FEDERAL COURT OF AUSTRALIA Sony Computer Entertainment Australia Pty Ltd v Hinson [2000] FCA 1290 SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED AND KABUSHIKI KAISHA SONY COMPUTER ENTERTAIMENT v NICHOLAS HINSON N 154 OF 2000 LEHANE J 5 SEPTEMBER 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 154 OF 2000 BETWEEN: SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED FIRST APPLICANT KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT SECOND APPLICANT AND: NICHOLAS HINSON RESPONDENT JUDGE: LEHANE J DATE OF ORDER: 5 SEPTEMBER 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants be granted the relief sought in the following paragraphs of the short minutes of order annexed to the report of the hearing on 5 September 2000: 1, 2 (amended by substituting for the word "damages" the words "pecuniary relief"), 3, 4, 6, 7, 8, 9, 10, 12 and 13. 2. The matter be listed for directions in relation to outstanding issues at 9.30 am on 6 December 2000. 3. The parties have liberty to apply on three days' notice. 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 N 154 OF 2000 BETWEEN: SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED FIRST APPLICANT KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT SECOND APPLICANT AND: NICHOLAS HINSON RESPONDENT JUDGE: LEHANE J DATE: 5 SEPTEMBER 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicants seek, in the absence of the respondent, orders finally disposing of the proceeding except in relation to pecuniary relief. They also seek an order for the filing of an affidavit by the respondent by way of discovery in aid of their claims for pecuniary relief. 2 Although the respondent is not represented and was not present at the hearing, I am satisfied by evidence read on behalf of the applicants that he has been served with documents in accordance with orders which I have made on previous occasions. The respondent has also sent directly to the Court two affidavits, one received in my chambers on 4 July 2000 and the other on 31 August 2000. From them it is clear, and I think it is permissible for me to take account of them to this extent, that the respondent is aware of the proceedings, that he is aware particularly of the applicants' proposal to seek final orders, and that he admits certain acts of infringement. 3 The claims which the applicants make relate to alleged infringements by the respondent of two registered trade marks, number 642679 and number 642678. The former mark is a device which I need not, I think, further describe. The second comprises the word – because what would normally be two words are run together – "PlayStation". Each mark is registered in respect of computer game players combined with CD‑ROM drives and software therefor. 4 In each case the second applicant is registered as the owner of the mark. In the statement of claim there is an allegation that the first applicant is an authorised user of the marks. It appears from evidence read on the hearing that the first applicant is a subsidiary of the second applicant and distributes its goods. Insofar as the evidence seeks to show, however, that the first applicant is an authorised user of either mark as defined in s 8 of the Trade Marks Act 1995 (Cth), it is deficient, for reasons which will appear. I do not think that that is of importance, however, in relation to the relief which is now sought. The applicants claim that the respondent has infringed the marks by importing goods for sale and also by selling goods, the goods in each case being CD‑ROMs. The respondent, it is said, has used marks which are either substantially identical with or deceptively similar to each of the registered marks in relation to both the imported CD‑ROMs and CD‑ROMs which the respondent is alleged to have sold. 5 I shall deal first with the claims relating to importation. The applicants claim that a notice of objection to importation was given to the Chief Executive Officer of the Customs (Customs CEO) in accordance with s 132 of the Trade Marks Act in relation to goods infringing the trade marks in question. A notice, purporting to be one given under s 132, was given to the Customs CEO in relation to each mark. In each case the notice was dated 7 October 1999. In each case it was expressed to have been given by the first applicant, which was described as an authorised user of the mark. By a letter dated 5 September 1997, the President of the second applicant had in terms authorised the first applicant as an authorised user of the marks to execute and lodge a notice under s 132 of the Trade Marks Act. 6 The scheme of s 132 is significant. In the first place, by subs (1) it authorises the registered owner of a registered mark to give to the Customs CEO a notice in writing objecting to the importation of goods that infringe the mark. Subsection (2) then provides that, if the registered owner has not given a notice, an authorised user having power to give a notice under subs (1) (which is a curious concept given that subs (1) makes no reference to authorised users) may ask the registered owner to give a notice. Then subs (3) provides that, if the registered owner does not comply with such a request, the authorised user may proceed to give the notice. In this case there is no evidence that the steps of request and non‑compliance occurred, necessary steps if the notices actually given are to be taken as notices given by the first applicant as authorised user. Though with some doubt, I think the appropriate conclusion is that the notices are to be treated as notices given on behalf of the registered owner by the alleged authorised user, the first applicant, as its agent. 7 At all events, it is clear that the Customs CEO accepted the notices and has raised no question as to their validity. In a notice of seizure dated 9 February 2000 addressed to the solicitors for the applicants, the Customs CEO notified the applicants, under s 134 of the Trade Marks Act, of the seizure of what were described as three hundred counterfeit Sony Playstation CD‑ROMs. The notice, in accordance with s 134(b)(ii), stated that the designated owner of those goods was the respondent and gave his address in Brighton East in Victoria. On an earlier occasion, being satisfied that an action had been brought by the "objector" (the applicants or one of them) for infringement of the marks, I made orders under s 137 preventing - to use the terminology of the section - the goods from being released. The applicants now seek an order under s 137(3)(b) that the seized goods be forfeited to the Commonwealth. 8 I am satisfied, as I was on the previous occasion, by the evidence read then and again today that the goods seized by the Customs CEO are infringing goods: that is to say, they are goods imported without the authority of the second applicant, and they are goods which bear each of the two marks in question (possibly, in the case of the device mark, a mark not quite identical, but certainly substantially identical, with it). 9 The evidence in relation to sale by the respondent is principally that of an executive of the firm of PricewaterhouseCoopers, which was engaged to conduct investigations on behalf of the first applicant regarding the importation and sale of counterfeit PlayStation computer games in Australia. He deposes to telephone conversations with the respondent and to a visit to the respondent's property during which he observed what appeared to be PlayStation computer games and purchased a compact disc. The particular disc and its packaging are in evidence. The packaging bears, quite prominently, marks which are substantially identical to each of the registered marks. I am satisfied by the evidence that, in selling the CD‑ROM disc in its packaging, the respondent infringed both marks by using substantially identical signs in relation to goods in respect of which the marks are registered. 10 It is clear that the respondent did not relevantly have the licence or authority of either applicant. The evidence satisfies me that the CD‑ROM which was sold may readily be identified as one produced and sold without the authority of either applicant. It is appropriate to mention at this point some other aspects of the affidavits which the respondent has sent to the Court. Counsel for the applicants read one paragraph of them, in which the respondent admits to selling approximately half a dozen copied PlayStation games which, the affidavit makes clear, he accepts amounted to infringement. The applicant also accepts that he was visited by the executive of PricewaterhouseCoopers. He disputes certain aspects of that witness's evidence. He does not, however, specifically take issue with the evidence of the particular sale to which I have referred. I find that he made that sale. 11 The other matter which should be mentioned is that the respondent in his earlier affidavit denies ordering, paying for or importing the three hundred games which were imported and states also that he has never tried to claim the games. He says, indeed, that he was not informed by the Customs CEO that the games had been seized. I think it is proper to take those latter statements into account, at least as a reasonably clear indication that the respondent makes no claim to the three hundred CD‑ROM discs seized by the Customs CEO, and the evidence to which I have referred otherwise satisfies me that this is an appropriate case in which to make an order that the goods be forfeited to the Commonwealth. 12 In my view, it is appropriate that I make certain procedural orders sought by the applicants (what they contemplate has in fact happened). The respondent having been properly notified (and having accepted that it would occur), it should be ordered that the hearing and determining of issues relating to liability take place before the hearing on issues of damages or other pecuniary relief, and that the trial take place in relation to issues relating to liability. Then, for the reasons I have given, in my view the applicants are entitled to declarations that the respondent has infringed each of the marks and that the respondent be restrained in appropriate terms from infringing each mark. As I have mentioned, I think this is an appropriate case for an order that the goods seized by the Customs CEO be forfeited to the Commonwealth. 13 The other orders sought and pressed relate to delivery up, the filing and service of an affidavit by way of discovery in aid of the claim for pecuniary relief, service and payment of costs. It is clear, I think, that, although the extent to which he has done so may be contentious, the respondent has infringed each of the marks. In order to make an election as to what pecuniary relief they might seek, the second applicant, at least, is entitled in my view to an affidavit of the kind sought: that is, one which will reveal the extent of the respondent's dealings with infringing goods and the pecuniary consequences of those dealings. Evidence of that kind is calculated to assist the determination of proceedings for pecuniary relief and, indeed, to assist the applicants in determining whether this is a case in which it is appropriate to proceed with a claim for relief of that nature. I also think that it is appropriate, infringement being established, that an order for delivery up of infringing goods be made. As for costs, there is no apparent reason why costs ought not in the ordinary way follow the event. 14 The orders must take account of the fact that the claim that the first applicant is an authorised user of the marks has not been made out. Accordingly, the orders which I make are orders 1 and 2 as set out in the short minutes handed up on behalf of the applicants which I shall initial and date and place with the papers, substituting for the word "damages" in order 2 the words "pecuniary relief". I also make the declarations numbered 3 and 4 in those short minutes and the orders numbered 6, 7, 8, 9, 10, 12 and 13. 15 I will give the parties liberty to apply on three days' notice and I will set the matter down for directions in relation to outstanding issues at 9.30 am on 6 December 2000. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane. Associate: Dated: 12 September 2000 Counsel for the Applicants: S C Dowling Solicitor for the Applicants: Allen Allen & Hemsley Counsel for the Respondent: No appearance Date of Hearing: 5 September 2000 Date of Judgment: 5 September 2000