MacPhee v Peters Foods Australia Pty Limited

AND: PETERS FOODS AUSTRALIA PTY LIMITED (IN LIQUIDATION) (ACN 000 249 132)

PETERS FOODS AUSTRALIA PTY LIMITED (IN LIQUIDATION) (ACN 000 249 132)

REASONS FOR JUDGMENT 1 The applicant, Michael MacPhee ('Mr MacPhee'), applies to the Court inter alia for a declaration that the advertising for sale, promotion for sale and selling or supplying of the respondent's, Peters Foods Australia Pty Ltd (in liquidation) ('Peters Foods'), Drumstick Gold product resulted in contravention of s 52 and s 53 of the Trade Practices Act 1974 (Cth) ('the Act'). Mr MacPhee seeks also relief against Peters Foods on the basis of passing off. 2 The Peters Foods' Drumstick Gold product is a lemon cheesecake flavoured ice cream in a cone. Peters Foods produced this product between November 2000 and June or July 2001. The last stocks of Drumstick Gold were exhausted in January or February 2002 after Peters Foods decided to delete that product line in favour of a new product to be released on the market. 3 Mr MacPhee was the owner and operator of a business which once traded under the name MacPhee's Kitchen. MacPhee's Kitchen, between October 1999 and June 2001 (when a decision was made to discontinue the business as it was no longer commercially viable), produced a product known as 'Say Cheese', which can be described as a cheesecake in a cone. 'Say Cheese' is not an ice cream. 4 MacPhee's Kitchen and Peters Foods were, at the relevant time, competitors selling frozen foods in the route trade market. The expression 'route trade' refers to the smaller retail outlets which are serviced by larger distributors. The route trade generally includes corner shops, petrol stations, schools, swimming pools and independent supermarkets. Peters Foods supplies the route trade with what it refers to as its 'impulse' line of individually sold ice cream sticks and cones. 5 It is Mr MacPhee's main contention that Peters Foods engaged in misleading and deceptive conduct (in contravention of s 52 of the Act) and as well made misleading representations (in contravention of s 53 of the Act) when it supplied to its retail resellers in the route trade advertising placards to be hung in proximity to the freezer. The first placard was distributed in September 2000. It was replaced in April 2001. The advertising placard is of a kind known in the trade as a range board, which is in effect a menu of ice cream and ice products offered for sale by Peters Foods that typically stood above the ice cream freezers from which those products were dispensed. During the relevant time, the hero product (being the product centrally placed on the range board and otherwise highlighted by the use of gold sparkles) was the Drumstick Gold ice cream [see Annexure A for whole range board, and Annexure B for life sized excerpt from Annexure A of the Drumstick Gold product]. The product is named and described by the words 'Lemon Cheesecake'. Although the product is in fact an ice cream and not a cheesecake or composed even partly of such ingredients required for it to be a cheesecake, the range board does not describe it as an ice cream nor does it use the words 'ice cream' in referring to it. 6 There were two subsequent range boards, which although they did not feature Drumstick Gold as the hero product, also named and described it by the words 'Lemon Cheesecake'. These range boards were used between April 2001 to September 2001 and September 2001 to April 2002 respectively [see Annexure C for the last range board used, and Annexure D for life sized excerpt from Annexure C of the Drumstick Gold product]. 7 Mr MacPhee also complains of an advertisement placed by the respondent in the September to October 2000 edition of 'Australian Service Station and Convenience Store News' which featured five Drumstick ice creams (as well as the Squid Lips icypole), the centrally placed product being the Drumstick Gold [see Annexure E]. The Drumstick Gold product was labelled as 'Lemon Cheesecake'. However, that description was qualified by several lines of text prominently placed on the page (to the left of the product) which stated that Drumstick Gold had a 'luscious lemon cheesecake flavour'. 8 Despite the fact that both business entities have ceased producing the respective products Mr MacPhee further seeks an injunction restraining Peters Foods from advertising or selling its Drumstick Gold product as a cheesecake in a cone product, or falsely representing or passing it off as such. 9 Mr MacPhee further seeks damages under s 82 of the Act, claiming that he is a person who was damaged by the misleading and deceptive conduct of Peters Foods or alternatively Peters Foods' false representations or what he considers to be Peters Foods' attempt to pass Drumstick Gold off as a cheesecake in a cone. The damage he claims is said to be his loss of profits from the sale of 'Say Cheese'. He claims that it was a consequence of the conduct of Peters Foods that he was forced to stop producing his cheesecake in a cone product. 10 It should be noted that Mr MacPhee during the course of the case, abandoned arguments based on a purported contravention of s 51AA(1) of the Act by the respondent, a claim that Drumstick Gold infringed his registered design and a claim that Peters Foods contravened s 52 and s 53 of the Act on the basis that Drumstick Gold did not have the flavour or consistency of a cheesecake, although represented to be a cheesecake.

A Definition of the terms Cheesecake and Ice Cream 11 I accept the undisputed affidavit evidence of Mr Kenneth Train, a highly qualified Head Teacher of Baking Trade at the Sydney Institute that a cheesecake is a 'flan or cake traditionally served as a dessert or accompaniment with coffee or tea. Having a sweetened cheese base, a cheesecake possesses a delicate cheese flavour.' Cheesecakes can either be cold set or baked. Ice cream by contrast is made by producing a light 'anglais' or 'custard' which is then churned whilst freezing takes place. Ice cream, such as the Drumstick Gold product, does not contain any cheese although it may contain flavouring or stabilisers in the form of edible gums which give it a cheesy flavour. It is not in dispute that cheesecake is distinctly a different product from ice cream.

MacPhee's Kitchen 12 Mr MacPhee has worked as a pastry chef for a period spanning 39 years, having commenced that employment at the age of 14. In the course of that period, Mr MacPhee has spent 25 years making cheesecakes for a variety of employers as well as in a number of businesses of which he was the owner or part owner. 13 During Mr MacPhee's time as a pastry chef he developed an idea that a dessert comprised of a real cheesecake presented in a cone would be a viable product in the marketplace. His view was that the product would be able to compete against ice creams in cones as buyers who preferred the taste of cheesecake to ice cream would be drawn to it. In Mr MacPhee's view, the cheesecake in a cone was furthermore superior to ice cream in that it would neither drip nor melt. 14 In early 1999 Mr MacPhee, who had overcome the main challenge in producing the product by finding a way to ensure that the cheesecake would stay in the cone, sought to bring his idea to fruition. He convinced Brad Clements ('Mr Clements'), whom he had met during the course of his pastry career in the early 1980s, to be his Sales Manager and later his business partner in the development, production and sale of cheesecake in a cone. It is not quite clear when the two became partners although the evidence of Mr Clements suggests this happened in October 1998. At some point during this period the product was given the name 'Say Cheese - Cheesecake in a Cone'. 15 On 17 March 1999 Mr MacPhee received a Certificate of Registration of Design which registered the design of 'Say Cheese' at the Designs Office as Design No 136756 for one year. That was later extended until 20 January 2005. It will be necessary to describe the registered design in some detail later as it is the subject of a cross claim. 16 From the middle of July 1999, Mr MacPhee and Mr Clements commenced business. The name 'MacPhee's Kitchen', which was the name of a previous business venture owned and operated by Mr MacPhee and his mother, was adopted as a business name. Factory premises in Ulladulla on the South Coast of New South Wales were rented and converted for use in manufacturing cheesecake and equipment was purchased. 17 In October 1999 the product named 'Say Cheese - Cheesecake in a Cone' was launched in the September to October edition of the magazine Retail World. Mr Clements, who was at that time the Sales and Marketing Manager, started receiving inquiries about and orders for the product. The first order for the product comprised 20 pallets (approximately 60,000 units) in November 1999 from the distributor Tarantos, which primarily serviced the route trade in Victoria. Although the retailer 'Coles' had expressed an interest in the product, Mr MacPhee and Mr Clements made a business decision to concentrate on the route trade rather than the supermarket trade due to the large order that had been placed by Tarantos. 18 Mr MacPhee claimed that he was happy with the volume of sales of 'Say Cheese' across the 1999/2000 summer. That was apparently a bad season in the ice cream trade because of poor weather. Internal accounts show that in March 2000 MacPhee's Kitchen distributed 'Say Cheese' to six buyers (at least some of whom were distributors). Mr Clements suggested in his evidence that the total number of buyers was between 10 to 15 suppliers by that time.

Peters Foods and Nestlé 19 Since 1995 Nestlé Australia Ltd has been the owner of Peters Foods Australia Pty Ltd. 20 Peters Foods in partnership with Petersville Limited conduct business under the name Nestlé Ice Cream. The respondent's DRUMSTICK® ice creams were first launched in Australia in about 1963 and have been sold continuously since that time. DRUMSTICK® is the number one pre packaged ice cream cone in Australia. The DRUMSTICK® ice cream range has been extensively advertised for many years, and the intellectual property in it is protected by the use of the trade marks DRUMSTICK®, PETERS®, and NESTLÉ®.

The Meeting Between Peters Foods and MacPhee's Kitchen 21 On 27 March 2000, Mr Clements and Mr MacPhee met Mr Delaney, the New South Wales State Manager for the Nestlé Ice Cream business. The three met in Bray's Café, which serves as a cafeteria for Nestlé Ice Cream staff. The meeting was held at the instigation of Mr Clements and Mr MacPhee who hoped that Peters Foods would be willing to distribute their product. Some controversy attends what was said and what took place at that meeting. It is clear, however, that Mr Delaney was provided with product samples, as well as a grey folder and that the possibility of Peters Foods distributing 'Say Cheese' was discussed. 22 There is some dispute both as to the contents of the grey folder and what was said during the conversation. However nothing turns on this and it is unnecessary that I make any findings on these matters. What is not in dispute is that Peters Foods expressed no interest in distributing 'Say Cheese' for MacPhee's Kitchen.

The Creation of Drumstick Gold by Peters Foods 23 Evidence was given by Ms Leanne Buckley ('Ms Buckley'), a very experienced Product Development Technologist in the Applications Group of the Nestlé Ice Cream business. It was not contested that Nestlé Ice Cream changes its flavour variants of the Drumstick ice cream range each year. Since 1999 Nestlé has launched two new flavour variants each year, one launched in the summer and the other in the winter. There are normally 4 or 5 different flavour variants of Drumstick ice creams in the range every season. When a new variant is added, the flavour variant which is not performing well is usually deleted. Drumstick Gold was deleted in June or July 2001 in favour of a product called Drumstick Royale. 24 It was the evidence of Mr Matthew Petersen, who at the relevant time was the Nestlé's Group Brand Manager for Impulse ice creams, and whose evidence on this point was not contested, that in or about late 1999, Nestlé Ice Cream commenced working on a new 'indulgent' variant of the Drumstick ice cream for launch in the summer range for 2000. The project was codenamed 'Project Pierre'. An advertising firm, Mojopartners, was hired to develop concepts for Project Pierre. 25 In or about January 2000, Mr Petersen and other Nestlé executives reviewed the options suggested by the advertising agency, which included involving Philippe Mouchel, a well known French chef who was a personal friend of the then General Manager of Nestlé Ice Cream, Patrick Lemoine. On 17 January 2000, Philippe Mouchel presented his ideas for a new variant of Drumstick ice cream. Philippe Mouchel put forward five ideas, of which one of the variants was cheesecake together with ice cream in either a lemon or strawberry sauce. One of those present at the meeting Tom Pritchard, the Applications Manager, pointed out that the Drumstick machinery would be unable to extrude cheesecake, but that a cheesecake flavoured ice cream could be produced. A decision was made to proceed with the development of a cheesecake flavoured ice cream. 26 Ms Buckley became the Product Development Technologist responsible for Project Pierre on 4 February 2000 and by March 2000 had created the first samples of the product. It did not contain any cheesecake, but had a lemon cheesecake flavour produced by the use of artificial flavouring from the flavour house Firmenich. Mr Petersen's evidence was that following taste tests, it was decided that Nestlé Ice Cream would continue the development process with a full production trial of the cheesecake flavoured Drumstick ice cream. By September 2000 the product was ready to be distributed to the market, including the route trade and advertising commenced in the September/October 2000 issue of the retail magazine 'Australian Service Station & Convenience Store News'.

The Launch of Drumstick Gold by Peters Foods 27 In September 2000 Mr MacPhee became aware that Peters Foods was launching a product which a distributor of MacPhee's Kitchen had described as a cheesecake in a cone. At some time during the course of September 2000 he saw an example of the first range board [Annexure A] at Spiro's Fish Shop in Ulladulla. 28 Mr MacPhee rang Mr Delaney who denied that Peters Foods were going to sell a cheesecake in a cone. Mr Clements had in the meantime left the business in either March or May 2000. 29 On 5 November 2000 Mr MacPhee was watching the Melbourne Cup Race on Channel 10. Drumstick Gold was the sponsor of the prize. The presenter referred to Peters Foods new product, describing it as a 'Lemon Cheesecake Ice Cream Cone'. Mr MacPhee called Mr Delaney and accused him of stealing his idea. Mr Delaney explained that the idea had come from another source, namely a French chef whom he did not identify by name. 30 On 15 November 2000, Lisa Walker, by then MacPhee's Kitchen's Marketing Manager, attended the Fine Foods Show at the Melbourne Exhibition, and was approached by customers who told her that they had seen 'Say Cheese' advertised on television. However, 'Say Cheese' had not been advertised on television, although by that time the television advertisements for Drumstick Gold had commenced. 31 After the launch of Drumstick Gold, MacPhee's Kitchen continued to receive orders for 'Say Cheese', but there was a decline in orders from the route trade. This decline led to the consequence that the business of selling 'Say Cheese' became unsustainable. Mr MacPhee discontinued it in June 2001.

The Range Board 32 It was the evidence of Mr Meek, the Marketing Manager of Peters Foods, that the first range board, to which reference has already been made, whilst in development had the words 'Lemon Cheesecake' added to it, where it had previously merely labelled the Drumstick as 'Gold'. The change came about as a result of feedback from consumers, which indicated that they were uncertain about the flavour of the ice cream. 33 As the three range boards are similar so far as is relevant for the purposes of the s 52, s 53 and passing off case, they will be considered together.

Was the Range Board Misleading and Deceptive, or did it Constitute a False Representation 34 Conduct will be in breach of s 52 of the Act if it is misleading or deceptive or likely to mislead or deceive. It will be misleading or deceptive if it induces or is capable of inducing error in at least a section of the public: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198. The relevant section of the public will be distributors to the route trade, retailers in the route trade and members of the public who purchase frozen confections as customers of retailers in the route trade: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [103] and Cassidy v Medical Benefits Fund of Australia [2002] FCA 1097 [42] - [44]. 35 It is not necessary for an applicant to show that a person has in fact been misled. It is sufficient if the offending conduct is capable of misleading a member of the public or of the relevant section of the public: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1980) 31 ALR 73. In a case such as the present the question whether the conduct is capable of misleading will involve a question of impression. It is not necessary that a person call evidence of a person actually misled. 36 Prima facie the description on the range board of the Drumstick Gold product as being 'Lemon Cheesecake' is a false description. It is thus at least prima facie misleading or deceptive. However, as counsel for Peters Foods submitted it is necessary to consider the depiction of the Drumstick Gold product and the description of the product appearing on the range board within the context of the whole board. Counsel further submitted that it was reasonably clear from the context that it was an ice cream or ice product and not a cheesecake. It may be accepted that an item appearing on a range board and being when viewed on its own misleading, may, when viewed in context, not be misleading. The short question here is whether the present is such a case. 37 It is submitted on behalf of Peters Foods that the range board was designed to be placed near ice cream freezers. It was said that the mark 'PETERS® and the mark DRUMSTICK® have been linked with ice cream products at least since the 1960s. Further it appears that all of the products depicted on the range board were ice cream products. 38 As to the first of these matters it is clear that ice cream freezers contain products other than ice cream so this is not determinative. Secondly, it does not follow simply from the fact that PETERS® or DRUMSTICK® are both marks linked with ice cream that every product produced by Peters Foods or sold under the mark DRUMSTICK® is necessarily an ice cream. There is nothing in either name which would require a member of the public to conclude that the Drumstick Gold product was ice cream, particularly where it was described as being 'Lemon Cheesecake'. It may be accepted that distributors to the route trade and retailers in that trade would be unlikely to be misled. They most likely have a greater knowledge of the Peters Drumstick products than members of the public. 39 It cannot however be assumed that a member of the public or a relevant class of the public purchasing frozen confectionary products at stores in the route trade necessarily knows that which is known to Peters Foods (or perhaps distributors and retailers), namely that all other products appearing on the range board are ice creams. 40 As the evidence makes clear Peters Foods is constantly introducing new products. Indeed it was contemplated that Peters Foods might introduce a cheesecake product presumably under the DRUMSTICK® mark. This evidence alone does much to negate the argument that would require an inviolable link between the marks PETERS® or DRUMSTICK® on the one hand and ice cream on the other. 41 No doubt a sophisticated consumer of ice creams or a distributor or retailer would have known that the other products on the range board were ice cream products. However, there is nothing that would necessarily lead an unsophisticated consumer to that conclusion. The Baci Drumstick obviously has some connection with chocolates of the same name. The product could be a chocolate fudge product or a chocolate ice cream. The Milo product might or might not be an ice cream product. It is clearly related to the drink powder. 42 In my view there is nothing in the context of the range board which would require 'a reasonable person in the relevant class of consumer to whom the range board was directed' (cf Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177) to conclude that the Drumstick Gold product was, despite its description as being 'Lemon Cheesecake', merely a lemon cheesecake flavoured ice cream. 43 It follows in my view that the description of the range board involved conduct on the part of Peters Foods which was misleading or deceptive. It follows also that the words 'Lemon Cheesecake' on the range board constituted a false representation under s 53 of the Act that the Drumstick Gold product was 'of a particular composition' ie cheesecake. 44 This analysis likewise applies to the two later range boards which repeated the same misrepresentation.

Was the Advertisement Misleading and Deceptive, or did it Constitute a False Representation 45 The advertisement in the September to October 2000 edition of 'Australian Service Station and Convenience Store News', however, was of a different nature than the range boards. It clearly qualified the 'Lemon Cheesecake' designation of the Drumstick Gold product with the word 'flavour' in the describing text placed on the same page of the advertisement [see Annexure E]. Whilst it is clear that the use of a qualifying statement in an advertisement will not necessarily nullify a misrepresentation otherwise contained in it, the issue is whether the overall effect of the advertisement is such that it is misleading or deceptive. 46 I do not consider, that when the advertisement was viewed in context, it would have been capable of misleading a member of the public or of the relevant section of the public, namely distributors to the route trade, or sellers in the route trade who would have considered the advertisement in order to decide whether to purchase the product for resale. The qualifying text was prominently displayed, and in fact, of a slightly larger and clearer font than the misleading representation: see TPC v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) (1995) ATPR 41-371 at 40,115 per Davies J and George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 563. 47 Mr MacPhee has consequently failed to make out this ground.

Passing Off relating to both the Range Boards and the Advertisement 48 Mr MacPhee submitted that Peters Foods has been guilty of the tort of passing off. In Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (at 355) Gummow J noted that '[a]ttempts to produce a definition of the tort [of passing off] which is both succinct and comprehensive have had mixed success'. The elements of the tort may be regarded as those identified by Lord Diplock in Ervin Warnick BV v J Townsend & Sons (Hull) Limited [1979] AC 731. The elements have also been described by the Full Federal Court in Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 in the following way at 369: '(1) that the trader's get-up, including any brand name, is recognised by the public as distinctive specifically of the plaintiff's goods; (2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff's goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, e.g. by means of a brand name which is in fact the plaintiff's); (3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods is the same as the source of those offered by the plaintiff.' 49 The submission of the applicant is that the respondent's conduct amounted to a misrepresentation made by a trader in the course of trade to prospective customers or ultimate consumers of goods or services supplied by the respondent which was calculated to injure the business goodwill of the applicant, where calculated is defined as 'reasonably foreseeable', and which caused damage to the business or goodwill of the applicant. 50 Mr MacPhee has not made out a case against Peters Foods based on passing off. It is not sufficient to establish passing off for Mr MacPhee to show that the range boards were misleading or deceptive. He has not shown that any misrepresentation to be found in the range boards or the advertisement led or was likely to lead the public or any member of the public to believe that the Drumstick Gold Product was, or was even connected in any way with, the goods of Mr MacPhee. There is also nothing in the evidence which suggests that the Peters Foods' Drumstick product was put on the market so as to injure the business goodwill of Mr MacPhee. If it matters there was nothing in the evidence which suggested that Peters Foods in any way intended to injure Mr MacPhee or indeed gave any thought to him in producing its Drumstick Gold product for sale. Mere production of a competing product does not constitute the tort of passing off even if it was known by Peters Foods that Mr MacPhee sold a cheesecake in a cone product.

Relief 51 The applicant seeks three different forms of relief - a declaration to the effect that the respondent breached s 52 and s 53 of the Act, an injunction to prevent the respondent from repeating the conduct, and damages both under the Act and at common law. However, a breach of the Act will not automatically result in the grant of each of these remedies.

Declaration 52 The Court has power to make a declaration that conduct contravenes s 52 or s 53 of the Act. The power is discretionary. It may be exercised notwithstanding that the conduct in question has ceased: Qantas Airways Ltd v Cameron (1996) 66 FCR 246. 53 In the circumstances I would grant a declaration that Peters Foods in the period September 2000 to April 2002 engaged in conduct which was in breach of s 52 and s 53 of the Act by distributing three range boards which depicted the product Drumstick Gold and described it as 'Lemon Cheesecake' when the said product was not cheesecake.

Injunction 54 While the Court has power to grant an injunction even where the conduct complained of has ceased (see s 80(4)(a)), I would not do so here particularly where it is clear that Peters Foods has no intention in the future of making a cheesecake flavoured ice cream product in a cone.

Damages 55 I agreed, at the request of the parties, to defer the question of the calculation of damages until the question whether Mr MacPhee has established a breach of s 52 or s 53 of the Act had been determined. 56 So far, however, as a claim is brought by Mr MacPhee under s 82 of the Act for damages, some loss on his part will be a necessary ingredient in any cause of action he might have. This demonstrates the unsatisfactory nature of separating out the issues of liability and damages. Indeed I pointed this out to the parties. Mr MacPhee at that time accepted that it was incumbent upon him in the liability aspect of these proceedings to show some damage even if only a nominal amount. If he did this, then the question of the quantum of the damage could be determined separately. 57 Section 82 of the Act entitles a person to recover damages occasioned by conduct which is in breach of the Act, relevantly s 52 or s 53. There is no difference for present purposes whether Peters Foods was in breach of s 52 or s 53 of the Act and henceforth I shall refer only to the former. The word 'by' signifies causation. This may be demonstrated in a common sense way: March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506. 58 It was submitted on behalf of Mr MacPhee that although there was no evidence that any person ceased purchasing the 'Say Cheese' product because of the range board depiction of Drumstick Gold, particularly the description of Drumstick Gold as 'Lemon Cheesecake', I should infer that this must have occurred. With respect I do not think that the inference can be made. It may, perhaps, be inferred that retailers in the route trade stopped purchasing the 'Say Cheese' product because of the presence on the market of the new product Drumstick Gold but this inference does not assist Mr MacPhee. He must show that his loss was a result of the misleading conduct ie the misdescription in the range boards. 59 Mr MacPhee was advised clearly at the time he sought to separate liability from quantum that he needed to show some loss in the proceedings on liability. He accepted this but chose to advance no evidence at all showing any loss relying only upon the inference referred to above which, with respect, cannot easily be drawn. This being the case he has not shown that he has a case in damages under s 82 of the Act. 60 In summary I will make the declaration sought by Mr MacPhee but dismiss the application so far as it advances a claim for damages. 61 In the circumstances as Mr MacPhee has succeeded in showing that Peters Foods contravened s 52 and s 53 of the Act, but has failed in showing that he has a case in damages, I would make no order for the costs of the application. Each party will thus bear his or its own costs.

Cross Claim 62 Mr MacPhee, in his application sought, additionally, damages for infringement by Peters Foods of Design No 36756, registered by Mr MacPhee under the Designs Act 1906 (Cth)('the Designs Act'). That claim was abandoned by Mr MacPhee shortly before the commencement of the hearing. Mr MacPhee agreed to pay the costs of Peters Foods in respect of that matter. 63 However, Peters Foods, no doubt prompted by the claim against it for infringement, cross claimed relying upon s 32 of the Designs Act seeking rectification of the register by the expunging of the entry of the registration of Mr MacPhee's design from the register. The parties were content that argument in respect of the cross claim be dealt with by the filing of written submissions. It was later agreed that no further oral submissions were necessary. 64 The design was initially registered under the Designs Act on 17 March 1999. An extension under s 27A(2) was granted to 20 January 2005. The article in respect of which the design is registered is said to be 'cheesecake'. The statement of the monopoly is in the following terms: '…the features of shape and configuration of a cheesecake …the features of pattern and ornamentation of the waffle pattern on the lower portion and the decorative sprinkles on top are to be disregarded.' The shape depicted was a cone shape with a flat top. 65 The representation showed only one perspective which included the top view and side. It was in the form shown in Annexure F. 66 Counsel for Mr MacPhee challenges the standing of Peters Foods to bring the cross claim. It is submitted that Peters Foods was not a person aggrieved within the meaning and for the purposes of s 39(1)(b) of the Designs Act at any relevant date. The cross claim was filed on 31 May 2002. At that date, and for that matter at any time before or after that date Peters Foods was not an entity that manufactured or marketed articles in respect of which the registered design was registered. Nor does it claim to be an entity which wishes to do so. Hence it is submitted Peters Foods has not established that the continuance of the registered design on the register limited, or would limit its business activities in any legal or practical sense. 67 It is not in dispute that Peters Foods is a manufacturer and marketer of ice creams. The article in respect of which the design is registered is, so it is said, cheesecake. Peters Food does not manufacture or supply cheesecake, whether in a cone or otherwise. The product Drumstick Gold was deleted from the range of products sold by Peters Foods in mid 2001 and in any event was ice cream and not cheesecake. While it is possible that Peters Foods might at some indeterminate time in the future once more wish to market a cheesecake in a cone there is no suggestion in the evidence that it has any present intention of doing so. If anything the inference from the evidence is to the contrary. Hence, it was submitted, Peters Foods had no standing. 68 The meaning of the term 'person aggrieved' in s 39 was considered recently by Heerey J in Supaproducts Pty Ltd v Alesevic & Ano [2003] FCA 1145. His Honour in that case adopted the interpretation applied to corresponding provisions of the Trade Marks Act 1995 (Cth)in The Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 12 IPR 417 at 454. In that case McLelland J held at 454 that: '…the expression would embrace any person having a real interest in having the register rectified…and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the register remaining unrectified…' 69 As Heerey J observed at [14], the approach taken by McLelland J was followed by Full Courts of this Court but also in the context of trade marks in Kraft Foods Inc v Gaines Pet Foods Corporation (1996) 65 FCR 104 at 112-113 and Campomar Sociedad Limitada v Nike International Ltd (1998) 85 FCR 331 at 363, 381. 70 Heerey J also held, following McLelland J in Ritz Hotel at 455, that the jurisdiction of the Court was to be established as at the time the proceedings were commenced, although should the facts change between then and the hearing a question of discretion could arise. 71 In Powell v Birmingham Vinegar Brewery Co Ltd [1894] AC 8, Lord Watson said at 12: 'In my opinion, any trader is, in the sense of the statute, 'aggrieved' whenever the registration of a particular trade mark operates in restraint of what would otherwise have been his legal rights. It is implied, of course, that the person aggrieved must manufacture or deal in the same class of goods to which the registered mark applies, and that there shall be a reasonable possibility of his finding occasion to use it. But the fact that the trader deals in the same class of goods and could use it, is prima facie sufficient evidence of his being aggrieved…' 72 This citation may be taken to support the submission made on behalf of Mr MacPhee that Peter Foods lacks standing to bring its application for rectification of the register because Peters Foods neither manufactured or dealt in the same class of goods to which the registered design applied, nor was there factually any reasonable possibility of it finding occasion to use it. On the other hand, if the test adopted by Heerey J was applicable then it can be said that at the time the cross claim was brought, it being at that time the case that Peters Foods was the respondent in proceedings for infringement of the registered design, the action of infringement itself 'appreciably disadvantaged' Peters Foods in a 'legal or practical sense' if the entry in the register was not expunged. 73 I think that the submission made on behalf of Mr MacPhee must fail. Section 32 specifically empowers a respondent in proceedings for infringement to counter claim for rectification of the register by the expunging of the entry of the registration of the design. It impliedly confers upon the Court jurisdiction to hear the counter claim which the section authorises. Two possible, and perhaps alternative, propositions then follow. The first is that the standing required for the bringing of an application for rectification of the register under s 39 has no application at all to a case where there is a cross claim brought under s 32. The second is that the situation of a person who is the respondent in proceedings for infringement either without more suffices to satisfy the precondition that such a respondent is a person aggrieved within s 39 or factually such a person who is a respondent will be appreciably disadvantaged in a legal if not practical sense so that the person will be 'aggrieved' and in consequence the prerequisite to jurisdiction will be satisfied. It matters not which of these propositions is correct. 74 In my view the Court has jurisdiction to decide the cross claim for rectification. Further, and relying upon what was decided by Heerey J, since the question in s 39, is to be determined as at the time of bringing the proceedings (here at the time of the cross claim) and not at the time of the hearing, jurisdiction will exist, although the Court might, as a matter of discretion, take into account the fact that since the commencement of the cross claim Mr MacPhee discontinued the proceedings brought by him against Peters Food claiming infringement.

Should the Register be Rectified? 75 By virtue of s 25 of the Designs Act the owner of a registered design has a monopoly in that design. Relevantly 'design' means 'features of shape… applicable to an article, being features that, in the finished article, can be judged by the eye, but does not include a method or principle of construction.' There is no doubt that there is, in the defined sense, here a design. Under s 23 of the Designs Act the Registrar of Designs is empowered to register any design which may be registered under the Designs Act. 76 Section 17(1) of the Designs Act provides: 'Subject to this Act, a design shall not be registered unless it is a new or original design and, in particular, shall not be registered in respect of an article if the design: (a) differs only in immaterial details or in features commonly used in the relevant trade from a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of the same article: or (b) is an obvious adaptation of a design that, before the priority date in respect of an application for registration, was registered, published or used in Australia in respect of any other article.' 77 Section 4 of the Designs Act defines 'article' to mean: 'any article of manufacture and includes a part of such an article if made separately, but does not include… The exclusions from the definition are not presently relevant. 78 It can be said generally, in the words of Taylor, Menzies and Owen JJ in their joint judgment in Malleys Limited v J W Tomlin Pty Ltd (1961) 180 CLR 120 at 124, that the monopoly granted by the registration is 'for the particular appearance represented by the drawings'. It is clear, however, from the provisions referred to above, that the design must be applicable to, or in other words it must relate to an article in the defined sense, that is to say the particular article in respect of which it is registered. The novelty of the design, a necessary prerequisite to registerability, must be judged against not merely designs commonly used in respect of that article but also other articles, at least to the extent that the design of other articles was registered, published or used in Australia before the priority date. So, the design will not be registrable if, notwithstanding that the design is not such as to be commonly used in respect of the relevant article, it is but an obvious adaptation of a design that before the priority date was, inter alia, commonly used in respect of some other article.

The Submissions made on behalf of Peters Foods 79 Two submissions were advanced on behalf of Peters Foods. 80 First, it was submitted that the design should not have been registered, because, although it was not a design commonly used in respect of cheesecake, being the article in respect of which the design was registered, it was an obvious adaptation of a design used in Australia for many years and relevantly long before the registration of design No 136756 in relation to other food stuffs, particularly ice creams. So, it is said, the use of a cone as the shape of a frozen dessert, for example as the shape of frozen yoghurt, or as here, cheesecake is a mere trade variant. The so called design was not, therefore, novel in the statutory sense, and infringed s 17(1)(b) of the Designs Act. It was not, therefore, registrable. 81 Alternatively, it was submitted that the shape of the registered design was one that was common to the frozen confectionary trade and was too general to attract statutory protection. What Mr MacPhee had sought to do by registering the design, it was submitted, was to seek to obtain a monopoly in an idea, that is to say the concept of making and supplying cheesecake in a cone. There was, it was submitted nothing remarkable about the shape and configuration of the cone depicted in the registration. The shape depicted was the same 'flat top' shape as has been used by Peters Food for ice cream cones in the years from 1963 to 1997.

A Mere Adaptation? - The Question of Novelty. 82 For a design to be registrable it must be novel. In In re Clarke's Registered Design (1896) 13 RPC 351 at 359 Lindley, Lopes and Kay LJJ said that the test of whether an article is novel will be whether it is: '…new or original with reference to the kind of article for which it is registered; meaning, by kind of article, not the class of article mentioned in the schedule to the Rules, but the kind of article having regard to its general character and use. A design may be new for a coal scuttle, but not for a bonnet.' 83 Their Lordships held in that case that the design for the shade of an electric light was not new because the same design had previously been applied to a gaslight. The design was for the shape applied to articles, not for a thing of the particular shape (see at 358). The distinction was between 'the shape of a thing and a thing of that shape'. 84 As the learned author, Russell-Clarke, of 'Copyright in Industrial Designs' 3rd ed, 1960 said at 18-29, the article to which the design has been applied: '…must appear to the eye to possess some incident of shape beyond those primary essential features which are the property of the fundamental article.' 85 There is much to be said for the view that the design here lacks novelty in the ordinary sense when reference is had to 'the general character and use' of the article in respect of which it is registered (ie 'cheesecake') cf Re Clarke's Registered Design at 359. But it is unnecessary to decide this question having regard to the particular meanings of 'novelty' found in paragraphs (a) and (b) of s 17. 86 Section 17(1)(a) directs attention to whether the design differs only in immaterial details or in features commonly used 'in the relevant trade' from a design inter alia used in Australia 'in respect of the same article'. Section 17(1)(b) directs attention to whether the design is but 'an obvious adaptation' of a design inter alia used in Australia in respect of another article. Although the relevant trade of which the paragraph speaks may be wide enough here to extend to the trade in frozen confectionary (cf Simmons v Mathieson & Co Ltd (1911) 28 RPC 486, Christopher Tasker's Design Right References [2001] 2 RPC 39 and C & H Engineering v F Klucznik & Sons Ltd [1992] FSR 421) subsection (a) focuses upon the article in respect of which the design is registered. Here that is cheesecake. There is, on the evidence, no cheesecake that, as at the priority date, had the same design as that which was registered. But subsection (b) is wider, for it focuses upon the design features of 'any other article' in use as at the priority date. 87 It seems to me to be inescapable that the registered design is an obvious adaptation of the design of ice cream cones in use many years before the priority date. It may be accepted, as counsel for Mr MacPhee submitted, that ice cream and cheesecake are distinct and recognisable food products distinguishable from each other. Their texture and flavour are, no doubt, different. But what is important here is the shape. The cone shape with a flat top is a shape that many manufacturers of ice cream and other cold confectionary products have used in the past. Judged by the eye the design has the same features of shape as are applicable to ice creams sold in a wafer cone. The registered design is neither 'substantially novel' nor 'substantially original' having regard to the nature and character of the subject matter to which it is applied (cf Le May v Welch [1884] Ch D 28 at 35). It is an obvious adaptation. There is no new conception (cf Sebel & Coy Ld's Application for the Registration of a Design (No 1) [1959] RPC 12 at 16 per Lloyd-Jacob J) and it lacks the required novelty that is a prerequisite of registerability.

A monopoly in a method or principle of construction? 88 It is important to recall that the monopoly obtained by registration of a design is for the shape rather than the way the product is made or constructed or the contents of the product. This is made clear by the definition of 'design' contained in s 4 of the Designs Act. In Dart Industries Inc v Decor Corporation Pty Ltd (1989) 15 IPR 403 at 408 Lockhart J usefully described a design as follows: 'The design is the mental conception conveyed to the mind by the eye; it is the mental picture of the shape, configuration, pattern or ornament of the article to which the design has been applied: Pugh v Riley Cycle Co (1912) 29 RPC 196 per Parker J at 202. For a design to be protected there must be a special or distinctive appearance, something in the design which captures and appeals to the eye. To have that effect, the design must be noticeable and have some perceptible appearance of an individual character: AMP Incorporated v Utilux Pty Ltd, supra.' Design registration is intended to protect the appearance of an article. The method of construction may be the subject of protection under patent law. 89 A feature which 'does no more than identify a general characteristic of shape' will be a method or principle of construction and outside the protection of the Designs Act: Firmagroup Australia Pty Ltd v Byrne and Davidson Doors (Vic) Pty Ltd (1987) 180 CLR 483 at 488. In that case Wilson, Brennan, Deane, Dawson and Gaudron JJ said: 'The only design features that are susceptible of protection are those features which convey the idea of "one particular individual and specific appearance"… No design should be so construed as to give to its proprietor a monopoly in a method or principle of construction.' What is protected by design registration is a specific shape. Protection of a general shape would give a monopoly over every distinct variation of that general shape and so protect a method of construction and not a design. 90 The present is a case where the placing of cheesecake into a cone produces general characteristics of shape and configuration which are necessitated by the method or principle of construction (cf Christopher Tasker's Design Right References [2001] RPC 39 at 50). The difference between shape and method of construction was usefully defined by Parker J in Pugh v Riley Cycle Ltd [1912] 1 Ch 613 at 619 - 620: 'The difficulty arises where the conception thus arrived at is not a definite conception as to shape or configuration, but a conception only as to some general characteristic of shape or configuration necessitated by the mode or principle of construction, the definite shape or configuration being, consistently with such mode or principle of construction, capable of variation within wide limits. To allow the registration of a conception of such general characteristic of shape or configuration might well be equivalent to allowing the registration of a conception relating to the mode or principle of construction.' 91 For these reasons I would allow the cross claim and direct that the register be rectified by the expunging of the entry of the registration of the design No 136756. I certify that the preceding ninety- one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.

Counsel for the Applicant and Cross Respondent: J Baird

Solicitor for the Applicant and Cross Respondent: Deacons

Counsel for the Respondent and Cross Claimant: J V Nicholas SC

Solicitor for the Respondent and Cross Claimant: Allens Arthur Robinson

Date of Hearing: 13 and 14 October 2003

Date of Judgment: 19 December 2003