Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Wednesday, March 20, 2013

When a strong case is not enough

By Senior Associate Tom Reid

Justice Foster's recent decision in Snack Foods Limited v Premier 1st Pty Ltd illustrates that when seeking an interlocutory injunction, a strong prima facie infringement case alone may not be enough.

Snack Foods Limited owned a registered trade mark for the words POPPED CORNERS in classes covering various snack foods. The mark was registered in June 2011. At the time of the hearing, the applicants had not yet launched any snack product under the mark. The launch was due in March 2013. In the meantime, Premier 1st had entered into an agreement with Medora (a US company) to distribute Medora's US range of snack products in Australia under the mark POPCORNERS. Premier 1st began marketing in October 2011 ahead of an anticipated November 2012 launch.

Snack Foods and its licensee sued for infringement. Premier 1st and Medora denied infringement and cross-claimed for cancellation of the registration. The Snack Foods companies sought an interlocutory injunction, and when Premier 1st withdrew a previous voluntary undertaking not to launch the POPCORNERS products, an urgent interim injunction. The hearing of the interim application was ultimately enough to dispense with the issue.

The three traditional elements of the test for obtaining an interlocutory injunction, set out in Castlemaine Tooheys Ltd v South Australia, are that the applicant show (i) that it has a prima facie case, (ii) that it will suffer irreparable harm if the injunction is not granted, and (iii) that the balance of convenience favours the granting of the injunction. While those three elements are commonly separately articulated, courts such as that in the Samsung v Apple appeal have tended to emphasise their interdependence.

In this case, Premier 1st conceded that the Snack Foods companies had a strong prima facie infringement case. However, balance of convenience factors were, in Justice Foster's view, more than sufficient to outweigh that concession. The Snack Foods companies failed to provide more than speculative evidence of the harm they might suffer through dilution and consumer confusion (in part because they had not themselves yet launched any product). By contrast, Premier 1st led evidence that an injunction would likely cost it a critical supply contract with Woolworths and potentially put it into liquidation. Justice Foster also took the view that Premier 1st and Medora had a 'real prospect' of success on their cross-claim for cancellation.
An interesting complication in the case was that from January 2012, a third party, Dainty, had sold a product under the mark POPCORNERS, including in Coles and Woolworths. It had stopped doing so in November 2012 after receiving a demand from the Snack Foods companies. Noting that timing, Justice Foster was also critical of the Snack Foods companies' delay in taking action against Premier 1st and Medora, and their decision to seek interlocutory relief instead of opting to press for an early final hearing.

The case is a stark reminder that for IP owners, a successful enforcement strategy involves more than a strong substantive claim.

No comments:

Post a Comment