Vivo International Pty Ltd v Tivo Inc

REASONS FOR JUDGMENT Revised from transcript 1 Before me is an interlocutory application filed by the appellants in an appeal which has already been heard by the Full Court (Keane CJ, Dowsett and Nicholas JJ) and in which judgment is reserved. The appeal was heard in Melbourne on 13 August 2012. 2 The appeal is against orders made by the primary judge on 23 March 2012 in a proceeding concerning two trade marks. The first trade mark (the TiVo trade mark) was registered to the first respondent pursuant to an application lodged on 10 November 1999. The second trade mark (the Vivo trade mark) was registered to the first appellant pursuant to an application lodged on 18 February 2008. In the proceeding the first respondent sought (inter alia) an order cancelling the registration of the Vivo trade mark and an injunction restraining the first appellant from infringing the TiVo trade mark. The primary judge ordered that the registration of the Vivo trade mark be cancelled. Her Honour also granted an injunction restraining the first appellant from infringing the TiVo trade mark. 3 The principal question under consideration by the Full Court is whether the order cancelling the Vivo mark ought to have been made by her Honour. The answer to that question depends upon whether the Vivo trade mark was, at the relevant time, deceptively similar to the TiVo trade mark. The order cancelling the first appellant's trade mark registration not only deprived the first appellant of the exclusive rights associated with registration of the trade mark, but it also deprived the first appellant of any defence it may have to infringement proceedings based upon s 122(1)(e) of the Trade Marks Act 1995 (Cth) (the Act). 4 On 19 April 2012 Jessup J made a consent order which stayed the primary judge's orders pending the hearing and determination of the appeal. This consent order was conditional upon the first appellant giving certain undertakings which were given by Senior Counsel on the first appellant's behalf. The undertakings are in the following terms: (a) not to place any further order for the manufacture, or otherwise to cause the manufacture, of products bearing the VIVO mark for sale in the Australian market beyond the products referred to in paragraph 15 of the affidavit of Fabio Michael Grassia affirmed 5 April 2012; and (b) to keep account of all sales of products bearing the VIVO mark, and, notwithstanding s 122(1)(e) of the Act, to abide by such order as the court may make in favour of the Respondents for damages or an account of profits (at their election) in respect of those sales in the event that the Appellants' appeal is unsuccessful. 5 The first appellant now seeks to be released from undertaking (a). Its application is supported by affidavit evidence from the first appellant's solicitor (Mr Polczynski) and the second appellant (Mr Grassia), the managing director of the first appellant. 6 The grounds upon which the first appellant seeks to be released from the undertaking are as follows: first, circumstances have changed since Jessup J made the order staying the primary judge's orders; secondly, the respondents have not given any cross-undertaking as to damages, and have refused to consent to an order varying Jessup J's order to include one; thirdly, the first appellant has good prospects of success in the appeal. 7 The affidavit of Mr Polczynski annexes copies of written submissions that were provided to Jessup J by the appellants, the transcript of the proceedings before his Honour, and correspondence exchanged between the parties since 14 September 2012 when the present application was foreshadowed. In the letter of 14 September 2012, it is asserted by the solicitor for the first appellant that the first appellant gave the undertakings, without obtaining what is referred to as the "usual cross-undertaking" and that this was "obviously an oversight" by the parties. Mr Polczynski's affidavit does not provide any evidentiary support for such an assertion. 8 In his affidavit Mr Grassia gives evidence that since the primary judge's orders were made, he has sought to develop a new brand consisting of the name of Viano. He says that in the period 23 March 2012 to 17 September 2012 the first appellant received orders for 540 units of VIANO branded product to a total value of $107,450. He says that customers are reluctant to place any significant purchase orders for VIANO branded stock because VIANO is not an established brand. He says this is particularly concerning to him at the moment because most customers are currently in the process of finalising orders for the Christmas period which is traditionally the time at which most of the first appellant's sales are made. 9 It does not surprise me that VIANO sales would be negligible having regard to the period in which they were sold. The evidence suggests that most of the first appellant's sales are made in the latter part of the calendar year. Moreover, the nature and extent of the efforts made by the first appellant to establish VIANO, whether through advertising or other promotional activities, is not apparent from the evidence. Very little detail is provided on this topic by Mr Grassia. I am not satisfied that extensive efforts have been made to promote sales of the VIANO product. 10 Mr Grassia also gives evidence of a new order that he has accepted involving the sale of a large number of televisions and other audio-visual products. He says it will be fulfilled with 6000 existing Vivo branded televisions, and a further 4,000 televisions and 9,500 smaller audio-visual products, such as portable DVD players and home theatre systems which are yet to be manufactured. He says that the 6000 Vivo branded televisions to be drawn from existing stock had already been manufactured or were in the process of being manufactured prior to the primary judge's orders being made. He says that the customer concerned will not accept Viano branded product and insists that the product be branded with the Vivo trade mark. 11 There appear to be inconsistencies in the evidence in relation to the 6000 Vivo branded televisions. The evidence before Jessup J suggested that they had been earmarked for sale well before now, and that the first appellant was committed to supply 4600 of those products to Dick Smith stores and Australia Post. The evidence before me indicates that the first appellant is still in possession of 6000 units, and that it is proposing to use them to fulfil the new order. 12 The inclusion of 9,500 smaller audio-visual products in the new order is significant in that at the time Jessup J heard the application for a stay, it was made clear to his Honour that the first appellant was not engaged in the sale of any such products and that for some time the first appellant had confined itself to the sale of televisions. Thus, the position seems to be that the first appellant is proposing to expand its trading activities, so that it is not only selling Vivo branded televisions, but other Vivo branded audio-visual products of the type that were not being sold when the matter was before Jessup J. 13 According to Mr Grassia, the first appellant stands to lose approximately US $3 million in sales and approximately US $350,000 in profit if the new order is cancelled. He also says that there are other customers to whom the first appellant wishes to sell Vivo branded products. It says that if it cannot do so by reason of the undertaking given to Jessup J, the first appellant stands to lose further sales that he estimates to be in the vicinity of $3 million to $4 million in the period 1 October 2012 to 31 January 2013. 14 As I have mentioned, one of the matters relied on by the appellants in support of their application for a variation of the existing interlocutory regime is what were described as their "good prospects of success in relation to the appeal". The appeal was heard by three judges and the Court has reserved its decision. For present purposes, it may be assumed that the appeal was brought bona fide and has some prospects of success. Beyond that, I do not think it appropriate that I venture into any consideration of the prospects of the appeal. 15 It is clear that the Court has power to release the first appellant from its interlocutory undertaking either in whole or part: Adam P. Brown Male Fashions v Phillip Morris Inc (1981) 148 CLR 170 at 177-178. In Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 McLelland J said at 46: The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature … and injunctions (or undertakings) made or given by agreement and without contest "until further order" ... In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application … (citations omitted). 16 There is discussion in other cases concerning the circumstances in which a court will vary an interlocutory order or undertaking made or given by consent or in the absence of a contested interlocutory hearing: see Nominal Defendant (NSW) v Manning (2000) 50 NSWLR 139; Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121 (Jagot J); and P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] FCA 413; (2009) 255 ALR 466 (Goldberg J). Ultimately, the order made by Jessup J was made by consent. However, having reviewed the transcript of the hearing before his Honour it would be wrong for me to say that the order made by his Honour was made in the context of an uncontested application. There was a serious contest before Jessup J in relation to whether there should be a stay and, if so, upon what terms. 17 In the present case I do not think there has been any material change in circumstances. At the hearing before Jessup J the first appellant's initial position was that there should be a stay in return for an undertaking by the first appellant that it would keep proper accounts. Subsequently, the first appellant agreed to provide a much more restrictive undertaking that prevented it from placing any further orders for Vivo branded products until the determination of the appeal. I am satisfied that the first appellant must have known at the time it gave its undertaking that it may receive further orders for Vivo branded products that it could not fulfil given the terms of the undertakings it proffered. Moreover, it was always contemplated by the parties to the appeal (as is apparent from the transcript of the hearing before Jessup J) that a hearing of the appeal would most probably take place during the August Full Court sittings which is when the hearing of the appeal took place, and that the appeal would be heard and determined within the space of some six to eight months. 18 The fact that the first respondent refused to consent to a variation of the first appellant's undertaking or to give a cross-undertaking of its own does not constitute a material change in circumstances. Senior Counsel who appeared on behalf of the first appellant before Jessup J adverted to the absence of any proffered cross-undertaking, both in the course of written and oral argument, but did not pursue the matter during the course of the hearing. I do not intend any criticism of him in that or any other respect. What is significant is that there is no reason to think that Senior Counsel overlooked the absence of a cross-undertaking, or that a cross-undertaking would have been required of the respondents should the first appellant have pressed for one. 19 As to the suggestion that a lack of any cross-undertaking was the product of an oversight, it seems to me that this is not borne out by the written submissions or the transcript of proceeding before Jessup J. Nor is it supported by any evidence from Mr Polczynski or Mr Grassia. 20 As McLelland J made clear in Brimaud, the over-riding principle applicable in considering an application such as this is that the Court should do what the interests of justice require in the circumstances. Leaving aside the ordinary rule of practice referred to by his Honour, and looking at the appellants' application in terms of what the interests of justice require in the circumstances of this case, I am not persuaded that the first appellant should be released from its undertaking. I do not consider that there is any injustice in the circumstances of this case in holding the first appellant to an undertaking that was given as a condition of a stay that it knew was intended to operate until the determination of the appeal and in circumstances where there has not been any material change in circumstances. 21 There are other aspects of the application that weigh against the grant of the relief sought. I have already mentioned the fact that the variation to the undertaking sought will have the effect of enabling the first appellant to commence selling audio-visual products other than televisions under the Vivo brand in circumstances where at the time the matter was dealt with by Jessup J it was made clear by the appellants that they were no longer engaged in that part of their business. There is also the matter of delay. It is apparent that Mr Grassia, if not his solicitors, would have appreciated, given the time that they knew the hearing and determination of the appeal was likely to take, that the existing stock on hand, even assuming that it was not committed for sale to Dick Smith stores and Australia Post, would have been inadequate to meet demand, particularly in the run up to the end of the calendar year. The delay that has occurred in bringing this application made it impracticable to assemble the Full Court in order to hear it. Had it been brought earlier, the Full Court might have considered whether or not to entertain it during or immediately following the hearing of the appeal by all three judges who sat. 22 In all the circumstances, I am not persuaded that there should be any variation to the existing interlocutory regime. The interlocutory application is dismissed. The appellants must pay the respondents' costs of the interlocutory application. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.