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Kila Roacks Design & Printing v Lucky Star (PNG) Ltd [2013] PGNC 146; N5318 (14 August 2013)

N5318

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 505 OF 2011

BETWEEN

KILA ROCKS DESIGN & PRINTING
Plaintiff

AND

LUCKY STAR (PNG) LTD
First Defendant

AND

DAVID LING as General Manager of Lucky Star Ltd – Lae Merchandised Shop
Second Defendant

Kimbe: Makail, J
2013: 09th & 14th August

TORT – Passing-off – Remedies – Damages – Types of damages – Nominal damages – Damages to damage to trade mark reputation – Assessment of – Protection of – Proof of – Expenses must be a direct result of the infringement – Copyright and Neighbouring Rights Act, 2000 – s. 27.

Cases cited

Brinks Incorporated and Brinks Air Courier Australia Pty Ltd -v- Brinks Pty Ltd, Barry Tan and Herman Lucas (1997) N1567

Other References

Tort, Clerk & Lindsell, Sweet & Maxwell, London © 1989

Counsel

Mr A Klewaki, for Plaintiff
No appearance, for Defendants

JUDGMENT

14th August, 2013

1. MAKAIL, J: This is an action based on the tort of passing-off. It involves the copying of designs and prints of the plaintiff by the defendants. The designs and prints are in these terms: "PASIN WEST" with a conch shell, two coconut palms with the sea at the background and sun rising emblazoned with the words "YU KAM PINIS" printed well at the back of T-shirts and at the front of the T-Shirts is printed in block letters "KIMBE" and two coconut palms. On 19th October 2011, default judgment was entered against the defendants. The matter came for assessment of damages. The plaintiff claims loss of wages, school fees and balance of purchase price of real property, loss of business income, general damages, exemplary damages, interest and legal cost.

2. Andrew Bige the Managing Director of the plaintiff sworn an affidavit on 01st August and filed on 02nd August 2011 (Exhibit "P1") to establish the plaintiff's losses. It is submitted that the plaintiff bears the onus of proving its losses and based on Mr Bige's affidavit, it has established its losses and should be awarded damages. The law is that where default judgment is entered, the onus of proof is on the plaintiff to prove its losses. The evidence must be clear, not vague or hearsay.

3. The law on passing-off has not been fully developed in this jurisdiction although the principles are settled and clear. As far as I am aware, the first reported case in Papua New Guinea is Brinks Incorporated and Brinks Air Courier Australia Pty Ltd -v- Brinks Pty Ltd, Barry Tan and Herman Lucas (1997) N1567, a decision by Injia, J (as he then was). It involved a dispute between the plaintiffs and the defendants over the use of the name "Brinks" or the like. One was protecting the use of the name "Brinks" or the like from being used by the other.

4. The Court dismissed the action because firstly, the first plaintiff did not acquire a reputation or goodwill in the country as it did not carry on any or sufficient business in the country to establish a reputation or goodwill; that the defendants did not misrepresent to the public in the country including the first plaintiff's customers or potential customers that their business was that of the first plaintiff, and that no damages were actually suffered or likely to be suffered by the plaintiffs as a result of the defendants' use of the name "Brinks".

5. Secondly, although the second plaintiff did acquire a reputation or goodwill in the country in the use of the name "Brinks" or "Brink's" as attaching to the provision of high quality security services, in particular, the provision of armoured car security services in the transportation of valuables, the defendants did not misrepresent to the public in PNG or the plaintiffs' customers or potential customers that the services they were providing was that of the second plaintiff or in any way associated with the second plaintiff, and because the second plaintiff did not actually suffer any damage or likely to suffer any damage as a result of the use of the name "Brink's" or "Brinks".

6. In the present case, the main issue is the measure of damages. Proof of damages or likely damage is the essence of the claim of passing-off. The plaintiff must show that it has suffered damages or likely to suffer damages. I think in recent times, the tort has been committed without much corrective or punitive action taken by the aggrieved party against the offending party. As a result, in 2000, Parliament legislated to regulate and control copyright and related activities by passing the Copyright and Neighbouring Rights Act 2000. The Act provided among others, civil remedies as well as criminal sanctions for breaches of the Act: ss. 27 & 28.

7. Section 27 provides for civil remedies. It states:

"7. Civil remedies.

(1) The owner of any right protected under this Act whose right has been infringed shall be entitled to payment of damages by the infringer for the prejudice suffered as a consequence of the act of infringement including such expenses directly caused by the infringement.

(2) For the purposes of Subsection (1), the amount of damages shall be fixed taking into account the importance of the material, the moral prejudice suffered by the owner of the right and the importance of the infringer's profits attributable to the infringement.

(3) Where the infringer did not or had no justifiable reason to know that he was engaged in an infringing activity, the Court may limit damages to the profits of the infringer attributable to the infringement.

(4) Subject to Subsection (5), where infringing copies exist, the Court shall order the destruction or other reasonable disposition of those copies and their packaging in such a manner as to avoid harm to the right holder, unless the owner of the right requests otherwise.

(5) Subsection (4) shall not apply to copies and their packaging which were acquired by a third party in good faith.

(6) Where there is a danger that implements may be used to commit or continue to commit acts of infringement, the Court may, whenever and to the extent it is reasonable, order their destruction or other reasonable disposition in such a manner as to minimize the risks of further infringements, including the surrender of the implements to the owner of the right.

(7) Where it appears to the Court that there likelihood of an act of infringement continuing, the Court may order that such act of infringement shall cease to be continued.

(8) A person who carries on an act of infringement in contravention of an order under Subsection (7) shall be liable, on conviction, to a fine not exceeding K100,000.00 in addition to any other penalty the Court is empowered to impose."

8. At common law, the measure of damages is restricted to nominal damages and may include damages for damage to the plaintiff's trade mark reputation. If the plaintiff claims substantial damages, he must prove them. The inquiry will not be limited to the sale made by the defendant to persons who were deceived by the infringement, but will extend to all sales made by the defendant under the offending mark, for the ultimate purchasers may have been deceived, although the immediate purchasers were not: see the 03rd volume of the 16th edition of the text Tort, Clerk & Lindsell, Sweet & Maxwell, London © 1989 at para 30-20 at pp 1638 – 1639 and para 30-42 at pp 1646 – 1647.

9. Under s. 27 (supra), damages may include damages for the prejudice suffered as a result of the act of infringement including such expenses directly caused by the infringement. In assessing the amount, consideration must be given to the importance of the material, the moral prejudice suffered by the owner of the right and the importance of the infringer's profits attributable to the infringement.

10. Applying these principles to the present case, first the plaintiff claims loss of wages, school fees and balance of purchase price of real property. In my view, these claims are not nominal damages. They are substantial and unsupported by evidence. Similarly, under s. 27, the plaintiff is entitled to claim expenses incurred as a result of the infringement but such expenses must be a direct result of the infringement. In my view, loss of wages and school fees are not expenses directly incurred by the plaintiff as a result of the infringement by the defendants. They are benefits that employees of the plaintiff may receive for working for the plaintiff in the business of designs and printing. As to the loss of balance of purchase price of real property, it is also not an expense directly incurred by the plaintiff as a result of infringement by the defendants. This head of claim is dismissed.

11. As to the claim for loss of business income, Mr Bige deposes that following the discovery of the production and sale of the plaintiff's art work by the defendants in large volume in Kimbe and Lae in mid 2009, the plaintiff lost significant income. This was due to the drop in the sale of the printed materials on the market in Kimbe. He produced an Income and Loss Analysis which may be found at annexure "G" to his affidavit. It shows among others, an annual income of K350,784.00 in 2006, a further K223,776.00 in 2009 and another K190,368.00 in 2010.

12. The plaintiff's counsel submits that the loss of business earnings is a result of the infringement by the defendants when they produced and sold printed materials using the plaintiff's design and print. Counsel submits K561,312.00 be awarded for loss of business income. This submission is unsupported by evidence. Similarly the annual income for each year disclosed in the Income and Loss Analysis does not show the expenses of the plaintiff and the profit to enable the Court to work out the losses. It is also unclear where this sum is derived from. Although a sum of K144,000.00 was proposed as an out of court settlement offer to the defendants, Mr Bige in his affidavit does not state how the sum of K561,312.00 was assessed. So the evidence as to how the sum was assessed is also vague. For these reasons, I am not satisfied that K561,312.00 is the total loss of profit.

13. Notwithstanding this, I am satisfied that the plaintiff lost some income as a result of the infringement by the defendants. I will award nominal damages in the sum of K10,000.00.

14. Thirdly, as for general damages, there is some sentimental importance and value for the designs and prints because it draws one's attention to the place called Kimbe. The plaintiff as the original designer of the designs and prints must be protected from persons who copy and produce the same designs and prints. I am satisfied under s. 27(2), I can fix an amount of damages for this head of claim. I consider a sum of K5,000.00 fair and reasonable. I award this sum.

15. The fourth claim is for exemplary damages. Counsel for the plaintiff submits that the Court should award exemplary damages. This will not only punish the defendants for their illegal activity but also to act as a deterrent to them and others from engaging in such illegal activity. An award of exemplary damages is discretionary. There is no evidence of statistics on cases of breaches of the Copyright and Neighbouring Rights Act 2000 to safely say that such breaches are on the rise and an order in the form of exemplary damages would be justified. In the circumstances, this head of claim is dismissed.

16. Fifthly, the plaintiff claims 8% interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act. It is discretionary. I award interest at 8% from the date of issue of writ to the date of judgement on the total judgment of K15,000.00 (K10,000.00 + K5,000.00). The writ was issued on 24th May 2011. The total number of days between that date and date of judgment, which is today is 814. The daily rate is K3.29 and multiplying this sum by 814 days gives K2,678.06. I award this sum.

17. Finally, I order the defendants to pay the cost of the proceedings to be taxed if not agreed.

18. It is the judgment of the Court that:

1. The plaintiff is awarded a total sum of K15,000.00 as damages.

2. 8% interest from date of issue of writ to date of judgment of K2,678.06.

3. The defendants shall pay the cost of the proceedings to be taxed if not agreed.
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Kumbari Lawyers: Lawyers for Plaintiff