IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY )No. G 18 of 1981 ) ) GENERAL DIVISION IN THE MATTER OF THE TRADE PRACTICES ACT 1974 BETWEEN: ROLLS~ROYCE MOTORS LIMITED, ROLLS-ROYCE LIMITED —SSSSSS Applicants AND: D.I.A. (ENGINEERING) PTY. LIMITED Respondent ORDERS JUDGE MAKING ORDERS: LOCKHART J. DATE OF ORDERS: 5 MARCH 1981 WHERE MADE: AT SYDNEY Upon the applicants by their counsel giving the usual undertaking as to damages, « THE COURT ORDERS THAT: 1. The respondent by itself, its servants and agents, be restrained until the hearing of the proceeding or further order, from advertising, promoting, displaying, offering for sale, selling or otherwise, in trade or commerce, dealing with, both at the 1981 International Melbourne Motor Show and elsewhere in Australia, any motor vehicle being a motor vehicle meeting any one or more of the following descriptions: (a) a motor vehicle having a radiator grille a representation of which grille is shown on the motor vehicle depicted in exhibit "Cc" in these proceedings; or CATCHWORDS Trade Practices - alleged breaches of ss. 52, 53, and 55 - production of 1920's - 1930's style car by respondent - whether either or any of the proposed use of name, emblen, grille and overall appearance of vehicle misleads or deceives or is likely to mislead or deceive. Jurisdiction - whether Court's jurisdiction extends to tort of passing off. Passing off ~ whether production of respondent's car constitutes passing off. Practice and Procedure - interlocutory relief - factors to be considered in an application for interlocutory relief. ROLLS~ROYCE MOTORS LIMITED, ROLLS-ROYCE LIMITED v. D.I.A. (ENGINEERING) PTY. LIMITED NO. G 18 of 1981 . LOCKHART J. 5 MARCH 1981 AT SYDNEY IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 18 of 1981 ) ) GENERAL DIVISION IN THE MATTER OF THE TRADE PRACTICES ACT 1974 BETWEEN: ROLLS-ROYCE MOTORS LIMITED ROLLS-ROYCE LIMITED Applicants AND: D.I.A. (ENGINEERING) PTY. LIMITED Respondent REASONS FOR JUDGMENT LOCKHART J. 5 MARCH 1981 AT SYDNEY . I propose to give my decision now as I have reached a firm view as to the result of this case and am mindful that an event of importance to the parties is imminent, namely, the 1981 Melbourne International Motor Show. This is an application for interlocutory injunctive relief. The case concerns the Rolls-Royce motor car of the applicants and a motor car which the respondent is in the course of producing. It is thus important to the parties, of material interest to some, and of academic interest to most. The facts are in a narrow compass. The Rolls-Royce motor car was first made in 1904 by Mr. F. H. Royce of Manchester whose business was acquired some two years later by Rolls-Royce Limited. It became a public company later that year. In 1971 a receiver 20/2 (b) a motor vehicle having a radiator grille colourably different from that representation; or (c) a motor vehicle bearing or embodying the registered trademark numbers A245413, A293855, A288879 and A288871 (hereinafter collectively called "the trademarks") or any trademarks substantially identical with or deceptively similar to any of the trademarks; or (d) a motor vehicle under the name of "Phantom" or any name substantially identical with or deceptively similar thereto, 2. The applicants secure the undertaking as to damages in a form and an amount to be determined by the Court failing agreement being reached between the parties. 3. Liberty be reserved to all parties to apply on the question of that security or on any other question arising in the working out of these orders on two days' notice. 4. Costs of this application, including all reserved costs, be costs in the proceeding. In 1906 the first Rolls-Royce cars were built, having a frontal radiator sculptured as indicated in a poster titled "Rolls-Royce Story ". Rolls-Royce cars have continued to use an almost identical radiator shape up to the present time. This radiator grille is a purely ornamental sculpture; it 1s neither functional nor mechanically useful. What is called in the evidence as the Rolls-Royce logo device, which I shall refer to as the Rolls-Royce emblem, has always appeared at the top of the radiator grille. The first Rolls-Royce model was superseded in 1907 by the Silver Ghost car. In 1925 the Silver Ghost was followed by the first of the Phantom series of motor cars. In 1933 Rolls-Royce Limited acquired the business of Bentley Motors Limited and produced Bentley motor cars. Following the Second World War, in 1946 Rolls-Royce Limited began to manufacture complete cars with standard body work. Prior to then, Rolls-Royce Limited merely made the chassis, wheels, radiator grille, engine, and power train of its cars. The body work was done to the prospective owner's specification by specialist body work builders. The initial Phantom produced by Rolls-Royce Limited was a big six-cylinder car. Whether or not it was a two, four, six or seven seater depended upon the particular owner. It continued in production until 1929. The Phantom II was released in 1929; the Phantom III in 1937; and the Phantom IV in 1950. This car had a coach body and only 18 such cars were built, being supplied exclusively to the order of crowned heads or rulers of States. It was the first Rolls-Royce to be used by British 12/4 was appointed to Rolls-Royce Limited who sold off some minor activities of the company. The aircraft engine mamfacturing division of the company was nationalised by the British Government and is at present controlled by the National Enterprise Board. Rolls-Royce Motors Limited, the first applicant, was incorporated at that stage. It was initially owned by the receiver. In May 1973 it was listed on the United Kingdom Stock Exchange. In July 1979 the first applicant merged with Vickers Limited. The first applicant is now a subsidiary of Vickers Limited which is a company listed on the London Stock Exchange. Since the merger with Vickers Limited it has continued to manufacture cars under the name of Rolls-Royce Motors Limited at Crewe in England. The first applicant is the registered proprietor of two trade marks in class 12 of the Australian Trade Marks Register. ~ Registration number 245413 is of the mark "Phantom" which is registered in respect of motor vehicles and chassis. The first applicant is also the proprietor of a trade mark consisting of a representation of the Rolls-Royce radiator grille which is registered in respect of motor cars. That mark is registration number 293855. Rolls-Royce Limited, the second applicant, is the registered proprietor of a trade mark consisting of the Rolls-Royce logo in class 12, registration number 288871. That mark is registered for motor cars and the first applicant is the registered user thereof. ---/3 royalty for ceremonial occasior. The Phantom V was produced in 1962. In 1973 the present model of the Phantom, the Phantom VI, was produced. Both the Phantom V and the Phantom VI have an extra long chassis, and have been purchased almost exclusively for ceremonial use. The Phantom VI is produced to the order, needs and tastes of the particular owner. The Governor of Western Australia has two Phantom model cars. One is the Phantom VI which was purchased in 1976 and the other is a Phantom IV purchased in about 1952. A Phantom VI was presented to her Majesty Queen Elizabeth II on the occasion of her Silver Jubilee by the Society of Motor Manufacturers and Traders. One of the distributors in Australia of Rolls-Royce motor cars, namely York Motors Sales Pty. Limited, sold a Rolls-Royce Phantom VI saloon to the Governor of Queensland in January 1973 and a Rolls-Royce Phantom VI saloon to the New South Wales Government — for use by its Governor in September 1976. The first applicant has four distributors in Australia. It has an Australian subsidiary, Rolls-Royce Motors of Australia Pty. Limited, but this company is concerned largely with the diesel engine business of the first applicant and with the supply of certification plates provided by the Australian Motor Vehicle Certification Board to purchasers of Rolls-Royce motor cars. The four Australian distributors of the first applicant are York Motors Pty. Limited as to New South Wales, the aA.c.T. and Queensland; United Motors Limited as to South Australia, Broken H111 and the Northern Territory; Kellow-Falkiner Pty. Limited as to Victoria and Tasmania; and Winterbottom Fords Pty. Limited as to Western Australia. oe e/5 There is evidence as to thn number of sales of Rolls-Royce motor cars in Australia between the years 1974 and 1980. I do not refer to that evidence in detail except to say that it establishes that some 552 Rolls-Royce motor cars have been sold during that period by distributors in this country; for example, 64 were sold in 1979 and 46 1n 1980. Rolls-Royce distributors in Australia are also responsible for the servicing of Rolls- Royce motor cars. The first applicant's Australian Distributors acquire cars from Rolls-Royce Motors Limited in the United Kingdom. Title passes on those cars when the motor car is shipped. The Rolls-Royce motor car is advertised by its Australian distributors by various means:- (a) in newspapers throughout Australia; (b) what is described in the evidence as the promotional type of advertising, namely use of demonstration model cars for visiting celebrities such as Dame Joan Sutherland; and (c) acquiring and maintaining stands at motor shows held in capital cities such as the 1981 International Motor Show of Melbourne currently being held. In late January 1981, the Australian distributors of the Rolls-Royce motor car received a letter dated 23 January 1981. I need not set out the whole text of that letter but I shall briefly mention its principal terms. It was signed by Mr. P. M. Ayres on behalf of Phantom Motor «+ /6 Car Company, a division of D.I.A. Engineering Pty. Limited, the respondent to these proceedings. It enclosed what was described as a preliminary brochure outlining the proposed release of a new motor car to be marketed by the respondent. It was described as follows:- "It is a luxurious hand-built vehicle of which only a limited number will be available in Australia each year. Its style, quality, performance, and exclusiveness will ensure immediate market acceptance- it is a brilliant design, distinctive,and unmistakably different, introduced to a market jaded with today's mass- produced look-alikes. We are now approaching a number of people such as yourselves to determine your interest in appointment as dealers for the vehicle... However, we are hopeful of producing the vehicle to sell for a retail price under $40,000." The brochure enclosed with the letter 1s a coloured brochure depicting the proposed motor car of the respondent. It is important to describe it in general terms. It depicts a motor car which is said by the brochure to be: "The Phantom is a prestige vehicle to be built with 1930's style bodywork, but using up-to-date production-car chassis and drivetrain components. It is a car that captures the spirit of motoring's extravagant past, the ultimate fashion accessory, but will be surprisingly inexpensive to own. The running costs of this classic will be actually less than those of a conventional Mercedes or Rolls of similar or higher price. The car is the result of thoughtful design, careful attention to detail, and perfect timing. The Phantom's styling has all the verve and panache that make so many 1930's cars the classics they are today. It is an original work of art; beautiful, sophisticated, and tasteful. The unique features in our design will not be found in any other modern day car." There is a picture of the motor car displayed under the caption, "Drive into the future with the past..."; and there is in the bottom lefthand corner what has been sometimes described in the evidence as a logo of the proposed car. I shall refer to it as the emblem. It is unnecessary to describe it, because it appears clearly from the exhibit itself, except to say that it is an upright rectangle with the word "Phantom" at the top, the word "Motor" at the bottom, both on a white background, the words being in black print, and in the centre of the emblem on a black background is a large letter "P" written in white. The back of the brochure also has the emblem in the bottom righthand corner and refers to the Phantom Motor Company at its Melbourne address, and invites the reader to visit the Phantom Motor Company's stand at the 1981 International Melbourne Motor Show. Details of the vehicle and its technical specifications are set out on that sheet. An article appeared in the Melbourne Age newspaper on 24 January 1981, written by one Christopher de Fraga, referring to the proposed vehicle of the respondent. I will not set out the article in detail but will refer to one or two points the writer makes. He refers to: "The Phantom's radiator shape is similar to the Rolls-Royce, but underneath the car it's all Holden." Again: "Modern motoring's reliability with some of the charm of a bygone motoring age is the aim of the designers of this latest Australian car, the Phantom. 2+ +/8 Although its name and radiator shape hark back to a Rolls-Royce model before World War II, the makers - Phantom Motor Company - insist that it is not a replica. 'I£f you want to see some features of another car in it you can,' saidMike Ayres, the car's builder. And he might have been referring to the Holden underpinnings of this classically shaped car." The applicants' solicitors wrote to the respondent on 23 February 1981 in which they asserted that Rolls Royce Motors Limited, the first applicant, was extremely well known for its high quality motor cars throughout the world, including Australia, and that various models, including Phantom models, have been produced since 1924. They drew attention to the existence of the relevant trade marks to which I have already referred, and to their extensive use in Australia by the first applicant. They complained, on behalf of their client, of the use by the respondent of:- "(a) a radiator grille substantially identical with that used by our client; (b) the name "Phantom"; (c) a badgewhich is similar to the ROLLS-ROYCE logo used by our client; or (d) trade marks deceptively similar to or substantially identical with the trade marks" They sought undertakings from the respondent that it would refrain from infringing the trade marks, from infringing sections 52 and 53 of the Trade Practices Act 1974, and from passing off the proposed Phantom motor vehicle as having any connection with the Rolls-Royce motor vehicle or the applicants. +29 A reply was received on 25 February 1981 by telex from the solicitor for the respondent which denied the allegations made in the letter from the applicants' solicitors and said:- "Without 1n any way retreating from the views expounded above and consistently with its lack of intention to deceive or cause confusion our client proposes taking the following steps with a view to eliminating any unease (however 111- founded) which your client may be suffering - 1. The vehicle will be renamed the "Phaeton" the latter name being derived from the original French term for a light four wheeler carriage. 2. The word "Phantom" will be removed from the logo and the word "Phaeton" will be substituted therefor. 3. Subject to the availability of the business name "Phaeton Motor Company" the present business name will be changed from "Phantom Motor Company" to "Phaeton Motor Company" or such other appropriate business name as may be available and the present business name will be discontinued. 4. All publicity will (as in the past) give due note to the use of the G.M.H. components incorporated in the vehicle. . If notwithstanding the foregoing your client proceeds with litigation resulting in any interim or interlocutory injunction our client's loss to this date would approximate one hundred and fifty thousand dollars to two hundred thousand dollars and this would escalate rapidly from this point onwards." In due course the applicants applied for ex parte relief from this Court, which was granted on Monday last, 2 March 1981. The proceedings came on for hearing yesterday on an interlocutory basis and have continued today. The applicants alleged that the conduct of the respondent, in producing a motor car said to incorporate features which are distinctive of motor cars produced by the first applicant, constitutes misleading and deceptive conduct within the meaning of the provisions of sections 52, 53 and 55 of the Trade Practices Act, 1974. The particular matters relied fin -10- on by the applicants in support of their case under the Trade Practices Act are the name "Phantom", the emblem and the radiator grille. The applicants assert that the respondent has infringed and is continuing to infringe its registered tradmarks. Again, they rely upon the use of the name "Phantom", the emblem and the radiator grille. The applicants also assert that the respondent is passing off its proposed motor vehicle as a Rolls-Royce motor vehicle or as a vehicle having connection or association with the applicants or either of them. In their statement of claim the applicants also ask for an order for delivery up of offending materials; damages or account of profits; and declarations that the respondent has contravened sections 52, 53 and 55 of the Trade Practices Act, infringed the relevant trade marks and committed a passing off. ° It is not disputed that this court has jurisdiction as to all these matters following the decision of the High Court in Philip Morris Inc. and Philip Morris Limited v. Adam P. Brown Male Fashions Pty. Limited, to which I shall refer as the Philip Morris case. Plainly, this court has jurisdiction with respect to the cause of action based on the alleged infringement of sections 52, 53 and 55 of the Trade Practices Act. It is also plain that the jurisdiction embraces the claim for infringement of trade marks under the Trade Marks Act as being a claim with respect to a matter arising under Commonwealth law and associated with the matter or matters arising under the Trade Practices Act; see in particular s. 32 (1) of the Federal Court of Australia Act, 1976 Whether the Court's jurisdiction extend to the tort of passing off rests on an analysis of the reasons for judgment of the members of the High Court in the Philip Morris case. The applicants' assertion that this Court has jurisdiction rests essentially on the reasons for judgment of Mason J., with whom Stephen J. concurred, namely, that: "...the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction." I am satisfied that this Court has jurisdiction to determine the claims for interlocutory relief asserted by the applicants. The cause of action based on passing off Stephen JJ. falls within the test enunciated by Masonand/ and,a fortiori, within the reasons for judgment of Barwick C.J. and Murphy J.- In hearing an application for interlocutory injunctive relief: "...the court does not undertake a preliminary trial and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. It looks to see whether the applicant for the injunction has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the trial of the action, the applicant will be held entitled to relief (Beecham Group Ltd. v. Bristol Laboratores Pty. Ltd. (1968) 118 C.L.R. 618; 1968 A.L.R. 9). I have already stated my views on the nature of the case which has to be made out to meet this test (see World Series Cricket Pty. Ltd. v. Parish (1977) 16 A.L.R. 181 at 185-6 and Commercial Bank of Australia Ltd. v. Insurance Brokers Association Of Australia (1977) 16 A.L.R. Tél at 168). I adhere to what I have previously said and will refrain from repeating it." wee /l2 -12- per Bowen C. J. in Transport Workers Union of Australia v. Leon Laidely Pty. Limited (1980) 28 A.L.R. 589 at p. 593. Deane J. expressed views to much the same effect at pages 599 and 600. The most recent statement of principle as to the Court's role in considering an application for interlocutory injunctive relief is to be found in the judgment of Mason J. in Commonwealth of Australia v. John Fairfax and Sons Limited (1980) 32 A.L.R. 485 at pp. 490 and 491 where his Honour said: "As this is an application for an interlocutory injunction until the hearing of the action, it is not my task to decide the issues which will arise on a final hearing. I have only to decide whether the plaintiff has made out a sufficient case for interim relief. In Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. 1968 A.L.R. 469; 118 C.L.R. 618, this court decided that what the plaintiff has to show in order to obtain an interlocutory injunction is that there is a probability that he will succeed at the trial, if the evidence remains the same. According to the House of Lords, the plaintiff need only show that there is "a serious question" to be tried (American Cyanamid Co. v. Ethicon Ltd. 1975 A.C. 396; 1975 1 All ER 504). But in Beecham it was acknowledged (A.L.R. at 470; C.L.R. at 622) that how strong the probability needs to be "depends...upon the nature of the rights" asserted and "the practical consequences likely to flow from the order" sought. Much depends on the state of the evidence which is presented on the interlocutory application." I turn first to the claim for relief based on the alleged contravention of ss. 52, 53 and 55 of the Trade Practices Act. Section 52 provides, so far as relevant:- "(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 53 provides, so far as relevant:- "A corporation shall not, in trade or comm «ce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services -- «-/13 -13- (a) falsely represent that goods are of a particular standard, quality, grade, composition, style or model or have had a particular history or particular previous use; (c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have; (d) represent that the corporation has a sponsorship, approval or affiliation it does not have;" Section 55 provides: "A person shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods." Sections 52 and 53 have been considered before; but not to my knowledge s. 55. I see no good purpose at this interlocutory stage of the case in traversing the principles to be found in the cases. It is sufficient to say that they may be found generally in R. v. Credit Travel; ex parte General Motors Manufacturers Corporation of Australia(1976-77)137 C.L.R. 545, especially per Mr. Justice Mason at p. 561 and Hornsby Building Information Centre Pty. Limited v. Sydney Building Information Centre Pty. Limited (1977-78) 140 C.L.R. 216 per Mr. Justice Stephen at p. 226. The applicants rely on a number of matters said to constitute misleading or deceptive conduct on the part of the respondent. First the name "Phantom". This was the name which the respondent intended to give to its motor vehicle until the solicitors for the applicants wrote to it asserting the rights of the applicants in these proceedings. As I have said the -.-/14 reply from the solicitors by telex was to the effect that the respondents intended to change the name "Phantom" to some other name which would not be a colourable imitation of it. At first, it was thought that the name should be "Phaeton"; but this has proved to be a name not available for registration as a business name under the relevant legislation in Victoria. It appears that the name "Phaeton" was initially put forward as an alternative by the respondent because it was asserted that it was derived from the original French term for a light four-wheeler carriage. Apparently, this meaning of the word which, according to the Shorter Oxford English Dictionary arose in 1742, was preferred to another meaning which arose about the same time (1747) namely, "a rash charioteer like Phaeton; som thing that like Phaeton sets the world on fire". "Phaeton" was the son of Helios, famous for his unlucky driving of the sun chariot. ° - The respondent prepared a form of undertaking in writing which it gave to the Court by its counsel during the hearing before me without admissions of liability that it will not, by its servants and agents: "1. Use the name or mark 'Phantom' in connection with the manufacture, supply or distribution of a motor vehicle, and, in particular, a motor vehicle of or similar to the prototype appearing in Fxhibits C and 4 in these proceedings. 2. Use the word 'Phantom' in the name or designation of a firm or corporation engaged in the business of manufacturing, supplying or delivering of motor vehicles. 3. Use a logo or mark of the same or similar content and layout appearing on Exhibit C 20/15 -15- in connection with the manufacture, supply or distribution of a motor vehicle and, in particular, a motor vehicle of or similar to the prototype appearing in Exhibits C and 4 in the proceedings." Exhibit "C" is a brochure depicting the motor car of the respondent. Exhibit 4 is a series of small coloured photographs of parts of the respondent's car in various stages of production. I will say something more about the undertakings later. As this is an interlocutory application, I do not think it necessary or appropriate to draw any conclusions as to why the respondent chose to name the vehicle "Phantom" or, for that matter, "Phaeton". The respondent led evidence from a Mr. Ayres who was responsible for the concept and design of the proposed motor vehicle and, obviously, the person mainly responsible for its production, yet no explanation was given as to why the name "Phantom" or "Phaeton" was selected. I should say at this stage that the word "Phaeton" is, in my opinion, in all the circumstances of this case, only colourably different from "Phantom". "Phantom" is a word which, in motor car circles, has been associated with Rolls-Royce motor cars for over 50 years. Why did the respondent choose to adopt this word? No explanation has been offered. All that the evidence reveals is that it was chosen by Mr. ayres himself at a time when he knew that it was a name which had been associated with the Rolls-Royce motor car over many years. I think this question, although relevant to interlocutory relief, is best left to the final hearing. -+-/16 Second, the applicants rely on the proposed use by the respondent of the emblem appearing towards the too of the front grille of the prototype motor vehicle describing the respondent's car as the "Phantom". Although there are obvious differences between this emblem and the emblem of the applicants, the overall impression it conveys is one of close similarity to the Rolls-Royce emblem, also its trade mark, and when it is used as part of the grille, the similarity is marked. I see no good purpose in mentioning the particular points of similarity and difference between the two emblems. The overall impression is the same and that is what matters. The third matter relied on by the applicants in support of their case was the alleged identity of the grille of the respondent's proposed motor car to that of the Rolls-Royce "Phantom" motor car. This is a critical matter in the case. The original design of the respondent's grille showed six sides" virtually identical with the sides of the Rolls-Royce grille. The respondent's proposed grille was then modified to its present form of seven sides. This was done by removing the horizontal plane at the top of the grille, thus leaving two sides meeting to produce a pointed top and by splaying the two bottom corners. Mr. Ayres gave evidence of a number of differences between the grille of the prototype vehicle of the respondents and the Rolls-Royce vehicle. He said that the grilles differed in their proportions as to both height and width; the respondent's grille had a pointed top and was not flattened out and there was a different angle at the top. The Rolls-Royce grille has 2/17 twenty vertical slats without a central pillar, whereas the respondent's grill has twenty-four vertical slats with a central pillar. The respondent's grille has "cut-away" edges at the bottom, which I have referred to as being the splayed corners; Mr. Ayres said that the respondent's grille has no "lip" on either side. The respondent's grille is made of mild steel,nickle chromed, giving a yellow colour, whereas the Rolls-Royce grille is made of stainless steel. The Rollis- Royce grilleperforms no function, whereas the respondent's grille performs vital functions. That is a brief summary of what he said as to the points of difference. Not having the benefit of the transcript, I may have overlooked one or two matters; but I think not. In my opinion, although these are differences, they are merely colourable. The overall impression one gains from viewing the grille of the vehicle which the respondent proposes to produce, wnether as set out in exhibit "C" or in the photographs, Exhibit 4, (the latter show the splayed corners at the bottom of the grille) is one of close identity to the Rolls-Royce grille. In any event, I have no real confidence that the vehicle which is to be ultimately marketed by the respondent will have the grille depicted in the recently taken photographs. It may or may not. The evidence 1s somewhat uncertain and imprecise. The Rolls-Royce grille has been used as a distinguishing feature of the Rolls-Royce motor car for over 50 years. The grille 1s square framed and vertically shuttered. It is a distinctive grille. The design of the respondent's grille, -.-./1g -18- whichever form it takes (either Exhibit "C" or the photographs in Exhibit 4), is such as, in my opinion, to falsely represent that its origin is Rolls-Royce. The more difficult question concerns the general or overall appearance of the respondent's proposed motor car. It is most clearly depicted in Exhibit "C", and does overall convey an impression of a car substantially the same as the Rolls- Royce "Phantom" of the 1920's and the early 1930's; but this impression is contributed to by the emblem, the name "Phantom" and the grille. If I put aside the name and the emblem, my impression does not really change. It is the grille that is of especial importance. The applicants did not assert that any interim relief is required as to the general shape, style or design of the respondent's proposed motor vehicle. Mr. Ayres gave evidence that it would be possible to redesign the grille so that the slats or shutters were horizontal rather than vertical; but still retaining the strut or support that he said was essential to the structure of the vehicle. Whether any grille that emerges from the redesigning of the existing grille will be sufficiently different from the Rolls-Royce grille as to remove any suggestion that the respondent's vehicle is a Rolls-Royce is not a matter on which I can comment. The respondent sought to answer the applicants' case by evidence from publications and books depicting various cars which have been produced over the years since ---/ 19 -19- the 1920's for the purpose, I gather, of showing that there is nothing particularly unique about the Rolls-Royce grille. I propose to say little about this as much will depend ultimately on the evidence adduced at the final hearing. It is sufficient to say at this stage that, although there appear to be early model cars in the 1920's and 1930's which have certain features in common with the Rolls-Royce car, none, according to the evidence, are to be found in motor vehicles currently produced or sold in Australia. Also, none of the grilles of the other vehicles to which I was referred in evidence seemed to me to be the same as the Rolls-Royce grille, although there were some similar features. Although Rolls-Royce cars have varied in design over many years, the Rolls-Royce has used basically the same distinctive grille from the 1920's to the present. Having considered all the evidence, I am satisifed that the applicants have made out a prima facie case, in the sense that, if the evidence remains as it is, it is probable that the applicants will succeed as to infringements of s. 52 of the Trade Practices Act. I need, therefore, say nothing about ss. 53 and 55. As to the alleged infringement of the trade marks of the first applicant, in my opinion the applicants have established a prima facie case as to infringement in relation to the name "Phantom", the emblem and the grille. What I ~--/ 20 -20- have said thus far as to the evidence is sufficient to establish this. The respondent submitted that I should view with some caution the validity of the trade mark in relation to the grille because it involved a novel concept, so it was said, namely, treating as a trade mark a very part of the motor vehicle itself. Also, it was said that any use by the respondent of the trade mark is not a use of the mark as a mark. These are matters which can be raised in due course at the final hearing of the case. They do not seem to me to operate to prevent the granting of interlocutory relief. I turn to the issue of passing off. The essential ingredients in the tort of passing off are, of course, well known and I will not dwell on them. It 1s sufficient if I refer to the speech of Lord Diplock in Warnink v. Townend & Sons (Hull) Ltd. 1979 A.C. 731, where his Lordship said at p. 742:- "My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd., 84 L.g.ch. 449 and the later 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 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 (ina quia timet action) will probably do so." I need not refer again to the relevant facts. I rely on what I hav -++/21 -21- already said and am satisfied that the applicants have established a prima facie case for the granting of interlocutory injunctive relief. In the result the applicants have established their claims for interim relief based on all causes of action. It is necessary to turn to the balance of convenience. The respondent claims that it is geared to introduce its,as yet unnamed and incomplete motor car at the 1981 International Motor Show at Melbourne, which commenced today. Although no firm orders have been lodged with it, plainly a number of inquiries have been made by persons which may lead to firm orders. The respondent has already expended substantial sums of money in the development of this motor vehicle and has commitments to sub-contractors in respect of other sums. The total appears to be in the order of some $70,000.00. However, Mr. Ayres frankly conceded in cross~examination that the bulk, if not all, of the money that has been expended to date, save for a few thousand dollars in relation solely to the Melbourne Motor Show, would not be lost if interim relief is granted. What would be lost, of course, is any profit that may be gained from orders that may be lodged at the motor show or otherwise for the respondent's proposed vehicle; although it must not be forgotten that the vehicle is still unnamed and incomplete. Although the planning of the respondent's vehicle has been on foot for some two or three years, the detailed olanning, design and contruction did not commence until about October 1980. Granting of interlocutory relief will not prejudice the ultimate production of any vehicle by the respondent save for some delay that will necessarily occur. Perhaps also there will be loss of interest -22- on borrowed money, if any, employed in the respondent's venture and loss of cash flow, but I have little direct evidence as to this. In other words, the granting of interlocutory relief would delay the ultimate marketing of the respondent's vehicle with attendant inconveniences, annoyance, some expenditure and perhaps embarrassment; but, so far as I can discern from the evidence, little that is not capable of being compensated by damages that would flow from the undertakings as to damages that will necessarily be given by the applicants as the price for interlocutory injunctive relief. It is common ground that the applicants do not themselves have assets in Australia, although at least one subsidiary plainly does. However, the applicants are prepared to secure any undertaking as to damages. The Rolls-Royce "Phantom"motor vehicle has been produced since the 1920's, although its design has varied over the years. It is a motor car of the highest quality. If the respondent is permitted to adopt distinctive features of the Rolls-Royce, advertise the proposed vehicle and market it, the public is likely to be confused as to the source of the respondent's car. Also, the harm that could be done to the Rolls-Royce name and vehicle is incalculable. Financial harm could be sustained by the companies that produce the Rolls-Royce. I am satisfied that the balance of convenience lies with the maintenance of the status quo, that is, the respondent not advertising or dealing in trade or commerce with this proposed motor vehicle involving the offending features to which I have referred - the name, the emblem and the grille. The respondent 22/23 -23- will have the benefit of the applicant's undertaking as to damages in the meantime. For these reasons I am satisfied that the applicant is entitled to interlocutory injunctive relief; but before departing from the case, there are a few observations I wish to make. The first is that the Court is not, of course, concerned at this stage with whether it should ultimately be held that the respondent has acted in contravention of ss. 52, 53 or 55 of the Trade Practices Act or has infringed the trademarks of the first applicant or has passed off its motor vehicle as a Rolls-Royce. The Court is concerned only with the question whether a prima facie case has been made out in the sense I have mentioned earlier, together with the question of the balance of convenience. Second, a matter that may be important, if and when the case is finally heard, is whether buyers of the proposed vehicle of the respondent would be misled or would be likely to be misled into believing, at the time of purchase, as distinct from earlier times, that the vehicle was in fact either a Rolls- Royce or in some way connected or associated with Rolls-Royce. Third, counsel for the respondent submitted that if interim relief is granted, the respondent ought to be free to use its stand at the present Melbourne Motor Show and display its proposed vehicle either with the grille in its present form or with a proposed new grille which is part of Exhibit 16. I do not think it would be appropriate to accede to that request. The Motor Show 1s being held. The respondent is free tO use its stand provided 222/24 -24- it does not contravene the injunction that is about to be granted. What it does will be a matter which it will no doubt carefully consider in conjunction with its legal advisers. Finally the respondent apparently thinks that there is a market for the production of a new car of the 1920/1930 style and designed with the application of up-to-date technology. The pursuit of that commercial project should not be inhibited unless it encroaches upon the legal rights of persons such as the applicants or contravenes the law. To change the form of the proposed vehicle and the emblem is but part of the answer to the problem. The answer lies mainly in changing the grille so that it is plainly different from the Rolls-Royce grille. Although the respondent has through its counsel proferred the undertakings which I have already referred to, I think in all the circumstances it is preferable that the subject matter of the undertakings be embodied in the form of injunctive relief. I note that the applicants ae prepared to secure their undertaking as to damages. I do not think it necessary to make any order to that effect. I will leave it to the solicitors for the parties to agree upon the appropriate form of security. If any problem arises about that question, the matter can be restored to the list by either party; but I express the view that the security should be provided, if not today, tomorrow whether by bank guarantee or other appropriate form. That leaves the question of the form of the injunctive relief. MR. PRIESTLEY: Your Honour, on the form of the injunction, my learned friend and I have been able to formulate something to be 022/25 -25- read into the judgment. Although it is not particularly ina neat form, I could hand it up. If it fits with your Honour's view, then it could be engrossed. What we have done is to take the draft of the existing injunction and the relevant part of the document your Honour has, so that at the end of sub-paragraph (d) your Honour will be able to add whatever remarks your Honour makes as to costs and whatever remarks your Honour makes about further proceedings. HIS HONOUR: I think what you have done by way of alterations to (1) (a) (b) would be sufficient, so far as I am concerned. MR. SHAVIN: We have no objection. MR. PRIESTLEY: As to what your Honour said concerning security, my instructing solicitor fears that the day may be too short, that he is not confident that he will be able to get the necessary formality completed tomorrow. MR. SHAVIN: We would seek a formal order to the effect that security be provided in a form to be agreed upon by the solicitors. HIS HONOUR: I think on reflection, that is reasonable and right. MR. PRIESTLEY: We would not oppose that. What my learned friend suggests would give us the flexibility we need in order to give the agreed security quickly. HIS HONOUR: Upon the applicants by their counsel giving the usual undertaking as to damages, I make the following orders: {1) That the resporiddent by itself, its servants and agents, be restrained until the hearing of the proceeding or further order, from advertising, «+ -/26 -26- promoting, displaying, offering for sale, selling or otherwise, in trade or commerce, dealing with, both at the 1981 International Melbourne Motor Show and elsewhere in Australia, any motor vehicle being a motor vehicle meeting any one or more of the following descriptions: (a) a motor vehicle having a radiator grille a representation of which grille is shown on the motor vehicle depicted in exhibit "c" in these proceedings; or (b) a motor vehicle having a radiator grille colourably different from that representation; or (c) a motor vehicle bearing or embodying the registered trademark numbers A245413, A293855, A288879 and A288871 (hereinafter collectively called "the trademarks")or any trademarks substantially identical with or deceptively similar to any of the trademarks; or (da) a motor vehicle under the name of "Phantom" or any name substantially identical with or deceptively similar thereto. (2) That the applicants secure the undertaking as to damages in a form and an amount to be determined 1/27 by the Court failing agreement being reached between the parties. (3) I reserve liberty to all parties to apply on the question of that security or on any other question arising in the working out of these orders on two days' notice. (4) That the costs of this application, including all reserved costs, be costs in the proceeding. { cert fy that t- 3 aca the Ayenkey oY (26) preced.ry farts ave a trea cory cf the Measons fer Jeogmert heren ci rus |oncur wy