Things just got UGGlier
In Deckers Outdoor Corporation Inc. v Farley (No 2) [2009] FCA 256, Deckers Outdoor Corporation, responsible for the well known sheepskin boots sold under the ‘UGG’ brand, has been successful in its application for summary judgement for trade mark infringement of its composite trade mark No. 785466. The Court has postponed making an order with respect to compensatory damages until further supporting evidence is presented.
As to its claims for declaratory and injunctive relief for copyright infringement, passing off and trade practices breaches Deckers was unsuccessful. Deckers has become renowned for aggressive enforcement of its intellectual property rights. In view of this positive finding of trade mark infringement, only time will tell whether it continues to pursue these other causes of action, particularly a damages claim for flagrant copyright infringement under Section 115(2) of the Copyright Act 1968 (Cth).
Background
Deckers Outdoor Corporation Inc. (Deckers) and its predecessors have designed, manufactured and sold footwear under the UGG brand in Australia and overseas for over twenty years. In 2003 Deckers became aware that counterfeit UGG products were being manufactured in Melbourne after search orders for a factory in Moorabbin were granted in their favour. Upon discovering the counterfeit products Deckers entered into a settlement agreement with Vladamir Vaysman, Victoria Vaysman and Hepbourne Pty Ltd and these parties also consented to orders restraining them from dealing with footwear bearing the words “UGG” or “UGG AUSTRALIA” or a “sun device” logo. However, the first settlement agreement was breached and a second settlement agreement entered into whereby those same parties, or any entity controlled by them, could not use the word “UGG” to describe or offer for sale any sheepskin products whatsoever.
Late in 2007 Deckers again discovered counterfeit “UGG” footwear being promoted and sold, in this instance on the internet. Deckers filed another claim. Search orders were granted and following an examination of documents seized under those orders, Deckers amended its Statement of Claim to include 22 respondents. Many of these claims have now been settled with only 6 respondents remaining: Hepbourne Pty Ltd, Vladamir Vaysman, Josef Vaysman, Polina Vaysman, Victoria Vaysman and Samba Enterprises Pty Ltd (the Respondents). The present decision relates to an application for summary judgement against the Respondents under Section 31A of the Federal Court of Australia Act 1976 (Cth) in respect of the following claims: declaratory and injunctive relief for trademark and copyright infringement, passing off and breaches of Sections 52 and 53 of the Trade Practices Act 1974 (Cth) as well as state legislation. This case note will focus largely on the trade marks aspect of the claim.
Deckers is the owner of composite trade mark No. 785466 registered since February 1999 and comprising the letters “UGG” below which appears the word “australia” below which appears a “sun device” logo (the Trade mark). This Trade mark, as well as other related marks owned by Deckers, has attracted considerable media coverage and attention and a comprehensive fact sheet on the registrability of the words “UGG” and “UGH” published by IP Australia can be accessed HERE. Deckers allege that the Respondents have infringed the Trade mark by using a mark which is substantially identical or deceptively similar to the Trade mark in connection with the footwear in respect of which the Trade mark is registered.
The Decision
To start the Court outlined that Section 31A of the Federal Court of Australia Act 1976 (Cth) empowers a court to give judgement in favour of an applicant if it is satisfied that the respondent “has no reasonable prospect of successfully defending the proceeding”.
In support of its claim of trade mark infringement Deckers relied on evidence from respondents who had been involved in the marketing of footwear manufactured at the Moorabbin factory, footwear ceased from the Moorabbin factory and advertising and markeing material. In light of this evidence, the Court found that the Respondents were manufacturing, packaging and distributing boots which had on their heels the “UGG australia” label and on their soles the embossed letters “UGG” in association with the “sun device” logo. The case then turned on the similarities between the registered Trade mark and the “counterfeit” products.
The Respondents all argued that the three elements of the Trade mark (the word “UGG”, the word ‘australia” and the “sun device” logo) did not all appear together on the boots or packaging and therefore argued that the marks in question were not deceptively similar. The Court found that this issue could only be determined having regarding “to the circumstances in which the goods were bought and sold and the characteristics of the persons who might be expected to be purchasers of the footwear”. The Court held that the impression created, and “intended to be created” (for example by use of the ® symbol next to the letters “UGG”) made it plain that it was an attempt by the Respondents to suggest that the boots were made by Deckers. The Court was left with no doubt with respect to the “likelihood of confusion and deception as to the provenance of the boots”.
The Court then considered the Respondents submission that there was a reasonable prospect that the Trade mark should be cancelled under Section 88 of the Trade Marks Act 1995 (Cth). This raised the same issue that was dealt with by the Trial Judge in E & J Gallo Winery v Lion Nathan Australia Pty Limited [2009] FCAFC 27 and discussed HERE by the Australian Trade Marks Law Blog, namely retrospective operation of orders made by a court under the Trade Marks Act. Along the same reasoning, the Court held that a successful cross claim under Section 88 would have no bearing on whether or not they had infringed the Trade mark during the relevant period since any order could only be “prospective in nature”.
Accordingly, Deckers was entitled to summary judgment on its claim that the Respondents had infringed the Trade mark in 2005, 2006 and 2007. As to Deckers claim for a declaration to pay compensatory damages, the Court held that the evidence put forward was not specifically directed to damage flowing from the trade mark infringement and that such evidence would need to be adduced and a claim for compensatory damages made.
Other Findings
Copyright Claim: Deckers claim for summary judgment with respect to copyright infringement of numerous literary and artistic works was rejected. The Court’s decision was based on the following issues raised by the Respondents:
- a dispute as to ownership of some of the copyright works;
- the question of whether the words “UGG australia” could attract copyright protection; and
- the potential for a successful defence under Section 77 of the Copyright Act 1968 (Cth)
Substantial Reputation: With regard to their application for declaratory and injunctive relief for passing off and trade practices breaches, Deckers pleaded that it had a substantial reputation both in Australia and overseas. However, no supporting evidence was presented and Deckers sought to rely on deliberate copying by the Respondents as evidence of their reputation. The Court found that without direct evidence, perhaps “expert evidence” it could not conclude that “the Respondents have no reasonable prospect of defending this aspect of Deckers” claim.
