PZ Cussons (International) Limited v Rosa Dora Imports Pty Ltd

REASONS FOR JUDGMENT 1 In the substantive proceeding, the applicants, PZ Cussons Australia Pty Ltd ('PZ Cussons') and PZ Cussons (International) Limited ('PZ Cussons International'), are in the business of manufacturing a range of dishwashing detergent products under various trade marks, including "Morning Fresh" and "Cussons". They allege that, from at least 8 December 2006, the first respondent, Rosa Dora Imports Pty Ltd ('Rosa Dora'), has been selling and supplying dishwashing detergent bearing the words "Morning Fresh" and/or "Cussons" without the applicants' authorisation or approval. By their statement of claim, they allege: · trade mark infringements; · misleading or deceptive conduct in breach of s 52 of the Trade Practices Act 1974 Cth) ("the TPA"); · the making of false and/or misleading representations in connection with the supply of goods or the promotion by any means of the supply of goods in breach of s 53 of the TPA; and · passing off. There are further allegations against the second respondent, which are not germane to the present motions. 2 There are two motions before the Court. 3 By a motion, notice of which is dated 10 September 2007 ("the applicants' motion"), the applicants seek summary judgment pursuant to s 31A(1) of the Federal Court of Australia Act 1976 (Cth). They contend that the first respondent has no reasonable prospect of successfully defending the claim of trade mark infringement pleaded against it in pars 7.1 to 7.4 of the Statement of Claim. The applicants initially relied on the following affidavits in support of their motion: · the affidavit of Francesco Tassone, co-owner and store manager of a supermarket in Austral, New South Wales; · the affidavit of Joanne Prassos, Quality Assurance Specialist; and · the affidavit of Piyaporn Limpipat, currently Technical Support Manager and formerly Quality Control Manager, of PZ Cussons (Thailand) Limited ('PZ Cussons Thailand'). The applicants sought to augment these affidavits subsequent to the hearing. See below at [32]-[34]. 4 The respondents, who were represented by counsel who appeared on behalf of both of them, oppose the applicants' summary judgment application. 5 By motion, notice of which is dated 11 October 2007 ('the respondents' motion'), the respondents also seek leave to file an amended defence, and "leave to withdraw their implied admissions to the notice to admit facts, on condition that their notice disputing facts be in the form faxed to the Applicants on 11 October 2007." At the hearing, the second part of this motion was not pursued. 6 The respondents rely on the affidavit of their solicitor, Gary Koutzoumis, and the affidavit of Nikola Nedelkovski, who is also the director of the first respondent, Rosa Dora. 7 As I stated at the hearing on 29 October 2007, I would grant the respondents the leave they seek to amend their defence, upon the basis that they pay the applicants' costs thrown away. I granted leave for the following reasons. 8 The respondents' Defence dated 6 September 2007 and filed on 10 September 2007 admitted the infringement of trade marks. In particular, the respondents admitted pars 7.1-7.4 of the applicants' Statement of Claim, which alleged: 7.1 The First Respondent's use of the words described at 6.1 above constitutes use of the words "Morning Fresh" and/or "Cussons" as a trade mark or trade marks. 7.2 The words described at 6.1 above are identical to, or alternatively, substantially identical with or deceptively similar to the Morning Fresh Trade mark and/or the Cussons Trade Marks. 7.3 The First Respondent has used the words described at 6.1 above: (a) in relation to goods in respect of which the Morning Fresh Trade Mark and/or the Cussons Trade Marks are registered, as set out at 5.1 and 5.2 above (the Registered Goods); and/or (b) in relation to goods of the same description as the Registered Goods. 7.4 By reason of the matters set out at 7.1 to 7.3 above, the First Respondent has infringed one or more of the trade marks set out at 5.1 and 5.2 above. 9 The applicants took the admissions made in the respondents' Defence as adequate for the purpose of summary judgment. They filed a summary judgment motion on 10 September 2007. By a letter dated 21 September 2007, the respondents indicated that they wished to amend their Defence, saying their original Defence "contained some typographical errors". They later accepted that the "proposed amendment to our Defence puts your client to proof on the issue of infringement of trade mark" in contrast to the previous form of the defence, but reiterated that this change was the result of "inadvertent" error. Since they sought to amend after the close of pleadings, the respondents required leave to do so. Until the hearing on 29 October 2007, the applicants opposed the proposed amendments. 10 Perusal of the original Defence supported the respondents' claim that they conceded liability inadvertently: compare Defence, par 8. Bearing in mind the accepted principles, the respondents should have leave to file an Amended Defence, as counsel for the applicants properly conceded at the hearing: see Cropper v Smith (1884) 26 Ch D 700 at 710 per Bowen LJ; Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 at 152-153 per Dawson, Gaudron and McHugh JJ; and Johnston v Vintage Developments Pty Limited [2006] FCAFC 171 at [23] per Tamberlin, Jacobson and Rares JJ. If the respondents were granted the leave they sought, no injustice would be done the applicants that could not be remedied by an award of costs in their favour. 11 I deal with the applicants' motion for summary judgment on the basis of the respondents' Amended Defence. 12 Section 31A of the Federal Court of Australia Act 1976 (Cth) relevantly provides: (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. … (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. 13 By enacting s 31A, Parliament intended "to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91-92 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130": see White Industries Aust Pty Ltd v Commissioner of Taxation [2007] FCA 511 at [54] per Lindgren J. Judges have differed, however, about the extent to which the provision achieves this end, but these differences probably do not much matter. The key is to address the statutory question. That is, under s 31A, in order to grant summary judgment, I must be satisfied that the respondents have no reasonable prospect of success in defending the infringement claim. As s 31A(3) makes clear, this does not mean that I must be satisfied that their defence is hopeless or bound to fail. 14 At the same time, the occasion for summary judgment must be clear before it will be granted: see Hicks v Ruddock [2007] FCA 299 at [13] per Tamberlin J. Summary judgment is inappropriate where there is a real dispute about the relevant facts and evidence: see Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd [2007] FCA 489 at [10] per Besanko J and Boston Commercial Services Pty Ltd v G E Capital Finance Australasia Pty Ltd [2006] FCA 1352 at [31] to [48] per Rares J; Australian and International Pilots Association v Qantas Airways Limited [2006] FCA 1441 at [23] per Tracey J; and Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [20] per French J. 15 The applicants' motion for summary judgment for trademark infringement falls to be considered by reference to the Trade Marks Act 1995 (Cth) ("the 1995 Act"), the pleadings and the affidavit evidence filed by the parties. The applicants rely on the statutory monopoly granted by trade mark registration: see s 20 of the 1995 Act. Section 120(1) of the 1995 Act provides that a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. Section 123(1) further provides that a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark. The respondents have not, however, pleaded s 123 of the 1995 Act in their Amended Defence. 16 By their Amended Defence, the respondents admit the applicants' incorporation and that PZ Cussons International is the registered owner of four identified Australian trade marks ("the Australian trade marks"): see [1]. They also admit that Rosa Dora supplied a quantity of Rosa Dora's products to Mr Tassone's supermarket: see [8]. They do not dispute that the use of the words "Morning Fresh" and/or "Cussons" constitutes the uses of these words as trade marks; that the words "Morning Fresh" and/or "Cussons" are identical to, or substantially identical with or deceptively similar to, the Australian trade marks; and that, when it supplied the goods to Mr Tassone's supermarket, Rosa Dora has used the words "Morning Fresh" and/or "Cussons" in relation to goods in respect of which the Australian trade marks are registered and/or goods of the same description: see [10]. The respondents do not, however, admit that by reason of these facts they have infringed the Australian trade marks: see [11]. This is because they do not admit that Rosa Dora's use of the Australian trade marks was not licensed, authorised, or approved by PZ Cussons: compare statement of claim [6.2] and proposed Amended Defence [9]. The respondents say, by way of defence, that they do not know and cannot admit this part of the applicants' claim. 17 The following is a summary of the applicants' affidavit evidence. 18 Mr Tassone, store manager and co-owner of a supermarket at Austral, New South Wales, deposed that he was responsible for purchasing and arranging for the supply of goods that are sold by his supermarket, including a range of dishwashing products from premium to discount. One such dishwashing product was the "Morning Fresh" dishwashing detergent manufactured by PZ Cussons. 19 Mr Tassone stated that, around 4 March 2007, he received an invoice dated 4 March 2007 from Rosa Dora relating to 1,982 bottles of "Morning Fresh" dishwashing detergent. The goods arrived on 7 March 2007 and, on that day, Mr Tassone instructed employees to "place the entire pallet on a 'back-of-shop' display for sale". The products remained on display for sale to customers from that day until the visit of a PZ Cussons sales representative in late March. About 15 boxes (24 bottles per box) were sold, although Mr Tassone does not have an exact record. 20 Mr Tassone stated that, in late March 2007, the PZ Cussons representative visited his supermarket and told him the "Morning Fresh" product was not genuine. Following this visit, he removed the "Morning Fresh" products from display and stored them at the rear of the supermarket. Sometime after 5 April 2007, another representative of PZ Cussons telephoned him, as a consequence of which PZ Cussons arranged for the remainder of the dishwashing product to be collected. Mr Tassone stated that he was not present at the time the products were collected, but he believes this was around 6 July 2007. 21 Ms Prassos, Quality Assurance Specialist (Powders) of PZ Cussons, deposed to her qualifications to make the tests she carried out on the "Morning Fresh" branded product taken from Mr Tassone's store, as well as to the results of these tests. She had extensive experience in analysing and testing the "Morning Fresh" dishwashing detergent manufactured by PZ Cussons. 22 Ms Prassos stated that, on 1 October 2007, she attended a "quarantine lock-up cage" at PZ Cussons' Dandenong premises and inspected a pallet of "Morning Fresh" branded dishwashing detergents. Ms Prassos identified the products as those coming from Mr Tassone's supermarket. Ms Prassos inspected the products and exhibited a number of photographs of them to her affidavit. There were two types of "Morning Fresh" - one labelled 'Cussons MORNING FRESH DISHWASHING LIQUID' in a predominantly white bottle and the other labelled 'Cussons MORNING FRESH DISHWASHING LIQUID WITH LEMON' in a predominantly yellow bottle. On the lower rear portion of the white and yellow bottles, there appeared the words: NET 500 ML Mfgd for PZ Cussons (Int'l) Ltd Singapore : 138 Robinson Road # 17 - 00 Hong Leong Center Singapore 068906 Malaysia : Tingkat II, Wisma D'sara Jin. Semantan, KL Hong Kong : 8th FI, Prince's Bldg., GPO Box 50, HKG Made in Thailand A serial number appeared after the words 'Made in Thailand'. 23 Ms Prassos deposed that she carried out three tests on the "Morning Fresh" from Mr Tassone's supermarket: (1) total anionic testing; (2) pH testing; and (3) viscosity testing. She stated that PZ Cussons routinely carried out these tests as part of its quality assurance practice. 24 Ms Prassos' results indicated that the products did not exhibit the characteristics of products manufactured by the applicants in Australia or Thailand. The tested product in the white and yellow bottles had a total anionic content of about 6.7% W/W and 5.9% W/W respectively. Ms Prassos stated that products manufactured in Thailand ranged from 13.7 to 21.0 W/W total anionic contents, depending on the particular version of "Morning Fresh". Australian "Morning Fresh" was between about 33.8 to 34.3%W/W. The tested product in the white and yellow bottles had a pH of about 7.5 and 7.9 respectively. Products manufactured in Thailand ranged from 6.0 to 7 pH. Australian "Morning Fresh" was between about 6.8 to 7.5 pH. The tested product in the white and yellow bottles also showed significant variation in viscosity from the Thai and Australian manufactured products. 25 In summary, the products from Mr Tassone's supermarket had a much lower anionic content than the products manufactured by PZ Cussons in Australia or under licence in Thailand, a slightly higher pH result, and a significantly higher viscosity. Ms Prassos concluded that: The Products are of a poorer quality than Australian Morning Fresh because they have lower levels of active surfactant ingredients. Consumers would need to use approximately five times as much of the Products as Australian Morning Fresh to obtain the same level of performance in terms of dissolving grease and suspending grease in dishwater. For the reasons set out above, the Products are of a substantially poorer quality than Australian Morning Fresh. The Products are also of poorer quality than Morning Fresh products from PZ Cussons (Thailand) Limited. 26 Ms Limpipat, who was Quality Control Manager of PZ Cussons Thailand between February 2003 and February 2007, stated that in this time she was responsible for the quality of all products manufactured in Thailand by PZ Cussons Thailand, including "Morning Fresh" dishwashing detergent. She identified the samples that she had received from PZ Cussons as identical with the photographs of the products that she received from the applicants' solicitors - being identical to the products examined by Ms Prassos. Ms Limpipat stated that PZ Cussons Thailand has manufactured dishwashing detergent bearing the "Cussons" and "Morning Fresh" trade marks in Thailand by authority of the PZ Cussons International since 1998. She deposed that, by reason of her employment and access to samples of Thai "Morning Fresh" made before February 2003, she was aware "of the packaging and labelling of Thai Morning Fresh produc[ts] manufactured since 1998". She said that she had compared the labelling and packaging of the alleged counterfeit products with the Thai "Morning Fresh" and concluded that "[b]ased on my knowledge of the Thai Morning Fresh that is currently made and has been made since 1998 it is clear to me that the [alleged counterfeit] Products were not made by PZ Cussons Thailand." She also deposed that "[n]o other person or organisation is or has been authorised to make products bearing the trade marks "Cussons" and "Morning Fresh" in Thailand during this time". I return to this last-mentioned matter below. 27 It is clear from the evidence of Ms Prassos that all "Morning Fresh" detergent for manual dishwashing that PZ Cussons sells in Australia is manufactured at Dandenong in Victoria. Ms Prassos' evidence makes it most unlikely that the suspected counterfeit product delivered to the respondents is genuine "Morning Fresh" detergent manufactured in Australia. Ms Limpipat's evidence is that, having regard to its labelling and packaging, the suspected counterfeit product was not made by PZ Cussons Thailand. In the light of this evidence, it appears unlikely that Rosa Dora's use of the Australian trade marks on the products sold to Mr Tassone was licensed or authorised by the registered owner, PZ Cussons International. 28 The respondents' evidence was comparatively brief. There was nothing in the affidavit of Mr Koutzoumis that assisted the respondents' opposition to the applicants' summary judgment motion. 29 Mr Nedelkovski deposed as to the circumstances in which he acquired the "Morning Fresh" products in question. He deposed that, in 2006, he heard of a source of cheap imported "Morning Fresh". He subsequently contacted "International Business" and spoke with a man, whom he now believes to be Vin Minh Duong. He obtained "Morning Fresh" products from him in April, November and December 2006. Mr Nedelkovski stated that he does not hold any more "Morning Fresh" stock purchased from Mr Duong or from any other importer. He stated that he has not had any contact with Mr Duong since March 2007, and does not intend to purchase any further goods from him or to "deal in any other imported Cussons products." 30 The respondents opposed the summary judgment motion on the basis that the applicants' evidence did not exclude the possibility that PZ Cussons International had licensed the product for manufacture in Thailand. They pointed to the fact that the product was invoiced to the respondents as "Morning Fresh"; the product purported to be manufactured for PZ Cussons International and in Thailand; and bore a serial number. In relation to the evidence of Ms Prassos and Ms Limpipat, the respondents submitted that: · their evidence did not "close off the possibility that the goods supplied by the Respondents were genuine product"; · Ms Prassos' chemical analysis reveals that the product licensed for Thailand is significantly different to the equivalent Australian product in all three measures. Ms Prassos does not, however, give evidence about the source of her data on the products manufactured in Thailand, and does not say that she subjected bottles of that product to the same testing that was undertaken on the respondents' allegedly counterfeit product; and · there is no evidence of the consistency of the genuine Thai product beyond the assertion implicit in the range of figures provided by Ms Prassos. · Ms Limpipat does not identify the differences between the respondents' product and the Thai products upon which she relies to conclude that the respondents' product was not manufactured under licence in Thailand; and · Ms Limpipat does not provide the Court with samples of the material by which she undertook such comparison. 31 The respondents argued that, in view of these deficiencies in the applicants' evidence, I should not be satisfied that they have no reasonable prospects of successfully defending the proceeding. 32 After the hearing of this matter on 29 October 2007 and prior to judgment, the applicants foreshadowed that they intended to seek leave to file, serve and rely on two further affidavits in support of their summary judgment motion. They have now done this. One affidavit has been affirmed by Richard Shepherd, the managing director of PZ Cussons Thailand, and another, by Ms Limpipat. Mr Shepherd's affidavit is in effect a response to my observation at the hearing on 29 October 2007 that doubted Ms Limpipat's capacity to give evidence concerning the status of PZ Cussons as an exclusive licensee. In his affidavit, Mr Shepherd has stated that, by reason of his employment in the PZ Cussons corporate group and his current position, he knows that no entity other than PZ Cussons Thailand is permitted or authorised to manufacture any product in Thailand under any "Morning Fresh" trade mark of the PZ Cussons group. Ms Limpipat's affidavit seeks to answer the respondents' criticism that she did not identify the differences between the alleged counterfeit products and the products of PZ Cussons Thailand. In her affidavit, Ms Limpipat has stated that the batch numbers on the counterfeit products do not match with the batch numbering system printed on the rear of dishwashing detergent products manufactured by PZ Cussons Thailand. She also pointed to an apparent typographical and a font difference on the rear panel of the alleged counterfeit products as compared with the genuine article. (Although counsel for the respondents sought to point to further deficiencies in this evidence, these possible deficiencies were relatively insignificant when the totality of the applicants evidence is considered.) 33 The respondents objected to leave being granted with respect to these two further affidavits. They complained in correspondence that the applicants had made drafts available to the Court prior to their application for leave. There is no merit in this complaint. It is not unusual in this Court to receive documents in draft for the purposes of leave applications. At the hearing, their counsel stated that they had located Mr Duong, the trader from whom they had acquired the products. Their counsel stated that they wished to pursue their counterclaim against him. Whilst he conceded that this did not constitute evidence supportive of their defence, he argued that the respondents should be have leave to issue a subpoena to Mr Duong, in order that he might give evidence about his knowledge of the origin of the products in question. 34 I accept that there is power to grant leave to the applicants to rely on supplementary affidavits in support of their summary judgment motion: compare Begg v Cooper (1878) 40 LT 29 and Carlton and United Breweries Ltd v Long [1958] VR 539 at 540-542 per Smith J. Subject to one matter, I consider this power should be exercised in the applicant's favour. The affidavits do not alter the essential case the respondents were to meet on this summary judgment application. On one view, the respondents were entitled to summary judgment without them. The effect of the affidavits is simply to overcome two potential minor deficiencies in the applicants' supporting material. These deficiencies were clearly capable of being met by the applicants. Had they sought leave at the hearing on 29 October 2007 to file this further material, I would have granted it. I can see no good reason to deny them leave now. 35 The respondents argued that it cannot be said that the applicants' case will not break down at trial. I reject this argument. I consider the possibility that the applicants' proofs will fail at trial to be sufficiently remote to justify the conclusion that the first respondent has no reasonable prospects of successful defence. It is to be borne in mind too that the respondents have not sought to adduce any supporting evidence of authorisation, although, as will be seen below, they foreshadowed today an application for leave to issue a subpoena against Mr Duong. 36 The first respondent has plainly used the first applicant's trade mark in relation to goods in respect of which the trade mark has been registered. Further, the first respondent has not sought to place any evidence before the Court that would tend to contradict the applicants' claim that the goods were counterfeit. There is no indication that any such evidence is available to it. 37 The nature of the respondents' Amended Defence is relevant too. As I have said, the respondents do not admit lack of authorisation upon the basis that they lack the requisite knowledge. That is, the respondents have sought to put the applicants to proof on one factual issue - whether the dishwashing liquid supplied by Rosa Dora was a genuine "Morning Fresh" product, manufactured with the first applicant's authorisation, in Thailand. Evidence on this issue is contained in the affidavits of Ms Prassos, Ms Limpipat and Mr Shepherd. According to Ms Limpipat, she examined the packaging and labelling on the alleged counterfeit goods and concluded, for the reasons stated in her second affidavit, that PZ Cussons Thailand had not manufactured them. Ms Limpipat was plainly qualified to give this opinion. In her first affidavit, she made it plain that the basis of her opinion was the labelling and packaging of the counterfeit goods. When regard was had to the photographs of the rear of the counterfeit bottles, which is clearly shown in exhibits 'PL 3' and 'PL 4' to her affidavit, the print supported her evidence. Her further affidavit puts the basis of her opinion beyond doubt. As already noted, her uncontradicted evidence was that only PZ Cussons Thailand is licensed to use the marks in question. The company's managing director, Mr Shepherd, has now also affirmed that this is the case. Further, Ms Prassos' evidence establishes that only PZ Cussons manufactured the dishwashing detergent under licence in Australia. The results of her tests also corroborated Ms Limpipat's evidence that the alleged counterfeit goods did not derive from PZ Cussons Thailand. This is so, even if some allowance is made for the respondents' criticisms of it. 38 Finally, as noted above, the respondents have not pleaded reliance on s 123 of the 1995 Act in their Amended Defence. That is, they have not sought positively to assert that the counterfeit goods were not counterfeit because the marks in question were applied with the consent of the registered owner. Had they done so, then it would have been incumbent on them to make out their case: see Brother Industries, Ltd v Dynamic Supplies Pty Ltd [2007] FCA 1490 at [72] per Tamberlin J. As things stand, even if they had relied on s 123, in the absence of evidence tending to support this assertion, there would be no reason to believe that they had any reasonable prospect of succeeding on a s 123 defence. 39 In these circumstances, there is nothing to be gained from adjourning this motion to permit the respondents to have a subpoena issued to Mr Duong. The respondents have not presented any evidence that would indicate that he could give relevant evidence concerning the issue of authorisation. They have not proposed in argument how he could give any such evidence. On the face of it, it seems most unlikely that he could assist the respondents at all on this question, especially when the evidence of Mr Shepherd is borne in mind. 40 In written submissions filed with leave after the hearing, counsel for the respondents submitted that s 123 was not 'a defence' in the strict sense. Instead, s 123 reduced the ambit of s 120. It was unnecessary, so counsel said, for the respondents to plead s 123 expressly as a defence. Even if this were so, it would not affect the outcome of the applicants' summary judgment motion. Let it be assumed that the Amended Defence positively asserted that the marks on the goods in question were applied with the registered owner's consent and the goods were not counterfeit. The respondents placed no evidence before the Court that tended to support this assertion: see Nokia Corporation v Truong [2005] FCA 1141 at [36] per Crennan J. Nor did they place any evidence before the Court that they had any such evidence available to them. 41 The pleadings and the evidence lead me to conclude that the first respondent has no reasonable prospects of defending the applicants' trade mark infringement claim. 42 Accordingly, providing the applicants file and serve the duly affirmed affidavits of Mr Shepherd and Ms Limpipat today, I would order summary judgment be entered on the trade mark infringement claim against the first respondent, Rosa Dora. I propose to adjourn the matter to enable the parties to prepare draft minutes of order to give effect to these reasons. 43 The respondents referred to a cross-claim, which they had recently filed, and in these submissions sought the requisite leave in this connection. They did not, however, address much, if any, argument on the cross-claim question at the hearing. I leave the matter of the cross-claim and any associated applications to one side, without determining them at this stage. Any application in this connection may be renewed, by motion, if needs be. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.