Case: Yap Cheng See v Granich &amp; Associates [2001] FCA 1735
Outcome: cited
The questions to be determined on this Application are whether, in all the circumstances, the decision of his Honour is attended with sufficient doubt so as to warrant the decision being reconsidered by the Full Court and whether substantial injustice would result if leave is refused, supposing the decision to be wrong ( D&eacute;cor Corporation Pty Ltd &amp; Anor v Dart Industries Inc. (1991) 33 FCR 397 at 398 and 399 per Sheppard, Burchett and Heerey JJ). At pp 399 and 400, their Honours said this: 'In our opinion, the principles discussed in Niemann and in other cases to which we have referred provide general guidance which a court should normally accept. However, there will continue to be cases raising special considerations, and the court should not regard its hands as tied in any case beyond this; that by s 24(1A) the legislature has evinced a policy against the bringing of interlocutory appeals except where the court, acting judicially, finds reason to grant leave. When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice ... and an interlocutory decision determining a substantive right where leave will more readily be granted. ... In the present case, the interlocutory decisions in respect of which leave is sought are certainly attended with difficulty, and their correctness is open to dispute. If they are wrong, significant consequences will be suffered by the applicants. We regard this as a clear case for the grant of leave.' In Yap Cheng See v Granich &amp; Associates [2001] FCA 1735 per North, Merkel and Gyles JJ, the Court noted the distinction to be drawn between an interlocutory decision on a point of practice or procedure and an interlocutory injunction 'on a point of substance' [6]. 32 Fourthly , Mr Corrick says that he first conceived of the possibility of marketing and selling inflatable surfcraft featuring the designs and logos of the NRL and AFL teams during the course of his holidays during December 2005 and January 2006 at Noosa in Queensland. Mr Corrick says that on his return to Sydney he proposed the notion to the NRL and AFL in February 2006 and then developed a concept and design but did so in circumstances where he was not aware of Midamarine's Registered Design. Mr Corrick says that he spent $30,000 developing the concept of the surfcraft endorsed with the designs, for approval of the NRL and AFL. In May 2006, licence agreements with the NRL and AFL were negotiated. Mr Corrick says that he does not have any documents in his possession, power or control in relation to the 'design process undertaken in developing the DMC surf mat' . DMC concedes that it copied the Wavestar article although DMC and Mr Corrick contend that that conduct occurred without any knowledge of or reference to the Registered Design or an assertion of such rights by Midamarine. That matter is the subject of controversy for the purposes of the action. 33 Fifthly , Mr Corrick in his affidavit says that Mr Binkin came to him with three product proposals for endorsement with NRL team graphics, 'a team branded rug or floor covering, wall hangings and the surf mat' . The surf mat was just one of a number. Mr Corrick says he did not proceed with any of the proposals. There was an existing licensee for floor mats and the NRL was not satisfied that the proposal concerning floor coverings and wall hangings was sufficiently differentiated. Although Mr Corrick mentioned the surf mat proposal to the NRL, 'the NRL was not interested' . However, by May 2006, Mr Corrick and DMC had established confidential licensing arrangements with each of the NRL, ARU and AFL to manufacture and supply inflatable surf mats displaying the names and logos of the various teams in the National football competitions administered by those bodies. 34 I am not satisfied that his Honour's decision is attended with doubt as to the conclusions he reached concerning these matters going to the strength of the arguable question to be determined at the trial of the action. 35 His Honour then considered where the balance of convenience lay and whether Midamarine had demonstrated that it had and would continue to suffer injury or damage not compensable by an award of damages. As to the question of irreparable harm, his Honour noted that Midamarine had embarked upon a process of developing the Wavestar and Surfster devices, had established a position as a manufacturer and supplier particularly of the Wavestar surf mats and had embarked upon a course of creating a market for the product and supplying the product to distributors since 2004. A part of that incremental process involved establishing an exclusive distribution arrangement with Mr Britz and his companies. His Honour also noted that the intervention of DMC had resulted in the loss of all future sales for the Wavestar article to an important buyer, Amart All Sports. His Honour accepted evidence that the loss of sales to Amart All Sports had a significant impact on the ability of Midamarine to make sales of its Wavestar product. His Honour formed the view that the impact of the conduct of DMC upon Midamarine's incremental development of the market for its product [35] was significant. The question seemed to be not one of just assessing lost sales but an assessment of the injury to the incremental development of the market by Midamarine and emblematic of that affect was the impact upon the purchasing behaviour of Amart All Sports and inferentially others. 36 It is correct that his Honour was critical of the evidence of Midamarine as to a wider injury or impact of the conduct of DMC. However, the assessment of the impact upon Midamarine in its development of the market was found, by his Honour, upon all the evidence to be a significant impact and thus injurious of Midamarine in a way difficult of assessment. 37 On the question of the balance of convenience, his Honour had regard to the strength of the arguable case established by Midamarine and the features of the conduct discussed in these Reasons which led to his Honour's conclusion that Mr Corrick had embarked upon a course of conduct astute to the assertions by Midamarine of rights derivative of its Registered Design. His Honour noted the exchanges between Mr Binkin and Mr Corrick, the submission of the two email graphic depictions, the copying of the Warning Instructions containing the reference to the shape of the inflated Wavestar product being a Registered Design, the lack of any evidence of independent design, the contention that DMC was at one point entitled to a Registered Design for its article although now to be discontinued. For interlocutory purposes, his Honour accepted Midamarine's evidence directed to the conscious quality of the conduct particularly the contentions, on all the evidence, that DMC adopted the features of shape, pattern and ornamentation in circumstances amounting to obvious imitation and, having regard to the evidence of knowledge, in a way amounting to fraudulent imitation. 38 I am not satisfied that his Honour's decision in support of the Orders in relation to irreparable damage and the assessment of the balance of convenience is attended by doubt. 39 DMC relies upon three further matters namely, the adequacy of Midamarine's undertaking as to damages, the imminent trial of the matter to commence during the early part of December (possibly 6 December 2006) and DMC's offer to keep proper records relating to importation and sale. 40 As to Midamarine's undertaking, DMC contends that any loss it suffers by reason of the Order will not realistically be recoverable having regard to the financial strength of Midamarine. Midamarine has provided the usual undertaking as to damages and there is a differentiation in the financial standing of Midamarine and DMC. However, in circumstances where Midamarine has satisfied the elements required to be discharged, according to principle, in the exercise of the discretion in the making of an interlocutory injunction Order pending trial, it seems to me that Midamarine ought not to be deprived of the benefit of the interlocutory Order on the ground that it is a corporation incrementally establishing in a market for its products and its financial standing is disproportionate to that of DMC. There is no evidence that Midamarine is in financial difficulty. 41 As to the imminence of the trial, DMC contends that because the trial of the action is to take place in the early part of December, the discretion ought to be exercised against making an interlocutory Order. However, because the trial is imminent, there is a real prospect that the period of the interlocutory restraint confronting DMC is likely to be short and the effect of the Order less burdensome. 42 As to the offer to keep proper records, two things should be said. Firstly, an undertaking to keep proper records is designed to preserve the evidence which would be relied upon by a successful applicant at trial in identifying the basis for an accurate calculation of its compensable loss in money terms. In circumstances where injury or harm not susceptible of compensation in money terms accrues to an applicant by reason of the respondent's conduct, an undertaking to keep proper records is less relevant. Secondly, as indicated in these Reasons, Spender J reached conclusions concerning the strength of the arguable case based upon evidence which suggests a strongly arguable case of fraudulent imitation of the Registered Design. In those circumstances, a question arises as to whether an applicant ought to be deprived of an interlocutory Order and put in a position of reliance upon an interlocutory undertaking of such a respondent. It seems to me that in the circumstances of this case, the Applicant ought not to be put in such a position. 43 Accordingly, I am not satisfied that by reason of the three further matters, his Honour's decision leading to the making of the interlocutory Order is attended by doubt. 44 Accordingly, I propose to dismiss the Application for leave to appeal and order DMC to pay Midamarine's costs of and incidental to the Notice of Motion. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 22 November 2006 Counsel for the Applicant: Ms Downes Solicitor for the Applicant: Mr Hall, Swaab Attorneys Counsel for the Respondent: Respondent appeared by its Solicitor Solicitor for the Respondent: Mr Philp, Bennett &amp; Philp, Solicitors Date of Hearing: 9 November 2006 Date of Judgment: 22 November 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1591.html