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[2002] FCAFC 157
Federal Court of Australia (Full Court)
2002-07-01
Original judgment source is linked above.
Background 19 The first appellant ("Sydneywide") is an importer and distributor of various kinds of non-alcoholic drinks. The second appellant ("Mr Klimis") is the managing director of Sydneywide. He and his brother are equal shareholders in that company. The first respondent ("Red Bull Australia") imports and supplies for sale in Australia a product known as "Red Bull" energy drink. The second respondent ("Red Bull GmbH") manufactures that product in Austria and supplies it internationally. It is supplied in cans. Save where it is necessary to distinguish them, both respondents will hereafter be collectively described as "Red Bull". In the course of its business, Sydneywide has, since at least February 2001, imported from New Zealand, advertised, distributed and sold in Australia an energy drink known as "LiveWire". The product is supplied in cans and bottles. Red Bull asserts that the get-up of the LiveWire product is substantially identical with, and deceptively similar to that of the Red Bull product and that Sydneywide's actions both contravened ss 52 and 53 of the Trade Practices Act 1974 (Cth) (the "Act") and constituted passing off. It also claims that Mr Klimis has been knowingly concerned in the alleged breaches of ss 52 and 53 and is personally liable for the passing off. 20 At first instance Conti J upheld Red Bull's claims that Sydneywide's conduct in connection with the distribution of LiveWire in cans contravened s 52 of the Act and constituted passing off. His Honour dismissed the claims concerning the bottled product and found it unnecessary to deal with s 53 of the Act. His Honour also found that Mr Klimis was knowingly concerned in Sydneywide's breach of s 52 but was not a party to the passing off. On 18 October 2001, his Honour ordered that: "1. the First Respondent by itself its servants and agents be restrained from selling, offering or exposing for sale, distributing and/or marketing in Australia any energy drink in any can displaying the packaging get-up of the can depicted in the Annexure to these Orders or any get-up substantially identical with or deceptively similar thereto; and 2. the Second Respondent be restrained from being knowingly concerned in or party to directly or indirectly, any conduct prohibited by Order 1 above." 21 The annexure to the order contained photographs of a LiveWire can. Both appellants appeal against the findings and consequential orders against them. Red Bull cross-appeals against his Honour's decision concerning the bottled product and the finding that Mr Klimis was not a party to the passing off.
Findings 22 Conti J found that Red Bull had been marketing its product internationally since 1987 and that it commenced marketing it in Australia in 1997. The product was first offered for sale in Australia in about March 1999. It is sold in cylindrical cans having a capacity of 250 mls. "LiveWire" is supplied in cans of the same shape and size and in bottles having a 330 ml capacity. Annexed to this judgment are photographs of a Red Bull can, a LiveWire can and a LiveWire bottle. Unfortunately, the colours are quite faded as a result of technological limitations. 23 In the following passage, Conti J identified certain matters which were common ground, namely that: "(i) Red Bull Australia, which is incorporated in Victoria, is a partially owned subsidiary of Red Bull GmbH; (ii) The Red Bull Group of Companies is one of the largest energy drink manufacturers in the world; (iii) The Red Bull product is manufactured in Austria; (iv) The Red Bull product is imported from New Zealand for sale in Australia under the provisions of the Trans Tasman Mutual Recognition Agreement made between Australia and New Zealand; (v) The Red Bull product is sold in Australia in a slim-line 250ml can incorporating the Red Bull get-up; (vi) Private consumption of the Red Bull product is allowed under the provisions of the Imported Food Control Act 1992 (Cth); (vii) The Red Bull companies are involved in the sponsorship of leading athletes; (viii) The Red Bull product is sold in retail outlets which include supermarkets, convenience stores, service stations, cafes, restaurants, night clubs and bars; (ix) The Red Bull product is sold in convenience stores and supermarkets and is presented thereby to consumers either unchilled on the shelf, or in refrigerators; and (x) Red Bull provides fridges known as barrel fridges, and bar fridges incorporating the Red Bull get-up, to certain retail outlets." 24 The significance of pars (iv) and (vi) is not clear. The agreementreferred to in par (iv) seems to have made it advantageous to import energy drinks from New Zealand rather than from Austria. The legislation referred to in par (vi) may explain the delay between promotion of the Red Bull product and sale thereof. These matters are of no great importance for present purposes. 25 The Red Bull product is described as a "carbonated taurine energy drink" which includes various ingredients. It is marketed in fifty-five countries including Australia. Identical packaging is used world-wide. Substantial amounts of money have been spent on promotional activities since 1997, and it is anticipated that this will continue. The marketing campaign focuses upon the slimline 250 ml can. This can has a smaller diameter than cans widely used for other kinds of soft drink. It is widely used for energy drinks. It is common for the drink to be consumed directly from the can, a practice which is encouraged by Red Bull promotions. Marketing strategy in Australia and world-wide has four core aspects, namely:
THE NOTICE OF APPEAL 48 The notice of appeal as filed was discursive (to say the least) and argumentative. At our request, counsel have submitted further, more limited grounds. The appellants have abandoned paragraphs 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22, 27, 28, 31 and 32 of the notice of appeal. Unfortunately there are two paragraphs identified as 32, one at the foot of p 8 and top of p 9, and the other at the foot of p 9 and top of p 10. The former relates to his Honour's reliance upon certain identified authorities; the latter relates to the order as to costs. It seems that both paragraphs are abandoned. The appellants continue to rely upon paragraphs 2, 3, 4, 5, 6, 7, 8, 9, 19, 23, 24, 25, 26, 29, 30, 33 and 34 of the notice of appeal and make a number of other assertions in the revised grounds, apparently in summary of their written and oral submissions. 49 Notwithstanding the appellants' very welcome abandonment of at least some of the grounds contained in the notice of appeal, it remains very difficult to identify the discrete issues which arise for determination. The so-called grounds remain a confused mixture of challenges to ultimate findings of fact and to intermediate findings, arguments as to whether or not there is evidence to support particular findings and disputes about the weight allegedly attributed by his Honour to various aspects of the evidence. Some of the grounds of appeal purport to refer to findings which his Honour may or may not have made, using the formula "if his Honour did so find". This approach to the drafting of a notice of appeal is quite unsatisfactory. It creates the impression that the appellants are, in reality, inviting the court to re-hear the matter ab initio. Indeed, much of what was said in oral argument suggested as much. It is unrealistic to expect an appellate court to revisit the evidence at large as is invited by the grounds of appeal, even in their ultimate, narrower form. These difficulties lead us to say something about the nature of an appeal to this Court.
Ambit of the Right of appeal 50 In the course of argument we drew counsels' attention to the decision of this Court in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 in which Allsop J (Drummond and Mansfield JJ concurring) discussed exhaustively the authorities concerning the nature of an appeal pursuant to the Federal Court of Australia Act 1976 (Cth). His Honour commenced by referring to the reasons of Beaumont and Lee JJ in Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 at 369 where their Honours said: "However, the hearing of an appeal in this Court is neither a trial de novo nor a trial of the case afresh on the record … and the court is not obliged to proceed to make new findings of fact on all relevant issues and discharge the judgment appealed from if those findings differ from those of the trial judge and do not support the judgment. The court must be satisfied that the judgment of the trial judge is erroneous and it may be so satisfied if it reaches the conclusion that the trial judge failed to draw inferences that should have been drawn from the facts established by the evidence. The court is unlikely to be so satisfied if all that is shown is that the trial judge made a choice between competing inferences, being a choice the court may not have been inclined to make but not a choice the trial judge should not have made. Where the majority judgment in Warren v Coombes … states that an appellate court must not shrink from giving effect to its own conclusion, it is speaking of a conclusion that the decision of the trial judge is wrong and that it should be corrected. …" Allsop J referred to various occasions on which that decision has been followed and to subsequent decisions of the High Court. Having concluded that an appeal is by way of re-hearing, his Honour continued at [21]: "However, this conclusion does not alter the need to show error on appeal. In Hamsher Beaumont J and Lee J identified the need for the demonstration of error in the trial judge's findings or conclusions and they expressed the view that the statements in Warren v Coombes … (dealing with an appeal by way of rehearing) that an appellate court must not shrink from giving effect to its own conclusion were premised on a conclusion that the decision of the trial judge was wrong and should be corrected." 51 His Honour then referred to numerous decisions including the decision of the Full Court in Cabal v United Mexican States (2001) 108 FCR 311 at [223] and [224] where the Court said: "[223] … In general on an appeal by way of rehearing from a judge sitting without a jury an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge. However once having reached its own conclusion it will not shrink from giving effect to it. [224] Notwithstanding the fact that the learned primary judge's review was conducted on the papers, and without any opportunity to consider the demeanour of the witnesses, the weight to be accorded to the evidence of the experts was primarily a matter for his Honour to determine. This Court can consider whether he fell into appealable error in that regard but it will not approach that evidence as though this were a rehearing de novo in which his Honour's views count for nought. If, after giving full weight to his Honour's views, we are persuaded that the conclusions which he reached were erroneous we must set aside his finding of fact. We cannot however simply substitute for his Honour's findings of fact those findings which we would have made had we been the judges on review who determined this matter at first instance." 52 Allsop J then continued at [24]: [24] What is error in any given case depends, of course, not only on the evidence, but also on the nature of the findings or conclusions made by the primary judge. The demonstration of error may not be straight-forward where findings or conclusions involve elements of fact, degree, opinion or judgment or when the findings or conclusions in question can be seen as made with the advantage of hearing the evidence in its entirety, presented as it unfolded at the hearing with the opportunity over the course of the hearing and adjournments for reflection and mature contemporaneous consideration and assessment, in particular in a long and complex hearing … . [25] This is not to elevate ordinary factual findings to the protected position of those based on credit, but it is to make clear, first, the advantages of the trial judge and, secondly, the need for demonstration of error. The inability to identify error may arise in part from the unwillingness of the appeal court to be persuaded that it is in as good a position as the trial judge to deal with the issues, because of the kinds of considerations referred to in [24] above. Or, it may be that the nature of the issue is one such that (though not a discretion) there cannot be said to be truly one correct answer. In such cases the availability of a different view, indeed even perhaps the preference of the appeal court for a different view, may not be alone sufficient … . 53 Allsop J continued at [28] et seq: "[28] … First, the appeal court must make up its own mind on the facts. Secondly, that task can only be done in the light of, and taking into account and weighing, the judgment appealed from. In this process, the advantages of the trial judge may reside in the credibility of witnesses, in which case departure is only justified in circumstances described in [various authorities]. The advantages of the trial judge may be more subtle and imprecise, yet real, not giving rise to a protection of the nature accorded credibility findings, but, nevertheless, being highly relevant to the assessment of the weight to be accorded the views of the trial judge. Thirdly, while the appeal court has a duty to make up its own mind, it does not deal with the case as if trying it at first instance. Rather, in its examination of the material, it accords proper weight to the trial judge's views. Fourthly, in that process of considering the facts for itself and giving weight to the views of, and advantages held by, the trial judge, if a choice arises between conclusions equally open and finely balanced and where there is, or can be, no preponderance of view, the conclusion of error is not necessarily arrived at merely because of a preference of view of the appeal court for some fact or facts contrary to the view reached by the trial judge. [29] The degree of tolerance for any such divergence in any particular case will often be a product of the perceived advantage enjoyed by the trial judge. Sometimes, where matters of impression and judgment are concerned, giving 'full weight' or 'particular weight' to the views of the trial judge might be seen to shade into a degree of tolerance of divergence of views … . In such cases the personal impression or conception of the trial judge may be one not fully able to be expressed or reasoned … . However, as Hill J said … 'giving full weight' to the view appealed from should not be taken too far. The appeal court must come to the view that the trial judge was wrong in order to interfere. Even if the question is one of impression or judgment, a sufficiently clear difference of opinion may necessitate that conclusion. [30] From these principles of how the appeal court should undertake its task, the following can be said about the approach of those conducting an appeal. The proper approach is not to ask the court to survey all the evidence, directed by the otherwise unassailable findings on credit, and to ask it to arrive at its own conclusions, without 'essaying the necessary task of positively demonstrating that the trial judge was wrong': … . It is not appropriate to treat the appeal as though it were a new trial on the evidence and constrained merely by the unassailable factual findings. Error must be demonstrated. … The views and conclusions of the trial judge ultimately have to be shown to be wrong. They should not be laid to one side and a simple re-argument of the case take place." 54 We gratefully adopt these observations. They will inform our approach to the resolution of this appeal.
The causes of action 55 Before turning to the grounds of appeal, it is appropriate that we identify the causes of action with which his Honour was concerned. As to passing off, Lord Diplock said in Erven Warnink Besloten Vennootschap v J Townsend & Sons (Hull) Ltd [1979] AC 731 at 742 that it is: "… possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so." 56 In the same case, at 755 - 756, Lord Fraser of Tullybelton said: It is essential for the plaintiff in a passing off action to show at least the following facts:- (1) that his business consists of, or includes, selling in England a class of goods to which the particular trade name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached. Provided these conditions are satisfied, as they are in the present case, I consider that the plaintiff is entitled to protect himself by a passing off action. 57 These approaches have not escaped criticism. See Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 355 - 356 (per Gummow J). In Reddaway v Bentham Hemp-Spinning Company [1892] 2 QB at 639 the plaintiff asserted that the description "camel-hair belting" was used in the trade to describe its product. The defendant sold a similar product as "The Bentham Camel-Hair Belting". Lindley LJ, at 643, quoted with approval the following passage from Ford v Foster (1872) LR 7 Ch App 611 at 628 (per Mellish LJ): "I think the test must be, whether the use of it by other persons is still calculated to deceive the public, whether it may still have the effect of inducing the public to buy goods not made by the original owner of the trade mark as if they were his goods. If the mark has come to be so public and in such universal use that nobody can be deceived by the use of it, and can be induced from the use of it to believe that he is buying the goods of the original trader, it appears to me, however hard to some extent it may appear on the trader, yet practically, as the right to a trade mark is simply a right to prevent the trader from being cheated by other person's goods being sold as his goods through the fraudulent use of the trade mark, the right to the trade mark must be gone." 58 At 644 of Reddaway, Lindley LJ continued: "Cave, J., gave judgment for the defendants on the ground that the plaintiffs had not proved any instance in which a purchaser had been misled. If this action had been an action for damages only, Cave, J., would perhaps have been right. If there had been proof of an intent by the defendants to deceive and of a sale with that intent, deception in fact would be inferred, and the plaintiffs would have been entitled to judgment even at law although only for nominal damages … ." 59 Lopes LJ said at 646: "If a person sells his goods with the intention of deceiving purchasers and of inducing them to believe that his goods are the goods of another, this is actionable, and entitles the latter to recover nominal damages even though no special damage is proved. If an article has acquired a distinctive meaning in the trade connecting it with a particular person's manufacture, and another so advertises or describes or makes up his goods as to lead purchasers to believe, or to create a probability of their believing, that they are buying the goods of the former, when in fact they are buying the goods of the latter (and this though there is no intention to deceive and no special damage proved), a Court of Equity will grant relief by way of injunction. The fraudulent intention is essential in the first case; it is unnecessary in the second." 60 Gummow J explained much of the above in Conagra, but we need not deal further with those problems. In TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43, the Full Court said at [25]: "In Reckitt & Coleman Products Ltd v Borden Inc … Lord Oliver expressed a similar idea when he listed the three elements that have to be demonstrated in a passing off action: (1) that the trader's get-up, including any brand name, is recognized by the public as distinctive, specifically of the plaintiff's goods; (2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff's goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, eg by means of a brand name which is in fact the plaintiff's); (3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the course [sic] of the defendant's goods is the same as the source of those offered by the plaintiff." 61 In Campoma Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [109] the High Court said: "The tort of passing off is but one of the greatly differing contexts in which the courts have been called on to define and identify the nature of goodwill. The injuries against which the goodwill is protected in a passing off suit are not limited to diversion of sales by any representations that the goods or services of the defendant are those of the plaintiff. … In more recent times there has been development both in the nature of the 'goodwill' involved in passing-off actions and in the range of conduct which will be restrained. In Mooregate Tobacco, Deane J spoke with evident approval of: 'the adaptation of the traditional doctrine of passing off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others.'" 62 Two important points emerge from these cases. Firstly, there is no requirement that there be an actual, subjective intention to mislead. See also BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1977) 51 ALJR 254 at 258 (per Gibbs J). Of course, that does not detract from the evidentiary value of deliberate borrowing as discussed in Australian Woollen Mills. Secondly, the misrepresentation need only be likely to lead the public to believe that the goods are those of the plaintiff. There is no requirement that actual deception be proven. This is inherent in the proposition that where the action is brought quia timet, the plaintiff need only show that damage is likely. We make these points because in some aspects of the submissions they appeared to be overlooked. 63 As to the s 52 claim, subs 52(1) of the Act provides: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." 64 Part VI of the Act provides for enforcement and remedies. Section 80 provides for injunctive relief, and s 82 provides for damages at the suit of an injured party. An injunction may be obtained pursuant to s 80, not only against a person who actually contravenes the Act but also against any person who "in any way, directly or indirectly, (is) knowingly concerned in, or party to, the contravention …". Pursuant to s 82 damages may be recovered against anybody contravening the section or any person who is involved in such a contravention. Pursuant to s 75B a person is involved in a contravention if he or she "has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention …". 65 The major issues at the trial appear to have been:
Grounds of appeal 66 We will deal with the grounds of appeal under the following headings:
Pleading points 67 Two pleading points were taken on appeal. The first appears in par 5 of the notice of appeal, but it is necessary also to refer to par 4. Those paragraphs assert: "4. His Honour erred in finding that similarities between the so-called "gestalts" of Red Bull and LIVE WIRE comprising: "(i) the almost identical red, blue and silver colour scheme of the packaging of both products; (ii) the similar ingredient platforms of both products; (iii) the similar design and layout of the front panels for both products, each incorporating a diagonal thrust element counter-balanced by a horizontal lime element; (iv) identical product container designs, being the distinctive 250 ml cylinder can; and (v) an almost identical positioning of both products in the minds of the target market, each conveying associations of 'youth, energy, vitality, strength and the like', due to their colour, packaging and labelling", were relevant to and/or determinative of the inquiry into whether the first appellant made the necessary misrepresentation for the purpose of passing off, or engaged in conduct in breach of the provisions of section 52 of the Trade Practices Act (s 52), and in particular erred in finding that there was any relevance at all in the aforesaid considerations (ii), (iv), and (v). 5. In relying upon the aforesaid "gestalt" His Honour erred in going beyond the respondents' pleaded case that the relevant misrepresentation was made because of alleged confusing or deceptive similarity between the LIVE WIRE get up, as pleaded, and the Red Bull get up, as pleaded." 68 Paragraph 4 raises a ground of appeal unrelated to the pleading point raised in par 5. We will return to that ground at a later stage. However the point raised in par 5 can be understood only in the context of par 4. This is because the "aforesaid gestalt" is presumably that described in par 4. Paragraphs 5 - 11 of the amended statement of claim are as follows: "5. The second applicant and its predecessors in title have since about 1987 manufactured energy drink products sold under and by reference to the name and trade mark RED BULL. 6. The first applicant is, and has been since in or about March 1999, the importer and supplier for sale in Australia of RED BULL energy drinks ("the applicants' product"). 7. The applicants' product has been extensively advertised, promoted and supplied: (a) internationally since 1987; and (b) in Australia since about March 1999. 8. The packaging of the applicants' product includes the following elements: - blue and silver background with a central element in red; - a diagonal line slashed across the face of the can; - large blue and silver rhomboid shapes; and - a horizontal line across the centre of the can (the "RED BULL get-up"). Particulars The RED BULL get-up appears on exhibit PD-4 to the affidavit of Paul Devereux sworn 6 April 2001 in these proceedings. 9. The RED BULL get-up is and has been visible and prominent: (a) in the advertising and promotion carried out by the applicants in relation to the applicants' product; and (b) when the applicants' product has been displayed for sale internationally and in Australia. 10. By reason of the matters set out in paragraphs 5 to 9 the applicants have established substantial goodwill and reputation in each of the elements of the RED BULL get-up and any combination of those elements. 11. By reason of the matters pleaded in paragraphs 5 to 9, the importation, advertising, promotion or sale in Australia of energy drink products incorporating the RED BULL get-up or a combination of its elements, signifies, or is likely to signify, to persons in Australia that such products are made by or with the licence or approval of the applicants." 69 Sydneywide's complaint appears to be that the concept of gestalt (as described in par 4 of the notice of appeal) goes beyond the features of the packaging of the Red Bull product referred to in par 8 of the statement of claim. The matters referred to in subpars 4(i) and (iii) of the notice of appeal clearly are within the case as there pleaded. Subparagraphs 4(ii), (iv) and (v) are the focus of this criticism. The various matters referred to in subpars 4(i) - 4(v) of the notice of appeal are extracted from the summary of Dr Beaton's evidence which appears at [58] in the judgment. The appellants do not argue that the paragraph inaccurately reflects Dr Beaton's evidence. Their criticism is that it does not reflect the case as pleaded. However no objection was taken at the trial to Dr Beaton's evidence. We therefore infer that the trial was conducted upon the basis that these matters were in issue. In B M Auto Sales (supra) at 258, Gibbs J said: "The evidence in the present case left no doubt that the appellants persisted in the use of the name with full knowledge that it had become distinctive of the respondent's business and that the use of the name was calculated to deceive. Although this was not expressly alleged in the statement of claim, the respondent's case on this issue was clearly made out by evidence to which the appellant did not object at the trial." 70 Obviously, it is the second sentence which is presently relevant. If Dr Beaton's evidence as to the concept of gestalt took the Red Bull case beyond the elements of get-up pleaded in the statement of claim, then such broadening was implicitly accepted by the appellants in light of their failure to object. In any event, we consider that this criticism reflects the appellants' misunderstanding of Dr Beaton's evidence and his Honour's use of it. We will return to that matter at a later stage. There is no substance in this ground of appeal. 71 The second pleading point appears in subpar 4(g) of the appellants' revised grounds of appeal as follows: "His Honour erred in treating a case based on a half view or back view of the appellant's product as open on the pleadings." 72 This submission relates to certain references in his Honour's reasons to the risk of confusion where the product name is not visible to a potential purchaser or is partially obscured. It is important to keep in mind that both products are supplied in cylindrical cans. Obviously enough, that shape makes it virtually impossible for an observer to see the whole of the curved surface of the can at any one time, at least in the absence of a mirror. Sydneywide, in its defence, drew attention to the presence of the Red Bull brand name, other aspects of the Red Bull get-up and to the distinctive aspects of its own get-up, including the brand name, clearly demonstrating an intention to rely upon these distinctions in answer to the Red Bull claims. The validity or otherwise of such a response could hardly be assessed other than by reference to the opportunity which a potential purchaser would have to observe those distinctions. For that reason alone, we would have thought that this ground of appeal is without merit. 73 However a consideration of the evidence led at the trial, again apparently without objection, puts the matter beyond doubt. There was obviously substantial evidence from the experts as to the way in which a customer would go about selecting a product of this kind and of the length of time likely to be consumed in so doing. Such evidence was relevant to the issue of opportunity to identify distinctions between one product and the other. Further, it was common ground that Red Bull supplied refrigerators to retailers, including one which is described as a "barrel fridge". There are photographs of such a facility in the appeal book. It has the outer appearance of a Red Bull can but is, of course, much bigger. A brochure appears at AB 339. It gives the dimensions of the barrel fridge as 440 mm in diameter and 840 mm in height. Fairly clearly, the product must be removed from the top of such a refrigerator. Once again, it is most unlikely that a potential purchaser would be able to see the whole of any outside surface prior to doing so. One suspects that Red Bull would prefer that competing products were not stored in Red Bull refrigerators, but Ms Carswell's evidence suggests that such a hope will not always be realized. 74 A realistic approach to the likelihood of confusion between the Red Bull product and LiveWire could not assume that a prospective purchaser would carefully examine the can before purchase. The expert evidence, experience and common sense suggest that relatively little attention would be given to the choice of the particular item for removal. We consider that his Honour, in considering the possibility of restricted visibility, was merely describing these aspects of the case in a conveniently abbreviated way. In so doing, his Honour was responding to the major issue raised by Sydneywide in its defence.
Trial Judge's approach 75 Paragraph 30 of the notice of appeal is as follows: "His Honour erred in approaching the determination of the passing off issue, as also the issue under s 52, by first determining an alleged likelihood of deception or confusion with reference to part only of the get up of the competing product (firstly with reference to the so-called "gestalt", and secondly with reference to only two elements of get-up - the "steep line or thrust, which runs diagonally" and the "colour combinations"), and then, having found a likelihood of deception or confusion based upon only part of the get up, considering whether other important elements of the get up, and in particular the distinctive word and other trade marks present on the goods, disturb his finding of confusing or deceptive similarity." 76 His Honour's ultimate conclusions were primarily based upon:
Dr Beaton's evidence 81 The appellants submit that Dr Beaton's evidence was inadmissible or of no weight because it went to the very issue which the learned trial Judge was obliged to determine and/or because it did not identify empirical material upon which opinions expressed therein may have been based. No objection was taken at the trial to the admissibility of Dr Beaton's evidence. As the trial was conducted upon affidavit, the appellants had advance access to that evidence. They chose to respond to it, using Ms Strachan as their expert. She responded in detail to Dr Beaton's affidavit, and he replied. The parties conducted the case upon the basis that such "expert" evidence was relevant and admissible. It would be curious indeed if either side could now successfully challenge his Honour's reliance upon it. Some might say that such an outcome would demonstrate serious shortcomings in the legal process. 82 It cannot be seriously suggested that marketing (including the mechanics and effects of advertising) is not an area of expert study. The very large amounts of money notoriously spent on advertising make such a proposition unlikely. Dr Beaton's curriculum vitae demonstrates that marketing is an organized area of study. In par 2 of his curriculum vitae (AB 576) he says: "As part of my Masters of business administration at the University of Witwatersrand, I studied the subject organizational behaviour which subject is based on an understanding of how human beings behave in various settings. These settings include, for example, the underpinnings of marketing including an analysis of how consumers behave in response to the marketing stimuli of marketers and their competitors." 83 He has had substantial experience in the commercial world with advertising, packaging and other marketing issues and has done research in the area. The evidence demonstrates an area of specialized knowledge and Dr Beaton's training and experience in that area. The close relationship between such expertise and the matters in issue in this case is obvious. That is not to say that every question asked in this case was necessarily properly put, but that was a matter for objection at the time. That both parties led evidence of this kind strongly suggests agreement that the matter was appropriate for expert evidence. We see no reason to doubt that this was the case. If there was any point to be taken, it ought to have been taken at the trial. It cannot be said that it makes no difference that it is made now. It may well be that had it been asserted at the trial that this was not an area for expert evidence, further evidence could have been led from the witnesses or others, disclosing the full extent of study in this area. Of course, the ultimate factual issues were for the Court to determine by reference to the evidence. 84 As to the suggestion that Dr Beaton's report was in some way inadmissible because of the alleged absence of empirical justification for some of the opinions, the appellants rely upon the following decisions:
Generic colours and use of similar colours by competitors 110 In the amended grounds of appeal the appellants assert that Conti J erred in failing to pay any, or any sufficient regard to "the proximity in get-up" of the Red Eye and Smart Drink products. The argument appears to be either that the common colours of the Red Bull and LiveWire get-ups are generic to the energy drinks market or that use of such colours is so widespread that it is impossible to assert that they are distinctive of the Red Bull product to the exclusion of other products, in particular LiveWire. His Honour found that four of the products available in the marketplace contained all three colours: Red Bull, LiveWire, Smart Drink and Red Eye Power. A survey conducted in December 2000 demonstrated that Smart Drink and Red Eye Power enjoyed very limited market share compared to Red Bull and the other market leader, the "V" drinks. In those circumstances, it cannot be said that the combination of blue, silver and red is generic to products in the energy drinks market. 111 The existence of other minor players trading under similar colours might, however, reduce the likelihood that a potential purchaser would assume that such colour combination indicated the Red Bull product or a product from the same source. This is very much a question of fact. Once again, relative market share would be a relevant consideration, as would differences in the various get-ups. The Red Eye Power get-up is that of a silver can with red and blue markings. The Smart Drink can appears as a blue can with silver and red markings. On the other hand, the Red Bull product appears to be particoloured, by which we mean that the can appears to be coloured blue and silver rather than either blue or silver. Of course, the matter is complicated by the other markings. The LiveWire product is closer in appearance to the Smart Drink product than is the Red Bull product, in the sense that there is rather more blue and less silver on the LiveWire can than on the Red Bull can. However there is rather more silver on the LiveWire can than on the Smart Drink can. More importantly, the LiveWire product and the Red Bull product both display the right-to-left diagonal thrust upon which his Honour placed substantial weight. It does not appear on the Smart Drink can. There is an elongated, silver triangle on the front of that can, with one side of the triangle running from top to the bottom of the can and in a right-to-left direction. However the overall effect is of a triangle rather than of a diagonal thrust. 112 The appellants' criticism is that his Honour did not have any, or any sufficient regard to these matters. Conti J was clearly aware of the existence of the Red Eye and Smart Drink brands and dealt with them (and other products) in his assessment of the evidence of the two experts at [52]. Ms Strachan considered that other brands and their get-ups undermined the assertion that the get-up of the Red Bull product was distinctive in the marketplace. Dr Beaton disagreed with this assertion. His Honour dealt with this difference of opinion and, as in other respects, preferred the views of Dr Beaton. However he also appears to have conducted his own comparison of the other get-ups. We suspect that the appellants' real criticism is that his Honour did not again refer to the presence in the marketplace of these other brands in giving reasons for his ultimate findings. It is most unlikely that he overlooked the matter in view of his detailed consideration of it at an earlier stage. We see no merit in this criticism.
Ms Carswell's evidence 113 Ms Carswell had met Mr Devereux, the Corporate Projects Manager for Red Bull, through a mutual friend and had formed the erroneous impression, based on discussions with him, that the Red Bull product was manufactured in New Zealand. She said that in 2001 she attended the Volume Plus Service Station on Windsor Road at Vineyard and noticed a Red Bull barrel fridge close to the counter at the front of the store. It was half-filled with energy drink cans and half-filled with energy drink bottles. She selected an energy drink bottle which was coloured blue and silver with a diagonal line across the face. There was red text in the centre with the words "LiveWire". She concluded that the drink was made by, or associated with Red Bull because the colours and design were similar to the colours and design of the Red Bull can. She inferred that the different name had been used because the product was in a bottle, not a can. She read the label on the back of the bottle which informed her that LiveWire was made in New Zealand. This confirmed her view that it was associated with Red Bull. She passed this information on to the mutual friend who had introduced her to Mr Devereux. In her oral evidence she conceded that she had erred in identifying the outlet at which she had seen the bottle. There are apparently a number of service stations in close proximity in the relevant area. On the day in question Ms Carswell went to one establishment in order to use the toilet facilities but then had to go to another as the facilities at the first were not in operation. This led to confusion in identifying the relevant service station. 114 Conti J seems to have misapprehended two aspects of this evidence. Firstly, he thought that Ms Carswell had removed a LiveWire can (rather than a bottle) from the barrel fridge. Secondly, he understood her to have done so in the course of seeking to buy a can of the Red Bull product. It is not clear whether she had such an intention or whether she was merely interested in the Red Bull product as a result of her previous association with Mr Devereux. There is nothing in her affidavit to suggest that she noticed anything about the colour of the bottle before removing it from the refrigerator. We reject the appellants' submission that her evidence implied that she had identified the brand name "LiveWire" before selecting the bottle. Of course, the refrigerator itself bore the Red Bull get-up. In cross-examination she appears to have conceded that this fact may also have contributed to her opinion that the product was associated with Red Bull. 115 The appellants submit that his Honour's misunderstanding of the evidence itself undermines the ultimate conclusions reached in the case. It is, we think, relatively clear that Conti J did not place great weight upon Ms Carswell's evidence, although he expressly declined to discount it entirely. At [62], after setting out his understanding of her evidence, his Honour observed that it was "of a somewhat peripheral kind". He also referred to a passage in Australian Woollen Mills at658 where Dixon and McTiernan JJ said that, "… [e]vidence of an actual case of deception, if forthcoming, is of great weight …". That reference suggests that his Honour saw Ms Carswell's evidence as "evidence of an actual case of deception". As we have previously pointed out, nothing in her evidence suggests that she had identified any physical characteristic of the bottle as being similar to the Red Bull product prior to removing it from the refrigerator. Rather, her evidence suggests that after removing the bottle, she formed the view that LiveWire was in some way associated with the Red Bull product, this view being based upon the similarity in get-up, the fact that the product was manufactured in New Zealand, and possibly the fact that it came from a Red Bull "barrel fridge". We consider that her evidence was little more than a particular example of Dr Beaton's evidence as to the conduct of purchasers of such items. In the light of certain aspects of get-up which suggested association with Red Bull, Ms Carswell was willing to infer such association notwithstanding the distinctive brand name and other differences in get-up. If anything, the fact that the product was in a bottle rather than in a can highlights the tendency to overlook differences in the face of similarities. His Honour's use of Ms Carswell's evidence does not seem to have gone any further. In particular, he did not rely upon it in forming the view that the LiveWire get-up was deceptive. We do not consider that his Honour's errors in any way undermined the legitimacy of his limited use of the evidence or contaminated his ultimate decision. 116 We should add that we are unable to accept Red Bull's implicit submission that the reference to Ms Carswell taking a "can" was merely a verbal slip. His Honour must have been of the view that Ms Carswell had taken a can. He would otherwise have referred to her evidence specifically in considering the case based upon the bottle.
The appellants' intentions 117 Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor's get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was "fitted for the purpose and therefore likely to deceive or confuse …". Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing. 118 In the present case the identical shades of blue, silver and red and the diagonal thrust are striking features of each get-up. Mr Klimis certainly had prior knowledge of the Red Bull get-up. It had been promoted in Australia since 1997 and had been on the market since 1999. Sydneywide had been involved in the energy drink market since 1997 and had acted as a sub-distributor for Red Bull from February 2000. The appellants submit that design of the LiveWire get-up had commenced before Sydneywide became a sub-distributor for Red Bull and that it could not then have had the relevant knowledge of the success of the Red Bull product. As we understand it, Conti J accepted that Mr Klimis first spoke to Mr Scarisbrook in February or March 2000, at about the same time as Sydneywide commenced as sub-distributor of the Red Bull product. Sydneywide staff had previously attended presentations concerning Red Bull and its product. The appellants' submission is therefore factually incorrect. In any event, Sydneywide's involvement in the market would have given it more than adequate opportunity to assess the impact of the Red Bull product. 119 Conti J considered Mr Klimis to be an unsatisfactory witness and, in particular, did not accept his evidence concerning development of the get-up. Such views would generally be treated by an appellate court as not readily open to challenge. Nothing which has been said in this appeal leads us to any different view. We see no basis upon which we could properly depart from his Honour's view of Mr Klimis as a witness or his rejection of his explanation as to how Sydneywide came to adopt the LiveWire get-up. We also see no reason for departing from the inference that Sydneywide deliberately copied aspects of the Red Bull get-up. This conclusion disposes of many of the grounds of attack upon his Honour's finding as to deliberate copying, but a few deserve specific comment. 120 In subpar 4(i) of the revised grounds of appeal it is asserted that his Honour: "… erred in making adverse findings about the Second Appellant's intention to deceive on the basis of alleged copying of only part of the Respondents get-up and on the basis of alleged copying of matters not alleged to be part of the Respondent's distinctive get-up." 121 This ground of appeal seeks to upset a finding of fact based upon observations of a relevant witness. However it is also based upon a misunderstanding of the relevance of the finding as to deliberate copying. Such copying may well be of only part of the competitor's get-up, indeed it is likely that this will be the case. If the offending trader copied the whole of the get-up, there could be little argument about its capacity to deceive. The inference dealt with in Australian Woollen Mills goes to the question of whether or not, to the extent that there has been copying, it is likely to cause deception or confusion. Similarly, the assertion that his Honour's finding was based upon copying of matters, some of which were not claimed as part of Red Bull's distinctive get-up, is also not to the point. Such copying may well disclose the copier's overall intention and therefore his or her belief as to the likely effect of it. It will then be for the Court to determine whether the copying of the distinctive aspects of the original get-up constitutes passing off. 122 In subpar 4(j) of the revised grounds of appeal it is alleged that his Honour erred: "… in making adverse findings about the Second Appellant's intention to deceive in the absence of evidence supporting the likelihood of the alleged deception" 123 This appears to mean that because nobody (perhaps other than Ms Carswell) gave evidence of having been deceived by the similarity in get-up, the finding of deliberate copying ought not to have been made. This ground again mistakes the nature of the inference discussed in Australian Woollen Mills. The inference is itself evidence as to the likelihood of deception. The absence of other evidence going to that matter will be a relevant consideration, but not conclusive of the matter. 124 Finally, in subpar 4(k) of the revised grounds of appeal it is asserted that his Honour "erred in making adverse findings about the Second Appellant's intention to deceive in the absence of the circumstances and nature of the alleged deception being put to him in cross examination." 125 It is quite clear that Mr Klimis' affidavit was drawn with the aim of demonstrating that there had been no deliberate copying. There could have been no other reason for the detailed history given in pars 25 - 46. He thus knew that such a case was being made against him. Clearly, his cross-examination was directed towards demonstrating copying. The following passage (to which his Honour referred in his judgment) appears at TS 1182 (AB 102) ll 19 - 25. It concerns conversations between Messrs Klimis and Casey and/or Scarisbrook. "Did you say anything about colour? --- No, colour wasn't an issue then, I don't think colour was an issue. Did you say you wanted it in blue, silver and red? --- No. Did you mention Red Bull? --- Why I want to mention Red Bull in a conversation? Did you mention Red Bull? --- I don't think so. I mean, in what context would I mention Red Bull? To show that I was a distributor of Red Bull?" 126 At TS 120 (AB 104) ll 19 - 30, the following passage appears: "But is it right to say, isn't it, that from the very first version of the packaging of the LiveWire can, you have been aware of the fact that in addition to black the colours put forward have been the same colours as Red Bull? --- I was aware that that was the colour that Frank (Scarisbrook) was using in his designs, yes, but that was the colour that he started off with, right, and I allowed him to continue his designs with that colour. I just want to ask you something, just see whether you agree with this, I just want to suggest to you that by then you had already said to Frank, 'I want something in the colours of Red Bull' or you had said to him, 'I want predominantly blue and silver with some red writing on it'? --- No, I said to Frank, I want, I don't like that design, I want you to elaborate on that design." 127 At TS 121 (AB 105) ll 1 - 3, the following passage appears: "I want to suggest that even before you got this design, you had said something to Frank about wanting it in red, blue and silver? --- I don't think so, no." 128 There was other similar cross-examination concerning the diagonal thrust and detailed cross-examination concerning similarities in the get-ups. Finally, at TS 138 (AB 122) ll 1 - 9 the following passage appears: "But I suggest that you copied Red Bull's colours, in that you have precisely the same colours, blue, red and silver? --- No. You have copied the diagonal feature of Red Bull? --- No. The process of development of the design that you and I have been through since the first design that Frank Scarisbrick [sic] drew, has been a process whereby your product design has got closer and closer to Red Bull? --- No, I believe that my design is an evolution of the sketch that I sent to Frank. I suggest that you and your colleagues have decided that you would sail as close, or go as close as you could to Red Bull and get away with it? --- No." Clearly, Red Bull's case was put to Mr Klimis in the course of cross-examination.
Ultimate findings 129 We use the term "ultimate findings" to describe the following: · the finding that passing off was made out; and · the finding that breach of s 52 of the Act was made out. 130 Critical issues at the trial were identification of the aspects of get-up which were distinctive of the Red Bull product and whether or not the LiveWire get-up was likely to mislead or deceive potential purchasers into mistaking the Sydneywide product for the Red Bull product or believing that the former product was made by, or with the licence or approval of Red Bull. The appellants' primary argument was that the differences in get-up were such as to outweigh the similarities. The appellants submit that Conti J made no finding as to the likelihood of deception, but when one reads the judgment as a whole, particularly [69] and [70], it is quite clear that his Honour found that the LiveWire get-up was calculated to deceive. The following passage is of particular importance: "Put another way, Sydneywide 'went too far', the description used by O'Loughlin J in Remy Martin … by seeking to 'cash in' on the reputation of Red Bull, and in so doing stepped over the lines of misrepresentation and deceit: see Twentieth Century Fox Film Corporation v The South Australian Brewery Co Ltd (1996) 66 FCR 451 at 467". 131 Reference to the passage cited from the South Australian Brewery case (per Tamberlin J) demonstrates his Honour's meaning. At 466 - 467 the following passage appears: "The intention of the breweries is to persuade consumers to believe that there is a strong association between their product and "The Simpsons". The breweries realised that they might be running a risk in promoting their can yet their intention was to obtain full benefit of "The Simpsons" association while at the same time attempting to distance the product from the series just sufficiently to avoid liability under the Act or at common law. The research advice was that the association need not be spelt out in an 'overt' way, but that a sufficient association could be made by use of the name. In short, the breweries and their advisers intended to exploit the association between 'The Simpsons' series and the beer by attempting to use the least necessary degree of overt connection, while at the same time being able to rely on the force of that association in promoting their beer. In accordance with the advice received, they decided to rely on the 'Duff' name as sufficient alone to make the connection. Their intention was to 'sail as close as possible to the wind' in order to 'cash in' on the reputation of 'The Simpsons' without stepping over the line of passing off or deceit. … The breweries knew that they were able by use of the name 'Duff' alone to evoke the powerful association without using names or images. I do not think that the changes in can colour or the 'tidying up' of the way 'Duff' was written was effective to eliminate the association. Accordingly, I consider this knowledge is important evidence to support the inference that the goal of creating and exploiting the powerful association with 'The Simpsons' had been achieved." 132 Conti J found that the LiveWire product would probably deceive. To some extent, that finding was based upon his assessment of Mr Klimis as a witness and his preference for Dr Beaton's evidence over Ms Strachan's. These are not areas in which an appellate court will frequently interfere. Obviously, the finding was primarily based upon his Honour's perceptions of the similarities and differences between the two get-ups. To that extent, this Court may be in as good a position to determine the matter as was the learned trial judge. However the ultimate decision was based upon a consideration of all of these matters. While the deliberate copying was a basis for an inference that the appellants considered that what they had done would be of benefit to them in the marketplace, Dr Beaton's evidence suggested the mechanism by which that benefit might arise. Just as his Honour's assessment of the two get-ups was informed by these considerations, so must be this Court's assessment of his decision. 133 Minds may differ concerning the question of deception, but we come to the matter with the benefit and burden of extensive argument as to the similarities and differences between the two get-ups. His Honour was in the same position. That is not the position of a potential purchaser who, as the evidence suggests, is likely to make his or her decision in a relatively short period of time and in conditions which may vary from case to case. We must keep in mind the views of the trial Judge and the finding of deliberate copying. We say again that the appellants apparently considered that there was advantage in the marketplace in copying aspects of the Red Bull get-up. In those circumstances we find ourselves unable to say that his Honour erred in concluding that the LiveWire get-up constituted a misrepresentation of that product as one which either was the same as the Red Bull product or was produced by, or with the approval of Red Bull. The ultimate findings flowed inevitably from that conclusion.
Other matters 134 The appellants assert in par 8 of the notice of appeal: "Having held that the LIVE WIRE bottle had, in common with the LIVE WIRE can, the colour scheme and 'diagonal thrust' element and accordingly the features of 'get-up' found by him to be similar, but did not make any relevant misrepresentations, His Honour erred in finding that the LIVE WIRE can made a relevant misrepresentation, and accordingly erred in finding that it was the size and shape of the LIVE WIRE can that resulted in such relevant misrepresentation." 135 This ground of appeal appears to assume that if the LiveWire can is deceptive, then the bottle must also be deceptive. Conti J, at [72], dealt with the LiveWire bottle. His Honour apparently considered that the size and shape of the bottle were such as to distinguish it from the Red Bull product. He concluded that the LiveWire bottle was "sufficiently distinct from that which now represents the most common size and shape of energy drink bottle containers". This presumably means that the LiveWire bottle is itself unique in the marketplace because of its size and shape. Such uniqueness might well detract from its capacity to deceive a potential purchaser into identifying it as the Red Bull product or as associated with Red Bull. 136 Quite apart from any suggested distinctiveness in the market place, the bottle's size and shape offer a good basis for distinguishing it from the Red Bull can. The base of the bottle is slightly shorter than the slimline can, but slightly greater in diameter. It then tapers so as to become a neck which is, itself, tapered. The total height of the bottle is more than 50 per cent greater than that of the slimline can. It has a red cap. Because of the greater diameter, the view from the front of the bottle discloses rather more of the colouring on either side of the brand name where it appears on the body of the bottle than does a view of the can. The brand name is reproduced, in slightly smaller characters, mid-way up the neck of the bottle. The silver stripe with the arrow passing through it, where it appears on the body of the bottle, is apparently of the same width as that on the can. However, where the body commences to taper, the stripe narrows, creating the appearance of a "dog leg". Further, the silver stripe reaches up to the cap of the bottle. The greater height of the bottle and the length of the silver stripe, together with the dog-leg, detract substantially from the diagonal thrust. Clearly, the bottle could not be mistaken for the Red Bull can. It might be mistaken for an associated product, but Conti J was not satisfied on that score. The differences in the effects of the get-ups are such that we are unable to say that his Honour must have found that the LiveWire can was not deceptive, having regard to his view as to the bottle. We will revisit this matter when we consider the cross-appeal. 137 In par 9 of the notice of appeal, it is asserted that Conti J erroneously found that the size and shape of the can were "distinctive". We infer that the "error" is said to lie in the fact that, as the evidence discloses, such a can is widely used for energy drinks. We do not consider that his Honour made any such error. At [56(v)], in summarising the evidence of Dr Beaton, his Honour referred to certain comments made by that witness concerning the 250 ml slim-line cans. Those comments recognized that the can was different from "a typical aluminium can used for most soft drink cans", but also recognized "that most other brands of carbonated energy drink in Australia (such as those cans used in associated with brands earlier identified) have utilised a similarly proportioned can…". The words in parentheses at the end of [56(v)] are of some importance. They are as follows: "I should interpolate to mention that Sydneywide submitted that it was part of Dr Beatons' thesis that the 250ml can was distinctive to Red Bull, but I do not read Dr Beatons' evidence as so asserting any such obvious inaccuracy …". 138 At [72] his Honour noted: "By far the majority of energy drink brands are in fact produced in 250ml cans." 139 His Honour did not find that the size and shape of the Red Bull can was "distinctive". Indeed, he expressly rejected such a proposition. There is nothing in the criticism contained in par 9 of the notice of appeal. 140 Paragraph 4(d) of the revised grounds of appeal asserts: "His Honour erred in finding (if his Honour did so find) a likelihood of deception that the products were the same in circumstances where both brands were not sold in the same store: (i) in the face of positive evidence that that had not occurred; (ii) in the absence of any evidence that that had occurred or was likely to occur; (iii) without paying any regard to the usual inference that the respondent's failure to call such evidence warranted." 141 This appears to be a reference to the last part of [66] in the judgment where his Honour referred to the following passage from the judgment of Jenkinson J in Freeman Cosmetic Corporation v Jenola Trial Pty Ltd (t/a South Pacific Cosmetics) (1993) ATPR 41-270 at 41,656 as follows: "…the trade names do not attract the eye unless the parties' bottles are viewed together. What attracts the eye, in the case of each of the parties' bottles, are the general shape of the bottle (including its cap) the vivid fruit or floral label, as without careful inspection the representation appears to be, the clearly defined rectangular area superimposed on the top and the bottom of that representation and a clear, spare black print on white background within the rectangles." 142 Conti J then continued: "I have already referred at [61] above to the implications of competing packaging of different brands being present at the same point of sale. Burchett J mentioned that in the proceedings before him, the competing products would sometimes be sold together but not invariably so, and a similar circumstantial inference may also be drawn in the present case. I see no reason why the force of the observations of Jenkinson J in relation to competing brands not being offered for sale "together" should not equally apply in principle to circumstances where competing brands are present at the same point of sale but in circumstances where the retail shoppers' views of the brand names in dispute are only partially visible or not visible at all to the shoppers, or at least to one or more of them." 143 At [69] his Honour said: "Sydneywide would have doubtless perceived that from the normal or usual standing distance of potential retail customers of energy drink products from the shelves and refrigerated containers of retailers, there was scope for such customers to mistake the LiveWire product for the Red Bull product, particularly if no Red Bull product was also on display, or where both products were on display in circumstances where either or both brand names were not readily discernible. Even in the situation where both brand names were to be discernible at the point of sale to the potential customer, there would also be the "Ms Carswell" kind of customer who might think that both products emanated from the same manufacturing stable, for all sorts of reasons, logical or otherwise." 144 His Honour there clearly identified various situations which might well occur from time to time in any mass-marketing exercise. It may be that the Sydneywide product is sold through outlets which generally also handle the Red Bull product. That does not mean, however, that there will always be stocks of both products in any one store, or that even if stocks are held, they will necessarily be displayed side by side. His Honour merely identified a number of different situations which, commonsense dictates, may obtain from time to time. It is also of some importance that his Honour was not making a finding of fact, but rather drawing inferences as to Sydneywide's perceptions. His Honour's reasons suggest that he considered deception to be more likely where the products are not displayed side by side, but his finding as to probable deception is not limited to that situation. There is nothing in this point. 145 In par 4(f) of the revised grounds of appeal it is asserted that: "His Honour (erred) in failing to hold that any confusion which his Honour may have held existed was merely transient and not entitling the respondent to a remedy." 146 We see no basis for this assertion in the evidence, nor do we understand any substantial argument to have been advanced in the course of oral submissions. The appellants did not ask his Honour to make such a finding, nor were we directed to any evidence which might suggest that it was the case. There is no substance in this ground of appeal.
SUMMARY - PASSING OFF AND S 52 147 As was pointed out in Campoma (supra) at [108], s 52 of the Act is designed to protect consumers. A passing off action, on the other hand, is designed to protect a trader's goodwill. However, once it was accepted that the Red Bull get-up as pleaded was distinctive of the Red bull product, the principal issue in the case was whether Sydneywide's conduct was likely to deceive (for the purposes of the passing off action) or was misleading or deceptive, or likely to mislead or deceive (for the purposes of s 52). His Honour found that both causes of action were made out. We see no basis for upsetting those findings.
Mr Klimis 148 Paragraph 80(1)(a) of the Act authorizes the grant of an injunction against any person who has engaged in, or proposes to engage in conduct which constitutes, or would constitute "being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention" of any provision of Part V, which contains s 52. In par 22 of the amended statement of claim it is alleged that Mr Klimis was so involved in Sydneywide's alleged misconduct. In par 33 of the notice of appeal the appellants submit that: "Having held that the evidence and findings as to the second appellant's conduct were not sufficient to render him liable at common law as a joint tortfeasor, and having held that the first appellant was not 'a one-man company', and having failed to make any finding that the second appellant contravened the provisions of section 75B of the Trade Practices Act, His Honour erred in finding that relief should be granted by way of appropriate orders against each of the appellants, and erred in making orders against the second appellant." 149 In par 4(l) of the revised grounds of appeal it is alleged that: "His Honour erred in finding that the Second Appellant contravened section 75B having regard to his Honour's erroneous findings as to the Second Appellant's intentions." 150 The references to s 75B of the Act are probably erroneous. That section defines the meaning of the expression "a person involved in a contravention" of various provisions of the Act. Some of the remedies prescribed in Part VI of the Act are available against such a person. Section 75B prescribes that the expression includes a person who "has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention". However, as we have demonstrated, injunctive relief is available pursuant to s 80. Paragraph 80(1)(e) expressly authorizes injunctions against such a person. Thus recourse to s 75B is unnecessary where injunctive relief is sought. That is the only relief granted in this case, other than costs. We will treat the appellants' references to s 75B as referring to par 80(1)(e). 151 Mr Klimis submits that the finding that he was knowingly concerned in Sydneywide's breach of s 52 cannot stand with the dismissal of the claim that he was liable for Sydneywide's passing off. He also submits that, for reasons previously discussed, Conti J should not have concluded that he intended to copy aspects of the Red Bull get-up. His Honour found at [70] that Mr Klimis had decided that it was desirable that Sydneywide adopt certain aspects of the Red Bull get-up and was active in designing the LiveWire get-up. Conti J found at [75] that: "The evidence … and the findings … demonstrate that Mr Klimis, as the self-styled Managing Director, and, I would infer, the decision-maker or ultimate decision-maker of Sydneywide at all material times and in all material respects, was personally involved in such capacity in the process of design, and the ultimate choice of design, of the packaging for the LiveWire can, and that he had sufficient knowledge of the risks to which Sydneywide was exposed, if Sydneywide's conduct subsequently complained of did in fact and reality 'sail too close to the wind'." 152 His Honour considered that Mr Klimis was "closely, as distinct from remotely, involved in Sydneywide's contravention of s 52 … ." We cannot see that any other view was open on the evidence. Some insight into the conduct proscribed by par 80(1)(e) can be derived from the decision of the High Court in Fencott v Muller (1982 - 1983) 152 CLR 570. Gibbs CJ said at 583: "Once it is conceded that it is within the power conferred by s 51(xx) of the Constitution for the Parliament to provide, as it has done by s 52, that a trading corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or to deceive, it must follow that it is also within the power of the Parliament to adopt a means of enforcing compliance with the prohibition which it has directed to the corporations. … Since corporations must necessarily act through human agencies, it is open to the Parliament to provide for sanctions against natural persons whose conduct brings about the contravention of the law by the corporation." 153 At 598 - 599, Mason, Murphy, Brennan and Deane JJ said: "Once it is accepted, as it now is, that the corporations power extends to the regulation of the trading activities of trading corporations, it necessarily follows that, in some circumstances at least, the power must extend to the imposition of duties on natural persons. Two considerations combine to sustain this conclusion. The first is that corporations act through natural persons. The second - and it is a consequence of the first - is that, in order to be effective, a regulation of the activities of corporations calls for the imposition of duties on those natural persons who would, or might, in the ordinary course of events, participate in the corporate activities, the subject of the intended regulation. Accordingly, when in the legitimate exercise of the corporation's power duties are imposed on corporations in relation to their trading activities, breach of which creates a civil liability, the power extends to the imposition of duties on natural persons, breach of which also creates a civil liability, not to engage in conduct which assists or facilitates a contravention by a corporation of duties thus imposed upon it. … Another way of expressing this approach is to say that where a law prescribing the way in which corporations shall conduct their trading activities is supported by the corporations power, an ancillary provision reasonably adapted to deter other persons from facilitating a contravention of the law by a corporation is supported by the same power." 154 These extracts deal with the constitutional power to impose liability upon a natural person as an incident of the corporations power. However their Honours' reasons also indicate the likely ambit of operation of any such provision. At a practical level, the following passage from the judgment of Wilcox J in Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) ATPR 40-876 at 49,512 demonstrates the relevant considerations: "The words 'knowingly concerned' are commonly found in statutory provisions creating criminal offences. In that context the word 'concerned' has been read as requiring facts connecting the accused with the commission of the relevant offence. … In Ashbury v Reid, the Full Court of the Supreme Court of Western Australia, after quoting the Oxford Dictionary definition of 'concerned', said at p 51: 'The question which a court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of s 54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connexion between him and the offence.' (R v Tannous) is an interesting case, in the present context. The appellant had agreed with two other persons that certain money owing to him could be used in the importation of cannabis, in the sale of which he was to become a participant. He took no other part in the enterprise. In fact his money was not used so that there was no causal relationship between the involvement of the appellant and the actual importation. Notwithstanding this, the Court held that there was evidence upon which he could be convicted of being knowingly concerned in the importation. At pp 308 - 309, Lee J said: 'The 'concern' to which the section speaks is not a concern personal to the appellant in the sense of being in his mind, but it is a concern which can be demonstrated objectively by reference to his association, whatever it may be, with the importation. It must be shown that he is 'concerned in' not just 'concerned about the importation'. A father, learning that his son had made arrangements to import narcotic drugs into this country, might well be anxious about, interested in or concerned about the fact and he might evince that anxiety, interest or concern to others. But he would not be guilty of the offence of being knowingly concerned merely from his knowledge of the importation and his state of mind arising therefrom. Before he could be convicted under the section he would have to do something to connect himself with or involve himself in the importation.' The Borthwick respondents were more than concerned about the acquisition of Borthwick by AMH. They were concerned in that matter. They took active steps to bring it about. Part of that activity took place in Australia. It matters not that a part of the Australian conduct, the visit to Mr McComas, not only failed of its purpose but, as events turned out, proved to be unnecessary." 155 Once it is accepted that Mr Klimis was active in bringing about Sydneywide's adoption of the get-up and in the marketing of the product, it follows that he was knowingly concerned in the contravention. Whether that involvement was direct or indirect may be a matter for debate, but it does not matter for present purposes. This aspect of the appeal must also fail.
Cross-appeal 156 Red Bull cross-appeals on four grounds which are set out in pars 2 - 5 of its notice as follows: "2. His Honour erred in failing to find a breach of the Trade Practices Act, and passing off, in relation to the LIVE WIRE bottle. 3. His Honour erred in finding that although the packaging of the LIVE WIRE bottle and can embodies some of the 'matrix of memory hooks' of the packaging of the RED BULL energy drink can, that factor alone was insufficient to support a finding in favour of the Respondents in relation to the LIVE WIRE can. 4. His Honour erred in finding, if his Honour so found, that because the size and shape of the LIVE WIRE bottle was sufficiently distinct from that which represents the most common size and shape of energy drink bottle containers, this was not sufficient to support a finding in favour of the Respondents in relation to the LIVE WIRE bottle. 5. His Honour erred in finding that Mr Klimis was not a joint tortfeasor at common law for the purposes of passing off."
The bottle 157 In considering the appeal, we have described the shape of the bottle, its size and the effects which that shape and size have upon the impact of the get-up. We have concluded that there was not necessarily any inconsistency in the fact that Conti J was satisfied that supply of the LiveWire can constituted passing off but not satisfied that supply of the bottle did so. For similar reasons, we consider that the cross-appeal must fail. Conti J accepted that there were significant similarities in the get-ups of the Red Bull can and the LiveWire bottle. This is what his Honour meant by speaking of the bottle embodying "some of the matrix of memory hooks of the packaging of the Red Bull energy drink can". However Conti J considered that such similarities were insufficient to demonstrate probable deception. Although he did not say so expressly, the reason was certainly the different appearance of the bottle as compared to that of the can. In other words, the similarities were negated by the differences in the shapes and sizes of the containers and other differences in get-up. His Honour also observed that "the size and shape of the LiveWire bottle is sufficiently distinct from that which now represents the most common size and shape of energy drink bottle containers." In other words, the LiveWire bottle is also distinctly different from other bottles used for the supply of energy drinks. As we have previously observed, such distinctiveness is likely to further reduce the risk of deception because of the level of recognition enjoyed by the bottle in the marketplace. The matter is very much one of judgment. We are not persuaded that his Honour erred. This aspect of the cross-appeal must fail.
Passing off case against Mr Klimis 158 Red Bull also appeals against his Honour's decision dismissing the claim for passing off as against Mr Klimis. The relevant factual findings appear in [75] of the reasons for judgment which paragraph is quoted above. Upon that factual basis, his Honour inferred that Mr Klimis was knowingly concerned in the breach of the Act but not that he was party to the passing off. As to passing off, his Honour observed: "Though he was the decision-maker for Sydneywide … , Sydneywide appears to have been a family company involving Mr Klimis' two brothers, and semble also his father, in varying capacities, as well as of course Mr Klimis. It was not a 'one man company' in the sense described by Lindgren J in Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 at 246." 159 Paragraph 5 of the notice of cross-appeal asserts that: "His Honour erred in finding that Mr Klimis was not a joint tortfeasor at common law for the purposes of passing off." 160 In dismissing this aspect of the case, Conti J referred to the decision of Lindgren J in Auschina Polaris. However that case did not concern joint tortfeasors. It was rather concerned with the circumstances in which a director of a corporation will be held liable for its tort. At 241 - 247, Lindgren J considered that question, identifying two lines of authority which, in his view, had established two conflicting "tests" for determining the question, namely:
Costs 165 As to the appeal, costs should follow the event. The cross-appeal added virtually nothing to the duration of proceedings, and the parties' submissions suggest that they spent little time in preparing for it. Unfortunately, we have spent much time in considering the Auschina Polaris question, but that is not to the point. There should be no order as to the costs of the cross-appeal.
Orders 166 We propose the following orders: (a) That the appeal be dismissed; (b) That the cross-appeal be dismissed; (c) That the appellants pay the respondents' costs of the appeal; and (d) There be no order as to the costs of the cross-appeal.
I certify that the preceding one hundred and forty-eight (148) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Weinberg and Dowsett.
Associate: Dated: 4 June 2002 Counsel for the Appellants: Mr A J L Bannon SC Mr J Hennesy
Solicitor for the Appellants: Andresakis & Associates
Counsel for the Respondents: Mr D K Catterns QC Mr R Cobden
Sydneywide Distributors Pty Ltd
Red Bull Australia Pty Ltd
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157
Federal Court of Australia Act 1976 (Cth) ss 4, 24(1)(a) Evidence Act 1995(Cth) ss 56, 57, 76, 79, 80, 135, 142 Evidence Act 1995 (NSW) Trade Practices Act 1974 (Cth) ss 52, 53, 75B, 80, 82 Federal Court Rules O 52 Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305 discussed Quick v Stoland Pty Ltd (1998) 87 FCR 371 cited HG v The Queen (1999) 197 CLR 414 cited Paric v John Holland (Constructions) Pty Ltd (1985) 59 ALJR 844 cited Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 applied Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 followed Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 considered Cabal v United Mexican States (2001) 108 FCR 311 considered Erven Warnink Besloten Vennootschap v J Townsend & Sons (Hull) Ltd [1979] AC 731 referred to Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 referred to Reddaway v Bentham Hemp-Spinning Company [1892] 2 QB 639 considered Ford v Foster (1872) LR 7 Ch App 611 referred to TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 considered Campoma Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 considered BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1977) 51 ALJR 254 applied Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd [2000] FCA 1463 referred to C A Hensckhe & Co v Rosemount Estates Pty Ltd (2000) AIPC 91-640 referred to Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1977 - 1978) 140 CLR 216 referred to Newton-John v Scholl-Plough (Aust) Ltd (1985) 11 FCR 233 referred to Hogan v Dunlop Pacific Ltd (1989) 83 ALR 403 considered W D & H O Wills (Aust) Ltd v Philip Morris Ltd (1998) 39 IPR 356 referred to De Cordova v Vick Chemical Co (1951) 68 RPC 103 referred to Freeman Cosmetic Corporation v Jenola Trial Pty Ltd (t/a South Pacific Cosmetics) (1993) ATPR 41-270 considered Twentieth Century Fox Film Corporation v The South Australian Brewery Co Ltd (1996) 66 FCR 451 considered Fencott v Muller (1982 - 1983) 152 CLR 570 considered Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) ATPR 40-876 considered Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 considered Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 considered Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1979) 89 DLR (3d) 195 referred to C Evans & Sons Ltd v Spritebrand Ltd [1985] 1 WLR 317 referred to Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd [2001] FCA 1838 considered SYDNEYWIDE DISTRIBUTORS PTY LTD AND EMANUEL KLIMIS v RED BULL AUSTRALIA PTY LTD AND RED BULL GMBH N 1340 OF 2001 BRANSON, WEINBERG & DOWSETT JJ 4 JUNE 2002 SYDNEY
[1999] HCA 2
(1998) 87 FCR 371
(1999) 197 CLR 414
(1985) 59 ALJR 844
(1937) 58 CLR 641
(1992) 35 FCR 359
(2001) 108 FCR 311
(1992) 33 FCR 302
(1999) 45 IPR 43
(2000) 202 CLR 45
(1977) 51 ALJR 254
(1985) 11 FCR 233
(1989) 83 ALR 403
(1998) 39 IPR 356
(1996) 66 FCR 451
(1996) 71 FCR 231
(1988) 83 ALR 403
(1997) 39 IPR 356
(1952) 86 CLR 536