FEDERAL COURT OF AUSTRALIA World Brands Management Pty Ltd v Cube Footwear Pty Ltd [2004] FCA 769 INTELLECTUAL PROPERTY – claim for interlocutory injunction by applicant and respondents – registered design for "bowling style" shoe – allegations of design infringement, misleading and deceptive conduct under the Trade Practices Act and passing off – whether there is a serious challenge to the registered design – whether consumers would confuse applicant's shoes with respondents' shoes – whether balance of convenience lies in favour of granting injunction – delay by the applicants in bringing motion Trade Practices Act 1974 (Cth), s 52 Smith v Grigg [1924] 1 KB 655 at 679 applied Water Recreations Pty Ltd v Fairmile Pty Ltd (1982) 42 ALR 273 at 282 applied Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120 at 124 applied Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281 discussed WORLD BRANDS MANAGEMENT PTY LTD & ORS v CUBE FOOTWEAR PTY LTD & ORS NO. V267 OF 2004 HEEREY J 4 JUNE 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V267 OF 2004 BETWEEN: WORLD BRANDS MANAGEMENT PTY LTD and OTHERS ACN 093 738 704 APPLICANTS AND: CUBE FOOTWEAR PTY LTD and OTHERS ACN 059 140 304 RESPONDENTS JUDGE: HEEREY J DATE OF ORDER: 4 JUNE 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Leave be granted to join the following parties to the proceeding as respondents: (a) Max Siano, trading as Max's shoes; (b) Sheriton Footwear Pty Ltd; (c) Kahlon Enterprises Pty Ltd; and (d) Gurpreet Singh Kalon. 1. Leave be granted to the applicants to file and serve a Further Amended Application and a Further Amended Statement of Claim in the form exhibited as the exhibit LME-1 to the affidavit of Lisa Maree Egan sworn 4 May 2004 and filed herein. 2. The applicants pay the respondents' costs thrown away by reason of the amendments and joinder referred to in paragraphs 1 and 2 above. 3. Otherwise the applicants' motion by notice dated 4 May 2004 be dismissed with costs. 4. Until trial or further order, the applicants and each of them by themselves, their agents and servants and otherwise howsoever be restrained from making demands of customers or former customers of the first respondent to cease and desist sale or offer for sale of any of the first respondent's shoes known as: (i) Cube 12230 or 91215; (ii) Cube Cult 12232 or 91216; (iii) Cube Korg 2301; (iv) Cube Ken 2300/Kato 2299; (v) Korg Kane 2301A; (vi) Korg Korg 2301; (vii) Shoobiz Latch A5 (Shoobiz brand); (viii) Clone Delay 2313 (Shoobiz brand). 1. The time for service of the first respondent's motion by notice dated 3 June 2004 be abridged. 2. The applicants pay the costs of the first, fifth, sixth and seventh respondents of and associated with the applicants' motion by notice dated 4 May 2004. 3. The costs of the parties of and associated with the respondents' motion by notice dated 3 June 2004 be reserved. 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 V267 OF 2004 BETWEEN: WORLD BRANDS MANAGEMENT PTY LTD and OTHERS ACN 093 738 704 APPLICANT AND: CUBE FOOTWEAR PTY LTD and OTHERS ACN 059 140 304 RESPONDENT JUDGE: HEEREY J DATE: 4 JUNE 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The first applicant is the exclusive distributor of footwear sold under the trade mark "Diesel" in Australia and New Zealand. The second applicant is the owner of the mark and the third applicant is the worldwide licensee and manufacturer. 2 The first applicant is the owner of registered design No 144280 dated 19 June 2001 (the Design) in respect of a design for footwear. The third applicant applies the Design to a type of casual footwear known as a bowling style. This kind of shoe has an all-leather upper, a flattish toe and a non-marking hard sole. 3 The applicants seek interlocutory injunctions against the first respondent Cube Footwear Pty Ltd (Cube), a manufacturer and importer of footwear, and the fifth, sixth, seventh and eleventh respondents who are individuals associated with Cube. It is alleged that Cube, by selling its own footwear, has infringed the Design and has committed the tort of passing off and contravened s 52 of the Trade Practices Act 1974 (Cth) (the TPA). 4 The application for an injunction will be refused for the following reasons. 5 The case based on design infringement is answered by the proposition that where there is a serious challenge to a recently registered design no interlocutory injunction should be granted: Smith v Grigg [1924] 1 KB 655 at 679, Water Recreations Pty Ltd v Fairmile Pty Ltd (1982) 42 ALR 273 at 282, Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120 at 124. 6 There is some evidence, admittedly problematic at the moment, as to prior publication in the United States at the first applicant's shoe conference and also evidence said to be inferred from the fact that copies of footwear the subject of the Design must have been shown to potential retailers some time before sales in Australia commenced in June 2001. I think it is sufficient to say that there is a challenge which is not based on frivolous or obviously untenable grounds. Moreover, I think also there is force in the foreshadowed attack on the ground of lack of distinctiveness. The design only shows a shape. It shows the sole of the shoe and the shoe in profile. Given, as I shall mention in a moment, that this type of shoe is part of a popular genre of casual shoe, there seems a real possibility of the respondents being able to show that there is a lack of distinctiveness in this particular design. 7 Turning to the TPA and passing-off claims, I do not agree that the decision of Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281 establishes some rule of law as to the circumstances which pertain in the retail footwear trade. Nevertheless, his Honour's observations are valuable in another way. They light up and provoke one's memories from personal experience as to the way in which shoes are bought by retail consumers. As counsel for the respondents pointed out, shoes are usually not a quick impulsive purchase of something off the supermarket shelf. Rather, shoes are compared and tried on and thought over. Shoes are expected to last for some years at least. If not well chosen, they may cause discomfort and regret. 8 In that context, I think it extremely unlikely that a purchaser would confuse the applicants' shoes with Cube's shoes, especially when the latter retail for about a third of the price of the former. Moreover, there is no suggestion that Cube's shoes are in any way deceptively branded. The applicants' shoes carry a distinctive trademark, which points against any conclusion that there is likely to be confusion or that the consumers will be misled. Certainly there is no evidence of any actual confusion. 9 That conclusion is reinforced by the fact that, as I have said, the evidence shows that these shoes are of a particular popular genre, of which a number of manufacturers produce models. A consumer is likely to choose between different embellishments or decorations or other features and to have regard to the brand and the price of the shoes. 10 I think also the balance of convenience lies against the grant of the injunction. In my opinion, counsel for the respondents was justified in criticising the delay, particularly since December last year, when it seemed reasonable enough to the respondents that the matter had come to rest. 11 In the circumstances it is reasonable to grant the injunctive relief sought by the respondents against threats by the applicants, modified as was suggested in argument. To grant such an injunction is consistent with maintaining the status quo. By rejecting the applicants' claim for an injunction means the respondents can, pending trial, lawfully deal with these products. It would be inconsistent with the proper conduct of the litigation for the applicants to make further threats in relation thereto. 12 I will dismiss the applicants' application. I will grant the respondents' application in the terms of the draft except that 5(a) and (b) will be deleted and (c) the words "without limiting the generality of the foregoing" will be deleted. 13 I will adjourn the directions hearing to a date to be fixed. The respondents to the applicants' motion should have their costs of that motion and the costs of the respondents' motion will be reserved. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. Associate: Dated: 16 June 2004 Counsel for the Applicants: C Golvan Solicitor for the Applicants: Middletons Counsel for the first, fifth, sixth, seventh and eleventh Respondents: G McGowan Solicitor for the first, fifth, sixth, seventh and eleventh Respondents: West & Co Date of Hearing: 4 June 2004 Date of Judgment: 4 June 2004