AOS IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: eee we NOT FOR GENERAL DISTRIBUTION No. WAG60 of 1987 UPRISING DRAGON LTD First Applicant and GLASS INVESTMENTS B.V. Second Applicant and BENEDICT TRADING AND SHIPPING PTY LTD Fixst Respondent and FINSTON LTD Second Respondent and MICHAEL JACK KAILIS Third Respondent and BENEDICT TRADING AND SHIPPING PTY LTD CROSS CLAIMANT and CRYSTAL GLASS INDUSTRIES LTD First Cross Respondent and CRYSTAL GLASS INTERNATIONAL PTY LTD Second Cross Respondent wee eee es sapere eo te ee ac eocar wee ye eee and UPRISING DRAGON LIMITED Third Cross Respondent and GLASS INVESTMENTS BV Fourth Cross Respondent CORAM: FRENCH J. 30 June 1987 EX TEMPORE REASONS FOR JUDGMENT This is the second motion for interlocutory injunctive relief un these proceedings. On 26 June, I gave judgment on a like motion brought by the applicants against the first and third respondents. In that judgment I set out the background to the proceedings by reference to the pleadings and affidavits then filed. That evidence 1s also relied upon in this motion which is brought by the first respondent, Benedict Trading and Shipping Pty Ltd ("Benedict"). This motion is brought by Benedict in its capacity as a cross claimant. It filed in this court on 26 June 1987 a cross claim in which 1t named, as cross respondents, two companies: Crystal Glass Industries Limited - the first cross respondent ("Crystal Glass") and Crystal Glass International Pty Ltd, the second cross respondent ("Crystal International"). The first and second applicants (UDL and Glass Investments) were named as third and fourth cross respondents respectively. 3. In its cross claim Benedict alleges that 1st is the holder of an exclusive Licence granted to 1t by Finston Ltd, the second respondent, to manufacture, process, package and otherwise use the products the subject of the patent and trade mark in Australia relating to what is commonly known as "Qualage" decorative glass. The cross claim alleges that since 24 December 1986, Crystal Glass and Crystal International have represented to certain distributors of glass products in Australia, O'Brien Glass Industries and Janco Distributors Pty Ltd, that they are exclusive licensees fox the manufacture and distribution of products made under the patent in Australia. It also alleges that in the June 1987 edition of Australian Building News, Crystal Glass and Crystal International advertised their intention to enter the Australian market. It is claimed that Glass Investments and UDL purported, or have threatened, to grant sub-licenses in Australia for the manufacture and distribution of the products. By reason of these matters, the cross respondents have together so it 1s alleged, engaged in conduct in trade and commerce that is misleading or deceptive ox likely to mislead or deceive, contrary to s.52 of the Trade Practices Act. They have, it is said, claimed to have rights to issue sub-licenses or the rights for the manufacture of and distribution of Qualage glass when the exclusive license in Australia is held by Finston and Benedict respectively. syreey em en eee aes oe 4. ft 1s further alleged that the cross respondents have infringed, or threatened to infringe, the patent by licensing, making, using or vending the products in Australia without the authority of Benedict or Finston. A similar allegation 1s made in respect of the use of the associated trademark "Qualage". The relief that is sought against all cross respondents 1s that they be restrained from:- (a) claiming to be exclusive or other licensees of the products; (b) granting licenses in respect of the patent and trade mark; {c) aunfringing patent 530765 by making, using or vending the products in Australia; (d) using the trade mark "Qualage" in respect of the products. By its motion filed on 26 June 1987, Benedict claims interlocutory relief in the following terms:- pone meen ee "1. Pending suit or until further Order the Cross-Respondents be restrained by injunction . from:- (a) claiming to be exclusive or other licensees of the Products (as defined in the Cross Claim); ner ee (b) gxanting licences in respect of the Patent and Trademark; Per (c) infringing Patent 530765 by making, uSing, or vending the Product in Australia; and hope an we ye 5. {d) using the trademark "Qualage" in respect of the Product." In support of the motion, reliance is placed upon affidavit material filed in connection with the applicants' earlier motion. A further affidavit has been filed in support of Benedict's motion, that being a further affidavit of Michael Jack Kailis, a director of Benedict and the third respondent in these proceedings. In the affidavit he says that he has become aware that Crystal Glass and Crystal International are holding themselves out as having the right to market the patent and trade mark as defined in the cross claim. He exhibits to the affidavit a copy of an extract from the June 1987 edition of Australian Building News, which, at page 12, had an article in respect of the intentions of Crystal Glass and Crystal International in Australia. That short article states:- "New Zealand-based company Crystal Glass recently purchased a small glass manufacturing company in Brisbane with a view to entering the Australian market with its unique architectural and decorative glass products. The company purchased currently bends glass for the Australian market, and Crystal will expand this service and introduce its own Qualage decorative glass. Qualage is leadlight glass which comes in stock sheets that can be cut to size - a unique process offering a wide range of applications from domestic to full~scale use in hotels and office blocks. It is available in Colonial, Tudor and Gothic designs." x roo 6. The test for the grant of interlocutory injunctive relief requires the parties seeking the relief to demonstrate that there 1S a serious question to be tried and that the balance of convenience favours the grant. The test is essentially the same where the subject matter of the case is a patent although it has been said that there may be different degrees of emphasis in the application of the relevant tests - Peter Pan Electrics Pty Ltd v Newton Grace Pty Ltd (1985) 70 ALR 731-739. The strength of the applicant's case and the balance of convenience are interdependent as was pointed out by the Full Court in Bullock and Others v The Federated Furnishing Trades Society of Australasia _ and Others (No. 1) (1985) 5 FCR 464 at 472 where Woodward J. said:- "Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises "a serious question to be tried") may still attract interlocutory relief if there 1s a marked balance of convenience in favour of 1t." Insofar as the first head of interlocutory relief is concerned, there 1s no clear evidence that any of the eross-respondents have claimed to be exclusive licensees of the products. It is plain enough, of course, that they claim to be licensees, in one way or another, to either sub-license or to directly manufacture and sell the product. Bergen eer ee ees ap els 7. The question of whether UDL, Crystal Glass and Crystal International, or any of them, could be called exclusive licensees is a controversial one, and I will not again canvass that question, which was considered in the judgment given on 26 June. It is plain enough that all assert, in one way or the other, to be entitled to either sub-license or manufacture the product, although the evidence in that regard in relation to Crystal Glass and Crystal International is considerably less clear than in relation to UDL and Glass Investments. There 1s, no doubt, an arguable question on both sides as to whether any of them have the rights that they assert. There is an arguable question, as I have already pointed out, as to whether Benedict itself has the rights which 1t asserts. In my opinion, however, in the absence of evidence that any of these cross respondents are claiming to be exclusive licensees, which would be a claim directly detrimental to the operations of Benedict in the Australian market, I am not prepared to grant injunctive relief. If such claims should subsequently be made, or evidence of such claims be adduced, then, of course, interlocutory relief of the kind already granted against Benedict would be sympathetically considered. The balance of convenience, in my opinion, does not favour the grant of injunctive relief which would restrain the eo me ee me jee tae moe ey ee wre ee 8. eross respondents, or any of them, from asserting that they are licensees at all. Accepting that there 1s or may be a serious question on the issue of that entitlement, but having regard to the dictum of Woodward J. in the Bullock case, I am not prepared to grant the second limb of the injunctive relief sought under paragraph (a) of the motion. Paragraphs (b), (c) and (d) involve a more dramatic interference with the activities of the cross respondents than does paragraph (a). Each of them, again for the reasons that I have already canvassed in my earlier decision, apears to turn on the question of whether or not Finston's purported termination of its licence to UDL was an effective termination. I have already expressed a provisional view about the likelihood of that termination being a valid one having regard to the evidence on the previous occasion, and there is nothing further before me to cause me to alter my view of the probabilities in that regard. I say that, of course, with the necessary qualification that the court does not have before it the contextual material or, indeed, the benefit of submissions from Finston which might cause it to take a different approach to the question of that purported termination. On the evidence as it stands, I am not satisfied that Benedict has shown a strong enough case in favour of the proposition that Finston has effectively terminated the UDL 9. licence, to justify the disruption that would follow to UDL, to Glass Investments, to Crystal Glass and Crystal International in their current or proposed market activities which would follow from the grant of the interlocutory relief sought under paragraphs For all of those reasons I propose to dismiss the motion for interlocutory relief. I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice French. Associate SDeswoln Date: (49) Sur IAS Counsel: »for the Cross Respondents: Mr A. Metaxas instructed by Messrs. Phillips Fox -for the Cross Claimants: Mr K.A. Dundo instructed by Messrs. Robinson Cox Date of Hearing: 30 June 1987 Date of Judgment: 30 June 1987