Energizer Australia Pty Limited v Gillette Australia Pty Limited

3 Energizer supplies its range of battery and personal lighting products under the brand names "Energizer" and "Eveready", and under a variety of sub-brand names. The total range of battery types and descriptions marketed and sold in Australia by Energizer include the following, which are listed in the order of their respective power performances: Brand Sizes available General Consumer uses Relative power Energizer e2 Lithium AA, coin, photo High drain devices Highest power Energizer e2 Titanium AA, AAA, C, D, 9V High drain devices Higher power Energizer Advanced Formula Alkaline AA, AAA, C, D, 9V, 6V, miniatures All devices High power Eveready Gold Alkaline AA, AAA, C, D, 9V All devices Moderate to high power Eveready Super Heavy Duty/Heavy Duty/ General Purpose (carbon zinc) AA, AAA, C, D, 9V, 6V Moderate and low drain devices Low to Moderate power Energizer and Eveready Rechargeables AA, AAA, C, D, 9V Specialist uses Variable power Zinc air 4 common sizes Hearing aids Moderate power Silver oxide Many sizes Watches, calculators, toys Moderate power

4 It will be seen from the first column that some of the brands of Energizer's batteries contain alkaline, whilst others contain lithium, titanium, or carbon zinc. The Energizer Advanced Formula alkaline battery is said by Energizer to be a premium, high performing, single-use consumer battery. Energizer has recently launched a new range of Energizer batteries into the Australian market, namely the Energizer e2, a titanium enhanced, high performance battery. This is positioned above the standard Energizer Advanced formula alkaline product. The Energizer e2 battery also comes as a lithium AA size, which is said by Energizer to be the highest performing battery of any single use product available in Australia in so-called high drain devices. 5 Energizer has also recently launched into the Australian market an alkaline Eveready variant in all major sizes which, as also set out in the above table of Energizer battery products, is branded Eveready Gold. Energizer's research indicates that Energizer and Duracell alkaline batteries occupy the premium segment of the primary (non-rechargeable) battery market. They are said to be long lasting, multi-purpose and suitable for medium to high drain consumer devices. 6 Energizer sells in the Australian market a number of carbon zinc batteries under the "Eveready" brand for use in consumer devices which do not require the power and performance of either lithium, titanium or alkaline batteries, and which presently include: (a) Super Heavy Duty (coloured black); (b) Heavy duty (coloured red); and (c) General Purpose (coloured blue). These batteries have been supplied by Energizer in the Australian market for many years. 7 Since 1997, Gillette has distributed Duracell branded batteries throughout Australia to agents and/or wholesalers, which in turn have distributed the batteries to wholesale retailers, convenience stores, pharmacies, supermarkets and discount department stores. Those Gillette batteries contain a variety of alkaline, lithium, nickel metal hydride and silver oxide elements, but not carbon zinc. Until February 1999, only one range of alkaline batteries was sold under the Duracell brand in Australia, known as the standard Duracell or "Coppertop" battery. In February 1999, Duracell introduced a new premium range of alkaline batteries, sold under the "Duracell Ultra" brand name. 8 Detailed below are some of the more common sizes, packs and uses respectively of the Duracell alkaline batteries available in the Australian retail market: "AAA 2 and 4 TV remote controls, personal digital assistants, cameras, handheld electronic games, Walkman audio units AA 2, 4, 6, 10 and 16 Discman audio units, Walkman audio units, cameras, handheld electronic games, remote controls motorised toys C 2 and 4 Medium sized torches (ordinary and halogen), toys (ordinary and high performance), portable CD "boom boxed", portable cassette players. D 2 and 4 Medium sized torches (ordinary and halogen), toys (ordinary and high performance), portable CD "boom boxes", portable cassette players, transistor radios"

Each of the above Duracell batteries are cylindrical in shape, with one terminal at each end. The AA size batteries are said to account for over one half of the Duracell batteries sold in the Australian retail market.

Types, compositions and performance characteristics of batteries generally 9 What I have described or recorded in this segment of my reasons for judgment is based upon the expert testimony of Mr Axford, presently a director of APSN Technical Services Pty Limited, who had been employed as a quality assurance engineer by Energizer between 1977 and 1993, and has since been a quality assurance engineer in the employ of Energizer Co Inc of the United States. A battery is a small cell or device which generates power or produces electricity by converting a chemical reaction into electrical energy. Each battery cell contains all of the chemical and construction parts required to generate an electric current. A battery consists of the following basic parts: (a) Two electrodes consisting of different kinds of chemically active material, comprising respectively: (i) A cathode carrying a positive electrical charge which is usually a manganese - dioxide carbon mix; this is the electrode reduced by the electro-chemical reaction; (ii) An anode (usually zinc) which carries the negative electrical charge; this is the electrode that is oxidised during the electro-chemical reaction; (b) An electrolyte, which is the medium for movement of the ions within the cell, and which carries the ionic current within the battery; the electrolyte also assists to promote the chemical reactions that occur at the electrodes; (c) A separator which prevents the electrodes from mixing together when the battery is not in use; and (d) A current collector which conducts electricity to the outside circuit. 10 Batteries power electrical devices by the following means: (a) Electro-chemical reaction; this is activated when a battery is inserted into a device and the device is turned on, thus completing the circuit; (b) Interaction with electrical devices; this occurs when the electrolyte oxides the zinc in the anode; the cathode's manganese dioxide/carbon mix reacts with the oxidised zinc to produce an electric current; the collector conducts the electric current out of the battery to an external circuit, being the contact points on the electrical device. However as a battery is used, there occurs a gradual drop in the voltage of the battery and its performance, because of oxidisation of the zinc in the anode, which causes the manganese dioxide in the cathode to be reduced, thereby creating by-products from the interaction between the zinc and the electrolyte; these by-products gradually slow down the cell's performance and lowers its voltage; the cathode's manganese dioxide depletes simultaneously, and becomes progressively less active as a cathode, until the battery is "dead". 11 Batteries generally are of two kinds; the first are the primary batteries, which stop functioning and are then disposed of; such batteries are generally "dry" cells, that is to say, they contain a jelly or paste-like electrolyte, being the chemical substance that conducts the electric current in the battery, which does not spill; the second are secondary or storage batteries which may be recharged and used again, after they have depleted their electrical energy. It is the primary "dry cell" batteries for household use which are generally the subject of this litigation. 12 More specifically, the present litigation focuses upon carbon zinc batteries and alkaline batteries. Carbon zinc batteries were first manufactured and sold in 1896 by the National Carbon Company, which later became known as Energizer USA, the United States parent of the present Applicant in the proceedings. In 1959, Energizer USA developed an alkaline battery capable of commercial exploitation, which it sold under the brand name "Energizer". The alkaline battery was revolutionary in battery technology, because it provided a significant increase in servicing capacity over the carbon zinc batteries then available, due to its higher content of active ingredients and greater chemical efficiency. 13 In the year 1942 there was introduced the lithium technology, lithium having a high energy density and being extremely reactive. Energizer Inc introduced under its Energizer brand the world's first AA lithium battery. As indicated in the table in [3] above, it is an AA battery with very high energy content and high rate discharge capacity, but is produced at a high cost of manufacture. In the year 2000, titanium technology was introduced by Energizer Inc in relation to the alkaline battery (see again [3] above), whereby titanium is combined with an additive in the battery cell to enhance conductivity, and thus to generate more power. In that year, Energizer released its "Energizer E2" batteries, which are alkaline and feature an enhanced cell design, using titanium with what is said to be substantially improved chemical efficiency and electrical conductivity. 14 Carbon zinc batteries are general purpose batteries that are suitable for use in low drain household devices such as toys or flashlights. Alkaline batteries, on the other hand, are suited for use particularly in household high drain or "high tech" devices such as portable computers, portable CD players, and so-called MP3 players or electronic games, and are generally more economical for such devices than carbon zinc batteries. Alkaline batteries have a different chemistry to carbon zinc batteries, in that the electrolyte medium is alkaline rather than acidic, and they have a very different construction. More specifically, due to the circumstances, first, that alkaline batteries oxidise more readily than carbon zinc batteries, secondly, that they are superior conductors of electricity inside batteries, and thirdly, that they do not participate in electro-chemical reaction, alkaline batteries enjoy the feature of the build up of concentrated reaction products which tend to reduce battery voltage, and are able to deliver sustained high currents for longer periods of time. Moreover alkaline batteries are more stable and perform better under low temperatures than carbon zinc batteries. 15 In the result, alkaline batteries last longer than carbon zinc batteries and are more expensive to manufacture, and as a result of their higher discharge rate, they are especially suited for use in high drain devices such as those already referred to in [14] above, such as video recorders, electronic games and portable CD players. For those reasons, alkaline batteries last longer than carbon zinc batteries, and are more expensive to manufacture. 16 Notwithstanding the advantages of alkaline batteries which I have outlined, and the fact that carbon zinc and alkaline batteries are used interchangeably, and in the same devices, and alkaline batteries store more energy than carbon zinc batteries of equivalent size, carbon zinc batteries comprise just under 50 per cent of the Australian battery market, calculated by volume of cells sold. The major brands of carbon zinc batteries available to consumers in the Australian market comprise Energizer's "Eveready" brands. It appears that Duracell does not, or at least no longer, markets in Australia a carbon zinc battery. According to data provided by A C Neilsen, market research consultants, for the 12 month period ended 30 September 2001, Eveready carbon zinc batteries accounted for 68.7 per cent, by volume of cells sold, or 78.8 per cent, by dollar value, of the total carbon zinc market. As appears from the Table set out in [3] above, Eveready carbon zinc batteries are marketed under the three product descriptions "General Purpose", "Heavy Duty" and "Super Heavy Duty", the latter being said to be the highest selling carbon zinc battery in the Australian market.

The circumstances giving rise to the present proceedings, and the structure and course of such proceedings 17 On or from about 11 November 2001, Gillette caused to be broadcast to members of the public by free to air television in Australia a commercial promotion, which included the text, sound and graphics ("the first broadcast") reproduced below: "Schedule A Sentences Transcript of Voiceover and Text 1 Which lasts longer? 2 Duracell alkaline or Eveready Super Heavy Duty batteries? 3 While Duracell keeps on running the Super Heavy Duty battery just can't keep up 4 Uh oh, no matter what they try, it won't help 5 With up to three times more power TEXT ON SCREEN : IN AA, AAA, C & D SIZES ONLY 6 Duracell always wins TEXT ON SCREEN : DURACELL LASTS UP TO 3 TIMES LONGER TEXT ON SCREEN : IN AA, AAA, C & D SIZES ONLY

" The graphics depicted four "bunny" rabbits engaged in what may be described as a running race undertaken over an obstacle course, the winning rabbit symbolising a Duracell alkaline battery, and being portrayed in the same pink colour and appearance featured frequently in previous television and other advertising promotions of Duracell batteries undertaken at least since 1981, and the three losing rabbits each purporting to symbolise other batteries, albeit that each competes against the Duracell rabbit for only one-third of the race distance, and even then uncompetitively in relation to the Duracell rabbit. The Duracell rabbit's racing performance was thus depicted as far outstripping that of the aggregate racing performances of the other three rabbits, in that each of the latter became successively exhausted after uncompetitively covering only one-third of the entire race distance, and yet even their aggregate racing performance fell well short of the single Duracell rabbit's winning performance over the total distance of the race. 18 On and from a date unknown, but believed to be some time after 11 November 2001, Gillette caused to be further broadcast to members of the public by free to air television in Australia a marketing advertisement which included the text, sound and graphics ("the second broadcast") reproduced below:

"Schedule B SENTENCES TRANSCRIPT OF VOICEOVER AND TEXT 1 Are you annoyed by constantly having to change flat batteries? 2 Today Brand Power looks at how you can avoid this with Duracell TEXT ON SCREEN : DURACELL BATTERIES 3 Longer lasting alkaline batteries TEXT ON SCREEN : ALKALINE BATTERY like Duracell are specially formulated TEXT ON SCREEN : SPECIALLY FORMULATED To last longer than super heavy duty batteries 4 In fact, four AA Duracell alkaline batteries are comparable to up to twelve of these AA super heavy duty batteries 5 Ensure that you get value for money TEXT ON SCREEN : BETTER VALUE FOR MONEY 6 Look for the Duracell Bunny next time you're shopping 7 Brand Power, helping you buy better.

" The graphics depicted, though this time in isolation, the Duracell bunny rabbit in its usual pink colours. 19 Energizer commenced the present proceedings for declaratory and injunctive relief and for damages by statement of claim filed on 22 November 2001. The hearing which has to date taken place has been confined in scope to injunctive relief. The introductory provisions of the statement of claim described Energizer as a supplier of a range of battery products in Australia, including its carbon zinc batteries branded "Eveready Super Heavy Duty", and its alkaline batteries branded "Energizer Advanced Formula" and "Eveready Gold", and Gillette as the supplier of alkaline battery products in Australia under the brand name "Duracell". 20 By the statement of claim (as subsequently amended), Energizer pleaded that Gillette represented falsely and misleadingly, by means of the first advertisement, which has been otherwise described as the "Race Bunny" advertisement, and in addition, by means of the second advertisement, which has been otherwise described as the "Brand Power" advertisement, as follows: "(a) That Duracell alkaline batteries last 3 times longer, or alternatively up to 3 times longer, than other consumer batteries, including Energizer Advanced Formula alkaline batteries. (b) That Duracell alkaline batteries last 3 times longer, or up to 3 times longer, than all Eveready batteries in all the battery sizes referred to in the Advertisement, including the Eveready Gold alkaline battery. (c) That Duracell alkaline batteries last 3 times longer, or up to 3 times longer, than all Eveready Super Heavy Duty batteries in all the battery sizes referred to in the Advertisement. PARTICULARS (i) Energizer relies on the text, sound and graphics of the Advertisement." In support of such allegations of false and misleading representations made by the first advertisement, and in addition by the second advertisement, Energizer furnished the following particulars in relation to both: "(i) Duracell batteries are roughly on parity with Energizer Advanced Formula alkaline batteries. (ii) Duracell batteries are roughly on parity with Eveready Gold alkaline batteries. (iii) Testing according to the appropriate standards does not support the representations made." 21 Further and in the alternative, Energizer has pleaded the following particulars as to the false and misleading nature of the representations made by each of the first and of the second advertisements: "(i) the Eveready Super Heavy Duty battery is less expensive than the Duracell alkaline; (ii) the Eveready Super Heavy Duty battery is not the most powerful battery in the applicant's range of batteries but is the fifth most powerful battery in the applicant's range; (iii) the applicant offers for sale two alkaline batteries which are comparable in performance to that of the Duracell alkaline, namely the Eveready Gold and the Energizer Advanced Formula Alkaline; and (iv) the comparison in the [advertisements] is not of like commodities." 22 Energizer has further pleaded the following particulars as to the false and misleading nature of the representations made by each of the first and second advertisements, namely that there is no disclosure in either of the advertisements of any of the four matters the subject of the particulars in [21] above. 23 The statement of claim asserted that Gillette's broadcasts of each of the two advertisements constituted conduct by way of engagement in trade or commerce which was misleading and deceptive, or likely to be so, in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act"), and also in contravention of ss 53(a) and (c) of the Act. It has also asserted that contrary to s 51A of the Act, Gillette did not have reasonable grounds for making the representations complained of at the time they were made, for the reasons set out in [21] above. 24 The proceedings first came on for hearing before Whitlam J on an interlocutory basis on 23 November 2001, when his Honour granted an interlocutory injunction until 28 November 2001, having the effect of restraining the first advertisement, to the extent that the same contained a statement to the effect that "Duracell lasts up to 3 times longer". However his Honour declined to grant interlocutory relief in respect of the second advertisement. I commenced the hearing of the proceedings, in so far as permanent injunctive relief was concerned, on 28 November 2001, and have continued in force the interlocutory injunctive relating to the first advertisement until further order. Although Energizer has maintained its claims for relief in relation to the second advertisement, its case has been to date conducted mainly in relation to the first advertisement. Energizer would seek however to maintain on foot the causes of action pleaded in relation to both advertisements. 25 During the course of the interlocutory proceedings conducted before me for injunctive relief, Gillette submitted three proposals to modify the audio text and the visual (or screen) text of the first advertisement set out in [17] above, without admission of any liability concerning the original content of the first advertisement. Such proposals were made progressively during the course of the hearings. Set out below is the first proposal for change prepared by Gillette, the heading 'SUPER" referring to screened words which would continue to be superimposed in white coloured cinematographic print in the lower section of the original advertisement, but with the addition of the words which are now underlined. The heading 'AUDIO" referred to spoken or "voiceover" words which related to the scenes of the first advertisement being screened, which were to remain unaltered in the first proposal.

"Transcript of Race Bunny commercial showing proposed supertext modification to the Original Advertisement AUDIO SUPER Which lasts longer? Duracell Alkaline or Eveready Super Heavy Duty batteries? While Duracell keeps on running, the Super Heavy Duty batteries just can't keep up. Uh Oh, no matter what they try it won't help. With up to 3 times more power In AA, AAA, C & D sizes only. Duracell always wins Duracell lasts up to 3 times longer than Eveready Super Heavy Duty in AA, AAA, C & D sizes only." 26 The next alternative modification which was submitted by Gillette, again without admission of liability, was as follows, the underlined words and deleted words signifying the proposed changes to the spoken and screened words respectively: "Transcript of Race Bunny commercial showing changes from Original Advertisement to Modified Advertisement AUDIO SUPER Which lasts longer? Duracell Alkaline or Eveready Super Heavy Duty batteries? While Duracell alkaline keeps on Running the Eveready Super Heavy Duty batteries just can't keep up. Uh Oh, no matter what they try it won't help. With up to 3 times more power In AA, AAA, C & D sizes only. Duracell always wins beats Eveready Super Heavy Duty. Duracell lasts up to 3 times longer than Eveready Super Heavy Duty In AA, AAA, D & D sizes only." 27 The third modification proposal submitted by Gillette, once again without admission of liability, was produced in the following form, previously suggested changes being maintained and the only further modification being the insertion of the superimposed white coloured cinematographic screened words as shaded, namely "Eveready Super Heavy Duty is a cheaper non-alkaline battery", at the commencement: "Transcript of Race Bunny commercial showing changes from Original Advertisement to Latest Advertisement AUDIO SUPER Which lasts longer? Duracell Eveready Super Heavy Duty is a cheaper non-alkaline battery While Duracell alkaline keeps on Running, the Eveready Super Heavy Duty batteries just can't keep up. Uh Oh, no matter what they try it won't help. With up to 3 times more power Duracell always wins beats In AA, AAA, C & D sizes only. Eveready Super Heavy Duty Duracell lasts up to 3 times longer than Eveready Super Heavy Duty in AA, AAA, C & D sizes only." 28 No alterations were proposed to the second advertisement set out in [18] above. The alterations proposed to the first advertisement would not require any alteration to be made to the original cinematography of the first advertisement.

Additional evidence tendered in the proceedings on behalf of Engerizer 29 In addition to what has been already recorded in [9-16] above, further affidavit evidence was tendered on behalf of Energizer, which I will summarise below to the extent which seems to me to be appropriate. All evidence in the proceedings was provided by affidavit, and there was no cross-examination. Some of the evidence was tendered on a confidential basis, but I do not think that any of the confidential material needs to be extracted or referred to in these reasons for judgment. 30 It has been the practice of Energizer to regularly commission both internal and external testing of inter alia the performance of Energizer's alkaline and carbon zinc batteries, and also the battery products of competing producers including Duracell. Such testing has been undertaken in accordance with standards set by the International Electrochemical Commission, the appointees to which include representatives of both Energizer and Duracell. Upon the basis of results of tests conducted at Energizer's various manufacturing plants, being results the subject of confidential exhibit material tendered by Energizer, and being tests said by Energizer to have accorded with the standards set by the Commission, Energizer's Marketing Manager Mr Carter has advanced the following theses: (a) Duracell alkaline batteries do not last three times longer than other consumer batteries, including the Energizer Advanced Formula alkaline batteries; (b) Duracell alkaline batteries do not last up to three times longer than all Eveready batteries, including Eveready Gold alkaline batteries; and (c) Duracell alkaline batteries do not last up to three times longer than all Eveready batteries in all the battery sizes in the first advertisement. 31 Energizer tendered certain market survey results undertaken by Research International Australia Pty Ltd (whereof Mr Carter has been an employee for about twenty years and a director for about 10 years) after the first and second advertisement had been the subject of television broadcasts. The purpose of such evidence was to ascertain the extent of television audience recall, mainly of the first advertisement, and to draw conclusions therefrom, and was the subject of objection made on behalf of Gillette, though not upon any basis as to Mr Carter's expertise. The following findings were made by Mr Carter in relation to the first advertisement (or so-called "Bunny Race" advertisement): (i) there was a relatively high level of recall by interviewees concerning the advertisement, and of their understanding that the same promoted the Duracell brand of battery and implied some form of comparison; such level was of the order of about one-half or thereabouts; (ii) there was a lower level of recall of those interviewees, in the order of about one-quarter or thereabouts, as to the message of the advertisement being to the effect that Duracell batteries lasted longer than any other brand or brands of batteries; there was a yet lower percentage of those interviewees who expressed the belief that the message was to the effect that Duracell batteries lasted three times longer than other brands, and a yet smaller percentage of those interviewees who expressed the belief that the message was to the effect that the Duracell battery was more powerful than other brands of batteries; (iii) marginally below one-tenth of the interviewees recalled reference in the advertisement to the "Super Heavy Duty Battery", or recalled the same as a black coloured battery; (iv) a relatively high proportion of those interviewees who recalled a comparative function of the advertisement identified the comparator battery as either an Energizer or Eveready battery, but only one-third of the interviewees possessing such extent of recall were able to identify the specific type of Eveready battery; (v) specifically in relation to the "3 times longer" or "3 times more power" claim, the greater proportion of interviewees were unable to identify the brand of the comparator battery, and the lesser, albeit still numerically significant, proportion recalled the comparator battery as the Energizer brand, and a yet still lower proportion believed the comparator to be the Eveready Super Heavy Duty battery; (vi) the largest group of interviewees believed that the statement "Duracell always wins" was a comparison made with all sizes of batteries, and was not limited, for example, to "AA, AAA, C or D sizes only"; (vii) almost one-half of the interviewees recalled that the advertisement referred to alkaline batteries, but most of the remainder were unable to recall the type of battery referred to in the advertisement; a small number thought that the batteries referred to were lithium or titanium batteries, and yet a smaller number again thought that what was referred to were carbon zinc batteries; and (viii) the majority of interviewees identified the Duracell battery as an alkaline battery, and a lower number knew Energizer to be an alkaline battery; there was a much lower level of knowledge of non-Duracell brand batteries, including Eveready brand batteries, and a very low level of awareness of Eveready Red or Black carbon zinc batteries. 32 Based upon the foregoing market research results, Mr Carter expressed the following opinions, to which objection was further made on behalf of Gillette: "Based on my experience in marketing and market research and the results of the Survey, I have concluded that a significant number of consumers who watch the Bunny Race Advertisement will form the impression that the comparison being made between batteries in the advertisement is between Duracell and Engerizer batteries, or other brands of batteries, including all types of Eveready batteries, and few will understand the advertisement as involving a comparison with only Eveready Super Heavy Duty batteries. In my view, the conclusions from this survey would not be likely to change significantly even if a larger sample size was used. I have taken into account the appropriate sample error in reaching my conclusions in this affidavit. Nor in my view, based on my knowledge of and experience of other surveys conducted around Australia, would the conclusions vary significantly if the survey was extended beyond Sydney and Melbourne to other areas in Australia." I would overrule the objections made on behalf of Gillette to the evidence of Mr Carter, by reason of the nature and extent of his marketing expertise and experience to which I have referred. In my opinion, the same was in principle properly collected and presented within the principles reviewed by a Full Court in Arnotts v Trade Practices Commission (1990) 24 FCR 313 at 359-361. Of course, the weight which I accord to Mr Carter's testimony is another matter. 33 I have already set out in [9-15] above material relating to the functions and compositions of batteries and battery brands based mainly on the expert testimony of Mr Axford. He provided further testimony, based upon a large volume of confidential research and technical material, concerning the means by which batteries power electrical devices, and also concerning battery types and the composition and characteristics of carbon zinc batteries and alkaline batteries, including differences of significance between carbon zinc and alkaline batteries. He also provided a body of additional detail concerning the scientific standards set by the International Electrochemical Commission, which I have already identified in [30] above, and his application of those standards to battery testing undertaken by Energizer at its United States testing facilities and at its manufacturing plants in Jakarta, Indonesia and Singapore, the results of which were included within the confidential research and technical material to which I have referred above. The test results which he reviewed were undertaken in relation to the following brands and types of batteries: (a) Eveready carbon zinc Super Heavy Duty batteries sourced in Singapore; (b) Eveready carbon zinc Super Heavy Duty batteries sourced in Indonesia; (c) Duracell alkaline batteries; (d) Eveready alkaline batteries; (e) Energizer alkaline batteries; and (f) Panasonic alkaline batteries. 34 The tests conducted demonstrated in Mr Axford's view the following conclusions, which I have extracted verbatim from his affidavit evidence: "(a) AA size Duracell alkaline batteries last less than 3 times longer than the Eveready SHD Singapore carbon zinc batteries in 2 out of the 4 of the devices simulated in the testing. (b) C size Duracell alkaline batteries always last less than 3 times longer than Eveready SHD Singapore C size carbon zinc batteries. (c) D size Duracell alkaline batteries always last less than 3 times longer than Eveready SHD Singapore D size carbon zinc batteries. (d) 9 volt size Duracell alkaline batteries always last less than 3 times longer than Eveready SHD Singapore 9 volt size carbon zinc batteries. (e) AAA size Duracell alkaline batteries last less than 3 times longer than the Eveready SHD Singapore AAA size batteries in 2 out of the 4 devices simulated in the testing. (f) AA size Duracell alkaline batteries last less than 3 times longer than the Eveready SHD Indonesia carbon zinc batteries in 2 out of the 4 of the devices simulated in the testing. (g) C size Duracell alkaline batteries always last less than 3 times longer than the Eveready SHD Indonesia C size carbon zinc batteries. (h) D size Duracell alkaline batteries always last less than 3 times longer than Eveready SHD Indonesia D size carbon zinc batteries. (i) AA size Duracell alkaline batteries always last less than 3 times longer than Eveready Gold AA size alkaline batteries in every test conducted. (j) C size Duracell alkaline batteries always last less than 3 times longer than Eveready Gold C size alkaline batteries in every test conducted. (k) D size Duracell alkaline batteries always last less than 3 times longer than Eveready Gold D size alkaline batteries in every test conducted. (l) 9 volt size Duracell alkaline batteries always last less than 3 times longer than Eveready Gold 9 volt size alkaline batteries in every test conducted. (m) AAA size Duracell alkaline batteries always last less than 3 times longer than Eveready Gold AAA size alkaline batteries in every test conducted. (n) AA size Duracell alkaline batteries always last less than 3 times longer than Energizer Alkaline AA size alkaline batteries in every test conducted. (o) C size Duracell alkaline batteries always last less than 3 times longer than Energizer Alkaline C size alkaline batteries in every test conducted. (p) D size Duracell alkaline batteries always last less than 3 times longer than Energizer Alkaline D size alkaline batteries in every test conducted. (q) 9 volt Duracell alkaline batteries always last less than 3 times longer than Energizer Alkaline 9 volt size alkaline batteries in every test conducted. (r) AAA size Duracell alkaline batteries always last less than 3 times longer than Energizer Alkaline AAA size alkaline batteries in every test conducted. (s) AA size Duracell alkaline batteries always last less than 3 times longer than Panasonic AA size alkaline batteries in every test conducted. (t) C size Duracell alkaline batteries always last less than 3 times longer than Panasonic C size alkaline batteries in every test conducted. (u) D size Duracell alkaline batteries always last less than 3 times longer than Panasonic D size alkaline batteries in every test conducted. (v) 9 volt size Duracell alkaline batteries always last less than 3 times longer than Panasonic 9 volt size alkaline batteries in every test conducted. (w) AAA size Duracell alkaline batteries always last less than 3 times longer than Panasonic AAA size alkaline batteries in every test conducted." 35 The authenticity and accuracy of the testing at Energizer Singapore and Energizer US were independently verified by affidavits of Energizer quality assurance and technology engineers resident in those countries. On the basis of the foregoing test results, Mr Axford expressed the conclusion that it could not be asserted accurately that Duracell alkaline batteries: (a) last three times longer than the Eveready SHD carbon zinc batteries in all of the battery sizes referred to in the Test Table; (b) last three times longer than the Eveready Gold alkaline batteries in all of the battery sizes referred to in the Test Table; (c) last three times longer than the Energizer alkaline batteries in all of the battery sizes referred to in the Test Table; and (d) last three times longer than the Panasonic alkaline batteries in all of the battery sizes referred to in the Test Table. 36 Whilst in order to endeavour to confine these reasons for judgment within manageable limits, I have not reproduced the bulk of the technical material provided by affidavit testimonies of Energizer's technical experts, I would seek to complete my review of the thrust thereof by incorporating below certain conclusions of Mr Hammel, who is a US Battery Technologist having nearly thirty years experience with the Gates Corporation until its battery manufacturing business was sold in 1994, and who has been subsequently engaged by Energizer US for approximately one year or thereabouts. His testimony summarised below constitutes in essence a technical comparison between carbon zinc and alkaline batteries. 37 Such conclusions of Mr Hammel were as follows: (i) the construction and composition of an alkaline battery allows it to provide more of its available energy than a carbon zinc battery is able to do; while the alkaline battery has an advantage over carbon zinc in terms of the amount of energy stored in a given size, the alkaline battery far excels over the carbon zinc during high rates of discharge and continuous service; in a given size of battery, the advantage of alkaline over carbon zinc could be in the order of 60% at low rates of intermittent discharge; however this advantage would extend to over twice that of carbon zinc at high continuous rates of discharge; the discharge rate of the battery depends on the load placed on the battery, which depends on the nature of the device in which the battery is being used; (ii) items such as portable CD players, digital cameras or electronic game machines have higher discharge rates than items such as radios or battery powered clocks; moreover alkaline batteries, being more suited for use in such devices, will always provide power for a significantly longer period than a carbon zinc battery. The difference in the expected performance of the two battery technologies in high discharge rate devices is generally reflected in the price charged for the product, and the price of carbon zinc batteries is lower than the price of alkaline batteries; (iii) alkaline batteries and carbon zinc batteries are not equivalent technologies, and a direct comparison of the performance of a carbon zinc battery and an alkaline battery is neither a fair nor a meaningful comparison. It is not a comparison of two batteries which have the same or equivalent technologies, or which sell for the same price, or which are targeted for use in the same devices; and (iv) an alkaline battery will always provide power for longer than a carbon zinc battery installed in a battery powered toy. No person familiar with battery technology would ever expect a carbon zinc battery to show an equal performance to an alkaline battery and it would therefore be unfair to compare them in a way which suggests that they are capable of equal performance; the fact that International Electrochemical Commission has differing minimum performance standards for the two technologies supported the view that this is the case.

Evidence tendered in the proceedings on behalf of Gillette 38 Expert market survey testimony was adduced by Gillette from Mr Briggs, the General Manager of Newspoll Market Research, in response to that adduced by Energizer from Mr Carter. I would summarise the thrust of his testimony as follows: (i) a telephone survey is an inappropriate way of measuring or evaluating consumer understanding of the messages or representations conveyed by the first and second advertisements; the respondents should have been shown the contentious advertisement and then asked questions; (ii) a survey made only 6 or 7 days after the advertisements first appeared was questionable; moreover no indication appears as to hours of the days during which the survey was undertaken, which was on Saturday and Sunday 17/18 November 2001; (iii) whilst the target population and means of selecting an individual in each household was reasonable, it was too random, and consequently skewed towards female household heads; (iv) the base of 197 interviewees was barely adequate; and (v) the response rate was so low as to leave too much room for bias; and (vi) because the battery market is complex, he was not convinced that the interviewees could have accurately interpreted what he described as vague or incorrect answers given by the respondents. 39 Thereafter Mr Briggs analysed the texts of the questions asked by Mr Carter, and the nature of the responses he received thereto, and concluded by denying the existence of support for Mr Carter's conclusions set out in [32] above. I should record at once that I have conceptual difficulty with at least his propositions (i) and (ii) in [38] above, since the evident objective of Mr Carter's survey was to test the recollections of persons who had actually seen the advertisement in the ordinary course of their living, rather than in some artificial environment. 40 Expert market research evidence was adduced by Gillette from Ms Strachan, to which objection was made by Energizer, and which I would summarise as follows: (i) a consumer exposed to the first advertisement would take out the message that Duracell alkaline batteries last longer than Eveready Super Heavy Duty batteries; (ii) the first advertisement did not portray anything to cause a consumer to assume that any Energizer battery was included in the comparison; (iii) consumers would be already aware that there are several different types of batteries available on the market, and whilst not all consumers may know that the two main types are alkaline and carbon zinc, consumers would know that there are at least two different battery classes, and that Duracell batteries are more expensive than the traditional "red" Eveready batteries because they are of a different and superior class; moreover consumers associate Eveready with the low price "red" batteries, moreover consumers hearing "Eveready Super Heavy Duty" in the context of a television comparison, would understand that this refers to a different Eveready battery, not being the "red ones"; (iv) consumers know that there are different battery systems, and that Eveready produces at least three different sub-brands which are placed at different price points, because some last longer than others; therefore it would be illogical for a consumer to take out from the television commercial that one type of Duracell battery would last three times longer than all Eveready batteries; such a take out would be consistent with the consumer's knowledge that Eveready batteries of different colours last different lengths of time; moreover, given that the first advertisement made no reference at all to any Eveready Gold alkaline battery, it would be even more illogical for a consumer to assume that the first advertisement was specifically claiming that the Duracell alkaline batteries last three times longer than that Eveready sub-brand; and (v) The logic for a consumer would appear to be as follows: · the comparison evident from the first advertisement reveals there are different brands and different lengths of performance; · alkaline is being compared to Super Heavy Duty and not to any other battery type. 41 Ms Strachan then spoke to the first of the so-called "modified" advertisements of Duracell (see [25] above), and stated that "… these additions (in conjunction with the communication points of the [first advertisement]) unequivocally convey to a consumer that the comparison being drawn is between Duracell alkaline batteries and Eveready Super Heavy Duty batteries, and no other battery", and further that "a consumer being exposed to that "modified" advertisement would take out a clear message that Duracell alkaline batteries last longer than Eveready Super Heavy Duty batteries". Ms Strachan made her affidavit prior to the further "modified" advertisements set out in [26-27] above. 42 Two affidavits were tendered on behalf of Gillette made by Ms Ross, its Business Manager - Batteries. She spoke of the battery market in Australia, much of which has already been recorded in these reasons for judgment. The only further matter that need therefore be mentioned in relation to her first affidavit is that Duracell's current marketing strategy is to increase consumer awareness of the benefits of alkaline batteries, as opposed to carbon zinc batteries, the current market share of alkaline batteries in Australia being slightly over 50% by cell volume. 43 In Ms Ross' second affidavit, apart from providing a substantial amount of detail concerning the pink Duracell bunny (see again [17] above), the following further material was provided: (i) carbon zinc and alkaline batteries are used interchangeably and in the same devices; so long as a battery is the correct size for the device in question, either a carbon zinc battery or an alkaline battery can be used in the same devices; (ii) Energiser and Gillette have broadcast television advertisements comparing carbon zinc and alkaline batteries since at least 1981; there exists clips of Gillette/Duracell television advertisements shown in the 1980s and 1990s, in which express comparisons are said to have been made between alkaline batteries and carbon zinc batteries, or some variant of that term, such as "ordinary carbon"; (iii) a report prepared for Gillette in 1998 by an independent market research company stated that "There is already extensive cross purchasing between the carbon zinc and alkaline battery segments. Of the battery buyers in the study who had bought a carbon zinc battery within the past twelve months, almost half (48%) claim that they mostly buy alkaline batteries". Other conclusions expressed in that study were as follows: · Cross purchasing between types and brands of batteries is extensive. · If the 'usually purchased' brand or type of battery is not available, another brand or type of battery is easily substituted. · Nine in ten battery buyers would purchase alkaline batteries if carbon zinc batteries were not available. · Battery buyers purchase in response to need, and select a branch based on experience, reputation and cost. · Around 40% of the battery buying community do not appreciate the difference between types of batteries. (iv) furthermore, certain slides contained in a 1997 report of A C Nielsen to Gillette include the following: · There is a high level of duplication between alkaline and carbon zinc batteries. · In the year ending Q3 1996, 32% of households purchased both alkaline and carbon zinc batteries. (v) retailers of batteries determine the retail price at which Gillette's Duracell brand batteries are to be sold or displayed for sale to consumers. Although Gillette's wholesale price will contribute to the retailer's determination of the price at which it chooses to sell Gillette's batteries, the price ultimately paid by consumers is within the sole discretion and control of the retailer (and of course manufacturers/wholesalers cannot engage in resale price maintenance); moreover the difference between the retail prices of Gillette's batteries and Energizer's Eveready brand Super Heavy Duty batteries varies "greatly" throughout the year as a result of discounting by retailers. Energizer evidence in reply 44 Mr Carter joined issue with Mr Briggs [see 38-39] above as to the appropriate nature of a telephone survey, conducted one week after a television advertising broadcast, for the purpose of evaluating impact of any such advertising. In his opinion, telephone surveys are very effective in measuring those kinds of impact, because they measure consumer understanding as a result of actual viewing experiences. Moreover a face to face survey by way of a video tape would have taken substantially longer to conduct. 45 Mr Carter otherwise joined issue with Mr Briggs upon the following issues which Mr Briggs had raised, in each case providing reasons for so doing: (i) the timing of the survey; (ii) the sample size, composition and response rate; (iii) the utility of the level of representation of females in the survey; (iv) the observance of standard practices concerning telephone surveys conducted in Australia; (v) the adequacy of briefing instructions given to interviewers; (vi) the format of the survey questionnaire; (vii) Mr Briggs' conclusion upon the "branded questions"; in that regard Mr Carter asserted as follows: "It is precisely this inability to identify the comparator brand… that confirmed that consumers did not understand the comparison being made in the Race Bunny Advertisement as one between Duracell and Eveready Super Heavy Duty batteries." (viii) the first advertisement (referring thereby of course to the so-called "Race Bunny Advertisement") would have generated confusion because it did not visually or significantly identify the comparator battery; (ix) the interviewees who were unable to identify the brands involved in the comparison were still able to recall that a comparison was being made; once made aware that Duracell was the advertised brand, the interviewees were able to provide responses in relation to the brands or type of the comparator battery; (x) a significant number of interviewees, although not a majority, considered that the first advertisement was intended to make comparisons with other brands of batteries; in any event, a significant number of interviewees were unable to identify the comparator battery as an Eveready battery and would have understood the comparison being made in the first advertisement as one between Duracell and any other batteries in the market; (xi) Energizer would traditionally be understood as the well known competitor of Duracell, rather than the name Eveready; (xii) the level of understanding indicated by the interviewees demonstrated that the telephone survey was capable of being much more than merely a test of recall; and (xiii) the deliberately unprompted questions elicited striking responses which indicated that consumers had seen the advertisement, and had a confused understanding of the comparison which was being made in the advertisement, and would continue to be affected by a confused understanding when they were next faced with the decision as to which batteries to buy. 46 Two affidavits provided somewhat belatedly by Mr Pattinson, Energiser's marketing manager contained material which may be treated as being in the nature of evidence in reply. The first related to the reach and frequency of the television broadcasting of the first and second advertisements, which was said to demonstrate that the television advertising slots booked or reserved by Gillette for the first and second advertisements involved a greater number of so-called "Target Audience Rating Points" than those taken up by Energizer for any previous Energizer television advertising segment, and in particular, those relating to the first advertisement represented "the highest ever weekly advertising weights" for the broadcast of any category of battery television advertising in Australia. The second affidavit of Mr Pattinson exhibited a series of photographs of displays of household batteries for sale in various different types of retail outlets in Sydney and Melbourne taken on 3-5 November 2001, such retail outlets varying between large department stores, supermarkets, convenience stores, pharmacies and shell shops. One series of photographs related to separate cabinet displays of the Duracell standard coloured batteries, at the top of which was prominently displayed "LASTS UP TO 3 TIMES LONGER", and immediately underneath whereof in significantly less sized lettering appeared "THAN EVEREADY SUPER HEAVY DUTY AA, AAA AND C & D sizes". The other series of photographs showed the Duracell batteries appearing in the same or immediately adjacent shelving as that containing various Energizer brands, albeit that each Energizer brand was separately displayed in discrete groupings.

Applicable legal principles 47 Indulgence in comparative advertising, which is the character of the advertising here at issue, has been traditionally recognised by this Court as an undertaking potentially fraught with risk. Comparative advertising may be misleading, because it creates a 'half truth' by omitting material necessary in order to make the comparison fair: Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369 at 375 per Gummow J. In referring to that dictum, Merkel J observed in Telstra Corporation v Optus Communications Pty Ltd (1997) ATPR 41-541 at 43,515 that "… there are obviously greater dangers in the 'half truth' or the unqualified literal truth in comparative advertising". 48 But the problem for the comparative advertiser is not confined to the omission of material. In Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 at 163, Lockhart J said as follows: "When a person produces a television commercial that not only boosts his own product but, as in this case, compares it critically with the product of another so that the latter is shown up in an unfavourable light by the comparison, in my view he ought to take particular care to ensure that the statements are correct." 49 In applying that dictum in State Government Insurance Commission v JM Insurance Pty Ltd (1984) ATPR 40-465 at 45, 362, Fisher J added the following: "In this sophisticated and highly technical area of motor vehicle insurance JM has decided to engage in comparative advertising. There is in my opinion a heavy responsibility on it to ensure that its comparisons are accurate, for inaccurate comparisons are inherently likely to mislead the public." 50 Nevertheless the foregoing general observation of Lockhart J in Stuart Alexander needs to be balanced against the further observation of his Honour in the same judgment at 164-5 as follows: "However, I think a robust approach is called for when determining whether television commercials of this kind are false, misleading or deceptive. The public is accustomed to the puffing of the products in advertising. Although the class of persons likely to see this commercial is wide, it is inappropriate to make distinctions that are too fine and precise." Many years later in Colgate-Palmolive Pty Ltd v Smithkline Beecham Holdings (Australia) Pty Ltd (1997) 39 IPR 147 at 153, Lockhart J said that "[t]he Court must be careful that it does not restrict competition unduly unless satisfied that the activities in question really do constitute unfair trade practices." 51 Subsequently on the subject as to the approach the Court should take in relation to comparative advertising, Wilcox J in Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd (1990) 14 IPR 270 at 276 referred with approval to what has been cited above at [50] from Stuart Alexander concerning the need for a robust approach to comparative advertising in determining whether television commercials are misleading. In Makita, the comparisons made in the advertisements suggested that the price of the Black & Decker drill and the Makita drills were comparable, which was not true in the case of one Makita drill, and further that the results of the suggested test would be the same in respect of other Makita drills, which was also untrue in the case of Makita drills with similar or greater power input. 52 The next issue, in relation to which I would invoke authority, concerns the implications of Mr Carter's evidence as to consumer surveys undertaken in relation to the first advertisement, and his expert opinions proffered in relation thereto referred to at [32] above. As there appears, I ruled in favour of the admissibility of that testimony. The criticisms of that evidence made by Mr Briggs are set out [38-39] above, and Mr Carter's rejoinders thereto are summarised at [44-45] above. Surveys apart, the following general observations made by Lindgren J in the preceding litigation between Energizer and Gillette (Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4) (2000) ATPR 41-751) are apposite to an understanding of the present issues: "38. I have reviewed each of the 10 second, 15 second and 30 second Duracell television commercials more than once, and have tried to assess their likely impact on members of the public in the circumstances in which they would have been likely to view them. Those circumstances are not the circumstances in which I viewed the commercials. First, it would be very unlikely that members of the public would have viewed any of the commercials in isolation: rather, they would almost certainly have viewed them after and before viewing other things on the television screen. Second, unlike myself, they would not have viewed the commercials with a special interest in them and many would probably have viewed the commercials against a background of distractions, such as domestic activity or simply pre-occupation with other more interesting concerns. Third, members of the viewing public would not know in advance that the commercials were about to commence." 53 Generally as to the implications and incidents of television advertising, the following extracts from the judgment of a Full Court in Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 provide guidance. At 569, Sheppard J (who was in dissent in the result) made the following general observation: "Although the television advertisement was shown frequently, its duration was only 30 seconds. When it was shown, it was shown without warning and, no doubt, as one of a batch of advertisements during advertising breaks between programmes or in the course of particular programmes. The opportunity which viewers had to see the advertisement was a fleeting one. It appeared momentarily on their screens. That is so in the case of most television advertising which must, perforce, be quite transitory. Indeed, that is why advertisers, such as the agency here, seek to "grab" or "hook" viewers by using material which so attracts their attention, that they are held for sufficiently long to see the product which is being advertised. This is particularly important when one bears in mind that viewers become distracted during advertising breaks by conversation, looking at reading material or leaving the room to attend to household chores and the like." And at 583, Burchett J, one of the majority, said as follows: "However, the ultimate conclusion whether the advertisement was likely to mislead should not depend upon precisely that analysis which would be sufficient for an advertisement appearing only in print… for the kind of representation constituted by the display of the trademark… The advertisement here in question uses the still relatively new technology of television…" Subsequently at 585 and 586, his Honour added the following general observations: "Such an advertisement is not analysed like a crossword puzzle. It comes as a caller upon a family relaxing in the evening. … … the vagueness of the suggestion conveyed in this case is not sufficient to save it. The vagueness is not incompatible with great effectiveness. It would be unfortunate if the law merely prevented a trader using the primitive club of direct misrepresentation, while leaving him free to employ the more sophisticated rapier of suggestion, which may deceive more completely." 54 Some recent observations by Lee J, in relation to some implications of television advertising in the context of the particular circumstances involved in Australian Competition & Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [15], are of potential application to the present circumstances, and are reproduced below: "In relation to the television advertisements, the impression to be gained by consumers from the advertisements was that no item of clothing or houseware was excluded from the respective sales. The voice-over, which often in television advertisements adopts an authoritative and informative role, did not mention that any item would be excluded. That impression was reinforced by the voice-over statement "25 percent off every stitch of clothing", and "15 to 40 percent off all housewares including tableware, furniture, kitchen appliances, cookware and lighting". The effect created by this latter statement was reinforced by the listing of items that constituted part of the class of goods on sale. Consumers who relied on the sound content of the television advertisements, not attentively watching the television, would not have known that any item was excluded. As far as the visual images were concerned, the size of the words containing the qualifying advice, compared with the size of the Target name and rondel, was not sufficient to distract attention from the latter. That information was given at the end of each advertisement when the viewer's attention may not have been as keen as at the beginning. Furthermore, it is often the case that the first impression will be the lasting impression." 55 The remaining area in this litigation where resort to judicial authority may assist relates to the corrective measures proposed by Gillette during the course of the proceedings, as set out respectively in [25-27] above. The appropriate starting point must be an appreciation of the reality that corrections of television advertising by further television advertising of the same advertiser involves all of the subtleties of communication to which reference has been made for instance in the preceding paragraph. In Makita, counsel for the unsuccessful respondent suggested, as a corrective measure in order to obviate the grant of injunctive relief, the superimposition on the footage depicting inter alia certain demonstrations of the advertised equipment some words identifying the two drills involved, and also stating their respective power inputs, and a sample of what was thus suggested was put in evidence. Wilcox J ultimately decided to grant the injunction sought in any event, observing at 282 as follows: "The subject advertisement is ingenious. I accept that it was made without any intention of denigrating competing products and that its central message is true. Under those circumstances, I am reluctant to preclude its future use. However, I have come to the conclusion that the advertisement is misleading in important respects, so that it ought not be allowed to be screened in its present form. Some of those misleading elements could be removed by suitably worded superscriptions but superscriptions cannot overcome all the problems. The appropriate course is, therefore, to make an injunction restraining the further use of the advertisement." 56 Earlier in Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293 at 299, Burchett J rejected proposed correction advertising of offending material for the following reasons: "The respondent indicated that it proposed to make changes in the advertisement in the very near future, designed to limit clearly the claims made to the new type of AA batteries. I was asked to exercise my discretion against granting an interlocutory injunction on the basis that this was about to be done. There were two reasons why I did not accede to the submission. In the first place, the suggested changes did not appear to me to be adequate. In the second place, a proposal to telecast acceptable advertisements in the future would not justify a continuance of unacceptable advertisements in the meantime. There was no suggestion that a retraction would be telecast, or that the terms of the new advertisement would actually draw attention to the problem created by the terms of the old. Far from correcting the matter, if correction be needed, a change so subtly shaded might well escape the attention of a viewer already imbued with the existing message. The impression originally gained might be reinforced by the repetition of a closely similar message, not corrected." 57 Finally in the present context of discussion of potentially applicable authority, I should refer to the observations of Tamberlin J in Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 at 338-339, where his Honour addressed the issue as to the impact of qualifying superscript statements involved in that case as follows: "The reference to "some exclusions" appears at the conclusion of the superscript and appears only once, which may not be reached by an ordinary reader. There is no forewarning of the specific wording of the exclusions. It is a very momentary and fleeting message in small print and plays a very subservient role in the advertisement. The evidence was that there was physically sufficient time to read all the words in the qualification but of course it must be impossible to say whether and to what extent the unexpected exclusion might register in the mind of a viewer. There is no real opportunity to review it, even if it is realised in the short time available, that there was something of significance being stated… I doubt whether a reasonable viewer would appreciate that there was any significant exclusion which flew in the face of the dominant representation of free local calls."

The respective submissions of the parties and my resolution thereof 58 Consistently with the authorities which I have reviewed, Energizer emphasised the circumstance that the advertising medium utilised here by Duracell was that of modern television, with its fleeting impact upon and uncritical scrutiny by most of its audiences, yet with its inherent capacity nevertheless to convey lasting impressions in relation to what is here involved, namely a product for regular household or domestic use (see [11] above). Energizer pointed to the further factors that alkaline and carbon zinc batteries, being those presently in most common use by individuals of the likely television audiences, are used interchangeably and in the same devices (see [43(i) to (iv)] above). 59 Energizer emphasised the following circumstances in particular: (i) the two Energizer alkaline brands and the Duracell alkaline brand are each comparable in performance; (ii) alkaline batteries are significantly more expensive than carbon zinc batteries; see [15] above as to the former's higher cost of production, and [40(iii)] and [43(v)] above as to the higher pricing of alkaline batteries, doubtless as a consequence, in comparison to carbon zinc batteries; (iii) the alkaline and carbon zinc AA size batteries throughout the Energizer and Gillette ranges are identical in shape and fit the same devices; (iv) there is no externally observable physical difference between a carbon zinc and an alkaline battery to indicate any difference in performance; and (v) all common size batteries are sold in similar "see-through" packaging, regardless of their internal composition (see the photographs of the retail shelvings referred to in [46] above). 60 Moreover, what has not already been recorded in my summary of evidentiary circumstances material to the issues is that the more recent Energizer television advertising, which had preceded the television advertising of Duracell the subject of complaint in the present proceedings, had been as follows: (i) in April and August 2001, Energizer screened an advertisement for its Eveready Gold alkaline battery, depicted as powering a toy boat travelling from Australia to France, the ratings for which screenings were estimated to exceed 200% of the target audience; such advertisement would have been understood, so it was submitted by Energizer, that Eveready Gold was a lasting battery, because it could power a toy for a long period of time; and (ii) in June 2001, Energizer screened two variants of an advertisement for its Energizer alkaline battery featuring an animated "humanized" battery, which had been used in Energizer advertisements since the early 1990s, involving a toy like battery figure relentlessly returning tennis balls in a rally, and Patrick Rafter as a weary and beaten opponent surrounded by tennis balls, in one version, and by empty water bottles in the other version; here again the ratings for such advertisements were estimated to exceed 200% of the target audience, and these audiences would have understood that the Energizer alkaline battery was long lasting; yet in the present television advertisement the subject of these proceedings, so Energizer's submissions continued, the same purported to portray Duracell's alkaline battery as being up the three times more powerful than Energizer's batteries generally, and thus including its alkaline batteries. 61 Thus at the outset of its submissions, Energizer sought to apply what was additionally said by Burchett J in Union Carbide at 297 (see [56] above) to the effect that earlier television advertising of a product could influence the interpretation which viewers placed on later television advertising of a like product, and submitted also that merely the fact that Gillette had been using its pink coloured bunny in its advertising for some years did not detract from the proposition so advanced. 62 Energizer contended that the first advertisement purported to demonstrate a three times superiority in the performance of the Duracell battery over all other batteries, as exemplified in its powering the winning Duracell racing bunny, appearing as it did in the colours in which it was marketed and wearing athletic clothing marked with the name Duracell, and submitted that the depiction of the bunny's inferior competition in the form of three racing bunnies, each of which collapsed successively at or before the end of what were one-third intervals within the total distance of the race, was both emphatic and eye catching. Energizer pointed then to the voiceover mid race "Uh oh, no matter what they try, it won't help", and thereafter to the triumphant voiceover "Duracell always wins", expressed without qualification, and uttered as the Duracell bunny stood arms aloft atop a hill in a victory pose, and the closing text showed a close up of the Duracell battery and stated "Duracell lasts up to 3 times longer". 63 Energizer thereafter pointed to the further circumstance that the battery powering each competitor bunny in the first advertisement was not visually identifiable, but was merely coloured light blue without any form of identification, the same not representing any format used by Energizer or any other battery manufacturer in Australia, with the consequence that the first advertisement was thus comparing the Duracell battery to all other brands of batteries. Energizer sought to draw analogies between the features of the first advertisement with those found by Lindgren J in Eveready (see for instance [52] above). 64 In summary to date, Energizer submitted that the "hook" or "grab" of the Duracell first advertisement was, and if not restrained would continue to be, the message that Duracell is three times more powerful than any competitor or competitors of Duracell, being so dominant that it "always wins" (as voiceover states therein), no matter what other battery is put up or compared against it. Indeed, as the Energizer submission continued, so unqualified is the message "Duracell always wins", in the context of the preceding messages "Uh oh, no matter what they try, it won't help" and "With up to three times more power", that the same renders nugatory and ineffective the barely readable superscripts "In AA, AAA, C and D sizes only". Or put another way by Energizer, the first advertisement is "plainly apt" to indicate to a significant number of viewers that its messages "Duracell always wins" and "with up to three times more power" are applicable to all of its trade competitors' products, or at least all Energizer (Eveready) brand batteries, or the best battery on offer of any competitor brand, whether alkaline in composition or otherwise. 65 Energizer's next submission was that the propensity for viewers to interpret the first advertisement as making a comparison with the best that Energizer (Eveready) and all other competitors have to offer is heightened by the following factors: (i) consumers would not readily regard it as likely that one of the two major battery manufacturers would spend large promotional funds on prime television (as to which see again [46] above) in order to proclaim merely that its battery is more powerful than its competitor's fifth best battery (see again the table of Energizer's battery brands at [3] above, where the fifth battery in descending order "Eveready Super Heavy Duty" appears); (ii) the only statement of difference between the batteries concerns their relative performances (ie "with up to three times more power"), thereby suggesting that the batteries are otherwise comparable, that is to say, that like is being compared with like; in particular, there is no mention of any price differential between the two batteries (see again [51] above relating to the price issue in Makita); (iii) the Energizer advertisement context particularised in [60] above, which would suggest to television viewers that Duracell's first or Bunny advertisement was a response to the advertisements of its competitor Energizer (Eveready); and (iv) the type of comparison that a television viewer would normally expect would relate to a competing brand within the same range. 66 Consequently, so Energizer's submissions continued, the first advertisement is likely to induce a significant number of television viewers to understand that the comparison of the Duracell battery is being made with batteries which include Energizer Advanced Formula Alkaline and Eveready Gold alkaline. 67 Nevertheless the circumstance remains that the first advertisement does contain as its second voiceover "Duracell alkaline or Eveready Super Heavy Duty batteries". Specifically as to that matter, Energizer submitted as follows: (i) the second voiceover occurs at precisely the point in time when the first (ie non-Duracell) competitor bunny is shown to stop at a rock behind which is hidden from the Duracell bunny the second replacement bunny, whose appearance had not previously been foreshadowed, and therefore comes as a surprise; that visual highlight of the first advertisement provides a significant distraction from close scrutiny of the spoken words of the second voiceover, with the consequence that there is a high likelihood that many viewers will remember only the reference to Eveready; (ii) only spoken words are used, that is to say, there does not appear to the television viewer any signage depicting "Eveready Super Heavy Duty", or "Eveready carbon zinc"; that omission is to be contrasted with the constant visual reminder of the Duracell name appearing on the winning bunny's shirt; the prospect therefore of viewers imperfectly remembering the name of the failed competitor battery is said to be very real; (iii) the words of the brand, to the extent of "super heavy duty", are descriptive, and for that reason have the propensity to be understood as referable to a competitor's top line battery, be it Eveready, if viewers catch that name, or any other competitor; moreover the use by other competitors (albeit insignificant in terms of respective market shares) would tend to encourage potential consumers to regard the words "Eveready Super Heavy Duty batteries" as descriptive; and (iv) there is no subsequent reference to Eveready in the remainder of the first advertisement, the third voiceover referring only to "Super Heavy Duty battery". 68 Energizer next submitted that the likelihood of deception is supported by the television survey to the effect that of those respondents who recalled (spontaneously) the first advertisement, a significant proportion understood its message to be one of Duracell lasting longer than other brands of batteries (see in that regard [31(ii)] above); reliance was also placed in that context upon what appears in [31(iv)] above (I have already referred to authority concerning the use of survey evidence in [32] above, to which may be added reference to State Government Insurance Corporation v Government Insurance Office of New South Wales (1991) 28 FCR 511 at 542-544 per French J); moreover upon the footing that Ms Strachan's evidence is admissible, notwithstanding Energizer's objection, Energizer would itself rely in the present context upon what she said as set out in [40(iii)] above. 69 Energizer submitted therefore that the first (or Bunny) advertisement made misleading comparisons, because it failed to mention firstly, the fact that Energizer sells comparable batteries to Duracell Alkaline, namely Energizer Advanced Formula Alkaline and Eveready Gold Alkaline, secondly that there is a substantial retail price differential between Duracell Alkaline and the Eveready Super Heavy Duty carbon zinc battery, and thirdly that the latter is only the fifth most powerful battery in the Energizer range of batteries. Gillette would appear to adopt the position that it was under no obligation to advertise the existence of Energizer comparable alkaline battery or batteries. The difficulty with Gillette's position in that regard is that its first advertisement is a comparative advertisement, thereby attracting authoritative observations of the kind referred to in [47-49] and [51] above. 70 The absence of price comparisons made by the first advertisement makes it difficult, so Energizer contended, for Gillette to make good the purported answer on its part to the effect that the first advertisement merely conveys the message that Duracell Alkaline is better value, because although it is more expensive than Eveready Super Heavy Duty, it lasts three times longer. It is not to the point, so the submission continued, that viewers might or would already know of the existence of a price differential or would in any event find that out when they arrive at a retail store and make a simple comparison, as Gillette contended. I think that Energizer is correct in its contention that there would obviously be many potential buyers who would be unaware of pricing differentials, and who would not bother, or be able in a practical sense to verify, the respective prices of Duracell Alkaline and Eveready Super Heavy Duty, and thereupon undertake some form of mental calculation whereby value would be compared against performance. Or as Energizer otherwise puts its case on this point, Gillette's proposition amounts to an assertion that an advertisement which tells only half the story is not misleading because it is open to consumers to work out the whole picture for themselves at the supermarket. Energizer would rely upon the adoption by the Court in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 50 of the following passage in CRW Pty Ltd v Sneddon (1972) AR (NSW) 17 at 28: "An advertisement published in a newspaper is not selective as to its readers. The bread is cast on very wide waters. The advertiser must be assumed to know that the readers will include the shrewd and the ingenuous, the educated and the uneducated and the experienced and the inexperienced in commercial transactions. He is not entitled to assume that the reader will be able to supply for himself or (often) herself omitted facts or to resolve ambiguities. An advertisement may be misleading even though it fails to deceive more wary traders." 71 As to the second or Brand power advertisement, extracted at [18] above, Energizer submitted that the opening statement "Are you annoyed by constantly having to change flat batteries?" is one which is unqualified and must cover all situations in which a consumer experiences the problem of changing flat batteries, including Energizer Advanced Formula Alkaline and Eveready Gold Alkaline batteries, and that the following statement "Today Brand Power looks at how you can avoid this with Duracell" is expressed as a solution to that common problem. The following statement "Longer lasting alkaline batteries like Duracell are specifically formulated to last longer than super heavy duty batteries" suggests, so Energizer further contended, that Duracell provides the solution, but the same makes no mention of the circumstance that the two Energizer alkaline brands provide exactly the same solution, thereby implying that only Duracell solves the problem. Energizer's submission continued to the effect that the comparison with super heavy duty batteries depicted as nondescript black batteries, resembling no particular battery, presented the same problems identified in the first advertisement, namely that super heavy duty batteries are likely to be regarded as the best brands which Gillette's competitors, including Eveready and Energizer, can offer. There is no mention in the advertisement that the comparator batteries are substantially less expensive, and the following statement "In fact, four AA Duracell alkaline batteries are comparable to up to twelve of these AA super heavy duty batteries", so Energizer next contended, is a clear suggestion that apart from the performance differential, the compared batteries are otherwise comparable, including on the matter of price. The problem was said to be exacerbated by the statements "Ensure that you get value for money", and "Brand Power, helping you buy better", coupled with the image of a shopping trolley at a supermarket cash register, which implied that Duracell gave the consumer comparatively better value simply by comparing performance characteristics, without actual retail pricing levels being indicated. Finally, the statement "Look for the Duracell Bunny next time you're shopping" was said by Energizer to "contaminate" this advertisement with the misleading message of the first or Bunny advertisement, by linking the same to the second or Brand power advertisement. 72 Gillette joined issue upon Energizer's contentions, and submitted that the comparison made in each advertisement is "clearly one between Gillette alkaline batteries and Eveready super heavy duty brand batteries". Duracell did not disagree that at least the first advertisement represents that Duracell alkaline batteries last three times longer, or up to three times longer, than all Energizer Super Heavy Duty batteries, but denied the falsity of that assertion. As I would understand the situation still to be, in the light of the course which the proceedings took before me, those Duracell performance claims require final scientific resolution at a future date, particularly if Energizer is to pursue its claim for damages. However, in the light of the combined testimonies of Mr Axford summarised at [9-15] and [33-36] above, and of Mr Hammel summarised at [37] above, it would follow that such representations are unsustainable, to the extent that the same are made in the first and second advertisements. 73 Thus the reality of the course of the proceedings which has thus far been taken is an implicit acknowledgment on the part of Gillette of formidable difficulty in maintaining the viability in law of the first or Bunny advertisement, and hence Duracell's placement before me, albeit without admissions, of the succession of proffered modifications thereto set out in [25-27] above. In relation to the first or Bunny advertisement, I am clearly of the view that Energizer's submissions, which I have recorded at length in [58-70] above, should be generally sustained, subject to the qualification that I would incline to the view that Energizer's prior screenings of its "toy boat" and "tennis" advertisements referred to in [60] and [65(iii)] above are probably to be excluded from the matrix of circumstances which otherwise, in my opinion as a judge of fact, have rendered the first or Bunny advertisement misleading and deceptive in contravention of ss 52 and 53(a) of the Act. I do not consider however that the first or Bunny advertisement contains in addition representations as to future matters within s 51A of the Act, as further contended by Energizer. 74 In making the findings adverse to Gillette of contravention of ss 52 and 53(a) of the Act in relation to the first or Bunny advertisement, I do not think that in the circumstances, caveats made by Lockhart J in Stuart Alexander (see [50] above) provide any basis for a sustainable defence on Gillette's part in relation to the first advertisement. Notwithstanding the outcome of the previous litigation between these major multinational competitors before Lindgren J last year (see [52] above), it is apparent to me that Gillette has determined to continue to court the potential risks involved in prominent comparative advertising, and to do so through medium of television with its particular characteristics which the further judicial observations extracted in [52-54] aptly describe. Gillette must accordingly suffer the consequences of a permanent injunction in relation to the first Bunny advertisement. 75 Turning them to the proposals for modification which Gillette has proposed to be made, without admission of liability, in relation to the first or Bunny advertisement, Energizer submitted as follows: (i) the same do not alter the fundamental visual hook or grab of the ascendant Duracell bunny, and are in any event relatively slight changes to the voiceovers and superscript; (ii) there will be many consumers who will have been imbued with the misleading and deceptive message of the original advertisement, and there will have been many battery sales made by Gillette in the light of that advertisement; (iii) the racing bunny has appeared on the Duracell packs for its alkaline batteries, and presumably will continue to do so, the racing bunny representing the image of the perpetuator of the misleading message of the first or Bunny advertisement; (iv) the average viewer, already familiar with the first or Bunny advertisement, would be unlikely to notice or draw any significance from the changes appearing in the revised advertisements, and is just as likely to treat that advertisement as "back on air" again; in any event, the visual message would continue to be dominating, and there would have been no retraction; and (v) the changes proposed are in all events relatively minor, and would tend to "escape the attention of a viewer already imbued with the existing message", to adopt the dictum of Burchett J cited in [56] above. 76 The most recently proposed review or modification, extracted in [27] above, does purport to address the subject topics of Energizer's complaints, namely the making of comparisons between Duracell Alkaline and Energizer's cheaper non-alkaline Eveready Super Heavy Duty battery. However Energizer submitted that the same does not address, adequately or at all, the fundamental problem of the inherently misleading comparison which it still makes, and in particular, the fact that the Super Heavy Duty battery is not the most powerful battery within Energizer's range; moreover, particularly in the light of the original text of first advertisement, merely to state that the Super Heavy Duty battery is "cheaper" is inadequate for the purposes of comparative advertising, at least for the purposes of the necessary corrections thereto, and there still remains the sophisticated rapier of suggestion, to adopt the description of Burchett J in [53] above. 77 Additional criticisms are advanced in relation to the most recent proposed revision of the first advertisement as follows: (i) the additional references to Eveready Super Heavy Duty are likely to reinforce the message that the comparison is a brand versus brand comparison; the likelihood of the words "Super Heavy Duty" being recalled by viewers at all from the original first advertisement, as distinguishing merely one of the batteries in the Eveready range, is low; (ii) in any event, the proposed superscript "Eveready Super Heavy Duty is a cheaper non-alkaline battery", in its setting, would be comparatively very small, and would be screened at a time when viewers are likely to be distracted by the entertaining visual action of the bunny race (see again in that regard the authoritative dicta cited in [53] and [55] above). Moreover such proposed superscript assumes that viewers will understand the significance of the reference to "non-alkaline", and in any event, the same would not inform the viewers that Energizer has a comparable alkaline battery to that of Gillette, and it may be understood as explaining why it is that Energizer's best battery is three times worse than the Duracell battery; also it is to be remembered that Energizer's two best batteries are promoted by Energizer as lithium and titanium batteries (see again [3] above), which are both more powerful than conventional alkaline batteries; (iii) the language of the last corrected advertisement which consumers would be likely to understand would still be one of power, yet the televised message would still be focusing on Energizer's fifth most powerful battery; (iv) the blackening of the competitor battery does not advance the status quo; it remains a nondescript battery with tall the implications thereby involved, and does not in any event look like the Super Heavy Duty battery; and (v) it remains untrue on any view that "Duracell always beats Eveready Super Heavy Duty"; it does not do so in the 9 volt and 6 volt size. 78 There is force in at least the greater part of these further submissions. My conclusion is that Energizer's submissions in [75-77] above are substantially correct and must be sustained in principle in relation to all changes proposed to the original Bunny advertisement, including those to the superscript thereof. To adopt the words of Wilcox J in Makita extracted in [55] above, "… superscriptions cannot overcome all the problems ", and of Tamberlin J in Optus extracted in [57] above, "It is a very momentary and fleeting message in small print and plays a very subservient role in the advertisement". 79 There remains for consideration the issues arising in relation to the second or Brand Power advertisement. I propose to deal with the same briefly. As earlier indicated, interlocutory relief in relation thereto was refused originally by Whitlam J, and I have not since altered the status quo. It is true that the statement therein "In fact, four AA Duracell alkaline batteries are comparable to up to 12 of these AA super heavy duty batteries", raises thereby issues as to comparability of batteries in terms of performance and price, and the case for enjoining the same at least to that extent is by no means without some degree of merit, particularly since the fist and second advertisement were part of a related campaign. However the second or Brand Power advertisement, viewed as a whole, does not to my mind produce the extent of impact of unfairness which so strikingly characterises the first or Bunny advertisement, and furthermore the first advertising has been "off the air", as it were, by the injunction of this Court, since 23 November 2001, and will continue to be so. Furthermore, it was fairly acknowledged on behalf of Energizer that the Brand Power advertisement at least did not cause as much harm as the Bunny advertisement. Not without a degree of hesitation, I would decline, in the exercise of my discretion, to enjoin the second or Brand Power advertisement, though whether the same was misleading and deceptive, for the purpose of Energizer's damages claims, will of course remain open for later decision. 80 I therefore propose to permanently enjoin the further publication of the first or "Bunny" advertisement, but to decline to enjoin the second or "Brand Power" advertisement. I do not think that in the circumstances of the case, it would be appropriate or practical to isolate aspects of the enjoined advertisement for the purpose of the restraint, and I will therefore order that the further televised screening of the same be prohibited generally. Given that the issues debated in the course of the proceedings focused mainly upon the first advertisement, and that injunctive relief has been declined in relation to the second advertisement, my present inclination would be to order that the Respondent pay eighty per centum of the Applicant's costs of the proceedings up to this time, but that is merely a tentative view, and I will stand over the proceedings to a date to be fixed in order to give both parties the opportunity to address the issues of costs. On that occasion, directions can be given as to further conduct of the proceedings in relation to the issue of damages. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.

Associate: Dated: 24 December 2001 Counsel for the Applicant: AJL Bannon SC & R Cobden

Counsel for the Respondent: FM Douglas QC & D Bennett

Solicitor for the Respondent: Mallesons Stephen Jacques