Hugo Boss Trade Mark Management GmbH & Co Kg v Sasalili Oxford Fia

Federal Court of Australia|2014-12-05|Before: Middleton J

INTRODUCTION 1 On 6 June 2014, the Court ordered that the Respondents pay the Applicant damages to be assessed for infringement of the Hugo Boss Trade Marks (as defined in the Statement of Claim), together with interest, or, at the Applicant's election, an account be taken of the Respondents' profits, together with interest. 2 The Applicant has elected that the Respondents pay the Applicant damages, including additional damages, together with interest. 3 The Applicant also sought orders that pursuant to r 40.02 of the Federal Court Rules 2011 (Cth) the Respondents pay the Applicant's costs from 5 September 2014 to 14 November 2014 being a total lump sum of $15,223.53. 4 In support of orders for damages and additional damages, the Applicant relied on: (c) the Affidavit of Matthew Peter Keighran sworn 3 October 2014; (d) the Affidavit of Lauren Jane Gore sworn 5 June 2014; and (e) the Second Affidavit of Lauren Jane Gore sworn 3 October 2014. 5 The Respondents have been served with copies of the orders made by the Court on 6 June 2014 and a later order made on 5 September 2014, and the Respondents have not contested the orders now sought by the Applicant. 6 Copies of the Keighran and both Gore affidavits were emailed to each of the Respondents on 4 October 2014 and were also personally served on each of the Respondents on 9 October 2014.

Compensatory Damages 16 The Respondents have had manufactured and offered for sale at the very least 11 different types of products, including men's, women's and children's clothing and hats, bearing the BOSSIT Mark (as defined in the Statement of Claim). Further, it appears that the Respondents' men's, women's and children's clothing and hats bearing the BOSSIT Mark were priced not inexpensively, the lowest price point being $20 for a children's t-shirt and the highest price point being $40 for a hat. Accordingly, I am satisfied that the Respondents have manufactured and offered for sale a not insignificant number of products bearing the BOSSIT Mark at non-inexpensive prices. 17 The Respondents have advertised and offered for sale products bearing the BOSSIT Mark by at least two means: (a) First, the infringing products were advertised, offered for sale and sold on the Respondents' Facebook Page which was visited, and subsequently "liked", by a significant number of consumers and which was operated by the Respondents for at least 10 months, including over the Christmas period. The Respondents also promoted and advertised on the Respondents' Facebook Page shipping of products bearing the BOSSIT Mark to Australian and international consumers. (b) Secondly, the infringing products were displayed, offered for sale and sold at stalls operated by the Respondents on three separate occasions over the Christmas period at markets at three different locations in New South Wales. Two of those markets (namely, the Fairfield and Blacktown markets) are regularly attended by many thousands of Australian consumers. 18 Accordingly, products bearing the BOSSIT Mark have, through the Respondents' Facebook Page and market stalls, received exposure to a significant number of Australian and international consumers over a non-insignificant period of time, crucially when consumer purchasing is at its highest due to the Christmas period. 19 The Respondents have disclosed that they purchased products bearing the BOSSIT Mark from at least two suppliers: (a) The Respondents disclosed on 12 July 2014 the name of an Australian supplier from who they claimed they had purchased all of their products and asserted that there was only one order for infringing products. The Respondents provided to Corrs Chambers Westgarth, solicitors for the Applicant, ('Corrs') an invoice from the Australian supplier dated 15 December 2013. (b) The Respondents then disclosed on 30 July 2014 the name of a Chinese supplier from whom they claimed to have purchased white and red hats bearing the BOSSIT Mark. The Respondents also claimed that the order from the Australian supplier above was their second order for infringing products. Corrs did not receive any documents from the Respondents which showed their purchase of the white and red hats from the Chinese supplier. Accordingly, the Respondents claimed that they only purchased a total of 35 products bearing the BOSSIT Mark in only two separate purchases, each from a different supplier. 20 However, the Respondents' Facebook Page showed before and after 15 December 2013 postings of photographs of products bearing the BOSSIT Mark that were different in type and colour from those disclosed by the Respondents on 12 and 30 July 2014, namely: (a) on 21 August and 23 October 2013 the Respondents posted photographs of a red and white hat bearing the BOSSIT Mark in what appeared to be a black embroidered form; (b) on 28 August and 29 September 2013 the Respondents posted photographs of white, red and yellow hats bearing the BOSSIT Mark in what appeared to be a black embroidered form; (c) on 29 September and 30 December 2013 the Respondents posted photographs of a pink women's t-shirt bearing the BOSSIT Mark in the form of a black transfer; and (d) on 29 September 2013 the Respondents posted photographs of a grey men's t-shirt bearing the BOSSIT Mark in the form of a black transfer. 21 The Respondents have failed to provide complete information as the Respondents have had manufactured and offered for sale products bearing the BOSSIT Mark, other than as disclosed by them. The failure by the Respondents to disclose these other products occurred despite requests made by Corrs on 3 and 16 July 2014 that the Respondents' disclosures needed to be completely accurate and entirely truthful. 22 Finally, I am satisfied that the Applicant has a strong image, reputation and brand recognition within Australia as a manufacturer and retailer of top-end products that are of an excellent standard and quality. Conversely, the Respondents' clothing and hats are inferior products because they appear to be cheaply manufactured and sold by means in which the Applicant would never engage (namely, at market stalls and on Facebook). I am satisfied that the presence of the infringing products in the Australian marketplace would significantly diminish the reputation and exclusivity of the Applicant's Hugo Boss Trade Marks (and the products to which those marks are applied by the Applicant) and tarnish the Applicant's brand because Australian consumers may choose not to purchase the Applicant's products if it is seen, as a result of the Respondents' conduct, that its brand is going down-market and its products are the subject of cheaper infringements.

Additional Damages 23 The Respondents have continually failed to comply with the Applicant's demands: (a) The Applicant caused two letters of demands to be sent to the Respondents in February and March 2014. The Respondents failed to comply with the demands by the deadline set out in each letter. (b) From on or about 4 March 2014 until 1 May 2014, Corrs continued on the Applicant's behalf to try to resolve the matter with the Respondents. This was undertaken through emails and telephone calls to the Respondents, during which the Respondents were provided with numerous extensions of the deadline for compliance with the demands. The Respondents also failed to comply with the demands by each of the extended deadlines. (c) On 1 May 2014, Corrs sent a further email to the Second Respondent stating that should the Respondents not comply with the Applicant's demands by the close of business on 2 May 2014, that the Applicant would issue court proceedings against the Respondents. Corrs did not receive a response to its 1 May email and subsequently issued proceedings on 2 May 2014. (d) On 3 May 2014, Corrs received an email from the Second Respondent which stated the following: "...I'm not in the mood or in the mind to do anything. [Y]ou can do whatever you wish take me to court lock me up when I'm in the right mind I'll get back to you". It was clear from the Second Respondent's email that the Respondents maintained that they were not going to comply with the Applicant's demands and that they were indifferent to the Applicant instituting court proceedings against them. 24 On the basis of the evidence before the Court, I am satisfied that the Respondents have a disregard for the Applicant's property rights in the Hugo Boss Trade Marks. 25 The Respondents' products are the same type of goods upon which the Applicant applies the Hugo Boss Trade Marks and both parties operate in the Australian retail clothing market. This makes the Respondents' infringement particularly insidious and in need of deterrence because their conduct has the potential to damage the Applicant's general image, reputation and brand, to damage Australian consumers' perception of the Applicant's brand, to damage the Applicant's market position in Australia as a manufacturer and retailer of products of excellent standard and quality and to diminish the standing of the Hugo Boss Trade Marks. 26 The Respondents were defiant and non-compliant with the Applicant's demands after they were informed that they had infringed the Applicant's Hugo Boss Trade Marks.

Disposition as to damages 27 In my view, an award of damages of $20,000 would compensate the Applicant for the damage caused by the Respondents' conduct even if some degree of speculation and guesswork is involved: see, eg, Adidas-Salomon AG v Turner (2003) 58 IPR 66 at [5]. 28 While the Applicant has limited evidence available regarding the range and cost of products bearing the BOSSIT Mark offered for sale and sold by the Respondents, the manner in which those products were sold by the Respondents, the length of exposure of those products to the Australian public and the damage to the Applicant's reputation, that does not preclude the Court finding that compensatory damages can be awarded. In fact, in these circumstances where the Respondents have ignored, with minor exceptions, the court process and when they chose to participate they provided at best incomplete information and at worst, false information, the Court must do its best to quantify the loss suffered by the applicant by reason of the Respondents' infringement of the Applicant's Hugo Boss Trade Marks. 29 An award of additional damages $10,000 would be a suitable sum to deter the Respondents from engaging in the infringing conduct in the future, but would also serve as a deterrent and make infringement unattractive to other retailers in the Australian marketplace. 30 Additional damages are appropriate in light of the Respondents' infringing conduct and particularly their conduct that occurred after they were informed that they had infringed the Applicant's Hugo Boss Trade Marks. Their conduct showed a complete and continual disregard of their legal obligations and the Applicant's intellectual property rights.

COSTS 31 The lump sum costs submitted for by the Applicant of $15,223.53 is in relation to the preparation of orders for damages and additional damages ('Damages Costs') and costs which have been incurred by the Applicant from 5 September 2014 to 14 November 2014. 32 I am satisfied that a lump sum costs order is appropriate. 33 I also accept that the lump sum Damages Costs contended by the Applicant is appropriate. 34 Professional work was carried out by Corrs amounting to $20,608.50 which included: (a) attending the directions hearing on 5 September 2014; (b) preparation of service of the court orders; (c) drawing the Fourth Affidavit of Gino Alfredo Zitignani proving service; (d) drawing the Affidavit of Matthew Peter Keighran in support of orders for damages and additional damages; (e) drawing the Second Affidavit of Lauren Jane Gore in support of orders for damages and additional damages; and (f) drawing submissions in support of orders for damages and additional damages and costs. 35 Disbursements of $1,139.40 have been incurred, which included Auscript fees for the directions hearing on 5 September 2014 (namely, $197.50) and process servers fees (namely, $941.90). 36 To reflect the discount that is likely to applied by the Court to professional fees assessed on a party and party basis, the Damages Costs should be reduced by $6,524.37 (being a discount of approximately 30%). 37 I otherwise accept that the lump sum Damages Costs proposed by the Applicant is logical, fair and reasonable and is proportionate to the nature and complexity of the matter.

CONCLUSION 38 I will therefore order that: (1) the Respondents pay the Applicant: (a) $20,000 being compensatory damages for infringement of the Hugo Boss Trade Marks (as defined in the statement of claim); and (b) $10,000 being additional damages for infringement of the Hugo Boss Trade Marks, together with interest thereupon until payment pursuant to the Federal Court of Australia Act 1976 (Cth). (2) Pursuant to Rule 40.02 of the Federal Court Rules 2011 (Cth), the Respondents pay the Applicant's costs of $15,223.53. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

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