Oakley Inc v Oslu Import and Export Pty Ltd

REASONS FOR JUDGMENT 1 I have in this proceedings made declarations that the first respondent, Oslu Import and Export Pty Ltd ("Oslu") has infringed (i) Australian Registered Designs No 125520 and No 128173 and (ii) Australian Registered Trade Mark No B387164 by its importation and sale of sunglasses having a particular design and/or wordmark. I granted injunctive relief against Oslu in respect of the design infringements. 2 Oakley sought in addition injunctive relief against the second respondent, Guo Qiang Tao who was Oslu's director and sole shareholder, on the basis of accessorial liability. At the original hearing I was not addressed directly on the incidents of this liability. Accordingly I deferred consideration of this claim and invited submissions on it. 3 Further submissions were put in by Oakley in which (inter alia) it sought to amend its Statement of Claim so as to include a claim of direct infringement by Mr Tao. I rejected that claim at a hearing on 7 September 2000. Prior to that hearing I drew the applicant's attention to the then recent decision of Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980 to the extent that it addressed the contentious issue of the personal liability of a director for his or her company's wrongdoing. Additional written submissions were later filed on that question. 4 Mr Tao, though present at the September hearing, did not make any submissions. He has elected in effect to abide by such orders as I make in the matter. I informed him of the issues that were to be decided by me. 5 Insofar as Mr Tao's secondary or accessorial liability is concerned it is clear that as the controller and moving spirit of the Oslu company, he directed and procured Oslu to commit the infringing conduct. Mr Tao's evidence at the principal hearing was unacceptable and unbelievable. Though he may well have positively sought out infringing styles of glasses, I am satisfied that, at the least, he was indifferent to whether Oslu was supplied with infringing styles. He was in 1998 clearly put on notice on several occasions prior to the initiation of this proceeding that Oslu had infringing glasses in its possession. I am prepared to infer that he was fully aware that the Oslu purchases he procured could possibly contain such styles as I have found they did. These conclusions are sufficient to justify a finding of secondary tortious liability in Mr Tao for Oslu's primary wrong as infringer. 6 In Pioneer Electronics Australia Pty Ltd v Lee [2000] FCA 1926 Sundberg J helpfully reviewed the "uncertain state" of the law on the personal liability of a director for corporate torts including the Root Quality decision to which I have referred. His Honour's treatment of the law and his conclusions make it unnecessary for me to retraverse independently the matters with which he dealt. He indicated that there are four views which have attracted judicial support. These are (1) a director will be liable along with the company when he or she has procured or directed it to commit a tort; (2) a director will be liable only if he has made the wrongful act his own as distinct from it being the company's act; (3) a director will be liable if he has assumed responsibility for the company's acts; and (4) a director is not liable for procuring the company to infringe the rights of others. His Honour concluded that the clear preponderance of authority, especially in this Court, favours the first approach. Applying the comity principle, Sundberg J in turn adopted the first approach not being convinced that it is clearly wrong. 7 For like reasons I also will adopt that approach while acknowledging that the question of accessorial liability of a director is a vexed one on which views differ. Given my finding I will order injunctive relief be granted against Mr Tao. I do not consider that its award is unnecessary given Mr Tao's past conduct in this matter. 8 Given the course this matter has taken since its inception, Mr Tao's lack of compliance with directions and his contribution to the subsisting need to adjourn consideration of possible pecuniary relief, the case is an appropriate one in which to make an immediate award of costs dealing with the issues of liability and declaratory and injunctive relief (including Mr Tao's personal liability). Because of the enduring prospect of delay in finalising such pecuniary claim as Oakley may wish still to prosecute, I intend ordering that the costs be taxed forthwith. That order may in the circumstances have the effect of bring the entire proceeding to an end. Such is a matter initially for the applicant. 9 The orders of the court will be that: (1) an injunction be granted to restrain the second respondent whether by himself, his servants, agents or otherwise howsoever, during the term of Australian Registered Designs No 125520 and No 128173 and any extension thereof, from directing or procuring the first respondent to infringe either of the said registered designs and in particular by making, importing, hiring or selling, offering or keeping for sale or hire sunglasses or any other eyeglasses or eyeglass frames with lenses to which either or both of the said designs or a fraudulent or obvious imitation of either or both of those designs has been applied; (2) the respondents pay the applicant's costs of the application on the issues of liability and declaratory and injunctive relief such costs to be taxed forthwith. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.