Case: Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd (2009) 79 IPR 437
Outcome: followed
Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd (2009) 79 IPR 437, a Full Court of this Court considered the subject of the taking of an account of profits under the Trade Marks Act . That case is particularly pertinent in that it, too, was decided against the background of what one might term an imperfect evidentiary foundation. To describe the evidence in the present case in relation to the profits as imperfect is, in no way, to voice a criticism of Jemella Australia. It has done the best it can to adduce evidence on that subject and further to secure, by court order, affidavits from those whom one might think know rather more on that subject. The result, nonetheless, is an imperfection in terms of allowing a precise assessment of an account of profits. There are some principles which emerge from Liquideng (2009) 79 IPR 437 which are pertinent. They are these: (a) In determining an account of profits the court must do the best it can on the whole of the material before it. Mere speculation or guesswork is not generally appropriate. Some foundation is needed. Nonetheless, the exercise of taking an account of profits calls for an allowance to be made for a lack of precision where evidence before the court is incomplete, inexact and generalised. (b) A pragmatic approach is the correct approach to take. The court should take into account the evidence before it, at least insofar as it provides indicators, limited though, they may be, as to the proper figure, rather than simply taking an open-ended approach and settling upon gross sales. (c) Where the evidence before the court gives some indications as to an appropriate figure, the proper approach is for the court to proceed and do the best it can, on the basis of what is before the court. Where it's not possible to calculate a figure, the court should give the benefit of the doubt to the holder or authorised user of the registered mark. That is because knowledge of precise costs is in the hands of the infringer. That said, simply to treat gross revenue as profits with an arbitrary discount, where the evidence suggested that there were costs, would be contrary to principle, even allowing for assessment being an inexact science. (d) No allowance should be made in respect of wages incurred by, or on behalf of the infringer. An infringing party ought not be permitted to have the benefit of remuneration or directors fees for carrying on its infringing activities. I approach the taking of the account of profits in this case on these bases. The giving of greater precision as to the precise cost of sale of each unit is a subject uniquely in the hands of those individual respondents involved in the activities of GHD Australia Direct. In those circumstances, it seems to me, consistent with principle as recited by the Full Court in Liquideng (2009) 79 IPR 437, to give the benefit of the doubt to Jemella Australia. It also seems to me that in so doing, a fair approach is to adopt the average submitted as appropriate by Jemella Australia. Jemella Australia accepts, correctly, with respect, that on the taking of an account, allowance must be made for the cost of purchasing the counterfeit irons including, in that regard, the telegraphic transfer fee in respect of purchase costs as evident in the material exhibited to Mr Gubecka's affidavit. Adopting then the average approach, and allowing for purchase costs, it is possible to tabulate an amount of profit per unit in respect of the 175 counterfeit irons. 'Schedule A Calculation of Profits' to Jemella Australia's submissions which provides that tabulation is annexure "A" to the reasons for judgment. That tabulation is cast on the sales at the minimum of $205, the maximum of $240 per unit, and then gives a median sale, or what I have termed an average. The end result of that, if one looks to that average, is a profit of $12,786. It is not possible, in the absence of an explanation from any of the individual respondents, particularly Mr Gubecka, to give any precision at all to how much of the expenses set out in the business activity statements ought properly to be regarded as attributable to the sales of the counterfeit irons. Again, that is a subject uniquely within the province of those behind GHD Australia Direct. I apprehend though, from Liquideng (2009) 79 IPR 437, that I ought, in the face of some indications on the affidavit material before me of additional expenses, at least to make some allowance for those as best I can. Postage and handling is one, but this seems to be incorporated, in any event, into the cost of sales, so I do not propose to make any allowance for that. Another, though, are internet costs. There may well also be some costs associated with the transporting of the counterfeit irons to the post office, although these would seem necessarily to be modest. I make that observation because it seems, on the evidence, that there were bulk dispatches of counterfeit irons, rather than numerous individual trips. There must also have been some cost of storage although, again, how much should be allowed in that regard is moot. I note that Mr Jakin deposes that the business was conducted from the residence of Mr Gubecka and Ms La Porta, who is Mr Gubecka's partner.