Bitek Pty Ltd v IConnect Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1249 of 2011

JUDGE: KENNY J DATE: 24 FEBRUARY 2012 PLACE: MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT 1 The applicant seeks judgment in default pursuant to Rule 5.23(2) of the Federal Court Rules 2011 (Cth) ("the Rules"). The applicant relies on various affidavits, including the affidavits of its solicitor, Gregory Ralph Tye, sworn on 9 December 2011 and 3 February 2012, as well as the affidavits of Joseph Zammit sworn on 6 February 2012 and 20 February 2012. There is also an affidavit of service sworn by Alexzandra Elizabeth Claire Coudraye on 21 February 2012. 2 The applicant began the proceeding by an originating application and a statement of claim, both filed on 10 November 2011. 3 Section 71 of the Designs Act 2003 (Cth) ("the Designs Act") is central to the proceeding. The provision reads as follows: (1) A person infringes a registered design if, during the term of registration of the design, and without the licence or authority of the registered owner of the design, the person: (a) makes or offers to make a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design; or (b) imports such a product into Australia for sale, or for use for the purposes of any trade or business; or (c) sells, hires or otherwise disposes of, or offers to sell, hire or otherwise dispose of, such a product; or (d) uses such a product in any way for the purposes of any trade or business; or (e) keeps such a product for the purpose of doing any of the things mentioned in paragraph (c) or (d). (2) Despite subsection (1), a person does not infringe a registered design if: (a) the person imports a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design; and (b) the product embodies the design with the licence or authority of the registered owner of the design. (3) In determining whether an allegedly infringing design is substantially similar in overall impression to the registered design, a court is to consider the factors specified in section 19. (4) Infringement proceedings must be started within 6 years from the day on which the alleged infringement occurred. 4 By its statement of claim dated 10 November 2011, the applicant claims that the first respondent is guilty of design infringements (as set out in s 71 of the Designs Act) and that the second respondent has authorised, or participated, in these infringements. 5 The applicant pleads that it is the owner of Australian Registered Design Number 321171, referred to below as the "bullnose wall plate design", and Australian Registered Design Number 332193, referred to below as the "reverse bullnose wall plate design". The bullnose wall plate design was registered on 19 September 2008 and certified on 16 December 2008, and remains registered until 5 September 2018 (subject to the payment of the relevant fees). The reverse bullnose wall plate design was registered on 12 August 2010 and certified on 10 November 2010, and remains registered until 29 July 2015 (subject to the payment of the relevant fees). 6 The applicant alleges that the first respondent has breached s 71 of the Designs Act in that the first respondent has: 1. made or offered to make certain wall plates which embody designs that are identical to, or substantially similar in overall impression to, each of the bullnose wall plate design and reverse bullnose wall plate design; or 2. imported such wall plates into Australia for sale, or for use for the purposes of any trade or business; 3. sold or otherwise disposed of, offered to sell or otherwise dispose of, such wall plates; 4. used such wall plates in any way for the purposes of any trade or business; and/or 5. kept such wall plates for the purposes of doing any of the things mentioned in the preceding subparagraphs. 7 In particulars of infringement, the applicant states that, after the relevant registration dates, the first respondent offered for sale and sold through its "eBay store" products that embodied the design of its bullnose wall plate design and reverse bullnose wall plate design, as alleged. 8 The applicant pleads that the second respondent was "in effective, sole, absolute and complete control" of the first respondent. The applicant further pleads that the second respondent authorised, directed and procured the first respondent's infringing conduct; acted with the first respondent in furtherance of a common design to infringe the applicant's designs, and was a joint tortfeasor with the first respondent in the infringing conduct. In particulars, the applicant states that the second respondent established the first respondent on 24 January 2008 and "personally handles sales of the items referred to" under the name "Adam". The second respondent's residence is also, so the applicant states, the first respondent's registered office and principal place of business. 9 By way of relief, the applicant seeks declarations as to the infringement of the bullnose wall plate design and the reverse bullnose wall plate design in breach of s 71 of the Designs Act, injunctions, and other orders. 10 In his first affidavit, Mr Zammit, who is the applicant's Branch Manager, deposes that: The applicant is a family-owned and operated business involved in the manufacture and supply of products to the Broadband, Cable, Satellite, Pay Television, Free-to-Air, CCTV/Security, Data and Electrical industries. The applicant owns the bullnose wall plate design and the reverse bullnose wall plate design. The applicant makes products that embody each of the bullnose wall plate design and the reverse bullnose wall plate design, and these products have certain identifiable features, as described by him. In September 2011, he became aware that the first respondent was advertising for sale and selling bullnose wallplates and reverse bullnose wallplates, through its eBay store. The applicant had not sold these products to the first respondent. Through Mr Zammit, the applicant placed orders with the first respondent and subsequently examined the first respondent's products. It was Mr Zammit's opinion that the first respondent's products were substantially similar in overall impression to the applicant's registered designs. Mr Zammit's evidence in this regard is augmented and made good by his second affidavit. The second respondent is the director of the first respondent, as evidenced by ASIC searches. 11 In his affidavits, Mr Tye deposes that: On 27 October 2011, he sent a letter of demand to the respondents, amongst other things, seeking that the respondents would cease selling or supplying the infringing wall plates. The respondents have not replied to this letter. At the outset of the proceeding, all the relevant court documents were emailed to the first respondent's email address and apparently received there. Another email was sent to the first respondent drawing its attention to the proceeding later in November 2011. The relevant court documents were also sent by post to the first respondent at its registered office, which is also its principal place of business and the second respondent's residential address. These documents were returned to Mr Tye's office stating that the attempts by Australia Post to deliver them at the specified address were "refused". On 18 November 2011, following the return of the documents, Mr Tye telephoned the mobile number for the second respondent and spoke with a person identifying himself as "Adam" - a name said to be adopted by the second respondent. In the conversation "Adam" indicated that he knew of the proceeding and said "This is going to cost Bitek money". A further email was sent to the first respondent on 18 November 2011; and subsequently the second respondent was served with the originating application, the statement of claim and the genuine steps statement. On 14 December 2011, a letter was sent by registered post and by email to the respondents, to the first respondent's registered office and the second respondent's residential address, enclosing the Court's orders of 13 December 2011. Notwithstanding the Court's orders of 13 December 2011 that the respondents file a defence, no defence has been filed. 12 Ms Coudraye further deposes to service in accordance with my orders of 13 December 2011. 13 Counsel for the Applicant also handed up at the hearing today a copy of an email, together with a relaying notification (which indicated that the email had been received by the recipient) of an email sent to the first respondent on 23 February 2012 attaching the applicant's outline of submissions and the applicant's proposed orders upon which it relied today. 14 There was no appearance for the respondents today, although the evidence establishes that they were served and made aware of the proceeding and today's application and hearing.

Consideration 15 Pursuant to Rule 5.23(2) of the Rules: (2) If a respondent is in default, an applicant may apply to the Court for: (a) an order that a step in the proceeding be taken within a specified time; or (b) if the claim against the respondent is for a debt or liquidated damages - an order giving judgment against the respondent for: (i) the debt or liquidated damages; and (ii) if appropriate, interest and costs in a sum fixed by the Court or to be taxed; or (c) if the proceeding was started by an originating application supported by a statement of claim, or if the Court has ordered that the proceeding continue on pleadings - an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled; or (d) an order giving judgment against the respondent for damages to be assessed, or any other order; or (e) an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order. 16 Rule 5.22 provides that: A party is in default if the party fails to: (a) do an act required to be done, or to do an act in the time required, by these Rules; or (b) comply with an order of the Court; or (c) attend a hearing in the proceeding; or (d) prosecute or defend the proceeding with due diligence. 17 Rule 5.23 and Rule 5.22 are not materially different from the equivalent provision under the former Rules: see O 35A r 3(2)(c). The principles that were applicable under the earlier provision continue to apply: see, e.g., Yeo v Damos Earthmoving Pty Ltd [2011] FCA 1129 at [9] per Gordon J. 18 According to these principles, the applicant's claim need not be proved by evidence. Instead, on the face of the statement of claim, there must be a claim for the relief sought and the court must have jurisdiction to grant that relief. See Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3] per Heerey J; Diesel SPA v Hwang [2005] FCA 1619 at [2] per Tamberlin J; Wu v Avin Operations Pty Ltd [2006] FCA 36 at [57] per Kenny J; and HIT Entertainment Ltd v Lodin [2006] FCA 722 at [5]-[6] per Stone J. Before an applicant can be said to be "entitled" to the relief claimed in the statement of claim, the court needs to be satisfied that "each element of the relevant civil wrong involved is properly and discretely pleaded in the statement of claim": see Macquarie Bank Ltd v Seagle [2005] 46 FCR 400 at 406 to 407 [24] per Conti J; Macquarie Bank Ltd v Seagle [2008] FCA 1417 at [20] per Jagot J; and Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [24] per Flick J. 19 Having read the statement of claim in this proceeding, I find that these conditions are satisfied. In addition, the evidence filed by the applicant in support of its application today further confirms that the applicant is entitled to the relief sought. 20 Over four months have passed since the applicant instituted this proceeding against the respondents, all of whom have been duly served with the originating application, genuine steps statement and statement of claim. The orders of the Court of 13 December 2011 and this interlocutory application, with supporting affidavits, have also been served on the respondents. Notwithstanding this, the respondents have not responded; and they have done nothing formally to acknowledge the applicant has applied to the Court for relief in respect of its claims against them. 21 Furthermore, the respondents: have not filed a notice of address for service, contrary to Rule 5.02; have not filed a genuine steps statement, contrary to Rule 5.03; have not filed any Defence contrary to Rule 16.32 and the Court's orders of 13 December 2012 (itself a default under Rule 5.22(b)); did not attend the first directions hearing on 13 December 2011 (a default under Rule 5.22(a) and (c), by virtue of Rule 5.01); and having regard to the above, have not defended the proceeding with due diligence (a default under Rule 5.22(d). 22 I am, therefore, satisfied that the respondents are in default for the purposes of Rule 5.22. The discretion conferred by Rule 5.23 is therefore enlivened. 23 Rule 5.23 is, nonetheless, discretionary and the circumstances attending the application must be taken into account. It is also well-recognised that the discretion must be exercised with caution: see Universal City Studios LLLP v Hoey t/as DVD Kingdom (2006) 232 ALR 525 at 527 [10] per Sackville J. 24 The history of the litigation to date clearly shows, however, that the respondents are either unable or unwilling to co-operate in having the applicant's claims for relief brought to trial either at all or within an acceptable period; or otherwise having the matter resolved appropriately. The respondents' conduct has been entirely unco-operative conduct: they have taken no step in the proceeding at all. Their defaults indicate that they do not intend to participate in the future. This has already resulted in delay. Such conduct not only puts the applicant to unnecessary expense, it is costly for the public purse and prejudicial to the administration of justice. 25 Whilst an order of the kind the applicant seeks should not lightly be made, in this case, there is no countervailing consideration greater than those to which I have referred. 26 Accordingly, the applicant has made out an entitlement to enter judgment in default. There is sufficient shown to support the grant of declaratory and injunctive relief of the kind the applicant seeks. The applicant is also entitled to pecuniary relief, in the nature of damages or an account of profits, as sought in its application. To this end, I would also order that there be an enquiry, including appropriate discovery, to quantify the damages, or subject to the applicant's election, to take an account of profits. 27 The applicant relied on Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 ("Norwich Pharmacal") to justify its application for extensive orders for disclosure. The applicant stated that these orders were sought for two purposes. The first purpose was to obtain sufficient information to make an election between damages or an account of profits. The second purpose was to obtain information as to the identities of the suppliers of the impugned products so that further proceedings could be initiated against those suppliers. I would not, however, make these orders in the form sought. The orders sought were akin to interrogatories and went well beyond orders as to the disclosure of identity (as in Norwich Pharmacal). I could find no support for orders in this form in other authorities (such as Computershare Ltd v Perpetual Registrars Ltd [2000] 1 VR 626, in which orders were made, amongst other things, to disclose the identities of persons having access to alleged confidential information). I have not on this occasion been referred to any authority that would justify orders of this particular kind: compare Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 10 [28]-[29]. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.