Waiwera Water New Zealand Ltd v Melrose

[2019] NZHC 3399

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1256

[2019] NZHC 3399

UNDER

Copyright Act 1994

Declaratory Judgments Act 1908 Designs Act 1953

Fair Trading Act 1986

BETWEEN

WAIWERA WATER NEW ZEALAND LTD

Plaintiff and first counterclaim defendant

AND

DAVID MURRAY MELROSE

Defendant

AND

WAIWERA GROUP LTD

Second counterclaim defendant

MIKHAIL KHIMICH
Third counterclaim defendant

LEON FINGERHUT
Fourth counterclaim defendant

WAIWERA, LLC
Fifth counterclaim defendant

O-I OPERATIONS (NZ) LTD
Sixth counterclaim defendant

OWENS-ILLINOIS, INC
Seventh counterclaim defendant

LINK PLAS LTD

Eighth counterclaim defendant

Hearing:

30 September 2019

Further submissions filed: 11 October 2019

Counsel:

P D M Johns for Defendant

Judgment:

18 December 2019

WAIWERA WATER NEW ZEALAND LTD v DAVID MURRAY MELROSE [2019] NZHC 3399 [18 December 2019]

JUDGMENT OF BREWER J

This judgment was delivered by me on 18 December 2019 at 4:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Introduction

[1]    Originally, the plaintiff sued Mr Melrose in relation to intellectual property rights it pleaded Mr Melrose was infringing. The remedies sought were primarily declarations in vindication of its claims.

[2]    Mr Melrose counterclaimed against the plaintiff and seven other parties. His case is that the intellectual property in question belongs to him. He pleads that his rights have been infringed and he seeks a range of remedies.

[3]    The plaintiff is now in liquidation. Prior to that, its claim was stayed due to a failure to provide security for costs.1

[4]    Mr Melrose has settled with and discontinued against the eighth counterclaim defendant (“Link Plas”).

[5]    Negotiations with the sixth and seventh counterclaim defendants (“O-I”) are ongoing and the proceeding against them is described by Mr Johns in his synopsis of submissions as effectively adjourned for the time being.

[6]    The second counterclaim defendant (“WGL”), the third counterclaim defendant (“Mr Khimich”), the fourth counterclaim defendant (“Mr Fingerhut”) and the fifth counterclaim defendant (“WLLC”) have not filed statements of defence or taken any other steps.

1      Following the ruling in Waiwera Water New Zealand Ltd v Melrose [2019] NZHC 221.

[7]    On 25 June 2019, Palmer J granted Mr Melrose’s application for a formal proof hearing against WGL, Mr Khimich, Mr Fingerhut and WLLC.

[8]    On 30 September 2019, I heard oral submissions from Mr Johns in support of the application for entry of judgment by formal proof. I directed further submissions be filed and gave leave for further evidence to be provided.  On 11 October 2019,  Mr Johns filed further submissions  and a further affidavit  of Mr Melrose (dated     8 October 2019).

[9]By memorandum dated 8 November 2019, Mr Johns told me:

(a)WGL was put into liquidation on 29 October 2019.

(b)Mr Khimich was adjudicated bankrupt on 8 October 2019.

[10]This judgment determines:

(a)Whether Mr Melrose has proven on the balance of probabilities that he owns the intellectual property rights as pleaded.

(b)If   so,    whether    the    counterclaim    defendants   (individually    or collectively) have infringed any of those rights.

(c)If so, what remedies can be given in all the circumstances.

What is Mr Melrose’s intellectual property?

[11]   There is a source of potable water at Waiwera. Mr Melrose is a beverage technology inventor and designer. In particular, he designs bottles. In 2005 he reached agreement with Mr Brown, who controlled the rights to extract and bottle Waiwera water, to design bottles for the commercial sale of Waiwera water.

[12]   Mr Melrose and Mr Brown set out their agreement in a succinct memorandum of understanding:

MEMORANDUM OF UNDERSTANDING

Between David Melrose

And

John St Clair Brown (Siesta Holdings Ltd)

This Memorandum of Understanding (MOU) confirms the respective intentions of David Melrose and John St Clair Brown regarding commercialisation of mineral water products utilising intellectual property (including Know-how, Design Registrations, Patents and Copyright) developed by David Melrose, with various Trade Marks of Siesta Holdings Ltd (in particular “Waiwera Infinity”).

Each party shall retain ownership of their respective intellectual property and is responsible for their own costs related to protection of such intellectual property. Development costs (label graphics, box graphics, etc) shall be the responsibility of David Melrose; production costs (label graphics, box graphics, etc) shall be the responsibility of Siesta Holdings Ltd.

Siesta Holdings Ltd shall be responsible for initial marketing of the products, and it is the intention of the Parties to create a new entity to be jointly owned by the Parties should the project be successful.

Siesta Holdings Ltd and David Melrose shall jointly trade in the products and both Parties agree to review the success of the trading on an annual basis to determine profit sharing of such trading after accounting for all costs (including marketing and bottle moulds).

With respect to all matters concerning property of Siesta Holdings Ltd, in particular the existing trade mark ownership used on labels, David Melrose agrees John St Clair Brown reserves all rights.

With respect to all matters concerning property of David Melrose, John St Clair Brown agrees David Melrose reserves all rights.

Both Parties agree all bottles shall feature “Copyright David Melrose Design” on the underneath to refer to and protect all bottle elements.

Signed on this date: 11^th of October 2005

David Melrose

John Donald St Clair Brown

[13]   In about 2009 the plaintiff acquired Mr Brown’s portion (through Siesta Holdings Ltd) of the common business. The plaintiff was a vehicle for Mr Khimich. The common business continued.

[14]   Mr Melrose, over a number of years, negotiated with Mr Khimich to sell his portion of the common business. At one point terms were drafted by solicitors and

Mr Khimich tendered a significant deposit. However, the deposit was not accepted and no agreement was reached.

[15]   The  relationship  between  the  parties  deteriorated.  From  around  2015   Mr Fingerhut negotiated on behalf of Mr Khimich. Mr Melrose, to exert pressure, withdrew his permission for his intellectual property (“IP”) to be used for the manufacture of bottles from December 2016. Negotiations finally broke down in February 2017.

[16]   In the meantime, and unknown to Mr Melrose, the plaintiff sought to claim rights in Mr Melrose’s IP in New Zealand and overseas. In 2011 the plaintiff applied for the trade mark “WAIWERA”, a word which is a major feature on Mr Melrose’s designed bottle. It was granted because of the reputation and presence in the market of Mr Melrose’s bottle.

[17]   Mr Melrose also had IP in a logo called the Waiwera Artesian Logo. It was registered as a trade mark in 2006 for use in the common business.

[18]   At some stage the plaintiff purported to transfer the WAIWERA trade mark and the Waiwera Artesian trade mark to WLLC, which was a vehicle for Mr Fingerhut.

[19]   The plaintiff began asserting to third parties, including its bottle manufacturer, that it alone owned the rights to Mr Melrose’s IP, or had an irrevocable right to use it. The plaintiff issued proceedings to vindicate its position, narrowly beating Mr Melrose (whose lawyers had instructions to sue) to the title of plaintiff.

[20]   The history of the business relationship between Mr Melrose, Mr Brown and the parties to this litigation is comprehensively described in the affidavits filed by  Mr Melrose. I am satisfied that the agreement set out in the memorandum of understanding quoted at [12] was operative throughout the period with which the litigation is concerned.

[21]   In particular, Mr Melrose never sold, assigned, transferred or by course of conduct relinquished any of his IP. None of the other parties to the litigation acquired

any beneficial or legal interest in Mr Melrose’s IP. Mr Melrose did no more than permit his IP to be used as part of a common business in accordance with the memorandum of understanding.

[22]   The common business was not a legal entity. Mr Brown (originally) had the right to take and bottle Waiwera water. Mr Melrose used his design expertise to create distinctive bottles (in particular) to assist with commercialising the rights to the water. Mr Melrose was not entitled to royalties; he contributed his IP, while retaining his rights to it, in the hope the common business would make a profit and he would get a part of it. In fact, Mr Melrose never received a profit share or any payment for his contributions.

[23]   This is a formal proof application.2 No statement of defence has been filed. The onus is on Mr Melrose to satisfy me of each cause of action (to a balance of probabilities standard) and, to the extent any damages are sought, to provide sufficient information to enable me to calculate and fix them.3

[24]   There is no evidence contesting the assertions made by Mr Melrose in his affidavits. The documentary exhibits to those affidavits are consistent with the assertions. In particular, there is nothing to suggest that the arrangement set out in the memorandum of understanding was ever altered materially. It would serve no purpose to repeat the assertions in more detail or describe the documentary exhibits.

[25]I am satisfied that Mr Melrose is the owner of the following IP:4

(a)The artistic and literary copyright in the CAD Drawings, being the copyright referred to in paragraph 7 of the statement of claim.

(b)Copyright in the WAIWERA ARTESIAN Logo as pleaded in paragraph 45B of the second amended statement of defence and counterclaim.

2      High Court Rules, r 15.9.

3      Rule 15.9(4).

4      Copyright Act 1994, s 21.

(c)Copyright in the drawings as pleaded in paragraph 67 of the second amended statement of defence and counterclaim, being drawings described as the 10 October 2014 Drawing, the 14 October 2014 Drawing and the Trade Mark Drawing.

Have the counterclaim defendants infringed Mr Melrose’s IP rights?

The first cause of action

[26]   The counterclaim’s first cause  of  action  is  against  the  plaintiff,  WGL,  Mr Khimich, Mr Fingerhut and WLLC (“The Waiwera Group”). It alleges infringement of Mr Melrose’s copyright in the designs of the Waiwera bottles.

[27]   Section 21 of the Copyright Act 1994 provides that the author of a work (or the employer of an author) will be the first owner of copyright. Section 29 provides that doing any restricted act in respect of a work not pursuant to a copyright licence is an infringement of that copyright. Copying a work and issuing copies to the public are both restricted acts.5 It is also a secondary infringement of copyright to possess or deal with an infringement copy in the course of business.6

[28]   Mr Melrose, through his solicitors, terminated any authority of The Waiwera Group  to  use  bottles  manufactured  to  Mr Melrose’s  designs  with  effect  from   1 December 2016.7

[29]   The evidence establishes that the notice of termination (as extended to Link Plas) was ignored. I find proved on the balance of probabilities the pleading at paragraph 80 of the second amended statement of defence and counterclaim:

Despite Mr Melrose’s termination of authority, The Waiwera Group has continued to:

a.issue to the public, possess, sell, or offer or exposure for sale or distribution, O-I Bottles and/or Link Plas Bottles, knowing and/or having reason to believe those bottles  were  infringing  copies  of Mr Melrose’s copyright works; and

5      Copyright Act 1994, ss 30 and 31.

6      Section 36.

7      There was an extension of time to 1 February 2017 to enable Link Plas to manufacture and supply bottles to The Waiwera Group.

b.copy or authorise the copying of the WAIWERA ARTESIAN Logo, and issue copies thereof to the public.

[30]I find for Mr Melrose on the first cause of action.

The fourth cause of action

[31]   The fourth  cause  of  action  pleads  that  The  Waiwera  Group  infringed  Mr Melrose’s copyright in the Trade Mark Drawing.8

[32]This cause of action is based on the following pleadings in the counterclaim:

69.On an unknown date between 22 October 2014 and 26 December 2014, without the authorisation of Mr Melrose, an unknown person copied the Trade Mark Drawing on behalf of or at the direction of The Waiwera Group, either by downloading a copy from the trade mark register or by other means.

70.On an unknown date between 22 October 2014 and 26 December 2014, following the copying of the Trade Mark Drawing as pleaded above, the Trade Mark Drawing was substantially reproduced by or on behalf of The Waiwera Group to produce a drawing (“Infringing Drawing”) used as the subject of a United States trade mark application in the name of Waiwera LLC, filed on 26 December 2014 under serial number 86490711 and later receiving registration number 4807262 (“US4807262”).

…

72.Waiwera LLC used US4807262 including further copies of the Infringing Drawing as the basis for an international registration number 1256075 (“WIPO1256075”) with WIPO pursuant to the Madrid Protocol, designating New Zealand.

73.The resulting New Zealand designation, including a copy of the Infringing Drawing, received New Zealand trade mark number 1030703 (“NZ1030703”) and has been published in the online trade mark register.

[33]   I am satisfied on the evidence provided that The Waiwera Group infringed Mr Melrose’s copyright in the Trade Mark Drawing as pleaded.

[34]I find for Mr Melrose on the fourth cause of action.

8      At [25](c) above. Copyright Act 1994, ss 29–31.

Seventh cause of action

[35]   The seventh cause of action alleges infringement of Mr Melrose’s IP in the designs of the bottles by The Waiwera Group. The claim is based on The Waiwera Group continuing to trade the bottles made by O-I and Link Plas after the termination date of their right to do so.

[36]   As I have said, the notices of termination issued by Mr Melrose’s solicitors were ignored. That is to say, the use of Mr Melrose’s IP continued unabated after the expiry of the termination date.9

[37]I find for Mr Melrose on the seventh cause of action.

Eighth cause of action

[38]   The eighth cause of action alleges breach of s 9 of the Fair Trading Act 1986 (“the FTA”) by The Waiwera Group, namely through misleading and deceptive conduct.

[39]   As I have said, Mr Melrose for some years negotiated with Mr Khimich and then Mr Fingerhut to sell his rights in the common business. These rights included Mr Melrose’s IP in the bottle design and in the Waiwera Artesian Logo. The negotiations proceeded on the acceptance by Mr Khimich and Mr Fingerhut that the IP in question belonged to Mr Melrose. Mr Melrose had no reason to believe otherwise.

[40]It is pleaded:

103. At various times during the Negotiations, The  Waiwera  Group  engaged in misleading and deceptive conduct, or conduct likely to mislead or deceive, by expressly and/or impliedly representing to  Mr Melrose that:

a.it understood that in order to lawfully deal in O-I and Link Plas Bottles it needed to obtain ownership of, or his express authority to use, his intellectual property pleaded above; and

9      Though it was extended in respect of the Link Plas bottles.

b.in the absence of acquiring such rights, it would cease dealing in O-I and Link Plas Bottles.

[41]   Section 9 of the FTA establishes a general prohibition that “[no] person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” The FTA does not define “misleading” or “deceptive” because, as Thomas J said in Paper Plus NZ Ltd v Robert Mitchell Ltd, “the section uses plain language and its meaning and intent are clear enough without refining or adding to its terms. It does not need a glossary”.10 While some measure of misrepresentation is generally required,11 intent to mislead is not required, nor that any person actually be shown to have been misled or deceived.12 A director may be directly liable under the FTA for their own personal conduct in trade, even where acting on behalf of their company.13 While particular remedies sought under s 43 may require proving damage or likelihood of damage, there is no need to show loss when bringing an action under the general prohibition.14

[42]   I accept that Mr Khimich and Mr Fingerhut negotiated with Mr Melrose on the basis that the IP was owned by Mr Melrose. I accept, on the balance of probabilities, that this was not  the  actual  position  of  Mr Khimich  and  Mr  Fingerhut.  When Mr Melrose gave notice of termination of his permission for his IP to be used in the common business The Waiwera Group asserted they had an irrevocable, royalty free licence to use the IP. They also sought to acquire registered ownership of rights in the same IP in New Zealand and overseas, without advising or seeking authority from Mr Melrose. I consider their conduct in their dealings with Mr Melrose constituted deceptive or misleading conduct in terms of the FTA.

[43]I find for Mr Melrose on the eighth cause of action.

10     Paper Plus NZ Ltd v Robert Mitchell Ltd & Ors HC Auckland CL 53-92, 10 March 1993 at 5.

11     Prudential Building & Investment Society of Canterbury  v  Prudential Assurance  Co  of  NZ Ltd [1988] 2 NZLR 653 (CA).

12     Bonz Group (Pty) Ltd v Cooke [1994] 3 NZLR 216 (HC); and Taylor Bros Ltd v Taylors Textile Services Auckland Ltd (1987) 2 TCLR 415 (HC) at 441.

13     See Kinsman v Cornfields Ltd (2001) 10 TCLR 342 (CA) at [27].

14 See Tot Toys Ltd v Mitchell [1993] 1 NZLR 325 (HC) at 367.

Ninth cause of action

[44]   The ninth cause of action is another claim that The Waiwera Group breached s 9 of the FTA. The allegation is that The Waiwera Group expressly or impliedly represented to O-I and Link Plas that it was entitled and lawfully able to authorise the manufacture of bottles either because The Waiwera Group owned the IP in their design or it was licensed to give such authorisation by Mr Melrose.

[45]   There is no doubt that O-I and Link Plas made bottles for The Waiwera Group which fall within the ambit of Mr Melrose’s IP. I accept also that after Mr Melrose terminated The Waiwera Group’s permission to use his IP for this purpose the continued authorisation of The Waiwera Group to O-I and Link Plas was misleading and deceptive conduct.

[46]   I am not satisfied on the balance of probabilities the same is true for the period preceding the termination of permission. That is because prior to the termination of permission The Waiwera Group was able to authorise the manufacture of bottles and I do not know the precise basis on which they did so.

[47]   I find for Mr Melrose on the ninth cause of action but limited to the periods following the termination  dates  of  the  permission  for  Waiwera  Group  to  use  Mr Melrose’s IP.

Tenth cause of action

[48]   The tenth cause of action alleges The Waiwera Group infringed Mr Melrose’s copyright in the Waiwera Artesian Logo by copying and/or authorising the copying of the Waiwera Artesian Logo and by issuing copies of it to the public.15

[49]   I accept that for various periods members of The Waiwera Group used bottle labels which were copies of Mr Melrose’s copyright work.

[50]   Once Mr Melrose had cancelled his permission for The Waiwera Group to use his IP then further use of it breached Mr Melrose’s rights.

15     Copyright Act 1994, ss 29–31.

[51]I find for Mr Melrose on the tenth cause of action.

What remedies can be given in all the circumstances?

[52]   WGL is in liquidation and Mr Khimich has been declared bankrupt. Whether I would be able to order either of them to pay damages is somewhat complicated.16 Whether they have any money to pay out is also unclear.

[53]    As I will come to, there are also outstanding issues as to quantum in respect of the other parties. As such, I will address first the non-pecuniary relief claims.

First cause of action

[54]   I make  a  declaration  that  Mr  Melrose  owns,  and  WGL,  Mr Khimich,  Mr Fingerhut and WLLC have each infringed, copyright subsisting in the works pleaded at paragraph 38 of the second amended statement of defence and counterclaim.17

[55]   I make an  order  by  way  of  injunction  restraining  WGL,  Mr Khimich,  Mr Fingerhut and WLLC, whether by themselves or by their servants, agents, contractors, or associates or otherwise howsoever from infringing in the works pleaded at paragraph 38 of the second amended statement of defence and counterclaim or converting the same for their own use, including by reproducing, distributing, advertising, offering for sale, selling or otherwise dealing with any infringing products and including requiring the deletion of any infringing copies stored in electronic format under their power or control.

[56]   I make an order requiring delivery up of all goods and documents in the possession, custody, power or control of WGL, Mr Khimich, Mr Fingerhut and

16 As regards WGL, s 248(1)(c) of the Companies Act 1993 requires the liquidator’s agreement or a court order for a party to continue legal proceedings against a company in liquidation. As regards Mr Khimich, s 76 of the Insolvency Act 1986 automatically halts court proceedings to recover any debt provable in the bankruptcy, though on application the Court may allow those proceedings to continue on terms it thinks appropriate. Pursuit of any damages may require negotiating these requirements, as well as joining the Official Assignee as a party in respect of Mr Khimich under r 4.50 of the High Court Rules 2016 and serving notice on the liquidators. I have not had submissions on leave-related issues and do not consider it necessary to resolve them here.

17 These are the CAD Drawings and the Bottle Design.

WLLC, or that of any of their servants, agents, contractors or associates, that infringe copyright in the works pleaded at paragraph 38 of the second amended statement of defence and counterclaim or in respect of which the sale, supply or use would be an infringement of the above injunction, including infringing bottles, tooling for the manufacture thereof and all plant and machinery, such as bottling plant, specifically adapted for use in creating or dealing with infringing goods and with no generic, non- infringing utility.

Fourth cause of action

[57]   I make  a  declaration  that  Mr  Melrose  owns,  and  WGL,  Mr Khimich,  Mr Fingerhut and WLLC have each infringed, copyright subsisting in the works pleaded at paragraphs 63 to 66 of the second amended statement of defence and counterclaim.18

[58]   I make an  order  by  way  of  injunction  restraining  WGL,  Mr Khimich,  Mr Fingerhut and WLLC, whether by themselves or by their servants, agents, contractors, or associates or otherwise howsoever from infringing the copyright in the works pleaded at paragraphs 63 to 66 of the second amended statement of defence and counterclaim or converting the same for their own use, including requiring the deletion of any infringing copies stored in electronic format under their power or control and the transfer to Mr Melrose of ownership of US4807262, WIPO1256075 and NZ1030703.

[59]   I make an order requiring delivery up of all infringing copies of the works pleaded at paragraphs 63 to 66 of the second amended statement of defence and counterclaim controlled by WGL, Mr Khimich, Mr Fingerhut and WLLC, or by any of their servants, agents, contractors, or associates, including all copies, reproductions or adaptations of these works.

18     These are the Trade Mark Commission, the 10 October 2014 Drawing, the 14 October 2014 Drawing and the Trade Mark Drawing.

Seventh cause of action

[60]   I make a declaration that Mr Melrose is the validly registered proprietor of NZ407219, and that WGL, Mr Khimich, Mr Fingerhut and WLLC have each infringed the copyright in that design.

[61]   I make an  order  by  way  of  injunction  restraining  WGL,  Mr Khimich,  Mr Fingerhut and WLLC, whether by themselves or by their servants, agents, contractors, or associates or otherwise howsoever from infringing the copyright in NZ407219 or converting the same for their own use, including by reproducing, distributing, advertising, offering for sale, selling or otherwise dealing with any infringing products and including the deletion of any infringing copies stored in electronic format under their power or control.

[62]   I make an order requiring delivery up of all infringing articles controlled by WGL, Mr Khimich, Mr Fingerhut and WLLC or any of their servants, agents, contractors or associates, including infringing bottles and tooling for the manufacture thereof and all plant and machinery, such as bottling plant, specifically adapted for use in creating or dealing with infringing goods and with no generic, non-infringing utility.

Eighth cause of action

[63]   I make a declaration that by the conduct pleaded at paragraphs 59–62 and 103 of the second amended statement of defence and counterclaim WGL, Mr Khimich, Mr Fingerhut and WLLC have each contravened s 9 of the FTA by misleadingly and deceptively representing to Mr Melrose that they understood they would need his authority to unilaterally use his IP that was used by the common business established by Mr Melrose and Siesta Holdings Ltd (which company’s interest was later acquired by Waiwera Water New Zealand Ltd.

Ninth cause of action

[64]   I make a declaration that by the conduct pleaded at paragraph 81 and 105 of the second amended statement of defence  and  counterclaim WGL,  Mr Khimich, Mr Fingerhut and WLLC have each contravened s 9 of the FTA by misleadingly and

deceptively representing to O-I and Link Plas that they  and/or  Waiwera  Water  New Zealand Ltd were entitled to use Mr Melrose’s copyright and registered design without his authority.

Tenth cause of action

[65]   I  make  a  declaration  that  Mr Melrose  owns,  and  WGL,   Mr Khimich, Mr Fingerhut and WLLC have each infringed, copyright subsisting in the WAIWERA ARTESIAN LOGO pleaded at paragraph 45A of the second amended statement of defence and counterclaim.

[66]   I make an  order  by  way  of  injunction  restraining  WGL,  Mr Khimich,  Mr Fingerhut and WLLC, whether by themselves or by their servants, agents, contractors, or associates or otherwise howsoever from infringing the copyright in the WAIWERA ARTESIAN LOGO pleaded at paragraph 45A of the second amended statement of defence and counterclaim or converting the same for their own use, including by reproducing, distributing, advertising, offering for sale, selling or otherwise dealing with any infringing copies and including requiring the deletion of any infringing copies stored in electronic format under their power or control.

[67]   I make an order requiring delivery up of all goods and documents in the possession, custody, power or control of WGL, Mr Khimich, Mr Fingerhut and WLLC, or that of any of their servants, agents, contractors or associates, that infringe copyright in the WAIWERA ARTESIAN LOGO pleaded at paragraph 45A of the second amended statement of defence and counterclaim or in respect of which the sale, supply or use would be an infringement of the above injunction, including infringing copies, tooling for the manufacture thereof and all plant and machinery, such as bottling plant, specifically adapted for use in creating or dealing with infringing goods and with no generic, non-infringing utility.

Damages and interest

[68]   Mr Melrose is entitled to damages and interest against Mr Fingerhut and WLLC.

[69]   Subject to the insolvency issues, Mr Melrose is also entitled to damages and interest against Mr Khimich and WGL.

[70]   I reserve the issue of quantum. Mr Melrose, in his affidavit (particularly his affidavit of 8 October 2019), provides information about his expenditure and the value of his IP. I am not persuaded there is sufficient detail to decide quantum or apportionment. Leave is reserved for Mr Melrose to file further evidence (including expert evidence) and further submissions should he wish. Any such evidence or submissions must be filed no later than 13 March 2020.

[71]   If Mr Melrose seeks to recover any monies from WGL and Mr Khimich it will likely be appropriate to pursue them through the conventional liquidation and bankruptcy processes. Should he seek to identify and quantify specific losses to those ends through this proceeding, he will have to serve notice on the liquidator in respect of WGL and on the Official Assignee in respect of Mr Khimich. To avoid doubt, reservation of the issue of quantum extends to the positions of WGL and Mr Khimich.

Costs

[72]   Mr Melrose is entitled to costs. I will receive counsel’s memorandum as to costs no later than 13 March 2020.

Brewer J

Solicitors:

Baldwins Law Ltd (Auckland) for Defendant