Virgin Enterprises Limited v Virgin Star Pty Ltd

LEGAL PRINCIPLES - interlocutory relief 11 The legal principles are well settled as to the necessary requirements for the grant of interlocutory relief. The Court must first inquire whether there is a serious question to be tried and then consider whether the balance of convenience favours the grant of relief on an interlocutory basis before all the facts are in, the evidence has been tested and full submissions have been made. 12 The expression "a serious question to be tried" means the applicant must show that there is a case which can be seriously argued and which has, on its face, some substance: see Republic of Ireland v O'Donoghue [2004] FCA 1753 at [15]. Other formulations of the test are that there must be a real prospect of succeeding in the claim for a permanent injunction at the trial or that the claim must not be frivolous or vexatious. There is no need to establish that, as a matter of probability, the plaintiff will succeed on a full hearing or that a prima facie case has been made out on the evidence at the interlocutory stage: see American Cyanamid v Ethicon Ltd [1975] AC 396 at 407 (American Cyanamid). It is clearly not necessary that there should be "strong grounds" to suppose that the respondent is contravening the law: see Construction, Forestry, Mining and Energy Union v CSR Limited t/as CSR Humes [2000] FCA 1203 at [27]-[28] (CSR Humes). 13 The two relevant questions of whether there is a serious question to be tried and whether the balance of convenience favours the grant of relief are inter-related to the extent that the strength of the case established on the interlocutory application is a material matter to take into account on a consideration of the balance of convenience. It is not, of course, conclusive of itself, however, it is a relevant consideration for the Court to take into account. 14 The concept of the balance of convenience involves an examination of whether the inconvenience or injury which the applicants would be likely to suffer if the injunctions were refused, outweighs or is outweighed by the injury which the respondents would suffer if the injunctions were granted: see D G Whelan Rentals Pty Ltd v Australian Building Construction Employees' and Builders Labourers' Federation (1983) 46 ALR 339 at 341 and American Cyanamid at 408. 15 The Court is concerned not only with the rights of the immediate parties but also, in an appropriate case, with the surrounding circumstances and the rights and interests of other persons who may, to varying degrees, have an involvement in the circumstances: see CSR Humes at [23]-[24].

respondents' case 16 Ms Maas appeared in this matter and has represented herself and the other three respondents in the proceeding. 17 Ms Maas has filed an affidavit dated 16 November 2005 in which she states that she is the sole director and secretary of Virgin Star and Web Dimensions. She states that the fourth respondent, Ms Wiklendt, was a director, secretary and shareholder of Virgin Star Pty Ltd, however, she resigned on 15 November 2005. 18 Ms Maas has a Bachelor of Computer Science, majoring in software engineering. She has been employed by Toshiba International as a C++ programmer for power stations. She also has experience in the building of an online banking system for the Commonwealth Bank. I am satisfied that Ms Maas has provided evidence of an expertise and significant experience in the field of information technology. 19 In about 2003, Ms Maas formed Web Dimensions with a view to going into the business of web design and database development. Since this time, Ms Maas has been engaged by a number of mainly small businesses to develop their websites and databases. Some web hosting has also been involved. 20 In June or July 2005, Ms Maas set up a large stall at the Darling Harbour Retail and Technology Expo and marketed her products and services. Ms Maas formed commercial relationships at this Expo with a number of potential clients, including Mr Simpson, one of the directors of a business known as Chemist Choice. Chemist Choice is an entity which provides pharmacy support, training, education and development for pharmacists and their assistants, including in the sales, staff, stock and marketing areas. Chemist Choice advertises in a national pharmacy magazine entitled "Retail Pharmacy", with a readership claimed to be in excess of 30,000 people. In the previous edition of this magazine, an advertisement was placed by Chemist Choice to which was attached a magnet showing the design of the Chemist Choice website at www.chemistchoice.com.au. A line at the bottom of the magnet inconspicuously states that the Chemist Choice website was designed by www.virginstar.com.au. Ms Maas claims that, as a result of the advertisement and the magnet, a considerable number of readers might contact Virgin Star or Chemist Choice for the purposes of engaging one of these companies to create a website for them or to purchase discounted business DSL. She claims that Virgin Star offers services at a price below that of the major internet providers and telecommunication companies. Mr Simpson claims that customers of Chemist Choice, being chemists, are extremely attentive to detail, such as the magnet notation reference to Virgin Star, and would be likely to form an adverse view of Chemist Choice if the word "Virgin" was replaced with some other word. On its face, this seems to me to be unlikely and I do not consider that should be given much weight in balancing competing hardships. 21 Ms Maas makes assertions in her affidavit as to the extent of the business that Virgin Star will generate. There is no documentary evidence to support the large figures claimed by Ms Maas. However, having considered her evidence and that of Mr Simpson, who was called at the hearing to give evidence, she may suffer some very small financial hardship and, of course, inconvenience and disruption, if the interlocutory relief sought is granted at this stage. 22 Ms Maas said that she personally created the name "Virgin Star". She says that she chose the word "Virgin" because it meant "not yet used" or "first of its kind" or as indicating a first time service or experience, and when she started "Virgin Star" she says there was no one offering significant discounts on DSL services for such businesses in Australia. She says that the word "Star" was chosen to express good luck. She denies that it ever entered into her thinking to attempt to gain some sort of financial or other advantage by using the word "Virgin" so as to give an impression of an association with the members of the Virgin Group. 23 Ms Maas agrees that, on or about 3 August 2005, Ms Wiklendt, who was then a director of Virgin Star, registered the business name "Virginstar" with the Office of Fair Trading. The corporate entity of Virgin Star Pty Ltd was created on or about 30 August 2005. At the time that the company was created and registered, she says that there was no objection to the use of these names by any person or entity. About ten days after the business name was registered, Ms Maas set up the Virgin Star website. The first upload for the website was on 12 October 2005 at 2:50 pm. 24 When the Virgin Star website was set up, the dominant colours were red and white to conform with the website for Chemist Choice Pty Ltd. Ms Maas received a complaint about the website and, as a result of allegations concerning the colour, she changed the colours of the website to substantially blue and white. The colours of the Virgin Group are well-known to be red and white. However, the fact that one of the members of the Virgin Group is Virgin Blue cuts, to some extent, across the effect of the change of colour by Virgin Star from red to blue. Ms Maas has detailed in address a number of what she claims to be differences between the respondents' use of the name and mark and the Virgin trade marks. 25 Ms Maas asserts that she has spent about $10,000 setting up Virgin Star, including creating the entity, the business name and the website and services associated with it. She claims that Ms Wiklendt has probably contributed loan monies of $25,000 towards the creation of the business and $6,000 towards plant and equipment. She asserts that if she could not trade under the name Virgin Star she would suffer a significant commercial loss. 26 In her affidavit, Ms Maas addresses in detail the allegations made against her in the affidavits filed by Virgin.

virgin's case 27 The evidence for Virgin is that the Virgin Group makes extensive use of the internet. It owns a large number of domain names that include the word "Virgin". The internet has been used widely as a means of marketing the goods and services of the Virgin Group and the members of the Virgin Group engage in substantial e-commerce activities. A number of the businesses run by the Virgin Group engage solely in e-commerce activities, including Virgin Wines, Virgin Books, Virgin Student, Virgin Digital, Virgin Games, Virgin Galactic, Virgin Money, Virgin Credit Card and Virgin Superannuation. 28 Virgin Net Ltd ("Virgin Net") is a member of the Virgin Group. Virgin Net is an on-line internet service provider based in the United Kingdom offering broadband, dial up and pay per user internet access and email services to the United Kingdom. The Virgin Net website located at www.virginnet.com and www.virgin.net provides on-line shopping, holiday services, entertainment, news and reviews of movies, travel, and shopping and is available to residents of Australia as part of the world-wide web. Virgin Net has been referred to in the Australian media, however, there is no evidence of Virgin Net's services being utilised from Australia. There is another member of the Virgin Group known as Virgin Biz which is an on-line business information and website creation service for small businesses in the United Kingdom. Another member of the Virgin Group is Virgin Business Solutions. The Virgin Business Solutions website is located at www.virginbusinesssolutions.co.uk, however, it is not currently operating. 29 Ms Maas contends that there is no basis for a conclusion that consumers would mistake or be misled by her website so as to infer some association, approval or permission on the part of the Virgin Group. Ms Maas says that this is because of the limited nature of engagement by the Virgin Group in the area of internet services where any confusion could arise in relation to the activities of the respondents. 30 Virgin filed a vast amount of material shortly before the matter came on before me. Most of it is quite unnecessary, however, it was put on presumably in an attempt to demonstrate the extent of use and reputation world-wide of the "Virgin" names and marks and its reputation in Australia in particular. In an application for an interlocutory injunction, such as the present, the quantity of material reproduced and served by Virgin is manifestly excessive. For example, one affidavit by Mr Martin O'Connor, of Addisons' Lawyers, sworn on 3 November 2005, has a total of 27 pages including 15 pages of tables setting out the Virgin trade marks relating, among other businesses, to sound recordings, transportation, life insurance, television, sporting activities, beverages and fruit juices. On 4 November 2005, a second affidavit was sworn and filed by Mr O'Connor for use in the proceedings which extends over 105 pages and 228 paragraphs. This mass of print is accompanied by 15 lever arch folders with 180 exhibits and over 5,000 pages of material, most of which is, on its face, irrelevant to the issues involved in this interlocutory application. 31 The material filed by Virgin is completely disproportionate to the narrow issues for consideration at an interlocutory stage of the proceedings, which is intended to make provision for the rights of the parties pending the final hearing. The exhibits reproduce verbatim extracts from newspapers relating to Sir Richard Branson and his variegated adventures and exploits over 17 or more years. In this ocean of unnecessary and unhelpful material, there is one paragraph in the affidavit of Mr O'Connor sworn on 4 November 2005 which refers to the Virgin Net business and website, which appears only to have provided services out of the United Kingdom. The five press articles referred to by Mr O'Connor in this paragraph are contained in Exhibit MOC-163. Four of these press articles relate to a criticism on the Virgin Net website of the State of Queensland as a tourist destination and the heated response of the Queensland Premier: "Virgin Blushes After Blue Mark Irving, Susan Hewitt 05/06/2000 The West Australian … RED faces for Virgin, in the same week as the company announced the new name for its Australian airline (Virgin Blue, by the way) its Web site has carried a story by a contributor denigrating major Queensland drawcards. Surfers Paradise? 'Rather tatty' the scribe sniffed. Port Douglas? 'Soulless'. Brissie? 'Nothing worth flying half way around the world to see.' Needless to say, there has been no shortage of banana benders volunteering to join a lynching party for the nameless scribe. 'I'd love to get hold of him,' Queensland Premier Peter Beattie said through gritted teeth. Virgin Australia distanced itself from the site, insisting not only did it have no control over the Web site editorial, it disagreed with it." I am at a loss to see any relevance in such articles, considered either alone or cumulatively. The fifth article referred to in Mr O'Connor's second affidavit is from "The Australian" of 25 July 2003. The one and only reference to Virgin Net in this three page article concerns Mick Jagger and a poll on rock icons: "When Virgin.net conducted a recent poll on rock icons, on the occasion of Bob Dylan's 60th birthday, asking respondents to name the best rock stars over 50, Jagger came a close second to David Bowie. Asked to name the rocker they would most like to see retire, Cliff Richard earned the ire of a full half of those polled, with Rod Stewart a quarter. Jagger did appear, fourth after Phil Collins, but with less than one in five giving him the thumbs down." (Emphasis in original) 32 Having regard to the manifest lack of relevance of much of the material, the volume and nature of the material filed and served by Virgin on this application borders on vexatious and frivolous use of Court procedure. The right to institute legal proceedings is not an open invitation to unnecessarily swamp respondents with material which travels far beyond the issues before the Court. An appropriate course for Virgin to have adopted before filing this material would have been to seek some indication from the respondents as to the elements of the application that were disputed and to exercise some selectivity and judgment in the preparation of material to be put before the Court rather than to embark on a costly and wasteful photocopying exercise. This is a case in which the respondents were not asked whether they conceded that Virgin had a long-standing world wide reputation, much of which is said to be reflected in the Australian community. This could easily have been done by Virgin. Instead, the evidence was simply filed. 33 In relation to Virgin's claim that damages are not an adequate remedy, the evidence does not make it clear with any precision exactly what it is about the reputation of the Virgin Group that would be damaged by the use of the respondent's website. Most of the 5,000 pages of material filed by Virgin do not relevantly bear on the reputation of the Virgin Group. The reputation apparently sought to be demonstrated and protected by the voluminous evidence largely turns on the behaviour of Sir Richard Branson over the past 17 or more years. This is because the evidence discloses that much of the reputation of the Virgin Group has been built up over the years by reference to the colourful, adventurous and, to some extent, light-hearted antics of Sir Richard Branson, who, on the evidence seems to have a particular penchant and ability to ensure publicity for the Virgin Group, in which his photograph features prominently, often standing in front of an aircraft emblazoned with the name "Virgin" and surrounded by a group of women in swimsuits. It is difficult to see how this material, of which a vast quantity has been filed by Virgin, advances the case of Virgin in the present proceeding. The material seems far removed from the modest enterprise of the respondents in seeking to provide internet services. To give an example of the peripheral import of Virgin's vast information dump, I set out below a copy of the contents of an article published in the Sydney Morning Herald in 1988, some 17 years before the commencement of this proceeding: "Virgin King Skis in for Launch and Drinks By Robyn Harvey 05/04/1988 Sydney Morning Herald … The king of the Virgin Empire, Richard Branson, made his presence known at Darling Harbour yesterday when he arrived on water skis to open what he claims is the largest record store in the Southern Hemisphere. In a very wet publicity stunt, Mr Branson, 37, skied into Darling Harbour dressed as an airline pilot accompanied by a 'hostess'. The purpose of his stunt was to promote his Virgin Atlantic Airline's bid for an Australian operating licence. Mr Branson kept the crowds, the press, and other such notables as Trish Goddard, Dick Smith, funny men Jono and Dano, and Rusty Nails waiting at the wharf alongside his 24-metre luxury power boat for 20 minutes before he appeared. As the soaked entrepreneur stepped from the water and greeted the crowds, Trish Goddard approached. They shook hands. But Mr Branson had decided the television presenter needed something a little more lively. He picked Ms Goddard up, carried her to the water's edge, threatened to throw her in - then suggested they all go and have a drink instead. Standing in his very wet suit, Mr Branson made a short speech before cutting the blue ribbon and declaring the Virgin Megastore open. 'It is difficult to talk in the state I'm in,' he said, 'but our main aim is to get our airline to fly down here.' If Mr Branson's bid is successful, flights will be offered between Australia and the UK at discount prices. He will meet the Minister for Transport and Communications, Senator Evans, tomorrow. The Megastore will also house what Mr Branson describes as the world's first condom bar. Profits from the condom sales will go to charity. Mr Branson has been in the public eye for some years: November 1987 - Launches Mates Condoms, for half the price of regular condoms. August 1987 - hands a cheque for Pound 25,000 to a fisherman for the development of a community project on Rathlin Island, Ireland, to help young people. July 1987 - Crosses Atlantic in hot-air balloon, but flight ends in near disaster after ditching in sea. August 1985 - Attempts to cross Atlantic by boat but fails when boat sinks." (Emphasis in original) 34 In this case, it is incumbent on the Court, having regard to what appears to be a vastly excessive and uncritical assembly of material covering a period of over 17 years, to observe that such a course of flooding the parties and the Court with a mass of irrelevant material, especially in cases where a person is not represented, is a course that should be strongly discouraged. The photocopies in this case comprise vast volumes of material given to the solicitor which has been reproduced without any real attention given as to whether the material is necessary, appropriate or relevant to the immediate issue for which it is to be used. Given that at least four copies of the material must have been made, the photocopied extracts amount to more than 20,000 pages. Such a pile of information could result in oppression to a litigant who is forced to consider this material in an attempt to meet it at such an early stage of the proceedings. In making these remarks, my purpose is to flag the fact that, at an appropriate stage, these considerations will have to be taken into account when considering the question of costs. 35 The question for the Court on an interlocutory application is, as indicated earlier, a narrow one and does not require as a basis for relief that an application establishes that there is a prima facie case. It is sufficient if there is a reasonably arguable claim to the effect that there could be confusion or misunderstanding or a breach of the trade mark or a passing off. I am satisfied, having regard to this relatively low threshold, that, in the present case, the "Virgin" names and marks are sufficiently well-known to arguably be a source of confusion in some minds at a casual glance. On this basis, I consider that the first stage in a consideration of an application for interlocutory relief has been made out by the Virgin Group. I now turn to the question of the balance of convenience.

Balance of convenience 36 I refer to the evidence of the parties outlined earlier. Virgin has not been able to point out any direct overlapping of a significant nature between the goods and services offered by the Virgin Group and those offered by the respondents. In the case of names and marks as widely known as those belonging to Virgin, it is not, of course, necessary to have any overlap or confusion in relation to a specific area, however, this is a relevant consideration for the Court to take into account. The strength of the case propounded by Virgin is also a matter to take into account. I am satisfied that Virgin has an arguable case, however, on the present state of the evidence, I do not give any controlling weight to this aspect. It is not, of course, necessary for Virgin to establish any actual confusion or that any specific person has been misled. 37 Virgin contends that, if interlocutory injunctive relief is not granted, it will suffer irreparable harm which cannot be compensated for in damages. However, the only harm which can be readily identified is a possibility of detriment to the reputation of the Virgin group as a result of the provision of poor quality services by the respondents. The nature of this harm is not defined. There is no evidence to suggest that the internet services to be provided by the respondents will, in any way, be inferior or unsatisfactory from a technical or commercial viewpoint. Practical experience indicates, however, that it is arguable that the "Virgin" names and marks may be diluted and the very large investment in the Virgin name may be somehow weakened as a consequence of the use of the name Virgin Star by the respondents. There is also the possibility that people will be misled and become unsatisfied with the "Virgin" names and marks as a consequence of being attracted to the Virgin Star website in the erroneous belief that it is associated with the Virgin Group. 38 I do not accept the somewhat extravagant claims by Ms Maas as to the extent of potential loss. In particular, I do not consider that the reference to Virgin Star on the magnet or advertising material is a major consideration. Nevertheless, there has been a substantial investment by Ms Maas in the establishment of the website and the registration of the business name and there has been a change in the colour of the Virgin Star Website. It is true that the company and domain name have only recently been set up and therefore there is no likelihood of disruption to an ongoing business. Weight should be given to preserving the status quo until the hearing can take place. I am not persuaded that damages are not an adequate remedy for Virgin if the applicant succeeds after the merits of the case have been fully ventilated. 39 In the above circumstances, I consider that the balance of convenience is in favour of the respondents. For these reasons, I decline to grant the interlocutory relief sought. 40 Accordingly, the order of the Court is that the application for interlocutory relief is refused. The costs are reserved. The parties are directed to contact my Associate with a view to further directions for a final hearing in this matter.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate: Dated: 22 December 2005 Counsel for the Applicant: D Sibtain

Solicitor for the Applicant: Addisons

The First Respondent appeared for the First to Fourth Respondents

Date of Hearing: 21 and 23 November 2005

Date of Judgment: 22 December 2005