Miller v Britt Allcroft

THE FINDINGS AND CONCLUSIONS OF THE PRIMARY JUDGE ON THE RESPONDENTS' CLAIM OF MISLEADING OR DECEPTIVE CONDUCT (a) The primary facts, including background facts 5 The primary facts, including background facts, were not controversial. Relevantly, they were found by his Honour as follows. 6 A series of children's books known as "The Railway Series" ("the Series"), published in the United Kingdom from 1945 onwards, featured an engine character named "Thomas the Tank Engine" ("Thomas"), and other characters known as "Thomas' Friends". There are now more than 150 books in the Series. Thomas is depicted as a tank engine with several distinctive features including a blue colour, a smiling face, a cloud of steam and the number "1". Each of Thomas' Friends has a distinctive face and colour. 7 The Railway Series Books have been extensively published worldwide, including Australia. BAT is now the owner of the rights, including copyright, in the Series and in Thomas and Thomas' Friends. BATL is licensed, exclusively, to reproduce those materials and characters, and to commercially exploit them. BATL has actively exercised those rights in several ways, including the production of several television series which have been broadcast in a number of countries, including Australia. BATL has also manufactured and sold (or authorised the manufacture and sale of) large numbers of Thomas Merchandise and has widely promoted and marketed them in Australia and elsewhere. Wholesale sales of Thomas Merchandise in Australia from 1987 to 1998 exceeded $110 million, including $17.3 million in the twelve months to September 1998. 8 The name "The Thomas Shop" is printed on the front of the appellant's premises in "Thomas" blue. The name has a representation of the front of a train as the letter "O" in "Thomas". 9 The shop stocks only Thomas Merchandise. Its interior has several stands and display items depicting Thomas. Near the front counter of the shop, where payment for goods bought is made, the appellant has placed a sign (about 18 cm x 24 cm) stating: "The Thomas Shop is independently owned and operated and is not associated, affiliated, related to or aligned with Britt Allcroft (Thomas) Ltd, Thomas the Tank Engine and Friends TM are trade mark of Britt Allcroft Inc copyright © Britt Allcroft (Thomas) Ltd 1998." 10 The same statement was also made on some (but not all) of the appellant's promotional material, although in a very much smaller typescript than the content of that material.

(b) His Honour's conclusions 11 His Honour held that the respondents had established a significant reputation in Australia in the name Thomas and in the representation of Thomas and Thomas' Friends; and that "… the name Thomas the Tank Engine, and depictions of Thomas, including the Thomas logos, and of Thomas' Friends in connection with the sale of toys, books, games, videos and the Thomas Merchandise have a meaning signifying goods sold by or licensed by the [respondents]" (at par 41). 12 The primary Judge turned then to consider whether the conduct of the appellant was likely to mislead or deceive. His Honour said (at par 44): "In my judgment, [the appellant's] shop named The Thomas Shop does represent to the public that she has some licence from or approval from the owners of the Thomas logos and marks and goodwill to conduct the shop. Its name is clearly intended to invoke association with the Thomas Merchandise. It is painted in 'Thomas' blue. It sells only the Thomas Merchandise. In connection with the sale of the Thomas Merchandise, the name Thomas or the name The Thomas Shop carry the secondary meaning that the operator of the shop has some licence from or approval from the [respondents] to conduct the shop. The use of the name, and the get up of the shop, and its function as selling exclusively the Thomas Merchandise, are all factors which I consider do communicate that connection." 13 After referring to the "character merchandising" cases (e.g. Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553), the primary Judge said (at par 49): "It also follows from my findings [that the presentation of the name 'The Thomas Shop' in a stylised manner confirms a connection with the respondents' goodwill] that [the appellant's] establishment of The Thomas Shop in the circumstances was not (as she claimed) deceptive or misleading because it conveyed no more than that she offered for sale the Thomas Merchandise, or that she offered for sale only the Thomas Merchandise: cp. Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 per Gummow J at 121-122; Musidor BV v Tansing (1994) 52 FCR 363. It also conveyed that The Thomas Shop was licensed or owned by the [respondents] or somehow authorised by or associated with them. That is the representation which, in the present circumstances, is misleading and deceptive having regard to the secondary meaning which I have found attaches to the name Thomas and to the Thomas logos in respect of the Thomas Merchandise." 14 His Honour found (at par 50) that the appellant had made a representation that her business was "somehow licensed by or associated with the [respondents'] business …." 15 In holding that the effect of the "disclaimer" statement did not "diminish" his conclusion, the primary Judge said (at par 57): "… I do not consider that the disclaimer of [the appellant] is effective to dispel the claimed association with the [respondents] which I have otherwise found to have been established. Each case must be determined on its particular circumstances. The factors which I regard as significant in reaching that conclusion are that the exterior of the shop presents no such disclaimer; it is only when at the point of sale in the shop and for those already attracted into the shop that the disclaimer becomes apparent. In the promotional material tendered as evidence, there is either no disclaimer (eg. on balloons and the like) or a disclaimer in such small print relative to the main content of that material as to be unlikely to carry any real impact to most persons who see it. The product being sold is genuine Thomas Merchandise: cp. Sony Music Productions Ltd v Tansing (trading as Apple House Music) (1993) 27 IPR 640, affirmed on appeal: see (1993) 27 IPR 649. In that case, the product being sold was a genuine but probably inferior recording. The concern that the performer and his recording agents might be associated with the inferior product was dispelled by the product labelling. Such is not the issue in this case. It is that [the appellant's] shop suggests an association with the [respondents] which she does not have. More generally, in respect of the sale of the Thomas Merchandise, the [respondents] claim that a shop called The Thomas Shop with its get up and promotion conveys that association. I do not consider that the disclaimer negatives that claimed association."

THE APPELLANT'S CHALLENGE TO THE PRIMARY JUDGE'S CONCLUSION THAT THE APPELLANT'S CONDUCT WAS LIKELY TO MISLEAD OR DECEIVE 16 On behalf of the appellant it is submitted that in all the circumstances of the case as revealed in the evidence, the inference was not open that the appellant's conduct was likely to deceive or mislead consumers into believing that the appellant's business was in some way connected with the respondents, or was carried on with the approval or licence of the respondents. In particular, reliance is placed upon the several disclaimer statements made by the appellant.

CONCLUSIONS ON THE CHALLENGE TO HIS HONOUR'S FINDING OF MISLEADING OR DECEPTIVE CONDUCT 17 In our opinion, the question for his Honour was essentially one of fact: was the appellant's conduct, considered in the context of all the surrounding circumstances, likely to mislead or deceive by representing to consumers that her business was somehow connected with the respondents or carried on with their licence or approval? 18 On the appeal Senior Counsel for the appellant argued: · The respondents' reputation in relation to Thomas merchandise was only that of a manufacturer and publisher. They had no reputation in South Australia or elsewhere as a retailer. · The use of the name "The Thomas Shop" for a shop painted in "Thomas" blue stocked entirely with Thomas merchandise did not convey any more than the true representation that the appellant was a retailer of Thomas merchandise at that shop. 19 But the appellant's course of conduct must be looked at as a whole. It is not appropriate to analyse separate aspects in isolation: Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626 at par 54. We see no error in his Honour drawing the inference that, viewed in a practical way, the representation being conveyed was that there was a connection of some sort between the shop as a business entity and the producer of the merchandise sold in it. 20 It is not necessary for the purposes of passing off, or statutory causes of action for misleading and deceptive conduct, for a plaintiff to establish that it is engaged in the same field of activity as that of the impugned conduct of the defendant: Hogan v Pacific Dunlop Ltd (1988) 83 ALR 403 at 431. So the fact that the respondents had not at the time of trial engaged in retailing, or in the franchising or licensing of retailers, was not necessarily fatal to their claim. 21 Two points can be made. First, the production of merchandise and the owning or licensing of shops in which that merchandise is sold are related fields of activity. Secondly, although it is implicit rather than explicit in his Honour's reasons, it is a common feature of retailing today for shops to bear the name of a famous trade mark, character or person's name which is the mark under which goods and services are sold at those shops. The natural conclusion that members of the public would draw is that a shop selling only one product, being a shop which bears the trade name of that product, and is fitted out with the colours, logos and other get up of the product, is either owned or licensed in some way by the manufacturer of that product. 22 Moreover, it was the appellant's intention to communicate such a connection. In a letter dated 7 March 1997, she unsuccessfully sought the respondent's approval to set up a "one-stop Thomas shop boasting an exclusive range of Thomas the Tank Engine and Friends Merchandise". (His Honour rejected an estoppel claim based on the alleged acquiescence of the respondents to this proposal. This part of his Honour's decision was not challenged on appeal.) To adapt the line of reasoning discussed in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657, if the appellant saw the conduct of a "one-stop Thomas Shop" as something which would necessarily involve the approval of the rights owner of Thomas Merchandise it can be inferred that others would also. 23 We further agree with his Honour's conclusion, for the reasons he gives, that the "disclaimer" statements lacked efficacy. We would only add that, even if it could be demonstrated that these statements were actually read by consumers, it would not necessarily follow that a significant section of the public would not believe that the respondents had somehow approved the conduct of the appellant's business. It will be recalled that the "disclaimer" statements did not, in terms at least, touch on that question. 24 In our view, his Honour was correct in holding that s 56 of the Fair Trading Act had been contravened.

OTHER ISSUES IN THE APPEAL 25 As noted, his Honour also found that the claims of passing off and infringement of trade marks had been established. However, we were informed by Senior Counsel for the respondents that these were, in truth, only alternative or "fall-back" claims. We agree that they would appear to cover substantially the same ground; and it follows that it is not necessary that we express a view on them. However, consequentially, a question does arise as to the form of some of the orders made at first instance. 26 The primary injunction granted was ordered in the following terms: "The [appellant] be restrained from, in trade or commerce, selling, offering for sale, advertising, promoting or in any other way dealing with, in Australia the sale of Thomas Merchandise under or by reference to: (a) the name 'The Thomas Shop' or any name substantially identical with or deceptively similar to the name 'The Thomas Shop'; (b) any representations of the [respondents'] logos, a copy of which is Schedule 'A' hereto ('the Thomas Logos'), or any logos substantially identical with or deceptively similar to the Thomas Logos which are not provided to the [appellant] either directly or indirectly by the [respondents] or either of them, or by the agents in Australia of the [respondents] or either of them, or by an authorised manufacturer or distributor of Thomas Merchandise; or (c) the logo of the [appellant] containing the name The Thomas Shop with the letter 'O' depicting the front of a locomotive engine with a blank face, a funnel, and a cloud of steam." 27 Whilst the order contained in par (a) is appropriate relief in the case of a contravention of s 56, the relief in pars (b) and (c), apparently directed to the claim of trade mark infringement, is not necessary in the present circumstances. So much is now accepted on behalf of the respondents. We will vary the orders accordingly.

ORDERS 28 We will make the following orders: 1. Vary the orders made at first instance on 26 June 2000 by deleting pars (b) and (c) from Order 1. 2. Appeal otherwise dismissed, with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Court.

Associate: Dated: 1 December 2000 Counsel for the Appellant: N W Morcombe SC, B F Beazley

Solicitor for the Appellant: Mallesons Stephen Jaques

Counsel for the Respondents: D K Catterns QC, S J Goddard

Solicitor for the Respondents: Andersons Solicitors