Advanced Hobbies International Pty Ltd v Dawn Developments Pty Ltd [1995] FCA 258

CATCHWORDS INJUNCTIONS - urgent application for interlocutory injunction restraining respondent from using trade mark in respect of which the applicant was registered as proprietor - dispute as to ownership of the trade mark - balance of convenience - no point of principle. Trade Marks Act 1955 ADVANCED HOBBIES INTERNATIONAL PTY LTD v DAWN DEVELOPMENTS PTY LTD No NG 214 OF 1995 Lindgren J Sydney 7 April 1995

IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No NG 214 of 1995 GENERAL DIVISION ) BETWEEN: ADVANCED HOBBIES INTERNATIONAL PTY LIMITED (ACN 004 934 258) Applicant AND: DAWN DEVELOPMENTS PTY LIMITED (ACN 000 533 577) Respondent CORAM: Lindgren J PLACE: Sydney DATE: 7 April 1995

MINUTE OF ORDERS THE COURT: 1. Orders that the application for interlocutory relief be dismissed. 2. Notes the respondent's undertaking to the Court given through its counsel and set out on page five of the Reasons for Judgment. 3. Orders that the costs of the application for interlocutory relief be the respondent's costs of the proceedings. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No NG 214 of 1995 GENERAL DIVISION ) BETWEEN: ADVANCED HOBBIES INTERNATIONAL PTY LIMITED (ACN 004 934 258) Applicant AND: DAWN DEVELOPMENTS PTY LIMITED (ACN 000 533 577) Respondent CORAM: Lindgren J PLACE: Sydney DATE: 7 April 1995

REASONS FOR JUDGMENT The application in these proceedings was filed on 5 April 1995 and was made returnable on 6 April, that is to say yesterday at 2.15 pm before me. The evidence was read yesterday afternoon, concluding at about 4.45 pm. I have heard submissions this morning, beginning at 8.30 am and concluding at 9.15 am. The reason for the urgency is that the applicant seeks an interlocutory injunction directed to restraining the respondent from exhibiting product bearing the trade mark "Kyosho" at a trade fair which was to begin at 9.00 am this morning and so has apparently just commenced. As I indicated yesterday, time would not permit me to give reasons in anything but the most sketchy form. However, I have formed a clear view as to what should be the result of this application for interlocutory relief. The proceedings relate to a registered trade mark "KYOSHO" ("the Trade Mark"). It is registered No A431624. The applicant ("Advanced Int'l") is the registered proprietor of the Trade Mark. John Suduk and Susan Elizabeth Suduk are the directors of Advanced Int'l. The respondent ("Dawn") is a company of which Carl James Melvey and is the managing director. Its other directors are his wife Jeanette Dawn Melvey and their son Peter James Melvey. The Trade Mark is registered in Part A of the Register in respect of, inter alia, "games and playthings". Kyosho Corporation ("Kyosho") of Japan is, and has at all material times been, a manufacturer and distributor of remote control mobile model toys. Kyosho entered into a distributorship agreement with J R Remote Control Australia Pty Ltd ("JR") dated 18 August 1986. That company is now also associated with Mr and Mrs Suduk. By the distributorship agreement, Kyosho and JR agreed that the distributorship on the terms of the distributorship agreement had come into effect and been operative from 1 October 1983. By the agreement, Kyosho appointed JR as its sole distributor in Australia, and consented to JR's registering and using the Trade Mark. It also consented to JR's using the Trade Mark "only with respect to the sales, distribution, advertising and promotion of Kyosho's model kits, accessories and related products and spare parts" as particularised in a schedule under the Trade Mark. There was a prohibition on assignment without Kyosho's consent. By deed of assignment dated 15 October 1990 JR assigned the Trade Mark to Advanced Hobbies (Aust) Pty Ltd ("Advanced Aust") which was another company associated with Mr and Mrs Suduk. Subsequently, on 1 January 1992, Advanced Aust assigned the Trade Mark to Advanced Int'l. There are issues as to whether Kyosho consented to the assignments or is estopped from denying that it did so. Kyosho claims to have terminated the distributorship agreement by notice in writing to Advanced Int'l dated 28 December 1993 and effective 15 February 1994. The distributorship agreement dated 18 August 1986 between Kyosho and J R contained, inter alia, these provisions: "9.1Nothing herein contained shall be construed as transferring to J R the ownership of any patents, utility models, trademarks, designs or copyright in COMMODITY. All such rights are to be expressly reserved in true and lawful owner thereof, namely KYOSHO. 9.4J R shall not register any trade name or trademark owned by KYOSHO without obtaining prior written consent of KYOSHO. It is hereby agreed that J R applied for the registration of the TRADE MARK in Australia on 12th day August of 1985, being trade mark application no. 431624, with the express consent of KYOSHO." Prior to Advanced Int'l's filing of its application in these proceedings, Kyosho had filed two earlier applications in this Court which are relevant to the present proceedings. On 9 June 1994 Kyosho filed an application No NG 335 of 1994 against Advanced Int'l seeking a declaration that Advanced Int'l holds the Trade Mark on trust for Kyosho and consequential relief, including an order that Advanced Int'l transfer the Trade Mark to Kyosho. In those proceedings Advanced Int'l has cross-claimed for damages for breach by Kyosho of various contracts between the parties. The other proceedings are proceedings No NG 859 of 1994 between Kyosho as applicant and Mr and Mrs Suduk and a company called "Kyosho Pty Limited" of which they were the directors, as respondents. Mr and Mrs Suduk had caused that company to be incorporated on 18 March 1993, and by the proceedings Kyosho sought an order restraining all three respondents from, inter alia, selling or offering to sell models or hobby products including remote control toys or models under or by reference to the name "Kyosho", and an order that the respondents cause a change in the name of the company, Kyosho Pty Limited, to a name not including the word "Kyosho" or any other word substantially identical with or deceptively similar to that word. In the event these last proceedings were settled on 15 December 1994. As part of the settlement, the Court noted the parties' agreement that Kyosho would pay to Kyosho Pty Limited $500.00 to cover its costs on the change of name and $7,000.00 to all three respondents in full and final settlement of their legal fees. Importantly, by consent, the Court ordered that within 14 days of receipt of those payments, the respondents were to bring about a change of name of Kyosho Pty Limited to a name which did not include the word "Kyosho" or any word substantially identical with or deceptively similar to that name, and further that Mr and Mrs Suduk were not to be involved, either directly or indirectly, with any corporation whose name included the word "Kyosho" or any other word substantially identical with or deceptively similar to that word. As I indicated earlier the proceedings have come before me urgently. Dawn proposes to exhibit at the 31st International Toy & Hobby Fair presented by the Australian Toy Association at the Sydney Convention & Exhibition Centre Darling Harbour, Sydney which commenced today at 9.00 am. Kyosho supports Dawn as its current Australian distributor. Dawn has proffered, without admissions, an undertaking to the Court in the following terms: "The respondent undertakes that it will, by itself, its servants and agents or otherwise, up to and including [a date to be fixed by the Court] keep accurate and complete records of all orders received by, or sales made by, it of any games or playthings supplied or offered for supply by the respondent under or by reference to the name 'KYOSHO'". That undertaking, which was proffered at the commencement of the hearing before me on 6 April, was rejected by Advanced Int'l. Notwithstanding the urgency with which the application for interlocutory relief had to be heard and determined, the parties' submissions ranged over a wide area. Advanced Int'l relies heavily, of course, upon its status as registered proprietor of the Trade Mark. Advanced Int'l referred me not only to the fact of its registered proprietorship of the Trade Mark and to ss 59, 60 and 61 of the Trade Marks Act 1955 ("the Act") but to evidence directed to showing continuity of its use of the Trade Mark. Dawn submitted that the rights conferred by registration in favour of Advanced Int'l by sub-s 58 (1) of the Act were conditional upon the validity of registration of the Trade Mark and submitted that on various bases Advanced Int'l was not entitled to enforce the rights conferred by registration. It would be possible to spend considerable time analysing the evidence relied on by Dawn for the proposition that Advanced Int'l is not now entitled to enforce the rights which, prima facie, attach to its registered proprietorship of the Trade Mark. The case made by Dawn in this respect seems, on the existing evidence and submissions, to be a strong one. But answers to it have been made on behalf of Advanced Int'l, and I think that Advanced Int'l has established that there is a serious question to be tried as to whether, on the final hearing it would obtain the injunctive relief sought. However, on the question of balance of convenience I am of the view that the case strongly favours the respondent. The applicant's undertaking as to damages is of very little value indeed. The applicant has a paid up capital of $50.00; it failed to lodge annual returns for 1993 and 1994; it is the subject of deregistration proceedings by the Australian Securities Commission which were commenced on 1 February 1995; it has a shareholders' equity of only $354.00 and the principals of the applicant have been associated as directors and/or shareholders and/or secretaries with some 18 companies of which to date 8 have been deregistered. I also take into account the undertaking proffered to the Court on behalf of Dawn to which I referred earlier. In the circumstances and, without discussing further at this point the question of a serious issue to be tried, I am clearly of the view that the application for interlocutory relief should be refused upon Dawn's undertaking to the Court being formally made and accepted. On the question of costs I have heard brief submissions. Mr Dubler of counsel for the applicant submits that the costs of his client's interlocutory application should be reserved. Mr Nicholas of counsel for the respondent submits that those costs should be the respondent's costs of the proceedings. It seems to me appropriate to regard the application as a discrete one and I think that it would not do justice if the respondent stood to bear, in any circumstances, the applicant's costs of the hearing on the interlocutory application. Accordingly, I order that the costs of the application for interlocutory relief be the respondent's costs of the proceedings. I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren. Associate: Dated: 28 April 1995 Heard: 6, 7 April 1995 Place: Sydney Decision: 7 April 1995 Appearances: Mr R E Dubler of counsel instructed by James Taylor & Co, solicitors, appeared for the applicant. Mr J V Nicholas and Mr R Cobden of counsel instructed by Gilbert & Tobin, solicitors, appeared for the respondent.