Case: NV Sumatra Tobacco Trading Company v British American Tobacco Australia Services Ltd (ACN 004 069 649) [2008] FCA 1542 ; (2008) 79 IPR 286
Outcome: followed
NV Sumatra Tobacco Trading Company v British American Tobacco Australia Services Ltd (ACN 004 069 649) [2008] FCA 1542 ; (2008) 79 IPR 286 ( NV Sumatra ), Greenwood J made an order that the applicant, NV Sumatra Tobacco Trading Company (NVS) provide security for certain costs that might be awarded against it in favour of the respondent, British American Tobacco Australia Services Ltd (BAT), notwithstanding the fact that NVS was the registered proprietor of 29 trade marks in Australia and the applicant in a number of pending applications to register trade marks. His Honour accepted that by being the registered proprietor of the trade marks, NVS had assets within the jurisdiction, but said that the question was whether they represented assets "of sufficient liquidity so as to constitute a realistic fund against which a successful respondent might enforce an order for costs" (at [20]). Greenwood J continued: A party seeking to enforce a costs order might consider whether a receiver might be appointed to stand in possession of the registered trade marks and the rights conferred by registration so as to realise those marks and convert the assets into a fund of money. However, such a process, if available, is one which bears a risk of certainty and complexity even within the jurisdiction. Although no doubt the registered trade marks have a value which can be calculated by reference to the discounted cash flows referable to the exclusive rights conferred by registration to sell goods bearing the marks, determining that value and effecting a sale might not be easy. His Honour did not regard the registered trade marks as assets within the jurisdiction against which an order for costs might easily be enforced. The applicants seek to distinguish NV Sumatra . They submit that in that case there was no evidence that the marks were in use in Australia, whereas in the present case there is ample evidence to that effect. Moreover, they submit that two problems associated with the trade marks in NV Sumatra do not exist in the present case. One problem was the difficulty of valuing the marks, and the other the difficulty of selling them. The applicants say that the present trade marks were valued as recently as April 2009 as part of an arm's length sale, that they are in use, and that at least two major companies (the respective applicants or their parent groups) have been willing buyers in the recent past. The applicants further submit that there is no reason to suppose that a receiver would have any difficulty in selling the trade marks at a price many times the amount of the respondent's costs. With respect, the applicants' submissions fail to grapple with the critical question whether the bare trade marks would be readily convertible into cash by sale to satisfy an adverse order for costs. The evidence to which the applicants refer is not evidence of a sale of the trade marks as items of property distinct from a sale of the underlying business. The applicants seek to distinguish NV Sumatra on the basis that it was common ground in that case that there was no mechanism for the enforcement of Australian costs orders in Indonesia. In that case, the only mechanism for enforcement was the realisation of the Australian registered trade marks, whereas in the present case there is that mechanism, garnishment of the monies falling due from the distributor to Rare Breed, and registration of the order for costs in the USA.