HIT Entertainment Limited v Lodin

The Respondent has, in contravention of section 9 of the Fair Trading Act 1999 (Vic), engaged in conduct, in trade or commerce, that is misleading and deceptive or likely to mislead or deceive by selling or offering for sale goods which bear:

(a) one or more of the Bob the Builder Marks, which are not goods of the First Applicant; and/or

(b) one or more of the Thomas the Tank Engine Marks, which are not goods of the Second Applicant.

The Respondent has, in contravention of section 12 of the Fair Trading Act 1999 (Vic), in trade or commerce, in connection with the supply or possible supply of goods, made false representations by selling or offering for sale goods which bear:

(a) one or more of the Bob the Builder Marks, which are not goods of the First Applicant; and/or

(b) one or more of the Thomas the Tank Engine Marks, which are not goods of the Second Applicant.

The Respondent has passed off his goods as the goods of one or both of the Applicants, or as goods otherwise associated with one or both of the Applicants.

Judgment be entered in favour of the Applicants against the Respondent.

The Respondent, whether by himself, his servants or agents or otherwise, be restrained from infringing the Bob the Builder Marks.

The Respondent, whether by himself, his servants or agents or otherwise, be restrained from infringing the Thomas the Tank Engine Marks.

The Respondent, by himself, his servants or agents or otherwise, be restrained from making, importing, promoting, distributing, offering for sale or selling any goods or services under or by reference to:

(b) any name that is substantially identical with or deceptively similar to the name BOB THE BUILDER;

(d) any mark substantially identical with or deceptively similar to any of the Bob the Builder Marks

The Respondent, by himself, his servants or agents or otherwise, be restrained from making, importing, promoting, distributing, offering for sale or selling any goods or services under or by reference to:

(b) any name that he substantially identical with or deceptively similar to the name THOMAS THE TANK ENGINE;

(d) any mark substantially identical with or deceptively similar to any of the Thomas the Tank Engine Marks

The Respondent deliver up to the First Applicant all goods in the Respondent's possession, or in the possession of any servant or agent of the Respondent, which bear:

(b) any name that is substantially identical with or deceptively similar to the name BOB THE BUILDER;

(d) any mark substantially identical with or deceptively similar to any of the Bob the Builder Marks

The Respondent deliver up to the Second Applicant all goods in the Respondent's possession, or in the possession of any servant or agent of the Respondent which bear:

(b) any name that he substantially identical with or deceptively similar to the name THOMAS THE TANK ENGINE;

(d) any mark substantially identical with or deceptively similar to any of the Thomas the Tank Engine Marks.

The Respondent pay to the Applicants damages in an amount to be agreed and in default of agreement to be determined by the Court on the application of the Applicants such application to be made no later than 10 August 2006.

Leave is granted for all goods currently in the possession of the Australian Customs Service pursuant to seizure number V04/06376 to be destroyed.

Leave is granted for all goods currently in the possession of the Australian Customs Service pursuant to seizure number V05/08293 to be destroyed.

The Respondent pay the costs of the Applicants in this proceeding.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT 1 The applicants allege that the respondent has infringed their trade marks in relation to the well-known children's cartoon characters, Bob the Builder and Thomas the Tank Engine. They also claim that the respondent has passed off his goods as the applicants' goods and has engaged in conduct that is misleading and deceptive conduct or likely to mislead and deceive. The first applicant is a member of the HIT Entertainment group of companies and the second applicant is wholly owned subsidiary of the first applicant. 2 On 1 February 2006 the applicants commenced this proceeding by filing and serving an application and statement of claim. I am satisfied by affidavit evidence filed by the applicant that on 6 February the application and statement of claim were served on the respondent personally at 15 Shirley Street, Noble Park, Victoria. The application and the accompanying letter from the applicants' solicitors stated that the applicant should attend the Federal Court in Sydney on 7 March 2006. The letter also advised that if the respondent was unable to travel to Sydney he should approach the Victorian Registry of the Federal Court to arrange a video link. It gave the telephone number of the writer and the Victorian Registry. 3 On the Court's initiative the first directions hearing was moved from 7 to 14 March 2006 and the Court advised both parties in writing of the change. At the directions hearing on 14 March 2006 the respondent did not appear. Mr Teasdale, who appeared for the applicants, indicated that, based on the respondent's non-appearance, he would be filing a Notice of Motion seeking default judgment against the respondent under O 35A of the Federal Court Rules. The matter was stood over until 6 June for further directions or for hearing of the Notice of Motion should one be filed. 4 The Notice of Motion was filed on 25 May. It was personally served on the respondent on 26 May 2006. No appearance has been filed for the respondent and he again failed to appear. Although I had told the applicants at the directions hearing on 14 March that I would hear any notice of motion for a default judgment on 6 June, the notice of motion was stamped "for directions only". The motion was served on the respondent before the mistake was picked up. On 26 May the solicitors for the applicant wrote to the Court pointing out the problem and stating that on 6 June they would seek leave for the motion to be heard on that date. Copies of this letter were sent to the respondent by express post and by registered post. In the circumstances I saw no injustice to the respondent in hearing the notice of motion. I am satisfied that he was properly advised of the date and purpose of the hearing, which he ignored at his peril. 5 Order 35A applies where a party is in default, which is the case here; O 35A r2(2)(b). It permits the Court to give judgment against the respondent in default under r3(2)(c) and r3(2)(d). Speaking of O 35A r3(2)(c), in Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3], Heerey J observed: 'the rule does not require proof by way of evidence of the applicant's claim; rather that on the face of the statement of claim there is a claim for the relief sought and, of course, that the court has jurisdiction to grant that relief.' 6 I am satisfied that the conditions of O 35A r3(2)(c) have been met and that I am entitled to make the orders sought. However, the applicants have elected to proceed under O 35A r3(2)(d) and accept that, in accordance with the principles stated in Australian Securities Commission v Macleod (1994) 54 FCR 309 at 314, I must satisfy myself on the evidence before me (uncontested though it may be) that their claims have been made out and I am justified in making the orders sought. On 6 June, after hearing submissions made by Ms Gay, the solicitor for the applicants and considering the evidence to which Ms Gay took me I reached that level of satisfaction and made the requested orders. I said that I would provide reasons at a later date; these are my reasons.

The respondent's conduct 7 In their written submissions the applicants identify the offending conduct of the respondent as follows: '(a) the attempted importation, through his agent Bakhtyar Amani, of a range of clothing bearing the names "Bob the Builder" and "Thomas the Tank Engine" and related images in October 2004 … (b) the offering for sale and sale of children's clothing featuring the names "Bob the Builder" and "Thomas the Tank Engine", and images of more characters, in October 2004 … (c) the attempted importation of a range of clothing bearing the names "Bob the Builder" and "Thomas the Tank Engine" and related images in October 2005 … (d) the offering for sale and sale of children's clothing featuring the names "Bob the Builder" and "Thomas the Tank Engine", and images of those characters in May 2006…'

The applicants' evidence 8 The applicants have filed a number of affidavits in support of their claims. In addition to affidavits of service that I do not need to dwell on, they are: (a) affidavit of Craig Raymond Douglas, a licensed enquiry agent, sworn on 23 May 2006; (b) affidavit of Dani Muntz, Operations Manager for Nationwide Research Group Pty Limited, sworn on 24 May 2006; (c) three affidavits of Rebekah Frances Gay, solicitor, affirmed on 25 May, 5 June and 6 June 2006 respectively; (d) affidavit Joyce D Slocum, General Counsel and Executive Vice President of the HIT Entertainment group of companies, affirmed on 25 May 2006; (e) Luke Muntz, Field Agent for Nationwide Research Group Pty Limited, sworn on 26 May 2006. 9 I accept the evidence in these affidavits which, together, present a coherent picture of the relevant facts in this matter. This evidence has satisfied me that, for reasons given below, the applicants have made out their claims and that I am justified in making the orders sought.

Trade mark infringement 10 The first applicant is the registered proprietor of the following trademarks in respect of several classes of goods: 789198 (BOB THE BUILDER); 826787 (a graphic of Bob the Builder); and 826795 (a graphic including the words "Bob the Builder"). I shall refer to these trade marks collectively as the Bob the Builder Marks. 11 The second applicant is a wholly-owned subsidiary of the first applicant, and is the registered proprietor of the following trademarks in respect of several classes of goods: 618252 (a graphic including the words "Thomas the Tank Engine & Friends"); and 903053 (a graphic including the words "Thomas & Friends"). I shall refer to these trade marks collectively as the Thomas Marks. The first applicant is the licensee of the Thomas Marks in Australia. 12 The applicants claim that the respondent's conduct, which was not authorised by the applicants, infringed their trademarks. The statement of claim sets out detailed particulars of the claims which are supported by the evidence of Mr Douglas, Ms Dani Muntz and Ms Gay. Ms Muntz gave evidence that she had observed Mr Lodin at his stall in the Caribbean Gardens & Market in Scoresby, Victoria, offering the offending goods for sale. Ms Slocum's evidence supports the claim that the respondent's activity was not authorised by the applicants. Mr Douglas gave evidence to the same effect as Ms Muntz and identified the relevant goods as counterfeit because of their poor quality and general appearance. Ms Gay confirmed Mr Douglas's account. 13 Apparently, prior to October 2004, the applicants filed a notice of objection with the Australian Customs Service pursuant to s 132 of the Trade Marks Act 1995 (Cth) in relation to the importation of goods which have the Bob the Builder Marks and the Thomas Marks applied to them or in relation to them. In October 2004 the Customs Service notified the solicitors for the first applicant that pursuant to this notice it had seized two consignments of children's wear containing denim jackets, overalls, jeans and other clothing bearing marks identical to or substantially similar to the Bob the Builder Marks and the Thomas Marks. Photographs of the offending items were sent to Ms Slocum who identified them as counterfeit. In doing so she relied on the fact that the tags and labels were not consistent with the guidelines given to authorised users, the inferior quality of the merchandise and information obtained from the authorised clothing licensee in Australia. 14 The designated owner of these consignments was Bakhtyar Amani. The evidence of Mr Douglas establishes that the respondent identified Bakhtyar Amani as his cousin and admitted to using his cousin's name to try and get the consignment through Customs. Mr Douglas gave the respondent copies of two Notices of Consent to Forfeit Goods from Australian Customs in the name of Bakhtyar Amani. 15 On 20 October 2004 the solicitors for the applicants were notified that Mr Armani had forfeited the consignments. In October 2005 Customs seized two further consignments that contained similarly offending goods. Those consignments, which were addressed to the respondent, were also forfeited. 16 I am satisfied on the basis of this evidence that the claim of trade mark infringement is made out.

Passing off and misleading and deceptive conduct 17 The applicants also claim that the conduct referred to above involves passing off the respondent's goods as goods of one or both of the applicants as well as misleading and deceptive conduct in breach of the Fair Trading Act 1999 (Vic) ss 9, 12(e) & 12(f). 18 The first applicant claims to have established an Australian and an international reputation in: (a) children's programs and videos called "Bob the Builder"; (b) the character of Bob the Builder; and (c) merchandise including children's wear which is based on or depicts the characters in the "Bob the Builder" programs, including the character known as Bob the Builder. 19 The first and/or second applicants claim to have established an Australian and international reputation in: (b) children's programs and videos called "Thomas the Tank Engine"; (c) children's programs and videos called "Thomas & Friends"; (d) the animated character of Thomas the Tank Engine; and (e) merchandise including children's wear which is based on or depicts the characters in the "Thomas the Tank Engine " programs, including the character known as Thomas the Tank Engine. 20 These claims were supported by Ms Slocum's evidence. Ms Slocum has been General Counsel for the HIT Entertainment group since March 2001. She gave details of the responsibilities of that position which give her a detailed knowledge of the businesses of the applicants and also described the history of both characters. Her account of the history of Bob and Thomas showed that both characters have had wide exposure in a variety of media in Australia and the United Kingdom and that associated merchandise is sold throughout the world. 21 I am satisfied that the offer to sell or the sale by the respondent of goods that bear the Bob the Builder Marks and the Thomas Marks but which are not the applicants' goods and are not authorised by them involves: (a) misleading and deceptive conduct, or is likely to mislead and deceive consumers; (b) false representations that the goods have been approved by the applicants; and/or (c) false representations that the applicants have authorised the respondent to sell goods bearing the Bob the Builder Marks or the Thomas Marks. In the circumstances I am satisfied this conduct of the respondent causes damage to the applicants' reputations.

Relief sought 22 For the reasons given above I am satisfied that the necessary elements of each cause of action pleaded by the applicants have been made out and that it is appropriate that judgment be entered against the respondent pursuant to O 35A r3(2)(d). For the same reasons I am of the view that the applicants are entitled to the declarative and injunctive relief they seek. 23 I am conscious that injunctive relief should only be granted if there is a real likelihood that the respondent will persist in his unlawful conduct. I am satisfied that this criterion is satisfied here. The respondent has persisted in his attempts to import infringing goods for well over a year. Ms Dani Muntz states that as recently as 21 May 2006 she observed the respondent at the Caribbean Gardens & Market selling items bearing the Bob the Builder Marks and the Thomas Marks and two jackets purchased at that time were exhibited to her affidavit. 24 The applicants also seek an order that the respondent deliver up the counterfeit goods to them. I have found that the sale of such goods causes damage to the reputations of the applicants. Given the respondent's past behaviour I am satisfied that without this relief there is a real possibility that he will attempt to dispose of any goods currently in his possession. This would cause further loss and damage to the applicants and might well prompt further proceedings which should be avoided if possible. I am therefore satisfied that it is appropriate to make the order sought. 25 The applicants also seek an order that the respondent pay damages to be determined by the Court but would like some time to consider if they wish to pursue such damages. I am satisfied that damages are appropriate and am prepared to allow the applicants a reasonable time to consider their position on this issue. 26 Finally, there is no reason why costs should not follow the event in the usual way and therefore the respondent should pay the applicants' costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Solicitor for the First and Second Applicants: Shelston IP Lawyers

Counsel for the Respondent: The respondent did not appear

Date of Hearing: 6 June 2005

Date of Judgment: 8 June 2006