W.H. Brine Co & Anor v. Whitton, Eane Ronald (trading as Skoolsports Equipment) [1981] FCA 174

Respondent ORDER JUDGE MAKING ORDER: Fox J WHERE MADE: Melbourne DATE OF ORDER: 19 October 1981 The Court orders that:

1. Judgment be entered for the applicants for damages in the sum of $16,488.00.
2. The respondent pay the applicants' costs of

) ) VICTORIA DISTRICT REGISTRY ) VG No. 57 of 1981 ) GENERAL DIVISION )

Liability has been admitted in this matter, and it comes before me for assessment of damages. The first-named applicant, W.H. Brine Co.,is a body corporate incorporated in the United States of America. It makes and sells a range of sporting equipment, particularly for lacrosse and soccer. It has a large market overseas for its soccer balls. Its best seller is its "International 32" ball, and on 4 February 1981 it applied for these words to be registered as a trade mark in Australia. It did not start to sell soccer balls in Australia until May 1981, after interlocutory judgment had been entered in this case. It had supplied and was supplying distinctive lacrosse equipment for sale here, and it had advertised

depicted with the same, or virtually the same markings as the particular ball the subject of these proceedings. One of the marks used on its lacrosse equipment, and shown in advertising material connected with it, is a stylised representation of a bearded King Neptune, with trident. its soccer ball had this and several other distinguishing features, including the mark "International 32"'. The second applicant was the designer of a number of marks and devices used by the first applicant, which had acquired the rights thereto from him. I shall describe the first-

The respondent has for many years sold sports gear in Australia and has a very large business in the sale, by wholesale, of soccer balls. Over the years, it has imported these from a number of sources. In response to an order or orders placed in 1979 with a South Korean manu- facturer (Nassau Co. Ltd., which I will call "Nassau'') two consignments of soccer balls were received in 1980, on which, as the respondent in due course found, were the Neptune mark and other marks of the applicant, used by it on balls of similar size. I take from the statement of claim the following list of marks and devices, said to be the property of the applicant and distinctive of its ball just mentioned, which appeared on the balls sold by the respondent: (a) a stylised representation of a bearded king together with a trident (hereinafter referred to as "the

Neptune trademark") incorporating inter alia the words "King of the Soccer

(b) the "International 32" with three globes between the word "International

(c) the "Crown Device Soccer ball" mark which incorporates 2 crowns identical

in shape to that in "the Neptune trademark" one of which is inverted incorporating inter alia the words "Soccer ball" in a particular dis- - tinctive script;

(d) the "Known Around the World as the Best" mark which consists of a globe

with three inwardly directed arrows all surrounded by the words "Known Around the World as the Best" in block lettering;

(e) the "International 32 with Crown Device" mark which incorporates inter

aliaa crown identical in shape to that in the Neptune trade mark together with the words inter alia "Internat-

(f) the "FIFA Approved" mark in a par- ticular stylised script;

(g) the "NISA Approved and Endorsed" mark consisting of the National Institute

for Soccer in America's two-shielded emblem, the words "National Institute for Soccer in America" and the words "Approved and Endorsed";

(h) a logo surrounding the soccer ball's valve consisting of 8 inwardly direct

equiangular portions of a circle sur- rounded by the words "Moisten Needle Inflate 6 to 8 lbs.";

(i) the words "World's Only Soccer Ball Unconditionally Guaranteed for One Season". The degree of distinctiveness of some of these is a matter with which I will deal later. <A principal difference between the balls is that in the four places, all prominent, where the word "Brine" appears on the applicant's ball, the word "Buffalo" is marked on the

It was in December 1980 that the applicant became aware of the use on balls sold by the respondent of the marks in question. The statement of claim and accompanying application were filed on 26 March 1981. On 6 April 1981 orders for perpetual injunctions were made

by consent, and the two following orders were also made:

1. That there be judgment entered for the firstnamed Applicant for damages to be assessed under Sections 52, 55 and 82 of the Trade Practices Act 1974.

2. That there be judgment entered for the Applicants for damages for infringement of copyright and conversion and for passing-off, or, at the election of the firstnamed Applicant, an account of

profits as sought in paragraphs 6 and 9 of the application.

(a} under s.82 of the Trade Practices Act, 1974 for breach of sections 52 and 55

of that Act; (b) for passing off; (c) for infringement of copyright; and (d) for conversion.

The evidence has mainly been by affidavit, most of the affidavits having been prepared for interlocutory proceed- ings. Oral evidence has been given by Mr. Toomey for the

Since about 1977 the respondent has been importing soccer balls from Nassau. It appears that some at least of the Brine International 32 balls are also made in South Korea and the applicant's Brine International 32 ball in evidence bears on one panel a small gold stamp "Korea". The balls normally received by the respondent from Korea, in response to his orders, carry markings on a number of panels. These markings have varied slightly from time to time, but, except for the subject balls, have always included the words "Buffalo Sports" together with a buffalo device. Although the offending balls were clearly marked "Buffalo" (with other matter) on four panels, they were not marked "Buffalo Sports'', nor did they have a buffalo device. This mark has been registered by the respondent as a trade mark in Australia, in appropriate

Nassau did not have the authority of the respondent to use marks and devices distinctive of the applicant's soccer balls, or any more than an implied consent to vary slightly the respondent's usual markings, and in particular did not have his authority to use the King Neptune mark. The balls from Nassau normally arrived in cartons of 18 or so and these the respondent did not usually open. He did not open the cartons con- taining the shipments in question, and he did not see any sample of what they were to contain. His sale of soccer balls, of varying sizes, design and quality, was about 100,000 for the year prior to the hearing. While he supplied soccer balls bearing the applicant's distinctive marks during 1980, he did not become aware of the fact until November 1980, when a few were returned to him for repair. It was the Neptune mark which he related to the applicant. He then promptly took steps to endeavour to ensure that no more of the particular balls, showing the King Neptune mark, were sold. In fact, a few probably were sold by retail in 1981. Apparently none were returned to the respondent, except those which I have mentioned as being returned for repair. He was not then aware that the other marks distinguished the applicant's ball. The figure "32" represented the number of panels comprising the sur- face of his ball, as well as Brine's ball. He thought that "International" was descriptive of the nature of the sport, and the common use throughout the world of the same or

similar balls, and that the accreditation marks "FIFA" -

Federation Internationale de Football Association - and "NISA"' - National Institute for Soccer - were authorised and had been placed on the ball by Nassau with that justi- fication. The respondent protested to Nassau in November

1980 and asked that there be no repetition of the wrongful supply.

While the respondent had known for some time of the applicant's reputation in Australia concerning lacrosse equipment, and of the use of the Neptune mark in connection therewith, he did not prior to February 1981 know of any reputation of the applicant in Australia concerning soccer balls or of its right to marks other than the King Neptune mark. In fact, all that the applicant had done prior to May 1981 was to advertise its balls in journals, including trade journals which had a circulation in parts of Australia, and, through Mr. Toomey (whose principal occupation was to conduct a retail store in Victoria) to issue some brochures referring to, and depicting, the Brine soccer ball. It was on the basis of a reputation thus gained that the respondent admitted

liability. Maxims Ltd. v Dye (1977) 1 WLR 1155 and Metric

Resources Corpn. v Leasemetrix Ltd. (1979) FSR 571 were

The respondent had used some of the markings on earlier occasions on balls sold or advertised by him, but had not regarded those as distinctive of a product of the applicant, or as being its property. So far as reputation in Australia is concerned, he was probably right until about 1980, and counsel for the applicant has said that in March

1981 Mr. Whitton asked Mr. Kimm of Nassau whether he had

authority to use the "FIFA" and "NISA" marks on the ball

and was told he did. This was not accurate. While Nassau had the authority of FIFA to use that mark of accreditation in some balls produced by it, 1t seems that this may not,

in terms at least, have extended to the particular ball produced for the respondent. There seems no doubt that the FIFA requirements concerning soccer balls had been satisfied. Nassau did not have authority to use the NISA mark. Some balls sold by the parties are all white, others have a pattern of coloured panels, - black, blue or red, but nothing turns on this circumstance. In the respondent's 1980/81 catalogue, which apparently was produced in about October 1980, there is an illustration of the ball now com- plained of, with the price $13.90 beside it. The use of this particular representation, which showed "Buffalo" clearly on it, was I think inadvertent and due to lack of care and is not an example of grossness of conduct on the part of the respondent. There was also an advertisement, published in March 1981 which offended in a similar way, and

My view is that the respondent was the victim of what was done by Nassau in Korea. He had not previously had trouble of a similar nature with Nassau, and had no reason to suspect that the applicant's marks would be used. He says that because of the volume of his business, and the fact that he and his wife virtually ran it alone (a cousin looked after the showroom display), he did not carry out checks

with each consignment of balls received. Possibly, he should

have, and he should have taken more care concerning the preparation of his 1980/1981 catalogue and his 1980/1981 advertising material. He had enjoyed over many years a considerable reputation as a reliable supplier of soccer balls, and other sporting equipment. He was an accredited supplier to the Victorian Soccer Federation, and was recently given the exclusive right to use the words "Victoriam Soccer Federation Approved Product" for a period

As the respondent's own records did not enable him to say, he inquired of Nassau as to the number of soccer balls bearing the applicant's marks, now in question, which Nassau had sent to him. He was told that in January 1980 a shipment of 144 size 5 balls "in assorted colours" had been sent to him, and that in April a further 950 balls had been sent, again in assorted colours, 400 being size 5 and 550 size 4. This makes a total of 1094 balls. The applicant has submitted that this number is probably inaccurate. The applicant's advisers have sought to determine the number of offending balls supplied, by taking from a catalogue of the respondent's the advertised price, $13.90, for a ball therein depicted and marked "Buffalo FIFA approved", which is treated as being the ball the sub- ject of this action, and finding from the respondent's invoices during the relevant period the number of sales at this price. The respondent challenges this method of approach on a number of grounds which I think come to say- ing that there were or probably were other balls sold at

that price, and that the catalogue, which was prepared in

October 1980, did not necessarily govern the price of balls

supplied during the period in question. While the research and calculations done for the applicant called for an explanation from the respondent, I think that his explan- ations are adequate, and that I should act on the figures supplied to him by Nassau. The conversation with Kimm is

There is no evidence as to the number of soccer balls sold in Australia by the applicant in and from May, and the number it might have sold but for the wrongful con-

duct attributable to the respondent is completely speculative.

Particular matters raised in the submissions in relation to damages, excluding for a moment damages for con-

(a) That the quality of the offending ball was inferior to that of the true Brine ball. There is conflicting evidence on this matter. The applicant's evidence is to the effect that the outer panels of the respondent's ball were applied by hand, and not by machinery, the latter being, so it is said, a superior method. The respondent contends that he was the first to import balls laminated by machine, and not hand stitched, but this may not answer the applicant's particular criticism. Both balls are made of nylon wound construction. From a visual examin-

the quality of the respondent's ball, but this is to the unpractised eye.

They appear very similar. There 1s strong evidence to the effect that FIFA bails supplied by the respondent were of high quality, and I see no reason to doubt that the offending balls were of the same quality. The question is of course one of comparison between the applicant's ball and that of the respon- dent, but I am left quite unsatisfied

The offending ball was sold at a relativ- ely cheap price and would seem to be a cheaper ball, or type of ball. In so far as this circumstance affected or might affect the applicant's trade it should be taken into account, but we are only dealing with the sale of a relatively small number of balls well before the applicant commenced to trade. Assuming the fact, the consequences seem to be too indeterminate and speculative. According to the respondent he often sold balls at less than catalogue price, and may have sold some of the offending balls at less

The life of a trade name or mark in the soccer ball market is limited, and the fact that the respondent had used marks distinctive of the applicant's goods for a period deprived the applicant of that proportion of the life of its marks. In the circumstances of this case this con- sideration is at the best very trivial, and I cannot give any meaningful effect to it. One matter which does occur to me, but about which I express no opinion, is

That the circumstances are sufficient to support a claim for "additional damages" under s.115(4)} of the Act. For reasons

That the value to the applicant of its copyright was diminished by the respon- dent's infringement. This is a conjectural matter, but it seems to me that the

as a result of the intermingling with the Buffalo name. There is no evidence of

assumed. So far as appears, the applicant had and has very few Australian outlets. The respondent does not rely upon the "innocent infringement" provision in s.115(3). 1 think a case is laid for me moving into the area of conjecture and awarding a small amount of damages under

(£} That while a reputation by advertisement can support an injunction to restrain passing off, it cannot support a claim for damages. In the present proceedings, I have to accept that there was a reputation, and one capable of being injured. I do not accept the submission as sound as a matter of law, but the fact is that any injury caused to the applicant's goodwill in Australia by the acts of the respondent

Section 82 of the Trade Practices Act, so far as material, is concerned with the consequences of misleading or deceptive conduct (s.52) or of conduct that is liable to mislead the public as to the characteristics of any goods (s.55). Damages under this head must be minimal, and can in this case be treated as the equivalent of those which can be

amount of damages to be awarded under these heads is $1,500.

It is admitted by the judgment entered that the applicant was at the time in question entitled to copyright protection in Australia in connection with the marks already referred to. Conversion is dealt with by s.116(1) of the

"Subject to this Act, the owner of the copyright in a work or other subject- matter is entitled in respect of any infringing copy, or of any plate used or intended to be used for making in- fringing copies, to the rights and remedies, by way of an action for con- version or detention, to which he would be entitled if he were the owner of the copy or plate and had been the owner of the copy or plate since the time when it was made."

relevant part of which for present purposes is as follows:

(a) in relation to a literary, dramatic, musical or artistic work - a reproduction of the work not being a copy of a cinematograph film of the work;

in the work, recording, film, broadcast or edition or, in the case of an imported

article, would have constituted an infringe- ment of that copyright if the article had been made in Australia by the importer."

Section 116(1) is to the same effect as s.7 of the Copy- right Act 1911, but in different terms. There was not in the 1911 Act any separate definition of "infringing copy" but one of ""infringing"' when related to copies (s.35(1)). Section 18(1) of the Copyright Act 1956 (Eng.) is in similar terms to s.116(1) of our Act, and the definition of "infringing copy" in s.18(3) of the English Act 1s, so far

as material, in similar terms to the definition in our s.10.

Publishing Co. (1939) AC 178, some copyright matter was printed by the defendant and bound into a larger volume, con- taining matter not the subject of the plaintiff's copyright. The plaintiff sued for infringement and in conversion under the 1911 Act. The House of Lords held that the causes of action were cumulative, but that overlapping of damages should be avoided; that the act of binding was the conversion, that the value was to be taken as at the date of conversion, and that, in the circumstances, a proper basis for assessment was to take a proportion of the sale price, corresponding to the part of the whole constituted by the infringing material,

but making a qualitative assessment as well as a quantitative

In Ash v Dickie (1936) Ch. 655, the correctness of which was unsuccessfully challenged by counsel in the Caxton Publishing Co. case, there was a pirating by a newspaper of

some articles in a published book. The articles comprised

part only of the newspapers. The Court of Appeal held that a starting point was the value of the newspapers, which could be taken as their sale price, and that the value of the articles, as part thereof, had then to be assessed.

decision of Simonds J which dealt with infringement of copyright in the production of a cover on a cardboard con- tainer in which was packed a writing pad of fifty sheets. The cover was apparently sold as part of the writing pad. Damages for conversion were taken as one-tenth of the whole-

The cases already referred to arose under the 1911 Act, which was in material respects expressed differently from the English Act of 1956, and the Australian Act of 1968, and which may therefore be regarded in a case such as the present as having distinctions of significance. Ravenscroft

& Herbert v New English Library Ltd. (1980) RPC 193 was a

case under the 1956 Act, and an apportionment was there made in relation to a literary work, not on the basis of volume or mass but on a value basis. The Infabrics case to which I will now refer, had not been decided in the Court of Appeal

as at the date of the decision in the Ravenscroft case.

shirts had on them attractive drawings of three racehorses in a tight finish, repeated at intervals. The plaintiff owned

the copyright in the drawings and sued for conversion. It

was held by the House of Lords that the shirts themselves were infringing copies within the meaning of s.18(3) of the

Act of 1956, and the measure of damages was their value.

Counsel for the respondent seeks to distinguish the Infabrics case on the basis that there were there no competing marks, some the property of one party, some the property of the other. It is true that the report makes no reference to marks other than those of the plaintiff. In the literary copyright cases, however, there was a mix of copyrighted material. This fact gives support to the sub- mission for the respondent, because in those cases a propor- tion sum was done. In this case, counsel submits that having in mind the proportion of the applicant's copyright matter in relation to all the material on the ball, and making allowance for the prominence of the Buffalo name I should take two to four-tenths of the value of the ball as the measure of damages. It is not disputed that there has been conversion or that the respondent's sale price was $13.90

The reasoning in the House of Lords proceeded, however, on the basis of finding, in a case of importation, what were the articles which were the infringing copies. Their Lordships had no doubt that this was the whole of the shirts. I cannot see that the result would have been differ-

ent had the defendants also had some mark or marks on the

with the conclusion of the Court of Appeal on the present

"We have heard some argument about the basis upon which the damages in respect of conver- sion should be assessed. It is possible to suggest cases in which this might be a difficult question. Suppose, for instance, that a manufacturer of motorcars were to in- corporate a copyright design in the upholstery of expensive motorcars, or a silversmith were to incorporate a copyright design in the decoration of expensive silver cups or bowls. It would seem to me, as at present advised, to be extravagant to hold that damages could be recovered under section 18(1) as for the conver- sion of the motorcars or of the pieces of silver. Just so in the present case Mr. Everington submits that the damages under section 18(1) should not be measured by the value of the shirts, but only by reference to some part of that value, which he suggests should be the difference between the value of a shirt with the design on it and of the same shirt without the design. Alternatively he suggests that the damages should be measured by reference to a part of the value of the shirt proportionate to the extent which the sub- strate of the design, which I take to mean so much of the material of the shirt as actually bears the design, bears to the whole area of the shirt. This is a problem which I think must be solved in each case having regard to the particular facts of that case. However, it is I think worth noting that section 18(1) relates to notional conversion of infringing

There is another way of looking at this matter. Section 116 provides for an alternative remedy by way of an action for the detention of the goods. In many jurisdictions (including England) an alternative to the return of the goods is judgment for their value. In this connection Copinger and Skone James (12 edn., para. 648)

"Where the defendant has mixed the plaintiff's work with work of his own, then, if it is physically possible to sever one from the other, the order for delivery up will apply only to the infringing material, see Warne

s& Co. v Seebohm (1888) 39 Ch.D. 73, where an appropriate form of order is set out; Nicols Advanced Vehicle Systems Inc. v Rees (1979) RPC 127, but where the parts are practically inseparable the order may go to the whole work, Stevens v Wildy (1850) 19 LJ Ch. 190. See discussion of similar problem in Salmond, Torts, (17th ed.), pp. 113, 114."

In reliance upon language to the same general effect in an earlier edition, and in an action for detinue, the New South Wales Full Court in Finn v Pugliese (1918) (18 SR 530) applied a test of whether the pirated portions were sub- stantial and could be conveniently separated (in a film) from the innocent portions. Pursuant to s.7 of the 1911 Act (a precursor of s.116 of the 1968 Act) it upheld an order for delivery up of the whole. As a question of fact, 1t would in the present case be held that the infringing

material was substantial, and certainly it is the fact that

it cannot be conveniently separated from the rest. |

The balls as a whole must I think be taken as the infringing copies. The Act does not permit of a con- struction which will enable something less to be treated as an infringing copy because the respondent's name appeared prominently on four panels. Under the Act, the applicant is deemed to become the owner on importation of the reproduction which is the article the making of which constituted the infringement. In the case of a soccer ball, this must, in my view, be the whole. Conversion is a wrong against the person entitled to possession, but it is clear that the

"owner" in the section is regarded as being such a person.

to Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185, in which the High Court considered damages for conversion in a statutory context. It was held that where a producer sold eggs outside a marketing scheme, the Board in which the property in the eggs was vested could not recover from him

the sale price of the eggs without deduction of the amount it would have had to pay him under the scheme for them. The fact that damages for conversion were intended to be compensatory was emphasised (see pp. 191, 192). The effect of this

decision was stated by Kitto J in Healing (Sales) Pty. Ltd. v

Inglis Electric Pty. Ltd. (1968) 121 CLR 584, 602). Menzies

"The true rule is, I think, that stated by Bramwell B in Chinery v Viall (1860) 5 H. s& N. 288 (157 ER 1192), viz. that the plaintiff is entitled to recover no more

The action for which s.116 provides is however intended to acknowledge the copyright owners complete domain over the infringing copies. The Copyright Acts of 1709 and of 1814, which dealt with literary copyright, provided that infring- ing copies could be seized and placed in the hands of the copyright owner who was then obliged to "forthwith damask and make waste paper of them'' (see the short historial account in Laddie, Prescott and Vitoria, the Modern Law of Copyright (1980)). In addition he had, under the 1814 Act (54 Geo. III c 156, s.4) a "special action on the case" and the offender was liable to pay a penalty of three pence per sheet of infringing material, - one half thereof to go to the Crown. The later Act of 1842 gave rights to sue in detinue and trover as well as the special action on the

The respondent's ignorance of what was on the balls, or of the applicant's rights, is no defence and does not in this case assist him on damages. The measure of damages must be the value of the balls at the time of con- version in Australia. There is no need to inquire as to the precise moment, or moments, at which this occurred; it was presumably no later than the time the balls were set aside for delivery. They were sold ex the respondent's premises at $13.90 per ball. It 1s submitted that from this amount should be deducted inward freight costs of 90c per ball, and delivery costs of 20c per ball. The former expense, as I understand, was related to a time before conversion and 1s

not deductible. The latter was an expense incurred after

that time as a cost relating to the sale and should be deducted. The net value should then be taken as $13.70 per ball. The amount of damages under this head, to the nearest dollar, is therefore $14,988. I think this is an unreasonably excessive amount if the aim is simply to com- pensate the applicant for loss and damage he suffered. However, even a cursory examination of the history of copy- right, and of the earlier Acts discloses that there was a penalty aspect in the remedies given. The fact that the existing statutory provisions can operate harshly was pointed out several times in the Infabrics case. Lord Scarman said (1981) FSR at p.277:

I therefore order that judgment be entered for the applicants for damages in the sum of $16,488.00, and I order that the respondent pay the applicants' costs of

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