On the grounds appearing in the accompanying Statement of Claim, the Applicants' claim:
1. An order that the First Respondent, by itself, its directors, officers, servants, agents or otherwise be permanently restrained from, in trade or commerce, and without the licence of the First Applicant selling, offering to sell or keeping for the purpose of sale or offering for sale, products that depict any of the following:
a) the name TERRY FITZGERALD
b) the whole or substantial part of any photograph of the First Applicant
c) any name substantially identical with or deceptively similar to the name TERRY FITZGERALD
2. An order that the First Respondent by itself, its directors, officers, servants, agents or otherwise be permanently restrained from, in trade or commerce, representing that any products sold or offered for sale by the First Respondent or on its behalf is being sold by the First Applicant or a company associated or affiliated with the First Applicant or otherwise has the licence, sponsorship or approval of the First Applicant or a company associated with the First Applicant.
3. An order that the First Respondent by itself, its directors, officers, servants, agents or otherwise be restrained from reproducing or authorising the reproduction, without the licence of the First Applicant, of the whole or a substantial part of any photograph of the First Applicant.
4. An order that the Second Respondent be restrained from being knowingly concerned in or a party to or from procuring any conduct of the First Respondent prohibited in paragraphs 1 to 3 herein.
5. An order that the First Respondent deliver up on oath within 7 days to the First Applicant any material that would constitute a breach of these orders in the possession, custody or power of the First Respondent, its directors, officers, servants and agents.
8. Damages or equitable compensation for passing off.
9. In the alternative to paragraphs 6 to 8, an account for profits.
10. Interest.
11. Costs.
12. Such further or other orders as the Court thinks fit."
[3]
The parties were represented before the Court by Ms C Cochrane of Counsel for the applicants, and Mr R Killalea of Counsel for the respondents.
[4]
The applicants have put the following affidavits before the Court:
Affidavit of Terry Fitzgerald sworn 2 March 2007 (with annexures) ("ATF 1").
No objections.
Affidavit of Terry Fitzgerald sworn 21 June 2007 (with annexures) (ATF 2").
Paragraph [8] ("Hot Buttered Australia" is different to the second applicant; no evidence of who "Hot Buttered" is): objection - hearsay: objection fails.
Paragraph [16], fourth line ("highest quality Indian 180gm cotton"): objection - opinion: lay opinion only; subject to weight, objection fails.
Paragraph [17] ("Consumers sometimes request that ... their"): objection - form (indirect speech; hearsay): objection upheld - "Consumers sometimes request that ... their" struck out.
Paragraph [17] ("They often request me to endorse Hot Buttered products so that they become collectable items"): objection - hearsay: objection upheld (entire sentence struck out).
Paragraphs [38(a)], [38(b)] and [38(c)] ("A number of articles ... extensive press coverage ..."): objection - suggests more articles, but no proof of this; not extensive in context: subject to weight; objection fails.
Paragraph [42] ("Unique means the web surfers who spend several minutes on the site as opposed to just hits"): objection - hearsay: evidence should come from Blue Central; objection upheld.
Paragraph [55] ("... outlet not suitable"): objection - in the nature of a submission): objection withdrawn.
Paragraphs [57] and [58] (Product comparison): objection - opinion: paragraph [57] a lay opinion only, subject to weight, objection fails; paragraph [58], objection withdrawn.
Paragraph [59] (last four lines): objection - opinion: lay opinion only; subject to weight; objection fails.
Paragraph [60] (entire paragraph, but "the" in the first and last lines in particular): objection - in the nature of a submission; opinion: lay opinion only; subject to weight; objection fails except that "the" in the first and second lines are struck out.
Supplementary Affidavit of Terry Fitzgerald sworn 12 July 2007 ("ATF 3").
Paragraph [7] (references to the name "Terry Fitzgerald" in advertisements): objection - hearsay: lay opinion only; subject to weight; objection fails.
Paragraph [8] (from "I have observed ...", and "all" in ninth line): objection - opinion: lay opinion only; subject to weight; objection fails except that the "all" in the ninth line is struck out.
Affidavit of Terry Fitzgerald sworn 5 September 2007 (with annexures) ("ATF 4").
Paragraph [5] (entire paragraph): objection - in the nature of a submission; opinion: lay opinion only; subject to weight; objection fails.
Paragraphs [9] to [11] (reference to "Fitzy" range): objection - relevance: relevant to damages; admitted; otherwise subject to submissions on relevance.
Affidavit of Allan Hunt sworn 21 June 2007 (with annexures) (AAH 1").
Paragraph [5] (last four lines from "Further ..."): objection - hearsay: objection as to last sentence upheld; otherwise not read.
Paragraph [11] (second line to end): objection - relevance: objection withdrawn.
Affidavit of Keith Curtain sworn 16 July 2007 (with annexures) ("AKC 2").
No objections.
Affidavit of Claire Elizabeth Ramsay sworn 5 September 2007 (with annexures) ("ACER").
No objections.
Affidavit of Rodney Malcolm De Boos sworn 5 September 2007 (with annexures) ("ARMDeB").
No objections.
Affidavit of Douglas McGregor Lees sworn 6 September 2007 (with annexures) ("ADML").
Paragraphs [13], [14] and [15] (entire paragraphs): objection - relevance: admitted subject to relevance (to be considered by the Court if necessary (T 64); objection fails.
The applicants also put before the Court the following exhibits:
"AE 1" - ASIC Historical Company Extract for Hot Buttered International Pty Ltd as at 10 September 2007 (T 70).
"AE 2" - Profit and Loss Statement for Hot Buttered International Pty Ltd for the period June 2004 to June 2005 (T 71 and T 190).
"AE 3" - Article about Terry Fitzgerald by Derek Hynd (T 72 to T 73).
"AE 4" - Light Blue T-shirt from the Hot Buttered "Soul" range (T 73 to T 74).
"AE 5" - The Australian Surfer's Journal (Volume 1, No 2), pp.29-45 and 7 (T 88 to T 89).
"AE 6" - Surfing World (Issue 281) at pp.60-67 (T 89).
"AE 7" - Tracks (October 2006, Volume 10 of 12), at pp.14 and 64 (T 90).
"AE 8" - Australian Surf Business: Australia's Surf Industry Trade Magazine (Issue 8 October/November 2005) (T 90).
"AE 9" - Australian Surf Business: Australia's Surf Industry Trade Magazine (Issue 12 June/July 2006) (T 91).
"AE 10" - Australian Surf Business: Australia's Surf Industry Trade Magazine (Issue 18 June/July 2007) (T 91).
"AE 13" - Morning of the Earth at pp.157-181 (T 168).
"AE 14" - The Surfer's Journal (Volume 15, No 2) at pp.48, 51, 57 and 59 (T 168).
The respondents have put the following affidavits before the Court:
Affidavit of Andrew Jones affirmed 20 August 2007 ("AAJ 1").
Paragraph [6] ("... as they were a great success to date and continued to receive excellent customer support and media attention."): objection - opinion; best evidence rule (unsupported assertion): lay opinion only; subject to weight; objection fails.
Paragraphs [11] to [18] (entire paragraphs): objection - relevance (objective test): admitted subject to submissions of bad intention.
Paragraphs [22] (entire paragraph): objection - hearsay: objection upheld as to part: "as the retailer ... to deliver".
Affidavit of Andrew Jones affirmed 24 August 2007 (with annexures) ("AAJ 2").
No objections.
Affidavit of Danielle Chapman affirmed 24 August 2007 (with annexures) ("ADC").
Paragraphs [9] and [10] (entire paragraphs): objection - hearsay: objection upheld; both paragraphs struck out.
Affidavit of Matthew Barnes affirmed 24 August 2007 (with annexures) ("AMB").
Paragraph [3] ("The teeshirts (sic) were high quality"): objection - misleading or confusing; relevance; hearsay: lay opinion only; subject to weight; objection fails.
Paragraph [8] ("I presumed upon the quality of the teeshirts (sic) being high quality because (i) the Surfing World teeshirts (sic), previously sold to me by 33south, were of high quality and (ii) the Tracks teeshirts (sic) appeared to be of the same high quality."): objection - misleading or confusing; relevance; hearsay: lay opinion only; subject to weight; objection fails.
Paragraph [10] ("On taking delivery of the teeshirts (sic) ordered from 33south, I observed that the quality of the teeshirts (sic), including the fabric, stitching and colour of the teeshirts (sic), and the presentation of the Tracks covers on those teeshirts, was high."): objection - misleading or confusing; relevance: lay opinion only; subject to weight; objection fails.
Paragraphs [16] and [17] (entire paragraphs): objection - hearsay: objection upheld; both paragraphs struck out.
Paragraph [17] (entire paragraph) - not read.
Affidavit of Phillip Adair affirmed 24 August 2007 (with annexures) ("APA").
Paragraph [10] ("The teeshirts (sic) are high quality."): objection - misleading or confusing; relevance: lay opinion only; subject to weight; objection fails.
Paragraph [10] ("Buyers often say things like: I like the cotton, its (sic) thin, not cloying."): objection - hearsay: objection upheld; last sentence struck out.
The respondents have also put before the Court the following exhibits:
"RE 2" - 33 South Men's First Summer 2005 Buyers Catalogue (T 151).
"RE 3" - Draft License Agreement between Surfing World and 33 South Pty Ltd (T 155).
"RE 4" - Agreement between the Copyright Group Limited and 33 South Pty Ltd dated 8 June 2006 (T 156).
"RE 5" - 33 South Pty Ltd promotional DVD Tracks Vintage T-Shirt Collection (T 156).
"RE 6" - Documents produced under applicant's subpoena to 33 South Pty Ltd (T 158).
"RE 7" - Tracks (April 2007, Volume 4 of 12) at p.100 (T 160).
"RE 8" - 33 South Pty Ltd "Vintage Tracks" Collection comprising 10 t-shirts in total (T 167).
Legislation relevant to the consideration of this application is ss.52 and sub-ss.53(c) and (d) of the Act:
"52 Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)."
"53 False or misleading representations
A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:
...
(c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;
(d) represent that the corporation has a sponsorship, approval or affiliation it does not have ..."
The applicants claim injunctive relief under ss.80, and damages under ss.82 and 87 of the Act.
[5]
This court has jurisdiction to hear the application arising in relation to ss.52 and 53 of the Act in that these sections are contained in Part V of the Act, and this matter arises under a part of the Act in circumstances where a civil proceeding has been initiated by a person (other than the Minister or the Commission, as defined in the Act) (see s.86(1A) of the Act). To the extent that the applicant also raises a claim of a "passing off" at general law, s.18 of the Federal Magistrates Court Act 1999 (Cth) confers jurisdiction on this Court given that, plainly, this is a matter associated with matters (ss.52 and 53 of the Act) in which the jurisdiction of this Court is being invoked.
In relation to the second respondent I note the Court's power to make orders under the provisions of s.87(1A)(a) of the Act to the extent that the applicants assert that the second respondent was a person who was involved in the contraventions claimed pursuant to ss.52 and 53 of the Act.
Further, none of this was at issue between the parties, and I agree with submissions by the applicants that the second respondent's liability in relation to the issue of "passing off" (if made out) would arise as a joint tortfeasor at general law on the basis that he procured or induced the impugned conduct, or acted in a common design, with the first respondent. See WEA International Inc v Hanimex Corporation(1987) 77 ALR 456 at 465, per Gummow J:
"It should be added that infringement of copyright statutes for long has been considered tortious, so as to make applicable the common law principles as to liability of joint tortfeasors. However, those principles would not have provided an answer for plaintiffs in cases such as Sarpy v Holland_. This was because the circumstance that two or more persons assisted or concurred in or contributed to an act causing damage is not of itself sufficient to found joint liability; some common design is necessary:_ Morton-Norwich Products Inc v Intercen Ltd [1978] RPC 501 at 515-16. The position in the United States as regards liability at general law for common design to effect infringement of copyright created by federal law is unsettled: Nimmer on Copyright s12.04 [A].
Where the infringer is a corporation, questions frequently arise as to the degree of involvement on the part of directors necessary for them to be rendered personally liable. Those questions are not immediately answered by principles dealing with "authorization" or joint tortfeasance. Rather, recourse is to be had to the body of authority which explains the circumstances in which an officer of a corporation is personally liable for the torts of the corporation: Polaroid Corp v Sole N Pty Ltd [1981] 1 NSWLR 491 at 498; C Evans and Sons Ltd v Spritebrand Ltd [1985] 1 WLR 317; Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 84 FLR 101 at 127; cf Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 ; 61 ALR 307. The present is not such a case. Nor is there any issue as to vicarious liability of an employer for the torts of an employee."
[6]
In written submissions made after the hearing in this matter (see paragraphs 59 to 63), the respondents submit that sub-ss.53(c) and 53(d) have not been pleaded outside the context of s.52 of the Act. (See also paragraphs 6 to 9 of the respondents' written submissions.) In short, therefore, the respondents submit that given that a breach of s.52 only was pleaded as the basis for the damages sought (the submissions are silent as to injunctive relief), and that therefore the respondents, having understood the pleadings as such, read the pleadings as being a claim for damages in respect of a breach of s.52 only.
In reply, the applicants asserted:
With reference to paragraph 19 of the statement of claim attached to the application, it is clear that the proceedings were brought pursuant to sub-ss.53(c) and 53(d), in addition to s.52 of the Act.
Any grievance with the pleadings should have been raised earlier and preferably at an interlocutory stage, and in particular, by way of a strike out application, or a request for particulars.
In any event, the applicants made it clear in opening and closing submissions that they intended to pursue claims under s.53 of the Act, and submissions were clearly made in relation to both relevant sub-sections of that section.
The respondents have not asserted, let alone put forward any evidence, that they were taken by surprise as to the case to be met.
Referred the Court to Gould & Birbeck & Bacon v Mount Oxide Mines Limited (in liq)[1916] HCA 81; (1916) 22 CLR 490 at 517, per Isaacs and Rich JJ, and as applied by Dawson J in Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd[1990] HCA 11; (1990) 169 CLR 279 at 293:
"Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest."
The respondents' complaint in this regard, as best understood (see paragraph 6 of respondents' written submissions of December 2007), are derived from paragraph 19 of the applicants' "pleadings" (the statement of claim attached to the application) which is in the following terms:
"19. By reason of the aforesaid the First Respondent has engaged in conduct which is misleading or deceptive or which is likely to mislead or deceive in contravention of sections 52, 53(c) or 53(d) of the Trade Practices Act 1974."
The respondents complained that the references to "misleading or deceptive conduct" refers only to s.52, and is expressly stated in that section, and is not so stated in s.53.
Focusing only on this paragraph in the statement of claim, I note and agree with the applicants' reference (see paragraph 13 of the applicants' subsequent submissions of 21 December 2007, and the reference to Millers Annotated Trade Practices Act (2007) ((28th edn.) [1.53.5])) that s.53 of the Act supports s.52 by "enumerating specific types of conduct which, if engaged in by a corporation in trade or commerce in connection with the promotion or supply of goods or services, will give rise to a breach of the Act".
I understood the applicants' position therefore to be that notwithstanding that the words used at the impugned paragraph 19 of the statement of claim ("misleading or deceptive conduct"), they are also, when read in the context of the statement of claim as a whole, and the relevant assertions made there, matters relevant to sub-ss.53(c) or 53(d). Further, that such sub-sections are to be read in support of s.52, in that s.53 enumerates the types of conduct which would give rise to breaches of the Act.
Further, that the relevant pleadings did rely on sub-sections of s.53, and that the respondents would have been aware of that. Noting of course that in any event the matter proceeded through hearings and subsequent submissions in that light.
I agree with the applicants' submissions in this regard. But in my view there is a further reason that the respondents cannot succeed in this charge. That is with reference to the actual application made to this Court, to which the statement of claim was annexed.
I note first that the applicants commenced proceedings in this Court by way of application (to which the statement of claim was annexed) in compliance with the relevant Rules of this Court:
"4.01 Application
(1) Unless otherwise provided in these Rules, a proceeding must be started by filing an application in accordance with the form of application set out in Part 1 of Schedule 2."
[7]
"4.02 Content of application
An application must precisely and briefly state the orders sought and (if the application is for a general federal law proceeding) the basis on which the orders are sought."
[8]
The form used by the applicants complies with that requirement.
The respondents take no issue that s.52 was not pleaded. In my view, any plain reading of item two in the application itself makes it clear that sub-ss.53(c) and (d) of the Act were also being invoked.
The references in paragraph 2 clearly direct the respondents to the issue that orders are being sought, in relation to the first respondent, and with reference to order four the second respondent, from representing that items being sold or offered for sale by the first respondent, or on its behalf, is being sold by the first applicant (sub-s.53(c) of the Act), or otherwise has the sponsorship or approval of the first applicant (sub-s.53(d) of the Act).
The application itself makes it very clear that damages pursuant to ss.82 and 87 of the Act are being sought.
In light of the above, the respondents' complaint in this regard does not succeed.
[9]
From the evidence before the Court, the following of relevance can be discerned.
The first applicant, Mr Terry Fitzgerald, is a director of Hot Buttered International Pty Limited ("Hot Buttered"), the second applicant in these proceedings (see ATF 2 at [1] (see also ATF 1 at [2])). The second applicant was at all relevant times a company duly incorporated in Australia (see paragraph 2 of the statement of claim, annexed to ATF 1). Since 1980, Hot Buttered has been in the business of developing, marketing and distributing surfboards, and surf-related products (see ATF 2 at [8]). It was Mr Fitzgerald's evidence before this Court that he had carriage and control of Hot Buttered.
Mr Fitzgerald commenced surfing in 1969, and during the 1970s he appeared in a number of documentaries and movies about surfing, and through success in competitions in his professional surfing career, has achieved recognition for his surfing achievements, including an induction into the "Surfing Hall of Fame in 1995". He was awarded an "Australian Sports Medal" by the then Prime Minister of Australia in 2000. He has been active in the surfing world in Australia, including the organisation and promotion of professional surfing competitions.
I am satisfied on the evidence before the Court that Mr Fitzgerald has such a profile in the surfing world in Australia (at least those parts relevant to these proceedings), and is known and respected and recognised by this community (see in particular ATF 2 at [2]-[6], [38]-[40]). (See also generally applicants' document entitled "Amended Table of Articles and Adverts in Applicants' evidence on Terry Fitzgerald and Hot Buttered" ("Amended Table of Articles") provided by way of aide memoire to the Court.) (See AAH at [4], ABF 1 at [4], and ABF 2 at [5], ADE 1 at [2], ADE 2 at [4], and ADML at [5]. See in particular, APA at [12].)
Hot Buttered has used Mr Fitzgerald's name, image and reputation for commercial purposes. See in particular ATF 2 at [11]-[13], [19]-[23], and [43], and see also Amended Table of Articles. See also AAH at [7] and [10], ABF 1 at [2]-[5], ABF 2 at [3]-[4], and evidence given by Mr French during the hearing before the Court that many Hot Buttered products were marketed with reference to Terry Fitzgerald, and further of the relationship between the first and second applicants.
The first respondent is 33 South Pty Ltd ("33 South"). It was not in dispute between the parties that 33 South is a company, that according to the second respondent's evidence (see AAJ 1 at [3]) originated in a commercial sense in April 2003 when the second respondent created what he described as his "own surf wear label" - "'33south' in Sydney".
In oral evidence before the Court, Mr Jones, the second respondent, stated that 33 South was a "wholesale business", and "not a retail business". Although he also gave other evidence that 33 South products were also sold through at least one outlet which he owned. While it is clear on the evidence that at the relevant and material times, 33 South has been involved in marketing and selling t-shirts in Australia, it was difficult to discern from Mr Jones' oral evidence before the Court what part of the wholesale t-shirt market 33 South operated in. In any event, what was not at issue between the parties was that at all relevant and material times Mr Jones, the second respondent, was a director of 33 South, and responsible for the control and carriage of its business (see the evidence of Mr Jones).
Mr Jones appears to have had extensive experience in the design and production of various clothing items, including, and relevantly, t-shirts (see AAJ 1 at [A] and [C]). In oral evidence before the Court, Mr Jones sought to demonstrate at some length the technical and other experience he had gathered over some years, and which was applied and incorporated in the design and manufacture of the "33 South t-shirt".
[10]
What is also not in dispute between the parties is that in the second half of 2006, 33 South caused to be produced and distributed in Australia a range of t-shirts featuring ten different selected designs. These were described as having a "vintage look" (Mr Jones' evidence-in-chief before the Court), and featured covers taken from issues of a particular surfing magazine" "Tracks" (see also AAJ 1 at [10]-[18]). It appears that this was done as a result of a licensing agreement with the publishers of Tracks (EMAP) in about June 2006. (See AAJ 1 at [9], and also generally oral evidence given before the Court by Mr Jones.)
It was also not in dispute between the parties that one of these selected designs featured a cover from an issue of Tracks magazine in 1975 which included, amongst other things, a photograph taken by a Mr Devine (see both the evidence of Mr Fitzgerald and Mr Jones before the Court) which depicted Mr Fitzgerald performing a particular surfing manoeuvre.
One of the impugned t-shirts is before the Court as exhibit RE 8. A description of the t-shirt assists in understanding the issue before the Court.
The t-shirt is yellow in colour, and on the front is reproduced the front cover of a Tracks magazine of June 1975 (TF 23). There are three panels depicted from this photograph on the t-shirt.
The first, at the top, is approximately 21cm x 16cm. Across the top of the panel appears the word "Tracks" blocked out in yellow. The remainder of the panel appears to be some palm-laden tropical scene.
The middle panel is 21cm x 2½cm, and contains the words "Fantasy Issue".
The third and bottom panel is approximately 21cm x 13cm. At the top it contains the words "Australian Titles - Terry Fitzgerald Interview". At the bottom are the words "Saga of Cindy and Brad - A surf romance". In between is a "grainy" (newsprint type) reproduction of a surfing scene depicting a surfer on a surfboard with one arm outstretched.
Above the top panel appear the words "Registered for posting as a periodical category B". On the right-hand side "June 1975 $0.40".
Just under the collar hem at the top and back of the t-shirt is a red label stitched to the t-shirt bearing the words:
[11]
Affixed to that tag by way of safety pin and looped chord is a larger cardboard tag bearing the words "33 South". On the back appear the words:
One each of all the t-shirts in the range were before the Court, including the yellow 33 South t-shirt. (For the photograph see statement of claim. For the yellow 33 South t-shirt see RE 8.)
It was not in dispute between the parties that Tracks was in the 1970s, and remains now, a well-known magazine about surfing. Evidence given by Messers Adair, French and Epper before this Court would all support the proposition that it has a high reputation in the surfing world in Australia.
[14]
The applicants' claim that the respondents have, by the distribution for commercial purposes of the t-shirt bearing Mr Fitzgerald's name and his image, misappropriated his name (which is said to be one of some celebrity), his image, and reputation, for material gain, and that this was done without the license, authority or even knowledge of Mr Fitzgerald, or Hot Buttered at the relevant time. That once Mr Fitzgerald became aware of the yellow 33 South t-shirts bearing his name and image being offered for sale, he requested that the respondents to stop such sales.
The applicants submit that the right to use a personality or a character as an aid in selling products is of great value and should be protected, and that this has been recognised by the courts (see in particular Hogan v Koala Dundee Pty Ltd[1988] FCA 333; (1988) 20 FCR 314 ("Hogan v Koala Dundee"), Wickham v Associated Pool Builders Pty Ltd(1988) 12 IPR 567 ("Wickham"), Fido Dido Inc v Venture Stores (Retailers) Pty Ltd(1988) 16 IPR 365 ("Fido Dido").)
The applicants assert a breach of s.52 of the Act. This section proscribes conduct by a corporation (and in the circumstances of the association, of Mr Jones) in that it shall not engage in conduct that is "misleading", "deceptive" or "likely to mislead or deceive". The Act itself does not provide definition for these terms.
The relevant test of whether conduct is misleading or deceptive is an objective test and involves a question of a finding of fact to be determined in light of the evidence of the impugned conduct.
The applicants submit that the impugned conduct of the respondents was misleading, was deceptive and was likely to mislead or deceive, and that it is for the Court to objectively decide whether this was so (see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd[1982] HCA 44; (1982) 149 CLR 191 ("Parkdale Custom Built Furniture")).
I note authorities that the term "likely to mislead", for the purposes of s.52 of the Act, was said to mean "... a real or not remote chance or possibility, regardless of whether it is less or more than 50 per cent" (Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union and Others[1979] FCA 85; (1979) 42 FLR 331 at 346, per Deane J. See also Sheen v Fields Pty Ltd(1984) 58 ALJR 93.).
In relation to s.52 specifically, the applicants submit that the issue for the Court is whether a reasonable member of the relevant class of consumers would be misled into believing that the applicants had produced the yellow 33 South t-shirt, or that a commercial arrangement had been concluded between the applicants, either one or both, on the one hand, and the respondents, either one or both, on the other, under which the applicants had agreed to the use of Mr Fitzgerald's name and/or image on the yellow 33 South t-shirts (see Pacific Dunlop Ltd v Hogan[1989] FCA 185; (1989) 23 FCR 553 ("Pacific Dunlop v Hogan"), and Taco Company of Australia Inc v Taco Bell Pty Ltd[1982] FCA 136; (1982) ATPR 40-303; (1982) 42 ALR 177 ("Taco Company v Taco Bell").
Clearly, in relation to s.52 of the Act, for a breach of that section to be found, the conduct complained of must convey a misrepresentation. The applicants say that the misleading or deceptive conduct conveying such a misrepresentation was that (relevant) consumers would be misled into thinking that the yellow 33 South t-shirts had been produced by Mr Fitzgerald and/or Hot Buttered, or that a commercial arrangement had been concluded between the applicants and the respondents under which the applicants agreed to the use of Mr Fitzgerald's name and image on the 33 South t-shirts.
The applicants rely in this regard on Pacific Dunlop v Hogan per the majority (Beaumont and Burchett JJ, Shepherd J dissenting). Pacific Dunlop v Hogan was a case involving conduct said to constitute passing off, and secondly said to be misleading conduct contrary to s.52 of the Act.
In essence, this case concerned a commercial advertisement (some posters were also used) using a "send-up" of a widely known character played by an actor in a movie, to promote the sale of a particular type of shoe. At first instance, amongst other things, the Court found (per Gummow J) that the objective of the advertisement was that a substantial number of viewers in the target audience would take away a favourable impression held by the movie character, and the actor playing the movie character, in connection with the brand of shoe.
The Full Court said, as summarised by Beaumont J at 577:
"a substantial number of viewers in the target audience would, as a matter of real, not remote, likelihood have responded to the advertisement 'on the footing that in accordance with general or normal practice', permission would have been sought for the advertisement from the first respondent, the film makers or both, and that they had 'some association of a commercial nature with' the production of the advertisement, or, more generally, with 'Grosby Leatherz' shoes. His Honour made similar findings with respect to the posters."
At first instance, the Court held that both passing off and misleading conduct contrary to s.52 of the Act had been made out. The Court found that in relation to the conduct complained of, that is, the conduct of the advertisers of the shoes, that the advertisers had passed off the shoes as goods with which the relevant actor had a commercial association, and had therefore engaged in conduct contrary to s.52 of the Act.
The principle to be drawn from that case, for present purposes, is that the relevant question (in relation to a contravention of s.52 and passing off) was whether the relevant section of the public would be misled into believing, contrary to the fact, that a commercial arrangement had been concluded between the parties before the Court such that there was a mistaken belief that the person whose image or persona was used in the advertisement had agreed to the advertising (see Beaumont J at 581, and per Burchett J at 583).
While the question was essentially one of fact as to whether such conduct amounted to a misrepresentation, in Pacific Dunlop v Hogan Beaumont J said (at 581): "...in the present case, because the representation alleged was not made in express terms, the resolution of the issue turns on the proper inferences to be drawn from the ... conduct, that is, the case depends upon secondary, rather than primary facts."
In relation to sub-s.53(c) of the Act, the relevant test is whether the t-shirts amounted to a representation, again contrary to fact, that the t-shirts had the "sponsorship" or "approval" of either of, or both, the applicants.
The relevant test under sub-s.53(d) of the Act is whether the t-shirts amounted to a representation, again contrary to fact, that 33 South who was the manufacturer and distributor of the t-shirts, had the "sponsorship" or "approval", or had some "affiliation" with, either or both of the applicants.
In Taco Company v Taco Bell the Full Court of the Federal Court "... established propositions affording guidance" as to whether conduct falls within s.52 of the Act (at 202):
The relevant section of the public needs to be identified such that the Court can then test whether the conduct is misleading or deceptive, with reference to this section of the public.
The issue is then to be considered by reference to all who come within this group. I note the reference in the applicants' submissions to Parkdale Custom Built Furiture (at 93, per Lockhart J: "including the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations").
Evidence that a person (within the group) has formed an erroneous conclusion may be persuasive, but is not essential, but is admissible in that context. That is, admissible for consideration in that context, noting that such evidence does not conclusively establish that such conduct is misleading or deceptive.
There is a necessity to enquire why the proven misconception has arisen (see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre[1978] HCA 11; (1978) 140 CLR 216 ("Hornsby Building Information Centre") at 228). In this way the evidence of those who say they have been misled can be evaluated to see whether they have been confused because of the misleading or deceptive conduct on the part of the respondents (see Taco Company v Taco Bell).
I note also that for the purposes of s.52 of the Act, there is no need for the applicants to prove some mental element of intent, nor even to prove that members of the relevant section have actually been misled or deceived for the conduct to nonetheless fall within the ambit of s.52. Noting of course that at the heart of the requirements of s.52 is that the impugned conduct cannot be categorised as misleading unless it contains, or conveys, a misrepresentation (Taco Company v Taco Bell), and noting that the test is objective (Parkdale Custom BuiltFurniture at 197-198, and 216.
In relation to passing off, the applicants referred the Court to ConAgra Inc v McCain Foods (Aust)Pty Ltd[1992] FCA 159; (1992) 33 FCR 302 ("ConAgra v McCain Foods") at 355 where what was described as the "classical trinity" of reputation, misrepresentation and damage was emphasised. Noting also that in Hogan v Pacific Dunlop Ltd(1988) 83 ALR 403 (at first instance) Gummow J found that for passing off to be made out the Court had to be satisfied that there was a reasonable likelihood that a substantial number of persons would have formed the impression that the applicant in that case and the respondents had some commercial association.
The conduct complained of then is that by depicting the name and image of Mr Fitzgerald on a particular t-shirt that was produced, or caused to be produced, by the respondents, and offered for sale, both directly and indirectly at retail outlets by the respondents, that such conduct caused persons in the relevant section of the public to form an erroneous conclusion that the applicants (and at the very least Mr Fitzgerald) had some commercial connection with the product being offered for sale.
The applicants submit that the relevant class of consumers in this matter is purchasers of surfboards and surf-related products in Australia, and that such a group is predominantly composed of surfers.
In this regard the applicants rely on the evidence of Mr Jones given by way of affidavit, and orally before the Court, that 33 South is a "surf wear label", and that the t-shirts were designed with the "surf market in mind".
See in particular:
AAJ 1.
Exhibit AJ 5 in particular the statement on the cover of the 33 South promotional CD (RE 5): "33south was established in Sydney in 2003 to create authentic surf wear".
The 33 South t-shirts were sold by 33 South to what were described as shops that only sell surfboards and surf-related products (ATF 4) and to other shops in areas that surfers frequent. (See ACER at [9]-[10], ADML at [17], ATF 4 at [3]-[4], and Mr Jones' evidence in cross-examination where he gave evidence that he "did design for the surf market", and "being able to target much more accurately the surf shops". He described his customers, that is, the retail stores to which the 33 South t-shirts were sold, as "some of them are surfers".)
Noting also the evidence of Mr Barnes in cross-examination even though his shop "Underdog Music and T-shirts" focuses on music and t-shirts and does not sell surfboards, but nonetheless "... yes, I do target surfers".
The evidence of Mr French and Mr Epper that they purchase surf-related products such as t-shirts, and had seen the 33 South t-shirt for sale and/or being worn on the street in areas close to surf beaches. See in particular ADE at [1]-[4], and ABF 1 at [2] and [6].
The 33 South t-shirts were brought to Mr Fitzgerald's attention by a young surfer, Kieron Prenter, who received a t-shirt as a present from his mother (see in particular ACP 1 at [2]-[3], and ATF 2 at [55]).
Advertisements featuring the 33 South t-shirts were placed in both the April and May 2007 editions of Tracks magazine which is a surfing magazine, a matter which is not in dispute (see exhibits TF 35 and AJ 6).
[15]
In submissions in reply the respondents do not appear to directly take issue with the applicants' characterisation of the section of the public relevant to the test the Court is required to apply in this matter.
I note that at [67(iii)] in written submissions (although apparently directed to the issue of misrepresentation and misleading conduct and damages) reference is made that a finding of misrepresentation might be made based on a narrow view of a reasonable member of "the relevant class of consumers", but that in respect of the same representation, such a finding might not be made on the view of a section of the public comprising a "substantial" number of persons.
To the extent that the respondents make reference to Talmax Pty Ltd v Telstra Corp Ltd(1996) 36 IPR 46; [1997] 2 Qd R 444 ("Talmax v Telstra") at 550 (line 50) and 451 (line 3) it may be said that there is some implicit assertion that as to the section of the public relevant to this case that this should be seen as the "general public".
That case involved a well-known Olympic swimmer being featured in an advertisement in which the applicant claimed that this implied a connection between him and Telstra (the respondent), a connection which did not exist, and in which the applicant failed. In relation to the question of what is the relevant class in this case, and as to whether regard should be had as to whether the relevant class is the "general public", this case does not assist the respondents. In Talmax v Telstra the Court held (at 446) that the advertisement in question was: "directed to the general public by inclusion in a newspaper with a wide circulation." This is plainly not the situation in this case.
In the current case, I am satisfied on the evidence before the Court that the relevant section of the public is not the "general public", but that class of consumers who are purchasers in a retail context of surfboards, and surf-related products in Australia, and while this group is predominantly comprised of surfers, it also includes those who purchase such products for surfers (as in the case of Ms Prenter who purchased the t-shirt for her son who is a young surfer). That is, the class of consumers of surf-related products.
[16]
Underlying the applicants' claims, and indeed their complaint about the respondents' conduct, is the applicants' reliance on Mr Fitzgerald's reputation, and that such reputation is a "saleable commodity", relevantly, in the surfing community because he is well-known in his own right and through his association with Hot Buttered. (For reputation see generally ATF 2 at [2]-[6], the Amended Table of Articles, AAH at [4], ABF 2 at [5], ABF 1 at [4], ADE 1 at [2], ADE 2 at [4a], ADML at [5].)
The evidence before the Court is that Mr Fitzgerald began surfing competitively in 1969 and won a number of professional titles, has received public recognition for his surfing achievements, and has been inducted into the Surfing Hall of Fame in 1995, and awarded the Australian Sports Medal in 2000 (see generally the Fitzgerald affidavits).
As to Hot Buttered, the evidence reveals this was established in 1971 by Mr Fitzgerald for the purpose of selling his surfboards, and that at least since 1980 has been in the business of developing, marketing and distributing a broader range of surf-related products using, to a large part, Mr Fitzgerald's name and image, and on occasion licensing other companies to do the same (see generally the affidavits of Mr Fitzgerald, and further ABF 1 at [3] and further note at [4]: "[h]e is still well-known among surfers in Australia, and would be considered iconic").
The applicants also submit that many articles, movies and advertisements have been published in Australia describing Hot Buttered and Mr Fitzgerald, and featuring Hot Buttered trade marks, and that Mr Fitzgerald's name or his image are used extensively. The applicants rely on samples of these articles, movies and advertisements as contained in the range of items annexed to advertisements to the applicants' evidence.
The respondents' submissions do not appear to directly attack the applicants' evidence and submissions in this regard.
At paragraph [4] of the written submissions, the respondents say that: "Terry Fitzgerald was known to a number of persons as a renowned surfer in and about 1975". This appears to be consistent with evidence given by Mr Jones before this Court in examination-in-chief when he referred to Mr Fitzgerald's "notoriety" as being in the "halcyon days" of "20 years ago".
Mr Jones' evidence was also that he had only "vaguely heard of Mr Fitzgerald" and "had heard of" Hot Buttered. (See also AAJ 1 at [19] as to "vaguely heard of Terry Fitzgerald as a surfing identity", and [20], "I had heard of Hot Buttered in my youth and had gathered that it was a good surfboard".)
I note further that the other possible reference relevant to this question appears in the respondents' submission under the heading of "Whether Misleading/Deceptive Conduct - Other Witness Evidence" where it is asserted that:
Mr Matthew Barnes gave evidence that he had not heard of Terry Fitzgerald or Hot Buttered prior to the Court proceedings (AMB at [19]), and gave "unchallenged oral evidence" before the Court that he had not heard of Terry Fitzgerald or Hot Buttered.
Ms Danielle Chapman also did not know of Mr Fitzgerald prior to the Court proceedings, and knew only of Hot Buttered as a "surf brand" (ADC at [14]).
Importantly, the respondents did not refer to this evidence in the context of Mr Fitzgerald's (and for that matter Hot Buttered's) reputation, but in the context of arguing that persons who had not heard of Terry Fitzgerald or Hot Buttered could not have been misled into thinking that Terry Fitzgerald or Hot Buttered had sponsored, endorsed or supported the sales of the yellow 33 South t-shirt (see in particular [52] to [56] of the respondents' written submissions).
Focusing solely, at the moment, on the issue of reputation, I agree with the applicants' submissions that these references to these particular pieces of evidence do not assist the respondents in seeking to challenge the reputation or notoriety of Mr Fitzgerald (in at least the Australian surfing world).
There is no dispute between the parties that Mr Fitzgerald was of renown at least in 1975. There is clear evidence before the Court that with reference to surfers (the relevant section of the public in this case) he continues to have reputation and renown.
The evidence of Mr Barnes, that prior to the Court proceedings he had not heard of Terry Fitzgerald or Hot Buttered, and the evidence of Ms Chapman that prior to the Court proceedings she had not heard of Terry Fitzgerald and only knew of Hot Buttered "as a surf brand", does not assist the respondents in relation to this question. On their own evidence, neither Mr Barnes, nor Ms Chapman, fall within the relevant group. That is, neither described themselves as surfers or even persons who purchased surf-related products for surfers.
It was Ms Chapman's evidence that her shop: "stocks smart casual mens (sic) and womens (sic) wear aimed at persons in the 30+ age bracket" (ADC at [2]). While she sold 33 South t-shirts (both the "Surfing World" t-shirts (see [214] below) and the "Tracks" t-shirts), and even though her shop was in a beachside suburb (Mona Vale, New South Wales), it was not a surfing shop. Further (and in support of the proposition that the section of the public relevant to this case are surfers and those who purchase surf-related products for them), she gave evidence that she sold the "Tracks" t-shirts to women as gifts for husbands, brothers and sons who were surfers.
Plainly, Ms Chapman does not come within the relevant group, and her association with the group appears to have been "second-hand", with relatives of surfers. Mr Lees' evidence (given for the applicant) (see ADML at [9]) was that Ms Chapman's shop was in a popular surfing area, and as such it was implausible that she did not know of Terry Fitzgerald, particularly as she was selling a t-shirt with his name and image on it. Her evidence however, is consistent with someone who professes no knowledge of, or interest in, surfing beyond selling surfing t-shirts to the relatives of surfers. As a measure therefore of Mr Fitzgerald's reputation and renown (and that of Hot Buttered by association with him), her evidence that she had not heard of him prior to these proceedings does not in all the circumstances above assist the respondents.
Similarly, the evidence of Mr Barnes also does not assist. Mr Barnes also is a shop proprietor, and manager of the business: "Underdog music and teeshirts" in a beachside suburb (Bondi, New South Wales).
Mr Barnes did not give any evidence that he was a surfer, or that had any association with surfers (beyond selling these t-shirts). His evidence was that he saw "surfers wandering up and down" on the street where he conducted his business and, given that the displays in his shop included surfing t-shirts, and to that extent he did target surfers. (Again relevant to the issue of the relevant section of the public.)
However, I did not understand his evidence to say that his interest in surfing extended beyond that. His evidence was also that the focus of his business was on "music and t-shirts", and did not sell surfboards or related products (beyond the t-shirts). That he had not heard of Terry Fitzgerald and Hot Buttered again does not assist as he plainly is not a member of that section of the public relevant to the issue in these proceedings.
Mr Phillip Adair also gave evidence on behalf of the respondents. While Mr Adair is, as the proprietor of "retro antiques", in the business of selling "retro" goods, and operates in a beachside area which "attracts beach-goers" (see APA at [1]), it was his evidence (although clearly given for a different purpose, that is, that he did not think that: "Terry Fitzgerald or Hot Buttered in any way sponsor[ed], endorse[d] or otherwise support[ed]" the 33 South t-shirt"), nonetheless importantly, that he has been "a casual and constant surfer for 25 years" (at [2]) and has known "for many years" of "Terry Fitzgerald, and of Hot Buttered, as surfing identities" (at [12]). In contrast to those who professed not to be surfers.
In all, therefore, on the evidence before the Court I am satisfied that the section of the public relevant to consideration of this matter is the purchasers of surfboards and the purchases (even for relatives) of surf-related products in Australia, and is predominantly composed of surfers. Further, that amongst this group, Mr Fitzgerald is well-known, as is his association with Hot Buttered.
[17]
I should just note that in submissions the respondents (at [35iii]) submitted that there was no evidence that Hot Buttered was a "significant brand" in the surf wear clothing market in Australia, contrary to the assertion of the applicants that both Mr Fitzgerald, but relevantly Hot Buttered, were "marketable brands" in the market for surf wear.
At first it must be noted that the respondents' submissions in this regard are put in answer to the applicants' submissions generally under the heading of: "The Intention of the Respondents", and dealing for the respondents' part with the assertions of lack of credibility in the evidence of Mr Jones (the applicants assert that it seems unlikely that Mr Jones would not have been aware of Mr Fitzgerald and Hot Buttered and the marketability of both brands in the market for surf wear). It is in this context that the respondents asserted that the applicants gave no evidence that they were a significant brand in the surf-wear clothing market in Australia.
As to the issue of credibility see further below.
Putting that issue to one side, I have difficulty in accepting the respondents' submission that the applicants gave no evidence that they were a significant brand in the surf wear clothing marketplace in Australia. The respondents rely on two small parts of Mr Fitzgerald's evidence in ATF 2 at [43]: "Hot Buttered Australia have developed the Hot Buttered 'Soul' range", and at [48] "Hot Buttered 'Soul' Australian retail sales are around $160,000 for the summer of 2005-2006". The respondents submit that it may be assumed that the "manifestly low returns" for 2005-2006, and the lack of returns for 2006-2007, indicate that Hot Buttered "Soul" was not a significant brand.
I have difficulty in accepting this part of the respondents' submissions. In my view, the two parts of Mr Fitzgerald's evidence relied upon are highly selective and ignore the large amount of evidence that supports the proposition to the contrary.
For example, see generally the evidence of Mr Fitzgerald in ATF 1 at [7]-[13]. In addition the evidence that the annual revenue of Hot Buttered for the financial year ending 30 June 2005 was over $2 million, and for the financial year ending 30 June 2006 was over $1.8 million. (See [19]-[23] as to the advertising, marketing and promotion of Hot Buttered, and the sponsorship by Hot Buttered of many Australian surfing events - see [31]-[37], and the number of magazine articles that have featured, in addition to Mr Fitzgerald, the Hot Buttered trademarks (remembering that there is evidence before the Court to support the proposition that Terry Fitzgerald and Hot Buttered are associated ([38]-[39]).)
I do appreciate that the respondents' point is focused solely on one aspect of Hot Buttered's activities, that is its development of the "Soul" collection launched in 2005 (see ATF 1 at [43]). It was what was said to be the low returns for this particular collection that led to the submission ("it may be assumed") that Hot Buttered "Soul" was not a significant brand such that Mr Jones would have noticed them in the marketplace.
First, again as this submission relates to the credibility of Mr Jones see further below.
Second, however, what this submission ignores, as it goes to the issue of what Mr Jones knew or did not know when carrying out the impugned conduct, is that intention is not an element that must be proved in order to establish contravention of s.52 of the Act. As already set out above, the test is an objective test.
Further, the applicants submit in response that it is not open for the respondents to ask the Court to draw such an inference, because it is not reasonably probable that this is the only possible explanation for that result (that is, the low returns), and second, the respondents failed to cross-examine Mr Fitzgerald on this point (with reliance on Jones v Dunkel[1959] HCA 8; (1959) 101 CLR 298 at 305 and 308).
I agree with these submissions. But what in my view is of importance in dealing with the respondents' submission is that these submissions ignore the test the Court is required to address, which involves an assessment of whether the conduct of the respondents is misleading or deceptive, or likely to mislead or deceive, with reference to the relevant section of the public to whom the question falls to be tested.
In this regard, focusing on one aspect only (and from the evidence it would appear to be a small part of Hot Buttered's activities), notwithstanding that it is involved with surf wear clothing is misleading. The issue here is whether Hot Buttered, as a whole, and with reference to all of its activities (not just one part), would be recognised by surfers as being a "significant brand" in the market for surfboards and, relevantly, surf-related products, including t-shirts. The evidence before the Court indicates that this is the situation.
On the evidence, therefore, I am satisfied that Hot Buttered, with reference to the relevant group, does have the profile as asserted by the applicants.
[18]
In submissions, the applicants invite the Court to find that Mr Jones was not a truthful witness, and was evasive, argumentative and appeared intent upon giving self-serving evidence in respect of all topics upon which he was cross-examined. In particular, the applicants asked the Court not to accept his evidence as truthful in relation to his denials as to the accuracy of the evidence given by Mr Fitzgerald, Mr DeBoos and Mr Lees (in particular paragraphs [50], [51], [52] and [53] of the applicants' written submissions).
In response the respondents submit that Mr Jones is a credible witness and that his evidence ought to be accepted (see [37] of the respondents' written submissions). The respondents' submissions also deal with each of the points raised by the applicants (see [35] and [36]).
It is not necessary at this point to go into details as to each of the matters where the applicants assert a lack of credibility on the part of Mr Jones' evidence and the respondents' response. (Where necessary these are dealt with below.) For now I note that these matters were:
Mr Jones' account of a telephone call with Mr Fitzgerald in January 2007.
Mr Jones' credibility and explanation for the level of knowledge he had in relation to the issue of sponsorship.
His evidence that he had only "vaguely" been aware of Mr Fitzgerald and Hot Buttered.
His explanation of the meaning of a statement which he made on the cover of the 33 South promotional CD (exhibit AJ 5).
Mr Jones' denials as to the accuracy of the evidence given by Mr Lees.
Mr Jones' evidence about his telephone conversations with Mr DeBoos.
The Court had the opportunity of observing both protagonists (Mr Fitzgerald and Mr Jones) give their evidence and be cross-examined in the witness box.
As a general observation, Mr Fitzgerald gave his evidence in a forthright and straightforward manner. His answers to questions in cross-examination were responsive, and when he was unable to answer a question he plainly said so. For example, when he was asked as to how conversant with surfing a person would need to be to be able to recognise him surfing on a wave (with obvious reference to his style of surfing, and with reference to the evidence that Mr Fitzgerald developed a particular manoeuvre known as the "bottom turn").
By contrast, Mr Jones' evidence was punctuated by obvious difficulties in giving a simple or clear answer. In part, I did find some of Mr Jones' evidence to be evasive. At one point in cross-examination while being asked of the need to know who rival manufacturers are in the clothing industry, his answers were particularly unresponsive and at one point, elicited the statement: "I'm not trying to be evasive". Despite his protestations in this regard, I did not regard the subject matter, nor the very clear question, to have warranted an inability to supply a clear answer. It is difficult not to conclude that even Mr Jones himself recognised that he was being evasive, thus necessitating a statement to the contrary.
It is clear that if the outcome of this case were to depend solely on the manner of the giving of evidence before the Court as between the two protagonists, Mr Fitzgerald and Mr Jones, then the applicants would succeed.
[19]
The Test, Mr Jones' Credibility and Celebrity Endorsement
[20]
But this is not the test that this is Court is required to apply in this matter. The test clearly, as set out above, is whether the conduct of the respondents was such that a reasonable member of the relevant class of consumers would be misled or deceived, or could be likely to be misled or deceived, that some commercial arrangement existed between the applicants and respondents to use Mr Fitzgerald's image or name on the 33 South t-shirts.
In this regard, the applicants rely on, in particular, Fido Dido and Twentieth Century Fox Film Corporation v The South Australian Brewery Co Ltd(1996) 66 FCR 451 ("the Duff Beer Case") to submit that a reasonable consumer in the relevant class (of surfers) would be aware that celebrity endorsement or approval of products is widespread in the surfing community.
In this regard, Mr Fitzgerald's evidence was that a significant portion of Hot Buttered's marketing budget was spent on endorsements of surfers, and the sponsoring of surfing events, because in his view, the people who buy the Hot Buttered products link the credibility, market acceptance and legitimacy of a brand to celebrity endorsement. In short his evidence, based on his observation of the consumers in the relevant class (of which I understood him to assert to be also a member) was that if a surfer appeared in a photograph featured with Hot Buttered products, that there was some relationship between Hot Buttered and the surfer, and further that this is an established practice in the surfing community.
His own practice of endorsing products and approving products, for example, by signing his own surfboards or appearing at Hot Buttered sponsored events, further reinforces this view. (See generally ATF 2 at [6] and [8], and further, evidence given in cross-examination (which remained unchallenged) that the industry "norm" involved licensing agreements with surfers ("athletes") in connection to the marketing and promotion of commercial products.) (See also AAH at [7], and in particular [9]-[11], AKC 2 at [5]-[6], ABF 1 at [5], and evidence given during cross-examination by Mr French and Mr Epper to the effect that many Hot Buttered products are marketed by reference to Mr Fitzgerald, and the evidence of Mr Epper during cross-examination where he: "always considered that Hot Buttered and Terry Fitzgerald were synonymous".)
The applicants also seek to rely in this regard on evidence given by Mr Jones under cross-examination to assert that even he appeared to accept that many surf wear companies sponsor professional surfers in order to benefit the image of the company and its products (see [43] of the applicants' written submissions).
I have difficulty in accepting the applicants' submission that Mr Jones appeared to accept that "many" surf wear companies sponsor professional surfers. Mr Jones was asked about the time when he was employed by "Hot Tuna". (See also AAJ 1 at A: "2002-2003 - AJ was head of design for Hot Tuna. AJ designed board shorts, T-shirts, walk shorts, jeans, woven shirts, printed shirts, polos, drawstring pants. AJ surfed frequently". But this was qualified in cross-examination before the Court: "yes, but head of design by way of consultant. There was no head office".)
When he was asked as to whether Hot Tuna was a major supporter of pro-surfing events and sponsored surfers by the use of endorsements, his evidence was that he was involved in the design side of this business, and not on the marketing side. He appeared to give evidence that he lived in Sydney at the relevant time, while the business operated out of Melbourne. His evidence was ultimately (and it must be said with some qualification, and even some obfuscation): "... it would be fair to guess that many surf wear companies sponsor surfers so I presume they do so because it's going to benefit their company somehow").
The applicants also submit that a reasonable person in the relevant class would be aware that Mr Fitzgerald as a surfing identity would protect his reputation by limiting the number and type of products with which he was associated (see in particular ATF 2 at [12]-[13], ATF 3 at [5]-[8], ATF 4 at [9]-[12], and oral evidence in this regard given by Mr Fitzgerald).
They further submit that the relevant consumers would understand that Mr Fitzgerald is selective about what he agrees to sponsor or approve (see in particular ADB 1 at [5], ATF 4 at [7], and ADML at [11]-[12]). In reply, the respondents do not appear to take issue with the evidence or submissions in this particular regard.
The Court is therefore left with evidence to support the proposition (unchallenged) that endorsement of products is widespread in the surfing community, that the relevant consumers in the class would comprehend that if a surfer appeared in a photograph with a product, that it is the norm in the surfing community that they would be sponsored by this product, and further, that a (reasonable) person in the relevant class would be aware that surfing identities, or those with some profile in the surfing community, would protect their reputation by being selective in the number and type of products with which they are associated.
[21]
I note that actual evidence that some person has in fact been misled by the conduct of the respondents is admissible for the purposes of consideration of the relevant issue, and may even be persuasive, but clearly it is not essential for the applicants to establish such evidence given that the test is an objective one (Sterling v Trade Practices Commission[1981] FCA 54; (1981) 35 ALR 59 at 69, and Peter Isaacson Publications Pty Ltd v Nationwide News Pty Ltd[1984] FCA 336; (1984) 6 FCR 289).
The applicants referred to the following evidence as supporting their claim that a number of consumers have been misled into believing that the respondents produced the yellow 33 South t-shirts, and sold these t-shirts with the approval of the applicants in return for a financial benefit.
Mr French gave evidence that he had seen a t-shirt with the name of Mr Fitzgerald, and a photograph of him on it in stores in Newport. He had seen people wearing these t-shirts in the streets around this suburb. He gave evidence that he would recognise the photograph of Mr Fitzgerald which appeared on the t-shirt because: "it has the Terry Fitzgerald 'bottom turn' which I recognised as being a particular surfing style performed by Terry Fitzgerald". He further gave evidence that he assumed that the t-shirt was a Hot Buttered t-shirt, and that it had some association with Mr Fitzgerald, and would not have bought the t-shirt if he had known otherwise (see in particular ABF 1 at [3]-[8]). In cross-examination before the Court Mr French confirmed when shown the 33 South t-shirt put before the Court (TF 34) that this was the style of shirt that he saw being worn around the streets of Newport.
In cross-examination, however, Mr French also gave evidence that in shopping he was interested in the look and quality of the product, and that if a product (in context, this clearly included surfing t-shirts) looked attractive to him, but he did not recognise the brand, he would take such an item "off the rack and look inside at the tag", and find out what brand it was.
The respondents' submission in this regard, in answer generally to the applicants' position, is that Mr French did not stand to be misled as a consumer of the yellow 33 South t-shirt because the label on the t-shirt would have disabused him of any idea that the product was approved or licensed by Terry Fitzgerald or Hot Buttered.
The respondents' position therefore is, with reference to the label on the yellow 33 South t-shirt (see [47] above), that Mr French did not stand to be misled as the 33 South label would clearly disabuse of the idea that the product was approved or licensed by Terry Fitzgerald or Hot Buttered.
Ms Cheryl Prenter also gave evidence that she purchased the yellow 33 South t-shirt in a shop called "Cotton Wool", for her son, who is a surfer and "a big fan of Terry Fitzgerald", because she recognised his name on the t-shirt and his image on the t-shirt as being one of Mr Fitzgerald, and while she noted the label on the t-shirt containing the words "33 South", would have, if she had thought about it, assumed that 33 South had permission from Mr Fitzgerald to use his name and image (see in particular ACP 1 at [2]-[5], and ACP 2 at [3]).
The respondents refer the Court to the actual words used by Ms Prenter in her affidavit evidence (ACP 1 at [4]):
"If I had thought about it, I would have thought the company that printed the t-shirt must have been given permission by Terry Fitzgerald to use his name and the photograph. I would not have bought it had I known that Terry Fitzgerald had not given such permission."
The respondents submit that her evidence does not go so far as to say that when she bought the yellow 33 South t-shirt she was actually misled into thinking that Mr Fitzgerald had given permission to 33 South for the production of the t-shirt, that her evidence goes no further than a suggestion that if she had asked herself that question, and been informed that Terry Fitzgerald had not given permission, she would not have purchased the t-shirt.
The respondents submit that the "critical issue" therefore is whether Ms Prenter was misled given that she did not raise that relevant question as to whether Mr Fitzgerald was paid for the use of his name or image. They suggest that the reason she did not ask that question was because it never crossed her mind that Terry Fitzgerald might not have given his permission. Noting of course that Ms Prenter says nothing about Hot Buttered. The submission therefore is that Ms Prenter has not even suggested that she was misled in any material way in respect to either of the applicants.
Putting to one side the issue of the label for the moment, the difficulty for the respondents' submission in this regard is that whatever question may or may not have been posed in the mind of Ms Prenter at the time of purchase, the evidence, that she gave in the same affidavit, clearly shows that she was induced to buy the t-shirt because the t-shirt had on it the name of Terry Fitzgerald and his photograph taken from a 1970s magazine. She recognised his name, and the photo as "a younger version of Terry Fitzgerald", and specifically selected and purchased that t-shirt for her son because she knew that her son was: "a fan of Terry Fitzgerald" (see ACP 1 at [3]).
It is clear that Ms Prenter was induced to buy the t-shirt because of what she saw as being the representation on the t-shirt of Mr Fitzgerald. Her evidence clearly is that this was the prime factor in selecting and purchasing this particular t-shirt for her son. The problem with the respondents' submission is that it calls for a high degree of speculation as to what else may or may not have crossed her mind at the relevant time. Speculation which could lead to a number of other possible conclusions, including the opposite to that which is asserted by the respondents. I note that no objection was taken to the affidavit of Ms Prenter and no cross-examination was conducted.
What the Court is left with then in relation to the evidence of Ms Prenter is that she was clearly induced to buy the t-shirt because of what she saw as being the association with Mr Fitzgerald, that is, an association between the manufacturer and distributor of the t-shirt, and the use of Mr Fitzgerald's name and image. That she did not think about the specific issue of whether Mr Fitzgerald had given permission for the use of his name, and image, at the time of purchasing the t-shirt does not diminish the situation that at the time of the purchase she believed she was purchasing an item with which Mr Fitzgerald had some association, or alternatively an item which was associated with Mr Fitzgerald.
The applicants also rely on the evidence of Mr David Epper that he saw the 33 South t-shirt in Newport at a shop called "Little Dragon", he recognised Mr Fitzgerald's name and image on the t-shirt and made the assumption that it must be a Hot Buttered t-shirt because: "I didn't think that Terry would put his name to anything that wasn't associated with the Hot Buttered brand". (See ADE 1 at [5]. See also ADE 2 at [3]-[6].) Mr Epper also gave evidence in cross-examination to similar effect and confirmed that when he saw the t-shirt in the shop: "I didn't check out the brand; I assumed it was Terry's t-shirt".
In reply the respondents' position is that Mr Epper gave evidence that he saw the t-shirt in a shop window, he did not go into the shop to buy the t-shirt, he did not look to the brand, and that he normally recognises Hot Buttered products by the Hot Buttered brand. In all, the respondents' position is that Mr Epper did not stand to be misled as a consumer as the 33 South label would disabuse any notion that the product was approved of, or licensed by, Terry Fitzgerald or Hot Buttered.
The applicants also rely on Mr Fitzgerald's evidence (ATF 4 at [6]-[7]) that "about 10 people" brought the 33 South t-shirts to his attention in early 2007 with words to the effect of: "what are you doing putting your name on a Tracks t-shirt? Did you authorise that? Are you getting paid for this?"
I should just note that the difficulty for the applicants pointing to this particular piece of evidence in support of the proposition that some person has in fact been misled in a relevant way, is that in relation to the "10 other people" Mr Fitzgerald said spoke to him (and this was not challenged) there is nothing before the Court to say that they were members of the relevant class against which the issue for the Court needs to be considered. It is clear that Mr Kieron Prenter, the son of Ms Prenter, and Ms Prenter, do fall within the relevant class, as do Mr French and Mr Epper. But there is nothing before the Court to show that these "10 other people" fall within that relevant class.
In relation to the evidence of Mr French and Mr Epper in particular, and in relation to the relevant class of persons as a whole, the respondents say that such persons did not stand to be misled, that the yellow 33 South t-shirts were being marketed, and sold, by or with the licence or approval of Mr Fitzgerald or Hot Buttered, because the label on the 33 South t-shirt would have clearly disabused them of any such notion.
The applicants referred the Court to the Hutchence v South Seas Bubble Co Pty Ltd(1986) 64 ALR 330 ("INXS case") to submit that the preferred review, relevantly, is that stickers and labels (such as the 33 South label relied on by the respondents in the current case) are not effective to prevent consumers being misled.
The issue between the parties in the INXS case was that the respondents caused to be manufactured, and offered for sale, certain t-shirts featuring the INXS logo, and copies of their record album covers. In that case the respondents did not deny that they had copied the designs of the applicants (INXS case at 336). Three out of the four matters at issue in those proceedings (noting that the proceedings were in relation to continuation of a restraining injunction granted to the applicants, but I note per Wilcox J at 335 (line 46): "in practical terms, and having regard to the market life of these T-shirts, the current application is likely to be determinative of the position of the parties, at least in relation to these particular designs") were s.52 and sub-s.53(c) of the Act, and passing off.
In that case the applicants' argument was that the t-shirt, given that it contained the name "INXS", and other symbols associated with that band, contained a representation that the t-shirt was produced and distributed by, or with the approval of, the members of the band (at 336).
One of the arguments raised by the respondents in that matter was that there was no apprehension that the purchasers would be deceived because the t-shirts bore a disclaimer of approval by INXS by way of a label (see 338 and 339).
Wilcox J said in this regard (at 339):
"One problem about the stickers and labels is that they may not come to notice before purchase. As I have mentioned, none of the Pier 1 witnesses noticed them when shown the respondents' t-shirts. If the purchaser did see and read the sticker or label on a particular t-shirt it is by no means clear that he or she would understand it is a statement that the garment had no association whatever with INXS. Indeed I suspect that many potential purchasers would not understand it at all."
Neither Mr Epper nor Ms Prenter noticed the 33 South sticker on the t-shirts.
While Mr French gave evidence that if he saw an item that he liked he would take it off the rack and look at the tag to find out what brand it was, I have some difficulty with the respondents' characterisation of Mr French's evidence in this regard as set out at paragraph [44] of the respondents' submissions.
The submissions take parts of the evidence given by Mr French before the Court to assert that Mr French said that if he saw a particular item that he liked, he would take it off the rack and if it was not apparent what brand it was, he would look inside at the tag and find what brand it was, and if the tag read "33 South - Made in China" (as the tag does read on the relevant t-shirt) he would know it was not produced by Hot Buttered and he would not buy it.
Mr French's evidence however needs to be understood in context and regard had to it as a whole. His evidence was also that in buying surf clothing he did not have a preference for a particular brand, but was interested in the look and quality of the brand that he would buy, and that he would be interested to know what brand it was. But did not know and could not say whether Hot Buttered was one of his favourite brands. It was in this context that he gave evidence before the Court, when shown the yellow 33 South t-shirt, that the tag on that t-shirt did contain the words "33 South - Made in China", and that he understood (at that time before the Court) that it was produced by 33 South, and not produced by Hot Buttered, and that if he particularly wanted to buy a Hot Buttered t-shirt he would then not buy that particular t-shirt.
Further, the issue before the Court is not only that the reasonable person in the relevant class would be misled, or deceived, into buying the yellow 33 South t-shirt because of some association with Hot Buttered, but also because of some association with Mr Fitzgerald. The evidence before the Court is that Mr Fitzgerald did licence (selectively) the use of his image and name on products other than those bearing the Hot Buttered label (see for example ATF 4 at [9]).
Given this evidence therefore, even if a member of the relevant group acting reasonably were to check or otherwise see the label on the t-shirts bearing the 33 South reference, it is still reasonable to say that such a person in this group could still be misled, given the image, and name, appearing on the front of the t-shirt, that Mr Fitzgerald had otherwise authorised 33 South to produce and distribute and offer for sale, the relevant t-shirt.
I note further that in the current case there is not even any disclaimer on the label, as there was in the INXS case, that Mr Fitzgerald had not authorised the respondents to take the action that they did with respect to the t-shirt (nor any reference that the t-shirt was in some sense "bootleg" as was the situation in the INXS case, implying possibly that it was produced without relevant authority).
As to the respondents' witnesses in relation to this particular issue, Mr Barnes and Ms Chapman, as already set out above, are not members of the relevant group. Mr Adair who is a member of the group (see APA at [2]) says (see APA at [12]) that he had known of Mr Fitzgerald and Hot Buttered as surfing identities for some time. Yet he was not caused by the cover on the "yellow t-shirt" to think that either of the applicants sponsored, endorsed or otherwise supported the sale of the t-shirt.
The difficulty for the respondents in relying on Mr Adair's evidence in this regard is that Mr Adair, in my view, is not a member of the relevant class of persons (see [96] above). The relevant class is surfers who buy surfboards and surf-related products in a retail context. That is, surfers who purchase such goods in a shop. Mr Adair's evidence was given in a quite different context. When Mr Adair speaks in his evidence of purchasing the t-shirts, he speaks as a shop proprietor, and businessman (see APA at [1], [4]). Mr Adair clearly, in context, is not a purchaser or consumer of the product in a retail context, but rather a person who sells such products. As such, I do not see him falling within the relevant group such that his evidence can assist the respondents.
What is left, therefore, is the evidence brought forward by the applicants (as referred to above) that at least some persons within the relevant class were actually misled into assuming, contrary to fact, that the applicants (in the case of Mr French: Mr Fitzgerald and Hot Buttered, in the case of Ms Prenter: Mr Fitzgerald, and in the case of Mr Epper: Hot Buttered) had given permission or authority for the production and sale of the yellow 33 South t-shirt, or were otherwise associated with the 33 South t-shirt.
Given what is also set out above, at best the respondents' position in reply (what remains) is that all three would have been disabused of this had they looked to the relevant 33 South label affixed to the 33 South t-shirt. For the reasons already set out above, this does not assist the respondents. I find therefore that there is evidence before the Court that in fact some persons have been misled. Of course, this is not conclusive, as the relevant question is one to be determined objectively by the Court for itself.
[22]
The applicants submit that the intent of the respondents to mislead a person in the relevant class need not be proven in order to establish a contravention of ss.52 or 53 of the Act. Given that the test is objective, intention is not an element relevant to these causes of action (Parkdale Custom Built Furniture at 197-198 per Gibbs CJ, at 216 per Brennan J, and York v Lucas(1985) 159 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ, and at 675 per Brennan J). In relation to the claim of passing off, the applicants also submitted that the respondents' absence of intention to deceive will not provide a defence (Hornsby Building Information Centre at 228).
Nonetheless the applicants submit proof of any intention to mislead may have some probative value in establishing contravention of the relevant parts of the Act. (Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd[1989] FCA 272; (1989) 89 ALR 48 ("Telmak Teleproducts v Coles Myer") at 65, Duff Beer case at 466. See also, relevantly, Australian Woollen Mills Limited v F S Walton and Company Limited[1937] HCA 51; (1937) 58 CLR 641 (in relation to the passing off action) at 657 per Dixon and McTiernan JJ.)
In this regard the applicants submit that the Court should infer from the evidence before it that Mr Jones deliberately chose to reproduce "iconic" images of famous surfers with some particular focus on Mr Fitzgerald on the 33 South t-shirts with the aim of using the market potential of their reputations to increase the sales of the t-shirts in the relevant community. Further, that the intention may also be imputed to 33 South given that Mr Jones is the directing mind of this company.
The applicants rely on a range of evidence in support of this proposition.
The applicants say that Mr Jones gave evidence that he had control over the selection of the Tracks magazine covers that were reproduced on the range of t-shirts. (Mr Jones' evidence given in examination-in-chief before the Court was to the effect that the process to obtain approval for the use of the designs started with the actual selection of images that he put forward and that there were 12 "Tracks covers that were selected initially", but of those only 10 went into production eventually. His evidence was that while there were discussions with Tracks, he was "pretty much at liberty to select" any of the covers subject to the concept that he sought to apply to this project which was a "vintage concept". See also in this regard the evidence of Mr Jones given by way of affidavit (see AAJ 1 at [10]).) (See also ATF 2 at [59].)
The applicants assert that the respondents "admitted" on the cover of the 33 South promotional CD that the range of t-shirts, which includes the relevant 33 South t-shirt, depict "some of the most memorable images in Australian surfing history" (see RE 5, and AJ 5).
The applicants also submit that the 33 South t-shirt depicting Mr Fitzgerald's name and image was important in the respondents' commercial venture, and this is seen by the fact that it was, and continues to be, used on the front page of the 33 South website (given in evidence in cross-examination), and was used in two advertisements placed in Tracks magazine for the t-shirt range that appeared after the commencement of these proceedings. (See in particular the exhibits TF 35 and AJ 6.)
The applicants also asked the Court to find that Mr Jones admitted in a telephone call made in January 2007 with Mr Fitzgerald that the 33 South t-shirt was the "best-selling" t-shirt in the range (see ATF 4 at [8]). In this regard, the applicants submit that this Court should not accept Mr Jones' denial of this made in cross-examination, in that it is asserted that his denial did not "ring true".
Part of the applicants' submission as to what did not "ring true" about Mr Jones' evidence is that Mr Jones explained, in denying that he said that to Mr Fitzgerald, that he was "fairly new into the surf industry", and that the purpose of the conversation was try to ascertain what the problem was and why Mr Fitzgerald was "clearly upset". In this regard the applicants point to evidence before this Court that Mr Jones' experience in the surf wear industry was significant. This included evidence that he had started his own street wear label ("Jones Clothing") in 1993 (see AAJ 1 at [80]), and was head of design for "Hot Tuna" and designed "board shorts, t-shirts, walk shorts, jeans etc" in 2000 to 2003 (see AAJ 1 at A). Further, in examination-in-chief he gave evidence that in London in 1992 he was a consultant (about six to eight months) at the opening of a retail surf shop. Added to this is that he subsequently started his own surf wear label, 33 South, in April 2003 (see AAJ 1 at D) (well over three years before events relevant to the issue before the Court).
The applicants submit that in light of all this experience his denials about knowledge about the power of character merchandising in the surf wear industry, and as it goes, in part, to his overall credibility, that his evidence should not be accepted.
This also leads, in part, to the submission that together with his demeanour in giving evidence before the Court, that the Court should not accept his evidence professing only a: "vague knowledge of Mr Fitzgerald" (see AAJ 1 at [19], and evidence given in cross-examination), of complete ignorance of other famous surfers on the t-shirts, and, indeed, of Hot Buttered as a clothing label (see AAJ 1 at [21] and evidence given in cross-examination). That his evidence in this regard did not ring true, and should not be accepted.
The applicants again generally rely on Mr Jones' experience in this industry and the admission both by way of affidavit (see AAJ 1 at [1] and in cross-examination) that as a small businessman he is required to know what products rival manufacturers are producing so that he can make a product aimed at a "gap" in the market. Given all this the applicants submit it is very unlikely that he would not have been aware of Mr Fitzgerald and Hot Buttered and the marketability of both brands in the market for surf wear.
The applicants also assert that the Court should take the view that Mr Jones' evidence was evasive and argumentative, and Mr Jones was intent upon giving self-serving evidence in respect of all matters upon which he was cross-examined. Further, that the Court should find that he was not a truthful witness given his repeated denials as to the accuracy of the evidence given by Mr DeBoos, Mr Fitzgerald and Mr Lees. An example is said to be his evidence given before the Court as to the meaning of the statement on the cover of the 33 South promotional CD (Exhibit AJ 5). That it was implausible, self-serving and argumentative.
The relevant text of what appears on the cover of his promotional CD (Exhibit AJ 5) reads:
"33south was established in Sydney in 2003 to create authentic surf wear largely inspired by the photography and graphics from the early years of Australian surfing.
Since the 70's, the iconic Tracks magazine cover art has presented some of the most memorable images in Australian surfing history. 33south is proud to launch the Tracks vintage t-shirt collection summer 06-07."
Mr Jones was asked what appeared to be a direct question as to his use of the word "iconic". The applicants rely on his answer as an example of his unsatisfactory evidence.
In a response, on this issue, the respondents submit that Mr Jones' use of the word, as he explained in cross-examination, was a reference to the "iconic" status of the relevant Tracks issues, and not a reference to the "images in isolation".
Mr Jones generally had some difficulty in giving simple, clear and straightforward answers to questions that were put to him. (This was not confined to cross-examination.) Nonetheless, on this issue I did find his explanation to be credible, and (comparatively) consistent with the words actually used on the cover of the 33 South promotional CD. Plainly, the cover did make a reference to the Tracks magazine cover art as being "iconic", and that in part this was derived from capturing "some of the most memorable images in Australian surfing history". But that also the "iconic" status of this cover art was derived from its vintage ("since the 70s").
To that extent, therefore, what I drew from Mr Jones' evidence in this regard was that at least some part of the intention was to present the "vintage" Tracks magazine covers on the t-shirts, rather than to intend necessarily to represent, in context and relevantly, Mr Fitzgerald's image and name. The presentation of that name and image was incidental to, or consequent upon, the use of the Tracks cover. Any plain look at what is depicted on the other nine t-shirts produced as part of this "series" would support Mr Jones' explanation (see RE 8).
The applicants, however, are on stronger ground with other aspects of Mr Jones' evidence, and their attack upon it.
At the very least Mr Fitzgerald's name and image, and the photo depicting him performing the "bottom turn", is described by Mr Jones as one of the most memorable images in Australian surfing history. Mr Jones' assertion in cross-examination that the "memorable nature" is a reference to the Tracks cover itself, and not to the image it depicts is not consistent with the plain words used on the 33 South CD cover (words authored by Mr Jones).
This must also be seen in context of Mr Jones' evidence also given in cross-examination that the yellow 33 South t-shirt featuring Mr Fitzgerald's name and image was chosen by him to go on the front page of the 33 South website, and in an associated "magazine ... as well", and was used in Tracks advertisements for the entire t-shirt range that appeared after the commencement of these proceedings (see in particular ATF 2 at [59], and Exhibits TF 35 and AJ 6).
The respondents' submissions do not directly give an answer to this aspect of this issue relied on by the applicants. That is the importance of the yellow 33 South t-shirt to the marketing and advertising of the "Tracks" t-shirts.
In relation to the actual importance of the 33 South t-shirt, depicting Mr Fitzgerald, to the respondents' commercial venture (as opposed to the lesser importance of the other nine t-shirts), the applicants seek to rely on what Mr Fitzgerald says Mr Jones told him in a telephone conversation in January 2007 (see ATF 4 at [8]).
Mr Fitzgerald's evidence was that in the telephone conversation Mr Jones told him that: "he would not agree to having the t-shirt" removed from sale in the marketplace because "it is one of my best selling t-shirts and I am going to make more".
In evidence before the Court Mr Jones said that this t-shirt was not the best-selling t-shirt in the relevant range. The applicants submit that his denials did not ring true and should not be accepted.
The respondents point to Mr Jones' evidence given in cross-examination that when Mr Fitzgerald asked him to "destroy t-shirts", and that when he made reference to "best-selling", he referred to best-selling "categories", and not specifically to the yellow 33 South t-shirt. The respondents submitted that the Court should have regard to the context of what was described as a "difficult conversation", but it "would only be fair to both parties to acknowledge the misunderstanding between the 'best-selling shirt' and 'best-selling categories'".
Curiously, the respondents' submissions make no reference to the evidence of Ms Chapman in relation to this particular issue. Ms Chapman's evidence was that from the seven (of the 10) t-shirts in the range which she stocked for sale in her shop, the "slower seller" was the "pale yellow t-shirt" (the t-shirt featuring Mr Fitzgerald). Her evidence was that the "biggest selling point of the individual t-shirts was the colour". It appears that red, black and green were the "best sellers" (see ADC at [13]).
Similarly, Mr Adair gave evidence (APA at [5]-[11]) that the colour of the t-shirts was the important factor in choice by consumers, that "female buyers tend to buy pink or white", that "male buyers tend to buy red or blue", and that "yellow is the least popular colour".
Mr Jones' evidence given in cross-examination was also consistent with this other evidence in relation to the importance of colour as a factor in the minds of consumers in making a choice about which t-shirt to purchase. Mr Jones' evidence was that he had his own "retail shop in the city", and that the most popular colours were black and the "two blue" colours, and the ones that had not "performed" as well (in his own shop) were the "pink one, the yellow one and the white one".
Clearly, the evidence of Ms Chapman and Mr Adair would support Mr Jones, at least at the factual level, that the "yellow t-shirt" was not the best-selling in the range and that therefore there would have been no basis for Mr Jones to have said so to Mr Fitzgerald in the telephone conversation. The respondents, however, in submissions make no reference to this evidence and ask the Court to accept Mr Jones' version because it "rings true", and that there was a misunderstanding as to "best-selling shirt" and "best-selling categories", given that it was a "difficult conversation".
On the basis of how both parties have chosen to make submissions on this issue, I note that Mr Fitzgerald's evidence about what was perceived in that telephone conversation remained unchallenged before the Court (other than for the evidence given by Mr Jones). No attack was made on Mr Fitzgerald's credibility generally. Nor in relation to this specific point when he was being cross-examined.
The applicants have, however, attacked Mr Jones' credibility. By way of submission, Mr Jones asks the Court to prefer his account to what was said to have occurred during this telephone conversation because he says what he submits occurred "rings true", because it was a difficult conversation, and there was a misunderstanding.
Notwithstanding that the respondents did not seek to rely on the evidence of Ms Chapman and Mr Adair in this regard, the Court cannot ignore that such evidence was given (and it was not challenged by the applicants) that generally, overall, the yellow t-shirt was not the best-selling t-shirt in the range.
But even within this context I have some difficulty in accepting the respondents' submission that Mr Jones' denial of what Mr Fitzgerald reported that he said, does ring true. This denial was plainly made by Mr Jones in cross-examination. Mr Jones made this denial in circumstances where he said in cross-examination that he sought to make contact with Mr Fitzgerald who was "clearly upset", and that he (Mr Jones) sought to understand why. His evidence also was that he was "fairly new into the surf industry" and that he "wanted to understand in fairness what this problem was because it rocked me".
Putting to one side the general observation about Mr Jones' evidence as referred to above (see [114] above), and focusing only on what the Court was invited to focus on by the respondents, that is, whether Mr Jones' evidence had the ring of truth about it, I have some difficulty in accepting Mr Jones' evidence that he did not understand why Mr Fitzgerald was upset and that he was "fairly new into the surf industry".
First, Mr Jones' own evidence, otherwise, was that he had been a surfer for many years in New South Wales. In AAJ 1 at [A] where he sets out relevant background and chronology, Mr Jones' evidence was that he had attended at the beach: "every summer as a child", and started surfing in the late 70s. Since that time whenever he was in Australia, which was for a considerable period up until, and including, the time of the commencement of these proceedings, he emphasises repeatedly "AJ surfed frequently".
Even more relevantly, it was also Mr Jones' evidence given by way of affidavit, and orally before the Court, that he had been involved in the surf-wear industry for some time. (In 1993 he started his own "surf street wear label" for example - see [A] of AAJ 1 - and had started his own "surf-wear label" - "33 South" - in 2003.) That he was otherwise focused on the design rather than the marketing side, may have been the case while he was working for "Oxford Shops" (1996-2002), but was clearly not the case in 1993-1994, and since 2003. Or for that matter in 2002-2003, when he was head of design for "Hot Tuna" (see as discussed above).
In this context, Mr Jones' evidence in relation to the conversation specifically with Mr Fitzgerald that he was "fairly new into the surf industry" clearly does not have the ring of truth about it. This is an important element in accepting Mr Fitzgerald's account of what occurred during this conversation.
Nor do I accept Mr Jones' assertion that he had difficulty understanding what Mr Fitzgerald's problem was. Mr Jones presented before the Court as astute, clever and generally knowledgeable about a number of relevant topics. (His own evidence was that he had extensive experience in the relevant business. He has lived and worked overseas.).
Even if Mr Jones did not know specifically in relation to the surf clothing industry that persons with reputation in that industry would seek to protect that reputation, and the commercial advantage that such reputation could deliver in the marketplace, I have difficulty accepting his assertion that he would not have known generally that persons with some profile and reputation, at whatever level, and in whatever industry, would seek to protect such reputation to their own commercial advantage.
To say that he wanted to understand (and implicit in this is that he did not immediately understand) why Mr Fitzgerald was upset, does not in all the circumstances "ring true". On both the evidence of Mr Fitzgerald and Mr Jones, Mr Jones initiated the telephone conversation. Mr Fitzgerald's evidence that: "one of those t-shirts has my name and image on it and we would like you to remove it from the marketplace ...", was confirmed in cross-examination by Mr Jones (albeit his version of the tone may have been different from what Mr Fitzgerald implies was his tone: "... Terry also asked me to withdraw the t-shirts which is in his affidavit, when he yelled at me to destroy them ...").
The parties therefore agreed that Mr Fitzgerald was very clear in what he was seeking.
In all the circumstances, Mr Jones' assertion that he was "new into the surf industry", and was almost naïvely seeking to ascertain why Mr Fitzgerald was upset, clearly does not have the ring of truth about it. In all the circumstances, I cannot accept that Mr Jones was so naïve about business matters in general, that he initiated a telephone conversation with Mr Fitzgerald, but did not understand what Mr Fitzgerald's problem was. In all, I accept Mr Fitzgerald's version of the telephone conversation.
In attacking the credibility of evidence given by Mr Jones, the applicants also rely on the telephone conversation referred to initially in the affidavit of Mr DeBoos (ARMDeB at [3]). Mr DeBoos is a partner in the firm of solicitors acting for the applicants in these proceedings. He gave evidence by way of affidavit (not cross-examined) as to a conversation with Mr Jones relating to the 33 South t-shirts.
In his affidavit, Mr DeBoos sets out certain matters that he said Mr Jones told him. Following the conversation, Mr DeBoos sent via facsimile transmission, to Mr Jones a statement of what was said to have been said by Mr Jones during the telephone conversation (see RMD 3 to ARMDeB). Mr Jones also by facsimile responded by letter dated 24 January 2007 (see RMD 4 to ARMDeB) in which he, amongst other things, stated: "I categorically deny all the comments attributed to me in your letter in which you refer to a phone call with your office. In particular, I did not advise that a number of people had their 'noses out of joint'".
In response, the respondents' submissions explain that Mr Jones made "a naïve and panicked attempt to withdraw" "without prejudice" comments made to Mr DeBoos until he could get legal advice. The respondents refer to Mr Jones' evidence before the Court that: "I freaked out because I'm going 'what's going on here'. These guys have just gone nuts".
What is clear from Mr Jones' evidence given before the Court is that his categorical denial in his reply to Mr DeBoos about what he had said to him in the telephone conversation was not strictly correct. His explanation before the Court for having said this in his written response was that in a sense he panicked, and by that denial, sought to preserve his "legal position" until he could obtain legal advice. This explanation implies nonetheless that he did say to Mr DeBoos the things he is reported to have said. At the very least, it is not a denial.
It is plausible that a person having had a conversation with a lawyer when subsequently confronted with a record of that conversation in writing may seek on subsequent reflection to retrieve the situation in the way that Mr Jones has done by making an assertion as to a "categorical denial".
However, while this attempt may perhaps be described as "ham-fisted" I do not draw any adverse view of Mr Jones' evidence before the Court solely because of this statement in his letter.
However, what remains is that he was unable to satisfactorily explain before the Court, despite evidence that there were inaccuracies in Mr DeBoos' letter, exactly what those inaccuracies were. For example, Mr Jones referred to that part of Mr DeBoos' letter that stated:
"You also advised that your company had only produced 200 units of the offending t-shirt, but that it proposed to continue production notwithstanding out client's concerns."
His evidence, at first, was that that was not what he said "at all", yet subsequently in cross-examination, then proceeded to qualify what on its face appeared to be a very clear answer, by saying "I can't understand how I could have possibly said that because continued production would be subject to orders being placed in the future". Then subsequently said: "You know there's not much there that, you know, really, I could imagine would be, you know - I can't imagine myself not saying it. I can't remember specifically saying it. It sounds fair enough."
Mr Jones' explanation as to why he categorically denied what was set out in Mr DeBoos' letter in his letter of reply, as I have said above, did sound plausible. His subsequent obfuscation, and shifts in evidence, however, does support the applicants' contention before the Court that Mr Jones' evidence was not reliable.
The applicants also seek to attack Mr Jones' credibility in relation to his evidence on the evidence given by Mr Lees.
Mr Lees gave evidence (see ADML) that he was a director and one of the owners of "Breaker Publications Pty Ltd", the publisher, amongst other things, of a magazine for surfers, "Surfing World". Mr Lees gave evidence that in early 2004 (see ADML at [13]) he entered into an agreement with "33 South in relation to the manufacture and sale of t-shirts bearing Surfing World magazine covers". It was Mr Lees' evidence that a number of t-shirts were produced bearing these covers and sold, but without full disclosure being given to his company. That sales information provided to Surfing World was "wrong" and inaccurate, and that his company: "never received final numbers relating to how many t-shirts were produced and sold". Ultimately, the relationship between Breaker Publications and 33 South ended unhappily (see ADML at [15]).
In his evidence before the Court, Mr Jones described Mr Lees' evidence as: "absolutely a gross distortion of the actual facts in this entire affidavit".
It is difficult to draw any adverse view of Mr Jones' evidence in relation to this particular issue. I agree with the respondents' submissions in this regard that whatever the situation as between Mr Jones and 33 South, and Mr Lees and Breaker Publications, there is insufficient material before this Court (not surprisingly given that that relationship is not at issue before this Court), for this Court to determine the accuracy, or otherwise, of Mr Jones' evidence. Whether Mr Jones or 33 South provided an accurate report to Mr Lees and to Surfing World, it is not possible to make any adverse inference (or for that matter, positive view), of Mr Jones' evidence in this regard for the purposes of the current proceedings.
In all, in my view, what can be relevantly drawn from the attack on Mr Jones' credibility (that is, on the evidence given to this Court) is that in the circumstances, Mr Jones' assertion that he had only vaguely heard of Terry Fitzgerald (and of Hot Buttered) prior to the time of his conversations with Mr Fitzgerald and Mr DeBoos does not ring true. Nor does any assertion that he was not aware of the practice of character merchandising, or that someone like Mr Fitzgerald would not seek to protect his reputation in relation to the number and type of products with which he was associated. Further, I do accept that in all the circumstances that Mr Jones did tell Mr Fitzgerald in a telephone conversation (even though it may not have been factually correct), that the t-shirt depicting Mr Fitzgerald's name and image was the best-selling t-shirt in the range.
While I accept Mr Jones' evidence that his intention was to produce a range of t-shirts bearing "iconic" vintage covers of "Tracks" magazine from the 1970s, and this is certainly consistent and flows on from the somewhat unhappy attempt to do something similar (although not using Tracks magazine covers) with Surfing World earlier, I am also of the view in circumstances, and in particular where I do not accept Mr Jones' evidence that he had not heard of Mr Fitzgerald ("only vaguely") and in circumstances where some (but not all) of his evidence was of adverse credibility, that there is also evidence before the Court (the use specifically of the yellow 33 South t-shirt on the 33 South website, and in advertisements) that it was also part of Mr Jones' intention (and given the relationship, that of 33 South) to use the name and reputation of Mr Fitzgerald in the marketing of these t-shirts. Even if it was of a lesser, or subservient, priority, it was in my view nonetheless at least a part of the overall intention).
[23]
In relation to the complaint pursuant to s.52 of the Act, I understand the respondents' position to be that the Court cannot be satisfied that the reproduction on the yellow 33 South t-shirt, in or about 2006, of the relevant 1975 Tracks cover amounted to a representation such that "the applicants" were misled or deceived, or were likely to be misled or deceived, that the reproduction was a misrepresentation that the production and sale of the t-shirts was with the licence, approval or otherwise connected with Terry Fitzgerald and/or Hot Buttered.
The reference in the respondents' submissions (at [30]) to the applicants being misled, should be understood more properly as a reference to persons or members of the relevant class. Whether or not the applicants were misled, per se, is not part of the relevant test for the Court to consider.
The respondents referred the Court specifically to a number of authorities on this issue.
In Wickham, the applicant was a famous swimmer who entered into an agreement with the respondent to promote and endorse the respondent's swimming pools. The applicant's position was that the agreement permitted the respondents to use her name and photograph, and in return she was to be paid a royalty for every pool sold, but that upon termination of the agreement, the respondent could no longer use her name and photograph in relation to their business. The respondent's position was that they had acquired the right in property to carry on business as: "Tracey Wickham Pools" (the name of the swimmer) notwithstanding the terms of the promotional agreement. The matters alleged included breaches of s.52, sub-ss.53(c) and 53(d) of the Act, and conduct which also amounted to passing off.
The Court (Spender J) held that given the arrangement between the parties, the use of the applicant's name and logo during the currency of the agreement did not breach the relevant sections of the Act, nor did it amount to a passing off, even regardless of any misconception on the part of the general public that the applicant may have owned the respondent's pool company. But that the use of the applicant's name after the termination of the agreement, was an attempt by the respondent to assert an association between its products and the applicant which they no longer had, and was in breach of s.52 of the Act. Further, that their conduct did amount to a form of approval by the applicant such that there was a breach of sub-s.53(c) of the Act, but that the conduct did not amount to representation that it had sponsorship, approval or affiliation, and that therefore there was no breach of sub-s.53(d) of the Act. The claim in passing off also did not succeed.
The Duff Beer case involved an application for an injunction by the makers and producers of an animated television series ("The Simpsons") in which an imaginary beer product ("Duff") had been created, and was particularly associated with one of the main characters in the series. The injunction was to restrain the promotion and sale of a product of beer called "Duff the Beer" produced by the respondents. The application for injunctive relief was made pursuant to s.52 of the Act (s.80 of the Act), and in the tort of passing off. The Court granted the application in relation to both grounds.
The respondents submit that in relation to both cases, the impugned use of the name of the respective applicants ("Tracy Wickham" and "Duff Beer") were "flagrant uses", which it was said "essentially defined the product". I understood the submission to be that the product (respectively, the swimming pool and the beer) and the name of the applicant (Tracey Wickham and Duff) were inseparable, and that the impugned use of the name was therefore not peripheral to the sale of the products with which those names were linked.
Honey v Australian Airlines Ltd(1989) 14 IPR 264 ("Honey v Australian Airlines") involved an application for relief pursuant to ss.52 and 53 of the Act which was unsuccessful. The Court at first instance found that the respondents' use of the applicant's photograph reproduced in a magazine, book and poster, did not constitute any representation of sponsorship, approval or affiliation by the respondent and their products of the applicant. The appeal was dismissed (Honey v Australian Airlines Ltd(1990) 18 IPR 185).
The respondents in particular rely on:
(At 187):
"On the bottom right hand side of the poster (the left hand side to the viewer) in what his Honour described (at 14 IPR 270) as 'small print when compared with the size of the poster and the size of the photograph' were the words:
ATHLETICS
Commonwealth Games
Edinburgh, Scotland
Long Jump
Gary Honey, Gold Medal Winner
(Photography by: Tony Feder, Melbourne)
AUSTRALIAN AIRLINES
To the right and slightly below the words 'Australian Airlines' appeared the first respondent's 'logo'. The printed words and 'logo' were white and were placed within an area 7.5 cm deep and 11.5 cm wide."
(Extract as in original, and not as reproduced by respondents in their submissions.)
(At 193):
"In the final analysis, the question whether the poster distributed by the first respondent and the book and magazine published by the second respondent may fairly be said to have conveyed to a significant section of the viewers of them the representations alleged by the appellant must be answered by an objective assessment of the overall impression which they would make upon those viewers."
(At 194):
"We are satisfied that viewers of the poster would have perceived it not as an advertisement or promotion of the services being offered by the first respondent, but rather as the promotion by the airline of sport. It is not, however, inconsistent with that conclusion to say that many, if not most, viewers would have assumed that the first respondent had undertaken the task of producing and distributing posters of the kind exemplified by the one here in question because it perceived that such activity would enhance its public image and so generate benefits to it in its commercial operations. But that is quite a different thing from saying that by publication of the poster the first respondent was representing that the appellant had approved the use of his photograph and endorsed, or was otherwise commercially associated with, the activities of the first respondent.
We agree with the conclusion reached by the primary judge that the poster would be seen 'as an art work supporting participation and excellence in sport and nothing more'."
The respondents submit that a fair reading of that judgment supports the proposition that the "mere photograph of a person of renown" on a relevant product will not necessarily suffice to satisfy the test of whether that photograph imports a notion of "sponsorship approval" for the purposes of s.53 of the Act.
"Whether the use of a person's photograph in a commercial publication carries the imputation that the use has been authorised or endorsed by the person photographed depends on the circumstances of the particular case: see Tolley at 339 per Viscount Hailsham [Tolley v J.S. Fry & Sons Ltd[1931] UKHL 1; [1931] AC 333]cf. Honey v Australian Airlines (1989) ATPR 40-961."
Campomar Sociedad Limitida v Nike International Ltd[2000] HCA 12; (2000) 202 CLR 45 ("Campomar v Nike International") at [99]:
"The matter should not be considered in the abstract. Regard must be had to the circumstances of the particular case and the remedy sought in respect of the contravention alleged either to have occurred or to be threatened. It is one thing, for example, to claim interlocutory relief, particularly on a quia timet basis, where one of the conditions for the grant of relief is the presence of a serious question to be tried as to the apprehended contravention of s 52(1). It is another to seek at a trial a final remedy, whether an injunctive order under s 80 of the TP Act or damages under s 82, at the suit of a person who alleges the suffering of loss or damage 'by conduct of another person' in contravention of s 52(1). To say this is to emphasise the point made by Toohey J in Wardley Australia Ltd v Western Australia_:_
'Although it is customary to speak of a claim for damages for misleading or deceptive conduct, s 52 of the [TP Act] does not of itself give rise to any liability. The consequences of a contravention of the terms of s 52 are to be found in various sections of the [TP Act].'
(Footnotes omitted)
The respondents seek to draw from these authorities support for the proposition that inclusion of the name "Terry Fitzgerald" and his image (of 1975) on the 33 South t-shirt: "presents Terry Fitzgerald at a very low level being a level which falls far short of defining the 33 South t-shirt as did the impugned use of personality/name in the Tracy Wickham/Duff Beer cases".
Further, that the reproduction of the photograph from 1975 on the impugned t-shirt does not incorporate any reference to "Hot Buttered".
The respondents in particular draw attention to what is actually reproduced on the t-shirt, and that amongst other things:
Most of the upper half is a hand-drawn graphic and superimposed upon it in large typeface is the word "Tracks".
This is prominent, in bold and in large typeface.
In the middle, in a discrete and delineated space, only includes the words "Fantasy Issue" which is prominent in black against a yellow background and is about half the size of the "Tracks" typeface.
Most of the lower half of the cover is a reproduction of the photograph said to be that of Terry Fitzgerald surfing in a wave, with the caption at the top of that panel being "Australian Surf Titles - Interview with Terry Fitzgerald", and at the bottom, the caption reading "The Saga of Cindy and Brad - A Surf Romance". The typeface for both of these captions is about half the size of the "Fantasy Issue" typeface, and are "substantially neutralised by their black and grey background".
The image in the upper half comprises a detailed hand-drawn graphic with sharp landscape and seascape images with black, white and grey contrasts, and this should be distinguished from the lower half of the cover comprising a reproduction of the 1975 black and white photograph predominately of the face of a wave and in the lower part, containing a fuzzy and distant image of a person crouched on surfboard with his back to the camera (which the respondents accept to be Terry Fitzgerald).
With reference to all of the above, the respondents submit that the name and the image of Terry Fitzgerald is presented at a "substantially lower level" than for example that of Mr Honey in Honey v Australian Airlines, in circumstances where:
Mr Honey's photograph is taken only one year before it was published on the impugned poster, whereas Mr Fitzgerald's photograph was reproduced thirty years after the photograph was taken.
Mr Honey's photograph featured prominently (in relation to clarity of the photograph, the relative large size on its poster, and the absence of material distracting attention from Mr Honey). All of these features are said to be absent in relation to the image and name of Mr Fitzgerald.
Mr Honey's name and the details of his winning a gold medal at the relevant Commonwealth Games were set out in a prominent block compared with Mr Fitzgerald's achievements which are not set out, his name is in relatively small typeface compared with the words "Tracks" and "Fantasy Issue".
In all, therefore, the respondents submit that the impression found on the 33 south t-shirt, with reference to the relevant group (which the respondents concede is a "surfer or buyer of surf-related products") is that the 33 South t-shirt reproduces a copy of the cover of Tracks magazine, and that Mr Fitzgerald's own evidence is said to support that proposition (see ATF 4 at [7]: "I became increasingly concerned in January and February 2007 about the 33 South t-shirt after about 10 people brought them to my attention by saying words to the following effect: "What are you doing putting your name on a Tracks t-shirt? Did you authorise that? Are you getting paid for this?").
The respondents further submit that Tracks magazine is a magazine of high repute in the surfing world (conceding that Terry Fitzgerald is a contributing editor). The submissions rely on what is said to be the reputation of Tracks, and seeks to distinguish that reputation gained over a long period of time, and with reference to a large number of champions on which it relies, to submit that it is not the actual identity of any given champion that is important because the champion of the day will be reported as the: "news of the day". (I should just note that while the reputation of Tracks magazine has been put into evidence before the Court, the actual content, for example, what is said to be the reporting on champions over a long period of time, has not been put into evidence as such. At best, therefore, the respondents' submissions in this regard require the Court to infer that this is the case.)
In any event, the respondents seek to persuade the Court that the inclusion of Mr Fitzgerald's name and image (at that time, that is, 1975) on the cover of the Tracks magazine, acknowledged that he was a figure of "some renown at that time", but that there is nothing to suggest that it was his name or image contributed, of itself, to the sale of Tracks magazine at the time of publication of that photograph.
On the same basis the respondents argue that when his name and image are reproduced in 2006, again, in the context of being on the cover of Tracks magazine (as in 1975), that there is nothing to suggest that his name or image will generate sales or otherwise be of commercial value to the respondents. Emphasising that this is the case given the "low key profile that his name/image are given in the 1975 cover of Tracks".
In all, therefore, the respondents say that the Court cannot be satisfied that the reproduction of the 1975 Tracks cover on the 33 south t-shirt in or about 2006 amounted to a misrepresentation that the sale of the impugned t-shirt was with the licence or approval of the applicants.
[24]
In relation to s.52 of the Act, the Court is required to consider whether a reasonable member of the relevant class of consumers would be misled by the conduct of the respondents into believing, contrary to the facts, that either Mr Fitzgerald and/or Hot Buttered had produced the yellow 33 south t-shirts, or that a commercial arrangement had been concluded between the applicants and the respondents, or that Mr Fitzgerald or Hot Buttered agreed to the use of Mr Fitzgerald's name or his image on the 33 South t-shirts.
Dealing first with the respondents' submissions.
First, it is not clear how, or from where, the respondents derive the proposition that the use of the name or relevantly, the photograph, on the relevant product needs to be "flagrant". While the Wickham and Duff Beer cases strongly imported a connection between the product and the name use (swimming pools and beer respectively), I do not understand the authorities to be restricted only to that level of association (that is, "flagrant").
The test before the Court now is one of whether a reasonable member of the relevant class would be misled or is likely to be misled or deceived. While it may be easier to come to this conclusion if the use is said to be "flagrant" (in the sense as used by the respondents in submissions), it is not the case that anything "lesser" could not also come within the relevant test. (See for example, Nixon v Slater & Gordon where just an image, even without a name, may have been sufficient to suggest an "association". As was said in that case at [56], whether the use of a person's photograph in a commercial publication carries the imputation that its use has been "authorised or endorsed by the person photographed depends on the circumstances of the particular case".)
In this regard, I agree with the applicants' submissions that in response to the respondents' reliance on Honey v Australian Airlines, the outcome of that case should be seen in the circumstances of that particular case, that is, on its own facts. In Honey v Australian Airlines, the Court made it clear that "the viewers" of the impugned poster would not have perceived it as an advertisement or promotion of services being offered by the respondent in that matter, but rather, as the promotion by the respondent of "sport".
The reasoning of the Court (particularly at 194) was that while viewers of the poster may have made some assumption that the respondent had undertaken the production of the poster because it thought that such activity would enhance its public image and consequently generate benefits to it in its commercial operations, that this was quite different from saying that by the publication of the poster the first respondent was representing that the applicant had approved the use of his photograph and endorsed, or was otherwise commercially associated with, the activities of the first respondent.
This is clearly distinguishable from the facts of the current case. The circumstances before the Court now do not admit of any consequential or indirect promotion of commercial benefit as in the Honey v Australian Airlines case.
In my view, the evidence before the Court is that some persons at least were misled into believing that the impugned t-shirt was endorsed by Mr Fitzgerald.
The inference (at least) in the respondents' submissions that the size of the print of Mr Fitzgerald's name on the cover reproduced on the impugned t-shirt, when compared to other lettering, does not directly address the evidence before the Court, that at least some people said that they were misled.
In any event, the issue is not one of the size of printing. The name of "Terry Fitzgerald" appears plainly on the t-shirt, that is, on the front of the t-shirt.
The respondents' argument that the magazine ("Tracks") is bigger than any one individual may indeed be a valid argument. The issue, however, is not one of comparison between Mr Fitzgerald and Tracks, even if it could be said that reasonable members of the relevant group of persons assume (correctly in this case) that Tracks had given authority. Such an assumption does not override or negate any likelihood that they could also have assumed that Mr Fitzgerald had likewise given authority or was otherwise affiliated with the t-shirt.
The respondents' submission that "there is nothing to suggest that his name/image will generate sales or otherwise be of commercial value to the respondents", does not address the evidence before the Court as to Mr Fitzgerald's reputation both in the 1970s, and currently amongst the relevant class. A reputation reinforced by magazine articles, surfing films and the promotion of products bearing his name, and his association with Hot Buttered, where his name and image is clearly of commercial value. Simply arguing that a smaller typeface somehow negates all this evidence is in my view not appropriate.
Further, as the applicants correctly submit in my view, the association between Mr Fitzgerald and Tracks which the respondents acknowledge (and in a sense rely on to make part of their argument) is indeed such that the reference on the t-shirts to "Tracks" reinforces the association between the impugned t-shirt and Mr Fitzgerald.
Further, I should note that the respondents' submission that there is no mention of Hot Buttered on the impugned t-shirt, again, does not assist the respondents in circumstances where such a submission ignores very clear evidence before the Court of the relationship between Mr Fitzgerald and Hot Buttered, and in particular as Hot Buttered being the vehicle for much (but not all) of Mr Fitzgerald's own commercial activity.
With reference to all of the evidence as set out above, the use of Mr Fitzgerald's name and well-known image on the impugned t-shirt was, in all the circumstances, conduct by the respondents which made a representation contrary to the fact, that is, a misrepresentation that did, and was likely to mislead, a reasonable member of the relevant class, that Mr Fitzgerald had some association with the production and offering for sale of the impugned t-shirt.
The evidence before the Court is that his name and image were clearly used on only one of ten t-shirts. The common feature on each of the t-shirts was the use of the Tracks name and the use of the Tracks vintage covers. The evidence was that these were displayed for sale, usually as a group (see ADC at [4], AMB at [9], and APA at [3]). While the reasonable member of the relevant group may have assumed an association with Tracks, I am also of the view that the evidence before the Court also reveals an association with Mr Fitzgerald, at least as it relates to the impugned yellow t-shirt.
There was no argument before the Court that Mr Fitzgerald was not a renowned surfer in the 1970s. There was more than enough evidence before the Court as to the reputation and notoriety of Mr Fitzgerald since then, and currently, amongst the relevant group.
For the reasons already set out above, Mr Jones' evidence that he had only "vaguely" heard of Mr Fitzgerald is not plausible, and the evidence of other witnesses brought on behalf of the respondents is not helpful for the reasons already given.
In my view the evidence does support the applicants' proposition that a reasonable consumer in the relevant class would be aware that celebrity endorsement, or approval of, products is widespread in the surfing community, which therefore increases the likelihood of their assuming that Mr Fitzgerald has sanctioned, or permitted, or allowed, the production and sale of the impugned t-shirts.
Nor for the reasons already set out above would they be disabused of this assumption because of the label sticker affixed to the impugned t-shirt. For the reasons already referred to above, that does not assist the respondents.
Further, the intention of Mr Jones, while not necessary to establish a contravention of s.52 of the Act, that is, his intention to mislead, does assist in establishing the applicants' cause of action in relation to s.52 (and see further in relation to s.53 of the Act). To the extent that at [67i] and [67iii] of the respondents' submissions assert that intention must be proved (at least infer in the case of [67i] and at [67iii]: "the test which must be applied if damages are to be proved is whether or not there was an actual misrepresentation") this is not part of the relevant test in relation to a contravention of s.52 of the Act. In any event, for the reasons already referred to above, I am satisfied that at least, in part, Mr Jones' intention was to so misrepresent the association with Mr Fitzgerald in relation to the impugned t-shirt.
In all the applicants succeed in relation to s.52 of the Act.
[25]
Consideration in relation to sub-ss.53(c) and 53(d) of the Act
[26]
Relevantly, sub-s.53(c) of the Act prohibits a corporation (and given what is set out above this includes conduct by Mr Jones) from representing that goods (relevantly, the yellow 33 South t-shirt bearing the name and image of Mr Fitzgerald) have sponsorship or approval of the applicants.
The applicants' position is that they rely on the applicants' reputation in the surfing community, their own licensing activities relating to the production of surfboards and related surf-wear (including t-shirts), the degree of awareness in the surfing community of character merchandising, to submit that a reasonable consumer in the relevant class would assume that the t-shirts and/or 33 South had sponsorship or approval or an affiliation with the applicants (see cf Duff Beer case).
The applicants point to this evidence to submit that it is sufficient to establish that the respondents' conduct amounted to a contravention of sub-s.53(c) of the Act.
The respondents assert that a breach of sub-s.53(c) of the Act has not been pleaded outside the context of s.52 of the Act. I have dealt with this issue above (see [30] above). In these circumstances, the respondents rely on submissions made in relation to s.52 of the Act. That is, in general, that the respondents did not misrepresent or mislead consumers to the effect that the applicants' licensed or approved the sale of the yellow 33 South t-shirt, for all the reasons stated in support of their arguments in support of s.52 of the Act.
First, I note that the relevant conduct by the respondents is the use of Mr Fitzgerald's name and well-known image on the front of the impugned yellow 33 South t-shirt. (For "well known" see the various articles and films referred to in the evidence before the Court. In particular, see the Amended Table of Articles).
To the extent that given the way the respondents have drafted their submissions, that it may be inferred that the Court should not find on the evidence that any person was actually misled by the misconduct of the respondents into assuming that the applicants had sponsored, approved or had some connection with the t-shirts, I note that in determining whether a breach of sub-s.53(c) of the Act has occurred, it is not necessary to show that consumers were actually deceived. The issue as I understand it is whether a representation of sponsorship is made contrary to fact.
In my view, the evidence before the Court reveals that there was no relevant commercial (or for that matter, any other) relationship between the applicants and the respondents. Neither of the applicants sponsored or approved of the manufacture, distribution and sale of the impugned yellow 33 South t-shirt. That t-shirt, by the use of Mr Fitzgerald's name and his image, an image which the evidence shows was widely known amongst the relevant class of consumers within the surfing community, did represent such an association, that is a sponsorship or approval.
I note further that in relation to "sponsorship" 10th Cantanae Pty Ltd v Shoshanna Pty Ltd(1987) 79 ALR 299 ("10th Cantanae") established that "sponsorship" contains more then just relevantly, as in this case, the application of a name to a t-shirt, but that another person or organisation stands behind the product (in 10th Cantanae it was an advertisement for a product), and even wholly or partly finances the relevant activity.
Mr Fitzgerald (and the evidence establishes a connection with Hot Buttered in the eyes of the relevant class of consumers for the manufacture and sale of surfboards and surf-related products) was of such repute and notoriety within the relevant class, and in particular, that he was involved in the production and sale of relevantly, surf-related products, both through the Hot Buttered name and otherwise, such that the use of his name and well-known image on the yellow 33 South t-shirt did, in all the circumstances, amount to a representation that the t-shirt had his sponsorship or approval, and by association, of Hot Buttered. This was contrary to the facts.
I should just note that the facts of the current case can be distinguished from that in 10th Cantanae where a television identity (Ms Smith) was not successful in a somewhat comparable claim for damages, in circumstances where an advertisement for "video" recorders used her name, but with a picture of another woman. In the current case, the use of Mr Fitzgerald's name and a well-known depiction of his image, clearly represents his association with the product (emphasising that he was in the business of producing and selling similar such products) which was contrary to fact.
Sub-section 53(d) of the Act concerns itself with representations that a corporation has a sponsorship, approval or affiliation it does not in fact have.
In Festival Records Pty Ltd v International Direct Marketing Pty Ltd(1986) ATPR 40-664 Lockhart J stated that in particular sub-s.53(d) of the Act:
"... are directed essentially to protecting the public in the market-place from deceptive and improper conduct. Those provisions are not directed to protecting the goodwill or reputation of a particular trader, notwithstanding that they may incidentally in some cases have that effect."
The applicants again rely on the evidence as referred to above (although noting that this section does not require a person to be misled or deceived by a particular representation) that the conduct of the respondents was such that there was a misrepresentation as to sponsorship or approval in relation to the goods or sponsorship in that there was a clear misrepresentation because neither Mr Fitzgerald nor Hot Buttered gave approval for the production, or sale, of the yellow 33 South t-shirt, nor are they affiliated with 33 South in any way.
The respondents again repeat the issue (already dealt with above) that subs-s.53(d) of the Act had not been pleaded outside the context of s.52 of the Act. For the reasons already set out above this submission does not succeed.
In these circumstances, the respondents again rely on the submissions that the respondents did not misrepresent, or mislead consumers to the effect that there was a misrepresentation that there was a sponsorship, approval or affiliation of the applicants with 33 South.
For the reasons above, and based on the evidence already referred to above, I agree with the applicants that the production, but in particular, the sale, of the impugned yellow 33 South t-shirt by 33 South (that is the corporation for the purposes of sub-s.53(d) of the Act) with the use of Mr Fitzgerald's name and well-known image, that it did have the sponsorship or approval or some affiliation with Mr Fitzgerald or Hot Buttered. This was contrary to the facts.
[27]
The applicants rely on the "classic trinity" of the tort of passing off referred to in ConAgra v McCain Foods at 355 per Gummow J to assert that the claim of the passing of is made out in the circumstances of this case.
These being reputation, misrepresentation and damage:
"In Reckitt & Colman Products Ltd v Borden Inc [1990] UKHL 12; [1990] RPC 341 at 406, Lord Oliver of Aylmerton formulated the essential elements in a passing-off action without referring specifically to earlier authority. Now, Nourse LJ (in Consorzio del Prosciutto di Parma v Marks and Spencer plc [1991] RPC 351 at 368-369) has said that the formulations by Lord Diplock and Lord Fraser had not in his experience given the same degree of assistance in analysis and decision as 'the classical trinity' of (1) reputation (2) misrepresentation and (3) damage."
I note also in Wickham, Spender J's reference to what was said by Powell J in Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd[1981] 1 NSWLR 196 at [204]. In Wickham at 577:
"In Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196, Powell J, at 204, identifies what a plaintiff must establish to succeed in an action for passing off:
(a) that his goods have, or his business has, acquired a certain goodwill or reputation; (b) that the actions of the defendant have caused, or in all probability will cause, the ordinary purchaser of the plaintiff's goods, or the ordinary customers of the plaintiff's business, to believe that the defendant's goods are those, or that the defendant's business is that, of the plaintiff; (c) that, in consequence, the plaintiff has suffered, or is likely to suffer, injury in his trade or business.
In this regard, see also Henderson v Radio Corp Pty Ltd (1960) 60 SR (NSW) 576 at 591 per Evatt CJ and Myers J; and The Clock Ltd v Clock House Hotel Ltd (1936) 53 RPC 269 at 275."
The applicants also refer the Court to:
Hogan v Pacific Dunlop per Gummow J who found that in order for passing off to be maintained the Court had to be satisfied that there was a reasonable likelihood that a substantial number of persons would have formed the impression that Paul Hogan had some commercial association with the producers of an advertisement which featured a character similar to Mr Hogan (see [X] in this judgement above).
"... the adaptation of the traditional doctrine of passing off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with another or others."
In relation to the issue of reputation the applicants submit that Mr Fitzgerald and Hot Buttered have a strong reputation in the market for surfboards and surf-related products (see generally above).
In relation to the issue of misrepresentation the applicants assert that the respondents conduct (the use of Mr Fitzgerald's name and image on the impugned t-shirt) amounts to a misrepresentation to purchasers of surfboards and surf-related products that both or either of the applicants had produced the impugned t-shirts themselves, or alternatively had given approval for the yellow 33 South t-shirts to be sold by the respondents in return for financial benefit.
The applicants generally rely in this regard on evidence before the Court that Mr Fitzgerald is well-known in the surfing community, the knowledge in the surfing community of the relationship between Mr Fitzgerald and Hot Buttered, that Mr Fitzgerald has a recognisable surfing style and that many similar images to that appearing on the impugned t-shirt of Mr Fitzgerald have been published since 1975 (exhibits TF 27 to TF 33, TF 1; see also AAH at [5], ABF 1 at [7], ABF 2 at [6], ACP 2 at [3], ADE 1 at [4], ADE 2 at [4]-[5], ADML at [10], and various evidence given orally before Court).
The applicants' position in relation to the misrepresentation is that the impugned t-shirt depicted the name "Terry Fitzgerald" and the image of a surfer in circumstances where Mr Fitzgerald is a well-known and respected surfer and had a well-known surfing style as depicted in the photograph used on the yellow 33 South t-shirt.
Further, that there was evidence before the Court that purchasers of surfboards and surf-related products would be aware that Mr Fitzgerald, through Hot Buttered, sells surf-related t-shirts, some of which feature images of Mr Fitzgerald surfing, and are even in the same "retro style" as the 33 South t-shirts. In this regard the applicants referred to t-shirts in the "Hot Buttered Soul" range launched in 2005, which include t-shirts with prints from the 1970s of Mr Fitzgerald surfing. This range, given the evidence before the Court, was featured in a number of articles and advertisements in surfing magazines (see ATF 2 at [43]-[48], TF 18 to TF 22, AKC 1 at [4]-[9], KC 1 to KC 3, and AKC 2 at [3]-[4], and KC 6)
The applicants also submit that the evidence before the Court reveals that they suffered damage by the misrepresentation, and rely on evidence that the applicants and the respondents are in direct competition in the same market. The applicants submit that the respondents wrongfully appropriated Mr Fitzgerald's name and image such that the relevant class of consumers would, on seeing the 33 South t-shirts, conclude that Mr Fitzgerald and/or Hot Buttered endorsed or sponsored the t-shirts. They draw an analogy with what was found by the Court in similar circumstances in Radio Corporation Pty Ltd v Henderson[1960] NSWR 279 ("the Ballroom Dancers case").
That case involved applicants (plaintiffs) who were professional ballroom dancers, and the defendants who were a record producing company which used without consent a photograph of the applicants dancing for a record cover. The defendants in that matter had never heard the applicants. Nonetheless, the Court held (at 285):
"... the wrongful appropriation of another's professional business reputation is an injury in itself, no less in our opinion than the appropriation of his goods or money. The professional recommendation of the respondents was and still is theirs to withhold or bestow at will. But the appellant has wrongfully deprived them of their right to do so and of the payment or reward on which, if they had been minded to give their approval to the appellant's record, they could have insisted. In our opinion it is idle to contend that this wrongful appropriation is not an injury to the respondents. It is as much an injury as if the appellant had paid the respondents for their recommendation and then robbed them of the money."
In addition the applicants rely on:
The Hogan v Koala Dundee case where the respondents in that case were found to have engaged in the tort of passing off (and contravened s.52 of the Act).
Fido Dido. This case involved applicants who were in the business of licensing the "Fido Dido" image in relation to its use on garments. The respondents advertised and offered for sale garments which were said to be deceptively similar to the Fido Dingo range. The Court held that the Fido Dido character had acquired a sufficient reputation and goodwill in Australia to be capable of being damaged by passing off.
The respondents submit that the claim of passing off is "subsumed in the s.52 claim", and rises or falls with that action, save as to the test as to who must be affected by the impugned conduct. The respondents submit that a plaintiff in a passing off action has to establish that a substantial number of persons constituting a section of the public have suffered on account of the passing off, and that the evidence in this case does not support such a finding.
First, I should note that I agree with the applicants that the respondents have provided no authority for the proposition stated in written submissions that "a plaintiff in a passing off action has to establish that a substantial number of persons constituting a section of the public have suffered on account of the passing off". I agree that this is not a correct characterisation relevant to this tort. I note what was said in this regard in ConAgra Inc v McCain and the Ballroom Dancers case. I note further in this regard the applicants reference to Erven Warnink BV v J Townend & Sons (Hull) Ltd (Advocaat case)[1980] RPC 31 (HL) (at 93) and the five characteristics identified in that case which must be present in order to create a valid cause of action for passing off:
"(1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that it is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."
(This statement also applied in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd(1980) 32 ALR 387, and Moorgate Tobacco.
In the current case, I am satisfied that the applicants' action for passing off is made out. Central to this tort is the false representation that, relevantly, the yellow 33 South t-shirt is somehow connected with Terry Fitzgerald and/or Hot Buttered. In the current case, the depiction of Mr Fitzgerald's name and well-known image on the impugned t-shirt did misrepresent (with reference to the evidence and issues identified about) to the ultimate purchasers of surfboards and surf-related products, of which the t-shirts are a part, that Mr Fitzgerald and/or Hot Buttered had either produced the t-shirts or had given approval for their production and sale in return for some financial or commercial benefit.
The evidence is such that Mr Fitzgerald and Hot Buttered have a reputation in the market for surfboards and surf-related products of which t-shirts are a part, and there is no question that the misrepresentation was made by 33 South in the course of trade. The evidence also is clear that Mr Fitzgerald and Hot Buttered and 33South were all engaged in the market of selling surf-related products, which included "surfing" t-shirts, including those depicting "vintage" scenes. In that sense the applicants and the respondents are in direct competition in the same market.
I note in this regard, in particular, what was said in circumstances contrary to the current case in Wickham. While the applicant in that case was successful in showing a contravention of ss.52 and 53 of the Act (after the termination of an agreement between the parties in that case), but was not successful in an action for passing off. At 577 the Court said:
"The difficulty for the applicant is that she has never sold swimming pools, and has never had a business of selling swimming pools. She has endorsed and promoted the pools of APB. She can look to the Trade Practices Act 1974 to protect the capacity she has to exploit her reputation as a champion swimmer, but she has never had a trade or business of selling swimming pools or swimming pool kits. It is not possible, therefore, for another person to pass off their trade or business as her trade or business."
In the current case, the parties were both engaged in the business of selling surf-related products, including t-shirts, and it is therefore possible for 33 South to pass off the production and sale of the relevant yellow t-shirts as being that of Mr Fitzgerald or Hot Buttered in circumstances where they were also in the same commercial market.
The applicants have been successful in showing a breach of s.52 of the Act, and a contravention of sub-ss.53(c) and (d) of the Act, and have been successful in making out the claim of passing off in relation to the respondents.
[28]
The applicants, in light of the findings of the contraventions of ss.52, and sub-ss.53(c) and 53(d), and the tort of passing off, seek injunctive relief that the respondents be permanently restrained from selling, offering to sell or keeping for the purposes of sale without licence, any products that depict the name of Terry Fitzgerald, the whole or a substantial part of any photograph of Terry Fitzgerald, and any name substantially identical with, or deceptively similar to, the name of Terry Fitzgerald. The respondents make no direct submission in relation to this issue.
Section 80 of the Act provides, inter alia, that if conduct that contravenes a provision of Part V of the Act, and the Court is so satisfied, injunctive relief may be granted.
In all, given the findings set out above, it is appropriate that the orders relating to injunctive relief sought by the applicants are made, and I propose to make orders as applied for by the applicants.
[29]
In addition, given the contravention of the relevant sections of the Act, and the applicants successfully establishing passing off, the applicants also seek damages under the following headings:
Loss of royalties of at least $6,000.
Loss of opportunity of at least $20,000.
Loss of reputation of at least $20,000.
The applicants referred the Court to s.82 of the Act to submit that the respondents are liable to either applicant for "loss or damage" suffered by the misrepresentation made, at least, in contravention of s.52, and rely on Poseidon Ltd & Sellars v Adelaide Petroleum NL[1994] HCA 4; (1994) 179 CLR 332 ("Sellars v Adelaide Petroleum") at 349:
"... where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages."
[30]
(Also applied in the Talmax v Telstra (the Kieren Perkins case) in assessing loss of opportunity (at 452).)
[31]
The applicants seek an amount of at least $6,000 under this heading.
The applicant's arguments are:
Hot Buttered makes considerable income licensing its trademarks internationally (see ATF 2 at [12] and AE 2).
In determining the size of the royalty fee that should have been paid to Hot Buttered for the use of Mr Fitzgerald's name and image, regard should be had to:
(a) 33 South's agreement to pay Surfing World magazine a royalty fee of 10% of the wholesale price of each t-shirt produced in the "Surfing World" range of t-shirts. (The percentage was confirmed by Mr Jones in evidence before the Court. I note also RE 3.)
(b) In relation to the range of t-shirts, of which the impugned yellow 33 South t-shirt was a part, 33 South agreed to pay to the publisher of "Tracks" magazine 12.5% of the wholesale price of each t-shirt. (This was also confirmed by Mr Jones in evidence before the Court.)
The applicants submitted that in light of the above, an appropriate royalty fee of 12.5% of the wholesale price of each t-shirt, should be applied, and provide a calculation based on $27.50 as being the price charged for each shirt (with reference to AAJ 1 and AJ 7). The applicants therefore seek an amount by way of royalty that Hot Buttered should have been paid for each 33 South t-shirt at $3.43 per t-shirt.
The respondents made no submissions on this particular issue.
In relation to the number of t-shirts to which this unit price should be applied, the applicants take issue with Mr Jones' assertion (I note AAJ 1 at [10]) that in all, 350 units of each t-shirt in the range, that is of the 10 selected designs, were manufactured and sold, should not be accepted, and invite the Court to find that a larger number of the impugned t-shirts were produced and sold in the 10 months from November 2006 to the date of the hearing before the Court. This is an extrapolation of the amount of 350 units of the impugned t-shirt which was delivered in November 2006, and in respect of which there appears to be no issue between the parties. The applicants seek an amount of about $6,000.
The applicants referred to the Court to, and invite the Court, to draw from the following in support of their submission:
That the "invoice" for November 2006 from of the supplier of the t-shirts "suggests" that further consignment orders were planned. The applicants refer to AAJ 2 at [7], and the reference to AJ 7 at page 1 (a relevant invoice) which states: "kept USD2,000.00 deposit for coming order" (RE 6).
The applicants argue that it "appears likely" that given the respondents' evidence regarding popularity of the t-shirts that 33 South would therefore have followed through with its original plan to order more consignments of the t-shirts. (As to popularity, see APA at [2], AMB at [20], and ADC at [5]-[7]. The applicants also rely on evidence given in cross-examination by Mr Jones: "one of the best-selling categories I've had in my business".)
The applicants also assert that it "appears likely" that 33South "would have" ordered more of the 33 South t-shirts depicting Mr Fitzgerald's name and image because his assertion that an equal number of each t-shirt in the range was produced and sold is inconsistent with what was said to be his earlier admission in a telephone call in January 2007 with Mr Fitzgerald that the yellow t-shirt was the best-selling t-shirt in the range. It was also inconsistent with the focus on this t-shirt in 33 South's advertisements in Tracks magazine, and on its website.
The applicants also rely on the assertion that the t-shirts were advertised in the April and May 2007 editions of "Tracks" magazine, and submit that given the popularity of the t-shirts and that the original consignment in November 2006 comprised only 350 units of each type of t-shirt that it "appears likely" that at least by December 2006 33 South would have sold all of the t-shirts in the original consignment, or at least the 350 yellow t-shirts, and that therefore by at least April/May 2007 33 South had obtained further consignments of at least the yellow 33 South t-shirt.
On the first day of the hearing in this matter before the Court that the respondents' Counsel informed the Court that 33 South had spent "$15,000 on freight bills in respect of the t-shirts", and that "this alone suggests more consignments were ordered".
The applicants also submit that the business records put forward by Mr Jones in support of the assertion that only 350 units of each t-shirt of the 10 in the range had been manufactured and offered for sale, should not be accepted on the basis that the evidence before the Court reveals that Mr Jones' business practice was not to keep accurate business records, and in particular not to disclose all sales made in his business records. In this regard, the applicants rely on the following:
(a) That in comparing Mr Jones' evidence with that of Mr Lees regarding the licensing agreement with Surfing World and the disclosure of sales in relation to the Surfing World t-shirts, and in particular Mr Jones' admission that he deliberately did not disclose to Surfing World sales made by 33 South t-shirts to Underdog Music or Cotton Wool, and that he continued to sell stock after the agreement was terminated, and that his "paperwork" in respect of sales was not "absolutely perfect", support the respondents' proposition in this regard. The applicants referred to the evidence of Mr Lees - ADML at [13]-[15] and DML 3 to that evidence.
Overall the applicants' position is that given the factors set out above, and given their submission that Mr Jones was not a truthful witness, the Court should find that more than 350 units of the impugned t-shirt were manufactured and offered for sale and sold, and therefore award the applicants damages in an amount in excess of the amount equivalent to royalties on 350 units alone.
In response the respondents' written submissions are brief (see [93]-[95]). They are:
That the applicants claim "all but alleges fraud and/or contempt on the part of Mr Jones", and if that claim was to be made it should have been the subject of at least "detailed cross-examination."
The applicants note that 3,500 units of the t-shirts were produced in September 2006 to sell in the period October to Christmas 2006, and "the applicants might infer that the original order was rushed to Australia by air at high cost". In this latter regard the respondents' submissions make reference to Mr Jones' evidence at AAJ 1 at [10].
On the evidence before the Court, it is clear that at least 350 of the impugned yellow t-shirts were manufactured or caused to be manufactured, and offered for sale by the respondents. It is appropriate given the contraventions of the Act set out above that royalty payments in respect of these t-shirts be made by the respondents to the applicants.
The issue for consideration, however, is whether damages for loss of royalties should be ordered in an amount in excess of that equivalent to and relevant to 350 units of the t-shirts only.
I note generally the guidance provided by authorities such as Marks v GIO Australia Holdings Ltd(1998) 196 CLR 494; [1998] HCA 69 per Gummow J (at [95]) notation that one of the elements relevant to considerations pursuant to s.82 of the Act is that the measure of compensation is "'the amount of' the loss or damage sustained". Further, in Finucane v New South Wales Egg Corporation(1988) 80 ALR 486, that once the entitlement to recover damages on the part of the applicant has been established the Court has "the obligation to award the amount which quantifies the applicant's actual loss".
Specifically, in relation to the respondents' submissions that the claim by the applicants alleges fraud and/or contempt on the part of Mr Jones, to the extent that the allegation of "contempt" relates to perhaps a subpoena in these proceedings, and what was said to be the non-production of relevant documents, that issue was a live issue before the Court and it was available to be pressed by the applicants. However, in relation to the allegation "of fraud", I note that in Kenny & Good Pty Ltd v MGICA (1992) Ltd(1997) ATPR 41-576 the Court set out as one of the relevant propositions in considering the assessment of damages pursuant to s.82 that the principles applicable to actions for deceit were closely analogous, and provided a useful guide (noting of course the caution referred to about the application of rigid rules where assessing damages).
Further, the respondents' submission that the applicants may infer that the original order (of 350 units) was rushed to Australia by air at high cost, to the extent that it relies on Mr Jones' evidence given by way of affidavit (AAJ 1 at [10]), I cannot see that Mr Jones' evidence: "in about September 2006 33 South produced (through a factory in China) about 350 units of each of the 10 selected designs (3,500 units in total) to sell 'in season' from October until Christmas 2006", can lead to any safe inference that this order was rushed to Australia by air at high cost, let alone that this is what actually happened. It was always open to the respondents to have put evidence of this before the Court.
In relation to the applicants submissions:
I agree that the "suggestion" or "likelihood" relied on by the applicants is feasible.
However, I have some difficulty with those pieces of evidence which the applicant seeks to rely on in this regard. For example, Mr Adair (at [2]) professing a "happiness" to stock "Tracks t-shirts" from November 2006, clearly relates to the consignment at that time which the respondents acknowledge took place. At best, Mr Adair's evidence goes no higher than expressing approval of the t-shirts as a saleable item. But that this may have converted into future orders for t-shirts, in the absence of anything else before the Court, makes even the "likelihood" asserted by the applicants appear remote. (Noting also that very clearly Mr Adair's evidence links the popularity of the t-shirts to Tracks which he considers to be an iconic magazine, rather than Mr Fitzgerald.)
Mr Barnes' evidence (AMB at [20]) is a factual account of the number of 33 South t-shirts sold. In all, his evidence is that he sold through his shop about 120 Tracks t-shirts (in context, plainly, the full range) of which 14 were the yellow impugned t-shirt, in a period from October 2006 to 24 August 2007. The Court has no evidence before it to assess whether the figures given by Mr Barnes' relevant sales over a 10-month period mean that the t-shirts were popular, such as to imply a likelihood of further orders being made.
Again, Ms Chapman's evidence (ADC at [5]-[7]) is a factual account about how she came to order the Tracks t-shirts. There is nothing about their popularity or otherwise in this part of her evidence.
Further, while it is clear that in cross-examination Mr Jones plainly said what the applicants report him as saying, the reference to "best-selling categories" was plainly a reference to the "Tracks" t-shirts range as a whole, and clearly not just to the impugned yellow t-shirt. On this evidence, it is just as "likely" to say that Mr Jones may have moved to order the manufacture of further t-shirts, but given other evidence as to the comparative lack of popularity of the "yellow" t-shirts in comparison with other "colours" in the range, it may be just as likely that he could have omitted the yellow t-shirt along with other "colours" in the range which did not sell as well, in any future orders.
In the context of consideration before the Court as to whether the respondents had provided, relevantly, all financial statements subject to subpoena, Counsel for the respondents did make reference to a number of documents that should have been provided in response to the subpoena, but had only been recently "discovered" in circumstances where it appears Mr Jones and a former partner had dissolved their business relationship and that one of those documents related to the cost of freight of transferring "the material" from China. A figure of "$15,000" was mentioned.
This document however was not ultimately put before the Court. Following obtaining instructions, the applicants' Counsel submitted that given that in matters of this type the applicants had the option of electing damages or an account of profits, and that the subpoenaed material was of relevance to electing an account of profits, and given that the instructions were to pursue damages rather than account of profits this material was no longer relevant.
It is correct of the applicants to submit that the respondents offered no real answer in their submissions to the applicants' contentions that they are entitled to royalties of at least $6,000 in respect of the impugned t-shirts. Subject to the qualifications set out above, I agree with the applicants' submissions in this regard.
In addition, a strong factor in support of the applicants' position is that Mr Jones' (unsatisfactory) evidence relevant to this issue about his keeping of accurate business records and the disclosure of sales made in those records, did support the submissions made by the applicants now in this regard. Contrary to the respondents' submissions these issues (not necessarily alleging fraud and/or contempt) were put in detail to Mr Jones in cross-examination. Surprisingly, the respondents' submissions are silent on anything further in this regard.
In all, therefore, while I note that damages must be assessed in light of an amount which quantifies actual loss, the respondents have provided no real answer to what the applicants say was the actual loss of royalties in this regard. I propose therefore to make an order in the amount sought by the applicants in this regard.
[32]
The applicants rely on Talmax v Telstra to argue similarities with the current case and to seek an award of an amount for loss of an opportunity to exploit a commercial advantage, that is, a loss of opportunity in the amount of $20,000.
In Talmax v Telstra the applicant was successful in establishing misleading and deceptive conduct against the respondents in that matter, which involved an advertisement which used his name and image. The claim for damages was based on the proposition that such publication diminished the applicant's opportunity to commercially exploit his name, image and reputation, and that in particular the misrepresentation of an association between the parties either eliminated or diminished the prospect of an association between the applicant and others where his name, image and reputation could be commercially exploited.
In that case the applicant was awarded damages and the loss of opportunity in the amount of $15,000 even in circumstances where no attempt was made to prove a particular lost opportunity. The applicants rely in particular on what was said (at 452):
"Loss of an opportunity to exploit commercial advantage is 'loss or damage' within s 82(1) of the Trade Practices Act, and so, logically, is diminution of such opportunity. What is called for in the present circumstances is an assessment of the possible extent to which Mr Perkins' commercial advantage was generally diminished and of the possibility that he lost the chance of a particular opportunity of exploitation of that advantage."
The applicants argued that in the current case there is evidence that Mr Fitzgerald through Hot Buttered has received substantial amounts where he has permitted the use of his name, image and reputation. The applicants referred to the evidence of Mr Fitzgerald in this regard. (See ATF 2 at [11], [12] and [16]. See also AE 2 in this regard.)
The applicants submit that an amount comparable to the amount awarded, in 1997, of $15,000 in Talmax v Telstra for a loss of opportunity to exploit commercial advantage is in today's terms the equivalent of $20,000, and that that should be the amount awarded by this Court in this regard.
The respondents reply is that:
The evidence of Mr Fitzgerald cited by the applicants does not disclose that he had received any payment from Hot Buttered in respect of the permitted use of his name, image and reputation. The respondents referred to the evidence provided by Mr Fitzgerald (see ATF 4 at [9]-[11] and the annexures relevant to that evidence) to say that an inference should be drawn that Mr Fitzgerald had assigned his interest in the use of his name to Hot Buttered at some time before 14 December 2005.
Hot Buttered's "profit and loss statement" (AE 2) was admitted for the limited purpose of establishing that non-English-speaking people might purchase a Tracks t-shirt in Australia, and cannot therefore be relied upon to establish loss of opportunity in this regard.
There is no evidence before the Court that Mr Fitzgerald was to receive payment for the permitted use of his name, image and reputation, or that he would receive payment for his own use. The respondents emphasise that Mr Fitzgerald had assigned such interest to Hot Buttered.
In any event there was no damage accruing to Mr Fitzgerald for the loss of opportunity.
In relation to AE 2, this document was the subject of objection by Counsel for the respondents, but this objection was withdrawn on the basis that the document was tendered in support of the arguments as to who made up the relevant class of persons to these proceedings.
Strictly, the respondents are also correct in saying that Mr Fitzgerald's evidence relied on by the applicants in this regard does not disclose that he received any payments from Hot Buttered in respect of permitted use of his name, image and reputation. But this does not dispose of this issue.
However, I do not agree with the respondents that Mr Fitzgerald's evidence (see ATF 4 at [9]-[11]) supports an inference that he signed over his interest in the use of his name to Hot Buttered "or some other person or entity". (I note that this evidence was admitted subject to relevance, and I consider it only in the light of the respondents' reliance on it now).
In any event, the evidence is that Mr Fitzgerald has authorised the use of his name 'in some circumstances", and does not stand for the proposition, as put forward by the respondents, that there was some general assignment of his interest in his name to Hot Buttered or some other person.
In any event, what the respondents' submissions fail to appreciate, to the extent that they appear to argue a distinction between Mr Fitzgerald and Hot Buttered and the loss of opportunity is that of Hot Buttered, and not necessarily that of Mr Fitzgerald alone, is, as the applicants submit, immaterial, because both are applicants in the proceedings.
Further, the evidence before the Court has clearly established a clear commercial relationship between Mr Fitzgerald and Hot Buttered, with the latter being the vehicle (to a large extent, but not exclusive) through which Mr Fitzgerald sold surfboards and surf-related products featuring his name and image (and signature), and relying on this name and image (see ATF 1 at [7]-[9], [14], [16] for the use of Mr Fitzgerald's name on Hot Buttered t-shirts, and as to the relationship between the two applicants in a commercial setting see ABF 1 at [5]: "many Hot Buttered products are marketed by reference to Terry Fitzgerald"; ABF 2 at [3]-[4], ADE 1 at [3]: "... I became aware of the Hot Buttered brand and came to know Hot Buttered merchandise as Terry Fitzgerald's merchandise. In my mind, Hot Buttered is Terry Fitzgerald"; AKC 1 at [3], [9], [11]; AKC 2 at [5], [6]; ADML at [6]).
The applicants' position is that the respondents have provided no answer to their contention that they are entitled to loss of opportunity to exploit a commercial advantage (of at least $20,000). Implicit in the applicants' position is that there is advantage to be found in a name of repute in a business context, and that this is capable of damage by a misleading or deceptive representation that is a contravention of s.52 of the Act.
In this context, I understand the applicants to argue that in the circumstances of this case there exists the damage to Mr Fitzgerald's (and by association Hot Buttered's) reputation in the breach of s.52 by the respondents in the sense of a diversion of sales away from them (see Sellars v Adelaide Petroleum). I understand the applicants to be seeking redress for the loss of opportunity arising out of the conduct of the respondents which I found to be in breach of s.52 of the Act (and for that matter sub-ss.53(c) and (d) of the Act).
The respondents caused to be manufactured and offered for sale a product (the impugned yellow 33 South t-shirt) which used the name and image of Mr Fitzgerald without his licence or authority. In these circumstances, there was in my view a loss of opportunity to Mr Fitzgerald (and Hot Buttered) to exploit Mr Fitzgerald's reputation, a reputation which, on the evidence, has some high level of commercial value (particularly in the relevant market) through the sale of the impugned t-shirts carrying his name and image, but without his authority.
As to the exact amount, the applicants have not attempted to prove a particular loss of opportunity (given Talmax v Telstra this is not necessary). In view of such authorities as Talmax v Telstra, I agree with the applicants that an amount of $20,000 is in the circumstances a best estimate of the value of the opportunity lost to Mr Fitzgerald to exploit his reputation, an exploitation which the evidence shows he has otherwise pursued commercially in the manufacture and sale of surfboards and surf-related products (including t-shirts) for many years. In view of this I will make the order as sought by the applicants.
[33]
The applicants also seek an amount of $20,000 on the basis of loss of reputation as a result of the conduct of the respondents.
The applicants submit that Mr Fitzgerald's and Hot Buttered's name and image have been damaged by association with:
Products sold at shops that were not shops dedicated only to selling surf clothing and surf-related products (see ATF 4 at [4]).
Products of a lower quality than the applicants' products (that is, that the 33 South t-shirts were of a lesser quality).
The applicants referred the Court to Surge Licensing Inc v Pearson[1991] FCA 216; (1991) 21 IPR 228, a case which concerned the reproduction on t-shirts of the characters "Mutant Ninja Turtles". They were shown smoking marijuana on the t-shirt. The applicants in that case held exclusive rights to market "Teenage Mutant Ninja Turtle products". The applicants were awarded damages of $10,000 for loss of reputation, even in circumstances where there was no evidence that anyone had actually been misled or deceived, and this activity only took place for a short period of time.
The Court found (at 233-234):
"The promotion of an illegality under the guise of someone else's products would undoubtedly have the potential to damage that person's reputation .... Assessment of damages of this kind is essentially intuitive. Having regard to the amounts awarded in other cases and doing the best I can in this regard, I fix damages in the sum of $10,000 and order that the respondents pay that sum to the applicants."
In relation to the sale of the impugned t-shirts bearing Mr Fitzgerald's name and image at retail outlets other than "core surf shops", the applicants submit that the use of Mr Fitzgerald's name and image without permission on a t-shirt sold in such shops, which are nonetheless located in beachside areas that persons in the relevant class (surfers or those who purchase surf-related products for surfers) are likely to visit, does affect Mr Fitzgerald's reputation in a negative way. The applicants rely on Mr Fitzgerald's evidence (ATF 2 at [55], and ATF 4 at [5]).
The evidence relied on, in effect, is that "the retail outlet concerned is not of the type or image that best represents my name or credibility" (ATF 2 at [55]), and also that "the use of my name and image without permission on a t-shirt that is sold in shops other than surf shops in beachside areas that surfers are likely to visit affects my reputation in the surfing industry negatively" (ATF 4 at [5]).
The applicants also submit that a number of the shops to which Mr Jones sold 33 South t-shirts are in areas close to the beach, and therefore are likely to be visited by surfers, are not core surf shops (the evidence of Mr Jones and Mr Barnes), and that the loss of reputation is "amplified" because of the location of the shops, and that surfers would be aware that t-shirts featuring Mr Fitzgerald's name and image are being sold in non-core surf shops. The applicants also submit that at least one of these non-core surf shops in this regard targets surfers (the evidence of Mr Barnes).
The respondents submissions are silent on this issue.
Notwithstanding this I have some difficulty with the applicants' argument in this regard. It is clear that Mr Fitzgerald has some reputation and (positive) notoriety in the surfing world in Australia. The evidence before the Court establishes the recognition level of his name and image.
The difficulty that I have with the applicants' argument in regard to this issue, however, is the absence of any explanation as to why Mr Fitzgerald's reputation would be adversely affected by the sale of t-shirts bearing his name and image in shops, other than those that deal exclusively with surf-related products.
In addition to there being no explanation by the applicants, there was no evidence whatsoever put before the Court that members of the relevant class, that is surfers and those who purchase surf-related products for them, would form an adverse view of Mr Fitzgerald's reputation simply because they would have seen a t-shirt bearing his name and image in an outlet that was not exclusively devoted to selling surf-related products. There was no evidence before the Court that these outlets were of such ill repute, or of the type of "bargain" or "cheap" selling shops or otherwise, such that it would create an impression that Mr Fitzgerald was associated with products sold in an outlet that may be described as "down market".
In my view, the weakness in the applicants' argument is revealed if one has regard to the argument being applicable to the sale of such t-shirts in an "up-market Department store", which could also be described as a "non-core surf shop". There is no evidence before the Court (let alone any evidence from which the Court could draw any such inference) that surfers would think any less of Mr Fitzgerald (or those who buy surf-related products on their behalf) simply because a t-shirt bearing his name and image was offered for sale in a "non-core" surf shop. In my view, there is no relevant distinction to be drawn between Mr Fitzgerald and Hot Buttered's focus on producing surf boards and surf-related products (to the exclusion of non-surf related products), and the sale of such items in what have been described as "non-core surf shops".
Nor is there evidence before the Court that Mr Fitzgerald and Hot Buttered only sell their products (or that products bearing Mr Fitzgerald's name and image produced or licensed by other businesses) in "core surf shops". (This may be the case but the applicants have not referred the Court to any evidence in this regard.)
Ultimately, I am not persuaded by the evidence relied on by the applicants in this regard that a loss of reputation is occasioned to Mr Fitzgerald simply by the t-shirts being offered for sale in "non-core" surf shops. Mr Fitzgerald's evidence, for example, that Ms Prenter found the impugned t-shirt on sale at a menswear outlet in Mona Vale and that "the retail outlet concerned is not of the type or image that best represents my name or credibility" (see ATF 2 at [55]) is unpersuasive in the absence of any other evidence. Mr Fitzgerald's evidence that "the retail outlet concerned is in the same shopping area as our own retail outlet Raised by Wolves" (at [55]) does not assist in this argument.
For the reasons set out above, I am not persuaded by the applicants' submissions in this regard, and would not make any order relating to the damages for loss of reputation in this regard.
The applicants, however, also rely on there being an effect on the applicants' reputation because of what they submit to be a difference in quality between the impugned 33 South t-shirts, and the quality of Hot Buttered t-shirts.
The applicants submit that Mr Fitzgerald's and Hot Buttered's reputation in relation to quality is properly measured by the quality of the Hot Buttered t-shirts, and that the presence in the market of 33 South t-shirts, and the effect that it has on those reputations, is measured by the difference between the quality of the respective t-shirts.
In this regard the applicants say that Mr Fitzgerald was the only witness who gave evidence about the difference in quality between 33 South t-shirts and Hot Buttered t-shirts (ATF 2 at [57]-[58], ATF 3 at [12], and evidence in cross-examination). (I should note that ATF 3 at [12] was admitted into evidence as Mr Fitzgerald's opinion and belief only.) The applicants submit that Mr Fitzgerald's opinion is based upon his experience, and that the 33 South t-shirts are of lower quality because they were made in China, are made of a lighter weight cotton than the Hot Buttered t-shirts, and that the "prints" appeared to use less colours.
The applicants submit that it is not in dispute that the 33 South t-shirts are made of lighter cotton than the Hot Buttered t-shirts (130 grams per square metre to 180 grams per square metre), and that Mr Jones gave evidence that the images used to create the prints on the 33 South t-shirts were low in quality because the Tracks covers that they came from were very grainy in appearance in the first place. (In this regard see ATF 3 at [12], AAJ 1 at [14], and Mr Jones' evidence in examination before this Court.)
The applicants also submit that the effect of the quality of the 33 South t-shirts on Mr Fitzgerald's reputation (as relevant in the relevant marketplace) is his concern to ensure that "his name and image are only used on good quality and innovative products" (see ATF 4 at [9]). The applicants pointed to an example of this as being in the agreement that Mr Fitzgerald has with the "Sole Surfer" where he agreed to endorse a range of footwear products which are described as quote "innovative". That Mr Fitzgerald has been selective about the company or person with whom he chooses to make an agreement is said to be exhibited with reference to the evidence of Mr Lees (see ADML at [12]).
In response the respondents submitted:
In reference to Mr Fitzgerald's evidence that he compared 33 South t-shirts with Hot Buttered t-shirts (see ATF 2 at [57]-[58], and ATF 3 at [12]), and that in his opinion in relation to the comparison "Hot Buttered products are of a higher quality", the respondents submit that Mr Fitzgerald gave no evidence of relevant expertise to be able to speak of "quality".
Mr Fitzgerald identified the weight of the cotton in the Hot Buttered t-shirts as being "150 and 180gms" (given in cross-examination), and about a "traditional surf shirt is 150-180gms", and that relatively speaking 33 South t-shirts were lighter than Hot Buttered t-shirts.
Mr Jones' evidence, which was unchallenged, was that cover art from the oldest editions of Tracks was selected to further enhance the vintage look, and that the relevant t-shirts were made from the highest quality 130 grams per square metre pure cotton, and finished with "an enzyme silicon and washed" to give the garment a very "soft hand feel", and to make the print fade even further to make it look like it was an original vintage garment from the actual era (see AAJ 1 at [14]-[15]).
Mr Jones gave detailed evidence concerning the production of cotton t-shirts (I understood it to be put in answer to Mr Fitzgerald's assertion that the 33 South t-shirts were of inferior quality because they were made in China), and that `production processes in China are "world-class", and that 33 South in production of its t-shirts always "sources" a long staple cotton which is "a fine quality category", and that ultimately the Tracks t-shirts produced in China were subject to "a rigorous approval process by Tracks magazine".
The respondents submit, given his academic studies and relevant experience, that Mr Jones is an expert in the field of design and production of clothing (although the respondents concede that he is not qualified as a Court expert in this matter), but that nonetheless on his uncontroverted evidence the Tracks t-shirts are made of high quality cotton, produced on high-quality machines and provide a sound basis for the assertion that the Tracks t-shirts are of high quality. The respondents also submit that that this is supported by other evidence before the Court given by Mr Barnes that the 33 South t-shirts that he sold were "very good quality shirts", and were better quality than his own t-shirts which he also sold in his shop.
By contrast the respondents submit that Mr Fitzgerald professed no expertise in the design and production of cotton clothing, but that in any event that the factors referred to in Mr Fitzgerald's evidence to assert that Hot Buttered t-shirts were of higher quality do not establish that conclusion.
In respect of the applicants' reliance on Mr Lees' evidence, I cannot see that it is relevant to the issue of quality. That Mr Fitzgerald may be selective with whom he chooses to enter into agreements is one thing, but the implication in the applicants' submissions that Mr Lees' evidence supports their arguments in relation to "quality" is not borne out by any plain reading of that evidence. Mr Lees gave evidence as to why Mr Fitzgerald withdrew from negotiations proposing the use of his name on Mr Lees' products.
Mr Lees' evidence is plainly: "the reason Terry gave for changing his mind was that he was trying to promote his own 'Hot Buttered' label and he saw authorising the use of his name and image on other t-shirts as a conflict of interest". There is nothing here to show that Mr Fitzgerald did not proceed with Mr Lees' approach to give his permission to use his image on t-shirts produced by Mr Lees for any reason relating to quality. The reason plainly had to do with what he perceived to be a "conflict" with his desire to promote the Hot Buttered brand.
I also have some difficulty with the applicants' submission and reliance on what was said to be Mr Jones' admission that the images he used to create the prints on the 33 South t-shirts were low in quality because the "Tracks covers they came from were very grainy in appearance", to support their argument that the 33 South t-shirts were of lesser quality than Hot Buttered t-shirts.
While some aspects of Mr Jones' evidence did give rise to some doubt, Mr Jones' evidence in relation to the particular look that he wanted to give to the range of t-shirts of which the impugned t-shirt was a part was in my view clear and plausible. He sought to create a "vintage look". He was clear in his evidence that his intention was to portray that what was being depicted was from a "magazine cover". That the relevant artwork was "newspaper print from the 1970s", and the prints "were very grainy anyway", was consistent with the look that he wished to project. It is in my view a misrepresentation of Mr Jones' evidence in this regard (evidence which I found plausible), to suggest that because the images used to create the 33 South t-shirt prints were "low" in quality, that somehow meant that the t-shirts themselves were low in quality. I do not accept this submission made by the applicants.
First, while I have some difficulties with Mr Jones' evidence in other respects, his evidence in relation to this issue was generally given in a straightforward manner (somewhat in contrast to the manner in which he gave some other evidence), and was highly plausible, noting that his unchallenged experience and expertise in matters of design and manufacture, and the attributes of the relevant of fabric used, in the manufacture of t-shirts.
The applicants rely on the submission that Mr Fitzgerald was the only witness who gave evidence as to the comparative difference in quality between the impugned t-shirt and the applicants' t-shirts. I do not see this as being determinative of this issue. The applicants seek damages on the basis of what was said to be the effect on the applicants' reputation of the quality of the 33 South t-shirts. I do not see a comparison of the relative quality of both sets of t-shirts as being ultimately determinative of this issue. Even if the applicants' assertion can be made out that the Hot Buttered t-shirts are of "better" quality than the impugned t-shirt (and in this regard I prefer Mr Jones' evidence as being stronger, although in saying this I do not reject Mr Fitzgerald's evidence, but accept on balance the strength of Mr Jones' evidence), the applicant would still not succeed.
In my view the issue as to the effect of loss of reputation, in relation to quality, is whether the impugned t-shirt was of such poor quality that the applicants' perceived association with it would affect their reputation. Even on the basis, for the sake of argument, of accepting the applicants' perception of the higher quality of the Hot Buttered t-shirts, this does not mean that simply by this comparison with the impugned t-shirt that it was of poor quality (even though it maybe said to have been of lower quality).
There is a distinction to be drawn between a comparison of "lower" quality and "poor" quality. In my view, for the applicants to have succeeded on this issue the Court would need to be satisfied that the impugned t-shirt was of such quality (poor or otherwise) that there would have been an effect on the applicants' reputation. This is not made out on the evidence. Importantly, Mr Fitzgerald's evidence in comparing the two products was not that the impugned t-shirt was of poor quality, but simply of "lower" quality to his own very "high" quality t-shirt. In all, what I gather from the relevant evidence is that even if Hot Buttered t-shirts were of higher quality than the 33 South t-shirt it was also of high quality, but even if of some lesser standard, nonetheless not such as to adversely affect the applicants' reputation.
For these reasons, and for the reasons immediately above, I do not accept the applicants' contention as to a loss of reputation and will not make an order as sought by the applicants in this regard.
[34]
In all, having found that by their conduct the respondents breached s.52, sub-ss.53(c) and (d) of the Act (and that the applicants were successful in their assertion of the tort of passing off), I am satisfied for the reasons given above, that the applicants are entitled to the injunctive relief that they seek, and entitled to some of the damages that they seek pursuant to s.82 of the Act. I note that the applicants did not pursue an account of profits, and nor did their submissions (both sets of written submissions) press any order as to interest.
[35]
In all, therefore, the orders that I propose to make in this matter:
The first respondent, by itself, its directors, officers, servants, agents or otherwise be permanently restrained from, in trade or commerce, and without the licence of the first applicant selling, offering to sell or keeping for the purposes of sale or offering for sale, products that depict any of the following:
(a) The name "Terry Fitzgerald".
(b) The whole or a substantial part of any photograph of the first applicant.
(c) Any name substantially identical with or deceptively similar to the name "Terry Fitzgerald".
The first respondent by itself, its directors, officers, servants, agents or otherwise be permanently restrained from, in trade or commerce, representing that any products sold or offered for sale by the first respondent or on its behalf is being sold by the first applicant or a company associated or affiliated with the first applicant or otherwise has the licence, sponsorship or approval of the first applicant or a company associated with the first applicants.
The first respondent by itself, its directors, officers, servants, agents or otherwise be restrained from reproducing or authorising the reproduction, without the licence of the first applicant, of the whole or a substantial part of any photograph of the first applicant.
The second respondent be restrained from being knowingly concerned in or a party to or from procuring any conduct of the first respondent prohibited by orders 1, 2 and 3 above.
The first respondent deliver up on oath within seven (7) days to the first applicant any material that would constitute a breach of these orders in the possession, custody or power of the first respondent, its directors, officers, servants and agents.
The respondents pay the applicants damages pursuant to s.82 of the Trade Practices Act 1974 set in the amount of $26,000.
The applicants have sought costs in these proceedings in the event that that they were to be successful. Neither party has made submissions on this issue. It is appropriate that the parties be given the opportunity to make such submissions on this issue should they choose to exercise it, at the handing down of this judgment.
[36]
I certify that the preceding three hundred and sixty-nine (369) paragraphs are a true copy of the reasons for judgment of Nicholls FM
Parties
Applicant/Plaintiff:
Fitzgerald & Anor
Respondent/Defendant:
33 South Pty Ltd & Anor [2008] FMCA 1132
Legislation Cited (2)
Practices Act 1974
Magistrates Court Act 1999
Cases Cited (60)
Fitzgerald & Anor v 33 South Pty Ltd & Anor [2008] FMCA 1132 (13 August 2008)
(b) The applicants also rely on Mr Jones' evidence - see AAJ 2 at [3], and the reference to AJ 3 and evidence given in cross-examination by Mr Jones before the Court to the effect that Mr Jones' evidence when questioned about Mr Barnes' evidence about the sale of 33South Surfing World t-shirts through his retail outlet, and Ms Chapman's evidence relating to Surfing World t-shirts, and the admission that under the agreement with Surfing World he was required to disclose sales and pay royalties on the t-shirts, and the admission that even though he had paid the licence agreement which was terminated he still regarded that the licence allowed him to continue to sell the t-shirts, but did not have to pay royalties.
(c) Mr Jones' explanation was that he owned the stock physically, that he paid for it, developed it and shipped it, and that therefore it continued to be his stock once Surfing World discontinued the ongoing relationship. That in these circumstances there was no licensing agreement for which a fee would then be paid.
(d) Notwithstanding also in particular his evidence that in response to a subpoena in these proceedings, Mr Jones was "sure" that he had intended to give an accurate figure of the yellow 33South t-shirts sold.
Given the evidence that the original consignment of 3,500 t-shirts (total of the range) was intended for sale for the season from October to Christmas 2006 (not disputed by the respondents) then advertisements for the sale of this range of t-shirts some four and five months later in April and May 2007, provided a strong basis for a finding that further consignments were in fact ordered and offered for sale.