Case: Adidas-Salomon AT v Turner (2003) 58 IPR 67
Outcome: cited
The applicants made reference in their submissions to Adidas-Salomon AT v Turner [2003] 58 IPR 67. Goldberg J commented upon the limited evidence available to him upon which to base the assessment of damages for the infringement of trade mark rights. The difficulty arose from the limited information which could be extracted from the respondent as to the sale of infringing items. His Honour however said (at 67): '... notwithstanding the difficulty facing me on the assessment of damages the Court has to do the best it can on available material.' He quoted from the judgment of the Full Court in Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 where the Court said (at 183): 'The principle is clear. If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages. We should add that we can see no reason why this principle should not apply in cases under the Trade Practices Act as well as in cases at common law. We emphasize, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant.' See also: Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 1852. 42 I do not consider that it is a consequence of the principle enunciated in Adidas or Enzed that, where a basis for quantification of loss is entirely within the knowledge of the applicant and no evidence is adduced as to the quantum, the Court should make its own uninformed assessment of a royalty or licence fee that the applicant might have foregone by reason of loss of sales. Speculation and even guesswork may have a role to play where the relevant evidence is inaccessible to the applicant. That is particularly so where the inadequacy of the evidence is caused by a recalcitrant or uncooperative respondent or one who has kept no adequate records of dealings. In so saying, of course, it must be recognised that an applicant may apply to the Court for an order for the examination of the respondent in aid of the assessment of damages. Relevant to this issue, and incidentally that of exemplary damages, is the observation of Lord Wilberforce in General Tire &amp; Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197 at 212, quoted by Jacob J in Lectra (at 393): 'First the plaintiff's (sic) have the burden of proving their loss: second, that the defendants being wrongdoers, damages should be liberally assessed but the object is to compensate the plaintiffs and not punish the defendants.' 49 In Adidas Salomon , Goldberg J also considered the devaluation of trade marked products. His Honour found that the respondent had offered infringing items for sale over the internet. Their availability for sale was made apparent to the public and such persons as would go his website. As in the case of the Sony Play Stations, he found it unlikely that the purchasers of the items or persons looking at the website would reasonably have believed that the items were genuine Adidas items. He said (at 68 [7]): 'I am prepared to draw an inference that, in general terms, a buyer would be satisfied that in order to obtain a genuine Adidas garment, one would need to buy it through more official channels and that it would have been apparent by reference to price that these were not genuine Adidas items. I am satisfied that the fact that infringing items were available in the circumstances in which the respondent was offering them for sale tended to diminish the reputation of the genuine product sold by Adidas and tended to devalue the products that Adidas offers for sale.' Like Emmett J his Honour found it very difficult to place any specific figure on the loss that would have been suffered by Adidas by way of additional devaluation of its products by reason of the conduct of the respondent. He was satisfied that such damages would not be nominal having regard to the extensive audience available to a website such as the respondent's website. 52 The applicants also claim compensation for damage to their reputation. It is submitted on their behalf that the Court should be willing to draw the inference, as did Goldberg J in Adidas Salomon , that the infringing items were offered for sale in circumstances which tended to diminish the reputation of the genuine products. The applicants, it was said, have a reputation for producing good quality DVDs. Those sold by Mr Hasluck were of poor quality. 53 The applicants submitted that the feedback on Mr Hasluck's eBay sales record, revealed that some people did not know they were buying infringing copies and complained. It was submitted that it is not until a person plays the DVD and sees its poor quality that it becomes apparent that it is an infringing copy. On that basis it was argued that Mr Hasluck's conduct had damaged each applicant's reputation. Those applicants who had greater numbers of DVD titles sold were likely to have suffered greater damage to reputation. 54 In the eBay member profile for the period from 6 March 2005 to 5 May 2005 the positive feedback score was 89.6%. 206 members left a positive comment, 24 left a negative comment. It is evident that there were some members who, thinking they were buying the genuine item, discovered it was illegal and complained about that fact. It is difficult to see how that kind of discovery would reflect back upon the reputation of the applicants. As to those who made positive comments, again it is difficult to see how their positive experience would reflect upon the reputation of the applicants. This is conceptually distinct from the question of devaluation of the product arising from the lower price at which it was available on the internet. I would add that the feedback comments were not correlated to the purchasers of particular DVDs and therefore not correlated to any applicant's product.