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Federal Court of Australia |
Last Updated: 23 January 2009
FEDERAL COURT OF AUSTRALIA
Nokia Corporation v Liu [2009] FCA 20
CORRIGENDUM
NOKIA
CORPORATION v ALBERT LIU
VID 171 of 2008
JESSUP
J
21 JANUARY 2009 (CORRIGENDUM 22 JANUARY
2009)
MELBOURNE
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IN THE FEDERAL COURT OF AUSTRALIA
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VICTORIA DISTRICT REGISTRY
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VID 171 of 2008
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BETWEEN:
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NOKIA CORPORATION
Applicant |
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AND:
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ALBERT LIU
Respondent |
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JUDGE:
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JESSUP J
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DATE:
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21 JANUARY 2009
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PLACE:
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MELBOURNE
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CORRIGENDUM
1 The catchwords for the judgment should read:
INTELLECTUAL
PROPERTY – Infringement of trade mark – Respondent imported
mobile phones bearing ‘Nokia’ trade mark – Mobile
phones
seized by Customs before reaching market – Consent judgment declaring
importation an infringement but not otherwise
dealing with applicant’s
allegations – Assessment of damages – No evidence of loss suffered
by infringing conduct
– Nominal damages awarded.
COSTS
– Proceeding in which injunctions, declarations and orders for delivery up
made – Damages also claimed – Nominal
damages only awarded –
Whether appropriate that successful applicant’s costs not be reduced by
one-third – Federal Court Rules, O 62 r 36A.
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I certify that the preceding one (1) numbered paragraph is a true copy of
the Corrigendum to Reasons for Judgment herein of the Honourable
Justice Jessup
.
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Associate:
Dated: 22 January 2009
FEDERAL COURT OF AUSTRALIA
Nokia Corporation v Liu [2009] FCA 20
INTELLECTUAL PROPERTY –
Infringement of trade mark – Respondent imported mobile phones bearing
‘Nokia’ trade mark – Whether
damages available where mobile
phones imported but seized by Customs before reaching market – Whether
damages available where
no evidence of monetary loss suffered by infringing
conduct.
DAMAGES – Infringement of trade mark - Whether
damages available where no evidence of monetary loss suffered by infringing
conduct
– Whether costs ordered to be paid in proceedings in which less
than $100,000 is recovered should be reduced by one third of
the amount
otherwise allowable.
Trade Marks Act
1995 (Cth)
Australasian Performing
Right Association Ltd v Pashalidis [2000] FCA 1815
Australian
Performing Right Association Ltd v Metro on George Pty Ltd (2004) 64 IPR
57
Axe Australasia Pty Ltd v Australoom Pty Ltd (No 2) [2006] FCA
844
Fasold v Roberts (unreported, Sackville J, 11 September 1997
MG942 of 1992)
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No
2) (2008) 76 IPR 763
Futuretronics.com.au Pty Ltd v Graphix Labels Pty
Ltd (No 3) [2008] FCA 896
LED Builders Pty Ltd v Hope [1994] FCA 1353; (1994) 53
FCR 10
McCormack v Riverwood International (Australia) Pty Ltd [2000]
FCA 32
Nokia Corporation v Mai [2003] FCA 924
Shahid v
Australasian College of Dermatologists (No 2) [2008] FCAFC 98
Sony
Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA
1852
Winning Appliances Pty Ltd v Dean Appliances Pty Ltd (1995) 32
IPR 65
NOKIA
CORPORATION v ALBERT LIU
VID 171 of 2008
JESSUP
J
21 JANUARY 2009
MELBOURNE
THE COURT ORDERS THAT:
1. The respondent pay the applicant damages in the sum of $10.
2. Subject to any order previously made by the court, the respondent pay the
applicant’s costs of the proceeding, including
reserved costs, but not
including the applicant’s costs of the assessment of its damages on 11
December 2008.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
The text of entered orders can be located using eSearch on the
Court’s website.
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BETWEEN:
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NOKIA CORPORATION
Applicant |
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AND:
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ALBERT LIU
Respondent |
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JUDGE:
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JESSUP J
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DATE:
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21 JANUARY 2009
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PLACE:
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MELBOURNE
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REASONS FOR JUDGMENT
1 In this proceeding, which was commenced on 26 March 2008, the applicant, Nokia Corporation, sues for infringement of certain "Nokia" trade marks under s 125 of the Trade Marks Act 1995 (Cth). The applicant is a company incorporated in Finland. It manufactures, distributes and sells mobile phones, and mobile phone accessories. It alleges that the respondent, Albert Liu, has imported into Australia, and there sold, mobile phones and accessories in infringement of the following marks:
(a) Australian Registered Trade Mark No. 458364 for NOKIA in class 9; (b) Australian Registered Trade Mark No. 490781 for NOKIA AND DEVICE in class 9; (c) Australian Registered Trade Mark No. 808735 for NOKIA in class 16; (d) Australian Registered Trade Mark No. 867057 for NOKIA in classes 9, 18, 25, 38, 41 and 42.The evidence upon which the applicant relies establishes that the applicant is the registered proprietor of those trade marks.
2 The Application was supported by a Statement of Claim filed on 26 March 2008. The respondent did not file a Defence but, on 10 April 2008, he appeared by his then solicitors. The applicant’s allegations of infringement are set out in par 4 of its Statement of Claim, in the following terms:
From a date unknown to the Applicant to the date of the issue of the Application herein, the Respondent has, without the licence or authority of the Applicant, manufactured or caused to be manufactured, imported or caused to be imported, advertised, offered for sale, distributed, supplied and sold goods bearing one or more of the Nokia Trade Marks or one or more trade marks which are substantially identical with or deceptively similar to one or more of the Nokia Trade Marks. PARTICULARS(i) thirty-three (33) mobile phone handsets; (ii) seventy-six (76) items of mobile phone packaging; (iii) thirty-two (32) mobile phone instruction booklets; (iv) twelve (12) mobile phone cables; (v) thirty-two (32) mobile phone earpieces; (vi) twelve (12) mobile phone pouches; (vii) forty-four (44) mobile phone batteries; and (viii) thirty-two (32) mobile phone chargers (together referred to as the Imported Items),(a) From a date unknown to the Applicant to the date of the issue of the Application herein, the Respondent has manufactured or caused to be manufactured, imported or caused to be imported, advertised, offered for sale, distributed, supplied and sold a variety of mobile phone accessories, including but not limited to mobile phone covers and mobile phone batteries, bearing one or more of the Nokia Trade Marks or one or more trade marks which are substantially identical with or deceptively similar to one or more of the Nokia Trade Marks, which products were not made by or under the licence or authority of the Applicant.(b) On or about 30 October 2007, the Respondent sold one (1) mobile phone handset with mobile phone accessories including one (1) mobile phone desk stand, one (1) mobile phone earpiece, one (1) mobile phone handsfree earpiece, one (1) mobile phone carrying pouch, one (1) mobile phone user guide booklet, one (1) mobile phone quickstart guide, one (1) mobile phone legal addendum booklet, one (1) mobile phone features booklet, one (1) mobile phone software CD-ROM and two (2) mobile phone batteries each bearing one or more of the Nokia Trade Marks or one of more trade marks which are substantially identical with or deceptively similar to one or more of the Nokia Trade Marks from his "eBay store" called "Super-E-World", which is located within the online auction website www.ebay.com.au, which mobile phone handset and mobile phone accessories were not made by or under the licence or authority of the Applicant. The said mobile phone handset and mobile phone accessories may be inspected during office hours on reasonable notice at the offices of the Applicant’s solicitors.
(c) On a date unknown to the Applicant but prior to 19 February 2008, the Respondent imported or caused to be imported into Australia the following items:
The Applicant cannot until after discovery give full particulars of all the aforesaid acts of the Respondent, but at the trial of this action the Applicant will rely upon and claim relief in respect of all such acts.all bearing one or more of the Nokia Trade Marks or one or more trade marks which are substantially identical with or deceptively similar to one or more of the Nokia Trade Marks. The Imported Items were seized by the Australian Customs Service ("Customs") pursuant to a Notice of Seizure to Objector dated 19 February 2008 as a part of a consignment of goods addressed to the Respondent at 1/6 Omar Street, Maidstone, Victoria. The Imported Items were not made by or under the licence or authority of the Applicant.(d) From a date unknown to the Applicant to the date of the issue of the Application herein, the Respondent has manufactured or caused to be manufactured, imported or caused to be imported, advertised, offered for sale, distributed, supplied and sold many other mobile phone products and accessories not made under the licence or authority of the Applicant each bearing one or more of the Nokia Trade Marks or one or more trade marks which are substantially identical with or deceptively similar to one or more of the Nokia Trade Marks.
Pars (a) and (d) of the particulars to this pleading are very similar. Par (a) is concerned with "a variety of mobile phone accessories", while par (d) is concerned with "many other mobile phone products and accessories". Otherwise, these paragraphs are substantially the same, and provide little assistance in identifying the acts of the respondent said to constitute infringement. Par (b) of the particulars is concerned with a sale on "eBay" on 30 October 2007, some five months before the institution of the proceeding. Par (c) is concerned with items seized by Customs in circumstances to which I shall refer below.
3 The making of the sale on eBay on 30 October 2007 to which the applicant’s Statement of Claim refers is established on the evidence before the court. The sale was made to Ms Rachel Nielson, an employee of a private inquiry agency engaged by the applicant. Through eBay, Ms Nielson made access to an "online store" which was advertising for sale a "New Nokia 8800 Limited Edition Gold Aussie Unlocked". The respondent was responsible for that entry in the online store, and was offering that item for sale. Ms Neilson purchased it, for a price of $563, plus $18 postage. On about 6 November 2007, she received her purchase, and it consisted of the items referred to in par (b) of the particulars to which I have referred.
4 The online store to which Ms Nielson had access for the purpose of purchasing her 8800 phone and accessories also promoted the sale of other models of supposedly Nokia phones. Likewise, the email which Ms Nielson received confirming her purchase referred to other supposedly Nokia phones which were available for purchase in the same way. I am satisfied that it was the respondent who was responsible for these entries in the online store, and that he was thereby offering for sale phones and accessories which he held out to have originated from the applicant, but which did not do so, and used the applicant’s trade mark for the purpose.
5 On 19 February 2008, a delegate of the Chief Executive Officer of Customs seized the following goods, all bearing a "Nokia" trade mark, pursuant to s 133(2) of the Trade Marks Act:
THIRTEEN (13) 7370 HANDSETS TWELVE (12) 7370 BOXES TWELVE (12) 7370 BOOKLETS TWELVE (12) Type CA-53 CABLES TWELVE (12) Type HS-23 EAR PIECES TWELVE (12) FABRIC POUCHES TWELVE (12) CARDBOARD TRAYS (A) TWELVE (12) CARDBOARD TRAYS (B) TWENTY (20) 5140i HANDSETS TWENTY (20) 5140i BOXES TWENTY (20) 5140i BOOKLETS TWENTY (20) BL-5B BATTERIES TWENTY (20) CARDBOARD TRAYS (C) TWENTY (20) TYPE HDS-3 EAR PIECES TWENTY-FOUR (24) BL-4B BATTERIES THIRTY-TWO (32) ACP-12U CHARGERSThe applicant was notified of the seizure. Pursuant to s 134(b)(ii) of the Trade Marks Act, the delegate informed the applicant that the "designated owner" of the seized goods was the respondent.
6 On 4 June 2008, the court made the following orders by consent:
(a) Australian Registered Trade Mark No. 458364 for NOKIA in class 9;1. By his importation into Australia of the items listed in Annexure A hereto each bearing one or more of the following Australian registered trade marks:
(together referred to as "the Nokia Trade Marks") without the licence or authority of the Applicant, the Respondent has infringed the Nokia Trade Marks and each of them. BY WAY OF FINAL JUDGMENT UNDER PARAGRAPHS 1, 3 AND 4 OF THE APPLICATION HEREIN THE COURT ORDERS BY CONSENT THAT:(b) Australian Registered Trade Mark No. 490781 for NOKIA AND DEVICE in class 9;(c) Australian Registered Trade Mark No. 808735 for NOKIA in class 16;
(d) Australian Registered Trade Mark No. 867057 for NOKIA in classes 9, 18, 25, 38, 41 and 42,
2. The Respondent be restrained whether by himself, his employees or agents or otherwise howsoever from infringing any of the Nokia Trade Marks and in particular from using the Nokia Trade Marks or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks in the course of trade on or in relation to:
(a) any of the goods in respect of which the Nokia Trade Marks are registered ("the Nokia Registered Goods");(b) goods of the same description as any of the Nokia Registered Goods; or
(c) services that are closely related to any of the Nokia Registered Goods,
THE COURT FURTHER ORDERS BY CONSENT THAT:not manufactured or provided by or under the authority of the Applicant or otherwise procuring or inducing any other person to do any of the acts specified in this paragraph (2).3. Within seven (7) days of the date of these orders, the Respondent deliver up on oath to the Applicant or its duly authorised agent for destruction under supervision all goods in the possession, power, custody or control of the Respondent, his employees or agents or otherwise howsoever to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks has been applied without the licence or authority of the Applicant.
4. Within seven (7) days of the date of these orders, the Respondent deliver up on oath to the Applicant or its duly authorised agent for destruction under supervision all catalogues, price lists, brochures and other documents and materials in the possession, power, custody or control of the Respondent, his employees or agents or otherwise howsoever bearing any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks without the licence or authority of the Applicant.
8. The Respondent pay the Applicant’s costs of the proceeding to date.5. Within seven (7) days of the date of these orders, the Respondent file and serve on the Applicant an affidavit setting out (and exhibiting all relevant supporting documentation (including, but not limited to, any purchase orders, invoices and receipts) in the possession, power and control of the Respondent whether by himself, his employees or agents) the full details of the supplier of each product that the Respondent has purchased, imported, distributed and sold to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar thereto has been applied without the licence or authority of the Applicant, such details to include full address, email address, telephone number, corporate and business details.6. Within fourteen (14) days of the service of these orders upon him, the Respondent make discovery verified by affidavit to the Applicant in respect of all purchases and sales by him or on his behalf of all items bearing the Nokia Trade Marks, or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks, without the licence or authority of the Applicant.
7. The respondent pay the Applicant damages for infringement of the Nokia Trade Marks, to be assessed together with interest thereon, or, at the option of the Applicant, the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks and pay the Applicant the amount found to be due on the taking of such account, together with interest thereon.
Annexure A, referred to in par 1 of these orders, listed the items seized by Customs on 19 February 2008.
7 On 12 June 2008 the court ordered, by consent, that the goods seized by Customs be forfeited to the Commonwealth and disposed of as directed by the Chief Executive Officer of Customs.
8 On 10 July 2008, the respondent filed his list of documents in purported compliance with par 6 of the orders made on 4 June 2008. The documents which he affirmed were in his possession, custody or power were the following:
1. Copy of Proforma invoice dated 5 January 2008 from March Technology Limited to Albert Liu. 2. Handwritten note dated 1 November 2007 3. Copy of ebay email dated 31 October 2007 from rachelmackeown to alselectronics@hotmail.com 4. Copy of Invoice from Yi Tong Communication Equipment Co no. 03087881 dated 3 October 2007.In addition, the respondent affirmed that he had had, but did not then have, the following document in his possession, custody or power:
5. Copy of Bank Statement for transactions for period 30 October 2007 for ANZ bank account no. 5111-91259 in the name of Yan Liu.9 Also on 10 July 2008, the respondent filed an affidavit affirmed by him on 27 June 2008. In purported compliance with par 5 of the orders made on 4 June 2008, the respondent exhibited a copy of the invoice referred to in item 1 of his list of documents (see par 8 above). He stated that that invoice was for the purchase by him of the goods seized by Customs. He exhibited also a copy of the invoice referred to in item 4 of his list of documents. That invoice was mostly written in the characters of a language other than English, but it included numerals in the arabic style. Counsel for the applicant invited me to infer that the invoice related to one "8800" mobile phone, and I shall do so. The respondent also exhibited to his affidavit a copy of an email he received from "Rachel Mackeown" dated 31 October 2007 (although wrongly referred to in the affidavit as being dated 5 November 2007), being a copy of the email referred to in item 3 of his list of documents. It seems that the sender of the email was in fact Rachel Nielson, and that the email referred to her online purchase of 30 October 2007.
10 In his affidavit affirmed on 27 June 2008, the respondent said that he did not have any goods to deliver up pursuant to par 3 of the orders made on 4 June 2008, and that he did not have any catalogues, price lists, brochures or other documents to deliver up pursuant to par 4 of those orders.
11 The day after the filing of the respondent’s list of documents and his affidavit of 27 June 2008, 11 July 2008, was the return date for a notice to produce served by the applicant on the respondent. The notice sought production of:
1. All purchase orders or like documentation, shipping documentation, delivery documents and correspondence relating to products acquired by the Respondent from March Technology Limited which bear the Nokia Trade Marks (as defined in paragraph 1 of the Application) or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks. 2. All purchase orders or like documentation, shipping documentation, delivery documents and correspondence relating to products acquired by the Respondent from Yi Tong Communication Equipment Co which bear the Nokia Trade Marks or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks.The respondent did not comply with the notice to produce.
12 The respondent’s solicitors ceased to act for him on 29 August 2008.
13 On 24 September 2008, the respondent was ordered to attend for examination before a Registrar of the court on 5 November 2008. He did not so attend. Counsel for the applicant appeared before me on 5 November 2008 and invited me to deal with the respondent on the basis that his failure to attend amounted to contempt in the face of the court. I was not prepared to do so. The applicant did not otherwise move that the respondent be dealt with for contempt.
14 On 5 November 2008 I ordered that the proceeding be fixed for the assessment of the applicant’s damages on 11 December 2008. Such an assessment was required by par 7 of the orders made on 4 June 2008, and upon it being done those orders will have done their work. The assessment proceeded (in the absence of the respondent) as ordered on 11 December 2008. These reasons deal with that matter.
15 Counsel for the applicant submitted that the number of goods seized by Customs, and the online promotional activity in which the respondent was apparently involved, justified the inference that the respondent was most probably engaged in the importation and sale of counterfeit Nokia mobile phones on a commercial scale. He drew my attention to documents which would support the inference that the phone which the respondent sold to Ms Nielson for $563, or a phone having similar specifications, would most likely retail for about $1,100. He asked me to infer that the applicant had lost substantial sales as a result of the respondent’s activities. He drew my attention to well-known authorities which established that, if the court was satisfied that an applicant has suffered damage as a result of the relevant respondent’s unlawful conduct, it must do its best to assess the quantum of the damages, even if a broad estimation, or even guesswork to an extent, is involved: see Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 1852, [7]. Counsel invited me to conclude that the loss and damage suffered by the applicant in the present case was probably in the region of $50,000 to $100,000.
16 There are a number of difficulties with the approach which I am being invited to take by counsel for the applicant. The applicant has provided virtually no evidence of the way it conducts its own business. Critically, there is no evidence of the money loss suffered by the applicant each time a sale of a mobile phone is not made. There is, for example, no evidence of the applicant’s gross profit on the wholesale sale of a particular phone, or of phones of a particular type. It may be one thing to estimate the number of sales which the applicant may have lost as a result of the respondent’s activities, but it is not possible to place a dollar value upon the applicant’s loss without information of the kind to which I have referred.
17 While I accept that the court may often be required to use broad estimations, and even sometimes guesswork, where the assessment of damages is concerned in a case such as the present, I would not be prepared to tread that path where the applicant had it within its power to improve the accuracy of the evidentiary base required for the calculation of damages, but has not done so: see Winning Appliances Pty Ltd v Dean Appliances Pty Ltd (1995) 32 IPR 65, 67-68.
18 However these considerations may be, there is a more fundamental problem with the approach which I have been invited to take by counsel for the applicant. Counsel submitted that the orders made by the court on 4 June 2008 constituted final judgment in the applicant’s favour. I agree. So far as par 7 of those orders is concerned, the only question which arises is the assessment of damages to which the applicant is entitled on that judgment. However, the only respect in which the orders of 4 June 2008 involve findings against the respondent relates to his importation of the items seized by Customs on 19 February 2008. In no other respect is there a finding, by consent or otherwise, that the respondent infringed the applicant’s trade marks. In the circumstances, the assessment of damages for which par 7 of those orders provides must be limited to damages arising from the unlawful conduct constituted by that importation.
19 The mobile phones seized by Customs never found their way to the respondent. They were forfeited to the Commonwealth, and disposed of as directed by the Chief Executive Officer of Customs. Whatever may have been the situation generally, it is clear that the applicant did not lose any sales as a result of the respondent’s importation of those mobile phones. Neither was the applicant’s reputation or standing damaged in any way. Counsel for the applicant was unable to identify any respect in which the applicant suffered damage as a result of the importation of those mobile phones, and, for my own part, I cannot see any. The need to make estimations, or to engage in guesswork, does not arise in the present case, since I am not satisfied that the applicant has suffered any damage at all as a result of the unlawful conduct which was the subject of final judgment in its favour.
20 Counsel for the applicant referred me to Nokia Corporation v Mai [2003] FCA 924. In that proceeding, Kenny J acceded to an application for summary judgment, and ordered that the then respondent pay the applicant damages for infringement of the Nokia trade marks, such damages to be assessed (or, at the option of the applicant, that the then respondent account for the profits made by him). The case did not involve the assessment of damages as such. Further, the consent declaration made by Kenny J was not limited to the then respondent’s act of importing goods which were, before arrival on the market, seized by Customs. In the circumstances, Mai is of no assistance to the applicant in overcoming the difficulties which I consider stand in its way in the present proceeding.
21 In the circumstances, I am in a position similar to that of Besanko J in Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763. Like his Honour, I propose to award nominal damages only in the sum of $10.
22 The applicant has sought its costs of the assessment. The respondent did not appear, and thus did not oppose the making of any such order. However, the applicant has failed on the only question which arose on the assessment, in which circumstances I am not minded to make a costs order in its favour. I accept that the award of nominal damages reflects, in a sense, the applicant’s success in the proceeding generally, but the assessment was a discrete component in relation to which the applicant sought a specific costs order. Because it failed on that component, I do not propose to require the respondent to pay its costs thereof.
23 On the other hand, the applicant is entitled to its costs generally in the proceeding, including reserved costs, save to the extent that any previous order provides otherwise. I shall make an order in those terms.
24 Against the prospect that I might make an award of damages in a sum less than $100,000, the applicant sought an order avoiding the operation of O 62 r 36A of the Federal Court Rules. It was submitted that "this is an appropriate course in relation to matters involving infringement of intellectual property rights", in which respect the applicant relied upon Sony and upon Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 3) [2008] FCA 896. Rule 36A provides as follows:
(1) Where a party is awarded judgment for less than $100,000 on a claim (not including a cross-claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders.
(3) This rule does not apply to a proceeding under the Admiralty Act 1988.(2) If the Court or a Judge is of the opinion that a proceeding (including a cross-claim for a money sum or damages) brought in this Court could more suitably have been brought in another court or in a tribunal and so declares, then any costs to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order.
25 In Sony, which was also a trade marks case, Emmett J said ([2001] FCA 1852 at [15]):
The amount of damages that I propose to order is well below $100,000. However, as I have indicated, the principal relief sought in these proceedings was injunctive relief. The applicants have been successful in their claims for injunctive relief. Having regard to the technicalities that are involved in the Trade Marks Act 1995, it is appropriate that claims for infringement of trade marks be brought in the Federal Court. The Federal Court has experience and expertise in dealing with matters involving intellectual property generally and trade mark infringement in particular.In Futuretronics (No 3), which was a copyright and contract case, Besanko J said ([2008] FCA 896 at [12]):
For a number of years this Court has taken the view that copyright litigation is appropriately commenced in this Court even if the monetary claim is small. I refer to LED Builders Pty Ltd v Hope [1994] FCA 1353; (1994) 53 FCR 10, Fasold v Roberts (unreported, Sackville J, 11 September 1997 MG942 of 1992), Australasian Performing Right Association Ltd v Pashalidis [2000] FCA 1815 and Australian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 64 IPR 57.26 Turning to the authorities referred to by Besanko J in Futuretronics (No 3), LED Builders was a copyright case in which Tamberlin J took the view that the proceeding could not have been more suitably brought in a district or local court. It appeared to his Honour that there was no jurisdiction in those courts to deal with copyright infringement. His Honour said (53 FCR at 12):
In my opinion r 36A, unless applied with discretion and caution can lead to harsh results. Especially is this so in relation to claims for small monetary amounts in matters such as copyright. If the rule is allowed to apply automatically in all cases where a sum, less than $100,000, is recovered, this can lead to harsh results in situations where there is no other more appropriate court. This in turn could lead to situations where parties may be discouraged from entering into settlements by reason of the potential cost penalty.Fasold v Roberts was in part a copyright case, in which a submission was made that Tamberlin J had been wrong (in LED Builders) to suppose that a copyright proceeding could not have been brought in the District Court of New South Wales. Sackville J accepted that submission, noting that State courts, within the limits of their respective jurisdictions, were invested with Federal jurisdiction in all matters in which original jurisdiction could be conferred on the High Court. However, his Honour continued:
Nonetheless, I do not think that the fact that the proceedings could have been brought in the District Court is a ground for reducing the first applicant's entitlement to costs by one third. As Tamberlin J said in LED Builders, it is appropriate that copyright infringement cases be brought in this Court. In the circumstances of the present case, there was a good deal to be said for the copyright claim being severed from the non-copyright claim. But even if that had been done, it still would have been appropriate for the copyright claim to have been brought and heard in this Court.Pashalidis was a copyright case in which Moore J was concerned to review a decision of a taxing officer applying subrule (1) of O 61 r 36A according to its terms. Noting that the case differed in this respect from LED Builders and Fasold v Roberts, Moore J nonetheless ordered that r 36A(1) not apply, for the following reasons ([2000] FCA 1815 at [13]):
However, these points aside, their Honours’ comments are apt to apply to the present case. In addition, the evidence, which is referred to in my judgment of 2 August 2000, reveals that APRA made numerous attempts to have the respondent procure a licence to perform (or authorise the performance of) the relevant works before commencing these proceedings. There is nothing to suggest that APRA did not then prosecute these proceedings with reasonable diligence in what is an appropriate forum. I propose to order that the costs ordered to be paid to APRA not be reduced under O 62 r 36A(1).Metro on George was a copyright case in which Bennett J referred to LED Builders, to Fasold v Roberts and to Pashalidis. Her Honour said that "generally, the court has taken the view that copyright litigation is appropriately commenced in this court, even where the claim is small in monetary terms" (64 IPR at 58 [8]). Her Honour referred to the complexity of the issues before her, to the fact that the proceeding was a test case, and to the representation of both sides by senior counsel experienced in copyright matters. She expressed the view that the proceeding was appropriately commenced in the Federal Court.
27 It has been observed that subrule (1) is independent of subrule (2) and, therefore, that the circumstance that the proceeding could have been brought in another more suitable court is not relevant to the exercise of the court’s discretion under subrule (1): see McCormick v Riverwood International (Australia) Pty Ltd [2000] FCA 32, [22] and Axe Australasia Pty Ltd v Australume Pty Ltd (No 2) [2006] FCA 844, [3]. In Metro on George Bennett J said: (64 IPR at 58 [7])
I agree that the two subrules are to be considered independently. Where the court is of the view that the proceedings should have been brought in another court or where judgment is for a sum less than $100,000 and the circumstances are such that the court should not exercise its discretion to reduce the amount allowable for costs, there will be a reduction in the costs to be paid by one-third.Subrule (1) of O 62 r 36A operates only when a party is awarded judgment for less than $100,000 on a claim for a money sum or damages. In such a case, the subrule sets up a presumption that the costs ordered to be paid should be reduced by one third of the amount otherwise allowable. It is for the party who would be entitled to the benefit of the costs order to persuade the court that the subrule should not operate according to its terms. Subrule (2), by contrast, operates with respect to all proceedings (save those excluded by subrule (3)), even those in which the successful party has been awarded a judgment for more than $100,000. In such a case, it lies upon the party seeking to avoid the normal application of the Federal Court costs scales to persuade the court that the proceeding "could more suitably have been brought in another court or in a tribunal".
28 Subrules (1) and (2) operate independently in the way I have described. That they do so does not, in my opinion, mean that the availability of another court or tribunal in which the proceeding might more suitably have been brought should always be regarded as irrelevant to the exercise of the discretion arising under subrule (1). In a case in which less than $100,000 is recovered, I cannot understand why the successful applicant might not submit that the subrule should not operate according to its terms because of the absence of any more suitable court or tribunal in which the proceeding might have been brought. Subrule (2) would be irrelevant in such a case because of the presumptive operation of subrule (1), but the negative of the situation which gives rise to the operation of subrule (2) need not, in my opinion, always be irrelevant to the discretionary exclusion of the operation of subrule (1). Indeed, it was the very absence of another more suitable court or tribunal for copyright cases that led Tamberlin J to exercise his discretion in LED Builders to exclude the operation of subrule (1). This assumption has been associated with the comments later made by Sackville J and Besanko J, amongst others, that it is appropriate that copyright cases be commenced in the Federal Court.
29 However, it cannot, in my view, be said that the policy behind r 36A(1) is that proceedings in which less than $100,000 is recovered should, prima facie, have been commenced in some other court or in a tribunal. The rule which applies in the absence of an order to the contrary is that, in any proceeding in which less than $100,000 is recovered, the costs must be reduced by one-third. The rule would so apply even in a situation in which no other court, and no tribunal, might have entertained the claims in question.
30 In Axe, Finkelstein J considered that r 36A(1) reflected two different but related principles. His Honour said ([2006] FCA 844 at [4]- [5]):
In my opinion the rule reflects at least two different but related principles. The first is that is it essential to keep down the costs of a small claim. Unless this principle is invoked the costs of small claims will often (perhaps more often than not) exceed the quantum of the claim. That places a very unfair burden upon an unsuccessful defendant who, in any event, will bear his own costs. The rule should encourage a plaintiff to negotiate with his solicitor and with counsel on a rate of fees that are appropriate to small claims. A benchmark may be fees charged in litigation in inferior courts, such as a District Court or a Magistrates Court. The second, but necessarily subsidiary, principle is that plaintiffs should be discouraged from prosecuting small claims to judgment, especially small claims where the costs will be significantly greater than the quantum of the claim.I would associate myself at least with the first of his Honour’s observations. I consider that the principal concern of r 36A(1) is that small claims should be accompanied by small costs orders. Where there is a hierarchy of courts with jurisdictional limits dependant on the amount claimed, the costs available to a successful party will differ according to the court in which the action is brought; and that in turn will depend upon the amount claimed. Recognising that proceedings of modest monetary potential might be, and commonly are, brought in the Federal Court, the framers of r 36A went part of the way to providing a lower scale of costs for such proceedings, although tied to the amount awarded rather than the amount claimed. These policy considerations apply regardless of whether the action in question might have been commenced at lower cost elsewhere (although, as I have observed above, such a circumstance cannot be universally excluded from the range of discretionary considerations which the court might take into account in deciding whether to avoid the operation of the subrule).
31 It follows that, even though it may be accepted that copyright (and, I am prepared also accept for present purposes, trade mark) cases are appropriately brought in the Federal Court, it is still within the scope of the policy of r 36A(1) that costs be reduced by one-third in such cases where the amount recovered as damages is less than $100,000. I am disposed to look to factors other than that the present proceeding is a trade mark case as a basis for excluding the operation of the subrule as sought by the applicant.
32 The present case did not involve a claim for a money sum only, but that circumstance does not render r 36A(1) inoperative: see Shahid v Australasian College of Dermatologists (No 2) [2008] FCAFC 98, [14]. However, the fact that the applicant sought other remedies might have the result of shifting the centre of gravity of the case away from the money award to such an extent that it would be unjust to allow the subrule to operate in the circumstances. The applicant sought injunctions, declarations, delivery up and damages or an account of profits. The extent to which the pursuit of the non-money remedies became the focus of the exertions of the applicant’s legal representatives is not apparent to the court, in part because, at a very early stage, the applicant secured the consent of the respondent to the grant of those remedies. The applicant is the moving party for an order excluding the operation of r 36A(1) and, on the state of the evidence, I do not think it has made good a case for such an order on the ground that the non-money aspects of its claims were the more substantial ones.
33 Taking a broad view of the applicant’s claims in the proceeding, they do not strike me as involving any degree of complexity. The Statement of Claim is in eight paragraphs extending over four pages. I have set out the single allegation of infringement above. As the particulars disclose, there were two occasions upon which infringements were, as alleged, detected by the applicant. In other respects, the pleading strikes me as being in something of a standard form. This is not intended as a criticism, of course. Rather, it is intended to highlight the relatively uncomplicated nature of the facts in issue. Neither did the case throw up any difficult or novel questions of law. It had none of the "technicalities" to which Emmett J referred in Sony. As trade mark cases go, the present proceeding must be regarded as very much towards the uncomplicated end of the spectrum.
34 From what I can gather, the chief difficulty encountered by the applicant lay in establishing in what other infringing conduct (ie other than the importation of the goods seized by Customs and the single sale to Ms Nielson) the respondent had been involved. That difficulty arose because the respondent effectively absented himself from the proceeding once he had complied with the court’s orders of 4 June 2008. But the difficulty, in my view, is such as is commonly encountered by litigants at all levels – perhaps more so in simple proceedings of modest potential in monetary terms than in proceedings in which the stakes are higher and it is, therefore, more likely that all parties will consider it to be in their interests to be professionally represented at all times. In any event, once the applicant had consented to final judgment in the terms that it did on 4 June 2008, the difficulty became moot. It does not provide a reason to exclude the operation of r 36A(1).
35 For the above reasons, I am not disposed to make an order excluding the operation of O 62 r 36A(1) in the circumstances of the present case.
Associate:
Dated: 21
January 2009
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Solicitor for the Applicant:
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Corrs Chambers Westgarth
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Counsel for the Respondent:
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The respondent did not appear
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/20.html