Campomar Sociedad, Limitada v Nike International Limited and ANOR S99/1998 [1999] HCATrans 50 (12 March 1999)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S99 of 1998

B e t w e e n -

CAMPOMAR SOCIEDAD, LIMITADA

Applicant

and

NIKE INTERNATIONAL LIMITED

First Respondent

NIKE AUSTRALIA PTY LIMITED

Second Respondent

Office of the Registry

Sydney No S100 of 1998

B e t w e e n -

CAMPOMAR SOCIEDAD, LIMITADA

First Applicant

NIKE COSMETICS SA

Second Applicant

and

NIKE INTERNATIONAL LIMITED

First Respondent

NIKE AUSTRALIA PTY LIMITED

Second Respondent

Applications for special leave to appeal

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 1999, AT 12.16 PM

Copyright in the High Court of Australia

____________________

MR D.K. CATTERNS, QC: May it please the Court, I appear with my learned friend, MS J.R. BAIRD, for the applicants. (instructed by Mallesons Stephen Jaques)

MR J.V. NICHOLAS: May it please the Court, I appear for the respondents in each matter. (instructed by Sprusons Solicitors)

GAUDRON J: Mr Nicholas, we think we might be best assisted if you were to go first in this matter.

MR NICHOLAS: Your Honours, there are three points we wish to make in relation to the appropriateness of this matter as a basis for special leave. The first, your Honours, is this, that the Campomar company, for whom my learned friend appears, both at the trial and before the court, was found to have deceived, by its use of its registered mark, pharmacists and customers who were exposed to their products. They were - - -

GAUDRON J: Was it found that it had deceived or that pharmacists had been deceived?

MR NICHOLAS: Your Honour, a submission that was put at trial and put before the Full Court to the effect that the customers and pharmacists concerned were the victims of a self-induced false assumption was rejected and it was held - - -

GAUDRON J: There are other alternatives.

MR NICHOLAS: It was held by the primary judge and the Full Court that it was the use of Campomar's mark in an intentional way, in a way calculated to cause deception, calculated to insinuate an association with my client's product that was in fact the cause of the deception that was accepted to have occurred at the trial.

GAUDRON J: Be it so, that has to be understood in a situation in which it was your client's - the extra recognition that attended your client's mark, your client not having been registered with respect to the category of goods in question.

MR NICHOLAS: That is so, your Honour. We accept that, for the purpose of the trademark law, my learned friend's client, whilst that registration subsisted, had a monopoly in respect of the application of the mark "Nike" on goods covered by the registration. But, your Honours - - -

GAUDRON J: And your client did not - the corollary is, of course, your client had none.

MR NICHOLAS: That is so, your Honour. But, your Honours, it is well established that a registered trademark does not confer a licence to pass off and that the use of a registered mark in a manner that amounts to passing off will be restrained.

GAUDRON J: The remedy here went far beyond restraining any passing off.

MR NICHOLAS: With respect, it did not, your Honour, if one looks at the final facts that were made.

GAUDRON J: It did not? Did not the trademark - was it not struck from the register?

MR NICHOLAS: Yes, your Honour, it was. In relation to the injunctive relief granted in respect of passing off in section 52, one of the questions agitated before the Full Court was whether the trial judge's findings involved the conclusion that the use of the name simpliciter on the goods covered by the registration involved a passing off, and the findings of the trial judge as interpreted by the Full Court, and the findings that were made independently by the majority of the Full Court, involved the proposition that a passing off was necessarily occurring, even if the name "Nike" simpliciter, devoid of the embellishment of the expression "sports perfume", was occurring.

GAUDRON J: Does that not raise an important question? Here were two registered trademarks. One, by brand recognition, had achieved a situation in which there was going to be confusion. But that is brand recognition. That is not disentitling conduct, is it?

MR NICHOLAS: Can I deal with what your Honour puts to me in this way, that there may have been a case where an honest trader, who did not package product and market product in a manner calculated to deceive, could do so in a way that did not give rise to a collision between its reputation and our reputation.

GAUDRON J: You have just said that there was a finding to the contrary.

MR NICHOLAS: In this case there was, your Honour, for this reason, that the conclusion that was arrived at by the Full Court and the primary judge was underpinned by a vital finding that, first of all, the original trading activity engaged in by the applicants was intentional - - -

GAUDRON J: Which was of short duration and which ceased virtually as soon as the proceedings were instituted, is that not right?

MR NICHOLAS: Approximately a month after an interlocutory injunction, approximately a month after it commenced, your Honour, that is right. Your Honours, the second vital finding underpinning the conclusion is that the only use within the contemplation of the applicants was also held to involve - it would involve passing off. Now, we submit that the proper approach is to look at the question of what use can be made of this mark lawfully before embarking upon a consideration of "Should the mark be expunged?" The findings made below are that, first of all, the only use that had been made was unlawful use, and the only use proposed to be made, as deposed to by the managing director of my learned friend's client, would also involve passing off.

In those circumstances, your Honours, we say that there is a finding that the use of the mark would confuse or deceive, for the purpose of section 28 of the Act, and that those two elements, the first and the second finding concerning intention that I have referred to, are sufficient to, for the purpose of subparagraph (d) of section 28, conclude that this mark would not be entitled to protection in a court of justice.

We say, your Honours, in circumstances where no lawful use can be made of the mark, on the findings that have been made, even if there is a question as to whether the marks ought to have been expunged, it is not a matter in respect of which it would be appropriate to grant special leave.

GAUDRON J: Why not?

MR NICHOLAS: Because my learned friend would be seeking, in effect, to have reinstated to the register two trademarks which, by passing off and 52 injunctions, his client was not entitled to use. We respectfully submit that renders the trademark issue an academic one only.

Your Honours, in relation to the continuing significance of section 28 of the repealed Act, we say that it is tolerably clear that under the 1995 Act the question of whether section 28 has an ambulatory or continuing operation is no longer relevant and that also - - -

GAUDRON J: Is that clear?

MR NICHOLAS: My learned friend might submit otherwise. We would respectfully submit that it is.

GAUDRON J: Can you take me to the present provision.

MR NICHOLAS: In the applicants' bundle under tab 5 your Honours will find the relevant provision of the 1995 Act. Section 234, at page 113 of the extract, if your Honours go to the introductory words of subsection (2):

In any legal proceedings -

certain marks, and essentially they are Part A marks under the old register or marks that had been accepted before the new Act came into force for registration under Part A -

is taken to be valid in all respects after a period of 7 years from the date of registration of the trademark unless it is shown that:

relevantly (d), over the page:

the registration of the trade mark would be contrary to section 28 of the repealed Act;

Now, your Honours, we say that that plainly is - - -

GAUDRON J: What does it mean "would"? Is? Would?

MR NICHOLAS: "Would", your Honours, we say as opposed to "would have been", or "would have offended".

GAUDRON J: But not "is" or "was"?

MR NICHOLAS: It could not be "is", your Honour, because section 28 has been repealed. The view we take of that, your Honour, is supported by the fact that in section - - -

GAUDRON J: What is the view you take of it?

MR NICHOLAS: That, your Honours, it is concerned with the condition of the mark as evaluated in accordance with the criteria set out in the repealed section 28 at the time the legal proceedings that are referred to in subsection (2) are commenced or heard.

GAUDRON J: But I do not follow from that that there is no longer any question of the kind that could arise under section 28 before.

MR NICHOLAS: It is relevant in this respect, your Honour, that the question of whether or not section 28 has an ambulatory operation does not arise in circumstances where one is postulating here a new statutory test, that is at the date these legal proceedings are commenced or heard, whichever is the case, would registration of this mark be contrary to section 28 of the repealed Act.

GAUDRON J: Presumably you read, to make sense of that, "would be contrary to section 28 if it had not been repealed".

MR NICHOLAS: No, your Honour, we would not read it that way at all.

McHUGH J: That is the problem, is it not? That is the issue.

MR NICHOLAS: We say, your Honours, that it imports by reference some language to be found in a repealed provision.

GAUDRON J: It is a very strange use of the subjunctive, I think.

MR NICHOLAS: Your Honour, that view is fortified by the presence in the new Act of sections 88 and 89 which are provisions that exclusively authorise the court to take into account supervening circumstances and events, blameworthiness - - -

McHUGH J: That is true, but that is under the 1995 Act, but 234 arguably is to be read as an exception to 88 and 89.

MR NICHOLAS: Your Honours, we would say no.

McHUGH J: I appreciate that.

MR NICHOLAS: And for this reason, your Honours, that section 234 is not intended to postulate different tests in respect of blameworthiness, but it does bring forward, as I have suggested by reference, the old criteria for the purpose of demonstrating whether the mark should be registered. But that is a question that is asked as at the date of the hearing or commencement of the proceedings.

Your Honours, the third point that we put in answer to the application for special leave has been covered somewhat by my submissions to this point. We say that the marks were not, on any view, even if one takes my learned friend's view of section 234, marks that would be entitled to protection in a court of justice. We say that because we have findings in our favour that these marks were first used in this country for the purpose of passing off and were only ever intended by the applicants to be used for that purpose also. We say, with respect - - -

GAUDRON J: There is no finding that they did not intend to make lawful use in the future, is there? That is one of the great difficulties with this case.

MR NICHOLAS: Your Honours, the only evidence was that a new range involving a particular get-up was proposed to be introduced if the court found that the earlier range involving the use of the word "sport" was unlawful. That proposed use was found to amount to a passing off and relief was granted on a quia timet basis.

GAUDRON J: How could it be? On what basis was the proposed use found to be passing off?

MR NICHOLAS: Upon a consideration of the evidence of people who were found to have been actually deceived, whose evidence was to the effect that the name - - -

GAUDRON J: Can you take me to that part of the judgment where it was found that the proposed use would constitute a passing off, a future proposed use would constitute passing off.

MR NICHOLAS: There was certainly a finding made.

GAUDRON J: Could you take me to it, please.

MR NICHOLAS: Yes, your Honour. If your Honours go to the judgment of Justice Sackville and page 124 of the book at line - - -

GAUDRON J: Justice Sackville was sitting on appeal?

MR NICHOLAS: Yes, your Honour. Line 3, and his Honour is directing himself at this point to a consideration of the primary judge's reasons for judgment. His Honour says:

Having regard to this background, I think that a fair reading of the primary Judge's reasons supports the view that he did intend to find that the appellants' use of the name NIKE for its products, without more, was conduct likely to mislead and deceive.

GAUDRON J: That is precisely what raises the important legal question. First of all, there was no explicit finding. It has to be read into it. But secondly, even assuming that his Honour did, that is what raises the very important issue. How can it be that the mere use of a registered name, in a category of goods in which it is registered and which the other brand is not registered, is likely to mislead and deceive? And even if it is, there is then the question whether that can be said to be disentitling conduct.

McHUGH J: And the further question as to whether, in any event, you should get injunctive relief.

GAUDRON J: Certainly whether you should get relief against rectifying the register.

MR NICHOLAS: We submit that that involves error in that one is approaching the question of whether or not we were entitled to passing off or section 52 relief, assuming that the mark was in fact valid. But one of the issues that had to be determined was whether or not the mark was in fact valid.

GAUDRON J: Well, it was.

MR NICHOLAS: Held.

GAUDRON J: Held it should be expunged, not that it was not valid.

MR NICHOLAS: Held it should be expunged.

GAUDRON J: Yes, not that it was not validly registered prior thereto.

MR NICHOLAS: Held that it offended section 28, your Honour. Your Honours, to complete the references, there is a reference also to be made to Justice - I should say, your Honour, that Justice Sackville dealt with the same question himself at page 125 of the book at line 25 and said:

In my opinion, the evidence relied upon by the primary Judge supported his finding that the appellants' use of the name "NIKE" in connection with the sale and promotion of their products was likely to deceive consumers and retails.

His Honour then refers to some evidence. Justice Lehane was essentially of the same view in both the way in which he characterised the primary judge's finding and the view that his Honour came to independently in the same way that Justice Sackville did.

Your Honours, we see this case as not involving any - we submit that it does not involve any special question and that basically it turned on a question of fact, that is to say what the use of this mark on these products conveyed to the pharmacists and consumers and other members of the public who were called to give evidence. If your Honours please.

GAUDRON J: Thank you, Mr Nicholas.

We need not trouble you, Mr Catterns. There will be a grant of special leave in this case.

AT 12.36 PM THE MATTER WAS CONCLUDED