No mean feet obtaining a discovery order – Manolo Blahnik Worldwide Limited v Estro Concept Pty Limited

Sex and the City fans will be very familiar with the infamous satin blue stiletto heels Mr Big proposed to Carrie Bradshaw with. The iconic moment was seared into pop culture history as Mr Big bent down on one knee and placed the cobalt blue shoe on Carrie’s foot like a life-transforming glass slipper – and just like that, the luxury shoe label MANOLO BLAHNIK became known for its coveted pieces of art for the feet, particularly the ‘Hangisi’ style.

Justice Markovic recently presided over an application for preliminary discovery that was sought after allegedly counterfeit MANOLO BLAHNIK shoes were found to be sold in a Sydney boutique store.

Manolo Blahnik – the prospective applicant

Manolo Blahnik Worldwide Limited (Manolo Blahnik), the prospective applicant, is a wholly owned subsidiary of Blahnik Group Limited (BGL) and a related entity of Manolo Blahnik International Limited (MBIL). BGL and its subsidiaries (BGL Group), including Manolo Blahnik, manufacture, distribute and sell luxury shoes and accessories bearing the ‘MANOLO BLAHNIK’ name and brand, which are sold in over 65 countries including Australia.

In Australia, Manolo Blahnik owns a number of trade mark registrations including:

Reg No.	Trade mark	Priority date	Goods and services
577300	MANOLO BLAHNIK	29 Apr 1992	Class 25: Footwear in this class
668747	BLAHNIK	04 Aug 1995	Class 25: Footwear
668749	BLAHNIK	04 Aug 2995	Class 42: Wholesale and retain services in respect of footwear
931856	MANOLO	02 Jul 2002	Class 18: Articles of leather or imitation leather; bags; holdalls; rucksacks; sports bags; boot bags; satchels; wallets; belts; purses; card holders; cheque book holders; umbrellas; parasols; travelling bags; brief cases; key holders; satchels; wash bags; tie cases Class 25: Footwear; ladies and children’s footwear; men’s footwear Class 35: The bringing together for the benefit of others of a variety of goods enabling customers to conveniently view and purchase those goods in a retail footwear and accessories store
931857	BLAHNIK	22 Oct 2002	Class 18: Articles of leather or imitation leather; bags; holdalls; rucksacks; sports bags; boot bags; satchels; wallets; belts; purses; card holders; cheque book holders; umbrellas; parasols; travelling bags; brief cases; key holders; satchels; wash bags; tie cases
1156524	BLAHNIK	09 Jan 2007	Class 16: Printed publications, printed matter; paper; stationery; writing implements; calendars; bags of paper or plastic; boxes of cardboard
1156525	MANOLO	09 Jan 2007	Class 16: Printed publications, printed matter; paper; stationery; writing implements; calendars; bags of paper or plastic; boxes of cardboard
1819181	MANOLO BLAHNIK	17 Oct 2016	Class 16: Printed publications; printed matter, paper; stationery; calendars; bags of paper or plastic; boxes of cardboard; cosmetic pencil sharpeners Class 18: Articles of leather or imitation leather, leather and imitations of leathers; bags; handbags; holdalls; rucksacks; sports bags; boot bags; satchels; wallets; purses; card holders; cheque book holders; umbrellas; parasols; trunks and travelling bags; brief cases; wash bags; key cases (leatherware); drawstring cloth bags; tie cases; gift bags; shopping bags; animal skins; imitation animal skins; luggage, knapsacks; beach bags, school bags; Sheet music bags; cases, suit cases; vanity cases, pocket books; briefcases; attache cases; walking sticks; whips; harness and saddlery Class 25: Footwear shoes; ladies’ footwear children’s footwear, men’s footwear; leather shoes, vinyl shoes, esparto shoes, esparto sandals, rubber shoes, low shoes, straw shoes, rain shoes, over shoes, bath slippers, bath sandals, galoshes, heels, lace boots, half boots, boots, beach shoes, sandals, slippers, innersoles, soles for footwear, footwear uppers, heel pieces tor boots and shoes, tips for footwear, fittings of metal for boots and shoes, non-slipping devices for boots and shoes, lace-up boots, soles, wooden shoes; gloves; clothing, sweaters, jackets, jumpers, vests, lingerie, blouses, shirts, trousers, skirts, dresses, hats, coats, ties, scarfs; belts Class 35: The bringing together for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods, namely, but not limited to footwear, bags and accessories
1867325	MANOLO BLAHNIK	21 Aug 2017	Class 4: Candles; perfumed candles; aromatherapy fragranced candles; tapers; wicks for lighting; wicks for candles; beeswax; night-lights (candles); Christmas tree candles; belting wax; grease for belts; non-slipping preparations for belts; greases and oils for leather and the preservation of leather; paper spills for lighting; wood spills for lighting; moistening oil; textile oil; dust removing preparations; industrial waxes; fuels; lubricants

(the MB Trade Marks).

The ‘MANOLO BLAHNIK’ branded products have been available for sale in Australia since 1997. Between 1997 and 2016, ‘MANOLO BLAHNIK’ branded products were sold to a number of Australian retailers including Myer and David Jones by a Hong Kong based distributor either directly or via third parties. Since 2016, ‘MANOLO BLAHNIK’ branded products have been made available by MBIL directly to wholesale partners and/or distributors in Australia either directly from Manolo Blahnik’s online store or Harrods, a Sydney-based department store which at the time of the decision was the only authorised retailer to sell Manolo Blahnik’s products in Australia. (PSA: as of the date of this post being published, David Jones has announced it will be stocking Manolo Blahnik’s products!)

Given the value of the ‘MANOLO BLAHNIK’ brand to the BGL Group, enforcement of intellectual property rights against infringing use by unauthorised third parties and combatting the sale of counterfeit ‘MANOLO BLAHNIK’ branded products are key worldwide priorities. In order to assist Manolo Blahnik in ascertaining whether products are genuine or counterfeit, the authorised manufacturers apply certain indicators of authenticity to the products, including the use of one matte colour and dots on the soles of all shoes manufactured after 2013, with the number of dots varying depending on the style of the shoe.

Estro – the prospect respondent

Estro Concept Pty Limited (Estro), the prospective respondent, runs two retail stores described as ‘luxury designer outlets’ offering a wide selection of competitively priced fashion apparel, items and accessories from Europe’s most prestigious designers. The brands stocked by Estro in its stores include Moschino, Valentino, Prada, Fendi, Gucci, Versace, Armani, Kenzo, Max Mara, Lanvin, Giuseppe Zanotti, Dolce & Gabbana, Miu Miu and Givenchy.  Critically, Estro has also stocked and offered for sale in its stores Manolo Blahnik products.  All ‘MANOLO BLAHNIK’ branded products offered for sale by Estro in its stores were claimed to have been obtained from its supplier, Codimark Projects Pty Ltd (Codimark), from which Estro sourced a variety of products under various brands from mid-2019.

Disputed product – Hangisi

In mid-2019, Manolo Blahnik’s online customer services portal received an email from a consumer who had purchased Manolo Blahnik Hangisi shoes from the Estro store in Drummoyne. The consumer was concerned her shoes were not genuine as the placement of the text on the soles was mismatched and there was no dot.

 

Manolo Blahnik inspected the shoes and found in addition to the lack of dots on the sole of the shoes and inconsistency in the soles such as differences in colour and finish, other differences included differences in the quality and finish of certain aspects of the purchased shoes, and incorrect font and labels on the packaging.

The senior legal counsel for Manolo Blahnik therefore formed the view that the shoes purchased from Estro were not authentic Manolo Blahnik Hangisi shoes. It should be noted that this decision did not finally determine whether the shoes supplied by Estro were in fact counterfeit.

Disputed product – Nadira

Shortly after investigating the Manolo Blahnik Hangisi shoes, Manolo Blahnik purchased a ‘Nadira’ style shoe from the Estro online store. Based on an inspection of the purchased Nadira shoe, the senior legal counsel formed the view that the authenticity indicators did not match those of an authentic Nadira shoe and that there were differences in the quality and finish of the purchased Nadira shoe when compared to an authentic Nadira shoe. He was of the opinion that the Nadira shoes purchased from Estro were not authentic.

Manolo Blahnik’s next steps

According to its evidence, Manolo Blahnik believed that Estro sold counterfeit ‘MANOLO BLAHNIK’ branded shoes and that it may have a right to obtain relief from Estro or its supplier of those goods for:

1. infringement of the MB Trade Marks pursuant to s 120 of the Trade Marks Act 1995 (Cth) in that:
   • the ‘MANOLO BLAHNIK’ branded products offered for sale by Estro bear trade marks that are substantially identical with, or deceptively similar to, the MB Trade Marks;
   • those products are the same as, similar to, or closely related to the goods and services covered by the MB Trade Marks; and
   • Manolo Blahnik has not authorised Estro to use the MB Trade Marks in relation to those products,
2. breach of s 18 or s 29 of the Australian Consumer Law, in circumstances where promoting and selling the ‘MANOLO BLAHNIK’ branded products had the potential to convey representations in trade or commerce that Estro or its supplier is affiliated with, approved by, or trading as an authorised distributor of ‘MANOLO BLAHNIK’ branded shoes, and that purchasers of those products are purchasing genuine ‘MANOLO BLAHNIK’ branded shoes and are to expect the same standard and quality as genuine ‘MANOLO BLAHNIK’ branded shoes; and
3. passing off.

Manolo Blahnik instructed lawyers to request information about Estro’s supplier and delivery up of the ‘MANOLO BLAHNIK’ branded goods in its possession, neither of which was readily provided. No progress was made after several rounds of correspondence between lawyers, which led to the commencement of proceedings seeking discovery.

Orders sought for discovery

Given the circumstances, Manolo Blahnik believed that it may have a right to obtain relief from Estro and its supplier, Codimark, but:

• due to the limited information available to it, Manolo Blahnik was not aware if the relationship between Estro and Codimark was such that Estro may have an available defence which would militate against Manolo Blahnik deciding to pursue a claim for relief against it;
• it had limited information as to the style, colour-way and size of the goods offered for sale by Estro;
• it was not aware of whether Estro was supplied with or sold goods other those that Manolo Blahnik had identified that bear the MB Trade Marks or the ‘MANOLO’, ‘BLAHNIK’ or ‘MANOLO BLAHNIK’ name or brand;
• Estro did not accede to the requests made by Manolo Blahnik for delivery up of the goods in its possession, which meant that Manolo Blahnik was unable to verify whether such goods were authentic ‘MANOLO BLAHNIK’ branded shoes; and
• it did not know the quantity of goods Estro still held in its possession or the quantity or price of goods sold by Estro, which would be relevant to deciding whether to commence a proceeding seeking injunctive relief, damages or both and is necessary to consider whether the volume and sales of the goods warrant expending significant cost and effort in pursuing a proceeding against Estro for such relief.

In order to determine whether it should commence a proceeding to obtain relief from Estro, Codimark or another supplier, Manolo Blahnik sought an order under r 7.22 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) for Estro to give discovery of documents that refer to, relate to or record the identity and contact information of its suppliers of the goods sold bearing any of the MB Trade Marks or the ‘MANOLO’, ‘BLAHNIK’ and ‘MANOLO BLAHNIK’ name or brand, and an order that Estro give discovery under r 7.23 of the Federal Court Rules of documents that refer to, relate to or record, among other things, the relationship between the prospective respondent and each of its suppliers including Codimark.

Rule 7.22 of the Federal Court Rules

To meet the requirements of r 7.22, the prospective applicant must satisfy the Court that:

1. it may have a right to obtain relief against a prospective respondent (in this case, Codimark);
2. it cannot identify the prospective respondent (in this case, Codimark or another supplier); and
3. another person (in this case, Estro) knows or is likely to know the identity of that prospective respondent or have a document which reveals that identity.

Though it is not an express requirement, a prospective applicant is not required to demonstrate the existence of a prima facie case but is expected to have made reasonable inquiries for an order under this rule. The correspondence sent by the lawyers for Manolo Blahnik adequately addressed this.

Manolo Blahnik claimed that it held a reasonable belief that it had the right to obtain relief from Estro or Codimark based on its view that it had identified at least two instances of counterfeit ‘MANOLO BLAHNIK’ branded products available for purchase at the Estro stores.

The discovery order was sought by Manolo Blahnik despite Estro providing the identity of its supplier, Codimark. Manolo Blahnik submitted the only way that it would truly know the identity of Estro’s supplier(s) was by seeing documents which identify the supplier(s) and to have Estro’s proper officer examined on that issue. Even if Manolo Blahnik made inquiries of Codimark, it submitted Codimark may only be one of a number of sources from whom Estro received counterfeit ‘MANOLO BLAHNIK’ branded products.

However, Justice Markovic was not persuaded that there was any proper basis to reject Estro’s evidence in relation to the identity of the supplier, and surmised there was simply no evidence that there was more than one supplier. In addition, her Honour opined that Manolo Blahnik’s cynicism of Estro’s evidence was not based on evidence but rather put by way of submission, and did not require cross-examination of a proper officer from Estro. Accordingly, her Honour declined to make an order requiring Estro to give discovery of documents relating to the identity of its suppliers pursuant to Rule 7.22 on the basis that Manolo Blahnik could not be said to be ‘unable to ascertain’ the identity of the supplier (i.e. the prospective respondent) in accordance with that rule.

Rule 7.23 of the Federal Court Rules

In order to obtain an order under r 7.23 of the Federal Court Rules, a prospective applicant must satisfy three requirements, being:

1. a prospective applicant has a reasonable belief that it may have the right to obtain relief from the prospective respondent;
2. after making reasonable inquiries, a prospective applicant does not have sufficient information to decide whether to start a proceeding to obtain the identified relief;
3. a prospective applicant must reasonably believe that a prospective respondent has or is likely to have in his, her or its control documents that are directly relevant to the question whether it has a right to obtain relief against the prospective respondent and inspection of which would assist in making that decision.

It was accepted by the Court that Manolo Blahnik held a reasonable belief that it had the right to obtain relief from Estro or Codimark. It was also evident that Manolo Blahnik had, through its lawyers, made reasonable inquiries of Estro for further information about the disputed ‘MANOLO BLAHNIK’ branded products.

The measure of preliminary discovery to be ordered is the extent to which that information is necessary to overcome the insufficiency of information already possessed by a prospective applicant after it has made all reasonable inquiries to enable it to make a decision as to whether to commence a proceeding.

Justice Markovic was satisfied that Manolo Blahnik did not have ‘sufficient information’ to decide whether to start a proceeding against Estro. This was particularly so in relation to quantum. Her Honour considered Estro had not provided the specific information sought by Manolo Blahnik, such as the number of shoes Estro received from Codimark and their sale price range. Accordingly, her Honour ‘did not accept that more precise information was not available’ (mmm, that double negative).

Knot Estro’s luck – the decision

Justice Markovic was ultimately satisfied that she should make an order in Manolo Blahnik’s favour requiring Estro to give discovery of documents relating to ‘MANOLO BLANIK’ branded products supplied to Estro by Codimark. While some information had been provided by Estro, albeit after the commencement of the application for discovery, that information was not sufficient to enable Manolo Blahnik to make a decision about whether to commence a proceeding seeking relief. In fact, the information provided by Estro was ‘imprecise’ and ‘appeared to be modest’.

Manolo Blahnik therefore succeeded in its application to obtain more information to assist in in making its decision as to whether to commence proceedings against Estro. As to what happens next, is up to Manolo Blahnik…

Featured image: ‘First Lady Melania Trump Departs Joint Base Andrews’, The White House, 4 March 2019, Wikimedia Commons, public domain (cropped).