LED Technologies Pty Ltd v Elecspess Pty Ltd [2009] FCA 141 | Case summary

LED Technologies Pty Ltd v Elecspess Pty Ltd [2009] FCA 141 | Case summary | Zoe

[2]

THE COURT ORDERS THAT: 3. The First, Second, Third, Fourth, Sixth and Seventh Respondents, whether by themselves, their servants or agents or otherwise howsoever be restrained during the term of the Applicant's registered Australian Design nos. 302359 and 302360 ("the Registered Designs") from infringing the Applicant's monopoly in the Registered Designs and, in particular, from directly or indirectly making, importing, selling or offering for sale any automotive lamps to which any or all of the Registered Designs, or any design that is identical to, or substantially similar in overall impression to the Registered Designs, have been applied in infringement of the Applicant's monopoly in the Registered Designs ("the Infringing Products"). 4. The First, Second, Third, Fourth, Sixth and Seventh Respondents pay to the Applicant damages in the sum of $200,000 for infringement of the Applicant's monopoly in the Registered Designs, such payment to be made by 25 March 2009. 5. The Applicant's claims against the Fifth Respondent in its Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008 be dismissed and the Applicant pay the Fifth Respondent's costs of those claims incurred after 10 April 2008. 6. The First, Second, Third, Fourth, Sixth and Seventh Respondents pay the Applicant's costs of those claims under the Designs Act 2003 (Cth) in the Applicant's Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008. 7. The Applicant pay the First, Second, Third, Fourth, Sixth and Seventh Respondents' costs of those claims under the Trade Practices Act 1974 (Cth) in the Applicant's Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008. 8. The application by the First to Third Cross Claimants to further amend their Amended Cross Claim dated 9 May 2008 is dismissed, that cross claim is otherwise dismissed and those Cross Claimants pay the Cross Respondents' costs of that cross claim. 9. The Amended Cross Claim of the Fourth, Fifth and Sixth Cross-Claimants dated 25 July 2008 is dismissed and those Cross Claimants pay the Cross Respondents' costs of that Cross Claim. 10. Subject to the Applicant's solicitors, Griffith Hack, retaining the sum of $75,000 in the Griffith Hack Trust Account, until further order of the Court, as security for the Fifth Respondent's costs of the Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008, Griffith Hack is released from the undertaking given by letter dated 10 July 2008, a copy of which is attached to this Order. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.

[7]

REASONS FOR JUDGMENT 1 The substantive proceedings concerned two designs of rear combination LED lights (Registered Design No.302359 - dual lens and No.302360 - triple lens) ("the Registered Designs") sold by the Applicant, LED Technologies Pty Ltd ("LED Tech"), under the name "LED autolamps" and registered under the Designs Act 2003 (Cth) ("the 2003 Designs Act"). 2 LED Tech contended that the First to Fourth Respondents ("the Corporate Respondents") infringed the Registered Designs ("the Designs Claims") and, further, by their conduct, contravened ss 52, 53 and 65C of the Trade Practices Act 1974 (Cth) ("the TPA") ("the TPA Claims"). LED Tech also contended that the Sixth and Seventh Respondents ("the Directors") authorised, directed and, further or alternatively, procured the conduct of the Third and Fourth Respondents. LED Tech did not seek relief against the Fifth Respondent, Mr Morrison. I upheld the Designs Claims but dismissed the other claims against the First to Fourth and Sixth and Seventh Respondents. 3 By cross-claim, the Respondents (except for the Second Respondent, Advanced Automotive Australia Pty Ltd) sought revocation of the Registered Designs. The Cross-Claimants also sought relief against LED Tech in relation to what they described as unjustified threats of design infringement and other relief against LED Tech and Mr Ottobre (a director of LED Tech) under the TPA. Separate cross claims were brought by the Corporate Respondents (except Advanced Automotive Australia Pty Ltd) and the Directors. Both cross claims failed. 4 On 18 December 2008, I published reasons for decision (the "Reasons for Decision") in relation to the various claims and cross claims. I did not make final orders on that day. Instead, I ordered the parties to confer and jointly file short minutes of final orders giving effect to the Reasons for Decision. The parties were unable to agree and on 18 February 2009 I heard argument about the form of the final orders. These reasons for decision address the form of those final orders by reference to the following headings: 1. Applicant's Design Claims; 2. Applicant's TPA Claims; 3. Damages including future damages; 4. Costs, Interim Costs and Cross Claims; 5. Application by First, Second and Third Cross Claimants to amend their Cross Claim; 6. Application for Stay. 5 For the reasons that follow, I consider that the final orders should be: OTHER MATTERS Upon each of the First to Fourth Respondents undertaking by their Counsel to set aside, retain and preserve until further order all base portions of the Infringing Products (as defined in para 3 of the Orders below) in their possession, custody, power or control. THE COURT DECLARES THAT: 1. The Condor product with the code number TL80RA offered for sale and sold by each of the First to Fourth Respondents infringes the Applicant's registered Australian Design no. 302359. 2. Each of the Condor products with the code numbers: (a) TL80RRA / TL80ARR; (b) TL80ARW; (c) TL100ARR; (d) TL100RAA; (e) TL100ARW; (f) TL125AAR / TL125RRA; and (g) TL125ARW, offered for sale and sold by each of the First to Fourth Respondents infringes the Applicant's registered Australian Design no. 302360. THE COURT ORDERS THAT: 3. The First, Second, Third, Fourth, Sixth and Seventh Respondents, whether by themselves, their servants or agents or otherwise howsoever be restrained during the term of the Applicant's registered Australian Design nos. 302359 and 302360 ("the Registered Designs") from infringing the Applicant's monopoly in the Registered Designs and, in particular, from directly or indirectly making, importing, selling or offering for sale any automotive lamps to which any or all of the Registered Designs, or any design that is identical to, or substantially similar in overall impression to the Registered Designs, have been applied in infringement of the Applicant's monopoly in the Registered Designs ("the Infringing Products"). 4. The First, Second, Third, Fourth, Sixth and Seventh Respondents pay to the Applicant damages in the sum of $200,000 for infringement of the Applicant's monopoly in the Registered Designs, such payment to be made by 25 March 2009. 5. The Applicant's claims against the Fifth Respondent in its Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008 be dismissed and the Applicant pay the Fifth Respondent's costs of those claims incurred after 10 April 2008. 6. The First, Second, Third, Fourth, Sixth and Seventh Respondents pay the Applicant's costs of those claims under the Designs Act 2003 (Cth) in the Applicant's Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008. 7. The Applicant pay the First, Second, Third, Fourth, Sixth and Seventh Respondents' costs of those claims under the Trade Practices Act 1974 (Cth) in the Applicant's Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008. 8. The application by the First to Third Cross Claimants to further amend their Amended Cross Claim dated 9 May 2008 is dismissed, that cross claim is otherwise dismissed and those Cross Claimants pay the Cross Respondents' costs of that claim. 9. The Amended Cross Claim of the Fourth, Fifth and Sixth Cross-Claimants dated 25 July 2008 is dismissed and those Cross Claimants pay the Cross Respondents' costs of that claim. 10. Subject to the Applicant's solicitors, Griffith Hack, retaining the sum of $75,000 in the Griffith Hack Trust Account, until further order of the Court, as security for the Fifth respondent's costs of the Second Further Amended Application and Fourth Amended Statement of Claim filed 5 May 2008, Griffith Hack is released from the undertaking given by letter dated 10 July 2008, a copy of which is attached to this Order.

[8]

APPLICANT'S DESIGN CLAIMS - PARAS 1, 2 AND 3 OF THE ORDERS 6 The declarations (paras 1 and 2) together with the Order in para 3 were not the subject of dispute. The Applicant sought additional declarations of infringement and injunctions against the Sixth and Seventh Respondents. I refuse to make the declarations of infringement or grant the injunctions additionally sought by the Applicant. 7 Although the Federal Court has power to grant declaratory relief (see s 21 of the Federal Court Act 1976 (Cth)), such a power is discretionary and, as Mason CJ, Dawson, Toohey and Gaudron JJsaid in Ainsworth v Criminal Justice Commission (1992) 157 CLR 564at 581-582: confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. … The person seeking relief must have "a real interest" … and relief will not be granted if the question "is purely hypothetical", if relief is "claimed in relation to circumstances that [have] not occurred and might never happen" … or if "the court's declaration will produce no foreseeable consequences for the parties". 8 Further, as the Court said in Mees v Roads Corp [2003] FCA 410 at [6] … It is clear that the power to grant a declaration of right is a power that should be exercised where there will be some utility in the grant of a declaration. As the Full Court said in Warramunda Village Inc v Pryde [2001] FCA 61 (2001) 105 FCR 437 at [8]: The remedy of a declaration of right is ordinarily granted as final relief in a proceeding. It is intended to state the rights of the parties with respect to a particular matter with precision, and in a binding way. The remedy of a declaration is not an appropriate way of recording in a summary form, conclusions reached by the Court in reasons for judgment. This is even more strongly the case when the conclusion is not one from which any right or liability necessarily flows. 9 The Applicant's request for declarations in relation to the Sixth and Seventh Respondents is rejected because the Applicant cannot and did not establish that there was any utility in granting the declarations sought. Moreover, the Reasons for Decision as to the liability of the Sixth and Seventh Respondents and the basis for that liability speak for themselves. 10 Paragraph 3 of the Orders was the subject of agreement. However, the Applicant sought additional injunctions to restrain the Sixth and Seventh Respondents from "procuring, inducing or authorising" some of the Corporate Respondents from infringing the Applicant's monopoly in the Registered Designs. I refuse to grant the Applicant further injunctions in those terms. In my view, that conduct is already the subject of the restraint set out in para 3 of the Orders. So much was conceded by Counsel for the Sixth and Seventh Respondents. For the avoidance of doubt, I have inserted the phrase "directly or indirectly" before the phrase "making, importing, selling or offering for sale any automotive lamps" in para 3 of the Orders. 11 In addition to these Orders, the Applicant sought an order for delivery up of the Infringing Products (as defined in para 3 of the Orders). After discussion in Court, the parties accepted that an undertaking from the Corporate Respondents in the form set out above was sufficient.

[9]

APPLICANT'S TPA CLAIMS 12 These claims failed: see [103]-[166] of the Reasons for Decision. Notwithstanding that fact, the Applicant nevertheless sought declarations that each Corporate Respondent contravened ss 52, 53(a) and 53(c) of the TPA along the following lines: By engaging in the conduct referred to in paragraphs [28] and [29] of the Fourth Amended Statement of Claim, the First Respondent has contravened sections 52, 53(a) and / or 53(c) of the Trade Practices Act 1974. Specific paragraphs of the Fourth Amended Statement of Claim were identified for each Corporate Respondent. 13 I refuse to grant the additional declarations sought by the Applicant against each of the Corporate Respondents. I put to one side the form of the declaration. For example, in my view it is inappropriate for a Court to grant a declaration that specifies that particular conduct "contravened sections 52, 53(a) and / or 53(c) of the Trade Practices Act 1974". It either contravenes each of the sections or it does not. 14 There is, in my view, a more fundamental reason why the Court should not grant the relief sought - the claims failed. During the course of argument, Counsel for the Applicant could not refer me to any authority or principle which would support the making of a declaration in circumstances where the claims had failed. After the hearing, the Applicant referred me to the decision of the Full Court of the Federal Court in Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99-100 as authority for the proposition that the Court has power to make a declaration in a case brought by a member of the public provided that the person had an arguable case for an injunction notwithstanding that the member of the public had suffered no damage and the case was not one appropriate for injunctive relief. In Australian Competition & Consumer Commission v Kokos International Pty Ltd (No 2) [2008] FCA 5 at [48], French J summarised the cases in the following terms: There may be a question about their utility given that these reasons set out the findings of fact and the contraventions which underpin the injunctive relief which has been granted and the pecuniary penalties which are to be imposed. However, as Nicholson J pointed out in Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (2007) ATPR 42-140 at [6] such declarations: 1. Are an appropriate vehicle to record the Court's disapproval of the contravening conduct: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89 at 100; Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 at [36]. 2. Serve to vindicate the ACCC's claim that the respondents contravened the Act: Australian Competition and Consumer Commission v Goldy Motors (2000) 23 ATPR 41-801 at [34]. 3. May be of assistance to the ACCC in the future in carrying out the duties conferred upon it by the Act: Goldy Motors 23 ATPR at [34]. 4. Are of assistance in clarifying the law: Goldy Motors 23 ATPR at [34]; Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 at [146]. 5. May inform consumers of the dangers arising from a respondent's contravening conduct: Chen 132 FCR at [48]; and 6. May deter corporations from contravening the Act: Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22]. 15 Putting to one side the question of whether the propositions summarised by French J are applicable to proceedings between private parties without the involvement of one of the public regulators, this is not one of the cases that satisfies any of the stated propositions. The Reasons for Decision (at paras [103] to [166]) record why it was and remains inappropriate for the Court to grant any relief of the kind sought by the Applicant. In my view, the matters listed in those paragraphs support that conclusion including, without limitation, the fact that what was conveyed by the representations meant different things to different classes of consumers, and, no less importantly, the Australian Design Rules suffer from their own problems. Put simply, there is little, if any, utility in making the declarations sought and the possibility that making of any declaration would create more confusion or itself be misleading. 16 For those reasons, it was and remains inappropriate for the Court to grant an injunction restraining each of the Corporate Respondents from making the representations which underpinned each of the TPA claims.

[10]

DAMAGES INCLUDING FUTURE DAMAGES - PARA 4 OF THE ORDERS 17 There are a number of issues raised by the parties in relation to para 4 of the Orders. 18 The Corporate Respondents contend that the Order should be limited to the Third and Fourth Respondents. I reject that contention. This issue was addressed in the Reasons for Decision at [95] to [102]. It is too late to raise these issues now. Paragraph 4 also addresses the liability of the Sixth and Seventh Respondents. As the Reasons for Decision record (see [171] - [175]), each of those Respondents is a joint tortfeasor to the design infringement as each had "a common design" with the Third and Fourth Respondents to infringe the Registered Designs and is jointly and severally liable to the Applicant for the damages assessed. 19 The Applicant also sought an order that the First to Fourth, Sixth and Seventh Respondents pay to the Applicant additional damages for the period from June 2008 to February 2009 in the sum of $100,000 for infringement of the Applicant's monopoly in the Registered Designs. During the course of argument, Counsel for the Applicant conceded that whatever view I took of the Applicant's entitlement to an award for future damages, the appropriate order was along the following lines: TheFirst to Fourth, Sixth and Seventh Respondents pay to the Applicant damages to be assessed (if any) for infringement of the Applicant's monopoly in the Registered Designs for the period from 25 July 2008 up to and including the date of any final order. 20 The Respondents oppose such an order on a number of grounds. First, that the claim for further damages was not pleaded. That is not accurate. In relation to each of the Corporate Respondents, the Applicant's Fourth Amended Statement of Claim included a claim that as a result of each Corporate Respondents' wrongful conduct (namely, infringement of the Applicant's monopoly in the Registered Designs), the Applicant not only had suffered but would continue to suffer loss and damage: see paras 15, 18, 21 and 23 of the Applicant's Fourth Amended Statement of Claim. 21 The second ground of opposition is that the conduct is speculative, without any solid or reasonable foundation and was not the subject of any evidence at trial. That contention should be accepted. The infringing conduct and the Infringing Products are identified in the Reasons for Decision. They are also the subject of appropriate declarations and injunctions. However, during the course of trial, the Applicant made no attempt to prove its pleaded case that the Corporate Respondents intended to continue to make, import, sell or offer for sale any of the Condor products after May 2008. That was a simple task to prove - a few questions during the cross examination of the Directors might have provided evidence of that intended future conduct. The Applicant did not submit that the evidence adduced at trial showed it was probable that losses of the kind alleged would occur in the period between May 2008 and the date of final orders. In fact, the premise for the application for an order that further damages be allowed was that those damages had not yet been proved. If the evidence had been led at trial, it would have been open to me to make an assessment of future damages up to the date of final orders. That task is not now possible. It is too late. The Applicant is bound by the manner in which it conducted its trial unless, amongst other considerations, the evidence could not without reasonable diligence have been discovered before and it would cause no prejudice to the other party by reason of its introduction: Re Australasian Meat Industry Employees' Union (WA Branch); Ex Parte Ferguson(1986) 67 ALR 491 at 493-494 per Toohey J; Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 266-267 per Brennan, Dawson, Toohey and Gaudron JJ. In the circumstances (including questions of fairness and management of the issue), it is inappropriate that there be an order in the terms sought by the Applicant.

[11]

COSTS, INTERIM COSTS AND CROSS CLAIMS - PARAS 5 TO 10 OF THE ORDERS 22 Paragraphs 5 to 10 were the subject of argument and discussion. In any multi-party multi issue case where there are winners and losers on both sides of the record it is often a difficult exercise to pronounce costs orders which properly reflect the outcome of the proceeding and which do not impose on the parties a disproportionate costs burden in quantifying those costs or which is in substance truly arbitrary. For those reasons, I have rejected the idea that I should award costs to the Applicant as some percentage of its total costs or by identifying particular steps in the preparation. Paragraphs 5 to 9 of the Orders (see [5] above) deal with the issues of costs on the claim, the cross claims and the costs of those cross claims in the most appropriate manner. 23 In relation to para 5 of the Orders, I have not awarded costs to the Fifth Respondent on an indemnity basis. Not only was the application not actively pursued at the hearing, I do not consider that the Fifth Respondent has established any basis for costs to be awarded on an indemnity basis: see Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225 at 232-234 per Sheppard J; Bagshaw v Scott [2005] FCA 104 at [39]-[43] per Bennett J; Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [4] per Finn J; Ruaro v Ferrari [2008] FCA 307 at [17] per Emmett J; Tadros v J & R Investment Services Pty Ltd (No 2)[2008] FCA 832 [13]-[16] per Buchanan J. 24 In addition to what I will call the traditional costs orders, the Applicant sought an interim costs order of the kind discussed by Jacob J in Mars UK Ltd v Teknowledge Ltd [2000] FSR 138. Putting to one side the question of whether in an appropriate case, such an order might be able to be made under s 43 of the Federal Court of Australia Act 1976 (Cth) in the absence of a specific power to do so (as exists in the United Kingdom), I do not consider that this is an appropriate case to make such an order for the same reasons that I rejected the idea that I should award costs to the Applicant as some percentage of its total costs or by identifying particular steps in the preparation. The number of parties and issues in this case makes that task not only arbitrary but, I suspect, unfair. This is not an appropriate case to make such an order (for a discussion on the position of such orders in Australia, see Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (In Liq) and Others (No 4) (2008) 169 FCR 497 at [18]-[21] per Finkelstein J). 25 Finally, mention should be made of para 10 of the Orders. There was no disagreement between the parties that the Applicant's solicitors, Griffith Hack, should be released from an undertaking given by letter dated 10 July 2008 to retain the sum of $400,000 in the Griffith Hack Trust Account as security for the Respondents' costs. The only issue was whether a portion of the $400,000 should be retained as security for the Fifth Respondent's costs of the Applicant's claims (see para 5 of the Orders) and if so, what portion. I accept that a portion should be retained. The amount retained is, as I said during the course of argument, at best an educated guess. It is difficult to estimate what costs might have been incurred by the Fifth Respondent on the Applicant's claims after 10 April 2008, being the date on which the Fifth Respondent served his sworn evidence that he had minimal if any involvement in the allegations against the Third and Fourth Respondents. The costs before that date will lie where they fall. In the circumstances of the present case, I will release Griffith Hack from the undertaking given by letter dated 10 July 2008 except to the extent of $75,000 which it will continue to retain until further order of the Court as security for the payment of the Fifth Respondent's costs.

[13]

APPLICATION FOR STAY 28 That leaves the question of a stay of these orders. The Sixth and Seventh Respondents supported the application made by the First to Fourth Respondents. A limited stay was sought in the following terms: The commencement of the operation of the above declarations and orders is stayed for 14 days upon the undertaking by the Respondents and Cross Claimants by their counsel to prosecute any appeal expeditiously. 29 Two things should be noted. The period of 14 days was said to enable the Respondents and Cross Claimants to prepare, file and serve not only a Notice of Appeal but an application to the Full Court of the Federal Court for a stay of the final orders pending hearing and determination of the appeal. Secondly, any stay does not and is not intended to affect in any way the undertaking from the Corporate Respondents to set aside, retain and preserve until further order all base portions of the Infringing Products in their possession, custody, power or control. 30 It is now well established that the grant of a stay does not require special or exceptional circumstances and a court will ordinarily grant a stay where the appeal would otherwise be rendered nugatory: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 693 and 695. Counsel for the Applicant submitted that none of the Respondents had provided any, let alone a sufficient, basis for a stay and that the Applicant should have the fruits of the litigation. In my view, I agree. The Respondents did not identify any reason why in the absence of a stay the appeal would be rendered nugatory. In fact, having regard to the form of the undertaking that was readily proffered by the Corporate Respondents regardless of the stay, at least those Respondents conceded that a stay was unnecessary. The undertaking was in the form of a final order. By its terms, it prevents the Respondents selling the Infringing Products. In those circumstances, I refuse to grant the Respondents a stay of the final orders. Of course, an application for a stay on proper material can be made to the Full Court.

LED Technologies Pty Ltd v Elecspess Pty Ltd

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