Brother Industries, Ltd v Dynamic Supplies Pty Ltd

• Jurisdiction: Australia Federal only
• Judgment Date: 26 September 2007
• Neutral Citation: [2007] FCA 1490
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Brother Industries, Ltd v Dynamic Supplies Pty Ltd [2007] FCA 1490

TRADE MARKS – infringement of registered trade marks – importing and selling goods packaged in counterfeit packaging constitutes ‘use’ of trade marks – construction of trade mark specifications – meaning of “consumables” – defence of consent – insufficient evidence to establish chain of supply started with manufacturer – consent of registered owner, not related entity in corporate group, must be acquired.

TRADE PRACTICES – misleading and deceptive conduct and false representations – importing and selling goods packaged in counterfeit packaging is misleading and deceptive – intention not relevant – importing and selling goods packaged in counterfeit packaging constitutes passing off.

TRADE PRACTICES – liability for sale of good not of merchantable quality – evidence of defectiveness required.

WORDS AND PHRASES – “consumable”

Trade Marks Act 1995 (Cth), ss 7(4), 9, 17, 20, 120, 123

Trade Marks Regulations 1995 (Cth), sch 1

Trade Practices Act 1974 (Cth), ss 52, 53, 74D, 74H

Angoves Pty Ltd v Johnson (1982) 43 ALR 349 cited

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 cited

Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 considered

Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330 cited

Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 considered

Estex Clothing Manufacturers Pty Ltd v Ellis and Goldstein Ltd (1967) 116 CLR 254 considered

Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212 cited

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 cited

Leeks v FXC Corporation (2002) 118 FCR 299 cited

Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 considered

Nokia Corporation v Truong (2006) 66 IPR 511 cited

Pioneer v The Registrar of Trade Marks (1977) 137 CLR 670 considered

Playboy Enterprises International Inc v Hong (2004) 63 IPR 533 considered

R & A Bailey & Co Lt v Boccaccio Pty Ltd (1986) 4 NSWLR 701 considered

Revlon Inc v Cripps and Lee [1980] FSR 85 cited

Thunderbird Products Corp v Thunderbird Marine Product Pty Ltd (1974) 131 CLR 592 cited

Transport Tyres Pty Ltd v Montana Tyres Rims and Tubes Pty Ltd (1999) 93 FCR 421 considered

W.D. & H.O. Wills (Australia) Lrd v Rothmans Ltd (1956) 94 CLR 131 cited

Blanco White TA and Jacobs R, Kerly’s Law of Trade Marks and Trade Names (12^th ed, Sweet & Maxwell, 1986)

Davison M, Johnston K and Kennedy P, Shanahan’s Australian Law of Trade Marks & Passing Off (3^rd ed, Lawbook Co., 2003)

BROTHER INDUSTRIES, LTD AND BROTHER INTERNATIONAL (AUST) PTY LTD (ACN 001 393 835) v DYNAMIC SUPPLIES PTY LTD (ACN 064 793 862)

NSD 50 OF 2005

TAMBERLIN J

26 SEPTEMBER 2007

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 50 OF 2005

BETWEEN:	BROTHER INDUSTRIES, LTD First Applicant/First Cross-Respondent BROTHER INTERNATIONAL (AUST) PTY LTD (ACN 001 393 835) Second Applicant/Second Cross-Respondent
AND:	DYNAMIC SUPPLIES PTY LTD (ACN 064 793 862) Respondent/Cross-Claimant

JUDGE:	TAMBERLIN J
DATE OF ORDER:	26 SEPTEMBER 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The applicants draft, file and provide to the respondent Draft Short Minutes of Orders in respect of the precise form of the orders arising out of these reasons for judgment, costs and directions as to the future conduct of these proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 50 OF 2005

BETWEEN:	BROTHER INDUSTRIES, LTD First Applicant/First Cross-Respondent BROTHER INTERNATIONAL (AUST) PTY LTD (ACN 001 393 835) Second Applicant/Second Cross-Respondent
AND:	DYNAMIC SUPPLIES PTY LTD (ACN 064 793 862) Respondent/Cross-Claimant

JUDGE:	TAMBERLIN J
DATE:	26 SEPTEMBER 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 This is an application for injunctive and other relief by Brother Industries, Ltd, a Japanese company (“Brother Japan”), and its wholly owned Australian subsidiary, Brother International (Aust) Pty Ltd (“Brother Australia”). When referring to both of these companies, I will use the term “Brother”.

2 Brother claims that Dynamic Supplies Pty Ltd (“Dynamic Supplies”) has infringed registered Australian trade marks of Brother Japan for the word ‘BROTHER’, and has engaged in misleading and deceptive conduct in contravention of ss 52 and 53 of the Trade Practices Act 1974 (Cth) (“TPA”) and the tort of passing off.

3 The alleged infringing conduct of Dynamic Supplies is the sale in Australia of unbranded, generic printer drum units in packaging which is allegedly counterfeit and to which the ‘BROTHER’ trade marks were applied.

4 In response to these allegations, Dynamic Supplies has filed a cross-claim seeking declaratory relief and damages by way of indemnity pursuant to s 74H of the TPA in respect of compensation which it paid to its customers who purchased defective goods manufactured by Brother.

BACKGROUND

5 For many years, Brother Japan has conducted an international business of producing, marketing and selling a variety of products, ranging from sewing machines to printers. Since the late 1970s, Brother Australia carried on the Australian arm of that business with the licence and authority of Brother Japan, and used several registered trade marks relating to the word ‘BROTHER’.

6 One product produced by Brother Japan is a printer drum unit. These units are designed to incorporate toner cartridges within their structure and are then inserted into machines such as printers and facsimiles in which they enable the transfer of the ink in the toner cartridge onto paper fed through the machines. Each printer drum unit produced by Brother is designed to be used with a number of machines. The specific printer drum unit relevant in this case, and in respect of which Brother’s trade marks are registered, is called a ‘Brother DR-200’ unit. This unit is embossed with the ‘BROTHER’ brand. It receives a ‘Brother TN-200’ toner cartridge and is manufactured for use in conjunction with a wide range of Brother machines, including laser printers, facsimiles and multi-function devices.

7 The Brother DR-200 is packaged in distinctive packaging, comprising a box made of cardboard which bears the ‘BROTHER’ trade mark. An unrelated Japanese company, Asano Danboru Kabushiki Kaisha (“Asano Danboru”), manufactures the Brother DR-200 packaging for all Brother DR-200 units produced in Japan. It does so according to very precise specifications. The evidence is that Asano Danboru has always performed this job exclusively for Brother Japan and has never outsourced manufacture of the Brother DR-200 packaging. This exclusivity of packaging supply has continued unbroken since the commencement of the relationship between Brother and Asano Danboru.

8 Brother also makes a printer drum unit which is similar but not identical to a Brother DR-200 and is not embossed with the ‘BROTHER’ name. It is called an ‘original equipment manufacturer’ product (“OEM product”). These OEM products are not branded, and have never been branded, with the ‘BROTHER’ trade mark. All OEM products produced by Brother are sold exclusively to one purchasing company (“Company X”), the identity of which, in these proceedings, is the subject of a confidentiality order. Having purchased the OEM products, Company X then sells or distributes them under a brand name unrelated to Brother or with no brand name at all.

9 The respondent, Dynamic Supplies, is an Australian company which imports and distributes or sells printer drum units which are made by Brother and contained in packaging bearing the ‘BROTHER’ trade mark. Until 2003, Dynamic Supplies sourced almost all of the Brother products it sold or distributed from Brother Australia or its authorised distributors. However, this arrangement changed in early 2003 when Dynamic Supplies sourced three shipments of units at a substantially lower price from another supplier in the United States of America, namely Discover Group Inc (“Discover Group”), which is an entity unrelated to the applicants.

10 In early 2004, Brother made several trap purchases from Dynamic Supplies and thereby came into possession of non-branded OEM products (“Sample Units”) which were packaged in what appeared to be Brother DR-200 packaging (“Sample Packaging”) and which were claimed to have been sold by Dynamic Supplies to a purchaser acting on behalf of Brother. Brother formed the view and claims in these proceedings that the packaging of the OEM products bearing the BROTHER mark is counterfeit. In addition, Brother received warranty claims from Dynamic Supplies concerning several OEM printer drum units (“Warranty Units”). After a technical assessment of these units, Brother honoured some of the claims and rejected others. The latter claims were rejected, Brother says, because it considered the products not to be genuine Brother DR-200 units. In this context, Brother commenced these proceedings, alleging that Dynamic Supplies is infringing its ‘BROTHER’ trade marks; engaging in misleading and deceptive conduct in breach of s 52 of the TPA; and falsely representing and passing off OEM products as branded Brother products. Dynamic Supplies denies these allegations.

THE TRADE MARKS

11 There are four registered trade marks which are the subject of these proceedings (“Brother’s Australian trade marks”). Each of them is a trade mark in respect of the word ‘BROTHER’. The registration details are...