Natural Waters of Viti Limited v Dayals - [2007] FCA 200 - FCA 1992 case summary — Zoe

CTHFCA

Natural Waters of Viti Limited v Dayals

[2007] FCA 200

Federal Court of Australia|1992-02-19|Before: O'Loughlin J, Bennett J

View original source

At a glance

Source facts

Court

Federal Court of Australia

Decision date

1992-02-19

Before

O'Loughlin J, Bennett J

Source

Original judgment source is linked above.

Judgment (30 paragraphs)

[1]

REASONS FOR JUDGMENT 1 The applicants ('Natural Waters') distribute bottled water in Australia under the brand name "FIJI" ('Fiji Water'). The respondents (together 'Dayals') distribute in Australia water bottled in Fiji under the brand name "Island Chill". Mr Jay Dayal ('Mr Dayal') is a director of the first respondent ('Artesian Waters') and is actively engaged in its day to day management and control. Mr Dayal's father and mother are also directors of Artesian Waters. The family operates a hardwood export business and it was Mr Dayal's idea in 2001 that they enter the bottled water market. He was responsible for the marketing "get-up" of the Island Chill product, including bottle shape and label design. Mr Pranesh Dayal is Mr Dayal's younger brother and trading partner in Australia. He reports to Mr Dayal daily in relation to Dayals' business activities in Australia. 2 Natural Waters alleges, in broad terms, contraventions of ss 52 and 53 of the Trade Practices Act 1974 (Cth) ('the Act'), ss 42 and 44 of the Fair Trading Act 1987 (NSW) and passing off by Dayals because of the packaging of Island Chill. These causes of action are each founded on the assertion that Island Chill's packaging shares a sufficient number of the features of Fiji Water's packaging so as to give rise to a representation that there is at least an association between the products and between Natural Waters and Dayals, where there is none. Natural Waters and Artesian Waters both own registered trade marks in Australia but no allegation of trade mark infringement is pleaded. 3 The issues that arise are: · The nature of the goods and their get-up. · The reputation of Fiji Water. · The intention of Dayals in designing the bottle and label for Island Chill. · Whether the consumer would be misled or deceived into thinking that Island Chill was Fiji Water or associated with Fiji Water or Natural Waters.

[2]

[4]

Similarities and differences in the 2003 get-up and the 2005 get-up 9 The parties agree that the 2003 get-up contains the following features: (a) use of a clear bottle with a recessed central body portion defined by protruding shoulders and base portions, with the label positioned in the recessed body portion; (b) use of a blue cap; (c) use of a colourful, tropical motif featuring tropical plants and other vegetation; (d) the depiction of a body of water in a tropical setting on the lower portion of the inner side of the back label; (e) a three-dimensional effect created by having a partially transparent label on the front panel of the bottle revealing the inner side of the back label; (f) prominent use of the word "Fiji"; and (g) use of the words "Taste of Paradise". 10 The parties agree that the 2005 get-up contains the following features: (a) use of a clear bottle with a recessed central body portion defined by protruding shoulders and base portions, with the label positioned in the recessed body portion; (b) use of a blue cap; (c) use of a colourful, tropical motif featuring tropical plants and other vegetation; (d) the depiction of a blue background and fern leaves on the inner side of the back label; (e) a three-dimensional effect created by having a partially transparent label on the front panel of the bottle revealing the inner side of the back label; and (f) prominent use of the word "Fiji". 11 Natural Waters emphasises what it says are the common features of the two get-ups: (a) use of a clear bottle with a recessed central body portion defined by protruding shoulders and base portions, with the label positioned in the recessed body portion; (b) use of a blue cap; (c) use of a colourful, tropical motif featuring tropical plants and other vegetation; (d) a three-dimensional effect created by having a partially transparent label on the front panel of the bottle revealing the inner side of the back label; and (e) prominent use of the word "Fiji". 12 The differences between the 2003 get-up and the 2005 get-up that are immediately apparent to the eye are: (a) The use of a different motif of tropical flowers. The 2003 get-up contains a range of flowers, including a white orchid, almost centrally placed at the bottom of the transparent label and a red hibiscus, above and to the left of the orchid, facing towards the centre. The 2005 get-up has, as a single tropical flower, a pink hibiscus located at the bottom right of the transparent label, facing upwards and towards the centre. (b) The inner side of the back label of the 2003 get-up depicts a body of water, including a waterfall in a predominantly blue and white colour scheme. The 2005 get-up has, on the inner side of the back label, striations of blue, green and white with green fern leaves; the predominant effect is of green and blue. 13 There are other differences, such as the words "bottled at source" at the bottom of the transparent label in the 2003 get-up and "from the islands of" above "FIJI" in the 2005 get-up. These differences are apparent on closer inspection, rather than by immediate impression. 14 The labels on the back side of the bottles appear different and the style and content of the writing is also different. In particular, on bottles with the 2003 get-up, there is a map of the Pacific region in pale blue and white. Four alternate graphics are used on bottles with the 2005 get-up. The content of the writing varies depending on the graphic. While the colours used also vary, the back label in the 2005 get-up is predominantly blue and white.

[5]

Island Chill 15 Dayals commenced importing, distributing and selling Island Chill bottled water in Australia in December 2005 with the following get-up: Island Chill 16 The parties agree that the get-up of Island Chill ('the Island Chill get-up') includes the following features: (a) the word "Fiji" in a prominent position on the front label as part of the expression "Bottled at Source in Fiji Islands"; (b) a bottle which has a recessed central body portion defined by protruding shoulders and base portions, with the label positioned in the recessed body portion; (c) use of a blue cap; (d) displays a body of water, or green image, on the inner side of the back label; (e) displays a beach landscape in the background; (f) displays a three-dimensional effect created by having a partially transparent label on the front panel of the bottle revealing the inner side of the back label; and (g) use of the words "Taste of Perfection". 17 Natural Waters does not assert an exclusive right to three-dimensional images on bottles, or to rectangular bottles, or to tropical scenes. It asserts that a sufficient number of "the constellation of features associated with the get-up" of Fiji Water have been appropriated by Dayals for the get-up of Island Chill so as to create an impression of association between the products which is misleading and deceptive or likely to mislead and deceive. 18 The distinctive features of the Island Chill get-up that are immediately apparent as different from those of Fiji Water are: (a) The brand name. The words "Island Chill" bear no literary or textual resemblance to the word "FIJI". That "Island Chill" is represented to be the brand name of Dayals' product is obvious; "Island Chill" is in substantially larger font than all other text on the bottle, located in a prominent (elevated and central) position and accompanied by a symbol of registration as a trade mark. It is similarly obvious that on Natural Waters' product, "FIJI" is represented to be the brand name of Fiji Water. (b) The visual appearance of the brand name. "Island Chill" is in dark blue writing outlined by white and in lower case script. "FIJI" on the bottle of Fiji Water is in capital script and in white writing outlined by gold. The type fonts used are different. (c) The shape of the bottles. Island Chill, while square in its horizontal shape, is elongated and rectangular vertically. The Fiji Water bottle is square in shape horizontally and vertically. This results in the Island Chill bottle being noticeably taller and thinner than the Fiji Water bottle. (d) The manner of use of "Fiji". Prominent on the Island Chill transparent label are the words, in blue writing outlined by white, "Bottled at Source in Fiji Islands". The effect of those words is to describe the geographical, rather than commercial, source of the product ([70] below). As I have noted, "FIJI" is represented in the 2003 and 2005 get-ups as the brand name of Fiji Water. (e) The tropical flower. In the Island Chill get-up, the flower is a hibiscus of orange-pink hue, on the bottom right of the Island Chill transparent label facing outwards. This is totally different from the motif of flowers and vegetation of Natural Waters' 2003 get-up, which is dominated by a white orchid. The tropical flower in the 2005 get-up is a hibiscus, but it is more pink in colour and faces a different direction. It is also presented from a more horizontal perspective than the Island Chill flower. 19 There are further differences apparent when the bottles are compared side by side as they might be, for example, on a supermarket shelf. I refer to them as they relate to features of Fiji Water relied upon by Natural Waters as distinctive of its product:

The colour of the Island Chill lid is a darker shade of blue.
The inner side of the Island Chill back label depicts a scene that is predominantly blue and white. By comparison with the 2003 get-up, which is also predominantly blue and white, the obvious differences are the use of different subject matter: a waterfall (2003 get-up) versus beach and ocean (Island Chill) and the greater impact of green in the 2003 get-up, whereas the Island Chill inner back label gives the impression of being almost devoid of green. The inner back label of the 2005 get-up depicts fern fronds and is predominantly green and blue. 20 There are other differences which require more detailed analysis and to which there is no need presently to refer. Some of the differences are on the labels on the back of the bottles where they would not be seen by a casual observer in a supermarket or refrigerated cabinet.

[9]

New Zealand Eternal 25 New Zealand Eternal is in a bottle with a square face but elongated in shape, more like the shape of the Island Chill bottle, but rounded. It is produced by Mead International Limited. New Zealand Eternal was available for sale in Woolworths in November 2005. It is described on the transparent front label as "Artesian Water Silica Rich". The bottle has a blue cap. Also on the front label is a tropical flower motif featuring three red hibiscuses. There is a three-dimensional effect with the inside of the back label portraying a regional Pacific map with New Zealand in the centre in orange, yellow, brown and white. 26 As at the date of the first marketing of Island Chill in Australia in December 2005, it cannot be said that the following characteristics, individually, were unique to the get-up of Fiji Water: (1) use of a clear bottle with a recessed central body portion defined by protruding shoulders and base portions, with the label positioned in the recessed body portion; (2) use of a blue cap; (3) use of a colourful, tropical motif featuring tropical plants; (4) a three-dimensional effect created by having a partially transparent label on the front panel of the bottle revealing the inner side of the back label; (5) a predominantly blue and white effect on the inner side of the back label; (6) the depiction of a body of water on the inner side of the back label; (7) green ferns on the inner side of the back label. 27 Each of features (1) to (6) is present in the bottle of Dancing. Dancing has been distributed in at least one major supermarket chain. There is no evidence of the extent of such distribution or, indeed, other relevant evidence about the product. Dayals have not established that these other bottled waters affect the perceived distinctiveness of the 2003 or 2005 get-ups. However, Natural Waters has not established that a single aspect of its get-up or a combination of some of those features were distinctive of Fiji Water ([60] below).

[10]

The person to assess the conduct and reputation 28 The parties agree that the principles in Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 apply in ascertaining whether there has been misleading or deceptive conduct in contravention of the Act or the Fair Trading Act. The subject matter of this litigation is bottled water. The conduct is tested as against the ordinary or reasonable member of the class of prospective purchasers of this product (Campomar at [103]). A potential purchaser does not come to a decision with the benefit of argument as to the similarities and differences between two get-ups but is likely to make his or her decision in a relatively short period of time and in conditions which may vary (Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at [133]). 29 Natural Waters did not adduce evidence of consumer association between aspects of the 2003 get-up or the 2005 get-up (together 'the Fiji Water get-up') and Natural Waters or Fiji Water. That evidence could have been the subject of market research but its absence does not affect the ability of the Court to ascertain the distinctive features of Fiji Water and determine whether a consumer would be misled as to the commercial origin of Dayals' product by the Island Chill get-up. 30 Dayals criticises the absence of expert evidence concerning the reputation of Natural Waters or Fiji Water and, in particular, the absence of survey evidence as to the reputation in, and public recognition of, the "constellation of features" relied upon by Natural Waters. There is no suggestion that such survey evidence was obtained and not adduced; the evidence is that Natural Waters has not engaged market research in this area. Natural Waters has adduced evidence of the sales, marketing and promotion of Fiji Water. Natural Waters submits, with reference to Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2006) 228 ALR 719 at [11]-[12] that expert evidence of reputation or consumer association would be unhelpful and inadmissible as it could amount to no more than an opinion on a matter that is not outside the experience of ordinary persons. As a general proposition, evidence as to the reputation of an applicant's packaging or get-up in the mind of the consumer may be adduced (Interlego AG v Croner Trading Pty Limited (1992)39 FCR 348 at 387 per Gummow J with whom Black CJ and Lockhart J agreed). The evidence ruled inadmissible in Cadbury seemed to concern the likelihood of deception rather than reputation (at [5]) and evidence of consumer recognition, in the form of a "chocolate sensory study" was admitted (Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136 at [69]).

[14]

Sydneywide 38 In Sydneywide, two competing energy drink products, "Red Bull" and "LiveWire", were packaged in cans of similar size and colour. The cans each had a "strong diagonal thrust" in their design. There were significant differences, including the brand names and the forms of writing on the cans. There was emphasis, by an expert witness at trial, on what was described as the "gestalt" of the brand, in the sense of '[a]n integrated perceptual structure or unity conceived, as functionally more than the sum of its parts', which was said to be 'almost identical' (at [41] and [91]). 39 The primary judge concluded that Sydneywide had intentionally adopted the Red Bull get-up for its packaging for the purpose of appropriating part of its trade or reputation and that it had selected a get-up which would "sail as close to the wind" as it thought expedient (Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd (2001) 53 IPR 481 at [47]). That finding formed an important basis for his Honour's conclusion that there was passing off and breach of s 52 of the Act as it led to the finding that there was scope for a purchaser to believe that both products emanated from the same "manufacturing stable", especially where the different brand names were not readily discernible (Red Bull at [69], cited in Sydneywide at [47]). 40 Weinberg and Dowsett JJ, with whom Branson J agreed discussed, at [55] and following, the elements of passing off and the relevance of the intent of the party accused. Their Honours concluded (at [62]) that there is no requirement that there be an actual, subjective intention to mislead; the misrepresentation need only be likely to lead the public to believe that the goods are those of the applicant. 41 There were differences in the get-up and the brand name. The relevance of the differences depended on the opportunity which a potential purchaser would have to observe those distinctions (at [72]). The parties adduced expert evidence before the primary judge of the likely behaviour of shoppers or consumers with respect to the products there in dispute. The evidence, as well as "experience and common sense", suggested that relatively little attention would be given to the choice of a particular item for removal from the refrigerator for purchase (at [74]). 42 Weinberg and Dowsett JJ considered at [107] the difference between and prominence of the brand names. The brand names were said to have similar associated connotations. Their Honours said that, where the purchaser may have in mind the connotations of the name rather than the name itself, such similarities may tend to undermine what might otherwise be a basis for clear distinction. Similar colour combinations and the diagonal thrust of design, notwithstanding the fact that other minor players in the market traded under similar colours, affected the Court's conclusion that there was a capacity to deceive.

[16]

Section 52 of the Act and passing off 44 Section 52 and its equivalent provision in the Fair Trading Act provide wider protection from deception (Campomar at [97]) but neither party has sought to rely on the distinction between the elements necessary to establish a contravention of s 52 and those to establish passing off. The question is what Island Chill would convey to a hypothetical ordinary and reasonable member of the class constituted by prospective purchasers of bottled water and whether that person would be mislead or deceived, or be likely to be misled or deceived, to conclude that Island Chill had sponsorship, association, approval or connection with Fiji Water or Natural Waters that it does not have (Campomar at [102]-[105]). 45 Whether Dayals is passing off its goods as those of Natural Waters depends on the reputation attached to Fiji Water's identifying get-up so that it is distinctive of bottled water sold by Natural Waters; a representation by Dayals leading or likely to lead consumers to believe that Island Chill is the product of Natural Waters; and actual or probable damage (Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7 per Lord Oliver; TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 at [25]; Sydneywide at [60]). Where a get-up of a product is distinctive of that product and its trade source, there may be passing off and contravention of the Act and the Fair Trading Act even though the products bear different brands or labels. 46 The fact that Natural Waters may establish reputation in the Fiji Water get-up does not mean that it has a monopoly over each aspect of that get-up. The goods are ordinary articles of consumption. By their nature, goods of different manufacturers will bear some resemblance to each other. Water is sold in bottles, frequently in transparent bottles and commonly with blue caps. The marks, brands and labels play an important part in distinguishing the goods of one manufacturer from those of another (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 200 per Gibbs CJ). Whether the reason for the distinctiveness of Fiji Water is one or more particular aspects of its packaging or the totality of its get-up, the offending product will only mislead or deceive consumers where it has taken the distinctive aspect(s) or so much of the totality of the get-up that the overall impression or the "gestalt" of the Fiji Water brand ([38] above) is adopted. If Dayals adopted an aspect of the get-up for its product, that fact alone does not dictate a finding of passing off (Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at 867; Cadbury (No 4) at [83]). 47 In Cadbury (No 4) at [84], Heerey J spoke of the "brand architecture" of, in that case, 'the name "Cadbury", the colour purple, the glass and a half device etc'. His Honour pointed out that '[t]he architecture of a building involves the whole, not just one component such as a roof or wall'. In other words, it is relevant to assess the evidence of reputation to determine which aspects of Fiji Water or its get-up are associated with Natural Waters and to ascertain whether or not the Dayals product has taken or adopted or displayed sufficient of those aspects to lead to a conclusion of passing off. That assessment of the evidence as to reputation is also relevant to the determination of whether Dayals' conduct is likely to mislead or deceive consumers in contravention of s 52 of the Act ([44] above).

[17]

The reputation of Fiji Water 48 Fiji Water was the first water from Fiji marketed in Australia. Fiji Water was first available for sale in Fiji and the United States of America in 1997 and in Australia in April 2003. Natural Waters does not suggest that it has any right to prevent the sale of bottled water from Fiji or that it has any property right in the use of the word "Fiji" for the purpose of describing the geographical source of a water product bottled in Fiji. 49 Ms Schmidt was the General Manager of the second applicant between March 2003 and April 2006. She is now the Director of Marketing at Fiji Water LLC and, in the course of her duties, visits various countries where Fiji Water is distributed for sale including Australia. Ms Schmidt's evidence is that Fiji Water is sold in Australia in retail outlets such as cafes, bars, restaurants, convenience stores and in supermarket chains. It is offered for sale at both "on-premise" (consumed at the point of purchase) and "off-premise" (consumed away from the point of purchase) establishments. 50 In on-premise locations, it is generally served in the bottle, giving the consumer sustained exposure to the material appearing on the bottle. It is offered for sale in large refrigerators shared with other beverages; it may be displayed in a separate Fiji Water fridge which contains only Fiji Water; it may be purchased by name from a menu; or it may be purchased in the rooms of guests at a hotel where it is placed on display. 51 As to off-premise locations, Fiji Water has been sold in fine food emporiums, health food markets and independent grocery and green grocery stores "in trendy suburbs and/or high-income earning suburbs" and in city convenience stores. Since November 2005 the off-premise trade channels include supermarkets, petrol shops and convenience stores in suburban areas. Fiji Water is also sold for consumption off-premise in a variety of ways. It may be displayed in a self-service refrigerating facility shared with other goods; in a self-service fridge housing only beverages; unchilled on a shelf shared with other consumable goods; on a stand allocated solely for Fiji Water; or displayed refrigerated or unrefrigerated in a facility or on a shelf shared with other consumable goods but requiring staff assistance. In each case the get-up of Fiji Water is prominently on display to consumers. 52 Natural Waters has focussed its marketing strategy on "trend setting" consumers and retailers and on ensuring prominent display at selected events and locations with the aim of encouraging recognition of the Fiji Water get-up. It is marketed as a "unique water" by emphasising the square shaped bottle, the artesian nature of the product, the silica content in the product and the fact that the product 'is sourced from an "untouched", remote and tropical Fijian paradise'. It is also marketed as "healthy water" by, among other things, associating it with a holiday destination. Fiji Water is sold in Australia in 500 ml and 1 litre square bottles. Ms Schmidt says that the common underlying tone in both the 2003 and 2005 get-up is 'that of the tropical Fijian paradise, with associations with concepts of purity, virginal ecosystem[s], and natural water source'. 53 Natural Waters has marketed Fiji Water extensively. During 2004, the first full year of trade in Australia, 50,000 cases of Fiji Water were sold, each case containing twenty-four 500 ml or twelve 1 litre bottles of water. That increased in 2005 to 87,000 cases and is expected substantially to have increased in 2006. It would seem that Natural Waters and Dayals' products are intended to be sold to the same broad class of persons and through broadly similar retail outlets, albeit that Island Chill is generally sold at a cheaper price than Fiji Water. 54 Natural Waters has expended significant sums of money in the marketing of Fiji Water, including the maintenance of attractive point of sale displays, event sponsorship, product placement in television shows and movies or with celebrities, outdoor billboard advertising and advertising in the print media. Ms Schmidt's evidence elaborated upon the nature and extent of the advertising and media exposure of Fiji Water as well as promotional activities with which it has been associated. The aim of Natural Waters' promotional activities is said by Ms Schmidt to ensure that the get-up is on prominent display with the intention, inter alia, of building brand recognition and increasing public awareness of the product. Promotional items include a branded barrel fridge, umbrella, stand alone refrigerator for installation in bars and nightclubs, stock display stands and banners for use at promotional events. Natural Waters has also marketed Fiji Water as a "celebrity water"; that is, a water consumed by film and television stars in Hollywood. 55 Photographic evidence of Natural Waters' promotional activities emphasise different individual features of the 2003 and 2005 get-ups. For example, promotional umbrellas place a strong emphasis on the words "The Taste of Paradise" and the white orchid but do not emphasise the inner back label image or the hibiscus. 56 Natural Waters submits that, through its extensive marketing and promotion of Fiji Water in Australia and internationally, Fiji and the Fiji Islands have come to be associated with pure drinking water. From April 2003 until December 2005, there was only one such bottled water product. That product was, Natural Waters contends, presented in a unique shape with a unique three-dimensional design configuration as part of its "constellation of features". As a consequence, Natural Waters submits, consumers are less likely to attend to differences between the Fiji Water and Island Chill products.

[18]

Consideration 57 Natural Waters relies on the reputation of the 2003 and 2005 get-ups. The reputation that is relevant to the determination of liability in these proceedings is the reputation in the get-up that existed as at mid December 2005, the commencement of the conduct complained of (Pub Squash Co at 861; Anheuser-Busch v Budějovický Budvar (2002) 56 IPR 182 at [237]). The vast majority of sales and promotional activities prior to mid December 2005 related to the 2003 get-up. It follows that, as at the relevant date, absent any evidence to the contrary and absent evidence of reputation specific to the 2005 get-up, Natural Waters' reputation in the 2005 get-up subsists in the features in common between the two versions and the overall impression that they both convey. 58 In McCormick & Co Inc v McCormick (2000) 51 IPR 102 at [81] to [88], Kenny J discussed the evidence necessary or sufficient to establish reputation in a trade mark. Her Honour pointed out that evidence of sales and advertising may be sufficient to establish reputation despite the absence of any direct evidence of consumer appreciation of the mark, as opposed to the product: 'public awareness of and regard for a mark tends to correlate with appreciation of the products with which the mark is associated, as evidenced by sales volume, among other things' (at [86]). Such factors may also establish the reputation necessary to found a case for passing off and contravention of s 52 of the Act (for example, Pacific Publications Pty Ltd v Next Publishing Pty Ltd (2005) 222 ALR 127 at [12] to [14]). 59 The reputation which must be proved in a case such as this is that the get-up, packaging, shape, or trade dress relied upon is associated by consumers with the applicant's product. It takes a strong case to establish a reputation of this nature (Interlego at 386) asconsumers will not necessarily associate a get-up with the applicant's product (Collins Debden Pty Ltd v Cumberland Stationery Co Pty Ltd (No 2) [2005] FCA 1398 at [33] to [34] per Lindgren J). The requisite reputation will more readily be found where the get-up is unique or striking rather than descriptive, mundane, merely functional, or in common use. 60 Natural Waters relies on a "constellation of features" which are said to be distinctive of Fiji Water. Some of these features have been given little emphasis in the promotional activities (eg, the red hibiscus). Other features are commonly used in the bottled water market (eg, blue bottle caps) or are not unique to Fiji Water (a three-dimensional effect created by a partially transparent label). There is no justification for concluding, on the basis of sales and marketing evidence alone, that these features individually have come to be associated by consumers with Fiji Water or Natural Waters. 61 The combination of features relied upon by Natural Waters does, however, in my view give rise to an overall impression or effect. Consumers are exposed to this effect to varying degrees when purchasing or consuming Fiji Water; indeed, the evidence is that in some instances (eg, on-premise locations) the degree of such exposure is likely to be high. The volume of sales in Australia of bottles bearing the 2003 get-up, as at the date of the conduct complained of, is significant. Promotional activities have also been significant and the 2003 get-up has featured in those activities. The extent of consumer exposure to the 2003 get-up is such that I am satisfied that Natural Waters has sufficient reputation in that get-up to found an action for passing off and contravention of the Act. As at the relevant date, December 2005, the reputation in the newly marketed 2005 get-up would extend to the common features; the continued use of the name, bottle shape and style; those features that create the common "gestalt".

[19]

The intention of Dayals in the design of the Island Chill get-up 62 Mr Dayal began researching the possibilities of setting up a water bottling business in Fiji to cater for what he perceived to be a growing market demand for bottled water in 2001. Artesian Waters purchased land for commercial production bore-wells in February 2002. It obtained authorisation to proceed with construction in or about January 2004. From about June 2002, Mr Dayal commenced inquiries into appropriate bottle shape, name and label designs and artwork for the Dayals product. 63 Mr Dayal made the decisions for Dayals on the marketing of a bottled water product from Fiji. There is no doubt, based upon Mr Dayal's evidence, that he was keenly aware of Fiji Water and its 2003 get-up when he made the decision to produce and distribute a bottled water from Fiji. Indeed, Mr Dayal readily conceded that he was keenly aware of the get-up used by Fiji Water in the form of the bottle that had been sold in Fiji from 1997. 64 Mr Dayal referred to the Natural Waters product as "Fiji Water" without further qualification and did not provide a sample of the get-up to his designers when he instructed them to design a get-up different from that of Fiji Water. He seemed to accept that there was no need to do so as his designers would be aware of it themselves. 65 Mr Dayal's evidence is that he received numerous bottles from the market in different countries and then formulated in his mind the features of shape and design which appealed to him. He instructed an Indian bottle blowing company to design bottles and manufacture molds for that approved design. Mr Dayal then turned to a name for the proposed bottled water product. He engaged the services of an American lawyer to assist in choosing a name that was available for use in the United States of America. For a period of time, he was attracted to the name "Tranquil" and in late 2002 he commissioned a Fijian company, Kreative Designs, to design labels using that name. In about March 2003, he became interested in the name "Island Chill" which'was a name that [he] had come up with in that month'. 66 Mr Dayal instructed Kreative Designs to design a range of label options based on the new name, Island Chill. His instructions were to design a label conveying coolness, relaxation and a tropical theme that was to be different to that of Fiji Water. Following discussions with Philstic Labels Ltd, a graphic design and label manufacturer based in New Zealand, he concluded that a transparent rather than an opaque label would be 'most beneficial'. In September 2005, Philstic designed a transparent front label based on the designs of Kreative Designs which included the back label (three-dimensional) seascape. Mr Dayal's evidence is that he chose the lettering of strong dark blue with a white outline and left the font type to Philstic. He says that his decision to adopt a dark blue bottle cap was affected by the colour of the lettering. Mr Dayal readily agreed that he and Kreative Designs were aware of the 2003 get-up but not the 2005 get-up. Whatever reference was made to the 2003 get-up in the design of Island Chill, I am not satisfied that Mr Dayal intended to appropriate the Fiji Water get-up. 67 Natural Waters invites the Court to infer that Dayals set out about 'the task of taking so much of the Fiji Water get-up as they thought would enable them to travel into the slipstream of [Natural Waters'] reputation' with reference to: · the rejection by Mr Dayal of earlier designs and late inclusion of features in common with the Fiji Water get-up; · specifically, an abandoned proposal to adopt white lettering outlined in gold for "Island Chill"; · omissions in Dayals' evidence; · alleged similarities between the Island Chill website and the Fiji Water website; and · the presence of the red hibiscus in the Island Chill get-up.

[20]

The earlier designs, late inclusion of Fiji Water features and the abandoned white and gold label 68 Natural Waters points to the fact that Mr Dayal obtained several earlier designs that differed substantially from that of Fiji Water, which he rejected and that he adopted features such as a transparent label and three-dimensional background label close to the launch date of Island Chill. Mr Dayal had known of those characteristics well prior to the commencement of the design process. He explained his process of reasoning in adopting different aspects of the Island Chill get-up as follows. Mr Dayal was aware of New Zealand Eternal, Dancing, Fiji Water and Outback waters, which incorporated into their design a transparent front label and a three-dimensional concept involving the use of a back label with decorative artwork visible from the front perspective of the bottle through the transparent front label. He formed the view that these design features were functional and aesthetically pleasing and suitable for use as part of a design for bottled water. He was aware of other bottles on the market that also used characteristics such as transparent front labels and three-dimensional inside back labels. Although his designers produced a label incorporating these features with "Island Chill" in white lettering outlined by gold, Mr Dayal ultimately rejected that label and adopted blue lettering, in lower case, outlined by white. He chose a combination of features that were, to him, attractive and at the same time were, in his opinion, sufficiently different to those of Fiji Water clearly to differentiate them. 69 Natural Waters emphasises that the design of the Island Chill bottle progressed, from 2002 to 2005, by the incorporation of features from the Fiji Water get-up. This included a move from: · an opaque to a transparent label; · a predominantly green colour scheme to a blue and white colour scheme with a red hibiscus; · including "bottled at source" on the front label, to 'bottled at source in Fiji Islands" at the bottom of the front label, to "bottled at source in Fiji Islands" in the middle of the front label in the same font and colour and "Island Chill"; · the incorporation of "taste of perfection" on the back label where the 2003 get-up has "taste of paradise". 70 Natural Waters places particular emphasis on the eventual use of "Bottled at Source in the Fiji Islands" and its position on the front label. That emphasis is misplaced. Natural Waters cannot claim a monopoly on all water from Fiji. Natural Waters accepts that its competitors are entitled to state that the source of their water is Fiji or the Fiji Islands. Its complaint is that it considers "Fiji" to be in "prominent use as a trade mark" in the Island Chill get-up. That submission is rejected. The word "Fiji" is not in use as a trade mark on the Island Chill bottle. Although in the same colour, the words "Bottled at Source in the Fiji Islands" are in noticeably smaller font to "Island Chill". I am not satisfied that the reasonable consumer would consider those words to form a part of the Island Chill brand name or otherwise represent an association between Island Chill and Fiji Water. Mr Dayal wanted to market a bottled water from Fiji. Dayals' use of "Fiji" evinces an intention to describe the geographical source of the Island Chill product, not an intention to appropriate the Fiji Water get-up.

[23]

The red hibiscus 76 Natural Waters submits that it cannot be mere coincidence that Island Chill displays a red hibiscus in a similar position to the red hibiscus in the 2005 get-up. That submission, at first consideration, has some force. While Mr Dayal admitted that he was aware of the 2005 get-up prior to launching the Island Chill website in "late 2005", he also said that he was not aware of the 2005 get-up when he signed-off on the final get-up of Island Chill in September 2005. That is reasonable, considering that Fiji Water was not marketed in the 2005 get-up in Australia until October 2005. 77 Much has been made of the single hibiscus. However, that did not appear on the 2003 get-up, other than in a tropical array of flowers, differently positioned and dominated by a white orchid. The hibiscus was not the sole flower, nor the dominant flower, nor in the same shade, nor in the same position in the 2003 get-up. Mr Dayal was not aware of the 2005 get-up, which featured a single hibiscus, prior to the completion of the Island Chill design. 78 The hibiscus was a flower adopted by other bottled water suppliers, such as Dancing. It is a flower commonly associated with a tropical theme. I do not accept that the flower and its location were deliberately chosen with a view to appropriating an aspect of the Fiji Water get-up. Even if it were, it cannot be said that the sole pink hibiscus in the bottom right of the front label, as it appears in the 2005 get-up, was itself distinctive of or associated with Fiji Water when it was but one of the flowers in the 2003 get-up in which a white orchid was dominant and the red hibiscus was located in a higher position on the left side of the front label. 79 Characteristics such as the transparent front label, the three-dimensional effect on the inside of the back label and a hibiscus were not created by Natural Waters nor unique to Fiji Water in the bottled water market. Mr Dayal did not suggest that he created any of these devices. As I have noted, there is no evidence that they were associated, in the mind of the consumer, with Fiji Water. They were devices used in get-ups that were themselves, individually, not the subject of reputation or goodwill. As long as there was no passing off of Fiji Water or a likelihood of deception of consumers, there was no prohibition on another bottled water manufacturer using one or more of these devices. Mr Dayal freely acknowledged that he adopted ideas that had previously been publicly used. His intention was to take what he thought were the best ideas in the marketplace and to create a get-up for Island Chill that maximised its attractiveness but maintained distinctiveness, in particular as against Fiji Water. I am satisfied that he succeeded.

[25]

Would the consumer be misled into thinking that Island Chill was Fiji Water or associated with Fiji Water or Natural Waters? 82 I am firmly of the view that the ordinary or reasonable consumer of bottled water would not confuse Fiji Water and Island Chill or be misled, or be likely to be misled, into believing that they were in any way associated, other than both being a product of Fiji. This is so whether the consumer paused to consider the bottles or made the choice with only a "transitory" glance. Natural Waters emphasises the distinctive aspects of the Fiji Water get-up. Two of the most distinctive are the square shaped bottle and the name "FIJI" in capital letters, in white, outlined by gold. Island Chill is in a bottle with an elongated shape, totally different although square faced, from the distinctive shape of the Fiji Water bottle. The name Island Chill is prominent and appears totally different in script, colour, name and style to the "FIJI" of Fiji Water. Those aspects alone are, in my opinion, sufficient clearly to differentiate the two products. 83 The blue cap, transparent label, three-dimensional background, tropical flower motif and colour and nature of the three-dimensional background are not displayed only on bottles of Fiji Water. They have been utilised in Australia by other manufacturers of bottled water. They do, however, form part of the overall impression or effect of Fiji Water, although there are differences between the 2003 get-up and the 2005 get-up. In each case, the use made of these devices by Island Chill is different. The blue cap is of a different colour; the single hibiscus is different to the 2003 get-up and of a different colour and position to the 2005 get-up; the three-dimensional scene is different and of a different predominant colour to each of the 2003 and 2005 get-ups. Importantly, the overall effect of the combination of each aspect of the design is different and sufficiently so to differentiate Island Chill from the 2003 get-up and the 2005 get-up. Unlike Sydneywide, there is no "gestalt" common to Island Chill and Fiji Water. The products simply look different. The ordinary consumer would not be misled or deceived into believing that they were from the same manufacturer or in some way commercially associated. The ordinary consumer would not believe that Island Chill was the product of Natural Waters or associated with Natural Waters or Fiji Water or was a bottle of Fiji Water.

Natural Waters of Viti Limited v Dayals

At a glance

Court

Decision date

Before

Source

Judgment (30 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (16)

Cited By (5)