CATCHWORDS Trade Practices -— Misleading and deceptive conduct - Use of Trade Mark "Big Mac" in respect of goods being a Trade Mark of another Corporation in respect of a different class of goods — Public misapprehension as to the limits of the corporation rights in respect of the name - Whether conduct creating mere confusion is conduct which is misleading or deceptive -— whether advertisement represented that a corporation had a sponsorship approval or affiliation which it did not have, Trade Practices Act 1974 - Sections 52(1), 53(c) and 53(d) McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Limited N.S.W.G. No. 20 of 1980 Coram: Smithers, Northrop and Fisher JJ. 16 December 1980 Sydney - Powe ee ed IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISIRICT REGISIRY } N.S.W.G. No. 20 of 1980 ) ) GENERAL DIVISION On appeal from the Federal Court of Australia BET WEEN: McWILLIAM'S WINES Pry. LIMITED Appellant (Respondent) AND: McDONALD'S SYSTEM OF AUSTRALIA PTY. LIMITED Respondent (Applicant) Judges Making Order: Smithers Northrop and Fisher JJ. Date of Order: 16 December 1980 Where Made: Sydney ORDER THE COURT ORDERS THAT: 1. The appeal be allowed with costs. 2. The cross-appeal be dismissed with costs. 3. The order made on 21 December 1979 be set aside. & The application be dismissed. The respondent pay the appellant's costs of the trial including all reserved costs and the costs of the proceedings for interlocutory relief. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) N.S.W.G. No. 20 of 1980 ) ) GENERAL DIVISION On appeal from the Federal Court of Australia BET WEEN: McWILLIAM'S WINES PrY. LIMITED Appellant (Respondent) AND: MCDONALD'S SYSTEM OF AUSIRALIA PTY. LIMIT ED Respondent (Applicant) Coram: Smithers, Northrop and Fisher JJ. 16 December 1980 REASONS FOR JUDGMENT Smithers J.: This is an appeal as of raght from an order of the Federal Court of Australia constituted by a single Judge which granted relief by way of injunction restraining the appellant from using or publishing or causing, procuring or authorising use or publication of the words "BIG MAC" in connection with the supply or possible supply of wine or in connection with the promotion by any means of the supply or use of wine. The order was based on a finding by the learned Judge that certain conduct of the appellant constituted a contravention of s.52(1) of the Trade Practices Act 1974 (the Act). The order was made pursuant to the authority conferred on the Federal Court of Australia by s.80 of the Act. The conduct of the appellant which was found to be in contravention of s.52(1) of the Act was the publication of certain advertisements in which there appeared the expression "BIG MAC" which was an expression used by the respondent in uts business of restauranteur and "fast food" retailer as the name of one of its products, namely a particular type of hamburger. In the conduct of its business the respondent had also used the name of "McDonald's" quite extensively as a trade name for itself. The "BIG MAC" hamburger had been widely advertised and was exceptionally well known to members of the public as a product of McDonald's. All advertisements were to the same effect and form. Each of them showed pictures of three bottles of wine, each two litres in size, and a number of glasses filled with wine. The advertisements also contained comments by persons described as "Top wine writers". The comments were about "Rosedale Dry Red". And the labels on the bottles featured the name "McWilliam's" and "Rosedale" and described the contents of 3. one bottle as "Dry Red Table Wine", another as "Medium White Table Wine" and the third as "Dry White Table Wine". One of the comments was by a Mr. Peter Wilson who said about the wine, "T call it the 'big Mac'". The respondent claimed that the use of the words "BIG MAC" by the appellant constituted, in trade or commerce, engaging in conduct that was misleading or deceptive or likely to mislead or deceive within s.52(1) of the Act. It also claimed that it constituted a contravention of s.53(c) of the Act in that the advertisement constituted a representation, in trade or commerce in connection with the supply or possible supply of wine, or in connection with the promotion by any Means of the supply of wine, that the wine had a sponsorship or approval which it did not have. It was also alleged that the advertisement constituted a contravention of s.53(d) of the Act in that, in the same way, the advertisement represented that the respondent had a sponsorship, approval or affiliation which it did not have. The main complaint of the respondent about the advertisement was the appearance of the words "BIG MAC" in letters about 3.5 centimetres in height, extending substantially right across the advertisement immediately below the word "McWilliam's" which was in letters about 1.5 centimetres in height. 4, The learned trial Judge found that the use of the words "McWilliam's BIG MAC" in the advertisement might be expected to cause a considerable amount of confusion to a sufficiently relevant number of potential purchasers of either or both the appellant's wines and the respondent's hamburgers. He expressed himself as satisfied that the measure of confusion which the relevant conduct would produce to be such that 1t would lead to a sufficient number of persons being likely to be misled or deceived upon the question of whether or not there was a business connection between the appellant and the respondent to establish a breach of s.52(1) of the Act. It was upon this finding that the relief granted was based. The learned trial Judge was not satisfied that by the relevant conduct of the respondent it represented that the Rosedale wine had a sponsorship or approval it did not have or that the respondent had a sponsorship, approval or affiliation which 1t did not have. It 1S hereinafter convenient to use the expression McWilliam's for the appellant and McDonald's for the respondent. The case made for McDonald's before the learned trial judge was that the conduct complained of was such as was likely to mislead or deceive the relevant persons in relation to whether or not there wasS some commercial connection between 5. McWilliam's and McDonald's, of almost any type, including for example that McWilliam's and McDonald's had joined together to promote McWilliam's wines, that McDonald's had approved the use by McWalliam's of the name "BIG MAC" for the promotion of its wines, or that McWilliam's and McDonald's had joined in a joint venture to promote the wines, or that McDonald's intended to sell McWilliam's wines in its outlets. That was the case put for the respondent in this appeal. Neither at the trial nor in this appeal was any case made that the use of the words "BIG MAC" were likely to deceive or mislead persons by causing them to think that the wines in respect of which the words were used were a product of McDonald's. To my mind the message said to be conveyed by the advertisement might well be likely to create a favourable attitude towards the appellant's wine. Belief that McDonald's towards whom, or whose products a substantial number of the public had pleasurable thoughts, were promoting the sale of the appellant's wine, could not but be a favourable factor, but one would think, on the whole, of minor importance in the sale of the wine. The first question is whether the conduct of the appellant in publishing the advertisement was misleading or deceptive or likely to mislead or deceive within the meaning of s.52(1) of the Act. The quality of being misleading or deceptive is said to attach to that conduct because the advertisement conveyed or was likely to convey to readers thereof the impression that McWilliam's and McDonald's had some business connection in relation to the promotion of the wine or the publication of the advertisement The learned Judge found that the conduct caused confusion amongst a wide range of people. By confusion it would seem that his Honour meant that a substantial number of people were caused to wonder whether there was some connection of a business nature between the appellant and the respondent. His Honour said that the wonderment which was caused was of such magnitude that it was likely that persons had been or would be misled or deceived by the conduct. I understand his Honour's finding to be that the conduct of McWilliam's in publishing the advertisement was likely to have caused confusion and wonderment in people's minds as to whether or not there was a business connection between McDonald's and McWilliam's concerning the promotion of the wine, but not to be a finding that the conduct was likely to cause them to form conclusions that there was in fact such a business connection. 7. I am confirmed in this view because his Honour went to some length in the early part of his Reasons for Judgment to examine authorities which he considered led to the conclusion that a state of affairs which causes confusion is for purposes of the Act to be equated with a state of affairs likely to mislead or deceive. It would seem clear that 1t was by acting on this view that his Honour made the finding that the conduct of McWilliam's was such as to establish a breach of s.52(1) of the Act. It would seem however that although an approach along these lines to a similar problem arising under s.114 of the Trade Marks Act 1905 was appropriate, and was adopted by Kitto J. in Southern Cross Refrigeration Co. v. Toowoomba Foundry Pty. Ltd. 91 C.L.R. 592 it 1s not appropriate in respect of s.52 of the Act. Section 114 of the Trade Marks Act provided - ++-noO mark the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice --. Shall be used or registered as a trade mark..." It was pointed out by Kitto J. at p. 594 that the corresponding provision of the English Trade Mark Act 1938 (Imp.) contained the words "or cause confusion" after the words "likely to deceive" and said "...but, while these words make the section more specific they add nothing to its effect." And in the same case on appeal in a joint Judgment the Full High Court said (supra at p.608):- 8. "It 1s, of course, for the person applying for registration to establish that there in no likelihood of confusion and we agree with Kitto J. that registration should be refused if 1t appears that there is a real risk that 'the result of the user of the mark will be that a number of persons will be caused to wonder whether 1t might not be the case that the two products came from the same source';it 1s, of course, not necessary that 1t should appear that the user of the mark will lead to passing-off: see per Morton J. (as he then was) in In re Hack's Application (1940) 58 R.P.C. 91, at p.103." The critical consideration appears to be that a person upon whom an onus lies to establish that use of his mark 1s not likely to deceive or be otherwise deemed disentitled to protection in a Court of justice can hardly succeed unless he establishes that there 1s no likelihood of confusion. The Sltuation which arises under s.52(1) is different. There, one 1s concerned with establishing that a person engaged in conduct having certain specified qualities, namely that it is misleading or deceptive or likely to mislead or deceive. In such a situation there 1S no scope for including in the proscribed conduct any conduct which does not fall within the very words of the Act. Accordingly the finding of the learned trial judge, as I have interpreted it, as indicated above, was not utself sufficient to sustain the order made in favour of McDonald's. As a result this Court was invited to decide whether the conduct of McWilliam's in publishing the advertisement was likely to mislead or deceive persons by causing them to believe that there was a business connection between McDonald's' and 9. McWilliam's in relation to the promotion of the sale by McWilliam's of its wine or in relation to some aspect of the advertisement. In this connection it is to be observed that 1t 1s for the Court itself to determine whether there 1s a likelihood that the relevant persons will be misled, and, in the words of Lord Morris in Parker-Knoll Ltd. v. Knoll International Limited {1962] R.P.C. at 279, "In arriving at a decision the court must not surrender in favour of any witness its own independent judgment", There 1s ample authority for the proposition that 1t ius for the court objectively to determine whether the conduct 1S likely to mislead. If anything, authority is somewhat sparse for the view that evidence of members of the public has any relevance at all. Reference may be made to two passages from Halsbury 3rd ed. vol. 38, the first at »p.589 dealing with comparison between trade marks; namely, "Whether or not any degree of resemblance likely to deceive or cause confusion exists, 18 a question of fact for the tribunal or court to decide upon the evidence in each case and 1s not a Matter for witnesses. What degree of resemblance is likely to deceive or cause confusion in any instance is incapable of definition a priori and the observations of judges upon other and quite different facts are usually of little help". [he second is at p. 639, paragraph 1051, omitting the first sentence 1s as follows, 10. "Tt is for the court to decide, in an action for infringement or for passing off, whether the similarity of the name or get-up complained of to that employed by the plaintiff is such as to be calculated to deceive, and it is therefore not proper for witnesses to be asked whether in their opinion this is the case." Reference may be made also to the balance of that paragraph and the succeeding paragraph. Reference may be made also to the dicta of Lord Diplock in General Electric Co. (of U.S.A.) v. General Electric (Co. Ltd. [1972] 1 W.L.R. at p. 738, Wrottesley J. in Concentrated Foods Ltd. v. Champ [1944] K.B. at p. 350 and Lord Macnaghten an Payton & Co. Limited v. Snelling Lampard & Co. Limited [1901] A.c. at p.3l1l. In our opinion evidence of members of the public that they have been misled, 1f it does actually go so far as that, 1S not conclusive of the question for determination but merely of peripheral value. The court must make up its own mind, and 1t 1S easier for the court, particularly in our opinion, in the circumstances of this matter to make an objective determin- ation. It 1S important to observe that the expression "BIG MAC" is not used as a name by which to refer to or identify the business entity known as McDonald's. Many witnesses statad that when they saw the words "BIG MAC" in the advertisement they thought of the Big Mac hamburger sold by McDonald's. 1l. Certain witnesses then concluded that McDonald's must have a business connection with McWilliam's in relation to the matter of promoting the sale of wine. But of course no such mental procedure would have occurred unless in the first instance the person concerned had interpreted the use of the expression "BIG MAC" in its setting un the advertisement as a statement of some kind made by McWilliam's with reference to McDonald's "BIG MAC" hamburger. If a person did conclude that the advertisement was making some sort of a statement about the "BIG MAC" hamburger 1t would be natural for him to try to make sense of the advertisement. If one considers what the situation would have been had _ the advertisement actually said ""McWilliam's - McDonald's" instead of "McWilliam's BIG MAC", 1t would have been guite reasonable to conclude that the advertisement was saying that McWilliam's and McDonald's were in some joint venture together concerning the wine promotion. Accordingly if by using the expression "BIG MAC" in its setting an ordinary person knowing of McDonald's hamburger would understand the advertisement to be referring to or saying something about McDonald's hamburger, it seems reasonable that he also should conclude that there 1s some relevant joint venture. In that case he would be misled. Whether he would be misled by the advertisement or by some other factor may be a question. But he would certainly acquire an erroneous i1dea of 12. the situation of the parties in relation to the matter in hand. It would seem therefore that an important guestion is whether a person knowing of McDonald's "BIG MAC" hamburger would understand the advertisement to be referring to McDonald's hamburger i.e., saying something about it, and if so why. It has been said that s.52(1) "...is concerned with consequences as giving to particular conduct a particular colour. If the consequence 1s deception, that suffices to mak2 the conduct deceptive." per Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. 140 C.L.R. 216 at 228, 18 A.L.R. 639 at 647. But the mere fact that the conduct was a matter constituting one of the factors by reference to which persons formed an erroneous conclusion is not conclusive that the conduct was deceptive. Thus in the Hornsby case itself 1t was assumed that by the use of the name "Hornsby Building Information Centre" others were led to believe that that entity was a branch or otherwise associated with the Sydney Centre. Yet it was held that the use of that name was not a contravention of s.52(1) of the act. It was said to be necessary to examine why the misconcevdtion has arisen in the minds of others. The explanation was found in the circumstance that the name adopted by the Sydney Building Information Centre being descriptive was equally applicable to any business of a like kind, its very 13. descriptiveness ensured that it was not distinctive of any Particular business, and hence its application to other like businesses would not ordinarily mislead the public. (per Stephen J. (supra) 140 C.L.R. at 229 and (1977) 18 A.L.R. at p. 648.) In such circumstances the conduct of the appellant did not have the quality of being truly misleading or deceptive. To determine how a person with knowledge of McDonald's "BIG MAC" hamburger would interpret the significance of the words "BIG MAC" 1n the advertisement it is convenient to examine the factors by which it 1s said a reader of the advertisement might be influenced in his understanding of the message presented in it. Omitting the erroneous assumptions and misconceptions referred to hereafter, they would in substance, be as follows:- (i) the advertisement was unambiguously about wine, the product of and offered for same by McWailliam's; (11) the bottle displayed was obviously a large bottle fitting the description 'big!: (111) "Mac" might be thought to be a corruption of "Mc" of the name "McWilliam's"; (iv) (v1) (v11) (v111) (1x) (x) 14. there was in small print a statement by one, Peter Wilson, a journalist to the effect that "I call 1t the 'big Mac'"; the words "BIG MAC" were not seen in the advertisement as being used as a name for a wine; the words "BIG MAC" in the advertise- ment could well be apt words to designate a large bottle of McWilliam's Rosedale Wine; the expression "BIG MAC" had never previously been used in connection with wine; the expression "BIG MAC" was not synonymous with McDonald's "BIG MAC" is but a trade name of a hamburger marketed by McDonald's. the hamburger was exceptionally widely known under the name "BIG MAC" and 1s an 1tem produced and sold by McDonald's in 15. very large numbers; (x1) the printing in the advertisement of the words "BIG MAC" was not similar to the printing of the expression "BIG MAC" in the publicity used by the respondent; (xii) the expression "McWilliam's BIG MAC" was a grammatical way of expressing the notion that the advertisement concerned "BIG MAC" the property of McWilliam's. (x111) the words "BIG MAC" are words associated in the public mind with McDonald's hamburger; (xiv) there was no reason to doubt that McDonald's might join with McWilliam's in promoting wine or in publishing such an advertisement; It is necessary, however, to consider factor (xiv). "BIG MAC" certainly identifies the McDonald's hamburger, but on the evidence one could not be satisfied that, 1t 1s Synonymous with the business entity trading as McDonald's . 16. On this matter it is useful to look at the respondent's publicity. In the quantity of publicity materials submitted to the Court one does not find any instance of McDonald's being referred to as "BIG MAC" . In every case it 1S clear that the trader concerned 1S McDonald's and that the Big Mac hamburger either named or illustrated, is its product. When "free offers" are made it is McDonald's which displays them, the logo which 1S displayed on publicity material is a capital "M" with the word McDonald's printed across it. The "Ronald McDonald Giant Song Story and Coloring Book" is "Available only at McDonald's", the products are obtainable at ""McDonaldland". The invitation to get a "'BIG MAC' hamburger with your back to school clothing" is redeemable only by presenting the relevant voucher at "McDonald's." The cover story of the Sydney "Bulletin" of 2 May 1978 contains an illustration of a "BIG MAC" but features McDonald's stating "at McDonald's they've got a recipe for hamburgers", and advising that 1t takeS money and years of work to become a millionaire making "BIG MAC's" under a McDonald's' franchise. The situation 15 Similar in relation to an article in the magazine "Business" and articles in other magazines. The nearest to use in the publicity submitted to the Court of "BIG MAC" being used to refer to the McDonald's business 1S an item in the Sun Herald of 7 October 1979 headed, " McDonald's is out to get it all" with a sub-heading "'BIG MAC' goes to the movies". That item explains how McDonald's has suceeded in 1ts mission to educate the palates of Australian children and how "the Big Mac 17. company is shaping up to the 1980's". Television texts invite people to "Come to McDonald's... We'll give you a Big Mac Free". Subject to Big Mac going to the movies there 1s no suggestion of an invitation to Big Mac or to Big Mac's or that Big Mac does this or that. There is no suggestion that "BIG MAC" is anything but a hamburger. It is not the company, it 1s not a business entity. The great majority of witnesses called by the respondent and some by the appellant deposed that immediately they saw the advertisement they thought of McDonald's Big Mac hamburgers. Some said they wondered whether McWilliam's "could get away with it, since everyone knew that "BIG MAC" was a hamburger." Others said that they thought Big Mac was a name they considered McDonald's was entitled to and therefore McDonald's must have given permission for use of the words "BIG MAC". But there 1s little support from any of the witnesses for the notion that the expression "BIG MAC" would be used as an alternative name for McDonald's. It 18 an alternative name for McDonald's "BIG MAC". But whether 1t is used in that sense in any varticulaar context would be a question of construction. In the instant case that matter of construction 1S complicated because of assumptions and preconceived ideas that were entertained by various readers one assumption was that it waS most unlikely that McWilliam's would use the same name for its wine pack as the appellant had 18. Made famous with respect to its hamburger and that it was unlawful for it to do so unless it was done in conjunction with McDonald's. In this context McDonald's as an entity, steps into the situation, whereas had the reader been free of his erroneous assumptions and preconceived ideas this would not have happened. So far as persons subject to such assumptions were concerned they certainly acquired an erroneous belief from the advertisement. When in a particular context one uses a trade name associated with a product of another person but which is a name which may lawfully be used, with respect to one's own product there is inevitably a risk that some persons may be confused. So far as McDonald's was concerned, subject to the law relating to passing off, trade mark infringement, and any incidental benefit 1t could obtain by means of relief under s.52(1), it had no right to deny McWilliam's the use of the name "BIG MAC" ain relation to any one of its wine products. And the one thing about which the bulk of witnesses in this case were in no doubt was that the product the subject of the advertisement was a wine product of McW1lliam's and not of "icDonald's. Also on the evidence no trade mark of McDonalds extended to wine. And whether McDonald's could achieve an incidental benefit through the operation of s.52(1) of the Act depended on the construction which persons would give to the advertisement. Of course it does not follow that over time members of the public acquainted with McDonald's 19. use of the words "BIG MAC" have not become so familiar with its exclusive use as the name of McDonald's' product, that they have come to believe that there is some legal or other restriction on the use of those words much wider than that which actually exists. And having regard to the nature and extent of the reputation of Big Mac as a McDonald's hamburger 1t is quite possible that without formulating the matter in their minds people harbour either consciously or subcon- sciously, a general concept that in some way, "BIG MAC" belongs to McDonald's. The result may be that they cannot imagine that Big Mac could be used in any context save as referring to McDonald's hamburger and inevitably construe the words in the advertisement as saying something about McDonald's or the Big Mac hamburger. Any person of one of the states of mind described above who reads the advertisement, and who even observes that 1t relates to wine, may well think that McDonald's Must have consented to the use of the words "BIG MAC" and, accordingly, conclude that there 1s some business connection between McDonald's and McWilliam's relating to the wine or the advertisement, Immediately a reader thinks that the words "BIG MAC" are a reference to McDonald's hamburger they are misled and it 1s almost inevitably that he will conclude that the McDonald's must be in the wine venture in some way. What else could a reference to the hamburger suggest? 20. But were it not for the notion that there would be something improper in the use of the words by any trader other than McDonald's, or that in whatever context they were used they could only refer to McDonald's hamburger, or for some such notion in the mind of a reader, the advertisement would not convey to anybody the idea that it referred to or had anything to do with the hamburger. Any such initial impression would be destroyed by the context. At most, all that might occur would be surprise that McWilliam's were using the same name for 1ts product as McDonald's was using for its. At the most some people might wonder whether McDonald's and McWilliam's were acting together. But even so they would not be misled. It 1S a question therefore whether any misapprehension which has arisen is a consequence of McWilliam's conduct or of other factors, namely that the advertisement was read and interpreted by reference to erroneous concepts and assumptions. And the further and critical question is whether conduct otherwise neither misleading nor deceptive acguires deceptive quality because persons under the influence of erroneous ideas draw erroneous inferences concerning it. It 1s no doubt a sound view that persons engaging in commercial activity involving communications with the public must take the commercial environment as it actually exists. It May be said therefore, that when McWilliam's published the 21. advertisement the commercial environment was such that it was likely that some persons because of their erroneous preconceived ideas, would understand the words "BIG MAC" to refer to McDonald's hamburger and would draw inferences therefrom as to the possible involvement of McDonald's in the wine venture, and that if they did they would be misled. Section 52(1) of the Act enjoins traders not to engage in conduct which 18 described by Stephen J. in the Hornsby Case (supra) as truly a contravention of the section, that is which 1s misleading or deceptive (see 140 C.L.R. at p. 226, 18 A.L.R. at p.645). It 1s difficult to think that conduct is truly misleading or deceptive if it tells the truth and is such that if 1t 1s observed by persons who have no false ideas concerning extraneous matters nobody will be misled. And that is the case with this advertisement. A person not under the influence of erroneous ideas such as those discussed above may well be surprised to see the words "BIG MAC" being used for a wine pack, he may wonder whether McWilliam's was entitled to use them, he may wonder whether McWilliam's had to get permission to use them. But he cannot proceed from wonder to conclusion or even to probability on those matters. He will never be more than at most, in the state described by the learned trial Judge in his basic finding in this case, namely confused as to whether there was or was not a business connection between McWilliam's and McDonald's. Such a person is not misled. 22. It follows from the above that those persons who, by approaching the advertisement with erroneous ideas in their mind and interpreting its contents by reference thereto and are thereby misled do not arrive at their erroneous conclusion as a consequence of the terms of the advertisement, but because of the application, to those terms, of reasoning based on erroneous assumptions of their own. A member of the public can hardly complain of being misled by the conduct of another if because of errors made by himself he erroneously interpreted the nature of that conduct. And one would not contemplate that conduct, only misleading to those who misinterpret 1t because they apply erroneous assumptions in the exercise of interpretation, would be proscribed by the legislature, Such conduct would not be, one would think, truly misleading or deceptive. In those situations in which it 1s lawful for a trader to commence to use, in connection with his product, a name already in use by another trader for his product and widely known in respect of that product the possibility that persons familiar with the previous use of the name will, for a time, wonder how 1t comes to be used for the new product, and to entertain theories about it, inevitably exists. But it 1S not the purpose of the Trade Practices Act to intercept the conduct of lawful business. But in such situations as last mentioned lawful business would be intercepted 1f£ the name could not be 23. used otherwise lawfully, but unlawfully because persons acting by reference to erroneous assumptions might for a time misunderstand what waS going on. It Seems a sound view that, in such situations, a certain amount of misunderstanding 1s tolerable, just as it was declared to be tolerable by Lord Simmonds in cases where like descriptive names are used for separate businesses. (see Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) R.P.C. 39 at pp. 42-63. But in this case, basically it is to be tolerated because such misunderstanding as occurs is the consequence not of misleading conduct by the appellant but of a misunderstand- ing by observers induced by erroneous assumptions on their part. Having regard to the foregoing the respondent's claim for relief under s.53(c) and (d) of the Act necessarily fails, as 1t did also in the view of the learned trial judge, for the reasons Stated by him. As a result the appeal should be allowed, the injunction dissolved, the cross appeal dismissed, the action dismissed and the trial Judge's orders as to costs be set aside and in their place it be ordered that the respondent pay the appellant's costs of the application made on 23 November 1979 and that the respondent pay the appellant's costs of the trial 24. including the costs of the proceedings for interlocutory relief and the costs of this appeal. I certify that this and the twenty-three (23) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Smithers Associate ADL ; Dated: lo: x8 FO IN THE FEDERAL COUnT Of AUST RYLI* N.S.W. No. G20 of 19F9 ) ) NEW _SOUIH WALES DISPRICT REGISE.¥ ) ) ) GENERAL DIVISION ON APPEAL FROM THE FEDEPAL COUP OCF AUST PALIA BETWEEN: MCWILLIAN'S WINES PrY. LTD. Apoeliantr (Respondent) and McDONALD'S SYSTEM OF AUSTRALIA Try. ITD. . Responcent (Applicant) NORTHROP J. REASONS FOR JUDGNENT 16 DECHMSEF 1929 The facts of this appeal are sev. out in the reasons for judgment of Smithers J. and need not be repeated. I agree generally with his Honour's reasons for Judgment and his conclusion, but I desire to make some general commerts. In reaching his conciusion, the learned trial judge placed great reliance upon expressions of opinion contained in judgments given .n matters involving the application cof the law relating to trade marks. Likewise, counsel for tho respondent relied upon a similar aprroach. Much assistance can be derived in considering the meaning and application of 8.52 Trade Practices 4ct 1074, as awended, by reference to those authorities ard authoriti2s relating to the tort of passing off, but at the same tiwe great care must be taken Since the policy of both the common law and statutes relating to trade marks and passing off have a different emphasis to the policy of Part V of the Trade Practices Act. For present purposes it is sufficient to say that the' policy of Part V is to protect the public as consumers of goods and services provided by corporations in trade and commerce, see R. v. Credit Tribunal; ex parte General Motors Acceptance Corporation, Australia (1976-77) 137 C.L.R. 545 per Mason J. at p.561 and Hornsby Buriding Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1977-78). 140 C.L.R. 216 per Stephen J. at p.226. The law relating to passing off ard to trade marks have a common basis, and although based upon deception to the public, are directed to protecting the proprietary rights of a trader. The essential characteristics to found a successful action of passing off have been summarised in Warnink v. Townsend & Sons (Hull) Ltd. [1979] A.C. p.731. At p.742 Lord Dipiock said: "My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd., 864 L.d. Ch. 449 and the Jatcr cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresantation (2) made by a trader ain the course of tradc, (3) to prospective customers of his cr 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 conseguence) 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." At p.752 Lord Fraser of Tullybelton said:, "As my noble and learned friend, Lord Diplock, said in Star Industrial Co. Ltd. v. Yap Kwee Kor [1976] F.S.R. 256, 269: 'whatever doubts there may have previously been as to the legal nature of the rights which were entitled to protection by an action for 'passing off' in courts of law or equity, these were laid to rest more than 60 years ago- by the speech of Lord Parker of Waddington in Spalding v. A.W. Gamage Ltd., 32 R.P.C. 273 ('the Gamage case') with which the other Members of the House of Lords agreed. A passing off action 1S a remedy for the invasion of a right of property not in the Mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing off one person's goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it 18 attached. It is local in character and divisible; if the business is carried on in several countrijes a separate goodwill attaches to 1t in each. So when the business is abandoned in one country in which 1t has acquired a goodwill the goodwill in that country perishes with it although the business may continue to be carried on in other countries." An action for infringement of a trade mark 1s a remedy for the invasion of a right in the mark, and at ihe present time depends upon the existence of a statutory right of a proprietary nature, see Kerly's Law of Trade Marks and Trade Names 10 Ed. para. 15-02, p.307. In Australia, see Trade Marks Act 1955, as amended, and for present purposes s.58, s.62 and s.65. See also Moorgate Tobacco Co. Lid. v. Philip Morris Utd. (1980) 54 A.L.J.R. 479. The registration of a trade mark under tho Trade Marks Act depends largely upon the absence of deception or confusion to the public and it is with respect to the sections relating to that aspect of trade marks law that reference 1s made. The following sections of the Trade Marks Act 1905-1948 are set out: "25. Subject to this Act, the Registrar shall not register in respect of goods a trade mark identical with one belonging to a different proprietor which is already on the register in respect of the same goods or description of goods or so nearly resembling such a trade mark as to be likely to deceive." "114. No scandalous design, and no mark the se of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice, or the use of which would be contrary to law or morality, shall be used or registered as a trade mark or part of a trade marl." These two sections and related issues arising in infringement actions have been considered in a large number of matters before the High Court. Registration of a mark confers a right of a proprietary nature and this has affected the exegesis of the sections. In Southern Cross Refrigerating Co. v. Toowoorba Foundry Pty. Ltd. (1953-4) 91 C.L.R. 592 Katto J. sets out a summary of the relevant principles developed by the courts. At pp.594-5 his Honour said: "I am concerned, therefore, to consider only s.114, the material provision of which 1s that no mark, the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice shall be registered as a trade mark. The corresponding section of the English Act (s.l1 of the Trade Marks Act 1938 (Imp.)) 18s in the same terms with the addition of the words 'or cause confusion' after 'likely to deceive'; but, while these words make the section more specific, they add nothing to its effect. In relation both to the English and to the Australian section there are certain propositions which I think may he accepted as established by the cases. I take them,' Substantially, from the Judgment of Romer J., (as he then was), 1n In re Jellinch's Applicatian (1946) 63 R.P.C. 59, at p.78 : (2) In all applications for registration of a trade mark, the onus is on the applicant to Satisfy the Registrar (or the court) that there 1s no reasonable probability of confusion. (i2) It 1S not necessary in order to find that a trade mark offends against the section, to prove that there 1S an actual probability of deception leading to a passing-off. While a mere possibility of confusion 1s not enough - for there must be a real, tangible danger of i1itsS occurring (""eckitt & Colman (Australia) Ltd. Vv. Boden (1945) 70 C.L.R. 84, at pp.34, 95; Sym Choon & Co, Ltd. v. Gordon Choonrs Nuts Ltd. (1949) 80 C.L.R. 65, at p.79) - 1t 18 sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt. (111) In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and tne character of the probable purchasers of the goods : Jafferice v. Scorlett (1937) 57 C.L.R. 115, at p.120). (iv) In applications for registration, the rights of the parties are to be determincd as at the date of the application. (v) The onus must be discnarged by tne applicant in respect of all goods coming within the specification in the application (pursuant to s.32(2)) of the goods or class of goods in respect of which the registration is desired, and not only in respect of those goods on which he 1s proposing to use the mark immediately. And the onus 1s not discharged by proof only that a particular method of user will not give rise to confusion. The test is, what can the applicant do if he obtains registration?" In dismissing the appeal from the decision of Kitto J., the High Court, comprising Dixon C.J., McTiernan, Webb, Fulliagar and Taylor JJ. in a Joint judgment said at p.607: "We have thought 1t necessary to make some reference to the matters proper for consideration in relation to this issue under s.25 for the argument of the appell nt seizes upon them and asserts that once these matters have been considered and the relevant issue answered in favour of an applicant 1t 1s impossible to say that the use by him, with respect to his goods, of the trade mark in guestion would be 'Jikely to deceive' within the meaning of s.114. Whilst conceding that the likelihood of deception 1s not as great where, 1n no sense, can it be said that an applicant's goods are the same or of the same description as those of en opponent, it is guite clear that the latter finding by no means disposes of the relevant inquiry under s.114. To suggest that it does really confuses the nature of the inquiry which arises under s.25 for 1t 18 not sufficient in order to reach the conclusion that an applicant's goods are of the same description as those of an opponent, merely, to find that in the course of marketing there 185 a likelihood of deception taking place; the inguiry 1S much more limited and must be answered ain favour of the applicant unless upon an examination of the material matters the conclusion 1s justified that the applicant's goods ought to be reuyarded as being of the same description as those of the opponent. This 1s far from saying that 1£ the evidence shows a probability or likelihood of deception such a conclusion would be justified. Indeed 1f it wer? not a distinct and ceparate inquiry it would be impossible to reconcile the multitude of cases - of which In re Jellinek's Application ((1946) 63 R.P.C. 59) and Reckitt & Colan (Australia) Ltd. v. Boden ((1945) 70 C.L.R. 84) are themselves examples ~- in which it has been thought necessary to consider the likelihood of deception notwithstanding a finding that the respective goods of the applicant and _ the Opponent were not the same or of the same description," It is not necessary to refer in detail to the ' earlier cases, but it is desirable to set out some passages therefrom. In Jafferjyee v. Scarlett (1937) 57 C.L.R. at p.115 Latham C.J. said at p.120: "Both the applicant and the opponent have filed declarations expressing opinions, on the one hand, that no person is likely to he deceived by the registration of the applicant's mark, and on the other hand, that Many persons are likely so to be deccived. The court must of necessity decide this question for itself upon an inspection of the two marks, bearing in mind the circumstances under which the marks will k2 used and under which goods will be bought and sold, and the character of the probable putchasers of the goods." At p.122 the Chief Justice said: "The court must endeavour to put itself in the position of ordinary purchasei1s of goods who have noticed a trade wark as being distinctive of particular goods, but who have not compared that mark with any other mark, and who are guite probably not aware of the fact that ancther more or less similar mark erists. Such purchasers have not had the opportunity or the occasion to make a precise comparison of the two marks. They will be guided, so far as they are influenced by trade marks at all, by a general recollection or impression Of the mark which they have seen. It should not be assumed by the court that the probable purchaser 18 a specially stupid man, or, on the other hand, that he 1S a man who sets trade marks side by side and examines them with particularity." At p.124 Dixon J. said: "According to those principles the applicant must sustain the burden of excluding real: likelihood of confusion between the marks among reasonable persons behaving with as little or as much vigilance as is commonly displayed by those who buy goods of the description in question in the ordinary course of affairs. If the court is not satisfied that there is no serious risk of deception or confusion, the application must fail." In Radio Corporation Pty. Ltd. v. Disney (1937) 57 C.L.R. 448 Latham C.J. at p.453 said: "I do not decide this appeal upon the hasis that the opponents have any exclusive right of any kind to the use of the words and figures in question whether by way of trade mark or under a copyright or otherwise. My opinion 1s based solely upon the ground that, as against the public, the applicants should not be granted the exclusive right to use the words in connection with any goods for the reason that the use of the words by them as a trade mark would be likely to deceive (sec.114)." The Trade Marks Act 1955, which came into operation on 1 August 1958, replaced the earlier Act of 1905. The earlier s.25 and s.114 are, with some alterations, now contained in s.33 and s.28 respectively. In_re Bali Brassiere Co. Inc.'s Registered Trade Mark and Berlei Lrd.'s Application (1968) 118 C.L.R. 128 Windeyer J. said at pp.139--140: "Cases were cited to me from passages in judgments dealing with marks held to be, or held not to be, by reason of similarities, deceptive or confusing. I have read these cases, and others. I do not think I need discuss them. The governing principles are not in dispute; and little 1s to be gained by the quotation of enunciations' and elaborations of them in other cases. The difficulty is always in their application to- the facts of the case in hand. There are, however, a few observations I would make about 1tem (a) in s.28. It refers to an objective quality of the mark, 'likely to deceive or cause confusion'. A mark is 'tlakely to deceive' - or in the words of s.62 1s 'deceptively similar', which by s.6(3) means the same thing - because of its inherent tendency in use, independently of the purpose or intent of the user. That 1s to say a mark can be deceptive without being used deceitfully. The word 'deceive', I take it, here has one of the meanings in the Oxford Dictionary, 'to cause to believe what is false, to lead into error'. This accords with Dr. Johnson's statement of its primary sense, which was given as 'to cause to mistake, to bring into error'. Lord Diplock, then Diplock L.J., said in the recent Berlei v. Bali Case (unreported) in the Court of Appeal that: 'Unlike "to deceive", "te cause confusion" does not necessarily connote any intentional misrepresentation on the part of the user.' With great respect for his Lordship's opinion, I doubt whether, in their context in relation to deceptive trade marks, the words 'to deceive' necessarily predicate intentional mMisrepresentation. However, it 1S unnecessary to pursue this question, because the words 'or to cause confusion' appear in s.28 and in S.6(3). They apparently denote an alternative, differing from 'to deceive'. Under the earlier Act confusion was not expressly mentioned. It was then considered - 10 - that a probability of confusion would establish that a mark was likely to deceive. The question of deceptiveness could, 1t was then said, be judged by asking whethcr 'there will be a confusion in the mind of the public which will lead to confusion in the goods' : per Lord Parker (then Parker 3.) in Re Pianotist Co.'s Application ((1906) 23 R.P.C. 774, at p.777), a passage guoted in this Court in Cooper Engineering Co. Pty. Ltd. v. Sigmund Pumps Ltd. ((1952) 86 C.L.R. 536, at p.538)." In applying these principles by analogy to s.52 Trade Practices Act, the learned trial judge concluded: "In an appropriate case it may be that some' limitation upon the way the relevant person was misled or deceived or was likely to be misled or deceived is relevant in determining whether such conduct is in breach of s.52(1) of the Act. In the case before me I an, however, satisfied that the measure of confusion which the relevant conduct will produce is such that it will lead to a sufficient number of persons being likely to be misled or deceived upon the question of whether or not there was a business connection between the applicant and the respondent to establish a breach of s.52(1). This 1S a very unusual case because of the great reputation of the words 'BIG MAC' in association with "McDonald's'." This approach is consistent with that used in the trade marks cases, but as I have gaid, the policy of the Trade Marks Acts is different from the policy of Part V of the Trade Practices Act. The former is concerned with deception or confusion to the public as to the source of goods, while the latter 1s concerned with decevtion to the public as consumers of goods or services. The possible duplication of remedies is referred to in the Horrsby BuijJding Information Centre Case, supra, wer Stephen J. at p.226: "It 18, no doubt, somewhat of a novelty that a guite extensive jurisdiction in passing off actions, traditionally the concern of the Supreme Courts of the States, should be conferred upon the Industrial Court and that this should be done by an Act described as one "relating to certain Trade Practices' and by sections not very explicitly directed to such a subject matter. However this is, I think, but a consequence of the very direct relationship which necessarily exists between the deception of consumers in the course of trade and the injury caused by the unfair practices of a trade rival. Such deception, wlll quite often be the means adopted to produce that injury. Legislation which aims at the prevention of the former wil] at the same time tend to put an end to the latter. If, moreover, the legislative prohibition can be enforced by an injunction which 'any other person' may seek (see s.80(1)), ait then pecomes possible for a trader, injured by the competition of his trade rival, to gain a remedy under the Act instead of having recourse to civil action by way of proceedings for passing off. The remedy in such a case will not, as in passing off, be founded upon any protection of the trader's goodwill but, being directed to preventing that very deception of the public which is injuring his goodwill, it will nevertheless be an effective remedy for that of which he complains. The provisions of s.82, not invoked in this case, which allow a person who suffers loss by another's act which 1S in contravention of s.52 to recover by action the amount of his loss, may render the statutory remedy even more complete." At pp.226-7 his Honour gave a warning: "The Sydney Centre will, however, only be entitled to relief 1f what 18 in question 15S truly a contravention of s.52(1); that 1s to say, 1S conduct which is misleading or ~ 12 = deceptive. It is only this with which s.52(1) 1s at all concerned. It is not concerned, as such, with any unfairness of competition in trade as between two traders. ... Scction 52 of our Act is on the contrary exclusively concerned with consumer protection. It says nothing about unfair acts or practices but devotes itself to the prohibition of conduct which misleads or deceives. It is in its emphasis upon this aspect of s.52 that the Merits of the Hornsby Centre's submissions lie. In determining the meaning of 'misleading or deceptive' in s.52(1) and in applying it to particular circumstances the law which has developed around the tort of passing oif, founded as that tort 1s upon the protection of the plaintiff's intangible property rights, May not always provide any safe guide. However the long experience of the courts in that field should not be disregarded, some principles which have been developed appear equally applicable to s.52(1)." Since that decision, s.52 Trade Practices Act has been amended by the inclusion of the words "or is likely to mislead or deceive" but in my opinion that does not affect the general statement of principles by Stephen J. The inclusion of those words is to be read as meaning "may mislead or deceive" or "may be expected to mislead or deceive" or "has a capacity or tendency to mislead or deceive". Subject to the negative onus involved in applications for registration of trade marks, that appears to have been the meaning given to the use of the word "Jikely" in the phrase "likely to deceive" in the Trade Marks Act 1905-1948. On an analysis of whether conduct is "misleading or deceptive or is likely to mislead or deceive", under s.52 Trade Practices Act it may be of assistance to consider whether a prospective consumer of goods or services is likely to be confused as to the nature or quality of the goods or services to be supplied or to wonder as to the nature or quality of those goods or services. There may be cases where the source of those goods or services may be of importance in proceedings based upon s.52 of the Trade Practices Act, but in my opinion the present case is not one. In the present case the words "BIG MAC" are descriptive. When used by McDonald's they describe and refer to a particular type of large hamburger. When used by McWilliam's they describe and refer to a particular type of large container of wine. There 21S no confusion and there can be no confusion between the two types of goods. There is no deception nor is there likely to be deception between the two types of goods. The source of the goods in the sense of who is the supplier of those goods is on the evidence in this case of no importance. The source does not affect the nature or quality of the goods supplied. A consumer purchasing a "B1G MAC" hamburger 1s unlikely to be handed a "BIG MAC" bottle of wine. A consumer purchasing a "BIG MAC" bottle of wine 1s unlikely to be handed a "BIG MAC" hamburger. In my opinion, the conduct of McWilliam's is not in contravention of s.52(1) of the Trade Practices Act. we are not concerned with what rights McDonald's may have against McWilliam's in relation to proprictary rights unless - 14 - on the same facts the conduct by McWilliam's is in contravention of s.52(1) of the Trade Practices Act. 4. I would allow the appeal with costs and direct the respondent to pay the appellant's costs of the trial, I certify that this and the The'@tL <A preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice NS 2rHRE P ThA wh g dheoeie Associate Dated: (pb DECEMBER (960 IN_ THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G20 of 1980 were GENERAL DIVISION BETWEEN: McWILLIAM'S WINES PTY. LIMITED Appellant - and - McDONALD'S SYSTEM OF AUSTRALIA PTy. LIMITED Respondent CORAM: Smithers, Northrop & Fisher JJ. 16 December 1980. REASONS FOR JUDGMENT FISHER J.: In this matter I have had the advantage of reading th- reasons for judgment of Smithers J. I agree with his conclusions and I adopt his statement of the relevant facts. However, as I find myself 1n disagreement with the decision of the learned trial judge it 1s appropriate that I briefly set out the reasons upon which I base my disagreement, Before us it was the case of counsel for the respondent ("McDonald's") that the evidence established confusion or likelihood of deception as to some business connection between th respondent and the appellant ("McWilliam's"), contrary to fact. The trial judge found that the appellant's conduct in using the words "Big Mac" had in the circumstances confused the public into believing that there was such a connection and, based on such confusion, he held that he was entitled to conclude that the conduct was "likely to mislead or deceive". In other words, an essential feature of his reasoning, as I understand it,was that, as a matter of law, conduct which "confused" was conduct which was likely to mislead or deceive. Such reasoning was based on the trial judge's understanding of trade mark cases. In my opinion, the trial judge was incorrect in concluding that conduct which 1s confusing (1n the sense in which he used the word) to members of the public falls within the section. It is however necessary to determine exactly what is meant by the word " confusion" for I see it as having at least two different meanings. A person may be in a State of confusion when he is unable to differentiate between product A and product B. Product A and product B are "confused", i.e. mixed up, in his mind, and this can have been the end result or consequence of misleading or deceptive conduct. This meaning 1s illustrated by a sentence in Halsbury's Laws of England 3rd ed. vol.38 p.597 where the author is dealing with the essentials of an action to prevent use of a trade name. He Says in paragraph 998: "The plaintiff must further prove that the defendant's use of name or mark was likely or calculated to deceive and thus cause confusion and injury, actual or probable..." (underlining added) However, the sense in which the trial judge made use of the word "confusion" was more referable to a state of mind at an earlier stage, namely the state of mind of a person whose preconceived ideas have been disturbed and who is in a state of wonderment in consequence of this disturbance. In my view this state of uncertainty or bewilderment precedes the state of confusion referred to in the previous paragraph of thease reasons, and the trial judge when he spoke of the confusion engendered by the advertisement was referring to this state of wonder or uncertainty. I can not accept that conduct which only produces this state of mind is conduct which misleads or deceives or is likely to mislead or deceive. Stephen J. 1n Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. (1978) 140 C.L.R. 216, admittedly prior to the insertion of the words "likely to mislead or deceive" in s.52,was quite firm that there was a clear distinction between conduct which confused and conduct which was misleading or deceptive. I refer to page 229 of the report of that case where Stephen J. said "the risk of confusion must be accepted", and to page 230: "Evidence of confusion in the minds of members of the public is not evidence that the use of the Hornsby Centre's name 1s itself misleading or deceptive but rather that its intrusion into the field originally occupied exclusively by the Sydney Centre has, naturally enough, caused a degree of confusion in the public mind, This 1s not, however, anything at which s.52(1) 1s directed." It was said by the trial judge that the addition of the words "likely to mislead or deceive" has extended the scope of the paragraph to cover confusing conduct 1n the sense of conduct which merely causes the public to reconsider or doubt its preconceived ideas. I can see no justification for such an extended meaning. As I see it, all the legislature has done 1s t ensure that it 1s not necessary to establish that the impugned conduct has, 1n the opinion of the court, in fact misled or deceived, but merely that 1t 1s such conduct as 1s capable of misleading or deceiving and 1s likely to do so. There is no suggestion that any expansion of the meaning of the descriptive words "misleading" and "deceptive" was intended, nor is there any necessity to imply such an expanded meaning. To be confused is an inherently different state of mind from that of being deceived or misled, and the legislature has given no indication that it contemplates encompassing the first mentioned state of mind. It follows that it is my opinion that the contention th- an expanded meaning be given to the words can not be supported, and conduct which merely confuses the public is not conduct which contravenes s.52(1). However counsel for McDonald's also submitted that the evidence established that there was a likelihood of deception of the public as to some business connection between the responder and the applicant. He based this submission on the trial judge's findings made in reliance on evidence given by members of the public, that a sufficient number of persons were likely to be misled or deceived in this regard, It 18 correct to say that there was evidence to the effect that various persons came to various conclusions as to the type of business association which they conjectured must exist between the two companies. I am assuming that such evidence went beyond, and that the trial judge found that it went beyond, merely establishing confusion, but I am far from satisfied that such an assumption is justified. However, accepting, as the trial judge accepted, that members of the public have been misled to the extent of believin that there was a business connection, the question arises whether at inevitably follows that the section has been contravened, It 1S my opinion that in this case a contravention has not been established notwithstanding such evidence. I am fortified by the fact that the High Court in Hornsby's case, supra was 1n a similar situation in that, as Stephen J. said at p.228: "The Sydney Centre tendered some evidence that persons had been misled in this way and for present purposes I will assume that this has occurred." Notwithstanding this evidence and this assumption the finding of the High Court was that the conduct was not misleading or deceptive. There are two matters to which I must refer. In the first aunstance 1t 1s for the court to determine whether there 1s a likelihood that the public will be misled, and, in the words of Lord Morris 1n Parker Knoll Ltd v Knoll International Limited (1962] R.P.C. at 279: "In arriving at a decision the court must not surrender an favour of any witness 1ts own independent judgment." Secondly, aS was said by Stephen J., in the sentence which follow. the passage of his reasons cited immediately above, "But to determine whether there has been any contravention of s,52(1) 1t 1s necessary to inquire why this misconception has arisen in the minds of others." In respect of the first matter, I adopt the reasoning of Smithers J. in support of his conclusion that 1t 1s for the court to determine objectively whether the conduct under onsideration 1s likely to mislead the public. The second preliminary matter to which I would refer 1s the statement of Stephen J. that 1t 1s necessary "to inquire why tms misconception has arisen in the mindsof others". In other words, it is necessary, as I see it, not only to see the conduct in its context, but, in circumstances where the consequence of a finding in favour of a party may be to grant that party a monopoly, to appreciate that that party may have contributed to the misconception. As Stephen J. again said 1n Hornsby's case at p.230, referring to descriptive names, but in my view equally applicable to the present circumstances, "To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation," Also, at p.229, he said: "The risk of confusion must be accepted, to do otherwise 1S to give to one who appropriates to himself descriptive words an unfair monopoly in those words..." In my view, such a warning 1s a fortior1 1f the party who might gain the monopoly has assisted, albeit with perfect propriety, in creating the context 1n which the confusion occurs. In the present matter it 18 crucial to enquire why members o1 the public were lead to believe that, or were wondering whether, there was a business connection between the two companies. Essentially it was 1n consequence of the substantial reputation which McDonald's had established, through its extentive advertisil! campaign, in the words "Big Mac". Such was the degree of satur- ation achieved by the advertising that members of the public associated "Big Mac" exclusively with that company, to the extent of accepting that the company "owned" the words. It followed that they had a preconceived notion in respect of the relationshiy between the company and the words "Big Mac". Such notion extender probably quite reasonably, to an opinion that nobody else could make use of the words without the approval of McDonald's. This in fact was the true position in respect of a wide range of products, as McDonald's had registered the words as a trade mark in respect of many products ancluding non-alcoholic beverages. It had not however registered the trade mark in respect of alcoholic beverages, a fact unlikely to be known to members of the public. However such was the extent of the association in the minds of the public between McDonald's and the words "Big Mac" produced by the advertising campaign, that the public reasonably believed that McDonald's "ownership" covered the field. It was against this background that the public became aware of the use of the words by another company in respect of alcoholic beverages. Such use was disturbing to the public's preconceived notions, and understandably lead some members of the public to wonder and conjecture how such use came about. It was a simplc step from that wonder to look for an explanation, and to speculatc on the possibility of a business connection or of some approval by McDonald's to the use by McWilliam's of the words. In so far as they assumed that McDonald's had exclusive right to the words, some such explanation was logically necessary. However, it was only logically necessary 1f the assumption was correct, and if the member of the public had a sufficiently enquiring mind to pursue, or was prompted to pursue, the line of thought. It follows that a member of the public could only be "misled" if he pursued a line of conjecture based on and motivated by the unwarranted albeit reasonable assumption. If the conjecture led to a misconception, namely the existence of a business relationship ~ between the two companies, these circumstances were, in the words of Stephen J. in Hornsby's case, supra the reason "why this misconception has arisen in the minds of others". The use of the words by McWilliam's 1s not to be seen in 2solation, but against the background of a misunderstanding. This was the way the matter was perceived by members of the public who gave evidence of having been led to believe there was a business connection, and counsel for McDonald's conceded before us that members of the public could not "form an objective view". The court however in making its objective determination would not, or should not, be labouring under such a misapprehensi and should not, in judging McWilliam's conduct, see it isolated from the context produced by McDonald's advertising campaign. Moreover the use of the words by the former company might have caused confusion, in the sense of causing members of the public to wonder, but would not, in my view, but for the erroneous assumption, have produced the likelihood of deception as to the existence of some business relationship. I have already stated my Opinion that the causing of confusion or wonderment is not tantamount to misleading. In my view an objective determination does not take the matter beyond such confusion, and the use of such words by McWilliam's was not likely to reach the stage of actually misleading a member of the public. He might be confused, he might be wondering, or his preconceived notions may have been disturbed, but 1n my opinion he was neither misled nor likely to be misled into an erroneous conclusion. I agree that the appeal should be allowed and the cross d appeal dismissed with costs both here and below to be pai by the respondent. I certify that this and the sS preceding pages are a true copy of the yf: for Judgment of Mr. i De oe = Dated: / ' Decomber g8 jRoO,