Frito-Lay Trading Company GMBH v Aldi Stores Limited Partnership [2001] FCA 1107

FEDERAL COURT OF AUSTRALIA

Frito-Lay Trading Company GMBH v Aldi Stores Limited Partnership

[2001] FCA 1107

FRITO-LAY TRADING CO GMBH v ALDI STORES LIMITED PARTNERSHIP N180 of 2001 SACKVILLE J SYDNEY 7 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 180 OF 2001

BETWEEN: FRITO-LAY TRADING COMPANY GMBH

APPLICANT

AND: ALDI STORES LIMITED PARTNERSHIP

RESPONDENT

JUDGE: SACKVILLE J

DATE OF ORDER: 7 AUGUST 2001

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The Court notes the undertaking given on behalf of Frito-Lay Trading Company GMBH ("Frito-Lay") to reimburse Aldi Stores Limited Partnership ("Aldi") for any losses incurred by it by reason of its compliance with orders 2, 3 and 4 of Gyles J made on 24 July 2001. 2. The Notice of Motion filed by Aldi on 2 August 2001 be dismissed. 3. Aldi to pay Frito-Lay's costs of the motion. 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 180 OF 2001

BETWEEN: FRITO-LAY TRADING COMPANY GMBH

APPLICANT

AND: ALDI STORES LIMITED PARTNERSHIP

RESPONDENT

JUDGE: SACKVILLE J

DATE: 7 AUGUST 2001

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This is an application for a stay of orders made by Gyles J on 24 July 2001. Aldi Stores Limited Partnership ("Aldi"), whose Notice of Appeal has not yet been filed, seeks orders staying Orders 2, 3 and 4 made by Gyles J. His Honour delivered judgment on 23 July 2001, and the orders were made in consequence of his Honour's finding that the prospective appellant had infringed the trademark of the prospective respondent in relation to a product marketed under the name "Cheezy Twists". The orders are as follows: "2. An order that the respondent, whether by itself, its servants or agents, be restrained from infringing the applicant's registered trade mark no 166590 by distributing, supplying or offering to supply in Australia any cereal preparations which use as a trade mark registered trade mark the sign CHEEZY TWISTS or use the packaging in the form of or substantially identical to Exhibit 6. 3. An order that the respondent take all reasonable steps to recall all packaging of cereal preparations which bear the sign CHEEZY TWISTS used as a trade mark, or the packaging in the form of or substantially identical to Exhibit 6, from all stores to which such packaging has been supplied. 4. An order that the respondent provide written verification to Allens Arthur Robinson of the destruction of all packaging of cereal preparations in their possession, power or control which bear the sign CHEEZY TWISTS used as a trade mark, or the packaging in the form of or substantially identical to Exhibit 6." 2 As there is some urgency about dealing with the matter my reasons for dealing with this application will be brief. The relevant principles are those stated by Heerey J in Henderson v Armadio Pty Limited (1996) 136 ALR 593, as endorsed by the Full Court in Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65. I have also taken into account the general approach reflected in the judgment of Gray J in Westaflex Australia Pty Limited v Wood (unreported, 17 January 1990). 3 Neither party has said anything substantial about the merits of the proposed appeal. It is difficult for me to make any assessment of Aldi's prospects of success. I think it appropriate to approach the motion on the basis that the proposed appeal is not to be regarded as frivolous. 4 The affidavit material relied upon by Aldi suggests that it expects to suffer losses of some $18,700 if the restraining order and the orders to recall and destroy the existing packaging are not stayed. There is no evidence that Aldi will sustain any loss of profits if the orders remain in place pending an appeal. 5 The further disadvantage that is said to flow from the orders is that a third party (identified as Real McCoy Snack Food Company Pty Ltd) will lose the business it presently provides Aldi. That business involves manufacturing the product known as Cheezy Twists. I think prejudice to a third party can be taken into account on an application of this kind. However, the evidence on this aspect of the matter seems to me to be vague in character and limited in scope. The contractual arrangements that are referred to in the evidence appear to be liable to be terminated on very short notice, if indeed, any notice is required. In any event on the evidence it is not clear why the manufacturing of the product cannot continue, albeit in a different get-up. 6 Each party has offered undertakings. Aldi has offered to keep records of all sales of the relevant product and to prosecute its appeal with due expedition. For its part, Frito-Lay has offered to undertake to reimburse Aldi for any losses it incurs by reason of its compliance with the orders made by Gyles J, should Aldi succeed on the appeal. 7 It seems to me that in the circumstances of the present case, no stay should be ordered. In my opinion, the prejudice relied upon by Aldi is very modest and can be adequately dealt with by accepting the undertaking offered on behalf of Frito-Lay. There is nothing to prevent Aldi from marketing its product in a different get up. Any difficulty associated with this, according to the evidence, is very short term. 8 I should refer to one further matter. Aldi has pointed out that Frito-Lay is a company incorporated outside Australia and apparently has no place of business in Australia. An order for security of costs had been made against Frito-Lay prior to the trial. Aldi says that any undertaking now offered by Frito-Lay ought to be supported by the provision of an appropriate security. I think there is some merit in that submission, although it needs to be supported by more evidence than I have before me. 9 I shall reserve Aldi's right to file a motion seeking security for the undertaking given by Frito-Lay, subject to Aldi filing a Notice of Appeal. However, having regard to the relatively modest amounts that are involved, the parties may be able to resolve this matter between themselves without the need to trouble the Court further. 10 While I do not think that this appeal is one that necessarily merits extremely urgent attention, I shall nevertheless make inquiries to see whether the appeal might be listed in the current sittings. If that is not possible, I shall take steps to see whether the appeal can be dealt with in the November sittings of the Full Court. 11 I dismiss the motion. I do so on the basis of the undertaking given on behalf of Frito-Lay to reimburse Aldi for any losses incurred by it by reason of its compliance with the orders of Gyles J should Aldi succeed on the appeal. However, this is without prejudice to Aldi's right, upon the filing of a Notice of Appeal, to seek security to support the undertaking that has been given on behalf of Frito-Lay by its counsel, Mr Kerr. 12 I will further order that the prospective appellant pay the prospective respondent's costs of the motion for the stay. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice SACKVILLE .