BESANKO AND BANKS-SMITH JJ:
1 We have had the advantage of reading the reasons for judgment of Stewart J. Subject to one matter, we agree with his Honour's reasons. The matter upon which we disagree with Stewart J relates to the appeal by PKT Technologies Pty Ltd (formerly known as Fairlight.Au Pty Ltd) (Fairlight) against the primary judge's award of profits for the infringement of the registered trade mark (see PKT Technologies Pty Ltd (formerly known as Fairlight.Au Pty Ltd) v Peter Vogel Instruments Pty Ltd [2018] FCA 1587; 135 IPR 463). Unlike Stewart J, we would dismiss the challenge by Fairlight to the primary judge's award.
2 In our opinion, the primary judge dealt with the arguments presented to him and those arguments were the arguments repeated on the appeal to this Court. His Honour has not been shown to have erred in his treatment of those arguments. Section 228 of the Trade Marks Act 1995 (Cth) was not relied on before the primary judge. It was referred to in passing when it was said that the principle upon which Fairlight relied i.e., the statement in Davison M J and Horak I, Shanahan's Australian Law of Trade Marks and Passing Off (6th ed, Thomson Reuters, 2016) (Shanahan's) (set out below at [13]) was consistent with s 228. The arguments of Fairlight were advanced by reference to that statement. Furthermore, to the extent that it might be said that s 228 has been alluded to in the submissions made on the appeal, it is to be noted that, in any event, this Court has not had the benefit of fully developed submissions on the scope and operation of s 228. A matter not clearly argued below and not the subject of developed submissions in this Court should not, in our respectful view, be entertained. Experience shows that what might appear clear without the benefit of full submissions and the citation of relevant authorities may well, at the least, be much less so after that is done.
3 The starting point is the evidence and submissions put to the primary judge. Fairlight tendered expert evidence from Ms Elizabeth Jean Smith to the effect that the proceeds of sales of the Fairlight CMI App for the period from March 2011 to 30 June 2012 to customers in Australia and in overseas countries totalled $137,485.30. At the conclusion of the hearing before the primary judge, both parties relied on more than one set of written submissions. It seems that in the first half of May 2017, Peter Vogel Instruments Pty Ltd (PVI) made a short submission to the effect that with respect to the infringement of trade mark, there was no evidence of sales in Australia. Fairlight made written submissions to the primary judge in the second half of May 2017 which contained a reference in a footnote to written submissions made at the original trial nearly two-and-a-half years earlier. Those earlier written submissions made reference to s 228, but even in those submissions, the emphasis was on sales, offers for sale, or marketing or promotion in Australia. In any event, when the issue of extraterritoriality specifically arose in late May/early June 2017, Fairlight filed its submissions dated 6 June 2017. The primary judge was entitled to proceed on the basis that those submissions were Fairlight's submissions on the topic. The contents of those submissions relevant to the present point were as follows.
4 Fairlight filed short submissions on 6 June 2017. The submissions contained the following:
6. Consistent with section 228(1) of the Act, as noted in Shanahan's:
It would appear there can be use in Australia for the purposes of the Act when a sale or offer for sale occurs in Australia but the goods are located, or the services will be provided, abroad.
7. PVI asserts, by reference to data maintained by Apple, that sales of the Fairlight App occurred overseas. This says nothing about the location of the infringing use. It also says nothing about the location of where the transaction took place or the mechanism as to how it occurred. PVI, who seeks to pare back the account by reference to allegedly overseas sales, bears the onus of establishing these matters. It has failed to do so. Submissions are not evidence and merely because a sale occurs to someone in the USA or elsewhere does not establish that the offer for those goods (and/or the sale) has not taken place in Australia.
(Emphasis added.)
5 The submissions then go on to assert that it is sufficient if the act of marketing or the act of offering for sale took place in Australia, even if the actual contract of sale took place overseas. That position certainly, insofar as it refers to offers for sale, is consistent with the statement in Shanahan's. Fairlight then made these submissions:
11. PVI is an Australian company, which conducted its business in Australia and received income in Australian dollars into a bank account in Australia from its misuse of the Fairlight trade mark. PVI applied the trademark to the Apps, and used the trade mark, in the course of its business, by uploading the Apps in Australia. Any sales by Apple were on the instruction, or at the direction, of PVI in the course of its business in Australia and, after the App was uploaded, PVI caused Apple to continue selling the Apps.
12. In conducting its business in Australia, and consistent with PVI having told the AAT that it sold the Apps, PVI allowed an intermediary to sell the App on its behalf and remit the revenue (after a deduction made by Apple) to PVI. Indeed, there has been a declaration that PVI's infringement involved it using the trade mark in the course of trade and it marketing and selling Apps, and a finding that it infringed by using the trade mark in Apps. Consequently, PVI must account for all profits made from sales of the Apps. As noted by Windeyer J in Coldbeam the infringer must "give up his ill-gotten gains to the party whose rights he has infringed".
(Footnotes omitted.)
6 In our opinion, it is clear from these submissions that there was no direct reliance on s 228 at all. Fairlight was, in fact, basing its argument on the statement in Shanahan's.
7 The reasoning of the primary judge on this issue was as follows.
8 The primary judge noted that Fairlight contended that the total sales of the Fairlight App made by PVI during the relevant period was $137,485 (at [131]). PVI contended that of the total sales made, only $9,357 worth related to sales made to Australian consumers (at [132]). The primary judge found that $9,808 worth of sales related to sales made to Australian consumers and that the balance related to sales made to customers in other countries (at [133]). The first question before the primary judge was whether the starting point for calculating the profits for which PVI was liable to account was the total sales of ($137,485) or merely Australian sales ($9,808). The primary judge referred to ss 20, 120(1) and 126(1) of the Trade Marks Act.
9 The primary judge referred to the presumption that general words used in a statute are interpreted to apply within territorial limits (at [137]). His Honour saw nothing in the Act which might lead to the conclusion that that presumption had been rebutted.
10 The primary judge said that it was well-established that a person may infringe a registered mark by using it in relation to goods that he or she exports for sale abroad (at [138]). The primary judge said that similarly, a person outside Australia may also infringe a registered mark by taking orders from Australian customers for goods that he or she proposes to export to Australia. That was because in each case there would have been a use by that person of the registered trade mark within Australia. The primary judge considered that the present case was "rather different" (at [138]).
11 The primary judge said that in this case, Fairlight sought to recover profits made from sales made by PVI in other countries in which there could never have been any infringing use of the registered trade mark (at [139]). His Honour said that selling goods, or offering them for sale, in a foreign country under or by reference to a particular trade mark, did not constitute an infringing use of the trade mark registered under the provisions of the Trade Marks Act.
12 Fairlight submitted that the declaration made by the Full Court in Peter Vogel Instruments Pty Ltd v Fairlight.Au Pty Ltd [2016] FCAFC 172; 343 ALR 387 was not limited to the use of the registered trade mark within Australia. The primary judge rejected that submission for the reason he gave (at [140]) and there is no challenge to that particular conclusion.
13 The primary judge then noted (at [141]) that Fairlight relied on the following statement in Shanahan's at p 53:
It would appear there can be use in Australia for the purposes of the Act when a sale or offer for sale occurs in Australia but the goods are located, or the services will be provided, abroad.
(Footnote omitted.)
14 It may be noted at this point that this quotation is taken from the reasons for judgment of Williams J in Re the Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corporation Ltd [1951] HCA 28; 82 CLR 199 at 204-205. It appears in the section in Shanahan's under the heading "Export". Section 228(1) of the Trade Marks Act is referred to in this section.
15 The primary judge said that he respectfully agreed with the statement in Shanahan's, but it was concerned with the question of trade mark use and nothing more (at [142]). The primary judge noted that there was no issue in this case that there was a use of the Fairlight mark in Australia. His Honour referred to the decision of Merkel J in Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 471; 143 FCR 479 at [36]-[43]. His Honour said there was no doubt that PVI authorised the use of the Fairlight mark in Australia on the Apple iTunes website which was directed to (inter alios) consumers in Australia. He said that despite the fact that there was no issue that there was use of the Fairlight mark in Australia, it did not follow that Fairlight could recover from PVI the profits from sales the latter made in other countries unless it is shown that they arose out of offers to sell that were made in Australia.
16 The primary judge went on to address a submission by Fairlight that the profits obtained by PVI from the sales of the Fairlight Apps to consumers in Australia and other countries overseas were profits attributable to the infringing use. His Honour said that, as he understood the submission, an inference should be drawn that the sales made to customers in other countries were the result of infringing use "(presumably in advertising and promotions)" that occurred in Australia. The primary judge said that while he did not think it was open to serious dispute that sales made to Australian consumers were the result of infringing use, "the evidence does not permit such a conclusion to be drawn in respect of sales to customers in other countries" (at [143]).
17 The primary judge concluded that he was satisfied that the profits which Fairlight were entitled to recover were confined to those made by it from sales to Australian consumers (at [144]).
18 Ground 5 of Fairlight's Notice of Appeal is in the following terms:
5. The trial judge erred in awarding the Appellant $9,808 (exclusive of interest) by reason of the Respondent having infringed its trademark by unlawful sales of Apps, rather than the amount of $137,485, by:
(a) failing to address, or address adequately, the relevant evidence; and
(b) failing to give adequate or proper reasons.
19 Its written outline of submissions with respect to this topic were very brief. They were as follows:
Ground 5: award of $9,808 for infringement of Fairlight.au's trademark
38. In awarding Fairlight.au $9,808, rather than $137,485, for PVI's infringement of its trademark, the Remittal Judge failed to address the submissions advanced by Fairlight.au that PVI conducted its business in Australia, received taxable income in Australia, and was paid in Australian dollars into a bank account in Australia.
39. The Remittal Judge, with respect, failed to address, adequately or at all, the relevant evidence, and also erred by failing to give adequate or proper reasons.
(Footnote omitted.)
20 The written outline of submissions contains a reference by way of a footnote to submissions lodged by PVI, not Fairlight, pursuant to leave granted on 23 May 2017. We think this is an error and the reference is intended to be to Fairlight's submissions dated 6 June 2017 pursuant to the leave granted by the primary judge on 23 May 2017.
21 The thrust of Fairlight's oral submissions on the appeal is contained in the following passage:
Now, we say that - we say that as a matter of substance rather than form the fact that the app was developed here, it was placed on a computer here, that the company was here, that it was selling them from here, that it was receiving the income here, was banking into account [sic], the fact that it puts it on a server that may distribute it in a world-wide fashion, it is a - we say, with respect to his Honour's observation, it is entirely artificial to say in those circumstances, if I am in my living room in the - or I'm in my office in the CBD and I breach someone's trademark by doing all those things and reaping the rewards here, that I'm not making an offer to sell in Australia, albeit the fact that someone in Iceland, for example, may be downloading it on their computer screen there. We're either right or wrong about that. That's our submission.
(Emphasis added.)
22 The passage which we have emphasised is significant because it shows that, consistent with its submissions to the primary judge, Fairlight's submissions proceed, and have proceeded, on the basis that, absent proof of a sale in Australia, it must show that it was making an offer to sell in Australia in relation to customers who download their App in countries other than Australia. The primary judge rejected that argument because, as his Honour put it, the evidence did not permit such a conclusion in respect of sales to customers in other countries which we take to mean a conclusion that such sales arose out of offers to sell that were made in Australia or advertising and promotions that occurred in Australia. That factual conclusion about sales, offers for sale and marketing or promotions in Australia has not been shown to be wrong.
23 Fairlight's challenge to the primary judge's award for trade mark infringement must be dismissed.
24 In our opinion, the orders which should be made are as follows:
(1) Order 1 made by the primary judge on 23 October 2018 be set aside and in lieu thereof there be an order as follows:
1. There be judgment for the first respondent/cross-claimant against the applicant/first cross-respondent in the amount of $366,158.50 (exclusive of interest).
(2) The appeal by PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) (Fairlight) be otherwise dismissed.
(3) The cross appeal by Peter Vogel Instruments Pty Ltd (PVI) be dismissed.
(4) Fairlight file on or before 10 December 2019 written submissions limited to three pages as to the order(s) which should be made as to costs and the reasons therefor.
(5) PVI file on or before 16 December 2019 written submissions limited to three pages in response to Fairlight's submissions.
(6) Fairlight, if so advised, file on or before 19 December 2019 written submissions limited to two pages in response to PVI's submissions.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Besanko and Banks-Smith.