Exagym Pty Ltd v Professional Gymnasium Equipment Company Pty Ltd & Ors [1993] QSC 8

IN THE SUPREME COURT OF QUEENSLAND Before the Hon. Mr Justice Thomas BETWEEN: AND: EXAGYM PTY LTD ACN 010 378 194 No. 1504 of 1992 Plaintiff PROFESSIONAL GYMNASIUM EQUIPMENT COMPANY PTY LTD AND: AND: AND: CATCHWORDS: First Defendant MICHAEL QUINN Second Defendant IMAGINATIVE PRODUCTS & PROMOTIONS PTY LTD ACN 883 438 591 Third Defendant LYNCO PROMOTIONS (A FIRM) Fourth Defendant LYN DINES Fifth Defendant JUDGMENT - THOMAS J. Delivered the 15th day of January, 1993 Injunctions - use of business name - alleged equitable right to assignment of trademark Counsel: D. Savage for plaintiff L. Harrison Q.C. for defendants Solicitors: Bowdens for plaintiff Crowley and Greenhalgh for defendants Hearing date: 15th January, 1993 -- 1 of 8 -- IN THE SUPREME COURT OF QUEENSLAND Before the Hon. Mr Justice Thomas BETWEEN: AND: EXAGYM PTY LTD ACN 010 378 194 No. 1504 of 1992 Plaintiff PROFESSIONAL GYMNASIUM EQUIPMENT COMPANY PTY LTD AND: First Defendant MICHAEL QUINN Second Defendant IMAGINATIVE PRODUCTS & PROMOTIONS PTY LTD ACN 883 438 591 Third Defendant LYNCO PROMOTIONS (A FIRM) Fourth Defendant LYN DINES Fifth Defendant JUDGMENT - THOMAS J. Delivered the 15th day of January 1993 This is a motion to discharge an injunction granted by Moynihan S.J.A. on 12th October, 1992. The injunction restrains the defendants, until trial or further earlier order, from selling or advertising certain home gymnasium equipment under the name "Exagym" or certain derivatives thereof, and from various related activities. Although the injunction does not make it clear on its face, it is -- 2 of 8 -- 2 understood by the parties to impose a restraint only within the State of Queensland. The applicants are the first two defendants. It will be convenient if I refer to the parties simply as the plaintiff and the defendants. The defendants are also seeking cross-injunctions to restrain the plaintiff, until trial, from using the name "EXA-GYM" or colourable imitations thereof. The material is very extensive. I have listened to submissions for some hours and have read the material overnight. The defendants did not appear in response to the original proceedings. Apparently the parties came into confrontation at the Home Show at the Brisbane Exhibition area last October when both were displaying similar products under the same trade name. Apparently different manufacturers were and are manufacturing similar products and giving the same name to them. In about December 1991 Mr Richardson had asserted on behalf of the plaintiff the exclusive right to use the name in Queensland, but neither party sought to restrain the other until the confrontation at the Home Show. The plaintiff thereupon brought proceedings. Their solicitor's letter of 10th October, 1992, (enclosing the documents seeking the injunction), wrote that the plaintiff would make application to the Court on 12th October, 1992 for injunctive relief "unless the offending display has ceased on or before 12 noon on Sunday 11th October, 1992". The letter concluded "If you choose not to appear on Monday 12th October, 1992 the hearing -- 3 of 8 -- 3 will proceed in your absence and the Court may make such orders as it considers appropriate." Apparently Mr Quinn, the moving force on behalf of the defendants, wished to travel to Taiwan at this time, and it is likely that instructions were difficult to obtain. In the event, on the morning of 12th October, not long before 1 0 o'clock, the defendants' solicitors delivered a letter alleging that the "offending display" had ceased and that "in the circumstances we assume that nothing more will be heard of the proposed application". The parties were not ad idem as to whether it had adequately ceased by that time. It is perhaps surprising that the defendants, without any checking, were prepared to assume that nothing more would take place. At all events they chose not to appear at the time contained in the Notice of Motion. The letters to which I have referred were brought to the attention of Moynihan S.J.A. who in due course made the order sought by the plaintiff. The defendants were immediately advised of the order. If they were aggrieved by the fact that the order was obtained, it is a little surprising that nothing has been done to set it aside until now. It is not suggested that the plaintiff failed to make proper disclosure of relevant facts in the proceedings before Moynihan S. J. A. Mr Harrison Q. C. (for the defendants) attempted to explain his clients' failure on the basis of "settlement negotiations" but I find this quite unconvincing. It is more likely that the defendants now find the present time convenient to attempt to commence the marketing of these products in Queensland and they find the -- 4 of 8 -- 4 injunction an impediment to it. All this however is only background to the real issues that have now been raised on behalf of the defendants. The defendants rely upon what Mr Harrison Q.C. described as an "equitable right to the assignment of a trademark". As to this, the best that can be said for it is that there is a convoluted case that is in considerable disarray. The defendants cannot and do not rely upon any common law rights arising from the conduct of any business in Queensland which gives them any right to use the name. Their claim is based upon a right, or a potential right, to a trademark. There is no evidence of the sale of any machines in Queensland by or on behalf of the defendants. On the other hand, the plaintiff, although it has not been marketing products under that name for an extensive period, has built up a reasonably substantial business over the past two years. Quite plainly, if the contest depended only on the common law, the plaintiff has shown the right to restrain the defendants from using the name. There is a sufficient right at common law to justify Moynihan S.J.A.'s order. The defendants' case in support of an entitlement to the assignment of a trademark is marked by an inability to produce any documents that produce that effect. There is some evidence that a Mr Stephens initiated the use of the Exagym equipment and name in New Zealand some years ago, through various companies bearing the name "Sherbrook". One of these, Sherbrook Holdings Ltd, registered the name "Exagym" as a trademark in Australia on 27th August, 1982. · The evidence -- 5 of 8 -- 5 suggests that Mr Stephens or his company may have intended to assign that mark to Mr Quinn, but the means or obligation by which this arose are not clear. In the event no transfer was made, and there is no satisfactory evidence of an agreement or other source of obligation for such a transfer. The defendants' difficulty in supporting this particular allegation is compounded by the fact that Sherbrook Holdings Ltd was struck off the company's register in New Zealand on 14th June, 1989. Prior to and after that time the Registrar of Trademarks sent renewal notices to the company, in view of the impending expiry of the trademark (i.e. seven years after its grant). In the event it also expired. It is of course possible that it might be revived. On 6th September, 1989 Mr Stephens signed an application for renewal of the trademark, in the name of the first defendant company, which then no longer existed. On 20th March, 1991 a further application was made for registration of an assignment from Sherbrook to the first defendant, although the time when that assignment is supposed to have been made is not clear. I do not propose to discuss the consequences of dissolution of Sherbrook or the prospects of its revival, or the inefficacy of any assignment made after its dissolution. In theory it is possible that a company may be revived for certain purposes and it is theoretically possible if it produced appropriate evidence that it could then honour any equitable obligation it might have with respect to the Australian trademark, assuming that that trademark was still subsisting in its name. It is also likely in that event that -- 6 of 8 -- 6 there would be contested proceedings trademark, and many difficulties lie successful outcome for the defendants. At the present time there has in relation to the in the path of a not even been an application made to restore the company to the register, and the various applications brought by the defendants 1 patent attorneys seem to be misconceived. Whilst the defendants may have shown the possibility of a theoretical case they have not shown enough material facts or foundation for it, and they have not yet even entered the correct groove that would enable the revival of the expired possibilities. I think that the defendants 1 case falls some distance short of a case fit for trial such as to found a right to restrain the use of the name by the plaintiff. I also think it falls short of showing any sufficient reason for the discharge of the present injunction. Nothing has materially changed the balance of convenience as it stood last October. The evidence then and now suggests that the balance of convenience in maintaining the present injunction lies in favour of the plaintiff. The situation to be assessed is of course the consequences of restraining one or other of the parties from continuing to use the name until trial. There are two businesses that say they want to use the same name. It would seem that only one should have the benefit at this stage; otherwise the situation would be chaotic. It is not an -- 7 of 8 -- 7 appropriate solution to restrain both of them or neither of them. There are competing submissions of some weight. However I think that the balance favours permitting the company that has actually been trading here under that name and which has over the past few years built up some goodwill in that name, to continue to use it. This will require the restraint of the defendants who have no similar record of activity, and whose claim depends upon a highly dubious entitlement to a trademark. Other points were argued on each side, but I do not propose to recount them. there is no reason why On my appraisal of the material the order made by Moynihan S . J. A. should not remain so as to bind the parties until the trial of this action. I think it desirable that the terms of the injunction be varied to reflect the parties' understanding of it, namely that it applies only to the activities of the defendants or their agents in Queensland. should be dismissed. Otherwise the defendants' motion -- 8 of 8 --