CATCHWORDS TRADE PRACTICES - Application for continuation of ex parte injunction - Production and distribution by respondents of T-shirts substantially identical to those sold by, or in association with, applicants - Knowledge by section of public of sale by or on behalf of applicants of clothing - Likelihood of deception of that section - Whether adoption by respondents of name "Bootleg Industries" and use of disclaiming stickers and labels avoids likelihood of purchasers being misled or deceived. PASSING OFF - Use of plaintiffs' name by defendant - Wrongful appropriation of plaintiffs' name and reputation. COPYRIGHT - Design "applied industrially" by application to T-shirts - Design not registered under Designs Act in respect of T-shirts - Effect of s.77 of Copyright Act. Trade Practices Act 1974 ss.52, 53, 75B Copyright Act 1968 ss.10, 32, 33, 74, 77 Designs Act 1906 ss.4, 17, 20, 23, 30 Office Cleaning Services Limited v Westminster Window and General Cleaners Limited (1946) 63 RPC 39, Australian Woollen Millis Limited v F 3 Walton & Company Limited (1937) 58 CLR 641, Nostac Enterprises Pty Limited v New Concept Import Services Pty Limited (1981) ATPR 40-235, Radio Corporation Pty Limited v Disney (1937) 57 CLR 448, Lego System Aktieselskab v Lego M Lemeistrich Limited £19831 FSR 155, Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Limited £1979] AC 731, Henderson v Radio Corporation Pty Limited £1960] SR (NSW) 576, TPotalization Agency Board v Turf News Pty Limited £1967] VR 605 applied. Chase Manhattan Overseas Corporation v Chase Corporation Limited (Wilcox J, 24 December 1985, not reported), Global Sportsman Limited vy Mirror Newspapers Limited (1984) 55 ALR 25, Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Pty Limited (1978) 140 CLR 216, Abundant Earth Pty Limited v R C Products Pty Limited (1984) 59 ALR 211, Littlewoods Pools Limited's Application (1949) 66 RPC 309, Tavener Rutledge Limited v Trexapalm Limited £1977] RPC 275 referred to. NSW G.18 of 1986 MICHAEL KELLAND HUTCHENCE, ANDREW CHARLES FARRIS, TIMOTHY WILLTAM FARRIS, JOHATHAN JAMES FARRIS, KIRK PENGILLY AND GARRY WILLIAM BEERS all t/as "INXS" & ORS v SOUTH SEAS BUBBLE COMPANY PTY LIMITED t/as BOOTLEG T-SHIRTS & ORS Wilcox J. Sydney 28 February 1986 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION et ee tree ere ~~ BETWEEN : No. G.18 of 1986 MICHAEL KELLAND HUTCHENCE, ANDREW CHARLES FARRISS, TIMOTHY WILLIAM FARRISS, JONATHAN JAMES FARRIS, KIRK PENGILLY AND GARRY WILLIAM BEERS all t/as "INXS" First Applicant DUSTBARKO PTY LIMITED t/as MMA MANAGEMENT Second Applicant STARSTRUCK MERCHANDISING PLY LIMITED Third Applicant HARIKLIA HERTSTANIDIS Fourth Applicant PHILIP MORTLOCK Fifth Applicant SOUTH SEAS BUBBLE COMPANY PTY LIMITED t/as BOOTLEG T-SHIRTS First Respondent DAPHNE VERA PEARSON Second Respondent DESMOND PEARSON Third Respondent ae ee ote ee tae ee et et ante nee IVY PRINTING PTY LIMITED Fourth Respondent CORAM: WILCOX J. DATE: 28 FEBRUARY 1986 PLACE: SYDNEY REASONS FOR JUDGMENT Michael Kelland Hutchence, Andrew Charles Farris, Timothy William Farris, Jonathan James Farris, Kirk Pengilly and Garry William Beers, the first applicants in these proceedings, are the members of a rock music group which was formed in 1977 and which, since 1979, has been known as INXS; pronounced "in excess". The group has made numerous records, some of which have achieved high sales volumes both in Australia and overseas. As at mid-January 1986 the two biggest selling albums "The Swing" -- issued in 1983 -- and "Listen Like Thieves" -- issued in 1985 -- had sold 306,027 and 206,269 copies respectively . In May 1985 INXS and its members won seven awards at the annual Countdown Awards including "The Most Outstanding Achievement Award", which is voted for by persons within the rock music industry, and "Most Popular Australian Group", which is voted for by members of the public. The group carries out an active concert program, een ee ee mE I pe eg me pe ne pee ee eee eee eS ee — ~ 3. drawing substantial audiences. In its 39 concert Australian tour, of all States and Territories, in August-September 1985 it played to a total audience exceeding 129,000. The success of INXS has generated, and no doubt in turn has been further stimulated by, considerable media publicity. Samples of publicity in the print media were admitted into evidence, not as proof of the assertions therein but to demonstrate the extent of public awareness of the group. In addition, the group has enjoyed extensive attention in the electronic media. There can be no doubt that INXS is well known amongst aficionados of rock music in Australia and probably amongst an even wider audience. According to the affidavit of Mr Garry Van Egmond, an entertainment entrepreneur of some 20 years standing, there has developed in Australia over the last ten years what he calls "a sizeable industry" which is involved in the sale of merchandise associated with rock groups. Mr Van Egmond agreed with an estimate that sales of such merchandise in 1986 would be "in the order of $10 million". Mr Van Egmond was himself a pioneer in this field, in which he is now involved through his company Starstruck Merchandising Pty Limited, the third : applicant. Not unnaturally, the members of INXS decided to participate in this industry, acting through their agent, a management company, Dustbarko Pty Limited, trading as MMA Management. It appears that the principals of Dustbarko, Messrs Chris Murphy and Gary Grant, manage all of the business affairs of INXS -- including the sale of merchandise -- in return for a percentage of all income, including royalties from the sale of merchandise. Dustbarko is the second applicant herein. During the last three years two firms, Acme T-Shirts and Sabotage, have manufactured and distributed merchandise -- mainly T-shirts -- under licence from INXS, given through MMA Management. That merchandise has always referred to INXS, usually using the name of the group and/or of one of its better known songs, and has been in fact approved by the members of the group. The evidence is that the members of the group, and their management agent, have always been particular about the quality of merchandise marketed in association with them. They have sometimes required an improvement in design before giving their approval to proposed products. Sales have been made to the public by Acme T-shirts and Sabotage through retail outlets -- predominantly record shops -- and at INXS concerts. It is not necessary to go into the detail of the evidence as to the volume of merchandise thus sold, and upon which the members of the group have received percentage royalties. It is sufficient to say that this by-product of the group's success as entertainers became during this period a substantial business in its own right, providing to the members of the group a significant additional income. For Fo pe ne torment TEAS coment Mane me enna ee emerge eee ene oper te eter ee ney we ee ne in NOTE: Exhibits B, C and D be retained; other exhibits may be returned. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. example, and without suggesting that this result was necessarily typical, the gross royalties earned by the group from merchandise sold at 10 concerts in April 1984, amounted to $15,797. In late 1983 Philip Mortlock, Creative Services Manager of the company which distributes INXS records, was asked by Mr Murphy to design a cover for the album "The Swing", then in production. Mr Murphy gave to Mr Mortlock a photograph of the group which had been taken in England and asked Mr Mortlock to create a design incorporating the photograph. He was asked to prepare the design on his own behalf outside business hours, the basis being that INXS would own the copyright. Mr Mortlock produced artwork which was délivered to Mr Murphy. Mr Murphy told him that the artwork was acceptable to the members of the group and it was in fact used for the album. One of the three T-shirts distributed by the first respondent, and in relation to which complaint is made in these proceedings, exactly reproduced most of the features of Mr Mortlock's design, including the photograph and the distinctive lettering of the words "INXS The Swing". During the course of the present hearing Mr Mortlock was, by consent, joined as the fifth applicant herein. In June 1985 Ms Hariklia Heristanidis, a graphic artist, was asked by Mr David Glover of Starstruck to design two T-shirts for the then forthcoming Australian and world Bane er eee ee a . — IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISTON BETWEEN : wee ew No. G.18 of 1986 MICHAEL KELLAND HUTCHENCE, ANDREW CHARLES FARRISS, TIMOTHY WILLIAM FARRIS, JONATHAN JAMES FARRIS, KIRK PENGILLY AND GARRY WILLIAM BEERS all t/as "INXS" First Applicant DUSTBARKO PTY LIMITED t/as MMA MANAGEMENT Second Applicant STARSTRUCK MERCHANDISING Pry LIMITED Third Applicant HARIKLA HERISTANIDIS Fourth Applicant PHILIP MORTLOCK Fifth Applicant SOUTH SEAS RUBBLE COMPANY Pry LIMITED t/as BOOTLEG T-SHIRTS First Respondent DAPHNE VERA PEARSON Second Respondent DESMOND PEARSON Third Respondent ee ny te ae Arment Ww . IVY PRINTING PTY LIMITED Fourth Respondent CORAM: = WILCOX J. DATE: 28 FEBRUARY 1986 PLACE: SYDNEY MINUTE OF ORDERS THE COURT ORDERS THAT upon the applicants by their counsel giving the usual undertaking as to damages: 1. Order 1 made on 22 January 1986 be dissolved. The first and fourth respondents and each of them be bo . restrained, by themselves, their servants or agents, until further order from: (a) printing, screening, silk screening, advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with any T-shirts or other garments which bear or embody the design known as "The Swing" design and which is shown on exhibit D herein, or any part of that design; or (b) advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with, any T-shirts or other garments were coe ee ns - - eee re ee ne eee room ns a eee -- - which bear or embody the designs known as the "flag" design or the "Listen Like Thieves" design and which are shown on exhibits B and C herein, or either of them, or any part of either of them. The second and third respondents and each of them be restrained, until further order, from being knowingly concerned in the advertising, promotion, display, offering for sale, selling or otherwise in trade or commerce dealing with any T-shirts or other garments which bear or embody any of the designs referred to in order 2 herein or any part of any of those designs. The respondents, and each of them, have liberty to apply, on three (3) days' notice to all other parties herein, in relation to the dissolution or vacation of orders 2 and 3 herein or either of them. The costs of the application for continuation of the orders made on 22 January 1986, being the proceedings heard on 24 January and 4 February 1986, be costs of the applicants in the principal proceedings against the first, second and third respondents. tours of INXS. She did so. The designs were approved by the members of INXS. Ms Heristanidis received a fee for her services from Starstruck and, on 22 July 1985, she assigned to Starstruck all copyright in the two designs. However, for more abundant caution, Ms Heristanidis was during the hearing joined as the fourth applicant. The two designs created by Ms Heristanidis have been referred to as the "flag" design and the "Listen Like Thieves" design. The flag design consists of a grey and white representation of a flag containing the letters "INXS" on the front of the garment and, on the back, the words "Listen Like Thieves", "World Tour '85" followed by a list of places, in Australia, Europe and North America, intended to be visited during the period August-November 1985. The lettering of the words "Listen Like Thieves" is designed so as to look like the lettering of the same words on the cover of the album of that name, Underneath the flag, on the front of the T-shirt as it was printed, was inserted a copyright symbol, followed by "INKS 1985". The "Listen Like Thieves" design is also double faceted. On the front of the garment appear the letters, in large script, "INXS", underlain by the words "Listen Like Thieves" and a photograph of the members of the group set against a fragment of the map of southern Queensland and northern New South Wales. The rear design repeats the ey ee cig renee STEED Fe RUMOR OT ee ee ee eng en ee ee hae ett ae ee ee ee en dle nom enn eee ot we ee ee 7. inscriptions "INXS" and "Listen Like Thieves" and includes a Jist of cities to be visited in what is called "Australian Tour 1985". On the front of the T-shirt appear the same symbols claiming copyright as on the "flag" design. On 14 August 1985 the members of INXS entered into an agreement with Starstruck whereby they granted to that company an exclusive right, during the period of the Australian tour and any agreed extension, to exploit what was called the "Name". The "Name" was defined as "the name(s), character(s), symboi(s), design(s), logo, identification(s), trademark(s), likeness(es) and visual representation(s)... of the artist professionally known as 'INXS'". The term of the agreement has been extended so that the agreement remains in force. The agreement made detailed provision for the sale by Starstruck at INXS concerts in Australia of "products bearing the Name which are approved by" INXS. Provision was made for the payment of royalties, calculated on a sliding scale dependent upon the average takings per head of paying patrons at each concert, and for the payment of advances, totalling $125,000, recoupable only out of royalties. Pursuant to the agreement Starstruck sold merchandise during the 1985 Australian tour'to the gross value of $379,432. The evidence does not disclose the precise amount of royalties payable to INXS but they must have been roughly the amount of the advance. According to the records of MMA 8. Management, the sales included 10,7605 "Listen Like Thieves" T-shirts, 468 sweatshirts of the same design, 2,662 "flag" T-shirts, 416 "flag" sweatshirts and 11,537 programs. The cover of the programs reproduced the design of the front of the "Listen Like Thieves" T-shirt. The evidence does not disclose why it was that, in 1975, the company formerly known as Heather Creations Pty Limited, the first respondent in these proceedings, took the evocative title South Sea Bubble Company Pty Limited. The sole directors and shareholders of the company are Daphne Vera Pearson and Desmond Pearson, the second and third respondents herein. On 1 March 1985 they registered under the Business Names Act 1962 (NSW) a business entitled "Bootleg T-Shirts". The application for registration showed the proposed business as being "T-shirt retailing" and the proprietor to be South Sea Bubble Company Pty Limited. It appears that the practice of Mr and Mrs Pearson is to take existing designs -- predominantly designs associated with pop groups -- to have copies made on their behalf by the fourth respondent, Ivy Printing Pty Limited, and to sell these T-shirts at places such as Paddy's Market in Sydney. Pursuant to this practice Mr and Mrs Pearson arranged for the production of a quantity of T-shirts fairly faithfully reproducing each of the T-shirts designed by Ms Heristanidis and, as mentioned, most of the features of Mr Mortlock's cover td ee epee an ee Np He ements eee ewe mt cen Serer en an mee 9. design for "The Swing" album, I say "fairly faithfully", in relation to Ms Heristanidis' designs, because there are some minor differences between the originals and the copies: in each case Mr and Mrs Pearson omitted the reference to copyright, there are variations in the colour shades of the "Listen Like Thieves" T-shirt and the background map fragment has inexplicably slipped a little to the south. But the copies retain all the INXS symbols, including name, references to the 1985 tour, photographs and general layout. Early in January 1986 Margaret Shearer, the Business Affairs Officer of INXS and of MMA Management, received some information about the sale of T-shirts at Paddy's Market. On 11 January 1986 Peter Wise, the solicitor for the applicants, went to Paddy's market and found a stall bearing a sign "Bootleg T-shirts". He purchased, inter alia, three T-shirts bearing the name "INXS", and being one each of the respondents' version of the "flag", "Swing" and "Listen Like Thieves" T-shirts. Mr Wise observed a small handwritten sign at the front of the stall with words to the effect of: "Some of the garments on sale and display have not been authorised by the relevant parties i.e. Midnight Oil, INXS, etc.. These are genuine bootleg products". However the effect of this opportunistic frankness was dissipated by what was said to Mr Wise when he enquired the meaning of the sign. The assistant to whom he put that question replied that it had something to By Se ee eae 8 Na cmap ne Pye a ree ee ree ee ee ree ree eet ee ee -- Re eee eee - ~ Powe oe - now we mee es - - 10. do with copyright, that "we don't have approval for everything here", only to be interrupted by another assistant who assured him that they did have approval from Midnight Oi1 and INXS. On 18 January 1986 Megan O'Rourke, a secretary employed by the solicitors for the applicants, went to Paddy's Market and to the stall visited by Mr Wise. Ms O'Rourke did not see the sign "Bootleg T-shirts", although she did notice that the sales assistants wore T-shirts with that inscription. She asked: "What INXS T-shirts do you have?" and was shown, and purchased, a further copy of each of the three T-shirts purchased by Mr Wise. Bach of the garments purchased by Mr Wise and Ms QO'Rourke bears a label and/or an adhesive sticker containing the words "The manufacturer does not warrant the depiction hereon has been authorised". Each of the labels is small -- about 5 3q. cm. -- and is sewn onto the garment immediately underneath a larger manufacturer's label. Each of the stickers is larger than the manufacturer's label. There is no evidence that either Mr Wise or Ms O'Rourke noticed any label or sticker before completing their respective purchases. Neither did any of three young people, Robyn Reid, Darren Tovey and Robert Crawford, who were approached by a representative of the applicants whilst they were visiting Pier One on 27 January 1986, were shown the respondents' T-shirts and asked what the inscription "INXS" meant to them; re ee re re ne ee rte ene Se te eer ee ee oe ome - ee ee ee ee whe ee re ee ee li. although Ms Reid did comment that if she had been shopping for a T-shirt she probably would have noticed the sticker because she would have been looking for size. On 22 January 1986, on the application of the first, second and third applicants, I made ex parte orders restraining the respondents, and each of them, from manufacturing, printing, screening, silk screening, advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with any T-shirts or other garments which bear or embody the design appearing on the applicants' "flag" T-shirt, the applicants' "Listen Like Thieves" T-shirt or the album cover of "The Swing" or which bear or embody the word "INXS" and from passing off as and for the T-shirts of those applicants any T-shirts not of their manufacture. I also made an order against Ivy Printing requiring that company to permit, under defined conditions, two persons, being members or employees of the applicants' solicitors, to enter certain premises occupied by it for the purpose of searching for and removing certain goods and records: cf Anton Piller K G v Manufacturing Processes Limited €19763 1 Ch 55; Universal City Studios Inc v Mukhtar & Sons Limited (1976) 2 FSR 252. I gave leave to the applicants to file an Application returnable on 24 January 1986. re a i ea ne a ntereee cone tee ee a a eee 12. On 24 January the applicants sought a continuation of the restraining injunction granted ex parte. This application was opposed by counsel for the first, second and third respondents but, after some argument, I continued the injunction pending disposal of the application for interlocutory relief. Between that day and the full hearing of that application on 4 February 1986 further evidence was filed on behalf of the applicants so that a considerable volume of factual material is now before the Court. Although the current proceedings are merely an application for the continuation of an interlocutory injunction, it seems unlikely that the factual position at any trial of the action would aiffer significantly from that which appears at the present time. In practical terms, and having regard to the market life of these T-shirts, the current application is likely to be determinative of the position of the parties, at least in relation to these particular designs. The fourth respondent, Ivy Printing, has taken no active part in the hearing regarding continuation of the restraining injunction. Unless otherwise indicated, I shall use the term "the respondents" to refer only to the first, second and third respondents. The respondents do not deny that they have copied the designs of the applicants; indeed their counsel formally admitted on their behalf that the T-shirts about which we ee ee ee re re re en re me nee te ee wee eee ee Hannes = 13. complaint is made in these proceedings are T-shirts which his clients procured to be manufactured through the fourth respondent. Neither do the respondents deny that they were engaged in the distribution and sale of the T-shirts so manufactured. Through their counsel, they assert an entitlement to do as they have done. Trade Practices claims The case for the applicants rests upon four bases: 3.52 of the Trade Practices Act 1974, s.53(c) of that Act, passing off and copyright. The first three causes of action considerably overlap. The applicants argue that each of the T-shirts, containing as each does the name "INXS" and other symbols associated with the band, contains a representation that the T-shirt {3 produced or distributed by, or with the approval of, the members of the band; that it is "an INXS T-shirt". It being undisputed that the T-shirts distributed by the respondents do not have this characteristic, the applicants submit that the conduct of the respondents offends against s.52 of the Trade Practices Act, being "conduct that 1s misleading or deceptive or is likely to mislead or deceive". Further, it is said, the respondents, in connection with the supply of the T-shirts are falsely representing that those goods have a sponsorship or approval -- that is by INXS -- that they do not have, contrary to s.53(c). Although proceedings do not lie directly against Mr and Mrs Pearson, Weep ee i pepe er ote ee -- - —— nae ae a - nd eo mee * - -- 14. under 38.52 and 53(c), the applicants invoke s.75B of the Trade Practices Act claiming that those two people have been knowingly concerned in the conduct of South Seas Bubble about which complaint is made. In a recent judgment, Chase Manhattan Overseas Corporation v Chase Corporation Limited (24 December 1985, not reported) I attempted a summary of the legal principles relevant to the determination of the question whether the use by a corporation of a particular name amounts to conduct which is actually or potentially misleading or deceptive, contrary to 3.52. I need not repeat the whole of that summary but, in the present context, it is necessary to recall that conduct does not offend against s.52 unless it contains a misrepresentation and that conduct is to he regarded as likely to mislead if this is a "real and not remote chance or possibility": see Global Sportsman Limited v Mirror Newspapers Limited (1984) 55 ALR 25 at p.30. The question whether conduct is, or is likely to he, misleading or deceptive 13 an objective one, to be determined by the Court for itself in relation to one or more identified sections of the public, the Court considering the full range of persons who fall within any particular identified section of the public. Evidence of the formation in fact of an erroneous conclusion is admissible but not conclusive; but, ordinarily, mere proof of confusion or uncertainty will not suffice to prove misleading or deceptive conduct. Se emer memeremenrennes — remananmptergaien—mp time iy et ce mg eee memes remapping sw oe oo 15. - In the present case the section of the public likely to be affected by the sale of T-shirts bearing the names of, or symbols relating to, INXS is the body of people who enjoy the music of that group: the people who attend their concerts, purchase their records and/or listen to their music on the radio or on television. Bearing in mind the notorious fact that the proportion of persons in any given age group who are rock enthusiasts tends to diminish with increasing age, it is reasonable to assume that a major proportion of INKS followers are teenagers or persons in their twenties. There is no reason to assume otherwise than that, in intelligence and educational attainments, INXS followers will represent a fair cross-section of the community. It is clear on the evidence that, during recent years, the members of INXS have carried on the subsidiary business activity of licensing the sale of merchandise, principally T-shirts, bearing the name of, and other references to, their group. The sale of this merchandise has occurred principally at concerts in which they have performed, in circumstances likely to lead a reasonable concert-guer to infer that the goods are sold with the blessing of the members of the band. The evidence indicates that there has been considerable publicity given to the current scale and method of operation of the merchandise licensing system associated with rock groups. Under those circumstances it is probable Uetereapeee ee er tee eee nr ere 16. that many rock enthusiasts will assume that the merchandise they see sold at INXS concerts is approved by the members of the group in return for a royalty or other fee. If they see what they recognize as that same merchandise sold in some other location, such as a record shop, they are likely to make the same assumption. Leaving aside for the moment one argument put on behalf of the respondents, it seems to me probable that they will make the same assumption if they see what is apparently the same merchandise offered for sale at a market stall. There is no question of an accidental similarity of name -- such as in Chase -- or of a name which might be adopted by the respondents without any intention of identification with the first applicants. This is not a case in which the name adopted by a defendant is descriptive of his or her business as in Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Pty Limited (1978) 140 CLR 216. The word "INXS" is a concocted or fancy name to which may be applied the observation of Lord Simonds in Office Cleaning Services Limited v Westminster Window and General Cleaners Limited (1946) 63 RPC 39 at p.42: ",.ein the case of trade names the Courts will not readily assume that the use by a trader as part of his trade name of descriptive words already used by another trader as part of his trade name is likely to cause confusion and will easily accept small differences as adequate to avoid it. It is otherwise where a fancy word has been chosen as part of the name. Then it is that fancy word which 1s discriminatory and upon which attention is fixed and if another trader takes that word as part of his trade name with only a small variation or addition, he may well be said to invite confusion. For why else did he adopt it?" que gepranen += = — eee perenne ee - aes ee =e eee ee oe 17. But this case does not rest on the word "INXS" alone; any possible doubt is set to rest by the inclusion upon the T-shirts of other references to the group. The situation then is that the respondents are putting onto the market merchandise which adopts the name and other symbols of the applicants and which is an almost exact copy of the merchandise marketed with their approval. It is appropriate to apply to the case the comment of Dixon and McTiernan Jd. in Australian Woollen Mills Limited v FS Walton & Company Limited (1937) 58 CLR 641 -- an action for passing off -- at p.657: "The rule that if a mark or get-up for goods 1s adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive." - In Nostac Enterprises Pty Limited v New Concept Import Services Pty Limited (1981) ATPR 40-235 Ellicott J. considered a claim for an interlocutory injunction to restrain the sale of show bags containing the name "Mr Men" or a representation of any of the characters in that series of books and television episodes. There was no evidence to a ine cee etna meee ee 18. found an inference that the public would assume a financial association between the creators of the "Mr Men" characters and the sale of products referring to them. Nevertheless an injunction was granted, his Honour expressing the view that "the use of the 'Mr Men' words and characters represent to the public ... that there is some likely association between the product and those responsible for the 'Mr Men' books and TV series". A similar comment may be made about the use, in the present case, of names and symbols associated with INXS; put if I am correct in inferring that many members of the public will assume an approval in return for a financial benefit, this case is even stronger than Nostac. However, counsel for the respondents argues that, notwithstanding the almost exact reproduction by his clients of the designs of the applicants, there is in this case no basis for an apprehension that purchasers will be deceived. He points to two matters: the facts that, so far as the evidence indicates, all sales on behalf of his clients have taken place at a stall at which there is some reference to "Bootleg Industries" and have been of garments bearing what he calls a disclaimer of approval by members of INXS. There are occasions upon which the effect of otherwise misleading or deceptive conduct may be neutralized by an appropriate disclaimer: see Abundant Farth Pty Limited v R C Products Pty Limited (1984) 59 ALR 211 at en ee ee a ete rte nt 19, p-e217 and the authorities there cited. But such cages are likely to be comparatively rare and to be confined to situations in which the court is able to reach satisfaction -- the onus resting on the party relying upon the disclaimer -- that the disclaimer is likely to be seen and understood by all those -- leaving aside isolated exceptions -- who would otherwise be misled before they act in relation to the relevant transaction. In the present case, it seems to me that it is difficult to feel satisfied, both as to seeing and understanding, in respect of both the name of the stall and the labels and stickers. The assumptions underlying counsel's reliance upon the first matter are that all potential purchasers would notice the use of the trading name "Bootleg Industries" and would understand from it that the items offered for sale were unapproved, or may be unapproved, by those with whom they were apparently associated. I have some reservations about the validity of the first assumption. In relation to the second, the inclusion of the alternatives "may be unapproved" leaves open the possibility of the error made by the sales assistant who incorrectly assured Mr Wise that, in the case of INXS, the garments were approved. But I think that the greatest difficulty is in accepting that all except an insubstantial number of potential purchasers would appreciate the significance of the word "bootleg". As the Macquarie Dictionary explains, that word -- which has its " ee ee es ee oe ee rer) wien ne Vode Ae eee et Ok rte ne a a 20. etymological root in the smuggler's practice of concealing illicit spirits in that part of the boot which covers the leg -- has developed to refer generally to an unlawful or clandestine object or enterprise. Many INXS fans, perhaps even the majority of them, would in the present case understand the word "bootleg" to indicate that some or all of the merchandise offered for sale under that title was illicit in the sense of being unauthorized by the persons with whom it claims association. But the word is not one in everyday parlance. Not all potential purchasers will he persons of wide vocabulary. The word "bootleg" was new to one of the three witnesses approached at Pier One at the time of that interview. Particularly in the absence of any evidence as to public acquaintance with the word, I am unable to feel satisfied that his is an isolated case. One problem about the stickers and labels is that they may not come to notice before purchase. As I have mentioned, none of the Pier One witnesses noticed them when shown the respondents' T-shirts. If a purchaser did see and read the sticker or label on a particular T-shirt, it is by no means clear that he or she would understand it as a statement that the garment had no association whatever with INXS. Indeed I suspect that many potential purchasers would not understand it at all. A number of studies have demonstrated that legalistic English is not widely understood in the Australian community; hence the movement nn i rR en ee et te me er ee ree ee ee ene 21. for "Plain English" drafting of legal documents and legislation: see the Report of the Senate Standing Committee on Education and the Arts, "A National Language Policy", published in October 1984 paras.3.10 - 3.22. But difficulties are not confined to legal documents. They extend to government communications, such as brochures and forms, and non-government communications, such as classified newspaper advertisements, which employ language not used in everyday speech:. see the papers presented at the seminar organized by the Department of Special Minister of State in Canberra on 14 June 1983 and in particular the surveys reported in the paper of Dr Judith Goyen. In this situation it would be a brave assumption that the meaning of words such as "warrant", "depiction" and "authorised" would be readily appreciated by all but an insignificant proportion of potential T-shirt buyers. I cannot feel satisfied that either of the disclaimers relied upon would be effective, in all but isolated cases, to remove the likelihood of error. It follows that there is a serious question to be tried that the sale by the respondents of the three styles of T-shirts copied on their behalf from the applicants' designs constitutes misleading or deceptive conduct in breach of s.52 and that, in breach of s.53(c), they have represented in connection with the supply of those T-shirts that the T-shirts have a sponsorship or approval -- namely by the INXS band ~~ that did not in fact exist. 22. Passing off claims In a case such as this there is considerable overlap between claims under s.52 and s.53(c) and the common law claim of passing off. However, as it seems to me, the claim in passing off is even stronger that the claims under the Trade Practices Act. Actions for passing off have succeeded where there has been a use of the plaintiff's name even in respect of a totally different type of product: see Lego System Aktieselskab v Lego M Lemelstrich Limited (19831 F8R 155 and compare Radio Corporation Pty Limited v Disney (1937) 57 CLR 448. The better view now is that there is no necessity for a common field of activity between the plaintiff and the defendant, provided that there is a misrepresentation by the defendant concerning the defendant's name or product resulting in a likelihood of damage to the plaintiff, as for example confusion adversely affecting goodwill -- see Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Limited £19793 Ac 731, Lego System -- or wrongful appropriation of the plaintiff's name and reputation -- see Henderson v Radio Corporation Pty Limited £1960] SR (NSW) 576 at pp.595, 603-604, Totalization Agency Board v Turf News Pty Limited £19673 VR 605, although compare Lyngstad v Anabas Products Limited (1977) 3 FSR 62 at pp.66-67. But in this case the applicants and the respondents are in direct competition in egh e nane ap a ty ete ro ri cor ei et wows ee we eee we ent eet ee ne 23. the same market. The respondents have copied the applicants' goods and put the copies onto the market in such a manner as to be likely to cause at least some purchasers to buy them in the belief that they were purchasing the goods of the applicants. Once it be accepted that the "Bootleg" name and the stickers/labels will not be effective to prevent a substantial proportion of purchasers being misled, the case is a classic example of the passing off by a trader of its goods as those of its rival. Copyright claims The evidence establishes that the designs copied for the purpose of the manufacture by the respondents of the three subject T-shirts were created by Mr Mortlock and Ms Heristanidis respectively. The artwork for each design was a drawing -- or alternatively "a work of artistic craftsmanship" -- and, therefore, within the definition of "artistic work" in s.10 of the Copyright Act 1968. Mr Mortlock and Ms Heristanidis were each resident in Australia and, therefore, were each "qualified persons" within the meaning of s.32(4) of the Act when they executed the artwork. The first publication of each of the works apparently took place in Australia. It follows that, subject to the Act, copyright subsists in the work: see 8.32(2). The usual duration of that copyright would be 50 years from the death of the author: see s.33(2). Ownership ee a en eg woe wore ne ee eee = oe ee re er won - ee -+ 24. is apparently vested in Starstruck as the person commissioning the drawings -- see s.35(5) -- but it is not necessary to determine that point because, in the alternative, it is vested in the authors themselves who are each applicants herein: see s.35(2). However, the respondents argue that the rights thus apparently vested are defeated by the provisions of Division 8 of Part III of the Act (ss.74-77) relating to designs. Broadly stated, the scheme of that Division is to remit to the provisions of the Designs Act 1906 the rights of copyright owners in relation to artistic works used in designs applied for industrial purposes. Section 74 defines the term "corresponding design", in relation to an artistic work, as meaning a design that, when applied to an article, results in a reproduction of that work. The word "article" in this definition should be interpreted so as to exclude things whose only function is to carry a design: see Littlewoods Pools Limited""s Application (1949) 66 RPC 309. The rationale of that exclusion, as was explained by Wynn Parry J. in that case at pp.310-311, is that such a thing, the paper or material to which the drawing is applied, is so subordinate or secondary to the features of pattern or ornamentation which constitute the design as to have no separate existence of its own. However, this cannot be said of a T-shirt which has a function independent of the ee nee ne Re ce ee EU ener Sete re me ee ne ee sree ae 25. carriage of any ornamentation which it may bear. A T-shirt must be regarded as an "article" for the purpose of the definition. Section 75 of the Copyright Act provides inter alia that, where copyright subsists in an artistic work and a corresponding design is registered under the Designs Act, it is not an infringement of the copyright in the work to do anything, while the monopoly in the registered design subsists under the Designs Act, that is within the scope of the monopoly in the design. Section 76 deals with the false registration of industrial designs. However, the designs of the applicants have not been registered under the Designs Act; so that s.77 is the provision which is critical to this aspect of the present case. That section relevantly provides: "77(1) Where -- (a) copyright subsists in an artistic work; (b) a corresponding design is applied industrially by, or with the licence of, the owner of the copyright in the work; (c) articles to which the corresponding design has been so applied (in this section referred to as "articles made to the corresponding design") are sold, let for hire or offered or exposed for sale or hire in Australia; and "(d) at the time when those articles are so sold, let for hire or offered or exposed for sale or hire, they are en ee et eS we ee arene ee tind tent ne en eee ee eee ed 26. not articles in respect of which the corresponding design has been registered under the Desiqns Act 1906-1968, the succeeding sub-sections of this section have effect. (2) During the period of 16 years commencing on the date on which articles made to the corresponding design were first sold, let for hire or offered or exposed for sale or hire in the circumstances referred to in paragraph (1)(d), it is not an infringement of the copyright in the work to do anything that, at the time when it is done, would have been within the scope of the monopoly in the corresponding design if the corresponding design had, immediately before that time, been registered in respect of all articles made to the corresponding design that had, before that time, been sold, let for hire or offered or exposed for sale or hire in those circumstances. ' (3) ... (4) For the purposes of this section, account shall not be taken of any articles in respect of which, at the time when they were sold, let for hire or offered or exposed for sale or hire, the corresponding design concerned was excluded from registration under the Designs Act 1906-1968 by reguiations made under that Act for the purpose of excluding from registration designs for articles that are primarily literary or artistic in character .. (5) The regulations may make provision for determining the circumstances in which a design is, for the purposes of this section, to be deemed to be applied industrially." The regulations made under the Designs Act, referred to in sub-s.(4), list various articles which are designated as being "primarily literary or artistic in character". The list does not include garments of any sort. Regulation 17(1) of the Copyright Requiations, made pursuant to s.77(5) of ee ee ee Cp rem Se I ae arr Sen nee ape ee te oe eee ne ete eee wee 9 VER Cree = eee ee te ee ee ee re oe ---- + aor ee 27. the Copyright Act, deems a design to be "applied industrially", amongst other situations, where it has been applied-to more than 50 articles. Although there is no specific evidence as to the numbers of "flag" and "Listen Like Thieves" T-shirts and "The Swing" album covers which were manufactured on behalf the applicants, it is clear that the number in each case exceeded 50. Thus s.77(1)(b) is satisfied in this case. Section 77(1)(c) requires that at least two articles to which a relevant design has been applied be sold, hired or offered for sale or hire in Australia, that is by, or with the licence of, the copyright owner. This condition is satisfied in respect of each of the three designs. Consequently s.77(2) operates, with the result that, for the period of 16 years after the date of the first sale or offer for sale by, or with the licence of, the applicants, it is not an infringement of the copyright in the artistic work to do anything that would have been within the monopoly of the corresponding design had it been registered in respect of all articles made to the corresponding design and previously sold, hired or offered for sale or hire by, or with the licence of, the applicants. The scheme of the Designs Act is that an application for registration of a design must be in respect of a particular article: see definition of "design" in s.4 TO Men ny ee Ste ee me ee ee ee ee ae ed i 28. and 33.17, 20(6) and 23(3). Consequently the monopoly given by the Designs Act extends only to the use of the design in relation to articles in respect of which registration has been effected: see $.30(1). Section 77(2) is consistent with the concept of specificity of registration. A copyright owner only loses his or her rights under that section in respect of infringements made by another person in regard to articles of the same type as those previously sold, hired or offered for sale or hire by, or with the licence of, the copyright owner. In the present case the third applicant, prior to the date of the alleged infringements and with the licence of the other applicants, sold and offered for sale T-shirts bearing the "flag" and "Listen Like Thieves" designs. The effect of s.77(2) is to deprive all the applicants of any protection under the Copyright Act in respect of the use of those designs by others upon the same article, that 1s upon T-shirts. But, so far as the evidence indicates, none of the applicants have ever sold, hired or offered for sale or hire T-shirts bearing "The Swing" design. Their use of this design for album covers would deprive them of the protection of the Copyright Act in relation to any copying by others of "The Swing" design on album covers; but it does not affect their right to restrain the use by others of this design on other articles such as T-shirts. The applicants have a prima facis case under the Copyright Act in respect of, but only in réspect of, the respondents' "The Swing" T-shirt. 29. The interrelationship of Copyright legislation with legislation providing for the registration of industrial designs has proved a troublesome matter in a number of countries. Various expert committees have recommended a variety of solutions: see Lahore "Intellectual Property Law in Australia - Copyright" (1977) at pp.279-282. The arguments for and against the exclusion from copyright protection of registrable designs are summarised by Ricketson: "The Law of Intellectual Property" (1984) at pp 513-574. In Australia the Designs Law Review Committee (the Franki Committee), which reported in 1973, recommended (p.110) the continuance of the policy of exclusion of registrable designs from copyright protection but subject to certain modifications in the then existing law. One of the proposed modifications was the exclusion from the definition of "corresponding design" in s. 74(1) of the Copyright Act of "a design that consists solely of features of two dimensional patterns or ornaments applicable to a surface of an article". Some of the Franki Committee's recommendations were carried into effect by the Designs Amendment Act 1981. For reasons which do not appear in the second reading speech of the Minister at that time, the recommendations in relation to dual protection, which were praised by Ricketson at p.525 as "a rational and commensense approach to the problem of ee ee Le em OR eee ee ee ' 30. protection", were not carried into effect. That this is "unfortunate -- at least in respect of the recommendation relating to two dimensional designs -- is, in my opinion, illustrated by the facts of this case. The designs used in the applicants' T-shirts are each works commissioned by Starstruck from a professional artist at its own expense for its own purposes. Starstruck could have used that design for the purpose of, say, a poster advertising INXS without thereby forfeiting its right to restrain someone else from using the design on a T-shirt. But, because the company chose to employ the design it had commissioned upon an article having functional utility, all other people are free, insofar as the law of copyright is concerned, to appropriate the design for their own commercial ends. Ina practical sense it does not seem sufficient to say that the copyright owner might have obtained some protection by registration under the Designs Act. It is hardly realistic to expect the creators of new designs for the ornamentation of clothes, or those retaining them, to undertake each time the task of obtaining registration of the design. The fundamental reasons for excepting industrial designs from the protection of copyright law are to avoid uncertainty in the industrial world and to avoid hindrance to the improvement of the design of manufactured articles. It is difficult to see that these reasons have much relevance to a two dimensional artistic work printed onto clothing which, at a glance, will appear as somebody's original creation. meen meee ee ne ee en tere ee SE en eee re te me See Se o Ne ~ 31. On the other hand it might cogently be argued that the denial to such a work of copyright protection is a disincentive to the development of better design in this area. As the Minister in charge of the 1981 Bill said in his second reading speech: "If good design is to flourish, those responsible for producing it must be protected": see Parliamentary Debates, House of Representatives, 7 April 1981, p.1369. Balance of Convenience I have reached the view that, in relation to all three of the subject T-shirts, the applicants have a strong prima facie case in respect of the claims made under each of 5.52 and s.53(c) of the Trade Practices Act and under the law relating to passing off and that, in respect of "The Swing" T-shirts, there is such a case pursuant to the Copyright Act. The question, therefore, arises whether, having regard to the comparative balance of convenience, interlocutory relief should be granted. Counsel for the respondents submits not. On behalf of his clients he offers an undertaking to keep accounts and he submits that, if the applicants are eventually adjudged to be entitled to succeed, such accounts will permit the accurate assessment of their damage. The submission assumes that any accounts which were kept would be complete and accurate and that the respondents have the resources to pay any damages which may gamers a eee ee - oe we ase oye wo a or 32. be awarded. These are assumptions which it is not easy to make. It would be difficult, if not impossible, for the applicants to demonstrate any understating of sales volume which might occur. Very little is known of the respondents, who have not given any evidence in these proceedings. In particular, there is no evidence as to their financial competence. There is one other matter which is relevant to the balance of convenience. I have already mentioned that the members of INXS have always insisted upon a high standard of design of the merchandise put onto the market with their endorsement. It is common ground that the T-shirts marketed by, or on behalf of, the various applicants are of high quality. By contrast, according to the uncontested evidence of Ms Shearer, the respondents' T-shirts suffer from deficiencies as to styling, choice of fabric used -- in one instance only -- and clarity of printing. Ms Shearer expressed the concern, which is I think reasonable, that the reputation of the applicants would be damaged by the release onto the market of inferior garments, erroneously associated with the applicants. The possibility of damage to the reputation of the plaintiff during the period of any trading by the defendant is always a matter relevant to the balance of convenience; cf Tavener Rutledge Limited v Trexapalm Limited £19772 RPC 275 at p.282. eee ene en on me en eee eee en ore nee er en ee cee oS we sete en 33. Against these factors, which point to the granting of interlocutory relief, must be set the question whether, if the proceedings fail, the respondents will be adequately protected by the undertaking as to damages which the applicants have already given in respect of the ex parte injunction and which they maintain. Both the first and third applicants appear to be operating substantial businesses. Counsel for the respondents had the opportunity in cross-examination to explore the question of the financial resources of the various applicants, but he did not do so. Under those circumstances, and having regard to the businesses they conduct, it is appropriate to deal with the matter upon the basis that the applicants have the capacity to honour their undertaking, if so required. It is true that, if the respondents are restrained from selling, there will be no proof available to them of the sales which they would have made during the period of restraint. However, they have had some experience of selling INXS T-shirts as part of their range of merchandise. They will have some knowledge of the proportion of those sales to their total sales. They would be in a position to prove the volume of sales of other T-shirts during the period of operation of the interlocutory injunction. Whilst any assessment of their damage would necessarily involve an element of judgment, it cannot, in my opinion, be said that the respondents are likely to be left uncompensated for any damage actually sustained. Taking into account the matters nen ee te nt ba ee 8 cee eee 34. of convenience on each side, and bearing in mind the considerable strength of the applicants' case, it is appropriate to exercise the discretion of the Court in favour of continuing the injunction. Orders The orders made on 22 January 1986 reflected a preliminary view that the applicants were entitled to restrain an infringement of copyright in respect of all three T-shirts. The argument has shown this view to be erroneous in respect of two of the three designs. In relation to those two designs the prohibition should be confined to the advertising, promotion, display, offering for sale, selling, or otherwise dealing with the T-shirts. In relation to the third design, "The Swing", the original orders should be retained. As there now appears to be no threat to offer for sale any other T-shirt bearing the word "INKS", there is no occasion to continue that part of the injunction. The injunction should extend to passing off. It is conceivable that the respondents may devise some method of marketing the T-shirts -- more particularly the "flag" and "Listen Like Thieves" T-shirts -- which does not involve a breach of the Trade Practices Act or an act of passing off. It is undesirable to attempt to anticipate that eventuality by now devising a qualification to the er a ns a pm emt - een ne - ee - se 35. order, the operation of which may give vise to uncertainty. However, liberty should be reserved to the respondents to apply in relation to the dissolution or variation of the injunction. It appears that the second and third respondents are the persons through whom the first respondent acts. They have been knowingly concerned in the infringement by the first respondent of ss.52 and 53(c) of the Trade Practices Act; accordingly an order should be made restraining them from being knowingly concerned in any of the acts in relation to which orders are made against the first respondent. Similarly, it appears from concessions made by its counsel that the fourth respondent is, as alleged, actively involved in the printing of the T-shirts and it is therefore appropriate that orders be made against that respondent. The costs of the motion to continue the injunction should be the applicants' costs in the proceedings against the first, second and third respondents. I certify that this and the thirty-four (34) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Wilcox. Date: 28 February 1986 Associate: averse eee Se eer ens at eee ne wb wererrt ns mee oe ees woe =e oe eee — - Counsel for the applicants: Solicitors for the applicants: Counsel for the first, second and third respondents: Solicitors for the first, second and third respondents: Counsel for the fourth respondent: Solicitors for the fourth respondent: Date(s) of hearing: 36. Me MR Ellicott Messrs Peter Wise & Co Mr J Ireland Messrs Lecn M Ratner Mr J K McLaughlin Messrs Makinson & d'Apice 4 February 1986 En re Sie mentee cennmermenne wey ee ee