FEDERAL COURT OF AUSTRALIA Safari Automotive Technology Pty Ltd v Ironman 4x4 Pty Ltd [2009] FCA 1330 TRADE PRACTICES –interlocutory injunction - restraining from importing distributing supplying offering for sale or selling goods of a same design and appearance - passing off - breach of ss 52 and 53 of the Trade Practices Act 1974 (Cth). EVIDENCE – hearsay expert opinion – need to comply with ss 76 and 79 of the Evidence Act 1995 (Cth). Copyright Act 1968 (Cth) Evidence Act 1995 (Cth) Trade Practices Act 1974 (Cth) Apand Pty Ltd v Kettle Chip Pty Ltd (1994) 52 FCR 474 Bayer Bioscience NV v Deltapine Australia Pty Ltd (No.2) (2006) 71 IPR 40 Cooke v Commissioner of Taxation (2002) 51 ATR 223 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd and Others (1999) 44 IPR 281 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Philips Electronics NV and Another v Remington Consumer Products Australia Pty Ltd (1997) 40 IPR 279 Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90 Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Limited (2001) 53 IPR 481 Sebel Furniture Ltd v Acoustic & Felts Pty Ltd (2009) 80 IPR 244 SAFARI AUTOMOTIVE TECHNOLOGY PTY LTD (ACN 071 262 756) and AUSTRALIAN PERFORMANCE DEVELOPMENT PTY LTD (ACN 096 857 082) v IRONMAN 4X4 PTY LTD (ACN 005 327 882) and ANGELLA PTY LTD (ACN 100 783 980) VID 748 of 2009 MIDDLETON J 18 NOVEMBER 2009 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 748 of 2009 BETWEEN: SAFARI AUTOMOTIVE TECHNOLOGY PTY LTD (ACN 071 262 756) First Applicant AUSTRALIAN PERFORMANCE DEVELOPMENT PTY LTD (ACN 096 857 082) Second Applicant AND: IRONMAN 4X4 PTY LTD (ACN 005 327 882) First Respondent ANGELLA PTY LTD (ACN 100 783 980) Second Respondent JUDGE: MIDDLETON J DATE: 18 NOVEMBER 2009 PLACE: MELBOURNE REASONS FOR JUDGMENT INTRODUCTION 1 This application for interlocutory injunctions came on before me as a matter of urgency. 2 On 27 October 2009, after considering the submissions of the parties, and upon certain undertakings being given, orders were made by the Court. 3 I now provide my reasons for dismissing the application for interlocutory relief. 4 The applicants' claims arise under the Copyright Act 1968 (Cth), the Trade Practices Act 1974 (Cth) ('Trade Practices Act'), and the tort of passing off. I do not need to deal with the Copyright Act aspects as they have been resolved by the giving of appropriate undertakings by the first and second respondents. 5 The parties are well familiar with the background to this litigation but a few salient points can be made. 6 Since 1989 Safari Automotive Technology Pty Ltd ('Safari') or its predecessors in business designed manufactured distributed and sold throughout Australia and the world snorkels for four wheel drive vehicles ('Safari Snorkels'). It is alleged by Safari that the Safari Snorkels are physically recognisable and can be distinguished from other snorkels in the Australian market place without the need to refer to the Safari trade mark. 7 Safari Snorkels account for approximately 66% of snorkel sales in Australia each year and there would be appear to be one major competitor in Australia. Undoubtedly, and I am prepared to accept, Safari and Safari Snorkels had become well known in the minds of traders and consumers of four wheel drive vehicles and vehicle accessories in Australia, and Safari has generated a substantial goodwill and reputation in Australia in relation to Safari Snorkels. 8 The first respondent, Ironman 4x4 Pty Ltd ('Ironman') imports distributes advertises offers for sale and sells snorkels which have a similar design and appearance to some models of the Safari Snorkels ('the Ironman Snorkels'). The second respondent sells both Safari Snorkels and Ironman Snorkels. APPLICANTS' CLAIMS 9 By their application the applicants seek interlocutory injunctions effectively restraining the respondents from importing distributing supplying offering for sale or selling in Australia snorkels of a same design and appearance as the Safari Snorkels, which conduct they allege constitutes passing off or a breach of ss 52 and 53 of the Trade Practices Act. 10 In essence, the applicants claims under the Trade Practices Act can be summarised as follows:- · Various statements in catalogues and on websites that Ironman Snorkels are made of 'high quality polyethylene and are UV resistant for long life' are false; · False representations are made because of the identical physical appearance to Safari Snorkels together with wholly copied copyright works included in Ironman Snorkel kits. Additionally, the Ironman representations of quality suggest falsely that Ironman Snorkels are of a commensurate quality or have the same design and manufacturing providence, or the same performance characteristics, uses or benefits, or are sponsored by Safari or Australian Performance Development Pty Ltd ('APD') or that Ironman is sponsored or approved by Safari or APD. 11 The claim in relation to passing off is that the identical physical appearance of Safari Snorkels together with a wholly copied copyright works included in Ironman Snorkel kits and the Ironman representations as to quality, suggest falsely that Ironman Snorkels are commensurate in quality and that Ironman's 4x4 Snorkel business is licensed or approved by Safari or APD. PRINCIPLES OF LAW 12 The relevant principles relating to the grant of interlocutory injunctions are well known and were conveniently set in a recent decision of Foster J in Sebel Furniture v Acoustic and Felts Pty Limited (2009) 80 IPR 224 paras 19 – 31. Relevantly in this case I stress the following aspects: (a) it is sufficient that an applicant show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial, and an applicant does not need to show that it is more probable than not that at trial the applicant will succeed; (b) if the Court looks at the evidence before it, and there is a probability that at the trial of the action the applicant will be entitled to relief then the applicant has established a prima face case; (c) whether an injunction should be granted will depend upon the inter-relationship between the probability that at the trial of the action the applicant will be held entitled to relief and questions of the adequacy of damages and the balance of convenience. 13 At this point it is also convenient to state some general principles in relation to the Trade Practices Act and the tort of passing off which I do not consider to be seriously in contention. 14 In the absence of copyright design or trade mark protection a person is free to copy a rival's product so long as the product is clearly identified as being of his own: see eg Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 200 per Gibbs CJ; Philips Electronics NV and Another v Remington Consumer Products Australia Pty Ltd (1997) 40 IPR 279 ('Philips (1997) 40 IPR 279') per Lehane J at 294; Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90 ('Remington (2000) 100 FCR 90') at [37] – [47]; Dr Martens Australia Pty Ltdv Figgins Holdings Pty Ltd and Others (1999) 44 IPR 281 at 358 per Goldberg J; Sebel (2009) 80 IPR 244 per Foster J at [176] – [181]. 15 In Puxu (1982) 149 CLR 191Gibbs CJ held (at 199-200): Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. See also Mason J at 210-11 and Brennan J at 224-6. 16 In both Remington (2000) 100 FCR 90and Sebel (2009) 80 IPR 244, the applicant for interlocutory relief failed to establish a prima facie case of passing off or breaches of ss 52 and 53 of the Trade Practices Actwhere the conduct complained of comprised merely the distribution and sale of goods of the same shape or appearance as the applicants' goods in circumstances where the goods were otherwise clearly labelled; Philips (1997) 40 IPR 279at 294, Remington (2000) 100 FCR 90 at [40]-[41] and Sebel at [181] and [184]. CONSIDERATION 17 It is convenient to make some observations as to some of the preliminary submissions before going through the major aspect of this case dealing with the Trade Practices Act and passing off allegations. 18 Evidence was sought to be introduced mainly through an affidavit sworn on 16 October 2009 by David Edward Inall (the Engineering and Marketing Manager of Safari) as to certain testing of the Ironman Snorkels by independent engineers. 19 Mr Inall deposed that he engaged Falcon Test Engineers ('Falcon') an independent accredited test laboratory to conduct an assessment of the quality of the Ironman Snorkels. A copy of the test report was exhibited; the effect of the evidence was to demonstrate the UV performance of the Ironman Snorkels to be 'very poor'. Falcon also concluded that the Ironman Snorkels were significantly weaker in impact strength than a Safari Snorkel. 20 The first conclusion was relevant to the substantive claim made against the respondents, and the second conclusion went to the question of balance of convenience because it was said that there were safety issues which would compel the Court's intervention at this early stage. 21 Issues arose as to the admissibility of the Falcon evidence. I will assume that the hearsay expert evidence is admissible by virtue of the operation of s 75 of the Evidence Act 1995 (Cth) ('the Evidence Act'). However, I take the view that whilst this is not evidence of an opinion given by a witness in court, the requirements in ss 76 and 79 of the Evidence Act apply. There is no reason why hearsay evidence of an opinion should not have to meet the requirements of admissibility of opinion evidence set out in the Evidence Act. 22 Upon reading the Falcon report it seems to be abundantly clear that it does not comply with s 79; it is not even clear who is the author of the opinion or who carried out the appropriate tests: see Cooke v Commissioner of Taxation (2002) 51 ATR 223. It is also not clear to me that the author of the report has sufficiently disposed the facts upon which the opinion is based. 23 I do accept that evidence given by an expert witness regarding observations of testing may not be opinion evidence for the purposes of the general exclusionary rule for opinion evidence. However, in this case without the benefit of the conclusions of the expert, I can reach no conclusions of the type pressed by the applicants based upon the test results which have been presented to the Court. 24 I therefore rule that the Falcon tests are inadmissible and any material relying upon such test is equally inadmissible as irrelevant. 25 If I am wrong in this ruling then having regard to the importance of the evidence, and the clear opportunity which the applicants have had to present the evidence directly, other than through Mr Inall, I put no weight on this evidence. 26 Therefore, I do not treat the Falcon tests as establishing (even at this early stage) the matters sought to be concluded by Mr Inall in his affidavit. 27 As a separate matter, I should indicate that I do not accept that by reason of the operation of O 58 r 31 of the Rules of Court that the evidence sought to be introduced by the applicants on this issue (including the Falcon tests) should be rejected. The Rule would not prevent this Court from considering the Flacon tests sought to be introduced by the applicants if they otherwise complied with the requirements of the Evidence Act: see generally Bayer Bioscience NV v Deltapine Australia Pty Ltd (No.2) (2006) 71 IPR 40 per Heerey J. 28 I now turn to the relevant claims. 29 As to the allegation that there was a false representation that the Ironman Snorkels were made with high quality polyethylene and were UV resistant for long life, in view of my rejection of the evidence in support of this claim (or alternatively my putting no weight on this evidence) that claim has not been established, even at this interlocutory stage. 30 As to the other allegations, the answer to these is that the Ironman Snorkels are distinctly branded and sold. Ironman has a significant and valuable reputation in Australia as a supplier of accessories for four wheel drive vehicles. Ironman is well known to consumers. The evidence shows that the Ironman snorkels are distinctly branded and packaged and sold as being Ironman Snorkels. 31 In my view, Ironman clearly brands its own products at the time at which the purchaser or consumer is making a decision to purchase those products. The evidence overwhelmingly indicates that the Ironman Snorkels are marketed and sold in circumstances where it would be clear to a consumer that they are Ironman products. That clear indication of brand would remain with the consumer well after the time of purchase. 32 I see no basis to distinguish the approach taken in Philips (1997) 40 IPR 279and Sebel 80 IPR 224. 33 Undoubtedly there are instances were the use of a trade mark might not prevent consumers being misled. Sometimes the powerful similarities of get-up overcome distinctive naming: see for example Apand Pty Ltd v Kettle Chip Pty Ltd (1994) 52 FCR 474 and Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Limited (2001) 53 IPR 481. 34 I also accept that by looking just at the snorkels themselves there is a resemblance with the new product and the Safari snorkel, although both have their own name embossed on each product. I also accept that Ironman copied the Safari Snorkel and templates. 35 However, as was noted in Remington (2000) 100 FCR 90 at [43]: …Of course, some people might, probably unjustifiably, and probably transiently, associate the new product in some way with the only product of that sort previously available. However, if anyone were misled as a result, it would not be by the conduct of the intruder upon the monopoly, but by virtue of an inherent problem of the situation. Nor is such a difficulty to be attributed to passing off, provided the goods in question are appropriately and clearly branded. Here, the Remington brand is prominent and virtually ubiquitous. 36 The Full Court continued at [45]: …The public is thoroughly accustomed to competing brands of almost identical products, which may or may not have some link – or may not today, but may tomorrow, share an over-all owner, by virtue of a takeover or purchase. A similar suggestion, made in the Dr Martens case, was there described (at FCR 148) as 'fanciful' and 'bizarre'. 37 I do not think it has been demonstrated that a person familiar with Safari products would inevitably conclude an association between Safari and Ironman Snorkel in view of the branding that takes place by the Ironman products and the presence in the market place of both Safari and Ironman. 38 I therefore came to the view that the applicants have a very weak prima facie case, and that if the evidence remained as it was the applicants would not obtain the relief they seek. 39 Putting aside the issue of public interest in preventing grossly substandard products flooding the Australian market (an assertion I reject as there is no evidence substantiating such a claim) the question then arises as to whether damages are an inadequate remedy and the balance of convenience is in favour of the applicants. 40 As I have indicated these issues are not to be treated in isolation from the issue of the serious question to be tried. It may be that even if there is a weak prima face case, the balance of convenience may be so overwhelmingly in favour of an applicant, that the grant of an interlocutory injunction is appropriate. 41 Further, there are a number of contentions of the applicants I accept. Ironman has only just launched the particular product the subject of the injunctions sought, this product being only one of a very large range of Ironman products. There are also difficulties with calculating losses when diversion is made to a third party because of the sales, or the possibility of depressed prices from illegitimate competition. 42 However, having reached the conclusion that the claim of the applicants is very weak I consider that this substantially neutralises the submissions made as to the adequacy of damages as a remedy and the balance of convenience in favour of the applicants. 43 Further, I consider the applicants underestimate the impact an injunction will have on the respondents, particularly the first respondent. I do not consider that the measures suggested by the applicants could be implemented without disruption to the respondents business, and perhaps, more importantly, their reputation. Whilst Ironman has only just launched the Ironman Snorkel, it has nevertheless entered the market sufficiently for an injunction to intrude into its legitimate business activities. 44 I also take into consideration that fact that the first respondent has offered to give an undertaking to keep an account. Whilst I accept this does not overcome all of the difficulties suggested by the applicants in assessing damages, it is a matter to be considered in the balance. 45 For the above reasons, the interlocutory relief was refused. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. Associate: Dated: 18 November 2009 Counsel for the Applicants: Mr G McGowan SC with Ms S Ryan Solicitor for the Applicants: Rush & Failla Counsel for the First Respondent: Mr SR Horgan SC with Ms GL Schoff Solicitor for the First Respondent: Davies Collison Cave Counsel for the Second Respondent: Self Represented Date of Hearing: 27 October 2009 Date of Judgment: 18 November 2009