We Two Pty Ltd v Shorrock

REASONS FOR JUDGMENT 1 The dispute between three former members of the rock band, Little River Band, and the company in which they once had an interest has been resolved, save for the question of costs. The parties do not wish to continue with litigation. But they ask me to rule on costs although there will never be a trial on the merits. The cases tell me that I have the power to award costs in these circumstances. How that power should be exercised will often be a matter of some difficulty. But before I turn to that issue, I should briefly set out the facts. 2 The Little River Band was established in 1975. In due course it was decided that the band should be "owned" by a trust of which the applicant, We Two Pty Ltd, would be the trustee and the members of the band, or companies controlled by them, would be the beneficiaries. This arrangement was put into effect with the result that, among other things, We Two became registered as the proprietor of the Australian Trade Mark A502665 "LITTLE RIVER BAND", registered in class 41 in respect of "Entertainment Services". It also became the owner of the common law mark "LRB" and a distinctive logo comprising the depiction of a "rampant platypus" enclosed in a circle and overwritten with the words "LITTLE RIVER BAND". 3 Not surprisingly, the constitution of the band changed over the years. Most of the original members have now left and been replaced by new musicians. It seems that whenever a member of the band retired his interest in the trust was sold to the remaining members or to the incoming musician. The documentation that was brought into existence when there was a transfer of the equitable ownership of an interest in the trust sometimes contained an acknowledgement that We Two was entitled to the trade mark. 4 The three respondents, Shorrock, Bertelkamp and Goble, were some of the original band members. They left the band years ago. Yet they are still performing and recently began to perform together. On some occasions they described themselves as "Bertels Shorrock and Goble of the Original Little River Band". They also intended to perform using the name "Bertels Shorrock and Goble, The Original Little River Band" in a manner which makes use of the common law mark "LRB" by highlighting (by enlargement) the letter "L" in the name Bertles, the letter "R" in the name Shorrock and the letter "B" in the name Goble. 5 It was the use by the respondents of the name "Little River Band" either alone or in combination with the common law marks that precipitated this action in which We Two alleged that, by their conduct, the respondents had infringed its registered and common law marks. Shortly after the action began We Two moved for interlocutory relief, and each side filed affidavits for that purpose. When the parties were informed that I would try the action in a few weeks the application for interlocutory relief was not pressed and both parties filed further affidavits in preparation for trial. 6 The pleadings disclose that the respondents relied upon two grounds to resist the claims for trade mark infringement. First it was alleged that the registered trade mark was liable to be removed for non-use, because it had not been used in good faith for the statutory period. By a counter claim the respondents sought rectification of the Register by having the trade mark removed. The second ground was based on the proposition that the respondents' use of the words "The Original Little River Band" and what was said to be a copy of the common law mark were not uses as marks but were merely descriptive, and, in any event, would not cause any confusion. 7 The case settled on the second day of the hearing. By that stage the respondents had withdrawn their rectification claim. The uncontested evidence made it clear that We Two had, in fact, used the registered mark in various ways during the statutory period and the respondents conceded that they could not obtain removal. As regards the settlement, the agreement is not confidential and I have a copy. The principal covenant, cl 2, provides that the respondents will not use "the Trade Marks, the Proposed Trade Marks or the Respondents' Logo as their name or in the name of their band, but shall be entitled to refer prominently but always only in a descriptive way in promotional and advertising material, to the fact that they were members of the original line up of the Little River Band". Save for that use the respondents promise not to carry on business using any of the following as a trade mark: "Little River Band"; "The Original Little River Band"; "LRB", the respondent's logo; the platypus logo; the image of a platypus; the image of a typical Australian Railway sign. I should also note that by cl 7 the parties agreed to submit their respective claims for costs to the Federal Court for its determination. 8 This is a sufficient statement of the facts. I would add one matter of opinion. I appreciate that the case has not been fully tried but I do at this stage have all the evidence in chief, some additional evidence by way of cross-examination and detailed submissions on the merits of the dispute. It is sometimes very difficult to determine whether or not particular words which have the appearance of a mark are purely descriptive and are not used as a trade mark. However, it is my opinion that, if the case had gone to judgment, We Two could well have succeeded. There was evidence that supported the view that the words and symbols used by the respondents were likely to cause confusion and there was little, if any, rebuttal evidence tendered by the respondents, at least in the evidence in chief of their witnesses. 9 The cases instruct me that if the parties to litigation have acted reasonably in commencing and defending the proceeding then, where there is no trial on the merits, the usual result will be that the court will make no order as to costs: J. T. Stratford and Son Ltd v Lindley No 2 [1969] 1 WLR 1547; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194, 204-205; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 625. This general rule may be departed from if either party has acted unreasonably in bringing or defending the proceeding. In such a case it may be appropriate to order the unreasonable party to bear some or all of the costs of the litigation. Further, if the judge is in a position to form a view about the merits of the dispute without the close examination of a case that follows a trial, that may also be relevant to determining whether or not the usual rule should be applied. For instance, in South East Queensland Electricity Board v Australian Telecommunication Commission (Pincus J, 10 February 1989, unreported) the court was in a position to form a view about the merits and accordingly ordered one party to pay 80 per cent of the costs of the other. 10 We Two asks for all of its costs. The respondents say that for the period up to and including 30 May 2002 there should be no order as to costs but that they should have their costs from then on. The point the respondents make is that on and from 31 May 2002 (in particular on that day and on 7 June 2002) We Two filed and served affidavits of its witnesses (pursuant to the order that the trial be conducted on affidavit) and it was only upon reading the material that the respondents knew that their claim for rectification and their original denial of the applicant's title and claim of prior use would not succeed. Another way of putting this submission is that We Two should be deprived of its costs because it did not, at an early stage, demonstrate to the respondents that they were likely to lose. I suppose it is relevant to point out that in respect of their own use the Trade Marks Act 1995 (Cth) imposes an onus on the proprietor of the mark to adduce evidence to show use during the statutory period: see s 100. In relation to the other defences the onus was, of course, on the respondents. 11 I am not much impressed with the respondents' argument although I have some sympathy for their position. All cases that are brought before the court carry the risk of losing. The usual consequence of losing a case is that the unsuccessful party will be required to pay the costs of the successful party. The losing party could hardly resist such an order by arguing that the successful party should have demonstrated his of her likelihood of success at some stage before trial. If that were the test then the usual rule as to costs would effectively be reversed. 12 On the other hand, I cannot help but think that these parties should have made a greater effort to sort out their differences before coming to court. That they were able to do so without the case going to judgment suggests to me that a settlement could have been achieved at an earlier point in time. Of course I am not in a position to say that any particular party is at fault in this regard. However it does seem that in this case, having regard to the relationship between the parties which seems to be more cordial than the relationship between most other parties who meet in court, greater effort should have been made. 13 All in all, there being no science to the task I am about to undertake, I think that the appropriate order to be made is that the respondents pay one half of We Two's taxed costs. In virtue of the tentative view I have formed about the merits of the case it would be wrong to deny We Two some success in relation to costs. Equally, my view is only tentative and may have changed if the trial had continued. The possibility of that change is reflected in the order that will be made.