FEDERAL COURT OF AUSTRALIA Christian v Société Des Produits Nestlé S.A. [2014] FCA 1075 Citation: Christian v Société Des Produits Nestlé S.A. [2014] FCA 1075 Appeal from: Application for leave to appeal: Société Des Produits Nestlé SA & Anor v Christian & Anor (No.4) [2014] FCCA 2025 Parties: JAMES WILLIAM CHRISTIAN and MARK CHARLES CHRISTIAN v SOCIÉTÉ DES PRODUITS NESTLÉ S.A. and NESTLÉ AUSTRALIA LTD ACN 000 011 316. File number(s): NSD 940 of 2014 Judge(s): YATES J Date of judgment: 2 October 2014 Catchwords: PRACTICE AND PROCEDURE – application for leave to appeal from interlocutory judgment of the Federal Circuit Court of Australia Legislation: Federal Court Rules 2011 (Cth); r 36.08 Cases cited: Nokia Corporation v Liu (2009) 179 FCR 422 Societe Des Produits Nestle S.A. & Another v Christian & Another (No 4) [2014] FCCA 2025 Societe Des Produits Nestle S.A. v Christian (No 5) [2014] FCCA 2234 Date of hearing: 2 October 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 37 First Applicant: In person Counsel for the First and Second Respondents: Mr S Burley SC with Mr B Mee Solicitor for the First and Second Respondents: Banki Haddock Fiora IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 940 of 2014 BETWEEN: JAMES WILLIAM CHRISTIAN First Applicant MARK CHARLES CHRISTIAN Second Applicant AND: SOCIÉTÉ DES PRODUITS NESTLÉ S.A. First Respondent NESTLÉ AUSTRALIA LTD ACN 000 011 316 Second Respondent JUDGE: YATES J DATE OF ORDER: 2 OCTOBER 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants' application for leave to appeal and the interlocutory application dated 16 September 2014 stand over for further hearing at a date and time to be appointed following the giving of judgment in SYD3214/2013 in relation to the respondents' claim for further injunctive relief to be heard by the Federal Circuit Court on 9 October 2014. 2. Within 48 hours of the Federal Circuit Court judgment referred to in Order 1 being given, the parties are to approach the Associate to Yates J to have the application for leave to appeal and the interlocutory application listed for further hearing. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 940 of 2014 BETWEEN: JAMES WILLIAM CHRISTIAN First Applicant MARK CHARLES CHRISTIAN Second Applicant AND: SOCIÉTÉ DES PRODUITS NESTLÉ S.A. First Respondent NESTLÉ AUSTRALIA LTD ACN 000 011 316 Second Respondent JUDGE: YATES J DATE: 2 OCTOBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) 1 On 3 September 2014, the Federal Circuit Court of Australia (the Federal Circuit Court) gave judgment against James William Christian (the applicant) for infringement of registered trade marks 563325, 563326 and 1172510: Societe Des Produits Nestle S.A. & Another v Christian & Another (No 4) [2014] FCCA 2025 (the primary judge's reasons). 2 The trade marks are owned by the first respondent to this application. The second respondent is the authorised user of those marks in respect of dietary supplements and sports nutrition goods. Trade Marks 563325 and 563326 are for the word MUSASHI simpliciter. Trade mark 1172510 is a device mark which includes the word MUSASHI (the Musashi device mark). 3 The Federal Circuit Court made the following orders: (1) By importing into, and selling and offering for sale supplements and therapeutic products in Australia under or by reference to the mark "A-SASHI" (A-SASHI Word Mark) and the devices appearing in annexure "A" to the reasons for judgment (First A-SASHI Device Mark and Second A-SASHI Device Mark), the first respondent has, within the meaning of s.120 of the Trade Marks Act 1995 (Cth), infringed Australian Registered Trade Marks: (a) 563325 MUSASHI in class 5; (b) 563326 MUSASHI in class 41; and (c) 1172510 MUSASHI and device in classes 5 and 32. (2) Subject to order 3, the first respondent, by himself, or by his employees or agents, is restrained from: (a) importing into, and selling, offering for sale or promoting supplements and therapeutic products in Australia, under or by reference to the A-SASHI Word Mark or the First A-SASHI Device Mark or the Second A-SASHI Device Mark; and (b) authorising, causing, procuring or inducing any other person to do so. (3) By 10 September 2014 the first respondent take down from the websites to which the domain name www.a-sashi.com and the domain name www.a-sashi.com.au resolve, and take down from the Facebook account at www.facebook.com/a.sashivitamins, any content which displays the sign "A-SASHI" and either of the First A-SASHI Device Mark and the Second A-SASHI Device Mark. (4) By 17 September 2014 the first respondent inform the second applicant in writing that the steps required by order 3 have been taken. 4 The Federal Circuit Court also made the following procedural orders: (5) The matter be listed for directions on a date to be fixed in relation to an inquiry for damages or an account of profits. (6) By 17 September 2014 the applicants file and serve submissions in relation to any other orders the applicants claim should be made. (7) By 24 September 2014 the first respondent file and serve submissions in response to the applicants' submissions and in relation to the orders referred to in paragraphs 1-6. (8) By 1 October 2014 the applicants file and serve any submissions in reply. (9) The matter stand over to a date to be fixed for hearing of the issues raised on the submissions unless the applicants and the first respondent inform the Court by no later than 1 October 2014 that they agree to the Court deciding those issues without further hearing. 5 The Federal Circuit Court reserved the question of costs. 6 Orders 6 to 9 concern additional orders sought by the respondents in respect of the applicant's trade mark infringements. These orders relate to further injunctive relief, including the cancellation of certain business names, domain names and a particular Facebook account. The primary judge was not prepared to make orders of that kind without receiving further submissions from the parties: [109] of the primary judge's reasons. 7 On 25 September 2014, the primary judge ordered that the outstanding issues for injunctive relief be listed for hearing on 9 October 2014. At that time, the primary judge also extended time for the applicant's compliance with Order 7 made on 3 September 2014 and, consequently, extended time for the respondents to file and serve their submissions in reply. 8 On 22 September 2014, the applicant applied to the primary judge for a stay of the orders made on 3 September 2014. His Honour heard the application on 25 September 2014 and dismissed it on 26 September 2014: Societe Des Produits Nestle S.A. v Christian (No 5) [2014] FCCA 2234. In dismissing the application, the primary judge said at [6]-[7] of his reasons: The only grounds on which Mr Christian relies in his affidavit is that he has a right to appeal against the orders I made on 3 September 2014, and that he has filed an application to the Federal Court of Australia for leave to appeal against those orders. Mr Christian notes that one of the claims for relief he has included in his application to the Federal Court is for a stay of execution of proceedings until his appeal is heard. Mr Christian would not agree to my reading the proposed grounds of appeal against my orders. In these circumstances, Mr Christian has not put before the Court any material on the basis of which it could be concluded that there exists an appropriate case for this Court to grant a stay of the orders I made on 3 September 2014. The application for a stay, therefore, must be dismissed. 9 The present position is, therefore, that the Federal Circuit Court has found the applicant liable for trade mark infringement, and has made some but not all the orders that are sought. Leaving aside any claims the respondents have for pecuniary relief, there remains the question of whether further injunctive relief should be granted against the applicant. 10 I should also record that, as a result of further applications made by the applicant in the Federal Circuit Court, the primary judge also made orders on 3 September 2014 concerning the applicant's desire to file a cross-claim in that proceeding. 11 On 17 September 2014, the applicant filed, in this Court, an application for leave to appeal. The grounds of his application are stated as follows: 1. The Court applied an incorrect principle of law by making orders which extend to enforcement outside the jurisdiction of Australia and the Territories, and is contrary to the terms within s. 18 Federal Court of Australia Act 1976; & 2. The Court made a finding of fact on an important issue, which could not be supported by the evidence. That is, the Court used the (first A-SASHI logo) as correct evidence, which is shown to be incorrect evidence in the supporting affidavit affirmed 16 September 2014, when determining the critical issue of deceptive similarity and delivering the substantive hearing judgment ruling that I have infringed the Australian Registered Trade Marks of Musashi, within the meaning of s. 120 of the Trade Marks Act 1995. 12 The grounds of appeal set out in the applicant's draft notice of appeal mirror the two grounds in the application for leave to appeal. 13 The first ground relates to Order 3 made by the Federal Circuit Court on 3 September 2014. In relation to that order, the applicant has said in an affidavit made on 16 September 2014: Pursuant to the terms within s. 18 Federal Court of Australia Act 1976, order 3 of the substantive hearing judgement [sic], extends to enforcement outside the jurisdiction of Australia and the Territories, and subsequently unfairly prejudices me in the USA where I launched my business and where Musashi do not market or sell goods. The A-Sashi Vitamins Facebook page is on a global social media platform and the page is used in the global market to promote products worldwide, instead of removing the Facebook page, I can simply restrict the countries in which the page can be viewed, which would hide the page from viewers in Australia, and leave the page visible to the 30,000 A-Sashi Facebook fans located in the USA. The A-Sashi Vitamins primary domain name www.a-sashi.com is a top-level domain, not specific to a country & used as my global web address to sell products worldwide and the online store can simply be reset to restrict purchases from Australia. 14 The applicant says that he has complied with Order 3. This occurred prior to the applicant filing his application for leave to appeal. The applicant apparently made no application to the Federal Circuit Court to stay the operation of that order before the time for compliance. 15 In his reasons, the primary judge recorded the following findings at [21]-[22] with respect to the applicant's activities outside Australia (footnotes omitted): According to Mr Christian, in August 2012 he had discussions with Arnet Pharmaceuticals, a contract manufacturer based in Florida in the United States of America, about that company manufacturing the special purpose vitamins and dietary supplements that Mr Christian intended to sell under the A-SASHI name. Within a few months of that initial meeting, Mr Christian provided to Arnet artwork for labels to be used in the packaging of the products. Each of the labels had the second A-SASHI logo. Beginning in December 2012, Mr Christian commenced selling the A-SASHI vitamins through its online store in the United States of America. Mr Christian initially sold using digital media, and weekly print media. Customers who ordered the A-SASHI products were supplied from the Shipwire east coast fulfilment facility in Lancaster Philadelphia, being the place where the bulk-finished goods manufactured by Arnet were stored. 16 In the present application, the applicant has given evidence, in his affidavit made on 16 September 2014, that his business has now ceased to trade, although he still has finished bulk goods stored at Shipwire. The applicant says that he hopes, eventually, to recommence marketing and selling in the United States of America through his A-SASHI Vitamins online store at www.a-sashi.com, and through his Facebook page at www.facebook.com/a.sashi.vitamins. 17 Notwithstanding this evidence, the applicant has informed me this morning that, in fact, he is not the owner of the goods stored at Shipwire. He said that his father is the owner of the goods and is in possession of them. Indeed, his father paid for their production, the cost of which the applicant estimates to be approximately US$25,000. 18 The applicant has also given evidence that his supply from the contract manufacturer was "cut" in November 2013. This was before the respondents commenced their proceeding against the applicant in the Federal Circuit Court for trade mark infringement. 19 It is not clear on the evidence how, with his contract manufacturing having been "cut", the applicant proposes to recommence business. Clearly, he is not in possession of any present stock to enable him to recommence business; nor does the applicant seem to be in funds that would enable him to do so. 20 The second ground relates to the applicant's claim that the first A-SASHI logo has only appeared in the header of his website and the header of his Facebook page up until mid-March 2013. In his affidavit made on 16 September 2014, the applicant said that the first A-SASHI logo has never appeared on A-SASHI Vitamins goods and has never been used to market A-SASHI Vitamins goods during the time that those goods have been available for supply in Australia. 21 The primary judge dealt with the applicant's use of the A-SASHI name and the A-SASHI logos at [23]-[27] of his reasons. In those paragraphs, his Honour did not distinguish between the A-SASHI name and each A-SASHI logo. Later, his Honour compared the A-SASHI logos with the Musashi device mark. His Honour found that, in use, the A-SASHI logos would deceive or confuse consumers about whether the goods in relation to which the A-SASHI logos have been or are used, have the same source as goods in relation to which the Musashi device mark is used: [92] of the primary judge's reasons. His Honour found (at [93]): Accordingly, by using the A-SASHI name and logos in connection with the marketing and sale of A-SASHI products, Mr Christian has infringed the MUSASHI marks. Unless restrained, Mr Christian will continue to use the A-SASHI name and second A-SASHI logo in connection with the marketing and sale of A-SASHI products. 22 This finding would indicate that the primary judge had in mind, when considering infringement, that the applicant had been using, but was not presently using, the first A-SASHI mark. The issue would seem to be whether the primary judge was in error in taking into account that use in finding infringement and in granting relief in terms of Orders 1 to 4 set out above. 23 Should leave to appeal be granted? It is a common and long-established practice in intellectual property trials, such as the present, to split the trial into, first, a determination of liability for infringement and, if appropriate, the grant of declaratory and/or injunctive relief and, secondly, if appropriate, the award of relief by way of damages or an account of profits: see, for example, the observations of the Full Court in Nokia Corporation v Liu (2009) 179 FCR 422 at [33]-[34]. That was the position here. Issues of liability and quantum were separated by the Federal Circuit Court by order made on 31 March 2014. 24 At the point at which a determination of liability for infringement has been made and judgment is given for declaratory and/or injunctive relief, but the question of pecuniary relief remains outstanding, the judgment so given is interlocutory in character because it does not conclude or finally determine all the rights of the parties at issue in the proceeding. In such cases, leave to appeal is readily granted. I do not understand the respondents to dispute that general proposition. They do, however, point to the fact that other questions of injunctive relief remain outstanding in the present case and raise the question whether, in that state of affairs, leave to appeal should be granted at this time. 25 The respondents properly raised that matter when the application for leave to appeal was first before the Court for directions on 24 September 2014. At that time, I explained to the applicant that that matter raised considerable discretionary considerations which would need to be taken into account when considering whether leave to appeal should be granted: see T6 (line 46)-T8 (line 14); T10 (lines 14-36). The applicant stated at that time that he wished to proceed with his application for leave to appeal before awaiting the outcome of the hearing now to be conducted by the primary judge on 9 October 2014: see [7] above. At a subsequent directions hearing on 26 September 2014, I listed the application for leave to appeal for hearing today and made orders for the filing of affidavits and outlines of submissions. 26 At the hearing today, the main contention raised by the respondents as to why leave should not be granted is that, to do so now, would be premature as the Federal Circuit Court has not finalised all orders in relation to the "liability" aspect of the proceeding. 27 In this connection, the respondents submit that, at the trial in the Federal Circuit Court, the applicant made no submission about the "extra-territorial effect" that Order 3 would have on him. There is evidence before me that the respondents sought that order in their written outline of submissions filed on 23 May 2014. In that outline, the respondents also made a submission that all versions of the A-SASHI website were specifically directed or targeted at Australian consumers. The applicant prepared a written outline of submissions which was filed on 29 May 2014. The hearing before the primary judge was on 6 June 2014. Neither in his written outline of submissions nor in his oral submissions before the primary judge did the applicant address Order 3 as then sought. 28 I do not raise that matter to reflect upon the likelihood of success of any appeal against the making of Order 3. I do raise the matter, however, because it has significance for the further hearing to be conducted by the primary judge on 9 October 2014. 29 The primary judge has yet to determine whether injunctive relief should be granted in relation to cancellation of the applicant's domain names and Facebook account. It is extremely likely that, when considering whether such relief should be granted, the effect of such orders, if made, on the applicant's overseas business interests, whatever they might presently be, will be raised by the applicant and arise for determination. 30 Further, the respondents have said that, without conceding or accepting that Order 3 was wrongly made or in excess of the Federal Circuit Court's jurisdiction (as the applicant contends), they propose to raise the question of the form of Order 3 before the primary judge and to seek a variation of it, having now been apprised of the applicant's present concern about its operation outside Australia. 31 It is convenient, at this point, to note that an interlocutory application dated 16 September 2014, which was filed by the applicant, is also before the Court for hearing. In that application the applicant seeks, amongst other things, an "order to stay the execution of proceedings until the appeal is heard [and] determined". The applicant relies on rule 36.08(2) of the Federal Court Rules 2011 (Cth). 32 Until such time as there is an appeal on foot in this Court, the Court's jurisdiction to grant a stay under that rule is not enlivened. This was pointed out to the applicant in correspondence from my Chambers to the parties on 19 September 2014. In that correspondence, it was suggested that, in the circumstances, the applicant may wish to consider seeking a stay from the Federal Circuit Court. As I have mentioned earlier in these reasons, such a stay was sought and refused for the reasons given by the primary judge: see his Honour's reasons quoted at [8] above. 33 As I understand his position, one of the applicant's significant concerns is that the Federal Circuit Court will proceed to make orders cancelling his domain names and Facebook account. The applicant wishes to avoid the possibility that such orders will be made before any appeal to this Court is heard. 34 I do not understand why the applicant adopted the position he did when seeking a stay before the primary judge on 25 September 2014, other than that it was a forensic decision by him. However, when arguing whether the further injunctive relief sought by the respondents should be granted by the Federal Circuit Court, the applicant will be able to agitate the effect that such orders might have on his interests outside Australia. If the Federal Circuit Court sees fit to grant further injunctive relief over the applicant's opposition, he will have the opportunity to seek a stay of such orders at the time that they are pronounced. 35 I am not satisfied that, at the present time, leave to appeal should be granted. I accept the respondents' submission that, to grant leave now, would be premature, particularly in light of the fact that the respondents' claim for further injunctive relief has been listed for hearing in one week's time, in circumstances where the applicant can raise his concerns about the effect that any order might have on his business interests outside Australia and where the respondents have informed me that they propose to seek, in any event, a variation of Order 3 that will attempt to address its operation on the applicant's activities, if any, engaged in outside Australia. 36 However, rather than refusing the applicant's application for leave to appeal and dismissing his interlocutory application for a stay, I am of the view that the better course is to stand over both applications for further hearing to a date after the Federal Circuit Court gives judgment in relation to the respondents' claim for further injunctive relief to be heard on 9 October 2014. 37 For those reasons I make the following orders: 1. The applicants' application for leave to appeal and the interlocutory application dated 16 September 2014 stand over for further hearing at a date and time to be appointed following the giving of judgment in SYD3214/2013 in relation to the respondents' claim for further injunctive relief to be heard by the Federal Circuit Court on 9 October 2014. 2. Within 48 hours of the Federal Circuit Court judgment referred to in Order 1 being given, the parties are to approach the Associate to Yates J to have the application for leave to appeal and the interlocutory application listed for further hearing. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 3 October 2014