Nokia Corporation v Liu

BACKGROUND 3 Nokia, a company incorporated in Finland, manufactures, distributes and sells mobile phones and accessories. It instituted the present proceedings on 26 March 2008. Put shortly, para 4 of its Statement of Claim alleged that, without its licence or authority, the respondent, Mr Liu, manufactured or caused to be manufactured, goods bearing one or more of four of Nokia's Australian registered trademarks which goods were imported, advertised and sold in Australia. The paragraph particularised two instances of the infringements alleged, these being (i) a "trap purchase" of a mobile phone and accessories bearing one or more of the infringing trademarks, the purchase having been made on 30 October 2007 from Mr Liu's "eBay store"; and (ii) a quantity of mobile phones and accessories, again bearing offending marks, which were seized by the Australian Customs Service on 19 February 2008 as a part of a consignment of goods addressed to Mr Liu. The particulars otherwise referred generally to acts of manufacture, etc of offending items "[from] a date unknown … to the date of the issue of the Application": subparas 4(a) and 4(d). The circumstances in which discovery was ordered will be mentioned later. It will be necessary to return below to the trap purchase. 4 Paragraph 4 concluded with the statement: The Applicant cannot until after discovery give full particulars of all the aforesaid acts of the Respondent, but at the trial of this action the Applicant will rely upon and claim relief in respect of all such acts.

5 The immediate impetus to the initiation of the proceedings was provided by the Customs seizure and the provisions of the Trade Marks Act 1995 (Cth) regulating the consequences of such a seizure: see s 133 - s 137. An interlocutory injunction was sought in the Application to restrain Customs from releasing the seized goods to Mr Liu. 6 On 11 April 2008, Mr Liu consented to that interlocutory injunction. The consent orders of that day envisaged that an application for summary judgment would be set down for hearing on 13 June 2008. 7 On 4 June 2008 further consent orders were made. It is necessary to set out the terms of these orders in some detail. They provided, relevantly, that: THE COURT ORDERS BY CONSENT THAT: 1. By his importation into Australia of the items listed in Annexure A hereto each bearing one or more of the following Australian registered trade marks: (a) Australian Registered Trade Mark No. 458364 for NOKIA in class 9; (b) Australian Registered Trade Mark No. 490781 for NOKIA AND DEVICE in class 9; (c) Australian Registered Trade Mark No. 808735 for NOKIA in class 16; (d) Australian Registered Trade Mark No. 867057 for NOKIA in classes 9, 18, 25, 38, 41 and 42, (together referred to as "the Nokia Trade Marks") without the licence or authority of the Applicant, the Respondent has infringed the Nokia Trade Marks and each of them. BY WAY OF FINAL JUDGMENT UNDER PARAGRAPHS 1, 3 AND 4 OF THE APPLICATION HEREIN THE COURT ORDERS BY CONSENT THAT: 2. The Respondent be restrained whether by himself, his employees or agents or otherwise howsoever from infringing any of the Nokia Trade Marks and in particular from using the Nokia Trade Marks or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks in the course of trade on or in relation to: (a) any of the goods in respect of which the Nokia Trade Marks are registered ("the Nokia Registered Goods"); (b) goods of the same description as any of the Nokia Registered Goods; or (c) services that are closely related to any of the Nokia Registered Goods, not manufactured or provided by or under the authority of the Applicant or otherwise procuring or inducing any other person to do any of the acts specified in this paragraph (2). 3. Within seven (7) days of the date of these orders, the Respondent deliver up on oath to the Applicant or its duly authorised agent for destruction under supervision all goods in the possession, power, custody or control of the Respondent, his employees or agents or otherwise howsoever to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks has been applied without the licence or authority of the Applicant. … THE COURT FURTHER ORDERS BY CONSENT THAT: 5. Within seven (7) days of the date of these orders, the Respondent file and serve on the Applicant an affidavit setting out (and exhibiting all relevant supporting documentation (including, but not limited to, any purchase orders, invoices and receipts) in the possession, power and control of the Respondent whether by himself, his employees or agents) the full details of the supplier of each product that the Respondent has purchased, imported, distributed and sold to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar thereto has been applied without the licence or authority of the Applicant, such details to include full address, email address, telephone number, corporate and business details. 6. Within fourteen (14) days of the service of these orders upon him, the Respondent make discovery verified by affidavit to the Applicant in respect of all purchases and sales by him or on his behalf of all items bearing the Nokia Trade Marks, or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks, without the licence or authority of the Applicant. 7. The Respondent pay the Applicant damages for infringement of the Nokia Trade Marks, to be assessed together with interest thereon, or, at the option of the Applicant, the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks and pay the Applicant the amount found to be due on the taking of such account, together with interest thereon. 8. The Respondent pay the Applicant's costs of the proceeding to date. The Annexure A referred to in para 1 of the orders listed the items that were seized by Customs. 8 On 12 June 2008 the Court ordered, by consent, that the seized items be forfeited to the Commonwealth. 9 In an affidavit of 27 June 2008 Mr Liu said he did not have any goods to deliver up pursuant to para 3 of the above orders; in an affidavit filed on 10 July in "purported compliance" (cf Reasons at [9]) with para 5 of the orders, Mr Liu exhibited (a) a copy of an invoice which he stated was for the purchase by him of the goods seized by Customs; (b) an invoice which related to one "8800" mobile phone; and (c) an email relating to the trap purchase. Also on 10 July, he filed his list of documents in purported compliance with para 6 of the orders. The list referred to four documents in his possession, three of which related to the goods seized by Customs or those the subject of the trap purchase. The fourth was a handwritten note of 1 November 2007 the contents of which are not in evidence. The list also indicated that he had lost his bank statement for transactions for the period, seemingly, from 30 October 2007. 10 A notice to produce had previously been served on Mr Liu seeking documentation concerning his acquisition from his suppliers of the goods the subject (a) of the Customs seizure and (b) of the trap purchase. He did not comply with this notice. 11 His solicitors ceased to act for him on 29 August 2008. 12 On 24 September 2008 Mr Liu was ordered to attend for examination before a Registrar of the Court on 5 November 2008. He did not attend. On 5 November 2008 the primary judge was invited to deal with the respondent on the basis that his failure to attend amounted to contempt in the face of the court. His Honour was not prepared to do so. Nokia did not otherwise move that the respondent be dealt with for contempt. 13 On 5 November 2008 it was ordered that the proceedings be fixed for the assessment of Nokia's damages on 11 December 2008. 14 Finally, we turn to the trap purchase and the evidence it generated. It looms large in the appeal. His Honour's findings on this trap purchase are encapsulated in the following two paragraphs (Reasons [3]-[4]): 3. The making of the sale on eBay on 30 October 2007 to which the applicant's Statement of Claim refers is established on the evidence before the court. The sale was made to Ms Rachel Nielson, an employee of a private inquiry agency engaged by the applicant. Through eBay, Ms Nielson made access to an "online store" which was advertising for sale a "New Nokia 8800 Limited Edition Gold Aussie Unlocked". The respondent was responsible for that entry in the online store, and was offering that item for sale. Ms Neilson purchased it, for a price of $563, plus $18 postage. On about 6 November 2007, she received her purchase, and it consisted of the items referred to in par (b) of the particulars to which I have referred. 4. The online store to which Ms Nielson had access for the purpose of purchasing her 8800 phone and accessories also promoted the sale of other models of supposedly Nokia phones. Likewise, the email which Ms Nielson received confirming her purchase referred to other supposedly Nokia phones which were available for purchase in the same way. I am satisfied that it was the respondent who was responsible for these entries in the online store, and that he was thereby offering for sale phones and accessories which he held out to have originated from the applicant, but which did not do so, and used the applicant's trade mark for the purpose. (Emphasis added.) 15 Both a web page of the eBay store on the date of the trap order and the email documentation generated by the order are in evidence. They revealed the following: (i) Mr Liu had been conducting his "eBay store" since 23 April 2007; (ii) by the time of the trap purchase he had sold 187 items, though it is not known how many of this number were infringing products; (iii) of the four types of mobile phone advertised on the face of the web page or else contained in email communications, two were of allegedly Nokia products; and (iv) the web page for the "Nokia 8800 Limited Edition Gold Aussie Unlocked" mobile phone indicated that six of these items were then available for purchase. 16 It could be inferred from the evidence before the primary judge that the phone sold to Ms Nielson for $563 would most likely retail for about $1,100.

THE ASSESSMENT OF DAMAGES 17 The assessment proceeded on the appointed day in the absence of Mr Liu. The case put by Nokia was that it should be inferred (a) from the number of goods seized by Customs and from the on-line promotional activity engaged in by Mr Liu, that he was most probably engaged in the importation and sale of counterfeit Nokia mobile phones on a commercial scale; and (b) Nokia had lost substantial sales as a result of Liu's activities. Nokia went on to submit that, if his Honour was satisfied that Nokia had suffered damage as a result of the relevant unlawful conduct, the court must do its best to assess the quantum of damages, even if a broad estimation, or even guesswork to an extent, was involved. The primary judge was invited to conclude the loss suffered was in the region of $50,000 to $100,000. 18 His Honour, first, indicated that Nokia provided virtually no evidence of the way it conducted its business and, critically, no evidence of the money loss suffered by the applicant each time a sale of a mobile phone was not made. He considered he had not been provided with means to put a dollar value upon Nokia's loss. His Honour went on (Reasons [17]-[19]): While I accept that the court may often be required to use broad estimations, and even sometimes guesswork, where the assessment of damages is concerned in a case such as the present, I would not be prepared to tread that path where the applicant had it within its power to improve the accuracy of the evidentiary base required for the calculation of damages, but has not done so: see Winning Appliances Pty Ltd v Dean Appliances Pty Ltd (1995) 32 IPR 65, 67-68. However these considerations may be, there is a more fundamental problem with the approach which I have been invited to take by counsel for the applicant. Counsel submitted that the orders made by the court on 4 June 2008 constituted final judgment in the applicant's favour. I agree. So far as par 7 of those orders is concerned, the only question which arises is the assessment of damages to which the applicant is entitled on that judgment. However, the only respect in which the orders of 4 June 2008 involve findings against the respondent relates to his importation of the items seized by Customs on 19 February 2008. In no other respect is there a finding, by consent or otherwise, that the respondent infringed the applicant's trade marks. In the circumstances, the assessment of damages for which par 7 of those orders provides must be limited to damages arising from the unlawful conduct constituted by that importation. The mobile phones seized by Customs never found their way to the respondent. They were forfeited to the Commonwealth, and disposed of as directed by the Chief Executive Officer of Customs. Whatever may have been the situation generally, it is clear that the applicant did not lose any sales as a result of the respondent's importation of those mobile phones. Neither was the applicant's reputation or standing damaged in any way. Counsel for the applicant was unable to identify any respect in which the applicant suffered damage as a result of the importation of those mobile phones, and, for my own part, I cannot see any. The need to make estimations, or to engage in guesswork, does not arise in the present case, since I am not satisfied that the applicant has suffered any damage at all as a result of the unlawful conduct which was the subject of final judgment in its favour. His Honour concluded Nokia was entitled only to an award of nominal damages. 19 On the issue of costs, his Honour considered that, as Nokia had failed on the only question which arose on the assessment, it was not entitled to costs at all on that component of the proceedings generally. However, that component apart, it was entitled to costs in the proceeding.

RELIEF FROM DISCOUNT OF COSTS AWARD 20 Having only been awarded $10 by way of nominal damages the question then arose whether Nokia's costs award should be discounted under O 62 r 36A. 21 The rule, for present purposes, provided: 36A Reduction in costs otherwise allowable (1) Where a party is awarded judgment for less than $100,000 on a claim (not including a cross-claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders. (2) If the Court or a Judge is of the opinion that a proceeding (including a cross-claim for a money sum or damages) brought in this Court could more suitably have been brought in another court or in a tribunal and so declares, then any costs to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order. His Honour dealt with the matter under subrule (1). He considered this subrule operated independently of subrule (2), though he was of the view that the availability of another court or tribunal "in which the proceeding might more suitably have been brought" was not always to be regarded as irrelevant to the exercise of the discretion under subrule (1): Reasons [28]. He considered the principal concern of r 36A(1) is that small claims should be accompanied by small costs awards: Reasons [30]. While the seeking of other remedies might have the result of "shifting the centre of gravity of the case away from the money award" to an extent that would make it unjust to allow subrule (1) to apply, his Honour did not consider Nokia had made good a case on this ground for an order excluding the subrule's operation: Reasons [33]. Nokia's case did not involve any degree of complexity; it was at the uncomplicated end of the spectrum: Reasons [33]. His Honour declined to order "otherwise" under O 62 r 36A(1).

Issue One: The assessment of damages 22 By way of preface, it is necessary that we make preliminary comments, first upon Nokia's pleading, secondly, upon the Consent Orders and, thirdly, upon the construction and interpretation of court orders. 23 First, the pleading. All that needs to be emphasised are that (i) the manner in which Nokia's four, specified, trade marks were alleged to have been infringed in para 4 of the Statement of Claim was by conduct which contravened s 120(1) of the Trade Marks Act 1995; and (ii) that "manner" of infringement had been particularised in a way that complied with the requirement of O 58 r 18 of the Federal Court Rules, ie "at least one instance" of the type of infringement alleged has been particularised. 24 Secondly, the consent orders. Paragraph 1 of the orders described the importation of the goods containing the offending marks without Nokia's licence or authority as having constituted an infringement of the four Nokia trade marks. A contravention of s 120(1) of the TM Act had thus been found (by consent) and, as provided in para 2 of the orders, a final injunction was ordered. That injunction in substance enjoined Mr Liu, his employees, etc from infringing any of the four marks in the manner proscribed not only by s 120(1) but also by s 120(2)(a) and (b) of the Act. This enlargement of the conduct prohibited by the injunction was, seemingly, in response to evidence of the manner of infringements filed by Nokia in support of its application. What we would emphasise is that the injunction itself was general in its terms. It was not qualified by reference to specific and particularised instances of infringement. We would also note in passing that, in his reasons, the primary judge found other instances of infringement of the Nokia marks beyond that agreed in para 1 of the orders. 25 Paragraph 3 presupposed the very possibility of such further instances. It required Mr Liu to deliver up for destruction all goods to which an infringing mark had been applied, which were in his or his employee's, etc. possession, power, custody or control. 26 Importantly, paras 5 and 6 imposed disclosure and discovery obligations on Mr Liu in respect of his suppliers of, and of his purchases and sales of, infringing items. Those orders were not limited to already proved or found instances of infringement. They were, we would note, relatively characteristic of orders made on an inquiry as to damages. 27 Order 7 presupposed that Nokia "may be able to recover substantial damages" (cf Kerly 19-129) in ordering that Nokia be paid damages to be assessed or, at its option, "the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks". 28 The final matter we would note relates to the formatting of the consent orders themselves. While the finding of infringements by importation in para 1 took the form of a Court "order", it had in substance the character of a declaration. Paras 2 to 4 of the orders fell under the heading: BY WAY OF FINAL JUDGMENT UNDER PARAGRAPHS 1, 3 AND 4 OF THE APPLICATION HEREIN THE COURT ORDERS BY CONSENT THAT: The paragraphs in the Application so referred to were the claims for injunctive relief (para 1) and delivery up and destruction (paras 3 and 4). Paragraphs 2 to 4 in the orders reflected these. The remaining substantive consent orders dealt with disclosure and discovery (paras 5 and 6), the assessment of damages (para 7) and costs (para 8). These orders came under the heading: THE COURT FURTHER ORDERS BY CONSENT THAT: and, in the case of orders 5 to 6, were clearly intended to be in aid of the alternative claims for relief by way of damages or an account of profits, sought in paras 5 and 6 of the Application. 29 Thirdly, the construction and interpretation of court orders. As the appeal involves what is, in essence, the proper construction of the consent orders, it is necessary that we refer briefly to interpretative principles properly to be applied to court orders. We refrain from any extensive general consideration of this subject. It was not a matter on which submissions have been made by Nokia yet there are clear indications that, as with the interpretation of statutes (see eg CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408) and of contracts (see eg Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]), the "ordinary rules of construction" of orders (cf Repatriation Commission v Nation (1995) 57 FCR 25 at 33-34 (Full Court)) as well are in evolution: see Athens v Randwick City Council (2005) 64 NSWLR 58 at [128]-[140] per Santow JA and [141] per Tobias JA; Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90 at [23]. 30 The orders in question are consent orders. Accordingly, all we need note for present purposes are the recent, uncontentious observations of Campbell JA in the New South Wales Court of Appeal (with whom Allsop P and Bastin JA agreed) in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 at [109] that: It is well established that in construction of consent orders evidence of surrounding circumstances is admissible: Rogers v Wentworth (NSWCA, 18 April 1988, unreported), at 18-19 per Hope JA (with whom Samuels JA agreed) at 6-8 per Mahoney JA; S & M Motor Repairs Pty Ltd v Caltex Oil (Aust) Pty Ltd (1988) 12 NSWLR 348 at 387D-E per Priestley and Clarke JJA; Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 at 573-5 [39]-[45]; Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58 at 70 [28] per Hodgson JA (with whom Santow and Tobias JJA relevantly agreed). We would add that in Kirkpatrick v Kotis [2004] NSWSC 1265, Campbell J (as he then was), after reviewing Australian and English authority, expressed the view (at [45]) that the surrounding circumstances which can be used to construe a consent order "are those which can be used to construe a contract": see also Athens, at [28]. 31 The particular consent orders in this matter were not accompanied by, and did not give expression to, reasons for judgment: on the significance of reasons in construing court orders, see Athens, at [129] ff. Nonetheless, as is apparent on their face, the orders draw meaning both from the Application and Statement of Claim filed in the proceedings and from evidence filed in support of the proceedings. As we will indicate below, they also are informed by well accepted practices adopted in trademark infringement litigation. These last, in our view, constitute part of the "factual matrix", the "objective setting" or, to use the contemporary interpretative formula, the "context" (cf Ho v Grigor [2006] FCA 417 at [29]) in which the consent orders are to be construed. 32 The question of construction raised, though not formulated by Nokia as such, is whether para 1 of the consent orders was intended merely to instantiate an act of infringement, ie the importation of the goods later seized, or was expressed as a limitation upon the scope of the assessment of damages contained in order 7. 33 It has been a long established practice in intellectual property proceedings to split the determination of liability for infringement and, if appropriate, the grant of injunctive relief on the one hand, and the award of relief by way of damages or (at the injured party's election) an account of profits on the other: see eg A G Spalding & Bros v A W Gamage (1913) 30 RPC esp at 400; affd (1915) 32 RPC 273; LED Builders Pty Ltd v Eagle Homes Pty Ltd (No 3) (1996) 36 IPR 293; and see generally Kerly's Law of Trade Marks and Trade Names, Ch 19 (14th ed, 2005). The present consent orders reflect that practice. The practice itself has in some degree influenced, and has led to accepted understandings about, the proper function of, and the limits to, the two stages of a split proceeding. 34 In trademark infringement proceedings in this country, for example, the liability stage is focussed on establishing the fact and manner of infringement(s) of the applicant's mark(s) and, where appropriate, the award of injunctive relief prohibiting such infringing conduct. It is not directed to the proof of each and every instance of infringement which, at the second stage of the proceedings, would justify the award of damages or an account of profits. So it is that O 58 r 18 of the Federal Court Rules requires that in trademark infringement proceedings: … particulars of the infringement must specify the manner in which the trade mark is alleged to be infringed and must give at least one instance of each type of infringement alleged. As we have noted, the present Statement of Claim gave two such particularised instances. 35 Establishing the manner of infringement (though not necessarily all the instances of such infringement) will, in turn contrive both the type of act(s) prohibited by such injunctive relief as may be granted and/or the scope of any order made as to the assessment of damages (or an accounting for profits made) on account of such past act(s). 36 The link between the manner of infringement found - and often enjoined - and the subsequent award of relief by way of damages (or an account) is reflected in the notion that: the scope of the inquiry as to damages corresponds to that of the injunction See National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199 at 1204-1205; or as put in Kerly (at 19-131): The proper form of an order for an inquiry as to damages occasioned by the infringement of a mark is, therefore, what damage (if any) has the claimant sustained by reason of the acts, repetition of which is restrained by the judgment. See also the form of the orders in A G Spalding 30 RPC at 400. 37 The reason an applicant is not required to establish at the liability stage all the instances of infringement which may have given rise to loss is essentially an expedient one, given the purpose behind the common practice of splitting intellectual property proceedings. It was explained by Harman LJ in National Broach (at 1204-1205) in relation to an inquiry as to damages in a breach of confidence case: It was the plaintiffs' initial complaint that the defendants had, in breach of the agreement, made use of confidential information in the form of drawings supplied by the plaintiffs for the purpose of the licence only. This was a matter in contest right up to the first day of the trial, when the defendants admitted that they had made use of the plaintiffs' drawings and submitted to an injunction which is the initial relief in Cross J's order. Cross J, however, when he came to the inquiry into the damages arising out of this breach, limited it to damages arising out of drawings of which particulars had been delivered under paragraph 15 of the statement of claim. The particulars enumerated something like 100 of such drawings and were put forward as instances on which, for the purposes of the trial, the plaintiffs proposed to rely. The plaintiffs sought to reserve the right to add to the instances and claimed relief in respect of wrongful user of drawings "whether particularised or not." Cross J, however, limited the inquiry to the drawings already so particularised. In my judgment, this is not in accordance with the practice in actions of this nature. It is only in patent actions that the rules (Ord 53A, r 12) specifically direct that instances only shall be given, but a similar practice prevails in trade mark and passing-off actions where, in my experience, the scope of the inquiry as to damages corresponds to that of the injunction granted - see A G Spalding & Brothers v A W Gamage Ltd - and it seems to me that it would unduly lengthen the trial of this kind of action for a plaintiff to be obliged to give in advance details of every instance of wrongful dealing on which he intends to rely on the inquiry.

38 As we have noted, the Federal Court Rules mandate the practice in trademark cases to which his Lordship referred. 39 While there was some early reserve expressed about allowing an inquiry as to damages which encompassed instances of infringement particularised but not proved at the liability hearing: see eg Aktiebolaget Manus v R J Fullwood & Bland Ltd (1949) 66 RPC 285 at 288-289; it is well settled both in England and Australia since National Broach, that on an inquiry as to damages the claimant is "entitled to orders designed to identify any further [instances of] infringement in the past": Sun Microsystems Inc v Amtec Computer Corp Ltd [2006] FSR 35 at [24]; Independiente Ltd v Music Trading-on-Line (HK) Ltd [2007] FSR 21 at [54]; Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 784 at [8] and [14]. We note in passing that the disclosure and discovery orders in the consent orders in this matter (ie orders 5 and 6) had precisely this purpose. 40 Having regard both to the principles to be applied to the construction of consent orders and to the practices in trademark infringement litigation to which we have referred above, we are satisfied that the consent orders in the present matter not only reflected those practices but were intended to - and can - be given their full force and effect. 41 The finding in paragraph 1 of the orders merely instantiated the manner of infringement pleaded consistent with the requirements of O 58 r 18 of the Federal Court Rules. It was not a limitation upon the scope either of the injunction or of the assessment of damages: cf National Broach, at 1204-1205. The remaining orders in consequence were to take effect according to their terms. 42 Orders 2 to 4 were the final orders made. As we have noted, the scope of the assessment of damages envisaged in order 7 was as to the damage (if any) Nokia sustained by reason of the acts, the repetition of which was restrained by order 2. Both the evidence filed in support of the application and the findings actually made by his Honour at the assessment hearing clearly demonstrated there were further instances of infringement beyond that found in order 1. We refer in particular to the trap purchase and to the infringing conduct the evidence of that purchase revealed. Such instances were within the scope of the assessment ordered. 43 The construction we have given the consent orders is one that gives effect to them according to their terms. It admitted of the possibility that there may have been infringing items that had to be delivered up for destruction under order 3; that there may have been disclosable or discoverable material which would evidence sources of loss to Nokia or of profit to Mr Liu or which might disclose further instances of infringements (cf orders 5 and 6). On the construction placed on the orders by the primary judge, these orders had no practical function. 44 We are in consequence satisfied that his Honour erred in the approach he took to the scope of the assessment inquiry. To this extent the appellant has made out ground 2 of its notice of appeal. While we appreciate the practical significance to Nokia of this conclusion - it confirms the continuing vitality and utility of the practices in trademark infringement litigation we have described - it brings with it no practical financial benefit to Nokia in the form of any entitlement to damages beyond nominal damages. We turn briefly to this matter which embodies two subsidiary matters in the appeal (see Grounds 4 to 6), on both of which Nokia must fail. 45 The party claiming damages resulting from the infringement of its trademark bears the onus of demonstrating what loss it actually sustained by reason of the infringer's conduct. The evidence, as we have indicated, revealed several instances of infringing conduct (beyond the importation of the seized goods) which may have occasioned actual loss to Nokia. However, as his Honour observed, Nokia had not provided the Court with the means for putting a dollar value on its alleged losses and he declined to do so. We agree. On the appeal Nokia argued only faintly to the contrary. 46 Furthermore, Nokia's omission in failing to provide an evidentiary basis for assessing its loss cannot be overcome by the assertion that it was Mr Liu's inadequate compliance or non-compliance with court orders that disabled it from proving the dimensions of its loss. An award of damages is compensatory only: General Tire and Rubber Company v Firestone Tyre and Rubber Company Ltd [1976] 93 RPC 197 at 212. An infringer's non-cooperation which renders available evidence inaccessible to a claimant may justify "speculation and even guesswork" in the quantification of a claimant's loss: see Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293 at [41]-[42]. It does not justify "guesswork" occasioned by a claimant's failure to provide evidence basic to the calculation of damages which it has within its own power. Again Nokia has accepted the limitations of its own case in this respect.

Issue Two: The Costs Appeal 47 To reiterate, the primary judge refused to order costs in relation to the assessment of damages. As to the rest of the proceeding, his Honour was unprepared to order "otherwise" under O 62 r 36A(1) of the Federal Court Rules with the consequence that, Nokia having recovered only $10 by way of nominal damages in the proceeding, its costs were reduced by one third of the amount allowable under O 62. 48 On the appeal Nokia has challenged the refusal to make an order under O 62 r 36A(1) and it seeks an order for its costs including for the assessment of damages. 49 It should be said by way of preface that order 8 of the consent orders required Mr Liu to pay Nokia's cost of the proceeding to the date of the consent order (ie 4 June 2008). As we understand it, the costs governed by this order as well as those incurred after 4 June 2008 are the subject of this appeal. 50 As to the claim for costs on the damages assessment, we consider his Honour's decision disclosed no error. It is well accepted that a claimant who seeks an inquiry as to damages does so at its own risk as to costs: see A G Spalding & Bros, 32 RPC at 287. Where, as here, Nokia prosecuted the assessment after having received Mr Liu's paltry disclosure and discovery and consequent upon his failure to attend the examination, it necessarily assumed the risk that any damages award it secured might be slight given the sparse evidence of instances of infringement. It exaggerated that risk, as we have noted, by not advancing evidence to facilitate calculation of damages. The primary judge's refusal to award costs on this component of the proceedings was the appropriate response to the choices Nokia made. 51 As to the refusal to order otherwise under O 62 r 36A(1), the situation is less clear cut. 52 In a trademark proceeding, only the Federal Court and State and Territory Supreme Courts are "prescribed courts" for the purposes of the TM Act: see s 190. There has been no direct conferral of jurisdiction under the Act on inferior courts. Nonetheless, under s 32AB of the Federal Court of Australia Act 1976, the Federal Court can remit an infringement proceedings to the Federal Magistrates Court in accordance with the requirements of s 32AB(6) and O 82 of the Rules. Such a remitter was not applied for in this matter and it is by no means clear that transfer to the Federal Magistrates Court was a realistic and available option in the circumstances. We would note by way of contrast, that the Copyright Act 1968 (Cth) has conferred jurisdiction on the Federal Magistrates Court in respect of copyright infringement proceedings: s 131D. 53 We emphasise this for this reason. For practical purposes Nokia was obliged to bring the present proceedings in a superior court and this, characteristically would be in the Federal Court. 54 The second matter we would emphasise is that, in infringement cases similar in character to the present, the effective relief sought - and obtained - will often be an injunction and this for the reason that further relief whether by way of damages or an account is likely to be unyielding of any significant return to the claimant even if the monetary liability itself could be calculated. 55 This likelihood, in our view, gives added significance to the common practice of splitting intellectual property infringement proceedings. With orders for discovery and disclosure deferred as a rule until liability for infringement has been established, a claimant is more likely at that later stage to be in a position to make a realistic appraisal of whether, consistent with the principle of a costs containment for small claims informing O 62 r 36A(1), it remains reasonable to prosecute a claim for damages or for an account, albeit at the risk of a reduced costs award or of no costs award at all. 56 We have already indicated why we agree with the primary judge that Nokia should be denied any award of costs for its prosecution of its claim for damages, irrespective of the provisions of O 62 r 36A(1). 57 We acknowledge that the award of costs was in the discretion of the primary judge: see Federal Court of Australia Act 1976, s 43(2); and that an appeal court properly ought be cautious in discerning a miscarriage in the exercise of that discretion such as would, on accepted principles: see House v The King (1936) 55 CLR 499 at 507; justify it exercising its own discretion in substitution for that of his Honour: Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 at 222. However, we are satisfied that such a course is warranted in this matter. In saying this we do not suggest that the primary judge erred in his statement of the applicable principles informing the s 43 discretion. Rather we consider that, in misconceiving the effect of the consent orders, his Honour overlooked the purpose and significance of the splitting practice adopted in this matter. As was indicated in National Broach (at 1204-1205), the infringement and injunction component of such proceedings was designed to curtail the length, and the costs, of the liability hearing. However, by deferring discovery and disclosure until after infringement had been established it could occasion the deferral of an informed decision as to whether further relief by way of damages or an account ought be pursued and, if so, at what likely risk in terms of a reduced costs award under O 62 r 36A(1). In the present matter, given Mr Liu's supposed compliance with the consent orders and his non-cooperation thereafter, Nokia ought to have appreciated the risk it ran in pursuing the damages assessment and in the manner it did. Its miscalculation was at its own cost. 58 In the particular circumstances of this matter, we do not consider that the cost minimisation principle informing O 62 r 36A(1) ought to have been applied to the proceedings generally. Unlike his Honour, we consider that the injunctive relief sought was the indispensable (Nokia in its submissions described it as "the predominant") element in the suite of relief sought. If Nokia had refrained after discovery and disclosure from proceeding to its doomed assessment of damages, there could in our view have been no question but that it would have been entitled to its costs up to the consent order and without reduction. It was in the appropriate Court for the relief it had obtained to that point and that relief as we have indicated was basic to its proceeding. In saying this we do not overlook that O 62 r 36A(1) is "triggered by a money judgment": Collier Constructions Pty Ltd v Foskett Pty Ltd (1992) 33 FCR 591 at 592. Rather we are indicating that, to that stage in the proceeding, no reason existed which would warrant subjecting Nokia to the cost containment principle immanent in O 62 r 36A(1). To that extent we at least will order otherwise for the purposes of the sub-rule. 59 Given its then limited knowledge about the extent of infringement of its marks, Nokia clearly was entitled to seek to derive further information about infringements and, correspondingly, about the dimensions of its loss. The disclosure and discovery consent orders were in aid of those ends as was the abortive oral examination. Though these steps were directed towards its claim for damages, they were in our view steps reasonably taken by it for the purposes of ascertaining whether it ought prosecute its claim at all or subject to the risk of costs reduction. Nonetheless, we consider that, probably from the time of the consent orders and assuredly after Mr Liu's purported compliance with the consent orders as to disclosure and discovery, Nokia ought reasonably to have been aware of the costs risks it could be likely to run in proceeding to an assessment of damages. That risk was realised in a manner far more adverse to its interests than it may have envisaged. For that Nokia had itself to blame. 60 For present purposes, though, we consider that from the date of the consent order, Nokia's costs were incurred under the shadow of O 62 r 36A(1). We can see no reason why, in the circumstances, the court ought order that the sub-rule should not apply. To that extent we agree with his Honour's decision. 61 Our conclusion is founded on the distinctive circumstances of this case and upon the error we perceive his Honour to have made in his appreciation of them. It is necessary for us to emphasise that we should not be taken as suggesting either that O 62 r 36A(1) has no role to play where a monetary judgment of less than $100,000 is awarded in combination with other relief such as an injunction: see Shahid v Australian College of Dermatologists (No 2) [2008] FCAFC 98 at [14]; or that the splitting of proceedings between liability and damages will necessarily immunise the liability component from O 62 r 36A(1).

CONCLUSION 62 We will order that the appeal be allowed in part and that order 2 of the orders under appeal be varied to provide as follows: 2. Subject to any order previously made by the Court the respondent pay the applicant: (a) the applicant's costs of the proceeding including reserved costs to the date of the consent orders of 4 June 2008; and (b) the applicant's costs of the proceeding including reserved costs from that date until the 11 December 2008 hearing of the assessment of damages at the reduced rate specified in O 62 r 36A(1) of the Federal Court Rules. 3. There be no order as to costs of the assessment of damages on 11 December 2008. 63 Finally, while Nokia realised its principal purpose in the appeal (which was to secure a finding that order 1 of the consent orders did not constitute a limitation upon the scope of assessment of damages mandated by order 7), it has had quite minor success from the appeal itself. In the circumstances we consider it appropriate to make no order as to the costs of the appeal. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Sundberg and Edmonds.

Associate: Dated: 1 October 2009 Counsel for the Appellant: Mr D Shavin QC with Mr M Goldblatt

Solicitor for the Appellant: Corrs Chambers Westgarth

Counsel for the Respondent: The respondent did not appear.