Dairy Industry Marketing Authority v. Southern Farmer Co-Operation Ltd [1982] FCA 17

Federal Court of Australia|1982-01-29|Before: Lockhart J

Trade Practices - s. 52; passing-off; unfair competition;

breach of copyright - applicants and respondent sell in South Australia packaged flavoured milk drinks.

s. 52 and passing-off - whether relevant packs and television advertisements thereof substantially the same or deceptively similar to each other.

unfair competition - whether there has been "something underhand or sharp" in the conduct of the respondent - whether the respondent has made a false representation about its goods.

DAIRY INDUSTRY MARKETING AUTHORITY, DAIRY VALE METRO CO-OPERATIVE

LIMITED, SCHOFIELD SHERBON BAKER PTY. LIMITED Applicants

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G2 OF 1982

BETWEEN: DAIRY INDUSTRY MARKETING AUTHORITY, DAIRY VALE METRO CO-OPERATIVE LIMITED, SCHOFIELD SHERBON BAKER PTY, LIMITED

Applicants AND: SOUTHERN FARMERS CO-OPERATIVE LIMITED Respondent REASONS FOR JUDGMENT LOCKHART J. 29 JANUARY 1982

Australians are well known as beer drinkers; but they also like milk. In the case of only one brand of flavoured milk known as "Moove" its retail sales value in New South Wales alone is currently in excess of $3.2 million per annum.

This case is part of a struggle for control of the flavoured milk market in South Australia. Earlier this month Dairy Vale Metro Co-Operative Limited, the second applicant, a company incorporated in South Australia, commenced to market in South Australia under licence from Dairy Industry Marketing Authority, the first applicant, a flavoured milk product described as "Good One Malt & Honey". Also earlier this month Southern Farmers Co-Operative Limited, the respondent, also incorporated in South Australia, commenced to market in South Australia a flavoured milk product described as "Malt 'N' Honey".

I shall for convenience sometimes use the expression "the applicants" which may be appropriate on some occasions to embrace all three applicants, sometimes two of them and occasionally only one.

The applicants seek interlocutory injunctions restraining the respondent in substance from selling or advertising its

product as "Malt 'N' Honey". The applicants allege that the

respondent is contravening s. 52 of the Trade Practices Act, 1974

("the Act"), passing off its product as "Good One Malt & Honey", engaging in unfair competition and infringing the copyright of the applicants or any one or more of them in the artistic work embodied in the "Good One Malt & Honey"pack.

The first applicant is a body corporate constituted under the Dairy Industry Marketing Act 1979 of the State of New South Wales and has its principal place of business in Sydney.

It is responsible for regulating the supply, storage and distribution of milk; the production, quality and storage of milk, dairy products and margarine; and the fixing of prices for milk and related dairy products in New South Wales.

In 1978 the first applicant established a marketing division known as the Dairy Promotion Council, to which I shail refer as the Promotion Council. The Function of the Promotion Council is to promote milk and related dairy products so as to increase the consumption as what is described in the evidence as white milk, treated milk, and other dairy products. The first major promotion initiated by the Promotion Council concerned a new range of flavoured milk sold under the trade mark "Moove".

*Moove" flavoured milk was first sold in New South Wales in January 1979 and was launched with a very heavy advertising campaign. "Moove" flavoured milk has,since its introduction into the market, been marketed by various regional dairy co-operatives pursuant to franchise agreements granted by the first applicant. There are now some 25 milk producers who have been franchised to produce and market "Moove" and these franchisees are situated in

New South Wales and Western Australia. Approximately $2,700,000

has been spent by the first applicant and its franchisees in advertising and otherwise promoting "Moove" flavoured milk.

In the middle of 1979 the Promotion Council decided to examine the possibilities of a new milk drink, having regard to the consumer trend towards natural foods. In due course the drink which became "Good One Malt & Honey"was developed and subsequently the drink "Good One Carob"milk drink was developed, the ingredients of which are substantially the same as the malt and honey variety except that it provides a chocolate flavour as an alternative.

In or about April 1980 the Promotion Council commissioned Schofield Sherbon Baker Pty. Limited, the third applicant, who are advertising agents of Sydney, to develop and launch an advertising campaign for a proposed new health milk drink. The campaign involved the development of advertising material, packaging layout, lego and marketing strategy. What is called the"Good One" logo was First drawn up by a Mr. Leong, an art director of the third applicant in Australia, in about March or April 1980 pursuant to instructions to his company issued by the first applicant. Mr. Leong subsequently sent the drawing of this logo to a Mr. Robert Blatchley, a freelance graphic artist, for final production drawings to be made.

Those drawings were made and returned to Mr. Leong in about April 1980 and they were then supplied to and used by the first applicant in the production of advertising and promotional material and packaging of the "Good One Malt & Honey"and "Good One Carob"milk drinks.

"Good One" milk drinks have been produced, distributed and

sold by franchisees of the first applicant pursuant to franchise agreements issued by it in circumstances similar to those relating to the marketing of "Moove" flavoured milk.

The first applicant has appointed some 23 co-operative dairies and other companies as its franchisees in New South Wales, Queensland, Western Australia, and South Australia. The first applicant has been negotiating with parties in Victoria and the Northern Territory for thelr appointment as franchisees in those territories. "Good One" milk drink products have been sold in 300 millilitre containers since their introduction on to the market. For about a month one of the first applicant's franchisees has been marketing in Queensland the two milk drink products in 600 millilitre packs.

Applications to register "Good One" and the "Good One" label have been filed on behalf of the First applicant pursuant to the Trade Marks Act 1955 (Cth.)}. These applications are pending.

"Good One" was launched on 1 February 1981; and that launch and the subsequent success of the product attracted considerable comment from the industry. Articles relating to the

"Good One" milk products appeared in the following publications:-

"B. & T. Advertising and Marketing Weekly" - 5 February "Food Week" - 27 January 1981

Each of these publications has a circulation which is Australia-

The first applicant has expended about $750,000 in promoting "Good One" in New South Wales, Queensland and Western Australia. The promotion has taken the form of heavy television and radio advertising; point of sale material including shelf stickers and window stickers of various sizes; promotion functions and trade presentations, and the use of what are described in the evidence as "Good One girls" to introduce the product to the retail market by way of promotion and sampling. In addition, franchised dairies outside New South Wales usually conduct their own local advertising campaigns.

"Good One" milk drinks are widely distributed throughout New South Wales, Queensland, Western Australia, and, since early January this year, in Adelaide, South Australia. The "Good One" milk drinks are also sold at the cafeteria near the departure lounges at the TAA terminal at Sydney airport. At current rates, Australian retail sales of "Good One Malt & Honey"are in excess of $5,500,00.00 per annum.

Milk distribution in South Australia is shared between two companies, the second applicant and the respondent, which trades as Farmers' Union.

In August 1981 negotiations commenced between the first and second applicants for the granting of a franchise by the first applicant to the second applicant to produce and market "Good One" milk drinks in South Australia. They entered into a franchise agreement which was executed by the second applicant on 24 November 1981.

In early December 1981 the second applicant retained a

Firm of advertising agents of Adelaide to act on its behalf in

connection with the launch and promotion of "Good One", and the launch date for "Good One" was set for 1 February 1982.

To promote the launch of the "Good One" products, the second applicant proposed to hold a trade function on 12 January 1982; and on 29 December 1981 a salesman employed by the second applicant hand-delivered invitations to this function. They were issued to employees of the second applicant, representatives of the second applicant's advertising agency, of the Promotion Council, of the South Australian Milk Vendors' Association, of the South Australian Milk Board, of the Dairymens' Association, of the Australian Dairy Corporation, and to various retail stores and a large number of milk vendors.

Evidence has been given by a Mr. Kahl, the marketing manager of the second applicant, that he first became aware of "Malt 'N' Honey", the product of the respondent, on 31 December 1981. He said he believed that on or about 4 January 1982 samples of "Malt 'N' IIoney" were delivered to the respondent's vendors in Adelaide; that on or about 5 January 1982 supplies of "Malt 'N' Honey" were given to the respondent's vendors to be supplied to the public; and that on 6 January 1982 the second applicant launched "Malt & Honey Good One". He said that in view of the launch of "Malt 'N' Honey" the second applicant brought forward the launch date of "Good One" in South Australia as he considered it imperative the "Good One" be launched and promoted as soon as possible.

A television advertisement for "Good One" appeared on

each of Adelaide's three commercial television channels on the

evening of 6 January 1982. No further television advertisements

appeared until Tuesday 12 January. Television advertising of "Good One" has since continued.

Since that time quantities of "Good One Malt & Honey" and "Good One Carob"have been distributed by the second applicant's vendors to members of the public in Adelaide and surrounding areas.

I should say that there is some question on the evidence as to whether the correct descriptions of the products of the applicants are "Malt & Honey Good One" and "Carob Good One", or "Good One Malt & Honey" and "Good One Carob". I do not think that anything turns on this for the purposes of this application, but the view I have formed on the evidence is that the better description is "Good One Malt & Honey" and "Good One Carob".

In the meantime, the respondent was preparing to launch 1ts product, "Malt 'N' Honey". The respondent was incorporated in South Australia in 1888 and has marketed milk and milk products in South Australia for at least 50 years. It has manufactured and marketed flavoured milk products in South Australia for at least ten years, and the volume of sales of flavoured milk by it in the year ended 30 June 1981 was about 5.5 million litres. It is anticipated that in the year ended 30 June 1982 the volume of sales will be at least 6 million litres. The sales of flavoured milk of the respondent in the year ended 30 June 1981 were about $3 million, and the retail value of those sales would have been about 40 per cent greater, that is, $4.2 million.

The Flavoured milk product range of the respondent present comprises three general product lines -

range has been marketed by the respondent for about

This range is not designated by any particular title

that it is the respondent's intention to market this

ingredients of the products may properly be described

as natural. All of the ingredients of "Malt 'N' Honey"

"Malt 'N' Honey" is marketed in 300 millilitre and 600 millilitre packs. The product "Malt 'N' Honey" was launched to major buyers on 30 December 1981, distributed to milk vendors probably on 4 January 1982, and delivered to shops and households for retail sale probably on 5 January 1982.

Just as there is some question on the evidence as to the correct name to be given to the relevant products of the applicants, so there is some question as to the correct name to be given to the relevant products of the respondent. Evidence has been given on behalf of the respondent that the words "Farmers" Union" are really part of the brand name of the products and should precede the reference to each particular product. I do not think anything turns on this for the purposes of the present application, but I think the correct description of the products is as I have

described, that is, without referring to the words "Farmers' Union";

although it is true that these products when distributed are accompanied by the words "Farmers' Union" usually in prominent places and it is, of course, the trading name of the respondent.

I shall in some detail set out evidence advanced on behalf of the respondent Mr. Kay, who is the marketing manager of the respondent, as to how the product "Malt 'N' Honey" came to be conceived and in due course marketed. I do this because of certain submissions on behalf of the applicants that the respondent has, in effect, engaged in a deliberate campaign of trade piracy.

There are portions of the evidence which I shall not refer to. By not referring to them, I have not overlooked them; it is simply that I have seen fit to set out those features of the relevant evidence which appear to me to be most material.

Mr. Kay gave the following evidence. The respondent first conceived a need for a new product at a "product meeting" of the respondent between himself, Mr. Coventry and Mr. Osborne, other employees of the respondent, on 4 March 1981 when it was determined that a banana-flavoured drink would be deleted from the respondent's "Shake" range. Various alternative flavours were considered by the meeting. He says that he favoured the use of a honey-flavoured product, if possible. The respondent is the major packer of honey in South Australia and for this reason Mr. Kay was keen to use a honey-flavoured product.

He was at that time aware of the "Malt & Honey Good One" product of the applicant and he believed a similar product could be successfully developed and marketed in South Australia. At that time he said that neither he nor, to his knowledge, anyone else had any idea that the respondent's product "Good One" would be

Following the decision to investigate the possibility of a malt and honey product as a replacement for the banana flavour, Mr. Kay approached the then advertising agents of the respondent and, in minutes of a conference with them on 13 March 1981, it is recorded that "the agency is to submit recommendations on a pack design and product name for a milk drink with malt and honey".

Further, in minutes of a conference with that firm on 7 April 1981, it is recorded that the agency tabled a mock-up of a sultana brunch pack and nature shake, that this was to be held for consideration and that the agency was to supply a list of alternative names.

In minutes of a meeting with that firm of 22 April 1981, it is recorded that the agency tabled a list of possible names for a new flavoured miik drink and that these were to be held for consideration,

At a "product meeting" of the respondent between Mr. Kay, Mr. Coventry and Mr. Osborne on 29 April 1981, the introduction of an additional malt and honey flavoured drink was discussed and alternative names were considered,

At a marketing meeting of the respondent held between Mr. Kay, Mr. Coventry, Mr. Osborne and a Mr. Vogt on 1 June 1981, possible new flavoured milk drinks were discussed and it was resolved that the name "Malt 'N' Honey" would be discussed by Mr. Kay and Mr. Osborne at a meeting with the respondent's advertising agents on 2 June 1981.

During 198] Mr. Vogt was the product manager of the respondent and Mr. Kay has sworn that, in connection with the malt

and honey milk drink, it was Mr. Vogt's responsibility to develop

and test a formula for it and that his responsibilities did not

include anything to do with the name, packaging or advertising of the drink. He did not attend any of the meetings with the respondent's advertising agents at which the name, packaging and advertising of the drink were discussed.

At a marketing meeting of the respondent on 15 June 1981, held between Mr. Kay, Mr. Coventry, Mr. Osborne and Mr. Vogt, it was resolved that "flavour testing of new flavours, including "Jaffa", "Pineapple", "Malt 'N' Honey" and "Caramel" flavoured milks, would be finalised by 3 July 1981".

Following this resolution, products were developed and tastings were in fact held at certain schools in South Australia on 25 August 1981 and 26 August 1981.

Following the receipt of results of the tasting of the "Malt 'N' Honey" flavoured product, instructions were given to the respondent's present advertising agents on 3 September 1981 to prepare a pack design for a "Malt 'N' Honey" label.

At a "product meeting" of the respondent held between Mr. Kay, Mr. Coventry, Mr. McPharlin and Mr. Vogt on 7 September 1981, it was resolved that vendors and van salesmen would be informed of the 300 millilitre banana "Shake" product and that Mr. Vogt was to continue research into a new flavour as it was envisaged that the banana flavour would probably be replaced by a malt and honey flavoured product.

Consideration was given by Mr. Kay and other employees of the respondent, during this period and afterwards, to various names which may have been adopted for the proposed malt and honey flavoured products. These names were discussed with and

recommendations made by the respondent's advertising agents. I need

not set out all the names that were considered by the respondent

except to say that one of them was "Malt 'N' Honey".

It was determined at meetings between Mr. Kay and other officers of the respondent that emphasis in the name and presentation of the proposed new product should be upon its natural ingredients and accordingly names which reflected this concept were selected for testing.

_ Market research, including tasting and examination of preference for name, were carried out at high schools in South Australia and were the subject of reports of Mr. Vogt of 25 and 30 September 1981 and 5 October 1981.

The minutes of a "product meeting" of the respondent held on 5 October 1981 and attended by Mr. Kay, Mr. Coventry, Mr. McPharlin, Mr. Osborne and Mr. Vogt, record that market research

At a conference with the respondent's advertising agents on 13 October 1981 the agents were instructed to design packaging for "Malt 'N' Honey" and "Egg-Nog" products and that they were to be similar in design and colour.

On 10 November 1981, at a marketing meeting of the respondents between Mr. Kay, Mr. McPharlin, Mr. Norton, Mr. Osborne and Mr. Vogt, the possibility of the sale of the "Good One" product of the first applicant in South Australia was considered and it was resolved that Mr. Kay approach the first respondent to ascertain the possibility of producing that product under licence, which would be in addition to the proposed "Malt 'N' Honey" product of the respondent itself.

It was further resolved that Mr. Osborne and Mr. Vogt proceed with "pack and product" development for the respondent's "Malt "N' Honey" product.

Following that meeting, Mr. Kay spoke to Mr. Tate of the first applicant on 11 November 1981. During November 1981 the respondent continued to develop a recipe for a "Malt 'N' Honey" product.

On 17 November 1981, at a "product meeting" of the respondent attended by Mr. Kay, Mr. McPharlin, Mr. Osborne and Mr. Vogt, it was resolved that Mr. Osborne was to proceed with a final artwork for the product pack and Mr. Vogt was to proceed with the development of the final recipe of the product.

At a marketing meeting of the respondent held 24 November 1981 and attended by Mr. Kay, Mr. McPharlin, Mr.

Osborne, Mr. Vogt and Mr. Norton, the meeting was informed that information had been received that the second applicant was to launch the product "Good One". At that time the respondent

was proceeding to develop its own malt and honey product and it was, Mr. Kay says, intended that this product should be developed and released as soon as possible.

At a conference with the respondent's advertising agents on 26 November 1981, they were instructed to prepare four-colour mock-ups of various atlerantive names for the respondent's proposed malt and honey product. Subsequently a large number of designs was produced and exhibited by the agency to the respondent.

At a "product meeting" of the respondent on 1 December 1981 and attended by Mr. Kay, Mr. McPharlin, Mr. Osborne and Mr. Vogt, it was resolved that Mr. Osborne was to proceed with the development and final artwork for the product "Malt 'N'' Honey"

as a matter of paramount importance and was to organise a leaflet

for circulation to potential retailers of "Malt'N' Honey" and to arrange a "product launch" function for van salesmen and major

At a conference with the respondent's advertising agents on 1 December 1981, at which Mr. Kay was present with other gentlemen, four pack designs for the proposed "Malt 'N' Honey" product were presented. It was agreed at that meeting that the name of the product was to be "Malt 'N' Honey" and it was resolved that the "natural goodness of the product be reinforced by the television commercial",

Development of the recipe of the respondent's product "Malt '"N' Honey" was completed on 14 December 1981.

It is in these circumstances that the applicants seek interlocutory injunctions against the respondent.

I am satisfied that this Court has jurisdiction to hear and determine this matter in all its aspects. Indeed, the contrary was not suggested.

The principles governing applications for interlocutory injunctive relief are well established and I need not refer to them at any length. It is sufficient to say that the Court must first decide whether a prima facie case has been made out in the sense

referred to by the High Court in Beecham Group Limited v. Bristol

Laboratories Pty. Limited (1968) 118 C.L.R. 618; and then, if the

Court is so satisfied, to proceed to consider the balance of convenience. These two matters are not, of course, necessarily divorced from each other.

judgment are made solely for the purpose of determining this

interlocutory application; and any views which I express are necessarily based on the evidence adduced in this application. The evidence at the trial may not, of course, be the same. Section 52 and passing-off It is convenient to consider these two bases of the applicant's case together. The applicants submitted that the respondent intentionally adopted so much of the get-up and colour scheme of the pack in which "Good One Malt & Honey" is sold as the respondent thought it could use to advantage without "a stmight out misappropriation of the 'Good One' name". It was submitted that the respondent intentionally endeavoured to misapprop- riate to itself so much of the goodwill attaching to "Good One Malt & Honey" as would benefit the sales of its own product by suggesting a business or trade connection with "Good One Malt & Iloney". The applicant submitted that in these circumstances the Court would readily infer that the respondent, in fact, achieved its object. It was submitted that this principle, which applies in relation to passing-off, also applies to s. 52 of the Act. The applicants relied principally on the following evidence to support their submissions: (al The Minutes of a "product meeting" of the respondent held on 1 September 1981, item 1.3 of which states under the heading Flavoured Milk:

"M.V. To design a Malt n Honey to be like the 'Good One' type"

duces tecum by the respondent showing a mock-up of the respondent's product

which later became"Malt 'N' Honey", the mock-up being similar in various respects

to the ultimate get-up of the respondent's pack. Particular reliance was placed

upon art work bearing the words "Good One" in bold letters in a type of scroll. Other art work contained words such as "GOODNESS", "MIGHTY GOOD", and "GOOD MOVE" in the scroll;

The fact that the former advertising agents of the respondent produced four suggested

produced by the present advertising agents and referred to earlier;

The fact that the advertising agents, former and present of the respondent knew at all material times of the applicants' product "Good One Malt & Honey"; and

The fact that the respondent would have copied the taste of "Good One Malt & Honey" if it thought

The applicants submitted that a prima facie case was not

agents, were not called to give evidence; (c) that Mr. Kay's demeanour and explanations in the witness box under cross-examination were unsatisfactory and unconvincing. Conflicts of evidence between witnesses generally should not be resolved on the hearing of applications or inter- locutory injunctions, but this is not such a case. The applicants seek to establish the deliberate intent of the respondent to adopt the get-up of the applicants' product by pointing to documents produced by the respondent on subpoena duces tecum and to the evidence of the respondent's principal witness,Mr. Kay. I cannot decide the correctness of the applicants' submissions, even on a prima facie basis, without dealing with Mr. Kay's credit. Ilis demeanour and evidence in the witness box did not impress me as unsatisfactory or unconvincing. Indeed, he impressed me as a witness of truth. Further, his evidence is consistent with the probabilities and generally with the contemporaneous documents. As to the minutes of 1 September 1981, Mr. Kay said in evidence:- "The history of the minute of that marketing or product meeting that has been referred to goes back to 26 August when Mr. Vogt wrote to me, informing me that his formula that he had prepared for a malt and honey drink had not been satisfactorily accepted in a test market and he was looking for some guidance as to where he goes to next. We then discussed it at the marketing or product meeting - I am not sure of the term - that document in September - we discussed it and said we must make all endeavours to ensure that we have a satisfactory product that is acceptable to the consumer. In our marketing research we

often look at products marketed by other companies, in terms of flavours, to determine

taste or one that we can market on a superior basis.

quality control officer who is involved in formulations

as well...In this instance, his responsibilities, as

can be seen by all the minutes that have been placed

before the court, have been to develop a formula for a

I accept his evidence as truthful. As to the art work relied on by the applicants, little is known about it, but it was prepared by the advertising agents of the respondent as part of their brief. Plainly they went through a process of eliminating various names for the prospective product, including the name "Good One". This was not a name suggested to them by the respondent. If the name ultimately selected by the respondent had been "Good One" there may be some substance in the submission of the applicants, but this is not what happened. After considering a variety of names, the respondent finally selected the present one, "Malt 'N' Honey". The evidence of Mr. Kay as to how this arose is destructive of the applicants' submission and is consistent with the history of the relevant events and the contemporaneous documents.

The other matters relied on by the applicants, which I have referred to as (c), (d) and (e) do not support the conclusion contended for by them. I reject the submission of deliberate piracy by the respondent. In view of my findings, it is not necessary to consider whether it is relevant to have regard to deliberate intent

to mislead or deceive for the purposes of s. 52 of the Act.

I turn to the question relevant to passing-off; whether the conduct complained of is calculated to deceive or to cause confusion between the two relevant products of the parties. The case of the applicants is based essentially on the alleged similarity in the get-up, appearance and colour-scheme between the applicants' "Good One Malt & Honey" pack and the respondent's "Malt 'N' Honey" pack. The packs are in evidence and speak for themselves. It is sufficient if I say that the applicants' pack is basically light brown or gold in colour. On its front and back it bears in large white letters the words "Good One". Above them there is a form of circle, dark brown in colour, containing the words "Malt & Honey", and the words "Wholesome Natural Goodness" are present along a band which resembles a long wing collar. The words, "Nothing Artificial" are printed in white at the bottom. On one side the ingredients are specified and beside them the words "Good One" appear again, as they do on the remaining side.

The respondent's pack is predominantly white. Its front and back bear a circle, mid-brown in colour, with the words, "wholesome, Natural Goodness" and underneath them on a dark brown colour, being really the inner part of the circle, the words appear "Malt And Honey Flavoured Milk Drink". There is something best described as a scroll in the lower part of the circle containing in bold white print "Malt 'N'Honey." A representation of a jar marked "Honey" and a container marked "Malt" appear below the scroll and the words, "Nothing Artificial" are printed in brown below them. The ingredients are specified on one side of the

pack and they follow, to some extent, the order of the

specification of ingredients on the side of the applicants' pack; but this is of little, if any, importance, especially as the recipe for the respodent's "Malt 'N' Honey" milk drink as specified by Mr. Vogt in December 1981, follows that order.

In my opinion the packs of the applicants and of the respondent are not substantially the same or deceptively similar to each other. In fact, I think they are quite different. There is no real possibility of confusion between the two packs. The fact that both the applicants and the respondent stress that their respective products embody wholesome, natural goodness is not to the point. On the applicants' own case, thestrend in the market piace, among consumers, is towards natural foods. There is little in common between the design and get-up of the two packs. The applicants on their pack and in their advertisements, stress that the product of the applicants is "Good One". The respondent emphasizes its product as "Malt 'N' Honey". There is no likelihood or reasonable possibility of confusion between the two.

I need say little about the television advertisements of the parties. There are two advertisements of "Good One Malt & Honey" which have appeared on television and one advertisement of the respondent's "Malt 'N' Honey". The applicants' case rests essentially on the alleged similarity between the two packs which appear in the relevant advertisements. As I have found that there is no real similarity, that is the end of the matter. However, the applicants rely to some extent on other alleged similarities between the television advertisements of the parties. I need not describe

the advertisements. They were shown in Court on more than one

occasion and they speak for themselves. In my opinion, the

television advertisements of the applicants and those of the

respondent are substantially different. There is no real likelihood or possibility of confusion between them. It follows that the applicants have failed to establish a prima facie case of passing-off.

Before leaving the question of passing-off I should say, however, that the respondent submitted that the applicants must fail because the evidence does not establish a prima facie case that the first or second applicants acquired a business reputation in the relevant product in South Australia which is entitled to be protected. It was submitted that this reputation could only be acquired by some sort of user in South Australia, and that mere knowledge by the South Australian public of the name of the applicants' product or of the get-up of the package without any business activities of the first or second applicant in South Australia in relation to the product would not be sufficient.

There is some divergence of judicial opinion about this matter. It is referred to in the judgment of Gibbs J. in B. M. Auto Sales Pty. Limited & Anor. v. Budget Rent A Car System Pty. Limited (1976) 12 A.L.R. 363 at pp. 369 and 370. I do not propose to decide this question as it is both unnecessary and inappropriate to do so - unnecessary in view of my earlier finding and inappropriate because of the interlocutory nature of this application. For the same reasons I do not propose to decide whether a prima facie case has been made out for the purposes of s. 52 of the Act that there is "in the mind of the relevant public some established truth against

which the notion of misleading or deceptive conduct can be

measured" per Toohey J. in Dairy Vale Metro Co-Operative Limited v.

Brownes Dairy Limited (1981) 35 A.L.R. 494 at p. 501.

What I have said about the absence of any real possibility of confusion between the two products also serves to defeat the applicants' case based on s. 52 where the relevant question is whether the respondent's conduct is misleading or deceptive or is likely to'mislead or deceive. This question is not answered necessarily by applying the same tests as operate in the field of passing-off; but my findings on fact as to the absence of potentiality for confusion also lead to the conclusion that there is no prima facie case as to misleading or deceptive conduct or conduct which is likely to mislead or deceive.

I turn then to the applicants' case based on alleged unfair competition. Whether a cause of action based on unfair competition is part of the law of Australia is plainly an arguable

question: see Hexagon Pty. Limited v. Australian Broadcasting

Commission (1975) 7 A.L.R. 233, a decision of Needham J; and Cadbury-Schweppes Pty. Limited & Ors. v. Pub Squash Co. Pty. Ltd.

at first instance before Powell J., reported, in part, as a note

on page 864, to the report of the appeal to the Privy Council in (1980) 2 N.S.W.L.R. 851. Whatever be the answer to this interesting

question, it is not for me to decide in this interlocutory hearing.

It seems that an essential ingredient of unfair competition,

whether it be an expansion of passing-off or an independent tort is

"that there must be something underhand or sharp in the conduct of the

defendant": per Needham J. in Hexagon (supra) at p. 252,and the respondent should have made a false representation about its goods. For the reasons already given by me no prima facie case has been

I turn to the alleged infringement of copyright. The applicants submitted that copyright subsisted in the whole face of the "Good One" pack, it being an artistic work. The ownership of the copyright was said to be in one of the three applicants. The respondent submitted that there was no evidence, or at least no sufficient evidence, as to the ownership of any relevant copyright, the evidence being at best ambiguous and equally capable of supporting the conclusion that the owner of the copyright was someone other than one of the three applicants.

I do not find it necessary to determine this question because of the findings which I have already made which lead to the conclusion that no prima facie case has been established of any infringement by the respondent of any copyright, whoever may be the owner or owners of it. I£ it had been necessary to decide the question of ownership I would have allowed the proceedings to be adjourned to enable the applicants to join any other necessary party or parties.

It is not necessary to turn to the balance of convenience as no prima facie case has been made out. However, if it had been necessary to deal with that question, I would have found that the balance of convenience favoured the refusal of interlocutory injunctive relief.

Neither "Good One Malt & Honey" nor the respondent's "Malt 'N' Honey" was launched in South Australia until early

January this year. Indeed, the respondent's product appears to have

Although the price of an interlocutory injunction would be an undertaking as to damages, this would not enable adequate reparation to be made to the respondent if it should ultimately succeed at the trial. The evidence establishes that valuable shelf space in retail outlets would be lost to the respondent and probably never regained. Shelf space is vital to the sale of these products. If I had found that a prima facie case had been established I would have directed an early final hearing of the matter. Indeed I think this case ought to have an early final

hearing in any event. Accordingly I refuse to make an interlocutory

BETWEEN: DAIRY INDUSTRY MARKETING AUTHORITY, DAIRY VALE METRO CO-OPERATIVE LIMITED, SCHOFIELD SHERBON BAKER PTY. LIMITED

Page 7, last paragraph, line 1; insert the word "at" after the word "respondent".

Page 9, last paragraph, line 2; delete the word "applicant" and insert instead the word "applicants",

Page 11, last paragraph, line 5; insert the word "were" between the words "recommendations" and "made".

Page 13, fourth paragraph, line 3; delete the word "atlerantive" and insert instead the word "alternative".

Page 15, second paragraph, line 2 ; delete the word "applicant's" and insert the word "applicants'".

Page 15, second paragraph, line 11; delete the word "applicant" and Lnsért instead the word "applicants".

Page 16, last paragraph, line 1; delete the word "not".

Page 16, last paragraph, line 5; delete the word "respondent" and

a i AE ERP aa hl a 9 RCT ROE te LE A A A a RRO ts er

Trade Practices - s. 52; passing-off; unfair competition;

breach of copyright - applicants and respondent sell in South Australia packaged flavoured milk drinks.

s. 52 and passing-off - whether relevant packs and television advertisements thereof substantially the same or deceptively similar to each other.

unfair competition - whether there has been "something underhand or sharp" in the conduct of the respondent - whether the respondent has made a false representation about its goods.

~ copyright - whether the respondent has infringed any copyright.

DAIRY INDUSTRY MARKETING AUTHORITY, DAIRY VALE METRO CO-OPERATIVE

LIMITED, SCHOFIELD SHERBON BAKER PTY. LIMITED Applicants

SOUTHERN FARMERS CO-OPERATIVE LIMITED Respondent NO. G2 OF 1982 :

) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G2 OF 1982

BETWEEN: DAIRY INDUSTRY MARKETING AUTHORITY, DAIRY VALE METRO CO-OPERATIVE LIMITED, SCHOFIELD SHERBON BAKER PTY. LIMITED

Applicants AND: SOUTHERN FARMERS CO-OPERATIVE LIMITED Respondent REASONS FOR JUDGMENT LOCKHART J. 29 JANUARY 1982

Australians are well known as beer drinkers; but they also like milk. In the case of only one brand of flavoured miik known as ""Moove" its retail sales value in New South Wales alone is currently in excess of $3.2 million per annum.

I shall for convenience sometimes use the expression "the applicants" which may be appropriate on some occasions to embrace all three applicants, sometimes two of them and occasionally only one.

The applicants seek interlocutory injunctions restraining the respondent in substance from selling or advertising its

product as "Malt 'N' Honey". The applicants allege that the

respondent is contravening s. 52 of the Trade Practices Act, 1974

The first applicant is a body corporate constituted under the Dairy Industry Marketing Act 1979 of the State of New South Wales and has its principal place of business in Sydney.

In 1978 the first applicant established a marketing division known as the Dairy Promotion Council, to which I shall refer as the Promotion Council. The function of the Promotion Council is to promote milk and related dairy products so as to increase the consumption as what is described in the evidence as white milk, treated milk, and other dairy products. The first major promotion initiated by the Promotion Council concerned a new range of flavoured milk sold under the trade mark "Moove".

"Moove" flavoured milk was first sold in New South wales in January 1979 and was launched with a very heavy advertising campaign. "Moove"" flavoured milk has,since its introduction into the market, been marketed by various regional dairy co-operatives pursuant to franchise agreements granted by the first applicant. There are now some 25 milk producers who have been franchised ta produce and market "Moove" and these franchisees are situated in

New South Wales and Western Australia. Approximately $2,700,000

has been spent by the first applicant and its franchisees in advertising and otherwise promoting "Moove" flavoured milk.

In or about April 1980 the Promotion Council commissioned Schofield Sherbon Baker Pty. Limited, the third applicant, who are advertising agents of Sydney, to develop and launch an advertising campaign for a proposed new health milk drink. The campaign involved the development of advertising material, packaging layout, logo and marketing strategy. What is called the"Good One" logo was first drawn up by a Mr. Leong, an art director of the third applicant in Australia, in about March or April 1980 pursuant to instructions to his company issued by the first applicant. Mr. Leong subsequently sent the drawing of this logo to a Mr. Robert Blatchley, a freelance graphic artist, for final production drawings to be made.

"Good One" milk drinks have been produced, distributed and

sold by franchisees of the first applicant pursuant to franchise

agreements issued by it in circumstances similar to those relating to the marketing of "Moove" flavoured milk.

The first applicant has appointed some 23 co-operative dairies and other companies as its franchisees in New South Wales, Queensland, Western Australia, and South Australia. The first applicant has been negotiating with parties in Victoria and the Northern Territory for their appointment as franchisees in those territories. "Good One" milk drink products have been sold in 300 millilitre containers since their introduction on to the market. For about a month one of the first applicant's franchisees has been marketing in Queensland the two milk drink products in 600 millilitre packs.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (319 paragraphs)

Cited By (1)