FEDERAL COURT OF AUSTRALIA Sony Computer Entertainment Australia Pty Ltd v Dannoun [2000] FCA 1634 CONTEMPT OF COURT – infringement of registered trade mark in breach of Court order – penalty Trade Marks Act 1995 (Cth) s 120 SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED & ANOR v MOHAMED SAMIR DANNOUN (also known as "Mohamed Dannoun") (also known as "Samir Dannoun") (also known as "Sam Turk") (also known as "Sam Dann") & ANOR LINDGREN J 16 NOVEMBER 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 243 OF 2000 BETWEEN: SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED (ACN 077 583 183) FIRST APPLICANT KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT SECOND APPLICANT AND: MOHAMED SAMIR DANNOUN (also known as "Mohamed Dannoun") (also known as "Samir Dannoun") (also known as "Sam Turk") (also known as "Sam Dann") FIRST RESPONDENT FERNANDO SILVA (also known as "Ferdinand Silva") SECOND RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 16 NOVEMBER 2000 WHERE MADE: SYDNEY THE COURT DECLARES THAT: The first respondent committed a contempt of orders numbered 8 and 9 made by the Court on 5 September 2000 by, on 15 October 2000 at a stall at Paddy's Markets, Flemington, without the licence of the second applicant, offering to supply and supplying compact disks containing software: (a) in which are stored electronically representations of marks; and (b) by reference to marks that are substantially identical with the second applicant's registered trade marks "PlayStation" and "PS". THE COURT ORDERS THAT: 1. The first respondent pay by way of penalty a sum of $3,500. 2. The first respondent pay that sum by 31 December 2000. 3. The first respondent pay the applicants' costs of the motion brought by notice of motion filed in Court on 27 October 2000 in so far as they relate to the contempt referred to in the above declaration, on an indemnity basis, that is, all the costs incurred by the applicants of and incidental to the motion except any costs unreasonably incurred and costs unreasonable in amount. 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 243 OF 2000 BETWEEN: SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED (ACN 077 583 183) FIRST APPLICANT KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT SECOND APPLICANT AND: MOHAMED SAMIR DANNOUN (also known as "Mohamed Dannoun") (also known as "Samir Dannoun") (also known as "Sam Turk") (also known as "Sam Dann") FIRST RESPONDENT FERNANDO SILVA (also known as "Ferdinand Silva") SECOND RESPONDENT JUDGE: LINDGREN J DATE: 16 NOVEMBER 2000 PLACE: SYDNEY REASONS FOR JUDGMENT Background 1 By notice of motion filed in court on 27 October 2000, the applicants seek an order that the first respondent ("Mr Dannoun") be found guilty of contempt of court, punished in relation to the contempt, and ordered to pay the applicants' costs of the motion on a solicitor/client basis. 2 On 5 September 2000 I made, inter alia, the following orders: "8. An order that until further order, each of the Respondents, whether by himself, his servants or agents or otherwise, be restrained from infringing the Second Applicant's registered Trade Mark No 642678 consisting of the mark 'PlayStation'. 9. An order that until further order, each of the Respondents, whether by himself, his servants or agents or otherwise, be restrained from infringing the Second Applicant's registered Trade Mark No 642679 consisting of the mark 'PS'." 3 The particulars contained in the statement of charge relate to two events – one on 27 September 2000 and the other on 15 October 2000. It is said that in each case, Mr Dannoun infringed the second applicant's trade marks by, without its licence, "Ľoffering to supply and supplying in Australia CD-ROMs containing software: (a) in which are stored electronically a representation of marks; and (b) by reference to marks, that are substantially identical with [the "PlayStation" and "PS" registered trade marks of the second applicant]." 4 Does "offering to supply" or "supplying" in the circumstances described constitute "use" of the "substantially identical" mark "as a trade mark", and therefore infringement of the second applicant's registered trade marks for the purposes of s 120 of the Trade Marks Act 1995 (Cth) ("the TM Act")? I will refer to this question when dealing below with the evidence of the two events. 5 Mr Dannoun appeared on the hearing of the motion, unrepresented. After I had given him certain explanations and warnings, he elected to testify. He adopted a handwritten statement signed by him as his testimony in chief, and was cross-examined by senior counsel for the applicants. 6 I will now turn to deal with the two events. The sale by Osama (also called "Buddy") Dannoun at markets at Penrith Showground on Wednesday 27 September 2000 to Brett Alexander Vizard. 7 According to an affidavit of Brett Alexander Vizard, on Wednesday 27 September 2000 Mr Vizard attended markets which were being held at Penrith Showground, Penrith where he bought two compact disk games with paper inserts in plastic packets for a price of $20, that is, $10 each. Their titles were "3 in 1 Driver Collection Vol 2" and "3 in 1 Driver Collection Vol 3". Mr Vizard stated that there were two men, each approximately 25 years old, at the stall. In his affidavit he described them. It is not suggested that either of them was Mr Dannoun. 8 In relation to this event of 27 September, Mr Dannoun claims in his statement as follows: "As in regards to my son Osama Dannoun selling these games. He is not my agent, he is over 18 years of age and he does not reside at my residence. He does not purchase his games from myself and I have nothing to do with his intake or expense he trades for himself I have no dealings with him in regards to the copied games." 9 Mr Dannoun states that he trades at a market only on Sundays and has nothing to do with the business activities of his son. In cross-examination, it was suggested to him that the relationship between him and his son was much closer. For example, it was put to Mr Dannoun that when an Anton Piller order in this proceeding was executed on 7 September last at Mr Dannoun's residence at 41 Banksia Road, Greenacre, it was his son "Buddy" who was at the house and dealt with those concerned in the execution of the order. Mr Dannoun stated that his son was merely visiting at that time. I note that according to the report made to the Court by the independent solicitor who was present when the Anton Piller order was executed, Mr Dannoun's son told her that he did not live at his father's residence and that his father had said that he (Buddy) was to be "in charge". 10 I am not satisfied on the evidence that Mr Dannoun's son was acting as agent for Mr Dannoun on 27 September. For this reason, I do not find the charge of contempt proved against Mr Dannoun in respect of that event. This conclusion makes it unnecessary for me to address the question whether, if I had been satisfied that the son was acting as agent for Mr Dannoun, the evidence of the son's selling activity would have established infringement. The sale by Mr Dannoun at Paddy's Markets, Flemington on Sunday 15 October 2000 to Mark Miller 11 Mr Dannoun states that he runs a business selling clothing at 14A Chapel Road, Bankstown under the business name "Static" but that on Sundays he also conducts a stall at Flemington markets selling both clothing and "PlayStation accessories". He states that at his stall he sells "second hand original PlayStation games, computer games, Dreamcast games and many other PlayStation accessories." 12 Mr Dannoun does not dispute that on 15 October at Paddy's Markets, Flemington, he sold to Mark Miller for $25 three compact disks with paper inserts in plastic wrappings from a stall he was conducting at the Markets. According to Mr Miller's affidavit, the three compact disks were games that bore the titles "Skateboarding", "3 in 1 Driver Collection" and "F1 Racing". Mr Dannoun sold the disks in response to Mr Miller's question, "How much are the PlayStation games?" to which Mr Dannoun replied, "Three for twenty-five dollars". The three compact disks are in evidence and their titles are in fact "MTV Skateboarding", "3 in 1 Driver Collection Vol 4" and "F1 Racing Championship". The cover of "F1 Racing Championship" bears both the "PlayStation" and "PS" trade marks and all three disks themselves have the marks electronically stored within them, so that when the disks are played, the marks are seen on the screen. 13 Mr Dannoun's statement contains the following: "After I received the court order stating I am not permitted to sell Sony pirated games, I only sold Dreamcast and original second hand Sony games along with PlayStation accessories. A few weeks after the court order a few of my customers returned to me some of the pirated games which I had sold to them earlier on, stating the games did not work on their machines or were faulty. I took their games and returned their money. I took the games which had been returned to me by the customers and placed them accidently [sic] alongside the original PlayStation games which I have in my possession. A fews [sic – few days] later a customer came to my stall and purchased some games from myself, I don't recall what games he purchased, but due to the returned being mixed up with the original games, I by accident, not intentionally sold him the pirated games, which had been returned to me by customers claiming to say they were faulty. I believed that I had been selling 'original second-hand Sony games' to my customers, not the pirated games. On my returning home that evening I realized that the copied games were missing, then I realizedthat they had been sold by accident. Since that date I have had returned to me 11 copied games. I have bought [sic – brought] these games here today to show you. I also have in my possession the original 'second hand' Sony games which I have been selling and still are selling at my stall at the markets, alongside the PlayStation accessories and clothing. I did not attempt to breach the court order on purpose, I didn't sell the copied games on purpose it was a mistake." 14 Mr Dannoun's statement concludes: "This is my statement written by myself as to what has happened since I was served with the court order. I am once again truly sorry for any recklessness caused on my behalf. I am prepared to sign any documents stating that in future I will no longer sell Sony pirated games. I do apologize to Sony and any other persons which I may of [sic] offended." 15 The cross-examination of Mr Dannoun was directed to showing that he had sold more "counterfeits" than the three disks sold to Mr Miller and that he had, in effect, not cared whether he did or did not observe the Court orders. It is clear from his statement that his understanding of the effect of the orders was that he was not to sell "pirated" PlayStation games, but would be at liberty to sell original or second hand authentic PlayStation games. He denied, however, that he sold any more than the three games he sold to Mr Miller. His case, as explained in his statement, is that he sold those three compact disks through oversight because, having been returned by dissatisfied customers, they were put by him in a place in the stall from which it was possible for them to be accidentally sold. 16 I have some doubt about Mr Dannoun's explanation. There are in evidence authentic PlayStation compact disks as well as those bought by Mr Miller. There is a striking visible difference: on the playing side the counterfeit ones are silver whereas the authentic ones are black. A person taking care not to sell counterfeit disks would surely look carefully at the stock, observe this difference and ensure that he did not hand over "PlayStation" disks with anything other than a black playing side. 17 Mr Dannoun himself describes his conduct as "recklessness". I do not wish to seize upon a word used by an unrepresented litigant and turn it to his disadvantage in an unfair manner, but I think that on Mr Dannoun's own account of the facts, his conduct was indeed reckless, having regard to the orders that had been served upon him and his admitted understanding of their effect. I am satisfied that Mr Dannoun was reckless as to whether the orders were observed. 18 Did Mr Dannoun infringe the trade marks? Section 120 of the TM Act defines infringement. In order to infringe a registered trade mark, a person must, relevantly, have "used as a trade mark" a sign that is "substantially identical with" or "deceptively similar to" the registered trade mark. I think that by selling the three disks in response to Mr Miller's inquiry about "PlayStation" games, Mr Dannoun did use both the "PlayStation" and "PS" signs as trade marks. There is no question but that the signs used are substantially identical to the two registered trade marks. Penalty 19 In his written statement, Mr Dannoun said that he was "presently married with nine children raging [sic] in age from 3 months – 21 years of age." 20 On the question of penalty, he asks me to take into account his family financial commitments, the fact that the three infringing disks were sold through inadvertence, and his offer to sign an undertaking not to sell "Sony pirated games" in the future. Senior counsel for the applicants did not suggest that the offer of a signed undertaking should be taken up, being content, I presume, to rely on the existing orders prohibiting infringement. 21 Senior counsel for the applicants submits that any fine of less than $10,000 would be insufficient to recognise adequately the significance of the Court's orders and of the disobedience of them that has occurred. If this submission related to the two offences alloyed, perhaps it should be understood as suggesting a lesser amount in respect of the one offence I have found proved. 22 I am concerned only with the event of 15 October; Mr Dannoun will be ordered to pay the applicants' solicitors' costs on a solicitor/client basis; and it is not suggested that I should not accept his statement that he has nine children to support. 23 I think an appropriate level of penalty is $3,500. In fixing the penalty at that level, I take into account the fact that the applicants' costs on an indemnity basis will amount to a significant sum. I also take into account the fact that so far as the evidence reveals, there has been only the one contempt – that on 15 October. Mr Dannoun must understand that if he were to infringe the trade marks again in contempt of the Court's orders, the penalty would be much more severe. Conclusion 24 There will be a declaration reflecting the finding of contempt on 15 October, imposition of a penalty of $3,500 and an order for indemnity costs. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 16 November 2000 Counsel for the Applicants: Mr S G Finch SC Solicitor for the Applicants: Allen Allen & Hemsley The first Respondent appeared in person. Date of Hearing: 13 November 2000 Date of Judgment: 16 November 2000