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[2010] FCA 2
defendant. Application dismissed. The parties were to file and serve any costs submissions by 20 January 2010. The applicants' objection to paragraph 40 of Mark Epstein's affidavit was upheld; the judge...
NutrientWater and LMBB argued that Baco copied the look of their enhanced-water products and that consumers could mistake Baco's Grassroots products for NutrientWater products. The court accepted that NutrientWater had a reputation in its product range generally, but found that the features it relied on were not shown to be uniquely associated with NutrientWater by May 2009. Similar features were used by other enhanced-water brands and indicated the product category. Baco's Grassroots name, G logo and other packaging differences made its products sufficiently distinguishable. The evidence of confusion mostly concerned vitaminwater's earlier market entry, not Baco. The application was dismissed.
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NutrientWater Pty Ltd (NW) and LMBB Pty Ltd alleged that Baco Pty Ltd had adopted a sufficiently similar look for its Grassroots enhanced-water products to pass them off as NutrientWater products, or to mislead consumers about trade source, sponsorship, approval or affiliation under ss 52 and 53(c) and (d) of the Trade Practices Act 1974 (Cth) (TPA). The dispute was decided by Kenny J in the Federal Court on 6 January 2010. Liability was being determined separately from quantum: [5]-[8].
NW began selling enhanced waters in Australia in November 2005. It relaunched its range in October 2006, using clear plastic bottles, large wrap-around labels, bright horizontal colour bands, a central white field, a range of brightly coloured variants, and a black-and-white NW logo: [10]-[12]. The products were sold nationally and NW undertook substantial marketing and promotion. The court accepted that NW had developed a nationally based reputation and goodwill in its product range by May 2009: [13]-[16].
The key complication was that NW's reputation in the range generally did not establish a reputation in each feature it alleged Baco had taken. Vitaminwater entered Australia in February 2008, and other enhanced-water competitors were also in the market by May 2009. The evidence showed significant similarities among the products' presentation, including bright variants, clear bottles, label banding and wellness themes: [32]-[41], [96]-[98].
Baco's design process included samples and images of NW's products, vitaminwater and other competitors. It launched its redesigned Grassroots products in May 2009. The court accepted that Baco wanted its products to be recognisable as enhanced waters while remaining distinguishable from competitors, particularly NW: [45]-[56]. Baco used a Grassroots name and G logo, a white band at the top of the label, a grass motif and a different bottle size and shape: [54]-[61].
NutrientWater sued after seeing Baco's products in Melbourne: [62]. Kenny J dismissed the application because NW had not proved a distinct reputation in the allegedly appropriated features and because Baco's branding and packaging sufficiently distinguished its products: [124]-[125].
The court set out three elements for passing off: reputation or goodwill attaching to the get-up among relevant purchasers; a misrepresentation likely to lead a significant proportion of potential purchasers to believe the goods came from NW or the same source; and actual or likely damage: [79]. The relevant date for the reputation inquiry was when Baco entered the market, May 2009: [80]. The judge also treated likely deception as a question of fact, to be assessed in the circumstances of the market and the likely knowledge of purchasers: [81].
The critical reputation question was not simply whether NW had sold and promoted its products successfully. The applicants needed to show that consumers associated the features relied on with NW specifically. Kenny J accepted a general reputation in the NW Product Range, but found that the features relied on were shared with other competitors and were not sufficiently distinctive of NW by the relevant date: [96]-[99]. In particular, the judgment considered the effects of vitaminwater's Australian entry and the presence of Smart Water. The judge found that features that might earlier have appeared characteristic of NW were no longer distinctive once other products used them in the market: [97].
Kenny J also addressed the consumer confusion evidence. Most of it concerned consumers mistaking vitaminwater for NW during 2008, rather than mistaking Baco's Grassroots products for NW in 2009. The market had changed by Baco's launch, with more competing brands available. Moreover, the consumers who described confusion generally recognised the different name or logo on the product: [67]-[72]. The court found no persuasive evidence of actual confusion between NW and Baco: [71].
The statutory claims required attention to the ordinary or reasonable members of the relevant class, not extreme, fanciful or capricious reactions: [88]. The judge considered the ordinary purchaser's likely impression, given the market and the product's price. These were inexpensive beverages, likely to be selected fairly rapidly, but the judgment reasoned that packaging, branding, name and logo would guide that selection: [101]-[103]. The court was not to decide the matter by placing the products side by side and engaging in detailed inspection. The assessment was one of impression based on recollection: [102].
The court accepted that copying can be evidentially relevant. Deliberate adoption of a rival's get-up may support an inference that the get-up is suited to deceive, but the ultimate question remains whether a misrepresentation was likely: [82]. The judgment's discussion of copying thus did not make copying itself sufficient for liability. It relied on the distinction between adopting successful or useful features and representing that one's goods are another trader's goods: [82], [86], [108]-[109].
Kenny J found that Baco's features were either common to enhanced waters or indicative of the category rather than NW's particular trade source: [110]-[112]. The prominent Grassroots name and G logo, repeated on the label, were visible regardless of how the bottle sat on a shelf. The judge also noted that NW's own logo and name were similarly visible: [113]-[116]. In a market where branding mattered and consumers had encountered several brands, Baco's products were not likely to be taken for NW's or to imply an association: [115]-[118], [123].
The judgment did not purport to establish a new legal test. It assembled and applied existing principles concerning passing off, product get-up and the TPA. Its passing-off framework drew on authorities including Reckitt and Colman, Pub Squash, Morgan & Banks, ConAgra and Red Bull: [79]. It described reputation, misrepresentation and damage as the core elements, while noting that formulations of the tort vary: [79].
For statutory misleading or deceptive conduct, the judgment treated the inquiry as distinct in origin and purpose from passing off, while recognising overlap where conduct conveys a representation about trade source: [83]-[85]. The court cited the Full Court's statement in Cadbury that particular branding features can become associated with a trader and that another trader's use of those features may mislead consumers: [83]. It also explained that there is no equivalent statutory requirement to prove exclusive reputation as an element of a TPA claim, although reputation in the features can be important to whether consumers are likely to be deceived: [89]-[91].
The judgment's application illustrates an important qualification: neither evidence of copying nor similarity alone resolves the matter. A respondent may use features that are common to a trade or product category, provided that the use does not create a likely misrepresentation about source. In the TPA context, the court cited Parkdale and Dr Martens for the proposition that copying is not enough where the respondent has sufficiently distinguished its goods: [86]. In passing off, Kenny J relied on Burford and Pub Squash to explain the balance between protecting goodwill and preserving competition: [104]-[109].
No subsequent state of the law can be established from the judgment text supplied here. The judgment reports the law as at January 2010 and cites authorities then relied on by the court. This analysis therefore does not claim how later courts have developed, followed or limited the decision.
At [79], the court said that passing off required reputation, a likely misrepresentation about source, and actual or likely damage. In plain English, the claimant had to show more than resemblance: consumers needed to associate the relevant presentation with the claimant, and the resemblance needed to be likely to cause a mistaken belief about who made or supplied the products.
At [80], the relevant date for reputation was Baco's market entry in May 2009. Put simply, earlier market success was not enough by itself. The question was what reputation the claimed features had when Baco began selling its products.
At [82], the court explained that proof of deliberate copying may support an inference of likely deception, but does not decide the question. In plain English, copying can matter as evidence, but the court still has to decide what consumers are likely to understand from the products as presented.
At [96], Kenny J found that NW had not shown that its colours or other relied-on features, individually or together, had become distinctively associated with it. The court was distinguishing reputation in the product range as a whole from reputation in the particular details the applicants sought to protect.
At [102], the court described the assessment as one of impression based on recollection. In plain English, the legal comparison was not a close visual inspection of two products placed side by side, but the likely impression on purchasers encountering them in ordinary shopping conditions.
At [104], the court stated that first use of a get-up does not confer a monopoly if later use is not likely to deceive ordinary reasonable consumers. This captures the judgment's competition balance: a trader may use common or useful product features, but not in a way likely to mislead consumers about source.
At [117]-[118], the court found that the branding clearly differentiated Baco's products and that Grassroots did not convey association with or sponsorship by NW. The practical point in the judgment was that names and logos can be important source indicators when visible on the products.
The decision is relevant to disputes in which a claimant says that a competitor has adopted the overall look, colour scheme, packaging format or other get-up of its products. Its reasoning is most directly engaged where the claimant relies on a combination of visual features, rather than only on a copied name or logo, and where similar features appear across several competing products: [96]-[98], [110]-[112].
It also addresses markets in which products are inexpensive and purchased quickly. The judgment considered that an ordinary purchaser might not make a lengthy comparison, but could still rely on visible branding to identify trade source: [103], [113]-[117]. The reasoning therefore turns on what consumers are likely to notice in ordinary retail conditions, including whether products are displayed together or separately: [73]-[77], [101]-[103].
The precedent's reasoning has particular relevance where the alleged confusion evidence concerns a different competitor or a different point in the market's development. Here, confusion involving vitaminwater in 2008 did not establish likely confusion involving Baco in May 2009, because the market then contained multiple participants and the earlier witnesses generally noticed their mistake through the branding: [69]-[72].
The judgment also identifies the importance of the claimant's evidence about the distinctiveness of the claimed features. Evidence of sales and promotion may support reputation in a product range, but does not necessarily show that consumers associate individual packaging features with that trader: [16]-[19], [96]-[99]. A lawyer assessing a comparable dispute would likely examine the relevant date, the competing products in the market at that time, the visibility and function of branding, and whether the claimant's reputation attaches to the specific features alleged to have been taken.
The supplied judgment contains no discussion of later cases treating Nutrientwater Pty Ltd v Baco Pty Ltd. Its date is 6 January 2010, and the text identifies the authorities Kenny J considered in reaching the decision, but it does not report any later judicial treatment. It would therefore be unsupported to say from this source whether later courts have followed, distinguished, approved or criticised it.
The decision itself does explain how Kenny J treated earlier authorities. It relied on the principles in passing-off cases including Reckitt and Colman, ConAgra and Red Bull when setting out the elements of the tort: [79]. It referred to Cadbury for the overlap between passing off and statutory claims: [83], [89]-[90]. It considered Natural Waters as an analogous dispute about bottled-water packaging and reputation in get-up: [92]-[95]. It also discussed Burford and Pub Squash in explaining why copying common or successful features does not necessarily amount to passing off where the goods remain sufficiently distinguished: [104]-[109].
The judgment distinguished Cat Media on its facts. Kenny J noted that Cat Media involved a distinctive product presentation, differences between the challenged packaging and other market products, an absence of a significant distinguishing feature, and findings of deliberate intention to mislead. Those features contrasted with Baco's branding and the evidence of an intention to differentiate: [119]-[122]. This is the treatment of precedent contained in this judgment, not evidence of how later courts treated Nutrientwater.
The judgment does not resolve whether NW or LMBB held any relevant reputation or goodwill. The court said it was unnecessary to distinguish between the applicants for the purposes of its decision: [3]. Since the claims failed on other grounds, the identity of the relevant holder remained undecided.
The court also did not decide whether the horizontal colour-and-white banding was properly called a “category signature”. It considered that description immaterial because the combination of banding, bright labels, clear bottles, quirky comments and wellness styling had become indicative of enhanced waters generally by May 2009: [63]-[66].
The case turned on the evidence about the particular market and date. The judgment does not set a general rule about when repeated use of a visual feature across a market defeats a claimant's reputation in that feature. It found on these facts that the evidence did not show that the relevant features were associated with NW specifically: [96]-[99]. Comparable disputes could turn on different evidence about market entry, competitor products, consumer recognition and the distinctiveness of the particular get-up.
Finally, the judgment's costs position was not fully determined in the reasons. The orders allowed submissions on costs, and Kenny J stated a tentative opinion that the applicants should pay Baco's costs: [125]. The final costs outcome is not included in the supplied text.
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A: INTRODUCTION 1 This is a case about competitors and their products in the market for enhanced water beverages. This is a comparatively new market in Australia that has rapidly increased over recent years. 2 The first applicant, NutrientWater Pty Ltd ('NW'), manufactures, promotes and sells a range of enhanced water beverages in Australia ('NW Product Range'). The NW Product Range is a range of lightly flavoured, non-alcoholic beverages containing various vitamins, minerals and other ingredients. 3 The second applicant, LMBB Pty Ltd ('LMBB'), was incorporated on 27 March 2008 and is a corporate nominee for a partnership that holds intellectual property for NW. NW has promoted and sold the NW Product Range pursuant to a licence granted to it by LMBB. The applicants pleaded that NW, and further or alternatively, LMBB had a reputation and goodwill in the distinctive appearance of the NW Product Range. In what follows it is unnecessary to differentiate between the applicants. For present purposes, it is sufficient to refer merely to NW. For reasons that appear below, it is unnecessary to decide whether NW or LMBB would be the holder of any relevant reputation or goodwill. 4 The respondent, Baco Pty Ltd ('Baco'), competes with NW in making, promoting and selling its own range of enhanced water beverages in Australia ('Baco Product Range'). 5 By a fast track list application dated 25 June 2009, NW seeks declaratory, injunctive and other relief, including damages, against Baco. NW claims that, by manufacturing, offering for sale and selling the Baco Product Range, Baco has and continues to: (a) pass off its range of enhanced water products as and for the NW Product Range; and (b) engage in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) ('TPA') and make false representations in breach of paragraphs 53(a), (c) and (d) of the TPA. (Although the applicants pleaded paragraph 53(a), they paid little attention to it and, for practical purposes, it added nothing to their case, and I shall not refer to it again.) 6 The substance of NW's case is that there is a striking similarity between the appearance of the Baco Product Range and the appearance of the NW Product Range. NW argues that, even if Baco has acted honestly, it has failed to ensure that its products are adequately distinguished from those of NW. NW argues that the overall appearance of the Baco Product Range so nearly resembles that of NW as to be misleading or deceptive or likely to mislead or deceive; and that the Court should grant the relief that NW seeks. 7 Baco denies NW's claims. Essentially, Baco maintains that its enhanced water products do not convey any misrepresentation to the effect that they are NW's product or have the same trade source, or that its products have any relevant association with NW or the NW Product Range; and that there is no likelihood that the ordinary reasonable consumer would be relevantly misled or deceived by the appearance of its products. 8 At this stage, the only issues for determination are issues of liability, the Court having previously ordered that issues of liability be determined prior to and separately from issues of quantum. 9 For the reasons explained in detail hereafter, I would dismiss the applicants' claims against Baco. In summary, NW has failed to make out its claims, first, because it failed to establish a relevant reputation in the features that Baco allegedly appropriated. Secondly, the authorities establish that a trader is entitled to adopt the features of competitors' products, providing the result is not likely to deceive or mislead the ordinary reasonable consumer into mistaking the trader's goods for the goods of competitors. The design of Baco's 'Grassroots' enhanced water products took on various features of the get-up used by Baco's market competitors, especially NW. At the same time, Baco's product design was, and was intended to be distinctive. Apart from Baco's products' branding - name and logo - many of the other significant design features used by Baco were, by May 2009 when Baco entered the market, being used by others in the enhanced water market besides NW. Furthermore, by its branding - name and logo - and other features of its get-up or packaging, Baco clearly differentiated its products from its competitors' products in the enhanced water market. Accordingly, such similarities as exist between Baco's and NW's enhanced water products cannot ground an action in passing off, or under ss 52 or 53 of the TPA. B: FACTS
The NW Product Range 10 NW was known as Natureau Pty Ltd ('Natureau') between 2006 and 17 February 2008, after which it took its current name. Mr Matthew Dennis, a founder and director of the company, gave evidence, which I accept, that he started the business of NW (formerly Natureau) with his friends, Mr Luke Marget and Mr Brad Wilson, in 2003. His evidence was that he, together with Mr Marget and Mr Wilson, developed the packaging for the NW Product Range. He also gave evidence, which I accept, that there was no market category for enhanced waters in Australia until NW entered the market in November 2005. On this date, NW marketed its first range of four enhanced water products under the names 'Antioxidant (Green Tea)', 'Energy (Passionfruit Citrus)', 'Immunity (Valencia Orange)', and 'Multi Vitamin (Cranberry Grapefruit)'. 11 Almost a year later, in October 2006, NW relaunched its product range in the packaging used by it at least until the time of trial. Mr Dennis said that, for reasons of cost and design improvement, NW wanted to adopt the new bottle shape and get-up, for which he, Mr Marget and Mr Wilson were responsible. Mr Dennis said that NW relied on the spectrum of colours used across the NW Product Range, the colour horizontal bands, and the shape of the bottle to make the product stand out on the shelves in retail stores. The relaunched NW Product Range consisted of the original themes and flavours, as well 'Endurance (Dragonfruit)'. 'Rehab (Pomegranate Berry)' was launched in February 2007. 12 Each product in the NW Product Range is presented in a cylindrical, clear plastic 575 ml bottle, with curved 'shoulders', a tall, slim overall shape, and a clear plastic lid. Each bottle has a comparatively wide mouth relative to the bottle's diameter. A tall label wraps around the bottle. The label, with a large surface area relative to the size of the bottle, has a central white field with bright horizontal bands of colour at the top and bottom corresponding to the bright colours of the variant beverage. Each variant beverage is described by a functional name such as 'Antioxidant (Green Tea)' and is brightly coloured. Seen together, the variant beverages form part of a spectrum from green to purple. The central white field has nutritional information on one panel, a list of ingredients on another, and a light-hearted comment about the beverage on a third. The black and white logo - a large stylized 'NW' in lower case with the word 'NutrientWater' - appears three times around the top coloured portion of the label. A photograph of the NW Product Range as at February 2007 appears below: Almost all the NW Product Range has been promoted and sold in this form since October 2006. 'Rehab (Pomegranate Berry)' has been sold in this form since February 2007. A product in the NW Product Range is a relatively low-cost item to consumers, selling for $3.50 to $4.00. (a) Geographical distribution 13 From October 2006 (and, in the case of 'Rehab (Pomegranate Berry)', February 2007), NW marketed and sold the NW Product Range in Melbourne, Sydney, and Brisbane; and on the Queensland Gold Coast and the Victorian Mornington and Bellarine Peninsulas. NW began marketing its products in Perth in December 2006; Adelaide, in January 2007; Canberra, in May 2007; far north Queensland and Tasmania, in July 2007; and the Northern Territory, in August 2007. Mr Dennis said that, by February 2008 (when its competitor, 'vitaminwater', entered the market), NW's enhanced water products were being sold in approximately 10,000 retail outlets. (b) Advertising and promotional activities 14 Since October 2006, NW has spent a large amount of money on marketing and promoting the NW Product Range in various ways. For example, NW has distributed to retail stores various forms of in-store display material and equipment, including refrigeration, refrigeration branding, shelf trays, product display stands, posters, counter displays, stickers and wall graphics. 15 NW has advertised its enhanced water products in mass-media publications, including newspapers, retail and trade-based magazines and journals. Since April 2007, NW has participated in several trade shows. Since June 2008, NW has promoted its products through product sampling (which involves bottles of its products being given free to the public). Between September and October 2008, NW advertised its products nationally in a radio campaign with the 'Today' network. NW has also advertised on television; and has provided sponsorship and endorsement to numerous events and organisations nationally. NW has used merchandise and vehicle signage to promote the NW Product Range; and has maintained a dedicated website, which from July 2007 to October 2009 has had approximately 50,000 recorded visits. 16 NW adduced very general evidence of sales, which showed that the NW Product Range has been comparatively successful in the market. Further, notwithstanding the entry of competitors in the market (as to which, see below), its retail sales increased in the financial year ended 30 June 2009. The evidence as to sales, marketing and promotional activities justifies the inference that, by May 2009, NW had acquired a nationally-based reputation and goodwill in the NW Product Range: compare McCormick & Co Inc v McCormick (2000) 51 IPR 102 at 129. 17 So far as NW's claim is concerned, however, there were some limitations with this evidence, particularly bearing in mind that expenditure after May 2009 was not relevant to NW's claim. For example, there were instances in which the date of the marketing or promotional activity in question was either not established or post-dated May 2009. 18 It is, moreover, not enough for NW to show in general terms that it had a reputation in the NW Product Range. In order to succeed, NW must establish that, as at May 2009 when Baco entered the market, NW had a reputation in the features that it seeks to protect and that it claims were appropriated by Baco. I explain the legal basis for these propositions below. 19 In this regard, NW's case is not straightforward because, before Baco entered the Australian market, NW already had a number of competitors, whose products had significant similarities with its own. As a consequence, as explained hereafter, NW has not established that its reputation lay in the features it seeks to protect as opposed to its overall get-up, including its distinctive name and logo.
History of vitaminwater in the USA 20 At the time NW put the NW Product Range on the market in Australia, a number of enhanced water products were being marketed by other traders in the United States of America. These products included 'vitaminwater' (now owned by Coca-Cola), PepsiCo's 'Aquafina Essentials' and Coca-Cola's 'Dansani NutriWater'. The history of vitaminwater is central to Baco's defence. 21 Energy Brands, Inc, also known as Glaceau, launched the vitaminwater brand of enhanced waters in the United States in 2000. Six years later, the United States market for enhanced waters was very large indeed and vitaminwater was very successful in it. By early 2006, vitaminwater was reported as ranked in the top ten bottled waters in the US market. According to Mr Mark Epstein, managing director of Baco, whose evidence on this point I accept, the rise of vitaminwater in the United States was widely publicised. Then, in 2007, Coca-Cola acquired Energy Brands (and vitaminwater).
NW's adoption of features of vitaminwater 22 Baco argued that, in launching and relaunching the NW Product Range, NW had substantially copied vitaminwater products. On the balance of probabilities, I find that NW did so copy. 23 None of the founders of NW had a background in product design and none was unsophisticated in commercial matters. Mr Dennis qualified as a solicitor before becoming a sales trader in institutional broking at Macquarie Bank. He ceased his employment there about September 2005, shortly before the NW Product Range was originally launched. His partners, Mr Marget and Mr Wilson, were in accounting and finance before entering the business of NW. Mr Dennis acknowledged that he spent a lot of time observing the market before he launched the NW Product Range, and, notwithstanding his coyness about the matter, it seems improbable that he did not take vitaminwater's US history and style into account when developing the NW business. This and the clear similarities between the US vitaminwater product and the NW Product Range (both in its original and relaunched forms) make it almost inconceivable that the founders of NW were not inspired by the get-up of the US vitaminwater. 24 Counsel for NW submitted that, although NW had referenced the vitaminwater products in the United States in the design of the NW Product Range, it had not directly copied them; nor had NW taken any of the distinctive features that it relied on in its case against Baco. 25 Of the three founders of NW, only Mr Dennis gave evidence. In cross-examination, Mr Dennis agreed that he had seen the vitaminwater product in the United States and that, by late 2005, he knew of the well-established US market for enhanced water beverages. Counsel for Baco specifically put to him that he had set out to copy features of the US vitaminwater label in a number of key respects. Mr Dennis replied: We didn't copy the US Vitaminwater products. There were certain ideas that we like[d] about the Vitaminwater products and other products on the market in the US at the time, and we set about developing our own enhanced water product which we thought would be better than their product. In cross-examination, Mr Dennis conceded that he took some discrete features from the US vitaminwater products, including the light-hearted, irreverent text appearing on one label panel, and the bright, horizontal colour along the top of the label. 26 Mr Mark Epstein from Baco referred in evidence to other similarities between the original NW and vitaminwater products, which were plainly to be seen, including a predominant focus on vitamins; running the brand name vertically up the full length of the label, in black text, with each word of the two-word name spanning the length of a separate horizontal panel and all in lower case letters; the use of all black text on the rest of the label; the use of a clear plastic bottle and clear plastic lid; a similar positioning of label and label size relative to the overall bottle size; a wrap-around label, with similar or identical variant names (e.g., 'energy'); and labels that matched the colours of each variant. 27 This is not to say that the NW and vitaminwater products were identical. As Mr Epstein fairly noted, there were differences between them, including, in the original NW products, the use of a large panel of coloured dots on the label, as well as a grey and white horizontal banded label. Examples of the original NW products and the US version of vitaminwater are shown below: 28 The relaunched NW products continued to have many similarities with the US vitaminwater product. Whilst the dot pattern was removed, the relaunched product retained many of the features of the original product, such as using the colour and white horizontal banding like vitaminwater. The relaunched product continued to have a 'medicinal' look and a similarly structured name (NutrientWater as opposed to vitaminwater). Indeed, the label on the US version of vitaminwater styled the beverage "nutrient enhanced water beverage". Further, as noted, NW was originally known as Natureau until its name changed around the time vitaminwater entered the Australian market. Despite Mr Dennis' denial, it is difficult to resist the conclusion urged by Baco that 'Natureau' was derived from 'Glaceau', the name of the owner at the time of vitaminwater, references to which appeared on the vitaminwater products. The relaunched NW product and the US version of vitaminwater are shown below. 29 In all the circumstances, having regard to the evidence, I find, on the balance of probabilities, that the founders of NW's business did not merely 'reference' the US vitaminwater products, but that NW directly copied many of its distinctive features in the NW Product Range (whilst at the same time introducing some points of difference, chief amongst which were the NutrientWater name and logo). 30 This finding is fortified by the fact that, save for Mr Dennis' testimony, there was very little evidence about the development of NW's get-up either in its original or relaunched form. This is to be contrasted with the more extensive evidence about Baco's design process with respect to its enhanced water products. Further, it follows from this finding that I consider that Mr Dennis significantly understated the influence of vitaminwater on the development of the NW products. Although Mr Dennis testified that he did not copy the US vitaminwater, but merely adapted certain features of the get-up of vitaminwater and other products, the evidence before the court justifies the inference that, in launching and relaunching its products, NW substantially copied the US vitaminwater products. 31 Given the derivative nature of the NW Product Range, it is unsurprising that there was some consumer confusion when the vitaminwater products entered the Australian market in 2008. The significance of this is discussed below.
Entry of vitaminwater into the Australian market in February 2008 32 In February 2008, Coca Cola Amatil launched 'vitaminwater' in the Australian market. The vitaminwater products were available in 500 ml bottles under functional names such as 'Power-C (Dragonfruit)', 'Focus (Kiwi-Strawberry)', 'Essential (Orange-Orange)', 'Energy (Citrus)', 'Revive (Fruit Punch)' and 'Triple X (Acai-Blueberry-Pomegranate)'. In the Australian market the NW and the vitaminwater products continued to have many similarities. The following is a photograph of an Australian vitaminwater product. As can be seen, there were also differences between the NW and vitaminwater products, including brand names and logos. 33 The launch of vitaminwater in Australia was accompanied by advertising and other promotional activities. For example, Mr Epstein saw a 'vitaminwater' advertisement on a bus in the Melbourne suburb of Richmond in November or early December 2008. The details of the marketing and promotional activities undertaken by vitaminwater are not in evidence, but these activities were clearly successful, because vitaminwater rapidly achieved substantial sales, with the result that, by May 2009, when the Baco Product Range was launched, vitaminwater was the clear market leader, followed by NW, with Smart Water, an enhanced water product introduced by Schweppes Beverages in mid 2008, a fair way behind both its competitors. 34 When vitaminwater entered the Australian market, NW was on early notice of the possibility for confusion between NW and vitaminwater products. This was the effect of the communications from some of its customers, who gave evidence in this proceeding. 35 Mr Keith Bethlehem, who was a solicitor in Sydney, gave evidence that, prior to February 2008, it had been usual for him to have a bottle of NW's 'Endurance (Dragonfruit)' with his daily lunch, which he purchased at a food court near his workplace. On the day in February 2008 that led him to make contact with NW, he went to a Woolworth's supermarket at lunch-time instead of the food court, because he needed some provisions. Before he reached the check-out, he noticed a refrigerator containing bottles of what he thought were the NW products that he ordinarily bought. He picked one out and joined the queue. While in line, he discovered that he had a vitaminwater product, not the NW product as he thought. He attributed his mistake to the fact that the colour of the label and beverage was almost identical to the product he ordinarily bought. He purchased the product, but was sufficiently angered by being misled that he contacted NW almost immediately thereafter. 36 Mr David Loakes, who was a builder in Melbourne, gave evidence that he became familiar with the NW products around October/November 2007, after which he purchased the product about a couple of times a week all the way through to March 2008. His evidence was that, on a day in March 2008, he went to buy his lunch in the same store as he usually did and took what he thought was a NW product out of the refrigerator while waiting for his sandwich. After opening and starting to drink it, he read the label and discovered that the product was vitaminwater, not the NW product as he had first thought. He attributed his mistake to the similarity in packaging and that fact that he found it in a similar place to where he was used to finding the NW product. Mr Loakes stated that he had contacted NW shortly thereafter because he was disappointed that a large manufacturer such as Coca-Cola was "pulling [NW] out" from prime position on the shelf. 37 Ms Chrysanthe Diamond, who was a sales assistant, was familiar with the NW products prior to April 2008 because she worked in an organic market place where the products were stocked. She said that she "drank [D]ragonfruit water pretty much every day … for lunch, in about the year prior". Her evidence was that, in April 2008, she was shopping in Woolworth's supermarket when she thought she saw the NW products in a refrigerator before the check-out counter, and picked one up, paid for it, and took it home. She did not realise until she was unpacking her groceries at home that she had purchased vitaminwater, not a NW product. Ms Diamond immediately emailed both companies stating her confusion. She said that she did so because she was "upset that I had purchased a Coca-Cola product when I thought it was an Australian product that I had been buying through a specifically organic and natural market place". 38 Ms Kelly Chapman, who was a legal resources manager at the firm of solicitors where Mr Dennis and his partner, Ms Elizabeth Wright, had worked, stated that she was aware of the NW products as at March 2008 because of her knowledge of Mr Dennis and because she had purchased the products regularly. Her evidence was that, in March 2008, she had come home from work and taken out a drink that she had bought earlier in the day and put it beside a bottle of NW product. She said that she "took a double take" when she realised that they were different products - the most recent purchase being a vitaminwater product. She attributed her mistake to the similarity in colour and shape. Ms Chapman told Mr Dennis' partner, Ms Wright, of what had happened. 39 Notwithstanding this information about confusion, NW took no legal action against vitaminwater. Counsel for Baco argued that NW did not do so because it was aware that it had copied many of its features from the US vitaminwater product. Perhaps so, but I would not treat the failure to sue as evidence of copying or consciousness of copying. Counsel for NW submitted, and I accept, that there may have been sound commercial reasons why NW did not institute legal action against Coca-Cola when it introduced vitaminwater into the market in 2008. Nothing can be inferred about NW's motives in failing to sue.
Entry of other market competitors in 2007 and 2008 40 Throughout 2007 and 2008, other brands of enhanced waters entered the Australian market, including 'Emma & Tom's' and Bickford's 'Vitamin H2O'. 41 In mid 2008, Schweppes Beverages launched its enhanced water product known as 'Smart Water'. Like the NW and vitaminwater products, the Smart Water products also had a form of colour and white horizontal banding on their labels; label colours that matched the colours of the variants of the beverage, visible through clear plastic bottles; quirky comments on the labels; and a 'wellness' theme. Like the Australian vitaminwater products, the bottles had a capacity of 500 ml. Unlike their competitors, the original Smart Water bottles also had green lids. One of the original Smart Water products is depicted in the photograph below. The packaging of Smart Water was revised in October 2009, introducing, amongst other things, a clear plastic lid.
Entry and development of the Baco Product Range (a) Baco's business 42 The original Baco business was the result of the work of the Epstein family. Mr Mark Epstein said in evidence that his family's involvement in the food and beverage industry in Australia commenced in 1940, when his grandfather and great-grandfather began a food manufacturing business, trading under the name 'Baco Foods'. The name 'Baco' was, he said, an amalgamation of the words 'Bakers' and 'Confectioners'. Mr Epstein said that the original Baco business begun bottling fruit juice in 1957 when it created the well-known 'Spring Valley' fruit juice brand. In the early 1990's, however, the family sold the original Baco business, which is now owned by Schweppes Australia Pty Ltd. In late 2003, Mark Epstein and his father, Robert Epstein, also a director of Baco, re-entered the beverage industry and formed a new company, which is the respondent in the proceeding. 43 Baco is a small business, the operational needs of which are met by Mr Mark Epstein. After launching a range of fruit juices under the brand 'Apple Tree', Baco expanded its beverage range by introducing a second brand known as 'Grassroots', with what Mr Epstein described as a 'wellness' theme. This brand too was first applied to fruit juices and, only later, to Baco's enhanced water products the subject of the proceeding.
(b) Baco's first product 44 Over two years prior to the launch of Baco's 'Grassroots' enhanced water products, in February 2007, Mr Mark Epstein contacted NW's Mr Dennis, expressing an interest in distributing NW's enhanced water products and investing in NW, but Mr Epstein's approach was rejected by NW. 45 About a year later, on 18 January 2008, Mr Epstein briefed Marcus Lee of Marcus Lee Design ('MLD') to create labels for a range of enhanced water products that Baco intended to produce and sell. In briefing Mr Lee, Mr Epstein provided Mr Lee with samples of the NW Product Range and the US version of vitaminwater, as well as images of other brands such as Emma & Tom's. In the initial design process, Baco and MLD referred to the NW Product Range as illustrative of successful enhanced water products in the Australian market. Since the Australian version of vitaminwater and Schweppes' Smart Water were both launched into the Australian market while Baco was designing its products, Mr Epstein also provided samples or images of these products to Mr Lee. 46 In an affidavit of 2 November 2009, Mr Epstein said that he "was of the view that a new product in [a] new category should have a distinctively different design which reflects the category in which it competes and [he] said that to Mr Lee at the time of briefing him on the proposed design". The unchallenged affidavit of Mr Lee sworn on 4 November 2009 corroborates Mr Epstein's evidence on this point. Mr Lee said: I do not recall the precise instructions I was given but, as best I can recall, they were to the effect that Baco wanted: a. labelling that would communicate that their new products were enhanced waters and, for that purpose, adopted the 'category signature' of that product category; b. labelling that retained distinctive Grassroots branding so as to differentiate their products from those of their competitors; and c. labelling that made clear that the new products were different from the Grassroots fruit juices that were already on the market and clearly identified their products as waters rather than as fruit juices. 47 In March 2008, Baco engaged Mr Rolf Grob of Troy White Engineering to design a bottle. Mr Epstein instructed Mr Grob that Baco required a label panel approximately 130 mm high, with a diameter of 67 mm, for its bottle. In cross-examination, Mr Epstein stated that his preference was for a tall and skinny bottle, rather than one that was short and squat. Mr Grob advised Mr Epstein that such a bottle would have similar characteristics to the bottle used by NW for the NW Product Range. Mr Epstein checked that NW's bottle shape was not the subject of a trade mark or design registration, and Baco maintained its instructions to Mr Grob. 48 Mr Epstein gave evidence, which I accept, that he considered that a distinctive label would clearly differentiate Baco's products from those of NW and that, since both Baco and NW used the same contract packer (Planet Sales), it was easy and efficient for the packer and therefore less costly overall if Baco's bottles had a similar diameter to those of NW. 49 In May 2008, Baco engaged Visy Packaging Pty Ltd ('Visy') to manufacture a bottle. Mr Daniel Martin of Visy expressed concern to Mr Epstein at the time that the initial bottle design was too close to the bottle design for the NW Product Range and that design changes were necessary if Visy were to supply Baco. As a result of this and another issue, design changes were made to the Baco bottle, including changing the shape of the shoulder, introducing embossing on the bottle, and changing the number of label panels. As it happened, however, owing to capacity problems on Visy's part, another company ultimately undertook bottle production. 50 In October 2008, Baco undertook a trial run of its new product. In December 2008, NW obtained samples of Baco's trial production from Planet Sales and threatened the institution of a legal proceeding to prevent the launch of the Baco product. (c) Baco's current product 51 Baco did not release its first production run onto the market and, without any admission of liability, in December 2008 and early 2009, set about redesigning its packaging and labelling. Mr Lee of MLD and Mr Grob of Troy White Engineering were briefed to redesign the label and bottle respectively. 52 Mark Epstein was overseas for the initial stage of the label redesign process, but he gave instructions to his father, Mr Robert Epstein, to pass on to MLD. Whilst Mark was away, Mark and Robert Epstein communicated very largely by emails, copies of which were in evidence. These emails showed that Mark Epstein wanted the redesigned label to be visually different and clearly to differentiate Baco's products from those of its competitors, especially NW. Mark also wanted a label that would appeal to the typical consumer of the product and be clearly referenced as within the enhanced water category. MLD's quotation reflected this understanding, stating that MLD's brief was "to clearly differentiate from the market competitors - specifically Nutrient Water [sic]". Indeed, in his unchallenged affidavit, Mr Lee stated that the objective of MLD's brief was "to further differentiate the current labels from competitors, such as Nutrient Water [sic], whilst also retaining a degree of visual connection to the enhanced water market". 53 In May 2009, Baco launched its enhanced water products onto the market in their redesigned packaging. The Baco Product Range, which is the subject of this proceeding, is depicted below. 54 It is clear that, in the course of the design process, Mr Lee put forward numerous forms of label, which were considered by Robert and Mark Epstein. As noted below under the heading 'category signature', for the reasons Mr Mark Epstein stated in cross-examination (and I accept were in fact his genuinely held reasons) he wanted to retain the colour and white horizontal banding. In cross-examination, Mr Epstein stated, and I accept, that the final form of the current label was "stumbled upon", when Mr Lee put some of the original labels in a box upside down. The result of the redesign was that the label had a white band across the top; a distinctive 'G' logo in a colour complementing the colour of the contents of the bottle; and changes to the themes or variant descriptors. Baco's labels predominantly used white text reversed out of the colours in contrast with the NW Product Range and vitaminwater products, which also had a more medicinal look. There was also a reduced use of pantone fluorescent colours from six to three variants. 55 The changes to Baco's enhanced water products as a result of the redesign process included changes to the bottle shape involving a larger bottle size (600 ml capacity rather than the 575 ml capacity of NW and the first Baco range); substantially larger embossing of the 'Grassroots' brand covering the full circumference of the bottle; a 17% shorter label; and an overall different shape. 56 The varieties of Baco's products became 'Goji & Green Tea De-stress', 'Mangosteen & Passionfruit Ener-G', 'Acai & Mandarin Resilience', 'Yumberry & Cranberry Vitamin Boost', 'Dragonfruit & Grapefruit Power On' and 'Pomegranate & Blueberry Recovery'. These variant themes and flavours were the same or very similar to those in the NW Product Range and some of the vitaminwater products. As Mr Epstein noted in cross-examination (and I accept), in the enhanced water market there were certain flavours that were common to the category as a whole, such as the red-coloured dragonfruit beverage. 57 Like all the enhanced water products in evidence, when arranged appropriately, the Baco Product Range produced an attractive 'rainbow' effect. Baco's colours were the same or very similar in number to those in the NW Product Range and the vitaminwater products. Baco's colours were also similar in shade to the colours in the NW Product Range and the vitaminwater products, although there were also differences between the shades. 58 Mr Epstein was extensively cross-examined on the similarities, particularly as to colour, that Baco's enhanced water products continued to bear with the NW Product Range. Counsel for NW submitted that Mr Epstein's opinions on the differences and similarities between the parties' products and their competitors must be treated cautiously because he was very closely involved with the products and not in this sense an ordinary consumer. I accept the point made by counsel for NW as valid and have borne it in mind in evaluating Mr Epstein's opinions on these matters. I have not treated his opinions as in any way dispositive of these issues. 59 Nonetheless I accept Mr Epstein's evidence in cross-examination that the Baco Product Range was more like the NW Product Range than the vitaminwater products, although the Baco Product Range took its inspiration not only from NW but also from vitaminwater. This is borne out by visual inspection. I would add here that I was generally impressed by the frankness of Mr Epstein. I found him a credible witness. 60 According to Mr Epstein, Baco also sought to differentiate its product from that of NW in ways other than those already mentioned, including by adopting a different style of light-hearted marketing comment on the label that more specifically addressed the flavour combinations of each variant and linked the beverage benefits to the 'wellness' additives particular to each variant. In cross-examination Mr Epstein also referred to various other features as differentiating Baco's enhanced water products from its competitors, but especially noted: (1) the label size; (2) the white band at the top of the label; and, most importantly, (3) the distinctive 'G' logo in individual colours throughout the range predominantly against a white background. 61 The evidence showed that Baco's point of sale promotional material clearly identified its enhanced water products by reference to the brand 'Grassroots', which was the brand clearly carried by the products themselves. Baco's invoices, receipts, business cards, and other corporate stationery are clearly marked with both the 'Apple Tree' and 'Grassroots' logos. The 'Grassroots' cartons are also clearly marked with the 'Grassroots' name and logo. 62 At this point, it is convenient to note that, in early May 2009, Mr Dennis of NW became aware that Baco was selling the Baco Product Range in Melbourne, when he acquired some Baco products from a cafeteria complex in Queens Road, Melbourne. NW issued these proceedings in consequence, maintaining that the changes that Baco has made to its products still failed to differentiate them from those of NW. NW argued that the bottle shape was not materially different from its own, and that Baco retained a clear plastic lid and tall label that resembled its own. NW noted that Baco's labels wrapped around the bottle just as its labels did, and that Baco retained light-hearted label comments like NW. NW asserted that both NW and Baco had prominent nutritional panels. Further, according to NW, the colours of the Baco beverages remained the same as its own; and, like its own labels, the Baco labels continued to bear bright horizontal bands of colour corresponding to the beverage colours. Thus, NW remained persuaded that the Baco Product Range was deceptively similar to the NW Product Range. As will be seen, at trial, NW relied most heavily on Baco's choice of colours, rather than any other feature, as giving rise to the prohibitive degree of similarity with its own products.
Category signature 63 It was part of Baco's case that the 'colour and white horizontal banding' used on the relaunched NW Product Range and on the vitaminwater products had become a category signature of the enhanced water market by May 2009, when Baco launched its own enhanced water products onto the Australian market. At trial, Mark Epstein gave evidence that this was his opinion; and his statement of opinion was entirely consistent with his earlier expressions of opinion and conduct during the redesign of the Baco products in late 2008 and early 2009. In late December 2008, Mark, at that date overseas, was discussing the preferred design with his father, Robert, by email. His (but not his father's) attachment to the colour and white horizontal banding was evident in these emails in mid to late December 2008. The emails show that Mark Epstein wanted to retain this feature because he saw it as affording "automatic recognition" that Baco's products were within the enhanced water category. In cross-examination, he explained that he "wanted to more closely align [Baco's] product as immediately recognisable as being a competitor in the enhanced water category". 64 I accept entirely that Mark Epstein genuinely held the opinion (in December 2008 and at trial) that the colour and white horizontal banding had become a category signature by the time Baco was engaged in redesigning the packaging for its product. Further, by May 2009, the use of the colour and white horizontal banding for enhanced waters was a feature of the US and Australian versions of vitaminwater (launched in 2000 and 2008 respectively), as well as the original and relaunched versions of the NW products, and the original version of Smart Water (launched in 2008). The feature was not, however, carried by Emma and Tom's, another enhanced water product. 65 Ultimately, however, whether or not the feature of colour and white horizontal banding is appropriately described as a category signature as at May 2009 is immaterial. This is because I accept that this banding, together with bright labels that correspond to the colour of the variant of the beverage as viewed through a clear plastic bottle, the quirky comment, plus a health-driven 'wellness' or medicinal look, had become indicative of an enhanced water product in general, rather than any particular brand or source, by May 2009. 66 The evidence shows that, by May 2009, there were a number of enhanced water products in the market, most of which had some common features in their packaging or get-up. The critical question is whether or not Baco adopted features that, alone or in combination, were distinctive of the NW Product Range. In closing, counsel for NW argued that it was the precise choice of colours that gave rise to the prohibitive degree of similarity between the Baco Product Range and that of NW, with the result that Baco's products were closer to those of NW than any others in the market. I discuss this critical question below, under the heading "Consideration".
Consumer confusion 67 A curious feature of this case was that evidence of consumer confusion focussed on the alleged confusion engendered by the entry of vitaminwater into the Australian market, rather than on the entry of Baco's 'Grassroots' enhanced water products. I have already described the evidence of Mr Bethlehem, Mr Loakes, Ms Diamond and Ms Chapman. NW relied on this evidence of consumer confusion to support the proposition that the names and logos of the products were not operating on the minds of consumers to indicate that the products came from different trade sources. NW invited the court to infer that there would be confusion as between the NW and the Baco enhanced water products. Counsel for NW submitted that, in this regard, the evidence of Mr Richard Partridge (to which I am about to refer) was especially damaging to Baco's case, because Mr Partridge had noted the 'Grassroots' branding and thought that NW had rebranded its products. 68 Mr Partridge, a solicitor at the same firm as Ms Chapman (and Mr Dennis' partner, Ms Wright) swore an affidavit in which he said that, about 16 September 2009, he was at a café that he knew well when he noticed a product in a refrigerator behind the counter that he thought was a NW product "with some minor changes to the packaging". Mr Partridge first said that he had subsequently learned the product was Baco's 'Grassroots' enhanced water product. Later, in cross-examination, he said that he did not handle the product or purchase it, but that he saw "the only marketable difference being the G instead of the NW logo". When counsel for Baco put to him that he had failed to mention this in his earlier affidavit, Mr Partridge's evidence became confused; he stated amongst other things that at the time he observed that the product had been renamed 'Grassroots'. This testimony was inconsistent with his earlier account of learning about the 'Grassroots' name and was omitted from his affidavit. Overall, I regret to say that I did not find Mr Partridge's evidence at all helpful. To the extent that it assisted at all, it tended to show that the 'Grassroots' name and logo were clearly visible to a consumer and apt to mark out Baco's enhanced water products. 69 The consumer confusion evidence was not probative of NW's claim. First, save for the evidence of Mr Partridge, the consumer evidence related to the period February to April 2008, when vitaminwater entered the market, and concerned confusion with vitaminwater. At the time of the vitaminwater confusion, there was only one participant in the market. This had altered by May 2009 when Baco launched its products, because the market contained not only NW and vitaminwater, but also a number of other traders. In these circumstances, the vitaminwater confusion does not justify an inference that the NW and Baco 'Grassroots' products would likely be confused. 70 In any event, the evidence of vitaminwater confusion was comparatively slight and unconvincing. By reason of her association with Mr Dennis or his partner, Ms Chapman was not truly within the class of ordinary consumers. The same can also be said of Mr Partridge. 71 Leaving aside Mr Partridge's evidence, which, for the reasons stated, I found unpersuasive, there was no evidence of actual consumer confusion as between NW's products and the Baco enhanced water products. Nor was there anything in NW's limited evidence of marketing and sales to indicate that there might have been any material confusion amongst consumers as to the trade source of the enhanced waters on the market. 72 Most importantly, save for Mr Partridge, in each case, the consumers recognised their mistake by noting the name and logo on the product. Mr Loakes and Mr Bethlehem apparently recognised their mistakes before they paid for their purchases (although Mr Loakes had consumed the product before payment). Having regard to this evidence (as well as to evidence of traders' marketing and promotional activities, such as those of NW itself and vitaminwater), and evidence of the sales being made by vitaminwater and NW, I accept that, as Baco submitted, by May 2009, consumers can be taken to have become aware of multiple participants in the enhanced water market and their different branding.
Distribution and conduct 73 Until the relaunch of the NW Product Range in October 2006, NW was a relatively small business, with product distribution personally undertaken by the three founders. After the relaunch, NW staff progressively grew and NW increasingly used independent distributors to distribute the NW Product Range to its retail outlets. These distributors were typically small privately owned businesses that distributed a range of food, beverage and consumable products that they did not own or control. Baco operated through the same type of distributors and similar retail outlets. 74 Mr Dennis gave evidence, which I accept, that two distributors had ceased distributing the NW Product Range and replaced it with the Baco Product Range. According to Mr Dennis, each sold into at least 200 retail stores. 75 Baco's enhanced water products have not been sold in supermarkets. Until recently the NW Product Range has not been sold in supermarkets either, although Mr Dennis gave evidence that the NW Product Range was about to enter Coles supermarkets. There was evidence that both Baco and NW offered discounts and other incentives to retailers to stock their products. There was also evidence that there were instances in which Baco's products replaced NW's enhanced water products in some stores. 76 Both Baco's and NW's enhanced water products were sold in convenience stores (Caltex and Mobil, and 7-Eleven in the case of NW) as well as cafes and other small independent outlets. Small outlets might stock only one brand of enhanced water, although convenience stores tended to stock more than one brand. Only about 20% of NW's sales were made through convenience stores. Where a retailer stocked more than one brand of enhanced water and displayed them together (as in a Caltex store), the photographic evidence showed that it was not difficult to distinguish the brands from one another. The evidence indicated, however, that this side by side display was not prevalent and that, even where a retailer stocked more than one brand, the different brands might be displayed in different parts of the store. 77 The questions again is, bearing in mind that the Baco products were not infrequently sold alone, did the packaging, including the branding, sufficiently differentiate them from the NW Product Range? As already indicated, this is explored further below.
C: CONSIDERATION: LEGAL PRINCIPLES AND THE FACTS AS FOUND 78 The principles governing passing off are generally well settled. The tort gives effect to the notion that a trader must not pass off the trader's goods or services as the goods or services of another. That is, a trader is not permitted to use names, marks, get-up, or other characteristics of another trader's goods so as to induce purchasers to believe that the goods that the trader is selling are the goods of the other. The tort is designed to protect a trader's intangible property rights in the trader's business, goodwill or reputation, which is likely to be injured by the misrepresentation involved in a passing-off: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 ('Hornsby Building Information Centre') at 226-227. 79 In ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 ('ConAgra') at 356, Gummow J remarked that "the law of passing off contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form". This remains true. For present purposes, it suffices to say that, in order to establish the tort of passing-off, NW must establish that: (1) a goodwill or reputation attaches to the NW Product Range in the minds of relevant purchasers by association with the get-up under which the NW Product Range is supplied to the public, such that the get-up is recognised by the purchasers as distinctive of the NW Product Range; (2) Baco has misrepresented to the public (whether intentionally or unintentionally) that the products in the Baco Product Range are products in the NW Product Range or that they come from the same source as products in the NW Product Range; and therefore that a significant proportion of potential purchasers is likely to believe that the products in the Baco Product Range are the products of NW or that they come from the same source as products in the NW Product Range; and (3) NW has suffered or is likely to suffer damage by reason of the erroneous belief engendered by Baco's misrepresentation. See Reckitt and Colman Products Ltd v Borden Inc [1990] RPC 341 ('Reckitt and Colman') at 406-7 per Lord Oliver of Aylmerton; Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd ('Pub Squash') [1980] 2 NSWLR 851 at 857 per Lord Scarman; Morgan & Banks Pty Ltd v Select Personnel Pty Ltd (1991) 20 IPR 289 at 294 per Clarke JA (with whom Priestley JA and Hope AJA agreed); ConAgra at 355-356 per Gummow J; and Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd(2002) 55 IPR 354 ('Red Bull') at 371-2 per Weinberg and Dowsett JJ (with whom Branson J agreed). Lord Diplock's more detailed statement of the elements of the tort in Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 at 742 has also been regularly cited and relied on in Australian courts: see, e.g., Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd [1998] ATPR 441-624 at 40, 839 per Goldberg J and Red Bull at 370. Nothing here turns on the differences in the formulations. If a case of passing off is made out, a court will presume damage, but, as to the measure of damage, the court will consider all the circumstances of the case: see Childrens Television Workshop Inc v Woolworths (NSW) Ltd [1981] 1 NSWLR 273 at 281-2 per Helsham CJ in Eq and Draper v Trist (1939) 56 RPC 429 at 442 per Goddard LJ. 80 The relevant date for determining whether NW had the necessary reputation in the elements of packaging and get-up in question was the date upon which Baco launched the Baco Product Range in the Australian market, that is, in May 2009: see Pub Squash at 861; Ricegrowers Ltd v Real Foods Pty Ltd (2008) 77 IPR 32 ('Ricegrowers') at 43 per Rares J; Health World Ltd v Shin-Sun Australia Pty Ltd (2008) 75 IPR 478 at 489 per Jacobson J; and Hansen Beverage Company v Bickfords (Australia) Pty Ltd (2008) 79 IPR 174 at 181 per Tamberlin J. 81 The tort of passing off can be made out without proof of actual deception and without proof of any "actual, subjective intention to mislead" on the tortfeasor's part: see Red Bull at 372. It is sufficient that there be a misrepresentation that is likely to lead the public to believe that the tortfeasor's goods are those of the claimant. This is a question of fact that the court must decide, having regard to the relevant circumstances. In this case, these circumstances include the marketing, branding and get-up of NW's products and those of its competitors and the likely knowledge of potential purchasers in the market into which the parties' products are sold: compare Reckitt and Colman at 415. 82 Proof that the alleged tortfeasor deliberately sought to take the get-up (or other distinguishing feature) of the other trader's product is of evidentiary value in the sense explained by Dixon and McTiernan JJ in Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 ('Australian Woollen Mills')at 657 and, more recently, in Red Bull at 388 per Weinberg and Dowsett JJ. That is, if a get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it can be presumed that the appropriated get-up is fitted for the purpose and therefore likely to deceive or confuse. It remains, however, for the court to decide whether in fact there is a misrepresentation likely to lead the public astray as to the source of the goods. See also Telmak Teleproducts (Aust) Pty Ltd v Coles Myer Ltd (1989) 15 IPR 362 at 383 per Wilcox and Einfeld JJ; The Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152 ('Kettle Chip') at 162-163 per Burchett J; and WD & HO Wills (Australia) Ltd v Philip Morris Ltd (1997) 39 IPR 356 at 367 per Davies J. Further, as Pub Squash (discussed below) shows, passing off is not established merely because the alleged tortfeasor is found to have copied features of a competitor's product. The copying of elements of another's products "may indicate nothing more than realisation that the plaintiff has a useful idea which the defendant can turn to his own advantage, though not intending to pass off his goods as those of the plaintiff": see ConAgra at 345 per Lockhart J. 83 Sometimes the proven circumstances may support causes of action under Pt V of the TPA (which includes ss 52 and 53) as well as in common law passing off. As the Court said in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 ('Cadbury') at 418-419, despite their different origins and purposes, there is an overlap between these causes of action. A misrepresentation as to the source of a trader's goods is not only an element in the tort of passing off, it can also be conduct that is misleading or deceptive or likely to mislead or deceive for the purposes of s 52 of the TPA: see Mars Australia Pty Ltd v Sweet Rewards Pty Ltd ('Sweet Rewards') (2009) 81 IPR 354 at 360 per Perram J and Ricegrowers at 48 per Rares J. Equally, such a misrepresentation can amount to a relevant misrepresentation for the purposes of s 53(c) and (d). As the Full Court said in Cadbury at 418: [T]rade indicia other than names and logos can become associated with a particular trader, such that a use by another trader could give rise to misleading and deceptive conduct or passing off. If particular branding elements used by a trader have been identified in a special way with that trader in the minds of members of the public, there may be misleading or deceptive conduct by reason of the appropriation of those particular branding elements by another trader. 84 Section 52 of the TPA provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Relevantly for present purposes, s 53 provides that a corporation shall not, in connection with the supply of goods represent that goods have sponsorship or approval that they do not have (para 53(c)); or represent that the corporation itself has sponsorship, approval or affiliation it does not have (para 53(d)). In substance, NW's case under the TPA is that, Baco, by using features of the packaging or get-up of the NW Product Range in the presentation of the Baco Product Range, misrepresented to consumers that: (1) Baco's products are the enhanced water products of NW; (2) Baco's products have the sponsorship or approval of NW; or (3) Baco has the sponsorship and approval of NW or is affiliated with NW. 85 As in the case of passing off, under the TPA, whether or not a representation is misleading or deceptive or likely to mislead or deceive is a question of fact, which must be determined by the court, having regard to all the relevant circumstances, including the history of the claimant's product, the circumstances in which the respondent's get-up was adopted, and the circumstances prevailing in the market at the relevant time. Further, in considering the statutory question, there are a number of well recognised principles to be borne in mind: see S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 361-3 per Hill, RD Nicholson and Emmett JJ citing Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 at 440-441 per Hill J. Chief amongst these is the principle that conduct may be found misleading or deceptive or likely to mislead or deceive notwithstanding that the respondent acted honestly and reasonably and did not intend to mislead or deceive. Should the court find that the respondent had such an intention, as in the case of passing off, the court may the more readily find that the conduct was in fact misleading and deceptive. 86 The latter proposition is, however, subject to much the same qualification as for passing off. As with passing off, the mere fact that one trader may have copied the design or get-up of another trader's product is not sufficient of itself to establish a contravention of ss 52 or 53 of the TPA, so long as the copyist has sufficiently distinguished its products and made it clear that they are not the goods of the trader whose design or get-up is copied: see Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281 ('Dr Martens') at 367-369 (affirmed on appeal: see (1999) 95 FCR 136), citing Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 ('Puxu') at 196, 199-200 per Gibbs CJ, 209-210 per Mason J, 225-226 per Brennan J. In Dr Martens at 369-370, Goldberg J referred to a number of decisions, including Reckitt & Colman, in which the labelling of a product had been insufficient to prevent passing off, but held that the decisions were distinguishable on their facts. 87 As with passing off, whether or not impugned conduct is misleading or deceptive, or likely to mislead or deceive, is to be determined at the time the impugned conduct commenced, that is, in May 2009: see Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 ('Taco Bell') at 195-196 and 203-204 per Deane and Fitzgerald JJ; Thai Wood Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289 at 302 per Gummow J; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 at 237 per Allsop J; Dr Martens at 363 per Goldberg J; and Natural Waters of Viti Ltd v Dayals (Fiji) Artesian Waters Ltd (2007) 71 IPR 571 ('Natural Waters') at 585 per Bennett J. 88 For the purposes of the statutory claims, in determining whether a misrepresentation has been made, the court must consider the effect of the impugned conduct on the "ordinary" or "reasonable" member of the class to whom the conduct is directed, rejecting reactions which are extreme, fanciful or capricious. As the Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 ('Campomar') at 87 said, "[t]he initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly attributed to the ordinary or reasonable members of the classes of prospective purchasers". Much the same standard is applied in a claimed case of passing off in assessing whether a representation of the relevant kind was made and its likely effect on the potential purchaser: see Ricegrowers at 46. The ordinary or reasonable member of the class need not be particularly intelligent or well informed; equally he or she is not to be considered as if careless or indifferent to the matter in question: compare Australian Woollen Mills at 658. 89 The place of reputation in a claim under s 52 (and therefore s 53(c) and (d)) was explained by the Full Court in Cadbury at 418-419, where the Court said: Whether or not there is a requirement for some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Pt V of the Trade Practices Act. The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. 90 As this passage shows, in considering the TPA claims in this case, one must focus on the statutory questions to which ss 52 and 53(c) and (d) give rise. When addressing these questions, the fact, if it be proven, that NW had a reputation in the feature or features allegedly appropriated by Baco such that the feature or features had become distinctive of its business or products is relevant to the answer the court gives. Unless NW had a reputation in May 2009 in the features of its packaging or get-up that it sought to protect, the use of those features by Baco is unlikely to convey the misrepresentations referred to in s 52 or s 53(c) and (d). In Sweet Rewards at 360, Perram J said much the same thing in a similar sort of case, when his Honour noted that reputation in a get-up or other features is not only essential for passing off, but important for a corresponding claim under s 52 of the TPA, because, in the case of s 52, "it is the reputation in those features which is the springboard for the argument that consumers are deceived by a particular imitation". 91 Thus, in order to establish passing off, or breach of ss 52 or 53 of the TPA, NW had to show that it had, as at May 2009, the requisite reputation in the feature or features of packaging or get-up that Baco had allegedly appropriated: compare Natural Waters at 585 per Bennett J. As to this, Baco argued that NW's claim failed because NW had not established any discrete reputation in those features as opposed to its overall get-up or packaging. This was because NW had not shown that Baco had appropriated any features that were distinctive of the NW Product Range within the enhanced water market. Absent the requisite reputation in these specific features, then, so Baco said, NW's passing off claim must fail. Further, without a showing of reputation, so Baco said, there could be no finding of relevant misrepresentation in breach of ss 52 or 53 of the TPA. 92 Natural Waters is illustrative of the difficulty of establishing reputation in get-up alone. The caseconcerned competitors in the bottled water market and, like this case, involved claims in passing off and under ss 52 and 53 of the TPA. The claimant argued that the respondent's bottled water shared the following features with its product: (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 and other vegetation; (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; and (5) prominent use of the word "Fiji": see Natural Waters at 575. 93 In dismissing the claims, Bennett J found that the claimant had failed to establish that these features had become individually distinctive of its product, or had come to be associated by consumers with it or its product: see Natural Waters at 579, 586. Her Honour explained (at 583): 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; 42 ALR 1 at 7-8; 1A IPR 684 at 689-90 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 … is adopted. 94 Her Honour added (at 585): 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 [AG v Croner Trading Pty Ltd(1992) 22 IPR 65] at 103-4) as consumers 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]-[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. (Emphasis added.) 95 In Natural Waters Bennett J accepted (at 590) that the applicant had sufficient reputation in the overall effect of its get-up to found an action in passing off or under s 52 (or s 53) of the TPA, but her Honour considered that, despite the similarities between the claimant's and the respondent's products, no reasonable consumer would be mislead or deceived into believing they were from the same manufacturer. 96 As stated above, I accept that, as at May 2009, NW had a reputation in the NW Product Range, but NW has not established that its reputation lay in the features it seeks to protect as opposed to its overall packaging or get-up, including its distinctive name and logo, which Baco has not sought to appropriate. NW has relied on a combination of features, which are said to be distinctive of the NW Product Range. Most of these features are shared with other competitors in the enhanced water market, particularly with vitaminwater, and, to a lesser extent, Smart Water. Most of the brands of the enhanced water products in evidence produced a rainbow-like effect of brightly coloured beverages when arranged appropriately. Most, if not all, enhanced water products presented their beverages in similarly bright colours. The numbers of variants in most brand ranges were similar. All enhanced water products were presented in clear plastic bottles and the principal traders used comparatively large wrap-around labels, with colour and white horizontal banding - the bright colour on the label complementing the colour of the beverage variety. The three principal traders each used light-hearted quirky comments on their labels too. All the enhanced water products in evidence had a 'wellness' theme. I am unable to accept that NW established such a degree of distinctiveness in the colours of the NW Product Range or any other feature, alone or together, that might have justified the proposition that it had a discrete reputation in those colours or some other feature. 97 As stated above, in the design of its own products, NW had copied many of the distinctive features of the US version of vitaminwater. By May 2009, a similar Australian version of vitaminwater had been on the market for well over a year and had become the market leader in terms of sales volume. It is, therefore, unsurprising that the features that might have been seen as distinctive of the NW Product Range in the Australian market before vitaminwater entered the market were no longer distinctive after vitaminwater had established itself there. This had clearly happened by May 2009. Other traders, such as Smart Water, had, moreover, by then entered the market and adopted many of the features that might previously have been thought characteristic of vitaminwater and NW. 98 In the circumstances of this case, the sales and marketing evidence adduced by NW cannot justify the conclusion that the features that Baco allegedly appropriated were, as at May 2009, associated by consumers with NW in particular as opposed to competitors in the enhanced water market generally. There is no room in such a case as this for a finding that NW has the requisite reputation in the features of the get-up on which it relies, because, when it first entered the market, NW substantially adopted the 'look and feel' or the 'gestalt' of the US version of the vitaminwater product and a local version of vitaminwater has since entered the Australian market. 99 On this analysis, NW's case fails from the outset, because it has not established the reputation, which is the first element in the tort of passing off; nor has it established the foundation upon which the misrepresentations referred to in ss 52 and 53 might be proved. 100 Even if NW had established a discrete reputation in a feature or features copied by Baco in designing its enhanced water products, for the purposes of the passing off claim, I would not be disposed to find that, on the balance of probabilities, Baco misrepresented to the public that its enhanced water products were products in the NW Product Range or came from the same source as the NW Product Range. Further, I would not be disposed to find that, on the balance of probabilities, a significant proportion of potential purchasers is likely to believe that Baco's products are the products of NW or that they come from the same source as the NW Product Range. Nor, for the purposes of the claims under ss 52 and 53 of the TPA, would I be disposed to find that, on the balance of probabilities, Baco, by using features of the packaging or get-up of the NW Product Range in the presentation of its products, misrepresented to consumers that: (1) Baco's products are the enhanced water products of NW; (2) Baco's products have the sponsorship or approval of NW; or (3) Baco has the sponsorship or approval of NW or is affiliated with NW. 101 The court must determine whether or not Baco has made any relevant misrepresentations to the public by launching its enhanced water products into the market "on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs": see Australian Woollen Mills at 659 per Dixon and McTiernan JJ. In this case, the court compares the effect of NW's enhanced water products, including their packaging, bearing in mind any reputation that NW has with respect to these products, and the impression likely to be made on the ordinary reasonable consumer when he or she has it in mind to purchase one of Baco's enhanced water products: see 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 10 IPR 289 at 306 per Gummow J. 102 Bearing in mind that the NW and Baco enhanced water products are not typically sold side by side, it is inappropriate to decide the matter of misrepresentation, including the likelihood of deceptive or misleading conduct, by putting the NW and Baco products side by side and comparing them. Further, these matters are not to be settled by close inspection and detailed argument. As Bennett J said in Natural Waters at 580 "[t]he determination of passing off and of contravention of the Act … is assessed as a matter of impression based on recollection", in this case of the get-up of the NW Product Range and the get-up of Baco's 'Grassroots' enhanced water products. 103 The fact that the goods are inexpensive is also relevant to the nature of the consideration that an ordinary reasonable consumer will give to the purchase. This case concerns the potential purchase of an inexpensive beverage, where an ordinary reasonable consumer is unlikely to engage in lengthy or detailed comparison of respective get-ups: see Natural Waters at 579 and Kettle Chip at 161. As the evidence of consumer confusion (such as it is) indicates, in choosing an enhanced water product, an ordinary reasonable consumer would probably choose fairly rapidly by reference to his or her preferred brand as indicated by packaging, name and logo. Indeed, products such as these, which appeal to a healthy life-style, may attract a higher degree of brand awareness and loyalty than that which attaches to less life-style orientated, but no less inexpensive, products. 104 In the context of the passing off claim made against it, Baco also relied on the proposition that the use of get-up that is common to the trade does not attract any liability. This proposition is accepted in this branch of the law: compare Ford v Foster (1872) LR 7 Ch App 611 at 628 per Mellish LJ, cited with approval by Lindley LJ in Reddaway v Bentham Hemp-Spinning Co [1892] 2 QB 639 at 643 and by Weinberg and Dowsett JJ in Red Bull at 371; Payton & Co Ltd v Snelling, Lampard & Co Ltd (1900) 17 RPC 48 ('Payton'); and W H Burford & Sons Ltd v G Mowling & Son (1909) 8 CLR 212 ('Burford'). The first use in a market of a particular get-up in a market does not confer monopoly or proprietary rights so long as any subsequent use by another trader is not likely to deceive the ordinary reasonable consumer into mistaking that trader's goods for the goods of another. 105 For a claim of passing off to succeed in a case where products generally resemble each other because of features common in the trade, the claimant must establish that the likeness between the claimant's goods and the alleged tortfeasor's extends to those features that otherwise distinguish the claimant's goods from others in the market: see Payton at 52 per Lindley MR. The decisions in Burford and Pub Squash are illustrative of the application of this principle. 106 In Burford, a soap manufacturer had been selling its laundry soap under the name "Signal Soap" in strawboard cartons about the size of a brick for twenty years. For four or five years, the defendants, also manufacturing soap, had packaged laundry soap, under the name "Tulip Soap", in long bars wrapped in strong paper, but, prior to the institution of the proceeding, had changed their packaging to cartons of exactly the same size, shape and material (although of a slightly different colour) to those used by the plaintiffs. There was evidence that the defendants had done so because they had seen the success of the plaintiffs and considered that using similar packaging would be advantageous to them too. The plaintiffs brought a proceeding for passing off, seeking injunctive and other relief. The defendants argued that they had a right to use the packaging, and that there was no similarity likely to deceive. O'Connor J said at 216: There is no doubt about the law in such a case. Every trader has prima facie a right to put up his goods in any packages which he may think attractive and convenient, and in any method which he may consider suitable for the carrying on of his trade. But that right is subject to limitations. He must not use the registered trade mark of another, and he must not put up his goods in such a form as to be likely to deceive ordinarily intelligent persons into mistaking his goods for goods known in the market as manufactured, put up, or sold, by another. Subject to these limitations every trader has a right to use any material or any shape he may think fit for packing of his goods and for putting them on the market. The plaintiffs have no monopoly in the particular kind of packing which they have adopted. … It is a material of very common use for packages and is becoming of more common use for that purpose every day. The use of strawboard for packages is therefore open to the trade, and no one trader can acquire a monopoly of it. … But that which distinguishes the plaintiffs' packages from what is common to the trade is the large and distinctive lettering on the package 'Signal Soap'. At 217, his Honour added that: [W]here, as in this case, a certain method of get up, though open to all traders, has been for many years solely identified with the plaintiffs' goods in a particular market, it is incumbent on a trader, who adopts the same method of get up for the purpose of pushing his trade in a similar article in the same market, that he shall clearly differentiate his goods on the face of the package from those of the plaintiffs. 107 In Burford at 218-219, O'Connor J held that the special characteristic that distinguished the plaintiffs' soap from what was common to the trade was the description "Signal Soap" appearing in large letters on its face; and that while the defendants' packaging was of the same material, shape, size and colour and "general get up" as that of the plaintiffs' soap, the distinguishing characteristics of the two products - the names of the products printed on the cartons - were sufficient to make it "impossible for anyone who can see to mistake the defendants' package for the plaintiffs'"; and that this was so despite similarities in the "general shape and form of the lettering on the other sides of the packages." Accordingly, his Honour granted the defendants' motion for nonsuit. On appeal, Griffith CJ, Isaacs and Higgins JJ expressed their agreement with the decision and reasoning of O'Connor J and dismissed the appeal: see Burfordat 222-224. 108 In Pub Squash the trial judge held that the defendant had sought to take advantage of the plaintiff's success in developing its 'Solo' lemon squash soft drink by seeking to copy or approximate the formula for 'Solo' and by choosing a product name and get-up derived from and intended to gain the benefit of the plaintiff's advertising and get-up. Notwithstanding these findings, the trial judge found that there had been no relevant misrepresentation on the defendant's part because the defendant had sufficiently distinguished its product from the plaintiff's product and, accordingly, the plaintiff had not made out a case of passing off. Delivering the judgment of the Privy Council dismissing the appeal, Lord Scarman noted (at 861) that: The [respondent's] intention was, not to pass off the respondent's goods as those of the appellants, but to take advantage of the market developed by the advertising campaign for 'Solo'. Unless it can be shown that in so doing the respondent infringed 'the plaintiffs' intangible property rights' in the goodwill attaching to their product, there is no tort: for such infringement is the foundation of the tort' [citing Hornsby Building Information Centre]. The law was designed, so Lord Scarman explained (at 858), to strike a balance between the protection of a trader's reputation and the need to keep competition free. 109 As Pub Squash and Burford show, the adoption by a trader of elements of get-up that appear to have been successfully used by a competitor is not new. Baco admitted that it had adopted certain design elements in its Baco Product Range that were shared with NW, but Baco argued that, as at May 2009, these elements were common to the enhanced water category in Australia. 110 I accept Baco's submission on this point. The features of NW's get-up that NW relied upon as distinctive were, as at May 2009, also used by vitaminwater and, to a lesser extent, by Smart Water. Moreover, a number of these features had been used by vitaminwater in the United States for some years before NW entered the market in Australia; and provided a design model that NW adopted for its own products when they entered the Australian market. Further, vitaminwater, with its similar get-up to NW (and to a lesser extent to Baco), had taken over from NW as the market leader in the Australian market. 111 As already stated, whether or not the colour and horizontal banding was appropriately described as a category signature is not the important point. The important point is that the banding, together with the use of bright wrap-around comparatively large labels corresponding to the colour of the beverage as viewed through a clear plastic bottle, and the use of a quirky comment, associated with a health-driven look, had become indicative of an enhanced water product by May 2009. By May 2009, there were a number of enhanced water products in the market having these features in common. 112 As noted earlier, most of the brands of enhanced water products in evidence produced a rainbow-like effect of brightly coloured beverages when placed appropriately together; and the colour of each variant was emphasized by the use of bright colours on the labels. I am unable to accept that, by using similarly bright colours in a similar way, or by using any of the other features to which NW pointed, Baco misrepresented to the public that its enhanced water products were products in the NW Product Range or came from the same source as the NW Product Range. Further, I do not accept that an ordinary reasonable consumer would be likely to believe that Baco's products were the products of NW or that they came from the same source as the NW Product Range. 113 Seen from the perspective of the ordinary reasonable purchaser, in a retail environment, the enhanced water products of NW and Baco would look different in a number of material respects, especially having regard to the branding, name and logo. In the case of the Baco 'Grassroots' products the prominent 'G' logo, coloured the same shade as the beverage variant, would stand out against a mainly white background constituting the top border of the label. The distinctiveness of 'Grassroots' enhanced water products, as compared with their competitors, is reinforced by a moderately large green grass band running through the centre of the label. The registered mark 'grassroots', which runs vertically down the top white band is clearly visible. The name and logo appear on each of three panels on the bottle label and would therefore be visible to the consumer no matter how the bottle was placed on a retailer's shelf, whether in or out of a refrigerator. 114 In the same way, the distinctive black and white 'NW' logo can be seen no matter how the bottle is placed on the shelf. This was, moreover, the effect of Mr Dennis' evidence because Mr Dennis agreed that, since the NW logo appears on all three panels of the label, it is almost impossible to have a NW enhanced water product located in a store without the name and logo being visible to the potential purchaser. 115 The evidence in this case shows that the branding of products in the enhanced water market is significant because potential purchasers are likely to understand and accept a brand as denoting a trade source. There was sufficient evidence to show that potential purchasers were likely to have relevant brand awareness. 116 In the period leading up to May 2009, NW regularly marketed and promoted its enhanced water products by reference to the 'NutrientWater' name and logo. In so far as Mr Dennis gave evidence to the contrary, I do not accept it. As Mr Dennis ultimately conceded, "if you were buying the NutrientWater product you would expect to see the name 'NutrientWater' or the logo on the product". 117 Especially following the entry of vitaminwater and other brands of enhanced water products into the Australian market, advertising and other promotional activities have been designed to make consumers brand-aware. The rapid and significant success of vitaminwater, as well as the growth in NW's sales, is indicative of the success of these activities. In such a market, it may reasonably be assumed that the ordinary reasonable purchaser would be alive to the differences between the branding, name and logo of the NW Product Range and Baco's enhanced water products, as well as those of their competitors. Given that the branding clearly differentiates the Baco Product Range from the NW Product Range, it is not probable that the ordinary reasonable consumer would be mislead or deceived into believing they were all NW's products or from the same trade source; or that Baco has the sponsorship or approval of NW or is affiliated with NW. It is worth noting that, in a case of this kind, before likely misleading or deceptive conduct can be established under s 52 of the TPA, it is not enough that "particular conduct causes confusion or wonderment"; rather there must be conduct that is misleading or deceptive or likely to mislead or deceive: see Campomar at 87, quoting Taco Bell at 137. NW has failed to establish that this is a case of the latter kind. 118 I find that, as at May 2009, the NW Product Range was distinguished from other products in the enhanced water market by its branding (including its name and logo), and not by the other features of get-up on which it relied. In this circumstance, Baco's 'Grassroots' enhanced water products did not convey any representation of association with or sponsorship by NW. This conclusion is entirely consistent with the evidence of Mr Mark Epstein and Mr Lee that Mr Epstein provided samples of competitors' products, including the NW and vitaminwater products, with the express instruction that Baco's labels were clearly to distinguish Baco's products from those of its competitors. 119 The evidence as to intention in this case contrasts with the findings made in Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133 ('Cat Media') and Red Bull. The Court in both cases expressly found that the respondent had designed its product with the intention of misleading consumers. 120 In Cat Media, Branson J considered two products sold in very similar packaging under the names 'Fat Blaster' and 'Fat Terminator'. Her Honour found that the Fat Blaster packaging "was highly distinctive in the weight loss supplement market when the product was launched" and that "the applicant ha[d] acquired a substantial goodwill and reputation in the name Fat Blaster and in the Fat Blaster get-up in connection with the distribution, sale and offering for sale of weight loss supplement products in Australia": see Cat Mediaat [13], [17] and [43]. Further, her Honour considered that the respondent's product presented as "having many similarities with the Fat Blaster box and as sharing few features with the packaging of the other products of the respondent or ... other products competing in the same market": see Cat Mediaat [36]. Accordingly, her Honour held that the applicant had established its claims in passing off and under s 52 of the TPA. In doing so, Branson J emphasised (at [51]) that this conclusion was based on the significant similarities between the competing products; "the dissimilarity between the Fat Terminator box and the packaging of other rival products"; and "the absence from the Fat Terminator box of a significant feature capable of unambiguously distinguishing it from the Fat Blaster product". In both Red Bull and Cat Media there were findings of deliberate copying by the respondent with intention to deceive: see Cat Media at[33] and Red Bull at 365. 121 The evidence of Mr Mark Epstein, corroborated by Mr Lee, was that the design of Baco's 'Grassroots' enhanced water products was intended to be distinctive, and differentiate the products from Baco's competitors, whilst being referable to the enhanced water market. I accept this evidence, which was fully supported by the documentary record. Further, Baco's use of the 'Grassrooots' name and logo to differentiate its enhanced water products from others was consistent with its use of this name and logo on its corporate stationery and the cartons in which the Grassroots products were packed for delivery to distributors and retailers. 122 I find that there was no intention on Mr Epstein's (or Baco's) part to deceive or mislead consumers into believing that Baco's goods were, or were relevantly associated with, NW's products. On the contrary, by its product branding, Baco sought to distinguish its products from its competitors in the enhanced water market. 123 Plainly enough, Baco sought to benefit from the success of the NW Product Range and the vitaminwater products in the Australian market. It was for this reason that Baco selected a get-up that emulated various characteristic features of other enhanced water products. Having regard to the circumstances prevailing in the enhanced water market by May 2009 (including its history and development, marketing and advertising, NW's branding, get-up or packaging and the branding, get-up or packaging of other traders), the likely knowledge of potential purchasers in the enhanced water market and likely impression on them of the get-up of the NW Product Range and the Baco enhanced water products, the circumstances in which Baco adopted its product get-up, and such other relevant considerations as have been mentioned, I find that Baco's enhanced water products were sufficiently differentiated from the NW Product Range as not to be likely to deceive or mislead potential purchasers or consumers as to the products' trade source or trade association.
D. DISPOSITION 124 In summary, NW has failed to make out its claims, first, because it failed to establish a relevant reputation in the features that Baco allegedly appropriated; secondly, because it failed to establish that, by adopting features common in the enhanced water market, it misrepresented the trade source of its enhanced water products or misrepresented its association with NW, so as to mislead or deceive potential purchasers of its products; and thirdly, because, by its branding and packaging, Baco clearly differentiated its product from its competitors' products. Accordingly, such similarities as exist between the Baco's and NW's enhanced water products do not amount to passing off or a breach of ss 52 or 53 of the TPA. 125 Accordingly, I would dismiss NW's application dated 25 June 2009. For the reasons discussed at the hearing, the applicants' objection to paragraph 40 of Mr Epstein's affidavit of 2 November 2009 should be upheld. My tentative opinion is that the applicants should pay the respondent's costs but I would afford the parties an opportunity to make written submissions if they consider another costs order more appropriate in the circumstances of the case. I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Nutrientwater Pty Ltd
Baco Pty Ltd
d v Shoshana Pty Ltd (1987) 10 IPR 289 Ford v Foster (1872) LR 7 Ch App 611 Reddaway v Bentham Hemp-Spinning Co [1892] 2 QB 639 Payton & Co Ltd v Snelling, Lampard & Co Ltd (1900) 17 RPC 48 W H Burford & Sons Ltd v G Mowling & Son (1909) 8 CLR 212 Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133
(2000) 51 IPR 102
(1978) 140 CLR 216
(1992) 33 FCR 302
(1991) 20 IPR 289
(2002) 55 IPR 354
(2008) 77 IPR 32
(2008) 75 IPR 478
(2008) 79 IPR 174
(1937) 58 CLR 641
(1989) 15 IPR 362
(1993) 46 FCR 152
(1997) 39 IPR 356
(2007) 159 FCR 397
(2009) 81 IPR 354
(1998) 88 FCR 354
(1989) 16 IPR 431
(1999) 44 IPR 281
(1982) 149 CLR 191
(1982) 42 ALR 177
(1989) 17 IPR 289
(2002) 56 IPR 182
(2007) 71 IPR 571
(2000) 202 CLR 45
(1987) 10 IPR 289
(1909) 8 CLR 212
(1999) 95 FCR 136
(1992) 22 IPR 65
Application dismissed. The parties were to file and serve any costs submissions by 20 January 2010. The applicants' objection to paragraph 40 of Mark Epstein's affidavit was upheld; the judge indicated a tentative view that the applicants should pay the respondent's costs: order and [125].