Abstract

Litigation has been likened to war.[iii] As a starting point, the litigation environment in civil suits is clearly an adversarial system. At first glance, it would lend itself to lessons of war, insofar as the parties generally throw everything they can at their opponents in the hope that their legal construction based on the facts will find favour with the decision maker.

Some obvious similarities are that parties in civil litigation may agree on some things but will take polarised positions on critically core issues. In addition, both parties accept that they will have to draw on their resources during the course of the litigation, both in terms of money and the time they must dedicate to proceedings.

The method which this paper puts forward boasts that it will help the party utilising the method and the Court. However, it is not a “one size fits all” suggested solution. It will not appeal to a well-funded party, who, regardless of the merits of their case, is able to adopt through a number of means such as lengthy protracted pre-litigation correspondence, or unmeritorious interlocutory applications, aims to exhaust their opponent financially and/or psychologically, in the belief that the claims, even strong ones, will be abandoned.

This paper proposes that before engaging in applicant/plaintiff civil litigation, at the time when the possible claims are considered, that there should be, in appropriate cases, a “culling” of claims by abandoning mediocre claims and narrowing the scope of the battlefield to only the best claim or claims.

Of course, there is an inclination to try to run as many claims as possible, in the hope that one or more of the claims appeal to the judge. Recently, in the Full Court of the Federal Court judgment in the Katy Perry case (Killer Queen), there were extremely competent lawyers on both sides which did not prevent their Honours of the Full Court from making this observation:

“The primary judge gave extensive reasons, not least because the parties chose to put every conceivably arguable factual and legal contention into issue. Their approach to the appeal was no different.” [iv]

This paper advocates – that in the appropriate circumstances – the strategy of the applicant/plaintiff should be based on the model of the Greeks, predominantly Spartans, at the Battle of Thermopylae, in 480BC.[v] This battle is more commonly identified with the 300 Spartan warriors which, for a time, were able to resist the Persian hoard. It is true that the 300 were ultimately defeated, but not because of the strategy they adopted, but rather by a Spartan traitor Ephialtes, who lead the Persians to a remote path behind the Spartans, leading to the ultimate death of the 300.

The battle, which has been the subject of the 1962 cinematographic film production “The 300 Spartans” starring Richard Egan as King Leonidas, and more recently “300” starring Gerard Butler as the Spartan leader, speaks from the past to inform in this instance, litigators.

The 300 were able to resist the Persian force by limiting the geographic area of engagement, rendering the vast resources of the Persians ineffective. So too, in the conduct of the litigation, if the issues of engagement are narrowed to a much smaller or narrower field of engagement, the potency of a much larger and/or well-funded opponent is significantly reduced (the “300 strategy”).

Of course, there will be readers of this article who have applied such strategy in appropriate cases for many years. However, I would suggest that the “throw in everything” approach dominates the litigation landscape.

There are several mechanisms which may be utilised in the exchange to achieve this goal, however it is a discipline which must be continually practised from correspondence to pleadings and contested interlocutory disputes.

First, we consider the 300 strategy. Thereafter, whilst making comparisons with the 300 strategy, we examine the approach of a number of other strategists who have deployed battle or war strategies to the litigation environment. The paper will then conclude by identifying in summary, the benefits of the 300 strategy when practised in the litigation landscape.

We do not posit a hard and fast rule in the process of litigation, but rather an approach to litigation in an environment when a small to medium enterprise (SME) seeks to enforce its intellectual property right (IPR) against a well-funded alleged infringer.

The strategy has two clear benefits. First, it will usually provide a much more level playing field where the disparity in resources of the opposing parties is reduced substantially. Secondly, the results of implementing this strategy will be welcomed by the Court, as reflecting the applicant’s intention aiming to reduce the issues in dispute to the strongest IPR claim.

What is the optimum goal strategy for war or litigation?

The “off-the-cuff” answer is likely to be “to win”. A less enthusiastic response would be “to win at all costs”.[vi]

Sun Tzu’s[vii] conclusion on the ultimate strategy of war, which, in the authors’ opinion, resonates with litigation, is this:

“Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting.”[viii]       

In litigation of course, there must be an immediate fight upon the filing of the initiating process. However, following filing, the ultimate strategy must be directed to break down the opponent’s resistance, achieve the relief sought (or as close to it), and consider the costs which are expended to achieve that result.

The 300 strategy aims to narrow the scope of the argument, substantially limiting the actions of a much better resourced opponent and driving the claims to resolution by narrowing the “playing field” or area of substantial dispute.

An essential element of the 300 strategy is that it requires a claim that has better prospects of success than the opponent. It is tailor made for a battle between a large corporation blatantly infringing the IPR of an SME, where the corporation seeks to exhaust the SME during the litigation process with mechanisms such as unmeritorious interlocutory applications.

What is the “300 strategy”?

The 300 strategy is a conscious approach the SME IPR owner adopts in seeking to enforce IPR, which narrows the conduct of the enforcement action to its minimal and most enforceable elements. The 300 strategy aims to limit in any and every way, how the SME approaches the enforcement action from the pleaded infringement case to correspondence and interlocutory procedures (if any), and case management. An example, and a memorable visual of this 300 strategy, is based on the example of the Battle of Thermopylae.

The Battle of Thermopylae was fought in 480 BC between the Persian Empire under Xerxes I and an alliance of Greek city-states, which were led by Sparta under Leonidas I. The battle lasted three days and was one of the most prominent battles of both the second Persian invasion of Greece and the wider Greco-Persian Wars. Leonidas chose to camp at and defend the “middle gate”, the narrowest part of the pass of Thermopylae. The strategy was designed by the Greeks to allow for their inferior numbers and so become less of a weakness.[ix]

The primary source for the Greco-Persian Wars is the Greek historian Herodotus. His account in Book VII of his Histories is such an important source that Paul Cartledge wrote: “we either write a history of Thermopylae with [Herodotus], or not at all”.[x] According to Herodotus, Xerxes’ army was so large that, upon arriving at the banks of the Echeidorus River, his soldiers proceeded to drink it dry. In the face of such imposing numbers, many Greek cities capitulated to the Persian demand for a tribute of earth and water.[xi]

The historian Diodorus Siculus, who had read Herodotus, agreed with Herodotus regarding the number of 300 Spartan hoplites. Herodotus claimed – which has been in dispute – that there were a total of 2.6 million military personnel Xerxes had gathered, accompanied by an equivalent number of support personnel.[xii] Modern scholars tend to reject the figures given by Herodotus and other ancient sources as unrealistic, resulting from miscalculations or exaggerations on the part of the victors.[xiii] Modern scholars’ estimates are generally 120,000 to 300,000, which are usually based on the studies of logistical capabilities of the Persians, the sustainability of the base of operations, and the overall manpower constraints.[xiv]

The Greek forces held back the Persian army until, at the end of the second day, its position was compromised by a Spartan traitor Ephialtes, who lead the Persians to a remote path behind the Spartans, resulting in the ultimate death of the 300.[xv]

At Thermopylae, it was a physical ground. In litigation, it is the conversion of that physically limited area to the manner and field by which the litigation is commenced and conducted.

In circumstances where ancillary claims are arguable but not the best IPR enforcement claim, it requires a dedicated discipline to resist the better resourced opponent by adding ancillary claims such as Australian Consumer Law claims and/or passing off. Adding these claims almost automatically has the effect of widening the field of engagement, so that there is additional strain placed on the SME’s resources in terms of costs and time dedicated to the proceeding.

Undoubtedly, there are practitioners who have adopted this strategy as their preferred methodology. However, it is suggested that these practitioners are in the minority, having observed numerous attempts at trial by correspondence, unnecessarily lengthy pleadings (of which the author admits guilt) and a number of arguable but not strong claims thrown in with a good claim.

The 300 strategy requires identifying the best claim/s.

For example, the best claim might be a trade mark infringement claim. Widening the fighting field by adding a passing off claim or a consumer claim under the Australian Consumer Law (“ACL”), which is contained in the Competition and Consumer Act 2010 (Cth) Schedule 2, opens up more expense and expands the fighting area, and is quite often added just as a precaution in the event the main claim does not stick.

Additional damages are available in each of the main intellectual property regimes, independently of compensatory damages. It has long been the case that under the Copyright Act 1968 additional damages in the nature of punitive damages, may be awarded as well as compensatory damages and the same position now applies under the other statutory intellectual property regimes.[xvi]

If the main claim is based on “deceptive similarity” of the respondent’s trade mark to the registered mark,[xvii] the likelihood is that if that claim fails the misrepresentation element of the passing off claim and s 18 misleading and deceptive contravention in the ACL, is also very likely to fail.

The 300 strategy is not simply applied to choosing the claims to be made. Often firms engage in lengthy correspondence over a range of issues, such as the pleading and discovery interrogatories. Smaller firms with limited resources compared to the opponent, and an IP owner with limited funds, find that a war by correspondence can be expensive. Accepting that a failure to respond will be detrimental to you if an interlocutory application is made, responses should be carefully crafted so as not to be brought out into the wider fighting field.

The 300 strategy dictates that you resist responding to every small point, but rather take a simpler approach of only engaging on the critical point/s. In short, the 300 strategy should be at least considered at every point of the litigation. This, it is suggested, is done by examining each step and asking, “will this open the fighting field, or is this an issue on which there is utility to engage?” 

Does this constitute a distraction that the opponent wishes to raise whereby the resources of the IPR enforcer will diminish and/or it will place the alleged infringer in a stronger position?

In a recent case the IPR enforcing party engaged in lengthy correspondence over an alleged copyright claim. The claim was very weak. At one point, with costs mounting responding to lengthy letters, the alleged infringer determined the best strategy was to face any claim. No claim was ever made. Of course, a response to an IPR “cease and desist” letter is essential, however identification of the key weaknesses in the IPR claim can save substantial time and costs.

In another example, in a trade mark infringement action, a respondent claimed a defence to infringement claims by a set of circumstances whereby that respondent sought to amend its defence. The circumstances became the subject of an interlocutory application to amend the defence which was unsuccessful before the docket judge.

As a result, the respondent sought and obtained leave to appeal to the Full Court on a discrete point. Applying the 300 strategy, the applicant concluded that rather than have this side issue become the subject of an appeal to the Full Court of the Federal Court, it consented to the orders that the respondent sought to amend the respondent’s defence to accommodate the circumstances.

The question was remitted to Jagot J (as her Honour then was), being a judge other than the docket judge, and was dealt with as a special question under the Federal Court of Australia Act 1976 (Cth) (FCA Act) s 37P, having regard to the overarching purposes described in Section 37M of the FCA Act, the Court having been satisfied that a question arising in the proceeding be heard separately from other questions arising in the proceeding.[xviii]

Control is limited for an SME who is named as a respondent in an IPR enforcement action. Those difficulties include:

• There is no control over the number of claims which the applicant wishes to make.
• A strategy to focus on the main claims only will leave the respondent open to an application for relief to end the proceeding or part of it early.

This does not prevent the respondent from adopting the 300 strategy to narrow the issues and the engagements.

Comparison of the 300 strategy with some other strategies

Sun Tzu

Sun Tzu was relevantly a Chinese general and military strategist living in the Eastern State of the Zhou Kingdom within the period of 770 – 256 BC. Sun Tzu has been traditionally credited as the author of The Art of War; an influential work of military strategy that has affected both Western and East Asian philosophy and military thinking.

Sun Tzu’s strategies have not been considered for their relevance in ancient times. In more modern times, direct adversarial engagements are reviewed as to their appropriateness in today’s world. It has been said in relation to US military theories:

“The majority of military theories that underpin modern U.S. strategy and doctrine are drawn from Napoleonic Era theorists who focused heavily on decisive battlefield conflict. In today’s post-information age, however, armed conflict represents the least likely manifestation of competition. Today, the use of coercive military force is limited by increasing international economic interdependence and global nuclear deterrence strategies. Consequently, the current strategic operating environment demands a deeper understanding of limited warfare tactics, competitive activities below levels of conflict, and information dominance to achieve strategic objectives. Sun Tzu’s seminal work, “The Art of War,” provides context that can help the United States better understand how to win without fighting, how to overcome a proclivity to utilize coercive force, and how to cultivate nonbinary understandings of war, peace, and competition.”[xix]

Sun Tzu proposed a tiered response to the opposition, a stratagem on these lines:

1. If our forces are ten to the enemy’s one, surround him.
2. If five to one, attack him immediately without waiting for some other advantage.
3. If twice as numerous, divide our army in two. This may draw criticism on the basis that dividing the forces into two violates a fundamental principle of war. However, it has been thought that Sun Tzu’s meaning is not suggesting weakening one’s force by dividing it, but rather that one part of the army may be used in the “regular way” and the other may be used for a special diversion.
4. If equally matched, we can “offer battle”.
5. If slightly inferior in numbers, we can avoid the enemy, which has been interpreted to mean “we can watch the enemy”.
6. If quite unequal in every way, quantitatively or qualitatively (or both), flee from him. The conclusion here is that “though an obstinate fight may be made by a small force, in the end it must be captured by the larger force.[xx]

The 300 strategy does not adhere to any of these layers of strategy. The first distinction is that each of these six strata are dependent on the size and skill of the opponent compared with your own force.

The 300 strategy is applicable to all instances and is most evident in relation to the final scenario: where instead of fleeing, because you have assessed that between you and the opponents, the opponent is quantitatively or qualitatively or both, superior in every way, it proposes to stay and fight, but to narrow the coal face of engagement.

The 300 strategy instructs us to remain, as this is where the strategy is most effective. This is where the intensity of the better financial resources and the better lawyers of the opponent cannot be as effective if the litigation teams met head on in an open field, where the parties engage on a wide number of issues.

There, where the fighting ground is wider, the smaller SME will be stretched to the maximum and seek resolution on even unfavorable terms, just to be out of the litigation which it commenced. Narrowing the scope of the battle issues, reduces the influence of the better resourced opponent.

Each stratagem is addressed in seriatim:

1. “If our forces are ten to the enemy’s one, surround him.”[xxi] The 300 strategy is directed to assisting an SME who is seeking to enforce their IPR against a Goliath-type respondent. Surrounding the enemy by widening the number of claims and widening the field of engagement will only lead to exhaustion of the SME’s resources, both financially and mentally, to continue the litigation. It will also empower the larger opponent. Accordingly, the SME should not attempt to surround the opponent and strain his/her resources. If the SME was to face an even smaller opponent, deliberately adopting a strategy to exhaust that smaller opponent by widening the fighting field, this cannot be consistent with the overarching purpose as stated in the FCA Acts 37M or the obligation imposed on practitioners under s 37N for the parties to act in accordance with that purpose. The application by the SME of the 300 strategy to an enforcement action against a party “smaller” than itself, such as a self-represented party, will only help narrow the issues and make for a more efficient proceeding.
2. “If five to one, attack him immediately without waiting for some other advantage.”[xxii] Again, this strategy is dependent on an assessment of the opposing force by the numbers and quality of the opponent. The 300 strategy does not support attacking based on an assessment of the capacity of the opponent. It is a strategy which applies regardless of the size of the opponent. It aims to narrow the scope of the “battlefield”. As to an approach of attacking, this will be limited to an attack within the scope of the boundaries set by the claims, being the scope of the dispute. The scope of the dispute by an IPR enforcement is in the hands of the applicant. It is common in IPR litigation for the scope to be widened by a cross-claim for revocation of the IPR, thus dissipating the infringement claim. For example, consistent with the 300 strategy, if there was an aggressive step to be considered by an applicant, this would most likely occur in the case of a summary judgment or default judgment application. However, given the fact that the 300 strategy aims to limit the scope of the engagement, a summary judgment, even if successful, in the hands of a strongly resourced respondent could lead to an application for leave to appeal the summary judgment and thereby widen the “battlefield” – a move contrary to the 300 strategy.
3. “If twice as numerous, to divide our army in two.”[xxiii] The comments in the preceding two paragraphs equally apply.It is of no consequence and should not be a temptation to increase the claims or attack the respondent on the basis that the IPR stakeholder is twice as well-resourced as the respondent. Using the processes available under the Federal Court Rules to exhaust a less resourced opponent compared to the SME, is in the author’s respectful opinion, to mis-use those processes for the impermissible motive of exhausting the opponent and not for their genuine application. It is also not consistent with the overarching purpose as stated in the FCA Acts 37M or the obligation imposed on practitioners under s 37N for the parties to act in accordance with that purpose.
4. “If equally matched we can ‘offer battle’”.[xxiv] This scenario has been interpreted and paraphrased “[i]f the attackers and attacked are equally matched in strength, only the able general will fight.”[xxv] This places emphasis on the quality and strength of the leadership. The 300 strategy does not respond to such a distinction. There may be an eminent Queens Counsel or Senior Counsel for the opponent, however if the battlefield is narrow, there is a much narrower scope for those skills to be fully displayed and forces an engagement only on the narrow scope of engagement, rendering the QC or SC’s considerable skill of lesser impact.
5. “If slightly inferior in numbers, we can avoid the enemy which has been interpreted to mean ‘we can watch the enemy’”.[xxvi] This strategy avoids conflict where there is a perceived slight imbalance in favour of the opponent by its fighting resources. This strategy would suggest to an SME IPR stakeholder to watch the opponent and its use of the contested IPR. This of course, due to the delay in taking enforcement action, would be detrimental to any interlocutory or interim application for injunctive relief. Another “watching” strategy is to fire several “cease and desist” letters across the respondent’s broadside without initiating a proceeding. The difficulty with this strategy against a better equipped opponent is that they may initiate proceedings under the groundless or unjustified threats provisions in the IPR statutory regimes.[xxvii] The SME would then be plunged into the litigation having to then prove that the threats (assuming they are determined to be threats) were justified by having to prove infringement.
6. “If quite unequal in every way, quantitatively or qualitatively or both, flee from him. The conclusion here is that ‘though an obstinate fight may be made by a small force, in the end it must be captured by the larger force’.[xxviii] This strategy accentuates and highlights the difference between Sun Tzu’s strategy and the 300 strategy. In litigation there is no doubt an SME will approach IPR enforcement against a well-resourced opponent with some hesitation. Such an opponent would, with its substantial resources, be expected to also retain top tier IP lawyers, and where necessary, experts in the relevant field. Such an SME should consider the advice of its IP lawyers and the planned conduct of enforcement action on the basis of the 300 strategy. Such an opponent will also have the means to challenge the IPR’s existence by cross-claim on any number of grounds relative to the IPR. If the IPR infringement claim is very strong, the SME might consider proposing to its IPR lawyers that the claim be taken on a speculative basis or supported by litigation funding. This will raise the issue as to whether the compensatory damages or the SME’s resources are sufficient to cover the shortfall between the actual costs and out of pockets, and a presumed order of costs on a standard basis. This action will of course, rest with the evaluation by the IPR owner’s IP lawyers considering whether to undertake the enforcement on a speculative basis, of the prospects of any cross-claim for revocation of the right, or any challenge to the claim to copyright originality, standing or ownership.

In this regard, the 300 strategy will have an additional benefit. The costs of a successful IPR claim would be likely to be reduced by unsuccessful ACL and passing off claims, not fully prosecuted.

Sun Tzu said that indirect tactics, efficiently applied, are inexhaustible and by analogy:

1. there are not more than five musical notes, yet the combination of these five give rise to more melodies than can ever been heard.
2. there are not more than five primary colours (blue, yellow, red, white and black), yet in combination they produce more hues than can ever be seen.
3. there are not more than five primary tastes (sour, acrid, salt, sweet, bitter), yet combinations of them yield more flavours than can ever be tasted.
4. in battle there are no more than two methods of attack – the direct and the indirect – yet these two in combination give rise to an endless series of manoeuvres … the direct and the indirect lead on to each other in turn … who can exhaust the possibilities of their combination?[xxix]

Clearly there are numerous, perhaps not endless, manoeuvres in litigation, however Sun Tzu’s approach to these did not depend on a single strategy, but rather an understanding that these many manoeuvres necessitated many alternate responses. The 300 strategy simply requires attention at all stages of a proposed litigation and its conduct to a narrower scope of engagement, a pruning. Thus, the combinations of indirect and direct actions which an opponent may generate are limited.

Those direct actions (such as cross claims for revocation) or indirect actions (such as interlocutory applications) will be advanced or defended, bearing in mind the constant awareness to narrow the scope of engagement.

For example, an offer of compromise. There will be, in a properly constructed offer under the principles of Calderbank v Calderbank, included grounds aimed to persuade the opponent to accept the offer.

The 300 strategy does not teach a strategy of non-response as a method of limiting the scope of the engagement, because the failure to respond to certain matters may be taken as a concession or admission.

The strategy does not support a continued practice of lengthy responses, a paper war or trial by correspondence. It does promote responses that are brief, but that summarise carefully each basis for rejecting the offer. Every sentence in response is to be scrutinised as to whether it is giving cause for the opponent to open up a battle by correspondence – an impermissible widening of the fighting face.

The strategy is mindful not to engage unnecessarily in the opponent’s points as if making a submission, but gives sufficient information to allow the Court to consider the point or points and conclude that they justify the position taken.

Clausewitz

Carl Philipp Gottfried von Clausewitz was a 19^th Century Prussian general and military theorist who stressed the “moral” and political aspects of war. His most notable work, Vom Kriege, was unfinished at his death on 16 November 1831.

Clausewitz recognized that his ideas connected with other subjects not involving war. He is famous for the aphorism, “War is . . . nothing but a continuation of [politics] [by] other means.”[xxx] Vladimir I. Lenin referred to Clausewitz in these terms:

“We all know the dictum of Clausewitz, one of the most famous writers on the philosophy and history of war, which says: ‘War is a continuation of policy by other means.’ This dictum comes from a writer who reviewed the history of wars and drew philosophical lessons from it shortly after the period of the Napoleonic wars. This writer, whose basic views are now undoubtedly familiar to every thinking person, nearly eighty years ago challenged the ignorant man-in-the-street conception of war as being a thing apart from the policies of government and classes concerned, as being a simple attack that disturbs the peace and is then followed by restoration of the peace thus disturbed, as much as to say: “They had a fight, then they made up!” This is a grossly ignorant view, one that was repudiated scores of years ago … All wars are inseparable from the political systems that engender them.”[xxxi]

So too, litigation cannot be separated from the corporate or personal politics of the IPR owner/s in determining whether to initiate an enforcement proceeding. Market share, the costs of the litigation in financial, emotional and physical terms on the company or individuals, and the risk of losing a challenge to the validity of the IPR are paralleled in war.

The ambitions of a country through its leaders seeking to expand their borders or protect them, the costs financially, emotionally and physically on a country’s population and finally losing territory or worse, being occupied by the opponent or opponents, are factors to consider. For example, the decision of the French government in 1940 to notify Adolf Hitler that it wished to negotiate an armistice, involved, in part, a decision to avoid Paris being levelled and the loss of life and historic buildings. With Germany threatening to occupy Paris, the French government was forced to relocate to Bordeaux on 10 June 1940 to avoid capture, and declared Paris to be an open city the same day.[xxxii]

The 300 strategy in this scenario is, prior to the commencement of a proceeding, an appealing way for SMEs to approach enforcement of the IPR through litigation, where ‘best endeavours’ have failed to reach a resolution.[xxxiii] It is a method by which the SME IPR owner adopts, from as early as the usual ‘cease and desist’ letter, an approach to an IPR enforcement, which consciously militates against expanding the face of engagement.

The difficulty in a satisfactory resolution for the IPR holder at an early stage, is that larger corporations are reluctant to resolve matters on terms favourable to the IPR holder unless there is a substantial risk. The reality of exhausting the rights holder is a powerful consideration. However, there may be other issues which impact on resolution, such as the concern of an adverse public reaction if and when the judgment is published.  

Napoleon Bonaparte

The Napoleonic Wars, (1799–1815) were a series of wars that ranged France against shifting alliances of European powers. Napoleon’s successes resulted from a strategy of moving his army rapidly, attacking quickly, and defeating each of the disconnected enemy units. Rather than spreading the heavy artillery out over a greater area to support the infantry, Napoleon used lighter field guns which were lightweight and more versatile, allowing them to be relocated quickly on the battlefield. These field guns would often come together to make a single battery:

Napoleon’s grasp of mathematics as well as tactics and command made him a skilled artillerist. It was in this branch of the military that he began his rise to power. By using artillery to quell a riot in Paris, he gained the favor of the government.

Unsurprisingly, he was an innovator in this field. He pushed the French military toward field guns which were on average a third lighter than those of their British opponents. This allowed the guns to be moved quickly around the battlefield and used to their best effect.

He also focused the power of his guns. Instead of spreading them out to provide support for the infantry, he collected large mobile batteries. Their coordinated firepower could make significant dents in enemy formations. This was the predecessor of the ever-growing batteries of the next hundred years.[xxxiv]

Napoleon’s strategy of outmanoeuvring the opponent by swift movements of his army and attacking quickly with the support of a very mobile artillery force is inconsistent with the 300 strategy. Court processes militate against ambush or surprise. Unlike the swift movements of the French army engaging at a number of locations swiftly, the 300 strategy focusses on a steady series of deliberate engagements within a confined area. Applying the Napoleonic strategy to litigation would equate to a series of swift and varied attacks over a greater face of fighting area thereby inviting engagement at a number of litigation locations.

The 300 strategy seeks to limit the wider scope of the matters of contest, thereby diminishing the effective full force of the opponent.

It has been said in relation to modern military theory that war is divided into strategic, operational, and tactical levels thought to have found its basis in the Napoleonic Wars and the American Civil War.[xxxv]

Referring to the Doctrine for the Armed Forces of the United States,[xxxvi] the ‘Three Levels of War’ article states:

“The tactical level of war involves the planning and execution of battles and engagements by the “ordered arrangement and manoeuver of combat elements in relation to each other and the enemy to achieve combat objectives.”

Litigation identifies with these multi-levels of consideration with costs in terms of actual financial outlay, the risk of adverse costs orders and the time dedicated to the litigation being factors in the operational considerations. However, unlike these Levels of War, Court Rules and Practice Notes import the element of justice levelling the fighting field. The 300 strategy further narrows that field.

WWII – Blitzkrieg

Blitzkrieg, meaning ‘Lightning War’, was the method of offensive warfare responsible for Nazi Germany’s military successes in the early years of the Second World War. Blitzkrieg combined forces of tanks, motorised infantry and artillery to penetrate an opponent’s defences on a narrow front, bypassing pockets of resistance and striking deep into enemy territory.[xxxvii] 

This method was used with great success by the German army in Poland in 1939 and in France in May1940:

The French had been preparing to defend the Meuse for years, but the effort had taken on an earnestness in September 1939, when the Wehrmacht had unveiled its “blitzkrieg” tactics for the first time against Poland. The Nazis had defeated the Polish armed forces in just over four weeks, using a combination of mobile troops, armored firepower and paralyzing air attacks featuring the terrifying Stuka dive bombers.[xxxviii]

Prior to May 1940, the combined French and British forces had almost one thousand more tanks than the Germans. French tanks were also superior to the German tanks, with better armour and more powerful main guns. France was also known as a global leader in artillery. The French planned to rush large numbers of infantry divisions across the border of Belgium to take on the Wehrmacht as far forward as possible.[xxxix]

The Blitzkrieg, as Napoleon’s strategy of swift mobile movements, designed to avoid a long war, was successful because the swiftness was focussed on a narrow area of attack, which necessarily, had the advantage of being a surprise. The speed through narrow focal points emphasised the surprise element. It has been said of this swift and concentrated attack:

Germany unleashed its blitzkrieg tactics during the Battle of France to great success.  This tactic saw German forces move at an incredible pace and overwhelm the Allied forces wherever they met. The battle began when German forces invaded France through the Ardennes Forest near southern Belgium.  

France had spent the years after World War I preparing a line of defences along its border that it shared with Germany.  This defensive line was called the Maginot Line and ran from the Switzerland Alps in the south to the Ardennes Forest; however, it did not extend north to the British Channel. France believed that the Ardennes Forest was too thick for German tanks and forces to move through and did not extend the Maginot Line any further north.

The German attack through the Ardennes Forest (codenamed Case Yellow) caught Belgium, Britain and France by surprise.  The German forces were able to easily push their way through the Ardennes Forest and moved at a surprisingly fast pace.[xl] 

The German blitzkrieg strategy of 1939 and 1940 depended on the element of surprise. Its inferior tanks were more than compensated by the speed of the German blitzkrieg attack. The expectation of the French was that, with the known German tank and artillery capabilities, the German forces were not expected to progress with lightning speed as they did. German troops overran Belgium, the Netherlands, Luxembourg, and France in six weeks starting in May 1940.[xli]

There is however, an obvious difference between war and litigation. An advantage in war is to attack the opposing force by surprise. A purposeful attack, after having planned the manoeuvres with precision, has usually gained an advantage over an unprepared adversary. The surprise military strike by the Imperial Japanese Navy Air Service upon the United States against the naval base at Pearl Harbor in Honolulu, Territory of Hawaii, at 8.00am on Sunday morning, 7 December 1941, is such an example.

It is not intended to reduce the gravity of that attack by drawing an analogy with civil litigation, however it is clear there is no place for surprise attacks in the process of litigation. The Federal Court Rules 2011 (Cth) (FCR), regulate that a party must plead a fact if failure to plead the fact may take another party by surprise.[xlii]

Within the FCA Act, the rules of Court and the Practice Notes issued by the Chief Justice of the Federal Court reflecting the Court’s expectations in the conduct of matters before the Court, there are numerous strategies within the FCR: for example, summary judgment applications[xliii] and preliminary discovery applications, but these are almost all on notice.[xliv] Those actions not on notice such as search and seizure applications, will be interim measures giving the respondent an opportunity to respond.

Another example of the advantage of narrowing the corridor of battle, is seen when the Allied forces pushed into Belgium in May 1940 to meet the German blitzkrieg. On the French Belgium border, the German troops had assembled the largest mechanised force the world had seen to that point in time. The German Ardennes plan, authored by General Franz Halder, the chief of staff of the German Army, was to cross into France via the Ardennes. The traditional route would have meant a war of attrition with the French, with poorer prospects of success. The Allied forces anticipated the move and pushed their best forces to meet the attack, however reconnaissance planes transmitted confusing news to Allied command. The report was a traffic jam of some 250km in length and stretching from the road to the Ardennes, back to the German border. It was said that the French Commander-in-Chief General Gamelin refused to believe the reconnaissance report, and the opportunity to change the course of the war by attacking this gridlock dissipated.[xlv]

This large mechanised force became critically exposed due to the geographic circumstances which created an engagement face, thus removing the advantage of the substantial force behind the attack. Like Thermopylae, the additional forces were rendered ineffectual. Confinement of the issues in most IPR cases is possible in the hands of the IPR applicant.

Of course, the IPR applicant does not have the same power to limit the claims when a cross-claim seeking the revocation of the IP right is brought. Having said that, cross-claims for revocation are far more common than the simple defence of the infringement action, which raises the question of the genuine strength of the cross-claim. Put another way, if a cross-claim is brought in most IP infringement cases, one must assume that a percentage of those cross-claims are strategic and not seriously based on substance.

Conclusion

Without in any way seeking to imply that the ferocity and tragedy of war is diminished by making a comparison with litigation, there are lessons to be learnt from war in a positive and helpful way for litigants involved in Court proceedings. If strategies used in war can have a positive impact in resolving a matter or matters before the Court, then the end justifies the means.

In this paper the author has focused on the Battle of Thermopylae as a battle that informs a technique which is not only consistent with the objectives of the FCA Act ss 37M and 37N, but also eases the financial personal burden on an SME seeking to enforce IPR, particularly against a better resourced opponent.

The goals are attained by adopting a policy in the litigation from the beginning, of limiting the area of engagement. The strategy will be tested. The opponent, particularly larger corporations and larger legal firms acting for them, will in many cases seek to exhaust a smaller IPR stakeholder by applications, lengthy correspondences and in the programming of matters in preparation for trial.

The 300 strategy requires constant examination of the responses to the opponent’s communications and its use of Court processes. There will be a natural “pull” to respond, and indeed each situation must be examined because silence is rarely a helpful response. However, in many cases it is not essential to follow the path the respondent seeks to draw out, and such attempts may be dealt with simply.

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[i] Barrister, Brisbane.

[ii] Bachelor of Law Degree Candidate.

[iii] Litigation as War, James W. Gould Litigation Summer 1991 Volume 17 Number 4 (Crump) found at https://www.jstor.org/stable/29759486 ; “Litigation Rules, Clausewitz, and the Strategies of War”, D. Crump, Elon Law Review Vol.9:1 found at:
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://eloncdn.blob.core.windows.net/eu3/sites/996/2019/07/1-22_crop.pdf  page 2. 

[iv] Killer Queen, LLC v Taylor [2024] FCAFC 149; (2024) 306 FCR 199 at [4].

[v][v] Θερμοπύλαι; “Hot Gates”.

[vi] “’Sue the bastards – leave no stone unturned – I don’t care about the cost – this is war.’ When you hear these words from a client, resist the temptation to take them to heart and file the complaint immediately…”: Litigation as War”, J W Gould, Vol. 17, No. 4 (Summer 1991), p 31 found at https://www.jstor.org/stable/29759486 .

[vii] Sun Tzu was a Chinese general, military strategist, writer, and philosopher who lived in the Eastern Zhou period of ancient China. Sun Tzu is traditionally credited as the author of The Art of War, (translated by Lionel Giles) an influential work of military strategy referred to by both Western and East Asian philosophy and military thinking. Sun Tzu concentrated on alternatives to battle, such as stratagem, delay, the use of spies and alternatives to war itself, the making and keeping of alliances, the uses of deceit, and a willingness to submit, at least temporarily, to more powerful foes: https://en.wikipedia.org/wiki/Sun_Tzu  

[viii] The Art of War, Sun Tzu, HarperCollins, 2013 p 9 (“the Art of War”); The Complete Art of War, L. Giles, Wilder Publications 2008, First Edition (“CAW”) p 15.

[ix]Battle of Thermopylae available at: https://en.wikipedia.org/wiki/Battle_of_Thermopylae

[x] Thermopylae: The Battle, Cartledge, Paul (2007) Thermopylae: the battle that changed the world (1. Pbk.ed). London: Pan. p 224 ISBN 9780330419185.   

[xi] They Died the Spartan’s Death, Thermopylae, the Alamo, and the Mirrors of Classical Analogy, Advances in the History of Rhetoric, Cox, Jeremy (2016).

[xii] Herodotus VII, 186.

[xiii] Persian Fire: The First world Empire and the Battle for the West, Holland, T. (2006), New York: Doubleday

(Holland) p 237. ISBN 0-385-51311-9; see https://en.wikipedia.org/wiki/Battle_of_Thermopylae#cite_note-h237-68 .

[xiv] Holland p 394.

[xv] https://en.wikipedia.org/wiki/Battle_of_Thermopylae#cite_note-h237-68.

[xvi] Copyright Act 1968 (Cth) s 115(4); Patents Act 1990 (Cth) ss 122(1A), 128(1A); Designs Act 2003 (Cth) ss 75(3), 77(1A), Trade Marks Act 1995 (Cth) ss 126(2), 129, Plant Breeder’s Rights Act 1994 (Cth) s 56(3A), 56A(3A).

[xvii] Trade Marks Act 1995 (Cth) s 120.

[xviii] Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited (No 4) (2022) 166 IPR 144; [2022] FCA 190.

[xix] The Art of Non-War: Sun Tzu and Great Power Competition by James P. Micciche, US Army War College, 18 March 2021 at https://warroom.armywarcollege.edu/articles/non-war/.

[xx] CAW p 17.

[xxi] The Art of War p10; CAW p 17.

[xxii] The Art of War p 10; CAW p 17.

[xxiii] The Art of War p 10; CAW p 17.

[xxiv] The Art of War p 10; CAW p 17.

[xxv] CAW p 17.

[xxvi] The Art of War p 10; CAW pp 17/18.

[xxvii] Copyright Act 1968 (Cth), ss 202 and 202A; Patents Act 1990 (Cth), ss 128–132; Trade Marks Act 1995 (Cth), ss 129–130A; Designs Act 2003 (Cth), ss 77–81; PBR Act, ss 57A, 57D, Circuit Layouts Act 1989 (Cth), s 46; Olympic Insignia Protection Act 1987 (Cth), ss 64 and 65.

[xxviii] The Art of War p 10; CAW p 18.

[xxix] The Art of War p 18.

[xxx] Crump p 2.

[xxxi] The Soviet Art of War, Doctrine, Strategy and Tactics, edited by Harriet Fast Scott and William F. Scott, Westview Press, Inc. 1982 p 25.

[xxxii] https://www.britannica.com/event/Battle-of-France-World-War-II/The-fall-of-France-June-5-25-1940 search conducted on 12 May 2025.

[xxxiii] The Civil Dispute Resolution Act 2011 (Cth) s 6.

[xxxiv] War History Online, A. Knighton, 2 February 2017 available at: https://www.warhistoryonline.com/napoleon/8-changes-napoleon-made-warfare.html?chrome=1

[xxxv] Three Levels of War, USAF College of Aerospace Doctrine, Research and Education (CADRE)

Air and Space Power Mentoring Guide, Vol. 1  Maxwell AFB, AL: Air University Press, 1997

(excerpt): https://www.armyupress.army.mil/Journals/Military-Review/English-Edition-Archives/November-December-2021/Harvey-Levels-of War/#:~:text=The%20three%20levels%20of%20warfare,tasks%20to%20the%20appropriate%20command.

[xxxvi] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://irp.fas.org/doddir/dod/jp1.pdf

[xxxvii] The Imperial War Museum available at: https://www.iwm.org.uk/history/the-german-lightning-war-strategy-of-the-second-world-war#:~:text=Blitzkrieg%2C%20meaning%20’Lightning%20War’,of%20the%20Second%20World%20War.

[xxxviii] How Did Nazi Germany Crush France During World War II So Easily? The National Interest, 12 November 2019 (2019 National Interest) available at https://nationalinterest.org/blog/buzz/how-did-nazi-germany-crush-france-during-world-war-ii-so-easily-95121 2019 National Interest.

[xxxix] 2019 National Interest.

[xl] History Crunch, available at: https://www.historycrunch.com/battle-of-france.html#/

[xli] Available at: https://encyclopedia.ushmm.org/content/en/article/german-invasion-of-western-europe-may-1940

[xlii] FCR r 16.03(1)(b).

[xliii] FCR r 26.01.

[xliv] FCR r 7.23.

[xlv] Greatest Events of WWII, Episode 1 seen at 22minutes and following; also at https://www.historyhit.com/how-a-couple-of-weeks-of-german-brilliance-in-1940-elongated-world-war-two-by-four-years/

1. Killer Queen, LLC v Taylor [2024] FCAFC 149 (Yates, Burley and Rofe JJ, 22 November 2024)

This recent decision of the Full Court of the Federal Court of Australia considered an appeal by the pop star Katy Perry in relation to the use of her name as it applied to clothing merchandise she and her corporate associates offered for sale. Trade mark infringement proceedings were commenced by an Australia clothing designer who was the registered owner of the word mark “Katie Perry”(one of her previous names), in respect of clothing in Class 25.

Background

Katy Perry, whose actual name is Katheryn Elizabeth Hudson, is an American singer-songwriter.  Katie Taylor, whose actual name was Katie Jane Perry, was the owner of Australian trade mark 1264761 (the ‘761 mark) in respect of the words “Katie Perry”, registered in Class 25 for “clothes” as from the priority date 29 September 2008.

In broad terms, Taylor was successful before the primary judge. On appeal Hudson was largely successful. Hudson did have a trade mark but removed clothing from the specifications when her applicant entity met resistance from the examiner of the Registrar of Trade Marks. The Hudson application was modified to proceed with the deletion of the clothing items from the specification. The sharp end of Hudson’s attack was a challenge to the registration of the ‘761 mark based on the Trade Marks Act1995 (Cth) (TM Act) s 60. This ground, available in opposition proceedings before the Registrar and on application for removal to Court, is available to trade marks (registered or unregistered), who satisfy two limbs:

• First, another trade mark had (Hudson’s mark relative to clothing) , before the priority date for the registration of the first – mentioned trade mark (the ‘761 mark) in respect of those goods or services, acquired a reputation in Australia; and
• Second, because of the reputation of that other trade mark (Hudson’s mark), the use of the first – mentioned trade mark (‘761 mark) would be likely to deceive or cause confusion.

On the cross-claim, the Full Court allowed the appeal ground, resulting in an order removing the ‘761 mark from the trade mark register, subject to a stay for a successful Special Leave application and if granted, a successful appeal. The success of this appeal on the s 60 ground and the removal of the ‘761 mark, meant Taylor’s infringement claim collapsed.

The infringement claim

Hudson had initially sought registration for her word mark, KATY PERRY (trade mark application no. 1306481) (the ‘481 mark) in 2009 in several classes including Class 25. As stated above, the application for the ‘481 mark was modified to reduce the scope of the specification by removing the Class 25 clothing items applied for, presumably because of an adverse examiner’s report in 2009.  The ‘481 mark proceeded thereafter to registration in Class 9, which included pre-recorded music CDs and downloadable videos of musical performances and recordings, and Class 41, which included live and pre-recorded musical performances.

Taylor brought an action against Hudson and her associated companies (conveniently the appellants) for infringement of the ‘761 mark. The appellants, in the primary proceeding, cross-claimed seeking cancellation of the ‘761 mark. The primary judge determined that Hudson and one of her associated companies, infringed the ‘761 mark and dismissed the cross-claim to cancel the ‘761 mark: Taylor v Killer Queen, LLC (No 5) [2023] FCA 364; 172 IPR 1 (PJ or primary judgment). Taylor commenced the action in 2019 and bearing in mind the limitation period for the tort of trade mark infringement of 6 years, Ms Taylor’s claim for relief related to conduct which occurred after 24 October 2013: PJ [378]. 

The primary judgment and the appeal raised numerous issues, largely because “the parties chose to put every conceivably arguable factual and legal contention into issue”: [4].

Did Taylor’s registration cover hats and/or shoes – The “Clothes” Issue [43] – [61]

The issue highlights the need to be particularly careful when filing trade mark applications. The simplicity of Taylor’s application for the ‘761 mark, “Clothes” in Class 25, ultimately proved inadequate to cover all of the allegedly infringing uses, for example shoes or hats. The primary judge determined that, with one exception, footwear, headgear, caps, hats and headbands did not fall within the scope of the “clothes” registration of the ‘761 mark. The exception was “party costumes”. Taylor argued before the primary judge and on appeal (in her cross-appeal), that headwear and footwear came within the meaning of “clothes”.

Before the primary judge, Taylor submitted that the word “clothes”, particularly when used in the context of a trade mark specification, was a catch-all word which referred to items which covered or protected the body from the elements. The primary judge considered definitions of the word “clothes” in the Oxford English Dictionary as “[c]overing for the person; wearing apparel; dress, raiment, vesture” and in the Macquarie Dictionary as “garments for the body; articles of dress; wearing apparel”: [45]. Ultimately the primary judge determined that the ordinary meaning of “clothes” was a reference to garments which covered the body but not the feet (or the head). In support of that finding, the primary judge reasoned that shoes and hats served different purposes, were made of different materials and tended to be sold in different stores or different areas or departments of larger stores, such as department stores: [47] referring to PJ [340].

Taylor’s cross-appeal failed. The Full Court was not satisfied that Taylor had demonstrated error on the part of the primary judge: [58]. The Full Court considered that if there were an ambiguity as to whether “clothes” included any covering of the feet or head, it would not be resolved in favour of the trade mark owner, principally because the trade mark owner bore the obligation “to specify the goods in respect of which the mark is to be registered and thereby define the scope of the monopoly they claim”: [59]. Taylor could have included shoes and headwear in the specification on application for the ‘761 mark but chose not to.

The impugned conduct [62] – [131]

The infringement case was based on impugned conduct through eight distinct sales channels (Trade Channels). The Trade Channels involved the different means that the impugned merchandise bearing the ‘481 mark was promoted and sold. Taylor alleged these were at the following locations and tours:

• during the Prismatic Tour conducted by Hudson in 2014 and the Witness Tour in 2018 (Hudson’s Australian tours).
• at pop up stores during the Prismatic Tour in Sydney and Melbourne.
• at various retail stores, and
• online at various websites.

The primary judge found that Hudson infringed Taylor’s ‘761 mark in five separate instances in various tweets, a Facebook post and a Facebook page event (PJ at [583(1)]). Further, that one of the corporate appellants, Kitty Purry (the third appellant), was liable as a joint tortfeasor in respect of certain acts of primary infringement by a marketing consultant (Bravado) for promoting and selling clothes, or goods of the same description to clothes (PJ [583(2)]). The primary judge rejected Ms Taylor’s claim that Killer Queen (the first appellant) and Hudson were liable for trade mark infringement as joint tortfeasors (PJ [390]).

Taylor’s cross-appeal on this joint tortfeasor issue focussed on three relationships relative to the Trade Channels: The Bravado Agreements, the Blackout Merch Agreement and the Epic Rights Agreement (together the agreements). The grounds of Taylor’s cross-appeal relating to the contended errors of the primary judge were set out at [68]. The Full Court considered each of the Trade Channels relevant to the agreements to which they related: [62]-[129].

The findings may be summarised as follows:

• in relation to Bravado, the Full Court respectfully concluded that the primary judge ought also to have concluded that Hudson was a joint tortfeasor with Kitty Purry. Certain acts set out in [109(1)]-[109(5)] were acts that could only come about by the agency of Ms Hudson, who as sole director, shareholder, CEO and CFO of Kitty Purry, the undisputed alter ego of Hudson (PJ at [404]). In addition, Hudson, as the sole shareholder, could be expected to derive financial benefit from the sale of the Katy Perry merchandise: [108]-[121].
• in relation to Blackout, the Full Court distinguished Bravado and found no error in the primary judge rejecting contentions that more detailed terms in Bravado could be inferred into Blackout: [128].
• In relation to Epic, their Honours considered that this followed the same path and fate as Blackout and the cross-appeal ground failed: [131].

The parties respectively challenged various findings of the primary judge in relation to the two “good faith” defences: TM Act s 122(1)(a) (the own name defence) and s 122(1)(fa) (the mark would be registered). These were on the basis of s 44(3), an honest concurrent use. Hudson firstly challenged the primary judge’s finding that the own name defence was not available to a licensee or joint tortfeasor: (PJ at [626], [630], [631]). Hudson also challenged the primary judge’s conclusion that the use of the ‘481 mark or Katy Perry Mark in Australia, did not constitute honest and concurrent use for the purpose of s 44(3) of the TM Act: [135].

Taylor in her cross-appeal challenged the primary judge’s finding that Hudson could rely on her stage name for the purposes of the own name defence, arguing that defence was limited to a person’s “legal” name. Taylor also challenged the primary judge’s finding for the purposes of s 122(1)(a) that Hudson’s use of her stage name was use in good faith.

The Full Court rejected Hudson’s case that the own name defence could extend to a licensee or joint tortfeasor under s 122(1)(a). Essentially, there was no basis to extend the defence beyond the terms which parliament had chosen to express it: [233].

The Full Court, having considered Hudson’s appeal point in relation to the own name defence, considered it convenient to deal with Taylor’s cross-appeal point in relation to that defence. Their Honours rejected Taylor’s case that the own name defence was not available to Hudson because her use of the name Katy Perry was not a use of her “legal” name. The Full Court determined that in trade, Ms Hudson was usually known by the name “Katy Perry” and there was no reason why, in principle, the “own name” defence could not apply to her use in good faith of that name. The Full Court referred to Parker-Knoll Ltd v Knoll International Ltd (No 2) [1962] RPC 265, at 275 where Lord Denning reasoned that the protection extended to the defendant’s use of their own name, “Knoll International Limited”, and also to the natural abbreviation of it to “Knoll International” omitting the word “Limited”.  However, it would not extend to the further abbreviation “Knoll”: [242].

Hudson’s second good faith challenge in relation to the rejection by the primary judge, that there was honest and concurrent use for the purpose of s 44(3), which would have permitted registration for the purpose of s 122(1)(fa). The elements for this defence were set out by reference to five non-exhaustive factors identified by Kenny J in McCormick & Co Inc v McCormick [2000] FCA 1335; 51 IPR 102.

The primary judge had considered a number of factual matters and determined that Hudson could not take advantage of the honest concurrent user defence. These matters were reproduced at [149] and included the fact that in May 2009 Hudson became aware of Taylor’s application for registration in Class 25 for clothes and through her lawyers commenced corresponding with Taylor threatening proceedings if she did not stop using the mark. During those communications Hudson had applied for the ‘481 mark including for use on clothes in class 25. Further, following the filing of the ’781 mark, Hudson unsuccessfully sought to negotiate a coexistence agreement with Taylor.

The primary judge found that the lack of demonstrated confusion which would arise and the question of relative inconvenience favoured registration under s 44(3) however those factors were outweighed by the circumstances in which Hudson first used her mark in Australia: [153] referring to PJ [698]. The primary judge also considered that the s 44(3) basis would not assist Hudson because there was no evidence of extensive use in Australia in relation to clothes as at June 2009: [202].

The Full Court agreed that no error accompanied the primary judge’s rejection of that defence because the defence was not available on the basis that there was no concurrent use of the ‘481 mark at the relevant time that would support an application for registration under s 44(3). It followed that there could therefore be no honest concurrent use. However, the Full Court, assuming if there were use, considered the primary judge’s finding that the appellants could not demonstrate, in any event, honest use, was in error: [204].

Their Honours’ reasons provide a very helpful comment regarding confusion at [297]:

“Whilst evidence of actual confusion can be a strong indicator of a likelihood of confusion, its absence is not an equivalently strong indicator that there is no likelihood of confusion arising. In Fine & Country Ltd v Okotoks Ltd [2012] EWHC 2230 (Ch); 7 WLUK 991, Hildyard J noted at [84] that courts recognise that the finding and producing of actual evidence of confusion is difficult. As observed by Diplock LJ in General Electric Co Ltd (USA) v General Electric Co Ltd “GE Trade Mark” [1972] 1 WLR 729, HL(E) at 737, the absence of confusion may be explicable, for example, by the small extent to which the mark has been used. That is the case here.”

The Full Court considered that the absence of evidence of actual confusion was explicable in the present case by the small scale of Taylor’s business as at the priority date and thereafter: [298]. Consequently, their Honours considered that the primary judge had fallen into error in relation to the likelihood of confusion limb of s 60:

“Once the common practice is taken into account, together with the primary judge’s finding that the Katy Perry Mark had a reputation in music and entertainment, and Ms Hudson’s own reputation in the name “Katy Perry”, and the correct comparison is made, we consider that because of the reputation in the Katy Perry Mark, the use by Ms Taylor of her mark on clothes would be likely to deceive or cause confusion.” [302].

The appeal was allowed against the primary judge’s finding that the s 60 challenge to the ‘761 mark failed.

Taylor applied for the Court to exercise the discretion enlivened under s 89 TM Act. Taylor’s grounds are found in [313] and included her honest adoption of her mark in 2007. This argument, however, was rejected.

The Full Court considered at [317] that the discretion was not enlivened:

• Taylor applied for her mark with knowledge of Hudson, her reputation, and her mark in circumstances where she also knew that popular music stars, like Ms Hudson, lend their names (and trade marks) to be used in connection with clothes and sell merchandise at their concerts, and accepted such conduct as a common practice.
• although not “blameworthy”, Taylor’s conduct contributed towards the cancellation result, and for that reason their Honours did not consider the s 89 discretion enlivened.

Had their Honours considered the discretion enlivened, their Honours determined that it would not have been exercised in Taylor’s favour for the reasons set out in [319]-[322] and included:

• Taylor’s rejection of Hudson’s proposal in 2009 for a co-existence agreement.
• The public interest factor of protecting consumers from being confused or deceived by preserving the integrity of the register.

It followed that the success of the s 60 ground meant the cancellation of the trade mark in suit, thereby dissipating the trade mark infringement action.

A link to the decision is here.

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2. Koninklijke Douwe Egberts BV v Cantarella Bros Pty Ltd [2024] FCA 1277 (Wheelahan J, 7 November 2024)

This recent decision of a single judge of the Federal Court of Australia, involved amongst the claims, an alleged trade mark infringement in respect of the shape of the Moccona coffee jar, the subject of a registered shape trade mark.

His Honour’s reasons for judgment relate to a dispute between the producers of Moccona coffee and the producers of Vittoria coffee in relation to the packaging of their respective freeze dried coffee products. Vittoria released a 400-gram instant coffee product under its brand name “Vittoria” in a cylindrical jar with a stopper lid. The first applicant (the applicants together Moccona unless individually identified), is the registered owner of Australian shape trade mark No 1599824 (the ‘824 mark), being the shape of a cylindrical container with a stopper in Class 30 over coffee and instant coffee. The second applicant (JDE AU) was pleaded to be the authorised user of the’824 mark in Australia, a claim which was challenged. The Trade Marks Act 1995 (Cth) (TM Act) s 8 sets out the definition of an “authorised user”.  

Moccona offered for sale its coffee products in jars, capsules, soft packs, sticks, sachets, and tins. An example of the Moccona jar appears in the reasons at [3] together with the five images which define the shape in the ‘824 mark registration. The ‘824 mark registration was not constrained by dimensions, colour or material. His Honour at [6] emphasised the trade mark infringement claims were limited to the 3D shape as identified in the registered representations:

In May 2021, Cantarella launched a 100-gram freeze-dried instant coffee product under the Vittoria brand. An example of the Vittoria 100gm jar appear in [8]. In August 2022, Cantarella launched a 400-gram freeze-dried instant coffee product, sold in a cylindrical glass jar with a glass stopper lid under the Vittoria brand an example of which is as follows:

Moccona’s three claims were that Vittoria has:

• within the meaning of s 120 of the TM Act, infringed the ‘824 mark.
• contravened ss 18, 29, and 33 of the Australian Consumer Law (ACL), which is found in Schedule 2 to the Competition and Consumer Act 2010 (Cth).
• The tort of passing off whereVittoria’s coffee products are passed off as coffee products that emanated from, or were associated with Moccona and their coffee products.

In summary, Vittoria denied infringement, cross-claimed for the cancellation of the ‘824 mark from the register on grounds set out in the reasons at [11]. These cancellation grounds may be summarised as follows:

• cancellation of the ‘824 mark because it was not inherently adapted to distinguish, or did not in fact distinguish, Moccona’s goods from the goods of other traders: TM Act s 41.
• the Trade Mark Registrar accepted the ‘824 application on the basis of evidence or representations that were false in material particulars: TM Act 62(b);
• the ‘824 mark was entered on the Register because of false suggestion or misrepresentation: TM Act s 88(2)(e).
• the ‘824 application was made in bad faith: TM Act s 62A; and
• in the alternative, Vittoria sought removal of the ‘824 mark under both ss 92(4)(a) and (b) for non-use, specifically under:
  • s 92(4)(a), that the ‘824 mark had not been used as a trade mark since the priority date and that Moccona had no bona fide intention as at the priority date to use the ‘824 mark, to authorise its use, or to assign it for use as a trade mark and because Moccona had not used the ‘824 mark, or used it in good faith.
  • s 92(4)(b), whereby the’824 mark remained registered for a continuous period of three years ending one month before 24 March 2023, and at no time during that period did Moccona use the ‘824 mark, or use it in good faith, as a trade mark, in Australia.

Relevant to the infringement case, if Moccona failed in its infringement case, Vittoria also cross-claimed for relief under the unjustified threats provision: TM Act s 129(2)(a): [13].

The issues for determination were set out [229] of the reasons in relation to the cross-claims and [230] in relation to the Moccona claims.

History of the parties uses in Australia

His Honour considered the history of the Moccona brand in Australia and the use of the ‘824 mark in advertising and other forms: [31]-[88]. Moccona launched its Moccona branded instant coffee in Australia in 1960. In evidence were various images and advertisements going to the issue of when Moccona began using the jar shape in the ‘824 mark registration. In evidence was an advertisement published in the “Dutch Australian Weekly” dated 2 December 1966 using a jar that was not “entirely unlike” the shape in the registration of the ‘824 mark: [35]. However, evidence of use by Moccona of earlier dates did not persuade his Honour from concluding that Moccona instant coffee was sold in Australia in a jar with a shape like that of the ‘824 mark before October 1977: [44].

His Honour’s reasons set out Vittoria’s brand history at [89]-[107]. Vittoria for the most had concentrated on coffee beans and ground coffee. It did at some time between the late 1950s and the late 1970s sell a Vittoria-branded instant coffee product, in a jar: [89].                                                

Vittoria-branded instant coffee product had not been sold in Australia between the late 1970s until the launch of the Vittoria 100-gram instant coffee product in 2021 when Woolworths and Coles began to stock it. Evidence about the development of Vittoria’s 400gm product and packaging was largely confidential, heard in closed court and the subject of a confidential annexure to the reasons. His Honour did identify evidence in general terms that “related to precisely how, why, and with what knowledge and motivation Cantarella settled on the packaging it ultimately adopted for the Vittoria 400-gram product”: [96]. The open reasons outlined his Honour’s reasoning on the issue. The main features of that evidence are set out in [101]-[107].

At [104], Wheelahan J concluded that the evidence about the development of the Vittoria 400-gram jar did not bear on the issues in the case. Moccona sought to engage the principle that, where a trader consciously emulated aspects of a competitor’s get-up, it was a reasonable inference that the trader believed there would be a market benefit in doing so, in the form of attracting custom that would otherwise have gone to the competitor: [99]; Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 (Australian Woollen Mills)at 657 (Dixon and McTiernan JJ). The applicants cited Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; 234 FCR 549 at [117] (Weinberg and Dowsett JJ) in support.

In this regard, Wheelahan J considered that these statements should not be understood as creating a rule of law but rather they constituted appellate guidance in relation to fact-finding, specifically whether in fact there was such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained: [106].

In support of its s 41 cross-claim (inability to distinguish the trader’s products and services), Vittoria identified other brands that had sold, or proposed to sell, instant coffee in a cylindrical glass jar substantially in the form of the ‘824 mark: [127]-[149]. An image of an Andronicus coffee jar without the label was reproduced at [141] of the reasons, which was substantially in the form of the ‘824 mark.

Summary of issues and determinations

Conveniently the challenges to the registration of the ‘824 mark were dealt with ahead of the infringement claim as a successful challenge to the registration of the ‘824 mark would put in a different context, the infringement claim. The parties had an agreed list of issues for determination: [229] and [230]. In relation to the cross-claim, his Honour identified the following issues and then answered them as also follows:

1. Should the ‘824 mark be cancelled on the ground that it lacks distinctiveness?
   Cancelling the ‘824 mark based on s 41 of the TM Act involved a two-stage inquiry. Firstly, ascertaining the degree to which the ‘824 mark was inherently adapted to distinguish and secondly, if the ‘824 mark was “not to any extent” or “to some extent, but not sufficiently” inherently adapted to distinguish, this then involved an assessment of the questions posed by either s 41(3)(b) or s 41(4)(b).
   Wheelahan J determined that the ‘824 mark was not to any extent inherently adapted to distinguish Moccona’s goods for the reasons set out in [258]-[267]. His Honour considered that “traders in coffee might, for perfectly legitimate reasons, seek to evoke the aesthetic of an old-fashioned jar in relation to their coffee by adopting a shape like that of the ‘824 mark: [266]. The evidence of other traders’ use of a similar shape also informed another issue: the ‘824 mark was both primarily functional and, to the extent that it was not functional, it drew on features of the common heritage that did not distinguish the goods of any one trader. Wheelahan J rejected however Vittoria’s claim that the ’824 mark did not acquire a distinctiveness in fact in relation to coffee and instant coffee, before the priority date of the ‘824 mark, 7 January 2014, for the reasons set out in [293]-[306]. His Honour found that from the time when the Andronicus advertisement was broadcast in 1981, Moccona had developed a significant association between their coffee products and the jar shape in which those products were sold. Further, in the two decades immediately preceding the priority date, there were no competitors using jars that were apt to detract from the effectiveness of this use as a trade mark or badge of origin: [306].
   
2. Should the ‘824 mark be cancelled on the ground that, as at the priority date, Moccona did not intend to use or authorise the use of the ‘824 mark in Australia as a trade mark in relation to instant coffee?
   By reason of his Honour’s finding that as at the priority date, the ‘824 mark was capable of operating, and in fact did operate, as a badge of origin in relation to the applicants’ coffee goods, this question was resolved against Vittoria.
   
3. Should the ‘824 mark be removed from the Register on the ground that at no time in the period of three years prior to the filing of the cross-claim did Moccona use the ‘824 mark in Australia as a trade mark in relation to instant coffee?
   Vittoria sought to advance both limbs of TM Act s 92(4) for removal based on non-use that when Moccona applied it had no intention to use the shape mark in good faith as a trade mark and secondly, it did not used the shape mark as a trade mark in the relevant three year non-use period. It will be recalled that Moccona’s case on use in Australia depended on JDE AU’s use as Moccona’s authorised user. The TM Act s 7(3) provides that the use by an authorised user of the mark is taken to be the use of the owner. His Honour accepted that JDE AU was an authorised user within the TM Act s 8(3) and that JDE AU used the ‘824 mark under the control of the trade mark owner: [324]. Both Moccona and JDE AU were part of the same corporate group and his Honour therefore found that there was a unity of purpose. Vittoria’s non-use case on both bases was rejected: [354].
   
4. Should the ‘824 mark be cancelled on the s 62A ground that the Registrar accepted the application for registration on the basis of evidence or representations that were false in material particulars, or on the ground that it was entered on the Register as a result of false suggestion or misrepresentation?
   Here Vittoria’s case was based on responses by Moccona’s attorneys to the examiners in the prosecution stage. These were in response to adverse reports raising objection under s 41. Moccona accepted that it had in a declaration addressing the objections, said inter alia that Moccona coffee had been sold in Australia since 1960 when the evidence showed it was in fact since at least 1977. All of the statements Vittoria impugned were set out in [407]. Moccona identified a statement in an adverse report which expressed the view that there was no documentary evidence to support use prior to 2008: [390]. Vittoria’s cross-claim ground failed for reasons set out at [406] and following. His Honour considered that the Registrar’s examiner placed no weight on the statement of use by Moccona since 1960 as it lacked evidence to support it: [418].
   In relation to the falsely suggested statement by Moccona’s agents that no other trader had used a jar similar to the shape mark in relation to coffee since 1960, his Honour considered that it was relevant to know that Andronicus and Park Avenue had used similar jars: [419]. His Honour concluded that while the possibility the examiner’s decision would have been different, his Honour was not affirmatively persuaded that the Registrar’s decision would probably have been different.
   
5. Should the ‘824 mark be cancelled on the ground that the application for registration was made in bad faith?
   The essence of this ground was that Vittoria claimed that Moccona was recklessly indifferent as to whether, other traders had used the same or very similarly shaped jars: [429]. His Honour considered that there was a lack of evidence to support the factual premises behind the bad faith cross-claim ground: [436].
   
6. Should the Court exercise statutory discretions in favour of Moccona to refuse to cancel or remove the ‘824 mark?
   His Honour considered that based on the findings, no order would be considered removing the ‘824 mark from the register: [438]. His Honour’s findings did not invoke the discretion, which is invoked where a trade mark should be removed but for the exercise of the discretion.
   
7. Is JDE AU, and has JDE AU been at all material times, an authorised user in Australia of the ‘824 mark?
   His Honour referred to the earlier finding that JDE AU was an authorised user of the ‘824 mark under issue (3) above.

In relation to Moccona’s claims, the following issues arose:

8. Has Vittoria’s marketing and sale of its Vittoria 400-gram product in a glass jar involved the use of the shape of that jar as a trade mark?
   Wheelahan J noted that this issue raised the same consideration as to whether Moccona used its jar as a trade mark and was a matter for the Court. Moccona claimed that the infringement came about because of “the attractive eye-catching shape of the glass jar and flat-topped stopper lid, which comprises the container in which the coffee product is held”: [442]. Moccona further said that the shape and the shape alone of the Vittoria coffee jar, functioned as a trade mark. Vittoria claimed that common sense suggested consumers used names and logos on labels to distinguish instant coffee products.
   His Honour considered that Vittoria did not use its jar shape as a trade mark to distinguish its product from those of other traders in coffee products:[456]. Reasons in support of this finding included that his Honour did not find the Vittoria jar “striking”. Further, just because a product is displayed in its packaging, did not automatically mean, the shape of the packaging was being used as a trade mark.
   His Honour placed weight on the “aisle fins”. These are perpendicular protrusions from the shelving to draw attention to a particular product. They were in this case information from the supermarket owner themselves. The image of the Vittoria jar and label appeared on the aisle fin and served as a visual cue for the product. That use was not necessarily using the shape as a trade mark as required by s 120.
   
9. Is the jar of the Vittoria 400-gram product deceptively similar to the ‘824 mark?
   This claim fell away because the “pin” to infringement was that Vittoria’s jar was used as a trade mark. As his Honour found it was not, then the question of deceptive similarity was rendered moot. Notwithstanding, his Honour addressed deceptive similarity. Wheelahan J did not consider there to be a real, tangible risk that a notional buyer, with a recollection only of the ‘824 mark shape’s rough proportions and general shape, would be perplexed, mixed up, caused to wonder, or left in doubt, about whether instant coffee sold in the Vittoria jar shape had the same commercial source as coffee sold in the ‘824 mark: [505].
   
10. Has the Moccona promotion and sale in Australia of coffee products in a clear glass jar resulted in the acquisition of substantial distinctive goodwill and reputation?
    Yes: [516].
    
11. By its marketing and sale of coffee in the Vittoria 400-gram product, is Vittoria likely to mislead a number of ordinary and reasonable consumers of coffee in Australia into the erroneous belief that the Vittoria 400-gram product emanates from the applicants or is otherwise connected, associated or affiliated with the applicants and their coffee products?
    Wheelahan J considered that it was not likely that consumers would be caused to wonder (let alone to conclude), whether there was a connection between the Vittoria product and the commercial source of the Moccona shape get-up: [537].
    
12. Has Vittoria thereby injured the goodwill and reputation of Moccona?
    Based on the findings, this issue did not arise.
    
13. In circumstances where the infringement claims failed, whether Moccona had made unjustified threats to bring an action against Vittoria on the ground that Vittoria had infringed the ‘824 mark?
    It is a condition of any application under the unjustified threats provision, s 129, that the infringement claim fails. Of course, it is not necessary for an infringement action to have been commenced, as a recipient of threats may commence an action based on a claim of unjustified threats. However, the collapse of Moccona’s infringement action meant that Vittoria’s s 129 claim for relief would succeed, which Moccona conceded.
    His Honour considered it unlikely that Moccona would hereafter threaten Vittoria in relation to the shape of the jar in suit. Accordingly, there was no utility in granting the injunctive relief sought. The orders dismissing the Moccona claims were sufficient to vindicate Vittora’s position, such that a declaration was not necessary. Questions of damages and additional damages were not appropriate to consider at this point as they could be affected by any other relief granted.

A link to the decision is here.

In Chou v Metstech Pty Limited [2023] FCAFC 205 (Yates, Downes and Jackman JJ, 22 December 2023), a decision of the Full Court of the Federal Court of Australia, their Honours considered an appeal from a decision of a single judge of the Court.

In very broad terms it could be described as a claim by the applicants for ownership of certain literary and artistic works authored by a former employee in pursuance of his contract of employment with the applicant parties. It was pleaded initially however as a “tortious conspiracy” and not pleading the usual elements of a copyright infringement claim under the Copyright Act1968 (Cth).

After several iterations of the pleaded case in the initiating process, including at trial, some of the cardinal concepts, as their Honours identified them, were addressed. On appeal, an issue raised challenging the declaratory relief ordered by the primary judge, was the primary judge’s error claimed by the appellants in ordering declaratory relief in the absence of a Taiwanese manufacture being a party to the proceeding. The appellants claimed that the manufacture was the “designer” of the works and that its rights in relation to the works were in rem. It followed according to the appellants, that the declaratory relief ordered should be set aside.

Background

The area of industry involved in the proceeding was the designing and distributing of telecommunications systems for use in underground mines. At [6] their Honours referred to the applicants’ (Metstech, or Metstech parties), summary of the Metstech System in closing submissions at the trial:

“… the Metstech System is a system pursuant to which two-way radio (VHF and UHF) and mobile telephone (LTE) signals can be transmitted and received along underground tunnels.  It is a “leaky feeder” system, in that the signals are transmitted and received through leaky coaxial cables, such that the entire length of each cable functions as an antenna.  The cables connect to the various devices through “N-Type” connectors.  It is a “dual band” system, in that it can transmit and receive radio frequency (RF) signals in two different bands (such as VHF and LTE) simultaneously.  It is a “duplex” system in that signals can be sent and received in two directions simultaneously.”

Their Honours noted that the primary judge had identified the “central factual dispute” as being whether Metstech’s products had been designed by the first appellant (Mr Chou), who was at relevant times, Metstech’s employee: [3]. The Act provides that, subject to any exclusion or modification by agreement, “[w]here a literary, dramatic or artistic work …or a musical work, is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part”: the Act s 35(6).

The statement of claim filed by the Metstech parties pleaded a number of causes of action but did not plead copyright infringement. In an amended summons the Metstech parties pleaded allegations of copyright subsistence and ownership but the amended summons contained no prayers for relief based on those copyright pleadings. On the third day of the trial the Metstech parties filed a further amended summons and a commercial list statement, which introduced further allegations of copyright subsistence and ownership and sought amongst other things, declaratory relief as to subsistence and ownership in relation to certain works: [19].

The Chou parties – defined in their Honours’ reasons for judgment as Mr Chou and Welldesign Electronics Pty Limited – did not admit copyright subsistence or ownership in certain works. They claimed that the final designs were carried out by manufacturers for the Metstech parties domiciled in Taiwan.

At trial, the Metstech parties alleged that the various respondents were involved in a “tortious conspiracy” to injure the Metstech parties and the thirteenth defendant, Metstech IP Pty Ltd (Metstech IP), by transferring business and assets of Metstech and Metstech IP to other entities, resulting in the Metstech parties having a lesser or no interest in the Metstech business:[2]. The various parties, both individuals and corporations, are identified in [1] of the reasons.

The declaration

In relation to copyright, the primary judge had found that Mr Chou designed the Metstech’s Products as a result of considering the conspiracy case advanced at trial, and had made consequential findings in relation to copyright subsistence and ownership: [4]. These findings and the works were reflected in the following declaration made by the primary judge:

“The Court Declares that:

1  Copyright subsists in the following works in respect of the Products and the Metstech System, and any revisions thereof, and such copyright is held by Metstech:

(a) the Metstech PCB Assemblies;

(b) concept designs;

(c) printed circuit board schematics and layouts;

(d) firmware source code (save for the source code relating to the Raspberry Pi Software);

(e) functional specifications;

(f) test results;

(g) bills of materials;

(h) data sheets; and

(i)  manufacturing files.”

Mr Park and the Martin parties each denied that Mr Chou designed certain works. They also denied subsistence in respect of one of the works claimed by Metstech and ownership of that product and other claimed Metstech works: [29].

Copyright claims – an unusual approach

Their Honours’ set out in their reasons at [33] – [40], some “cardinal concepts” in copyright. The Full Court further noted that the Metstech parties did not before the primary judge, identify and prove the existence of specific literary and artistic works and addressing Mr Chou’s authorship (if any), to those identified works by reference to the Copyright Act.

Instead, the Metstech parties called on a consulting electrical engineer, who, in his report, discussed generalities including the tasks that are typically undertaken as part of electrical design and prototype manufacturing processes; the tools and software that would be required to build the Metstech System; and the role of original component, equipment and design manufacturers. The electrical engineer’s report included a view on copyright ownership of documents which were likely to be produced in the design and manufacturing process”: [41].

The Full Court considered that plaintiffs advanced their copyright case on the incorrect basis that Mr Chou was the alleged designer of electrical components and products. The correct basis was to plead and present evidence on authorship based on Mr Chou’s alleged creation of specific works that were either original literary works or artistic works within the meaning of the Copyright Act rather than “generalised categories of possible works”: [44]. In addition, the items over which Metstech claimed copyright were unusually not before the Court: [45].

The Full Court referred also to a number of general findings on credit made by the primary judge. These included that her Honour approached the evidence of Mr Chou with some caution as it appeared to her Honour that Mr Chou had not complied with the orders for disclosure: [49].

The declaration was in issue on appeal by Grounds 1 and 2. Relevantly, on publishing her reasons for judgment, the primary judge directed the parties provide proposed orders reflecting her Honour’s reasons. The plaintiffs proposed orders included the declaration. The Chou parties, Mr Park and the Martin parties each responded to the plaintiff’s proposed orders by providing written submissions. However, those submissions failed to address the proposed declaration. The Full Court therefore understood that failure, given the primary judge’s findings and reasons, as being an acceptance by the defendants that there was no impediment to the declaration being made.

The Chou parties however contended on appeal in Grounds 1 and 2, that the primary judge erred in making the declaration because, in essence, the Chou parties submitted, the Taiwanese manufacturer referred to as “Yokao” was not notified of the proceeding or joined to the proceeding as a necessary party. Grounds 1 and 2 are reproduced at [63] of the reasons.

The submission followed from the Chou parties’ argument that as the declaration affected Yakao’s rights in rem, Yakao’s joinder to the proceeding was necessary. It followed by the failure to join Yakao, the declaration should be set aside: [64]. The Full Court did not consider the declaration was an order in rem, but rather an order affecting the interests of the immediate parties: [75].

Somewhat unremarkably, Mr Park and the Martin parties supported Mr Chou’s submission saying that if this submission was accepted on appeal, then the other orders should be set aside.

The Full Court also had to consider whether these grounds could be raised now as no such objection had been raised before the Primary Judge: [66]. In deciding not to allow the Chou parties to raise the objection on appeal, the Full Court noted at [68]:  “The Chou parties informed the primary judge that they did not ‘seek to be heard’ on this subject”, except to contend that “Mr Chou did not create or design these products nor prepare the documentation” (references to the primary judge’s reasons omitted)

The Full Court emphasized that the case before the primary judge was about the work Mr Chou in fact carried out as a Metstech employee and whether that work was pursuant to the terms of that employment: [70]. The defensive case that Mr Chou did not carry out the relevant design work (or work of original significance) was a factual case only. Metstech directed its case to the work Mr Chou did as an employee, and by reason of that, there was no possibility that Yakao’s rights could be affected: [73].

The Full Court saw no reason why the declaration could not be varied to make clear that Yakao’s rights were not affected. That variation took the form that the declaration could be prefaced by the words: “As between the plaintiffs and the defendants …”: [80]. On the final day of hearing the appeal, the Chou parties accepted that if the declaration was varied as suggested, Grounds 3-10 of the appeal fell away: [89].

The Chou parties raised similar arguments to the order for delivery up. The Full Court did not accept those arguments, on the basis that the order for delivery up had “effect according to its own terms”: [90].

Other grounds of appeal included that there was no evidentiary basis for an order for an inquiry into damages and an appeal as to costs at first instance. The Metstech parties cross appealed on grounds that the primary judge did not deal breaches of duties owed to Metstech as directors, officers and employees, however during the appeal, Metstech accepted these matters were academic if the declaration and other orders were undisturbed.

The appeal and cross-appeal were dismissed.

By Dimitrios Eliades

Generate Group Pty Ltd ACN 072 667 228 v Sea-Tech Automation Pty Ltd ACN 003 916 434 and Gregory John Harris

The earlier proceeding

In 2007 the author reported on a decision of Einstein J of the New South Wales Supreme Court in respect of a notice of motion seeking interlocutory relief. The application sought inter alia, injunctive relief requiring the defendant in that proceeding, Sea-Tech Automation Pty Ltd (“Sea-Tech”), to provide the plaintiff (“Generate”) with a copy of the source code versions of three computer programmes. ^[i]

The facts arise in a relatively common circumstance in intellectual property cases. A party has a concept or even a developed idea or prototype and seeks specialised assistance to further develop or refine the concept or prototype. A dispute as to the ownership of the intellectual property rights in the upgraded product is not unusual in these cases.

Broadly, the proceeding arose from a fallout between Generate, who was in the business of providing management products to the hospitality industry and Sea-Tech, who was in the business of software development. More particularly, Generate contended it entered into a written agreement with Sea-Tech, whereby it furnished Sea-Tech with software known as Bevlink version 3, which had been the product of prior software developers and which it was then using with its customers.

Generate claimed it provided Bevlink version 3 to Sea-Tech on the basis that Sea-Tech would enhance the software as reasonably required by Generate. In exchange for Sea-Tech’s services, the parties would share the revenue derived from the “Bevlink” software, later re-branded under the name “Generate”.

Between 1998 and 2002 Sea-Tech produced Bevlink versions 4 and 5 conducted maintenance on the Bevlink programme including corrections, bug fixing and customisation responsive to customer requirements, and enhancements. ^[ii] In early 2004, Sea-Tech had provided numerous versions of Bevlink version 6 for Generate to evaluate but the product was not ready for market.

Upon giving the appropriate undertakings to the Court as to damages, Einstein J ordered Sea-Tech to deliver to Generate copies of the source code for the identified computer programmes. His Honour was satisfied that:

• Generate had shown a degree of probability of likelihood of success in its construction of the agreement with Sea-Tech and accordingly that it had a serious and not speculative case which has a real possibility of ultimate success. ^[iii]
• Undertakings to the Court, including:

– By Generate’s directors’ in the sum of $190,000 (being the value attributed by the defendant to the source code);

– As to confidential disclosure arrangements regarding the software, were sufficient, when considered in the light of all of the other evidence, to warrant the exercise of the Court’s discretion in terms of both a serious case issues as well as the balance of convenience issue, to make the orders for injunctive relief. ^[iv]

There does not appear to have been any judgment from a final hearing of the proceeding or from any application ending the proceeding early.

Recent developments

On 18 December 2015, Generate Group Pty Ltd, commenced proceedings in the Federal Court of Australia against Sea-Tech alleging that Sea-Tech had infringed Generate’s copyright in a computer software product known as Generate V6. Sea-Tech cross claimed against Generate on grounds not clear from the available public documents, but assumed to be in relation to a competing clasim of ownership of the copyright in the relevant source code/s.

Between December 2015 and April 2016 the court file reflects an orderly compliance with a pleading timetable. By June 2016, Generate suspected that Sea-Tech was responsible for hacking into its computer system and on 5 July 2016 obtained an interlocutory injunction. Generate had by the time of the injunction application discovered evidence which indicated that its electronic files relating to the litigation had been remotely accessed using a remote access software program titled “Team Viewer” and codes not associated with Generate. ^[v] Generate also identified that a director of Sea-Tech, Mr Harris, who was subsequently joined as second respondent, was responsible for this unauthorised access. ^[vi]

TeamViewer is a software program which enables remote access to a server and connected Team Viewer logged on computers. Access is available with the correct Team Viewer ID and password. The orders associated with the injunction made on 5 July 2016 included that Sea-Tech propose a forensic expert to take and keep a secure image of devices associated with two specified TeamViewer identification numbers.

Thereafter determinations were made in respect of each parties’ respective interlocutory applications, subpoena requests for the production of documents, which included consideration of claims of legal professional privilege. ^[vii]

Relevantly orders were made by Jagot J on 17 April and 27 April 2018 which appear to have finalised the matter, at least before her Honour. At the time of this publication there do not appear to have been published reasons for judgment accompanying the orders. The orders:

• Made 17 April 2018 against Gregory John Harris:

– Are prefaced by a penal notice to Mr Harris and any other person who knew of this order and did anything which helped or permitted Mr Harris to breach the terms of the order.

– Provided that Mr Harris be restrained for a period of 5 years from inter alia competing with Generate in the supply of beverage monitoring information technology in Australia; being a director of any entity so competing with Generate or being an employee of such a competing entity.

– Required Mr Harris to deliver up documents list in a schedule to the orders.

– Required Mr Harris to use an identified programme to delete copies of documents list in a schedule to the orders.

– To be permanently restrained from using, accessing, copying, modifying, distributing or otherwise dealing with identified files list in a schedule to the orders or any other files copied from Generate’s server without its knowledge.

• Made 27 April against Sea-Tech Automation Pty Ltd on an ex parte basis:

– Are prefaced by a penal notice to Sea-Tech and any other person who knew of this order and did anything which helped or permitted Sea-Tech to breach the terms of the order.

– Entered judgment in favour of Generate against Sea-Tech in the amount of $4,368,135.

– Dismissed the Sea-Tech cross claim against Generate.

– Provided that Sea-Tech be restrained for a period of 5 years from inter alia competing with Generate in the supply of beverage monitoring information technology in Australia.

– Provided a restraint by Sea-Tech its servants and agents from licencing or otherwise supplying or offering to supply the computer programme currently known as Flow or Flowtech or from receiving any financial benefit from the programme.

o Required Sea-Tech to deliver up documents list in a schedule to the orders and to delete files of Generate in Sea-Techs’ possession and control from all its locations.

– Required Sea-Tech to use an identified programme to delete copies of documents list in a schedule to the orders.

– To be permanently restrained from using, accessing, copying, modifying, distributing or otherwise dealing with identified files list in a schedule to the orders or any other files copied from Generate’s server without its knowledge.

Take home point

The litigation in two superior courts over some 11 years involved a dispute as to ownership of the copyright in the source code of programme enhancements. If a single take home point emerges from the proceedings, it is best described (in this author’s opinion) by Einstein J in his 2007 in this statement:

“One of the real difficulties which faced the parties on the interlocutory hearing and which will face the parties on the final hearing, concerns the simple fact that the Software Development and Support Agreement to which they signed, did not descend into the detail of defining [or seeking to define], which parts, if any, of the source code was to be made available to the plaintiff. As will appear from what follows the definition of “software” utilised by the parties was general in its terms and did not distinguish between any language or form of code in which the computer program might be recorded.” ^[viii]

It is one thing therefore to make a provision as to the rights to the source code and another to identify with precision what the source code encapsulates and whether the rights relate to parts of the source code and if so what parts. The emphasis is not unlike the requirement expressed often by the courts that confidential information be identified with precision and not as a blanket catch-all phrase assumed to be linked for example to a product, method, integer or process.

Dimitrios Eliades, Barrister – BTH LLB LLM SJD

Footnotes

[i] Hearsay Issue 18 June 2007: Generate Group Pty Limited v Sea-Tech Automation Pty Limited [2007] NSWSC 226 (Einstein J, 15 March 2007) (“the 2007 decision”).

[ii] The 2007 decision at [16].

[iii] The 2007 decision at [59].

[iv] The 2007 decision at [74].

[v] Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 377 (Jagot J, 13 April 2017) at [5].

[vi] Ibid.

[vii] Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 377 (Jagot J, 13 April 2017); Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 1261 (Gleeson J, 30 November 2017); Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2018] FCA 482 (12 April 2018).

[viii] The 2007 decision at [20].

Background

The ‘overlap provisions’ generally represent a policy consideration of the government. Copyright protection in relation to artistic works (life of the author plus 70 years — see s 33), far exceeds design protection under the Designs Act 2003 (Cth) (10 years: s 46). In the case of a drawing which becomes a corresponding design applied to an object, such as the hull of a yacht, the industrial application of that corresponding design will give the author of the drawings a protection in the commercialisation of the product which is undesirable.

The result is the loss of copyright protection upon the application of a corresponding design to an object which is industrially applied, which is in essence where more than 50 are made: Reg 17 Copyright Regulations 1969.

The effect is to push copyright owners to register the design under the Designs Act for protection. The plug and mouldings were not registered as designs, however the defence is not available to a ‘work of artistic craftsmanship’: s 77(1)(a).

Facts

The Respondent manufactured the JS 9000 yacht in Australia and in other parts of the world. In 2003, the second appellant (Mr Rogers) and the third appellant (Mr Warren), who had previously been employed by Swarbrick Yachts, were employed at the factory of the fourth appellant (Boldgold).

Their employment with Boldgold related to the yacht construction of a JS9000, utilising a hull and deck moulding which Boldgold had acquired from Mr Rogers. The moulding had been given to Mr Rogers in late 2002 by Swarbrick Yachts.

In September 2003, a judge of the court granted ex parte injunctive relief preventing the reproduction in material form of the object known as “the Plug” and “from manufacturing or procuring the manufacture of any mould using the JS 9000 hull and deck mouldings”: the reasons at [14].

The question

Broadly, the question was whether the Plug, the hull and deck mouldings were works of artistic craftsmanship, thereby not being caught by the overlap provisions.    

It is noted that the questions arose and were determined according to the Copyright Act 1968 (Cth), before the amendments to the relevant provisions introduced by the Designs (Consequential Amendments) Act 2003 (Cth).
 
Decision

The appeal against the decision of the Full Court of the Federal Court of Australia, was allowed.

Reasons

Their Honours in their joint reasons considered that an important element in determining whether a work is a work of artistic craftsmanship, was the level of constraint upon the author/designer by the necessary functionality and utility of the object. Relevantly at [83]:

 However, determining whether a work is “a work of artistic craftsmanship” does not turn on assessing the beauty or aesthetic appeal of work or on assessing any harmony between its visual appeal and its utility. The determination turns on assessing the extent to which the particular work’s artistic expression, in its form, is unconstrained by functional considerations.

This issue had to be considered objectively: the reasons at [63] and regard to the designer’s aspirations did not play a role, even though it was admissible. The Court considered a number of factors, particularly the following passage from an article:

The designer cannot follow wherever aesthetic interests might lead. Utilitarian concerns influence, and at times dictate, available choices. Indeed, aesthetic success is often measured in terms of the harmony achieved between competing interests.”[91]

The Court found that the visual and aesthetic considerations were “subordinated to the truly functional required of a ‘sports boat’ (the reasons at [73]). It followed that as the Plug was not a work of artistic craftsmanship, the deck and the hull mouldings which were made from the Plug, could not be of that character. In addition, at the trial, the hull and the deck moulds were not put forward as independent works of artistic craftsmanship from the Plug.

Burge v Swarbrick [2007] HCA 17 (Gleeson CJ, Gummow, Kirby, Heydon and Crennan JJ, 26 April 2007)

SURVEY PLANS

A question which has been circling for some time in the Copyright Tribunal was the copyright ownership of survey plans prepared by registered surveyors in respect of real property.

Background

A number of questions of law were referred by the Copyright Tribunal to the Federal Court for determination under s 161 of the Copyright Act 1968 (Cth). The Copyright Agency Limited (CAL) had applied to the Tribunal to fix terms for the acts of copyright (specifically reproduction), done by the Crown with respect to survey plans.

CAL was collection society under s 153F for Division 2 of Part VII purposes (use of copyright material for the Crown). CAL submitted that the surveyors were authors and owners of the copyright in the survey plans which were ‘artistic works’, and accordingly were entitled to terms being determined by the Tribunal for the acts of reproduction. CAL’s submitted that, as it was a collecting society under the Copyright Act, s 183A(1) operated to replace the usual Crown use provisions requiring notice and the fixing of terms contained  under ss 183(4) and (5).

The State of New South Wales (the State), submitted that neither ss 183(5) nor s 183A(2) operated in relation to the acts done by the State in relation to survey plans, firstly because it owned the copyright in the survey plans and secondly, if it did not own copyright in the surveys, it had a licence to use them for the proper maintenance and conduct of the land title system.

Ownership was claimed through the operation of ss 176 or 177 of the Copyright Act, which in essence provides for ownership by the Crown where that the survey plans were either made (s 176) or first published (s 177) by, or under the direction or control, of the State. In the alternative, it was authorised to do the acts, by reason other than by the compulsory licence mechanism in s 183 of the Copyright Act, for which remuneration is required to be paid to the copyright owner.

Decision

Their Honours decided that the State did not own the copyright pursuant to either s 176 or s 177 of the Copyright Act. In addition, the State was entitled to a licence to use the surveys other than by the mechanism provided for in s 183 of the Copyright Act.

Reasons

The ownership issue

The Full Court considered that surveys were not made by or under the direction and control of the State, predominantly because the State did not have the ability to require the landowner to order the survey or complete the survey once started. A survey plan might be commenced, but the State could not direct or control its completion.

Rather the work was determined to be ‘brought about’ or made because of the direction of the client of the surveyor who instructed the making of the survey.

The benefits bestowed on a survey complying with all of the regulations, were not relevant to either the making (s 176) or the first publication (s 177) of the survey, as neither would occur but for the clients instructions to have the survey made.

The licence issue

The full Court determined that quite apart from the entitlement to licence copyright material under s 183, the State was given a licence from the copyright owner in relation to surveys.

The exclusive right to do any of the acts comprised in copyright of the artistic work, includes a right to authorise someone to do such act or acts: s 13(2) of the Copyright Act. In relation to works, those acts are found in s 31. Under the Part VII Crown Use provisions, particularly s 183, the acts of the State would be an infringement of the copyright but for the Crown Use right.

Infringement of works in governed by s 36 and in the case of an artistic work, copyright is infringed if an act set out in s 31 is done by someone not the owner or without the licence of the owner (s 36(1) of the Copyright Act). In this regard, the phrase is done if the doing of the act was done by a licence binding on the owner: s 15 of the Copyright Act.

The Full Court determined that licensed surveyors (the copyright owners of the survey), must be taken to know that when a survey satisfied any requisitions, that it will be registered for the purpose of defining the land it related. Accordingly, by allowing the survey to proceed to registration, the surveyor knew, accepted and authorised the State to do all of the acts required of a registered plan, including the right to reproduce it. The court said at [155]:

By assenting to the submission of the Relevant Plan for registration, the surveyor who made the Relevant Plan authorised the State to do everything that it was obliged to do in consequence of the registration of the Relevant Plan so as to become a registered plan. The consequence of registration is that the State was authorised to do the acts in question. It was an incident of each surveyor’s assenting to the submission of a Relevant Plan to LPI, with the intention of its becoming a registered plan, that the surveyor authorised the State to do with the Relevant Plan all of the acts described above that might otherwise constitute an infringement of the copyright in the Relevant Plan.

CAL lodged on 2 July 2007, an application for special leave in the High Court.

Copyright Agency Limited v State of New South Wales [2007] FCAFC 80 (Lindgren, Emmett & Finkelstein JJ, 5 June 2007)

Dimitrios G Eliades

 

 

 

Introduction

The High Court has considered the question of the rights to copyright (if any), in certain architectural drawings, flowing to a purchaser of real estate, in circumstances where there had been development approval given in accordance with the drawings.

Facts

Proceedings were initiated by the owner of real estate at Nelsons Bay, in New South Wales (the ‘site’), in respect of alleged threats made against it by an architectural firm, which it claimed were groundless¹.   The architectural firm had prepared drawings, upon which development consent had been obtained from the local authority. The firm claimed copyright in respect of the drawings as ‘artistic works’, within the meaning of the term in s 10 of the Copyright Act 1968 (Cth).

The development had been a venture between two registered proprietors, one of which was a company in which the architectural firm’s principal had an interest. Copyright was not in dispute — the question being whether there was a licence to use them. The firm alleged that the new site owner (‘Concrete’), had no right to use the plans simply by virtue of acquiring the site. Concrete claimed, inter alia, that it had the benefit of an implied term of the contract between the firm and Concrete’s predecessors in title, to the effect that the plans could be used for the purpose for which they were created, namely the development and that the implied license extended to successors in title.

Relevantly, the immediate predecessor in title was a trustee appointed by the Supreme Court under s 66 G of the Conveyancing Act 1919 (NSW). The application for the court’s intervention under the section arose because the proprietors of the property held the property as tenants in common and had had a falling out. Accordingly, application was made to the Court for the appointment of trustee to carry out the sale of the property. It should be noted that there were no limitations by the trustee as to the exclusion of the benefit of the architectural drawings.

The failure to exclude the plans from the sale, was a major factor in the Court’s determination of whether or not a license existed in favour the owner of the site, which amounted to an authorisation within the meaning of s 15 of the Copyright Act. If in fact it was an authorisation, express or implied within that provision, then the threats were unjustified within the meaning of s 202(1) of the Copyright Act.

The provisions

Section 15 provides:

For the purposes of this Act, an act shall be deemed to have been done with the licence of the owner of a copyright if the doing of the act was authorized by a licence binding the owner of the copyright.

Section 202(1) provides:

1. Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.

Decision

Their Honours found for Concrete unanimously. Kirby and Crennan JJ, placing emphasis on the site being sold with a current development approval attached. This, their Honours said, indicated to a purchaser that the development consent could be used for the purpose of building in accordance with the architectural plans².  Gummow ACJ considered that if the firm were to deny consent for Concrete to use the plans, it would be pursuing its own interests which would be in conflict with the interests of the joint venture in which it was a participant.

Subject to any contrary agreement, Callinan J implied the term for the use of the plans in a contractual engagement of an architect. In this regard, Hayne J stated that the issues which arose in the case and the determination thereof, was not in his view a determination for all situations arising between an owner of real estate and an appointed architect.

The case involved a second issue for the High Court’s consideration.  Parramatta had sought at trial, the disqualification of the Trial Judge on the basis of apprehended bias arising from statements made by his Honour and in respect of questions which his Honour put to one of Parramatta’s witnesses. The High Court unanimously found that there was no bias by his Honour leading to a retrial, but that his Honour was attempting by his questioning, to identify the issues for resolution.

The Court considered that the Full Court erred in entertaining submissions in relation to copyright and thereafter dealing with the issue of bias. The Full Court had upheld the appeal in favour of the architects and thereafter found the allegation of bias made out. However, Gummow ACJ noted, the relief for the finding of bias was a re-trial. By making consequential orders upon the finding on the copyright issue, no relief had been given for the finding on bias. 

Relevantly, his Honour said at [1] — [3]:

Having decided that issue adversely to Concrete and disagreeing with the outcome at the trial, the Full Court went on to consider the challenge to the conduct of the trial which had been put on a quite different footing, namely, the alleged apparent bias of the primary judge. The Full Court upheld that challenge.

In proceeding in this way, the Full Court itself fell into error. The present respondents, Parramatta Design & Developments Pty Limited (“Parramatta”) and Mr Fares, were permitted to present their arguments to the Full Court on inconsistent bases. If the bias submissions were to succeed, the remedy would be a retrial. If the copyright submissions were to succeed, the Full Court would itself provide the orders which should have been made and there would be no occasion to order a retrial.

The Full Court so disposed of the appeal as to accept the bias submissions but without consequential relief. If allowed to stand uncorrected, this outcome would have the adverse consequences for the administration of justice to which Kirby and Crennan JJ refer in their reasons for judgment in passages with which I agree.

Conclusion

The case is certainly an argument in favour of purchasers of development sites in which local council approval has been given in accordance with certain drawings. Of course, this is a different situation if the vendor/seller specifically does not include the drawings in the sale, which in practice would seem an unlikely situation.

Difficulties may arise, where the architect has, in the agreement with his/her client, specified that the licence is a personal one, limited to that particular proprietor. In this regard, the architect’s association with the venture provided elements of conscience, which might not be as clear in most cases in which the question of the licence to use the drawings is raised.

Endnotes

1. See s 202 of the Copyright Act 1968 (Cth).
2. Their Honours’ joint judgment at [94].

 

Background

The case involved the copyrights to software improvements, between a customer and a contract service provider. The plaintiff (Generate) was a client of the defendant (Sea-Tech), in relation to the production of computer software programs which were used in the hospitality industry. The programs enabled the measurement of drink portions and the ability to integrate the bar services and gaming functions of the machines in a premises. Generate had utilised the services of another software developer to create earlier versions of the program which it updated through Sea-Tech. Sea- Tech and Generate entered into a written agreement for three years with successive twelve month terms, which the parties could terminate on one months notice. In late 2006, Sea-tech gave such notice which was accepted by Generate.

Proceedings

Generate sought interlocutory relief by motion, requiring Sea-Tech to provide copies of the source code versions of three particular programs. Although there were disputes between the parties as to certain factual matters, as an interlocutory application, his Honour considered that it was inappropriate to deal with the resolution of those disputed facts.

Decision

Einstein J granted the relief sought by the motion to Generate, making a number of orders as to confidentiality by reason of the commercial sensitivity of the material and the fact that both parties were in related industries.

Reasons

His Honour found that there was a serious question to the tried. The agreement dealt with the issue of title, but did not deal with the issue of licensing of the software. In relation to the aspect of the balance of convenience, his Honour considered that the circumstances ‘clearly favoured the plaintiff’, the main danger being to the loss of customers. His Honour did not elaborate on his observation that the circumstances clearly indicated the balance of convenience was with Generate. It is suggested that a consideration may have been, the identification by Generate of any claim it might have. In this manner the application may have yielded information in the nature of a pre-action discovery.

Dimitrios Eliades

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The Facts

The first respondent (Toea) was the owner of the land upon which certain markets operated (the Carrara Markets). The second respondent (Mr Rosenlund) was the full time manager, responsible for operating, supervising and controlling the market for Toea.

There were approximately 400 stalls at the Carrara Markets. Toea granted stallholders a license to occupy designated areas pursuant to a written agreement for a fee.

Over a period of about 18 months, the applicant (Louis Vuitton), through its investigators, made trap purchases of illegal items bearing one or more of the Louis Vuitton trademarks or marks which were deceptively similar thereto. Louis Vuitton did not seek relief from the infringing stall holders, but rather from the market operators, to whom the documented results of the illegal activities were given.

The Issue

Toea and Mr Rosenlund did not essentially dispute the infringements by the stallholders, but disputed whether in the circumstances, either or both of them, infringed the trademarks by their conduct.

Louis Vuitton’s Methodology

Louis Vuitton manufactured merchandise including handbags, luggage and accessories, utilising its registered trademarks in the design. Its products were only available through its own retail outlets. Save for the second hand market, it was and is not possible to purchase a new Louis Vuitton item through the usual retail outlets. The products are of extremely high quality and priced at the upper end of the market (the reasons at [4]).

Control of the Markets

The Carrara Markets, the largest on the Queensland Gold Coast, attracted between 18,000 — 23,000 customers each weekend. Stallholders had continuous access to their stalls and were either:

• permanent stallholders, who could erect signage and secure permanent structures; or
• casual stallholders, who had no rights to erect structures nor to require the identical stall to be allocated to them. In practice, the rules were relaxed for long term casual stall members.

Toea provided ATM facilities, issued newsletters and notices to the stallholders, suggesting marketing strategies on how they might operate more profitably. Toea also arranged bus services to attend other retail complexes and pick up patrons, who wanted to shop at the Carrara Markets.

Toea and Mr Rosenlund exercised some control over the type of goods sold and the location of certain stalls. For example, they would consciously separate stalls, which dealt in similar products.

In addition, it was a characteristic of the market that some stalls (usually long term), were sold in the same way as businesses are sold outside of the market environment. These sales were conducted through Toea. Mr Rosenlund would interview prospective buyers and upon the sale of a permanent stall, Toea received a 10% commission on the sale price. Sales were recorded for up to $400,000.00.