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Thursday, May 9, 2013

All that glitters is guano?

By Lawyer Rob Clark

Guano seller proves you should not leave your damages claim up to kismet*

The recent Federal Court decision of Kismet International v Guano Fertilizer Sales [2013] FCA 375 is a salutary lesson to plaintiffs of the need to provide evidentiary support for a claim for damages.

Guano is a phosphate fertiliser created from bird and bat droppings. The proceedings involved two sellers of guano which originated from the same region of Indonesia. The applicant, John Jashar, had sold guano under the name 'Guano Gold' or 'Guano Kwik Start' since 1996, and had a substantial reputation in the relevant market for the sale of guano under those marks. The respondent, James McMahon, placed two advertisements in a local classifieds advertising 'Guano Gold' fertiliser from 2009-2011. Mr Jashar sued Mr McMahon for misleading and deceptive conduct and passing off.

Mr McMahon admitted the misleading and deceptive conduct, the goodwill and reputation of Mr Jashar in the marks and the passing off claim – he had mistakenly believed the trade mark to refer to the type of guano sold by the Indonesian seller, rather than the guano of Mr Jashar. Therefore, the only issue at trial was the remedy for the misleading and deceptive conduct and passing off. Mr Jashar sought to argue that he should get damages for lost sales, damages for loss of reputation and an injunction.

In order to make out the claim to lost sales, it was incumbent on Mr Jashar to prove that the lost sales were due to the use of his trade mark by Mr McMahon. Despite this, no evidence was put on by Mr Jashar. He simply sought to rely on the methodology for assessing damages discussed in GM Holden v Paine, where Justice Gordon essentially assumed that proven sales of the infringer were lost sales of the trade mark owner, subject to a discount to take into account varying circumstances.

Justice Murphy rejected this approach in the circumstances of the case, finding that such methodology was only suitable where it was difficult to provide evidence in relation to lost sales. This was not the case in the present circumstances, as Mr McMahon put on detailed evidence from a number of individuals who, between them, purchased the majority of the guano sold by Mr McMahon. Those people said that they had not been influenced to buy the product based on Mr McMahon's use of trade mark 'Guano Gold' – most had purchased from Mr McMahon because the guano was cheaper than Mr Jashar's or that they did not like dealing with Mr Jashar. Further, Mr McMahon did not extensively promote his guano under the trade mark, only referring to it as 'Guano Gold' in his advertisements, which were small, and on some of the packing of guano – though most of the guano sold was sold in bulk without packaging. In discussions with purchasers Mr McMahon referred to his product as guano, as did his purchasers.

Overall, Justice Murphy was unable to find that any of the sales of guano by Mr McMahon were motivated by the use of Mr Jashar's trade mark, and therefore that they were lost sales of Mr Jashar. Justice Murphy  found that while it would often be difficult to provide evidence in relation to damages and in those situations the court would do the best job it could, this did not excuse an applicant from having to provide evidence where it was available, and certainly to rebut evidence which is put on by the respondent.

In relation to the reputational damage claim, Justice Murphy awarded Mr Jashar a mere $5000 in damages due to that fact that the guano was treated largely as a commodity by purchasers and the fact that, on the evidence before the court, most purchasers did not care what trade mark the guano was sold under. Justice Murphy refused to award an injunction because Mr McMahon had already ceased selling the guano under the trade mark.

While Kismet v Guano breaks no new legal ground regarding damages, it is a useful reminder for those contemplating or conducting litigation that evidence regarding damages cannot be an afterthought following proof of infringement. The remedy is what makes the litigation worthwhile, and the applicant has the onus of proof. For Mr Jashar, kismet has not been kind.

* fate

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