Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2018] FCAFC 105 | Case summary

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2018] FCAFC 105 | Case summary | Zoe

[16]

Competing products 4 Since about 2008, Careline has manufactured and sold its bio-placenta product under the brand name "CHANTELLE Sydney". At [128] of his Honour's reasons, the primary judge found that the "CHANTELLE" bio-placenta product, sold in boxes containing either three or six ampoules of serum, had been available for sale since about September 2014. 5 Homart's bio placenta product was launched onto the market in early 2016, under the brand name "CHÉRI Australia", and also sold in boxes containing either three or six ampoules of serum. 6 The primary judge found that the get-up of the "CHANTELLE" product was "distinctive" ([109]) and "striking" ([188]) and that the competing products were "strikingly similar" ([84]). His Honour concluded that 11 features, taken together, were distinctive of the "CHANTELLE" six ampoule bio-placenta product ([134]). Those features, set out at [82] of the primary judge's reasons, are (emphasis in original): (1) The rectangular box is of a notably solid, chest-like construction. It is made of cardboard, but has a solid feel as if made of wood. Its dimensions are about 26.9 cm in length, by 6.4 cm in height, by 15.9 cm in width. The lid is affixed to the base along a rear hinge and by a ribbon on the left hand side (as it opens). (2) The box is inserted into a translucent rectangular matte plastic sheath. (3) The lid of the box closes onto the base by enveloping the upraised lip of a tray. As noted below, the lip and tray arrangement is physically distinctive. (4) The tray is fixed to the box and is filled with a foam insert into which are twelve cut-outs arranged in two parallel lines of six, the lower of which are shaped to contain ampoules containing the product, the upper six hold clear plastic applicators with white lids. (5) Sitting loose above the tray is a white foam sheet and a brochure of the CHANTELLE product range. (6) The six ampoules are brown and bear writing including the words "Chantelle SYDNEY" and product information. (7) The colour of the box has been described in the evidence of Ms Yeh in a product comparison as "bronze golden". It is a deep rich gold. That colour "saturates" all visible surfaces of the box, inside and out with the exception of surfaces where there is black writing. (8) The exterior four sides of the box contain no writing. (9) The top of the box bears the words, centred, "CHANTELLE SYDNEY". The same words have since about August 2015 appeared on the inside of the lid. (10) The base of the box is a golden base divided by and five horizontal lines. At the top are the words "Chantelle SYDNEY", "BIO PLACENTA" and some product information. Additional information is then set out beneath, arranged between the horizontal lines. (11) After sale, the product may be supplied by vendors in a rectangular carry bag which has a gold rope handle and bears the words, centred, "Chantelle SYDNEY" rendered in the same font as on the box. The bag is also saturated with the bronze gold colour. The dimensions of the bag are about 16.2 cm in length, by 27.4 cm in height, by 7.0 cm in width with the handle and opening at one of the ends. 7 In arguing that the primary judge erred in relation to the distinctiveness of the "CHANTELLE" get-up Homart emphasised the goldness of the box (being (7) in the list above) and the presence of the "CHANTELLE" mark (being (5), (6), (9), (10) and (11) in the list above).

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Parties' reputations in the bio-placenta products 8 It was not necessary, as Homart acknowledged, for Careline to demonstrate a particular reputation in order to prove misleading or deceptive conduct. Instead, as Heerey J said in reference to the Trade Practices Act 1974 (Cth), the predecessor to the ACL, in Woodtree Pty Ltd v Zheng [2007] FCA 1922; (2007) 164 FCR 369 at [34]: In claims under the Trade Practices Act it is not necessary for a plaintiff to establish an exclusive reputation, or indeed any reputation at all. The question is rather whether consumers are likely to be misled or deceived by the defendant's conduct. 9 However, as Homart observed, the assessment of the impugned conduct is not done in a vacuum. Thus in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70; (2007) 159 FCR 397 ("Cadbury") at [99], the Full Court said: Whether or not there is a requirement for some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Part V of the Trade Practices Act. The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. 10 At [134], the primary judge found that, by reason of the combined effect of sales, promotions and display of the "CHANTELLE" bio-placenta product, Careline had established a reputation in not only the brand name "CHANTELLE Sydney", but also (and separately) in the get-up of the product. His Honour continued: This is such that consumers familiar with the CHANTELLE bio-placenta product who observe the packaging but not the name, would nonetheless recognise it to be a product originating from the manufacture[r] of the CHANTELLE bio-placenta product. 11 At [135] and [136], the primary judge made the following findings: In my view the evidence of the competing products enables me to draw the conclusion that to the relevant consumers the particular get-up of the CHANTELLE bio-placenta product is unique. I am satisfied that the CHANTELLE bio-placenta product [had] sufficient reputation in its get-up amongst the relevant consumers by the time of the launch of the Homart product to found an action for contravention of s 18 of the ACL. As at February 2016, the reputation would extend to the overall impression created from the shape and form of the box, the colouring, the internal arrangement, the sleeve and the Gold CHANTELLE carry bag. 12 Homart submitted that the primary judge overemphasised the effect of the uniqueness of the features of the "CHANTELLE" packaging on consumers and attributed a much greater readiness for consumers to be misled by the similarities in get-up than Careline could possibly have achieved in such a simple get-up over a fairly short period of time. Homart emphasised that the relevant question was the reputation of the "CHANTELLE" bio-placenta product from September 2014, when its new packaging was launched, until February or March 2016 when the "CHÉRI" bio-placenta product entered the market. This, Homart submitted, was a relatively short period of time for a "deep and wide reputation in a simple thing like an unadorned box". Homart also observed that there is nothing inherently forbidden about making an identical product; the question is whether doing so is misleading or deceptive. 13 Homart argued that the "CHÉRI Australia" branding on its products meant that its products were distinguished from Careline's products but, in contrast to his Honour's findings concerning the distinctiveness of the "CHANTELLE" get-up, the primary judge found (at [195]) that the "CHÉRI Australia" name was a "relatively weak mark" for distinguishing its otherwise identical products. At [152], his Honour also noted that, unlike the "CHÉRI" bio- placenta products for which Homart used the colour gold, the other "CHÉRI" products adopted a two-toned colouring in which a substantial proportion of the packaging is coloured an alternative colour (in the example shown, black, but in other examples, pink or silver) and use a distinctive wreath shape on the packaging.

[18]

Homart's intention 14 At [34] of his Honour's reasons, the primary judge set out the relevant principles concerning the significance of intention in a misleading or deceptive conduct case: Where the Court has made a finding of intention to deceive, it may more readily infer that the intention has been, or in all probability will be, effective. However, even an imitation of one product by another does not necessarily bespeak of an intention to deceive purchasers; Campomar at [33]. Evidence of intentional copying of a rival trader's get-up may give rise to such an inference, but the role of intention should not be overstated. It is "simply one piece of evidence to be assessed with such other evidence as may be adduced on the issue"; Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd [2000] FCA 756; (2000) 49 IPR 286 at [33], [34] (Sundberg, Emmett and Hely JJ). See also Playcorp Group of Companies Pty Ltd v Peter Bodum A/S [2010] FCA 23; (2010) 84 IPR 542 at [149], Middleton J at first instance (not the subject of the appeal) said: I approach the question of intention in the way expressed by Dixon and McTiernan JJ in Australian Woollen Mills Limited v FS Walton & Co Limited (1937) 58 CLR 641, at 657…: The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. 15 At [138], his Honour referred to Careline's submission that there was: … intention on the part of Homart to copy the entirety of the packaging of the CHANTELLE bio-placenta product, save for minor elements and the name. It submitted that the Court should infer that Homart intended to appropriate at least part, if not all, of Careline's reputation in its packaging and that this finding can be treated as reliable expert evidence that the Homart packaging for its 6-ampoule product is in fact likely to deceive consumers … 16 At [154] and following, the primary judge considered the evidence of Ms Pei-Ching Yeh, the marketing manager/skin care product developer and head of the design team at Homart. As his Honour noted at [162], being the Homart employee "wholly responsible" for the design and development of the "CHÉRI" bio-placenta product, Ms Yeh's intention was "in effect, the intention of Homart". His Honour referred to Ms Yeh's affidavit evidence that she had no intention to mislead or confuse consumers. At [158], the primary judge found that Mr Yeh had frankly admitted that she intended to copy some, but not all features of the "CHANTELLE" bio-placenta product. His Honour then continued: However, in my view Ms Yeh's admissions do not go far enough or reflect the reality of the situation. In my view, her intention in creating the Homart design was to adopt the colour, shape, arrangement and style of the Careline 6-ampoule box and its contents for its bio-placenta product, including its internal arrangement, for the purpose of maximising its impact on the market and to benefit from the reputation developed by Careline in its product. At the time of making the design she had the CHANTELLE bio-placenta product firmly in mind. 17 At [159] and [160], his Honour found: … Ms Yeh did intend to replicate the features of the CHANTELLE bio-placenta packaging, with the exception of its name, with the understanding that the likely consequence would be that the similarities of that packaging would be influential to consumers in their choice of product. In this context, whilst Ms Yeh was responsible for placing the brand name "CHÉRI Australia" on the packaging, I consider that she nevertheless intended that the packaging of the new CHÉRI bio-placenta product would import a reference to the CHANTELLE bio-placenta product by the similarities of the packaging design and general get-up. Indeed, in my view, the objective similarities between the packaging of the Homart and Careline products defy a conclusion that Ms Yeh was not aware that they would have an impact on consumers. 18 At [162], the primary judge concluded: I have set out above a summary of the evidence of Ms Yeh and some of my findings in that regard. In my view, that evidence supports a finding that Homart did intend, by adopting Careline's packaging for its 6-ampoule bio-placenta product, to gain a market advantage at the expense of Careline from the adoption of its packaging. In this context, the intention of Ms Yeh as the employee wholly responsible for the design and development of the new bio-placenta product is, in effect, the intention of Homart. 19 At [163], his Honour set out eight factors that his Honour considered to weigh in favour of the inference of intention to gain a market advantage at Careline's expense. At [164], his Honour stated that these matters weighed "in favour of a finding that there was intentional copying". 20 His Honour then referred to Homart's submission that the choice to use the branding "CHÉRI Australia" served to distinguish the brand and reflected a clear intention not to mislead. At [166], the primary judge rejected the proposition that the mere presence of the "CHÉRI Australia" name was "per se sufficient to dispel the suggestion of an intention to copy". At [167], his Honour concluded that "Ms Yeh (and accordingly Homart) did have the requisite intention. Accordingly, this is one factor to weigh in considering whether misleading or deceptive conduct is made out." 21 At [200], his Honour returned to the issue of Homart's intention, referring to Australian Woollen Mills Limited v FS Walton & Co Limited [1937] HCA 51; (1938) 58 CLR 641 ("Australian Woollen Mills") and Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; (2002) 234 FCR 549 ("Red Bull (appeal)") at [117]. At [202], his Honour said: I have found that Homart intentionally adopted a get-up for its product for the purpose of appropriating part of the trade or reputation of Careline. The choice of the CHÉRI Australia brand name was not, in the particular circumstances of this case, sufficient.

[19]

Primary judge's contravention findings 22 Section 11 of the primary judgment, entitled "Conclusion in relation to Careline's cross-claim for misleading and deceptive conduct", comprises [188] to [204] of his Honour's reasons. 23 At [188], the primary judge referred to his earlier conclusion that the get-up of the Careline six-ampoule bio-placenta product was sufficient to found Careline's action under s 18 of the ACL. His Honour also found that the get-up of that product was striking and unique and was, at the time of the launch of Homart's product, distinctive of Careline's bio-placenta product. 24 At [190], his Honour found that, by advertising and selling the "CHÉRI" six-ampoule variant, Homart had engaged in conduct in breach of s 18. His Honour gave the following reasons for this conclusion: (1) With the exception of the name "CHÉRI Australia", Homart had appropriated all of the features of the get-up of the "CHANTELLE" bio-placenta product ([192]). (2) The unique combination of features comprising the get-up of the CHANTELLE bio- placenta product was "eye-catching". They extended to the packaging in open or closed configuration and provided strong visual cues by which a consumer would note and remember the product. From this combination, quite separately to the name, the consumer was informed of the origin, quality and type of goods being purchased. Homart had taken all of those cues ([194]). (3) The suggestion conveyed by the get-up was not dispelled sufficiently by the use of the "CHÉRI Australia brand name" because that name was "a relatively weak mark for distinguishing otherwise identical products" ([195]). (4) The trade circumstances demonstrated that the display of the bio-placenta products in stores often may not clearly show the trade mark. In those circumstances, consumers were likely to use the visual cues provided by the get-up of the packaging to indicate the product which they seek rather than the product name ([198]). (5) It was likely that "a not insubstantial number of persons within the relevant class, who are aware of the CHANTELLE bio-placenta product, would be diverted from a search for that product by the get-up of the Homart product. They may note that something seems different about the brand name, but be convinced by the other similarities in the get-up that her or his recollection as to the brand name was mistaken. A consumer familiar with the CHANTELLE bio-placenta product may well recall it's get-up, but have no or an imperfect recollection of its name and acquire the CHÉRI bio-placenta product believing it to be the CHANTELLE bio-placenta product. This would be especially likely in circumstances where the store does not stock both brands" ([199]). (6) His Honour's findings about Homart's intention led to the application of the principle in Australian Woollen Mills ([200]). 25 At [203], his Honour considered the three-ampoule variant of the "CHÉRI" bio-placenta product and stated that the differences between the get-ups of the competing three-ampoule products made Careline's case more difficult. His Honour said: [T]he box of the 3-ampoule CHÉRI bio-placenta product is smaller and less bulky, the lid closes in a different way, there is no display tray and the colour gold is a little more silvery than bronze. On the other hand, the saturated colouring effect, the similarities in the writing on the base of the box and on the ampoules themselves and the absence of writing on the sides of the box are adopted on the 3-ampoule CHÉRI bio-placenta product. The evidence reveals, as one would expect as a matter of course, that the 3- ampoule and 6-ampoule CHÉRI bio-placenta products are sold side by side. These matters lead me to the view that one cannot meaningfully distinguish the effect of the representations conveyed by the more visually obvious 6-ampoule get-up and those of the 3-ampoule variant.

[20]

Is leave to appeal required? 26 Homart sought leave to appeal to the extent that it was required by s 24(1A) of the Federal Court of Australia Act 1976 (Cth). By s 24(1A), an appeal may not be brought without leave from an interlocutory judgment of the Court constituted by a single judge exercising the Court's original jurisdiction. 27 Careline contended that leave to appeal was not necessary because the orders appealed against are final and not interlocutory. The order dismissing Homart's amended application was identified as the clearest example. However, if leave was required, Careline did not oppose it being given. 28 "The test for determining whether a judgment is final, as distinct from interlocutory, is whether the judgment finally determines the rights of the parties to the proceedings": SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd [2015] FCA 787; 114 IPR 231 ("SNF") at [134] citing Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; (1984) 54 ALR 767 at [2] to [3] ("Computer Edge"). In Computer Edge, a judgment comprising final orders (including two permanent injunctions) and an interlocutory order facilitating the determination of a claim for damages was held not to be a final judgment because it left undetermined the question whether any, and what damages were payable. Computer Edge was followed by the Full Court in Miki Shoko Co Ltd v Merv Brown Pty Ltd (1988) ATPR 40-858. 29 In TAG Pacific Ltd v McSweeney [1992] FCA 191; (1992) 34 FCR 438 ("Tag Pacific"), Olney J distinguished Computer Edge, finding that leave to appeal was not required where the Court had exercised its power to try the issue of liability before and separately from the issue of the quantum of damages. At 444, his Honour said that, in those circumstances: … the rights "that were at issue" in the proceedings presently under review related solely to the question of liability and those rights have been finally determined as between the parties. 30 A similar approach was taken by Tracey J in Damorgold Pty Ltd v JAI Products Pty Ltd [2014] FCA 448. 31 However, in Oliver Hume South East Queensland Pty Ltd v Investa Residential Group Pty Ltd [2017] FCAFC 141; (2017) 348 ALR 385, Dowsett J noted (at [21]) that the correctness of Tag Pacific had been doubted by Full Courts in Landsal Pty Ltd v REI Building Society [1993] FCA 171; (1993) 41 FCR 421 at 431 and NZI Securities Australia Ltd v Poignand [1994] FCA 46; (1994) 51 FCR 584 at 594. 32 Dowsett J also expressed the tentative view that Tag Pacific is inconsistent with the decision in Computer Edge, and accepted Flick J's statement, in Anying Group Pty Ltd v Wang [2012] FCA 702 at [8] that, in circumstances where orders are made, some of which are final in nature and some of which are interlocutory, all of the orders are "interlocutory" for the purposes of s 24(1A). 33 In this case, there has been a final determination of Homart's claim, but the cross-claim has not been finally determined because damages on the cross-claim are yet to be assessed. A cross- claim is a separate proceeding: SNF at [139]. Accordingly, on the weight of the authorities above, leave to appeal is required from the judgment on the cross claim. 34 In the absence of opposition to the grant of leave to appeal, to the extent that it is required, leave should be granted. The judgment has determined all issues of liability on the cross-claim. Leave should readily be granted if, as a practical matter, the interlocutory judgment has the effect of determining an important issue in the proceeding: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 158; (2011) 217 FCR 238 at [33].

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Principles governing appeal 35 Homart acknowledged that its first task was to demonstrate error in the trial judge's findings or conclusions: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 ("Branir") at [21]. 36 The relevant principles were explained by the Full Court in Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104; (2016) 247 FCR 570 at [45] to [47] as follows: [T]he principal role of an appellate court on a re-hearing is that set out in Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551, where Gibbs ACJ and Jacobs and Murphy JJ stated that: ... in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what the proper inference to be drawn is, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it. It is also not in doubt that in the context of an appeal concerning misleading or deceptive conduct, as this Court in Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286; [2000] FCA 756 at [16] (per Sundberg, Emmett and Hely JJ) observed: Once the primary facts have been found, the question whether conduct is misleading or deceptive or is likely to mislead or deceive is itself a conclusion of fact. Even where primary facts are not in dispute, an evaluation of facts not depending on assessment of credibility requires appellate caution in reversing the findings of a trial judge. The nature of the issue that arises in such a proceeding, involving as it does matters of impression, is one in which particular respect and weight should be given to the decision of the trial judge, unless some error in his judgment is demonstrated. Nevertheless, such a principle does not preclude an appellate court from reaching a different conclusion from the trial judge if it forms the view that conduct is not misleading or deceptive, even if it was found to be so by the trial judge... We accept that the appeal before us is by way of a rehearing, but to so conclude does not obviate the need to show error on the part of the primary judge. Where the issue concerns a matter of impression or evaluation, the demonstration of error is not straight-forward. In this respect, we would adopt the observations of Allsop J (as he then was) in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at [24] to [30]. In such a case, the appellants' onus to establish error will not be easily discharged... 37 Recently, in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93, a Full Court considered the nature of appellate review in a case involving findings of misleading or deceptive conduct, in a manner which does not depart from the principles set out above. The analysis of Allsop CJ (Markovic J agreeing) is at [2] to [10] and of Perram J (Markovic J also agreeing) is at [45] to [55] of the reasons.

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Alleged errors in primary judge's reasoning 38 Homart argued for the following two propositions: (1) the primary judge erred in holding that the presence of a "different prominent brand name" on the Homart packaging, which Homart described as "a simple single colour rectangular box of relatively expensive personal care goods", was insufficient to distinguish the Homart goods; and (2) the primary judge's pathway to that conclusion was affected by an incorrect application of Australian Woollen Mills. 39 Homart contended that the primary judge made the following six errors in his Honour's assessment of whether the respondents engaged in misleading or deceptive conduct: (1) failing to consider the high consumer outlays associated with the "regular purchases" of expensive products; (2) failing to consider the absence of a single instance of confusion by a consumer familiar with the "CHANTELLE" product; (3) failing to find that the colour gold was commonplace enough to affect consumer perception of the Homart and Careline products, even if other gold packages did not have the full "combination" of features; (4) failing to take proper account of the "CHÉRI" brand as sufficiently distinguishing Homart's products from the "CHANTELLE" products when both were packaged in an unadorned rectangular gold prism of particular dimensions; (5) taking into account factors that were not conduct of Homart or did not bear on its conduct, namely: (a) labels sometimes not being visible when boxes are stacked horizontally in retail stores; (b) photos of the product being viewed by consumers and retail staff on small screens such that branding was indistinguishable; (c) consumers choosing to refer to "gold boxes" when inquiring about the product with retail staff; (d) evidence concerning purchases by customers who are not "familiar" with the product; and (e) that regular customers would take "less time and care" in their selection of a familiar product, without acknowledging that regular customers would be less likely to mistake a brand; and (6) mistakenly finding that the principle in Australian Woollen Mills was enlivened in relation to the six-ampoule product. 40 Homart contended, alternatively, that the primary judge erred in not distinguishing the three- ampoule products from their six-ampoule counterparts, and in failing to consider the effect of: (1) the order-of-magnitude lower volume of sales of the three-ampoule products relative to the six-ampoule products, and consequently weaker reputation in the "CHANTELLE" three-ampoule get-up; (2) the significant physical differences between the three-ampoule variants; (3) the absence of any finding of improper intention; and (4) the presence of third-party products on the market at the relevant time that "were much more similar to the CHÉRI [three]-ampule product than was the case in respect of the [six]-ampule products". 41 Homart also contended that, on the evidence, the primary judge could not have been and should not have been led to the conclusion that his Honour reached about the likelihood of deception.

[23]

Failure to consider "high consumer outlays" 42 Homart argued that the primary judge erred by failing to take into account the "high consumer outlays" associated with the regular purchases of the competing products. It submitted that his Honour did not note the evidence that multiple boxes were often purchased in one transaction, resulting in a more expensive purchase. Homart argued that the primary judge erred by failing to take into account the "large outlays", whether considered as a single purchase or as a sequence of regular purchases, which would "necessarily" make consumers who were familiar with the "CHANTELLE" product much less likely to overlook the fact that their cosmetic product was labelled "CHÉRI". 43 Homart argued that the expense of a product is an important factor when considering how likely consumers are to overlook labelling distinctions. Its submissions placed emphasis on Conti J's statement in Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited [2001] FCA 1228; (2001) 53 IPR 481 ("Red Bull (trial)") at [73] that: [T]here is a factual distinction, generally speaking, between deception concerning the kind of product here involved, and for instance the furniture and fashion clothing cases, since in the latter circumstances, prospective customers will tend to more closely examine the commodity, and in particular the label attached thereto, before committing to a purchase … one sees again judicial emphasis upon the distinction involved in circumstances involving inexpensive products from those of comparably more expensive products such as clothing and furniture … 44 Homart's written submissions pointed to cases involving differently labelled and expensive products, like the furniture in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 (although there the labels were not prominent and may have gone missing). In such cases the likelihood of deception is said to be low. It argued these cases are to be contrasted with those involving differently labelled but cheap products bought on impulse (such as the beverage cans in the Red Bull cases), in which deception is more readily found. 45 Homart did not though point to evidence in support of its premise that the competing products, whether bought in single or multiple box purchases, involved "high consumer outlays" for the relevant consumers. Nor did it point to evidence that the expense of the products was an important factor affecting the likelihood of consumers being misled by Homart's packaging and get up. 46 At [75] of his Honour's reasons, the primary judge made findings concerning the prices at which the different products were sold: the "CHANTELLE" products were sold within the range of $48 to $96 for the six-ampoule product and the "CHÉRI" six-ampoule products were sold within the range of $49 to $68. His Honour found that the products were intended for daily or, if not daily, fairly frequent use. His Honour also found that consumers would be expected to make fairly regular purchases of the products, noting that the underside of the "CHÉRI" product states that one ampoule will give one week's worth of usage. 47 Homart did not submit that these findings were not open to the primary judge. As Careline submitted, the findings concerning frequency of use and purchases tend against the contention that the purchases involved "high consumer outlays" for the relevant consumers. 48 We do not consider that the primary judge was required to characterise regular purchases of the products as involving "high consumer outlays". We accept the broad proposition that consumers are likely to pay more careful attention when a purchase is expensive. However, given the wide range of prices for cosmetics, it is not obvious that consumers would consider these products expensive; there was no evidence that consumers perceived regular purchases of the products as involving high outlays; and no evidence directed to the impact of the competing products' prices upon the likelihood of customers being misled. Further, at [76] and [77], his Honour addressed the evidence as to the perceived habits of shoppers for the products and the competing submissions as to the likely degrees of their pre-purchase deliberation, and concluded that the evidence did not permit a relative assessment as to the greater or lesser degrees of such deliberations. The primary judge found that consumers were likely to take "some care" in selection of the products as they are cosmetics to be applied to the skin. 49 In our view the primary judge gave proper attention to the level of care or attention that consumers were likely to give when considering purchase of the competing products. We do not accept that his Honour's consideration of the price of the bio-placenta products involved error.

[24]

Failure to consider absence of evidence of relevant confusion 50 Homart did not suggest that the primary judge failed to recognise the potential significance of the absence of any evidence of confusion. His Honour did so at [33], citing Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) [2006] FCA 446; (2006) 69 IPR 23 at [81]. Rather, Homart contended that the primary judge erred in failing to have regard to the absence of any evidence of confusion experienced by consumers familiar with the "CHANTELLE" branded product (being the language of the Full Court in Cadbury set out at [9] above). 51 Paragraphs [179]-[187] of the primary judge's reasons are entitled "Evidence of confusion". At [179], his Honour identified Homart's submissions that there was no evidence of actual confusion, or alternatively that any instances of such confusion are to be accorded no weight, and that either assessment of the evidence told in Homart's favour. 52 After considering the evidence of Mr Fang Zheng, concerning some confusion on his part as well as on the part of a shop assistant with whom Mr Zheng dealt, his Honour concluded (at [185]) that "the evidence of confusion deserves little weight". 53 The primary judge referred to the evidence of Mr Tao Li, Mr Jianping Zou and Ms Sha Ma (witnesses familiar with the Careline product who were initially confused but ultimately not misled), and concluded at [187]: Ultimately, I give the evidence going to confusion or the absence of confusion little weight. The matter is to be decided having regard to the other considerations to which I have referred above. 54 His Honour did not expressly advert to the fact that there was no first-hand direct evidence of confusion from a consumer familiar with the "CHANTELLE" products. 55 In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634; (2014) 317 ALR 73, Allsop CJ made the following remarks concerning the role of confusion evidence, at [45]: Evidence that someone was actually misled or deceived may be given weight. The presence or absence of such evidence is relevant to an evaluation of all the circumstances relating to the impugned conduct. Where the conduct and representations are to the public generally and concern a body of simple direct advertising, the absence of individuals saying they were misled may not be of great significance. There was no such evidence here. The ACCC was criticised for that. That criticism is unfounded. The objective assessment of advertising using ordinary English words in an attempt to persuade can be undertaken without the lengthening of a trial by the bringing of witnesses of indeterminate numbers. Language, especially advertising, seeking to raise intuitive senses and associations, can have its ambiguities and subtleties. The task of evaluating the objective character and meaning of the language in the minds of reasonable members of the public is not necessarily one that will be assisted in any cost effective manner by calling members of the public. The question is one for the Court: Taco Company of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. 56 In Red Bull (appeal) at [108] Weinberg and Dowsett JJ observed that the absence of evidence may make it difficult to demonstrate the likelihood of deception when the allegedly offending product has been in the marketplace for some time. The absence of evidence of actual deception was acknowledged to be relevant in Facton v Toast Sales Group [2012] FCA 612; (2012) 98 IPR 13 at [175] (in a case where the alleged misrepresentations concerned the sale of certain products with the approval of the trade mark owner), and "not entirely irrelevant" in 260 Oxford Street Pty Ltd v Premetis [2006] NSWCA 96 at [84]. In Chase Manhattan Overseas Corp v Chase Corp Limited (1986) 12 FCR 375 at 380, Neaves J said that the absence of evidence of deception was "a factor to be weighed in the scales". In Ricegrowers Ltd v Real Foods [2008] FCA 639; (2008) 77 IPR 32 ("Ricegrowers") at [105], Rares J concluded that the absence of evidence of deception in that case suggested that no one was deceived. 57 These cases illustrate that the significance of an absence of evidence of deception may vary according to the circumstances of the particular case. 58 Homart submitted that, other than the evidence of Mr Zheng (mentioned above), there was no evidence of confusion. It contended that Mr Zheng's evidence did not fit into the class of persons who are capable of being confused because he was not familiar with the "CHANTELLE" product, in accordance with the Full Court's decision in Cadbury at [99]. Careline accepted that there was no first-hand direct evidence of confusion, but pointed to hearsay complaint evidence. It also submitted that the degree of familiarity required for confusion can be very small, citing Bridge Stockbrokers Ltd & Moore v Bridges & Ors [1984] FCA 430; (1984) 4 FCR 460 at 467 and I [1988] FCA 647; (1988) 13 IPR 323 at 340. 59 In our view, the primary judge was not required to conclude that the absence of first-hand direct evidence of confusion from a consumer familiar with the "CHANTELLE" products was significant in the circumstances of this case. It was a matter of speculation whether a complaint would have emerged during the period that the competing products were both in the market if there had been confusion. Further, the fact that the get-ups of the competing products were effectively identical apart from their brand names provides an obvious and plausible explanation for the absence of complaints. 60 We are not satisfied that Homart established any error in his Honour's reasons on this issue.

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Failure to find gold "commonplace" 61 Homart contended that the primary judge wrongly failed to find that the colour gold was commonplace enough within the market for similar cosmetics to affect consumer perception of the parties' products, even if other gold packaged cosmetics did not have the full "combination" of features the Homart and Careline products shared. 62 Homart noted the finding of the primary judge, at [119], that "in general terms the colour gold is of significance to the relevant consumers, being largely persons of ethnic Chinese origin". His Honour found that this fact was neutral or negative to Homart's submissions, saying that it suggested that "these consumers would be well used to goods of gold appearance and would be familiar with different hues and textures of the colour gold". His Honour found that only the "CHANTELLE" and "CHÉRI" products were the same colour as each other, saying: No other product identified by Homart utilised the same matte bronze-gold colour with minimalist additions in the form of a centred black name on the top surface, and otherwise no adornment or writing on the visible surfaces. The product most closely resembling the rich yellow-gold colouring of the CHANTELLE bio-placenta product was the SHELANO product. To my eye it has a similar bronze-gold colour to that of the CHANTELLE bio-placenta product. However, this product had across the entirety of its upper-most surface embossed words LIGHTENING SKIN repeated and in raised gold shiny lettering a logo, and the words SHELANO AUSTRALIA beneath which was a black and white label identifying the product within a rectangular golden frame. The sides of the box had writing on them, including SHELANO AUSTRALIA and the words in black, SKIN LIGHTENING PROGRAM. The lay-out of the base of the box was quite different. In addition, the SHELANO box was of a completely different construction to the CHANTELLE box … 63 Homart referred to the evidence of gold-coloured cosmetic products on the market when Homart launched its products and submitted that it was sufficient to demonstrate that a gold colour was sufficiently present in the market. It also observed that, as gold was a luxury colour, there was nothing inherently distinctive in that choice of colour for the packaging of what it described as "a luxury cosmetic product". 64 Homart submitted that, on these findings and the evidence of other products, the reasoning of Heerey J in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470; (2008) 75 IPR 557 ("Cadbury (No 8)") at [57]) is applicable. In that passage, Heerey J said: [L]ack of exclusivity remains relevant at a factual level. The more extensive a plaintiff's reputation, the easier it will be to show that any contrary message that might be conveyed to consumers by third-party usage can be discounted. Conversely, knowledge of third-party usage can impact on the likelihood or otherwise of consumers being misled or deceived. The hypothetical reasonable chocolate consumer could think along these lines: Purple makes me think of Cadbury chocolate. But I know that other chocolate makers' products such as Violet Crumble use purple. So Cadbury does not have a monopoly in the use of purple for chocolate. Seeing chocolate in a purple wrapper with Darrell Lea's name on it in a Darrell Lea shop does not makes me think it comes from Cadbury. 65 At [108], the primary judge referred to this passage of Cadbury (No 8) as authority for the following proposition: The question of fact in relation to this evidence is whether third party usage of the identified features of get-up can relevantly be said to discount or diminish the force of the representation conveyed to consumers by reason of the get-up of the product in suit. 66 At [132], his Honour again referred to [57] of Cadbury (No 8), this time in support of the following statement: The hypothetical reasonable consumer might see a packaging feature (for instance, the use of gold colouring) and perceive it to be a general use of colouring rather than being indicative of a particular manufacturer. 67 Homart did not contend that the primary judge had misunderstood the legal position, as articulated by Heerey J in these passages. Rather, it complained that the primary judge "insisted" that third party products were only relevant if they displayed the full "combination" of features of Careline's products. This approach was said to be revealed by his Honour's conclusion, at [133]: The extensive evidence upon which Homart relied to make good this submission [that the packaging features relied upon by Careline are "common place"] did not, however, rise to the level required. The evidence of sales of gold coloured cosmetic products does not demonstrate that the combination of packaging elements used by Careline in the CHANTELLE bio-placenta product is in fact used by any other manufacturer. 68 Underlying Homart's submission is the contention that Careline's packaging did not have any distinguishing features apart from its brand. As Homart's written submissions put it, "beside the prominent brand, the gold colour is all that distinguished the outside of the box". 69 In our view, the primary judge was entitled to find, based upon his Honour's impression and evaluation of the evidence, that the "CHANTELLE" packaging was distinctive in the respects identified by his Honour and, thus, to reject Homart's case that Careline's products were distinguishable by only their brand, in a sea of gold packaged cosmetic products. Indeed, we would have reached the same conclusion on the evidence. Homart did not establish any error on the part of the primary judge in reaching those conclusions based upon impression. Having identified distinctive features of that packaging, it was legitimate for his Honour to consider whether an ordinary reasonable consumer would differentiate that packaging from a range of other gold packaging. We do not detect any error in the primary judge's consideration of the particular features of the third party packaging and whether they exhibited the distinctive features that his Honour had identified in the "CHANTELLE" packaging. 70 Homart also submitted that had the primary judge considered the "individual features" of third party products, his Honour would not have found at [109] that "there [was] insufficient evidence of third party usage of these products to found a conclusion that they played a role in consumer perception of the CHANTELLE bio-placenta product". At [108], the primary judge identified as a relevant question whether "third party usage of the identified features of get-up can relevantly be said to discount or diminish the force of the representation conveyed to consumers by reason of the get-up of the product in suit". At [109], his Honour referred to the dispute between the parties as to the extent to which the Court could accept that any of the competing products identified were available for sale in Australia before the relevant date. His Honour concluded that it was not necessary to resolve that aspect of the controversy, preferring to conclude "having regard to all of the evidence … that the evidence tends to confirm, rather than dispel, the conclusion that indeed the get-up of the CHANTELLE bio-placenta product was distinctive." Homart did not make oral submissions directed to this finding. The primary judge was not required to consider "individual features" of get-up. It follows that we reject this aspect of Homart's appeal.

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Failure to take proper account of "CHÉRI" branding 71 Homart contended that the primary judge erred by failing to conclude that the "CHÉRI" brand sufficiently distinguished Homart's products from the "CHANTELLE" products when both were packaged in an unadorned rectangular gold prism of particular dimensions. 72 At [134], the primary judge concluded: [B]y reason of the combined effect of sales, promotions and display of the CHANTELLE bio-placenta product, Careline has established a reputation in not only the brand name Chantelle SYDNEY, but also in the get-up of the product. This is such that consumers familiar with the CHANTELLE bio-placenta product who observe the packaging but not the name, would nonetheless recognise it to be a product originating from the manufactur[er] of the CHANTELLE bio-placenta product 73 At [165] and [166], his Honour noted: The get-up of a product may contain within it a misrepresentation as to origin even where the name on the product is different to the original which is said to have been replicated. In each case it will be a question of fact and degree; see Peter Bodum at [244] (Greenwood J, Tracey J agreeing at [267]); Red Bull at [133]; compare with Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876; (2000) 100 FCR 90; Dr Martens Australia Pty Ltd v Rivers (Australia) Pty Ltd [1999] FCA 1655; (1999) 95 FCR 136. A weak or non-distinctive trade mark may not be sufficient to distinguish the rival product from the distinctive product sought to be copied; Peter Bodum at [244]. Ultimately the question of whether there is misleading or deceptive conduct or passing- off is a matter for the Court. I do not accept that the mere presence of the CHÉRI Australia name is per se sufficient to dispel the suggestion of an intention to copy. 74 At [192] and following, the primary judge stated, relevantly: [192] As I have noted, with the exception of the name CHÉRI Australia, Homart has appropriated all of the features of the get-up of the CHANTELLE bio-placenta product. In this regard, I refer to section 6 above. I am mindful of the fact that in a get-up case, a difference in the name of a product can be compelling. In most cases, it is likely to be. However, in my view the present case falls comfortably within the exception for the following reasons… [193] In the context of a case such as the present, the relevant misrepresentation is implicit. It is that a bio-placenta product with the get-up of the Homart product is the same as, or associated with, the manufacturer of the CHANTELLE bio-placenta product. In such a case, the "rapier of suggestion" may well be subtle, and designed to influence prospective customers in favour of Homart's product upon the basis of an underlying assumption. In the present case, that assumption is that two products of the same distinctive get-up are from the same source: Pacific Dunlop Limited v Hogan (1989) 23 FCR 553 at [586]. [194] The unique combination of features making up the get-up of the CHANTELLE bio-placenta product are eye-catching. They extend to the packaging in open or closed configuration and provide strong visual cues by which a consumer would note and remember the product. From this combination, quite separately to the name, the consumer is informed of the origin, quality and type of goods being purchased. Homart has taken all of those cues. [195] The suggestion conveyed by the get-up is not, in my view, dispelled sufficiently by the use of the CHÉRI Australia brand name. The name CHÉRI Australia is a relatively weak mark for distinguishing otherwise identical products because; (a) such reputation as Homart has in the mark CHÉRI is weak and has been significantly dissipated by reason of Homart's choice to use it in packaging distinctly different to the products in the balance of the CHÉRI range (see section 9 above); (b) the phonetic and visual similarities between the first letters of both the CHÉRI and CHANTELLE marks diminish the effect of the use of different words (see [85] above). In this context both Chantelle and Chéri are French sounding names. Both commence with "Ch…". To persons not familiar with French, they are likely to be weak means of distinguishing otherwise identical products (unlike "Andronicus" and "Moccona" in Stuart Alexander). They are likely to be perceived as words that convey little or no meaning (I make this observation without particular regard to the level of English literacy of the target market and assuming it to be roughly on par within native English speakers); and (c) the addition of the reference to "Australia" has a similar local geographical connotation to "Sydney" as used in the CHANTELLE bio-placenta product. … [198] Further, the trade circumstances to which I have referred in section 5 above demonstrate that often the display of the bio-placenta products in stores may not clearly show the trade mark, for instance, when the products are stacked one on top of the other. In those circumstances consumers are likely to use the visual cues provided by the get-up of the packaging to indicate the product which they seek rather than the names. 75 Homart submitted that the notion of customers seeking the "packaging but not the name" was "unrealistic" in the case of the products before the Court. In support of that submission, Homart referred to the primary judge's findings that some care would be expected to be taken in selection of the products, as skin care cosmetics (at [76]) and that the relevant consumers, namely persons of mostly ethnic Chinese origin whose first or preferred language was Cantonese or Mandarin, were "no less able" to distinguish brand names rendered in the Roman alphabet than native English speakers (at [196]). Homart also noted that while the "CHÉRI" branding was not descriptive it was prominent, and an inseparable and central part of the packaging. Homart referred to what it described as "obvious visual distinctions between the ["CHANTELLE" and "CHÉRI" brands], namely: the words themselves, their capitalisation, size, presence of graphical accent [above the "E" in "CHÉRI"], CHÉRI's distinct serif-font, the presence of a graphical watermark emblem [in the "CHÉRI" mark], and the different place names "Australia" and "Sydney" [used in "CHÉRI Australia" and "CHANTELLE Sydney" respectively]". Homart contended that these matters should have led to a finding that the "CHÉRI" branding displaced any possible misleading impression that may have arisen from the similarities between the get-ups of the products. 76 Homart further contended that "[t]he packaging was entirely plain. The CHÉRI brand name was very prominent. If in such circumstances, a prominent brand name is an insufficient "disclaimer" then, in effect, Careline has obtained a monopoly in unadorned coloured boxes of a particular size". This, Homart argued, is a proposition that has been repeatedly rejected, citing WH Burford & Sons Ltd v G Mowling & Son [1909] HCA 83; (1908) 8 CLR 212 at 22; JB Williams Co v H Bronnley & Co Ltd (1909) 26 RPC 765; Payton & Co v Snelling, Lampard & Co Ltd (1900) 17 RPC 48; and Ricegrowers at [64]. 77 Homart also argued that the primary judge was too dismissive of the "CHÉRI" trademark. Homart noted that the volume of accumulated sales of "CHÉRI" branded products was comparable to the sales of "CHANTELLE" branded products: sales of around 90,000 units of "CHÉRI" products including non-placenta products since 2004, compared with sales of around 96,000 units of the "CHANTELLE" bio-placenta product since 2008. However, Homart did not expressly contend in oral submissions that the primary judge had made any error in reaching his conclusion that the "CHÉRI" brand was weak. 78 Moreover, the underlying premise of Homart's argument is that the Careline packaging was not distinctive. As we have concluded above, it was open to the primary judge to find that packaging to be distinctive in the respects that his Honour identified. Consequently, the primary judge was not required to find that the competing products "both were packaged in an unadorned rectangular gold prism of particular dimensions" or that the packaging was "entirely plain". Nor do we accept the criticism that his Honour's findings confer on Careline a monopoly on unadorned coloured boxes of a particular size. Rather, it is a matter of impression whether the "CHÉRI" brand distinguished Homart's products from the Careline products and it was open to the primary judge to conclude that the "CHÉRI" brand does not serve to differentiate Homart's products. 79 Further, having examined the packaging ourselves, we agree with the primary judge's impression for the reasons given by his Honour. We reject Homart's submission that the matters identified above are "obvious visual distinctions" between the two products as they appear on boxes of the same size and construction, and of virtually the same colour, and in the same location in the centre of the lid of each box. We agree with Careline's submission that they are unlikely to serve as real points of distinction in the mind of a prospective purchaser. 80 We do not accept that the notion of customers seeing the "packaging but not the name" is necessarily unrealistic where the packaging bears so many similarities; the names are phonetically and visually similar (as the primary judge observed); and the reputation in the brand "CHÉRI" was not strong, and can be expected to have been dissipated by the use of gold packaging that did not match the two-tone colour scheme used by Homart's other "CHÉRI" branded products, and mentioned at [12] above. 81 We reject Homart's contention that the primary judge erred in failing to take proper account of Homart's use of the "CHÉRI" brand as distinguishing its bio-placenta products.

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Regard to matters that do not bear on Homart's conduct 82 The parties were in agreement that causes of confusion that are not a defendant's fault, or do not bear a sufficient connection between the impugned conduct and any confusion, must be disregarded: Telstra Corporation Limited v Phone Directories Company Pty Ltd [2014] FCA 568 at [564]; Hornsby Building Information Centre Ltd Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216 at 228 ("Hornsby Building Information Centre"); Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235 at [266]-[267]; Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 170; (1982) 42 ALR 177 at 203. 83 Homart argued that the following matters should have been disregarded by the primary judge on this basis: a) Labels sometimes not being visible when boxes are stacked horizontally ([74] and [198]). b) Consumers choosing to occasionally view photos on miniaturised screens ([78], incorporated at [198] by reference to "section 5"). c) Identification of the "Chantelle" bio-placenta product products by the shorthand "the gold box" by some consumers ([79] and [189]). The logical problem with this claim is said to be that merely because some consumers use a shorthand expression - "gold boxes" - to refer to a product that does not evidence that there is a reputation of the kind (exclusive or non-exclusive) that founds confusion in the particular design as a whole. d) Evidence concerning purchases by consumers who are not familiar with the product ([71], [76], [185]): His Honour appeared to consider the behaviour of such consumers (namely, gift shoppers) as relevant. e) His Honour's reasoning that regular customers might take less time in selecting a product, seemingly without balancing this against the necessary logical and ameliorating corollary that such "regular" consumers would also be proportionately more familiar with the brand and much less likely to take no or insufficient account of the different brand "CHÉRI" ([76]). 84 In our view, the primary judge was not required to disregard (a) because, as identified in Careline's submissions, the stacking of the boxes was a natural and obvious consequence of the distribution by Homart of its products at the outlets referred to in the evidence. The primary judge found, at [74], that there was no systematic manner in which the CHANTELLE and CHÉRI bio-placenta products are displayed or sold, and the stores were often small and crowded. 85 Likewise, again as identified in Careline's submissions, the primary judge was not required to disregard (b) because the use of mobile devices equipped with relatively small screens for online shopping and product research is ordinary and expected consumer behaviour, particularly where Homart used the internet to promote its goods. 86 As to (c), the primary judge referred to the use of the "gold box" shorthand as evidence of reputation (at [189]) and not as a circumstance causing confusion. On a fair reading, the primary judgment at [79] records a finding as to the use of the "gold box" shorthand but not any consequent finding about confusion. 87 As to (d), at [71] and [76], the primary judge was setting out findings based on this review of the whole of the evidence. His Honour did not make consequential findings about likelihood of confusion. At [185], his Honour addressed Careline's reliance on aspects of this evidence to show confusion, and explicitly gave the evidence little weight in that regard. 88 As to (e), at [76] of his Honour's reasons, the primary judge set out his conclusions concerning the evidence of perceived habits of shoppers. His Honour does not make a finding of confusion at this point in the judgment. 89 Accordingly, we are satisfied that none of the matters raised reveals any error on the part of the primary judge.

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Misapplication of Australian Woollen Mills 90 At [200], his Honour stated that the findings as to Homart's intention he had expressed in section 8 of his Honour's reasons (entitled "The development of the CHÉRI bio-placenta product"), led to his application of Australian Woollen Mills. 91 Homart contended that the primary judge erred in applying the principle in Australian Woollen Mills as a step in reaching his ultimate conclusion that Homart had engaged in misleading or deceptive conduct. Homart alleged the following four flaws in his Honour's reasoning on this point: (1) His Honour enlivened the principle without making a "vital" finding that Ms Yeh (and thereby Homart) intended to deceive consumers rather than merely attract familiarity. (2) If his Honour did make a finding of intention to deceive, then that finding involved a wholesale rejection of Ms Yeh's detailed account of her subjective purposes when developing the packaging of Homart's product. Such a finding was made without Ms Yeh being given an opportunity to address it in cross-examination, and without explicit reference to the seriousness of the finding. (3) His Honour misapprehended Ms Yeh's evidence concerning the change in Homart's packaging from two-tone to a single tone and concerning the "Laviena Ultra Radiance Skin Care Complex" product, a cosmetic produced by STN International Pty Ltd ("Laviena product") that Homart alleged shared features with the CHANTELLE and CHÉRI products. (4) In determining Homart's intentions, his Honour looked only at the design and development process and did not consider the evidence of Homart's marketing and advertising. 92 In oral submissions Homart contended that the use of the "CHÉRI" brand name in this case is "very close to decisive" of the absence of the requisite intention. 93 In our view, this argument must fail at the outset because, even if the primary judge erred in his application of Australian Woollen Mills, his Honour identified ample other bases for his conclusion that Homart had contravened s 18 of the ACL. The primary judge's finding as to Homart's intention was not integral to his Honour's contravention finding (intention not being a necessary element of s 18); it was simply a further matter lending support to this conclusion, which was primarily based on the striking similarity between the packaging of the competing products. As appears from [34] of his Honour's reasons, set out at [14] above, the primary judge recognised that "the role of intention should not be overstated" and that it was "simply one piece of evidence".

[29]

Intention findings 94 The relevant passage in Australian Woollen Mills at 657 states: [T]he examination made of the respondent's motives and good faith seems to us to leave the question of infringement and passing off very much in the same position as it stood in without it. The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public. But the practical application of the principle may sometimes be attended with difficulty. 95 At [161] and [200], the primary judge referred to the following passage from the decision of Weinberg and Dowsett JJ in Red Bull (appeal), as an application of Australian Woollen Mills: Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor's get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was "fitted for the purpose and therefore likely to deceive or confuse…" Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing. 96 At [201], the primary judge said: In the present case, I am satisfied that this was the intention of Homart. As noted in Red Bull at first instance (Conti J) at [64], the difference between the brand names is not necessarily decisive of an absence of the requisite intention. Nor, as I have noted above by reference to the Full Court decision in Peter Bodum, is the presence of a brand name determinative of an absence of misleading conduct. In the present case, in any action under s 18 of the ACL, one must look at the totality of conduct of the alleged deceiver. 97 We do not accept that the principle identified in Australian Woollen Mills is restricted in its application to cases of deliberately dishonest traders. In our view, that case illustrates the broader rule to the effect that a mark or get-up selected for the identified purpose should be presumed to be fitted for that purpose. There is no reason in principle why a finding of deliberate dishonesty is necessary for the application of that presumption. There is no reason to doubt the observation of Weinberg and Dowsett JJ in Red Bull (appeal) that the borrowing of aspects of a competitor's get-up may give rise to an inference of the kind that their Honours identified. 98 In this case, the primary judge found that: (1) Ms Yeh intended that the packaging of the "CHÉRI" product would import a reference to the "CHANTELLE" packaging by the similarities of the packaging design and general get-up ([160]); (2) Ms Yeh must have been aware that the objective similarities between the packaging of the Homart and Careline products would have an impact on consumers ([160]); (3) Homart intended, by adopting Careline's packaging for its 6-ampoule bio-placenta product, "to gain a market advantage at the expense of Careline from the adoption of its packaging" ([162]); (4) Homart "took deliberate action …to bring each feature used by Careline in its product into its competing product", reflecting an "intent to do so for the purpose of bringing the two products in close similarity to each other" ([163]); and (5) Ms Yeh (and accordingly Homart) had the "requisite intention" which, by reference to [164], was an intention to copy the "CHANTELLE" get up ([167]). 99 The "intention of Homart" in the first sentence of [201] is not clearly identified. As we read the reasons, his Honour was saying that Homart had an intention analogous to the intention of the trader described in Red Bull (appeal) in the passage set out at [200] of his Honour's reasons. 100 In our view, these findings enliven the principle identified in Australian Woollen Mills and Red Bull (appeal), and they therefore give rise to the presumption that Homart's conduct would be fitted for the purpose that it sought. By inference, Homart's appropriation of the get-up of Careline's product would enable Homart to gain a market advantage through its tendency to mislead or deceive consumers. Moreover, to the extent that it was necessary for the primary judge to make a finding of an intention to deceive on the part of Ms Yeh (and in turn Homart), we consider these findings amount to a finding to that effect. 101 Homart also criticised the reference in [201] of the primary judge's reasons to [64] of Red Bull (trial). It submitted that, contrary to the primary judge's reasons at [201], at [64] Conti J was not concerned with the significance of brand names to the question of intention to deceive. We reject this criticism, it being founded on a misinterpretation of Conti J's reasoning. At [63], Conti J had found that the respondent to that proceeding had intentionally adopted the most prominent features and characteristics of the get-up of the applicant's beverage product, albeit not the applicant's trademark or brand name. Citing Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1989) 89 ALR 48 at 69, Conti J also found at [63] that the "evidentiary value of the existence of circumstances of get-up adoption … are highly significant to the drawing or otherwise of an inference of adoption and consequently of deception, since "the courts have long recognised that traders best know their trade". At [64], Conti J then: (1) noted that "the actual appearance of the packaging to prospective consumers was ultimately the determining factor, rather than the alleged infringer's intention per se"; (2) referred to the statement at 659 in Australian Woollen Mills, said in the context of the passage set out at [94] above, that the Court's determination of deception "… depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs"; and (3) observed that the obvious difference between the brand names appearing on the competing packaging was not decisive. 102 In our view, at [64] Conti J was therefore considering the significance of the presence on the products of the obviously different brand names with regard to the relevant principles, including what was said in Australian Woollen Mills concerning the significance of the "alleged infringer's intention". The primary judge's reference to this passage at [201] of his Honour's reasons reveals no error.

[30]

Ms Yeh's evidence of her purposes 103 Homart argued that, if the primary judge made a finding of intention to deceive, then that finding involved a wholesale rejection of Ms Yeh's detailed account of her purposes when developing the packaging of Homart's product. We accept that submission. However, we do not accept that this indicates error on the part of the primary judge. 104 Homart identified the following key points of Ms Yeh's evidence on this subject: (1) The initial design was based on a different product, named "SHELANO". (2) Ms Yeh used the brand name "CHÉRI", an established Homart trademark registered used on Homart products sold in Australia since 2004, for reasons that had nothing to do with deceiving customers. (3) Ms Yeh contemplated many different design ideas and incorporated distinguishing features. (4) Ms Yeh had no knowledge of CHANTELLE sales volumes. (5) Ms Yeh frankly admitted that she adopted certain features of the CHANTELLE product. (6) In her affidavit evidence, Ms Yeh completely rejected any proposition that she intended to deceive customers and she was never challenged directly on that evidence. (7) The colour gold and "CHÉRI" mark were part of the Homart stable well before the decision to produce a bio-placenta product was made. 105 For its part, Careline identified the following adverse findings made by the primary judge concerning Ms Yeh's evidence: (1) Ms Yeh's explanation that "undecorated boxes are common in the luxury cosmetics trade", accompanied by photographs of products (such as "Chanel Paris" and "Fendi Roma") which adopt such a branding technique, was somewhat self-serving, and more in the nature of a submission than of evidence of her thought processes at the time that she designed the "CHÉRI" bio-placenta product. Contrary to the tenor of Ms Yeh's evidence, the primary judge found that the most likely source of inspiration for Ms Yeh's choice of a largely "undecorated" box and the use of a gold-rope handled gold carry bag to be the CHANTELLE bio-placenta product, a sample of which she had in her possession ([147]). (2) Ms Yeh's assertion that when boxes in which a product is held are large, it is "common" for the people in the cosmetics/luxury trade "to give a roped-handled paper bag", referring to the Laviena product and to others, was another self-serving submission ([149]). (3) Ms Yeh's admissions did not go far enough or reflect the reality of the situation, and at the time of making the design, she had the "CHANTELLE" bio-placenta product firmly in mind ([158]). (4) In her oral evidence, Ms Yeh appeared to deny that she turned her mind to whether or not the "CHÉRI" bio-placenta product sufficiently distinguished the CHANTELLE bio-placenta product, however, the primary judge found that Ms Yeh did intend to replicate features of the "CHANTELLE" bio-placenta packaging with the understanding that the likely consequence would be that the similarities of that packaging would be influential to consumers in their choice of product ([159]). (5) The objective similarities between the packaging of the Homart and Careline products defy a conclusion that Ms Yeh was not aware that they would have an impact on consumers ([160]). (6) In so far as Ms Yeh gave an explanation for her design choices that deviated from her acceptance that she had copied the "CHANTELLE" bio-placenta product, the primary judge found them "unconvincing" ([163(4)]). (7) To the extent that Ms Yeh's evidence denied an intention to bring each feature used by Careline in its product into the Homart product for the purpose of bringing the two products in close similarity to each other, that evidence was rejected ([163(5)]). (8) Ms Yeh was not naïve to the benefits of adopting the features of the Careline packaging as a means to swiftly gain market share by benefitting from the reputation inuring to Careline in its bio-placenta products ([163(8)]). 106 Mr R Cobden SC, senior counsel for the appellant, conceded that Homart was on notice that Careline would put a submission that the "CHÉRI" mark did not ultimately work as a disclaimer, and that issue was addressed in the closing paragraph of Ms Yeh's evidence. However, he argued that it was unfair to make a finding that Ms Yeh effectively did not have an honest belief that the trademark would work to distinguish the "CHÉRI" bio-placenta product when she had explicitly expressed that belief. Mr Cobden SC did not point to any particular unfairness to Ms Yeh, or to Homart, such as a lost opportunity to call corroborative evidence. Although Ms Yeh was not cross-examined on the particular matter identified by Mr Cobden SC, it was put to her that she ultimately proceeded with her packaging design knowing that consumers might be misled by it. We do not accept that there was any unfairness in the primary judge's finding. 107 In our view, the primary judge dealt with all of the main elements of Ms Yeh's evidence. It was not necessary for his Honour to address every feature of Ms Yeh's evidence that led the primary judge to make the intention findings: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [41]; Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247 at 259. 108 Moreover, his Honour's reasons do not reveal a failure to take into account the gravity of the alleged intention: cf s 140(2) Evidence Act 1995 (Cth). 109 Finally, while it is generally true that evidence which is unchallenged ought to be accepted, it is a matter for the Court whether to accept unchallenged evidence: Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 at 18; Pasqualotto v Pasqualotto [2013] VSCA 21 at [243]-[245]. This is not a case where the Court was bound to accept Ms Yeh's evidence because it would have been unreasonable to do otherwise: cf. Precision Plastics Pty Ltd v Demir [1975] HCA 27; (1975) 132 CLR 362 at 370, where the relevant evidence was uncontradicted. 110 Homart also pointed to Ms Yeh's evidence, given during cross-examination, that she believed that she had done enough to distinguish the "CHÉRI" packaging from all other products, and that "If we [Homart] think there will be confusion then we wouldn't launch [the CHANTELLE product]". Homart also noted that Ms Yeh agreed that it was the logo in her mind that was the differentiating feature, particularly due to the embossed ring. Ms Yeh also added that the leaf- like accent on the "E" in "CHÉRI" was significant to her. 111 Homart contended that the primary judge erred in the last sentence of [166], where his Honour said that he did not accept that the mere presence of the "CHÉRI Australia" name is per se sufficient to dispel the suggestion of an intention to copy because, on the evidence, Ms Yeh held a belief that the brand name would sufficiently differentiate Homart's product. 112 We do not accept that this submission demonstrates a relevant error on the part of the primary judge. As appears from [164], at [166] the primary judge was addressing Homart's argument that the use of the relevant branding was itself reflective of a clear intention not to mislead. His Honour was entitled to reject that submission, and to prefer to assess Homart's intention by reference to the whole of the evidence rather than by inference from the use of the "CHÉRI Australia" brand name on the products.

[32]

Laviena product finding 116 Before the primary judge, Homart had adduced evidence of the Laviena product, which had an accompanying gold-rope handled gold carry bag similar to that used by the Homart and Careline products. At [146], the primary judge rejected Homart's submission that "something similar" to the Laviena product was on the market prior to February 2016 (when Homart's product was launched), saying that "the evidence as to "something similar" was in Ms Yeh's affidavit and concerned a product called "LARIENA" not "LAVIENA"". 117 Homart noted that, at [112], the primary judge also referred to this product and foreshadowed his finding at [146] that "no evidence proved that this product was available before the launch of the "CHÉRI" bio-placenta product and "still less was there any evidence that it was known to relevant consumers in the market". The primary judge also found that "Ms Yeh did not refer to it during her design exercise". 118 At [163(7)], his Honour found that "Ms Yeh's reference to the Laviena product as a justification for some aspects of these features appears to have been an afterthought on her part as … were her references to "common" features. The Laviena product packaging was ultimately not proved to have been available on the market before February 2016 and Ms Yeh gave no evidence that she had regard to it when she did her designs". 119 Homart referred to Ms Yeh's evidence at para 14(j) of her first affidavit that Laviena was one of a list of products which Ms Yeh knew were "now on the market in this part of the market, and my memory is that all of them, or at least products very similar to them, were on the Australian market for some time". We accept that, on this evidence, his Honour made an error in his finding at [146], which was foreshadowed in the reference thereto at [112] and repeated at [163(7)]. 120 That error does not extend to the findings that Ms Yeh did not refer to the Laviena product in her design process. As Careline's submissions noted, para 14 of Ms Yeh's affidavit is not evidence that Ms Yeh actually saw the Laviena product in store at any time or that it actually played a role in her design of the "CHÉRI" product. She could not say whether what she had seen (many years earlier) was Laviena or something "similar" to it.

[33]

Significance of errors 121 Homart argued that these errors tainted Ms Yeh's evidence in the eyes of the primary judge, saying that this was most clearly revealed at [153], [163(6)] and [163(7)] of his Honour's reasons. We do not agree. 122 The primary judge's salient finding, at [162] was that Homart (by Ms Yeh) intended, by adopting Careline's packaging, to gain a market advantage at Careline's expense. That inference was based on the eight matters set out in [163]. The first three matters concerned the very close similarity between the two get-ups. The fourth matter was his Honour's rejection of Ms Yeh's explanations for her design choices that departed from her acceptance that she had copied the "CHANTELLE" packaging. This fourth matter entails a general rejection of Ms Yeh's evidence that she had not simply engaged in a copying exercise as unconvincing. The fifth matter was that the similarity between the product get-ups itself reflected an intention to achieve that similarity. The eighth and final matter was that the primary judge did not believe that Ms Yeh was naïve to the benefits of adopting the features of Careline's packaging as a means of gaining market share by leveraging off Careline's reputation. 123 These matters provide ample justification for the primary judge's salient finding. 124 The unexplained abandonment of the two tone colour scheme provided the sixth basis for his Honour's inference. Even if it is assumed in Homart's favour that Ms Yeh's explanation for the single tone colour scheme was an adequate one, that does not affect the conclusion that Homart had intentionally adopted Careline's packaging. This is especially so as his Honour found that the colour was merely one of the distinctive features of the Careline product's get- up. Nor does it affect the primary judge's earlier finding (at [153]) that the abandonment of the two-tone scheme was inconsistent with an intention on Homart's part to draw on the reputation of its existing range in the sale of the "CHÉRI" bio-placenta products. Further, regardless of the reasons for the move, it was open to the primary judge to find at [153] that, together with the adoption of the other distinctive packaging features of the "CHANTELLE" bio-placenta product, the move reflected an intention on the part of Ms Yeh to create packaging that, in fact, closely imitated the packaging of the "CHANTELLE" product. 125 The error in relation to the Laviena product is trivial. The important finding, not challenged, is that Ms Yeh did not have regard to the Laviena packaging when designing the packaging for the "CHÉRI" bio-placenta products.

[35]

Three-ampoule variants 127 The primary judge analysed the three-ampoule packaging at [203] of his Honour's reasons, as follows: I turn now to address the 3-ampoule variant of the CHÉRI bio-placenta product. As I have noted in section 6.2.2 above, there are some aspects of the get-up of the 3-ampoule product that are different to the 3-ampoule CHÉRI bio-placenta product. This makes, as Careline accepted, its case pursuant to s 18 of the ACL more difficult. In particular, the box of the 3-ampoule CHÉRI bio-placenta product is smaller and less bulky, the lid closes in a different way, there is no display tray and the colour gold is a little more silvery than bronze. On the other hand, the saturated colouring effect, the similarities in the writing on the base of the box and on the ampoules themselves and the absence of writing on the sides of the box are adopted on the 3-ampoule CHÉRI bio-placenta product. The evidence reveals, as one would expect as a matter of course, that the 3- ampoule and 6-ampoule CHÉRI bio-placenta products are sold side by side. These matters lead me to the view that one cannot meaningfully distinguish the effect of the representations conveyed by the more visually obvious 6-ampoule get-up and those of the 3-ampoule variant. 128 Homart argued that the primary judge's adoption of the reasoning concerning the six-ampoule product resulted in error because the following meaningful distinctions between the three and six-ampoule variants were ignored: (1) There was no Australian Woollen Mills finding in relation to the three-ampoule product. (2) The findings about the reputation of the six-ampoule product get-up were based in part on the large volume of sales of Careline's six-ampoule product ([124], [129] and [134]). However, the volume of sales of Careline's three-ampoule product was less than 10% of the total ([88]). (3) The third-party products on the market (for example, those noted at [114]-[117] of his Honour's reasons) were much more similar to the "CHÉRI" three-ampoule product than was the case in respect of the six-ampoule products. (4) The physical differences (including in size, proportions, materials and opening mechanism) between the Careline and Homart three-ampoule products were more pronounced than even those to which the primary judge had adverted (at [87], [190], [203]) and can be easily observed by examining the physical units themselves. 129 We do not accept that his Honour's reasons reveal any relevant error. At [203], the primary judge identified five reasons for concluding that the three-ampoule packaging was misleading or deceptive. His Honour's reasons at [158] and [162] reveal that he was aware that the Australian Woollen Mills inference concerned only the six-ampoule product. As Careline submitted, its reputation in the "CHANTELLE" six-ampoule packaging was directly relevant to reputation in the three-ampoule product. His Honour was not required to give separate consideration to the impact of third party products on the market. In our view, his Honour's reasons reveal that the primary judge gave proper consideration to the differences between the competing three-ampoule products. We do not accept that the primary judge's reasons reveal any failure to appreciate the physical differences between the Careline and Homart three- ampoule products, or that he assessed those differences to be less pronounced than the true position. 130 Accordingly, we are not satisfied that his Honour erred in his consideration of Homart's three- ampoule product. 131 Homart also argued that, in granting injunctive relief in connection with the three-ampoule variant, the primary judge should have considered the product in the context of a market from which the six-ampoule product had been removed. Homart contended that the primary judge erred in granting an injunction in relation to the three-ampoule variant without considering that market circumstances would be altered by the injunction in relation to the six-ampoule variant. 132 The order made by the primary judge on 20 April 2017 was: Homart by itself, its servants and agents be restrained from selling, offering for sale, distributing, promoting and/or marketing in Australia any bio-placenta oil skin care product in the packaging and get up depicted in Annexure A hereto, or any packaging or get up that is deceptively similar to the packaging or get up of the Careline Australia Pty Ltd (Careline) bio-placenta skincare product depicted in Annexure B hereto. 133 Annexure A to that order depicts both Homart's six-ampoule and three-ampoule products. 134 The Court's power to grant an injunction is found in s 232 of the ACL. The power is confined by the scope and purpose of the Act and is expressed to permit the grant of an injunction "in such terms as the court considers appropriate". By s 232(4), the power may be exercised "whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of a kind" that, relevantly would involve a contravention of s 18 of the ACL, and "whether or not there is an imminent danger of substantial damage to any other person if the person engages in conduct of that kind". There must be a nexus between the conduct found to constitute the contravention and the injunction granted. Whether there is a sufficient nexus between the orders sought and the contravention involves an evaluative judgment: Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Ltd [1999] FCA 1387; (1999) 95 FCR 114 at [39] (French J). 135 Homart did not point to any express statutory limitation on the injunction power in support of its contention, and conceded that this point had not been taken at trial. However it argued that its "failure to anticipate the hypothetical outcome" should not prevent the Full Court from considering the issue. 136 We do not accept that the primary judge was required to consider the effect in the market place of an injunction affecting only the six-ampoule product before granting the injunctive relief. The question was whether to grant an injunction under s 232, having found that Homart had engaged in conduct in contravention of s 18, comprising its marketing and sales of both the six and three-ampoule bio-placenta products. His Honour did not make a finding that Homart would not have contravened the ACL had it marketed and sold the three-ampoule product alone. Nor was his Honour required to consider whether Homart would contravene the ACL if it marketed and sold the three-ampoule product alone. The requirement that an injunction under s 232 be "appropriate" did not import such a requirement. While an injunction will not be "appropriate" if it operates upon conduct that does not contravene the ACL that is not the position here because the marketing and sale of the three-ampoule products was found to contravene the Act: cf. ICI Australian Operations Pty Ltd v Trade Practices Commission [1992] FCA 707; (1992) 38 FCR 248 at 267. 137 While it would have been permissible for the primary judge to have considered the hypothetical scenario identified by Homart, his Honour was not required to do so. Accordingly we do not accept that the primary judge's reasons reveal any error in the exercise of his discretion as to injunctive relief.

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd

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