143. The most which the applicant was accepting in the period from March 1988 was the use of MOO on cheese, not on flavoured milk products. The applicant has never complained of the former, and would still be barred from alleging trade mark infringement in respect of such use, given the retention after these proceedings of the MOO registration in a limited form. When the "launch" of the MOO UHT flavoured milk product was imminent, the applicant moved quia timet and promptly. In the meantime, as I later find, the first respondent had gone ahead well aware there was significant aural similarity between MOO and MOOVE and that for a number of years the applicant had produced flavoured milk products under the name MOOVE; cf. B.M. Auto Sales Pty. Ltd. v Budget Rent A Car System Pty. Ltd. (1976) 51 ALJR 254 at 259.

144. In my view, the first respondent has not made out the defence of acquiescence to the claim for injunctive relief which I would otherwise grant against it. The first respondent proposes to continue the conduct complained of. Accordingly, I find for the applicant on the trade mark infringement issue. I refer later in the reasons to the form of appropriate injunctive relief.

145. The first respondent has been anxious to expand the market for its products. The officers of the first respondent who played the principal parts in the events giving rise to this litigation were Mr. Howell and Mr. Wills. Mr. Howell is the immediate superior to Mr. Wills. In September 1986, Mr. Wills briefed Messrs. Frank Small & Associates, marketing research consultants, to conduct research into the unutilised opportunities which might exist for cheese products in the Australian market. The report was furnished in January 1987 and Mr. Wills then formed the view that a major opportunity for the first respondent to increase its sales lay with the development of a cheese marketed in a form which would appeal to children.

146. Messrs. Luscombe & Partners were the first respondent's advertising agents and Mr. Wills attended meetings with representatives of that firm in January, February and March 1987 at which, along with other matters, there was discussion of the results of this market research. At a meeting attended by Mr. Wills on 9 July 1987, Messrs. Luscombe & Partners were told that the first respondent sought "preliminary media proposals" for a new natural cheddar children's cheese with a strong appeal to children aged 2-7 years and with an advertising budget of approximately $500,000 to be "targeted nationally to women 25-40 years". The advertising agents were told that a formal advertising brief would follow but that in the meantime the agents were to consider developing a list of alternative product names. I turn now to the subject of flavoured milk.

147. In September 1986, the first respondent had commissioned Messrs. Frank Small & Associates to undertake comparison tests between full cream milk and UHT (long life) milk, with children as the targeted group. The report received in November 1986 indicated that young children could not discriminate between UHT and full cream milk. Samples of chocolate and strawberry flavoured milk were then produced by the first respondent and in March 1987, Messrs. Frank Small & Associates used these samples to conduct tests to evaluate the acceptance of these flavours. The tests were completed by the end of March, and the first respondent was then orally advised by Messrs. Frank Small & Associates that the results were favourable.

148. In April 1987, the first respondent commissioned a study by Messrs. Luscombe & Partners to evaluate the suitability of various brand names for a range of products to be specifically marketed to children. On 29 June 1987, Mr. Wills prepared a document headed "Murray Goulburn Development Plan" which was prepared to brief the managing director of the first respondent of current progress. This shows that at that stage the name "Farm Fun" was the proposed brand name to be used on a flavoured UHT milk drink to be packaged in a form particularly suitable for inclusion in school lunch boxes. Under the heading "Background", the competition in supply of UHT milk products was shown to include "Dairy Farmers" and the products to include "Flavoured - Moove (250 ml)". Under the heading "Key Demographics", the "purchasers" were described as "grocery buyers with children aged 3-9 years for which (sic) school lunch is prepared at home every or most days", and the "consumers" were described as "children 3-9 years old". There was also a proposal for the introduction of "line extensions" which would appeal to older children, namely those aged 8-11 years.

149. At a meeting on 4 August 1987 with representatives of Messrs. Luscombe & Partners, Mr. Wills and Mr. Howell presented them with two written advertising briefs both bearing Mr. Wills' name. That for the children's cheese product was dated 4 August 1988, and the brief for the school milk product was dated 3 August 1988. The minutes of this meeting, prepared by the advertising agents, described the task of the agency in each case as the preparation of a "critical path timetable" with a view to the marketing of the products.

150. Early in August, Mr. Wills had a conversation with Mr. Howell in which he suggested that there could be commercial advantages in having the one name for both the children's cheese product and the school milk product. However, Mr. Wills also said that he was not entirely convinced that "Farm Fun" was the right name. This conversation occurred before the meeting of 4 August.

151. On 21 August, Mr. Howell and Mr. Wills attended a further meeting with representatives of Messrs. Luscombe & Partners to receive the response of the agency to the two briefs which had been delivered on 4 August. At the commencement of the meeting, Mr. Graham Gladman, the primary spokesman for the "creative group" told Mr. Wills and Mr. Howell that the agency had devised a good name and graphic treatment which answered both briefs. Mr. Leishman, the art director of the agency, then said that "MOO milk" would be a better name than "Farm Fun". He told the meeting the reason he liked the name MOO was that he had always called milk by that name. Mr. Howell and Mr. Wills responded favourably to the suggestion. Mr. Howell said to Mr. Wills (but not to the meeting) that whilst he thought MOO was a great name, he would be surprised if it was available. He said "It's so perfect, I can't believe it will be there for us to use."

152. On 24 August 1987, Mr. Wills instructed Mr. O'Rourke, the company secretary, to do an urgent trade mark search of the name "MOO". Mr. O'Rourke promptly made inquiry of Mr. Scott, a partner of the firm of Messrs. Edward Waters & Sons. On 26 August, Mr. O'Rourke reported back to Mr. Wills that Messrs. Edward Waters & Sons had advised that there was a trade mark MOO which was owned by a company called Healthways, the registration of which was due to run out on that day. Messrs. Edward Waters & Sons also acted for this company, the second respondent. Mr. Wills then spoke on the same day to Mr. Anderson of the second respondent. Mr. Anderson said that his company had no further use for the mark, and was going to let it lapse. He said, according to Mr. Wills' account, "We have no further use for the name. Some time ago we used it on reduced cream which was sold in New South Wales and Victoria". Thus it was drawn to the attention of the first respondent that the MOO mark was not in current use and had not been used for some time. Mr. Wills suggested a payment of $10, and it was agreed that Messrs. Edward Waters & Sons would be instructed by the first respondent immediately to attend to the renewal of the registration. In his dealings with Mr. Anderson, Mr. Scott made no inquiry as to the degree of user of the MOO trade mark by the second respondent. I have dealt earlier in these reasons with the subsequent events concerning the assignment of the trade mark.

153. As I have already mentioned, Mr. Wills said in his evidence that in taking the decision to use the name MOO, he had never thought that this would be a problem for MOOVE, because the MOOVE product was aimed at "an entirely different market", namely teenagers and young adults, and was promoted so as to appeal significantly to that market. Mr. Wills said that this view that there would be no problem with the name MOO was reinforced when Mr. Scott of Messrs. Edward Waters & Sons advised that the mark MOO was available and was already registered, and by the circumstance that the mark was subsequently assigned so that it became the property of the first respondent.

154. Mr. Howell denied that he had participated in any discussions concerning the obtaining of benefits for the first respondent by the adoption of MOO as utilising the first three letters of MOOVE. He also denied that he had given at any stage any instructions to attempt to find a name or use a name to obtain benefits or advantages for the first respondent from any other existing product on the market. Mr. Howell had thought that MOO was probably already registered by some other business as its property.

155. The "creative team" working on the briefs at Luscombe & Partners included Mr. Trumble and Mr. Leishman. In the second or third week of August 1987, Mr. Leishman had a conversation with Mr. Trumble in which both said they did not like the then proposed choice of the name "Farm Fun". Mr. Leishman said he thought "Farm Fun" was hackneyed, out of date and boring. Mr. Leishman said he had called milk "Moo". The upshot of this conversation was that the mock-ups were prepared for the meeting on 21 August in which MOO was presented as an alternative to "Farm Fun". Mr. Leishman had before him the written brief for school milk which had been presented at the meeting earlier in August. On the first page of this brief under the heading "Competition" and opposite the name "Dairy Farmers", there appeared "Flavoured - Moove (250 ml)", along with the trade names of the UHT milk products of other companies.

156. There was a further meeting on 1 September 1987 between Mr. Wills and officers of the advertising agency. In the agents' minutes for that meeting, the developments in relation to the cheese product are described for the first time under the heading "MOO CHEESE". The members of a meeting attended by Mr. Howell and Mr. Wills on 14 September 1987 refer to the "MOO Milk product". Although the evidence did not reveal the formal decision making processes adopted by the first respondent, plainly by September 1987 a decision had been made in favour of MOO for both the cheese and milk products. Preparations for marketing them continued in the manner described earlier in these reasons, with priority being given to MOO cheese.

157. The evidence satisfies me that when, over the period August - September 1987, the first respondent selected MOO for its cheese and milk products, it was aware that MOO was not in current use by the second respondent and had not been used for some time, but the legal significance of this was not appreciated by the first respondent. Further, the first respondent was well aware that there was significant aural similarity between MOO and MOOVE and that the latter was the name under which the applicant had produced flavoured milk products for a number of years. But I accept what was said by the witnesses for the first respondent to the effect that the first respondent was not acting fraudulently in the sense of choosing MOO in the hope or expectation of deriving benefit from its resemblance to MOOVE. The first respondent's position was that the products would be directed at different "target" markets and be promoted accordingly. The acquisition of the registration of MOO confirmed the first respondent in the view that there would be no problem with the proposed course of conduct. The first respondent was not setting out to "cash in" on the reputation of MOOVE or to sail as close to the wind as it might without attracting legal liability.

158. Thus, the inferences that would otherwise assist the applicant on its passing-off claim are not available to it: Kettles And Gas Appliances Ltd. v Anthony Hordern & Sons Ltd. [1934] NSWStRp 51; (1934) 35 SR (NSW) 108 at 127-128 per Long Innes J.; Just Jeans Pty. Ltd. v Westco Jeans (Aust.) Pty. Ltd. (1989) ATPR 40-927 at 50,044 per Wilcox J. Nor do I believe it would be accurate to characterise the first respondent as an unscrupulous trader which cleverly pitched its marketing techniques at uncertain or perplexed shoppers, in the sense described by Lockhart J. in Bridge Stockbrokers Ltd. v Bridges (supra), when dealing with s. 52 of the TP Act.

159. However, in this regard it may be noted that the evidence of Mr. Hamill, chief executive of the advertising agency George Patterson Pty. Ltd., bears out the need for some principle such as that propounded by Lockhart J. In describing advertising industry practices, Mr. Hamill said:

"Well, obviously if you are going to look

at a competitor's products, and discuss

their names, you have to also discuss any

similarity that might exist between the

proposed name you have and your

competitors. Then you can take one of

two decisions. You can decide to choose

a name, which is close to your

competitor, because you feel you would

like to get some halo effect from their

name, so ---

HIS HONOUR: Some what? --- I am sorry.

Some what effect? --- Halo effect. In

other words what I am saying is, you get

some of the character of their name

associated with your product, which you

sometimes might do intentionally. That

also runs the risk of confusion, where

you may simply be advertising your

competitor's name and the market thinks

they are both the same. It is a very

dangerous road to tread down. You have

to be careful of the results, so you

might then intentionally choose a name

totally different. But both practices

are common, and both are always discussed

when looking at product names. Whether

you intentionally choose to follow the

competitor; whether you intentionally

choose to leave the competitor alone and

go a different track."

The present is not a case of conscious choice to seek some "halo effect".

160. In his address, counsel for the applicant rather put his case on the basis that what the first respondent had done amounted to a preparedness to run the risk that there might be deception and confusion between MOO and MOOVE when used in relation to flavoured milk products. The facts, in my view, do not rise so high in the applicant's favour, even assuming that if they did so, that would be sufficient to bring the applicant success on its claims of contravention of s. 52 of the TP Act and passing-off. It follows that my findings as to the conduct of the first respondent do not alter my provisional view expressed earlier in these reasons that the applicant has not succeeded on either of these counts.

161. What was said for the applicant in address really was another way of putting the case as to blameworthy conduct in the sense described in GE Trade Mark (supra) but classing as "blameworthy" conduct what was careless and wanting in diligence in having regard to the interests of others. This returns me to the issue of whether on the assumption that it is necessary on the facts of this case for the applicant to show blameworthy conduct on the part of the first respondent for the applicant to succeed in its claim for expungement under s. 22 of the Trade Marks Act, the applicant has shown that there was such conduct.

162. The conduct of the first respondent as registered proprietor of MOO must have as a result the likelihood of causing deception or confusion in the sense of trade mark law. By "blameworthy conduct" Lord Diplock was referring to "such blameworthy conduct by (the registered proprietor) as would amount to an equitable ground for disentitling (it) to protection for the use of the mark"; see (1973) RPC at 335. Contract will attract the epithet "disentitling" if it has an immediate and necessary a relation to the equity sued for: Meyers v Casey [1913] HCA 50; (1913) 17 CLR 90 at 123. There will be such an immediate and necessary relation where goodwill, for which protection is sought by reliance on a trade mark registration, was built up by false advertising (cf. Manhattan Medicine Company v Wood [1883] USSC 104; 108 US 218 at 223, (1883); Kettles And Gas Appliances Ltd. v Anthony Hordern & Sons Ltd. supra at 128). But what, short of this, will be "blameworthy"?

163. As the finding in the GE Case itself indicates, the appreciation by a registered proprietor that there is a risk of confusion arising from the use of the registered mark will not of itself involve the registered proprietor in blameworthy conduct in continuing to use the mark. The facts in the present case as to the position of the first respondent when MOO was selected and the assignment taken in August-September 1987, are somewhat more in favour of the applicant for expungement than the facts were in the GE Case. Nevertheless they still, in my view, fall short of what is needed to attract the epithet "blameworthy" in the sense understood by Lord Diplock in the GE Case.

164. However, as I have indicated earlier in these reasons, the applicant is entitled to an order under s. 22 for expungement of the MOO registration in relation to milk.

165. The result is that the applicant has failed in its claims based on passing-off and contravention of s. 52 of the TP Act. Further, the applicant has failed in its attack on the validity of the assignment of the registration of MOO.

166. The applicant also sought expungement of this registration for non-use within the meaning of s. 23 of the Trade Marks Act. On that application, the first respondent has succeeded in showing use in the relevant period in relation to cheese and in relation to flavoured milk. A question arises as to whether the balance of the registration should be expunged for non-use, and, as I have indicated, I will hear the parties as to the form of the appropriate order, which will have to take into account the result of the application under s. 22 of the Trade Marks Act.

167. The applicant has succeeded in establishing that the MOO registration should be expunged in relation to milk (not just flavoured milk) on the ground that by 5 August 1988 the use of the trade mark in relation to milk was likely to deceive or cause confusion within the sense of s. 28 of the Trade Marks Act, thus rendering the registration vulnerable under s. 22 of that statute. Once the Register is rectified accordingly, there will have been removed the bar presently imposed by sub-s. 58 (3) of the Trade Marks Act. The result, in my view, will be that the applicant would be entitled to relief against the first respondent for infringement of the applicant's registration for MOOVE. It will be necessary to hear the parties as to the form of such relief, with particular reference to the time for which it should operate.

168. I would not regard this as an appropriate case for any territorial limitation upon the operation of injunctive relief against infringement. The MOOVE registration does not have any such limitation upon it, although it would have been open to the Registrar to place upon the registration a limitation as to use within a territorial area within Australia (see s. 44 and the definition of "limitations" in sub-s. 6 (1) of the Trade Marks Act). Nor has the first respondent eschewed the extension of the marketing of MOO UHT flavoured milk beyond New South Wales.

169. The only order to be made today is that the proceedings should stand over for the bringing in of short minutes to implement these reasons for judgment.