WILLIAMSON-DICKIE MANUFACTURING COMPANY V LODOWN DISTRIBUTION LIMITED HC AK CIV-2011-404-003093

WILLIAMSON-DICKIE MANUFACTURING COMPANY V LODOWN DISTRIBUTION LIMITED HC AK CIV-2011-404-003093 21 July 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-003093BETWEEN WILLIAMSON-DICKIEMANUFACTURING COMPANYPlaintiffAND LODOWN DISTRIBUTION LIMITEDFirst DefendantAND STEVEN BARRY JONESSecond DefendantAND VIRGINIA EASTONThird DefendantAND DICKIES NZ LIMITEDFourth DefendantHearing: 21 July 2011Counsel: AH Brown QC for PlaintiffNo appearance for DefendantsJudgment: 21 July 2011JUDGMENT OF ASHER JSolicitors/Counsel:AH Brown QC, PO Box 2815, Shortland Street, Auckland 1140. Email: Andrew@andrewbrown.co.nzJackson Russell, PO Box 3451, Shortland Street, Auckland 1140. Email: rhawk@jacksonrussell.co.nzDG Collecutt, Auckland. Email: gcollecutt@gmail.comSimpson Dowsett Mackie, DX CP39001, Auckland 1440. Email: tony@ssd.co.nzIntroduction[1] This is an application on notice for an interim injunction. The plaintiff,Williamson-Dickie Manufacturing Company ("Dickies"), seeks various interlocutoryorders against the first defendant, Lodown Distribution Ltd ("Lodown"). Theprincipals of that company are the second defendant Mr S B Jones, and the thirddefendant Ms V Easton. An associated company Dickies NZ Ltd is the fourthdefendant.[2] At the outset of this hearing Mr Collecutt appeared as counsel for all fourdefendants, and while not consenting to the application he offered no opposition. Hedid not seek leave to withdraw as the defendants may take steps in the future.However, given his position he sought leave to be excused from attending the rest ofthe hearing and I granted him that leave.[3] This application therefore proceeds by way of formal proof without therebeing any active opposition. In the circumstances I only shortly summarise myreasons for decision.Background[4] Dickies and Mr Jones and Ms Easton have had a business association sincethe late 1990s. Companies controlled by them have, through various distributionagreements, been the prime distributors of Dickies products in New Zealand andthen in Australia as well.[5] Dickies is an established clothing manufacturer based in the United Stateswhich I am satisfied has considerable goodwill in the Dickies name and the Dickieshorseshoe logo. I am informed that Dickies clothing has a reputation for high qualityand being hard wearing clothing, and is popular in certain sections of the community,both in New Zealand and Australia.[6] There were various distribution and licence agreements entered into betweenthe Jones/Easton business enterprises and Dickies. Two primary agreements whichwere renewed at various times were a distribution agreement and a licence agreement. The various relevant agreements had all expired on or by 31 December 2010.[7] Dickies has registered its name and logo as trademarks. I am satisfied that ithas sufficient goodwill in the name and logo to sustain a claim of passing off.Lodown and the Jones/Easton enterprises by virtue of the distribution and licenceagreements had various rights to use the trademarks and represent themselves asDickies dealers. The relevant agreements, however, had an express clause statingthat on termination the distributor or licencee ceased to have any rights to thetrademarks and were to cease and desist from using them.[8] It would appear from the affidavit evidence filed on behalf of Dickies that inthe last few years the Jones/Easton enterprises have had financial difficulties. Theyhave not paid trade debts and their Australian enterprises are now in receivership orliquidation. There is a current debt from Lodown to Dickies in the sum ofUS$86,887.53. There has been a deterioration of the relationship between the partiesover the last two years culminating in the various agreements being allowed toexpire and not being renewed.[9] The affidavit evidence shows that following the expiry of the agreementsLodown and enterprises associated with Mr Jones and Ms Easton have continued totrade as if they were still Dickies dealers and had a right to use the trademarks.Amongst other things they have continued to operate shops which are named andsigned as if they are authorised Dickies dealers and indeed they have opened a newshop this year following the expiry of the agreements using the Dickies name. Theyhave used domain names that indicate they are authorised Dickies dealers and ingeneral offer goods and services to the New Zealand public still using the Dickiesname.[10] In the course of submissions I discussed with Mr Brown QC the right thatany vendor has to sell a labeled product. Mr Brown has made it clear that the orderssought have been drafted in a way that will still permit the defendants to sell Dickiesproducts. The objection in general terms is to the defendants taking any steps thatindicate that they run Dickies shops or are authorised Dickies dealers. I am satisfied that the orders as drafted do not go further than necessary.[11] Given that this is a formal proof hearing I do not propose going into theparticulars of the allegations and the orders that I will make. I am satisfied that atthe very least there is a serious question to be tried of breach of trademark andpassing off and that the particular breaches are addressed in the orders.[12] I therefore make the following orders:(1) An interim injunction is issued restraining the first defendant whetherby its servants, agents, or otherwise howsoever from infringing:(a) Clause 10.5 of the Distribution Agreement 2005-7 by:(i) operating the Dress-Smart, Manukau and Newmarket stores under the trade marks and trading names DICKIES or DICKIES 4 LESS;(ii) using the DICKIES horseshoe logo as part of the trade name for the Dress-Smart, Manukau and Newmarket stores;(iii) continuing to operate the website www.dickies.co.nz;(iv) using the domain names www.dickies4less.co.nz andwww.dickies4less.com.au;(v) using the online trading names Ddickies4Less and Dickies4Le$$.(b) Clause 20 of the Licence Agreement 2005-7 by using theDICKIES horseshoe logo as part of the trade name of theDress-Smart, Manukau and Newmarket stores.(2) An interim injunction is issued restraining the first, second and thirddefendants, whether by their servants, agents or otherwise howsoeverfrom operating the Dress-Smart, Manukau and Newmarket storesunder the trade marks and trading names DICKIES, DICKIES 4LESS and the DICKIES horseshoe logo.(2A) An interim injunction is issued restraining the first, second and thirddefendants, whether by their servants, agents or otherwise howsoeverfrom trading or selling under the trade mark or trading namesDICKIES, DICKIES4LESS or any name incorporating DICKIES.(3) An interim injunction is issued restraining the first, second and thirddefendants, whether by their servants, agents or otherwise howsoeverfrom operating the website www.dickies.co.nz.(4) An interim injunction is issued restraining the first, second and thirddefendants, whether by their servants, agents or otherwise howsoeverfrom operating and selling online using the trading names"Dickies4Less", "Dickies4Le$$" or any trading name incorporatingDICKIES.(4A) An interim injunction is issued restraining the first, second and thirddefendants, whether by their servants, agents or otherwise howsoeverfrom directly or indirectly:(a) Providing, using, identifying, exposing, hosting or facilitatingin New Zealand an internet service or site incorporating orusing the word DICKIES as a domain name or part thereof orany similar domain name likely to damage or dilute the valueof the plaintiff's DICKIES trade name or trade mark;(b) Promoting or offering any goods or services for sale within New Zealand by means of any internet service or siteincorporating or using the word DICKIES as a domain name or part thereof;(c) Advertising or holding themselves out as an authorised dealer of the plaintiff.(5) An interim injunction is issued restraining the fourth defendant fromcontinuing to use the trade mark DICKIES as part of its registeredname.Costs[13] As is usual in an interlocutory hearing the successful party is entitled to costs.I order costs on a 2B basis plus reasonable disbursements...Asher J