adidas AG v Hilton HC Auckland CIV 2011-404-2751

[2011] NZHC 1006

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-2751

BETWEEN  ADIDAS AG First Plaintiff

ANDADIDAS INTERNATIONAL MARKETING BV

Second Plaintiff

ANDADIDAS NEW ZEALAND LIMITED Third Plaintiff

ANDFORRESTER HILTON Respondent

Hearing:         9 September 2011

Counsel:         A Kingston for Plaintiffs

No appearance by, or on behalf of Respondent

Judgment:      9 September 2011

(ORAL) JUDGMENT OF HEATH J

Solicitors:

Baldwins, PO Box 5999, Wellesley Street, Auckland

ADIDAS AG V FORRESTER HILTON HC AK CIV 2011-404-2751 9 September 2011

Introduction

[1]      adidas AG, adidas International Marketing BV (adidas BV) and adidas New Zealand Ltd seek summary judgment against Mr Forrester Hilton on the grounds that he has infringed their registered trade marks.  Unless the context otherwise requires, I refer to those three companies collectively as “adidas”.

[2]      Difficulties arose with the service of the proceeding on Mr Hilton.  Orders for substituted service were made by Associate Judge Faire, on 4 August 2011.  Service has been effected subsequently, in terms of those directions.  In addition, adidas has served the New Zealand Customs Service.  That Service, through its legal counsel, has  acknowledged  receipt  of  the  documents  but  no  steps  have  been  taken  to intervene.

[3]      Based on a hearing date of 1 September 2011, the time within which the documents were served under the substituted service order was short by one day.  I am asked to abridge time for service.  I am prepared to do so, both on the basis that the period is so short and because the application has been adjourned for hearing at a later time which would, had Mr Hilton wished to take any steps, have been sufficient to enable him to prepare and file affidavits in opposition.  An order shortening the time by one day is made.

[4]      On 1 September 2011, the application for summary judgment came before Associate Judge Sargisson.  No steps had been taken by Mr Hilton.  She declined jurisdiction because of concerns about an Associate Judge’s power to order substantive injunctive relief, on a summary judgment application.  Following a short hearing in the Duty Judge List on Wednesday last, the application was set down for hearing before me today.

The facts

[5]      The adidas group of companies has its base in Germany, where adidas AG is incorporated.  The parent company owns a number of trade marks which have been

registered in New Zealand.  Another company within the group also owns registered trade marks in New Zealand.  That company is adidas BV, a company registered in the Netherlands.  A third company, adidas New Zealand Ltd, is incorporated in New Zealand and authorised to use and enforce adidas trade marks in New Zealand.  The relevant marks protect the “adidas” and “Reebok” brands.

[6]      The adidas group carries on business throughout the world as a manufacturer and  retailer  of  clothing,  mainly  of  a  sporting  nature.     A  common  problem encountered by businesses of that type is the existence of counterfeit products.  A number of counterfeit products have entered New Zealand.   Their importers have sought illegitimately, to gain the benefit of the “adidas” and “Reebok” trade names.

[7]     Among its powers the New Zealand Customs Service may issue a “Determination Notice” to prevent entry of counterfeit products.  An importer has the opportunity to forfeit goods to the Crown to avoid the cost of legal proceedings.

[8]      In September 2010 two Determination Notices were issued by Customs New Zealand in respect of “Reebok” trade marks.   The importer was Mr Hilton, also known  at  that  time  as Yuga Avatar  Das.    Those  imports  resulted  in  successful proceedings brought by adidas against Mr Hilton, to protect its trade marks.  During the course of a telephone discussion while those proceedings were pending, Mr Hilton advised a solicitor acting for adidas that he regularly imported counterfeit products.

[9]      Further Determination Notices were issued by New Zealand Customs Service in April and May 2011 in respect of:

(a)       Forrester Hilton of 5 John Street Whangarei on 12 February 2011 – 9 singlets bearing trade mark nos 130219 and 293503, INV 15936;

(b)      Shyama Hilton of 888 Takehiwai Street Whangarei on 17 February

2011 – 10 singlets bearing trade mark nos 130219 and 293503, INV

15952;

(c)       Amrita Mani-Hilton of PO Box 24289 Manners Street Wellington on

12 February 2011 – 9 singlets bearing trade mark nos 130219, 293503 and 755152, INV 15953;

(d)      John Deere of PO Box 39865 Lower Hutt Wellington telephone no

027 733 1962:

(i)On or about 22 March 2011 – 12 basketball vests bearing trade mark nos 130219, 99528 and 293503, INV 16089;

(ii)On or about 2 February 2011 – 12 basketball vests bearing trade mark nos 130219 and 293503, INV 15927;

(iii)On or about 23 February 2011 – 14 basketball vests bearing trade mark nos 130219, 99258 and 293503, INV 15983.

(e)      Alistair Quinn of PO Box 40567 Lower Hutt Wellington (now closed) phone [phone] on or about 9 February 2011 – 13 basketball vests bearing trade marks 130219 and 293503, INV 15934.

[10]     On 2 May 2011, a further Notice was issued in respect of a shipment of seven

“Reebok” products by “John Deere”.

[11]     In total, 79 products listed in the relevant Determination Notices have been identified as “adidas” products and a further seven as “Reebok”.  No permission was given for these goods to be imported.

Analysis

[12]     Although different names have been used by the importer, adidas believes that Mr Hilton is the person responsible for the imports.  That belief has been formed based on the fact that three of the shipments are to persons named Hilton and three to persons who gave a contact telephone number that is the same as one previously identified by Mr Hilton as his own.  Some have used Post Office box numbers that

have since been closed.  None of the goods have been forfeited voluntarily, either to

New Zealand Customs Service or on request to adidas.

[13]     The evidence filed on behalf of adidas satisfies me that the importations to which I have referred were effected by or on behalf of Mr Hilton.  The inference that those involved are associates who act on his instructions or fictitious names used by him to conceal his identify is irresistible.  In brief, there is too much of a coincidence in the linkages between Mr Hilton, on the one hand, and the names, telephone numbers and Post Office box, on the other, for there to be any credible explanation involving lawful conduct; certainly in the absence of cogent evidence to that effect.

[14]     adidas seek orders for the destruction of the goods in the shipments to which I have referred and an injunction preventing Mr Hilton and any of his associates from infringing their trade marks in the future by importing counterfeit goods into New Zealand.

[15]     Section 89 of the Trade Marks Act 2002 deals with the circumstances in which registered trade marks are infringed.  I am satisfied on the evidence that the goods identified are counterfeit and contain signs that infringe the relevant trade marks.  It is unnecessary for me to go into detail.  It is clear that Mr Hilton did not have the right to use the trade marks and that the relevant products were sufficiently similar to come within s 89(1).

[16]     The object of these proceedings is to protect the trade marks.  Adidas does not seek damages against Mr Hilton.

[17]     In the circumstances, I make the following orders:[1]

[1] See also the order shortening time for service set out at para [3] above.

(a)       A declaration under s 153(1) of the Trade Marks Act 2002 that the goods are goods on which an infringing sign is used, other than for

private or domestic use

(b)An order under s 154(1)(c) of the Trade Marks Act 2002 that the goods be forfeited to the Crown and destroyed

(c)      An injunction restraining Mr Hilton, his agents, servants, employees, associates and others who act in concert with him, directly or indirectly, from using in the course of trade, including making, importing, selling or offering for sale, goods that bear a trade mark of one or more of the three adidas companies so nearly resembling their mark as to cause deception or confusion

[18]     Costs are sought.  One set of costs is awarded in favour of the three adidas companies against Mr Hilton on a 2B basis together with disbursements.  Both are to be fixed by the Registrar.

Addendum

[19]     I direct that the orders be served on Mr Hilton in the manner stipulated in

Judge Faire’s substituted service order of 4 August 2011.  Leave to apply is reserved

if this causes any difficulties.

P R Heath J