Wednesday, April 30, 2014

Update on BUGATTI GMBH v SHINE FOREVER MEN PTY LTD

Last October, Tracey J presided over a dispute between Bugatti GmbH and Shine Forever Men Pty Ltd, in which the complainant alleged that the respondent has infringed their trade marks in Australia for the word ‘Bugatti,’ (which is a class 25 registered mark for clothing, dating back to 1989) by marketing and selling clothes and accessories under the marks Bugatchi or Bugatchi Uomo, breaching s 120(1) of the Trade Marks Act 1995. Tracey J ruled in favor of the complainant, and ordered Shine Forever to pay $551,159.39 to Bugatti plus costs on an indemnity basis.

Shine Forever was also ordered to provide an affidavit that discloses the amount of infringing goods that it had sold, the prices they were sold for, the costs incurred while acquiring and selling the goods, and the estimated profit they have made. The affidavit was meant to help make it easier for Bugatti the assess the damages or, should it choose to, an account of profits.

Tracey J’s decision over the Bugatti case not only underscores the scrutiny the court will place on an infringer, but also the leeway that is given to a trade mark owner if the infringer is obstinate. Shine Forever’s big mistake in this case (besides infringing another party’s trade mark in the first place) is that it gave the court the impression that it was particularly uncooperative – it was tardy when complying with the court’s orders and allegedly manipulated the figures in their “election” affidavit, stating that the total sales for the goods sold “through the BUGATCHI UOMO branded store” were $198,407.39 while its total outgoings were stated to be $157,680, which meant that there was no profit after adjustments.

However, Shine Forever had filed a profit and loss statement for the first 8 months of the infringing period that reveals total sales of $370,440.10, a statement that was audited and certified by Shine Forever’s external accountants. Shine Forever made no attempts to explain the disparities between the figures in its affidavit material. In fact, Shine Forever didn’t even show up to the hearing for the account.

Bugatti pointed out the disparity between the two figures, with the audited figures showing sales of $46,000 per month. Bugatti then put forward that Shine Forever would have made a total of $1,129,440.10 and after applying a number of assumptions and discounts that take into account estimated costs in the “election” affidavit, concluded that the actual figure was $551,159.39.

The impression of disregard for the process of the court never plays out well with judges. The court in this case recognised that the respondent was engaging in questionable conduct and was willing to assist the applicant to get to the heart of the actual profit made by the respondent.

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