Archive for August, 2010
The tort of injurious falsehood (sometimes called malicious falsehood or even trade libel) has been largely superseded (but not totally extinguished) by passing off and the modern wrongs against misleading or deceptive conduct. In a helpful, practical primer, Jagot J has had to explore its operation as one of the issues in the Jack Brabham Engines case. There is also an elementary lesson to learn in passing off.
In overview, the case concerned 2 rival businesses engaged in developing car engines. They agreed to pool their resources and develop technologies through a new corporate vehicle, Jack Brabham Engines (JBE). The principals in the competitors became directors and shareholders and the great man himself was a shareholder. Things didn’t work out and one of the principals, Mr Beare, who had secured patents for technology he had developed earlier decided to invest elsewhere in competition with JBE.
Amongst other things, he published statements on his website and in ASIC documents which the applicants complained were injurious falsehoods. Jagot J rejected these allegations.
Her Honour pointed out at  that the tort required proof of 3 ingredients: proof that (1) the respondent has made a false statement, (2) that the respondent made the statement maliciously and (3) as a result the applicant has suffered actual damage.
Her Honour quoted Gleeson CJ on the difference between the tort and defamation:
The tort of defamation protects reputation, and it does so in a manner that involves a balancing of various considerations including the right of free speech. The tort of injurious falsehood protects against provable economic loss resulting from false and malicious statements.
Jagot J at  also endorsed the statement in Halsbury’s Law of Australia as a convenient summary of what is required for the statement to be malicious:
The applicants failed on all heads for a wide variety of reasons. Some of the statements were not even pleaded. The applicants failed to prove that others were even false and, at every turn, the statements were not shown to be malicious because they were the honest beliefs or opinions of Mr Beare. There was also no proof of damage.
The difficulties of proving malice in particular highlight why, if the conduct is in trade or commerce, the tort has largely been supplanted by the fair trading laws such as s 52 (in the case of corporations) and s 9 / s 42 (in the case of individuals).
The applicants also alleged passing off from use of the names “Beare Technology Engine” and “Beare Head Technology”. The names were not registered as trade marks, hence any rights had to arise at common law.
The problem for the applicants here was that Mr Beare had used these names in his business before JBE was incorporated and, while he or his company had authorised JBE to use the names, JBE was unable to identify any assignment of the earlier business and its goodwill to JBE. As a result, JBE did not own the relevant reputation.
Jack Brabham Engines Limited v Beare  FCA 872
Janice Luck and Peiwen Chen have published at the Fortnightly Review an analysis of the High Court’s recent rulings in the trade mark cases: Gallo v Lion Nathan (the Barefoot case) and Health World v Shin-Sun.
As Janice was one of the members of the Working Party whose review led to the 1995 Act and has been teaching trade mark courses at Melbourne Uni. for longer than she probably cares to remember, you should read it here.