Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Limited

Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Limited - [2015] FCA 753 - FCA 2015 case summary — Zoe

[8]

The advertisement 3 The advertisement commences with a mother standing in the kitchen with her son as she looks at a pyrex dish that appears to have "burnt on soiling", perhaps from meat. The mother goes to rinse it in the sink, turning on the tap. Before she can rinse the dish, a male voice, apparently that of the dishwasher, exclaims as the shot cuts to the kitchen's dishwasher: "Katie! Don't pre-rinse that dirty dish." Katie replies with surprise: "What?" The male voice then says, "I can deal with it - if you switch to Fairy Platinum". As he says this, the shot swings up to a pixelated blue, red and white box that transforms into a Fairy Platinum packet. Katie and her son look at the dirty dish sceptically. Katie says, "Impossible!" Both shake their heads. The shot cuts back to the dishwasher. The male voice says, "It's true. Put it straight in here…" Katie puts the dish into the dishwasher. The male voice continues, as Katie takes the filter from the dishwasher: "…and take a look at that filter." Katie holds the filter and grimaces as she looks at it. The male voice says: "I can clean all the grease from that too." 4 The advertisement then shows a manicured hand holding a Fairy Platinum capsule, and quickly transitions into a split screen comparing the capsule with a blue dishwashing tablet with a red ball inserted in the centre. The tablet on the left is described in subtitling as "LEADING TABLET", while subtitling identifies the Fairy Platinum capsule on the right with the text "FAIRY". Throughout this section, each of the tablet and the Fairy capsule is depicted cleaning identical dirty dishes. While the dish on the right ends up spotless, the dish on the left is not quite clean. The dirty part of the dish is emphasised by a white circle appearing around it briefly. There is small white text in the middle of the screen during the sequence which says "creative visualisation". 5 At the same time as the 'creative visualisation' appears, the male voice says: "Fairy's powerful liquid top capsules clean better than the leading tablet…" Meanwhile, white text appears at the bottom of the screen which says: "* based on Kantar volume share (in tonnes) for year 2014; Independent IKW Testing". After a pause, the male voice says: "…and cuts through grease in one wash". The text at the bottom the screen reads: "Cuts through grease in one wash - Based on Galaxy Research 2013, 101 respondents." Meanwhile, a red circle on the top-right of the screen appears with the text: "9/10 AUSTRALIAN CONSUMERS". The male voice then says: "nine out of ten Australian consumers agree." 6 In the final sequence, the dishwasher opens. Katie then holds up the clean dish, looking at it admiringly, and says "impressive". Her son holds a clean filter and nods at her approvingly. In the final shot, the dishwasher is open and Fairy liquid, Fairy Platinum tablets, and a clean filter sit on the door. The male voice says: "Fairy - love it or your money back". Red text appears which says: "MONEY BACK GUARANTEE."

[11]

Automatic dishwashing detergent market 12 According to the applicant, sales in the Australian automatic dishwashing detergent market total approximately $216 million per annum. The parties broadly agree that various Finish products represent approximately 70% of that market. The respondent's evidence is that Fairy's total market share is currently approximately 8.5%. 13 Sales of dishwashing tablets account for a significant proportion of the Australian automatic dishwashing detergent market. The applicant's evidence is that total sales of Finish dishwashing tablets for the year to 31 May 2015 are just under $118 million. 14 The applicant's evidence is that consumers in the market are highly influenced by price promotions. The respondent's counsel, Mr Cobden SC, submitted that pricing is an important consideration for consumers in the market and that this factor tends to demonstrate the substitutability of "premium" tablets (of which Finish Quantum Max and Fairy Platinum are said to be examples) for "mainstream" tablets (of which Finish Max-in-1, Finish All-in-1 and Fairy All in One are said to be examples). 15 The applicant also contended that performance claims are important influences in customer choice. Mr Cobden SC acknowledged that performance claims "play a role". 16 The respondent's witness, Ms Ramesh, said that the market for dishwashing products and the market success of a product is "heavily reliant" on the quality of the products' technical capabilities, one measurement of which is the performance of the products under consumer trials. 17 Both parties adduced evidence of testing of various products. It is not possible or appropriate for the Court to attempt to make detailed findings about the comparative performance of the products on this interlocutory application. However, I note that the respondent's testing evidence sought to demonstrate the following matters: That pre-rinsing is not required with Fairy Platinum; Fairy Platinum cleans better than Finish All-in-1; Fairy Platinum cuts through grease in one wash. 18 I also note that the applicant's testing evidence included evidence seeking to demonstrate that Fairy Platinum does not clear better than Finish All-in-1.

[12]

The "leading tablet" 19 The applicant's evidence was that Finish Quantum Max is the highest selling dishwashing tablet in Australia, as measured by number of tablets sold, with approximately 142 million tablets sold in the year to 31 May 2015. In contrast, Finish All-in-1 sales in the year to 31 May 2015 were about 62 million tablets. 20 There is evidence that, by dollar value, Finish Quantum comprises approximately 58.5% of the applicant's tablet sales, while Finish Max-in-1 comprises about 21.2% and Finish All-in-1 comprises about 20.1% of the applicant's tablet sales. 21 The respondent's evidence was that, by volume, total sales of Finish All-in-1 and Finish Max-in-1 tablets combined exceed the total sales of Finish Quantum tablets (24.8 tonnes of Finish All-in-1 and Finish Max-in-1 versus 23.6 tonnes of Finish Quantum). 22 For the purposes of this interlocutory hearing, the primary significance of this evidence is that there is a dispute between the parties as to which Finish tablet or tablets is the "leading tablet" in the Australian market. 23 The respondent's evidence is that the data upon which it relied to identify Finish All-in-1 tablets as the "leading tablet" in the advertisement is 2014 market share data showing that the 1.12 kg box of 56 Finish All-in-1 lemon tablets is the largest selling product by volume. Although it is not entirely clear, the respondent may additionally have relied upon the fact that when the SKUs (stock keeping units) for all Finish All-in-1 and Finish Max-in-1 products are added together, the data shows that those products comprise the largest proportion of sales by volume (being the 24.8 tonnes mentioned above). 24 Mr Cobden SC submitted that it is artificial to suggest that the consumer has a preconception about what a leading tablet will be in this market. When viewing the advertisement, reasonable viewers will understand the "leading tablet" to be the tablet depicted in the advertisement. For the purposes of the interlocutory application, I accept that submission although, as appears below, in my view, there is an issue about what reasonable viewers would understand is depicted.

[13]

The "leading tablet" in the advertisement 25 The "leading tablet" is identified visually in the advertisement. It is not identified by name. 26 The respondent says that the tablet referred to as the "leading tablet" in the advertisement is the Finish All-in-1 tablet, and is recognisable as that tablet. The respondent says that viewers would recognise that the tablet is not Finish Quantum Max because the Finish Quantum Max tablet is visually distinct from the Finish All-in-1 tablet. 27 The appearances of the Finish Quantum Max, Finish Max-in-1 and Finish All-in-1 tablets are depicted in the schedule to these reasons, as well as the "leading tablet" shown in the advertisement. All are rectangular. All have blue and red colouring. All are similar in size. All have a red circular shape in the centre of the tablet. 28 Important differences are that the Finish Max-in-1 and Finish All-in-1 tablets are "hard pressed" tablets, while the Finish Quantum Max tablet has a plastic coating with separate blue and white compartments. The Finish Max-in-1 is surrounded by a dissolvable wrapper, while the Finish All-in-1 is not (it is sold in individual wrappers that must be removed before the tablet is placed in the dishwasher). 29 Plainly enough, the "leading tablet" in the advertisement strongly resembles the Finish Max-in-1 and Finish All-in-1 tablets. I accept that persons working in the industry would recognise instantly the difference between the hard pressed tablets and the Finish Quantum Max tablet. However, it is not obvious to me that reasonable viewers of the advertisement would necessarily or even probably recognise the "leading tablet" as one of those tablets rather than the Finish Quantum Max tablet. My preliminary view, at this interlocutory stage, is that it is quite likely that reasonable viewers would recognise the "leading tablet" in the advertisement as a Finish product, based on its colouring, its shape and the distinctive red ball in the centre of the tablet but would not draw the finer distinction between the hard pressed tablets and the Finish Quantum Max tablet. In expressing this view, I take into account the evidence of the "shape and colour" trade mark registration, which Mr Cobden SC argued supports the contention that there is a high degree of recognition among consumers of the hard pressed tablets. However, I also consider that dishwashing tablet design differences, if known, are quite likely not to be memorable to a reasonable viewer (being "casual but not overly attentive": cf Telstra Corp Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 at 523), watching the advertisement in the context of viewing other things, such that the viewer could be expected to differentiate the "leading tablet" in the advertisement from the Finish Quantum Max tablet. 30 In reaching this view, I am not assuming that reasonable viewers would necessarily understand the comparison in the advertisement to be comparing "like with like" in the sense of a comparison between the Fairy premium tablet and the Finish premium tablet. I accept, for the purposes of this application, Mr Cobden SC's submission that there is a high degree of substitutability between the various dishwashing tablets and that it is not self-evidently unfair to compare Fairy Platinum with Finish All-in-1. However, I do consider that reasonable viewers would not necessarily understand the comparison in the advertisement to be a comparison between Fairy Platinum and Finish All-in-1, particularly where Finish All-in-1 is not named in the advertisement and, as Mr Cobden SC submitted, consumers are unlikely to have any pre-conception about what is the "leading tablet".

[15]

Misleading or deceptive conduct and advertising 34 The applicable legal principles in respect of misleading or deceptive conduct in advertising are well-established. They are summarised in the recent decisions of Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2014) 317 ALR 73 ("ACCC v Coles") at [35]-[47] and Nicholas J in Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd [2015] FCA 227 ("Samsung v LG") at [60]-[76]. 35 A two-step analysis is required, addressing the following issues: (1) whether each or any of the pleaded representations is conveyed by the advertisement; and (2) whether each of the representations conveyed is false, misleading or deceptive or likely to mislead or deceive: Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35 at [200]. 36 The causing of confusion or questioning is insufficient; it is necessary to establish that the ordinary or reasonable consumer is likely to be led into error: ACCC v Coles at [39]. 37 It is necessary to view the conduct as a whole and in its proper context (ACCC v Coles at [41]). The question whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact that must be determined in light of the relevant surrounding circumstances: Samsung v LG per Nicholas J at [61], applying Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [109] per McHugh J. The dominant message will be of crucial importance: ACCC v Coles at [42], citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 ("TPG") at [45]. 38 In Samsung v LG at [73], Nicholas J referred to the following observations of Hill J in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc [1992] FCA 630; (1992) 38 FCR 1 at 50, albeit in the context of a newspaper advertisement: Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error. 39 The way in which a court is to review the advertisement the subject of proceedings to determine the representations made therein was the subject of the following caution by Lindgren J in Gillette Australia Pty Ltd v Energizer Australia Pty Ltd [2002] FCAFC 223; (2002) 193 ALR 629 ("Gillette") at [47]-[49]: I have carefully viewed the Modified Advertisement several times and tried to assess its likely effect on viewers. But, as I observed in the earlier Eveready case (at [38]), apart from the difference between a one-off viewing and repeated viewings, the circumstances in which a judge attends to a television commercial for the purposes of a case are not those in which members of the public do so. First, members of the public watch a commercial after and before viewing other things, rather than in isolation. Secondly, unlike the judge, they do not carefully view the commercial with a special interest in noting and memorizing its features. Thirdly, they view the commercial, not in the calm of chambers, but against a background of distractions, such as domestic activity, or simply a preoccupation with other more interesting or pressing concerns. Fourthly, usually they do not know in advance that the commercial is about to commence. I have tried to make allowances for these considerations. In assessing the likely effect the commercial would have on the viewing public, I have borne in mind the fact that the impressions conveyed and taken away are at once more and less than those conveyed by, and taken away from, a studied reading of the transcript [of the commercial]. A television commercial simultaneously stimulates the visual and auditory senses. There are subtleties of suggestion not available from a reading of the transcript. 40 In Reckitt Benckiser (Australia) Pty Ltd v SC Johnson & Son Pty Ltd [2004] FCA 1237 at [38], Conti J set out the following broad propositions which I do not understand to be contentious: (1) In identifying what may constitute relevant conduct, the packaging and advertising of the product must be viewed as a whole, rather than by endeavouring to ascertain in isolation the meaning of the critical words; (2) It is the first impression conveyed by the packaging or other advertising which creates the impact on a reader or viewer, rather than an analysis of the constituent parts of the advertised message; (3) The whole of the message the subject of a controversial promotion should be considered in context. Thus, where a false dominant impression is conveyed, its message will not be ameliorated by the accuracy which may be derived from a careful analysis of all the constituent parts of the whole; most readers or viewers would not make a close study for instance of the subject packaging or television advertisement, but would absorb the general thrust thereof.

[17]

Interlocutory injunctive relief 43 Section 234(1) of the Australian Consumer Law provides that if an application is made under s 232, the court may, if it considers it is desirable to do so, grant an interim injunction under the subsection pending the determination of the application. 44 In Warner-Lambert Co LLC v Apotex Pty Ltd [2014] FCAFC 59; (2014) 106 IPR 218 at [68]-[70], the Full Court set out the principles which govern applications for interlocutory relief in the following terms: …There are two inquiries that must be undertaken when determining whether an applicant should be granted an interlocutory injunction. The first relates to the strength of the applicant's claim to final relief. The second relates to the balance of convenience or, as it is sometimes expressed, the balance of the risk of doing an injustice by either granting or withholding the interlocutory relief sought. The principles to be applied in determining whether or not to grant interlocutory relief were considered by the High Court in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, including by Gummow and Hayne JJ at [65]-[72]. Gleeson CJ and Crennan J agreed at [19] with the explanation of the relevant principles in those paragraphs. In O'Neill Gummow and Hayne JJ stated at [65]: The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; [(1968) 118 CLR 618]. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued [at 622-623]: "The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [at 622]: "How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks." Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party's case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate. 45 The Court is required to make an assessment of the applicant's case for the purpose of deciding whether it has made out a prima facie case of sufficient strength to justify the grant of an interlocutory injunction to restrain the advertisements: cf Samsung v LG at [87]. 46 In considering whether to grant an interim injunction, the Court should also weigh up the real consequences to each party, taking into account both the public interests and the private interests involved: cf Trade Practices Commission v Santos Ltd (1992) 38 FCR 382 at 397. 47 In this case, there is a dispute between the parties as to whether the grant or refusal of an injunction would effectively resolve the commercial dispute between the parties, or determine the matter in favour of one of the parties. To the extent that the grant or refusal of interlocutory relief is going to have the practical consequence of deciding the applicant's claims for final relief, the applicant is required to demonstrate a relatively strong case: cf Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 ("Samsung FC") at [87]; Generic Health Pty Ltd v Otsuka Pharmaceutical Co., Ltd [2013] FCAFC 17; (2013) 296 ALR 50 per Emmett J at [26], Greenwood J at [253], and Bennett J at [121]-[128]. 48 I accept that the relief may be final to the extent that the respondent's ability to attract custom by the use of the advertisement would be lost for the duration of any interlocutory injunction: cf Telstra Corp Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 at 527. 49 The consideration of the balance of convenience involves a consideration of whether the likely harm to the applicant if no injunction is granted outweighs or is outweighed by the assessment of prejudice or harm to the respondent an injunction is granted (Samsung FC at [55], [62] and [66]). The question of whether damages will be an adequate remedy will ordinarily be considered as part of the balance of convenience (Samsung FC at [61]).

[25]

Are the representations conveyed false, misleading or deceptive or likely to mislead or deceive? 64 I am satisfied that, on the currently available evidence, that there is a serious question to be tried that the advertisement is false, misleading or deceptive or likely to mislead or deceive, at least in the following respects: (1) A reasonable interpretation of the advertisement is that it represents that the "leading tablet", being a Finish dishwashing tablet (but not necessarily Finish All-in-1) is able to clean effectively, without a pre-rinse of dirty dishes, when the testing evidence relied upon by the respondent to justify the advertisement does not have regard to the performance of the Finish Quantum Max product, and there is no evidence that the Finish Quantum Max product is unable to clean effectively, without a pre-rinse of dirty dishes; (2) A reasonable interpretation of the advertisement is that it represents that Fairy Platinum cleans better than a Finish dishwashing tablet (but not necessarily Finish All-in-1), when there is no currently before the Court no evidence that Fairy Platinum cleans better than Finish Quantum Max; (3) A reasonable interpretation of the advertisement is that it represents that 9 out of 10 Australian consumers agree that Fairy Platinum cleans better than a Finish dishwashing tablet, when there is no survey evidence to this effect; (4) If reasonable viewers do differentiate between the various Finish dishwashing tablets, a reasonable interpretation of the advertisement is that it represents that 9 out of 10 Australian consumers agree that Fairy Platinum cleans better than Finish Max-in-1 or Finish All-in-1, when there is no survey evidence to this effect. 65 As I understood the respondent's case, it did not contend that any of these representations was intended to be made, or could fairly be made. The respondent's testing evidence does not support any of these representations. 66 I also accept that, if reasonable viewers do differentiate between the various Finish dishwashing tablets, the advertisement may convey that Finish All-in-1 is the "leading tablet" and that there is a serious question to be tried about whether that representation is false, having regard to the evidence of sales by tablet and dollar value. 67 Concerning Finish Max-in-1, I note that there is an issue between the parties about whether its performance is identical to the Finish All-in-1 product. The respondent contends that the applicant itself has represented that the only difference is Finish Max-in-1's dissolvable wrapper. The applicant says that the Finish Max-in-1 contains "Glass Protection" ingredients. To the extent that reasonable viewers would understand the advertisement to refer to Finish Max-in-1, as opposed to Finish All-in-1, the current evidence suggests that the respondent would be entitled to rely upon testing of the Finish All-in-1 product to justify the advertisement's representations.

[27]

Balance of convenience and justice 73 In my view, the balance of convenience strongly favours the grant of an interim injunction. The most significant consideration is the public interest in preventing consumers from being misled by the advertisement, and consequently making purchasing decisions on the basis of misinformation. 74 The other significant consideration is the real risk to the applicant that the Finish brand may be unfairly tarnished by the advertisement. This is another factor weighing in favour of interim relief. 75 The respondent criticised the applicant's evidence on the balance of convenience as vague. I accept that the evidence does not presently provide any basis for quantifying the harm likely to be suffered by the applicant as a result of the broadcast but, in my view, it is obvious that some harm is likely if the applicant's strong prima facie case succeeds at a final hearing. 76 The respondent identified the following matters weighing against interim relief: (1) The removal of the advertisement from the air would impact on broader promotional campaigns the respondent is conducting with major supermarkets in Australia; (2) An injunction would harm the respondent's relationship with major retailers and media outlets and television stations; (3) The respondent will lose a significant amount of money if the pre-booked television spots for the broadcast of the advertisement are cancelled; (4) The respondent has no back-up advertisements available to run to replace the advertisement and it would take about ten days to prepare a revised version of the advertisement which would also be costly; (5) Without evidence that any viewer took the advertisement to mean what the applicant says, the Court is asked to remove the only current advertising for their only significant competitor. 77 I accept that an interlocutory injunction would have significant adverse impacts on the respondent. However, its losses arising from the costs of cancelling advertisements are quantifiable and are covered by the undertaking as to damages. As to the other likely impacts, as the respondent's submissions implicitly acknowledge, it would not be precluded from advertising Fairy Platinum. It has been aware of the applicant's claims since 10 July 2015 and has been able to plan since then against the contingency that an interlocutory injunction might be granted. 78 I do not accept that the respondent's position as the applicant's only significant competitor is a material consideration, particularly when I consider that the respondent would not be precluded from advertising Fairy Platinum in other ways, which do not give rise to the strong prima facie case established by the applicant. 79 The respondent submits that any assessment of damages would not be particularly complex in this case; the task of assessing damages on the undertaking would be more complex. In my view, there would be complexities in either of these assessment tasks. Mr Cobden SC referred to Telstra v SingTel [2007] FCA 824, in which the Court refused to grant an interlocutory injunction in a case of comparative advertising. I do not accept that the case is analogous. In Telstra, the Court did not find a prima facie case of misleading or deceptive conduct and so was not required to consider the balance of convenience. I note the Court's observations (at [17]) must be read in that context. Further, in addressing the balance of convenience, the Court noted that there were documentary records that would make it relatively easy to assess the impact of the relevant advertising campaign on the applicant. That does not apply to this case.

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (28)