Nokia Corporation v Cellnet Group Limited

"37. The basis for the exercise of a court's jurisdiction to order summary judgment is not in doubt. In Dey v Victorian Railways Commissioners (1949) 78 CLR 62, Dixon J said at p 91 that "… a case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury". In General Steel Industries Inc v Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125 at 129. Barwick CJ stated that the jurisdiction to terminate an action "… is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion." Both those authorities dealt with the exercise of a power of summary dismissal of a plaintiff's claim, but, in Theseus Exploration NL v Foyster (1972) 126 CLR 507, which dealt, amongst other things, with the giving of summary judgment, Barwick CJ at 514 said:

"Perhaps the summary intervention to prevent the continuance of a plaintiff's action ought to be much rarer than the giving of summary judgment but there is sufficient correspondence in the two situations to make apposite to this case much of what I said in General Steel Industries v Commissioner for Railways (N.S.W.) …" 38. Webster and Anor v Lampard (1993) 177 CLR 598 was also a case involving the exercise of a power to give summary judgment. At pp 602-603 in a joint judgment, Mason CJ and Deane and Dawson JJ cited both Dey v Victorian Railways Commissioners and General Steel Industries v Commissioner for Railways for the proposition that the power must be exercised with exceptional caution, and stated that '[n]owhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact. " 44 On an application such as that presently before the Court, the Court should examine the evidentiary material placed before it, not for the purpose of making findings of fact where the material conflicts, but to determine whether a triable issue is disclosed (see: Wickstead v Browne (1992) 30 NSWLR 1 at 9). 45 On the hearing of the Motion the Respondent by its Counsel offered undertakings to the Court in the following terms:- "1. The Respondent will from the date of this order until further order of the Court or agreement of the parties, source and purchase all Nokia batteries only from authorised Nokia distributors. 2. The Respondent will, within 14 days, destroy the current stock of Nokia branded BMC-3 batteries held by it pursuant to the order of Justice Gyles of 17 December 2004 and upon completion of the destruction will file an affidavit deposing as to the destruction." 46 On the hearing of the Notice of Motion before me the extent of proof offered in respect of an alleged infringement of the registered trade mark left open the question as to whether the five batteries found to be without PTC fuses were in fact genuine Nokia batteries. The highest that Nokia's case could be put was that if Sanyo did what it was required to do by the Product Purchase Agreement and the five batteries were manufactured after 10 April 2003 then they would have had PTC fuses incorporated in their circuitry. 47 Apart from this question and the possible argument that if the batteries came from Dextra Solutions Limited as an authorised distributor there may have been a licence to use the trade mark in respect of them even if the batteries were not genuine Nokia batteries, there were a number of questions which were raised in argument in relation to the appropriate form of relief. These included: (a) Whether it would be appropriate to make a declaration that the trade mark had been contravened in circumstances where an injunction may not be granted due to the lack of evidence of a threat of further infringement; (b) Whether in the light of Cellnet's proposed undertaking to the Court No. 1 above, offered on an interlocutory basis only, an injunction should be granted; (c) Whether an injunction should be granted in circumstances where it would be impossible, short of destroying the goods which the Respondent was offering for sale, to determine whether the injunction was being breached; (d) Whether an inquiry as to damages should be ordered where it may be found that only five "counterfeit" batteries had been sold by Cellnet, Nokia had been the relevant purchaser of those batteries, and no sale had been lost by Nokia as a result of any infringement that may be established; (f) Whether an inquiry as to damages should be ordered if it be found that the Respondent was an "innocent infringer". 48 I was taken to a number of authorities on the question of what might be appropriate relief in the circumstances were an infringement to be found. These included Louis Vuitton Malletier SA v Knierum [2004] FCA 1584; Edelsten v Edelsten (1863) 1 DeG.J & S. 184; 46 E.R. 72; The Sanitas Company, Limited v Condy (1887) 4 RPC 530; Slazenger & Sons v Spalding & Brothers (1910) 1 Ch 257; A. G. Spalding & Bros v A W Gamage Ld (1915) 32 RPC 273; Fram Manufacturing Co Ld v Eric Morton & Co (1923) 40 RPC 33; Champagne Heidsieck et Cie v Scotto & Bishop (1926) 43 RPC 101; Wayne V Myers Coy. Ld v L. E. Fields Auto Services Ld (1954) 71 RPC 435; Henderson v Radio Corporation Pty Limited (1960) 1 AIPR 620; Colbeam Palmer Limited v Stock Affiliates Pty Limited (1968) 122 CLR 25; Gillette UK Limited v Edenwest Limited (1994) 111 RPC 279; Coflexip SA v Stolt Comex Seaway MS Ltd (1999) FSR 473 and (2001) 1 All ER 952. I was also taken to an article by Roshana Kelbrick from the University of South Africa in Pretoria entitled 'Damages Against the Innocent Infringer' (1996) 4 European Intellectual Property Review 204, to s 115(3) of the Copyright Act 1968 (Cth) and s 68 of the Trade Marks Act 1955 (Cth). 49 In my opinion it is unnecessary to decide these issues as to the appropriate form of relief, if any, on an application for summary judgment in circumstances where I consider there is a fairly arguable point as to whether the trade mark was infringed by the Respondent in the first place. It should also be remembered that even though in General Steel Industries Inc v Commissioner for Railways (NSW) (1964)112 CLR 125 at 130 Barwick CJ said: "I do not think that the exercise of the jurisdiction (in that case summary dismissal) should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim". in Theseus Exploration NL at p 514 he said:- "The jurisdiction to give summary judgment should not be exercised 'where a difficult question of law is raised'". 50 Having said that, I should refer to some passages from the decisions to which I have been taken which highlight the relevance of the questions listed above. 51 In Wayne V Myers Coy Ld there had been an infringement of the trade mark "Redex" on two occasions when an oil additive had been supplied from a container bearing the mark "Redex" which did not consist wholly of the plaintiff's additive. Vaisey J said at pp 439 - 40:- "… I think in all the circumstances that there is prima facie the right to an injunction here and now. On the other hand, it is such a futile deception, from which the Defendants cannot possibly obtain, as far as I can see, any tangible reward, such a stupid thing to have done and such a foolish invasion of the Plaintiffs' rights, that I can hardly believe they would ever seriously contemplate repeating this kind of wrongful act. Therefore, I am rather disposed to think, although the right to an injunction has been made out, having regard to what I think is the extreme improbability of any intention to inflict damage on the Plaintiffs, the granting of an immediate injunction is almost too large a weapon with which to deal with so trifling and so trumpery an affair. I feel disposed to give the Plaintiffs liberty to apply for an injunction so that if there is the least suspicion of this sort of thing happening again (and I warn the Defendants that they must be careful) the Defendants can be restrained. There would be liberty to apply in this action for an injunction based on a declaration which I can make, if necessary, in an appropriate form, that the Plaintiffs have established to my satisfaction an infringement of their trade mark rights and a passing-off of goods as theirs, but I should say in the order, being satisfied that the acts of the Defendants were not malicious, or intentional, or something of that kind, or were by inadvertence or misunderstanding, I should only give liberty to apply for an injunction. I think I must make an order for an enquiry as to damages. I think those damages will be confined to the infringement of trade mark. Unless the Plaintiffs are in possession of some evidence which would enable them to establish damages, I cannot imagine that such an enquiry is likely to lead to any result, but I will make the order for an enquiry, and I sincerely hope that there will be some small payment by the Defendants to the Plaintiffs which they will accept in full satisfaction of their claims so that it will not be necessary to go through this process in what I venture to call a rather trumpery case of directing the Master to have a formal enquiry." 52 In Louis Vuitton Malletier SA, a case where the Court had been asked to make orders by consent against an unrepresented litigant, which Finkelstein J declined to make, His Honour said in paragraph 15 of his reasons:- "The true position is this. The basis for the grant of an injunction in an intellectual property case is in every respect the same as in any other case. The plaintiff must show there is a risk that the defendant will engage in infringing conduct in the future. If the plaintiff is unable to make good that proposition, he will not obtain an injunction." 53 In Colbeam Palmer Limited Windeyer J said at p 32:- "The distinction between an account of profits and damages is that by the former the infringer is required to give up his ill-gotten gains to the party whose rights he has infringed: by the latter he is required to compensate the party wronged for the loss he has suffered. The two computations can obviously yield different results, for a plaintiff's loss is not to be measured by the defendant's gain, nor a defendant's gain by the plaintiff's loss. Either may be greater, or less, than the other. If a plaintiff elects to take an inquiry as to damages the loss to him of profits which he might have made may be a substantial element of his claim …" Later at p 35 His Honour said:- "… I find positively that the defendant did not know of the registration of the name Craftmaster as a trade mark until at the earliest 30th August 1965 when it learnt of the letter received by one of its retailer customers. … … … I consider that the account of profits for which the plaintiff asked ought not to go further back than 30th August 1965. As profits, not damages, were asked for, it is irrelevant to contrast the position in regard to damages. Nevertheless, because something was sought to be made of it during the argument, I merely mention that different considerations may govern an inquiry as to damages; for damages being in origin a common law remedy, it seems that if it were not for s.68 a plaintiff could be entitled to be compensated for the whole loss that he suffered by the defendant's usurpation of his proprietary rights in a registered mark: see A. G. Spalding & Bros. v A W Gamage Ltd (a passing-off case) and Henry Heath Ltd v Frederick Gorringe Ltd (an infringement of a registered mark). The cases on this point are, however, conflicting: see Halsbury's Laws of England, 3rd ed., vol. 38, p.646. Whatever view be taken of this, I see no reason for enlarging accountable profits because damages might be calculated in respect of a longer period."

54 In Edelsten Lord Westbury, the Lord Chancellor, said at p 178:- "… although it is well founded in reason, and also settled by decision, that if A has acquired property in a trade mark, which is afterwards adopted and used by B in ignorance of A's right, A is entitled to an injunction; yet he is not entitled to any account of profits or compensation, except in respect of any user by B. after he became aware of the prior ownership." 55 In Slazenger & Sons Neville J said at p 261 "I think Edelsten v Edelsten is still applicable, and that in a case where the infringement of a trade mark is made without the knowledge of the existence of the plaintiffs' rights there is not a right to compensation, but only a right to an injunction. …" 56 In Fram Manufacturing Co Ltd, a case where the defendants are alleged to have acted innocently in respect of contraventions of the trade mark "Fram" applied to razors, Lush J said at p 36:- "But he pleaded that he had acted innocently, being unaware that the mark on the razors was a Trade Mark, … … The Plaintiffs did not accept the Defendant's statement that he had acted innocently, and evidence was called on this issue. I must decide that issue in favour of the Defendant; I think that he did act innocently and when the razors were bought, as they were in Germany by the Defendant's father, and when they were sold, the Defendant had no knowledge that he was infringing the Trade Mark. … … He (the Defendant) also contended that it is not the practice to award damages against a defendant who has innocently infringed a trade mark, and that, on that ground …, I ought to dismiss that part of the claim. … With regard to damages, I think that Mr. Moritz's contention that no damages are recoverable is right. I do not agree that damages cannot in a proper case be awarded against an innocent infringer … …it does not follow, because there has been a falling-off of business, that the damage is attributable to the infringement; and unless the Plaintiffs can prove that the manufacture and sale of articles bearing the Plaintiffs' mark caused the damage they cannot recover damages or ask for an inquiry or an account. …So far, therefore, as the claim for damages is concerned, I think that it fails. In my opinion, however, the Plaintiff … is entitled to an injunction. I think that, as the registered proprietor of the Trade Mark, he was entitled to have it protected and to prevent an infringement …" 57 In Champagne Heidsieck et Cie the plaintiffs were producers of two qualities of champagne, one prepared for Continental consumption and the other for consumption in England. Some champagne prepared for Continental consumption had been sold to some restaurants in the West End of London bearing English labels that were forgeries of the plaintiff's labels. Tomlin J said at p 105 in respect of the second defendant, Mr. Bishop:- "It seems to me that, on the material before me, I am bound to accept the conclusion that Mr. Bishop did, as he said, I rather gathered, out of good nature, act as an intermediary in placing parcels of wine with West End restaurant-keepers to whom he was known on behalf of a wine-merchant with whom he had been acquainted for many years. Of course, that conclusion of fact does not relieve Mr. Bishop of liability in respect of the relief which is asked by the writ. It may be that as a result of that no claim for damages may be made against him, but it still exposes him to this, namely, that he has, in fact, been a party to a transaction which I hold was an infringement of the trade mark right, and in fact a passing off, although he was not aware of it, and it seems to me that, so far as he is concerned, there must also be an injunction against him." 58 In Gillette UK Limited, another razor case, in which summary judgment had been sought, Blackburne J said at pp 289 - 291:- "It is not necessary for this court to examine the limits of any discretion which exists to refuse an enquiry, because in my view the present case cannot realistically be said to fall within the ambit of any such discretion as does exist. If the plaintiffs have an arguable case for claiming damages, the court would (as a matter of ordinary justice) make an order for an enquiry to enable them to pursue it. In the case before me the evidence discloses that counterfeit razors were sold by Edenwest to M&S Toiletries and that a quantity of those razors were subsequently sold to William Morrisons for sale to the public. In those circumstances the plaintiffs have, at the very least, an arguable case for saying that they have suffered damage by reasons of Edenwest's acts of passing off and trade mark infringement arising out of that sale. That being so I should, as a matter of ordinary justice, direct the inquiry which the plaintiffs seek, of course, at their own risk as to costs. Mr. Nicol submits, however, that Edenwest has acted innocently in the matter, in the sense that when supplying the counterfeit razors to M&S Toiletries, it had no knowledge that it was infringing the first plaintiff's registered trade mark or that it was passing off counterfeit goods as goods of the plaintiffs. In those circumstances, he submits, the Court cannot require Edenwest to pay damages and therefore I should refuse an inquiry. Mr. Miller for the plaintiffs did not dispute Edenwest's innocence in the sense that I have just described but submitted that such innocence is irrelevant to the plaintiffs entitlement to damages. I confess that I was startled by Mr. Nicol's submission since it seemed to me and, despite argument, still seems to me that if the plaintiffs have suffered loss by reason of Edenwest's actions there can be no good reason why they should not recover damages to compensate them for that loss. … As regards infringement of a registered trade mark I take the view that it is well settled law, and has been for very many years, that innocence on the part of the infringer is no defence to a claim to damages and that the law in this regard is accurately stated in Kerly's Law of Trade Mark's and Trade Names, 12th Edition, at paragraph 15-80. That paragraph, so far as relevant, reads as follows: Damages are a matter of right; the account of profits is an equitable remedy and the court has a discretion whether or not to grant it. Accordingly, a successful plaintiff in an infringement action is entitled to an inquiry as to damages (at his own risk as to costs) in any case where there is a reasonable prospect that the inquiry would reach a positive result; whilst only in certain cases will the court grant an account of profits … An account is generally refused if the defendant had no knowledge of the plaintiff's mark and, when ordered, is limited to the period during which such knowledge had existed; whilst knowledge or absence of knowledge does not affect the right to damages. … In Henry Heath Ltd v Frederick Gorringe Ltd (1924) 51 RPC 457, Eve J declined to follow Slazenger v Spalding and directed an inquiry not withstanding the innocence of the defendant infringer. Since then, as far as I am aware, innocence on the part of the infringer has never at any rate in this country been found to justify denying damages to the plaintiff. On the other hand my attention has been drawn to a number of decisions where an inquiry was directed notwithstanding the defendant's innocence see, for example, Flalho v Simond & Company Ltd (1937) 54 RPC 193; Ravenhead Brick Company Ltd v Ruabon Brick and Terra Cotta Company Ltd (1937) 54 RPC 341, and Sony Corporation and anr v Anand [1982] FSR 200. In none of those cases was there any discussion whether damages were available where the infringement was innocent - doubtless because everyone assumed that the law was well settled on this point." 59 In Coflexip SA, a patent case,Laddie J had granted a limited injunction in the first instance. His injunction was discharged and replaced by one in the normal form. In the Court of Appeal Aldous J said:- "65. The judge seemed to believe that injunctions which restrained infringement of a patent were broad injunctions: but they equate to the statutory right given, a right which has been held to have been validly granted and infringed. The injunction granted by the judge would allow the defendant to do other acts even though they may infringe. The defendant in those circumstances would be better off in that a change from that which is described and shown in the process description would allow him to continue in business without having to seek guidance from the court before adopting the change. The advantage to the defendant of only having the injunction cover a particular article or process is clear. If he makes a change he will not be in breach and it will be up to the patentee to bring another action. However the disadvantage to the patentee is equally clear. To obtain an injunction he has to establish his monopoly and that it has been infringed, and the judge must conclude that further infringement is apprehended. From his point of view, it is the infringer who should seek guidance from the court if he wishes to sail close to the wind. In the normal course of events that would be reasonable." 60 In relation to the issue of the appropriate form of relief against an "innocent infringer" Roshana Kelbrick said in her article (referred to above) in relation to Blackburne J's decision in Gillette UK Limited:- "Is the court's reliance on Kerly's categorical statement that 'knowledge or absence of knowledge does not affect the right to damages' correct? Kerly's authority is Spalding & Bros v A W Gamage Ltd - which dealt with passing off, not infringement of a registered mark - and Henry Heath - an instance of trade mark infringement where an inquiry as to damages was granted but no reasons for judgment were given . … The finding by the Edenwest court that the point is 'settled law' seems justified when only the most recent decisions are considered. However, the chronological review of all the decisions on the point illustrates that this finding was not justified. …" 61 For my part I would have thought that there may be two classes of "innocent infringer" to whom reference should be made in considering the question of appropriate relief, namely, those who had no knowledge of an applicant's trade mark and those who, having knowledge of it, were unaware that, by their conduct, they had engaged in a contravention of that mark. A proper basis for finding that an infringer was unaware of a contravention might include, amongst other things, the price at which it had been possible for the alleged infringer to acquire the product that ultimately proved to be counterfeit. Were the price unusually low it could well sound alarm bells of which the alleged infringer would have to take notice. 62 In the light of the conclusion that I have reached on the summary judgment application, it would seem inappropriate for me to reach any concluded views on the other matters which have been raised. Suffice it to say that there are some interesting questions which will arise for consideration at a later trial. 63 In my opinion the application for summary judgment should be dismissed with costs. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham J.

Associate: Dated: 20 June 2005 Counsel for the Applicant: R Webb SC

Counsel for the Respondent: D J Jackson QC with M Condon

Date of Hearing: 25 May 2005, 8 and 9 June 2005