Nemorin v Pierre

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1040 of 2012

JUDGE: FLICK J DATE: 11 APRIL 2013 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 24 July 2012 the Applicants, Ms Marie Nemorin and Mr Marc Nemorin, filed in this Court an Originating Application. That Application was subsequently amended in September 2012. In November 2012 the Respondents, Messrs Armande Pierre and Allan Webb, filed Points of Defence. 2 That which divides the parties is the use of a trade mark in respect to goods sought to be imported. The Applicants (inter alia) seek declaratory relief that the Respondents have infringed Australian Registered Trademark No 1430338. Injunctive relief is also sought. The Respondents have not inspected the goods sought to be imported and cannot, they maintain, admit whether the goods imported are goods of the same description as those in respect to which that trade mark is registered. They also maintain that any use of the trade mark would not be likely to deceive or cause confusion and that any registration of the trade mark by the Applicants was done in bad faith and hence liable to be revoked. 3 Yesterday the Court was informed that the proceeding had been largely resolved between the parties. Left unresolved were the form of orders to be made, including orders as to costs. Competing versions of the proposed orders were provided to the Court this morning.

THE fACTS IN OUTLINE 4 The relevant facts are within a narrow compass. 5 It would appear that a Mauritian company, Eugenie Food Products Limited ("Eugenie Food Products"), produced goods for the food trade. 6 Relevantly for the purposes of the present proceeding, in October 2005 Eugenie Food Products wrote to the First Applicant confirming that "your company, Flavours From Afar, has been given the exclusive rights to sell and market Eugenie's range of products within Sydney …". The typed version of that letter referred to the sale of products within "the Australian territory…". The latter phrase has been crossed out and in lieu the word "Sydney" and thereafter some indecipherable words written by hand. This letter confirmed that these rights would continue for a period of 18 months. Goods were apparently supplied in 2007 and 2008. 7 The goods supplied, however, gradually became more and more difficult to obtain and in about 2008 its products disappeared from retail outlets. There is some evidence that no products directly supplied by Eugenie Food Products have been sold in Australia since mid-2009. There is also some evidence that "for some years now Eugenie has sold products made by individuals … in their homes". 8 Whatever may be the position as to goods imported to Australia, in February 2009 the Controller within the Ministry of Foreign Affairs, Regional Integration and International Industrial Property Office in Mauritius issued to Eugenie Food Products a Certificate of Registration of a Mark. The mark the subject of the certificate is No 07019/2009 and is as follows: The Certificate specifies that the "validity of the mark" is for a 10 year period expiring in October 2018. The list of goods the subject of the trade mark includes specified food products. 9 The Respondents carry on in Australia a business known as Riviera Food Products. In doing so it imports goods from Mauritius. It sells its products to grocery retailers, including those in Sydney, Melbourne, Brisbane and Perth. 10 In February 2012 an Australian Certificate of Registration of Trade Mark was issued to the Applicants. The mark depicted in that Certificate is as follows: The period of registration is stated to be due for renewal in June 2021. Again, the goods the subject of that trade mark are specified, being specified food products. 11 In about April 2012 Riviera Food Products ordered goods from Seskel Enterprises Limited, another Mauritian company. The order included a quantity of goods produced by Eugenie Food Products. In June 2012 Riviera Food Products received a notice from the Australian Customs and Border Protection Service that it had seized 1,932 "jars of pickles, jams and chilli paste". The notice identified a seizure number of PCI 12/003 and stated that the seizure was pursuant to s 133 of the Trade Marks Act 1995 (Cth). The goods were said to be "deceptively similar to a trade mark notified by Marc Nemorin and Ghyliane Nemorin". 12 In July 2012 the solicitors acting for the Applicants sought from the Manager of Riviera Food Products an undertaking "not to import any further products similar to those covered under seizure Nr PCI 12/003…". Later in July 2012 the Patent and Trademark Attorneys then acting for the Respondents responded, saying that their clients "confirm that they will not be importing any further products of the type subject to the abovementioned seizure order…". 13 At no time were either of the Respondents aware that the Applicants had applied for in June 2011 or been issued with the Certificate of Registration that in fact issued in February 2012.

THE APPROPRIATE ORDERs to be made 14 This summary outline of the facts is sufficient to expose the fact that difficulties may have been encountered by the Applicants in establishing an entitlement to either: declaratory relief, it perhaps being open for the Respondents to have contended that there had been no infringing conduct established in Australia such as to attract the grant of that discretionary remedy; or injunctive relief, it perhaps being open for the Respondents to have contended that there was no evidence or no sufficient evidence of any threat of any future infringement of the Australian trade mark. Conversely, had the matter proceeded to hearing, the Applicants ran a risk that the Respondents could possibly have made good their contention that: the Australian trade mark had been registered in "bad faith". The Points of Defence filed in November 2012 contend (inter alia) that "it may be inferred that the Applicants registered the Mark in order to appropriate for themselves any goodwill or commercial reputation in Australia inhering in the get up of the Eugenie products they had formerly imported and distributed". The facts relevant to any of these issues, it may be expected, would have been contentious. Indeed, oral submissions this morning made clear that the extent of cross-examination may have been extensive. One forensic course that the Respondents could have plotted was to confine attention to the declaratory and injunctive relief sought by the Applicants. In raising a question as to the validity of the Australian trade mark, however, they considerably "raised the stakes" in the issues to be resolved. 15 But none of these issues need be - or should be - further addressed in any great detail. 16 The parties have exchanged competing versions of proposed orders to be made.

Declaratory relief? 17 One of those orders proposed by all parties is an order to be made "by consent" declaring that the Respondents have infringed the Applicants' Australian trade mark. Instances can, of course, be provided where a declaration has been made by consent or upon the basis of agreed facts. Examples include applications made by the Australian Competition and Consumer Commission in proceedings alleging contravention of the Trade Practices Act 1974 (Cth): e.g., Australian Competition and Consumer Commission v Real Estate Institute of Western Australian Inc [1999] FCA 18, 161 ALR 79. Other examples include cases where penalties are being sought: e.g., Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427 at [58]-[59], 236 ALR 665 at 680-681 per Kiefel J. 18 In the circumstances of the present case, however, it is not considered appropriate to grant declaratory relief by consent. Considerable reservation is expressed as to whether or not the importation of the goods and the immediate seizure of those goods would constitute a "use" of the goods which could constitute an "infringement". Be that as it may, given a conclusion that an injunction should be granted, it was accepted by the parties that the grant of declaratory relief would serve no useful additional purpose.

Injunctive relief and forfeiture? 19 Another of the orders sought is the grant of injunctive relief. 20 There was limited evidence upon which any finding could be made as to any future threat of any importation of goods sourced directly from Eugenie Food Products. But there was some potential for goods to be imported which could constitute an infringement and the Respondents did not oppose the grant of injunctive relief. 21 As proposed, the form of injunction sought was as follows: The Court orders by consent that the respondents by themselves, their servants and/or agents, be restrained from and are hereby so restrained from importing into Australia or distributing within Australia, without the prior written authority of the applicants, goods that infringe Australian Registered Trade Mark No. 14300338. It is understood that the reference to "Australian Registered Trade Mark No. 14300338" was intended to be a reference to Australian Registered Trade Mark No. 1430338. Reservation was expressed as to the form of such an order. Left open to future dispute would be potentially an argument as to whether imported goods did constitute an infringement of the trade mark. There was, however, no opposition by the parties to an order in the following terms, namely an order that: The Court orders by consent that the Respondents by themselves, their servants and/or agents be restrained from and are hereby so restrained from importing into Australia or distributing within Australia without the prior authority of the Applicants, goods that display the trademark number 07019/2009 as issued on 25 February 2009 by the Registrar of Trademarks in Mauritius. 22 Nor was there any opposition by the Respondents to an order that the goods the subject of the seizure on 20 June 2012 be forfeited to the Commonwealth. Such an order should also be made.

Costs? 23 The general approach, or - at least - an approach which is frequently adopted in this Court, is to make no order as to costs where there has been no hearing on the merits. At least that is the position where the Court is not in a position to form a view as to the competing merits of the claims being advanced and resisted. One question which has been raised is whether that should be the general approach of the Court "except in exceptional circumstances". 24 In Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 Hill J reviewed the authorities and observed: These cases seem to me to support the following propositions being made. (1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order ... (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial... This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them... (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation... (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted... These observations have, in turn, been cited with approval by Finkelstein J in Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 at 287. His Honour there went on to observe: For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in exceptional circumstances… 25 A "more flexible approach" has been advocated by McHugh J in Re The Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. His Honour there observed: In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation … Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried… If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases : (1986) CLR at 624-625. As contemplated by (inter alia) McHugh J, there are some circumstances in which a view can be formed without the close examination of a case that follows a trial: cf.: We Two Pty Ltd v Shorrock [2002] FCA 875 at [9] per Finkelstein J. 26 These decisions provide a useful guide, to both the Court and litigants, as to the manner in which the discretion as to costs may be exercised. So, too, do those decisions stating that costs ordinarily follow the event: e.g., Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496 at 509 per Beaumont J; Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 48,134 at 48,136 per Toohey J; Ruddock v Vadarlis (No 2) [2001] FCA 1865 at [9], 115 FCR 229 at 234 per Black CJ, Beaumont and French JJ. It is nevertheless prudent to recall that the discretion is to be exercised judicially, and not arbitrarily, and by reference to the facts and circumstances of each individual case. Attempts to narrow the discretion by "judge-made rules" have been rejected: Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213 at 219 per Fisher J. The discretion should not be seen as being confined by reference to any inflexible approaches to be applied in all circumstances. None of the authorities suggest otherwise. 27 In those circumstances where no reliable view can be formed as to the competing prospects of success of the parties, two considerations relevant to the order as to costs to be made are: (a) the undesirability of forcing the parties to litigate the facts and the need for the court to resolve those claims, even on a provisional basis; and (b) the desirability of avoiding the prospect that an order for costs being an impediment to the parties resolving a dispute by consent. 28 The Respondents appear to have proceeded - not from the proposition that there should be no order as to costs - but rather from the proposition that the grant of some form of relief to the Applicants entitles them to some form of order in their favour. That starting point was presumably upon the legitimate basis that the consent by the Respondents to some form of relief evidenced some measure of success. Accordingly, they proposed (in part) that the Applicants should have their costs as from 18 September 2012, that date being the date upon which the Applicants filed an Amended Originating Application. The Applicants sought an order that they be paid their costs as from 2 November 2012 on an indemnity basis. That last date was the date upon which the Points of Defence were completed, including in particular the allegation that the Australian trade mark had been registered in "bad faith". No order should be made on an indemnity basis. 29 The present proceeding is one in which no certain or even reliable view can be formed as to the competing merits of any of the three issues the subject of submissions. Although some reservation may even now be tentatively expressed as to the entitlement of the Applicants to declaratory or injunctive relief, the proceeding being settled also includes the Defence of the Respondents that the registration of the Australian trade mark was secured in "bad faith". Just as it is imprudent to attempt to form a view as to the prospects of success of each of the parties in the absence of a hearing, it would be even more imprudent to attempt to form a view as to whether or not each of the parties may have secured some measure of success such as to enliven the discretion to apportion costs: e.g., Roadshow Films Pty Ltd v iiNet Ltd (No 4) [2010] FCA 645, 269 ALR 606, 86 IPR 589 per Cowdroy J. It is that very exercise of engaging in some hypothetical analysis which underlies in part the general approach of the Court that there should be no order as to costs in the absence of a hearing. 30 In the circumstances of the present case, including the consent by the Respondents to the form of injunctive relief and their offer to pay the costs and their acceptance that they should pay the costs of the Applicants essentially as from 18 September 2012, it is appropriate that such orders should be made. That was in part the offer made by the Respondents and this Court should not put any further obstacle in their path in now making the orders the subject of submissions this morning. Nor should the Court attempt to "second guess" the reasons why the Respondents have made the offer in fact made. In any settlement those reasons may include a commercial assessment as to prospects of success, the costs involved in running a case to hearing and factors known only to the legal representatives and not the Court.

CONCLUSION 31 Orders should be made in the form discussed during the course of submissions this morning.

THE ORDERS OF THE COURT ARE:

1. By consent the Respondents by themselves, their servants and/or agents, be restrained from and are hereby so restrained from importing into Australia or distributing within Australia, without the prior written authority of the Applicants, goods that display the trade mark the subject of the certificate of registration number 07019/2009 as issued on 25 February 2009 by the Registrar of Trademarks of Mauritius.
2. By consent, the Respondents are to take steps to ensure that all goods currently in the possession of the Australian Customs and Border Protection Service pursuant to seizure reference number PCI 12/003 be forfeited to the Commonwealth.
3. Subject to orders 4 and 5, the Respondents pay the Applicants' costs of these proceedings from 18 September 2012.
4. The Respondents pay the Applicants' costs in preparing their originating process filed on 18 September 2012.
5. The Applicants pay the Respondents' costs of the directions hearing held on 12 September 2012, to be taxed if not agreed. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.