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GM Holden Ltd v Paine [2011] FCA 569 (30 May 2011)

Last Updated: 8 June 2011

FEDERAL COURT OF AUSTRALIA


GM Holden Ltd v Paine [2011] FCA 569


Citation:
GM Holden Ltd v Paine [2011] FCA 569


Parties:
GM HOLDEN LTD (ACN 006 893 232), GENERAL MOTORS LLC and GM GLOBAL TECHNOLOGY OPERATIONS LLC v DARREN PAINE, KIT WHEEL & TYRE PTY LTD (ACN 130 334 548), RICKY WAI CHU, TYRES FOR LESS PTY LTD (ACN 119 126 653), SAMUEL ELLIOTT LEWIN, BSA WHEELS AUSTRALIA PTY LTD (ACN 103 714 076), MICKY WU, TALEB TYRES (AUST) PTY LIMITED (ACN 107 451 794), AHMED TALEB, MOHAMED TALEB, GALLOP TRADING PTY LTD (ACN 093 740 535), MIN CHAO WU, YI FEI FENG, IB INTERNATIONAL TRADING PTY LTD (ACN 125 489 161), GUO YUAN YANG, A PERSON KNOWN AND IDENTIFIED BY THE FIFTH RESPONDENT AS “FRANK”, WORK WHEELS AUSTRALIA PTY LTD (ACN 137 424 269), YOESOEF FIRDAUS, HELEN SETYANINGSIH, ZUMBO WHEELS AUSTRALIA PTY LTD (ACN 133 316 104), IGOR POCEV, WEICHUN CHEN, WEIZHEN CHEN and YI SHU


File number:
VID 629 of 2010


Judge:
GORDON J


Date of judgment:
30 May 2011


Catchwords:
CORPORATIONS – stay of proceeding against company in liquidation – s 500(2) Corporations Act 2001 (Cth)

INTELLECTUAL PROPERTY – trade marks – registered designs – advertisement, purchase and sale of allegedly infringing goods – whether allegedly infringing trade marks or designs substantially identical with or deceptively similar in overall impression to registered trade marks and designs – whether infringement made out in the circumstances – insufficient evidence to support finding of design infringement where allegedly infringing product not available for comparison with registered design – ss 20, 120, 126 Trade Marks Act 1995 (Cth) – ss 71, 75 Designs Act 2003 (Cth)

TRADE PRACTICES – passing off – misleading or deceptive conduct – whether made out in the circumstances – Joint tortfeasors – ss 52, 53, 75B, 80, 82 Trade Practices Act 1974 (Cth) – ss 42, 44 Fair Trading Act 1987 (NSW)

DAMAGES – compensatory damages – exemplary damages – relevant principles – additional damages under s 75 of the Designs Act 2003 (Cth)


Legislation:


Cases cited:
Adidas-Salomon AT v Turner [2003] FCA 421; (2003) 58 IPR 66
Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; (2007) 157 FCR 564
Elwood Clothing Pty Ltd (ACN 079 393 696) v Cotton On Clothing Pty Ltd (ACN 052 130 462) [2009] FCA 633; (2009) 81 IPR 378
Deckers Outdoor Corporation Inc v Farley (No 5) [2009] FCA 1298; (2009) 262 ALR 53
Enzed Holdings Limited v Wynthea Pty Limited [1984] FCA 373; (1984) 57 ALR 167
Jones v Dunkel (1959) 101 CLR 298
Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449
Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1
LED Technologies Pty Ltd v Elecspess Pty Ltd [2008] FCA 1941; (2008) 80 IPR 85
Norm Engineering Pty Ltd v Digga Australia Pty Ltd [2007] FCA 761; (2007) 162 FCR 1
Paramount Pictures Corporation v Hasluck [2006] FCA 1431; (2006) 70 IPR 293
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 5; (2003) 196 ALR 257
Review Australia Pty Ltd (ACN 067 634 360) v Innovative Lifestyles Pty Ltd (ACN 107 012 260) [2008] FCA 74; (2008) 246 ALR 119
Review Australia Pty Ltd (ACN 122 295 836) v New Cover Group Pty Ltd (ACN 111 991 596) [2008] FCA 1589; (2008) 79 IPR 236
Sanders v Snell (1997) 73 FCR 569
The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444
XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448


Date of hearing:
18 April 2011


Date of last submissions:
18 April 2011


Place:
Melbourne


Division:
GENERAL DIVISION


Category:
Catchwords


Number of paragraphs:
101


Counsel for the Applicants:
EJC Heerey


Solicitor for the Applicants:
Middletons


Counsel for the Ninth and Tenth Respondents:
A Franklin SC


Solicitor for the Ninth and Tenth Respondents:
Theodore Solomon & Partners

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 629 of 2010

BETWEEN:
GM HOLDEN LTD (ACN 006 893 232)
First Applicant

GENERAL MOTORS LLC
Second Applicant

GM GLOBAL TECHNOLOGY OPERATIONS LLC
Third Applicant
AND:
DARREN PAINE
First Respondent

(and others as according to the attached schedule)

JUDGE:
GORDON J
DATE OF ORDER:
30 MAY 2011
WHERE MADE:
MELBOURNE

THE COURT ORDERS THAT:


  1. The parties are directed to confer and bring in orders to give effect to these reasons for decision by no later than 4:00 pm on 3 June 2011.

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 Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 629 of 2010

BETWEEN:
GM HOLDEN LTD (ACN 006 893 232)
First Applicant

GENERAL MOTORS LLC
Second Applicant

GM GLOBAL TECHNOLOGY OPERATIONS LLC
Third Applicant
AND:
DARREN PAINE
First Respondent

(and others as according to the attached schedule)

JUDGE:
GORDON J
DATE:
30 MAY 2011
PLACE:
MELBOURNE

INDEX
Content
Para No(s)
A
INTRODUCTION
[1] – [10]
B
THE CLAIMS
[11] – [68]

(a) Trade Mark Infringement
[15] – [34]

(1) Trap purchases
[16] – [24]

(a) Trap purchases at Bob Jane Bankstown
[16] – [17]

(b) Trap purchases at Tyre Factory, Bayswater
[18]

(c) Trap purchases at Tyre Factory, Sunshine
[19]

(d) Trap purchases – Other evidence
[20] – [23]

(e) Trap purchases – Conclusion
[24]

(2) Sales on eBay
[25]

(a) 19″ Advertisement
[26]

(b) Wheels and Tyres Advertisement
[27] – [28]

(c) Later evidence of Mohamed and Moussa Taleb
[29] – [32]

(d) Wheel centre caps added by Bob Jane
[33]

(3) Conclusion on Trade Mark Infringement
[34]

[35]

(c) Design Infringement
[36] – [64]

(1) VE GTS Design
[40] – [43]

(2) Pentagon Design
[44] – [45]

(3) Other matters
[46]

(d) Sydney Tyres
[47] – [51]

(e) Liability of Mohamed and Ahmed Taleb
[52] – [68]

(1) Mohamed Taleb
[52]

(2) Ahmed Taleb
[53] – [59]

(3) Other matters
[60] – [66]

(4) Conclusion
[67] – [68]
C
DAMAGES AND OTHER RELIEF
[69] – [101]

(a) Compensatory damages

(1) Lost profits identified in invoices
[76] – [84]

(2) Lost profits identified in the imported goods
[85] – [88]

(3) Damage to reputation
[89] – [93]

(b) Exemplary damages
[94] – [98]

(c) Additional damages under s 75(3) of the Designs Act
[99] – [100]

(d) Other relief
[101]

REASONS FOR JUDGMENT

A. INTRODUCTION

  1. The first applicant, GM Holden Ltd (ACN 006 893 232) (GM Holden), is the exclusive manufacturer, wholesaler and distributor of all Holden vehicles, branded new and spare parts and accessories for Holden vehicles in Australia. GM Holden only sells spare parts and accessories for GM Holden vehicles to a network of authorised retailers and wholesalers (Holden Dealers).
  2. In 1987, GM Holden established an official branded performance vehicle division. The performance vehicle division modifies standard Holden vehicles using unique body-work, alloy wheels, interiors, upgraded performance engines, brakes, transmissions and suspension. The performance division is known as Holden Special Vehicles (HSV). Under licence from GM Holden, Premoso Pty Ltd (Premoso) operates the performance division. Premoso only sells genuine spare parts and accessories for HSV vehicles to a network of authorised retailers and wholesalers (HSV Dealers). HSV Dealers are required to only sell spare parts and accessories to customers who provide a build and tag number to certify their ownership of a HSV vehicle. Of the approximately 250 current Holden Dealers, 60 are also HSV Dealers.
  3. The second applicant, General Motors LLC (General Motors), is the owner of all trade marks associated with official Holden products. A special power of attorney has been given by General Motors in favour of the General Counsel of GM Holden to enforce Holden’s intellectual property rights within Australia. GM Holden is responsible for the management and protection of all registered and un-registered trade marks, registered designs and copyright associated with Holden products in Australia.
  4. General Motors is the owner of all trade marks associated with official Holden products, GM Holden and HSV in Australia including the following registered trade marks:
Trade Mark No.
Trade Mark
Classes
563702
2011_56900.png
(HSV Rondel Mark)
12, 16, 21, 25, 28, 37
639717
2011_56901.png (Holden Lion Mark)
12, 36
831207
HSV
6, 9, 12, 14, 16, 18, 20, 21, 24, 25, 28, 35, 36, 37, 39
1003159
HOLDEN
12

(collectively the Trade Marks). General Motors licenses use of the Trade Marks to GM Holden, which in turn sublicenses use of the Trade Marks to Premoso.

  1. Since July 2006, GM Holden has manufactured and sold the VE series Commodore. Premoso has utilised the design of 20 inch alloy wheels identified as VE GTS, which are factory fitted on all GTS variants of version 1 of the E series HSV (the VE GTS Wheels). The E series HSV is based on the VE model Commodore and was manufactured and sold between 11 August 2006 and 19 August 2009. GM Holden has offered a style of the 20 inch alloy wheels as an optional extra when purchasing a VE model Holden under the style name “Supersport” (the Supersport Wheels). Supersport Wheels are manufactured for Holden by a United States based company, Trade Union International, Inc, through its Chinese manufacturer, Nantong Trade Union Aluminium Alloy Co.
  2. Since 31 March 2008, Premoso has utilised the design of a 20 inch alloy wheel identified as “Pentagon”, which are offered as an optional extra when purchasing an E series model vehicle from the HSV range including the E2 Clubsport, Clubsport Tourer and Maloo Vehicles (the Pentagon Wheels). Each of the VE GTS, Supersport and Pentagon Wheels are designed to be fitted on vehicles based on the VE model Holden, and will not fit on earlier model Commodores without modification.
  3. The third applicant, GM Global Technology Operations Inc (GM Global), is the owner of all registered designs utilised in the manufacture of HSV and Holden vehicles, parts and accessories. GM Global licenses use of the registered designs to GM Holden. GM Holden sublicenses use of the designs to Premoso. GM Holden and GM Global are wholly-owned subsidiaries of General Motors.
  4. The registered designs in Australia of which GM Global is the owner include the following:
Registration No.
Representation
Status
305935
(VE GTS Design)
2011_56902.png
Registered and Certified
319648
(Pentagon Design)
2011_56903.png
Registered and Certified

(collectively the Designs).

  1. The Supersport Wheels have a circular cap fixed to their centres. The wheel centre cap features the Holden Lion Mark (see 4 above). Circular caps featuring the HSV Rondel Mark (see 4 above) are fixed to the centre of wheels fitted to HSV model vehicles. These wheel centre caps are offered for separate sale by HSV Dealers to certified owners of a HSV vehicle.
  2. Initially 24 respondents were joined as parties to these proceedings. Since the proceedings were filed, the applicants have settled with 17 respondents and withdrawn the proceedings against four respondents. The proceeding remains outstanding as against the ninth respondent, Ahmed Taleb, and his son, Mohamed Taleb, the tenth respondent (collectively, the Talebs). The eighth respondent, Taleb Tyres (Aust) Pty Ltd (ACN 107 451 794) (now Belaaa Pty Ltd (in liq)), was a company of which Ahmed Taleb was the sole director and the Talebs were both shareholders. It traded at 42 Princes Highway, Arncliffe, New South Wales (Taleb Tyres). Taleb Tyres was placed into liquidation on 14 December 2010. The applicants’ claim against Taleb Tyres is stayed: s 500(2) of the Corporations Act 2001 (Cth) (the Corporations Act). No leave of the Court was granted to continue the action against Taleb Tyres.

B. THE CLAIMS

  1. The applicants seek relief against the Talebs for trade mark and design infringement, passing off and misrepresentations in breach of ss 52 and 53(a) of the Trade Practices Act 1974 (Cth) (the TPA) and the equivalent provisions in the Fair Trading Act 1987 (NSW) (the FTA).
  2. The applicants allege that since at least 11 November 2008, each of the Talebs and Taleb Tyres (or any of them) has, without the licence or authority of the applicants, imported, manufactured, offered for sale and sold products which (i) embody designs that are identical to, or substantially similar in overall impression to, the Designs; or (ii) are offered by reference to signs which are substantially identical with or deceptively similar to the Trade Marks, including:
    1. the Supersport Wheels;
    2. the Pentagon Wheels; and
    3. VE GTS Wheels.

It will be necessary to return to consider these allegations in further detail later in these reasons for decision.

  1. On 10 March 2010 the solicitors for the applicants sent a letter of demand to Taleb Tyres and Mohamed Taleb requiring them, inter alia, to:
    1. provide an undertaking that they, whether themselves, their servants, agents, employees or any of them, will immediately cease and forever refrain from importing, manufacturing, promoting, offering for sale or selling ... products bearing Holden Intellectual Property, without the licence, approval or authority of [GM Holden];
    2. acknowledge that their importation, offering for sale or selling of such products is an infringement of [GM Holden’s] intellectual property rights;
    3. provide a statutory declaration detailing:

3.1 the number and full particulars of products they have manufactured, imported, taken orders for, purchased, received, promoted, offered for sale, sold or otherwise dealt with;

3.2 the name and contact details of all suppliers from whom they have received products and the quantity received from each supplier; and

3.3 the name and contact details of all customers (including other businesses) to whom they have sold products and the quantity sold; and

3.4 deliver up to the applicants’ solicitors:

3.4.1 all stock ... in the possession, custody or control of Taleb Tyres and Mohamed Taleb; and

3.4.2 all packaging, purchase orders, invoices and other materials in any form which include or refer to products in their possession, custody or control.

The letter of demand was not complied with. The applicants’ solicitors sent a further letter on 21 September 2010 requesting that they comply with the 10 March letter. No response was received. The Talebs and Taleb Tyres were then joined as parties to these proceedings.

  1. The applicants contend that the Talebs engaged in contraventions acting as joint tortfeasors with Taleb Tyres, in that they have procured or directed the following contraventions:
    1. the use of trade marks in the course of trade in Australia (which are substantially identical with and deceptively similar to the Trade Marks) on products in breach of ss 120(1) and 120(2)(a) of the Trade Marks Act 1995 (Cth) (the TMA);
    2. without the licence or authority of GM Global, made, offered to make, sold, offered to sell or imported into Australia for sale or use for the purposes of any trade or business a product, which embodied a design that is identical to, or substantially similar to the overall impression of, one or more of the Designs therefore infringing s 71 of the Designs Act 2003 (Cth) (Designs Act);
    3. represented that the products were the same as, or emanated from the same trade source as, the Holden products, or were authorised by or associated with the applicants, thereby engaging in misleading or deceptive conduct in breach of ss 52 and 53(a) of the TPA and ss 42 and 44(a) of the FTA; and
    4. passing off the products as certified Holden products.

(A) TRADE MARK INFRINGEMENT

  1. Each Trade Mark is registered in class 12 on the Register of Trade Marks in respect of parts and accessories for vehicles. Section 20 of the TMA defines the statutory monopoly provided to General Motors as the registered owner of the Trade Marks. The question which arises is whether the products sold by the Talebs and Taleb Tyres are similar enough to the registered goods such that the question of infringement falls to be determined by s 120(1) of the TMA. The Talebs do not dispute that if it is found that their goods were sold bearing a mark, then the mark that these goods allegedly bore was substantially identical with, or deceptively similar to, one of the Trade Marks.

(1) Trap Purchases

(a) Trap Purchases at Bob Jane Bankstown

  1. On or about 4 December 2009, Taleb Tyres invoiced and supplied the Bob Jane
    T-Marts’ store situated at 164 Canterbury Road, Bankstown, New South Wales (Bob Jane Bankstown) with 20 wheels under the item no. “S720855120SILV”. The invoice bore the number 34718. Bob Jane Bankstown’s accounting records record the receipt of 20 “SUPERSPORT 20X8 5/120 VE” wheels from Taleb Tyres with the same invoice number, 34718. The applicants submit, and I accept, that the wheels described by Bob Jane Bankstown as “SUPERSPORT 20X8 5/120 VE” are the same wheels specified by Taleb Tyres as item number “S720855120SILV”.
  2. Mr Fahd is a licensed commercial agent engaged by Nationwide Research Group (Nationwide) to make inquiries about and purchase replica Holden wheels from Bob Jane Bankstown. On 17 December 2009, Mr Fahd attended Bob Jane Bankstown and purchased a set of four 20″ x 8″ alloy wheels for AU$1,200 (the Fahd Products). The Fahd Products were described on the receipt as “Supersport 20X8 5/120 VE”. The photographs of the Fahd Products show the Holden Lion Mark in the wheel centre caps on the wheels. At the time of inquiring about and purchasing the Fahd Products, a male employee at Bob Jane Bankstown described them to Mr Fahd as “copy Holden Supersport” rims. The Fahd Products were packed in green boxes marked “Verde Custom Wheels” and featured a sticker which read “Distributed by Taleb Tyres Australia Pty Ltd, www.talebtyres.com.au”. In addition to a set of four plastic wheel centre caps with the Holden Lion Mark cast onto them, the Fahd Products were also supplied with a “wheel registration” booklet which states that its source is Trade Union International, Inc.

(b) Trap purchases at Tyre Factory, Bayswater

  1. On 2 March 2010, Mr Williams, a researcher employed by Nationwide, purchased four “Supersport” wheels from the Tyre Factory store situated at the corner of Stud Road and Mountain Highway in Bayswater, Victoria (the Williams Products). Photographs of the Williams Products show the Holden Lion Mark in the wheel centre caps on the wheels. The Williams Products were packed in green boxes marked “Verde Custom Wheels” and featured a sticker which read “Distributed by Taleb Tyres Australia Pty Ltd, www.talebtyres.com.au”.

(c) Trap purchases at Tyre Factory, Sunshine

  1. On 23 July 2010, Ms Munn, a Licensed Enquiry Agent employed by Nationwide, purchased four “Supersport” wheels from the Tyre Factory store situated at 265 Ballarat Road, Sunshine, Victoria (the Munn Products). Photographs of the Munn Products show the Holden Lion Mark in the wheel centre caps on the wheels. The inside of the wheel included the embossed marking “S7-28” and the back of the wheel bore the embossed marking “C-S7-BS”. The receipt issued to Ms Munn recorded the wheels as “20X8 SUPERSPORT 5/120 SILVER”. The wheels were sold with tyres and without packaging.

(d) Trap purchases – other evidence

  1. On 12 November 2010, Mohamed Taleb was directed to file an affidavit which identified the names and addresses of all persons known by him to have been involved at any time in the sale, purchase or supply of products which embodied designs that were: (i) identical to, or substantially similar in overall impression to, the Designs; or (ii) offered under or by reference to signs which were substantially identical with or deceptively similar to the Trade Marks of 12 identified products. The list of products included the Supersport Wheels, the Pentagon Wheels and the VE GTS Wheels.
  2. In response to that direction, on 24 November 2010 Mohamed Taleb swore an affidavit which exhibited a schedule which was said to contain the names, addresses, telephone numbers, fax numbers, email addresses and domain names of persons involved at any time in the manufacture, importation, sale, offer for sale, purchase, order, supply, distribution, promotion or provision of any of the products listed in the orders of 12 November. Part of the schedule included a Taleb Tyres transaction history report for wheels specified as “S720855120SILV – NEW WHEEL”. The report records sales of 169 wheels between January 2009 and January 2010 for $36,257.20. The transaction history report records the sale to Bob Jane Bankstown of 20 wheels on 4 December 2009. For those reasons, I accept that the wheels purchased by Mr Fahd at Bob Jane Bankstown were supplied by Taleb Tyres.
  3. Another transaction history report recorded sales by Taleb Tyres of 71 wheels specified as “20’ S7 WHEEL” for a total price of $14,457.50. As noted above at paragraph 16, the “S7” also designates the “Supersport” style wheels.
  4. In addition to these transaction history reports produced by Mohamed Taleb, the applicants’ solicitors were told by Bob Jane Corporation Pty Ltd (Bob Jane) that it had conducted an investigation of all stores to identify the sale of any wheels and wheel centre caps which potentially infringed the Trade Marks and the Designs. Bob Jane provided the applicants’ solicitors with the following documents:
    1. on 31 March 2010, a sales report summarising (i) details of sales of potentially infringing products by Bob Jane Bankstown; and (ii) the supplier of the products. The sales report contained the entries relating to Taleb Tyres listed in Annexure A;
    2. on 28 October 2010, another sales report, listing potentially infringing products sold by all of the Bob Jane stores, which included the entries relating to Taleb Tyres listed in Annexure B; and
    3. numerous invoices from Bob Jane and Taleb Tyres for wheels designated “SUPERSPORT 20X8 5/120”, “SUPERSPORT 20X8 5/120 VE”, “S720855120SILV” and “20″ S7 WHEEL”. The Taleb Tyres invoices were addressed to Bob Jane Preston and Bob Jane Bankstown.

(e) Trap purchases - conclusion

  1. The applicants contend (and I accept) that each of the above trap purchases constituted an infringement of the Holden Lion Mark, and each sale amounted to passing off the wheels as genuine Holden wheels and misrepresentation that the wheels were manufactured by or under the licence of the applicants when they were not.

(2) Sales on eBay

  1. Mohamed Taleb admits that in or around 13 September 2004 he registered on behalf of Taleb Tyres, or for his own benefit, a user account with the Australian eBay website (eBay) with the user identification “wheel_tech”. Information provided to eBay by Mr Taleb for the registration of the account included his name, an email address (max@talebtyres.com.au) and an address (42 Princes Highway, Arncliffe, New South Wales, the address of Taleb Tyres). During cross examination, Mohamed Taleb admitted that the eBay account was his and that although one of his employees maintained it, he was responsible for it. He also gave evidence that he wanted the listings to stay on the account even if he was not the person who put them up on the internet and he used Taleb Tyres to sell the products advertised on his eBay account. Therefore, for these reasons (and contrary to the respondents’ submissions) a finding of liability for trade mark infringement in relation to the eBay advertisements against Taleb Tyres is also a finding against Mohamed Taleb (see further paragraph 52 below).

(a) 19″ Advertisement

  1. Evidence of the advertising and sales of the respondents’ products on eBay was adduced through Mr Pieris, a solicitor employed by the applicants’ solicitors. He gave evidence that on 24 February 2010, he accessed and printed two eBay webpages. The first featured an advertisement for “19 INCH HOLDEN VE SUPERSPORT STYLE WHEELS **BRAND NEW**” for $699 per set (excluding postage) (the 19″ Advertisement). The second page of the 19″ Advertisement contained the following statements:
WHEEL TECH – PROFESSIONAL SERVICE & QUALITY ITEMS GUARANTEED

**NOW AVAILABLE IN 19″ HYPER SILVER FINISH TO SUIT MOST MODEL COMMODORES**

You are buying a set of four (4) BRAND NEW VE SUPERSPORT STYLE WHEELS, HOLDEN CAPS ARE INCLUDED BUT NOT PICTURED.

...

INFORMATION

Wheels: VE SUPERSPORT STYLE REPLICA WHEELS
...

(Emphasis added.)

As is apparent, the goods were dealt with under and by reference to the term “HOLDEN”.

(b) Wheels and Tyres Advertisement

  1. The second eBay webpage accessed by Mr Pieris on 24 February featured an advertisement for “19 INCH HOLDEN VE SUPERSPORT WHEELS+PIRELLI TYRES *NEW*” for $1,299 (excluding postage) (the Wheels and Tyres Advertisement). The second page of the Wheels and Tyres Advertisement contained the following statements:
WHEEL TECH – PROFESSIONAL SERVICE & QUALITY ITEMS GUARANTEED

$1299 FOR WHEELS W/ PIRELLI TYRES. ALL BRAND NEW!!

**THIS PACKAGE IS ONLY AVAILABLE TO FIT VE COMMODORE MODELS. THE WHEELS WILL FIT MOST MODEL COMMODORES HOWEVER THE SIZE OF THE TYRES INCLUDED IN THIS PACKAGE ARE OVERSIZED FOR PRE-VE MODELS”

You are buying:

-4 x Holden VE Supersport Style Wheels (Holden Centre Caps included)

-4 x 235/45/19 Pirelli Pzero Rosso Tyres (This size is suitable for VE MODELS ONLY)

-Full set of wheel nuts, lock nuts and hub rings

-Fitting and Balance also included.

INFORMATION / SPECS

...

Condition: Brand New in the box.
...

Again, the goods were dealt with under and by reference to the term “HOLDEN”. The respondents conceded in their closing submissions that the wording of these eBay advertisements (including descriptions such as “19 INCH HOLDEN VE SUPERSPORT STYLE WHEELS” and statements such as “HOLDEN CAPS ARE INCLUDED BUT NOT PICTURED”) constituted conduct that was misleading or deceptive (or likely to be so) for the purpose of s 52 of the TPA.

  1. In addition to the advertisements, Mr Pieris exhibited an eBay “Feedback Profile” for the “wheel_tech” eBay account, which included customers who had purchased “19 INCH VE SUPERSPORT STYLE WHEELS” from the eBay account. The feedback profile listed 21 such transactions, each for $699 per set of wheels, a total of $14,679. The relevant entries are dated between October 2009 and April 2010. Again, the goods were dealt with under and by reference to the term “HOLDEN”.

(c) Later evidence of Mohamed and Moussa Taleb

  1. The trial of this proceeding was held on 18 April 2011. On 8 April 2011, Mohamed Taleb filed an affidavit in these proceedings in which he asserted, for the first time, that the “Supersport” style wheels supplied by Taleb Tyres did not include the caps on which the relevant Trade Mark appears. I reject this evidence. It is directly contradicted by the contemporaneous advertisements placed by Taleb Tyres on eBay, namely the 19″ Advertisement and the Wheels and Tyres Advertisement, both of which referred to the fact that Holden caps were included: see [26] and [27] above. It is also directly contradicted by the products themselves. Each of the wheel centre caps, the wheels and the label on the packaging of the “Supersport” style wheels bears the same part designation “S7”, which suggests that the components were manufactured, packaged and imported together.
  2. It is also recent invention. In addition to the contemporaneous advertisements, it is contrary to the fact that Mohamed Taleb failed to refer to or assert that the “Supersport” style wheels supplied by Taleb Tyres did not include the caps on which the relevant Trade Mark appears in any of the following contexts:
    1. in telephone discussions with the applicants’ solicitor on 26 February 2010 when they discussed the removal of the 19″ Advertisement from the eBay website;
    2. in response to a letter of demand sent by the applicants’ solicitor dated 10 March 2010 which included allegations of infringement of the Trade Marks by the sale of “Supersport” style wheels to Bob Jane Bankstown;
    3. in response to further emails sent by the applicants’ solicitor dated 17 and 25 March 2010;
    4. in the Fast Track Response dated 24 November 2010; and
    5. in his initial affidavit sworn on 24 November 2010.

Moreover, there was no reference to the claim in any letter sent by the respondents’ solicitors to the applicants’ solicitors, including the letter dated 11 January 2011. For these reasons it is not necessary to further consider the respondents’ submissions regarding the wheel centre caps.

  1. Moussa Taleb was called by the respondents to give evidence. He also filed an affidavit sworn on 8 April 2011 in which he said that he drafted these advertisements but “inadvertently included the word, ‘Holden’ because he had used a template which contained that word in relation to sales of other Holden wheels (inclusive of wheel centre caps) which Taleb Tyres had acquired as a result of trade-ins by customers”. His further evidence was that the wheels that were sold on eBay described as “Supersport” style wheels would have been supplied without any caps whatsoever but that if someone particularly wanted caps, they would supply generic caps that had no markings on them. I also reject this evidence. It is also recent invention. I do not accept that the text in the 19″ Advertisement and the Wheels and Tyres Advertisement was extracted from a template for the sale of second hand goods. The products offered for sale in these advertisements were new goods which were identified in a precise manner. Moreover, as the applicants’ Counsel submitted, these advertisements offered delivery to all parts of Australia. The advertisements were not advertisements for one or two products but advertisements drafted to offer for sale a significant volume of these products, which is what Taleb Tyres did: see [28] above.
  2. For those reasons, I reject the respondents’ contention that none of the “Supersport” style wheels supplied by Mohammed Taleb and Taleb Tyres included wheel centre caps bearing the Holden Lion Mark.

(d) Wheel centre caps added by Bob Jane

  1. Mohamed Taleb’s evidence was to the effect that the wheel centre caps bearing the Holden Lion Mark were added to the products by Bob Jane and that the applicants were required to call evidence from Bob Jane. I reject that contention. As explained above, there is more than sufficient evidence to reject the contention that each of the “Supersport” style wheels supplied by Mohammed Taleb and Taleb Tyres did not include caps bearing the Holden Lion Mark.

(3) Conclusion on Trade Mark Infringement

  1. I therefore find that:
    1. each of the “Supersport” style wheels supplied by Mohammed Taleb and Taleb Tyres did include the centre wheel caps bearing the Holden Lion Mark; and
    2. each of the advertisements used the word “Holden” in respect of the products they sold,

such that this conduct constituted infringement of the Holden Lion Mark, and there was both passing off of the wheels sold and/or advertised as genuine Holden wheels and a misrepresentation that they were manufactured by or under the licence of the applicants, when they were not.

(B) TRADE PRACTICES ACT AND FAIR TRADING ACT INFRINGEMENT

  1. As just noted, I have concluded that in relation to both the trap purchases and the sales on eBay, each sale amounted to passing off the wheels as genuine Holden wheels and a misrepresentation that the wheels were manufactured by or under the licence of the applicants, when they were not. In particular, it is clear that Taleb Tyres represented that their products were the same as, or emanated from the same trade source as, the Holden products, or were authorised by or associated with the applicants (when they were not), thereby engaging in misleading or deceptive conduct in breach of ss 52 and 53(a) of the TPA and ss 42 and 44(a) of the FTA, and passing off the products as certified Holden products when they were not.

(C) DESIGN INFRINGEMENT

  1. The applicants submitted that products sold by the respondents also infringed the Designs.
  2. The question is whether the products sold by the respondents embody designs that are “identical to, or substantially similar in overall impression to” the Designs: s 71(1)(a) of the Designs Act.
  3. The principles relevant to infringement of designs registered under the Designs Act were conveniently summarised in LED Technologies Pty Ltd v Elecspess Pty Ltd [2008] FCA 1941; (2008) 80 IPR 85 at [68] – [83]. As those paragraphs make clear:
    1. infringement is determined by comparing the allegedly infringing product against the registered design, not by comparing a product embodying the registered design against the infringing product: s 71;
    2. infringement is determined by comparing only the visible features of the design to the infringing product: ss 7 and 19;
    3. the Court assesses whether the allegedly infringing design is substantially similar in overall impression to the registered design by comparing the allegedly infringing product to the registered design in the context of the whole appearance of the designs: see s 71 (read with s 19 of the Designs Act);
    4. the whole appearance is relevant as the context for the design even though, strictly, the design is only the distinctive visual features of the product. Greater weight is given to distinctive features than to other parts of the design, although still in the context of the whole of the appearance; and
    5. in determining whether a design is infringed the Court must give more weight to similarities between the designs than to differences between them: s 19(1).
  4. In the present case, the applicants submitted that there were two design infringement cases. The first concerned the VE GTS Design, and the second concerned the Pentagon Design. I will deal with each in turn.

(1) VE GTS Design

  1. On 25 March 2010, the applicants’ solicitor provided Mr Mohamed Taleb with a summary document which included, inter alia, details of the VE GTS Design.
  2. Then, on 6 July 2010, Taleb Tyres purchased from BSA Wheels Australia Pty Ltd four wheels specified as “AU295 HB-20X8-5/120 C73.1” (AU295). The wheel model AU295 was illustrated in the BSA Catalogue which was tendered in evidence.
  3. If a visual comparison is made of the AU295 in the BSA Catalogue against the registered design, the AU295 is at the very least “substantially similar in overall impression” to the Design: s 71(1)(a) of the Designs Act. Each wheel has ten spokes of the same shape, spacing and configuration. In my view, the AU295 infringes Design No.305935 (being the VE GTS Design).
  4. I accept the applicants’ submission that Taleb Tyres purchased these products from BSA for the purposes of sale or offering them for sale and that therefore the products infringe ss 71(1)(c) or (e) of the Designs Act.

(2) Pentagon Design

  1. On 6 July 2009, Taleb Tyres issued invoice number 31663 to Bob Jane Bankstown for four wheels designated as “20″ NH WHEEL” for $900. Bob Jane’s own sales reports record a supply to it on 6 July 2009 of four wheels designated as PENTAGON 20X8 5/120 with a reference to the Taleb Tyre Service invoice number 31633 for $818.16. The applicants submitted and I accept that the $818.16 equates to $900 less GST. On the same day, Bob Jane invoiced a customer for the sale of four wheels designated as PENTAGON 20X8 5/120.
  2. The applicants submitted that these documents record the supply by Taleb Tyres of a replica of the applicants’ “Pentagon” style wheel which was at the very least “substantially similar in overall impression” to the Pentagon Design within the meaning of s 71(a) of the Designs Act. There is a difficulty with that submission. I am unable to make a visual comparison of the wheel sold by Taleb Tyres against the registered design. In the absence of a visual comparison, there is no basis for finding that the wheel sold by Taleb Tyres was at the very least “substantially similar in overall impression” to the Pentagon Design within the meaning of s 71(a) of the Designs Act. The claim is rejected.

(3) Other matters

  1. The respondents have not pleaded any reliance upon factors which might have mitigated an award of damages under s 75(2) of the Designs Act.

(D) SYDNEY TYRES

  1. Mohamed Taleb was at all material times the sole director, secretary and shareholder of Sydney Tyres Australia Pty Ltd (ACN 108 548 714) (now Tassa Pty Ltd) (Sydney Tyres). The shareholder of Sydney Tyres (Mohamed Taleb) resolved to wind up the company on 14 December 2010.
  2. Documents produced under subpoena by the Australian Customs and Border Protection Service (Customs) record a large number of importations of “car wheels” by Sydney Tyres from “Nantong Trade Union Aluminium Alloy Co” of Weier Road, Jiangsu Oidong Economic Development Zone, China. A spreadsheet of the importations was tendered in evidence. The total quantity of goods described as “car wheels” was 15,691 units, for a total price of over $1.95 million.
  3. Mohamed Taleb has not explained any of these importations in either of his affidavits. The applicants submitted that these unexplained importations support the finding that the Court should reject his evidence that he simply purchased all relevant wheels from the back of a truck, from a person called “Mike”, for cash with no receipts. In cross examination, Mohamed Taleb said he did not know Mike’s last name. He said in the real world this is how business is conducted. He admitted that the business did not claim any GST input credits for the purchases from Mike and he knew he was buying goods that were unauthorised or not authentic.
  4. The applicants also submitted that the evidence supports a finding that Mohamed Taleb had been operating a large and sophisticated importation business which he has not properly explained to the Court and that a percentage of the 15,691 wheels infringed the Trade Marks and/or the Designs. The first finding, regarding the large and sophisticated importation business, is open on the facts. A large number of wheels were imported by a company controlled by Mohamed Taleb. The second finding, that a percentage of the 15,691 wheels infringed the Trade Marks and/or the Designs, is not in my view a finding supported by evidence.
  5. Put another way, even if the Court was to assume that the Nantong entity from which Sydney Tyres imported the large numbers of tyres was the same entity as supplied Holden with its genuine Holden products (see further paragraph 5 above), the circumstances appearing in the evidence do not in my opinion support any inference that may reasonably be drawn that some of the imported tyres were products that infringed the Trade Marks and/or Designs: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 304-305. This is in large part due to the paucity of available documents relating to the trade and/or business affairs of Sydney Tyres. No invoices, company orders or other similar documents were tendered that established, for example, that the tyres ordered by Sydney Tyres from Nantong Trade Union Aluminium Alloy Co were in fact tyres that infringed Holden Trade Marks and/or Designs. In fact, the only evidence before the Court concerning the wheels available for purchase from Nantong Trade Union Aluminium Alloy Co of Weier Road, Jiangsu Oidong Economic Development Zone, China was print outs from the Trade Union website which did not include images of any of the infringing products. Therefore, I reject the applicants’ submissions in relation to Sydney Tyres.

(E) LIABILITY OF MOHAMED AND AHMED TALEB

(1) Mohamed Taleb

  1. The applicants submitted (and I accept) that Mohamed Taleb was a joint tortfeasor in the trade mark infringement and passing off committed by Taleb Tyres by reason of the following matters (see Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449 at [291], [404] and [405]):
    1. Mohamed Taleb had the necessary knowledge. He gave evidence that he knew that the Holden branded products sold by Taleb Tyres were not authorised by the applicants;
    2. Mohamed Taleb used the company, Taleb Tyres, as an instrument of his own wrong – he gave evidence that he used the company, Taleb Tyres, to sell the products listed on his personal eBay account;
    3. Mohamed Taleb made the tort his own. For example, he gave evidence that he was the person who would complain if the listings were removed from the eBay account and that he wanted to maintain the advertisements (see [26] and [27] above) on his eBay account; and
    4. Mohamed Taleb has a close personal involvement in the infringing acts of Taleb Tyres: see [25] to [34] above.

(2) Ahmed Taleb

  1. The applicants also submitted that Ahmed Taleb was a joint tortfeasor in the trade mark infringement and passing off committed by Taleb Tyres. The following matters are relevant to the consideration of this submission.
  2. On 1 April 2011, this matter was fixed for hearing on 18 and 19 April 2011. On 1 April, there was no suggestion of Ahmed Taleb being unavailable.
  3. In fact, no difficulty with him appearing at the trial was raised until 12 April (six days before the hearing) when the respondents filed and served an outline of submissions stating that Ahmed Taleb would not be available for cross examination because he had a long-standing business commitment in China. No application for an adjournment of the hearing was made. No application to have Ahmed Taleb give evidence by video link from China was made. No application to have Ahmed Taleb give evidence by telephone was made. Instead, the respondents sought to tender an affidavit sworn by Ahmed Taleb. The applicants objected and the objection was upheld.
  4. Having made no attempt to appear at the trial or seek an adjournment, the Court is entitled to accept that the evidence he would have given would not have assisted his case: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
  5. What then is the evidence against Ahmed Taleb? On the one hand, Mohamed Taleb gave evidence that his father was not involved in the day to day management of Taleb Tyres other than when Mohamed Taleb was overseas in late October and early November 2010.
  6. On the other hand, there is other evidence which supports the contention that Ahmed Taleb played a significant role in the conduct of Taleb Tyres including that:
    1. Ahmed Taleb had a long and personal involvement in running the Taleb Tyres business, having established the business in 2003 and having been sole director from this time until 2006, when Mohamed Taleb became the “sole manager”;
    2. although on 14 December 2010 Fadia Taleb was the sole director of Taleb Tyres and had held that position since 16 February 2010, Mohamed Taleb’s evidence was that she was not really a director of the company. Rather, Ahmed Taleb had been the sole director of the company since its incorporation in December 2003 until 16 February 2010;
    3. on 14 December 2010, the shareholders, Mohamed and Ahmed Taleb, resolved to place Taleb Tyres into liquidation;
    4. on 14 December 2010, Ahmed Taleb caused himself to be registered as the person carrying on business in New South Wales under the business names “TALEB TYRES” and “TALEB TYRES AUSTRALIA”;
    5. in October 2010, Ahmed Taleb became the sole shareholder in “AM TALEB HOLDINGS PTY LTD” (ACN 094 089 040), a company which is registered as carrying on business as “TALEB TYRES & WHEELS”. The sole director and secretary is Mohamed Taleb. Ahmed Taleb was a director for one day – 11 October 2010;
    6. Ahmed Taleb manages the day to day affairs of the business as a caretaker when Mohamed Taleb is overseas;
    7. on at least one occasion, 5 June 2009, Ahmed Taleb is recorded as the salesperson of the infringing products; and
    8. in the liquidation of Taleb Tyres, he and Mohamed Taleb claimed an employee priority debt of $50,120.
  7. For those reasons, I find that Ahmed Taleb was a joint tortfeasor in the trade mark infringement and passing off committed by Taleb Tyres by reason of the matters set out in Keller v LED Technologies at [291], [404] and [405], namely that:
    1. Ahmed Taleb had the necessary knowledge;

2. Ahmed Taleb used the company, Taleb Tyres, as an instrument of his own wrong;

3. Ahmed Taleb made the tort his own; and

4. he had a close personal involvement in the infringing acts of Taleb Tyres.

(3) Other matters

  1. In addition to the evidence referred to above, the conduct of both Mohamed and Ahmed Taleb in the liquidation of Taleb Tyres cannot be ignored. This proceeding was commenced by the applicants against Taleb Tyres and both Mohamed and Ahmed Taleb on 25 October 2010. On 14 December, Taleb Tyres went into liquidation on the basis that the company was unable to pay an outstanding GST liability to the Australian Taxation Office of approximately $3.4 million. The proceeding against Taleb Tyres was stayed: s 500(2) of the Corporations Act.
  2. The applicants were informed of the fact that Taleb Tyres was in “voluntary liquidation” on 11 January 2011. After the applicants’ solicitor was informed of the voluntary liquidation of Taleb Tyres, he gave evidence that he accessed the company’s website at www.talebtyres.com.au which still appeared active. Print outs from the website were tendered in evidence. Those print outs recorded that as at 22 March 2011, the copyright in the website was still held by Taleb Tyres and that a blog entry dated 23 December 2010 (after the liquidators were appointed) read:
Currently we are undergoing major construction and service upgrades both in the workshop and online and would like to thank you all for your patience.

On completion, in early 2011 Taleb Tyres will boast state of the art technology that this industry has not yet seen.

  1. On 13 January 2011, the applicants’ solicitor wrote to Mr Nolan, the respondents’ solicitor, and asked whether Taleb Tyres was still operating, and if so, who owned and operated that business, and the circumstances in which that business was acquired. No response was received.
  2. On 9 February 2011, the applicants’ solicitor received the report to creditors dated 15 December 2010 and minutes of the first meeting of creditors dated 23 December 2010. The report:
    1. records Taleb Tyres as having nil assets and nil equipment;
    2. records the only liabilities as an employee priority debt of $50,120 which was claimed by Mohamed and Ahmed Taleb and related loans of $29,400;
    3. records the liability to the Australian Taxation Office as nil, when in fact it was in excess of $3.4 million;
    4. makes no reference to the tyre business or what became of it; and
    5. makes no reference to these proceedings or the claims made by the applicants.
  3. During cross examination, Mohamed Taleb admitted that the statements in the report that the liability to the Australian Taxation Office was nil and that the company had no assets were false. He also admitted that the company was wound up to avoid the liabilities owed to the Australian Taxation Office. Finally, he admitted that he moved a resolution at the first meeting of creditors on 23 December 2010 for the early destruction of the books and records of Taleb Tyres. He admitted to the Court that he was “happy to destroy as many records of the company as quickly as possible”.
  4. On 1 March 2011, the applicants’ solicitor wrote to the liquidators expressing his concerns about the circumstances surrounding the winding up of Taleb Tyres. As at 30 March 2011, the applicants’ solicitor had not received a response to that letter.
  5. As is apparent, Mohamed and Ahmed Taleb are not witnesses of truth. They have disregarded their obligations to the Australian Taxation Office and their obligations under the Corporations Act. They have acted without any regard for the commercial interests of the applicants. In their conduct of Taleb Tyres, they have ignored numerous legal obligations for their own self interest. Unless their evidence was supported by contemporaneous documentary evidence from a reputable third party, it cannot be relied upon.

(4) Conclusion

  1. For those reasons, I also find, pursuant to s 75B of the TPA, that each of Mohamed and Ahmed Taleb was knowingly concerned (or in the case of Ahmed, directly or indirectly knowingly concerned) in the conduct of Taleb Tyres which infringed ss 52 and 53(a) of the TPA: see [49] – [55] above. Each had knowledge of the essential matters (Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1 at [1] – [16] and [17]) of the contravention: see [47] to [60] above.
  2. The applicants are therefore also entitled to injunctive relief and damages against both Mohamed and Ahmed Taleb as joint tortfeasors under s 126 of the TMA, s 75 of the Designs Act, ss 80 and 82 of the TPA and for common law passing off.

C. DAMAGES AND OTHER RELIEF

  1. The applicants elected for damages rather than an account of profits.
  2. The applicants must prove their loss on the balance of probabilities and with as much precision as the subject matter reasonably permits: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 5; (2003) 196 ALR 257 at 266 [37]; The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 80 at 83-84, 138, 153 and at 161.
  3. In assessing damages, the Court must do its best to quantify the loss suffered by the applicants by reason of the respondents’ breach/es, even if some degree of speculation and guess work is involved: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; (2007) 157 FCR 564 at [35]; Placer (Granny Smith) at [38] and Enzed Holdings Limited v Wynthea Pty Limited [1984] FCA 373; (1984) 57 ALR 167 at 183.
  4. As Hayne J (with whom Gleeson CJ, McHugh and Kirby JJ agreed) said in Placer (Granny Smith) at [38] citations omitted):

It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind.


  1. In the present case, that principle is important. It is important because the respondents failed to comply with a Court order on 12 November 2010 to provide evidence of the products imported by Taleb Tyres. Moreover a subpoena to the liquidators of Taleb Tyres produced no books and records, and Mohamed Taleb agreed that he was willing to destroy the books and records of Taleb Tyres as soon as possible.
  2. Against that background, I turn to consider the various heads of damages.

(A) COMPENSATORY DAMAGES

  1. There are three categories of compensatory damages – lost profits identified in invoices, lost profits identified in the imported goods and damage to reputation. I will deal with each in turn.

(1) Lost profits identified in invoices

  1. Lost profits are an appropriate measure of damage where the parties are in actual or potential competition: Elwood Clothing Pty Ltd (ACN 079 393 696) v Cotton On Clothing Pty Ltd (ACN 052 130 462) [2009] FCA 633; (2009) 81 IPR 378 at [11]; TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444 at [207]; Norm Engineering Pty Ltd v Digga Australia Pty Ltd [2007] FCA 761; (2007) 162 FCR 1 at [266] – [271]. In the present case, the respective parties are all selling wheels for Holden cars.
  2. The applicants used, and I adopt, the method of calculating lost profits employed in Elwood v Cotton On at [13] and in Norm Engineering v Digga Australia at [266] – [271], as follows:
    1. examine the number of sales made by the respondents;
    2. assume that the respondents were trying to capture sales from the applicants (which ought to be plain in the case of replica Holden wheels);
    3. assume that number of sales made by the respondents is equal to the number of sales lost by the applicants;
    4. discount the number in (3) to reflect the fact that not all sales made by the respondents can be considered sales lost by the applicants. To this end, in Norm Engineering, Greenwood J at [270] stated that the discount factor should be “determined according to proper principles, so as to reflect a proportionate sense of the impact upon the applicant of the respondent’s conduct”; and
    5. apply any further discount necessary in the circumstances of the case.
  3. The profits to be calculated for this purpose are the “lost net profits ... [meaning] revenue less all costs including variable and indirect costs, but not including income tax”: TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) at [207] and Elwood v Cotton On at [11]. The applicant is also entitled to “recover indirect losses (such as damage to goodwill) as long as the cause is the infringement, the loss is foreseeable and is not unduly speculative”: TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) at [207] (per Finkelstein J) and Elwood v Cotton On at [11].
  4. In the present case, the applicants’ claim for lost profits is confined to the respondents’ sales of “Supersport” style wheels. The applicants submit that, in the present case, the assessment of such compensatory damages ought not differ between the various causes of action for trade mark infringement, passing off or statutory misleading conduct. Rather, the Court is entitled to assess such compensatory damages arising from each of these causes of action as co-extensive: Deckers Outdoor Corporation Inc v Farley (No 5) [2009] FCA 1298; (2009) 262 ALR 53 at 71.
  5. In quantifying the damages, the applicants rely upon the “Feedback Profile” to Mohamed Taleb’s eBay account (see [28] above) which related only to the “19 INCH VE SUPERSPORT STYLE WHEELS”. It listed 21 transactions each for $699, totalling $14,679. The relevant customer feedback entries are dated between October 2009 and April 2010. The transactions amount to a total of 84 wheels. Annexed to their submissions was a spreadsheet prepared by the applicants’ solicitors identifying each of the sales by Taleb Tyres of “Supersport” style wheels, cross-referenced to the evidence. The total number of “Supersport” style wheels sold by the respondents and identified in the evidence was 368 wheels, for sales totalling $75,679.
  6. Mr Matthew Everett, the Product Manager Collision at GM Holden, has given evidence that there was a sharp decline in the sale of Supersport Wheels commencing in mid 2008, which he believes could be attributable to replica versions becoming available at around that time. Mr Everett also gave evidence that the retail price of “Supersport” style wheels purchased from a Holden or HSV dealer (excluding tyres and fitment, but including wheel centre caps) would cost $3,202.
  7. The evidence does not clearly identify the ultimate retail price charged for each of the Supersport Wheels sold on a wholesale basis by the respondents. The applicants submitted (and I accept) that there was some price differential between those products and the applicants’ authentic products which justifies some discount to reflect the fact that not all sales made by the respondents can be considered sales lost by the applicants. What then is the appropriate discount?
  8. The applicants submitted that the discount ought be slight. They submitted that unlike a case such as Elwood v Cotton On, the present case involved the sale of like-for-like branded goods specially designed for use in Holden cars, which are the clear market leader. Further, they referred to the fact that:
    1. the applicants’ authentic products were available for purchase across Australia throughout the relevant period; and
    2. the customers of these products are not just average motorists but Holden enthusiasts who are specifically seeking out Holden branded goods which will fit their Holden cars.

Accordingly, the applicants submitted that the Court can and should infer that a significant proportion of the customers who ultimately purchased the respondents’ products would have paid the higher price for the applicants’ authentic products if the respondents’ cheaper products were not available.

  1. Ultimately, the Court must do the best it can to determine the appropriate discount. In all the circumstances, I consider that an appropriate discount would be 40%. When applied, this discount produces a total number of lost sales of 220 units, or 55 sets of four wheels. That total number of lost sales should then be multiplied by the applicants’ net wholesale profit per full set of four Supersport wheels with wheel centre caps, which was set out by Mr Everett in Confidential Exhibit MLE-8 to his affidavit affirmed on 12 April 2011.

(2) Lost profits identified in the imported goods

  1. In the wheel registration booklet packed inside the box of wheels purchased by Mr Fahd from Bob Jane Bankstown (see [17] above), the manufacturer of the products was identified as Trade Union International, Inc.
  2. At paragraphs 47 to 51 above, I set out my findings regarding Mohamed Taleb and Sydney Tyres, including that, at all relevant times, Mohamed Taleb was the sole director, secretary and shareholder of this company, and the documents produced under subpoena by Customs showed that 15,691 “car wheels” (with a total Australian price of over $1.95 million) had been imported by Sydney Tyres from “Nantong Aluminium Alloy Co”, the Chinese manufacturer of alloy wheels for Trade Union International, Inc. These importations were not explained by Mohamed Taleb in his affidavits, a fact which was relied upon by the applicants in urging the Court to reject Mohamed Taleb’s evidence that he simply purchased all relevant wheels from the back of a truck from a person called “Mike”, for cash with no receipts (see further paragraph 49 above).
  3. I have already concluded at paragraphs 50 and 51 above that although the evidence supports a finding that Mohamed Taleb had been operating a large and sophisticated importation business which he has not properly explained to the Court, it does not support a finding that a percentage of the 15,691 wheels imported by Mohamed Taleb and/or Sydney Tyres infringed the Trade Marks and/or the Designs.
  4. In certain circumstances, a Court is entitled to speculate or even guess (see Aristocrat [2007] FCAFC 40; (2007) 157 FCR 564 per Black CJ and Jacobson J at [35]; Enzed Holdings Limited v Wynthea Pty Limited at 183, per Sheppard, Morling & Wilcox JJ) in relation to the question of the quantification of damage. However, a Court is not entitled to guess at how many of the 15,691 imported wheels were “Supersport” style wheels with Holden Lion Mark caps like the ones purchased by Mr Fahd: see [72] above. That is a question of fact, and one that has not been proved on the balance of probabilities. For these reasons, the claim for compensatory damages in relation to the lost profits in the identified goods is rejected.

(3) Damage to reputation

  1. In Elwood v Cotton On at [32], the issue of damage to reputation was addressed as follows:
... an award of general damages is to be that sum which will put the [applicant] in the same position as it would have been in if it had not suffered the wrong. There is no dispute that, subject to issues of causation and foreseeability, any secondary loss, including damage to reputation, caused by the infringement is recoverable [TS & B Retail Systems Pty Ltd v 3 Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444 at] [207]-[208].

  1. Was there loss to the applicants’ reputation in the circumstances? Where reputational damages are sought, evidence is usually led to establish: (a) the importance of singularity, distinctiveness, quality or some other commercially valuable aspect of reputation to the victim; and (b) how, and to what extent, the infringing product or conduct damaged that aspect of the victim’s reputation: see Elwood v Cotton On at [33] – [34] and [39]; Paramount Pictures Corporation v Hasluck [2006] FCA 1431; (2006) 70 IPR 293 at [55]; Review Australia Pty Ltd (ACN 122 295 836) v New Cover Group Pty Ltd (ACN 111 991 596) [2008] FCA 1589; (2008) 79 IPR 236 at [44] – [46] and Review Australia Pty Ltd (ACN 067 634 360) v Innovative Lifestyles Pty Ltd (ACN 107 012 260) [2008] FCA 74; (2008) 246 ALR 119 at [29] – [31].
  2. The applicants relied on the evidence of Ms Harden and Mr Everett as to the reputation established in the Holden brand as a result of longstanding investment in creating exclusive designs. Authorities have often stated that mere difficulty in assessing damages does not relieve the Court of its responsibility of estimating them as best it can (Amann at 83). To this end, and as the cases cited in paragraph 90 above demonstrate, although damage to reputation may be difficult to quantify, it is compensable nonetheless.
  3. In the present case, the applicants claim damage to reputation on the following facts:
    1. the applicants have developed a substantial reputation in Australia for its innovative and exclusive wheel designs and the applicants only sell Holden wheels, Holden wheel centre caps and HSV wheel centre caps to select wholesalers within Australia;
    2. the Holden wheels are sold for a retail price between $3,500 and $4,500 per set and the infringing products sell for a retail price between $700 and $1,000 per set (a considerably lower price); and
    3. the presence of the infringing products in the marketplace has significantly diminished the reputation of the designs for the Holden wheels, diminished the exclusivity of the designs in the marketplace and tarnished the applicants’ brands.
  4. In the circumstances, particularly where the respondents have not provided a full explanation of their conduct, the applicants submitted and I accept that an appropriate award of damages to reputation is $20,000.

(B) EXEMPLARY DAMAGES

  1. In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448 at 471, cited with approval by the Full Court in Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 at 9:
As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff’s rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v. Harvey [1814] EngR 330; (1814) 5 Taunt 442 [128 ER 761] substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs C.J. saying:

“I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?”

The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broome v. Cassell & Co. [1972] AC, at p 1130, “to teach a wrong-doer that tort does not pay”.

  1. In Sanders v Snell (1997) 73 FCR 569 at 451 Wilcox, O’Loughlin and Lindgren JJ expressed the view that exemplary damages:
... can apply only where the conduct of the defendant merits punishment, which is only considered to be so where his conduct is wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like; or as it is sometimes put, where he acts in contumelious disregard of the plaintiff's rights.

  1. The applicants submitted that the respondents’ passing off has been wanton and has disclosed fraud, malice and/or insolence in the relevant sense to found an order for exemplary damages based on the following facts:
    1. the flagrancy of the copying by the respondents given that the features of pattern and ornamentation on the respondents’ products are a close copy of the Holden wheels and wheel centre caps – this is a passing off case in the counterfeiting category;
    2. the respondents did not have to incur the significant design costs that the applicants had to incur in order to create the Holden Wheels;
    3. the respondents’ products continued to be offered for sale well after the applicants’ solicitors first wrote to them;
    4. the letters of demand sent by the applicants’ solicitors were ignored completely;
    5. there is a need to deter similar infringements to protect consumers from being misled that they are purchasing authorised products when in fact they are not; and
    6. there is a public interest in deterring unauthorised copying in circumstances where design is at the heart of a business such as the applicants’.

I agree. As I have noted earlier, the conduct of the respondents showed a complete and continual disregard of their legal obligations and, in particular, the rights of the applicants. This was particularly brought into focus by the deliberate destruction of documents orchestrated by Mohamed Taleb (see [64] above): Mohamed Taleb admitted during cross examination that he was “happy to destroy as many records” of Taleb Tyres “as quickly as possible” following the first meeting of the company’s creditors. It is likely that this conduct of Mr Taleb had a direct bearing on the fact that the liquidators of Taleb Tyres were unable to produce any documents in response to subpoenas served on them by the applicants. This conduct constituted a contumelious disregard of the applicants’ rights, and requires exemplary damages to be calculated accordingly.

  1. The amount of such exemplary damages is entirely in the Court’s discretion and, as noted by Brennan J in XL Petroleum at 471, there is no necessary proportionality between the assessment of compensatory damages and exemplary damages, and indeed, the latter may be many times greater than the former.
  2. In the circumstances of the present case, I consider that an appropriate award of exemplary damages for passing off is $200,000.

(C) ADDITIONAL DAMAGES UNDER S 75(3) OF THE DESIGNS ACT

  1. The quantity of proven design infringement in this case was small. As a result, the applicants did not press their claims for lost profits in respect of such infringements. However, after being put on notice of the relevant design registration by the applicants’ solicitor on 25 March 2010, when Mr Round provided Mohamed Taleb with a summary document which included, inter alia, details of the VE GTS Design, the respondents proceeded to infringe the VE GTS Design on 6 July 2010: see [41] above. Moreover, the rear of the VE GTS Wheels bear a notice so as to indicate that registration of the design had been sought.
  2. The applicants submitted and I agree that these factors support a finding of flagrant infringement, and that an appropriate award of additional damages is $10,000.

(D) OTHER RELIEF

  1. The applicants sought and, in my view, are entitled to appropriate declaratory and injunctive relief and an order for delivery up of infringing products. I will direct that the parties confer and bring in orders to give effect to these reasons for decision.
I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:


Dated: 30 May 2011


ANNEXURE A: PARA [23(1)]

Transaction Date
Supplier Code
Supplier Name
Reference
Quantity
Value
Product Code Description
17/8/2009
TALEB
Taleb Tyre Service
32488
20
$3,636.40
SUPERSPORT 20x8 5/120
8/09/2009
TALEB
Taleb Tyre Service
32914
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
9/09/2009
TALEB
Taleb Tyre Service
32951
20
$3,636.40
SUPERSPORT 20x8 5/120 VE
31/10/2009
TALEB
Taleb Tyre Service
34086
2
$363.62
SUPERSPORT 20x8 5/120 VE
9/11/2009
TALEB
Taleb Tyre Service
34196
20
$3,636.20
SUPERSPORT 20xx8 5/120 VE
17/12/2009
TALEB
Taleb Tyre Service
34718
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
12/01/2010
TALEB
Taleb Tyre Service
35389
20
$3,636.20
SUPERSPORT 20x8 5/120
10/11/2008
TALEB
Taleb Tyre Service
27133
4
$818.16
SUPERSPORT 20x8.5 5/120
11/11/2008
TALEB
Taleb Tyre Service
27119
16
$3,272.64
20x8 SUPERSPORT ALLOY
27/11/2008
TALEB
Taleb Tyre Service
28760
4
$818.16
HOLDEN 20x8.5 SUPERSPORT
29/11/2008
TALEB
Taleb Tyre Service
28770
4
$818.16
HOLDEN 20x8.5 SUPERSPORT
18/03/2009
TALEB
Taleb Tyre Service
29895
8
$1,115.12
SUPERSPORT 20x8 5/120
25/03/2009
TALEB
Taleb Tyre Service
30014
8
$1,672.72
SUPERSPORT 20x8 5/120
30/03/2009
TALEB
Taleb Tyre Service
30078
4
$836.36
SUPERSPORT 20x8 5/120
1/05/2009
TALEB
Taleb Tyre Service
30558
8
$1,443.00
SUPERSPORT 20x8 5/120
28/05/2009
TALEB
Taleb Tyre Service
30964
4
$836.36
SUPERSPORT 20x8 5/120 HYPER
6/07/2009
TALEB
Taleb Tyre Service
31663
4
$818.16
PENTAGON 20x8 5/120
6/07/2009
TALEB
Taleb Tyre Service
31663
1
$209.11
SUPERSPORT 20x8 5/120
25/07/2009
TALEB
Taleb Tyre Service
32064
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
1/08/2009
1
Cash Purchases
TALEB 32214
20
$3,636.20
SUPERSPORT 20x8 5/120

ANNEXURE B – PARA [23(2)]

Transaction Date
Supplier Code
Supplier Name
Reference
Quantity
Value
Product Code Description
10/11/2008
TALEB
Taleb Tyre Service
27113
4
$818.16
SUPERSPORT 20x8.5 5/120
11/11/2008
TALEB
Taleb Tyre Service
27119
16
$3,272.64
20x8 SUPERSPORT ALLOY
27/11/2008
TALEB
Taleb Tyre Service
28760
4
$818.16
HOLDEN 20x8.5 SUPERSPORT
29/11/2008
TALEB
Taleb Tyre Service
28770
4
$818.16
HOLDEN 20x8.5 SUPERSPORT
18/03/2009
TALEB
Taleb Tyre Service
29895
8
$1,115.12
SUPERSPORT 20x8 5/120
25/03/2009
TALEB
Taleb Tyre Service
30014
8
$1,672.72
SUPERSPORT 20x8 5/120
30/03/2009
TALEB
Taleb Tyre Service
30078
4
$836.36
SUPERSPORT 20x8 5/120
1/05/2009
TALEB
Taleb Tyre Service
30558
8
$1,443.60
SUPERSPORT 20x8 5/120
28/05/2009
TALEB
Taleb Tyre Service
30964
4
$836.36
SUPERSPORT 20x8 5/120 HYPER
5/06/2009
TALEB
Taleb Tyre Service
31102
4
$700.00
SUPERSPORT 20x8 5/120
6/07/2009
TALEB
Taleb Tyre Service
31663
4
$818.16
PENTAGON 20x8 5/120
6/07/2009
TALEB
Taleb Tyre Service
31663
1
$209.11
SUPERSPORT 20x8 5/120
25/07/2009
TALEB
Taleb Tyre Service
32064
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
17/08/2009
TALEB
Taleb Tyre Service
32488
20
$3,636.40
SUPERSPORT 20x8 5/120
8/09/2009
TALEB
Taleb Tyre Service
32914
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
9/09/2009
TALEB
Taleb Tyre Service
32951
20
$3,636.40
SUPERSPORT 20x8 5/120 VE
31/10/2009
TALEB
Taleb Tyre Service
34086
2
$363.62
SUPERSPORT 20x85 5/120 VE
9/11/2009
TALEB
Taleb Tyre Service
34196
20
$3,636.20
SUPERSPORT 20xx8 5/120 VE
17/12/2009
TALEB
Taleb Tyre Service
34718
20
$3,636.20
SUPERSPORT 20x8 5/120 VE
12/01/2010
TALEB
Taleb Tyre Service
35389
20
$3,636.20
SUPERSPORT 20x8 5/120
11/03/2010
TALEB
Taleb Tyre Service
1
-16
-$2,908.96
SUPERSPORT 20x8 5/120







Schedule of Parties


GM HOLDEN LTD (ACN 006 893 232)
First Applicant


GENERAL MOTORS LLC
Second Applicant


GM GLOBAL TECHNOLOGY OPERATIONS LLC
Third Applicant


DARREN PAINE
First Respondent


KIT WHEEL & TYRE PTY LTD (ACN 130 334 548)
Second Respondent


RICKY WAI CHU
Third Respondent


TYRES FOR LESS PTY LTD (ACN 119 126 653)
Fourth Respondent


SAMUEL ELLIOTT LEWIN
Fifth Respondent


BSA WHEELS AUSTRALIA PTY LTD (ACN 103 714 076)
Sixth Respondent


MICKY WU
Seventh Respondent


TALEB TYRES (AUST) PTY LIMITED (ACN 107 451 794)
Eighth Respondent


AHMED TALEB
Ninth Respondent


MOHAMED TALEB
Tenth Respondent


GALLOP TRADING PTY LTD (ACN 093 740 535)
Eleventh Respondent


MIN CHAO WU
Twelfth Respondent


YI FEI FENG
Thirteenth Respondent


IB INTERNATIONAL TRADING PTY LTD (ACN 125 489 161)
Fourteenth Respondent


GUO YUAN YANG
Fifteenth Respondent


A PERSON KNOWN AND IDENTIFIED BY THE FIFTH RESPONDENT AS "FRANK"
Sixteenth Respondent


WORK WHEELS AUSTRALIA PTY LTD (ACN 137 424 269)
Seventeenth Respondent


YOESOEF FIRDAUS
Eighteenth Respondent


HELEN SETYANINGSIH
Nineteenth Respondent


ZUMBO WHEELS AUSTRALIA PTY LTD (ACN 133 316 104)
Twentieth Respondent


IGOR POCEV
Twenty-First Respondent


WEICHUN CHEN
Twenty-Second Respondent


WEIZHEN CHEN
Twenty-Third Respondent


YI SHU
Twenty-Fourth Respondent


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