San Remo Macaroni Company Pty Ltd v San Remo Gourmet Coffee Pty Ltd

Introduction 1 The applicant seeks interlocutory relief pending trial restraining the first respondent San Remo Gourmet Coffee Pty Ltd from using the name "San Remo" in its wholesale business of marketing and selling coffee products and in the retail business it carries on at 269 Charman Road, Cheltenham, Victoria. Initially interlocutory relief was also sought against the second respondent which purchased the retail business carried on under the name "San Remo Gourmet Coffee" at the premises at Shop 1, 113 Puckle Street, Moonee Ponds, Victoria from the first respondent on 20 June 2000. The applicant and the second respondent reached an accommodation and the application for interlocutory relief proceeded only against the first respondent.

Background 2 The applicant says it has developed and built up a substantial reputation in the name "San Remo" in relation to its business of manufacturing pasta products. The applicant manufactures and sells by way of wholesale a substantial and varied range of dry and fresh pasta products. The products are packaged in distinctive packaging which includes the "San Remo" name, a registered Australian trade mark incorporating the words "San Remo" and a device depicting two monks cooking or eating spaghetti. The packaging uses red and green colours. The applicant's use of its name and device is typically, but not always, in the following form: 3 The applicant's business commenced in 1936 but the "San Remo" name was not used as a brand until 1952. The applicant is registered as the proprietor of the following Australian trade marks: · the words "San Remo", registered in respect of pasta products, macaroni and spaghetti, (No 564652) registered from 3 October 1991; · an image of two monks cooking spaghetti with a saucepan and plate with the words "San Remo La Preferita", registered in respect of all goods in class 30 with the exception of coffee and macaroni, (No 203770) registered from 22 July 1966; · an image of two men tasting food with nameplate in rectangle, serrated side with the words "San Remo Fresh! The Pasta People Since 1936", registered in respect of all goods in class 30, particularly pasta, fresh pasta and pasta sauces, (No 626102) registered from 25 March 1994; · an image of two monks eating spaghetti with the words "La Preferita San Remo", registered in respect of coffee, (No 170700) registered from 21 November 1961. 4 The applicant sells its products nationally through major supermarket chains and independently owned stores. The applicant's products are available in virtually all supermarkets and other food stores in Victoria. In the financial year ended 30 June 2000, the value of products sold by the applicant bearing the San Remo brand name was $74.2 million, of which sales of 29.3% occurred in Victoria and Tasmania. 5 The applicant has developed a substantial marketing strategy based on the San Remo name, involving television and magazine advertising and supermarket promotional activity. The applicant says that the San Remo brand is the leading brand in the pasta market with a market share in excess of 40% of the national and the Victorian dry pasta markets. The applicant says that pasta is now a staple food of nearly every household in Australia and that over the period from 1987 to 2000 the dry pasta market trebled in volume. 6 The applicant's marketing strategy involves developing a strong association in the minds of consumers between pasta and pasta related products, such as between pasta and particular sauces. The applicant's promotional material seeks to use images to associate the elements of traditional Italian fare (made up of pasta and a sauce together with parmesan cheese, olive oil, wine and bread) pleasantly in the minds of consumers with what it calls the "pasta occasion" (which it describes as a relaxed family oriented occasion) and the name "San Remo". 7 The applicant has not, to date, marketed or sold coffee under, or by reference to, the name "San Remo". However, it contends that: "Coffee is a natural member of the set of products referred to as making up the 'pasta occasion'. It is a traditional Italian beverage and its consumption with pasta is a part of the 'pasta occasion' concept." The applicant says that coffee is a traditional accompaniment to an Italian meal. 8 The applicant first became aware of a coffee shop known as "San Remo Gourmet Coffee" at 269 Charman Road, Cheltenham in or about March 1999. At that time the applicant considered that the operation of this business was confined to the immediate locality and was not a sufficient threat to the applicant's business due to its localised nature. 9 In or about May 1999 the applicant became aware of a further "San Remo Gourmet Coffee" outlet at Shop 1, 113 Puckle Street, Moonee Ponds. It used the same logo or get up in relation to San Remo coffee as was used at the Cheltenham premises. The shops featured the words "San Remo Gourmet coffee" in a form different in style and layout from the manner in which the applicant applies the words "San Remo" to its products. The first respondent's use of the name "San Remo" is typically in the following form: 10 At the time the applicant became aware of these two retail outlets, it took no steps in relation to their use of the name "San Remo". 11 On 16 October 2000 as a result of a Freedom of Information request, the applicant's solicitors received a copy of an Examiner's Report in respect of an application made on 16 November 1998 by the first respondent to register the trade mark "San Remo Gourmet Coffee" in Australia. The report was dated 16 February 1999. The examiner said that the mark was not capable of distinguishing the first respondent's goods from the goods of other traders and that there were grounds for rejecting the application because the trade mark was substantially identical with or deceptively similar to three of the applicant's registered trade marks and was for similar goods. 12 In October 2000 the applicant became aware that the Moonee Ponds shop had been sold to the second Respondent, Café Coffee Pty Ltd. It had been re‑named "Café Remo" but it continued to use the name and products of the first respondent. 13 The applicant fears that any representation of the San Remo name other than by it will dilute and undermine the distinctiveness of the name in respect of which it has built up a significant investment. The applicant fears that the continued existence of the San Remo Gourmet Coffee name in the marketplace will derogate from the strong association created by the applicant in the minds of consumers between the name "San Remo" and pasta products. The applicant is concerned about products not under its control which could affect the standing of its brand name in the eyes of consumers. It says that any product recall in relation to the first respondent's products will impact on the applicant's business in Victoria. It also fears that the use of the San Remo brand name is likely to cause confusion with consumers and traders as to whether there is an affiliation between the first respondent and the applicant and that there is a risk that its standing in the market will be affected. 14 The business now carried on by the first respondent commenced in September 1981. Its principal activity was the wholesaling of freshly roasted coffee with some retail sales. It commenced using the name "San Remo Coffee" in 1987. In 1993 the predecessor of the first respondent transferred the business to the premises at 269 Charman Road, Cheltenham. The business was incorporated under the name "San Remo Gourmet Coffee Pty Ltd" in March 1994. A wholesale and a retail operation was carried on at the Cheltenham premises. The Moonee Ponds shop was opened in October 1997 as a café/beanery and traded under the name "San Remo Gourmet Coffee". The business was sold on 20 June 2000 to the second respondent who changed the name of the business from "San Remo Gourmet Coffee" to "Café Remo" but continues to sell the first respondent's coffee and to use materials which display the name "San Remo Gourmet Coffee". 15 The first respondent's business is approximately 60% wholesale and 40% retail with an annual turnover of approximately $750,000. It has about 120 wholesale customers, the majority of whom are based in metropolitan Melbourne. The first respondent supplies products including freshly roasted coffee beans, chocolate, sugar, coffee syrups, crockery, umbrellas and street barriers as well as espresso equipment. 16 The first respondent delivers its merchandise in two vans which display the first respondent's logo. The staff in the Cheltenham shop wear shirts and aprons printed with the first respondent's logo and they use cups printed with the first respondent's logo. The retail outlet displays the first respondent's logo as do items such as cups, mugs, carry bags and packets of coffee. The bags in which the first respondent packs its coffee have red sides. In other places where the words "San Remo Gourmet coffee" are displayed, the colour of the words are black with the exception of the "m" in "Remo" which is red. The words "San Remo" are in upper case except for the "m" which is in lower case. 17 The first respondent estimates that if it were compelled to change its name it would incur losses and costs of the order of no less than $80,000 and a loss of the goodwill which it has built up in connection with its name over the past thirteen years. 18 Mr Paul Caligiore, a director of the first respondent, challenged the applicant's assertion that the association of coffee with pasta is part of "the pasta occasion" concept and that coffee is a traditional accompaniment to the Italian meal. Mr Caligiore said it is not traditional to serve hot beverage with pasta. 19 Mr Caligiore said that it is not the present intention of the first respondent to operate any retail outlet in Victoria, other than at the Cheltenham premises. At the hearing, counsel for the first respondent offered an undertaking on behalf of the first respondent, which he said remained open, that the first respondent would not sell the Cheltenham retail business or open any other retail outlet until the hearing and determination of the proceeding.