Trade marks, passing off and misleading & deceptive conduct
12 The three causes of action relied upon by the Applicants were an infringement of their trade marks, passing off and conduct which was said to be likely to mislead or deceive.
13 Given the imperative to make orders and provide reasons on the interlocutory application sooner rather than later, it is sufficient to merely outline some of the more relevant principles.
14 Insofar as an alleged infringement of trade marks is concerned, the starting point is to recognise that a "trade mark" is defined by s 17 of the Trade Marks Act 1995 (Cth) ("Trade Marks Act") as being:
… a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.
Registration of a trade mark confers "exclusive rights". Section 20(1) thus provides as follows:
If a trade mark is registered, the registered owner of the trade mark has, subject to this Part, the exclusive rights:
(a) to use the trade mark; and
(b) to authorise other persons to use the trade mark;
in relation to the goods and/or services in respect of which the trade mark is registered.
The function of a trade mark is "to give an indication to the purchaser or possible purchaser as to the manufacture or quality of the goods - to give an indication to his eye of the trade source from which the goods come, or the trade hands through which they pass on their way to the market": In Re Powell's Trade-Mark [1893] 2 Ch 388 at 403-404 per Bowen LJ.
15 As noted by Burley J in Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd [2018] FCA 235 at [271], (2018) 354 ALR 353 at 417 ("Bohemia Crystal"), in E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15 at [43], (2010) 241 CLR 144 at 163 French CJ, Gummow, Crennan and Bell JJ approved the following statement of the Full Court in Coca-Cola Company v All-Fect Distributors Ltd [1999] FCA 1721, (1999) 96 FCR 107 ("Coca-Cola"):
Use "as a trade mark" is use of the mark as a "badge of origin" in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods. … That is the concept embodied in the definition of "trade mark" in s 17 - a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else.
(citation omitted)
Justice Heydon agreed: [2010] HCA 15 at [87], (2010) 241 CLR 144 at 175. See also: Nature's Blend Pt Ltd v Nestlé Australia Ltd [2010] FCAFC 117 at [19], (2010) 272 ALR 487 at 491 per Stone, Gordon and McKerracher JJ.
16 Infringement of a trade mark is addressed in s 120 of the Trade Marks Act. Secton 120(1) provides as follows:
When is a registered trade mark infringed?
(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
The phrase "substantially identical" is not defined but its meaning is to be determined by its ordinary or usual meaning, namely that which is "in substance" the same or "essentially" the same: Registrar of Trade Marks v Woolworths Ltd [1999] FCA 1020 at [70], (1999) 93 FCR 365 at 387 per Branson J. Whether marks are "substantially identical" requires a side by side comparison and depends on the court's own judgment: Shell Company of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 414. Windeyer J there observed:
In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. "The identification of an essential feature depends", it has been said, "partly on the Court's own judgment and partly on the burden of the evidence that is placed before it": de Cordova v. Vick Chemical Co [(1951) 68 R.P.C. 103, at p. 106]. Whether there is substantial identity is a question of fact: …
(some citations omitted)
In order to determine whether marks are "substantially identical", they should thus be compared side by side with their similarities and differences noted: Coca-Cola [1999] FCA 1721 at [38], (1999) 96 FCR at 121 per Black CJ, Sundberg and Finkelstein JJ. By way of contrast, whether a mark is "deceptively similar" is not to be determined by a side by side comparison, but rather by reference to whether there is a likelihood of deception or confusion from a recollection or impression of the registered mark: Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390 at [143], (2002) 56 IPR 182 at 216. Allsop J (as the Chief Justice then was) there observed:
[143] The question of deceptive similarity must be judged by a comparison different from the side by side comparison undertaken to assess substantial identity; the question being the likelihood of deception or confusion from a recollection or impression of the registered mark. Thus, a side by side comparison is inadequate, and too narrow a test. The comparison is between, on the one hand, the impression based on recollection of the registered mark used in a normal or fair manner that persons of ordinary intelligence and memory would have, and, on the other hand, the impressions that such persons would get from the impugned mark as it appears in the use complained of: …
(citations omitted)
17 Section 122 of the Trade Marks Act should also be noted. Section 122(1)(b) provides as follows:
When is a trade mark not infringed?
(1) In spite of section 120, a person does not infringe a registered trade mark when:
…
(b) the person uses a sign in good faith to indicate:
(i) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or
(ii) the time of production of goods or of the rendering of services; or
…
In Bohemia Crystal at [293], Burley J observed that the "purpose of subsection 122(1) is to protect the fundamental right of a trader to honestly describe his or her product" and "to provide a 'second-line' mechanism to preserve the freedom of traders to use descriptive terms". His Honour went on to further observe (at 421 to 422) (without alteration):
[295] The policy underlying subsection 122(1)(b)(i) may be seen to lie in a consistent aim in trade marks legislation to ensure that traders may continue to use language in respect of their goods or services insofar as it represents the normal usage of the English language. …
…
[297] Turning to the "good faith" requirement, in Johnson & Johnson, at 354 Gummow J (Lockhart J agreeing at 341) noted that the concept of use in good faith in S 64(1) of the 1955 Act addressed the essential concern that the use be honest, and considered the test approved by Romer LJ in Baume & Co Ltd v Moore (A H) Ltd [1958] Ch 907; [1958] 2 All ER 133 at 123; [1958] RPC 226 at 235 under s 8 of the United Kingdom Trade Marks Act 1938 which required (emphasis added):
the honest use by the person of his own name without any intention to deceive anybody and without any intention to make use of the goodwill which has been acquired by another trader.
[298] His Honour noted that this approach has also been adopted where there was claimed to be a descriptive use of a trade mark under s 64 of the 1955 Act in James Watt Constructions Pty Ltd v Circle-E Pty Ltd [1970] 3 NSWR 481 at 493, and went on to apply it as a means of considering whether there was good faith use in Johnson & Johnson (at FCR 355-6; ALR 731; IPR 32-3) in respect of the descriptive use of the word "caplets.
[299] The same concept of good faith use has been applied by Sundberg J in relation to subs 122(1)(b)(i) of the TM Act in the context of the descriptive use of "luscious lips" in Nature's Blend Pty Ltd v Nestle Australia Ltd [2010] FCA 198; (2010) 86 IPR 1 at [42], where his Honour said that to rely on the defence the respondent must show it acted honestly and without any ulterior motive.
18 If attention is shifted to the tort of passing-off, the essence of the tort is the protection of a plaintiff's goodwill attaching to a business or commercial venture. In Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12 at [108], (2000) 202 CLR 45 at 88, Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ thus observed that "… passing-off, at least so far as concerns equitable relief, protects against injury to the goodwill built up by the activities of the plaintiff". It is not concerned with an invasion of privacy: 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 317 per Gummow J. The tort provides a remedy for the invasion of a right of property in the business or goodwill likely to be injured by misrepresentations made by the passing off of one person's goods as those of another: Star Industrial Company Ltd v Yap Kwee Kor trading as New Star Industrial Company (Singapore) (1976) 1B IPR 582 at 592 per Diplock LJ; Pacific Publications Pty Ltd v Next Publishing Pty Ltd [2005] FCA 625 at [25], (2005) 222 ALR 127 at 135 per Tamberlin J. It is not a remedy for the invasion of a right of property in a mark, name or get-up which has been improperly used. Nor is it, unlike s 52 of the former Trade Practices Act 1974 (Cth) or ss 18 and 29 of the Australian Consumer Law, designed to protect consumers.
19 The precise definition of the elements of the cause of action, however, remain somewhat elusive: ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 355 per Gummow J ("ConAgra"); Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 268 per Gummow, French and Hill JJ. But, for present purposes, those elements were summarised as follows in Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 at 742 by Diplock LJ:
My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd., 84 L.J.Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.
His Lordship continued:
In seeking to formulate general propositions of English law, however, one must be particularly careful to beware of the logical fallacy of the undistributed middle. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader's wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial "puffing" which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result.
Lord Diplock's statement as to the five "characteristics" of the cause of action for passing off has been adopted in Australia: Moorgate Tobacco Co Ltd v Philip Morris Ltd (No. 2) (1984) 156 CLR 414 at 443-444 per Deane J; ConAgra (1972) 33 FCR 302 at 308-309 per Lockhart J; Osgaig Pty Ltd v Ajisen (Melbourne) Pty Ltd [2004] FCA 1394 at [83]-[85], (2004) 213 ALR 153 at 167-168 per Weinberg J ("Osgaig"); Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 471 at [29]-[30], (2005) 143 FCR 479 at 487 per Merkel J.
20 There is thus a need to establish goodwill or reputation attaching to the relevant goods in the mind of the purchasing public, misrepresentation and damage or a likelihood of damage: Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 at 356-357 per Goldberg J. The misrepresentation relied upon need only be likely to lead the public to believe that the goods are those of the plaintiff - proof of actual deception is not required: Osgaig [2004] FCA 1394 at [85], 213 ALR at 168 per Weinberg J. There need not, however, be any deliberate fraud or any intention on the part of a defendant to deceive: ConAgra (1992) 33 FCR at 344 per Lockhart J; Select Personnel Pty Ltd v Morgan & Banks Pty Ltd (1988) 12 IPR 167 at 170-171 per McLelland J. There is no requirement that a respondent has been fraudulent, malicious or negligent: R & C Products Pty Limited v S C Johnson & Sons Pty Limited (1993) 42 FCR 188 at 192 per Davies J. But the presence or lack of any conscious intent can be relevant as a matter of evidence in establishing whether there has been any unlawful passing off: Pacific Publications [2005] FCA 625 at [88], (2005) 222 ALR 127 at 148 per Tamberlin J.
21 Of relevance to both a case involving an alleged infringement of a trade mark and passing off is the prospect that a decision by a competitor to select a particular get-up of another product and borrowing aspects of the get up of that other product may, in some circumstances, be presumed to have the effect of appropriating part of the reputation of that other product. The application of the presumption is not restricted to circumstances in which the competitor is found to have been deliberately dishonest; the presumption illustrates a "broader rule": Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2018] FCAFC 105, (2018) 264 FCR 422 ("Homart v Careline"). Murphy, Gleeson and Markovic JJ there addressed what they described as the "Intention findings" of the primary Judge as follows (at 444 to 445):
Intention findings
[94] The relevant passage in [Australian Woollen Mills Ltd v FS Walton & Company Ltd (1937) 58 CLR 641] at 657 states:
[T]he examination made of the respondent's motives and good faith seems to us to leave the question of infringement and passing off very much in the same position as it stood in without it. The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public. But the practical application of the principle may sometimes be attended with difficulty.
[95] At [161] and [200], the primary judge referred to the following passage from the decision of Weinberg and Dowsett JJ in [Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549], as an application of Australian Woollen Mills:
Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor's get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was "fitted for the purpose and therefore likely to deceive or confuse … " Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing.
[96] At [201], the primary judge said:
In the present case, I am satisfied that this was the intention of Homart. As noted in Red Bull at first instance (Conti J) at [64], the difference between the brand names is not necessarily decisive of an absence of the requisite intention. Nor, as I have noted above by reference to the Full Court decision in Peter Bodum, is the presence of a brand name determinative of an absence of misleading conduct. In the present case, in any action under s 18 of the ACL, one must look at the totality of conduct of the alleged deceiver.
[97] We do not accept that the principle identified in Australian Woollen Mills is restricted in its application to cases of deliberately dishonest traders. In our view, that case illustrates the broader rule to the effect that a mark or get-up selected for the identified purpose should be presumed to be fitted for that purpose. There is no reason in principle why a finding of deliberate dishonesty is necessary for the application of that presumption. There is no reason to doubt the observation of Weinberg and Dowsett JJ in Red Bull (appeal) that the borrowing of aspects of a competitor's get-up may give rise to an inference of the kind that their Honours identified.
22 Finally, the Applicants place reliance upon ss 18 and 29 of the Australian Consumer Law. That Law is in Sch 2 to the Competition and Consumer Act 2010 (Cth). Although the terms of s 18 of the Australian Consumer Law are well known, they bear repetition. Section 18(1) provides as follows:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The other provision invoked by the Applicants, s 29(1)(a), (g) and (h) provide as follows:
29 False or misleading representations about goods or services
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
…
(g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or
(h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or
…
23 Sections 18 and 29, it may be noted, are in substantially similar terms to ss 52 and 53 of the now-repealed Trade Practices Act 1974 (Cth).
24 As with the other causes of action of present relevance, it is unnecessary to canvas the applicable principles of relevance to ss 18 and 29 of the Australian Consumer Law. It was the application of those provisions and those principles which divided the parties on the present interlocutory application. But a few brief observations may be made.
25 First, ss 52 and 53, and now ss 18 and 29, are provisions designed to protect members of the public who are consumers of goods and services from unfair trading practices: Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626 at [38], (2000) 104 FCR 61 at 72 per Beaumont, Tamberlin and Emmett JJ (citing Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 ("Hornsby Building Information Centre")). They are not provisions specifically designed to protect traders, although the operation of those provisions may incidentally have that effect. As stated by Barwick CJ, with whom Aickin J agreed, in Hornsby Building Information Centre ((1978) 140 CLR at 220):
Section 52 is concerned with conduct which is deceptive of members of the public in their capacity as consumers of goods or services: it is not concerned merely with the protection of the reputation or goodwill of competitors in trade or commerce.
26 Second, in Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247, (2004) 139 FCR 215 ("Domain Names"), Wilcox, Heerey and RD Nicholson JJ outlined some of the matters to be proved and the manner of proof as follows (at 220):
[17] It has long been established that
• When the question is whether conduct has been likely to mislead or deceive it is unnecessary to prove anyone was actually misled or deceived: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 49 CLR 191 at 198.
• Evidence of actual misleading or deception is admissible, and may be persuasive, but is not essential: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87.
• The test is objective and the Court must determine the question for itself: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202.Conduct is likely to mislead or deceive if that is a real or not remote possibility, regardless of whether it is less or more than 50%: Global Sportsman.
[18] The likelihood of recipients of a representation being misled or deceived is not a matter to be proved by evidence (testimony, documents or things), or by judicial notice or its statutory equivalent…. The existence or otherwise of such a likelihood is a jury question for the trier of fact: …
(citation omitted)
27 Third, the statutory provisions nevertheless do not extend to circumstances in which people fail to take reasonable care of their own interests: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54, (2013) 250 CLR 640 at 651-652 ("TPG Internet"). French CJ, Crennan, Bell and Keane JJ there observed:
[39] …Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. That is to say there must be a sufficient causal link between the conduct and error on the part of persons exposed to it. It is in that sense that it can be said that the prohibitions in ss 52 and 18 were not enacted for the benefit of people who failed to take reasonable care of their own interests.
(citation omitted)
See also: Mackinnon v Partnership of Larter [2019] NSWSC 1658 at [67] per Stevenson J.
28 Fourth, it is not necessary to prove an intention to mislead or deceive but proof of such an intention has a very strong evidentiary value: Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 394 per Gummow J. See also: Trani v Trani (No. 2) [2019] VSC 723 at [67], (2019) 349 FLR 261 at 277 per Forbes J.
29 Although there is an "overlap" between the tort of passing off and provisions such as those formerly found in the Trade Practices Act and now found in the Australian Consumer Law, both remedies address different concerns. In the context of the Trade Practices Act, in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70, (2007) 159 FCR 397 at 418-419, Black CJ, Emmett and Middleton JJ thus observed:
[98] There is an overlap between causes of action arising under Part V of the Trade Practices Act and the common law tort of passing off. However, the causes of action have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting. Passing off protects a right of property in business or goodwill whereas Part V is concerned with consumer protection. Part V is not restricted by common law principles relating to passing off and provides wider protection than passing off.
[99] …. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product.
These observations were also applied, not surprisingly, in the context of the "analogues of ss 18, 29(1)(g) and(h)" of the Australian Consumer Law by Siopis, Rares and Katzmann JJ in Kosciuszko Thredbo Pty Ltd v TredbotNet Marketing Pty Ltd [2014] FCAFC 87 at [29], (2014) 223 FCR 517 at 524-525.