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Federal Court of Australia |
Last Updated: 26 February 2003
Oakley, Inc v Franchise China Pty Ltd ACN 080 032 604 [2003] FCA 105
INTELLECTUAL PROPERTY - trade marks - infringement of s 120(1) the Trade Marks Act 1995 (Cth) - importation of counterfeit sunglasses - whether importation of falsely marked goods as gifts for importer's employees involves use of the marks in the course of trade
INTELLECTUAL PROPERTY - passing off - elements of passing off - whether gifting of sunglasses in applicant's get-up to importer's employees actionable in passing off
WORDS AND PHRASES - "in the course of trade" - "substantially identical"
Trade Practices Act 1974 (Cth) ss 52, 75B and 80
Trade Marks Act 1995 (Cth) ss 17 and 120(1)
Federal Court Rules O 11 r 23
Australian Securities Commission v MacLeod (1994) 54 FCR 309 cited
The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1961] HCA 75; (1963) 109 CLR 407 considered
Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 referred to
Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 at 497 referred to
TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 at par [25] followed
Sony Music Productions Pty Ltd v Tansing (1993) 27 IPR 640 referred to
WD & HO Wills (Australia) Ltd v Rothmans Ltd [1956] HCA 15; (1956) 94 CLR 182 applied
Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 417 - 418 considered
Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; (2001) 51 IPR 149 at 157 considered
Buying Systems (Australia) Pty Ltd v Studio Srl (1995) 30 IPR 517 considered
Golden Pages Trade Mark [1985] FSR 27 approved
"Hospital World" Trade Mark (1967) 84 RPC 595 at 598 - 599 referred to
"Update" Trade Mark (1979) 96 RPC 166 referred to
"Visa" Trade Mark (1985) 102 RPC 323 referred to
Warnink v Townend & Sons (Hull) Ltd [1979] AC 731 at 742 cited
Rolls-Royce Motors Ltd v Zanelli (1979) 96 RPC 148 at 154 cited
Lahore, Patents, Trade Marks and Related Rights, Vol 1A (at 102-11-02) at [56,130] and [77,010]
Wadlow, The Law of Passing Off, 2nd ed, 1995 at 4.17, 4.28 and 6.24
OAKLEY, INC v FRANCHISE CHINA PTY LTD ACN 080 032 604, BARRY JAMES RUMPF, BRUCE ROBERT JOHNSTONE AND ROBERT JOHNSTONE
V 1179 OF 2001
DRUMMOND J
21 FEBRUARY 2003
BRISBANE (VIA VIDEOLINK TO MELBOURNE)
IN THE FEDERAL COURT OF AUSTRALIA |
|
QUEENSLAND DISTRICT REGISTRY |
|
JUDGE: |
DRUMMOND J |
DATE OF ORDER: |
21 FEBRUARY 2003 |
WHERE MADE: |
BRISBANE (VIA VIDEOLINK TO MELBOURNE) |
1. The second and third respondents have infringed the applicant's registered trade marks numbered 387164 and 636580.
2. The second and third respondents have passed off sunglasses not connected with the applicant as the applicant's sunglasses.
THE COURT ORDERS THAT:
1. The amended application filed 29 November 2001 as against the fourth respondent be dismissed.
2. An injunction issue restraining the second and third respondents from selling, offering for sale, importing, promoting, advertising or otherwise using Australian Trade Marks numbered 387164 and 636580 or any other marks substantially identical therewith or deceptively similar thereto in relation to the goods or services in respect of which each of those marks is registered or in relation to goods and services of the same description or closely related goods and services.
3. An injunction issue restraining the second and third respondents from passing off sunglasses which are not connected in the course of trade with the applicant as the applicant's sunglasses.
4. The goods, the subject of the Notices of Seizure to Objector both dated 10 October 2001 addressed to the second respondent and Mr Robert Johnstone issued by the Australian Customs Service under the Trade Marks Act 1995 (Cth), be forfeited to the Commonwealth pursuant to s 137(3)(b) of the Trade Marks Act 1995 (Cth).
5. The second and third respondents pay the applicant's damages to be assessed or at the election of the applicant there be an account of profits for trade mark infringement.
6. The second and third respondents pay the applicant's damages to be assessed or at the election of the applicant there be an account of profits for passing off.
7. Delivery up on oath to the applicant or its nominated agent for destruction all promotional material relating to the seized goods referred to in Order 4 above.
8. There be all accounts and enquiries and discovery in aid thereof as to damages and accounts of profits and compensation as are necessary.
9. The second and third respondents pay the applicant's costs of and incidental to this action, including reserved costs.
10. Liberty to apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
QUEENSLAND DISTRICT REGISTRY |
|
JUDGE: |
DRUMMOND J |
DATE: |
21 FEBRUARY 2003 |
PLACE: |
BRISBANE (VIA VIDEOLINK TO MELBOURNE) |
1 The applicant, Oakley, Inc ("Oakley"), seeks orders against the second and third respondents ("Rumpf" and "Johnstone" respectively) in respect of infringement of its trade mark rights, passing off and misleading conduct within s 52 the Trade Practices Act 1974 (Cth). On 15 July 2002, orders were made against the first respondent, Franchise China Pty Ltd ("Franchise China"), that finally disposed of Oakley's application against that company. At all presently relevant times, Rumpf and Johnstone were directors of this respondent. Oakley has not served the fourth respondent (who is thought to be in China and is the son of the third respondent) and has indicated that it does not intend to proceed against him. Its claim against the fourth respondent will therefore be dismissed.
2 Oakley's claim is based on three importations of sunglasses into Australia that were seized by the Australian Customs Service:
* Around 15 October 2001, 2,917 pairs of sunglasses bearing Oakley marks were seized. They were packed in small boxes each containing twelve pairs that were found inside two pieces of furniture in a shipping container consigned to Franchise China at Unit 5, 789 Kingsford Smith Drive, Eagle Farm, Brisbane.
* Around 10 October 2001, 598 pairs of sunglasses bearing Oakley marks were seized. They were consigned to Rumpf at this same Kingsford Smith Drive address.
* Also around 10 October 2001, 530 pairs of sunglasses bearing the applicant's marks were seized. They were consigned to "Robert Johnstone" at this same address.
3 The applicant's case is that the first, second and third respondents infringed two of the applicant's trade marks, which are both registered in relation to sunglasses, by importing these sunglasses into Australia for the purposes of sale here. The applicant also contends that the second and third respondents are liable as joint tortfeasors for the first respondent's trade mark infringements.
4 Neither Rumpf nor Johnstone disputed the evidence with respect to the seizures. Nor did they dispute the extensive evidence led by Oakley that showed that the sunglasses seized were not genuine Oakley sunglasses and were all falsely branded with two of Oakley's marks. It is therefore unnecessary to refer further to this evidence. I am satisfied that all the sunglasses the subject of Oakley's action bear marks identical or substantially identical to two of Oakley's registered trade marks, but are not genuine Oakley sunglasses.
5 Johnstone acknowledges that for several years he has imported and sold substantial quantities of sunglasses from China all bearing false Oakley trade marks. Johnstone says that it was he who imported the 2,917 pairs of sunglasses seized around 15 October 2001, that they are his property and that he imported them for sale here. He also expressly says that "the sunglasses referred to in the Applicant's material are all my property and imported by me or on my behalf", except for the 598 pairs of sunglasses and the 530 pairs of sunglasses seized around 10 October 2001 which he says were both imported by Rumpf. At the trial, Oakley sought leave to further amend the statement of claim to set up claims for relief in respect of other acts of trade mark infringement by the second and third respondents. I refused that leave, but Oakley was allowed to lead evidence relating to these activities to support the case of trade mark infringement pleaded. I understand Johnstone to accept responsibility for these other activities in so far as they involve the importation of falsely marked Oakley products, including sunglasses.
6 On 15 July 2002, I gave judgment in the action against Franchise China in default of delivery of its defence. In seeking this judgment, the applicant relied upon evidence with respect to the 2,917 sunglasses seized on 15 October 2001 that showed it had a good factual foundation for this judgment: see O 11 r 23 the Federal Court Rules and Australian Securities Commission v MacLeod (1994) 54 FCR 309. The orders I then made included the following:
3. A declaration that the First Respondent has infringed the Applicant's marks.4. An order for the goods, the subject of the Notice of Seizure to Objector dated 15 October 2001 directed to the First Respondent issued by the Australian Customs Service under the Trade Marks Act 1995 ("the seized goods"), to be forfeited to the Commonwealth pursuant to section 137(3)(b) of the Trade Marks Act 1995.
5. The First Respondent pay the Applicant's damages or at the election of the Applicant an account of profits for trade mark infringement to be assessed.
6. The First Respondent pay the Applicant's damages or at the election of the Applicant an account of profits for passing off to be assessed.
7. Delivery up on oath to the Applicant or its nominated agent for destruction all promotional material relating to the seized goods referred to in Order 4 above.
7 Johnstone, as the principal of Franchise China, stood by, after notice, and permitted the applicant to obtain this judgment in default against his company. The container in which the sunglasses were found was consigned to the company at the Eagle Farm address from which it and Johnstone and also Rumpf carried on business. The evidence shows that Franchise China, at all material times, carried on the business of importing goods from China for sale here. Johnstone's claim in evidence at trial that these sunglasses "are all my property and imported by me or on my behalf" might be thought to be inconsistent with the judgment against the company. But in view of Johnstone's insistence on claiming responsibility for this importation and the applicant's willingness to accept that, I propose to proceed on the basis that Johnstone bears the responsibility he embraces either because the sunglasses were in law his own property or, in a loose sense, they were his property because they were the property of the company of which he is the sole shareholder and for which he arranged their importation in his capacity as director.
8 For the reasons I have given, Johnstone has infringed s 120(1) the Trade Marks Act 1995 (Cth) by using "as trade marks" marks upon sunglasses dealt with in the course of trade that are identical or substantially identical with two of the Oakley registered marks. This is so whether the sunglasses were Johnstone's personal property or the property of his company.
9 Johnstone's defence is that, at the market stand from which he sells these falsely marked sunglasses, he always displays a sign alerting potential purchasers to the fact that they are not genuine Oakley sunglasses. The evidence on this point is confined to a brief statement by Johnstone in his affidavit and to brief comments in his oral evidence given at the end of the trial where he described the sign as saying "These excellent sunnies are sold as replicas. They're not to be confused with the real item". He said the sign was a big sign and he could not understand why the applicant's witness, Taylor, did not see it. Taylor, of Trade Mark Investigation Services, describes his visit to a stall G082A at the Ascot Street Fair, Racecourse Road, Brisbane around 27 May 2001 at which he saw counterfeit Oakley sunglasses on sale. This is Johnstone's stall. Taylor says that he saw Johnstone (who was known to him) working at it and that he bought a pair of counterfeit Oakley sunglasses there. He paid by credit card; on the credit card receipt the merchant's name was shown as Tipplers Island Resort, at Stradbroke Island. Johnstone says that he had borrowed the credit card machine from the owners of Tipplers who are personal friends. Taylor also says that he followed the van into which the goods displayed at stall G082A were packed away back to Franchise China's premises at Unit 5, 789 Kingsford Smith Drive, Eagle Farm. Taylor does not mention any sign being displayed at that stall that might have alerted potential customers to the fact that the goods being sold were not the genuine article. He was not cross-examined about whether there was such a sign.
10 There will be infringement within s 120(1) the Trade Marks Act where the alleged wrongdoer uses marks that are "substantially identical with, or deceptively similar to" the registered owner's trade mark. An assessment of whether marks are "identical" or "substantially identical" is made having regard to the resemblances between the marks side by side, ignoring matters extraneous to the marks themselves: The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1961] HCA 75; (1963) 109 CLR 407 at 414; Lahore, Patents, Trade Marks and Related Rights, Vol 1A (at 102-11-02) at [56,130].
11 It is doubtful in infringement proceedings where the question is whether a mark is "deceptively similar" to a registered mark, whether it is relevant to have regard to the fact that the respondent offers the counterfeit articles in circumstances which include statements by the alleged infringer to consumers disclaiming that the marked goods are the genuine article or to the fact that there is a large price differential between the infringing article and the genuine article sufficient, according to the infringer, to prevent confusion: see Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 at 128 - 129, per Gummow J and Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 at 497. But it is clear that such a disclaimer or price differential can provide no defence where, as here, the infringing marks are identical or substantially identical to the registered marks.
12 There will therefore be a finding in accordance with that sought by Oakley against Mr Johnstone of trade mark infringement in respect of the 2,917 pairs of sunglasses.
13 The applicant also claims that Johnstone has passed off his sunglasses as the applicant's. The elements required to establish the cause of action are reputation, misrepresentation and damage. See TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 at par [25].
14 The evidence establishes that Oakley has a substantial reputation or business goodwill in Australia as a supplier of sunglasses sold in distinctive get-ups here. Oakley has extensively advertised and promoted its sunglasses throughout Australia, including in magazines and at trade shows around Australia and it is involved in well publicised sponsorship arrangements with respect to its sunglasses with various Australian as well as international sporting personalities. There is also evidence of the substantial sales Oakley has enjoyed with its sunglasses range in Australia. Its products have been sold here since at least March 1987, when Sundaze Pty Ltd was one of its two Australian distributors of Oakley products, including eyewear. From April 1992 to November 1999, Sundaze was the exclusive importer and distributor of Oakley products in Australia. That relationship terminated in November 1999 and distributor rights were transferred to Oakley South Pacific Pty Ltd ("Oakley SP"), a wholly owned subsidiary of Oakley. Since then Oakley SP has sold a wide range of Oakley products in Australia including sunglasses. They are all made in the United States and are sold to Oakley SP by Oakley. All Oakley sunglasses, with the exception of the "X Metal Style", bear either or both the Oakley stylised mark or the ellipse mark with which the sunglasses the subject of this action are all marked. These marks are part of the get up in which it sells its sunglasses here that has long been distinctive of Oakley.
15 The applicant must also show that Johnstone misrepresented his goods as the applicant's and that potential customers were thereby likely to have been confused or deceived into thinking that his goods were genuine Oakley sunglasses. See Lahore, at [77,010].
16 As I understand his evidence, Johnstone accepts that his conduct in selling the falsely marked Oakley sunglasses is capable of amounting to misrepresenting them as genuine Oakley sunglasses, but for what he has to say about displaying the sign, and about the price at which he offers them for sale as compared with the price of genuine Oakley sunglasses. He says these two circumstances put potential purchasers on notice that they are not being offered the genuine article. (Even if Johnstone disputed having misrepresented the sunglasses he offered for sale, I would find that his display at his market stand of the sunglasses bearing the false Oakley marks amounted to the necessary misrepresentation.)
17 As Wingate Marketing at 128 shows, the test for passing off is not the same as that for trade mark infringement. A clear enough statement to potential customers that goods marked so as to suggest they are a particular producer's goods are not, in fact, the genuine article may, depending on the circumstances, be sufficient to prevent the representation having the quality of confusion or deception necessary for there to be passing off (or misleading and deceptive conduct within s 52 the Trade Practices Act): see Sony Music Productions Pty Ltd v Tansing (1993) 27 IPR 640. But it is not easy for a trader to defeat a passing off claim where he uses indicia which are distinctive of the plaintiff's goods in conjunction with a disclaimer that there is, in truth, no connection with the plaintiff: see Wadlow, The Law of Passing Off, 2nd ed, 1995 at 4.17 and 6.24.
18 Johnstone's evidence about the disclaiming sign is too sketchy and unconvincing to justify my finding that he acted so as to put potential purchasers on notice that they were not being offered genuine Oakley sunglasses sufficiently clear to avoid confusion or deception.
19 Johnstone also says that the fact that the sunglasses he sells are not genuine Oakley glasses would be self-evident to any purchaser "if one were to compare the selling price of [his] merchandise with that of those purporting to be the genuine article". There is limited evidence before me as to the retail prices of genuine Oakley sunglasses of a similar get-up to those sold by Johnstone. Taylor says that Johnstone offered for sale Oakley branded sunglasses, not further described, at his stall at the Ascot Street Fair around 27 May 2001; Taylor says he paid Johnstone $40 for the one pair of sunglasses he then bought that resembled the Oakley "Straight Jacket" style of sunglasses. This he says was 42% of the wholesale price of the genuine Oakley product. Johnstone did not attempt to show by evidence the prices at which genuine Oakley sunglasses like his, including those in the 15 October seizure, are sold. He did not attempt to make a case that genuine sunglasses are only ever sold at high prices. He did not suggest that genuine Oakley glasses like his are never sold at reduced prices at sales in stores where they are commonly available or whether genuine sunglasses are available at factory or other discount retail outlets. Johnstone was selling his sunglasses in a market setting at which people would in all likelihood expect to find bargains. So far as the evidence goes, an ordinary customer shopping at a suburban market stall could well believe that the sunglasses sold by Johnstone were the genuine article, but were being sold cheaply because of any one of a number of plausible explanations, eg, discontinued lines or seconds stock or liquidation stock. Johnstone's general assertion about pricing set out above is not, I think, sufficient to transfer to Oakley the evidential burden of going into detailed evidence about how and at what prices genuine sunglasses like those sold by Johnstone have been sold in Brisbane.
20 I find that, but for their seizure, Johnstone would have misrepresented the 2,917 pairs of sunglasses as genuine Oakley glasses by offering them for sale.
21 Oakley's evidence from witnesses, including Prpic and Taylor, is that the glasses in the three consignments the subject of this action were markedly inferior in quality in a number of respects to genuine Oakley glasses. This evidence is not disputed by the respondents. That is sufficient to establish that Oakley is likely to suffer damage to its goodwill from the activities of Johnstone in selling poor quality glasses in circumstances in which consumers might well think they are genuine Oakley glasses.
22 There will be a finding that Johnstone passed off his sunglasses for Oakley sunglasses as alleged in the statement of claim.
23 The evidence which I consider shows that Oakley has a good claim in passing off against Johnstone also shows it has made out its claim for relief under ss 80 and 75B the Trade Practices Act in respect of misleading conduct within s 52 of that Act against him.
24 Rumpf put forward a different defence to the trade mark infringement and the passing off and Trade Practices Act claims from that relied on by Johnstone.
25 He denies any responsibility for the importation of the 2,917 pairs of sunglasses consigned to Franchise China that were seized by customs officials on 15 October. He also denies any responsibility for the other importations of falsely marked Oakley sunglasses the subject of Oakley's evidence, though not the subject of claims for relief in the statement of claim. Rumpf admits, however, that he is responsible for the importations on 10 October 2001 of the 598 sunglasses consigned to himself and of the 530 sunglasses consigned to the fourth respondent. (He says he falsely identified the fourth respondent as the consignee of the second lot to avoid paying Chinese customs duties that would have been payable on a single consignment to him of all these glasses.) He says that he imported these two lots of glasses as agent for the Kirwan Group of companies solely for the purpose of them being given to Kirwan employees and contractors who worked for the Kirwan Group as Christmas gifts. Rumpf contends that he imported these sunglasses for a private purpose, and not for the purpose of trade, and should therefore escape liability under s 120 the Trade Marks Act (and in respect of the other causes of action relied on by the applicant).
26 Section 120(1) shows that infringement of a trade mark requires use by Rumpf of the applicant's registered mark "as a trade mark". Section 17 defines a trade mark as "a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person". Rumpf did not suggest that the fake Oakley marks applied to the sunglasses for which he accepted responsibility were not to be used on those sunglasses as a sign that they were connected with the applicant. If Rumpf's evidence is accepted, it is easy to infer that the false Oakley marks were to be so used. Rumpf's central contention was that the false Oakley marks on the sunglasses were not used "as a trade mark" within s 120(1) because he did not and never intended to deal with those glasses "in the course of trade", within the meaning of that term in s 17 of the Act.
27 He relied on WD & HO Wills (Australia) Ltd v Rothmans Ltd [1956] HCA 15; (1956) 94 CLR 182 as authority for the proposition that importation of marked goods for a private, as opposed to a trading purpose of the importer, does not amount to use of the mark in trade and so cannot result in the infringement of another's registered mark. There, the question was whether the proprietor had used its registered mark in respect of cigarettes for the purposes of a trade in a particular period so as to defeat an application for removal of the mark from the Register for non-use. The High Court, at 191, said:
In the definition under discussion [in Aristoc Ltd v Rysta Ltd (1945) AC 68] the words are "in the course of trade", whereas in s. 72(2) of the Trade Marks Act 1905 - 1948 the words are "for the purposes of trade" but there does not appear to be any real distinction in meaning between the two expressions. ... The word "trade" is, as their Lordships have told us in the Aristoc Case a very wide word, but the use of a trade mark for the purposes of trade would have to be at least a use of the mark to indicate the origin of the goods.
28 In that case, the proprietor of the mark contended that it had used the mark in trade because it had, in effect, acted as the intermediary between smokers in Australia and the American manufacturer and owner in the United States of the mark of the marked cigarettes in arranging for the purchase in and despatch from the United States of those cigarettes to the smokers in Australia. The High Court, at 188 and 191, in rejecting the proprietor's claim that it had used the mark in Australia, said:
The cigarettes were not imported for sale. They were imported for consumption. The cigarettes that reached Australia for consumption by the Australian purchasers were in no different position from cigarettes which a traveller might have purchased in the United States and brought with him to Australia for his own consumption here....
In our opinion the whole trading in the cigarettes took place in the United States. It was there and there only that the trade mark "Pall Mall" was being used for the purposes of trade. When the goods left the United States they were no longer in the course of trade. Trading in them had finished. They had been consigned to the consumer and were at his risk.
29 The term "trade" in the context of the phrase in s 17 the Trade Marks Act 1955 (Cth) is undoubtedly a wide one. It encompasses a wider range of commercial transactions than the actual sale and purchase of marked goods. It has been held that "a use of a mark in an advertisement of goods is a use in the course of trade, and is of course a use in relation to the goods advertised": The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1961] HCA 75; (1963) 109 CLR 407 at 422. The use of a mark on goods in conducting investigations as to whether there might be a market for those goods is unlikely to be a use of the mark in the course of trade: that will generally be the use of a mark in activities preparatory to the commencement of a course of trade. See Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 417 - 418. But where the owner of a mark is able to show that it is committed to supplying marked goods to persons prepared to purchase them, activities preliminary to the actual commencement of selling the goods, such as the distribution of marked samples and marked brochures to agents, so that they could show them to prospective customers in soliciting business will probably amount to the use of the mark in the course of the trade: see Settef at 439; Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; (2001) 51 IPR 149 at 157 and cf Buying Systems (Australia) Pty Ltd v Studio Srl (1995) 30 IPR 517.
30 That marked goods are supplied free of charge does not necessarily mean that the mark is not being used in the course of trade. That is shown by the free sample cases, such as Settef. The Irish Supreme Court, in Golden Pages Trade Mark [1985] FSR 27, held that marked classified telephone directories distributed by the Post Office free of charge to telephone subscribers involved use of the mark by the directory publisher "in the course of trade": the publisher engaged in this activity to earn income from the sale to traders of advertising in the directory. Though in conflict with a UK Patent Office case ("Hospital World" Trade Mark (1967) 84 RPC 595 at 598 - 599) and a British Board of Trade case ("Update" Trade Mark (1979) 96 RPC 166), Golden Pages was referred to with approval in by Whitford J in "Visa" Trade Mark (1985) 102 RPC 323. I consider it correctly states the law.
31 Though goods distributed free of charge may, in some circumstances, be deemed to be dealt with "in the course of trade", that would not, I think, be the case here: if Rumpf's evidence is accepted as establishing that his sunglasses were imported into Australia to be given as gifts to Kirwan Group employees, and contractors, I do not think that the sunglasses, marked though they were with the false Oakley marks, would be "dealt with or provided in the course of trade" within s 17. The sunglasses were bought directly from Johnstone's agent in China. There would be no aspect of "trade" in their use once they were received by Rumpf on behalf of the Kirwan Group in Australia.
32 It can be inferred that what Rumpf says was the intended use of the counterfeit Oakley sunglasses would involve use of the false Oakley marks to suggest to the recipients to whom they were to be given that the sunglasses originated with Oakley. It can be said that some commercial benefit would be gained by the Kirwan Group from giving the sunglasses to employees and contractors by encouraging good industrial relations with them. But that would not be sufficient, in my opinion, to show use of Oakley's marks by Rumpf and the Kirwan Group "in the course of trade" by Rumpf or the Kirwan Group. The Kirwan Group was involved in trade in that it carried on the business of building maintenance and cleaning. But Rumpf's evidence is that the Kirwan Group intended to use the Oakley marks in question for purposes confined to its own internal organisational arrangements. That it may have depended upon the efficacy of those arrangements to conduct its business in the market in which it operated does not, I think, mean that, in so far as it may have given falsely marked Oakley sunglasses to its employees and contractors, it would have made a use of Oakley's mark in the course of trade.
33 So far as the passing off claim against Rumpf in respect of the two importations he acknowledges he made is concerned, an action for passing off lies only against a trader in his capacity as such: no action lies against a private individual in his private capacity. Wadlow at 4.28 and Warnink v Townend & Sons (Hull) Ltd [1979] AC 731 at 742 and Rolls-Royce Motors Ltd v Zanelli (1979) 96 RPC 148 at 154. Of this rule, Wadlow observes:
It may be reprehensible, but it is not passing-off to economise by telling ones' guests that cheap sparkling wine is Champagne or by re-filling an empty spirits bottle with a cheaper brand. Nor is it passing-off for a private individual to seek to impress with known counterfeit versions of expensive and prestigious goods.
34 The misrepresentation that the sunglasses were genuine Oakley glasses that would have been made if they had been gifted to Kirwan Group employees and contractors would not have been made by the Kirwan Group in its capacity as a trader acting as such for much the same reasons that I do not consider that such a use of the falsely marked sunglasses would have constituted a use of that mark in the course of trade within s 17 the Trade Marks Act.
35 If Rumpf's evidence as to the purpose for which the sunglasses were imported stood alone, I would reject it. In material respects, however, Rumpf's evidence about his purpose for importing the two lots of glasses is confirmed by that of the witness Collins, managing director of Kirwan Industrial Services, a division of the Kirwan Group. Nevertheless, I am not prepared to accept what Rumpf says was his reason for importing the two consignments of sunglasses.
36 Though Rumpf says he was responsible only for the two importations I have referred to, the evidence shows that he was connected with the distribution within Australia of quite large quantities of sunglasses falsely marked with Oakley trade marks both before and after the two importations in October 2001 for which alone he accepts responsibility.
37 Rumpf says that he commenced business from Unit 5, 789 Kingsford Smith Drive, Eagle Farm in April 2001 as an importer of Chinese merchandise acquired from distressed stock sales and surplus production of Chinese factories. For some reason that he does not explain, he says Franchise China's business was relocated to this same unit. He also says he became a director of this company, in effect, purely to assist Johnstone, who was in ill health. Rumpf says he only looked after the maintenance of the statutory records, though he was also a signatory on Franchise China's bank account. Rumpf said that a person named Pie was employed as manager of Franchise China and was responsible for the full-time running of its business. When confronted with a facsimile he sent to Franchise China's customs agent in Brisbane on 27 September 2001, Rumpf acknowledged he was involved in other matters of that company's business, but only when Johnstone consulted him about them. Rumpf sent this facsimile when the container consigned to Franchise China in which the 2,917 pairs of sunglasses were found by Australian Customs was embargoed, in an attempt to obtain release of the container, which contained a lot of other merchandise for Franchise China.
38 Taylor and a number of federal police agents went to Unit 5 on 6 September 2001. Rumpf agrees that he was working there that morning, as was Johnstone and Pie; he does not dispute that the federal police searched the unit and found a number of cartons containing, among other things, about 400 sunglasses, 240 baseball caps and a number of plastic pouches, all bearing Oakley trade marks. Taylor said that all the goods were marked with false Oakley marks and that the sunglasses and packaging were identical to the sunglasses and packaging of the 15 October seizure. Those items were seized by the federal police. Rumpf in oral evidence said he had no knowledge of how these glasses came to be in Unit 5. He added: "I was a director of Franchise China, but I didn't take any active part in the nuts and bolts, day to day affairs of what went on with buying and selling the goods ... but the sunglasses ... belonged to Mr Johnstone because he ran his own business separate in his own name, from the business of Franchise China". I gather from this evidence that Rumpf's position is that the glasses belonged to Johnstone personally and had nothing to do with Franchise China, but even if they should turn out to have something to do with Franchise China, Rumpf knew nothing at all about them because, though a director, he was not involved in that company's day-to-day business activities.
39 On the same day, 6 September 2001, federal police seized a number of "Fed Ex" and "TNT Airfreight" cartons from Unit 6, 789 Kingsford Smith Drive, Eagle Farm. Rumpf was not present at this seizure and denies being responsible for any of these goods. Taylor inspected the goods contained in these cartons; they comprised nearly 3,000 pairs of different styles of Oakley branded sunglasses and a number of Oakley branded caps and garments. Taylor said none were genuine Oakley products. There was no evidence in the applicant's case as to who was the owner or occupier of Unit 6, the unit adjacent to Rumpf's. Rumpf said he knew nothing at all about this unit or the Oakley branded products seized there. But the cartons had attached to them packing slips that were addressed to a number of different people. One of the boxes was addressed to Barry Rumpf, Kirwan Group Service, 252 Hyde Street, Yarraville, Victoria 3013. Another box was addressed to a Martin Rumpf of 2 Hepburn Road, Doncaster, 3108. Martin is Rumpf's son; that was then the son's place of residence. At the time when the boxes addressed to Martin were seized, Rumpf was director of a company with its registered office at that same Doncaster address. The rest of the boxes were addressed to various staff of the Kirwan Group at 5 Kent Street, 252 Hyde Street and 12 Campbell Street, Yarraville 3013, identified by Rumpf as all being Kirwan Group addresses.
40 Rumpf says it was Johnstone who was responsible for importing these goods (a responsibility Johnstone now accepts). He says it had been Johnstone's practice to send airfreight broken up into small separate consignments addressed to different people, including himself, in order to avoid Chinese export duty. He was aware that Johnstone was importing goods using Rumpf's name and address. Rumpf would take possession of such goods when they arrived in Australia. Where the goods were consigned to Kirwan employees, Rumpf said they would let him know that the particular package had arrived and Rumpf would have it brought to his office in Melbourne. He would then notify Johnstone in order to find out what to do with them. Sometimes Johnstone would pick them up in Melbourne, sometimes Rumpf would deliver them to Johnstone at his home in Mulwala and sometimes Rumpf would take them to Unit 5 at Kingsford Smith Drive. Rumpf was aware that the goods he so dealt with for Johnstone would be used by Johnstone as stock on his market stand. He also admitted that he knew that some Oakley-branded sunglasses were being stored at his warehouse unit at Eagle Farm and that they were not genuine because Johnstone had told him so.
41 In early January 2002, 204 pairs of counterfeit Oakley sunglasses consigned to a James Rumpf of "2 Hepburn Road, Melbourne, Vic 3108", were seized in Sydney by Australian Customs. This is the same address of the shipment to Martin Rumpf at Doncaster that was seized on 6 September 2001 from Unit 6. Rumpf denies responsibility for this January importation. "James" is Rumpf's second Christian name and James Rumpf was the name of his father, who died in 1996. A search by Oakley's solicitors on 15 January 2002 of the White Pages showed the address for "Rumpf B" at that time as being this Doncaster address. An historical personal extract for Barry James Rumpf on the Australian Securities and Investments Commission database, obtained on 15 January 2002, also lists the Doncaster address as his address. Though Rumpf accepts that "Rumpf B" in the White Pages refers to him, he denies living there at the time of the January 2002 seizure - at that time, he says it was his wife, her mother and his son Martin who resided at the Doncaster address.
42 On 22 April 2002, Australian Customs in Brisbane seized 276 counterfeit Oakley sunglasses consigned to "Adam Slack" of "Unit 1/414 Pineridge Road, Runaway Bay Qld 4216". The applicant's attempts to contact Slack at this address were unsuccessful. Rumpf denies any involvement in this importation. Unit 7, 414 Pineridge Road, Runaway Bay was listed from 16 November 1998 to 12 November 2001 as the principal place of business in Queensland of Kirwan Industrial Services, of which Rumpf has been a director. Rumpf has never resided in Unit 1, though he sometimes stays in Unit 7, which he says is owned by his daughter. In October 1999, Johnstone told Taylor that this unit belonged to his son (the fourth respondent). Searches of the White Pages and land title searches conducted on behalf of the applicant in May 2002 indicate that Johnstone's wife had a telephone connected to "414 Pineridge Road, Runaway Bay". It would be an extraordinary coincidence if the fake Oakley sunglasses were consigned to an addressee unconnected with Rumpf at the block of units in which one was owned by Johnstone's wife and in which Rumpf sometimes stays.
43 I have already referred to what Taylor had to say about buying a pair of counterfeit Oakley sunglasses from Johnstone's stall on 27 May 2001; the credit card receipt he received from Johnstone showed the merchant's name as "Tipplers Island Resort" at Stradbroke Island. At that time, Rumpf was a director of two businesses whose addresses were "Tipplers Island Resort South Stradbroke Island". Rumpf admits to having lived at Tipplers at one stage.
44 On his own evidence, Rumpf had an arrangement with Johnstone in place for a considerable time before the importations the subject of this action under which Johnstone conducted his business from Rumpf's premises at Unit 5, Eagle Farm. Rumpf was aware that Johnstone's business included the frequent importation of fake Oakley sunglasses and other products and their sale from Johnstone's market stand in Brisbane. During this period, on his own evidence, he permitted Johnstone to consign packages from China to him, some of which he knew contained fake Oakley glasses; he took delivery of these consignments and also arranged for others to whom he says Johnstone consigned fake Oakley sunglasses to deliver them to him and he then took them to wherever Johnstone directed him to take them, including, on occasion, Rumpf's Unit 5.
45 Rumpf has too many connections to importations of fake Oakley sunglasses and too much involvement, on his own evidence, with Johnstone's trade in such sunglasses to make believable his claim that his purpose in arranging for the importation of the two consignments of fake Oakley sunglasses seized on 10 October 2001 was the private one he described.
46 Further, Rumpf's initial reaction to Oakley's inquiries relating to the three importations the subject of this action is inconsistent with the claim he now makes that he imported two of the three lots of sunglasses in question as gifts for Kirwan Group employees. Just before this action was commenced by Oakley, its solicitors, Davies Collison Cave, received a letter dated 29 October 2001 from Gadens Lawyers in relation to the sunglasses seized in October. The letter advised that Gadens had preliminary instructions to act on behalf of Rumpf and said:
In relation to the Oakley goods in question we are instructed by our client that on their arrival in Australia, our client advised TNT to immediately return these goods to their country of origin. Consequently we are presently liasing with the Australian Customs Service in relation to the notices that have been served upon our client by them in an attempt to clarify these matters.
47 Subsequently, in a letter dated 8 November to Davies Collison Cave, Gadens wrote: "...once again [Rumpf] reiterates his position that he has not been involved in the deliberate importation of counterfeit sunglasses".
48 Rumpf, in his statement of 8 March 2002, said the seizure of the 2,917 pairs of sunglasses by Customs on 15 October 2001 from a shipping container consigned to Franchise China "was a matter of considerable surprise to the management of" that company - he was one of its two directors - who were not aware of the existence of the sunglasses until they were discovered by Customs officers in the container. In this statement, he explained how in June 2001 "the Franchise China management" was told by their Chinese agents that Chinese Customs had intercepted the container in question, had discovered the sunglasses, which were not mentioned in the shipping documentation, and had removed those sunglasses. He added that "the facts are that these sunglasses were not ordered by or with the knowledge of the Second Respondent and all of the Respondents were of the sincere belief that the furniture had been emptied of its contents entirely". All this is inconsistent with Johnstone's evidence at trial, wherein he accepted personal responsibility for these sunglasses which he said were his property and imported by him on his own behalf.
49 The inconsistency between the initial position Rumpf took up as set out in the letters written by his solicitors and his current evidence about his purpose for importing the two consignments of sunglasses for which he now accepts responsibility and the inconsistency between what he said in his March 2002 statement about the ignorance of all respondents, including himself and Johnstone, of the existence of the sunglasses in the container and Johnstone's evidence at trial are further reasons for doubting Rumpf's credibility as a witness.
50 Collins' evidence, supportive though it is of Rumpf's, in so far as he now says he imported the two lots of sunglasses for a private purpose, does not persuade me to accept what Rumpf says.
51 In his statement prepared on 8 March 2002, Rumpf spoke of his reasons for importing the two lots of sunglasses totalling 1,128 pairs; he referred to the Kirwan Group's practice of presenting "each staff member" with a bottle of wine as a Christmas present and how it was decided that in 2001 "they would be given a pair of sunglasses instead of the usual bottle of wine". In this context, he said the Kirwan Group: "employs approximately 750 people in Australia and 300 in Thailand. In addition, it engages the services of between 50 and 100 sub-contractors". The Kirwan Group comprises of around seven companies in Australia and one in Thailand. Rumpf is a director of some of the companies in the Group. A large part of the Kirwan Group's business is grounds maintenance and the provision of cleaning services. The context in which Rumpf made these statements suggests that he was seeking to explain why he needed just over 1,100 pairs of sunglasses for Christmas gifts.
52 In his affidavit, Collins, the managing director of Kirwan Industrial Services (which he describes as a division of the Kirwan Group of companies), said that "the Group employs over 1,000 people in Australia and Thailand". He then referred to Rumpf's proposal that "the Group give to its staff and associates at Xmas 2001, sunglasses in lieu of the usual bottle of wine". After referring to learning of the seizure of the sunglasses that Rumpf had imported, he said "the project was abandoned due to lack of time prior to Xmas and each of the divisions then proceeded to make their own independent arrangements". He added, "the subsidiary in Thailand subsequently purchased 650 pairs of Bolle brand sunglasses". In oral evidence, Collins said he thought the Kirwan Group employed "in the region [of] between six and seven hundred" people in Australia and had in the region of 100 to 150 people he described as "associates" who were to be included in the Christmas gift of sunglasses. He described them as the "many suppliers who we rely upon to provide us with the best price throughout the year, and the best service for a customer". These appear to be the people that Rumpf described as "sub-contractors", ie, people not employed but engaged under contract by the Kirwan Group to provide its services to the Group's clients.
53 I infer that Collins' affidavit was intended firstly to confirm Rumpf's evidence about the sunglasses being imported as Christmas gifts and not for sale and, secondly, to confirm why Rumpf imported just over 1,100 pairs of sunglasses for that purpose. It appears plain enough from the affidavit that mention was there made by Collins of the company's employees in Thailand, in addition to those in Australia, to explain why that number of sunglasses were imported by Rumpf. Collins would not agree with suggestions that the Thai subsidiary purchase was linked with the Brisbane seizure. He could, however, offer no satisfactory explanation for why he had bothered to mention what was done in Thailand after the seizure.
54 Rumpf said he arranged with Johnstone, who had an agent in Beijing, for the two consignments totalling 1,128 pairs of sunglasses to be purchased in China and shipped to him in Brisbane. It was also part of the arrangement that the sunglasses would be consigned not to the Kirwan Group or any member of that Group, but to Rumpf personally: Rumpf said he was going to deliver them to Kirwan's office. The sunglasses were consigned to Rumpf at the Eagle Farm premises in Queensland even though the Kirwan Group offices are in Melbourne and Rumpf had, from time to time, picked up packages of fake Oakley sunglasses there for Johnstone. He said:
The arrangement was that when Kirwan's received the goods, there would be an invoice issued by the agent in Beijing to Kirwan's, and they would remit the money to a bank account nominated by the Beijing agent. The goods were never received by Kirwan's; consequently, they were not under any obligation to pay.
55 He said that it was Johnstone who ultimately "wore the cost" of the glasses of about $6,000 to $7,000.
56 Johnstone gave evidence that it was he who thought up the idea of the Kirwan Group giving their people sunglasses rather than a bottle of wine, that he mentioned it to Rumpf and that it was he who imported them, "not for Barry, for Kirwan's" although his only association with the Kirwan Group was through Barry in respect of the two consignments of sunglasses. He did not know Collins. He confirmed that he had not been paid for the glasses. It strains credulity to accept this evidence. Johnstone no doubt bore the cost of these sunglasses. But I think it more likely that he did this because there was no arrangement for them to be imported for the Kirwan Group and that they were imported to be sold at Johnstone's market stall.
57 While Collins does support Rumpf's claim, I think the weight of evidence justifies a finding that the two lots of sunglasses in question were imported for the purpose of sale in Australia. Rumpf accepts responsibility for the importation of these sunglasses. I think they were imported for the purpose of being sold by Johnstone at his market stand. Rumpf was sufficiently involved to be guilty of infringing Oakley's trade marks in respect of these two importations.
58 There will therefore be a finding that Rumpf infringed Oakley's trade mark rights in respect of the sunglasses imported on 10 October 2000.
59 As to the passing off claim against Rumpf, on the view of the facts that I have taken, there will also be a finding that, by being involved in importing the two lots of sunglasses in question into Australia for the purpose of their being sold here, Rumpf is liable for passing off those glasses as genuine Oakley glasses. For similar reasons, Oakley succeeds on its Trade Practices Act claims against Rumpf.
60 I do not think it necessary to resolve the question as to the test to be applied in order to determine whether directors are liable for the acts of their company as joint tortfeasors. The applicant is entitled to the relief it claims against both Johnstone and Rumpf on the bases I have set out in these reasons.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. |
Associate:
Dated: 21 February 2003
Counsel for the Applicant: |
Mr B Fitzpatrick |
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Solicitor for the Applicant: |
Davies Collison Cave Solicitors |
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Counsel for the Second Respondent: |
The Second Respondent appeared in person. |
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Counsel for the Third Respondent: |
The Third Respondent appeared in person. |
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Date of Hearing: |
19 and 20 September 2002 |
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Date of Judgment: |
21 February 2003 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2003/105.html