDENCE	[17]
Huatech’s witnesses	[17]
Respondents’ witnesses	[31]
BACKGROUND	[49]
Electrical switchgear products	[49]
Distribution of the Huatech Products	[51]
2016 Distribution Agreement	[52]
2018 Sales Contract	[61]
Termination of 2016 Distribution Agreement	[63]
Appointment of Leistung Energie as exclusive distributor	[65]
2019 Gelpag Distribution Agreement	[67]
Powins trade mark applications	[68]
New Powins Switchgear Panels and New Powins Circuit Breakers	[70]
LEGAL PRINCIPLES	[71]
Misleading or deceptive conduct, and false or misleading representations	[71]
Passing off	[82]
REPRESENTATIONS	[99]
Overview	[99]
Were the Representations conveyed?	[100]
Respondents’ Publications and Customer Communications	[100]
Submissions	[105]
Huatech	[105]
Respondents	[113]
General observations	[115]
Affiliation Factors	[145]
2019 Announcement	[158]
New Powins Switchgear Brochure	[163]
March 2019 LinkedIn Post	[168]
First 2020 Advertisement	[173]
2020 Features	[177]
May 2020 LinkedIn Post	[183]
Customer Communications	[187]
BHP March 2019 emails	[187]
20 March 2019 emails	[193]
20 March 2019 phone calls	[198]
27 March 2019 email	[205]
1 April 2019 email	[210]
FMGL 2019 emails	[214]
BHP 7 August 2019 email	[218]
Tetra Tech 22 August 2019 email	[223]
Essential Energy 29 August 2019 email	[232]
KPS 10 September 2019 email	[233]
OFI Group November 2019 emails	[237]
iPower 2019 emails	[243]
EDL Energy 2020 emails	[247]
10 February 2020 spreadsheet	[252]
ECM Hahn 2020 emails	[256]
First ISAS May 2020 emails	[261]
Second ISAS May 2020 emails	[266]
iPower 2020 emails	[271]
First Farmer 2020 emails	[275]
Second Farmer 2020 emails	[279]
Third Farmer 2020 emails	[284]
Powins MV Switchgear Brochure	[289]
George Fisher Mine 2019 quotations	[293]
Newcrest 2019 emails	[297]
BHP July 2019 emails	[306]
Mount Isa Mines quotations	[307]
2019/2020 quotations	[311]
Howden 2020 emails	[317]
Newcrest 2020 emails	[321]
Were the Representations misleading?	[327]
Submissions	[327]
Consideration	[338]
ACL CLAIMS	[351]
Submissions	[351]
Consideration	[355]
PASSING OFF CLAIM	[364]
Submissions	[364]
Huatech	[364]
Respondents	[369]
Consideration	[373]
TRADE MARK INFRINGEMENT	[384]
Legal Principles	[384]
Huatech	[403]
Respondents	[407]
Consideration	[410]
Availability of pleaded defences	[414]
RELIEF	[423]
Prohibitory injunctions	[425]
Principles	[425]
Submissions	[430]
Consideration	[435]
Corrective advertising	[440]
Declarations	[443]
Exemplary damages for passing off	[446]
Legal Principles	[446]
Submissions	[455]
Consideration	[461]
CROSS-CLAIM	[470]
Background	[473]
20 March 2018 Meeting	[473]
Announcement	[482]
March Pipers Letter	[487]
October Pipers Letter	[487]
Litigation Statement	[492]
Sections 18 and 29 ACL Contentions	[492]
Claims advanced by the respondents	[492]
Legal Principles	[498]
Did the Inferences arise from the publications?	[498]
Announcement	[498]
March Pipers Letter	[502]
October Pipers Letter	[509]
Litigation Statement	[514]
Dissemination of the Huatech Publications	[520]
Submissions	[523]
Consideration	[532]
Were the Inferences misleading or false?	[552]
Submissions	[552]
Consideration	[558]
Did the respondents suffer any loss or damage?	[569]
Submissions	[569]
Consideration	[572]
Unconscionable Conduct	[576]
Overview	[576]
Legal Principles	[582]
Submissions	[601]
Consideration	[601]
Breach of Contract	[615]
Overview	[615]
Background	[616]
Legal Principles	[618]
Submissions	[636]
Arbitration Clauses	[646]
Consideration	[653]
DISPOSITION	[662]

REASONS FOR JUDGMENT

HALLEY J:

INTRODUCTION

1. The applicant and cross respondent, Xiamen Huadian Switchgear Co., Ltd, or “Huatech” (Huatech), is a manufacturer of medium-voltage electrical switchgear panels (Huatech Switchgear Panels) and vacuum circuit breakers (Huatech Circuit Breakers) (together, Huatech Products).

2. Huatech was registered as a company in December 2002. Huatech’s founders decided at an early stage that its General Manager, Mr Charles Sher, would establish a German company with a German name (Gelpag GmbH) and that Huatech would enter into agreements with Gelpag GmbH. Huatech considered that the two perceived benefits of this arrangement were that Gelpag GmbH would be able to arrange certain “type testing” to international standards in Germany, and that Huatech’s products might benefit from being affiliated with a German brand.

3. The Huatech Products have been sold to Australian customers since at least 2007 under the marks AMS and VEP, respectively. The Huatech Products have variously been co-branded with the mark GELPAG, a distributor’s mark (by way of example, BV2, POWINS and LEISTUNG ENERGIE), or Huatech’s own name, alongside the AMS or VEP mark.

4. Huatech is the owner of Australian trade mark registration no. 1148294 comprising the fancy mark VEP in class nine for electric switches, circuit breakers, electric relays, distribution boxes (electricity), switchboards, distribution boards (electricity), current transformers, sensors, and high and low voltage switch planks (the VEP Mark and VEP Registration).

5. By February 2019, in excess of 4,000 Huatech Switchgear Panels (together with Huatech Circuit Breakers) had been installed at sites around Australia.

6. Huatech contends that, as a result of the sale and promotion of the Huatech Products in the period up to February 2019, Huatech and its products had acquired a significant reputation in Australia as a source of manufacture, as had its AMS and VEP marks as indicia of trade origin.

7. The first respondent and first cross-claimant, Powins Pty Ltd (Powins), is an electrical turnkey solutions provider for electronic switchgear products in Australia. It was a non-exclusive distributor of the Huatech Products between February 2016 and February 2019. In the period since its distribution arrangements with Huatech ended in February 2019, Powins has promoted and sold a different range of medium voltage switchgear panels (New Powins Switchgear Panels) and circuit breakers (New Powins Circuit Breakers) (together, New Powins Products).

8. The second respondent and second cross-claimant (Gelpag AU) is a wholly owned subsidiary of Powins. Gelpag AU was incorporated in 2019.

9. Huatech alleges in the second further amended statement of claim filed on 20 December 2021 (2FASOC) that the respondents have engaged in misleading or deceptive conduct in contravention of ss 18 and 29 of the Australian Consumer Law in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (ACL), passing off and trade mark infringements.

10. Huatech alleges that Powins, or alternatively, both Powins and Gelpag AU, made the following representations in publications and in communications with its customers:

    (a)the New Powins Switchgear Panels originate from the same manufacturer as the Huatech Switchgear Panels sold in Australia since around 2006 by reference to the mark AMS, including in conjunction with distributor names as in the case of POWINS AMS and GELPAG AMS (Switchgear Origin Representation);

    (b)the New Powins Switchgear Panels now sold as “POWINS AMS12 and POWINS AMS24 Switchgear” are the same products as, or an updated model or version of, the corresponding Huatech Switchgear Panels (Switchgear Same Product Representation);

    (c)the New Powins Circuit Breakers originate from the same manufacturer as the Huatech Circuit Breakers previously sold in Australia since around 2006 (Circuit Breaker Origin Representation);

    (d)the New Powins Circuit Breaker now sold as VEP-VX5 is the same product as, or an updated model or version of, the corresponding Huatech Circuit Breaker (Circuit Breaker Same Product Representation);

    (e)Gelpag GmbH (or alternatively, Gelpag Advanced Technology GmbH or Gelpag AU) was the manufacturer of, and further or alternatively is the owner of the intellectual property rights in, the Huatech Products sold in Australia between 2005 to 2018 (Gelpag Representation); and

    (f)Powins, and further or alternatively, Gelpag AU, has the sole authority, or alternatively authority, of the manufacturer of the Huatech Products already installed in Australia, to provide servicing, spare parts and operational testing for all such products (Existing Products Affiliation Representation),

    (together, Representations).

1. Huatech relies on the Representations for both its passing off and ACL cases.

2. Huatech puts its passing off case in two ways. First, on the basis of the substantial reputation of Huatech and its products as a source of manufacture of switchgear panels and vacuum circuit breakers, and second, alternatively, on the basis of the reputation of the AMS and VEP marks as indicia of origin for those products.

3. Huatech contends that the respondents have infringed or threaten to infringe the VEP Registration by the use (and/or threatened use) of the mark VEP (including as “VEP-VX5” or “GELPAG VEP”) in relation to circuit breakers, each of which is substantially identical or deceptively similar to the VEP Mark.

4. Huatech seeks declaratory, injunctive and pecuniary relief in this proceeding. Questions of pecuniary relief do not arise for determination at this stage.

5. The respondents filed an amended statement of cross-claim on 3 November 2022 (Amended Cross-Claim). They contend that Huatech has contravened ss 18 and/or 29 of the ACL, engaged in unconscionable conduct by making false and misleading representations to the respondents’ existing and potential customers, and breached confidentiality and good faith contractual obligations under agreements that it had entered into with Powins by misusing confidential information in communications with those existing and potential customers.

6. For the reasons that follow I have made the following principal findings:

   (a)the respondents made each of the Representations;

   (b)each Representation was misleading or deceptive and false or misleading;

   (c)by February 2019, the AMS and VEP marks of Huatech had acquired a significant reputation in the Australian market with customers and end-users in respect of switchgear panels and circuit breakers;

   (d)by February 2019, Huatech had not acquired a significant reputation in the Australian market with customers and end-users as a source of manufacture of switchgear panels and circuit breakers;

   (e)the respondents passed off the New Powins Products as those of, or as being associated with, the manufacturer of the Huatech Products or the business or goods provided by that manufacturer;

   (f)the respondents passed themselves or their businesses off as being associated with the manufacturer of the Huatech Products or the business or goods provided by that manufacturer, or having its sponsorship, licence or approval;

   (g)the respondents infringed the VEP Registration;

   (h)the passing off conduct of the respondents is sufficient to constitute a conscious and contumelious disregard for Huatech’s rights and an award of exemplary damages is appropriate;

   (i)given the nature and extent of the respondents’ contraventions of ss 18 and 29 of the ACL, passing off and trade mark infringement it is appropriate to grant the prohibitory injunctions, declarations and corrective advertising sought by Huatech;

   (j)the determination of the quantum of the damages and/or account of profits and exemplary damages to which Huatech might be entitled is to be the subject of a subsequent hearing;

   (k)the representations alleged in the Amended Cross-Claim either did not arise as alleged or to the extent that they did arise they were not materially misleading or deceptive or false or misleading;

   (l)the inferences arising from the statements in the publications relied upon by the respondents in the Amended Cross-Claim either did not arise or to the extent that they did arise, they were not false or misleading or could have given rise to any detriment to the respondents and they were not disseminated using any confidential information of the respondents provided to Huatech;

   (m)Huatech has not engaged in any conduct that could be fairly characterised as a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience; and

   (n)Huatech has not breached any implied nor express terms of good faith nor confidential provisions in its distribution and sales contracts with Powins.

   EVIDENCE

   Huatech’s witnesses

7. Huatech relies on affidavits from the following witnesses:

   (a)Mr Franklin Zheng (aka Zheng Minsheng) affirmed on 8 February 2021 and 30 September 2021;

   (b)Mr Teddy Lin (aka Lin Mingrui) affirmed on 8 February 2021, 20 August 2021 and 30 September 2021;

   (c)Mr Bing Ye affirmed on 7 February 2021 and 20 August 2021;

   (d)Ms Min Ding affirmed on 20 August 2021;

   (e)Mr William Zhu (aka Zhu Wenli) affirmed on 20 August 2021;

   (f)Mr Alan Whitham affirmed on 29 September 2021 and 12 December 2021; and

   (g)Dr Alfonso Juan Rene Rossi Perez (Dr Rossi) affirmed 29 September 2021.

8. Mr Zheng is the Vice-General Manager and Director of Huatech’s R&D Centre. He was one of the founders of Huatech and was responsible for designing the Huatech Products. He conceived the AMS and VEP brands. His evidence principally addressed the formation of Huatech and the development of its products. He was cross-examined.

9. Mr Lin is the Overseas Business Development Manager for Huatech. In the period since 2009, he has provided technical support for Australian distributors and end users of Huatech Products. Since 2015, he has also been responsible for promotional and sales support, quotations and specifications for commercial operations and relationships.

10. Mr Ye has been the Deputy General Manager of Huatech since 2016. He is responsible for Huatech’s corporate strategy implementation, commercial and marketing operations, sales support, and research and development. His evidence is directed at aspects of Huatech’s commercial operations, public statements made by Huatech and Huatech’s commercial relationships with Powins, Gelpag AU and other entities. He was cross-examined.

11. Ms Ding has been an in-house legal and intellectual property administrator for Huatech since 19 July 2011. Her evidence addresses the circumstances in which drafts of two letters dated 29 March 2019 and 30 October 2019 letters, the subject of the Amended Cross-Claim, were sent to Huatech’s Australian lawyers, Pipers Intellectual Property (Pipers). She was cross-examined.

12. Mr Zhu has been the General Manager of Huatech since 1 October 2016. He is responsible for all of Huatech’s domestic and overseas business operations, including in Australia. His evidence is directed at aspects of the cross-claim alleging that confidential information was provided to him and to Huatech. He was cross-examined.

13. I am satisfied that each of the Huatech witnesses answered questions put to them in cross-examination truthfully and to the best of their recollection. Not surprisingly, their oral evidence was less fluent and more stilted than their affidavit evidence. None was a native English speaker and each gave oral evidence with the assistance of an interpreter. Contrary to the submissions advanced by the respondents, I do not accept that there was any deliberate attempt to avoid questions or otherwise answer questions dishonestly by asking from time to time to give answers through an interpreter when pressed on significant matters. In assessing the credit of the Huatech witnesses, I have also taken into account the additional challenge for the Huatech witnesses that arose through the frequent use of negative propositions in questions, such as “didn’t he”, “wasn’t it” and “you never”, which were at times combined with complex questions.

14. Mr Martin Chen and Mr Albert Foo were directors of Leistung Energie Limited (Leistung Energie), the current distributor of the Huatech Products in Australia. One of the principal issues raised in the Amended Cross-Claim was whether Mr Chen and Mr Foo had improperly used customer lists of the respondents, and in particular that Mr Foo was able to contact customers of Powins directly because of confidential information given to him by Mr Chen. Much of the respondents’ challenge to the credit of the Huatech witnesses was focused on evidence concerning their knowledge of Powins’ concerns about Mr Chen’s relationship with Mr Foo, an allegedly fraudulent invoice prepared by Mr Foo, and directions that Huatech may have given internally that Mr Chen was not to be informed of purchase orders from Powins.

15. I am satisfied that, read as a whole and in context, contrary to the submissions advanced by the respondents, the responses given by the Huatech witnesses on these issues could not fairly be characterised as evasive, incomplete, argumentative or implausible. I accept that at times there appeared to be a certain sensitivity and defensiveness in their responses, but I am satisfied that this was largely attributable to Mr Chen being a former employee of Huatech, the rigours of cross-examination, technical difficulties that arose in the course of the video technology being used, translation issues and, given the allegations made in the Amended Cross-Claim, concerns about what Mr Chen and Mr Foo might have done with customer information of Powins. As the Huatech witnesses acknowledged, internal directions had been given within Huatech following Mr Zhu’s meeting in March 2019 with two Powins’ executives, Mr Dean van Wijk and Mr Julian Rauwendaal, both of whom gave evidence in the proceedings, that had the effect of limiting the dissemination of information concerning purchase orders of Powins to Mr Chen.

16. Mr Whitham is a consultant with 45 years’ experience installing and maintaining power systems for industrial and commercial applications, including switchgear, and working with original equipment manufacturers. He has approximately 25 years’ experience consulting in relation to the procurement, installation, commissioning and maintenance of electrical equipment. He gave evidence as an independent expert that AMS and VEP are only associated with the Huatech Products and are not generic terms for switchgear and circuit breakers in Australia. He was cross-examined.

17. Dr Rossi is a consultant engineer with approximately 45 years’ experience as an electrical engineer for industrial and commercial applications. He gave evidence as an independent expert that AMS and VEP are product names associated with Huatech as the manufacturer of Huatech Products and those marks are not generic descriptors nor acronyms for switchgear and circuit breakers in Australia. He was cross-examined.

18. Both Mr Whitham and Dr Rossi were impressive witnesses. They responded directly and concisely to the questions that were put to them in cross-examination and their affidavit evidence was not relevantly disturbed. The challenges to their independence and alleged lack of impartiality were misconceived. The respondents submitted that Mr Whitham should never have been put forward as an expert witness by Huatech because it was clear from his email correspondence that “he had a long term friendship and business relationship with somebody Powins had dismissed in disgrace from its organisation”. There was nothing in the email correspondence that Mr Whitham put before the Court in his second affidavit that relevantly impacted on Mr Whitham’s independence. Mr Whitham candidly acknowledged in the course of his cross-examination that when he received the notice from Powins that the former employee had been dismissed, he “was disgusted with that piece of paper being sent the way it was” and his view was that if a company wanted to terminate someone they would send an email saying “he no longer works for us and please forward all future [correspondence] to whoever you nominate, not send a letter like that out”. He was “totally disgusted with that attitude” by Powins but it was a “kneejerk reaction” on his part and it did “not stop [him] from continuing working with POWINS in the future on other issues”.

19. Equally, Dr Rossi’s evidence concerning his knowledge of the dismissal of that employee and subsequent communications with the employee did not cause me to doubt his independence. Dr Rossi acknowledged that he had been referred work by the employee. He stated, however, that he was aware that the dismissal was “under litigation” and he emphatically denied that he had ever enquired into the circumstances of the dismissal or discussed it with the employee. There is no reason why I should not accept his evidence on this issue.

20. Nor do I accept that Mr Rossi’s location in Western Australia relevantly precludes him from giving evidence as to the extent of the use of AMS in Australia. The respondents did not point to any evidence that might suggest that the switchgear industry was materially different in other states and territories in this country.

    Respondents’ witnesses

21. The respondents rely on affidavits from the following witnesses:

    (a)Mr Dean van Wijk sworn on 8 April 2021, 11 August 2021, 27 September 2021 and 2 December 2021;

    (b)Mr Julian Rauwendaal sworn on 11 August 2021, 3 December 2021 and 16 December 2021;

    (c)Mr Justin Senescall sworn on 22 February 2021;

    (d)Mr Noel Sankey sworn on 18 May 2021;

    (e)Mr Antonio Muguira sworn on 30 July 2021;

    (f)Mr Mark Brown sworn on 3 December 2021; and

    (g)Mr William Redmond sworn on 16 December 2021.

22. Mr van Wijk has been the general manager of the Queensland office of Powins since January 2015. He is responsible for the conduct of the day-to-day business operations of Powins, including sales, product management and client liaison. Prior to his employment by Powins, he had over 16 years’ experience in the electrical engineering industry. He was cross-examined.

23. Mr Rauwendaal has been the mining manager for Powins since January 2015 and the Powins “Operations Manager Eastern Region” since March 2018. He has over 27 years’ experience in the electrical switchgear design and manufacturing industry. He was cross-examined.

24. Both Mr van Wijk and Mr Rauwendaal were unsatisfactory witnesses. They were argumentative, partisan, defensive and evasive. They had a pronounced tendency not to answer questions directly and both gave long-winded responses and commentary on issues at best only tangentially relevant to the questions they had been asked.

25. The following exchange in the course of the cross-examination of Mr van Wijk was a representative example of his approach to giving evidence. After having his attention drawn to the agreement that Powins entered into with Gelpag GmbH on 8 March 2019, the cross-examination proceeded as follows:

    Okay. Do you agree that you were in a hurry to have the agreement signed urgently at the beginning of March?---We were – we were not in a hurry to sign the agreement.

    Do you agree that there was some urgency in having the agreement signed, because tenders for three customers, including BHP, were under review?---I – when I – we not – we were not in – we were not in a rush to sign – sign the agreement, because there was no – they didn’t have a Type Test for a product. We knew that. I don’t – I don’t know what you’re referring to, in terms of BHP tenders. Maybe if you can take me to those and I can have a look at that, then I could understand.

    Could the witness please be shown VWX5. If we can go across to the third page of that document, down the bottom. It should be number 61. If we could just zoom in. Thank you. Do you see there, there’s an email from you to Charles Sher on 11 March?---Yes.

    You say:

    Charles, find attached the signed copy of the distributor agreement for your urgent actioning. Please sign the attached and send back to me electronically for immediate use. I have posted the original to you for signing as well, which

    – if you could kindly send me back a copy, that would be good.

    And then you say:

    I require this back urgently for BHP, Mount Isa and Rio Tinto current tenders which are under review for approximately 60 panels.

    Do you see that?---Correct.

    So, do you agree with me that there was urgency for you to get this contract signed on 11 March, three days after you had issued the announcement?---Yes, but this doesn’t – this doesn’t – this agreement doesn’t include the conversations we had, in terms of providing a Type Tested product. It also doesn’t take into consideration that we would tender packages for BHP, Mount Isa and Rio Tinto, and those would take, in effect, up to six – six to nine months to be awarded to a company.

    HIS HONOUR: Mr van Wijk, did you need this signed distributor agreement urgently from Mr Sher, as at 11 March 2019?---Yes.

    And why did you need it urgently?---We – we required it urgently to – at that time, Huatech and its distributors had – had already informed all of our clients that POWINS no longer had access to their products, and could no longer service the Australian market, in terms of medium-voltage switchgear. I required this to send out to our clients to say we had signed an agreement with GELPAG switchgear and were – and we would have a product that we would be able to service the market with.

    Did you need it urgently - - -?---At that time - - -

    Yes. Did you need it urgently for BHP, Mount Isa and Rio Tinto’s current tenders?---We submitted it as part of those tenders to say that we did have a continuity of product.

    So you did require it urgently for BHP, Mount Isa and the Rio Tinto current tenders?---Correct.

    That is the signed agreement?---Yes.

26. Mr Rauwendaal’s advocacy was particularly prominent in his evidence in relation to the content of the communications with the respondents’ customers. This evidence included that references to products being identical in those communications was meant to convey only that they were identical in appearance, namely the colour and shape of the box in which the products were located, and that references to the New Powins Circuit Breaker being an updated model or version of the Huatech Circuit Breaker was only intended to convey that the two products were interchangeable and were 100% compatible.

27. Further, I do not accept, contrary to the submissions advanced by the respondents, that the concessions made by Mr Rauwendaal in the course of his cross-examination after the lunch break should be given little weight on the basis that he did not understand questions or that he was tired. Rather, I am satisfied the concessions were wholly consistent with the content of the contemporaneous documents and the apparent logic of events. These concessions included the following, in relation to the reference to the installation of 4,000-plus Huatech Switchgear Panels in an email exchange with EDL Energy in January 2020:

    Continuing:

    For your interest only, I attach brochure of the POWINS AMS12 GELPAG switchgear with 4000-plus panels installed.

    ?---     Yes.

    Now, based on the answers you’ve given to previous questions, you would accept that you understood, at the time you sent this email, that the 4000-plus panels installed could only possibly refer to the Huatech product and not to the product that you were now selling as POWINS AMS12?---Yes.

    And so you understood that to be misleading?---Yes. I – as – as I spoke before, the 4000 panels I spoke of was of – of GELPAG. That’s what I hoped to convey to the gentleman.

    You understood that what you had said was misleading?---Yes.

28. Nor do I accept, contrary to the respondents’ submissions, that Mr Rauwendaal’s confrontational and argumentative approach in the course of his cross-examination can be explained away on the basis that he was “a true tradesperson who has not received accolades from university”. His advocacy in giving evidence reflected a sophisticated understanding of the issues in play in the proceedings.

29. Ultimately, I was not able to place any material weight on the evidence of Mr van Wijk or Mr Rauwendaal on matters in dispute, except to the extent that it was against interest or corroborated by contemporaneous documents.

30. Mr Muguira has been employed by MEHE Electrical Engineering Consultants (MEHE) as a registered electrical engineer since July 2012. His role at MEHE involves electrical engineering design and consulting, electrical and power system engineering. He has over 35 years’ experience working on electrical design projects in mining and heavy industry sectors in Australia, New Zealand and Indonesia. During his career he has been primarily involved with the design and operation of medium voltage switchgear, including air-insulated type switchgear and its components. He gave evidence of the use of acronyms for switchgear products in the Australian electrical industry. He was cross-examined.

1. Mr Sankey has over 39 years’ experience in the electrical industry. He is currently an operations manager for TGOOD Australia Pty Ltd. He was previously employed in a variety of roles within the switchgear industry, including as a medium voltage switchgear national product manager. He also gave evidence of the use of acronyms for switchgear products in the Australian electrical industry. He was cross-examined.

2. Mr Muguira generally answered questions directly and without prevarication. The same could not be said for Mr Sankey. Mr Sankey found it difficult to focus on the questions he was asked, he was often argumentative and he appeared to be more concerned with providing answers that might assist the respondents rather than making appropriate concessions or clarifications when confronted with documents or propositions inconsistent with his generalised affidavit evidence.

3. Moreover, Mr Sankey’s affidavit evidence, to which he attempted to adhere in the course of his cross-examination, that AMS and VEP were not specific to any manufacturer, was contradicted by a licence agreement between Lend Lease i.Power Solutions Pty Ltd and Lend Lease i.Power Solutions (WA) Pty Ltd (iPower), Huatech and Gelpag GmbH dated 29 March 2012 that identified the marks to be licensed pursuant to the agreement as AMS and precluded the two iPower corporations, as licensees, from manufacturing, marketing or selling “the Contract Products to accommodate other brand of VCB instead of VEP”. The “Contract Products” were identified as AMS-12, AMS-24 and AMS-36.

4. When confronted with this inconsistency in cross-examination, Mr Sankey sought to deflect the significance of the inconsistency, as illustrated in the following exchanges with his cross-examiner:

   And so do you agree with me that when i.Power Solutions used BV2 AMS on its products while you were the medium voltage manager this is precisely what it was doing. It was adding the BV2 prefix to the licensed mark AMS?---Well, at that time, we had been using that for the last – since I started in 2007, so it meant nothing to me. It was just what we had been using for that time.

   …

   So do you agree with me that it is crystal clear in this agreement that VEP was Huatech or GELPAGs brand of vacuum circuit breaker?---No, it’s not that – I – as I said, I always understood the VEP to mean vacuum embedded pole.

   Well, that’s not the question I asked you. I asked you earlier whether your evidence was that it was only used as a – to generally describe a vacuum embedded pole irrespective of who manufactured or supplied the embedded pole vacuum circuit breaker and you said “yes”. What I’m putting to you is that this is entirely inconsistent with that evidence?---But that’s what they’ve named it. I – I have no – I had no influence on what they named their product.

   Well - - -?---They could call it anything they liked.

5. Neither Mr Muguira nor Mr Sankey was able to identify any use in Australia of the acronyms AMS or VEP by any manufacturer other than Huatech. In the absence of such evidence, I was not able to place any weight on their evidence to the extent that it was to the effect or might otherwise have inferred that AMS and VEP were widely used as acronyms in the Australian electrical industry for switchgear and circuit breaker products.

6. Mr Senescall is the principal of Seneworth Legal Partners. He was previously engaged by the respondents to act for them in relation to the disputes the subject of these proceedings. He gave evidence concerning the responses by the respondents to the letters written by the law firm, Pipers, on behalf of Huatech. He was not cross-examined.

7. Mr Brown has been employed by Powins since about 1 March 2018 as its Operations Manager in Western Australia. He was engaged as a consultant to Powins between 2015 and 2018 in relation to Powins’ Medium Voltage range of switchgear products. He worked for iPower for approximately one to one and a half years from 2002 and became familiar with Gelpag GmbH and subsequently formed a working/business relationship with Mr Sher. He gave evidence that in his experience Australia was a unique market for the sale of switchgear, and mechanisms are often developed here in response to Australian specific problems or compliance issues. He also gave evidence of enquiries that he had received in communications with two customers in 2019 that had led to him sending emails to them concerning the “GELPAG MSA” and “POWINS AMS” products. He was not cross-examined.

8. Mr Redmond is a solicitor of Redmond + Redmond lawyers. He gave evidence in relation to Mr Charles Sher’s alleged inability to give oral evidence in the proceedings. He was not cross-examined.

   BACKGROUND

   Electrical switchgear products

9. Electrical switchgear products monitor and regulate the flow of power in electrical utilities and other industrial facilities, protecting against surges and ensuring that electrical power systems are safe for use.

10. Electrical switchgear products include “switchgear panels”, which are metal housing units containing electrical fuses, switches, power conductors, circuit breakers and controls.

    Distribution of the Huatech Products

11. Since at least 2007, Huatech has promoted and sold the Huatech Products to customers in Australia through Huatech’s channel partners and distributors, including Gelpag GmbH.

    2016 Distribution Agreement

12. In February 2016, Huatech and Powins entered into an agreement (2016 Distribution Agreement) under which Powins was appointed as a non-exclusive distributor of Huatech’s products for a period of three years within Australia, Fiji, New Caledonia and PNG.

13. Clause 1 of the 2016 Distribution Agreement defined “Products” as follows:

    Products shall mean the products manufactured or marketed by the Company listed in Schedule 1.

14. The following products were listed in Schedule 1:

    Schedule 1      List of Products

    Products shall mean

    AMS type medium voltage air insulated metal-clad switchboards, including

    AMS – 12: 12kV, 25/31.5/40/50kA, 630/1250/2500/3150A

    AMS – 24: 24kV, 25/31 .5kA; 630/1250/2500A

    AMS – 36: 36kV, 25/31.5kA; 630/1250/2000/2500/3150A

15. Clause 3.3 of the 2016 Distribution Agreement stated:

    3.3 Site Services and/or After-sales

    [Powins] shall be responsible for all after-sales service of the Contract Products within the warranty period of the Contract Products.

16. The warranty period was the earlier of 18 months from the date of delivery or 12 months from the date of installation/commissioning.

17. Clauses 6.1 and 6.2 of the 2016 Distribution Agreement stated as follows:

    6.1 Use of the Company name

    [Huatech] expressly prohibits any direct or indirect use, reference to, other employment of its name, trademarks, or trade name other than the purpose of this Agreement. All advertising and other promotional material will be submitted to [Huatech] at least two (2) weeks in advance and will only be used if [Huatech] consents thereto, which consent shall not be unreasonably withheld.

    6.2 Intellectual Property Rights

    6.2.1 [Powins] shall promptly notify [Huatech] in writing of any infringement, or suspected or threatened infringement, of the Information, the Licensed Marks or any of the Company’s Intellectual Property Rights relating to the Products which may come to [Huatech]’s knowledge during the term of this Agreement. Powins shall not take further steps in respect of such infringement without the Company’s prior written instructions.

18. Clause 13.1 of the 2016 Distribution Agreement provided:

    13.1 Arbitration Huatech

    Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, interpretation, breach or termination shall be referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre (“HKIAC”) in accordance with the UNCITRAL Rules as at present in force and as may be amended by the rest of this Clause.

19. After delivery of the Huatech Products, Powins completed final wiring and assembly in Australia in order to sell and market the completed switchgear product.

20. In the period between 2016 and January 2019, Powins promoted and sold the Huatech Products in Australia under or by reference to the marks AMS and VEP respectively.

    2018 Sales Contract

21. In or about May 2018, Powins and Huatech entered into a contract with an effective date of 7 April 2018, which allowed Powins to purchase the Huatech Products directly from Huatech (2018 Sales Contract).

22. It was a term of the 2018 Sales Contract that:

    13.4 Confidentiality

    All Parties agree that based upon the principle of honesty and good-faith, neither Party will disclose, use or allow a third party to use the commercial secrets obtained in the process of execution and performance of the Contract. Otherwise, the infringe Party shall indemnify the damaged Party for the direct losses suffered there from.

    Termination of 2016 Distribution Agreement

23. In February 2019, the 2016 Distribution Agreement came to an end.

24. The 2016 Distribution Agreement was not renewed upon termination.

    Appointment of Leistung Energie as exclusive distributor

25. On 23 August 2018, Huatech and Leistung Energie entered into a confidential agreement (2018 OEM Agreement).

26. Since February 2019, the Huatech Products have been distributed through MVLV Power Solutions Pty Ltd and Plummers Industries Pty Ltd, who have been engaged by Leistung Energie as Huatech’s exclusive channel partner and distributor under the 2018 OEM Agreement.

    2019 Gelpag Distribution Agreement

27. On or about 8 March 2019 Powins and Gelpag GmbH entered into an agreement for the distribution of the New Powins Products (2019 Gelpag Distribution Agreement).

    Powins trade mark applications

28. On or about 15 March 2019:

    (a)trade mark applications no. 1996288 (GELPAG AMS in class 9), no. 1996289 (GELPAG VEP in class 9) and no. 1996290 (GELPAG MSA in class 9) were filed naming Gelpag AU as applicant; and

    (b)trade mark application no. 1996287 (POWINS AMS in class 9) was filed naming Powins as applicant,

    (together, the Trademark Applications).

29. The class 9 filing for each of the Trademark Applications included:

    Building automation installations; Electronic digital automation installations for measuring building services installations; Electronic digital building automation systems; Engineering design software; Electrical switchgear; Electric control boxes; Switchgear (electric); Telemetry apparatus; Telemetry installations; Terminal boxes (electrical); Boxes adapted for housing electric instruments; Electric circuit breakers; Electric power units; Electric power analysers; Electric power converters; Electric power line detectors; Switch cabinets (electric); Switching boxes for use in electrical engineering; Switching devices for electric contactors; Switching devices for electric relays; Switching power supply apparatus; Electric transformers; Apparatus for accumulating electricity; Electrical accumulators; Instruments for accumulating electricity; Electric regulating apparatus; Electric regulating modules; Electrical apparatus for use in regulation; Electronic regulating apparatus; Regulating apparatus, electric; Regulating transformers; Electronic controlling apparatus; Power units for supplying (other than generating) electrical current; Electric current transformers; Electric current adaptors; Electric current control devices; Electric current distribution apparatus; Switch mode power supply apparatus (electric); Electric circuits; Distribution units (electricity); Electrical distribution installations; Electricity distribution apparatus; Electricity distribution instruments; Electric power supplies (other than generators); Computer software; Application software’: Australian Trade Mark Application No. [1996287, 1996288, 1996289 and 1996290] (published, under examination, not accepted, at the time of filing this pleading).

    [Emphasis omitted.]

    New Powins Switchgear Panels and New Powins Circuit Breakers

30. Since at least March 2019, the respondents have offered for sale and sold the New Powins Products in Australia.

    LEGAL PRINCIPLES

    Misleading or deceptive conduct, and false or misleading representations

31. Section 18 of the ACL provides:

    (1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

    (2)Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).

32. Section 29(1) of the ACL relevantly provides:

    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:

    (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or

    …

    (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

    (h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation.

33. The principles and authorities in relation to ss 18 and 29 of the ACL are well established.

34. First, although s 18 is directed at conduct and s 29 is directed at representations, there is no material difference between the expressions “misleading or deceptive” in s 18 and “false or misleading” in s 29: Australian Competition and Consumer Commission vTPGInternet Pty Ltd (2020) 278 FCR 450; [2020] FCAFC 130 (TPG FCAFC) at [21] (Wigney, O’Bryan and Jackson JJ); Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493 at [88] (O’Callaghan J).

35. Second, it is necessary to identify the impugned conduct and then to consider whether that conduct, considered as a whole and in context, is misleading or deceptive or likely to mislead or deceive: Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 (Google) at [89], [102] and [118] (Hayne J); Campomar Sociedad, Limitada v Nike InternationalLimited (2000) 202 CLR 45; [2000] HCA 12 (Campomar) at [100]–[101] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). As put by McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 (Butcher) at [109]:

    It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct.

    [Footnotes omitted.]

36. In TPG FCAFC, the Full Court (Wigney, O’Bryan and Jackson JJ) emphasised the need to look at all relevant circumstances in order to determine whether the impugned conduct was misleading or deceptive or likely to mislead or deceive. Their Honours stated at [25]:

    A question that commonly arises is whether a publication or communication is misleading when it contains a misleading statement in one place but also contains another statement, perhaps in a different place in the publication or communication, which remedies the misleading character of the first statement. Ultimately, the question is one of overall assessment of the publication or communication. The correct approach was summarised by Edelman J in Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647 (at [214]) (upheld in Valve Corporation v Australian Competition and Consumer Commission (2017) 258 FCR 190, noting that there was no challenge to his Honour’s relevant statements of principle (recorded at [158]):

    One consequence of the need to consider the conduct in light of all relevant circumstances is that any allegedly misleading representation must be read together with any qualifications and corrections to that statement. Hence, although a qualification to a statement might be effective to neutralise an otherwise misleading representation, this might not always be so, particularly if the misleading representation is prominent but the qualification (often linked to the representation by an asterisk) is not: Medical Benefits Fund of Australia Limited v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1, 17 [37] (Stone J). As Keane JA expressed the point, the qualifications must have “the effect of erasing whatever is misleading in the conduct”: Downey v Carlson Hotels AsiaPacific Pty Ltd [2005] QCA 199 [83].

37. Third, conduct is misleading or deceptive or likely to mislead or deceive if it has the tendency to lead into error, that is, there is a sufficient causal link between the conduct and the likely error on the part of persons exposed to the conduct: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 (TPG HCA) at [39] (French CJ, Crennan, Bell and Keane JJ). Consumers may be lead into error if particular words are selected for emphasis and the balance are relegated to relative obscurity as many persons will only absorb the general thrust of information presented to them: TPG HCA at [51] (French CJ, Crennan, Bell and Keane JJ).

38. Conduct is likely to mislead or deceive if there is a real and not remote chance or possibility that a person is likely to be misled or deceived: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87 (Bowen CJ, Lockhart and Fitzgerald JJ); Butcher at [112] (McHugh J); TPG FCAFC at [22(a)] (Wigney, O’Bryan and Jackson JJ). Mere confusion or wonderment will not ordinarily establish misleading or deceptive conduct: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (Taco Bell) at 201 (Deane and Fitzgerald JJ).

39. Fourth, where the impugned conduct is directed to the public generally (or some relevant section of the public), the Court must consider the likely characteristics of the persons who comprise the relevant class of persons to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful: Campomar at [101]–[105] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); Kraft Foods Group Brands LLC v Bega Cheese Ltd (2020) 377 ALR 387; [2020] FCAFC 65 (Kraft) at [236] (Foster, Moshinsky and O’Bryan JJ).

40. Fifth, it is not necessary to show actual deception nor to adduce evidence from persons to show that they were actually misled or deceived: see, eg, Google at [6] and [9] (French CJ, Crennan and Kiefel JJ); Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd (2016) 118 IPR 239; [2016] FCA 235 (Flexopack) at [265] (Beach J). Further, it is not necessary to show any actual or completed transaction entered into, although the conduct must be more than merely transitory or ephemeral: Flexopack at [268]-[269] (Beach J).

41. Sixth, provisions proscribing misleading or deceptive conduct may be contravened at the point where members of the target audience have been seduced into the seller’s “web of negotiation” or “marketing web” by the impugned conduct, even if the consumer may come to appreciate the true position before a transaction is concluded: TPG HCA at [50] (French CJ, Crennan, Bell and Keane JJ).

    Passing off

42. The tort of passing off protects a right of property in business or goodwill built up by the activities of the plaintiff: AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273 at 284 (Lord Parker); Campomar at [108] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).

43. Passing off is a remedy for the invasion of property in a mark, name or get-up which has been improperly used: AMI Australia Holdings Pty Ltd v Bade Medical Institute (Australia) Pty Ltd (No 2) (2009) 262 ALR 458; [2009] FCA 1437 at [81] (Flick J). In Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 (Reckitt), Lord Oliver stated at 499:

    The law of passing off can be summarised in one short general proposition — no man may pass off his goods as those of another.

1. There are three core elements to the tort of passing off which a plaintiff must establish: Reckitt at 499 (Lord Oliver); Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (2020) 156 IPR 413; [2020] FCA 1530 (Allergan) at [447] (Stewart J); Flexopack at [278]-[279] (Beach J).

2. First, an applicant must establish a goodwill or reputation attached to the goods or services which they supply in the mind of the purchasing public by association with the identifying “get-up” under which their particular goods or services are offered to the public: Reckitt at 499 (Lord Oliver). The plaintiff’s own indicium must be known in the relevant market: ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (ConAgra) at 343 (Lockhart J).

3. The plaintiff must establish that its product bears a distinctive character within the market: Cadbury Schweppes Pty Ltd v Pub Squash Co Ltd [1980] 2 NSWLR 851 at [22]; (1980) 32 ALR 387 at 393 (Lord Scarman). This must be such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Demonstrating this element involves proof of a substantial number of persons who are aware of the plaintiff’s product and who are thus potential customers: Knott Investments Pty Ltd v Winnebago Industries Inc (2013) 211 FCR 449; [2013] FCAFC 59 (Knott Investments) at [14] (Allsop CJ); Taco Bell (Beach J).

4. The size and extent of the class will vary according to the circumstances and will be measured by reference to the relevant group or section of the public most likely to be customers: Knott Investments at [14] (Allsop CJ).

5. The nature of the class of persons who may be deceived or confused will necessarily be informed by the nature of the good or service in question and the characteristics of that class: Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379; [2017] FCAFC 83 at [71] (Greenwood, Jagot and Beach JJ).

6. Relevantly, it is not necessary that a plaintiff show a business presence in Australia to be successful in an action for passing off, provided it can establish a local reputation: ConAgra at 344 (Lockhart J); Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc (2020) 385 ALR 514; [2020] FCAFC 235 (Hashtag FCAFC) at [126]-[127].

7. The relevant date for assessing reputation is the commencement of the relevant conduct by the respondents, and to the extent that a respondent’s conduct may have eroded an applicant’s goodwill, it should not have the benefit of any such erosion: Flexopack at 280 (Beach J).

8. Customers need not be aware of the plaintiff’s actual identity provided they recognise the plaintiff’s product by the indicium in suit: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 189 (Bowen CJ).

9. In Birmingham Vinegar Brewing Co Ltd v Powell [1897] AC 710, Lord Halsbury LC said at 713-14:

   I am satisfied that a person who puts forward this ‘Yorkshire Relish,’ made as it is by the present defendants, is representing it as being a particular manufacture. It may be true that the customer does not know or care who the manufacturer is, but it is a particular manufacture that he desires. He wants Yorkshire Relish to which he has been accustomed, and which it is not denied has been made exclusively by the plaintiff for a great number of years. This thing which is put into the hands of the intended customer is not Yorkshire Relish in that sense. It is not the original manufacture. It is not made by the person who invented it. Under these circumstances it is a fraud upon the person who purchases to give him the one thing in place of the other.

10. To the same effect, Lord Herschell said at 715:

    I think that the fallacy of the appellants’ argument rests on this: that it is assumed that one trader cannot be passing off his goods as the manufacture of another unless it be shewn that the persons purchasing the goods know of the manufacturer by name, and have in their mind when they purchase the goods that they are made by a particular individual. It seems to me that one man may quite well pass off his goods as the goods of another if he passes them off to people who will accept them as the manufacture of another, though they do not know that other by name at all.

11. Second, an applicant must establish a misrepresentation by the respondent to the public (intentional or otherwise) leading or likely to lead to a belief by the public that the goods or services offered are those of the applicant: Reckitt at 499 (Lord Oliver). Proof of actual deception is not required: Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549; [2002] FCAFC 157 at [62] (Weinberg and Dowsett JJ). However, proof of deliberate borrowing of features or get-up of a rival’s product provides evidential value: Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 (Australian Woollen Mills) at 657 (Dixon and McTiernan JJ). This is not confined to cases of “deliberate” dishonesty — it is enough that the “allegedly infringing trader borrows aspects of the other trader’s mark”: In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (2020) 377 ALR 116; [2020] FCA 193 at [121] (Katzmann J), citing Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd (2018) 264 FCR 422; [2018] FCAFC 105 at [97] (Murphy, Gleeson and Markovic JJ). The role of intention will always depend on the circumstances of the case.

12. Not every form of conduct causing confusion or even deception will constitute passing off. As Rares J stated in Ricegrowers Ltd v Real Foods Pty Ltd (2008) 77 IPR 32; [2008] FCA 639 at [75]:

    In cases of passing-off where the wrongful appropriation of the reputation of the plaintiff or that of his goods is in question, a plaintiff who used descriptive words in his trade name would find out that quite small differences in a competitor’s trade name would render the latter immune from action. The law recognises the possibility of blunders by members of the public when descriptive words are used by two traders as part of their respective trade names. But, Stephen J said the risk of confusion must be accepted because “to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe”: Hornsby [Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216] at CLR 229; ALR 648–9; IPR 826–7.

13. Traders have a right to describe their products and to use their own names. The law also recognises a doctrine of “honest concurrent user”: General Electric Co (of USA) v General Electric Co Ltd [1972] 1 WLR 729 at 743 (Lord Diplock). This assumes that the honest concurrent use will result in some risk of deception, but provides an equitable compromise between the competing interests of the concurrent users and those of the public and other traders.

14. It is not necessary that the representation be fraudulent: ConAgra at 344-5 (Lockhart J), 365 and 372 (Gummow J).

15. Third, Huatech must show that it has suffered, or is likely to suffer, damage by reason of the misrepresentation: Reckitt at 499 (Lord Oliver).

    REPRESENTATIONS

    Overview

16. The Representations provide the foundation for the ACL and passing off claims that Huatech advances in these proceedings. It is first necessary to determine if the Representations were conveyed by the respondents and then to determine whether, to the extent that they were conveyed, were they false or misleading?

    Were the Representations conveyed?

    Respondents’ Publications and Customer Communications

17. Huatech alleges that the Representations were conveyed in the promotional and advertising materials of the respondents annexed to the 2FASOC (Publications) and in the direct communications by the respondents with their customers identified in Schedule 11 to the 2FASOC (Customer Communications).

18. Huatech alleges the Representations were made by both Powins and Gelpag AU because Gelpag AU was a wholly owned subsidiary of Powins, the two companies shared a common (and sole) director, the respondents admit that the New Powins Products were sold by “the Respondents”, the respondents positively plead in the cross-claim that their customers are customers of the “Cross-claimants” and that the statements made by Huatech directed at Powins gave rise to inferences about both respondents. Huatech submits that the conduct in relation to the Publications and the Customer Communications was therefore jointly engaged in by Gelpag AU or was conduct authorised by Gelpag AU. The respondents did not dispute these contentions of Huatech. In the context of these contentions and submissions I accept that both respondents are responsible for the distribution of the Publications and the Customer Communications.

19. The Publications are pleaded in the 2FASOC as comprising:

    (a)the document entitled “Announcement of Exclusive Distributor POWINS Pty Ltd” on and since 8 March 2019, (2019 Announcement);

    (b)a brochure entitled “Powins Switchgear” on a date no later than 27 February 2019, (New Powins Switchgear Brochure);

    (c)a LinkedIn post entitled “POWINS Appointed Exclusive Distributor for GELPAG Switchgear” that was published in or about March 2019 (March 2019 LinkedIn Post);

    (d)a quarter-page advertisement published in the January-March 2020 edition of Industrial Electrix magazine (First 2020 Advertisement);

    (e)a four-page feature entitled “Australian Electrical Turnkey Solution Provider” published in the January-March 2020 edition of Industrial Electrix magazine and republished by Mr Dean van Wijk through a LinkedIn post in or about March 2020 (First 2020 Feature);

    (f)a three-page feature entitled “Australian Electrical Turnkey Solution Provider” which Powins caused to be published on pp 106-8 of Australian Power Technologies’ “Purchasing Directory – Transmission and Distribution – Industrial Electrix” on about 21 May 2020 (Second 2020 Feature);

    (g)a further LinkedIn Post published by Mr Dean van Wijk on or about 23 May 2020 (May 2020 LinkedIn Post);

    (h)a cover story entitled “POWINS AMS 12kV GELPAG Switchgear and Switchroom the Choice of Another Brownfield Upgrade in the Mt Isa Region” published in Australian Power Technologies’ “Transmission and Distribution”, Issue 3 June-July 2020 (July 2020 Cover Story); and

    (i)a three-page feature entitled “Australian Electrical Turnkey Solution Provider” published in Australian Power Technologies’ “Transmission and Distribution”, Issue 3 June-July 2020 (Third 2020 Feature).

20. The Customer Communications comprise the emails listed in Schedule 11 of the 2FASOC sent by the respondents to their customers in the period between 20 March 2019 and 6 February 2021 and two telephone conversations on 20 March 2019.

21. It is alleged in the 2FASOC that Powins has and, alternatively, Powins and Gelpag AU have, published and distributed, or authorised the publication and distribution of the Publications and the Customer Communications.

    Submissions

    Huatech

22. Huatech submits that the Publications and the Customer Communications demonstrate a prolonged and extensive pattern of seeking to leverage off the commercial reputation of Huatech, its products and its marks since February 2019. It further submits that the Court ought to find that the respondents intended to appropriate Huatech’s commercial reputation and that the respondents intentionally adopted identical (AMS and VEP) and similar (MSA) marks to Huatech’s registered and unregistered trademarks and brand names of which they were aware.

23. Huatech submits that the steps taken by the respondents to secure the GELPAG domain name (prior to the 2016 Distribution Agreement expiring), to license the GELPAG trade mark, and to use references to GELPAG without any attempt to disclaim the “historical” install base of the Huatech Products or differentiate their products from the Huatech Products, are part of this course of conduct.

24. Huatech submits that, in making the Representations, the respondents intentionally engaged in that conduct for the purposes identified above and, in so doing, misrepresented that there was an affiliation between the respondents and the New Powins Products, on the one hand, and Huatech and the Huatech Products, on the other hand, for the respondents’ benefit.

25. In order to make good these propositions, Huatech has identified various factors that it contends were employed in various combinations in the Publications and Customer Communications and on which it relies to establish that the respondents made each of the Representations (Affiliation Factors).

26. Huatech relies on the following Affiliation Factors, in various combinations, as giving rise to the Switchgear Same Product Representation, the Circuit Breaker Same Product Representation, the Switchgear Origin Representation and the Circuit Breaker Origin Representation (together, Same Product and Origin Representations):

    (a)using AMS (Switchgear Panels only) (Use AMS);

    (b)emphasising the letters A M S (Switchgear Panels only) (Emphasise A M S);

    (c)using VEP (Circuit Breakers only) (Use VEP);

    (d)emphasising the letters V E P (Circuit Breakers only) (Emphasise V E P);

    (e)using MSA (Switchgear Panels only) (Use MSA);

    (f)emphasising the letters M S A (Switchgear Panels only) (Emphasise M S A);

    (g)referring to the customers’ “install base” or “installed product” of Huatech Products (whether referred to as “GELPAG” or otherwise) in communications about the New Powins Products (Cite Customer Install Base);

    (h)referring to the Australia-wide or worldwide install base of the Huatech Products (whether referred to as “GELPAG” or otherwise) in communications about the New Powins Products, including references to “thousands of panels” in communications about the New Powins Products (Cite Total Install Base);

    (i)referring to the effect of “the previous switchgear range (2005-2018)” or “the original GELPAG switchgear released and sold in Australia from 2005-2016” or “existing GELPAG switchgear installed from 2005” in communications about the New Powins Products (Cite Previous Range);

    (j)stating that the New Products are “identical” to the Huatech Products (Identical). This included a number of statements that the products were “identical and interchangeable with” the previous products. There was no clear explanation as to why “identical” would be necessary or appropriate if mere interchangeability or equivalence was all that was sought to be conveyed;

    (k)stating or implying that the New Powins Products are what used to be sold as GELPAG AMS, POWINS AMS or BV2 AMS (Former Name Affiliation);

    (l)stating or implying that the New Powins Products are what used to be sold or serviced by Powins or iPower (Continuation of Supply). This includes references to the respondents having a type tested product at any time between February 2019 and 4 July 2019; and

    (m)responding to queries for Huatech Products or parts by offering a “GELPAG” New Product or part and/or asking the customer to change the part number/description in their system (Product Switch).

27. Huatech relies on the following Affiliation Factors, in various combinations, as giving rise to the Gelpag Representation:

    (a)Cite Customer Install Base;

    (b)Cite Huatech Install Base or Cite Total Install Base;

    (c)stating or implying that the Huatech Products were manufactured by Gelpag GmbH (Gelpag Manufacture);

    (d)stating or implying that Gelpag GmbH owns the intellectual property rights in the Huatech Products (Gelpag IP); and

    (e)stating or implying that the New Powins Products were based on the Huatech Products’ design (Upgraded Design).

28. Huatech relies on the following Affiliation Factors, in various combinations, as giving rise to the Existing Products Affiliation Representation:

    (a)stating or implying that the respondents are “authorised” in relation to existing product (R Authority);

    (b)stating or implying that the respondents have “sole authority” in relation to existing product (R Sole Authority);

    (c)stating or implying that Huatech does not have “authority” in relation to existing product (Huatech No Authority); and

    (d)stating or implying that Huatech can no longer manufacture or will no longer manufacture the existing product (Huatech No Manufacture).

29. Huatech annexed to their closing submissions detailed schedules in which it identified which Representations it alleged were conveyed by each of the Publications and each of the Customer Communications. It also annexed schedules identifying which Affiliation Factors it relied upon to establish each Representation that it alleged was conveyed in each of the Publications and Customer Communications.

    Respondents

30. The respondents deny that the Representations were conveyed by the Publications and the Customer Communications. In an annexure to their closing submissions, the respondents provided a 40-page table summarising the reasons why they contend the Representations did not arise (Respondents’ Table).

31. The Respondents’ Table includes responses to the following effect, some of which would appear to be more directed at alleged falsity rather than whether the Representations were conveyed:

    (a)the representation is not expressly made nor can it be inferred from any of the language contained in the text;

    (b)the use of the words “Air-Insulated metalclad switchgear” is descriptive of the object being sold and cannot be the source of the inferences sought to be drawn by Huatech;

    (c)the use of AMS should be accepted as an industry accepted term for “air insulated metalclad switchgear”;

    (d)the references to “Gelpag” were intentional and true, Gelpag had a reputation in Australia for good design in the electrical market in general and more specifically in switchgear and do not give rise to any representation of manufacturing origin;

    (e)references to new products being exchangeable with previous products installed by Powins is only a representation offering customers a capability to extend existing infrastructure in a cost effective manner;

    (f)the manufacturer of the product is not expressly stated;

    (g)customers in the market rely on the name of the service provider and the marketed design, not the place of manufacture;

    (h)the identity of the person providing the installation and ongoing maintenance services was the relevant matter for end users;

    (i)the letters AMS were not used together, rather they are contained in a description of what the product does;

    (j)it could never be suggested by Huatech that it had any claim to the name “GELPAG”;

    (k)Gelpag GmbH created a market for itself in Australia in the period between approximately 2007 to 2016 as a designer and a company that could support and provide German engineered switchgear and circuit breakers;

    (l)the affiliation of the “Gelpag” name is a consequence of the strategy undertaken in Australia to market the “Gelpag” name rather than the name of the manufacturer, Huatech, and cannot give rise to a representation as to the origin of manufacture;

    (m)the phrase “you already have a large quantity of GELPAG switchgear installed on your site” is a direct reference to the way in which the product was sold as being German designed and a Gelpag GmbH authorised product;

    (n)it is true that as at 11 May 2020, Powins was the sole distributor of GELPAG switchgear;

    (o)the expression “identical” in the context of a tender should be limited to the fact that the product will be contained within a metalclad box with similar dimensions which has already been supplied and needs replacing as part of the tender;

    (p)the phrases “latest Gelpag MSA technology advancements” and the “new Gelpag switchgear” all indicate to the reader that here is a new product being provided and that it has no association with the manufacturer Huatech;

    (q)the document on its face does not make any references to Huatech’s products nor components;

    (r)the type test certificates for the product clearly indicate that the designer of the product is “GELPAG” and it is manufactured by an entity other than Huatech;

    (s)the tender process would eliminate any misrepresentations that might have been made because the type test certificates would need to be produced;

    (t)the respondents are marketing their products as MSA or VX5, not AMS;

    (u)the new products marketed by the respondents are designed by Gelpag AU, and improvements have been made to the old design that Gelpag AU “participated in the development of”; and

    (v)a vacuum circuit breaker described as VX5 cannot be said to have any relevance to VEP in circumstances where VX5 is described as “new” or “technologically advanced”,

    (together, Respondents’ Answers).

    General observations

1. As stated above, cl 13.4 of the 2018 Sales Contract provided:

   13.4 Confidentiality

   All Parties agree that based upon the principle of honesty and good-faith, neither Party will disclose, use or allow a third party to use the commercial secrets obtained in the process of execution and performance of the Contract. Otherwise, the infringe Party shall indemnify the damaged Party for the direct losses suffered there from.

   Legal principles

2. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, the Privy Council described five criteria for the implication of a term into a contract which must be satisfied. The proposed implied term must:

   (a)be reasonable and equitable;

   (b)be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;

   (c)be so obvious that “it goes without saying“;

   (d)be capable of clear expression; and

   (e)not contradict any express terms of the contract.

3. These five requirements have been described as “conditions necessary” for the implication of an implied term: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347 (Mason J, Stephen J agreeing at 344 and Wilson J agreeing at 392).

4. Justice Edelman noted in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1; [2015] FCA 825 at [1003] that one of the difficulties with the implication of a term of “good faith” is that although it has been expressly recognised across many different legal contexts over a long period of time, across both civil and common law, it is a principle that can “mean different things in different contexts”. His Honour also accepted, at [1006], the conclusion propounded by the Victorian Court of Appeal in Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212 at [108] that they did “not accept that an obligation of good faith should be implied indiscriminately into all commercial contracts” for two reasons:

   (a)questions of implication, like those of construction, require close focus upon the terms of the contract itself; and

   (b)the potential for the content of “good faith” to differ from one contractual context to another.

5. Whilst the meaning of a duty of “good faith” in Australian contract law is not settled, it was described in the case of Paciocco by Allsop CJ (with whom Besanko and Middleton JJ agreed) in the following terms at [288]:

   [A]n obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at time conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.

6. As the Full Court (Finn, Sundberg, Jacobson JJ) explained in Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; [2010] FCAFC 21, at [39], in order to establish that an equitable obligation of confidence with respect to information arises, an applicant must establish the following four elements:

   (a)the information must be identified with specificity;

   (b)it must have the necessary quality of confidence;

   (c)it must have been received in circumstances importing an obligation of confidence; and

   (d)there must be an actual or threatened misuse of the information without consent.

7. Whether information has the necessary quality of confidence is a question of fact. In Del Casale v Artedomus (Aust) (2007) 165 IR 148; [2007] NSWCA 172, at [40], Hodgson JA (McColl JA agreeing) stated:

   In Wright v Gasweld, at NSWLR 334; IPR 489, Kirby P listed some factors that helped in determining whether information may be considered confidential. That list has been expanded by R Dean, The Law of Trade Secrets and Personal Secrets, 2nd ed, Lawbook Co, Sydney, 2002 at p 190 to include:

   1.        The extent to which the information is known outside the business.

   2.The extent to which the trade secret was known by employees and others involved in the plaintiff’s business.

   3.        The extent of measures taken to guard the secrecy of the information.

   4.        The value of the information to the plaintiffs and their competitors.

   5.The amount of effort or money expended by the plaintiffs in developing the information.

   6.The ease or difficulty with which the information could be properly acquired or duplicated by others.

   7.Whether it was plainly made known to the employee that the material was by the employer as confidential.

   8.The fact that the usages and practices of the industry support the assertions of confidentiality.

   9.The fact that the employee has been permitted to share the information only by reason of his or her seniority or high responsibility.

   10.That the owner believes these things to be true and that belief is reasonable.

   11.The greater the extent to which the “confidential” material is habitually handled by an employee, the greater the obligation of the confidentiality imposed.

   12.That the information can be readily identified.

8. Information may be confidential even if it is derived from material that is readily available if a person has used their intelligence to produce a result that can only be replicated if somebody undertakes the same process: Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215 (Lord Greene MR); see also Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 49 (Gowans J); Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 at [97] (Giles JA, Priestley and Meagher JJA agreeing). An inference may arise that information is not confidential if it is mixed with information that is not confidential: Faccenda Chicken Ltd v Fowler [1987] Ch 117 at 138 (Kerr, Neill and Nourse LJJ).

9. Customer lists has been held to constitute confidential information: DC Payments Pty Ltd v Next Payments Pty Ltd (2016) 51 VR 151; [2016] VSC 315 (DC Payments) (Vickery J); Gold Titan Pty Ltd v Lopez [2021] FCA 918.

10. In DC Payments, the applicant and respondent were competitors in the supply of automatic teller machines. The applicant brought proceedings against the respondent for breach of confidence. The respondents sought to strike out the proceedings on the basis that the applicant had used the respondent’s confidential information in bringing the proceedings.

11. The respondent maintained a customer list, described as a “Master Customer List”. The Master Customer List recorded details of each merchant with whom the respondent had a contract. It was inadvertently provided, as an attachment to an email, to an outdated email address of a former employee of the applicant that caused the Master Customer List to be automatically forwarded to a manager of the applicant. The email was marked on its face “confidential and internal to [the respondent]”. The applicant took steps to quarantine the Master Customer List. It was stored on a secure drive and only the applicant’s lawyers had access to it. It was subsequently included on a list of documents discovered by the applicant.

12. After considering the relevant principles relating to the confidentiality of information, Vickery J concluded at [61]:

    I find that the Master Customer List was a detailed and carefully drafted document that is of considerable value to Next Payments. It was also of considerable value to any competitor of Next Payments. The fact that the document contains, in addition to sensitive commercial information, the names of its customers that is ultimately information which is in the public domain, does not detract from its essential characteristic as being confidential.

13. Justice Vickery was satisfied that the Master Customer List was a “product of skill, effort and ingenuity” on the part of the respondent and its employees, and represented confidential information: at [63]. In reaching this finding, his Honour placed particular emphasis on the evidence that the Master Customer List was guarded by various internal measures, it was plainly made known to the respondents’ employees that the material was regarded by the respondent as confidential, it contained all of the information about merchants who had contracts with the respondent, the employee who had shared the information was only permitted to do so due to their seniority and level of responsibility and a competitor, such as the applicant, was likely to be advantaged if it obtained access to the information: at [64].

14. After considering the factual context in which the amendments to the pleading were formulated and advanced, Vickery J concluded that a clear inference could be drawn in the circumstances that the applicant had used the Master Customer List for the purpose of re-drafting its pleadings in both the proceedings and related proceedings: at [68]-[71]. His Honour made orders striking out paragraphs of the pleadings that had been amended and consequential orders to redress any advantages that had otherwise been obtained by the applicant: at [85]-[86], [89].

    Submissions

15. The respondents submit that Huatech breached:

    (a)clause 13.4 of the 2018 Sales Contract by disseminating confidential information and acting otherwise than in good faith; and

    (b)an implied term to act with good faith in the 2016 Distributor Agreement and the 2018 Sales Contract by acting otherwise than in good faith.

16. The respondents submit that the respondents’ customer list, the telephone numbers, and emails constituted confidential information for the purposes of cl 13.4 of the 2018 Sales Contract and that the use of the confidential information is a breach of the term of good faith as well as a breach of the express term of confidentiality.

17. In addition, the respondents submit that the arbitration clause at the end of the 2016 Distribution Agreement and the 2018 Sales Contract has been waived by Huatech commencing litigation, and that it is on that basis that the arbitration clause does not survive the contract in this instance.

18. The respondents allege four instances of conduct in which Huatech either by itself or by a servant or an agent published one of the Huatech Publications to the respondents’ customers or potential customers in 2019 and 2020 using the respondents’ “Confidential information”.

19. The alleged conduct relied upon by the respondents is the publication:

    (a)of the Announcement by Mr Ye on behalf of Huatech on around 4 February 2019;

    (b)the March Pipers Letter using the Confidential Information by an unnamed “servant and/or agent” of Huatech on or around 29 March 2019 from the email address “[email protected]”;

    (c)of a “previous draft of the October Pipers Letter” and the October Pipers Letter using the “Confidential Information” by an unnamed “servant and/or agent” of Huatech on or around 4 December 2019 from the email address “[email protected]”; and

    (d)the Litigation Statement to the customers and potential customers of the respondents in Western Australia.

20. The respondents allege that the Litigation Statement was distributed by a servant and/or agent of Huatech and, further that Mr Albert Foo, in his capacity as a servant and/or agent of Huatech, personally hand delivered the Litigation Statement to customers and potential customers of the respondents in Western Australia.

21. Huatech submits that there is no evidence the respondents designated any information to be confidential other than in relation to one discrete project, which was for a limited duration and did not involve customer email addresses. Further, it submits that there is no evidence that Huatech received such information from the respondents or in any way used it, whether itself or via a servant or agent.

22. Further, Huatech submits that the respondents have not established that Huatech had in its possession the email addresses of any of the recipients of those documents.

23. Regarding the four instances of publication of documents, Huatech:

    (a)submits that Mr Albert Foo did not disseminate the Announcement as Huatech’s servant or agent;

    (b)denies that the March Pipers Letter was published by an unnamed servant and/or agent of Huatech using any confidential information of the respondents;

    (c)denies the October Pipers Letter allegation; and

    (d)as explained above, admits publication of the Litigation Statement, that the Litigation Statement was unsigned and purported to be from Huatech, and that it was published on Huatech’s letterhead and under its company seal. Huatech also admits that the Litigation Statement contains the contact details of Mr Ye of Huatech and that Mr Ye is a Chinese national domiciled in China. However, Huatech denies using “Confidential Information” in publishing it.

24. Huatech submits that it has maintained an extensive historical sales record identifying customers and projects serviced by Huatech from as early as 2007, well before the 2016 Distribution Agreement was entered into.

25. Huatech submits that cl 13.4 refers to “commercial secrets”; it does not refer to “confidential information”. It submits that a “client list” (if one existed in this case) would not be a commercial secret even if it were confidential.

26. Huatech submits that the respondents do not identify any specific information said to be confidential, there is no reference to any evidence of any information being designated as confidential, and no submissions are directed to establishing confidentiality of information as a matter of law.

27. Further, Huatech submits that there is no evidence that the respondents ever communicated pleaded “email contact details of persons employed by customers of” the respondents to Huatech on a confidential basis, and that while Huatech received a discrete number of customer names and project names from Powins sporadically, this was never subject to a confidentiality claim.

28. Huatech submits that there is no evidence to support any inferential case that the circumstances of any particular communication imported an obligation to treat pleaded customer information as confidential.

29. Huatech submits that the respondent’s breach of contract case has not been clearly articulated.

    Arbitration Clauses

30. The respondents submit that the arbitration provisions in cl 13.1 of the 2016 Distribution Agreement did not survive termination by reason of cl 12.8. Clause 12.8 provides for the cessation of “further rights and obligations” of the parties, but specifies that “clauses 6.2, 6.4 and 10, together with those clauses the survival of which is necessary for the interpretation or enforcement of this Agreement, shall survive termination or expiration of this Agreement, and shall continue in full force and effect”.

31. Huatech submits that the arbitration clauses in both the 2016 Distribution Agreement and the 2018 Sales Agreement preclude Powins from bringing the contract claims as they contain express terms requiring any contractual claim to be “referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre” or “settled through friendly negotiations or, failing that, submitted for arbitration in Stockholm at the Arbitration Institute of the Stockholm Chamber of Commerce”.

32. Huatech submits that each of the arbitration clauses operates to disentitle Powins from seeking relief in this court (that is, they operate as a bar to any claim) for breach of those agreements.

33. Huatech submits that, properly understood, cl 13.1 of the 2016 Distribution Agreement is not a clause providing for “further rights and obligations” — it is an enforcement provision that operates as a bar. It submits that it is therefore unaffected by cl 12.8, either because cl 12.8 does not capture cl 13.1 prima facie, or because cl 13.1 is within the exception for “clauses the survival of which is necessary for the interpretation or enforcement of [the] Agreement”.

34. Huatech submits that that interpretation is the only commercially sensible one, particularly given that cl 13.1 is expressed as applying to “any question regarding [the Agreement’s] existence, validity, interpretation, breach or termination”, and that it would be commercially nonsensical if an arbitration clause (plainly an “enforcement” term) that covered questions regarding termination of the agreement did not itself survive termination. If that were the case, it submits, clearly a party could frustrate an arbitration clause by terminating (or repudiating) the contract or waiting until after its expiry to raise disputes regarding breaches in Court.

35. As to the respondents’ apparently separate contention that the cause of action and relief relates to conduct that occurred by the parties at a time when the agreement had expired, Huatech submits that:

    (a)if all of the relevant conduct occurred after the 2016 Distribution Agreement had expired, it is not clear why the arbitration clause would not operate. If this is a contention by Powins that it cannot bring a claim in respect of conduct that occurred after the 2016 Distribution Agreement expired, then Huatech would accept that contention and the claim would fail. If not, Powins has not explained what is meant beyond the argument about the survival of the arbitration clause;

    (b)it is not clear on what basis Powins contends that the relevant conduct (alleged to have occurred in 2019 and 2020) occurred at a time when the 2018 Agreement had expired. The 2018 Sales Agreement states that it is valid until 31 December 2020. If Powins contends that the 2018 Sales Agreement expired at some earlier date (for example, when the 2016 Distribution Agreement expired), it should articulate the basis on which that is said to be the case; and

    (c)further, if the conduct did occur after the 2018 Sales Agreement had expired, Powins has not articulated how it is said that the arbitration clause in the 2018 Sales Agreement would not operate.

36. Huatech further submits that Gelpag AU has no standing to bring the contract claims as it was not a party to either the 2016 Distribution Agreement or the 2018 Sales Contract, and that no implied term of cooperation and good faith in the 2016 Distribution Agreement or the 2018 Sales Contract survived termination of either or both of those agreements.

    Consideration

37. I am not satisfied that the respondents have established the breach of contract claims that they seek to advance in the cross-claim for the following reasons.

38. First, the respondents have not articulated the basis, scope or content of any implied term of cooperation and good faith. Contrary to the respondents’ submissions, Huatech has not admitted any implied term of confidentiality. Moreover, I do not accept in the light of the Representations made by the respondents in the Publications and the Customer Communications and Gelpag AU’s trade mark applications that any dissemination of the Huatech Publications, given their tone and content, to any customers or potential customers of the respondents would contravene any implied term of cooperation and good faith.

39. Second, the “Confidential Information” pleaded by the respondents is confined to “email contact details” of persons employed by customers of the respondents. No confidential customer list is pleaded. In any event, no customer list was identified in evidence. Further, no confidential email addresses or telephone numbers were proved in evidence.

40. Third, cl 13.4 of the 2018 Sales Contract refers to “commercial secrets” not “confidential information”. No evidence was elicited in the course of the hearing that any information was designated confidential by Powins, much less a “commercial secret” under the 2018 Sales Contract.

41. Fourth, there was no pleaded case based on Huatech “making information available to the servants or agents of [Huatech]”, nor was any evidence elicited in the course of the hearing that Huatech had provided or otherwise made available to its servants or agents any customer list or email contact details of persons employed by customers of the respondents. Nor am I satisfied that the respondents have established that Mr Albert Foo and Leistung Energie were relevantly Huatech’s “servant and/or agent”.

1. Fifth, Gelpag AU as no standing to bring any contract claims because it was not a party to either the 2016 Distribution Agreement or the 2018 Sales Contract.

2. Further, and in any event, I accept that the arbitration clauses in the 2016 Distribution Agreement and the 2018 Sales Contract survived the termination of both agreements.

3. I accept that Huatech’s interpretation of the arbitration clauses is the only commercially sensible one. Clause 13.1 of the 2016 Distribution Agreement is expressed as applying to “any question regarding [the Agreement’s] existence, validity, interpretation, breach or termination”. Clause 12.8 provides for the cessation of “further rights and obligations” of the parties following termination but cl 13.1 is not a clause providing for “further rights and obligations”. Clause 13.1 is a provision directed at the means by which questions regarding the existence, validity, interpretation or breach of the agreement can be determined. Further, cl 13.1 falls within the exception in cl 12.8 for “clauses the survival of which is necessary for the interpretation or enforcement of [the] Agreement”.

4. Finally, the respondents’ contention that Huatech has waived the arbitration provisions of the 2016 Distribution Agreement and the 2018 Sales Contract by commencing these proceedings is misconceived. It is the respondents, not Huatech, that have alleged and sought to litigate breaches of those agreements in these proceedings.

   DISPOSITION

5. For the foregoing reasons, there should be judgment for Huatech against the respondents and the Amended Cross-Claim should be dismissed.

6. The parties are to provide agreed draft declarations and orders to give effect to the reasons for judgment delivered today (other than in respect of damages, any account of profits and exemplary damages) and, in default of agreement, each party will be given the opportunity to file and serve draft declarations and orders it proposes to be made, including as to costs and prohibitory injunctions, in the light of these reasons for judgment.

7. The parties will be given an opportunity to lead any further evidence and make submissions on the applicants’ claims for damages, any account of profits and exemplary damages in the light of these reasons for judgment and all such claims will be determined at a subsequent hearing.

I certify that the preceding six hundred and sixty-four (664) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.

Associate:

Dated:       29 September 2022