Consideration
35 Regrettably the parties were at odds as to the effect of the pleading in para 10 of the defence first filed by Killer Queen and Ms Hudson and maintained by the respondents in the Amended Defence. The correspondence that passed between them, culminating in the 17 February 2020 Letter, did not assist. The meaning of para 10 as currently pleaded and the effect of the admission in para 10(b) thus falls to be resolved as a preliminary matter.
36 Ms Taylor understood that the combined effect of para 7, 10 and 11 of the Amended Defence is that the respondents have admitted trade mark infringement, save for their defences pleaded at [11] or success on the Amended Cross-Claim. That is, Ms Taylor understood that the pleading at paras 7 to 10 was, in effect, an admission of each of the elements required to prove trade mark infringement for the purpose of s 120 of the TM Act: there is a statement that each of the respondents have provided licences of the KATY PERRY name (para 7); there is an admission that the KATY PERRY mark is deceptively similar to the Applicant's Mark (para 9); and there is an admission that the KATY PERRY name is used as a trade mark in relation to the merchandise in para 7(b), which includes clothing, by the respondents (para 10). She submitted that the proposed amendment to para 10 would have the effect of withdrawing that admission because it would mean that the respondents could (and apparently will) submit that Ms Taylor has not proved that they have used the KATY PERRY mark as a trade mark in Australia in respect of any goods and thus will allow them to deny that Ms Taylor has satisfied the requirements of s 120 of the TM Act.
37 Contrary to Ms Taylor's submissions, an analysis of the FASOC and the Amended Defence demonstrates that the admission made in para 10 of the Amended Defence is limited in the way contended by the respondents. That is, it is an admission that the licensing of the KATY PERRY mark by the respondents constituted use for the purposes of s 120 of the TM Act. My reasons for coming to this view follow.
38 The text of the relevant part of the FASOC is set out at [11] above. In summary the FASOC:
(1) alleges that the respondents infringed the applicant's mark both directly by their use of the KATY PERRY mark and indirectly as joint tortfeasors;
(2) in particular, para 7 alleges that the respondents themselves carried out the Accused Acts, as defined. That is, by importing for sale, distributing, advertising, promoting, marketing, offering for sale, supplying, selling and/or manufacturing in Australia or to people in Australia the Registered Goods or goods of the same description bearing or in association with the KATY PERRY mark;
(3) at paras 8 and 9A it is alleged that the respondents participated in a common design with named third parties to carry out the Accused Acts and that the respondents are each a joint tortfeasor in acting in that way with each of those third parties;
(4) at para 9 it is alleged that each of the KATY PERRY marks which are said to be used by the respondents and the named third parties, is substantially identical with, or deceptively similar to, the Applicant's Mark;
(5) in para 10 it is alleged that the conduct referred to in para 7, namely the conduct that gives rise to the direct trade mark infringement claim by the respondents, and/or the conduct referred to in para 8, namely the conduct that gives rise to the allegation of trade mark infringement against the respondents as joint tortfeasors, constituted use of the KATY PERRY marks as trade marks in respect of the Registered Goods and/or goods of the same description. That is, the allegation of use of the trade marks in para 10 is in relation to both types of trade mark infringement alleged against the respondents; and
(6) in para 11 it is alleged that first, by reason of the matters pleaded in para 7, 9 and 10 of the FASOC, which concern the direct claim of trade mark infringement against the respondents, and secondly, in the alternative, by reason of the matters pleaded in paras 7 to 10, which concerns the claim against each of the respondents as joint tortfeasors, the respondents have infringed the Applicant's Mark pursuant to subs 120(1) and (2) of the TM Act.
39 It is apparent that the claim of trade mark infringement by the respondents is made on two bases although the structure of the pleading is to combine or "wrap up" the two claims at certain points.
40 It is then necessary to consider the Amended Defence in order to understand the nature of the admission made in para 10 thereof. It has a number of features:
(1) by para 7 the respondents plead that prior to the establishment of Killer Queen Ms Hudson and, after the establishment of Killer Queen, Killer Queen provided licences of the KATY PERRY name, brand and trade mark on commercial terms and that, from time to time since their establishment, Kitty Purry and Purrfect Ventures have also provided such licences. The respondents say that pursuant to those licences various merchandise, including clothing, bearing the KATY PERRY mark has been offered for sale, supplied and sold by persons including retailers to persons resident in Australia. The respondents otherwise deny the allegations in para 7 of the FASOC. That is, while the respondents admit that licences were provided and sale or supply of merchandise including clothing has been made pursuant to those licences, i.e. by the licensees, they deny the allegations that underpin the direct trade mark infringement claim;
(2) in paras 8 and 9A the respondents answer the allegation that they were each a joint tortfeasor as alleged in paras 8 and 9A of the FASOC. They repeat the pleading as to the provision of licences for use of the KATY PERRY mark included in para 7 of the Amended Defence and otherwise deny the allegations;
(3) the respondents admit that the KATY PERRY mark (and each of the Infringing Marks as defined in the FASOC) is deceptively similar to the Applicant's Mark but otherwise deny the allegations in para 9 of the FASOC; and
(4) finally, the respondents plead to para 10 of the FASOC. In doing so they repeat paras 7(a), (a1) and (b) of the Amended Defence (see at [12] above) that each of Killer Queen, Ms Hudson, Kitty Purry and Purrfect Ventures has at various times granted licences of the KATY PERRY mark. Next, they admit, in relation to the merchandise referred to at para 7(b) of their defence, that the name KATY PERRY is used in relation to such merchandise by or under the control of the respondents. Lastly, they otherwise deny the allegations in para 10 of the FASOC.
41 Based on this analysis, the admission clearly relates to the merchandise that was offered for sale, supplied and sold pursuant to the licences granted by the respondents. That is, the respondents admitted use of the KATY PERRY mark insofar as merchandise, including clothing, was sold pursuant to the licences. The defence may not have been drafted with crystal clarity. Clearly, given the exchange of correspondence, Ms Taylor had questions about its meaning. However, when it is considered in the context of the FASOC and having regard to all of its terms, its meaning becomes clearer and the limited effect of the admission in para 10 is apparent.
42 Ms Taylor placed some emphasis on the 17 February 2020 Letter in support of her construction of the admission. She asked the rhetorical question, how could one deny the allegations of trade mark infringement in para 11 of the FASOC if each element of infringement had been admitted and contended that it was for that reason that Silberstein & Associates wrote their letter dated 13 February 2020 to Corrs (see [18] above) which elicited the 17 February 2020 Letter in response. But, the respondents accept that that the position stated in the 17 February 2020 Letter, which was written before the decision in PDP Capital was handed down, needs to be corrected.
43 The next question that arises is whether the respondents should be granted leave to amend para 10 in the way proposed which would result in a withdrawal of the admission.
44 Ms Taylor submitted that seeking to withdraw the admission is not "uncontroversial" and that there is no evidence that the admission was made based on a view of the law. Rather, the admission is to a central matter of fact in the case, being the use of the KATY PERRY mark as a trade mark by the respondents in Australia. That submission (which was developed further) need not be addressed further given the view I have reached regarding the effect of the admission.
45 Ms Taylor submitted that, remarkably, there is not one shred of evidence about the circumstances in which the admission came to be made. She submitted that this ought to be fatal to this part of the respondents' application. She contended that there is no evidence that the respondents made their admission on a view of the law which was at odds with the conclusion in PDP Capital. That is, even if the respondents were not aware of PDP Capital, there is no evidence that they were advised whether to make an admission as to trade mark use based on their licensing of third parties, or at all.
46 Ms Taylor submitted that, given the absence of any evidence in respect of this issue, the Court can safely infer that any evidence led would not have assisted the respondents and that such an inference is open on an application to withdraw an admission where evidence explaining the basis of an admission is not led. Ms Taylor submitted that, ultimately, the respondents should be held to the choices they have made in respect of the conduct of the litigation to date, relying on Tamaya Resources at [127(5)].
47 Ms Taylor observed that the respondents seek to withdraw the admission in light of the decision in PDP Capital of which, at the time of writing their letter on 15 July 2021, they said they had recently become aware. Ms Taylor contended that, despite preparing an affidavit in support of the application, Ms Gourley had not clarified that assertion in her evidence but simply relied on her correspondence which, Ms Taylor said, falls short of an adequate explanation. Ms Taylor submitted that, indeed, it is wrong for the respondents to submit, on the evidence, that they and their advisors only recently became aware of PDP Capital as Corrs' letter of 15 July 2021 merely says that "we" have recently become aware, with no explanation as to who the "we" is, or how it was that they only "recently" became so aware.
48 Ms Taylor contended that, in any event, the conclusion in PDP Capital was itself based on a number of other decisions all of which had been handed down more than a decade before this proceeding commenced. She contended that the submission that the respondents' advisors were also not aware of these decisions must be rejected on the basis that there is no evidence from Ms Gourley to establish such an assertion.
49 Ms Taylor raised a number of matters in relation to the prejudice that would be occasioned if the amendment is allowed which are set out and considered at [63]-[73] below.
50 Finally, Ms Taylor submitted that the respondents have not provided any, or any adequate, explanation for the delay in seeking to amend and, in the absence of any evidence, the ostensible justification for the amendment is the decision in PDP Capital. However that decision was handed down on 30 July 2020, almost 15 months ago, and virtually all interlocutory steps in the proceeding have been undertaken since that time. Ms Taylor submitted that, had the amendment been sought in a timely manner, the prejudice identified in relation to the forensic decisions made and the question of joinder of third parties would not arise. She observed that Ms Gourley provides no explanation as to how and why it was that PDP Capital only came to the attention of someone recently, nor what "recently" means. Ms Taylor submitted that if there is not a proper explanation in the evidence that adequately justifies an extensive delay that is an important reason to refuse leave to amend.
51 Having carefully considered these submissions and the applicable principles, I have come to the view that the amendment to para 10 should be allowed. My reasons follow.
52 The admission was first made in December 2019 at the time of the filing of the defence to the amended statement of claim and remained in the Amended Defence which was filed on 10 March 2021. The respondents seek the amendment to para 10 of the Amended Defence on the basis of the decision in PDP Capital which was handed down on 30 July 2020.
53 Ms Gourley's evidence, which the respondents rely on in support of their application to amend their defence, is set out at [25]. Ms Taylor criticises that evidence. She says that it falls well short of the evidence required to support the withdrawal of an admission, relying on Ansell, particularly at [55]-[57] (see [34] above) and the Court's observations at [58]-[60] about the quality of the evidence relied on by the party seeking to withdraw the admission in that case. She also says that the respondents by that evidence fail adequately to explain the delay in seeking the amendment.
54 Ms Gourley candidly explains that she only became aware of the decision in PDP Capital and its significance on 2 July 2021, well after Killer Queen and Ms Hudson had filed their defence and after she had certified the Amended Defence. It was only upon becoming aware of the decision in PDP Capital that Ms Gourley understood that trade mark licensing might not constitute trade mark use and therefore would not, without more, constitute trade mark infringement and that her prior understanding had proceeded on a misapprehension of the law. I pause here to observe that in the course of argument senior counsel for the respondents informed the Court, again candidly, that it was not Ms Gourley's fault alone and this was an error for which he is "principally responsible", that a mistake had been made, they were not aware of PDP Capital and they should have been. Once Ms Gourley understood the significance of PDP Capital she proceeded to obtain instructions from the respondents to seek to amend para 10 of the defence.
55 Relevantly, in PDP Capital one of the issues raised for consideration by the respondent, Grasshopper Ventures Pty Ltd, was whether use of the trade mark in issue by a trading company authorised to do so by it constituted use of that mark as a trade mark by Grasshopper for the purposes of s 120 of the TM Act. That issue was determined in favour of Grasshopper: see PDP Capital at [488]. I found that Grasshopper's authorisation of the use of the mark in question was not capable of constituting trade mark infringement for the purposes of s 120 of the TM Act.
56 On appeal that finding was challenged. In PDP Capital Pty Ltd v Grasshopper Ventures Pty Limited [2021] FCAFC 128; (2021) 391 ALR 608 (PDP Capital Appeal) a Full Court of this Court (Jagot, Nicholas and Burley JJ) rejected the appellant's contentions that Grasshopper should be taken to have engaged in an act of infringement by authorising one or more of the companies in the group to apply the mark in question to various products and that Grasshopper's conduct fell within that prescribed by s 120 of the TM Act: see PDP Capital Appeal at [65]-[75].
57 By the amendment, which reflects the reasoning in PDP Capital (as confirmed in PDP Capital Appeal), the respondents seek to add to their defence to the direct trade mark infringement claim a contention that the mere licensing of the use of the KATY PERRY mark as alleged in paras 7(a) and (a1) of the Proposed Further Amended Defence does not constitute infringement of the Applicant's Mark by them. The admission as currently made in para 10 is incorrect as to a matter of law. The respondents seek to make an amendment which is consistent with the law as it currently stands.
58 In those circumstances I do not agree that the respondents' evidence suffers from the deficiencies alleged by Ms Taylor. As set out above, Ms Taylor relied on the observations at [58]-[60] of Ansell.
59 Ansell concerned a claim for infringement of a patent. In that case, as here, the respondent who was seeking to withdraw admissions relied entirely on evidence given by its solicitor as to why the admissions had been made and why it now sought to withdraw them. Relevantly, the admissions concerned the properties of the product the subject of the claim for patent infringement. That is, they were admissions as to matters of fact. At [59] Rares J found that the absence of any evidence about the knowledge or state of mind of the respondent's own personnel was "striking" and that it had remained silent on how it, as opposed to its solicitors, had made the admissions and whether they were incorrect. His Honour found that the respondent made a deliberate choice in circumstances where it was open to it to explain the material and thus inferred that nothing the respondent could say would have assisted its case. Justice Rares concluded that there was no evidence that the respondent would suffer any injustice by being held to those admissions and that the evidence showed that it had made the admission for a tactical reason: see Ansell at [62]-[63]. The amendment by which the admission would have been withdrawn was refused.
60 This case is different. The admission the respondents seek to withdraw goes to a matter of law and not a factual matter. It is therefore understandable and entirely appropriate that the explanation for why the respondents made the admission originally but now seek to withdraw it comes from their lawyer and not from someone within the respondents. It would be curious if any member or officer of the respondents or Ms Hudson herself was able to give evidence about their understanding, or the effect, of Australian trade mark law. Accordingly in the circumstances of this case it is entirely appropriate that the reason why the admission was first made and the reason why the respondents now seek leave to withdraw it by amending their defence has been provided by Ms Gourley.
61 As to the evidence itself, while not detailed, given the nature of the admission which the respondents seek to withdraw it is sufficient both in terms of explaining why the admission was made and why the respondents now wish to withdraw it and the delay. Ms Gourley does not, in terms, explain why it took 15 months. But in my opinion the evidence speaks for itself and it is not necessary for her to provide any further evidence given the facts that are disclosed. That is, Ms Gourley simply was not aware of the decision.
62 Ms Taylor says that the point of law clarified by PDP Capital and PDP Capital Appeal was based on authorities the subject of analysis in PDP Capital at [454]-[487], referring in particular to Unilever Australia Ltd v PB Foods Ltd [2000] FCA 798, Louis Vuitton Malletier SA v Toea Pty Ltd (2006) 156 FCR 158 and Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd [2006] FCA 275 (2006) 68 IPR 229, which were handed down well prior to the commencement of this proceeding. Ms Taylor contended that the respondents' advisors must have been aware of these authorities. But even if they were, that is not to the point. As I observed at [453] of PDP Capital "[s]ave in one limited respect I was not taken by the parties to any case that had considered the issue" raised. That is, the issue had some novelty about it, had not been squarely considered and, to the extent it had been, there was some divergence in the authorities.
63 The remaining factor to consider is that of prejudice: see Tamaya Resources at [127]. In that regard Ms Taylor raises six matters, a number of which are related and which I consider below.
64 The first matter raised by Ms Taylor concerned the effect of the withdrawal of the admission. Ms Taylor submitted the starkest prejudice is that the respondents will have available to them a defence that they currently do not have, namely asserting that she has not made out her claim of infringement which is a complete defence to her case. Ms Taylor submitted that the prejudice to her brought about by this change is far greater than its importance to the respondents because the respondents have other defences and a cross-claim. However, this factor cannot be a relevant prejudice where the nature of the amendment is to correct what was otherwise an incorrect understanding of the law. It would not be appropriate, or in the interests of justice, to permit the case to proceed in that way.
65 Next, Ms Taylor submitted that her solicitor has made forensic decisions about the conduct of her case on the basis of the admission having been made. Since the 17 February 2020 Letter all interlocutory steps in the proceeding in relation to evidence, subpoenas, joinder and discovery have been undertaken. Insofar as the joinder of other parties was concerned Ms Taylor submitted that, if the amendment is allowed, she will be forced to consider whether it is necessary to join some or all of the third parties identified by Dr Silberstein in his evidence to guard against the Court finding (absent the admission) that the respondents did not use the KATY PERRY mark as a trade mark in Australia. As many of those potential respondents are based overseas it will create significant legal and logistical complications to do so.
66 It is evident from the claim as pleaded that, from the outset, Ms Taylor was aware that the respondents may not have used the KATY PERRY mark in Australia and that it may only have been used by third parties. In the amended statement of claim, which was filed prior to the filing by the then respondents, Killer Queen and Ms Hudson, of their defence and thus prior to the making of any admission, Ms Taylor alleged that the respondents had participated in a common design with third parties and that they were liable as joint tortfeasors. At that time those third parties included Target and Myer and various websites. Ms Taylor chose not to join any third party to the proceeding but to plead a case in joint tortfeasorship. I would infer that the claim of joint tortfeasorship was included to guard against the possibility that the use of the KATY PERRY mark by those third parties was not trade mark use by the respondents and thus not trade mark infringement. The case in joint tortfeasorship has been maintained in the FASOC despite the admission.
67 Ms Taylor submitted that while she may have been aware that some parties other than Killer Queen and Ms Hudson were involved in the sale of Katy Perry branded goods from the outset of the litigation, she did not know the identity of all relevant parties and the inter-relationship between them and Killer Queen and Ms Hudson and this was not something she could have discovered other than through this litigation. She submitted that it cannot be said that she had no further intention to join parties merely because they were not initially joined.
68 Dr Silberstein's evidence is that he would need to consider whether to join third parties as a result of the withdrawal of the admission in para 10. However, he does not explain why it is that he would reach a different decision about the joinder of third parties now as opposed to when the proceeding was commenced or when the FASOC was filed. That is particularly stark in the case of Target and Myer of whom Ms Taylor has been aware since the outset of the litigation. As to the other potential third parties raised by Ms Taylor:
(1) in a letter dated 25 August 2020 Dr Silberstein wrote:
However, any dispute regarding discovery must necessarily await: (a) our review of the subpoenaed material from Target and Myer, the balance of which we expect to receive this week or early next week; and (b) our consideration of whether or not our client ought to join new respondents to the proceedings arising out of the review of your clients' evidence and the subpoena materials. It appears that potential respondents would include further entities associated with your client such as Kitty Purry, Inc and Purrfect Ventures LLC, as well as third party entities such as Bravado International Group, Inc., Bravado International Group Merchandising Services, Inc, GBG USA Inc and Direct Management Group Inc. Our client is entitled to carefully consider such matter before making a decision and filing any joinder application.
(Emphasis added.)
(2) in a letter dated 7 August 2020, again prior to the filing of the FASOC, Dr Silberstein wrote:
Joinder
Having considered your clients' evidence and the subpoena materials, we anticipate imminent receipt of instructions to file an interlocutory application joining Kitty Purry Inc and Purrfect Ventures LLC to the proceedings as respondents. Both entities appear to be related to your clients. ...
Our client is also considering her position as to whether to join Bravado International Group Merchandising Services, Inc (Bravado). However, our client cannot sensibly make that decision without understanding the proportion of profits arising from licensing of your clients' marks which is taken by Bravado versus that which is passed onto your clients and Kitty Purry Inc. We request that you provide an unredacted version of the agreements between your clients and Kitty Purry and the Bravado entities so that a decision can be made. If it will provide your clients comfort, those documents can be subject to a confidentiality regime whereby access is restricted to external counsel only (that is, solicitors and barristers).
(Emphasis added.)
69 Both letters were sent after the filing of Killer Queen and Ms Hudson's defence to the amended statement of claim (which first included the admission) and prior to the filing of the FASOC. These letters, and in particular the second of them, indicate that Ms Taylor was considering whether, at least in the case of Bravado International Group Merchandising Services Inc, it was beneficial, presumably from a cost benefit perspective, to join that company. She has not done so to date. It is difficult to see how she would have come to a different view on that issue had the admission as to trade mark use not been made.
70 The third matter relied on by Ms Taylor is that she would have to consider whether she should seek further discovery, subpoenas, or Sabre orders to lead further evidence establishing use of the KATY PERRY mark as a trade mark in Australia by the respondents. Ms Taylor refers to and relies on the evidence given by Dr Silberstein (see [26]-[29] above). Relevantly, by orders made on 12 November 2020 (Discovery Orders) the respondents were ordered to give discovery of, among other things:
1. Documents which record, describe or evidence the terms of any agreements entered into between any one or more of:
(a) the Respondents, and/or
(b) any related party of the Respondents; and/or
(c) (without limiting (b)), Bravado, DMG, or GBG USA Inc; and/or
(d) one or more third parties other than the Department Stores (including, but not limited to, the Pop Up Stores, Named Websites, or other websites particularised in paragraph 7 of the Statement of Claim),
in respect of, inter alia, any importation for sale, distribution, advertisement, promotion, marketing, offer for sale, supply, sale and/or manufacture in Australia or to people in Australia, clothes or Related Goods bearing, or otherwise in association with, the Alleged Infringing Marks.
For the purposes of the Discovery Orders "Third Parties" was defined to mean "Bravado International Group Inc, Bravado International Group Merchandising Services Inc (together, Bravado); Direct Management Group Inc (DMG); GBG USA Inc; and NKSFB, LLC".
Categories 2 to 5 of the Discovery Orders sought documents which went to the joint tortfeasorship case.
71 There has thus already been discovery in relation to the relationship between the respondents and various third parties and in relation to the joint tortfeasorship case. Ms Taylor contended that she would now need to seek further evidence of how particular goods came to be sold to customers in Australia to identify instances in the chain of commercial events where the KATY PERRY mark was used in physical or other circumstances by the respondents. That is, based on her understanding of the admission, Ms Taylor would now need to seek further discovery to show that the respondents were using the mark. That this is so arises from Ms Taylor's misunderstanding as to the ambit of the respondents' admission in para 10 of the original defence and the Amended Defence. An application for further discovery of this nature may well be a consequence of the withdrawal of the admission. If such an application is made it will need to be addressed at the time. In any event I apprehend that, if further discovery is sought, subject to its ambit, the respondents would co-operate. This is particularly so given the submission by senior counsel for the respondents that if further discovery is required "that could obviously be done within the next two and half months without jeopardising the trial".
72 Lastly, Ms Taylor submitted that taking steps to consider the joinder of additional parties and the seeking of further disclosure would almost certainly cause the hearing date to be lost and that further delay to her obtaining relief will cause her substantial prejudice. Ms Taylor submitted that the fact that she is funded is irrelevant. If her rights are being infringed, she is prejudiced because of the further delay to her in receiving relief. Relatedly, Ms Taylor submitted that the prejudice is of a kind that cannot be compensated by an award of damages. She contended that, if the amendment is allowed, as well as the prejudice she has identified she would incur further costs in respect of at least the further steps that may need to be undertaken.
73 Allowing the amendment may lead to an application by Ms Taylor to adjourn the hearing currently scheduled to commence on 29 November 2021. However, no such application has been made and, if made, will need to be considered at the time. Ms Taylor does not otherwise identify any prejudice she suffers with any precision beyond stating generally that if her rights are being infringed then she has a right to relief sooner rather than later. So much can be accepted. But again, in the absence of any application for an adjournment of the hearing, this submission does not go very far to establishing any actual prejudice.
74 Consideration of whether to grant leave to amend is to be undertaken in accordance with the overarching purpose in s 37M(1) of the Federal Court Act: see Tamaya Resources at [125]. That purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Having regard to the matters set out above, it would not be consistent with the overarching purpose to permit the case to proceed based on an admission which is not consistent with the current law. To the extent that Ms Taylor suffers any prejudice by reason of the amendment, it is apparent that it can be addressed and is, in my opinion, outweighed by that consideration. Accordingly the amendment to para 10 should be allowed.
75 The respondents also seek leave to amend para 11 of the Amended Defence in the manner identified at [13] above. Ms Taylor conceded that if the amendment to para 10 is allowed then it would follow that the amendment to para 11 would also be allowed.