FEDERAL COURT OF AUSTRALIA TRADE PRACTICES - misleading or deceptive conduct - relevance of intention to mislead or deceive. PASSING OFF- injunctions - desirability of injunction in general terms restraining a respondent from passing off. COPYRIGHT - infringement - injunctions - desirability of order for withdrawal of trade mark application. Trade Practices Act 1974 (Cth), s 52, s 53(c), s 53(d) Trade Marks Act 1995 (Cth) Copyright Act 1968 (Cth), s 115, s 126(a), s 126(b) Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 34 IPR 225, followed ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248, followed WMC Ltd v West Gold Resources N.L, (North J, 11 September 1997, unreported) distinguished australian home loans ltd t/a AUSSIE HOME LOANS v lee anthony PHILLIPS and TECHNOCRAT COMPUTING PTY LTD ng 559 of 1997 LEHANE J SYDNEY 20 FEBRUARY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 559 of 1997 BETWEEN: australian home loans ltd t/a AUSSIE HOME LOANS Applicant AND: lee anthony PHILLIPS FIRST Respondent TECHNOCRAT COMPUTING PTY LTD SECOND RESPONDENT JUDGE(S): LEHANE J DATE OF ORDER: 20 FEBRUARY 1998 WHERE MADE: SYDNEY THE COURT DECLARES THAT: 1. The respondents and each of them have infringed the applicant's copyright in the artistic work as depicted in Schedule "A" to the reasons for judgment ("applicant's work"). THE COURT ordErS THAT: 2. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from, in trade or commerce in Australia, advertising, promoting, offering to supply or supplying any building or construction services or building or construction advisory services under or by reference to any business name, company name or any trade mark consisting of the words "AUSSIE HOME BUILDERS" or any other words substantially identical or deceptively similar to the words "AUSSIE HOME LOANS". 3. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from, in trade or commerce in Australia, advertising, promoting, offering to supply or supplying building or construction services or building or construction advisory services under or by reference to the trade mark "AUSSIE HOME BUILDERS" and device as depicted in Schedule "B" to the reasons for judgment or any other trade mark substantially identical or deceptively similar to the trade mark "AUSSIE HOME LOANS" and device as depicted in Schedule "A" to the reasons for judgment. 4. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from infringing the applicant's copyright in the applicant's work and in particular from reproducing or authorising the reproduction in any material form of the whole or a substantial part of the applicant's work. 5. The respondents deliver up on oath to the applicant all signage, brochures, business cards and other advertising and promotional material in the possession, custody or control of the respondents or either of them which refer to any company name, business name, or any trade mark consisting of or including the words "AUSSIE HOME BUILDERS" or any words substantially identical or deceptively similar to the words "AUSSIE HOME LOANS". 6. The respondents deliver up on oath to the applicant all signage, brochures, business cards and other advertising and promotional material in the possession, custody or control of the respondents or either of them which refer to the trade mark "AUSSIE HOME BUILDERS" and device as depicted in Schedule "B" to the reasons for judgment. 7. The respondents deliver up on oath to the applicant or destroy under supervision all infringing copies of the applicant's work in the possession, custody or control of the respondents or either of them. 8. The first respondent forthwith do all acts and things and execute all such documents as may be necessary or desirable to be done or executed in order to withdraw or procure the withdrawal of Trade Mark application No. 670434 in Class 37. 9. The respondents pay the applicant's costs and be jointly and severally liable for payment thereof. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY ng 559 of 1997 BETWEEN: AUSTRALIAN HOME LOANS LTD T/A AUSSIE HOME LOANS Applicant AND: LEE ANTHONY PHILLIPS first Respondent technocrat computing pty ltd second respondent JUDGE(S): LEHANE J DATE: 20 FEBRUARY 1998 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT The applicant seeks relief against the second respondent for conduct allegedly infringing the Trade Practices Act 1974 (Cth) and against the first respondent as a person alleged to be involved in that conduct. It seeks relief against both respondents for allegedly passing off services provided by them as having a connection or an association with the applicant. The applicant also claims that the respondents have breached the applicant's copyright in a particular artistic work. I shall return to those claims in greater detail shortly. The proceeding was listed for trial today, as to issues other than damages or an account of profits. The respondents did not appear and were not represented. In the initial interlocutory stages, the respondents were represented by solicitors. Those solicitors, however, some time ago ceased to act and gave notice accordingly. Evidence was tendered by the applicant, which I need not describe in detail but which satisfies me that the respondents have had adequate notice of all interlocutory orders made in the proceedings, and of the fact that it was set down for trial today. The respondents had sent to the court and to the applicant, to serve apparently the purpose both of defence and of evidence, a copy of the statutory declaration lodged in opposition proceedings in the Trade Marks Office, to which I shall have to refer again later. In my view, however, quite apart from formal matters, the declaration does not shed any particular light on the matters in issue in this proceeding. In the circumstances, the trial was conducted ex parte; but, as will appear, in my view the applicant has established by evidence which it tendered each of the causes of action upon which it relies. The applicant has carried on business since mid 1992 as an originator of loans, particularly home loans: loans for the purpose of purchasing or building a house. Since shortly after it began carrying on that business, the applicant has traded under the name "Aussie Home Loans" and that name has, since various dates extending from October 1992 to January 1993, been registered as a business name in each of the states and territories of Australia. The applicant has also used logos or devices in connection with its business. Since January 1994, it has used what has been described as a house device. That device comprises a somewhat stylised depiction of a house incorporating the words "Aussie Home Loans". A copy of the device is attached to these reasons (Schedule "A"). Neither the name nor the device has been registered as a trade mark. In comparatively recent times the applicant has lodged an application to register the device under the Trade Marks Act 1995 (Cth), but that application is of no particular importance to the outcome of this proceeding. What is important is that it is quite clear on the evidence that the applicant's business has expanded very rapidly so that it is now very large. It may confidently be said also, on the evidence, that it is very well known throughout Australia. There is in evidence a substantial quantity of advertising material including press, television and radio advertisements, material of the sort commonly known as "advertorials" and also (and perhaps of particular significance) a great deal of what appears to be unsolicited press reporting of the activities of the applicant and particularly the manner in which and the extent to which the applicant has competed in relation to the provision of home loans, with the established banks. In the advertising material, and in the press reporting, the name by which the applicant is described is "Aussie Home Loans". The house device commonly appears in the advertisements. There is also in evidence a quantity of the applicant's stationery which makes prominent use of the house device. In summary, it can be said with considerable confidence that both the name and the device are well known as indicating or representing the applicant and its business. The respondents on 29 September 1995 entered into an agreement with a company called AHL (Services) Pty Limited, which is apparently (though there was no evidence precisely on this point) related in some way to the applicant. At all events, the agreement is one for the provision of services by the respondents in promoting loans originated by the applicant. In the course of providing services under that agreement, the respondents were provided with, and I infer used, stationery provided by the applicant which incorporates both the name "Aussie Home Loans" and the house device. The first respondent had already, although the applicant was not aware of this, lodged an application for registration of a trade mark in class 37 in respect of building and construction. The application was lodged on 24 August 1995. It was for a mark described as "Aussie Home Builders", with a device, being the house device with minor variations. Again I shall attach to these reasons a copy of the device included in the first respondent's application (Schedule "B"). As will be evident, when the two devices are compared, they are extremely similar. The only differences readily apparent to the eye are that whereas the applicant's house device has a shaded roof the device included in the first respondent's application has its roof unshaded; the first respondent's device includes, as the applicant's device does not, a chimney, or at least a suggestion of a chimney; and, of course, whereas the third word in the applicant's device is "Loans", that in the first respondent's device is "Builders". Other than that, the first respondent's device is, I think I may say without undue pre-judgment, a close copy of that of the applicant. The type used is substantially identical. The rectangular shapes in which the three words are written are apparently identical in size and are separated apparently by identical spaces. The roof appears to be of a substantially identical size and shape. When one compares the two devices side by side, in the knowledge that the applicant's was the earlier, it is quite plain that the source of the inspiration for the first respondent's design was that of the applicant. The respondents apparently provided services under the agreement with AHL (Services) Pty Limited for some months and then, in circumstances which did not appear in the evidence, ceased to do so. Shortly thereafter the applicant became aware of the first respondent's trade mark application and the applicant's first letter of demand to the first respondent followed about a month later. That demand having apparently elicited no response, a further demand was sent, on this occasion to the second respondent as well and also to another company which is not concerned in these proceedings. The respondents declined to provide undertakings sought in the demands and these proceedings were commenced reasonably shortly thereafter. Not a great deal appears in the evidence of the precise character of the business conducted by the respondents but there are what may be described as some suggestive indications. First, there is evidence that there have been obtained directly from the first respondent a number of documents. One is a business card of the first respondent, originally provided by the applicant, incorporating the applicant's house device but in which the word "Loans" has been crossed out, as have certain other words which might have been taken as indicating a relationship between the first respondent and the applicant. Then there is what is, no doubt, a more recent business card of the first respondent, not at all unlike his earlier business card, which includes, however, the first respondent's house device, that is the device using the name "Aussie Home Builders", and including also, above the first respondent's name, the words "Aussie Home Builders". The third of the documents is one headed "Aussie Home Builders"; beside the heading is the first respondent's device with a subtitle, "Mission Statement", above which there appears the phrase, "Your complete and one stop shop to your new home." At the foot of the document there appears the name "Technocrat Pty Ltd" followed by an Australian company number which, on the evidence, is that of the second respondent. The evidence suggests that there has been a deal of carelessness in the use of the correct corporate name of the second respondent, but there is no doubt on the evidence that "Technocrat Pty Ltd" and the second respondent are one and the same, its correct name being "Technocrat Computing Pty Ltd". There is also in evidence what appears to be the second respondent's fax header sheet. It is headed "Aussie Home Builders". It has at its foot a reference to "Technocrat Pty Ltd" with its Australian company number and is said to be "trading as Aussie Home Builders". The document subheaded "Mission Statement" describes, in rather vague terms, what the business of Aussie Home Builders is intended to be. Principally it appears to be intended as a business involving the construction of houses rather than the provision of finance. There are, however, indications in the document, including the phrase "complete and one stop shop" which suggest that the business might at least have been intended to play some part in arranging the provision of finance for those seeking to buy homes or to have homes constructed for them, either for their own occupation or by way of an investment. Finally, the evidence includes an advertisement in a Brisbane newspaper, which appeared apparently on 22 October 1997, for "Aussie Home Builders". The advertisement does not incorporate the name of the second respondent in either form or, for that matter, the name of the first respondent. It does however include telephone and fax numbers as those of "Aussie Home Builders" which appear from other evidence to be those of the second, and apparently also the first, respondent. The advertisement is significant because it spells out rather more fully what might have been meant by the expression "one stop". It claims that Aussie Home Builders assists clients with "land selection", "contract-settlement neg", presumably negotiation, "individually tailored house plans to a turn-key landscaped finish" and also, significantly, it includes the following: first, the question: "Planning to upgrade to that new home but not to another 25 year mortgage?" and then the suggested answer: "Aussie Home Builders can show you how to own your new home in 5 - 7 years with no extra home loan repayments." The advertisement also proclaims the availability of mortgage protection insurance. It is, I think, fair to infer that what was thus offered included more than the mere design and construction of a house but included at least assistance, of some not very clearly specified kind, with the obtaining of the finance. It is in those circumstances that the applicant seeks relief, relying on the causes of action which I have mentioned. First it is said the second respondent has infringed s 52, s 53(c) and s 53(d) of the Trade Practices Act by engaging in conduct in trade or commerce that is misleading or deceptive, and in trade or commerce in connection with the supply of services or with the promotion of the supply of services, representing that the services have a sponsorship or approval that they do not have or that the second respondent has a sponsorship, approval or affiliation that it does not have. The suggestion is, of course, that the material to which I have referred suggests a connection with or approval of or affiliation with the applicant. The particular, and no doubt unusual, circumstances here are, I think, of some importance. It is significant that the respondents had a connection, through the September 1995 agreement, with the applicant. It is significant that, even before that connection formally took effect, the first respondent had lodged its trade mark application. It is also significant that both respondents used not only a name but particularly a device which clearly, on the evidence, had become distinctive of the applicant in connection with a fast-growing and apparently very successful business. There can, I think, be no serious doubt, given the wide publicity (and therefore, I infer, wide recognition) of the applicant's name and device, that the respondents sought by using not merely a name but also a device closely similar to that of the applicant to trade off the applicant's considerable and fast-growing reputation. In other words, this is a case of the sort where a respondent will be more readily held to have engaged in conduct likely to mislead or deceive because an intention to mislead can be inferred. In this connection I was referred to a number of well known authorities, particularly the recent decision of Tamberlin J in Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 34 IPR 225. The case under the Trade Practices Act requires, I think, little further elaboration. If merely the name Aussie Home Builders had been selected by the respondents as a name under which they chose to carry on business, then depending upon the circumstances and given that there is apparently at least a substantial degree of disparity between the businesses of the applicant and the respondents, it is possible that neither s 52 nor s 53 would have been infringed. It is, however, in my view, quite different where through the use of the device there has been what can only be taken as a deliberate attempt to suggest an association. Given the wide recognition of the applicant's name and device there can, I think, be no conclusion other than that the use by the respondents of the name in conjunction with the device is misleading or deceptive and, for the purposes of s 53, suggests a sponsorship or affiliation that does not exist. The reasons I have given necessarily lead, in my view, to the conclusion that the second respondent has infringed s 52 and s 53 of the Trade Practices Act. Given that correspondence on the second respondent's fax letterhead has been signed by the first respondent as a director of the second respondent, given that it appears from the Australian Securities Commission records that the first respondent is indeed a director of the second respondent and given also, particularly, that the business cards and mission statement to which I have referred have been obtained from the first respondent, it inevitably follows, in my view, that the first respondent is liable as a person involved in the second respondent's breach. The case in passing off can, I think, be equally quickly dealt with. For the reasons I have given, I conclude that there have been misrepresentations in the course of trade both by the second respondent and by the first respondent. The misrepresentations were directed to potential customers. The misrepresentations are such as to suggest a connection between the respondents and the applicant which does not exist; thus it may readily be concluded that the misrepresentations are calculated to injure the business or goodwill of the applicant and so to cause damage. It follows that the applicant has made good its claim that the respondents have passed off services provided by them as, or as having connection with, services provided by the applicant. That brings me to the claim based on copyright. The applicant submitted that, subsistence and ownership of the copyright having not been put in issue, the applicant may rely on the presumptions in s 126(a) and s 126(b) of the Copyright Act 1968 (Cth), and I can see no reason why that is not so, even if, particularly in ex parte proceedings, the result may seem a little surprising. In any event, there is evidence that the managing director of the applicant was the author of the house device; the device is in my view an artistic work for the purpose of the Copyright Act; and there is in evidence an instrument by way of confirmation and assignment whereby, if the copyright had not already passed to or vested in the applicant, it has now done so. The evidence indicates that the first respondent has reproduced and published what is in substance a copy of the applicant's house device. The minor differences to which I have referred certainly do not, in my opinion, avail the first respondent. Equally, the second respondent has in its documents, which are in evidence, at least published what is an infringing copy of the applicant's house device. It follows inexorably, I believe, and without the need of any further exposition, that the applicant has made out against each respondent a case of infringement of copyright. The question then arises, what relief should be given to the applicant? The applicant seeks, first, a declaration that each of the respondents has infringed the applicant's copyright in the artistic work which is the applicant's house device. Infringement of copyright, as I have said, is in my view established and I can see no reason why in this case it is not appropriate to grant the declaration which the applicant seeks. Next, the applicant seeks a number of injunctions. The first of them is one which would restrain the respondents, their servants and agents, in trade or commerce in Australia, from advertising, promoting, offering to supply or supplying, any building or construction services or building or construction advisory services under or by reference to any business name, company name or any trade mark consisting of, or including the words, "Aussie Home Builders" or any other words that are substantially identical or deceptively similar to the words, "Aussie Home Loans". There was some discussion in the course of argument as to whether it was appropriate to restrain the use by the respondents of the name "Aussie Home Builders" simpliciter, otherwise than in conjunction with the house device. Given the character of the respondent's conduct as I have described it, and given its deliberate use of the name "Aussie Home Builders", in conjunction with the device, it is in my view appropriate to restrain the respondents from using the name "Aussie Home Builders". By their own conduct, in my view, they have already suggested a connection by their use of the device with the name, and the suggestion is not eliminated simply by restraining them, for the future, from using the device. On the other hand I would not restrain the respondents from using any name or mark including the words "Aussie Home Builders". It is no doubt possible that a name including those words might be used in a way which did not infringe any right of the applicant. The order I propose to make, therefore, under this head is one restraining the respondents, their servants and agents, from using in connection with the services described, a business name, company name or trade mark consisting of the words, "Aussie Home Builders" or any other words substantially identical or deceptively similar to the words, "Aussie Home Loans". Thirdly, the applicant seeks an order restraining the respondents, their servants and agents, from advertising, promoting, offering to supply or supplying, building or construction services or building or construction advisory services under or by reference to the trade mark "Aussie Home Builders" and device as depicted in the trade mark application, or any other trade mark substantially identical with or deceptively similar to the trade mark "Aussie Home Loans" and device: that is, the applicant's device. The reasons I have already given will indicate why, in my view, the applicant is entitled to that order. The use of the name with the device infringes the Trade Practices Act, amounts to passing off and, where there is a publication of the device, is an infringement of copyright. The respondents have sufficiently indicated that they propose (unless restrained) to continue using the name and device. This is, accordingly, a proper case for an injunction as sought. Fourthly, the applicant sought, but does not now press, an injunction in more general terms restraining the respondents from passing off. As I indicated during the argument, I would not have been disposed to grant an order in those general terms: the reasons appear in the decision of the Full Court in ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248. Fifthly, the applicant seeks an order restraining the respondents, their servants and agents, from infringing copyright, and in particular from reproducing or authorising the reproduction in any material form of the whole or a substantial part of the applicant's house device. I propose to make that order for reasons already given. Then the applicant seeks orders for delivery up of what may be compendiously called infringing copies. Again, having made out its case in copyright, the applicant is in my view entitled to those orders. Finally, the applicant seeks a particular order against the first respondent. That order would require the first respondent forthwith to do all acts and things and execute all such documents as may be necessary or desirable to be done in order to withdraw or procure the withdrawal of the first respondent's trade mark application. There was some discussion in the course of argument as to whether it was appropriate to make such an order, or whether on the other hand the court ought to decline to make an order of that kind, leaving the applicant's existing opposition proceedings to take their course. The applicant was not able to refer me to any decision of the court in which a mandatory order for the withdrawal of a trade mark application had been made and my own limited research has uncovered no such decision. The applicant did, however, refer me to the unreported decision of North J in WMC Ltd v Westgold Resources N.L., decided on 11 September 1997. In that case his Honour made an order of a kind which is by no means unprecedented, requiring respondents to change or withdraw a registered business name. The order was made on the footing that in the circumstances of the case the use of a name incorporating the words "Western Mining" amounted to misleading or deceptive conduct. The case, it was said, was particularly apposite in the present circumstances because the name "Western Mining", like the name "Aussie Home Loans", incorporated both geographic elements and elements descriptive of the nature of the business carried on. The Trade Marks Act provides, of course, a particular procedure, that is opposition proceedings, by which one who asserts that an applicant for registration of a trade mark is not entitled to have it registered is entitled to intervene, for the purpose of preventing registration, in proceedings in the Trade Marks Office. It seems to me unlikely, and the dearth of reported decisions may bear this out, that the court would ordinarily uphold a claim by an applicant in effect to shortcut the procedure for which the Trade Marks Act provides by commencing proceedings for an injunction requiring the withdrawal of an application. The suggestion was, however, that the present circumstances are somewhat special. The particular circumstances are that the reproduction and publication of the house device in the form in which it is incorporated in the first respondent's trademark application constitute infringements of copyright. The circumstances also include the claim, which I have held to be made out, that the use by the respondents in the course of their business of the house device as included in their trade mark application amounts to conduct which is misleading or deceptive and to passing off. I am not by any means certain that the success of the applicant in its trade practices and passing off claims would of itself properly lead to an order requiring the withdrawal of the application for the mark. That is so because it may well be the case that, for example by the use of prominent disclaimers, the suggestion of association which I have held to exist could be overcome. The fact that the applicant has established that it is the owner of a common law trade mark comprising its house device may mean that the first respondent is not entitled to registration of a trademark the subject of his application. But that, I think, is precisely the sort of question which is properly decided in opposition proceedings and in relation to which the court would ordinarily be reluctant to interfere by way of an injunction of the kind sought. A particular complicating factor in this case, however, is what I have held to be the respondents' infringement of copyright. It follows, I think, from what I have already held that any publication by the first respondent of a trademark incorporating the device as included in its application will amount to an infringement of the applicant's copyright. In those circumstances, in my view, it is proper for the court, in exercise of its power under s 115 of the Copyright Act to grant an injunction of the kind which is sought. I think it is not inappropriate to add that the court will more readily grant such an injunction in circumstances where, as here, there is an apparent and substantial degree of deliberation in the respondent's conduct. Accordingly, though with some hesitation, I think this is a case where it is appropriate to make the order which the applicant seeks. The orders which I make are substantially those sought in the application, with the exceptions already noted. They are as follows: The Court declares that: 1. The respondents and each of them have infringed the applicant's copyright in the artistic work as depicted in Schedule "A" to the reasons for judgment ("applicant's work"). The Court orders that: 2. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from, in trade or commerce in Australia, advertising, promoting, offering to supply or supplying any building or construction services or building or construction advisory services under or by reference to any business name, company name or any trade mark consisting of the words "AUSSIE HOME BUILDERS" or any other words substantially identical or deceptively similar to the words "AUSSIE HOME LOANS". 3. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from, in trade or commerce in Australia, advertising, promoting, offering to supply or supplying building or construction services or building or construction advisory services under or by reference to the trade mark "AUSSIE HOME BUILDERS" and device as depicted in Schedule "B" to the reasons for judgment or any other trade mark substantially identical or deceptively similar to the trade mark "AUSSIE HOME LOANS" and device as depicted in Schedule "A" to the reasons for judgment. 4. The respondents and each of them, whether by themselves, their servants, their agents or otherwise be restrained from infringing the applicant's copyright in the applicant's work and in particular from reproducing or authorising the reproduction in any material form of the whole or a substantial part of the applicant's work. 5. The respondents deliver up on oath to the applicant all signage, brochures, business cards and other advertising and promotional material in the possession, custody or control of the respondents or either of them which refer to any company name, business name, or any trade mark consisting of or including the words "AUSSIE HOME BUILDERS" or any words substantially identical or deceptively similar to the words "AUSSIE HOME LOANS". 6. The respondents deliver up on oath to the applicant all signage, brochures, business cards and other advertising and promotional material in the possession, custody or control of the respondents or either of them which refer to the trade mark "AUSSIE HOME BUILDERS" and device as depicted in Schedule "B" to the reasons for judgment. 7. The respondents deliver up on oath to the applicant or destroy under supervision all infringing copies of the applicant's work in the possession, custody or control of the respondents or either of them. 8. The first respondent forthwith do all acts and things and execute all such documents as may be necessary or desirable to be done or executed in order to withdraw or procure the withdrawal of Trade Mark application No. 670434 in Class 37. 9. The respondents pay the applicant's costs and be liable jointly and severally for payment thereof. Order 6, as sought in the application, includes a reference to a device used by the applicant before 1994. There was no evidence that the respondent had ever used, or threatened to use, that device. I have, therefore, excluded the reference to it. I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane. Associate: Dated: 20 February 1998 Counsel for the Applicant: K. Howard Solicitor for the Applicant: Sprusons: solicitors Date of Hearing: 20 February 1998 Date of Judgment: 20 February 1998