Adidas AG v Alibaba (NZ) Trading Limited HC Auckland CIV 2009-404-2261

[2010] NZHC 1148

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-3361

BETWEEN  ADIDAS AG First Plaintiff

ANDADIDAS NEW ZEALAND LIMITED Second Plaintiff

ANDALIBABA (NZ) TRADING LTD First Defendant

ANDXING JIE CHEN Second Defendant

Hearing:         28 June 2010

Appearances: R M Wallis for plaintiffs

No appearance for defendant

Judgment:      28 June 2010

Reasons for

Judgment       30 June 2010

REASONS FOR JUDGMENT OF ALLAN J

Solicitors:

Baldwins Law Ltd, Auckland  [email protected]

ADIDAS AG V ALIBABA (NZ) TRADING LTD HC AK CIV 2009-404-3361  28 June 2010

[1]      This proceeding is concerned with the detention by the NZ Customs Service in  March  2009,  of  a  shipment  of  1800  pairs  of  counterfeit  socks  bearing  the plaintiffs’ trade marks.

[2]      The defendants have taken no step in the proceeding, which was accordingly set down for formal proof.  At the conclusion of the formal proof hearing, I made the orders sought by the plaintiffs, and advised counsel I would set out my reasons in a short judgment.  These are those reasons.

[3]      The first plaintiff is an international sports goods company with a universal reputation.  The second plaintiff is its New Zealand subsidiary.  Between them, the plaintiffs own the rights in a large number of trade marks in New Zealand and they also import and sell here a wide range of sporting goods, including apparel branded with their trade marks.   The plaintiffs rely for present purposes in particular upon Trade Mark No.714063, which relates to clothing bearing three distinctive parallel stripes.

[4]      Because counterfeiting is a major problem for the plaintiffs, they have lodged notices with the New Zealand Customs Service pursuant to s 137 of the Trade Marks Act 2002 (the Act).  The Chief Executive of New Zealand Customs duly accepted the notice pursuant to s 139 of the Act.

[5]      Under s 143 of the Act, the Chief Executive may conduct an investigation in order to establish whether or not certain imported goods are goods to which a notice, accepted and in force, relates.   Once such a determination is made, the Chief Executive must serve written notice of that determination upon the importer and any other person who has an interest in the goods.

[6]      On or about 9 March 2009 the defendants imported into Auckland some 1800 pairs of socks bearing trade marks that were the subject of the plaintiffs’ trade mark registration No 714063.   On 7 May 2009 the second plaintiff received from New Zealand Customs a Determination Notice advising that Customs had determined that the products constituted counterfeit products and that they infringed the plaintiffs’

trade mark.   The plaintiffs thereupon sought forfeiture of the shipment from the defendants.  No response having been received either during the statutory period or an extended period of a further 10 working days, the plaintiffs commenced this proceeding.

[7]      There was a second shipment of similar counterfeit products which was again intercepted by Customs, and was the subject of a notice given by New Zealand Customs on 2 June 2009.  The plaintiffs again sought forfeiture of the shipment from the defendants.  This time, on or about 10 June 2009, the defendants agreed to forfeit the second shipment.   Forfeiture did not however extend to the first shipment, the subject of this proceeding.

[8]      This proceeding was served on the defendants on 9 June 2009, within the extended time period for the issue of proceedings pursuant to s 149(3) of the Act. Documents  were  also  served  on  the  Chief  Executive  of  New  Zealand  Customs through his chief legal counsel.  The department has elected to take no step in the proceeding.

[9]      The defendants were required to file and serve a statement of defence on or before 14 July 2009.  They have failed to do so.  Neither have they taken any other step in the proceeding.

[10]     Inquiries made by the  plaintiffs as  to the whereabouts of the defendants suggest that the first defendant no longer carries on business in New Zealand, and that the second defendant may have left New Zealand for China.  Premises formerly occupied by the defendants are now occupied by others having no connection with the defendants.

[11]     Having considered the affidavit evidence relied upon by the plaintiffs, I am satisfied the defendants’ use of the first plaintiff’s trade marks is an infringing use for the purposes of s 89(1) of the Act, in that the goods imported by the defendants bear marks that are identical or similar to the plaintiffs’ trade marks, in relation to goods which are identical to or similar to goods for which the plaintiffs’ marks are registered.

[12]     I accept by reason of the sheer quantity of goods imported by the defendants (1800 pairs of socks) that they cannot have been intended for personal and private use, and that an order pursuant to s 153(1) of the Act 2002 is appropriate.

[13]     That subsection provides:

153      Proceedings to determine whether goods bear infringing sign

(1)       The Court may, on an application by any person, make a decision whether or not goods to which a determination under section 146 relates are goods on, or in physical relation to, which an infringing sign is used that have been imported other than for private and domestic use.

[14]     Given  my  findings,  the  provisions  of  s  154(1)  of  the  Act  apply.    That subsection reads:

154      Powers of Court

(1)       If, in proceedings under section 153, the Court decides that any goods that are the subject of a determination made under section 146 are goods on or in physical relation to which an infringing sign is used, that have been imported other than for private and domestic use, the Court must make an order that the goods be—

(a)      forfeited to the Crown; or

(b)      destroyed; or

(c)      otherwise dealt with as the Court thinks fit.

[15]     I have determined that the goods imported by the defendants infringe the plaintiffs’ trade mark, and that they have been imported other than for private and domestic use.   The Court is accordingly obliged by virtue of s 154(1) to make an order that the goods be:

a)        forfeited to the Crown, or b)     destroyed, or

c)       otherwise dealt with as the Court thinks fit.

[16]     The plaintiffs seek an order that the goods be destroyed.  I am satisfied that it is appropriate to make such an order.

[17]     For the foregoing reasons, I made at the hearing on 28 June 2010 orders:

a)       Under s 153(1) of the Act, that the imported pairs of socks are goods in relation to which an infringing mark is used other than for private and domestic use;  and

b)        Under s 154(1) of the Act, that the goods should be destroyed. [18]   The plaintiffs do not seek costs;  neither do they seek any other relief.

C J Allan J