Australian Postal Corporation v Digital Post Australia Pty Ltd

1. The issue of the quantum of any pecuniary relief be determined separately from, and subsequent to, the determination of all other issues in the proceeding.
2. The Respondents file their Defence and any Cross-Claim by 4pm on 13 April 2012.
3. The Respondents make discovery by 4pm on 13 April 2012 of all documents concerning: (a) the decision to adopt the name "Digital Post Australia"; (b) instructions for and examples of the use of the name "Digital Post Australia" as a brand or trading name; and (c) consumer reactions or responses to the name "Digital Post Australia".
4. The proceeding be referred for mediation, such mediation to be completed by 21 April 2012.
5. The parties file and serve any further evidence in chief by 4pm on 11 May 2012.
6. The parties file and serve any evidence in answer by 4pm on 18 May 2012.
7. The parties file and serve outlines of submissions by 4pm on 21 May 2012.
8. The hearing be listed on a date to be fixed on an estimate of 3 days.
9. Liberty to apply.
10. Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 258 of 2012

BETWEEN: AUSTRALIAN POSTAL CORPORATION (ABN 28 864 970 579)

AND: DIGITAL POST AUSTRALIA PTY LTD (ACN 192 998 715)

JUDGE: MIDDLETON J DATE: 4 APRIL 2012 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant, ('Australia Post') seeks an interlocutory injunction restraining the first respondent, Digital Post Australia Pty Ltd ('DPA'), pending the hearing and determination of this proceeding, from: (a) supplying or selling, offering to supply or sell, or advertising or promoting for supply or sale, electronic mail services under or by reference to the name "Digital Post Australia" or any name which is substantially identical or deceptively similar to the trade mark "AUSTRALIA POST"; or (b) representing that the DPA's electronic mail services are authorised or official postal services, or are services of, associated with, or authorised or approved by, Australia Post, by describing those services as a "post service," "postal service" or "postal mail service." 2 Australia Post's claims are based on alleged contraventions of: ss 18, 29(1)(a), 29(1)(g) and 29(1)(h) of Sch 2 to the Competition and Consumer Act 2010 (Cth) ('Australian Consumer Law'); passing off; and infringement of two of Australia Post's registered trade marks pursuant to s 120(1) of the Trade Marks Act 1995 (Cth). 3 Relevantly, Registered Trade Mark Nos. 759014 and 1317044 are registered for the words "AUSTRALIA POST". Australia Post contends that the use of the name "Digital Post Australia" infringes these trade marks. Furthermore, Australia Post contends that, having regard to the strength of the association between the name "Australia Post" and its business in Australia, the use of the name "Digital Post Australia" to refer to the DPA's business (that being a post service, postal service or postal mail service) is likely to mislead or deceive consumers. Specifically, it is likely to cause consumers to be misled or deceived into believing that DPA's service is either authorised or approved by, an official postal service of, or associated with Australia Post. 4 The relevant principles governing the grant of injunctive interlocutory relief are now well established and were recently discussed in the High Court decision of Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. I need not rehearse them. However, of particular relevance to this proceeding are two matters that were referred to in the recent Full Court decision of this Court in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156. The first is that it is important to consider the strength of the applicant's prima facie case as this also impacts on the Court's consideration of the balance of convenience, and more generally whether the Court should intervene at an interlocutory stage and grant an injunction: Samsung at [56]-[59]. 5 The second matter is the adequacy of damages. This is a matter which must be considered as part of the Court's general discretion as to whether or not an injunction should be granted. In Samsung, the Full Court said at [62]: The assessment of harm to the plaintiff, if there is no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is at the heart of the basket of discretionary considerations which must be addressed and weighed as part of the Court's consideration of the balance of convenience and justice. 6 It should also be borne in mind that, at an interlocutory stage, it is generally not appropriate to make positive findings of fact. This is because there may be some issues of evidence that may impact on any findings of fact. Nevertheless, in a case such as the present, it is necessary to make some assessment as to Australia Post's case. 7 I turn first to the allegations concerning misleading or deceptive conduct under the Australian Consumer Law and the associated claims. There is no doubt that Australia Post has a strong reputation in Australia in providing a reliable and accessible letters service to all Australians for many years. It is similarly not in doubt that Australia Post has a strong reputation in the name "Australia Post" in relation to this service. The question may arise as to the extent to which Australia Post's reputation exists in relation to services outside mail delivery. However, for the purposes of this hearing, I need not delay too long in relation to this particular matter. 8 Of particular relevance to Australia Post's misleading or deceptive conduct claim is DPA's website. Exhibited to the affidavit of Natalie Jane Hickey sworn on 26 March 2012 are screenshots of the homepage of DPA's website. At the bottom of the homepage is a disclaimer stating that: "Digital Post Australia… is not an Australia Post business". Putting aside any disclaimer, the website does not found a strong case for misleading or deceptive conduct in my view. The way in which it is set out would not lead any consumer to form the view that DPA is connected or affiliated with Australia Post. Indeed, I do not think that the name "Digital Post Australia" in itself would cause any consumer to be misled or deceived in the way alleged by Australia Post. 9 The material before me indicates that there is a very weak case as far as Australia Post's misleading or deceptive conduct claim is concerned. In saying this, I am aware that I should be careful not to ignore the possibility that a consumer may be 'enticed' to the website on the basis of any misleading or deceptive conduct on the part of DPA. As Counsel for Australia Post submitted, it is improper to then treat the disclaimer as somehow discounting that enticement. However, in my view, there is nothing of a misleading or deceptive nature in the enticement, that being the reference to "Digital Post Australia". 10 Once one enters the website, one sees the words "Australia's online postal service". Australia Post submitted that this indicated some association with it. However, this text should be considered in the context in which it appears, having regard to the format of the website, the reference to "Digital Post Australia", and, assuming one sees it, the disclaimer. 11 The disclaimer would make it beyond absolute doubt that there is no connection with Australia Post. However, as I have said, one does not need the disclaimer to reach the conclusion that the conduct complained of is not misleading or deceptive. Nonetheless, for the purposes of this interlocutory injunction, it seems prudent to direct that the disclaimer be made more prominent on the home page of its website. 12 I have not rehearsed all the principles that the parties put before me in relation to misleading or deceptive conduct. No one seems to be in any doubt as to the appropriate principles to adopt. At the end of the day it is a matter of judgment and impression based upon what is before the Court as to the content and context of the allegedly misleading or deceptive conduct. 13 I turn to the question of the trade mark infringement. As Counsel for DPA accepted, this stands in a different category to the misleading or deceptive claim in relation to the "serious question to be tried" inquiry. I think this claim warrants more investigation; it cannot be said that it is not without merit and substance. However, I do not have to weigh up the exact merits or otherwise of this claim. Again, it will ultimately be a matter of impression upon which minds may differ as to whether there has been trade mark infringement under s 120(1). Nevertheless, I have taken the view that an injunction should not be granted on the basis of the alleged trade mark infringement, assuming it to have some basis. I say this without considering whether DPA could rely upon s 122(1)(b) on the basis that use of the name "Digital Post Australia" was in good faith. 14 The reason I have taken the view that an injunction should not be granted arises on the analysis of the balance of convenience, assuming that Australia Post has surmounted the hurdle of showing there is a serious question to be tried, and assuming, as I do, that there is not a weak case in relation to the trade mark infringement case. I have come to the view that the most decisive factor is that more damage would be attributed to DPA if the injunction were granted than any damage done to either the public or to Australia Post. 15 To require DPA to alter its marketing and the way in which it has promoted itself to this point in time would inflict upon it a harm that is unnecessary insofar as the market place is concerned and DPA's business. I am mindful that, at present, all DPA is doing is seeking potential customers' expressions of interest. It is not otherwise carrying on the business that it proposes to undertake at the middle or the end of this year. 16 The real damage that Australia Post would suffer if the injunction were not granted would be loss of reputation and goodwill. Counsel for Australia Post submitted that it would be difficult to quantify these things. Having regard to the fact that, on current indications, there will be a trial for this matter in May, and that Australia Post itself has not really commenced business in this particular area, I am not convinced that quantifying damages will be an insuperable problem. 17 I certainly do not take the view that it would be impossible to claim damages for loss of goodwill. There have been instances where the court has been able to award and quantify damages where there has been, for instance, liability found for passing off and subsequent loss of goodwill. Undoubtedly, there may be difficulties in this. I think, however, that given the time that will elapse before the trial and determination of this matter, the loss to Australia Post, if they are correct, will be minimal. 18 As far as the public is concerned, because of the view I take in relation to the misleading or deceptive conduct matter, I do not think there is any likelihood that the public will be misled in the way in which Australia Post alleges. If there is any doubt, the direction that the disclaimer be made more prominent avoids any confusion in the mind of the public in the interim before a trial of this matter is heard. 19 There is just one other matter I wish to mention specifically in relation to the evidence of Mr David Harold Hynes in an affidavit affirmed on 3 April 2012. Mr Hynes is the Chairman of DPA. In that affidavit, evidence was given about the adoption of the name "Digital Post Australia". Annexed to the affidavit was a confidential exhibit, which was a presentation given as a result of consumer research, delivered in November 2011. 20 It is quite apparent that after the delivery of that consumer research presentation and before 18 January 2012 there was a change in the name of DPA's business. The name eventually adopted was, of course, Digital Post Australia. Why that change occurred will be a matter of some relevance at the trial of this proceeding. I do not, for the purposes of this application, make any finding - even tentative - as to the content of Mr Hynes' affidavit or whether, in fact, it is misleading. 21 In paragraph [34] of Mr Hynes' affidavit, when referring to the consumer research presentation, Mr Hynes states that each business name option considered by DPA included the word "post" which was intended to be used in a descriptive sense. At paragraph [33] Mr Hynes states that: A 'practical' name was felt to be similar to Bpay and Eftpos and there was no indication in the consumer research that there was any perception by consumers that DPA's name was in any way associated with APC [Australian Postal Corporation]. 22 As Counsel for Australia Post submitted, the name "Digital Post Australia" was not in contention, or did not seem to be in contention, in the consumer research presentation made in November 2011. Whatever the result of the inquiry as to Mr Hynes' affidavit may be at trial, it would not impact on my conclusion in relation to the nature of the case at this interlocutory stage in relation to the misleading or deceptive conduct case. 23 For those reasons I reject the application for interlocutory relief, bearing in mind that a trial will be conducted in May of this year. I will make directions for that to occur. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.