CATCHWORDS Trade Practices - misleading and deceptive conduct - reputation and goodwill in the name "Miki House" - relevant geographical area for reputation and goodwill. Trade Marks - validity of registration of trade mark - when is validity determined - intention to use mark - whether mark likely to deceive or cause confusion - validity of assignment of trade mark - assignment of mark without goodwill - whether assignment sufficient to transfer ownership of mark. Trade Marks Act 1955 (Cth) ss.22, 28, 59, 62, 82 Trade Practices Act 1974 (Cth) 5s.52, 53 MERV BROWN PTY. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. and MIKI SHOKO CO. LTD. V. No. G 221 of 1985 MIKI _SHOKO CO. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. and MERV BROWN PTY. LTD. N. No. G 276 of 1985 NORTHROP J. 22 MAY 1987 MELBOURNE: , "? IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: a io ic Ks | DATE PLACE V. No. G 221 of 1985 MERV_ BROWN PTY. LTD. Applicant and DAVID JONES (AUSTRALIA) PTY. LTD. and MIKI SHOKO CO. LTD. Respondents NORTHROP J. 22 MAY 1987 MELBOURNE MINUTES OF ORDER THE! COURT ORDERS :- l. That the respondents and each of them by themselves, their directors, officers, servants and agents or otherwise howsoever be restrained:- (a) (b) from importing or causing to be imported into Australia or manufacturing or causing to be Manufactured or keeping for sale, advertising or offering for sale, supplying, distributing or selling any articles of clothing or any other goods whatsoever under or by reference to the trade mark "Miki House" or under or by reference to any name, word or mark substantially identical or deceptively or misleadingly similar thereto; from falsely representing by any means in the course of trade or commerce in connexion with the supply or possible supply or in connexion with the Promotion by any means of the supply or use of any articles of clothing or any other goods that such goods are of a standard or quality as the articles of clothing or other goods of the applicant referred to in (a) hereof; (c) from representing by any means in the course of trade or commerce in connexion with the supply or possible supply or in connexion with the promotion by any means of the supply or use of any articles of clothing or other goods:- (i) that any such goods, not of the manufacture of or sold or approved by the applicant, have the sponsorship or approval of the applicant; (ii) that the respondents or any business of the respondents or either of them has the sponsorship or approval of the applicant or is affiliated with the applicant. 2. That the respondents and each of them by themselves, their directors, officers, servants or agents or otherwise howsoever be restrained:- (a) from passing off their goods or the goods of one or other of them as goods of and/or provided by and/or approved by and/or connected and/or associated with the applicant; (b) from passing off their trade or business or the trade or business of one or other of them as and for a trade in business of and/or approved by and/or connected and/or associated with the applicant; (c) from enabling their goods or the goods of one or other of them to be passed as and for the goods of and/or provided by and/or approved by and/or connected and/or associated with the applicant by using in respect of articles of clothing or any other goods the trade mark "Miki House" or any name, word or mark substantially identical or deceptively or misleadingly or confusingly similar thereto. 3. That the cross claim be dismissed. 4. That the respondents pay the applicant's costs to date, ancluding all reserved costs. 5. Proceedings otherwise adjourned sine die. (Settlement and entry of Orders is dealt with in 0.36 of the Rules of Court.) IN THE FEDERAL COURT OF AUS IA NEW SOUTH WALES DISTRICT REGISTRY N. No. G 276 of 1985 GENERAL DIVISION BETWEEN : MIKI SHOKO CO. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. Applicants and MERV BROWN PTY. LTD. Respondent COURT: NORTHROP J. DATE : 22 MAY 1987 PLACE: MELBOURNE MINUTE OF ORDER THE COURT ORDERS THAT the application be dismissed with costs, including all reserved costs. (Settlement and entry of orders is dealt with in 0.36 of the Rules of Court.) IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: MERV_ BROWN PTY. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. and MIKI SHOKO CO. LTD. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION wewwwr BETWEEN: MIKI SHOKO CO. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. and MERV BROWN PTY. LTD. COURT: NORTHROP J. DATE : 22 MAY 1987 PLACE: MELBOURNE REASONS FOR JUDGMENT. V. No. G 221 of 1985 Applicant Respondents N. No. G 276 of 1985 Applicants Respondent In these proceedings between Merv Brown Pty. Ltd. on the one hand and Miki Shoko Co. Ltd. and David Jones (Australia) Pty. Ltd. on the other, the essential issue 15 which company has the right to use the mark "Miki House" in Australia with respect to clothing. On 28 October 1985, the Court as presently constituted granted anterlocutory injunctions restraining Miki Shoko and David Jones from advertising or offering for sale or selling within Australia articles of clothing by reference to the mark "Miki House." On the same day, the Court refused to grant interlocutory injunctions restraining Merv Brown from so advertising or offering for sale or selling articles of clothing by reference to the mark Miki House. The reasons for those judgments are reported; (1986) 10 F.C.R. 459. This 1s the trial of the proceedings. There are two separate proceedings before the Court. They were heard together. In the Victorian proceedings (V. No. G 221 of 1985) Merv Brown is the applicant and David Jones and Miki Shoko are the respondents. In substance, Merv Brown is seeking injunctions ina form Similar to the existing interlocutory injunctions, damages and consequential relief. The questions of damages and consequential relief have been deferred until after the question of liability has been determined. The claims by Merv Brown are based upon the Trade Practices Act 1974, Passing off and onan infringement of the trade mark "Miki House." Merv Brown is registered as the proprietor of the mark "Miki House" pursuant to the Trade Marks Act 1955 in respect of articles of clothing being goods included in Class 25 of the Register of Trade Marks. Ina cross claim in the Victorian proceeding, David Jones and Miki Shoko are seeking a declaration that the form of assignment by which Merv Brown became registered as the proprietor of the mark "Miki House" an respect of articles of clothing did not validly assign to Merv Brown the mark "Miki House" pursuant to the Trade Marks Act. In the New South Wales proceeding (N. No. G 276 of 1985), Miki Shoko and David Jones are the applicants and Merv Brown 15 the respondent. In substance, Miki Shoko and David Jones are seeking injunctions restraining Merv Brown from advertising, offering for sale or selling articles of clothing by reference to the mark "Miki House", damages and consequential relief. The questions of damages and consequential relief have been deferred until after the question of liability has been determined. The claims by Miki Shoko and David Jones are based upon the Trade Practices Act, passing off and upon the Trade Marks Act. At the hearing, evidence was presented both by affidavit and orally. The affidavits used at the hearing of the motions for interlocutory relief were relied upon. Further affidavits were relied upon. A number of the deponents were cross-examined. Other oral evidence was led from witnesses. At the end of the hearing it was apparent that apart from one issue relating to the assignment of the mark "Miki House" to Merv Brown, the facts were not really in dispute. I turn first to consider the competing claims based upon the Trade Practices Act. The trade mark "Miki House" was registered in Part B of the Register of Trade Marks in respect of articles of clothing, being goods included in Class 25 for a period of 7 years from 2 April 1980. A company P. & M. Harbig & Co. Pty. Ltd. was entered in the Register as the proprietor of that mark. The Certificate of Registration was given on 3 August 1982. P. & M. Harbig & Co. Pty. Ltd. is controlled by Richard Harbig who also controls a number of other related companies. Richard Harbig did not invent the mark "Miki House." He saw it in the United States of America early in the year 1980. The Harbig group of companies carried on a number of activities including the business of importing clothing and the business of property development. Richard Harbig thought the mark "Miki House" could be used to advantage in connexion with the clothing business being conducted by his companies. By deed of assignment dated 19 August 1980, the trade mark was transferred with goodwill to P. & M. Harbig (Holdings) Pty. Ltd., another company controlled by Richard Harbig. That transfer was registered on 11 August 1982. By deed of assignment dated 4 March 1985, the trade mark was transferred without goodwill to Merv Brown. That transfer was registered on 14 August 1985. Disputed questions of fact and of law arise with respect to this transfer and these matters will be dealt with later in these reasons. For present purposes it is sufficient to say that by their pleadings, Miki Shoko and David Jones admit that Merv Brown is and at all material times was registered as the proprietor of the trade mark but deny that 1t is the owner of the mark and allege that there was no valid assignment of the trade mark to Merv Brown. Merv Brown 1s controlled by Mr. Mervyn Brown who also controls a number of other related companies. Among other activities these companies carry on the business of manufacturing, distributing, offering for sale, and selling clothing throughout Australia. On 11 June 1985, Merv Brown lodged applications to register the trade mark "Miki House" in respect of all goods in Classes 16, 18, 24 and 28 of the Register of Trade Marks. Early in the year 1982, Mr. Mervyn Brown visited Japan. While there, he saw clothing being sold under the mark "Miki House." The clothing was for children. The clothing was made from bright bold colours and was very attractive. The mark "Miki House" was striking. He thought the mark could be used successfully in Australia with respect to clothing, particularly children's clothing. On his return to Australia he instructed his patent attorney to search the Register of Trade Marks in Australia. He was advised by his attorney that the search disclosed that P. & M. Harbig & Co. Pty. Ltd. had applied for registration of the mark "Miki House" with respect to clothing. Mr. Mervyn Brown took no further action with respect to the mark for some years. Miki Shoko Co. Ltd. 15 a corporation incorporated under the laws of Japan on 20 August 1978. Among other activities Miki Shoko, which took over a family business previously being conducted by the persons controlling Miki Shoko, manufactures and sells children's clothing and other associated accessories. From 1978 Miki Shoko marketed the children's clothing under the mark "Miki House." It invented the mark. Eventually it became registered as the proprietor of that mark in Japan. Until 1982 the Miki House range of clothing, mainly children's but some adult, and accessories were sold only in Japan. The clothing and accessories became well known in Japan and were associated with the mark "Miki House." They were seen in Japan by officers of retail stores in Australia while visiting Japan. These visits were regular and occurred frequently. They were a source of information for purchases and for ideas to be adopted in Australia. Mr. Mervyn Brown was attracted to the clothing and mark when he saw them in Japan in 1982. As is to be expected, clothing purchased in Japan was taken by purchasers to other countries. Mr. Richard Harbig saw the mark "Miki House" in the U.S.A. in the year 1980. In 1982, Miki Shoko made its first export sales to Hong Kong. Thereafter, export sales were made to Singapore, the U.S.A. and other countries. Miki Shoko has displayed its Miki House range of clothing at an international trade fair in Paris since 1984. Miki Shoko has never sold its Miki House range of goods directly to the public in Australia. It advertised in Japanese magazines and some of those magazines came to Australia but hada very limited distribution here. Likewise, some of the Miki House range of clothing purchased in Japan was brought to Australia. Again, the use was limited and was' restricted mainly to some of the Japanese community in Australia and the articles were purchased outside Australia. The trade mark "Miki House" with respect to clothing was first registered in Japan in November 1982. A summary of trade mark applications and registrations in the name of Miki Shoko as at 27 June 1986 is set out:- "Country Date of Date of Application Registration JAPAN 16.12.77 26.11.82 KOREA 02.06.83 23.01.84 HONG KONG 08.06.83 24.09.84 SINGAPORE 14.06.83 PENDING ENGLAND 31.05.83 WITHDRAWN FRANCE 31.05.83 31.05.85 WEST GERMANY 15.06.83 13.02.84 SWITZERLAND 09.06.83 11.02.84 ITALY 11.07.83 PENDING BENELUX 15.06.83 15.06.83 DENMARK 31.05.83 30.08.85 AUSTRIA 31.05.83 12.10.83 NORWAY 01.06.83 29.11.84 SWEDEN 01.06.83 WITHDRAWN FINLAND 31.05.83 WITHDRAWN CANADA 08.06.83 01.11.85 UNITED STATES 03.08.83 WITHDRAWN AUSTRALIA 14.07.83 PENDING SPAIN 14.03.86 PENDING PORTUGAL 12.03.86 PENDING. " It appears that the application in the U.S.A. was withdrawn pursuant to an arrangement with Walt Disney interests in that country because of the likelihood of confusion between "Miki House" and the well known mark "Mickey Mouse." It was not clear why the application was withdrawn in England, but it was said because 1t was necessary to establish more sales. In Australia, Miki Shoko faces the problem of the prior registration of the mark "Miki House." A series of events commenced in October 1983 which, unknown to the parties, formed the basis for the present proceedings. In October 1983, officers of David Jones, being concerned with the purchase of children's wear for sale by vetail by David Jones in Australia, visited Japan. They saw Miki Shoko children's wear and accessories being sold under the label "Miki House." They were being sold in shops and in boutiques within large department stores. The boutiques were like shops within shops. The products offered an up-market totally co-ordinated range of merchandise. In other words the merchandise was suitable for sale in large department stores and not in cheaper chain stores. The prices were more suited to the higher class department stores. The officers of David Jones tried to reach agreement with Miki Shoko for the exclusive right to sell this merchandise in Australia under the mark "Miki House" but at that time Miki Shoko refused to sell on the ground that 1t was still developing its domestic market in Japan and was not prepared to export. David Jones bided its time. In March 1984, Mr. Darryl Beitzel, the sales manager of Update Imports Pty. Ltd. visited Japan. Update Imports is a member of the Merv Brown group of companies. While in Japan he saw a department store selling children's clothing and accessories under the mark "Miki House." He took photographs of some of the clothing and purchased other items of clothing which he brought back to Australia. On his return to Australia, Mr. Beitzel caused enquiries to be made concerning the mark "Miki House" and discovered that P. & M. Harbig (Holdings) Pty. Ltd. was registered as the proprietor of that mark with respect to clothing. He did not take the matter further at that time. In October 1984, the buyers from David Jones visited Japan. On this occasion they were able to place orders with Miki Shoko for the purchase of children's clothing and accessories under the mark "Miki House." The merchandise was due to arrive in Australia about the middie of the year 1985. In November 1984, Mr. Mervyn Brown heard that P. & M. Harbig (Holdings) Pty. Ltd. was closing down most of its business including its import quotas for clothing. Discussions took place between Mr. Mervyn Brown and officers of the Harbig group of companies concerning the purchase by - 10 - the Merv Brown group of companies of the assets of the Harbig group of companies including computers, warehouse and office equipment, and registered trade marks. The various trade marks, some 25 in all, were to be assigned to various of the Merv Brown group of companies including Merv Brown and Update Imports. The total price to be paid for the trade marks was $22,000. The mark "Miki House" was to be transferred to Merv Brown and §2,000 was apportioned to that mark. The purchase price was paid at the end of May 1985. The evidence relating to these negotiations will be considered in more detail later in these reasons. For present purposes it is sufficient to say that by a deed of assignment dated 4 March 1985 P. & M. Harbig (Holdings) Pty. Ltd., in consideration of the sum of $5,000, assigned to Merv Brown all its right title and interest in three trade marks including the mark "Miki House" "without the goodwill of the business concerned in the goods with respect to which the said trade marks are registered". That transfer was registered on 14 August 1985. In the meantime, Merv Brown initiated plans to sell children's clothing in Australia under the mark "Miki House." Initially, Merv Brown intended to sell the clothing through chain stores such as Best & Less, Target, Venture and K-Mart. This clothing was to be in the middle of the price range. Negotiations commenced in December 1984 with representatives from Best & Less. In February 1985, Mr. Gary Brown, the Merchandise Manager of Update Imports, was travelling overseas for the purpose of buying sample garments for Update Imports. While in Singapore, he met a Mr. McDermott, the - ll - Children's Wear Controller of Myer Melbourne Ltd.. Mr. McDermott told Gary Brown that Myer was thinking of setting up specialty children's wear boutiques within Myer's children's wear departments. Gary Brown told Mr. McDermott that Merv Brown was the registered proprietor of the trade mark "Miki House" in relation to clothing in Australia and that "Miki House" garments might be suitable for those boutiques. They arranged to discuss the matter further after they both returned to Melbourne. At the time of this conversation with Mr. McDermott, Gary Brown did not know of the negotiations between Merv Brown and the chain stores and in particular Best & Less. After his return to Australia, Gary Brown and other officers of Merv Brown, including Mr. Mervyn Brown, had a series of discussions relating to the future plans with respect to the sale of "Miki House" merchandise. Gary Brown was pushing for the development of "Miki House" as a national brand to be sold Australia wide through the department stores. The sales were to be up-market and preferably through boutiques within department stores such as Myer, David Jones, Grace Bros. and Fitzgeralds. In addition, the merchandise could be sold through small retailers which, while large in number , accounted for a small part only of merchandise being sold. Under this plan, the "Miki House" merchandise would not be sold through the chain stores. Eventually Gary Brown's ideas prevailed and Merv Brown decided to use the mark "Miki House" to found a national brand for the sale of children's clothing and accessories. - 12- Following this decision being made, the Merv Brown group of companies commenced a period of frenzied activities. The chain stores were notified that Merv Brown would not negotiate further for the sale of "Miki House" brands to them. In April, Gary Brown went to Japan to purchase further "Miki House" merchandise to be used as samples. A marketing agent was engaged for the purpose of negotiating and licensing other persons to manufacture merchandise using the mark "Miki House" under license from Merv Brown. The agency commenced doing that. A decision was made to sell accessories under the mark "Miki House" as well as the clothing. In June, the applications for registration of the mark "Miki House" in relation to those accessories were lodged. Merv Brown began adapting its premises to be able to cope with the new development. Officers of Merv Brown hegan contacting the department stores with respect to selling the brand name and the provision of boutiques for that purpose. The promotion was made by reference to clothing purchased in Japan from Miki Shoko, by garments made up in Taiwan as samples at the request of Merv Brown, from photographs of Miki Shoko garments and from sketches prepared by Julia Fawcett, a design artist employed by Update Imports to work on the "Miki House" project for Merv Brown. It was. planned to manufacture much if not all of the clothing and accessories in Australia. In addition, members of a_ large number of the small retail stores attended and saw the "Miki House" project being developed at the premises of Merv Brown. -13- On 29 May 1985, the first consignment of "Miki House" merchandise purchased by David Jones from Miki Shoko was shipped from Japan. It arrived in Australia on 26 June 1985. Early in June Mr. Beitzel met with officers of Grace Bros. in Sydney and discussed the project. About the middle of June Mr. Beitzel, with the Managing Director of the marketing agent, met with Mr. McDermott and Michelle Coony, an officer of Myer. Discussions took place concerning the whole project andthe provision of boutiques in the Myer stores for the sale of the "Miki House" merchandise. On this basis, Myer and Grace Bros. would have a month before any other department store would be permitted to open similar boutiques. The whole of the discussions were based on the mark "Miki House" with respect to children's clothing and accessories. Merv Brown was claiming it was registered as the proprietor in Australia of that trade mark. Discussions took place with other department stores including Fitzgeralds in Hobart and Launceston. On 26 July 1985, Mr. Beitzel and Julia Fawcett met with officers of David Jones. The events that took place on that day are those set out in the report in 10 F.c.R. 459. The whole project was being planned to commence the sales at Myer and Grace Bros. early in the year 1986. - 14 - On 20 August 1985, David Jones commenced selling the Miki Shoko merchandise under the mark "Miki House." On 10 September 1985, the Children's Vogue was published in Australia. It contained a two page advertisement for "Miki House" goods. It depicted a mumber of photographs of children in "Miki House" clothing. It emphasised the mark "Miki House." It contained the following text:- "Exclusive to David Jones. Miki House, Japan's leading designer for children. Fashions & fashion accessories for lucky boys and girls from 1-6. Available at Elizabeth St., Sydney & Bourke St. Melbourne only. There's no other store like DAVID JONES." Thereafter, the events occurred as set out in the earlier report. For the purposes of deciding these proceedings, the crucial date is 20 August 1985. For Merv Brown to succeed in its claim based upon the Trade Practices Act, it must establish that on that date it had acquired in Australia a reputation or goodwill in the name "Miki House" with respect to children's clothing. If it had 50 acquired a reputation or goodwill, it seems to be accepted that David Jones, in selling children's clothing under the name "Miki House", is engaging in conduct in contravention of the Trade _ Practices Act. Likewise, 1f David Jones and Miki Shoko establish that they or either of them had acquired in Australia a reputation or goodwill in the name "Miki House" with respect to children's clothing, then Merv Brown is engaging in conduct in contravention of the Trade Practices Act. For present - 15 - purposes, I put to one side questions relating to the claims for passing off and for infringement of trade mark. For a discussion of the essential difference between these causes of action, I refer to what I said in McWilliam's Wines _ Pty. Ltd. v. M ld's System ustralia Pty. Ltd. (1980) 49 F.L.R. 455 at pp.467-474. From a consideration of all the evidence before the Court, I find that by 20 August 1985, Merv Brown had acquired in Australia a reputation or goodwill inthe name "Miki House" with respect to children's clothing. There had been no long user of that name in Australia. There had been no sales of clothing in Australia by reference to or in respect of that name. Since December 1984, Merv Brown had been negotiating in Australia with retailers for the proposed supply of children's clothing by reference to the name "Miki House." It had proceeded with the preparation and display to retailers and sub-manufacturers of designs, sketches and display devices known as storyboards for the purpose of introducing, distributing and then selling to the public by retail children's clothing with respect to the mark "Miki House." It had proceeded with the rearrangement of its manufacturing operations and the redesign of its showroom premises to enable the promotion and sale to retailers of clothing with respect to the mark "Miki House." These changes were seen by sub-manufacturers and by many smaller retailers of children's clothing. It had obtained from Taiwan samples of the proposed clothing for display and promotional purposes. It had arranged for the supply of ~ 16 - locally manufactured garments for this purpose but none of these had been supplied by 20 August 1985. It had designed the form of the name "Miki House" to be used with respect to the clothing and this had been shown to sub-manufacturers and retailers. Its licensing agent was promoting the proposal among sub-manufacturers for the purpose of licensing them to manufacture different types of garments for supply to retailers. It had become registered as proprietor of the trade mark "Miki House" and was telling sub-manufacturers and retailers that it was the owner of the mark "Miki House." It had applied to register the trade mark "Miki House" with respect to other types of articles which were to be supplied to retailers in connexion with the sale of clothing and its licensing agent was using that trade mark in connexion with possible licensing arrangements for the manufacture of those articles under the mark "Miki House." Reference has been made to the reputation or goodwill in Australia. For the purposes of these proceedings, I am of the opinion that Australia is the relevant geographical area. Reputation or goodwill is divisible and to arise it must be with respect to a trade relation with persons within the relevant geographical area. Thus, Miki Shoko appears to have a reputation or goodwill in Japan in the name "Miki House" with respect to clothing. That reputation or goodwill does not prevent another person acquiring a reputation or goodwill in Australia in the name "Miki House" with respect to clothing. This is made clear by a reference to passing off actions and in this respect, the - 17 - similarity with claims based upon s.52 of the Trade Practices Act; see Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. (1982) 42 A.L.R. 177 per Franki J. at pp.187-3 and Deane and Fitzgerald JJ. at p.202. See also Alain Bernardin et Compagnie v. Pavilion Properties Limited [19671] R.P.C. 581 ("the Crazy Horse Case") per Pennycuick J. at p.584 and The Athletes Foot Marketing Associates Inc. v. Cobra Sports Ltd. £1980] R.P.C. 343 per Walton J. at p.357. The fact that some persons in Australia know of the reputation or goodwill of the name "Miki House" with respect to Miki Shoko does not, of itself, prevent Merv Brown from acquiring its reputation or goodwill in Australia with respect to that name. The essential feature is the existence 1n Australia of a trade relation with respect to articles and that name. In the present case, a large number of affidavits were relied upon by Miki Shoko and David Jones where the deponents, mainly of Japanese nationality, stated they knew of the mark "Miki House" and that Miki Shoko sold garments and articles under that mark. A number had bought garments so labelled and had brought them to Australia. Some had seen advertisements in Japanese magazines circulating in Australia for "Miki House" brand clothing. None had purchased in Australia clothing under the mark "Miki House." Likewise, a number of persons employed by retailers in Australia knew of the mark "Miki House" used in Japan by Miki Shoko. None of these facts, however, prevented Merv Brown from acquiring a reputation or goodwill in Australia in the name "Miki House" - 18 - with respect to clothing; see Anheuser-Busch Inc. Vv. Budejovicky Budvar (1984) 4 I.P.R. 260 per Oliver L.J. at pp.279-81. At p.288, Dillon L.J. said:- "To this end, the reputation in this country, however widespread, of the plaintiffs' 'Budweiser' as the name of a very popular American beer in the American market does not help the plaintiffs. That merely shows a recognition in this country of the Plaintiffs' goodwill in America; it does not show a goodwill in this country attached to a business in this country." The Japanese magazines available in Australia in which "Miki House" articles were advertised did not contemplate sales or purchases in Australia of "Miki House" articles. The negotiations between Miki Shoko and David Jones to some extent illustrate a basis on which both Miki Shoko and David Jones or either could found the establishment of a reputation or goodwill in Australia in the mark "Miki House" with respect to clothing. Those negotiations were limited to one retailer in Australia. By 25 July 1985, Miki Shoko and David Jones knew of the activities of Merv Brown in Australia with respect to the mark "Miki House" in relation to goods. They knew that Merv Brown was dealing with other retailers and with sub-manufacturers in this regard. Neither took any overt action to counter those activities by Merv Brown. It wasn't until 20 August 1985 that the conflict became apparent. By then, in my opinion, Merv Brown had acquired the necessary reputation or goodwill. The fact that no sales had taken place does not prevent the reputation or goodwill being acquired; see Volt Australia Ltd. v. Directories (Aust.) Pty. Ltd. (1985) 5 I.P.R. 140. On these findings, I am satisfied that the offering for sale and sale by David Jones of clothing under the mark "Miki House" on 20 August 1985 constituted conduct that was misleading or deceptive or likely to mislead or deceive within 5.52 of the Trade Practices Act by David Jones and Miki Shoko. That conduct, likewise, constituted a breach of s.53 of that Act. The advertisement in Children's Vogue likewise contravened s.52 and 5.53. That conduct was likely to mislead or deceive retailers and manufacturers of children's clothing into believing that the goods being advertised and offered for sale under the name "Miki House" had originated from Merv Brown. This was so particularly with respect to officers of Myers and Grace Bros. who believed that those retailers were to be given one month's exclusive use of selling clothing under that name. On the same findings, it is apparent that Merv Brown has established its claim based upon the tort of passing off. The essential elements of passing off are stated in Vennootschap v. J. Townend & Sons (Hull) Ltd. £19793 A.C. 731 per Lord Diplock at p.742. See also what I said in the Biq Mac Case, above, at p.468. It follows from the findings made that Miki Shoko and David Jones have not established their claim against Merv Brown insofar as it is based on the Trade Practices Act. Counsel for Miki Shoko and David Jones contended that his clients had established a reputation or goodwill in Australia - 20 - in the mark "Miki House" with respect to clothing before the assignment of the mark to Merv Brown on 4 March 1985. It was contended that the reputation or goodwill arose from the knowledge of persons in Australia of the mark "Miki House" with respect to clothing manufactured and sold by Miki Shoko in Japan. For reasons given earlier, those facts are not sufficient to establish the acquisition by Miki Shoko or David Jones of the required reputation or goodwill. Likewise with respect to the magazines containing advertisements for "Miki House" clothing manufactured or sold by Miki Shoko. Accordingly, their claim based on the Trade Practices Act fails. There remains to be considered the competing claims arising in connexion with the Trade Marks Act. In some respects this is the most difficult aspect of the applications. The claims come within the accrued jurisdiction of this Court and the temptation to refrain from hearing and determining these claims is strong. From what has been said already, injunctions will be made against Miki Shoko and David Jones. Those injunctions are made under' the Trade Practices Act. In those circumstances, no further injunctive relief need be given under either the passing off claim or the Trade Marks claim. No submissions have been made on the question of other relief and I am not sure whether relief under the Trade Marks Act would be more extensive than under the Trade Practices Act. I am conscious of what was said by Deane and Fitzgerald JJ. in the Taco Bell Case at pp.205-6:- - 21 - "As we followed the argument, 1t was not suggested on behalf of the Bondi company that it is entitled to relevantly different relief for alleged passing-off from that available to it in respect of the contravention of s 52 of the Act which attracted the jurisdiction of the Federal Court. It is, no doubt, ordinarily desirable that a trial court should make all findings appropriate to the determination of each claim where a number of causes of action are properly joined. It is also plainly desirable that if it 1s proposed to bring proceedings both for contravention of s 52 of the Act and for passing-off in respect of substantially the same conduct, both claims shall be pursued in the Federal Court which alone has jurisdiction to deal with the claim for contravention of 5s 52. on the other hand, we consider that the Federal Court should not, as a matter of general discretion, proceed to decide additional claims where it is pointless so to do. There are plainly many cases where an associated claim for passing-off provides no basis for wider or more effective relief than the primary claim for contravention of s 52 and where, if the primary claim fails, the associated Claim will plainly also fail. In such cases, the court should not be troubled by the associated clain. On the other hand, there may well be cases in which there are legitimate reasons for pursuing a claim for passing-off in addition toa claim for contravention of s 52. It is, for example, conceivable that a claimant might be entitled to relief for passing-off, even though his primary claim for contravention of s 52 of the Act faiis. Alternatively, a wider form of injunction or more extensive damages might, arguably, follow from success in the associated claim for passing-off. In such circumstances, however, the applicant should, either in his pleading or in the presentation of his case, make clear the reason for the joinder of the associated claim or claims. Such a course would both highlight whether there is any purpose in such joinder and permit the identification of any additional issues which arise beyond the claim which primarily attracts the jurisdiction of the Federal Court. A side benefit of that course would be that it would better enable it to be seen whether the joinder of the associated claim 1s within jurisdiction and otherwise appropriate." - 22 - What has been raised 1n the present case is the validity of the registration of the trade mark "Miki House" in the name of Merv Brown. Merv Brown alleges that the trade mark 1s and at all relevant times has been valid and subsisting. A claim is based on an infringement of that mark by Miki Shoko and David Jones. By their defence, Miki Shoko and David Jones deny any infringement and in s0 doing allege that the registration is invalid. They allege that the use of the trade mark would be likely to deceive or cause confusion. In their cross claim, as first amended, they sought orders as follows:- "IL. An order that the trade mark be removed from the Register of Trade Marks. 2. An order that the Register be rectified by the deletion of the name of (Merv Brown) and the insertion of the name of (Miki Shoko) as registered proprietor of the mark." Miki Shoko and David Jones were not able to proceed with the claim for order 1 since the Registrar of Trade Marks was not a party to the proceeding. They did not pursue their claim for order 2. In the result, the only order sought in their cross claim was as follows:- "A Declaration that the form of assignment dated 4th March 1985 between P & M Harbig (Holdings) Pty. Ltd. and (Merv Brown) did not validly assign to (Merv Brown) trade mark no. B344,637 in Class 25 pursuant to the Trade Marks Act 1955." - 23 - In the New South Wales proceedings, Miki Shoko and David Jones seek a number of orders based upon the Trade Marks Act, but, in the result, the only matters proceeded with can be dealt with in connexion with the claim for the declaration in the cross claim. The Court was informed from the bar table that proceedings are pending before the Registrar of Trade Marks relating to the "Miki House" mark separate and distinct from the pending application by Miki Shoko for registration of that mark. Any findings of fact or expressions of opinion made in the present case could have an effect on the Registrar in the exercise of his powers under the Trade Marks Act with respect to proceedings before him involving the mark "Miki House." For instance, before the application by Miki Shoko for registration could be granted, the existing registration would need to be expunged, and submissions were made on this issue. In their cross claim, Miki Shoko and David Jones repeat the allegation that the use of the trade mark "Miki House" by Merv Brown is and was at all material times likely to deceive or cause confusion in that at all material times Miki Shoko had a reputation in Australia in the name "Miki House" in respect of clothing and accessories and that as a result the trade mark was not validly registered in the name of Merv Brown. They allege further that by the deed of assignment, the trade mark was assigned to Merv Brown without goodwill and that the trade mark was not at any time in use in good faith in Australia by Merv Brown or the Harbig companies. By its defence to the cross claim, Merv Brown denies the allegations made and says further that the trade mark "Miki House" denoted to the public in Australia a connexion in the course of trade between articles of clothing and Merv Brown to the exclusion of all other persons; cf. sub-section 82(4) of the Trade Marks Act. In all the circumstances, but with some reluctance, I propose to deal with the matters raised but in 50 doing I want to make it clear that the facts found apply only to these proceedings and any expressions of opinion on law should not be used to restrict the functions of the Registrar. Merv Brown is registered as the proprietor of the mark "Miki House" with respect to clothing. Under s.59 of the Trade Marks Act, the original registration and the assignments thereof are deemed to be valid unless the contrary is shown. Under 5.62, a registered trade mark is infringed if a mark substantially identical with or deceptively similar to that trade mark is used in the course of trade without permission. Here, Miki Shoko and David Jones are using a mark identical with that registered in the mame of Merv Brown as' proprietor. Thus, the issue raised here is whether the mark was invalidly registered and 1f not, whether the assignment to Merv Brown is invalid. - 25 - I turn first to consider the validity of the registration of the mark. This can be raised in infringement proceedings without counter claiming for rectification under s.22 of the Trade Marks Act; see HTX International Pty. Ltd v. Semco Pty. Ltd. (1983) 49 A.L.R. 636 per Fox J. at pp.640-641. For present purposes, the question of validity of the registration of the mark is to be determined as at the date of the application for registration by Harbig, namely, 2 April 1980. That is the priority date; generally see HTX International at p.643. It is difficult to see any foundation for the contention by counsel for Miki Shoko and David Jones that the mark was invalidly registered by reason of the first issue. The making of the application for registration is evidence of an intention to use the mark. In addition, in the present case Mr. Harbig has given evidence, which I accept, that he intended to use the mark; generally see Aston v. Harlee Manufacturing Company (1960) 103 C.L.R. 391. The fact that a similar mark is registered and used in another country as the mark of someone else in respect of the same goods does not of itself affect the validity of the registration in Australia; per Kitto J. in The Kendall Company v. Mulsyn Paint and Chemicals (1963) 109 C.L.R. 300 at p.304. Reference is made also to Thunderbird Products Corporation v. Thunderbird Marine Products Pty. Ltd. (1974) 131 C.L.R. 592 and The Seven Up Company v. 0.T. Ltd. (1947) 75 C.L.R. 203 per Latham C.J. at p.215. - 26 - On the evidence I am satisfied that when the Harbig company made application for registration of the trade mark, those controlling the company had the intention to use the mark with respect to trade in clothing. It follows that the registration was not invalid on the first issue. Counsel contended further that the registration was invalid by reason of s.28(a) of the Trade Marks Act. That Paragraph reads:- "28. <A mark - (a) the use of which would be likely to deceive or cause confusion; Shall not be registered as a trade mark." It is clear that prior to the priority date, Miki Shoko had not traded in Australia with respect to the name "Miki House." The mark was registered as a trade mark in Japan but that, of itself, is not likely to deceive or cause confusion in Australia. Some people in Australia knew of the mark in Japan, some had purchased clothing in Japan bearing that mark and had brought the clothing to Australia. Some magazines containing advertisements for "Miki House" clothing had circulated in Australia. These facts have been mentioned earlier in these reasons. These were all isolated events and limited to a small class of persons. There was no suggestion that the clothing was available in Australia. There was - 27 - certainly no real tangible danger of deception. Generally see Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Gtd. (1954) 91 C.L.R. 592; the Seven Up Case, above, per Williams J. at p.211. See also Moorgate Tobacco Co. Ltd. v. Philip Morris Ltd. (1984) 156 C.L.R. 414 per Deane J. at pp.433-4. In my opinion, Miki Shoko and David Jones have not established a defence based upon s.28 of the Trade Marks Act. I turn now to consider whether the assignment of the trade mark to Merv Brown was sufficient to make Merv Brown the owner of the mark. This depends upon the application of 5.82 of the Trade Marks Act. That section is set out in full:- "82. (1) Subject to this section, a registered trade mark may be assigned and transmitted with oar without the goodwill of the business concerned in the goods or services in respect of which the trade Mark is registered or of some of those goods or services. {2) Subject to the next 3 succeeding sub-sections, an assignment of a registered trade mark without goodwill, whether before or after the commencement of this Act, is invalid if - (a) the trade mark was not at any time in use in good faith in Australia by the assignor or his predecessor in title; or (b) a substantially identical or deceptively Similar trade mark continues to be used by the assignor, after the assignment, in relation to other goods or services, where there exists a connexion in the course of trade between those goods or services and the assignor and where those goods or services are of the same description as those in respect of which the trade mark has been assigned, or of such a description that the public is likely to be deceived by the use of the trade mark by the assignor and assignee upon their respective goods or services. - 28 - (3) Paragraph (a) of the last preceding sub-section does not apply where - (a) the trade mark was registered with the intention that 1t should be assigned to a body corporate to be formed and the trade mark has been so assigned; or (b) the trade mark was registered with the intention that a person should be permitted to use it as a registered user and a registered user has been registered in respect of the trade mark within 6 months after the registration of the trade mark and has used the trade mark within that period. (4) An assignment of a trade mark is not invalid if, at the date of the institution of the proceedings in which the validity of the assignment is called in question, the trade mark has come to denote to the public a connexion in the course of trade between the goods or services and the assignee to the exclusion of all other persons, or, if the registration is limited to a territory, to the the exclusion of all other persons within that territory. (5S) An assignment of a trade mark shall not be held to be invalid except in proceedings instituted within 3 years after the registration of the assignment. (6) If goods bearing a registered trade mark are purchased or acquired by a person, the sale of or other dealing in those goods by that person, or by a person claiming under or through him, is not an infringement of the trade mark by reason only of the trade mark having been assigned by the registered proprietor to some other person after the purchase or acquisition of those goods. (7) All rights subsisting in a trade mark (being a registered trade mark), whether under this Act or otherwise, shall be deemed to be assigned upon the registration of the assignment of the trade mark." It will be recalled that the trade mark "Miki House" was registered for a period of 7 years from 2 April 1980 and that P. & M. Harbig & Co. Pty. Ltd. was entered in the Register as the proprietor of that mark and that by deed - 29 - of assignment dated 19 August 1980 that mark was transferred with goodwill to P. & M. Harbig (Holdings) Pty. Ltd.. That transfer was registered on 11 August 1982. By deed of assignment dated 4 March 1985, the mark was transferred without goodwill to Merv Brown and that' transfer was registered on 14 August 1985. On those facts, counsel for Miki Shoko and David Jones submitted that sub-section 982(2) applied and thus the assignment to Merv Brown was invalid with the result that although Merv Brown was registered as the proprietor of the mark, he was not the owner of the mark and that the Register could be rectified by orders made in appropriate proceedings. For the purposes of this case, he submitted that this Court should make orders consistent with the fact that Merv Brown was not the owner. Thus the Court should refuse to make the declaration sought by Merv Brown that the action of Miki Shoko and David Jones constitutes an infringement of Merv Brown's rights in and to the registered trade mark and should make the declaration sought in the cross claim. Reference was made earlier in these reasons to the fact that the determination of this issue depended upon disputed questions of fact and I now turn to the relevant evidence to determine those questions of fact. This depends essentially on evidence given by Mr. Mervyn Brown, Mr. Harbig and Mr. Ward, a former employee of one of the Harbig group of companies. I accept the witnesses Mr. Mervyn Brown, Mr. Harbig and Mr. Ward as witnesses of truth giving evidence to the best of their recollection. In many respects, matters of - 30 - detail relating to their businesses was done by other persons. Mr. Harbig and Mr. Mervyn Brown tended to be concerned with the broad principle leaving others to organise the detail. Mr. Harbig and Mr. Mervyn Brown were able to control their respective groups of companies and tended to ignore the detail of different companies being different legal persons. The relevant facts are that Mr. Mervyn Brown, an about November 1984, discovered that P. & M. Harbig (Holdings) Pty. Ltd. was closing down its clothing business and was selling its assets, including its import quotas, with respect to various types of clothing. He knew Mr. Harbig and Mr. Ward, then the general manager of the Harbig company. General agreement was reached during discussions between Mr. Mervyn Brown and Mr. Harbig. One of the Merv Brown group of companies bought some of the Harbig import quotas. Mr. Mervyn Brown agreed to take over from Mr. Harbig some of the staff of the Harbig company, and to purchase his computer and computer software, his customer lists, his overseas supplies lists, most of his labels, a lot of his warehouse and office equipment and most of his registered trade marks, some 25 in all, including the mark "Miki House." These were all paid for by the Merv Brown group of companies. Mr. Ward, who subsequently was employed by one of the Merv Brown group of companies, attended to the detail of the arrangements and agreements between Mr. Harbig and Mr. Mervyn Brown. During subsequent discussions and negotiations with respect to trade marks, agreement was reached. - 31 - The general arrangements were agreed to by December 1984. This is consistent with the action taken by Mr. Mervyn Brown in discussing the sales to a chain store, More or Less, of "Miki House" clothing. During January 1985, detailed discussions were had concerning the transfer of the trade marks. Correspondence occurred relating to this. The total price for all the marks was $22,000. The marks were to he transferred to and among the Merv' Brown companies. Three, including "Miki House", were to be transferred to Merv Brown. The sum of $2,000 was allocated for the transfer of the "Miki House" mark. The purchase price totalling $22,000 was to he paid on 28 June 1985. This was confirmed by letter from Merv Brown dated 15 February 1985. In fact, that money was paid on 29 May 1985 and included a cheque in the sum of 6§5,000 from Merv Brown being the total price for the three trade marks transferred to Merv Brown, including the "Miki House" Mark. Mr. Ward, on behalf of Mr. Harbig, arranged for the necessary deeds of assignment for the trade marks to he prepared. They were prepared by E.J. Wellington, Patent Attorneys for the Harbig group of companies. The relevant deed of assignment 1s dated 4 March 1985 and is between P. & M. Harbig (Holdings) Pty. Ltd. as Assignor and Merv Brown as Assignee. The recitals refer to the trade marks including "Miki House" and that the Assignor "has agreed with the Assignee for the sale, assignment and transfer of the said trade marks to the said Assignee without goodwill of the business concerned in the goods with respect to which the - 32 - said trade marks are registered." The deed then provides "that in pursuance of the said agreement, and in consideration of the sum of five thousand dollars ($5000.00) paid by the said Assignee to the said Assignor, the receipt of which is hereby acknowledged, the Assignor hereby sell, assign and transfer unto the Assignee all right, title and interest in the said trade marks without the goodwill of the business concerned in the goods with respect to which the said trade marks are registered." That assignment was registered on 14 August 1985. At the time the seal of Merv Brown was affixed to the deed, Mr. Mervyn Brown in whose presence the seal was affixed, did not realise or understand the implications arising from the words "without goodwill" contained in the deed. In September 1985, during the hearing of the motions for interlocutory relief herein, the significance of those words in the deed of 4 March 1985 became apparent. A further deed dated 2 October 1985 was entered into between P. & M. Harbig (Holdings) Pty. Ltd. and Merv Brown correcting what was said to be an error in the deed of 4 March 1985. The deed of 2 October 1985 recited the deed of 4 March 1985, and included the following recitals:- "B. The Assignment of the trade marks was incorrectly expressed to be without the goodwill of the business concerned in the goods with respect of which the trade marks are registered. c. The parties now wish to correct the Assignment aun the manner hereinafter set forth." - 33 - The deed then continues: - "NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS & CONDITIONS HEREINAFTER CONTAINED, THE PARTIES HEREBY AGREE TO AMEND THE ASSIGNMENT AS FOLLOWS: 1. The words 'without the goodwill' whereever appearing in the Assignment are hereby amended by the deletion of the word 'without' and by the substitution therefor of the word 'with' so that the words 'without the goodwill' shall now read 'with the goodwill'. 2. The parties hereby agree, declare & confirm that the trade marks were assigned under the Assignment together with the goodwill of the business concerned in the goods in respect of which the trade marks are registered and which relates to the trade marks. 3. The parties hereby agree, declare and confirm that it was at all material times the intention of the parties that Merv Brown should obtain all rights to the trade marks including any reputation which may have been acquired by reason of any prior usage of and the goodwill attached thereto. 4. The parties hereby agree, declare and confirm that at the time the Assignment was executed, they each did not understand what was meant by the use of the words 'without the goodwill' and that the goodwill in the trade marks was in fact so assigned to Merv Brown at the time of the Assignment." Sub-section 82(1) of the Trade Marks Act 1s concerned with the goodwill of the business relating to the goods in respect of which the mark is registered, rather than the goodwill attaching to the mark. On all the evidence, I am satisfied that the goodwill of the clothing business conducted by the Harbig group of companies passed to the Merv Brown group of companies as a result of the agreements - 34 - referred to above. The fact that goodwill attached to the property development part of the business of the Harbig companies does not prevent the goodwill relating to the whole of the clothing business being assigned, cf. Re the trade mark of John Sinclair Ltd. (1932) 49 R.P.C. 123 and Re the trade mark of George Dobie & Son Ltd. (1935) 52 R.P.C. 333 which dealt with the purported assignment of part of the goodwill of a business concerned in the goods in respect of which the trade mark is registered. In John Sinclair, Maugham J. makes it clear that where more than one business is being conducted by an assignor of a trade mark, there can be an assignment of the goodwill of that part of the business concerned in the goods in respect of which the trade mark is registered. In the present case the Harbig group of companies disposed of the whole of the clothing business being the business in respect of which the mark "Miki House" was registered. Altogether, a total amount of some $1,000,000 was paid by the Merv Brown group of companies to the Harbig group of companies. As part of that overall agreement, $2,000 was paid by Merv Brown to P. & M. Harbig (Holdings) Pty. Ltd. for the mark "Miki House." On this finding, s.82 has no application. Accordingly, there is no need to consider other submissions made that there had been relevant "use" by Harbig 50 as to take the mark outside the operation of paragraph 82(2)(a) and that in any event, on the facts found and on what 9 occurred between 20 August 1985 and 18 December 1985, being the date of the cross claim which raised this defence, the mark "Miki - 35 - House" in Australia was distinctive of Merv Brown. Any expressions of opinion would be obiter dictum. The submissions raise difficult questions of law and the application of that law to the facts to be found. Further, any expressions of opinion could inhibit the exercise of power with respect to pending proceedings before other tribunals. In all the circumstances, I refuse to make the declaration sought by Miki Shoko and David Jones in their Cross claim but at the same time I decline to make the declaration sought by Merv Brown. In the result, in the Victorian proceedings, I grant permanent injunctions in the terms of paragraphs 4 and 6 of the application. I dismiss the cross claim. Miki Shoko and David Jones to pay the costs including reserved costs of Merv Brown. Otherwise, the proceedings are adjourned sine die. The New South Wales proceedings are dismissed with costs including reserved costs. Teme a ie oe ne I certify that this and the thirhy ter (34) preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice RM Nr ihrup " Sanu P Lao. Associate Dated: 2.) Ma 1187 a a ' t : ! | ATTACHMENT A Title of Action Dates of Hearing Judgment Delivered Counsel for Applicant Solicitors for Applicant Counsel for Respondents Solicitors for Respondents: MERV BROWN PTY. LTD. v. DAVID JONES (AUSTRALIA) PTY. LTD. and MIKI _SHOKO CO. LTD. V. No. G 221 of 1985 MIKI SHOKO CO. LTD. and DAVID JONES (AUSTRALIA) PTY. LTD. v. MERV BROWN PTY. LTD. N. No. G 276 of 1985 9/2/87 to 13/2/87 16/2/87 to 18/2/87 22 May 1987 A. Archibald Q.C. and G. Clarke Messrs. Freehill, Hollangdale and Page J.M. Ireland Messrs. Gadens Signed ...Sharow . £ .Uaet Date 22 May 1987