relief
44 In their money claims in the proceeding, the applicants elected to seek damages rather than an account of profits. They relied on s 126 of the Trade Marks Act and s 115(2) of the Copyright Act. They sought such damages as would compensate them for the losses which they sustained as a result of the respondents' infringing conduct. The applicants' case proceeded on the basis that there was no need to distinguish between the approaches required to be taken under these provisions. The respondents did not resist my taking that approach, but they submitted that the applicants had not established, as a matter of evidence, that they had suffered damage or, if they had, what was the quantification thereof.
45 The applicants' first proposition was that I should infer that they had lost sales as the result of the presence on the market of the respondents' garments bearing the infringing labels. They claimed that they would have made every one of the sales that the respondents made under those labels - see paras 7, 8 and 9 above. But the applicants called no evidence by reference to which I could make any such finding. There was no detailed evidence as to the retail circumstances under which the applicants' and the respondents' goods were sold. For example, I do not know to what extent they might be sold in close physical proximity to each other; I do not know what category of consumer might be interested in goods of this kind; and I have no expert evidence as to the tendency for such consumers to make choices by reference to labels or known trading names rather than, for instance, by reference to the fabric, quality, style, comfort and other characteristics of a particular garment. The applicants made no attempt to match particular garments of their own with garments displayed for sale by the respondents, containing one of the infringing labels, to assist the court in determining what a consumer, confronted with the latter, would most probably have done in the absence of that label. Yet the applicants ask me to infer that every consumer who purchased a pair of jeans on which an infringing label was stitched would, in the absence of that label, have purchased a product (presumably a like pair of jeans) from the applicants instead. That would, in my view, be a matter of conjecture or surmise, rather than of inference. The gap in the evidence is just too wide to be crossed by the drawing of an inference, especially since it is the applicants themselves who have chosen to go to trial on this limited evidence.
46 The applicants did place into evidence two pairs of the respondents' jeans, purchased on behalf of the applicants, labelled as indicated in para 8 above, and one pair of the respondents' jeans, also so purchased, labelled as indicated in para 7 above. All three were adult jeans (sizes 30, 32 and 34). In each case the label depicted in para 7 (the "ORIGINAL" label) was sized 22 mm x 39 mm. Where that label appeared alone (on one of the three pairs of jeans), it was situated on the right front, just above the pocket, and on the right rear, just below the belt. Where the label appeared in conjunction with the label depicted in para 8 (on the other two pairs of jeans), it was situated at the centre of the back, just below the belt, and on the right hip, just below the belt. The label depicted in para 8 itself (which I have found not to amount to an infringement of trade mark, and which was not suggested to amount to an infringement of copyright) was 45 mm x 163 mm and was, in each case, situated on the left front pocket. All three pairs of jeans were labelled as "MISH MASH" in the conventional position of a branding label at the inside rear waist, and also had the words "MISH MASH" impressed on the metal buttons used at the front opening and, in two instances, elsewhere. Given the size and placement of the labels, and the other indications of source, to which I have referred, I think it quite improbable that a consumer would have purchased a pair of jeans corresponding to these in the mistaken belief that they were the applicants' product.
47 A further problem for the applicants is that they led no evidence of wholesale margins which the third applicant (by which alone the damages claim was advanced) made on garments of the kind that the respondents sold under the infringing labels, and which it was allegedly denied by those sales. That is to say, even if I were persuaded that every sale by the respondents represented a sale by wholesale lost by the third applicant, I would still have no way, on the evidence, of calculating the third applicant's net monetary loss attributable to the loss of that sale.
48 Despite submissions made on behalf of the applicants, the present situation is very far removed from one in which an applicant has done all it reasonably can to quantify its loss and the court has no alternative but to travel the remaining distance by estimation, and possibly even - according to the authorities - by guesswork. This is a case in which the third applicant has led no evidence at all to assist on the matter of quantification, in which, inevitably, one would expect that a well-run, substantial, trading concern would be readily able to provide a figure for its margin on a particular product, and in which no explanation has been provided for the third applicant's omission to do so. In these circumstances, it would be factually problematic (to say the least) and jurisprudentially unsound for the court to hazard an estimation of what the third applicant's losses might be.
49 In the alternative, the applicants claimed damages for loss of reputation, substantially by reference to the approach taken in Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd (2008) 166 FCR 358, in Review Australia Pty Ltd v New Cover Group Pty Ltd (2008) 79 IPR 236 and in Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378. The first two of these authorities were design cases, while the third was a copyright case.
50 In Review v Innovative, there was evidence that the applicant, which conducted its own stores, had a reputation for originality of design in relation to dresses and frocks. Unchallenged evidence had been led on behalf of the applicant that, when its designs were adopted by other traders, "the claim to originality … is lost" (166 FCR at 366 [29]). Recognising the force of that consideration, I said (166 FCR at 367 [30]):
If garments bearing a substantial similarity to those of the applicant started to appear in other outlets and under other brands, the consumer's perception of the originality of the applicant's designs would necessarily be weakened. In an extreme case, the consumer's perception may be that the applicant's garments were nothing very special at all, and that she might as well spend her discretionary dollar at any outlet where she noticed something to her taste.
The rather special circumstances of this case, and particularly the fact that it was a designs case, ought not to be overlooked when the question arises whether it is authority for the proposition that damages are available for loss of reputation.
51 Review v New Cover was also a designs case and, as the name of the case indicates, involved the same applicant. In that case also, Kenny J accepted "that 'exclusivity' (and design 'freshness') was of commercial value" (79 IPR at 247 [46]). Her Honour's conclusion was based upon specific evidence led in that case.
52 In Elwood, Gordon J accepted that infringement of the applicant's copyright "would cause a loss of reputation to the applicant in terms of brand-name recognition" (81 IPR at 384 [33]). Her Honour continued (at [34]):
What then is the commercially valuable aspect of the applicant's reputation, and how, and to what extent, was this commercially valuable aspect damaged by the conduct of the respondent? At its highest, it was submitted by the applicant that the "iconic" and "exclusive" nature of the Elwood brand was "cheapened" by the production of the infringing products of the respondent. For the moment, I am prepared to accept that the exclusivity of the applicant's reputation was, on balance, adversely affected by the availability of the infringing products - as the availability of a product increases and its cost decreases, it will be viewed as less exclusive.
Gordon J then went on to grapple with the question of the quantification of this loss. A significant aspect of Elwood, in my view, was that the copyright works were central graphical features of the garments to which they were applied. This may be seen in the representations of the garments themselves which appear as annexures to the earlier judgment of the Full Court in the same matter: 172 FCR at 596-597. Thus, although a copyright case rather than a designs case, Elwood had in common with the two Review cases that the intellectual property sought to be protected was associated with something striking about the appearance of garments, in relation to which exclusivity was both asserted and established.
53 The present case is, in my view, quite different from those to which I have referred above. From the evidence which has been led, it could not be said that the applicants' mark No 883618, or the applicants' work, was a conspicuous feature of the appearance of the articles to which it was applied. So far as the evidence shows, in some cases labels corresponding with the mark and the work would have been noticeable to the observer, but in other cases they may not have been (eg where they may have been obscured by a belt or ornamentation, or where they may have been applied to the inside of a garment, as, for instance, on the inside collar of a shirt). Even where they were visible, the labels, as they appeared on the applicants' garments, were not, to my way of looking at it, either a conspicuous or a significant feature of the overall appearance. Neither was there any evidence that the mark was associated with a reputation for exclusivity or originality.
54 Neither, I would add for the sake of completeness, was the applicants' case run by reference to a proposition that their reputation for quality would be diminished if consumers, thinking that they were buying the third applicant's garments, bought the respondents' garments instead, only to find that the garments did not meet their expectations. There was no suggestion in the applicants' case that the respondents' garments were not every bit as satisfactory to the consumer as the third applicant's garments would have been, if purchased instead.
55 For the above reasons, I am not persuaded that the third applicant has suffered any reputational damage as a result of the infringing conduct of the respondents.
56 Although not part of my reasons for the conclusion which I have expressed, I think it appropriate to add that it does not follow, from that conclusion, that a trader such as the first respondent is, in facts broadly equivalent to those of the present case, at liberty to appropriate the registered trade mark, or to infringe the copyright, of another trader, and to do so with monetary impunity. Because of the way the applicants conducted their case, I have not been called upon to consider what title they might have had to a remedy in the way of an account of profits, but I must say that it is not apparent to me why such a remedy might not have been both logical and appropriate in the circumstances of the case. I can see the sense in which a court would readily require a trader which has marketed its product under the trade mark of an opponent to yield up to that opponent the profits which it has gained thereby. Because no such claim was made on behalf of the applicants, however, I shall say nothing further about the matter.
57 The applicants also sought additional damages for infringement of copyright under s 115(4) of the Copyright Act. By para (b) of that subsection, I should have regard to:
(i) the flagrancy of the infringement; and
(ia) the need to deter similar infringements of copyright; and
(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and
(ii) whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and
(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv) all other relevant matters….
Of these items, subpara (ii) is clearly irrelevant to the circumstances of the present case. Further, there is no evidence that the respondents derived any benefit as a result of their infringement of copyright, the relevance of which, had it occurred, would have arisen under subpara (iii). The applicants did not invite me to infer that, in the absence of the infringement, the respondents would have sold fewer pairs of jeans than they in fact did.
58 Neither could I find that the respondents' conduct was flagrant, within the context of subpara (i) of s 115(4)(b). The second respondent came by the labels which I have held infringed the applicants' work in what appears to have been the normal course of the first respondent's business. He bought the garments in question from a company named "Robin Textiles". As viewed by him when he went to Istanbul, the labels on those garments reflected the name of that business. Had he turned his mind to the matter of copyright, it would not, in my view, have been unreasonable for him to have assumed that the business known as Robin Textiles either owned, or was licensed to use, any such copyright work as may have been relevant. I am not prepared to hold, in a business such as that in which the respondents engaged, that they should have approached their task of buying garments from Turkey with an in-built suspicion that Robin Textiles was not entitled to such copyright as may exist in the labels which appeared on their garments and under their own name. There was, in my view, nothing flagrant about the first respondent's infringement.
59 It is likewise with respect to subpara (ib) of the para (b) of s 115(4). Promptly upon being notified of the applicants' demands, the respondents withdrew from sale their remaining stock of the garments which incorporated the infringing labels. It was not suggested that they could have done more.
60 That leaves subpara (ia) of s 115(4)(b). I did, for a time, entertain the view that a trader such as the first respondent should be deterred from purchasing goods which have sewn into them labels which incorporate drawn elements without first satisfying themselves that there could not be any infringement of copyright involved in so proceeding. On reflection, however, I have come to the view that this would be too severe an application of the discretion for which s 115(4) provides in the context of the present case. Without saying anything further about the general position about such a trader, here I am faced with a situation in which the second respondent was presented with garments which bore the name of the trading house by which they were offered for sale. I am not prepared to hold it to be an object of the Copyright Act that a buyer in such a situation should be deterred from proceeding further without making inquiries as to the entitlement of the seller to use the labels in question. The present case is, of course, not one in which the very item purchased by the respondents was potentially a copyright work in itself, such as, for example, might be the case where a text, a work of art, a piece of music, or an engineering or architectural design was purchased. In the present case, the items purchased were denim jeans, and the respondents found it convenient to indicate source by the attachment of a label in the conventional way. As I have explained above in connection with subpara (i), there is no reason to think that questions of copyright were uppermost in the second respondent's mind at the time; and I would go further and say that there is no reason to hold that they ought to have been. In the circumstances, the notion of deterrent, which finds expression in subpara (ia), is quite inapt to the facts of the case.
61 For the reasons given above, I would reject the applicants' claim for damages, both under the Trade Marks Act and under the Copyright Act.
62 For my own part, I can think of no reason not to proceed to consider the availability of the other heads of relief sought by the applicants, declarations and injunctions. However, the applicants made no submissions on those subjects, and the respondents requested the opportunity to address the court about them, and on the matter of costs, once my reasons for judgment on liability and damages were available. In the circumstances, I shall follow the course proposed by the respondents.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.