Coathurst Pty Ltd v Dune Holdings Limited [2015] ATMO 115 (3 December 2015)

Suggesting that a party has manufactured evidence is a very serious allegation.

Section 253 of the New South Wales Crimes Act states that it is an offence to make a false document in that it relates to a person either creating a new forged document or forging details on an existing document with the intention to use it to obtain a financial advantage. The maximum penalty for making a false document is 10 years imprisonment. Coathurst Pty Ltd, one of the parties involved in this matter, is a New South Wales company and so New South Wales law would apply.

In 10 October 2013, fashion footwear and accessories retailer Dune Holdings Limited applied for the partial removal from the Australian Trade Mark Register of the trade mark described as the “Dunes Rash Pro logo”. It had been registered under class 25 (clothing surf wear, footwear head gear) by Coathurst Pty Ltd, with a priority date of 30 May 1996.

Click here to view image.

Dune Holdings Limited has pending applications for the trade marks DUNE and DUNE LONDON for classes of goods and services that are the same or at least similar to the class 25 goods covered by Coathurst Pty Ltd’s registration.

It is also worth noting that this is not the first time the two companies battled over the Dunespro trademark registration. Dune Holdings Limited made an unsuccessful attempt at removing the trade mark from the registry back in 2005.

Dune Holdings relied on the same ground that was unsuccessful in 2005, alleging that Coathurst Pty Ltd was unable to use the trade mark in Australia on relevant goods or services within the 3 years it was registered and a month before the non-use application was filed (s92 (4)(b) of the Trade Marks Act 1995).

Coathurst Pty Ltd has been continuously using the trade mark on its website during the relevant non-use period, along with its use on a broad range of goods that fall under class 25, which are sold by way of a retail store.

But the difference this time around is that Dune Holdings alleged that the evidence presented by Coathurst (demonstrating use of the trade mark during the relevant non-use period) was fabricated. The issue of the fabricated evidence, as well as other arguments debated during the hearing, are set out below.

1. The fin sock photograph

Below is a photograph, filed as evidence in this dispute, of a fin sock bearing the logo in dispute, with a notable dark area above where the logo is affixed.

Click here to view image.

Dune Holdings claimed that the dark area may be an obliteration over which the logo had been affixed in order to make it seem like the trade mark was used in relation to an article of footwear.

On the issue of the challenge to the probity of the evidence, the hearing officer noted, “The essence of the Applicant’s submission is that in the picture the darker area above the Trade Mark may be an obliteration over which the Trade Mark has been affixed in order to spuriously establish use in relation to an article of footwear.”

The hearing officer was unconvinced, pointing out that there are other explanations, such as:

  1. the dark area being a problem with the lighting, resulting in a darker area; or
  2. the article of footwear may just be one which had an existing generic sign that was removed to make way for the Dunes Rash Pro logo.

Curiously, no technical evidence was presented about the possible manipulation of this image. In January 2016 there were many media reports about how photographic company Nikon had given the first prize in a photography contest to a man named Chay Yu Wei, but that the winning photograph had clearly been manipulated. By changing the colour levels around an electronic version of the photograph, a faint white box was evident around part of the image, indicating that the photograph had been altered. Here is a photograph demonstrating the methodology used to ascertain that the winning image was faked:

Click here to view image.

Dune Holdings inexplicably did not provide evidence of this type which would have demonstrated conclusively any manipulation of the image of the fin sock.

2. A photograph of thongs

Also filed as evidence was a photograph of a pair of thong (“thongs” being the Australian term for “flip flops” as they are known in other parts of the world), bought from Coathurst’s store. This evidence was filed to demonstrate that showing that the Dunes Rash Pro logo as affixed to the goods appear on stickers that can be easily peeled off.

The hearing officer quite properly saw nothing suspicious about this, and pointed out other possible explanations, such as:

  1. the thongs being bought in bulk from a manufacturer without any trade mark affixed to them, which Coathurst had to do using the stickers; or
  2. Coathurst could have supplied stickers of the logo to the manufacturer so that it can be affixed during production.

None of the new arguments posited by Dune Holdings established any improper actions on the part of Coathurst.

Click here to view image.

3. The Wayback Machine

Another issue debated by the parties was evidence of use of the mark on the respondent’s website. Use of a trade mark on a website is difficult to assess in circumstances where there is no verifiable history as to when an existing layout was implemented.

Of note is that the very useful archival site with its “Wayback Machine”, a mechanism that captures period snap shots of all sites on the Internet, was not of use in this case, as the relevant non-use period was outside of the earliest archived copy of Coathurst’s site on the service.

4. Trap purchase

Dune Holdings commissioned an investigator in June 2014 to visit one of the retail outlets alleged to carry Coathurst’s products. The investigator provided evidence that none of the goods offered by Coathurst were for sale at the retail outlet.

The hearing officer also dismissed this evidence, citing that the goods might have been supplied during the relevant period, and that if the purpose was to prove the lack of use, it would have been more logical and relevant to investigate Coathurst’s own factory outlet – something that Dune Holdings failed to do.

5. Internet outlets

Finally, Dune Holdings also exhibits various Internet searches showing some popular fashion outlets not carrying any goods bearing the trade mark in question, but this too was considered irrelevant by the hearing officer. The retailers listed high street retailers such as Oroton, Hush Puppies, David Jones, Kate Spade and others which tend not to sell fashion surfwear (which Coathurst’s products fall into). Sites that sell fashion surfwear like Quicksilver or Billabong are noticeably absent in Dune Holdings’ evidence.

Dune Holding’s application to remove Coathurst’s trade mark from the register was rejected.

The issue of the allegation of possibly fabricated evidence is an important one. Solicitors and barristers are obliged not to make allegations of criminality, fraud or other serious wrongdoing in ‘court documents’ without an adequate factual foundation.

In White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (“White Industries”), Goldberg J noted that in legal proceedings (a different forum to the administrative proceedings of a trade mark removal action before a delegate of the Trade Mark Registrar), costs against a solicitor personally could be made when an allegation of fraud was made without “specific instructions and an appropriate evidentiary foundation, direct or inferred, for alleging and pleading fraud.”

The court in that case quoted with approval Oldfield v Keogh:

“Written pleadings are frequently sent to counsel for revisal containing serious allegations of fraud, dishonesty, or misconduct. The consequence of lodging such pleadings in Court may be to cause irreparable injury to the person thus publicly accused. For an advocate to allow such charges to be launched with his name attached to them without the fullest investigation would be to abuse the absolute protection against actions for slander which the law affords to counsel. Counsel is not worthy of that protection unless he justifies it by the most scrupulous care in his written or oral attacks on character. He must insist upon being supplied with all the information which is thought by his client to justify the attack, and then he must decide for himself whether the charges made are such as can be justifiably made. In exercising his judgment in such a matter the advocate is fulfilling one of the most delicate duties to society which his profession casts upon him. It is no small responsibility which the State throws upon the lawyer in thus confiding to his discretion the reputation of the citizen. No enthusiasm for his client’s case, no specious assurance from his client that the insertion of some strong allegations will coerce a favourable settlement, no desire to fortify the relevance of his client’s case, entitles the advocate to trespass, in matters involving reputation, a hair’s-breath beyond what the facts as laid before him and duly vouched and tested will justify. It will not do to say lightly that it is for the Court to decide the matter. It is for counsel to see that no man’s good name is wantonly attacked.”

Having set out this quotation, Goldberg J went on in White Industries to say that:

“Although Lord Macmillan refers to counsel in this passage the principles are equally applicable, in my view, to solicitors particularly where the solicitors sign the pleading containing the allegation.”

These issues were not raised by the hearing officer, and the hearing officer certainly has no jurisdiction to consider these points. But the strategy of asserting that evidence was fabricated is not one which any practitioner should adopt without exercising extreme caution.