Energizer Australia Pty Ltd v Gillette Australia Pty Ltd

The advertising campaign 15 The packing in which the M3 Power razor is distributed states, inter alia, that: 'Gentle micro-pulses stimulate hair up and away from the skin. In just one power stroke, you get a remarkably close and more thorough shave.' Variants on that theme are to be found in point of sale material, retail pamphlets, a booklet which has been distributed to the trade and on the Gillette website. 16 The central representation, which Energizer submits is false, is that the razor emits 'micro-pulses' or vibrations or has a pulsing action that stimulates, raises or lifts facial hair up and away from the skin giving a closer and/or more thorough shave than all other men's system razors. In some instances the benefit is not said to be a closer and/or more thorough shave, but (for example) the best shave ever. 17 Gillette has announced an 'unprecedented' proposed media expenditure of $10 million in connection with the launch of the product. The proposed television and print advertising will make the representations which Energizer claims are false. On the materials before me I accept Energizer's submission that looming on the horizon in Australia is a massive media blitz promoting the M3 Power razor, the focus of which will be the representation that Energizer alleges to be false. 18 Consumer research conducted in the USA demonstrates that the message that the M3 Power razor 'raises hair higher to cut', is one which is conveyed by Gillette's advertising, and is one which resonates with consumers.

Hair raising claims 19 As already indicated, Dr Leffell's brief was to provide an opinion as to whether there was any scientific basis for the hair raising claims made in relation to the M3 Power razor. The study conducted on 8 October 2004 was designed to demonstrate whether an oscillating razor could by virtue of its impact on the skin, cause hair to stand up. Shortly stated, Dr Leffell's evidence in these proceedings, as it was in the Hamburg proceedings, is that there is no physiologic or other scientific basis for the claim that an oscillating razor can cause facial hair to stand up proud in the manner shown in Gillette's advertising in Germany and the USA. As a scientist and skin specialist of many years, Dr Leffell was of the opinion that the mild vibrative effect of the razor applied to the skin would not have any effect on the hairs such as to cause them to be raised up, or stand proud. The study clearly showed that the application of the razor to the skin did not cause the facial hairs to be raised up or to stand proud of the skin. 20 Dr Leffell was cross-examined and the methodology of the study which he observed was criticised, in particular by Dr Saker, an engineer and research scientist employed by Gillette. Dr Saker's ultimate conclusion was that the study conducted by Energizer does not 'exhibit the requisite rigour or expertise necessary to determine whether the hair extension effect produced by an oscillating razor that my colleagues and I have recorded at Advanced Technology Centre does not, in fact, occur' (emphasis added). Whether the criticisms levied by Dr Saker are made out, and if so with what result, is a matter for determination at the final hearing.

Hair extension effect 21 But more needs to be said about Gillette's claimed 'hair extension effect', if only because Mr Kohler, who responded to Dr Saker's affidavit, has confirmed that Energizer's tests were designed to observe hair raising, not hair extension. Dr Leffell confirmed that this was so. To Dr Leffell there is a significant difference between the notion of hair 'raising up' or 'lifting' away from the face, and the notion of hair 'extending'. The lifting or raising of hair involves a move of the hair towards a vertical position, with a change in the angle between the hair and the face. Whilst 'hair extension' is not a term with which Dr Leffell is familiar, he understands the term to refer to the hair moving in and out of its follicle, but maintaining the same angle against the face, rather than moving towards a vertical position. 22 In essence the 'hair extension effect' is an alleged increase in the observable length of beard hairs which is said to be triggered by micro-pulses produced by an oscillating razor, such as the M3 Power razor. Dr Powell, an engineer by training who joined Gillette in January 1995 and who is now the Laboratory Director of Gillette Advanced Technology Centre, explained the hair extension effect, and the reason for its occurrence, as follows: 'Based upon their examination of this hair extension effect, Gillette scientists have concluded that the extension effect occurs because many facial beard hairs are subtly bound within the hair follicle due to deposits of sebum within the follicle and on the surface of the hair shaft and a build-up of surface level corneocytes which have a tendency to adhere together through a process known as "interdigitation". The growing hair, bound to the sebum deposits and corneocytes, is "bound" within the follicle so that it does not fully release above the skin surface. The hair agitation and surface skin stress produced by an oscillating razor disperses and unbinds the sebum deposits and corneocytes, which allows the hair to move freely within the hair follicle and to reach its full extension above the skin surface… .' 23 Dr Powell has no medical training. He agreed in cross-examination that this expression of opinion is one which requires dermatological expertise which he does not have, but he said that it is 'within the boundaries of my team members'. 24 Many of the studies relied upon by Gillette to sustain the claims made in relation to the M3P razor were conducted before Dr Powell joined Gillette. None of the studies involved the use of the M3 Power razor, although two studies involved the use of a prototype. The studies were conducted by Gillette personnel and are unpublished. There was no peer review. The following table summarises the results of these tests. DATE TEST RESULT 1990/1991 KLP1 An oscillating razor produced an increase in observable hair length. 1990 KLP2 Neither the agitation associated with the application of shave preparations, nor any chemical or surfactant effects incidental to preparing the face for shaving triggered the hair extension effect. 1992 KLP3 Physical agitation of hair and skin produced a hair extension effect. Once the hairs were extended, the hairs did not appreciably retract afterwards. 2003 KLP4 An oscillating cartridge of a M3 Power prototype produced statistically significant hair extension effects comparable to those observed in earlier tests. The observed differential translates into approximately 3 hours of beard hair growth. 2001/2002 KLP6 10 per cent more of the observable hairs were removed with a single stroke of an oscillating razor (the M3 Power prototype) than in the case of the M3 Power prototype in non-oscillating mode. 1991 KLP8 Application of a transparent hemispherical dome to the skin and face near a hair revealed individual hairs releasing and extending from the hair follicles in a manner consistent with Gillette's research. 2003 KLP10 An oscillating M3 Power razor produced stress waves in the skin surface. 25 These studies are relied upon by Dr Powell as supporting the notion that hairs otherwise bound to the skin will 'pop up' above the skin level. If that occurs, the tip of the hair will be at a greater height by virtue of its having 'popped up' or extended, than it was beforehand. 26 The conclusion which Dr Powell draws from these studies is expressed in his affidavit as follows: '38. For the reasons set forth above, I believe that Gillette has demonstrated, to a reasonable degree of scientific certainty, the following: (a) that the hair extension effect occurs; (b) that the micro-pulses produced by an oscillating razor and, in particular, the M3 Power, are sufficient to trigger this effect; (c) that the mechanical and chemical processes attendant to the casual application of shave preparation or pre-shave face washing are not sufficient to trigger this effect; (d) that as a result of this effect, M3 Power delivers a shave that is superior in terms of single stroke closeness efficiency; (e) that average consumers can and have appreciated its superior closeness.' 27 Paragraph (e) appears to be based upon consumer research conducted in the USA in early 2004 which found that randomly selected and geographically diverse groups of adult male wet shavers: (a) preferred the M3 Power razor as an overall superior product to the Mach 3 Turbo shaving system; (b) perceived the M3 Power razor to be superior to the Mach 3 Turbo shaving system in terms of shave closeness, smoothness and comfort by a statistically significant margin; (c) preferred the M3 Power razor as an overall superior product to the Schick Quattro shaving system; and (d) perceived the M3 Power razor to be superior to the Schick Quattro shaving system in terms of shave closeness, smoothness and comfort by a statistically significant margin. 28 Dr Powell does not suggest that any of the studies support the suggestion that the effect of the oscillating razor is to cause the hair to raise itself from the skin at an angle. The studies do not demonstrate any change in hair angle. All they show is hair extension. 29 Evidence has been filed by an expert statistician, Dr Jarrett, which is critical of the Gillette tests, and dismisses them as being more in the nature of preliminary studies, rather than independent scientific studies. Dr Leffell also asserts that the Gillette tests do not provide any significant level of support for Dr Powell's views. Again, the validity and effect of these criticisms is not capable of resolution at the level of an application for an interlocutory injunction.

Energizer response to 'hair extension effect' 30 Dr Leffell says that in his clinical and teaching experience as a dermatologist he has not encountered the concept of 'hair extension' as presented by Gillette. He is not aware of any scientific basis for Dr Powell's assertion (par 22 above) that facial hair becomes 'bound' within the hair follicle by sebum deposits and corneocytes adhering together, so that it does not fully release above the skin surface. Dr Leffell also states that Dr Powell's assertion is inconsistent with his own observations of facial hair structure and function during more than 20 years of experience. Dr Leffell gives reasons why the claim made by Dr Powell as set out in par 22 above is without scientific merit, and inconsistent with his experience as a dermatologist. Even if that effect did occur, in Dr Leffell's opinion the oscillating action of the M3 Power razor would not have the effect attributed to it by Dr Powell because washing or shaving the face (even with a non-oscillating razor) would be likely to remove the build up of corneocytes. 31 Both Dr Leffell and Mr Kohler have sworn that whilst they were not retained by Energizer to consider whether the M3 Power razor had a 'hair extension' effect, if there were such an effect, and if it were of practical significance, they would have expected to observe it during the course of the study (unless, in the case of Mr Kohler, the hairs were standing at or around 90 degrees to the skin's surface), but did not do so. 32 However, the study of 8 October 2004 did not involve measurements, and Dr Leffell accepted in cross-examination that measurement (as opposed to optics) is the only true way to determine whether hair extension is occurring.

An undisclosed fact 33 Energizer is in the course of developing, or at least investigating the development of, its own battery powered oscillating razor to compete with the M3 Power razor. Depending upon the precise facts, that might lead to an inference that Energizer believes that such a razor will provide enhanced shaving performance to users of such a product, although no particular inference can be drawn as to the claims which Energizer would make in relation to that product should it proceed to the stage of commercialisation. 34 This matter was not disclosed on the application for an ex parte injunction. It should have been disclosed: Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681-682. It is, however, profitless to consider whether the ex parte order should be set aside on that account, because even if set aside, Energizer could nonetheless move for interlocutory relief as to the future, which in substance, is what has occurred.

A serious question to be tried? 35 Energizer has not sought to make out a case in these proceedings that use of the M3 Power razor does not produce a closer shave, but the evidence referred to above establishes at least a prima facie case that micro-pulses do not cause facial hair to stand up, in the sense of moving to a vertical position, with a change in the angle between hair and face. Dr Powell does not suggest that his studies establish that an oscillating razor will produce this effect. 36 Some of the television advertisements used overseas (for example, Exhibit IN5: 'A Power so Awesome') show what appears to be an electronic wave moving over hairs on the face, with the hairs immediately standing up as a result. Whilst the television images are fleeting, they do appear to show facial hairs moving to a vertical position with a distinct change in the angle between hair and face. But another television advertisement used overseas (Exhibit IN5: "M3 Power') appears to be different. As the male voice over states: 'Turn it on and the micro-pulses raise the hair so the blades can shave closer' an image is shown depicting hairs extending at an angle (as if they are growing). The hairs do not appear to be bending towards a perpendicular position but rather continue their extension at the same angle at which they started at the beginning of the image. 37 I was shown three versions of Gillette's proposed Australian television commercial (Confidential Exhibit CJB7). A 15 second version does not display any image of the claimed hair raising effect. My impression of the two 30 second versions is that they depict hairs extending at an angle (as if they are growing) and then bending towards a perpendicular position with the skin. 38 However, my focus in the present application is not on any particular advertisement, but on the more general question of whether Energizer has established that the claims referred to in the application particularly paragraphs 1(a) and (b), are misleading and deceptive, which, in the context, necessarily involves a consideration of whether an oscillating razor produces a hair extension effect, and if so, whether that effect is sufficient to sustain the claims in question. 39 According to Dr Powell, 'hair extension' raises the tip of the hair up and further away from the surface of the skin, leaving more hair available to be cut. The micro-pulses produced by the M3 Power razor are sufficient to trigger this effect. Gillette contends that this is sufficient to sustain the claim that micro-pulses emitted by the M3 Power razor stimulates, raises or lifts facial hair up and away from the skin. 40 However, the evidence of Mr Kohler and Dr Leffell denies that any hair extension effect arises from the use of the M3 Power razor. I do not agree with Gillette's submission that this evidence does not constitute expert evidence of any utility because it fails to set out the reasoning process on which the opinion is based. Dr Leffell relies upon the following matters as justifying his opinion that the vibrations from the M3 Power razor do not produce a hair extension effect: (a) in his clinical and teaching experience as a dermatologist, he has not encountered the concept of hair extension as presented by Gillette; (b) the studies relied upon by Dr Powell as supporting his contrary opinion, either do not support or do not provide any significant level of support for Dr Powell's views when account is taken of the detailed criticisms which Dr Leffell makes of those studies; (c) the theory advanced by Dr Powell as explaining the reason for the hair extension effect (see paragraph 22 above) is without any scientific merit for reasons which Dr Leffell explains, and is inconsistent with Dr Leffell's observations of facial hair structure and function during his 20 years experience as a dermatologist; and (d) Dr Leffell did not observe the claimed effect during the tests which he attended, and although his brief was the examination of hair raising claims, he expects that if there were a hair extension effect and it was of practical significance, he would have observed it. 41 There is thus a serious question to be tried as to whether the vibrations from the M3 Power razor do produce a hair extension effect. If that issue were resolved favourably to Gillette, a further issue would or may arise as to whether a particular advertisement conveys that the M3 Power razor causes hairs to stand up or stand proud of the skin. On the evidence as it currently stands, there is at least a serious question to be tried as to whether such a claim would be sustained by reference to the hair extension effect, if that effect were established. 42 Contrary to the submission put on behalf of Gillette, in my view, it does not matter that Energizer's evidence as to the absence of a hair extension effect arose only in reply. That is simply a reflection of the way in which the application unfolded. Energizer contended that Gillette was making hair raising claims for its product; Gillette responded by denying that it was making those claims and set up the hair extension effect as supporting its product claims; Energizer's riposte was that the micro-pulses emitted by the M3 Power razor do not produce that effect. 43 Both parties made detailed criticisms in final submissions of the other's evidence including assertions of ineffectual cross-examination and failure to cross-examine, which it is not appropriate or necessary for me to deal with in detail at this stage of the proceedings. It is sufficient for present purposes for me to say that on the materials before me there is a serious question to be tried, and Energizer's case cannot be dismissed as a weak one.

Balance of convenience 44 The M3 Power razor is a new product on the Australian market, and the matters of which Energizer complain in these proceedings are to be at the heart of an imminent nationwide advertising campaign of unprecedented scope to launch the product. If the representations are false, then consumers will be mislead into buying a much more expensive product than the Mach 3 Turbo on a false premise. The fact that a study undertaken in the USA has shown consumer satisfaction with the M3 Power razor in terms of shave closeness, smoothness and comfort is not really to the point if it be shown that the claims which Gillette makes about the new product of which Energizer complains are unfounded. There is evidence from Mr Nuich of Energizer, which I accept, that innovations in razor technology are a strong driver for commercial sales, and may enable a premium price to be charged for the product. 45 Gillette's preparations to launch the product on the Australian market began before the Hamburg proceedings. The evidence does not establish the date upon which Gillette became practically committed to continue with the launch. However, to the extent that Gillette persevered with its launch plans after the Hamburg proceedings, it did so with its 'eyes wide open' to the possibility that Energizer would institute proceedings for injunctive relief in this country as well: Ingersoll-Rand (Aust) Ltd v Industrial Rollformers Pty Ltd [2000] NSWSC 177 at [11]. When Gillette commenced the distribution of the M3 Power razor to distributors and retailers in Australia on 28 January 2005, it was aware of the judgments in the Hamburg proceedings. Gillette did not undertake any further testing of the M3 Power razor to support its claims, or give Energizer any notice of its intention to launch in this country. 46 The launch of the M3 Power razor in the United Kingdom, supported by representations similar to those the subject of these proceedings, was highly successful, with the new razor securing a very significant section of the market in a matter of months. A similar result can be expected to occur here if Gillette launches the product in association with its projected media campaign. I accept Energizer's evidence that a similar performance in Australia would have a very serious effect on Energizer's business, and that this effect may well endure even if the advertising ceases as a result of a final hearing. I also accept Energizer's evidence that it is likely to be very difficult, if not impossible, for Energizer to calculate its actual loss if the M3 Power razor is launched using the claims the subject of these proceedings in its advertising campaign. 47 The continuation of the interim injunctions will cause considerable harm to Gillette's commercial interests in terms of wasted expenditure on advertising and promotional material for the M3 Power razor which contains the representations complained of by Energizer. However, the harm which Gillette will suffer in this respect is likely to be quantifiable, and is covered by Energizer's undertaking as to damages. I also accept Gillette's evidence that a likely consequence of the continuation of the injunction is that the launch may have to be cancelled, and the product re-launched in about three months by which time television advertisement and packaging omitting the matters of which Energizer complains are likely to be available. Again, the harm is likely to be capable of estimation. This is one of those cases in which significant financial loss will be sustained by one party or the other in consequence of either the grant or refusal of interlocutory relief. There may also be some reputation damage to Gillette if interlocutory relief is granted. 48 But, in my view, Energizer has not been guilty of any delay in instituting the proceedings. It moved for an ex parte injunction as soon as it learnt that the M3 Power razor was to be launched in Australia in conjunction with the claim that micro-pulses emitted by the razor stimulate hair up and away from the skin, that being the same claim as was restrained in the Hamburg proceedings. Mr Bruce, Gillette's Business Manager for Grooming conceded in cross-examination that it was feasible for Gillette to have removed the hair raising claims from its advertising materials in late 2004 prior to the Australian launch until the propriety of making these claims had been adjudicated upon by the Hamburg Court. He also agreed that if the claim is in fact false it would be extremely damaging in his opinion for Gillette to continue to make that claim. 49 I do not accept Gillette's contention that harm to consumers is not demonstrated if the matters of which Energizer complains are untrue. The argument that consumers will suffer no harm even if those claims are wrong because (for whatever reason) the razor in fact shaves closer assumes that to be the case. There is no evidence that the M3 Power razor in fact shaves closer than other razors, hence the argument cannot be sustained. In any event, it overlooks the evidence that claimed innovations in shaving technology are a strong driver for commercial sales, and at a premium price. 50 The balance of convenience favours the continuation of the interlocutory injunction until the hearing of these proceedings or further order. The hearing of the proceedings should be expedited. I decline to extend the operation of that injunction in the manner which Energizer seeks because I accept Mr Bruce's evidence as to the time and cost which would be involved in complying with the order as extended, and the likelihood that it would not be productive of material practical benefit.

Conclusion 51 I order that: 1. The injunction granted on 8 February 2005 be continued until the hearing of these proceedings or further order. 2. The hearing of these proceedings be expedited. 3. The matter be returned to the Registry for the purpose of allocation to a docket. 4. Costs be costs in the cause. 5. These orders be entered by the Registry forthwith. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Counsel for the Applicant: F M Douglas QC, M J Darke

Counsel for the Respondent: A J L Bannon SC, C Dimitriadis

Solicitor for the Respondent: Allens Arthur Robinson

Date of Hearing: 17, 18, 21 February 2005