> EX _TEMPORE JUDCMENT IN THE FEDERAL COURT OF AUSTRALTA VICTORIA DISTRICT RECTSTRY VG No. 194 of 1982 GENERAL DIVISTON ee ee we Between: ATARL TNC. and FUTURETRONTCS AUSTRALIA (Applicants) And: FATRSTAR FLECTRONTCS PTY. LTD. (Respondent) CORAM: SMITHERS J. 23 December 1982 iris dae rece pee le names HONOUR: In this case the applicants seek interlocutory injunctions restraining the respondent from importing anto Australia Video Computer Systems called "VCSs" fron infringing the trademark "Atari" of Futuretronics Australia Pty. Ltd. and from trading and selling in Australia VCSs which it has imported from outside Australia and which bear the trademark in question. It is not disputed that the trademark was affixed to the goods in question by Atari Inc. The applicants aiso seek an injunction restraining the respondent from representing in relalion to these goods ee a=-- - ~ 2. that it has the capacity and ability to provide ail necessary equipment and services for the proper and/or effective maintenance, servicing or repair ,of the VCSs which are imported by it. Secondiy, that the VCSs as aforesaid, have the benefit of a capacity or ability by the respondent to provide a proper and/or repair of those systems. Thirdly, that persons who purchased the said vCSs imported, as aforesaid from the respondent between 15 November 1982 and 31 December 1982, were entitled to receive from the second-named applicant three video catridges worth about $100.00. The outline of the factual situation is that the applicant Atar Inc. is an American Company and is the Manufacturer of VCSs. These are eiectronic units comprising a multi circuit unit and auxiliary equipment. Atarl Inc. distributes these units world-wide through distributors who are authorized to sell to retailers who trade in particular areas. In Austrajia the applicant, Futuretronics, is the sole distributor. The respondent, having purchased a quantity of Atari vcSs outside Australia, has imported them into Australia and sells them to purchasers by retail as Atari VCSs, which they are. Atarl is the registered proprietor of two trademarks in Australia. One, the word Ata11 and the other being a device. The two trademarks are normally TL cee pire crete aoe se ae aye PR OTP MAT sOt, U4 A A ee tee ee pee en 3. used in conjunction, the one with the other, and that is being done in respect of the goods in question which bear the words Atari and the device. As I have indicated, that mark was placed there by the applicant, Atari. There 11S no contractural relationship between Atari and the respondent, Fairstar Electronics Pty. Ltd., and no evidence that in trading in Australia by retail, Fairstar 1S in any contracturai breach in relation to any person. It is said that by selling the goods in Australia with the mark upon them the applicant is infringing the trademark. This argument was originally supported by reference to certain obiter dicta in W.D. & H.O. Wills (Australia) Ltd. v. Rothmans Ltd. (1956) 94 C.L.R. 193 and to the view expressed by Mr. Justice Starke in Atari v. Smith (1980) 33 A.L.R. 20, that judgment being given on 26 November 1980. In the latter case the facts were very much like those in this case and Mr. Justice Starke came to the conclusion that it was arguable that in the circumstances described above the respondent by its conduct might be described as infringing the Atari trademark. He considered the balance of convenrence and gave interlocutory reiief. That case was settled and the die cone onan ee reer tne Se ee ro ome eee eres ee le - - - os ~— - - 4. issue remained judicially where it then was. The ground upon which Mr. Justice Starke felt an argument might be supported was the difference in language between that in s.6 of the Commonweaith Trademark Act of 1959 and that in s.3 of the English Trademark Act of 1965. The importance of this was that when the case of Champagne Heids1zeck Monopole Societe et cle. Monopole Societe Anonyme v. Buxton (1930) 47 R.P.C. 28 (the Champagne Case) was decided, the relevant definition of "trademark" was that un s.3 of the English Act of 1905. Had it not been for that differentiation in language, Mr. Justice Starke would have considered that the decision in the Champagne Case was decisive against the applicant. The matter having been argued before me at some length I am persuaded that the argument in favour of the applicants is, although arguable, less arguable than was considered by Mr. Justice Starke. There seems to be much authority approving the decision in the Champagne Case and it appears that 3t does not depend upon the difference in terminology of the two sections. It depends upon the fundamental nature of a trademark as defined by Clauson dg. in the Champagne Case. The critical consideration is that the registered proprietor of a trademark is to have the right exclusively to use such trademark in the sense of preventing others from selling wares which are not his marked with his trademark. As put by Clauson J. adapting what is said in Kerley on Trademarks (6th Edition) at 'ST p-451:- "J... the use of a mark by the defendant, which is reiied on as an infringement, must be a use upon goods which are not the genuine goods 1.e. those upon which the plaintiff's mark 3s properly used, for anyone may use the Plaintiff's mark on the plauntiff's goods, Since that cannot cause the deception which is the test of infringement." See for clarification, the judgment of Clauson J. at p.36 in the Champagne Case. e@ Mr. Merkel has relied upon the language of s.62 of the Australian Act and it cannot be denied that those words, as they stand, are categorical and purport to show that any use at all by a person other than the proprietor or the registered user of a mark in the course of his trade, is unlawful. In the case of James Minifie & Co. v. Fdwin Davey & Sons (1933) 49 C.L.R. 349 at p. 361 Mr. Justice Dixon - as he then was - said:- @ "It 4s said that the acknowledged policy of the Trade Marks Act is to strengthen and protect with new remedies a form of property or proprietary right already existing and not to create a new one, and, accordingiy, that what is forbidden is a use of the mark analogous to that which would amount to passing off. But this method of reasoning is of little assistance because the very question may be said to be whether, for the protection of the existing form of proprietary right or interest, the statute has not made it an infringement to use the mark in respect of goods in any way in the course of trade. It 1s, perhaps, true that the words are capable of an appiicattion which would go beyond use in trade or business and extend to use in the hands of ultimate consumers or utiliizers of the goods. But, Pes RSE ce et ctr Hees erin ce cee eee re see woe —- - - ween 6. while it 1s natural to understand the Janguage of a provision in the Yrade Marks Act as restricted to commercial and trading operations, some firmer ground is needed to support an implication further restricting its meaning. There 1s good reason for preventing any use of a trade mark upon or in connection with goods which tends to confuse the public as to what it signifies and so to impair the reputation which the registered proprietor has obhtained or is seeking to obtain under it." In the present case it cannot be said that the use of the trademark by the respondent in connection with the VCSs does tend to confuse the public as to what it signifies or to impair the reputation which the registered proprietor has, or 1s seeking to obtain, under it. It appears to me to be acknowledged or rather to be implied in what his Honour says, that the Draconian terms of s.62 are to be construed according to the fundamental nature of what a trademark is. The Champagne Case has never been said to be inaccurate and has many times been approved. As to s.62, I have been referred to a short but critical passage in the judgment of Walliams J. in Mark Foy's Limited v. Davies Coop and Company Limited and Another (1956) 95 C.L.R. 190 at p. 204.: We are speaking of s.62, or rather, the equivalent, namely s-53 of the Act as it then was. He said:~ "Section 53 is really an appendage to s.50 and its function is to widen the definition of infringement so as to include cases where the defendant does not use the identical trade mark hut uses a mark substantially identical with 3t or so nearly resembling it as to be likely to deceive. But the alleged infringement must still be the use of the plaintiff's trade mark or some mark substantially identical with it as a trade . mark." I do not find anywhere any suggestion that s.53 as it then was or s.62 as 1t now is, are necessarily to be read entirely literally and with each word extending into every aspect of trade to which they are capable of referring, they are read without reference to the fundamental nature of a trademark. It seems to be not vigorously disputed that 1f s.62 1s to be read in the way in which Mr. Merkel would ask me to read it, there would be serious consequences in ordinary commerce in relation to cases where people buy on the ordinary market goods which are sold with trademarks affixed to them. As the peopie who buy at auction or buy bankrupt stocks or people who buy 1n other circumstances, if they are to deal with them at all, they must deal with them under the name by which they are known. If doing so, such persons were infringing trademarks I have a suspicion that there would be some relevant authority which would make that clear. If such people are not infringing the trademark one reason would be that once a manufacturer puts a trademark on his gocds and seiuds them into the course of trade on the billowing ocean of trade, wherever people bona fide deal Fe a epee ce steeneuee ce me ee ee te wees - - - - eal a te 8. with those goods under that name and by reference to that trademark, not telling any lies or misieading anyone in any way at all, they are simply not infringing the trademark. They are not "using" the mark in the relevant sense. The Act 18 to be read by considerations such as these and these must be the considerations which ultimately support the Champagne Case. Accordingly, on the whole I must concede that the applicants have a case which I see is arguable but I consider for the reasons which I have given it 1s likely to be found wanting. When I come to the question of whether the respondent is conducting itself in a misleading fashion in stating the warranties that ut gives, I am not satisfied that the applicant's case has been established. It is perfectly clear that the respondent cannot give any warranty which would bind Futuretronics and it does not seek to do so. It tells its customers in piain language that it carries out ats own warranty work and in effect tells customers that 1f anything goes wrong with their sets to bring them back and at least 1f they do so within 90 days their complaint will be dealt with and the unit will either be repaired by them or will be replaced. That, in effect, 1s the same kind of warranty that Futuretronics itseif gives to its customers. The only difference 15 that Futuretronics make it conditional on tha" ee os ed wo mn ee ee ee 9. getting back the warranty card whereas the respondent does not. Both parties purport to exclude any implied warranty. Whether that 1s intended to exclude the warrantics which arise under the conditions of part V of the Trade practices Act one does not know. But it 18 clear that to purport to exclude implied warranties 1s, in these days, mis]eading. The pubiic is entitled to know that there 1S aleays these days a warranty of merchantability or quality implied by law. I have looked at all the affidavits which have been filed and, of course, one realises that the whoie of this proceeding arises out the fact that the applicant 1s disturbed that the respondent has been able to acquire substantial quaiities of these articles. It may have some genuine fear that the respondent has not the skill to carry out the repairs which are likely to be required by customers, but the evidence would suggest that except for the repairing of what might be called the incidental and ancillary functions of the VCSs, the units perform very well and it is not very likely that in 90 days many of the units are likely to be found defective in what might be described as their fundamentals. If they are, then one would doubt the competence of Futuretronics or any but a very iimited number of skilled persons in Australla to repair them and, going on common knowledge, to endeavourr to unravel the tangled circuitry of the magical circuits of these units. 10. It would not be commercially rationat, one would just throw the unit away and replace it with another one. This is what Futuretronics seem to suggest might happen and 1t is what would happen with the respondent. The matter has come to light because of the advertisements by Futuretronics offering three additional cartridges to people who have bought an Atari VCS from any shop, any shop in Australia, provided however that the warranty card be returned to Futuretronics. One cannot help but feel that at least one objvective of this was to fiush out the peopie who had purchased units from traders like the respondent who issue no warranty card. It 1s only natural that peopie who purchased from Fairstar, knowing that Fairstar did its own servicing, knowing that it had no warranty from Futuretronics or from Atari, felt that as the goods were Atari goods, that Fairstar were very busy selling Atari goods and should seek to get the three free cartridges. They could not get the three cartridges but the fact that they were disappointed was really due to the form of Fairstar's advertisement which invited everybody, wherever they had purchased their units to apply. When TI come to the question of the balance of convenience I do not find that there has been any real interference with 1i. the goodwill of the applicants. The applicants' business is so- tremendous that the small irritations which have been caused to some customers, largely brought about by the conduct of Futuretronics itself, has been minimal. There 1s no evidence that any person who has purchased a VCS from the respondent has been dissatisfied with the article in any respect. In some cases the 90 day period has expired, in other cases it 1S expiring rapidly. But, of course, i1n ali cases the statutory warranty will persist and people who @ have got something that is fundamentaily bad wili undoubtediy receive new machines in place thereof. But one imagines that the quality of these articles is such that fundamental defects are not likely to be numerous. There 1s a prospect that this case will come on in March and directions to that effect have been applied for and have been granted. If the respondent were restrained from trading in these articles during the next three months he @ would be restrained in relation to about one quarter of his total turnover. I certainly feel that the only basis realiy on which an injunction could be sought in this case would be in relation to the trademark. It is my general view that in the end the probabilities are that the applicants' case on that ground will not succeed. Of course it 1s obvious from what I have said that it will require full consideration at the trial. eer eer Ce en ee ee ee er rere eet es ! 12. Therefore, I think that the damage to the applicants by the refusal of an injunction, will cause 1t no irreparable harm and indeed minimal harm in any respect should at ultimately be successful in its action to restrain the respondent from seliing the units at all. On the other hand, such a restraint at this time will greatly affect the respondent's business over a critical time of the year. The respondent has consented to give an undertaking that he will in respect of all future sales attach to the goods or deliver in connection with the goods a warranty in terms which have been submitted to the court and upon that undertaking being given, I will refrain from giving any relief by any interlocutory orders such as has been sought. I w21il adjourn the summons indefinitely. I order a defence to be given 28 days from this date. I order that the mutuai discovery without notices 14 days after the defence has been delivered. Interrogator1les may be delivered 14 days after discovery or rather shall be delivered not later than 7 days after discovery; That there be answers within 14 days of the delivery of interrogatories and that the parties consuit with the registrar as to an early hearing in the New Year and that there be liberty to either party to apply as it may be advised. I reserve the question of costs of these proceedings. wt fete seme ues oe eeprnte m _ Rute Nene ee Age Eanes ry ae Se eee aan are we et es Av ee mer aw ene teh Naw PR er re et 13. T aiso order that the respondent until the hearing and determination of the action keep the following accounts and records: An account of the profit made by the respondent by the importation and sale of the video computer systems and cartridges bearing and/or under and/or an relation to the said trademarks or any of them. An account and record of any and/or sums received by the respondent as a result of the sale by it of the said cartridges bearing and/or under and/or in relation to the said trademarks or any of them. An account and record of the cost to the respondent of the importation and sale of all the said cartridges sold by the respondent bearing and/or under and/or in relation to the said e@ trademarks or any of them. An account and record of all sales by the respondent of the said cartridges bearing and/or under and/or in relation to and/or by reference to the said trademarks or any gr then ~s i T cetufy that this aad the drfedve- i) piecedine pages are a trus copy of the k Reasers for Judg nent herein of the i Yoaeeble Ih. Tustice 7114 ¥Aet 9 ¢ Associate roa, ue iva <7 ed, ON ign ee Cee ene cee eee - ~ Peale SO FL OS] u aa 1 ee te ee re Ee wOrtesg et ay Se A fn Re Cote cine ees sitet mest,