Outdoor Power Products Pty Ltd v Silvan Australia Pty Ltd

REASONS FOR JUDGMENT 1 This is an application for an interlocutory injunction. The cases that explain the principles which govern the granting of interlocutory injunctions establish that first the applicant must make out a fair case for the breach, or in a quia timet application the apprehended breach, of his legal rights. That is, the applicant must show that he has a case worthy of trial. This does not mean that the court will undertake a preliminary trial in an attempt to predict the outcome. Indeed, in most cases that will be an impossible task: not all the facts will be known; cross-examination of witnesses is not usually permitted; such applications are generally brought on short notice; the judge will not have had sufficient time to give adequate consideration to the often intricate questions of fact and law that may arise. Still, on occasion it will be necessary for an applicant to show more than that his case is not frivolous. Or, at least, the judge should exercise a degree of caution when assessing the strength of the applicant's case. This is particularly so when, as here, the decision on the interlocutory application may have the practical effect of resolving the case. The second element that the applicant must establish is irreparable injury. If the applicant's injury in the event of final success would be adequately compensated by damages, an injunction will not issue. Where the applicant makes out both these requirements (a serious issue to be tried and irreparable harm) and the respondent also shows a fighting case, it is then necessary to consider whether the balance of convenience favours the grant or refusal of the injunction. On this question many factors may be taken into account. 2 In this action, the applicant seeks an interlocutory injunction to restrain an alleged infringement of its trade mark. There are, in addition, the usual subsidiary claims in passing off and misleading conduct (Trade Practices Act 1974 (Cth), ss 52 and 53 and Fair Trading Act 1999 (Vic), ss 9 and 12). The applicant's trade mark consists of the shape of a backpack style container which has on its sides and partially around the front, commencing about one third of the way from the top, a series of ridges or ribs that do not meet, and is supported at the base by a rectangular tubular foot. The mark has been registered in respect of goods in class 7 (containers for electric or machine powered sprayers) and class 8 (containers for hand operated sprayers for chemicals and agricultural liquids). 3 In its physical form the applicant's backpack container is referred to as the Solo sprayer, after the name of its manufacturer, Solo Kleinmotoren GMBH, a company established in the Federal Republic of Germany which specialises in the production of medium to high quality agricultural products. The applicant is a subsidiary of the German company. 4 The Solo sprayer was first introduced into the Australian market in 1967. It is used for spot spraying pests and for weed control. It is particularly useful for spraying along channels and on hillsides where it is not practical to use larger equipment. The applicant was incorporated in 1972 and since then has imported and distributed throughout Australia products, including the Solo sprayer, manufactured by its parent company. It markets those products through a network of dealers and distributors. Sales are made to retailers of agricultural and horticultural products as well as to end users, including bodies such as local government authorities. 5 The applicant describes the Solo sprayer as its "flagship" product. In the last thirty or so years it estimates it has sold more than 280,000 units. Currently there are approximately 15,000 backpack sprayers sold each year, of which approximately 60 per cent are Solo sprayers. The current list price per unit is $198, but most Solo sprayers sell for around $170. 6 A trade mark is a sign used to identify the source of the seller's goods or services and to distinguish them from the goods or services of others: in other words a trade mark is a so-called badge of origin. In the case of a trade mark consisting of the configuration of a container, the mark usually identifies the source of the goods enclosed in the container. The shape of a container can also be a trade mark for its (the container's) own source. This is the situation with the trade mark for the Solo sprayer. At least it must be presumed that this is so, for otherwise the trade mark would not have been registered. 7 The respondent is one of the applicant's competitors. It distributes farm equipment, including agricultural spraying equipment, through a network of dealers that specialise in agricultural products. The business commenced in 1962 as a family concern operating under the name Silvan Produce & Hardware. There was a reorganisation of the business in 1976 and it was taken over by a company, Silvan Pumps & Sprayers (Aust) Pty Ltd. In 2002 it was acquired by the respondent. 8 Two well-known trade marks are used in the promotion of the respondent's products: the word mark "Silvan", which was registered in 1975, and the word mark "Selecta", which was registered in 1998, in each case in respect of goods in class 7. The Silvan mark is used as a house brand for all products made or distributed by the respondent. Specific ranges of product carry an additional mark. The Selecta mark is used in relation to agricultural and industrial accessories. Included in this range are portable sprayers, both handheld and backpack style. 9 The present dispute arose in the following way. In July 2005 the respondent purchased 769 backpack sprayers from a manufacturer in China. This sprayer had been in manufacture for about five years and had been sold in a number of countries including Australia. A side by side comparison of the applicant's trade mark and the sprayer manufactured in China shows that in its essential features the Chinese sprayer is almost identical to the applicant's mark. The essential elements of the applicant's mark are discernable not only from the representation of the mark (comprising the configuration of the container) but also from the description that appears on the certificate of registration. The description reads: "The mark consists of the backpack style container that is wider at the top and gently tapers toward the bottom in both width and breadth; on either side and wrapping around the sides and partially around the front of the container are a series of ridges or ribs, that do not meet; the ridges are approximately one quarter of the length of the container and start approximately one third of the way from the top of the container; supporting the base of the container is a rectangular tubular foot that extends upwards into the container." Each feature identified in the written description, being a feature which can be seen in the registered drawing, is also visible on the Chinese sprayer. 10 The respondent commenced to sell the Chinese sprayer having had printed on it the word mark "WeedPAK", a new trade mark for which an application for registration is pending. The respondent says that when it ordered the sprayer it also requested the manufacturer to apply the "Selecta" mark to the product as well but this instruction was overlooked. The sprayers were sold at a price of $29.40 each, being a price significantly less than the price charged for a Solo sprayer. 11 The respondent says that before it ordered the sprayer it conducted a search of the Register of Designs to ascertain whether the configuration of the sprayer was the subject of a registered design. I assume that the respondent was concerned that the applicant (or its parent) may have obtained registration for the design of the Solo sprayer. At all events, the search disclosed no registered design. 12 When the applicant discovered that the Chinese sprayers were being offered for sale it immediately contacted the respondent alleging, among other things, that the respondent was infringing the applicant's trade mark and was guilty of passing off. It demanded that the importation and sales cease. It turned out, however, that all the respondent's sprayers had been sold. 13 In September 2005 the respondent purchased 1,770 units of a modified backpack sprayer from the Chinese manufacturer. There are two modifications viz, the ribbing has been removed and the design of the anchor straps has been changed so that the top of the container is now a different shape. In addition, the new sprayer has printed on the front in prominent lettering both the Selecta and the WeedPAK marks. The respondent has begun to market these sprayers, which it refers to as the Selecta sprayer. The applicant contends that when offered for sale the Selecta sprayer infringes its trade mark. The interlocutory injunction which the applicant seeks is to restrain this allegedly infringing conduct. 14 I have mentioned that the applicant also contends that by selling the Selecta sprayer the respondent will be passing off its goods as the applicant's and will also be engaging in misleading conduct. These claims are based not only on the appearance of the Selecta sprayer (which is an important element of each cause of action) but also on the appearance of the packing box in which the Selecta sprayer is sold. The packing box is being changed but the one in which the Selecta sprayer is presently packaged is quite similar to the box in which the applicant's product is sold. The applicant's packing box is predominantly red with a white background, while the respondent's box has reversed the colours. There is a photograph of the Solo sprayer on the applicant's packing box. There is a similar photograph of the Selecta sprayer on the respondent's packing box. On the applicant's box there is a description of the product appearing in six languages, German, English, French, Spanish, Italian and Dutch. The respondent's packing box has a description of the product in five of those languages, with Italian being omitted. 15 Immediately before the hearing the respondent indicated that it was in the process of repackaging its product and would adopt a get up very different from the applicant's. I have been provided with a sample of the new get up. It is, as the respondent says, different from the applicant's. 16 Dealing now with the causes of action, the trade mark infringement claim will be considered first. An action will lie if the respondent is using a mark substantially identical with, or deceptively similar to, the registered mark and is using such mark in relation to goods in respect of which the trade mark is registered: Trade Marks Act 1995 (Cth), s 120. Here, only two questions arise for consideration. First, is the respondent proposing to use the Selecta sprayer as a trade mark? Second, is the Selecta sprayer deceptively similar to the applicant's mark? The second question is confined to deceptive similarity because, with the removal of the ribbing from the body of the container, the applicant could not make out a case that the Selecta sprayer is substantially identical to its trade mark. 17 The first question (trade mark use) is by no means easy to answer, even to the extent that an answer is required on an interlocutory application. The difficulty arises because of the type of mark that is in issue, namely a shape which is said to denote its own source. If a trade mark consists of a letter or group of letters, a word or group of words, a symbol, a design or a combination of any of these, it will usually be easy to tell whether the mark is used as a badge of origin. Difficulties may arise when it is said that the use of the mark is for descriptive purposes, but that does not often occur. 18 Here there are two ways in which the Selecta sprayer might be used as a mark. The first is when a photograph of the sprayer appears on the packing box or on promotional literature. The second is by displaying the product for sale removed from its packing box. In considering whether either use is as a trade mark it is necessary to look at the matter differently from the use of a typical trade mark. For one thing, when shape is a badge of origin for the thing itself the difference between use and use as a trade mark is a rather metaphysical concept. For another thing it is, in any event, probably not sufficient simply to show that a container in the shape of a registered mark is being offered for sale. 19 The first use (a photograph of the Selecta sprayer) is not, to my mind, use as a trade mark. The following is what appears on the most recent packing box. There is the Selecta mark at the top. The product is described as a "WeedPAK Knapsack". Certain details are provided about the product, including its litre capacity, that it has a fan or cone nozzle, that the spray gun handle has a filter, that there is a left or right side pump handle. The use of the photograph seems only to serve a descriptive function. The same is probably true of the photographs on the earlier packing box. At any rate, in my view, the alternative contention is not sufficiently arguable to found interlocutory relief. 20 The second use, display for sale, is more difficult. The evidence suggests that it is not uncommon for these kinds of sprayers to be offered for sale by being displayed, sometimes alongside other products in the range, or even alongside competing products. In addition, they are offered for sale with promotional material including flyers, advertisements in trade journals, brochures and the like. Whether or not the configuration of the sprayer is being used as a trade mark will depend upon the manner in which the product is promoted. That will include how it is being promoted in any accompanying literature. I think there is a very real risk that promotion by the display of the Selecta sprayer may involve trade mark use. 21 The second question is whether the Selecta sprayer is deceptively similar to the applicant's trade mark. On this aspect there is some evidence, of a hearsay kind, of actual confusion. Usually, convincing evidence of actual confusion is the best evidence of deceptive similarity. I propose, however, not to act on the Applicant's evidence, for it seems to me to relate to the first version of the Selecta sprayer which, as I have said, was substantially identical to the applicant's trade mark. But the changes to the Selecta sprayer, including the removal of one of the essential features (namely the ribbing), renders this evidence irrelevant. 22 Accordingly, having put this evidence to one side, the second question is to be answered following a comparison between the general impression, based on recollection, of the applicant's mark and the impression gained from the use or the anticipated use by the respondent of its mark. There will be infringement if after this comparison there is a likelihood of deception or confusion: Trade Marks Act, s 10. The deception or confusion is to be determined by reference to purchasers of these kinds of products. On this aspect I should proceed on the basis that the products have a specialised market. The persons in this market would include farmers, hobby farmers, horticulturalists and others with a like interest. I will assume also that the purchaser is of ordinary intelligence and memory and would take ordinary care in selecting the product to be purchased. 23 Although there is no evidence of actual confusion, there is one piece of evidence which I think is quite important. In his affidavit, Mr Helle, the general manager of the applicant, described the essential features of the Solo sprayer as being "the features of the tapering tank and external ribbing (a feature of many Solo products)". According to Mr Helle, it is these features that make the product "unique to the Applicant". 24 On the basis of this evidence, along with my own impression, I am of opinion that with the ribbing removed, as it has been on the current Selecta sprayer, an ordinary purchaser will not likely consider that the mere shape of the Selecta sprayer bears similarity to the applicant's mark. Moreover, I do not accept that the opposing view is sufficiently strongly arguable to found an injunction the practical consequence of which may be to resolve this dispute. 25 In arriving at this conclusion I have put out of my mind the fact that both the Solo sprayer and the Selecta sprayer are manufactured in a similar white plastic, that each has a bright red screw top, and that the respective marks (Solo, in the case of the applicant, and Selecta and WeedPAK, in the case of the respondent) are in the same red lettering. I have put those features out of my mind because the applicant's mark is not registered in colours. 26 I will now deal with the remaining causes of action. It is convenient to consider them together for this reason: the parties accept that if one cause is made out so too will the other and, conversely, if one fails both will fail. 27 Speaking very broadly, in a passing off action an applicant must prove the following three elements. First, he must show a goodwill or reputation in the goods or services in question by reference to his use of a mark, trade name or get up. Second, he must show that the respondent has by misrepresentation led the public (or a section of the public) to believe that his (the respondent's) goods or services are those of the applicant or are connected with the applicant. Finally, the applicant must demonstrate that he has suffered or, in a quia timet action, will suffer damage. 28 It seems to be conceded that the first and third elements of a passing off claim have been sufficiently made out. At least the respondent has not directed any submissions to the contrary, which is not surprising in the face of the evidence. I need only determine, to the requisite standard, whether there has been or will be a misrepresentation. 29 For this purpose the applicant has tendered an example of the Solo sprayer and an example of the current version of the Selecta sprayer. I am in no doubt that the general appearance (shape and colour) of each product is so similar as to cause a reasonable hypothetical member of the class of persons to whom these products are being offered for sale to suspect they may be from the same source. That was my immediate impression when I saw the exhibits. It is the impression which has remained with me in the few days since the hearing. 30 Not only is this the impression that I think is likely to be induced in the minds of prospective purchasers, it is, I think precisely the impression intended by the respondent. That is to say, I suspect that it is no accident that the respondent has put onto the market a product which, so far as its get up is concerned, is very similar in appearance to the Solo sprayer. My view about the respondent's position is confirmed by the first two versions of its packing box. Each box was, so it seems to me as presently advised, deliberately designed to take advantage of the reputation the applicant has in the colour and style of its packing box. 31 The result is that each element of an action in passing off has been made out sufficiently for the purposes of an interlocutory application. The only question that remains is whether an injunction is an appropriate remedy and, if it is, what is to be the proper scope of that injunction. 32 On the question whether an injunction should be granted I am in no doubt whatever that it should. Rarely will damages be an adequate remedy for an interference with the applicant's goodwill, which is, after all, what lies at the root of a passing off claim. Indeed, as an examination of the cases will show, an injunction is the remedy granted almost as of course in such cases. As well, one should not lose sight of the fact that the misleading conduct claim is founded on a statute enacted to serve the public interest and not simply private rights. Once it has been found that there is a misrepresentation to the public, or to a section of the public, the court should, whenever possible, restrain the continuance of that conduct even where no private rights are affected. 33 Regarding the form of relief, I propose to ignore that which is sought by the applicant. What it sought was unreasonably wide. Instead, provided the applicant proffers the usual undertaking in damages, an injunction will go until trial restraining the respondent from selling or offering for sale its current Selecta sprayer in a similar colour scheme to the applicant's. I will hear from the parties on the precise form of the order. 34 It will be noted that the injunction does not restrain the respondent from using a packing box which is similar to the applicant's packing box. I have assumed that there is no utility in restraining the use of that packing box since I have restrained the sale of the product itself. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.