Federal Court of Australia
[Index]
[Search]
[Context
] [Help]
Re: STAR MICRONICS PTY. LIMITED and STAR MICRONICS CO. LIMITED And: FIVE STAR COMPUTERS PTY. LIMITED (trading as COMPUTERFAIR); ALL DATA AUSTRALIA PTY. LIMITED and GRAHAM PHILLIP O'NEILL No. V G174 of 1989 FED No. 525 Copyright - Trade Practices - Passing Off 18 IPR 225
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J.(1)
HRNG
SYDNEY
#DATE 9:10:1990
Counsel for the applicant: Dr J. McL. Emmerson QC and
Mr B.R.S. Kendall
Solicitors for the applicant: Messrs Stephens Solicitors
Counsel for the 1st and 3rd respondents: Mr J.M. Ireland
Solicitors for the 1st and 3rd respondents: Messrs R.E. Sanders,
Simpson and Freed
ORDER
Within 21 days the parties bring in short minutes of orders which are agreed
or which they propose.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
JUDGE1
This application seeks relief against alleged breach of copyright, against
statements and conduct alleged to be in breach of ss.52, 53 and 55 of the
Trade Practices Act 1974 (Cth) and against conduct alleged to constitute
passing off. The hearing proceeded on the issue of liability only, leaving
the question of damages for future consideration. Even so, some issues of
liability are still outstanding. The evidence given as to conduct said to be
misleading and deceptive and in breach of the Trade Practices Act dealt with
only a few transactions and may or may not be alleged to relate to other
transactions which may be identified for the purposes of the claim for
damages. Some of the subject printers sold were sold after the commencement
of those proceedings (16 were admitted to have been sold between 9 August 1989
and 30 September 1989), and there is an issue as to the extent to which they
fall within the applicants' claims. In the circumstances, it is not
practicable to deal finally with all issues as to liability.
2. Cross-claims lodged on behalf of the first respondent were not pursued.
3. The applicants are Star Micronics Pty Limited ("Star Australia"), a
company incorporated in and carrying on business in Australia and Star
Micronics Co. Ltd ("Star Japan"), a company incorporated in and carrying on
business in Japan. Star Japan is the manufacturer in Japan of a wide range of
computer equipment including printers, which it distributes under the name of
Star or Star Micronics. Under a Distributorship Agreement dated 18 December
1986, Star Australia has been granted by Star Japan the exclusive right to
distribute in Australia Star products, one of which the Star NX-1000 printer
is the subject of these proceedings. The applicants have now ceased to
distribute this printer, which has been superseded.
4. The application was initiated by Star Australia as licensee. In
accordance with s.120 of the Copyright Act 1968 (Cth)("the Act"), leave was
sought and was granted on 9 August 1989 to join Star Japan as an applicant in
the proceedings. Star Japan appears to have been formally joined as an
applicant by the filing of an amended Application and an amended Statement of
Claim on 30 August 1989.
5. Star Japan produced slightly different models of its NX-1000 printer, one
being designed for distribution in countries such as Australia which have a
240v electricity supply, another model for Hong Kong, Singapore and other
countries in southeast Asia which have a 220v power supply and another model
for countries which have a 110v power supply. The printers distributed by
Star Australia were the 240v models. For each area, different printers were
produced for printing in black alone or in both black and other colours.
6. One of the allegations made in the Statement of Claim was that the 220v
model of the NX-1000 printer was unsuitable for use in Australia. Breaches of
s.52, s.53 and s.55 of the Trade Practices Act were alleged. Much of the
affidavit evidence which was filed in the Court went to that issue. At the
hearing, Dr J. Emmerson QC, with whom Mr B.R.S. Kendall of counsel appeared
for the applicants, withdrew this claim, with a view to limiting the issues
which needed to be resolved at the hearing.
7. The second respondent, All Data Australia Pty Limited ("All Data"),
imported some 220v NX-1000 printers from Hong Kong and distributed them to
others in Australia including the first respondent. The proceedings against
All Data have been resolved by consent.
8. The first respondent, Five Star Computers Pty Limited under its trade name
"Computerfair" carries on business as a retailer of computers and associated
products. The third respondent, Mr G.P. O'Neill, is a director of
Computerfair. During the course of the hearing, Mr J. Ireland, counsel for
Computerfair and O'Neill, gave to the Court on behalf of his clients, without
admission of liability, the following undertakings:-
"1. The first respondent undertakes to the Court that it will
permanently refrain from selling, offering or exposing for sale or
distributing by way of trade without the licence of the second
applicant
any Star Model NX-1000 computer printer which has been manufactured
by the second applicant for operation with a 220 volts mains supply.
2. The third respondent undertakes to the Court that he will permanently
refrain from causing or permitting the first respondent to sell, offer
or
expose for sale or distribute by way of trade without the licence of
the
second applicant any Star Model NX-1000 computer printer which has
been manufactured by the second applicant for operation with a 220
volts
mains supply."
9. Computerfair, which had previously been a sub-licensee of Star Australia,
sold a number of the NX-1000 printers which it had obtained from All Data at
prices (Colour $549, Black and White $460) which may have been less than the
prices at which the printers distributed by Star Australia were sold
throughout Australia. The number of the alleged infringing printers which
were sold has not been determined. Mr J. Ireland, counsel for Computerfair
and Mr O'Neill, admitted to the purchase by Computerfair of 71 NX-1000
printers of which 6 were used for parts or for testing. However, the
quantification of the sales and the issue of damages or an account of profits
have been set aside for separate determination.
10. It is not in dispute that the Star products are well known in Australia
and have a reputation or goodwill which, in Australia, is attached to the
applicants.
Copyright Claim
11. The computer program, the subject of copyright, was alleged by counsel
for the applicants to reside inter alia in a computer chip or ROM in the
printer. Claims for copyright in what was described as a gate array and in
the get-up or packaging of the goods were not pursued. It is agreed that the
ROM in the 220v printer and in the 240v printer were substantially identical.
12. The principal case put against Computerfair was that it sold without
licence NX-1000 printers, each of which contained the ROM which incorporated a
program the subject of copyright. Reliance was placed upon s.38 of the
Copyright Act which provides, inter alia:- "38.(1) The copyright in a
literary, dramatic, musical or artistic work is infringed by a person who, in
Australia, and without the licence of the owner of the copyright -
(a) sells, lets for hire, or by way of trade offers or exposes for sale
or
hire an article; or
(b) by way of trade exhibits an article in public,
where, to his knowledge, the making of the article constituted an
infringement of the copyright or, in the case of an imported article,
would,
if the article had been made in Australia by the importer, have
constituted
such an infringement."
Other relevant provisions are:-
"31.(1) For the purposes of this Act, unless the contrary intention
appears
copyright in relation to a work, is the exclusive right -
(a) in the case of a literary, dramatic or musical work, to do all or
any of the following acts:-
(i) to reproduce the work in a material form;
...
(vi) to make an adaptation of the work;
(vii) to do, in relation to a work that is an adaptation of the first-
mentioned work, any of the acts specified in relation to the first-
mentioned work in subparagraphs (i) to (v), inclusive;
...
36.(1) Subject to this Act, the copyright in a literary, dramatic,
musical
artistic work is infringed by a person who, not being the owner of the
copyright, and without the licence of the owner of the copyright, does in
Australia, or authorizes the doing in Australia of, any act comprised in
the
copyright."
13. This aspect of the case therefore was put upon the footing that the
NX-1000 printers had, without the licence of Star Japan, been sold by
Computerfair in Australia when, to the knowledge of Computerfair, the article
had been imported into Australia by All Data and, had the article been made in
Australia by All Data, its making would have constituted an infringement of
Star Japan's copyright.
Licence
14. No evidence was called on behalf of Computerfair of any express licence
to sell the 220v NX-1000 printers. Evidence was given on behalf of the
applicants that Star Japan distributed its goods through exclusive
distributors in each country and that, in Australia, Star Australia was the
exclusive distributor and distributed through sub-distributors and authorised
dealers. This fact was known to Computerfair and to Mr O'Neill as
Computerfair had earlier been an authorised dealer of Star Australia.
15. Mr Ireland submitted that, while Star Japan did not expressly provide for
distribution into Australia otherwise than through Star Australia,
nevertheless the arrangements made did not prohibit such a supply. That may
be so. But the question is whether Computerfair had a licence from Star Japan
to sell and offer for sale the NX-1000 printers in Australia.
16. The evidence shows that there was no express licence from Star Japan. As
to an implied licence, I conclude that it was common knowledge in the trade,
and that Computerfair and Mr O'Neill knew, that Star Japan produced 240v goods
for distribution in Australia, and that Star Australia was the exclusive
distributor in Australia of the goods.
17. It follows that Computerfair, which was not authorised by Star Japan or
Star Australia to do so, had no licence to distribute Star 220v equipment in
Australia. See, eg., Interstate Parcel Express Co. Pty Ltd v. Time-Life
International (Nederlands) B.V. (1977) 138 CLR 534; Colgate-Palmolive Ltd and
Anor v. Markwell Finance Ltd and Anor (1989) RPC 497; Computermate Products
(Aust) Pty Ltd v. Ozi-Soft Pty Ltd (1988) 20 FCR 46; Ozi-Soft Pty Ltd and Ors
v. Wong and Ors (1988) AIPC 90-469.
Ownership
18. The applicants allege that the program in the ROM in the NX-1000 printer
was an original literary work of which an employee of Star Japan, Mr M. Itoh,
was the author and, as the program and the ROM were designed and made in the
course of that employment, ownership of the copyright resides in Star Japan.
Section 32 of the Act provides, inter alia:-
"(1) Subject to this Act, copyright subsists in an original
literary, dramatic, musical or artistic work that is unpublished and
of which the author -
(a) was a qualified person at the time when the work was made; or
(b) if the making of the work extended over a period - was a
qualified person for a substantial part of that period.
...
(2) Subject to this Act, where an original literary, dramatic,
musical or artistic work has been published -
(a) copyright subsists in the work; or
(b) if copyright in the work subsisted immediately before its first
publication - copyright continues to subsist in the work,
if, but only if -
...
(d) the author of the work was a qualified person at the time when
the work was first published;
...
(4) In this section `qualified person' means an Australian citizen,
an Australian protected person or a person resident in Australia."
The Copyright (International Protection) Regulations provide inter alia:-
"4.(3) Subject to these Regulations, the provisions of the Act
relating to works and other subject-matter apply in relation to
persons who, at a material time, are citizens or nationals of a
Country specified in Part I or Part II of Schedule 1 in like manner
as those provisions apply in relation to persons who, at a material
time, are Australian citizens.
(4) Subject to these Regulations, the provisions of the Act
relating to works and other subject-matter apply in relation to
persons who, at a material time, are resident in a country that
constitutes, or forms part of, the territory of a Country specified
in Part I or Part II of Schedule 1 in like manner as those
provisions apply in relation to persons who, at a material time, are
resident in Australia."
Japan is listed in Part 1 of Schedule 1.
19. Accordingly, as Mr Itoh was a resident and no doubt a citizen of Japan,
copyright subsists in original literary works of which Mr Itoh was the author.
As the subject work was done by Mr Itoh in the course of his employment with
Star Japan, copyright, if it subsists, is owned by Star Japan.
20. It is not in dispute in these proceedings that the source code for the
NX-1000 printer was developed by Mr Itoh personally or that the object code
and the ROM were produced by him or in accordance with his instructions and
under his supervision. However, an issue was raised as to whether the work
was an original work. Unfortunately, Mr Itoh was not called as a witness
although a statement by him, which was prepared at a late stage, was tendered
in evidence without objection. The submission put by Mr Ireland was that it
was not proved that the works of which Mr Itoh was the author were original
works. Mr Ireland submitted, for example, that as the NX-1000 printer
replaced the Star NX-10 printer, the source code for the NX-1000 printer was
no doubt a development of the source code of the NX-10 printer and that the
source code for the NX-10 printer had no doubt been developed from another
printer.
21. As only a fragment of the source code for the NX-1000 printer is in
evidence, and as Mr Itoh did not give evidence, there is force in the
submission put by Mr Ireland. However, I accept the evidence of Mr H.
Nakajima that the NX-1000 printer was a sophisticated printer developed by
Star Japan and significantly different from the earlier NX-10 printer. The
evidence before the Court shows that the program for the NX-1000 printer was
developed as an individual work by Mr Itoh. The first step was the creation
of a flow-chart. A copy or portion thereof in Mr Itoh's handwriting is in
evidence. Part of the source code in Mr Itoh's handwriting is also in
evidence. These documents suggest original work. The work itself was complex.
Mr Nakajima gave evidence that such portions of the flow charts and the source
codes for the NX-10 and the NX-1000 printer as are in evidence are different
and that the program for the NX-10 printer could not be used for the NX-1000
printer. Likewise, Dr K.E. Forward, a lecturer in computer engineering at the
University of Melbourne, said in evidence that the object code for the NX-1000
was twice the length of the object code for the NX-10 printer, that the
sequence of numbers in the two was quite different and that the object code
for the NX-10 printer had been "generated" from a different set of source
codes. For his part, Mr Itoh said in his statement:-
"The computer program in the Star NX-1000 printer is entirely
different from the computer program in the Star NX-10 printer. The
program in the NX-1000 uses a different language from that used in
the NX-10, because the processor chips (CPU's) in the two printers
are different. This is because the NX-1000 printer has many
functions which are different from, or additional to the functions
of the NX-10."
22. In the Computer Edge Pty Ltd v. Apple Computer Inc (1986) 161 CLR 171
("the Apple case") at pp 182-3, Gibbs C.J. said:-
"The expression `original' in that section does not mean that the work
must be the expression of original or inventive thought. `The
originality which is required relates to the expression of the thought.
But the Act does not require that the expression must be in an original
or novel form, but that the work must not be copied from another
work-that it should originate from the author': University of London
Press Ltd. v. University Tutorial Press Ltd. (1916) 2 Ch, at pp 608-609,
and see Sands and McDougall Pty. Ltd. v. Robinson (1917) 23 CLR 49 and
Victoria Park Racing
and Recreation Ground Co. Ltd. v. Taylor (1937) 58
CLR, at p 511. Originality is a matter of degree, depending on the
amount of skill, judgment or labour that has been involved in making the
work: See Ladbroke (Football) Ltd. v. William Hill (Football) Ltd.
(1964) 1 WLR, at pp 277-278, 282, 285; (1964) 1 All ER pp 469, 473,
475."
Applying his Honour's remarks to the facts of the case, I accept the
applicants' contentions that the source code and the object code, including
the program in the ROM, were original.
Literary Work
23. It was said by counsel for the applicants that Star Japan was the owner
of the copyright in a literary work which was found in the ROM. Section 10(1)
of the Act gives these definitions:-
"`adaptation' means -
...
(ba) in relation to a literary work being a computer program - a
version of the work (whether or not in the language, code or
notation in which the work was originally expressed) not being a
reproduction of the work;
...
`computer program' means an expression in any language, code or
notation, of a set of instructions (whether with or without related
information) intended, either directly or after either or both of
the following:
(a) conversion to another language, code or notation;
(b) reproduction in a different material form, to cause a device
having digital information processing capabilities to perform a
particular function;
...
`infringing copy' means -
(a) in relation to a work - a reproduction of the work, or of an
adaptation of the work, not being a copy of a cinematograph film
of the work or adaptation;
...
being an article the making of which constituted an infringement of the
copyright in the work, recording, film, broadcast or edition or, in the
case of an article imported without the licence of the owner of the
copyright, would have constituted an infringement of that copyright if
the article had been made in Australia by the importer;
...
`literary work' includes -
...
(b) a computer program or compilation of computer programs;
...
`material form', in relation to a work or an adaptation of a work,
includes
any form (whether visible or not) of storage from which the work or
adaptation, or a substantial part of the work or adaptation, can be
reproduced;"
It was submitted that, if the NX-1000 including the ROM had been produced in
Australia by All Data, the production of the ROM would have constituted an
infringement of the copyright by amounting to a reproduction of the work in a
material form or an adaptation of the work.
24. Counsel for Computerfair submitted that the provisions set out above,
which were introduced after the decision of the Federal Court in Apple
Computer Inc v. Computer Edge Pty Ltd (1984) 1 FCR 549 and before the judgment
of Gibbs C.J., Mason, Wilson, Brennan and Deane JJ. in Computer Edge Pty Ltd
v. Apple Computer Inc, cited above, did not encompass a case such as the
present.
25. In the High Court, it was held by Gibbs C.J., Brennan and Deane JJ.,
Mason and Wilson JJ. contra, that the ROM there under consideration was not a
reproduction or adaptation of a source program. Gibbs C.J. and Brennan J. also
held that the program in the ROM did not constitute a literary work. That
decision considered the Act in the form in which it stood prior to the
amendments introduced by the Copyright Amendment Act 1984 (Cth), which
introduced the amended definitions I have referred to above with respect to
"adaptation", "computer program", "infringing copy", "literary work" and
"material form".
26. It is not in dispute that both the source code and the object code are
computer programs as defined in the Act. The source code was written first by
Mr Itoh in Assembly language and recorded in a computer. The computer was
then used to convert the Assembly language into machine-readable language. In
that form, the object code, the program was recorded in a computer and a
print-out in hexadecimal notation could be obtained. The next step was to
transfer the program to a ROM or chip which had the capacity to receive and
store the code in its memory. Mr Nakajima gave evidence that this was done by
the use of equipment called a ROM Writer. However, Dr Forward gave evidence
that a ROM could be manufactured with the program in it. It may well be
therefore that a ROM Writer was used in the development of the subject ROM but
not for the purpose of mass production.
27. The program was stored in the ROM in the form of electrical charges in
the cells of the ROM. The term "ROM" stands for "Read Only Memory" and the
ROM therefore serves as a memory bank and to provide instructions to the mini
processor which controlls the operations of the printer. Apart from its use
in the printer, the ROM can be drawn on, as was done by Dr Forward, to produce
a print-out of the program in hexadecimal notation.
28. Dr Forward gave this evidence, after examining the logic boards on the
220v and 240v models of the NX-1000 printers:-
"5. The logic circuit boards contain a multi-function integrated circuit
central processing unit (CPU), a Gate Array integrated circuit, a RAM, a
ROM and a power transistor Array, the individual transistors which are
used to provide the relatively high driving currents required by the
stepper motors which drive the platen, the carriage and the printer
head. The logic circuit boards also have a number of other components
such as capacitors and resistors, which do not affect the logical
operation of the printer.
6. I examined the contents of the ROMS in each of the logic circuit
boards and from my examination of the contents of each of the ROMS, I
have come to the conclusion that they contain a computer programme which
is used to provide instructions to the micro processor or CPU, which
controls the operation of the printer.
7. Each of the ROMS contains a computer program, that is normally fixed
inside the ROM at the time of the manufacture of the ROM and the only
way the computer programme can now been (sic) changed is by the
substitution of another ROM programme in a different way from the
original ROM, or by erasing the ROM and by reprogramming it.
8. The computer programme contained in each of the ROMS is coded in
eight bit binary numbers, and each of these numbers is known as a
`byte'.
9. The computer programme in each of the ROMS is relatively large, 64k
bytes (k = 1024, and there are two characters per byte, so this gives a
total of just over 130,000 characters). ...
10. A source programme cannot be directly understood by a computer.
A source programme is therefore compiled into executable or object code
which can then be understood by a computer and the computer
programme in the ROM is in object code. The object code is stored in
the memory cells of the ROM as an electric charge which represents
binary machine code."
29. Mr Ireland submitted that the ROM, which stored the electrical impulses,
did not contain a computer program as defined in s.10(1) of the Act. Mr
Ireland relied principally upon the reasoning in the Apple case. However, the
program in the ROM meets the description of a "computer program" in s.10(1) of
the Act in that it is an expression in object code of a set of instructions
intended to cause a device having digital information processing capabilities,
the printer, to perform particular functions. The form of storage in the ROM,
electrical charges, though not visible, meets the definition of "material
form".
30. Such a computer program is a "literary work" as defined, as was held by
Lockhart, Sheppard and Beaumont JJ. in Dyason and Ors v. Autodesk Inc. and
Autodesk Australia Pty Ltd (unreported 14 September 1990). In the light of
their Honours' respective reasons for decision, I must reject Mr Ireland's
many submissions on this point, including his submission that the ROM was a
mere adjunct to a mechanical contrivance and therefore not the subject of
copyright, an argument referred to by Gibbs C.J. in the Apple case at p 184.
Infringement
31. It follows that the making of the printer, including the ROM, by All Data
in Australia would necessarily have constituted an infringement of the
copyright, for a replication of the ROM would have necessitated the
reproduction of the computer program contained in the ROM. Mr Ireland
submitted that the program in the ROM in the form of electrical charges was
not a reproduction of or adaptation of the source code as originally written
by Mr Itoh or of the object code as printed out in hexadecimal notation, being
quite different in form. However, I do not need to decide that point. The
ROM contained a computer program as defined. Replication in Australia of the
ROM including the program would have constituted reproduction of the program.
Knowledge
32. Section 38 requires "knowledge", of which Lockhart J. said in the Apple
case at p 583:-
"Knowledge of the law is not required: Sillitoe v. McGraw-Hill (The
Times), January 18 1982). The knowledge is actual, not constructive,
knowledge: Van Dusen v. Kritz (1936) 2 KB 176; R.C.A. Corporation v.
Custom Cleared Sales Pty Ltd (1978) 19 ALR 123.
The requisite knowledge may be inferred from the relevant
circumstances. In Albert v. S. Hoffnung and Co. Ltd (1922) 22 SR
(N.S.W.) 75 Harvey J. said at p 81:
"Knowledge' in the section (i.e. subs. 2(2) of the Copyright Act (I.N.P.)
and 2 Geo. V.C. 46, which is substantially similar to s.103 of the
Copyright
Act 1968) cannot mean in my opinion any more than notice of facts such
as would suggest to a reasonable man that a breach of the copyright law
was being committed.'
For presently relevant purposes there is no material difference between
s.103 and ss 37 and 38. See also Infabrics Ltd v. Jaytex Shirt Co. Ltd
(1978) FSR 451, R.C.A. Corporation's case (see above) and Copinger
on Copyright (12th ed.) par 530.
The requisite knowledge may be inferred if the evidence leads
reasonably to that conclusion. Such an inference can only be drawn after
consideration is given by the court to the whole of the evidence in the
case. It will be more readily drawn if there is evidence from which the
court can conclude that the defendant has the knowledge and he does not
deny the knowledge unless a satisfactory explanation is given for his not
giving evidence denying that knowledge."
33. There is no evidence that Computerfair and Mr O'Neill had actual
knowledge that the making of the article in Australia would constitute a
breach of Star Japan's copyright and there is no evidence that such a matter
was general knowledge in the computer industry. The packaging of the NX-1000
printer and the documents did not refer to copyright and no warning was given
by the applicants before the proceedings were commenced, though the 16
printers sold after the institution of proceedings may be in a different
position.
34. However, Computerfair and Mr O'Neill would have assumed that Star Japan
had intellectual property rights in the NX-1000 printer and that manufacture
by All Data in Australia without licence would have infringed those rights.
Computerfair and Mr O'Neill did not adduce evidence to the contrary. That was
sufficient actual knowledge to attract the operation of s.38. Knowledge of the
law of copyright or of the precise nature of the intellectual property rights
that would be infringed is not required.
Trade Practices Claims
35. I turn now to the claims made under s.52 and s.53 of the Trade Practices
Act. As I have mentioned, the Statement of Claim was amended during the
course of the hearing to limit the claims made in this respect. Even so,
there is not a simple allegation that Computerfair was selling, as goods
produced and distributed by Star Japan for sale in Australia, goods which were
not so produced or distributed. The allegations as to representations are in
substance:-
"10. The first Respondent has advertised for sale, offered for sale,
supplied and sold, in trade and commerce direct to the public in
Australia computer printers carrying the `Star' trademark, but which
were not designed and adapted by Star Japan for operation in Australia
(`the first Respondent's computer printers') and which were not supplied
by the first Applicant to the first Respondent.
...
11. In the course of the conduct referred to in paragraph 10, the first
Respondent has represented to the public and to its customers that:
(a) The first Respondent's computer printers as advertised for
sale, supplied and sold as aforesaid, carried a warranty which was
given or authorised by the first Applicant or Star Japan;
(b) the first Respondent had the capacity and ability, to provide
all the necessary equipment and services for the proper maintenance
of
the first Respondent's computer printers, both during and after the
warranty period;
(c) the first Respondent had the capacity and ability to provide
to purchasers of the first Respondent's computer printers the product
services and the product quality;
...
(e) the first Respondent's computer printers were designed and
manufactured for use with a 240 volt power supply."
36. Mr S.V. Harrison gave evidence that, at the premises of Computerfair, he
spoke to a salesman, Peter Smith, and was handed a dodger entitled "Star
Multi-font Colour Printer NX-1000". This dodger was put out by the Star
organisation and had the address and telephone number of authorised
distributors in New South Wales, Queensland,
Victoria
, Western Australia and
New Zealand printed thereon. On the front of the dodger, apparently placed
with a rubber stamp or its equivalent, was the name "Computerfair" and
Computerfair's address and telephone number. Mr Harrison asked Mr Smith if the
printer was covered by a Star Micronics warranty. Mr Smith answered yes. On
22 March 1989, Mr Harrison purchased one of the printers from Mr Smith. On
the invoice received were the words "Warranty on retail goods shall always be
that as stated by the Manufacturer." The printer supplied came in the usual
Star packaging. It was not until subsequently that Mr Harrison ascertained
that the printer he purchased was a 220v printer.
37. With Star products, Star Japan did not itself give any warranty and no
warranty document was included in the package. However, Star Australia in
practice guaranteed Star products for 12 months from the date of sale and
authorised Honeywell to repair defective products at Star Australia's expense.
Goods needing repair after the 12 months period were repaired by Star
Australia at the expense of the owner or dealer who returned them for repair.
The evidence as to this warranty arrangement was somewhat unsatisfactory but
there was put in evidence an advertisement relating to a Star product, other
than the NX-1000 printer, which mentioned that the product was guaranteed for
12 months. I accept that such a practice with respect to Star products was
known to the sub-distributors and authorised dealers of Star Australia. This
warranty practice was not extended to the 220v products.
38. On these facts, I am satisfied that there was a false oral representation
made to Mr Harrison that the printer carried a warranty by Star Australia or
Star Japan. The printed statement on the invoice did not amount to such a
representation, rather the contrary. There was no representation that
Computerfair had the capacity and ability to provide all the necessary
equipment and services for the maintenance of the printer, both before and
after the warranty period. There was no representation as to Computerfair's
capacity and ability to provide all necessary equipment and services for the
maintenance of the printer. There was no express representation that the
printer was designed and manufactured for use with a 240v power supply, but as
Star Japan did manufacture NX-1000 printers for use with a 240v power supply
and distributed those printers in Australia through its exclusive distributor,
Star Australia, and as the dodger handed by Computerfair to Mr Harrison
related to such printers, there was an implied representation that the printer
was such a printer. That representation was false.
39. Subsequently, in May 1989, Mr Harrison, at the behest of Star Australia,
made a trap purchase from Computerfair and, in this instance, Peter Smith when
asked as to warranty wrote on the invoice "12 months warranty". That
representation amounted to conduct that was misleading or deceptive
notwithstanding that Mr Harrison, who knew the true facts, was not likely to
be misled or deceived thereby. The representation did not suggest a warranty
given by Computerfair itself, for the invoice stated that the only warranty
given was the manufacturer's warranty.
40. Mr G.J. Watmore went to Computerfair on 22 March 1989. He also saw Mr
Peter Smith and was handed the Star dodger for the NX-1000 Colour Printer.
That also had the name of Computerfair and its address and telephone number
stamped on the front of it by rubber stamp or like means. On this occasion
also, Mr Smith wrote on the invoice "12 months warranty". On the top right
hand corner of the box in which the printer was packaged, a sticker had been
placed stating "220V/250V".
41. With this transaction also, there was a false representation that the
goods carried a warranty given or authorised by Star Australia or Star Japan
and a false representation that the goods were designed and manufactured for
use with a 240v power supply, that being implied from the sale of the printer
in Australia and being within the voltage stated on the sticker placed on the
package. The representations alleged in paragraphs 11(b) and (c) of the
Amended Statement of Claim were not established.
42. On 3 May 1989, Mr G.J. Angel purchased a black and white NX-1000 printer
from a salesperson named Perry. Prior to purchasing the printer, Mr Angel was
given a similar dodger for the black and white printer. The name Computerfair
was stamped on this dodger, on the back page adjacent to the names of Star
Micronics' dealers in Australia and in New Zealand.
43. Subsequently, after unpacking the printer and finding that it was
produced for use with 220 volts, Mr Angel rang Star Australia. After that
conversation, Mr Angel rang Computerfair and spoke to a salesperson who did
not identify himself. The salesperson said that the printer was covered by a
warranty by Star Micronics. Mr Angel said that he had contacted Star
Micronics and been informed that the printer was not so covered. The
salesperson then said that Computerfair would provide warranty cover.
44. On these facts, there was a false oral representation that the printer
was covered by a Star Micronics warranty. There was a representation implied
from the dodger and from the other circumstances I have mentioned that the
printer was produced for use with a 240v power supply. The other
representations alleged were not established.
45. These were the only transactions proved by the evidence. It appears from
the way in which the argument proceeded at the hearing that counsel for the
applicants may wish to contend that the findings in relation to those
transactions should be applied to some or all of other transactions that have
yet to be identified. However, at the present I can take that matter no
further.
46. It was further alleged that:-
"14.The aforesaid conduct of the first Respondent referred to in
paragraphs 11 and 12, constitutes conduct, in trade or commerce that has
misled and deceived, or that is likely to mislead or deceive members of
the public throughout Australia into the belief that the trade and
business of the first Respondent:
(a) is connected in the course of trade with;
(b) is affiliated in the course of trade with;
(c) has the sponsorship or approval of the first Applicant."
47. The use by Computerfair of the Star Micronics' dodgers, the placing of
the stamp of Computerfair thereon and the sale of Star Micronics' products in
the circumstance that Star Australia was the exclusive distributor constituted
facts which amounted to a sale of the goods as goods with which Star Australia
was associated and, therefore, that the goods had an association with Star
Australia. Because Star Australia distributed products designed for use with
a 240v power supply, there was an implied representation that the goods sold
by Computerfair had that characteristic, which they did not.
48. All the false representations I have mentioned amounted to breaches of
s.52 and s.53 of the Trade Practices Act. It appears unnecessary to consider
the application of s.55 of the Trade Practices Act and for the moment I make
no finding thereon.
49. It was admitted that Mr O'Neill was a director and the general manager of
Computerfair and that he had the care and control of the day-to-day operations
of Computerfair. It follows that Mr O'Neill was involved in the
contraventions of the Act which were based upon the handing out of the Star
Micronics' dodgers and the sale of the Star NX-1000 printers without
distinguishing them from the 240v printers distributed through Star Australia.
However, no finding should be made against Mr O'Neill with respect to the
statements as to warranty written or oral which were made by Peter Smith or
Perry or over the phone for there is no evidence that Mr O'Neill gave any
instruction with respect to warranty or played any part in what was said or
written.
Passing Off
50. The applicants also rely upon the tort of passing off. For the reasons I
have already given, there was a passing off of NX-1000 printers as goods
associated with Star Australia and as goods distributed by Star Australia,
which they were not. There was also a passing off of the NX-1000 printers as
the printers which Star Japan had produced for and made available for
distribution in Australia, that is to say as the Star's 240v printers, which
they were not. See J. Ingram and Sons v. The India Rubber, Gutta Percha, and
Telegraph Co Ltd (1902) 29 VLR 172; A.G. Spalding and Bros v. A.W. Gamage Ltd
(1915) 32 RPC 273; Wilts United Dairies Ltd v. Thomas Robinson Son and Coy Ltd
(1958) RPC 94; Colgate-Palmolive Ltd v. Markwell Finance Ltd, cited above.
51. Mr O'Neill also was personally liable for the passing off, being
responsible for the day to day management of Computerfair and therefore for
the sale of the NX-1000 220v printers and the distribution of the Star
Micronics dodgers. I would apply the principles which were set out in my
decision in Australian Performing Right Association Limited v. Valamo Pty
Limited and Anor (unreported 18 July 1990).
Conclusion
52. I do not propose when delivering these reasons to make any formal orders
but will direct that, within 21 days, the parties bring in minutes of orders
which are agreed or which they propose. The orders should deal inter alia
with the future conduct of the proceedings.
53. I take the opportunity of reiterating the view which I attempted to
convey in the course of the hearing that, if the claim against Computerfair
and Mr O'Neill concerns only 71 NX-1000 printers, then it scarcely seems to be
a claim worth the time and expense which has been and still has to be devoted
to the proceedings. A commercial solution to the litigation, rather than a
legal judgment, would seem to be more appropriate.