6.1.3 The threshold issue
439 Given my conclusion in relation to PDP's claim for trade mark infringement under s 120 of TM Act, it is not strictly necessary for me to consider what I have termed the threshold issue. However, I do so for completeness and against the possibility that I am found to be wrong in my conclusions in relation to PDP's trade mark infringement claim.
440 The issue raised by Grasshopper is whether use of the New Wicked Mark by a trading entity authorised to do so by it constitutes use of the New Wicked Mark as a trade mark by Grasshopper for the purposes of s 120 of the TM Act. Grasshopper submits that the authorised use by other entities of the New Wicked Mark is not capable of constituting trade mark infringement by it within the meaning of s 120 of the TM Act. It contends that is so for the following reasons.
441 First, it submits that authorisation of infringement is a separate statutory tort and that no provision in the TM Act extends civil liability to secondary tortfeasors. Grasshopper says that this position is to be contrasted with that found in other intellectual property legislation in which there are express provisions which provide that authorisation constitutes infringement, referring, by way of example, to s 36(1)-(1A) and s 101(1)-(1A) of the Copyright Act 1968 (Cth) (Copyright Act).
442 Secondly, Grasshopper relies on the decision in Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd [2006] FCA 275; (2006) 68 IPR 229 (Aristocrat Technologies) at [133]-[135] where Wilcox J accepted a submission that one cannot infringe a registered trade mark merely by authorising another to do so and thus rejected the applicant's trade mark infringement case. Grasshopper submits that this Court should follow that decision unless satisfied it is plainly wrong.
443 Thirdly, Grasshopper refers to s 7(3) of the TM Act (see [433] above) and contends that, in contrast, under s 120 of the TM Act a person infringes a registered trade mark if the person "uses as a trade mark a sign" that meets the requirements of any of the subsections of s 120. Grasshopper says that this does not engage the authorised use provision in s 7(3) of the TM Act but, rather, that s 120 fastens upon the use of a "sign" as a trade mark, not "use of a trade mark" or use by the "owner".
444 Fourthly, Grasshopper submits that PDP's approach means that the question of whether an entity which authorises another's use of a mark would itself infringe would turn on whether the first mentioned entity was the "owner" of the mark. This, it says, would make no sense.
445 Fifthly, Grasshopper submits that the authorised use provisions operate in the context of requirements in the TM Act concerning "use of a trade mark" by the owner. It refers, by way of example, to s 100(1)-(3) of the TM Act each of which include as note 1:
If the registered owner of the trade mark has authorised another person to use it, any authorised use of the trade mark by that person is taken to be a use of the trade mark by the registered owner (see subsection 7(3)).
Grasshopper observes that there is no such note to s 120 of the TM Act and that s 15AB of the Acts Interpretation Act 1901 (Cth) permits the use of notes to determine the meaning of an "ambiguous or obscure" provision.
446 Finally, Grasshopper submits that this position makes sense from a policy point of view. It says that the purpose of the authorised use provisions is for there to be a mechanism by which the trade mark owner can maintain registration of its trade mark while allowing others to use it. Its purpose is not to widen the scope of what may constitute infringement or to create a separate statutory tort.
447 PDP relies on s 7 and s 8 of the TM Act. It submits that there is nothing in the statutory language of ss 7, 8 or 120 of the TM Act limiting the regime to registered marks or which indicates that the authorisation regime is the equivalent of a "one way street", whereby the owner of the mark only benefits from use occurring via an authorised user, but it is somehow immune from a finding of direct infringement via the same use. PDP submits that the authorities demonstrate that where an authorised user has engaged in infringing conduct pursuant to the authorisation, the owner of that mark (whether the infringing mark is registered or unregistered) is also liable for direct infringement.
448 In support of its position, PDP relies on Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd (2016) 243 FCR 152 (Scandinavian Tobacco) at [54], Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720; (2019) 369 ALR 299 (Southcorp) and Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280; (2016) 335 ALR 144 (Playgro). PDP submits that the authorities cited by Grasshopper can be distinguished on the facts and that the authorities on which it relies are the correct and current state of the law.
449 The issue for resolution is whether, where an authorised user is alleged to have engaged in infringing conduct under s 120 of the TM Act pursuant to its authorisation, the owner of the infringing mark (whether registered or unregistered) can also be liable for direct infringement under s 120 of the TM Act.
450 Section 7(3) of the TM Act provides that "[a]n authorised use of a trade mark by a person … is taken, for the purposes of this Act, to be use of a trade mark by the owner of the trade mark" (emphasis added). Section 8, in turn, defines "authorised user" and "authorised use" (see [433] above). Section 120 of the TM Act (see [430] above) focuses on the use by a person of a sign as a trade mark that is substantially identical with or deceptively similar to a registered trade mark in relation to, among other things, goods or goods of the same description in respect of which the trade mark is registered.
451 Two things can be observed from the language of these sections. First, the effect of s 7(3) is that use of a trade mark, in this case the New Wicked Mark, by a person, in this case one of the Valentine Companies other than Grasshopper, under the control of the owner of the mark, Grasshopper, is taken to be use of the trade mark by the owner of that mark, that is, Grasshopper. Section 7(3) provides that the section operates for the purposes of the TM Act. Secondly, as PDP submits, there is nothing in the language of ss 7, 8 or 120 of the TM Act which limits the concept of authorised use to registered marks.
452 Section 120 of the TM Act focuses on use of a sign by a person. That is, infringement will be made out where, for example, a person uses as a trade mark a sign that is substantially identical with or deceptively similar to a registered trade mark in relation to goods that are the same or of the same description as goods in respect of which the trade mark is registered. The notes to each of s 120(1), (2) and (3) of the TM Act relevantly refer the reader to s 6 (for the definition of registered owner) and s 10 (definition of deceptive similarity) but do not refer to s 7(3). As Grasshopper points out, this is in contrast to other sections of the TM Act. For example, note 1 to s 101(4) which is in Pt 9 "Removal of trade mark from Register for non-use" (see [245] above) refers to s 7(3) of the TM Act and includes "[i]f the registered owner of a trade mark has authorised another person to use it, any authorised use of the trade mark by that person is taken to be a use of the trade mark by the registered owner".
453 Save in one limited respect I was not taken by the parties to any case that had considered the issue now raised by Grasshopper, namely whether by the authorised use of the New Wicked Mark by the other Valentine Companies, Grasshopper can be found to have directly infringed any of the Wicked Sister Marks under s 120 of the TM Act.
454 As noted at [442] above, Grasshopper relies on the decision in Aristocrat Technologies. In that case two associated companies, Aristocrat Technologies Australia Pty Ltd and Aristocrat International Pty Ltd, brought proceedings against Vidtech Gaming Services Pty Ltd and its two directors alleging infringement of the first applicant's trade marks and copyright and contraventions of s 52 of the Trade Practices Act 1974 (Cth) (TPA). Relevantly the first applicant, Aristocrat, was the owner of various registered trade marks that it applied to electronic gaming machines manufactured by it and the second applicant was an authorised user of those marks. The first respondent, Vidtech, carried on the business of purchasing and reconditioning used electronic gaming machines and reselling them, apparently always outside Australia. The second and third respondents participated in the conduct of that business. In the period 2001 to 2004 from time to time one or other of the second and third respondents commissioned VR Farrow & Co Pty Ltd trading as Capre Classic Graphics to produce artwork that included substantial parts of the Aristocrat artwork for a particular model electronic gaming machine. That artwork was displayed on perspex panels that were able to be installed in the electronic gaming machines.
455 As Wilcox J observed much of the case, and thus his Honour's reasons, was focused on the alleged copyright infringement claim. At [133]-[135] Wilcox J addressed the trade mark infringement claim as follows:
133 Counsel for the applicants argued that the respondents infringed their client's trade marks in two ways by:
'(a) reconditioning EGMs with counterfeit artwork that incorporated Aristocrat's registered trade marks for various games; and
(b) using the trade mark "ARISTOCRAT" in relation to the sale of EGMs in circumstances where, by reason of their reconditioning, the EGMs are not the same goods to which the applicants applied their mark.'
134 Counsel for the respondents submitted as follows:
'The perspex panels which were provided did not, according to Mr Farrow's evidence (and the artwork which is seen in the Macau machine) include reference to either the word "Aristocrat" or the word "Queen of the Nile".
Accordingly, the only trade mark infringement that can be argued by Aristocrat would be the application by Capre Classics of the registered marks "Dolphin Treasure", "Penguin Pays" and "Chicken" to perspex panels. The application of those registered trade marks was not carried out by Vidtech itself. It was done by Capre Graphics. The Trade Marks Act does not have a comparable doctrine to the law of authorisation such as operates under copyright law. Vidtech did not sell the panels in Australia. It sold them to overseas purchasers and a sale to overseas purchasers is not a use of the trade mark in Australia, within the reach of the Act. In short, no trade mark infringement has been demonstrated by Aristocrat in these proceedings.'
135 I accept these submissions. The applicants' trade mark claim is not made out.
456 I understand the reference at [134] of Aristocrat Technologies to the "comparable doctrine to the law of authorisation such as operates under copyright law" to be a reference to, for example, s 36 of the Copyright Act which relevantly provides:
(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
(1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:
(a) the extent (if any) of the person's power to prevent the doing of the act concerned;
(b) the nature of any relationship existing between the person and the person who did the act concerned;
(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.
457 In Aristocrat Technologies Wilcox J found that the trade mark infringement claim was not made out. One reason for doing so was because, as his Honour accepted, another company, Capre, and not the first respondent, Vidtech, applied the trade marks to the perspex panels, any infringement of the applicant's trade marks could not have been by Vidtech. This was because under the TM Act there is no "law of authorisation" of the same fashion as found in the Copyright Act. I pause here to note that the facts in Aristocrat Technologies were different to those before me in that the alleged infringing conduct was carried out by an independent third party and was at the request of, or as authorised by, Vidtech.
458 Grasshopper also relies on the decision in Louis Vuitton Malletier SA v Toea Pty Ltd (2006) 156 FCR 158 (Louis Vuitton). In that case the respondent, Toea, was the landlord and operator of a market at which there were some 400 stalls occupied by different traders pursuant to agreements entered into with Toea. The applicant, Louis Vuitton, alleged that various stallholders breached one or more of its trade marks but rather than seek relief against the stallholders it sought relief against Toea and the manager of the market, Mr Rosenlund. At [2] Dowsett J set out the allegations made against Toea and Mr Rosenlund, noting that Louis Vuitton alleged that they:
• were aware that stallholders were infringing the Louis Vuitton trade marks;
• permitted them to continue trading at the Market;
• failed to take adequate steps to prevent them from further infringing the trade marks; and
• derived financial advantage from such continued trading.
It is said that such conduct constituted infringement of the relevant trade marks.
459 At [3] Dowsett J observed that the allegations concerning infringement by individual stallholders were not "seriously disputed" by the respondents and that the issue that arose for determination was whether in the circumstances the respondents, or either of them, had infringed Louis Vuitton's trade marks. Grasshopper relies, in particular, on his Honour's reasons at [143]. For context and in order to understand the case put by Louis Vuitton and his Honour's observations, it is convenient to set out [140]-[143] where, after outlining the facts in detail, under the heading "The Law", his Honour said:
140 In paras 1 and 2 of its outline the applicant puts its case as follows:
1. This proceeding raises for determination by the Court the extent of the obligations of a owner of market premises, where it is drawn to the owner's attention that, over a period of years, some of the stallholder licensees are engaging in the unlawful conduct of selling counterfeit goods and thereby infringing a number of registered trade marks.
2. It is contended that where, as here, the landowner takes no effective steps to stop the conduct but by acts or omissions tacitly accepts it, the landowner in fact joins in the tort and becomes independently liable as a joint tortfeasor.
141 In the course of the trial, the applicant sought to base its case on three different propositions, namely:
• that a person in control of premises who benefits from another's activities on those premises is liable for torts committed by that other person in conducting those activities;
• that a licensor who, having knowledge of past torts committed by a licensee on the relevant premises, permits the licensee to continue using the premises is liable for any further torts (of the same kind) committed by the licensee; and
• that a licensor is liable for torts committed by a licensee in carrying out their joint enterprise.
142 In the course of oral submissions counsel put the case in this way (at TS 200 II 25-30):
Our starting point is very simple, your Honour. When one goes to The Koursk ([1924] P 140) which has been adopted as the foundation of the principle of joint tortfeasorship by the High Court in Thompson's case, [Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574] and we've set it out in paragraph 18 of our outline, Scrutton LJ spoke of two persons who agree on a common action in the course of, and to further which one of them commits a tort.
And that's the foundation of what are joint tortfeasors. In this case, in our respectful submission, the evidence is clear that Toea, as landlord or land owner, and the stallholders, who are two or more persons, agree on a common action, the common action being the promotion of their joint businesses at the market.
143 Given that the relevant cause of action is created by the Trade Marks Act 1995 (Cth) (the "Trade Marks Act"), one might reasonably have expected the applicant's case to commence with an examination of the relevant statutory provisions, with a view to identifying the extent to which either of the respondents could be said to have infringed in the sense defined in s 120. Pursuant to ss 125 and 126, proceedings may be brought for such an infringement, seeking injunctive relief, damages or an account of profits. Criminal liability is imposed by Pt 14. Section 150 provides that a person who aids, abets, counsels, procures or is knowingly concerned in the doing of an act outside of Australia which, if done in Australia, would be an offence, is taken to have committed the offence. That section is said to be without prejudice to the operation of s 5 of the Crimes Act 1914 (Cth) (now s 11.2 of the Criminal Code Act 1995 (Cth)) which deals with aiding, abetting, counselling and procuring an offence committed by another person within Australia. However no provision extends civil liability to "secondary" tortfeasors. Thus the applicant seeks to rely on principles as to liability in tort drawn from the general law.
(Emphasis added.)
460 As Grasshopper points out, and as is made clear in the decisions on which it relies, the TM Act does not include a scheme extending liability to secondary tortfeasors as is the case, for example, in the Copyright Act.
461 PDP relies on three cases, only one of which touches directly upon the issue which has been raised by Grasshopper. The remaining two cases consider whether, given the relevant facts before the Court in each case, there was "use as a trade mark" by the alleged infringer.
462 In Scandinavian Tobacco the relevant facts were that the respondent, Trojan Trading Company Pty Ltd, imported cigars which it repackaged and sold in Australia. These included cigars made by or under the control of the first appellant, STG, and which were supplied in packaging which did not comply with the plain packaging laws. Those cigars were repackaged by Trojan in compliant plain packaging. It was not in dispute that the repackaged cigars were genuine goods made by or under the control of STG or that Trojan applied STG's trade marks, or caused them to be applied, to the goods in the course of their repackaging without the consent of STG. The primary judge found that Trojan did not infringe STG's trade marks. On appeal STG challenged that finding.
463 Two issues arose on appeal: first, whether Trojan used STG's trade marks "as a trade mark" as required by s 120 of the TM Act, a matter raised by Trojan by way of notice of contention; and secondly, whether s 123 of the TM Act applied to any such use. In relation to the first issue, Trojan contended that it did not use STG's trade marks as trade marks because it did not use any of them to do anything more than to indicate a connection in the course of trade between its repackaged goods and the owner of the STG trade marks. In considering that issue, a Full Court of this Court (Besanko, Nicholas and Yates JJ) reviewed the authorities which considered the concept of "use as a trade mark", in particular, in circumstances where a trade mark is affixed to goods by its registered proprietor and those goods are then imported into and sold in Australia by another person. Their Honours observed (at [50]) that by the time the TM Act was drafted the question of whether in those circumstances there was use of the registered mark by the person who imports and sells the relevant goods in Australia was "by no means settled".
464 At [51]-[54] the Full Court said:
51 As we have explained, at a conceptual level, it is difficult to see why a reseller who supplies genuine goods does not use a trade mark which the registered owner previously applied to those goods but does use a trade mark when he or she supplies goods to which a trade mark has been applied by a third party without the consent of the owner. However, there are two policy arguments often advanced to justify this distinction which we will now mention.
52 The first argument focuses on concerns that trade in genuine goods imported from overseas (ie parallel imports) may be impeded by trade mark ownership and licensing structures and arrangements that may make it difficult to establish that the registered owner of a mark has consented to the application of the mark to genuine goods. But in most cases the argument is likely to be answered by giving full effect to the wide language of s 123 of the 1995 Act. Similarly, to the extent that the 1995 Act may have placed the burden of proof of the matters referred to in s 123 upon the respondent, it is also important to recognise that, in a particular case, the evidential burden may quickly shift to the registered owner since it will usually be best placed to know whether a registered trade mark has been applied with or without consent: Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No 3) (2010) ALR 258 at [101].
53 The second argument emphasises the difficulty that may be faced by resellers who may have no sure way of knowing whether a mark applied to goods which they purchase was applied by or with the consent of the trade mark owner. This is, however, a difficulty that resellers have always faced when acquiring goods from anyone other than the registered owner of the mark. In the context of the 1995 Act, the reseller will either have the benefit of s 123 or will be left to rely upon any contractual or other remedies it may have against the person from whom it acquired the goods in the event these are found to be infringing.
54 Turning to other provisions of the 1995 Act, s 7(3) provides that an "authorised use" of a trade mark is taken to be use of the mark by the owner. Section 8(3) contemplates that a person who merely deals with, or provides, in the course of trade, goods in relation to which a mark is used, may be an authorised user of the mark. In such a case there may be use of the mark by both the authorised user and the registered owner. This accords with the view of Aickin J in Pioneer that a person who imports and sells goods to which a mark has been applied by the registered owner will have used the mark. Indeed, it seems to us that his Honour's analysis of the law in Pioneer (including at 688) had a considerable influence upon the drafting of the authorised use provisions.
465 At [56] the Full Court concluded that under the TM Act a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of the manufacture of those goods will have used the mark as a trade mark.
466 The facts in this case and the argument put by Grasshopper are not the same as those before the Full Court in Scandinavian Tobacco. In Scandinavian Tobacco, Trojan, the purchaser of products from the registered proprietor of the mark, affixed the registered proprietor's marks to the repackaged goods and contended, in doing so, it was not using those marks as trade marks. Here, Grasshopper says that it authorised use of the New Wicked Mark by the other Valentine Companies at different points in time, that any alleged infringing conduct for the purposes of s 120 of the TM Act can only have been by those companies and that use of the New Wicked Mark as a trade mark by the other Valentine Companies is not use by it for the purposes of s 120 of the TM Act. PDP contends that by analogy the Full Court's observations at [54] of Scandinavian Tobacco apply equally here. However, I am unable to draw any analogy that might assist PDP from those observations.
467 It is convenient next to consider Playgro. In that case Moshinsky J considered, in the context of an infringement application, whether the respondents used their trade mark (referred to as the Playgo Device Mark) as a trade mark in relation to goods in respect of which the applicant's trade marks were registered, namely playthings, in Australia.
468 Relevantly the respondents, Playgo Art & Craft Manufactory Limited and Playgo Toys Enterprises Limited, were companies incorporated in Hong Kong and members of the Playgo group of companies which designed, manufactured, distributed and wholesaled children's toys. The former, Playgo Craft, was the holding company for the intellectual property of the group while the latter, Playgo Enterprises, was responsible for the distribution and wholesaling of the group's products. On 17 and 19 September 2012 respectively Playgo Craft filed applications to register the Playgo Device Mark as a trade mark in Hong Kong and China in relation to various goods in class 28. Registration was granted on 16 October 2013 (Hong Kong) and 7 April 2014 (China). On 22 April 2013 Playgo Craft applied to register the Playgo Device Mark as a trade mark in Australia for various goods in class 28 but subsequently withdrew its application.
469 In 2013 and 2014 Playgo Enterprises sold and delivered in China toys bearing the Playgo Device Mark to Australian retailers who then offered for sale and sold them to customers in Australia. The products were manufactured in China by another company in the Playgo group of companies, Tai Way, at a factory located in Dongguan city in the Guangdong province and were packaged and labelled by Tai Way at the factory under the authorisation of Playgo Enterprises. The Playgo Device Mark was then applied to the products by Tai Way at the factory under the authorisation of Playgo Craft and at the direction of Playgo Enterprises.
470 The applicant, Playgro Pty Ltd, contended that Playgo Craft and Playgo Enterprises infringed its trade marks contrary to s 120(1) of the TM Act by using the Playgo Device Mark in relation to playthings or, in the alternative, that Playgo Enterprises had a common design with one of the retailers, Myer, to supply Playgo branded toys for sale in Australia such that Playgo Enterprises was a joint tortfeasor in infringing sales of those goods by Myer. This was said to be because Playgo Enterprises sold and delivered the toys bearing the Playgo Device Mark to Australian retailers in China for sale to customers in Australia and those retailers then offered for sale and sold the toys to customers in Australia.
471 One of the issues for resolution was whether Playgo Craft and Playgo Enterprises used as a trade mark the Playgo Device Mark in relation to goods in respect of which the relevant Playgro trade marks were registered, namely playthings, in Australia. His Honour found (at [125]) that they did and set out his reasons for reaching that conclusion.
472 Justice Moshinsky noted that the starting point for considering that issue was the text of s 120(1) of the TM Act and the concepts it embodies and, putting to one side substantial identity and deceptive similarity which his Honour had already considered, the central concepts were "use" and "use as a trade mark". That being so, his Honour turned to consider the decisions in Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 and E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 (E & J Gallo) in which consideration was given to the concept of "use" of a trade mark. After doing so, at [139] his Honour said:
Although Estex and Gallo were concerned with applications for the removal of registered trade marks for non-use, the consideration of 'use' of a trade mark in the passages referred to in paragraphs [127]-[138] above does not appear to be limited to that context, and seems equally applicable to an infringement context. This is consistent with the principle of statutory construction that words used consistently should be construed consistently, unless there is good reason to do otherwise: Queensland v Forst (2008) 168 FCR 532 at [41] per Black CJ, citing Craig, Williamson Pty Ltd v Barrowcliff [1915] VLR 450 at 452 per Hodges J; Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J (with whom Barwick CJ and Jacobs J agreed).
473 Justice Moshinsky then turned to consider the concept of "use as a trade mark", referring to the decision of a Full Court of this Court (Black CJ, Sundberg and Finkelstein JJ) in Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107 at [19] which held that "use as a trade mark" was "use of the mark as a 'badge of origin' in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". At [142]-[143] his Honour said:
142 In the present case, the Playgo Device Mark was applied to children's toys by Tai Way at the Dongguan factory under the authorisation of Playgo Craft and at the direction of Playgo Enterprises. The toys, with the Playgo Device Mark, were sold by Playgo Enterprises to Myer and WSL in China, for sale to customers in Australia. It is to be inferred that when Playgo Enterprises sold its products to Myer and WSL, it knew that the goods were to be offered for sale and sold to customers in Australia. Applying the concepts of 'use' and 'use as a trade mark' discussed above, the respondents used as a trade mark the Playgo Device Mark in Australia in that it was used as a 'badge of origin' to indicate a connection in the course of trade between the goods and the respondents. The respondents did not cease to use the Playgo Device Mark upon sale and delivery of the goods to Myer and WSL in China; rather, the mark was being used by the respondents so long as the goods were in the course of trade and it was indicative that they were the respondents' products. The goods remained in the course of trade until their ultimate sale to customers in Australia.
143 The facts of this case are materially the same as those in Estex. In each case, a foreign company affixed a trade mark overseas, sold and delivered the goods with that mark to an Australian retailer overseas, and the goods were (to the knowledge of the overseas company) to be sold to customers in Australia. Although it is true that in Estex, the foreign company was the registered proprietor of the trade mark in Australia, that fact does not appear to have played a part, or at least a significant part, in the reasoning of Windeyer J or the Full Court of the High Court in support of the conclusion that the foreign company used the trade mark in Australia.
474 At [147] Moshinsky J concluded that Playgo Craft and Playgo Enterprises used as a trade mark the Playgo Device Mark in relation to playthings in Australia and, given his Honour's findings in relation to substantial identity and deceptive similarity, it followed that they infringed Playgro's trade marks contrary to s 120(1) of the Act.
475 The facts in Playgro are, on one view, similar to those now before me in that one company, Playgo Craft, owned the alleged infringing mark, the Playgo Device Mark, and another company in the same group, Tai Way, manufactured and applied the mark to the relevant products at the direction of the company that then sold them, Playgo Enterprises. However, the issue raised before me was not raised before Moshinsky J and there was no contention that the owner of the mark did not use it. The argument focused on whether there was use of the Playgo Device Mark as a trade mark in Australia. His Honour relevantly found that the Playgo Device Mark was applied to the toys by Tai Way at the Dongguan factory under the authorisation of the owner of the mark, Playgo Craft, and at the direction of Playgo Enterprises.
476 As in Playgro, here Grasshopper owns the relevant trade mark but the Infringing Products are manufactured by other Valentine Companies who, I infer, also apply the New Wicked Mark to those products and supply them for retail sale. There can be no dispute that the New Wicked Mark is applied to the Infringing Products with Grasshopper's authorisation. Mr Valentine's evidence is that both before and since he has been a director of Grasshopper, he has overseen all of BMB's and Brisbane Fine Foods' daily operations relating to the Wicked Business (see [66] above). But that is not an answer to the issue now before me.
477 The final case relied on by PDP is Southcorp in which, it seems, Beach J considered a similar argument to that now before me. There the applicant, Southcorp, applied for default judgment and summary judgment against the respondents including dismissal of the cross-claim filed by the first and second respondents. Beach J acceded to Southcorp's application. In doing so, after setting out the procedural history, his Honour concluded (at [20]) that each of the respondents was in default within the meaning of r 5.22(a), (b) and (d) of the Federal Court Rules and thus the Court's power to enter default judgment was enlivened. However, despite that being so, his Honour decided to deal with Southcorp's claims by way of summary judgment noting that, had he not granted summary judgment, he would have entered default judgment given "the numerous identified acts of default". That said, his Honour dismissed the cross-claim on the basis of the respondents' defaults.
478 Insofar as Southcorp's claim was concerned, his Honour:
(1) noted that Southcorp, which was the owner of three registered trade marks in class 33 in relation to wine, alleged that the respondents infringed its trade marks by using certain marks (referred to as the Impugned TMs) in relation to wine within the meaning of s 120(1) and s 228 of the TM Act and that it raised the following four primary issues on the pleadings (at [29]):
(a) whether any of the Impugned TMs have been used "as a trade mark";
(b) whether any of the Impugned TMs are substantially identical with, or deceptively similar to, the Southcorp TMs;
(c) the liability of the third and fourth respondents; and
(d) the quantum of pecuniary relief to which Southcorp is entitled.
(2) was satisfied that Southcorp had established its claim under s 120(1) and s 228 of the TM Act and that it was entitled to an account of profits and interest thereon and to relevant declarations and injunctions against the respondents; and
(3) set out the relevant evidence and reasons for reaching that conclusion addressing, among other things, whether the Impugned TMs had been used as a trade mark, whether the Impugned TMs were substantially identical with or deceptively similar to Southcorp's trade marks, whether the respondents intended to deceive or cause confusion and whether the use of the Impugned TMs was likely to deceive or cause confusion, finding in favour of Southcorp in relation to each element.
479 Commencing at [69] Beach J addressed the "[l]iability of the respondents". His Honour observed that the first and second respondents had admitted that they had labelled the bottles of wine in question with the Impugned TMs and that the necessary infringement had been established. His Honour turned to consider the liability of the third and fourth respondents whose involvement in any conduct had been denied but who did not appear at the interlocutory hearing. Notwithstanding that denial, Beach J was satisfied that those respondents were also directly liable for infringing Southcorp's trade marks. In that regard his Honour said (at [70]-[72]):
70 First, so much is made apparent by the bottles of wine themselves. Those bottles explicitly identify the first and third respondents and bear a variety of trade marks sought to be registered in Australia by the second, third and fourth respondents.
71 Second, the first to third respondents have positively averred that the fourth respondent licensed the third respondent, and the third respondent licensed the first and second respondents, to use a number of the Impugned TMs on bottles of wine, being the trade marks which the fourth respondent has also applied to register in Australia. It follows that there has been use of the Impugned TMs by the first and second respondents which has been authorised by the fourth respondent, and accordingly pursuant to s 7(3) of the TMA "is taken…to be a use of the trade mark by" the fourth respondent.
72 Third, the direct involvement of the third respondent in the use made of the Impugned TMs is confirmed by the business cards used by the "R&R GROUP" in Australia, which identify the third respondent as part of that group, and is also confirmed by the website located at www.rrwinery.com.au, which has featured the use of a variety of trade marks sought to be registered in Australia by at least the second and third respondents.
480 At [73] Beach J found that the fourth respondent was also liable as a joint tortfeasor and set out the reasons for so finding.
481 Based on his Honour's findings, it appears that the relevant relationship between the respondent companies was that the fourth respondent licensed the third respondent, and the third respondent in turn licensed the first and second respondents, to use a number of the Impugned TMs on bottles of wine and the first and second respondents then applied the labels bearing the Impugned TMs to the bottles of wine. Beach J found that the fourth respondent was liable on two bases: first, because of the operation of s 7(3) of the TM Act based on the use by the first and second respondents; and secondly, as a joint tortfeasor, a claim which is not made in this proceeding.
482 Grasshopper contends that: the decision in Southcorp is interlocutory and concerned a summary judgment and default judgment application; the third and fourth respondents did not appear; the reasoning at [71] is in error; Beach J was not taken to the decisions in Aristocrat Technologies or Louis Vuitton; and the argument that there is no statutory tort of authorisation in the context of the TM Act was not put to his Honour.
483 Given the summary nature of the application before Beach J, it is difficult to discern what arguments were made to support the findings at [71], in particular where his Honour found that the fourth respondent was directly liable for infringement given the licence granted by it to use the Impugned TMs and the operation of s 7(3) of the TM Act, although it seems that, as Grasshopper observes, his Honour was not taken to the decisions upon which Grasshopper now relies.
484 Before further considering the effect of Southcorp on the issue raised by Grasshopper, it is convenient to refer to one other decision which addresses, albeit again in the context of an interlocutory application, the issue of whether use by an authorised user in contravention of s 120 of the TM Act would also render the owner of the trade mark liable for contravention of that section. The relevant decision, to which neither party drew my attention, is Unilever Australia Limited v PB Foods Ltd [2000] FCA 798 (Unilever v PB) which concerned an application made by Cadbury Limited, a UK corporation, challenging ex parte orders permitting service of the originating process on it by Unilever Australia Limited. Unilever alleged that the first respondent, PB Foods Limited, had contravened s 120 of the TM Act. Prior to Unilever seeking to join Cadbury to the proceeding and obtaining orders for service on it, Moore J had refused to strike out certain paragraphs of PB Foods' defence. In those paragraphs PB Foods contended that the use complained of by Unilever was authorised use in that it was authorised by Cadbury who would be able to obtain registration of certain of the infringing marks in its name if it were to apply for registration under the TM Act. This was said to raise a defence under s 122(1)(f) of the TM Act.
485 Cadbury submitted that when the order permitting service on it was made, there was insufficient material before the Court to establish a prima facie case as required by O 8 r 2 of the Court's Rules at the time, including that there was no evidence that any use of the trade marks by PB Foods was use authorised by Cadbury. However, Moore J was satisfied that there was sufficient material to establish authorised use on a prima facie basis. In coming to that view, his Honour referred to:
(1) PB Foods' defence and its submissions in opposition to the application to strike out a part of that defence that its use of the infringing trade marks had been authorised by Cadbury;
(2) a licence agreement between Cadbury Schweppes Pty Limited (referred to as CSPL) and Peters (WA) Limited (later known as PB Foods) based upon which, for the purposes of the application before him, Moore J inferred that commercial agreements existed between Cadbury, CSPL and PB Foods whereby PB Foods used trade marks owned by Cadbury in the sale of products; and
(3) other evidence, which his Honour said "goes some further way in resolving whether Cadbury has authorised use of any of the infringing trade marks", referring to an application by Cadbury to register two of the infringing marks.
486 At [6] Moore J concluded that there was "sufficient evidence of authorisation to sustain a conclusion of a prima facie case against Cadbury if the legal foundation for that case can otherwise be demonstrated". In relation to that, at [7] his Honour said:
The claim against Cadbury as initially framed involved a bare allegation of contravention of s 120 of the 1995 Act. Cadbury submitted that use by PB Foods did not constitute use by it for the purposes of s 120 even if it had authorised the use. Senior counsel for Unilever disavowed, at the hearing on 21 March 2000, any reliance on s 7 of the 1995 Act, notwithstanding that I had earlier accepted a submission of PB Foods (then contested by Unilever but unsuccessfully) that PB Foods' defence based on s 122(1)(f) was not unarguable because Cadbury, though not PB Foods, might secure registration of the alleged infringing marks. Rather, PB Foods submitted that the authorisation of the use of infringing marks was itself an infringement. Reference was made to s 20 though that plainly concerns authorisation by a registered proprietor which Cadbury is not at least for the purposes of the 1995 Act. I was not referred to any material that would suggest use, in fact, by Cadbury nor any provision of the 1995 Act (apart from s 7) or authority that would support the proposition that infringing use by an authorised user rendered the owner liable for contravention of s 120. Accordingly, I am not satisfied that the case against Cadbury as originally propounded, raised a prima facie case against Cadbury.
487 The decisions in Southcorp and Unilever v PB are difficult, if not impossible, to reconcile. It is apparent that in Unilever v PB Moore J had the benefit of more developed argument in relation to the issue, while in Southcorp there was no contradictor who appeared to contest the issue of whether the owner and licensor of the marks could be found to be directly liable for trade mark infringement under s 120 of the TM Act. Further, the decision in Unilever v PB in relation to the issue is consistent with that taken in the later decisions in Aristocrat Technologies and Louis Vuitton, to which it seems the Court was not taken in Southcorp, to the effect that the TM Act does not include any statutory tort of authorisation. Having regard to those matters, I prefer the decision in Unilever v PB to that in Southcorp. It is difficult to see how the inclusion of s 7(3) of the TM Act introduces the ability to achieve what it seems the legislature has excluded from the TM Act. That is, an action against a trade mark owner for direct liability for infringement where the owner has authorised the use of the allegedly infringing mark by another.
488 It follows that I would determine the threshold issue in favour of Grasshopper. Based on the matters set out above, its authorisation of the use of the New Wicked Mark is not capable of constituting trade mark infringement. That is, in its role as the owner of the New Wicked Mark who licensed it to other Valentine Companies to use, it cannot be the subject of the present action for direct liability pursuant to s 120 of the TM Act. That is not to say that no cause of action would lie against Grasshopper or a party in its position. As was the case in Southcorp and other cases, an action may lie against such a party as a joint tortfeasor. But that is not the basis on which PDP seeks to impugn Grasshopper's conduct.