FEDERAL COURT OF AUSTRALIA John Brodel v Telstra Corporation [2004] FCA 505 practice and procedure – application to review decision of Registrar – motion for summary judgment – whether proceeding discloses no reasonable cause of action – application refused Federal Court of Australia Act 1976 (Cth), s 35A Copyright Act 1968 (Cth), ss 32(1), 134 Trade Marks Act 1995 (Cth), ss 20, 120 Limitation of Actions Act 1958 (Vic), s 5(1) Federal Court Rules, O 20, r 2 Re Kwiatek and Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 followed Martin v Commonwealth Bank of Australia [2001] FCA 87 applied Cottrell v Wilcox [2001] FCA 866 applied General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied Dey v Victorian Railways Commissioners (1949) 78 CLR 62 applied Webster v Lampard (1993) 177 CLR 598 applied Francis Day and Hunter Ltd v Twentieth Century Fox Corporation Ltd [1940] AC 112 considered Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119 considered Green v Broadcasting Corporation of New Zealand (1983) 2 IPR 191 considered Sullivan v FNH Investments Pty Ltd (2003) 57 IPR 63 considered Brodel v Farnsworth (unreported, Finkelstein J, 1 August 2003) considered ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 referred to Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 referred to JOHN BRODEL v TELSTRA CORPORATION LIMITED ABN 33 051 77 V 615 of 2003 KENNY J 26 APRIL 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V615 OF 2003 BETWEEN: JOHN BRODEL APPLICANT AND: TELSTRA CORPORATION LIMITED ABN 33 051 77 RESPONDENT JUDGE: KENNY J DATE OF ORDER: 26 APRIL 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application to review the decision of the Registrar made 17 December 2003 be refused. 2. The proceeding be dismissed pursuant to O 20 r 2 of the Federal Court Rules. 3. The applicant pay the respondent's costs of the proceeding, including the costs of the motion before the Registrar and the costs of the application to review the decision of the Registrar. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V615 OF 2003 BETWEEN: JOHN BRODEL APPLICANT AND: TELSTRA CORPORATION LIMITED ABN 33 051 77 RESPONDENT JUDGE: KENNY J DATE: 26 APRIL 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT application 1 This is an application under subs 35A(5) of the Federal Court of Australia Act 1976 (Cth) to review a Registrar's decision made on 17 December 2003. Subsection 35A(6) provides as follows: The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. A review under subs 35A(6) on an application under subs 35A(5) is by way of a hearing de novo: see Re Kwiatek and Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 381 per Northrop J; Martin v Commonwealth Bank of Australia [2001] FCA 87 at [6] and [12] per North, Mansfield and Katz JJ; Cottrell v Wilcox [2001] FCA 866 at [8] per Sundberg, Emmett and Finkelstein JJ. 2 On 17 December 2003, acting under O 20 r 2 of the Federal Court Rules ("the Rules"), a Registrar of the Court dismissed Mr Brodel's application claiming damages for "breach of copyright of trade mark (common law)", on the ground that the application disclosed no reasonable cause of action. This is the decision that Mr Brodel now challenges. Order 20 r 2 provides as follows: (1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. (2) The Court may receive evidence on the hearing of an application for an order under sub-rule (1). The Registrar dismissed Mr Brodel's application for damages, on the application of the respondent made by way of motion dated 18 September 2003. the matter before the court 3 In support of his original application, Mr Brodel filed an affidavit, apparently sworn on 6 August 2003. There were a number documents attached to the affidavit. They included: · Letter of acceptance dated 8 March 1991 from Telecom Australia (now the respondent) to The Australian Fax Company; · Letter dated 24 August 2000 from Mr Brodel, The Australian Fax Company, to Mr Robert Kelson, Callinan and Lawrie; · Letter dated 26 January 1991 from Mr Brodel, The Australian Fax Company, to Mr David Petch, National Supply Manager, Telecom Mobile Phones; · Certificate of Registration of Trade Mark No 875456; · Certificate of Registration of Business Name No 1300243U; · Notice of discovery; and · Statutory declaration of 26 May 2000 made by Mr Brodel. 4 At the time the Registrar made his decision, the Registrar had before him Mr Brodel's application, this affidavit and the material that accompanied it. By the affidavit of 6 August 2003, Mr Brodel deposed that: - He wishes to submit to this Court statutory declarations showing evidence of ownership of trade mark ("Smartfax"), which he first applied for on 9 March 1990 (Application No 530295). - He commenced use of the trade mark in late 1990 when he tendered for a contract with Telecom to supply facsimile equipment and his tender was accepted (Contract No C51844). At this point he was trading as The Australian Fax Company. - He was trading at the time of the tender application with Telecom. - Telecom registered the trade mark in mid-1994 and marketed a facsimile product for a number of years. - After a prolonged request by his patent attorney, Mr Robert Kelson of Melbourne, Telecom withdrew the application and he was compensated for costs. - He now claims trade mark infringement and violation of his common law rights to the trade mark. Mr Brodel filed another affidavit on 26 September 2003, in which he deposed: - His trade mark was infringed on or about July 1994 by Telecom. - His "Common Law, Copyright of Trademark has been breached". - He has a right of appeal. 5 In support of its motion for summary dismissal, the respondent relied on the affidavit of Natalie Jean Hickey sworn on 18 September 2003. 6 Mr Brodel filed a further affidavit on 20 April 2004. By this affidavit he deposed to lodging documents from his patent attorney, Mr Robert Kelson, to support his application to review the Registrar's decision of 17 December 2003. There are a number of documents attached to this affidavit, including a letter dated 1 October 1996 from Mr Kelson to Mr Brodel; a fax cover sheet date-stamped 24 September 1996 from the Australian Industrial Property Organisation ("AIPO") to Mr Kelson; application for registration of a trade mark No 530295 dated 8 March 1990 and date-stamped 9 March 1990 by the Patent Office; letter dated 26 September 1996 from AIPO to The Australian Fax Co; letter dated 16 September 1996 from Mr Brodel; and status reports for trade mark applications, including Nos 652986, 652987 and 530295. 7 On the basis of Mr Brodel's affidavits and the material that accompanied them, together with Ms Hickey's affidavit and the exhibits accompanying it, the respondent provided the following chronology. 9 March 1990 Mr Brodel applied to register "SmartFAX" in class 38 (application no 530295). 26 January 1991 Mr Brodel, as the managing director of The Australian Fax Company, tendered to Telecom Australia to supply mobile facsimile machines. 4 February 1991 Telecom Australia accepted tender for trial purchase of 50 portable facsimile machines from Mr Brodel. 8 March 1991 Letter of Acceptance from Telecom Australia to The Australian Fax Company regarding the supply of equipment. 21 March 1991 Contract variation letter from Telecom Australia to The Australian Fax Company. 1991 Mr Brodel supplied 50 facsimile machines to Telecom Australia branded "Telecom" (not "Smartfax"). Mr Brodel agreed not to compete in the market using the name "Smartfax". 1 November 1991 Application no 530295 lapsed. July 1994 Alleged infringement of trade mark by Telstra. 17 October 1996 Mr Brodel applied to register "Smartfax" in class 9 (application no 719813). May 2000 Mr Brodel entered into negotiations to supply facsimile machines to retailers, with no intention of selling to public. 16 January 2001 Application 719813 withdrawn by Mr Brodel. 11 May 2001 Mr Brodel applied to register composite "Smartfax" logo in class 9 (application no 875456). Registration was successful. 8 Mr Brodel did not contest the accuracy of this chronology. Having regard to what I am about say, I draw attention to the following matters: - In early 1991, Mr Brodel was apparently using the word "Smart FAX". For example, the words appeared on the letterhead of The Australian Fax Company in January 1991. This is consistent with Mr Brodel's statement that he commenced using the words "Smart FAX" when he tendered for a contract with the respondent. - In early 1991, in the course of negotiating the sale of facsimile machines to the respondent, Mr Brodel apparently agreed with the respondent that he would "brand the goods with a Telecom sticker and that [he] would not compete in the market place as a competitor using [his] trade mark "Smartfax": see letter dated 24 August 2000 from Mr Brodel to Mr Kelson, attached to Mr Brodel's affidavit of 6 August 2003. - The respondent marketed a product using "SMART FAX" in July 1994, and possibly "for a number of years": see Mr Brodel's affidavit of 22 September 2003 and his statutory declaration of 10 June 1998, which is exhibit NJH4 to Ms Hickey's affidavit. Mr Brodel alleges that the infringing acts or passing off occurred in July 1994. - Mr Brodel believed that he was "inhibited from using the trade mark SMART FAX" by the respondent's trade mark application No 652986 (filed 14 February 1995) until the application was withdrawn in May 2000: see Mr Brodel's statutory declaration of 26 May 2000, which is attached to his affidavit of 6 August 2003. consideration of summary judgment application 9 The Court will only dismiss or stay a proceeding under O 20 r 2 in a very clear case. In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 ("General Steel") at 128-129, Barwick CJ accepted that: [T]he jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. The standard of satisfaction required for summary judgment is that stated in General Steel at 129-130: see also Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J and Webster v Lampard (1993) 177 CLR 598 at 602-603 per Mason CJ, Deane and Dawson JJ. 10 By his application, Mr Brodel raises three possible causes of action: infringement of trade mark, infringement of copyright and passing off. I examine below each cause of action. (a) Infringement of trade mark 11 The material before the Court indicates that Mr Brodel applied to register the trade mark "SmartFAX" in class 38 on 9 March 1990 and that this application lapsed on 1 November 1991. He subsequently applied to register the trade mark "SMARTFAX" in class 9 on 17 October 1996, and this application was withdrawn on 16 January 2001. On 11 May 2001, Mr Brodel successfully applied to register a composite trade mark in class 9. This registration was advertised on 11 April 2002. Having regard to these facts, the respondent submits that the applicant acquired exclusive rights under the Trade Marks Act 1995 (Cth) only in relation to the trade mark, which was the subject of application in May 2001. It further submits that those rights first accrued on the date the registration of the mark was deemed to have taken effect, namely, 11 May 2001. 12 I accept the respondent's submissions. Subsections 20(1) and (3) of the Trade Marks Act 1995 (Cth) provide as follows: (1) If a trade mark is registered, the registered owner of the trade mark has, subject to this Part, the exclusive rights: (a) to use the trade mark; and (b) to authorise other persons to use the trade mark; in relation to the goods and/or services in respect of which the trade mark is registered. … (3) The rights are taken to have accrued to the registered owner as from the date of registration of the trade mark. Subsection 120(1) of the Trade Marks Act 1995 (Cth) further provides: A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. Mr Brodel alleges that there was an infringement of his trade mark in July 1994. His rights as the registered owner of a trade mark did not, however, accrue until 11 May 2001. He does not allege that the respondent used as a trade mark a sign that was substantially identical with, or deceptively similar to, his registered mark on or after 11 May 2001. There is therefore no tenable basis for Mr Brodel's action for infringement of the trade mark registered on 11 May 2001 in respect of the respondent's conduct prior to that date. (b) Infringement of copyright 13 The respondent also submits that the applicant has no tenable cause of action for infringement of copyright, since the word "Smartfax" does not constitute an original literary work in which copyright is capable of subsisting under s 32(1) of the Copyright Act 1968 (Cth). In support of this submission the respondent relies upon Francis Day and Hunter Ltd v Twentieth Century Fox Corporation Ltd [1940] AC 112 ("Francis Day"); Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119 ("Exxon Corporation"); Green v Broadcasting Corporation of New Zealand (1983) 2 IPR 191 ("Green"); and Sullivan v FNH Investments Pty Ltd (2003) 57 IPR 63 ("Sullivan"). 14 In Francis Day,the Judicial Committee of the Privy Council held that the song title "The Man Who Broke the Bank at Monte Carlo" was not an original literary work, and copyright did not extend to it, observing at 123: There may have been a certain amount, though not a high degree, of originality in thinking of the theme of the song, and even in choosing the title, though it is of the most obvious. To "break the bank" is a hackneyed expression, and Monte Carlo is, or was, the most obvious place at which that achievement or accident might take place. 15 In Exxon Corporation, at 143-145, the English Court of Appeal held that the word "Exxon" did not qualify for copyright protection as "an original literary work". In connection with the Copyright Act 1842 (UK), Stephenson LJ said at 143: I would have thought, unaided or unhampered by authority, that unless there is something in the context of the Act which forbids it, a literary work would be something which was intended to afford either information and instruction, or pleasure in the form of literary enjoyment, whatever those last six words may add to the word "pleasure." Mr. Price has not convinced me that this word "Exxon" was intended to do, or does do, either of those things; nor has he convinced me that it is not of the essence of a literary work that it should do one of those things. 16 In Green,Ongley J of High Court of New Zealand, held that the title of a talent quest show, "Opportunity Knocks", did not constitute an original literary work and copyright did not subsist in the title. More recently, in Sullivan, Jacobson J held that copyright did not subsist in the slogans "Somewhere in the Whitsundays" and "The Resort that Offers Precious Little". His Honour held, at 75-76, that authorship of the slogans did not require "the requisite degree of judgment, effort and skill to make it an original literary work in which copyright may subsist". 17 Having regard to these authorities, I accept that, as the respondent submits, there is no tenable claim that the word "Smartfax" constitutes an original literary work in which copyright is capable of subsisting under subs 32(1) of the Copyright Act 1968. 18 If I were wrong in this (and copyright were capable of subsisting in the word "Smartfax") Mr Brodel's action for infringement of copyright would nonetheless fail. This is on account of s 134 of the Copyright Act 1968 (Cth). Section 134 provides as follows: (1) An action shall not be brought for an infringement of copyright or in respect of the conversion or detention of an infringing copy, or of a device (including a circumvention device) used or intended to be used for making infringing copies, after the expiration of six years from the time when the infringement took place or the infringing copy or device was made, as the case may be. (2) An action may not be brought under section 116A, 116B or 116C in respect of an act done by a person if more than 6 years have elapsed from the time when the act was done. 19 As already noted, Mr Brodel commenced this proceeding an application filed on 6 August 2003. As at that date, by virtue of s 134, any cause of action for copyright infringement accruing prior to 6 August 1997 was barred by statute. According to Mr Brodel, the respondent's alleged infringing action took place in July 1994 and, in consequence, any action in respect of this infringement can no longer be pursued. As his application presently stands, Mr Brodel has not alleged any infringing action after August 1997 and his action for copyright infringement would be bound to fail. passing off 20 In Brodel v Farnsworth (unreported, Federal Court of Australia, 1 August 2003) Finkelstein J said at [3]: A person who uses a mark in the course of business may have a claim against another under the common law action of passing off notwithstanding that the mark is unregistered. The underlying principle behind passing off is that a person should not represent his goods and services to be those of another. A plaintiff who seeks to bring an action for passing off must demonstrate the following: (i) he had an established reputation or goodwill in the relevant goods or services; (ii) there is or will be a misrepresentation by the defendant that its goods or services are those of the plaintiff and, as a result, confusion or deception is likely to be experienced by the general public; and (iii) there is or will be damage to the plaintiff's goodwill or reputation as a result of (ii). It is probably the case that property rights in an unregistered mark will exist only for the period in which the mark is distinctive of a plaintiff's goods or services in the eyes of a substantial number of the relevant sections of the public. This statement of the elements of an action for passing off is supported by the authorities: see, e.g., ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 308-309 per Lockhart J and 355-356 per Gummow J; and Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at 858 and 861. 21 The respondent submits that: (a) [Mr Brodel] has not produced any evidence to suggest that he had at any time any established reputation or goodwill in the name 'Smartfax' when applied to facsimile machines. To the contrary, [Mr Brodel's] evidence is that: · he commenced use of the name 'Smartfax' in late 1990 by tendering to Telecom to supply facsimile machines; · apart from that tender, he did not use the name 'Smartfax' in relation to facsimile machines until about May 2000; and · the facsimile machines he supplied to Telecom pursuant to that tender were branded 'Telecom', not 'Smartfax'. (b) There is no evidence that the respondent misrepresented that its goods or services were those of [Mr Brodel]. Logically, no such misrepresentation could have occurred. As the applicant did not have any reputation or goodwill in the name 'Smartfax', there was no possibility of the general public being confused or deceived. (c) In the circumstances where the applicant did not have any reputation or goodwill in the name 'Smartfax', [Mr Brodel] cannot have suffered any relevant damage. 22 Mr Brodel's case is that he commenced using the name "Smartfax" in early 1990 in tendering to the respondent to supply facsimile machines and that, by agreement with the respondent, he ceased to use the name "Smartfax" and to compete in the market using that name by February or March 1991. On his own account, he did not use the name "Smartfax" again until May 2000. In these circumstances, as presently formulated, Mr Brodel's case in passing off is untenable, because he would be unable to establish that he had an established reputation or goodwill in the "Smartfax" product as at July 1994 and, so it seems, in the years immediately thereafter. 23 Furthermore, any action in passing off that depended upon conduct taken prior to 6 August 1997 would be barred by statute. This is the effect of s 5(1) of the Limitation of Actions Act 1958 (Vic). 24 At the hearing, Mr Brodel stated that he had purchased one of the respondent's "Smartfax" machines in August 2000. Implicit in this statement was a submission that he had a cause of action that was not statute-barred. It seems to me, however, that a cause of action alleging this fact would also probably be untenable. In a statutory declaration made 26 May 2000, which was attached to his affidavit of 6 August 2003, Mr Brodel stated that on or about 26 May 2000, he had entered into negotiations with retail companies and a supplier to retail companies to "supply those organisations with facsimile machines for retail sale under the trade mark SMARTFAX". He added, however, that: My market is the buying representatives of those organisations in similar organisations. At present I do not intend to sell direct to the public. Accordingly, I do not and will not advertise the goods myself. 25 In these circumstances, it seems unlikely that Mr Brodel could establish at any trial that, as at August 2000, he had any relevant established reputation or goodwill; and that the respondent misrepresented that its goods or services were his and, as a result, confusion or deception was likely to be experienced by the general public. That is, even if Mr Brodel were to reformulate his claim in the manner adumbrated at the hearing, his prospects of success would probably remain very low. summary 26 For the reasons stated, I accept, as the respondent submits, that Mr Brodel's case, as presently formulated, is plainly untenable. Accordingly I would dismiss the application to review the Registrar's decision of 17 December 2003. Mr Brodel should pay the respondent's costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate: Dated: 26 April 2004 The applicant appeared for himself Counsel for the Respondent: Dr M J Collins Solicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 23 April 2004 Date of Judgment: 26 April 2004