Britt Allcroft (Thomas) LLC v Miller

Federal Court of Australia|2000-07-01|Before: Mansfield J

REASONS FOR JUDGMENT 1 Britt Allcroft (Thomas) LLC ("BAT LLC") and Britt Allcroft (Thomas) Limited ("BATL") (together, "the applicants") principally apply to restrain Robyn Leanne Miller ("Mrs Miller") from selling, offering for sale, advertising or promoting in Australia the sale of children's toys or other products under or by reference to the name "The Thomas Shop" or any name substantially identical or deceptively similar to that name or from using certain logos comprising the applicants' trade marks and logos. 2 Mrs Miller runs a business in a small shop in a retail shopping area at Glenelg, a beachside suburb of Adelaide. She uses the business name "The Thomas Shop". She sells only "Thomas the Tank Engine & Friends" merchandise, which is manufactured and sold under licence from the applicants. 3 It is claimed that the name of Mrs Miller's business, 'The Thomas Shop', her use of certain logos and get up, and the advertisement and promotion of her business constitute misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA") and s 56 of the Fair Trading Act 1987 (SA) ("the Fair Trading Act"). It is also claimed that she is wrongly passing off her business as being associated with the business of the applicants. The applicants also claim that the conduct of Mrs Miller infringes their marks registered under the Trade Marks Act 1995 (Cth) ("the Trade Marks Act"). The applicants accept that Mrs Miller may sell Thomas the Tank Engine & Friends products, provided she acquires them lawfully from a licensed supplier. They also accept that she may operate a business selling only Thomas the Tank Engine & Friends products. Their complaint concerns the manner in which she does so. 4 The applicants do not seek damages from Mrs Miller, even if they succeed in their claim. They seek declaratory orders, and injunctive relief, so that the conduct of which they complain will not continue. 5 Mrs Miller's response is primarily that she is entitled to operate the business as she presently does. She does not dispute that the applicants have a substantial reputation and goodwill in Australia in the name and get up of Thomas the Tank Engine & Friends, and the registered marks. She says she does not intrude upon that entitlement, as she claims that her business as it is presented does no more than claim an entitlement to sell Thomas the Tank Engine & Friends merchandise. 6 The parties are agreed that the first question for resolution by the Court is whether the name or presentation and promotion of Mrs Miller's business as 'The Thomas Shop' in the circumstances connotes more than Mrs Miller claims. In particular, it asks whether it connotes that she has some association with the applicants' business, and whether it infringes the marks. 7 There is a second question to decide. Mrs Miller opened 'The Thomas Shop' on about 1 September 1997. She claims that the applicants consented to her opening her shop to sell only licensed Thomas the Tank Engine & Friends merchandise, and to her naming the shop 'The Thomas Shop', and to the manner of her presentation of the shop. She says she relied upon that consent, given by way of a written representation, in proceeding to open her shop, so that the applicants are now estopped from claiming the relief which they are claiming against her. 8 The facts underlying this proceeding are largely not in issue. 9 A series of children's books known as "The Railway Series" was originally written in the United Kingdom by the Reverend Wilbert Vere Awdry and first published in 1945. The first eleven books in the series were illustrated by C Reginald Dalby. Later books in the series were written by Christopher Vere Awdry. 10 The Railway Series features an engine character named "Thomas the Tank Engine" ("Thomas"). It also features other characters, including railway engines and carriages, and non-railway characters such as Harold the Helicopter and Bertie the Bus, as well as human characters such as "The Fat Controller" (together "Thomas' Friends"). There are now in excess of 150 books in The Railway Series, each featuring Thomas and/or Thomas' Friends. 11 Thomas is depicted in illustrations in The Railway Series as a tank engine with a number of distinctive features, including a distinctive blue colour, a smiling face, a cloud of steam, and the number "1". There are two other train engines which are blue in colour which feature in The Railway Series: Edward the Blue Engine, and Gordon the Big Express Engine. Each of Thomas' Friends is also depicted with a distinctive face and in distinctive colours. 12 W H Books Limited ("WHBL") was the publisher of The Railway Series books and the owner of copyright in those books. The Railway Series books have been extensively published worldwide, including Australia. From 1982 to May 1998, BATL was the exclusive licensee of WHBL for the purposes of reproducing The Railway Series in the form of video, film and broadcast and similar forms of presentation including commercially exploiting the Thomas character and the Thomas' Friends characters. BATL during that time was also the exclusive licensee of WHBL for the purposes of manufacturing and selling goods comprising or depicting the Thomas character or the characters of Thomas' Friends or of items decorated with or bearing their representations. 13 By agreement dated 21 April 1998, WHBL assigned to Reed Consumer Books Limited ("RCBL") its rights in The Railway Series and in Thomas and in Thomas' Friends, as well as the benefit of the licence between BATL and WHBL. On 27 April 1998, RCBL agreed to sell to BAT LLC the rights, including the copyright, in The Railway Series and in Thomas and in Thomas' Friends. On 26 May 1998, WHBL and RCBL assigned all interest in the license between WHBL and BATL to BAT LLC and it accepted the obligations of WHBL under that licence. 14 Accordingly, it is clear that BAT LLC is now the owner of the rights in The Railway Series, and in Thomas and in Thomas' Friends and that BATL is licensed exclusively to reproduce those materials and characters and to commercially exploit them under the licence agreement referred to. 15 It is also clear that BATL has actively exercised those rights. In association with an affiliated company Britt Allcroft (Productions) Limited, it has produced several television series, in excess of 100 episodes, based on The Railway Series and Thomas and Thomas' Friends. Those television series have been broadcast internationally, including from 1987 by the Australian Broadcasting Commission. It has also produced or authorised the production of a number of video titles of the television series, which have been sold in Australia. It has also, from 1982, manufactured and sold, or authorised the manufacture and sale of large numbers of toys, games and related merchandise which comprise or depict or are decorated with representations of Thomas and Thomas' Friends and other scenes and incidents from The Railway Series ("the Thomas Merchandise"), including in Australia. There are currently forty-four licenses of Thomas and the Thomas Merchandise in Australia for their manufacture or distribution. The range of the Thomas Merchandise marketed in Australia is extensive. It includes books, confectionary, clothing and footwear, food, furniture, giftware, greetings, promotional items, quilt covers and haberdashery, stationery, toiletries, toys, videos, audio cassettes and compact discs. BATL has also, since 1982, widely marketed advertised and promoted, in Australia and elsewhere, the television series, the video and the Thomas Merchandise. 16 In Australia, that promotion has been through television radio and the print media. It has also included promotions at point of sale and other promotional activity. It has undertaken those activities largely through its agent in Australia since 1987, Gaffney International Licensing Pty Ltd ("Gaffney"). It also endeavours to ensure that the books of The Railway Series, and the Thomas Merchandise, are available in all States of Australia from a variety of retail outlets including major department stores, toy stores, and specialist retail stores. Gaffney operates a Thomas website which is extensively visited. The annual wholesale sales of the Thomas Merchandise in Australia are well in excess of $10 million. 17 BATL at material times has been the registered proprietor in Australia of the composite mark consisting of the words "Thomas the Tank Engine and Friends" and the Thomas logo ("the Thomas logos"). Since 8 December 1993, BATL has also been registered as the proprietor in Australia of the word mark "Thomas the Tank Engine and Friends" under the Trade Marks Act in respect of classes of goods and services which encompass the activities of Mrs Miller's shop. That mark has those words depicted in a cloud graphic. 18 Consequently, the applicants claim to have acquired a valuable reputation and goodwill in Australia (and internationally) when used in connection with the distribution, advertising and sale of children's toys, games, books and in connection with the Thomas Merchandise (a) in the name "Thomas the Tank Engine" (b) in any name which includes the name "Thomas" (c) in the Thomas logos, and (d) in embodiments and illustrations of the Thomas character or of Thomas' Friends or of scenes and events from The Railway Series or from the television series referred to. 19 The applicants, in maintaining that claim, acknowledge that the word "Thomas" is a commonly used first name, middle name and last name. It is the middle name of Mrs Miller's only child. There are in excess of 1,000 people with the surname "Thomas" in the current Adelaide White pages telephone directory. 20 On 30 April 1997, Mrs Miller obtained registration in South Australia under the Business Names Act 1996 (SA) of the business name "The Thomas Shop" for the purposes of the retail sale of goods including the Thomas Merchandise. She intended to sell exclusively the Thomas Merchandise. She had made inquiries of BATL to ascertain to whom she could speak about her plan, and was directed to Gaffney. On 3 March 1997, she spoke to an officer of Gaffney by telephone, and explained her plan. She was told her idea was a good one. At her request, she was provided with a list of the persons or entities in Australia licensed to sell the Thomas Merchandise. She was told that Gaffney would ascertain from BATL its policy on the idea of a shop stocking exclusively the Thomas Merchandise and using the Thomas logos as part of the shop's identity. Gaffney then made an appropriate inquiry of BATL. 21 It is desirable to refer in some detail to the subsequent communications between Gaffney and Mrs Miller as they are integral to Mrs Miller's claim to an estoppel. 22 On 7 March 1997, Mrs Miller wrote to Gaffney in the following terms:

"Further to our recent telephone conversation please find enclosed the proposed details in regards to "THE THOMAS SHOP". In an effort to pursue this venture further I require your endorsement and assistance with the following queries. (a) Approval to own and operate a business trading as "THE THOMAS SHOP". The place of business to operate in Adelaide, South Australia. It is likely that additional outlets operating under the same name may be opened at a later date. (b) Approval required to reproduce artwork for shop fit-out and frontage. (c) negotiate the opportunities available to extend the existing range with additional product lines. (d) "THE THOMAS SHOP" agrees to only stock and sell those products endorsed and licensed under Britt Allcroft. (e) Assist if possible with the provision of bromides, artwork requirements and if available point-of-sale material. I trust you find the attached proposal informative and I look forward in (sic) discussing details with you further. Once again, thankyou for your help and assistance to date."

23 The enclosure contained a detailed proposal for "The Thomas Shop". It clearly contemplated use of the Thomas logos. The proposed business cards and packaging were to acknowledge "copyright" of BATL and that Mrs Miller was licensed by BATL to operate in the manner proposed. 24 On 26 March 1997, Gaffney wrote to Mrs Miller. She was told that BATL had not yet decided on a response to her proposal. On 24 April 1997, Gaffney again wrote to Mrs Miller in the following terms:

"Apparently they [BATL] are receiving an increasing number of similar requests. As such this will be one of the topics of their upcoming marketing conference, at which time they hope to formulate a policy on how to proceed with such requests. I will let you know as soon as they get back to me with more information. Thanks for being so patient … but it does usually take time to break new ground!" 25 It was following this letter that Mrs Miller procured in her name registration of the business name "The Thomas Shop". 26 In the meantime, Mrs Miller had also entered into negotiations to lease premises for the shop. She also made inquiries of authorised distributors of Thomas Merchandise to secure stock for the shop. She had further developed her concept for the design of the shop. On 1 May 1997, she wrote to Gaffney informing it that she was negotiating to secure a lease of suitable premises, and to secure the Thomas Merchandise for her shop and that she proposed to open the shop in mid June 1997. She did not mention in that letter that she had procured the registration of the business name. She added:

"At this stage I will not proceed with utilising the Thomas the Tank Engine & Friends trademark as part of the shop frontage identity nor on printed material until Britts have determined their policies in regards to this." 27 On 6 June 1997, Mrs Miller again wrote to Gaffney with an update on her progress with "The Thomas Shop". She reported that she was in the process of arranging the fit-out of the shop and display units. She asked for the correct Print Media Standard colour of Thomas blue, and how she could acquire some free-standing characters of Thomas and of Thomas' Friends. 28 The officer of Gaffney who had been dealing with Mrs Miller was away at that time. Another officer of Gaffney responded on 6 June 1997 in the following terms:

"Thank you for your brief update on "The Thomas Shop" - its sounds terrific! As you may be aware, Dierdre Melrose is currently at the New York Licensing Show and will not be returning to the office until Monday 16 June, 1997. To assist you with your first query, following is the Thomas the Tank Engine character profile, highlighting all PMS colours. … Please do not hesitate to contact me if you have any further queries." 29 Any scope for Mrs Miller misunderstanding the effect of that communication was quickly arrested. On 17 June 1997, Gaffney through its officer principally dealing with Mrs Miller wrote to her as follows:

"I believe you were in contact with Andria Karayiannis during the period of my visit to New York. As you may be aware, Andria is new to our company and I would therefore like to take this opportunity to reiterate our position to ensure there has been no misunderstanding. As previously advised, Britt Allcroft (Thomas) Limited in the UK are yet to formulate their strategy on "Thomas the Tank Engine & Friends Concept Shops". I am following up with Britt Allcroft (Thomas) Limited as to whether they have made a decision and will inform you upon receipt of their response. I note from your fax you are still referring to your venture as "The Thomas Shop", please confirm the registered name of your company and the intended trading name of the store. Thank you Robyn, I look forward to hearing from you as soon as possible." 30 Mrs Miller promptly responded, on 18 June 1997. She wrote that she had leased premises at Glenelg and that all the shop display fixtures and fittings had been ordered. She proposed to open on 1 August 1997, trading as "The Thomas Shop"; she enclosed a copy of the business name registration. She added:

"Following my fax updates to you on Thursday 1st May, 1997 and 6th June, 1997 re progress of "The Thomas Shop" I wish to advise you that a lease has been agreed to for a retail premises at Glenelg and all shop display fixtures and fittings have been ordered (hence my fax to you June 6th re Thomas Blue PMS colour). An opening date of August 1st has been confirmed and the business will be trading as "THE THOMAS SHOP". (please refer to attached copy of Certificate of the Registration of a Business Name). My initial and sole request to Britt Allcroft (Thomas) limited and to your company is the issue directly relating to the useage of the Thomas the Tank Engine & Friends trademark as part of the store's identity, both on the shop window and on printed material. As stated in my fax to you dated 1st May, 1997 I am prepared not to proceed with utilising the official trademark and can go ahead wit alternative designs however surely it would be within the best interest of Britt Allcroft to utilise the trademark within its correct specifications considering the nature of the business." 31 She sought a prompt reply. 32 Before receiving a reply, Mrs Miller formally leased the shop for a one year term with extensions available up to a further seven years, and arranged for its fit out. She spent some $18,000 on its fit out, and its general promotion. She spent a similar amount acquiring the Thomas Merchandise to sell by retail. She started operating The Thomas Shop from 1 September 1997. 33 The shop name on the outside of the shop had a representation of Thomas at either end of the name, and the letter "O" in Thomas was also a front-on representation of a train face with a cloud of steam from the funnel; the train face was clearly a representation of Thomas' face. The front window of the shop also had that name and presentation. 34 By letter dated 12 November 1997, BATL expressed its concern at her having established the shop in that manner. It referred to the fitting out of the shop and the use of images of Thomas and Thomas' Friends in the name and get up of the shop, in its stationery and promotional material. It indicated that it had decided not to license or authorise any "Thomas Shops". It complained that Mrs Miller was infringing its intellectual property rights and was passing off her business as being connected in some way with BATL's business. It required Mrs Miller to change the name of the shop, to cancel the registered business name, and to change the get up and presentation of the shop. 35 There followed correspondence between solicitors for the applicants and for Mrs Miller over a period of time, before these proceedings were instituted. 36 In January 1998, Mrs Miller made some alterations to the presentation of the shop: (1) she removed the representations of Thomas from their position adjoining the name; (2) she removed the features of Thomas from the face of the engine in the name The Thomas Shop from the front of the shop and from the stationery and point of sale material, but so that the "O" in Thomas still clearly represented an engine, with the cloud of smoke, but the enlarged "O" had no features of Thomas' face within it; (3) she had erected inside the shop a sign about 18 cm x 24 cm which reads:

"The Thomas Shop is independently owned and operated and is not associated, affiliated, related to or aligned with Britt Allcroft (Thomas) Ltd, Thomas the Tank Engine and Friends TMR trade mark of Britt Allcroft Inc © Britt Allcroft (Thomas) Ltd 1998" 37 The name The Thomas Shop is now printed on the front of the premises in "Thomas" blue. The name still has a representation of the front of a train as the letter "O" in "Thomas" but the face is now blank. There is still a cloud of smoke rising from the funnel. Adjacent to the name appears a train signal and section of a train line rather than, as previously, a representation of Thomas. That presentation was designed by Mrs Miller. It is not suggested as being taken from any of the BATL representations of Thomas or from the Thomas logos. There is affixed to the inside of the front window a large promotional poster of Thomas, such as might be found in a shop selling the Thomas Merchandise. There are also other smaller stained glass pictures of Thomas affixed to the front window of the shop, again of the kind which might be used as promotional material in a shop selling the Thomas Merchandise. 38 The interior of the shop has various stands and display items depicting Thomas. A small Thomas train runs on rails around the shop. A trolley designed to appear as a railway trolley, painted in "Thomas" blue, is one of the features. The shop stocks exclusively the Thomas Merchandise. 39 In the Adelaide White pages of the telephone directory the shop is under the entry "Thomas Shop, The" and in the Yellow pages under the Toys section in the same way. That is because Mrs Miller wants to promote awareness that she is selling the Thomas Merchandise. 40 In my judgment, the applicants have established a significant reputation in Australia in the name Thomas and in the representations of Thomas and Thomas' Friends. That reputation is not really contested by Mrs Miller. It was really because of that reputation that she sought to establish The Thomas Shop. It is a reputation which can readily be inferred from the extensive marketing in Australia of Thomas and of Thomas' Friends, and of the Thomas Merchandise since 1987, including through the television series and videos, and through its promotional activities conducted in Australia by Gaffney. The very substantial dollar volume of sales of the Thomas Merchandise over the period from 1987 attest to that. It has been part of that promotion to make a feature of the depictions of Thomas, including the one predominantly blue colour, the smiling locomotive engine face, and the cloud of steam. The television series and the videos, on the evidence, promote the representations of Thomas and of Thomas' Friends. The number of licensees of the Thomas merchandise, the range of the Thomas Merchandise, and the large number of visits to the Thomas website each month, all tend to confirm that picture. 41 I am satisfied that the name Thomas the Tank Engine, and depictions of Thomas, including the Thomas logos, and of Thomas' Friends in connection with the sale of toys, books, games, videos and the Thomas Merchandise have a meaning signifying goods sold by or licensed by the applicants. 42 The more significant issue is whether Mrs Miller, in commencing and operating The Thomas Shop from September 1997 has engaged in conduct which is misleading or deceptive, or is likely to mislead or deceive, or has engaged in conduct which constitutes passing off. The parties' submissions were based upon Mrs Miller's conduct of the shop as it has been operated since January 1998, that is after Mrs Miller made the changes to its manner of presentation and operation, including the sign, referred to in par 36 above. 43 The applicants' submission is that Mrs Miller's conduct constitutes a representation in trade or commerce that her shop is owned or conducted by, or with the licence sponsorship or approval of, the applicants. Mrs Miller's response is that she does not convey any such representation. She acknowledges that she does not have the licence sponsorship or approval of the applicants to conduct the shop, and says in her defence that the name and presentation of her shop merely identifies the type of product sold in the shop. She says it would be misleading not to call the shop The Thomas Shop as it sells only the Thomas Merchandise. 44 In my judgment, Mrs Miller's shop named The Thomas Shop does represent to the public that she has some licence from or approval from the owners of the Thomas logos and marks and goodwill to conduct the shop. Its name is clearly intended to invoke association with the Thomas Merchandise. It is painted in "Thomas" blue. It sells only the Thomas Merchandise. In connection with the sale of the Thomas Merchandise, the name Thomas or the name The Thomas Shop carry the secondary meaning that the operator of the shop has some licence from or approval from the applicants to conduct the shop. The use of the name, and the get up of the shop, and its function as selling exclusively the Thomas Merchandise, are all factors which I consider do communicate that connection. The promotional material headed "The Thomas Shop" with the stylised "O" resembling the front of a locomotive engine (including the small cloud of smoke from the funnel), albeit without Thomas' facial features, also has that effect. The examples of promotional material in evidence include assertions that the shop specialises in the Thomas Merchandise. 45 I do not consider that the absence of Thomas facial features from the stylised "O" in Thomas removes from what was otherwise a clearly unauthorised use of the Thomas logo the impact of the presentation of the name The Thomas Shop. The use of that name in relation to the sale of the Thomas Merchandise itself attracts the attention of potential consumers to the connection between the applicants' goodwill and the Thomas logos and to the Thomas character. The presentation of the name The Thomas Shop in its stylised manner in my view simply tends to confirm that connection. The other signage in the shop and the promotional material also tend to show that the name itself, as it is presented, reinforces that connection. 46 In The Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152, Burchett J at 161 said:

"In general, and more particularly in the case of an item likely to be purchased for a small price without long consideration, the comparison which must be made is between the impression of the applicant's goods retained in a customer's mind and the impression made by the sort of consideration he is likely to give to the respondent's product before purchasing it." 47 Of course, those comments were made in a case where the products themselves were being passed off as the applicant's products, notwithstanding differences between them. But having regard to the nature of Mrs Miller's business I consider that those observations are apt also to describe the present circumstances where Mrs Miller is said to be passing off her business as in some way related to the applicants' business. That decision was affirmed on appeal: Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474. 48 The conclusion to which I have come reflects the approach of the Courts to what has come to be called "character merchandising": see eg Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 and the cases discussed by Sheppard J at 563-571, by Beaumont J at 578-582 and by Burchett J at 583-586 in that case. 49 It also follows from my findings that Mrs Miller's establishment of The Thomas Shop in the circumstances was not (as she claimed) deceptive or misleading because it conveyed no more than that she offered for sale the Thomas Merchandise, or that she offered for sale only the Thomas Merchandise: cp. Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 per Gummow J at 121-122; Musidor BV v Tansing (1994) 52 FCR 363. It also conveyed that The Thomas Shop was licensed or owned by the applicants or somehow authorised by or associated with them. That is the representation which, in the present circumstances, is misleading and deceptive having regard to the secondary meaning which I have found attaches to the name Thomas and to the Thomas logos in respect of the Thomas Merchandise. 50 The elements of the cause of action in passing off are well known, and are not in issue: see Erven Warnick Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 at 742. In the light of my findings above, I am also satisfied that Mrs Miller had made a misrepresentation that her business is somehow licensed by or associated with the business of the applicants. That misrepresentation has been made by her in the course of her business to potential customers of her business and to others who may acquire the Thomas Merchandise from her. It is also a reasonably foreseeable consequence (that is, in the relevant sense, the conduct is calculated to have the effect) that by her misrepresentation the goodwill of the applicants in Thomas and Thomas' Friends and in the Thomas logos may be damaged, because the applicants' opportunity to preserve that goodwill and intellectual property and to use it if they choose by licensing shops such as The Thomas Shop in the future, and by controlling then the get up and quality of such shops. Finally, I am satisfied that her misrepresentation will probably cause damage of that nature to the appellants. Their ability to establish, or licence, "concept shops" in the future will have been impaired. That form of protection of goodwill by the grant of equitable relief was confirmed by the High Court in Campomar Sociedad Limitada v Nike International Ltd (2000) 169 ALR 677 at 706-707. 51 Consequently, in my judgment, the cause of action in passing off has also been made out. 52 In my judgment, the disclaimer in the shop or on some promotional material, in the circumstances, does not diminish those conclusions. The "disclaimer" of association at the bottom of some promotional material is in a very much smaller typescript than the content of that material. In Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 66 FCR 457, Tamberlin J at 471 said:

"An express disclaimer, can if sufficiently prominent, destroy any suggestion of association between a character and the product under consideration." 53 Despite efforts to distance the product from the characters in 'The Simpsons' television program in that case, his Honour found that the assertion that there was no such association in the circumstances reinforced the conclusion that the Duff beer product was intended to be marketed with a keen awareness of the existence of that program. In his subsequent reasons for decision as to the appropriate form of remedy for the contravention of s 52 and for passing off, in Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 34 IPR 247, Tamberlin J was faced with competing contentions as to the appropriate form of an injunction. The producer of the beer submitted that the appropriate injunction was one which restrained it from selling the beer unless the packaging and promotional material contained a clear and prominent statement that there was no association with 'The Simpsons' program and its production was not authorised by producers of that program. In rejecting that submission, his Honour observed that in Hogan v Pacific Dunlop Ltd (1988) 83 ALR 403 (on appeal Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553) Gummow J had granted an injunction restraining the further broadcast of a television advertisement unless it was made clear that those entitled to the Crocodile Dundee goodwill had not agreed to, and did not endorse, the product being advertised. As Tamberlin J pointed out (at 251), that formulation of the orders turned on the special facts of the case, including Gummow J's view (at 433) that there was

"a very real prospect that the chance of such misrepresentation being effected will be most significantly reduced by an appropriate disclaimer."

Tamberlin J also noted that, in that case, the association found to be conveyed or claimed did not arise from the direct use of a specific name, unlike the present case and unlike the Duff Beer case. His Honour also noted the further distinction that the Crocodile Dundee case concerned advertisements and a disclaimer on advertising before sale, which he described at 252 as a "significant distinction". 54 I shall not repeat the analysis of other authorities on disclaimers and qualifying injunctions made by Tamberlin J in the Duff Beer case (at 252-253). I respectfully agree with and adopt his Honour's views. 55 The "disclaimer" in this matter is one which is within the shop itself. 56 In a practical sense, it operates at the point of sale. There is no detailed evidence as to the extent to which Mrs Miller advertises or promotes the store, or whether that advertising contains any disclaimer. The disclaimer does appear on certain promotional material, but only in the form and size to which I have already referred. Other advertising material in evidence contains no such disclaimer. 57 In this matter, I do not consider that the disclaimer of Mrs Miller is effective to dispel the claimed association with the applicants which I have otherwise found to have been established. Each case must be determined on its particular circumstances. The factors which I regard as significant in reaching that conclusion are that the exterior of the shop presents no such disclaimer; it is only when at the point of sale in the shop or for those already attracted into the shop that the disclaimer becomes apparent. In the promotional material tendered as evidence, there is either no disclaimer (eg. on balloons and the like) or a disclaimer in such small print relative to the main content of that material as to be unlikely to carry any real impact to most persons who see it. The product being sold is genuine Thomas Merchandise: cp. Sony Music Productions Ltd v Tansing (trading as Apple House Music) (1993) 27 IPR 640, affirmed on appeal: see (1993) 27 IPR 649. In that case, the product being sold was a genuine but probably inferior recording. The concern that the performer and his recording agents might be associated with the inferior product was dispelled by the product labelling. Such is not the issue in this case. It is that Mrs Miller's shop suggests an association with the applicants which she does not have. More generally, in respect of the sale of the Thomas Merchandise, the applicants claim that a shop called The Thomas Shop with its get up and promotion conveys that association. I do not consider that the disclaimer negatives that claimed association. It may be that any shop selling exclusively or predominantly the Thomas Merchandise could not adopt the name The Thomas Shop, at least with the get up and presentation of this shop, without claiming such an association, whatever disclaimer is contained within the shop. It is not necessary to decide that question. The subject matter of this litigation is the name and presentation of The Thomas Shop, including the disclaimer, selling exclusively Thomas Merchandise. 58 In my judgment, the applicants have also established that Mrs Miller continues to infringe their entitlement to use the Thomas logos by use of the representation and logo referred to in pars 36 and 37 above ("Mrs Miller's logo"), as well as the earlier representation and logo used by her referred to in par 33 above. 59 Mrs Miller contends that the applicants do not have an exclusive entitlement to the use of the word "Thomas" (a proposition which they do not contest). She denies that the use of her logo infringes the Thomas logos because it is not substantially identical with or deceptively similar to the Thomas logos. 60 However, I am satisfied that Mrs Miller's logo is deceptively similar to the Thomas logos. Much of the reasoning for that conclusion is the same as that by which I have concluded that Mrs Miller has engaged in conduct that is misleading and deceptive, and constitutes passing off. The issue as to deceptive similarity is really a matter of impression. 61 In Australian Woollen Mills Ltd v F S Walton and Co Ltd (1937) 58 CLR 641 at 658, the test to be applied in considering whether a registered trade mark has been infringed was expressed by Dixon and McTiernan JJ at 658 in the following terms:

"In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. Evidence of actual cases of deception, if forthcoming, is of great weight." 62 In the present case, there is no direct evidence of deception. I do not consider that such evidence is critical. As I have indicated, my conclusion is reached having regard to the combination of features which appear in the Thomas logos and which find expression in Mrs Miller's logo: the way in which the word 'Thomas' appears, the puff of steam, and the round face of the locomotive engine (although Mrs Miller's logo has that face blank and face on whereas the Thomas logos have that face at an angle and with features). As Lindgren J did in Gardenia Overseas Pte Ltd v The Garden Co Ltd (1994) 29 IPR 485, I have considered the likelihood of deception by reference to the probable impressions on customers and potential customers which would arise if the Thomas logos were being used properly and within the scope of the registration. Having regard to the nature of Mrs Miller's business I am satisfied that the use of Mrs Miller's logo infringes the Thomas logos because it is deceptively similar to the Thomas logos and is used in relation to services that are closely related to the exploitation of the Thomas logos through the Thomas merchandise by the applicants: s 120(2)(b) of the Trade Marks Act. 63 Mrs Miller submits further that she is not infringing the Thomas logos because she is using Mrs Miller's logo in good faith to indicate the kind of goods which she sells at the Thomas Shop, namely the Thomas merchandise: s 122(1)(b) of the Trade Marks Act. She contends that the Thomas Merchandise is a "kind" of goods within that subsection because of its reputation. No authority was referred to in support of that latter contention. 64 Section 122(1)(b) of the Trade Marks Act relevantly provides:

"(1) In spite of s 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, … or some other characteristic of goods or services; …" 65 Mrs Miller contends that Thomas Merchandise is a kind of goods, and that Mrs Miller's logo was used in good faith to indicate that she offered for sale exclusively the Thomas Merchandise. She points to her communications with Gaffney indicating her intentions as evidence of her good faith, and that the name The Thomas Shop as it is presented indicates the kind of goods which are available in the shop. 66 Section 122(1)(b)(i) is expressed in terms which are a little wider than its legislative ancestor in s 64(1)(b) of the Trade Marks Act 1955 (Cth). That section referred to the use of a sign in good faith "of a description of the character or quality" of goods or services. In Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 77 FLR 139 it was held that the use of the mark 'Caterpillar' denoted that the goods hired out originated from the registered owner of the mark or had some connection with the mark, rather than describing the character or quality of the goods hired out, so that the defence was not made out. 67 I do not consider that the words "kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services" in s 122(1)(b)(i) of the Trade Marks Act were intended to encompass the identification of the source of goods or services from the registered owner of a mark. The words in s 122(1)(b)(i) appear to have as their underlying element or genus some objective description of the goods or services or of a feature of the goods or services, by reference to commonly used and understood qualities (the common usage may of course have a technical or specialist connation in certain circumstances). Indicating that particular goods originate from the registered owner of a mark, or that they are of a particular brand the goodwill in which is enjoyed by another person or entity, in my judgment, goes beyond the type of characteristic which s 122(1)(b)(i) contemplates. If it had been intended that that provision would enable a sign to be used which has the effect of enabling a trader effectively to adopt another's registered mark because only that other person's product is being sold or supplied from that premise, the section could readily have been expressed to say so. It would in addition be a dramatic reduction in the protection which the Trade Marks Act provides to the registered owner of a mark, and one which might have been expected to have been clearly indicated if it had been intended. It would otherwise diminish the intention of the Trade Marks Act to enable a registered mark to indicate the connection to the course of trade between goods and services and the person who has the right to use the mark, or to provide "a badge of origin": per Lockhart J in Levi Strauss & Co v Wingate Marketing Pty Ltd (1993) 43 FCR 344 at 360-361. See also the discussion in the judgment of Burchett J in Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 342. In that case, Gummow J at 347-348 drew the distinction between a trade mark use of particular words and a description of the goods in question. 68 In addition, in my judgment, the use of Mrs Miller's logo in the present circumstances does more than indicate that the Thomas Shop sells the Thomas Merchandise. I have found that it also conveys that the shop is owned by the applicants or licensed by them or is somehow authorised by or associated with them. It is a consequence of the fact that the expression Thomas presented in connection with certain goods, and as here presented in connection with premises of a certain name and get up, has the secondary meaning to which I have referred. Thus, the protection which s 122(1)(b) might offer is not available because Mrs Miller's logo indicates more than that which the subsection contemplates even if (contrary to my conclusion) it encompasses signage which identifies the origin of goods or services by use of another's mark. 69 Accordingly, I also find that Mrs Miller has infringed the Thomas logos. 70 Mrs Miller's claim that the applicants are estopped by their conduct from seeking any relief from her is based upon the communications between herself and Gaffney between March and June 1997. Her defence pleads that she entered into the lease of the shop, and expended money on its fitout and on the Thomas Merchandise for stock following the communications culminating in the letter from Gaffney of 17 June 1997 and her response of 18 June 1997. The defence asserts that she was "induced by the representations" made in those communications, in the light of the applicants' knowledge of her plans. That picture, it was submitted, amounted to Gaffney on behalf of the applicants initially giving her encouragement to proceed with her plans and then taking no step to disavow that encouragement. 71 It is not necessary to determine whether that state of affairs might give rise to an estoppel: cp. Commonwealth of Australia v Verwayen (1990) 170 CLR 394 ("Verwayen"). That is because, in my judgment, the factual foundation based upon the communications is not made out. Gaffney's letters at no time indicated that the applicants encouraged Mrs Miller to proceed to establish The Thomas Shop. She was told from the first letter of 26 March 1997 that BATL had not decided on whether it agreed to her proposal, and soon after she was told that BATL were considering her request or proposal in the context of formulating a general corporate policy on whether to support the establishment of shops like the then proposed Thomas Shop. That position was clearly reaffirmed in Gaffney's letter of 17 June 1997. 72 It was in the face of that clear position, rather than in the light of any encouragement from Gaffney on behalf of the applicants, that Mrs Miller then entered into the lease of the shop, fitted out the shop, stocked the shop with the Thomas Merchandise, and started operating as The Thomas Shop on 1 September 1997. 73 Moreover, Mrs Miller's evidence did not really advance her claim based upon an estoppel. She said she was not induced by her communications with Gaffney to set up the shop, or to use the name, as she did. She knew at all times that Gaffney could not itself give her permission to use the Thomas logos. She said that she did not need to obtain the applicant's permission to use the name The Thomas Shop, and had already made up her mind in February 1997 to use that name when she first developed her proposal which was submitted to Gaffney on 7 March 1997. She did that as a matter of courtesy only. Although the shop uses "Thomas" blue, she has avoided using the red and black colours which are also part of the Thomas identity. She has also promoted the shop, and used stationery and packaging for the shop, which has the blank face of a locomotive engine without Thomas' facial characteristics; it does however have the small cloud of steam coming from the funnel. 74 In her affidavit sworn on 6 September 1999, Mrs Miller claims to have proceeded to establish and operate The Thomas Shop "in consequence of [Gaffney's] encouragement" because she was led to believe that "my establishment of a dedicated store with the name The Thomas Shop was an excellent idea and had their approval". In my judgment, the communications from Gaffney did not give Mrs Miller reason to believe that. Indeed, she acknowledged so much in her oral evidence. She said she never asked Gaffney for approval to open the shop under that name, but only sought approval to use the Thomas logos and trademarks. Later in the same affidavit, she claims to have been misled by Gaffney about the applicants' support for her plan, and that she was induced by them to incur the costs associated with the establishment of the shop. Again, in her oral evidence, she presented a different perspective. She claims only that she was given the "feeling" that the applicants were very positive and encouraging. She did not ask for permission to call the shop The Thomas Shop, and in her mind its name was never an issue in her communications with Gaffney. Whatever Gaffney and the applicants may have had in mind on that topic, it was on Mrs Miller's own evidence an attitude which was not inducive of her decision to start the shop under that name. As the written communications show, there was in any event no foundation for Mrs Miller to draw any comfort from those communications on that score. 75 The highest she put her case, in re-examination, was that if she had been told prior to opening the shop that the applicants objected to her use of the name The Thomas Shop, then she would not have used that name. 76 In my judgment, that evidence does not establish that Mrs Miller was induced by any conduct on the part of the applicants to enter into the lease of the shop, or to fit it out or to stock it. There was no conduct by the applicants which, as a fact, led her to act as she alleges in her defence or in her affidavit. Nor, in my judgment, could she reasonably have formed any understanding that the applicants had encouraged her to proceed to establish the shop from the communications with Gaffney. If I may use a description given by Deane J in Verwayen at 439, the evidence does not reach

"… the minimum content of the assumed state of affairs from which the doctrine of estoppel precludes departure and the appropriate relief to which the relevant party is entitled pursuant to ordinary equitable principles operating on that assumed state of affairs." 77 I do not consider that the applicants played any real part in Mrs Miller making any assumption that they approved in any way of her establishing The Thomas Shop as and when she did, so as to lead to the conclusion that it would now be unconscionable to permit them to depart from that assumption. In the light of Mrs Miller's oral evidence, in my view, she herself did not make any such assumption. 78 Accordingly, the asserted estoppel is not made out. 79 For these reasons, I consider that the applicants are entitled to orders restraining Mrs Miller from, in trade or commerce, selling, offering for sale, advertising, or promoting in Australia the Thomas Merchandise under or by reference to (a) the name "The Thomas Shop" or any name substantially identical with or deceptively similar to the name "The Thomas Shop" (b) the Thomas logos or any logo substantially identical with or deceptively similar to the Thomas logo (c) the logo of Mrs Miller containing the name The Thomas Shop with the letter "O" depicting the front of a locomotive engine with a blank face, a funnel, and a could of steam. 80 I do not intend by these orders to prevent Mrs Miller from operating a shop which sells the Thomas Merchandise, and if she wishes exclusively the Thomas Merchandise. Nor do I understand that the applicants claim to be entitled to prevent her from doing so. The sale of the Thomas Merchandise might involve the display within the shop of promotional material such as posters or representations of Thomas or of Thomas' Friends. The order in (b) above will require to be carefully expressed to ensure such conduct is not also prohibited. 81 I will therefore give the parties the opportunity of making submissions as to the precise form of the orders to be made before formally making orders in this matter. In the first instance, it is for the applicants to draw up minutes of order to which any further submissions may be directed. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate: Dated: 30 May 2000 Counsel for the Applicants: D K Catterns QC with him S J Goddard

Solicitors for the Applicants: Mallesons Stephen Jaques

Trade Marks Act 1995(Cth)ss 120(2)(b), 122(1)(b)(i)

Trade Marks Act 1955(Cth)s 64(1)(b)

Trade Practices Act 1974(Cth)s 52

Business Names Act 1996(SA)

At a glance

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Judgment (18 paragraphs)

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Cases Cited (19)

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