The Federal Court’s decision in Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2016] FCAFC marks the end* of a long-running dispute between the Aristocrat Technologies group and Global Gaming Supplies, Impact Gaming and Tonia Enterprises.
*hopefully
The Aristocrat group and its trade marks
The Aristocrat group supplies gaming technologies and services to the international gaming industry. Aristocrat Technologies Australia (“ATA”) designs, manufactures and supplies gaming machines and software, and also owns various registered trade marks and the copyright in the computer software and artwork used in Aristocrat gaming machines.
ATA holds current Australian trade mark registrations for a range of marks, including the word “ARISTOCRAT” and the following logo:
Background to the dispute
Enter Global Gaming Supplies, Impact Gaming and their respective directors (amongst others, the “Respondents”), who were found to be participants in a joint venture arrangement from around October 2004 for the supply of refurbished Aristocrat gaming machines to various overseas markets. The joint venture employed a gaming technician called Mr Allam (through his company Tonita Enterprises) to provide certain services to the joint venture, including burning Aristocrat gaming software onto blank memory chips and manufacturing counterfeit compliance plates to be fixed onto Aristocrat machines.
The Aristocrat parties (“Aristocrat”) commenced proceedings alleging copyright infringement and trade practices contraventions against Global Gaming Supplies and its director in 2006. Separate proceedings alleging copyright infringement, trade mark infringement and trade practices contraventions were commenced against Impact Gaming, its director and Tonita Enterprises and Mr Allam in 2007. The proceedings were consolidated on 22 June 2007.
The primary decision
After obtaining and executing Anton Pillar orders at the Respondents’ premises, Mr Allam’s residence and Tonita’s warehouse, Aristocrat was able to bring a significant amount of evidence in support of the counterfeiting and copyright infringement claims – fake compliance plates engraved with the Aristocrat trade mark, proof of duplicated serial numbers on gaming machines, engraving equipment found in the possession of Mr Allam, counterfeit and blank memory chips, CD-ROMs containing Aristocrat software and computer software used by Mr Allam to burn Aristocrat game software. All of these were admitted into evidence during the proceedings.
It was accepted over the course of the primary proceedings that the Respondents had acted in concert to fit gaming machines with fake Aristocrat compliance plates, and to upload Aristocrat game software reproduced by Mr Allam onto them. The Court also accepted that some of those machines (containing the software and / or fitted with the fake compliance plates) had been sold by the Respondents and exported to customers in South America. However, Aristocrat was unable to determine exactly which machines contained the counterfeit software or games.
The primary judge found that the Respondents and Mr Allam had infringed copyright and ordered that they pay damages under sections 115(2) and 115(4) of the Copyright Act 1968 (Cth). His Honour also made a number of costs orders. Notably, Aristocrat was not granted any relief with respect to the trade mark infringement claims.
The appeal
The initial decision has been appealed, cross-appealed, remitted and appealed again (phew!).
Here, the Full Court was considering an appeal by Aristocrat against the correctness of the primary judge’s interpretation of the decision in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 and his subsequent reasoning for dismissing Aristocrat’s trade mark case (the copyright claims having already been decided). Aristocrat also submitted that his Honour erred by failing to give effect to his own findings.
Ultimately, the Full Court found that the Respondents, their directors and Mr Allam had infringed Aristocrat’s trade marks, and it granted a series of injunctions restraining the respondents from using Aristocrat’s various registered marks.
We’ve set out below some of the key points from the appeal judgement.
1. Does there need to be physical evidence of the allegedly infringing mark for a claim of trade mark infringement to be sustained?
The primary judge had dismissed Aristocrat’s claim of trade mark infringement in light of the “substantial identity” and “deceptive similarity” test of trade mark infringement set out by Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963). It was held that because Aristocrat could not produce the machines containing the counterfeit plates or software for inspection, he was unable to apply those standards established by Windeyer J, so trade mark infringement could not be made out.
This finding called attention to one of the key issues with the evidence in this case: Aristocrat was unable to identify the specific machines which contained the counterfeit software or compliance plates, and so was unable to produce them to the Court for examination.
In determining whether trade mark infringement had occurred, the primary judge had applied Windeyer J’s tests of “substantial identity” and “deceptive similarity” from Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd. In doing so, he held that because Aristocrat could not produce the machines containing the counterfeit plates or software for inspection, he was unable to apply those standards established by Windeyer J, so trade mark infringement could not be made out.
This issue was put to rest by the Federal Court, which spent some time considering whether or not this was relevant to the application of the “substantially identical” test. The Court’s decision on appeal made it clear that the test of whether a mark is “substantially identical” to a registered trade mark must be carried out in context. Put simply, where the allegedly infringing item is available for examination, of course this should be done. However in this case, the Court was satisfied (based on the evidence) that it could be inferred that the fake compliance plates bore the word “Aristocrat”, and this was enough to satisfy the “substantially identical” test (at [94]). The fact that the machines in question were not available for inspection by the Court would not, in and of itself, preclude the application of the test set out in Shell v Esso or a finding of trade mark infringement.
2. Can use of a mark on counterfeit goods be use “as a trade mark”?
Another question before the Court on appeal was whether the Respondents had used any of the relevant marks “as a trade mark”. The Respondents argued that they had not used any of the marks “as a trade mark” because they had not used the marks to indicate a connection between the goods and any of the Respondents (rather, they had used the marks to indicate a connection between the goods and Aristocrat!)
The Court emphasised that context is “all important” in determining this question. It was held that the Respondents’ use did constitute use as a trade mark, because the Aristocrat mark was used as “a badge of origin” to indicate that the gaming machines had been made by or with the authority of the person who affixed the mark (emphasis added) (at [116]). The Court found that this constituted use to indicate a connection in the course of trade between the goods and the Respondents.
The Court found it unnecessary to consider whether the trade mark would have been infringed if the counterfeit plates had been fitted to genuine gaming machines that didn’t include counterfeit software (though based on the brief discussion at [118] of Aickin J’s decision in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670, it looks as though the Court may well consider this an infringing act).
3. Injunctive relief may be framed to ensure that infringing parties do not seek to hide behind the “cloak” of a corporate alter ego
Aristocrat sought a number of remedies, including that the Respondents and Mr Allam be restrained from infringing the Aristocrat trade marks.
Counsel for Tonita submitted that it should not be liable for any trade mark infringement, on behalf of Mr Allam, which occurred prior to its incorporation. The Court agreed with this statement, however it considered that the question of whether Tonita should be subject to an injunction restricting it from infringing any of the trade marks that Mr Allam was been found to infringe should be decided as follows (at 174] – [175]):
“In circumstances where it is clear that Tonita is the alter ego of Mr Allam, that question should be decided by reference to a wider set of considerations… In our view, the Court may frame injunctive relief, in an appropriate case, with a view to ensuring that the infringer is not tempted to seek to work around an injunction protecting intellectual property rights through the interposition of a corporate entity that serves as a mere cloak behind which he or she may continue to infringe. In such a case the Court may grant an injunction against the corporate entity and the person who stands behind it.”
Looking forward
This judgement was handed down very recently, and we’re looking forward to seeing what the impact of the decision will be.
In this IPW writer’s view, it could be significant for companies involved in the import, export and distribution of goods. The decision appears to potentially broaden the scope of liability for trade mark infringement with a view to precluding potential infringers from finding a “work around” through creative corporate structuring (and certainly makes it clear that individuals cannot seek to use corporate entities to protect themselves from liability if they are found to have infringed intellectual property protections). It will also be interesting to see whether the Court’s practical approach to applying the test in Shell v Esso is followed, and if so, what effect this will have on the outcome of future trade mark litigation cases.
