CATCHWORDS Trade Practices - Consumer protection - misleading or deceptive conduct - conduct likely to mislead or deceive - passing off - use of logo by island guesthouse containing silhouette of island - similar logos used by booking and travel agent in advertising relating to island - whether deceptive or misleading conduct or likely to mislead or deceive - whether passing off. Trade Practices Act 1974, ss. 52, 53(c)(d). Pinetrees Lodge Pty. Limited -v- Atlas International Pty. Limited N.S.W. No. G21 of 1981 Coram: Ellicott J. 22 September 1981 Sydney rey IN THE FEDERAL COURT OF AUSTRALIA SYDNEY DISTRICT REGISTRY No. G21 of 1981 GENERAL DIVISION PINETREES LODGE PTY. LIMITED Applicant ATLAS INTERNATIONAL TRAVEL PTy. LIMITED trading as "Lord Howe Island Tourist Centre" Respondent ORDER JUDGE MAKING ORDER: Ellicott J. DATE OF ORDER 13 October 1981 WHERE MADE: Sydney THE COURT ORDERS THAT:- 1. The respondent, by itself, 1ts servants and agents be restrained from using in trade or commerce the logo being annexure "P" to the affidavit of Bruce McFadyen sworn on 23 March 1981 and filed herein. nay 2. Either party have liberty to apply. That the respondent pay four-fifths of the applicant's costs of these proceedings. AN IN THE FEDERAL COURT OF AUSTRALIA ) ) SYDNEY DISTRICT REGISTRY ) No. G21 of 1981 ) GENERAL DIVISION ) PINETREES LODGE PTY. LIMITED Applicant ATLAS INTERNATIONAL TRAVEL PTY. LIMITED trading as "Lord Howe Island Tourist Centre" Respondent CORAM: ELLICOTT J. REASONS FOR JUDGMENT Pinetrees Lodge Pty. Limited (the applicant) conducts a guest house on Lord Howe Island. It has brought these proceedings against Atlas International Travel Pty. Limited (the respondent) claiming that the respondent has in trade or commerce engaged in conduct that 1s misleading or deceptive or is likely to mislead or deceive in breach of s.52 of the Trade Practices Act 1974 (the Act), that it has committed breaches of s.53(c) and (a) of the Act and 1s guilty of passing off its business as that of the applicants. 2. Since the early 1970's the applicant has operated the business of a guest house called "Pinetrees"" on Lord Howe Island. It caters for tourists, 1s the largest guest house on the island and can accommodate 80 people or approximately 25% of the total island tourist accommodation. There are some 13 other such establishments on the island. The respondent has for some ten years conducted the business of a tourist agency and in so doing acted for a number of these establishments. It currently represents lodges and flats providing over 65% of the accommodation on the island and books approximately 3500 persons per year into such establishments. It 1s also an established travel agent. Until late 1977 the applicant accepted tourist bookings from the respondent and paid it commissions in respect thereof. For reasons which were given in evidence 1t ceased to do so and thereafter appointed the New South Wales Government Travel Centre as its general sales agent. The reasons given make it clear that the applicant no longer wished the primary booking of accommodation at "Pianetrees" to be associated with the respondent. Since then the respondent has booked members of the public wishing to go to"Pinetrees"into that guest house through the New South Wales Government Travel Centre. un 3. In 1973 Bruce McFadyen who shortly thereafter became and still is an executive director of the applacant was requested by the then main shareholder, Mrs Kirby, to design a logo for use by the applicant in connection with ats business. The logo he designed was as follows:- The island silhouette at the top of the logo as adopted was reproduced in a dark blue, the word "Pinetrees" in amid green and the words "Lord Howe Island" also in dark blue. There are two significant mountains on Lord Howe Island known as Mt Lidgbird and Mt Gower which tend to dominate the island. The island silhouette in the logo was intended in part to represent these mountains. Mr McFadyen described the logo as a worms eye view. In designing it,he drew the shape of the mountains as an accurate representation of their silhouette but he intentionally exaggerated their vertical scale. The palm trees and vegetation beneath do not and are not realistic representations and are based on stylised trees and vegetation that he had often drawn as an architect on architectural presentation drawings. The lettering was set out and hand drawn by him and was not based on a standard printer's alphabet but he says that the way in which he conbined the mountains, the palm trees, the vegetation and 4. the lettering was a conscious design decision on his part and that their combination did not depict an actual island scene but was intended to convey a feeling of identification with Lord Howe Island. He asserted that the logo was an original design. After being developed, this logo was used in that form or with very minor variations on letterheads, envelopes, brochures and advertisements sent out by the applicant and on calendars and t-shirts supplied by it to tourists. Examples of these various items, apart from calendars, were admitted in evidence. The directors and staff of"Pinetrees"have worn the t-shirts during most of their working time and the t-shirt has ian fact been part of each waitress! day time uniform for about four years. On arrival at the airport guests are met by a director of the applicant wearing a t-shirt to aid with identification. Over the past five years about 3,000 t-shirts bearing the logo have been sold to Lord Howe Island visitors. In March 1979 the applicant lodged an application for registration of the logo as a trademark with the Registrar of Trademarks. This application is pending. After the applicant ceased dealing direct with the respondent it took a number of steps to advertise its accommodation. It purchased double column advertising space an the "Travel Australia" section of Saturday's "Sydney Morning Herald" which it still maintains. It appointed a permanent Sydney sales representative whose primary task was to service travel agents in the Sydney Metropolitan area and to inform them of the booking arrangements. This representative is still employed. It took a number of uN 5. other steps to make the travel industry aware of its decision to disassociate itself with the respondent's agency. As a result of what has happened the applicant and the respondent are apparently the only establishments which regularly advertise Lord Howe Island holidays in the Sydney daily press. Substantially all of the other guest houses and tourist establishments on the island rely - on advertisements placed by the respondent. Prior to 1973 the applicant had used another, but different, logo which contained a representation of the two mountains with four palm trees in the foreground on a beach. It was not a silhouette. Examples of this, as used on pamphlets and letterheads, are in evidence. Towards the end of July 1980 the respondent commenced to advertise Lord Howe Island holidays in the "Sydney Morning Herald/using in the advertisement, in black,a representation of two palm trees with foliage beneath them, Although not identical in every respect to the palm trees and foliage shown in the applicant's logo this design,on examination,is found to be a direct copy,in material respects of two of the palm trees and of vegetation in the applicant's loge. Having noticed this,the applicant wrote to the respondent on 4 August 1980 requesting it to cease using any part of their logo in its advertisements. ry 6. This design was developed by a Miss Schofield, a commercial artist. She was requested by the respondent to prepare urgently a design suitable for use on classified advertisements in the 'Sydney Morning Herald." Prior to this being completed, she was given by Mr Estella, the respondent's General Manager, colour literature, brochures and photographs relatiny to the island. Included amongst the brochures was the applicant's brochure which _ contained on the front a representation of the logo referred to earlier. She agreed in cross-examination that she used the logo on the applicant's brochure as a reference and that although not in precisely the same relationship as in the applicant's logo every single feature that appeared in her completed drawing was taken from it. This representation, however, was not intended for use ag a logo. Around the same time the respondent also requested Miss Schofield to design a new logo for use by it on such items as its stationery, travel bags and advertising material. She was asked to use her own discretion as to how she could "capture" the island in a logo and she had before her the material relating to the island referred to earlier. In answer to this request she produced five coloured designs for a logo. Each of- them contained a stylised representation of the dominating mountains on Lord Howe Island. They were considered by the board of the respondent and it chose one which, in black, looks as follows:- ay This design has always been used by the respondent in association with the name "Lord Howe Island Tourist Centre". In the actual logo chosen,and,as subsequently used by the respondent on stationery and in colour advertising literature, the palm trees were shown in a mid to dark green, the sun in a shade of mustard yellow and the silhouette of the island and sea in differing shades of dark blue. It 1s fair to say that the logo chosen by the respondent's directors,out of the five submitted by Miss Schofield,was the one which,in fact,bore the closest resemblance to that which had been adopted by the applicant. In cross-examination Mr Smith, the managing director of the respondent, agreed that he had told Mr McFadyen in October 1930 that Mr Estella had selected the logo and that at the time it was selected he had told Mr Estella it was very similar to "Pinetrees" logo and that if he wanted "Pinetrees" to deal with their tourist centre again he should perhaps not use logos so similar. Mr Estella in evidence agreed that he was aware of the similarity when the palm tree logo was chosen. As stated earlier, the applicant objected to the use by the respondent of the design of palm trees in the "Sydney Morning Herald" advertisement. On 11 August 1980 the respondent replied. The letterhead contained its newly adopted logo. ' 8. Shortly after this, the respondent agreed not to use the"palm tree"design in its advertisements. The applicant then objected to the use of the silhouette logo adopted by the respondent but the respondent claimed it was entitled to use 1t and continued to do so. Correspondence passed between the parties and this is 1n evidence. Without prejudice to its right to use the"palm tree"logo the respondent did however use another lego, namely, one similar to that initially adopted but with the palm trees removed and an aeroplane substituted. The applicant, however, objects to the use by the respondant of both the "palm tree" logo and the "aeroplane" logo. Subsequently,as a result of discussion and the correspondence, another logo was created,namely, one which depicts, instead of palm trees or an aeroplane, a comparatively large representation of a woodhen in green. This last-mentioned logo was the subject of discussion at the hearing. The applicant indicated that it has no objection to the respondent using this logo. The respondent however still claims the right to use both the "palm tree" and "aeroplane" logo. This would involve their use on such objects as advertisements, brochures, stationery and cabin bags. Examples of the use of one or other of the logos on such objects are in evidence. There is one example of the use of the""palm tree"logo in white on a card headed "Get the know-how on Lord Howe." 9. In advertisements in the "Sydney Morning Herald" the logos are not, of course, reproduced in colour. The silhouette of the island and the palm trees are, for instance, shown in black. The representation of the sun in the respondent's logo is shown in black dots. Advertisements by both parties in the "Sydney Morning Herald" dated Saturday October 18, 1980 are in evidence. These use the applicant's logo and the respondent's"palm tree" logo and the advertisements appear one under the other. It was common ground that both the applicant and the respondent have always used their respective silhouettes in association with their respective trading names. Evidence was given by persons who have visited the island. Two called by the applicant testified to their knowledge of the island, its features and characteristics and its plant, sea and animal life. Each of them had seen the applicant's logo and the respondent's"palm tree" logo. They emphasised that although the two mountains dominated the island they could be viewed from different angles. The colours of the island also varied depending on the time of day and the position of the sun. Each of them had been familiar with the applicant's logo over a number of years. They also testified to the reasonably high quality of accommodation facilities, food and service supplied by the applicant at "Pinetrees" 10. Those called on behalf of the respondent testified to the significance of the mountains, vegetation and the colours of the island and made it clear that they regarded the mountains and palm trees as being distinctive of Lord Howe Island and not of any particular establishment. One regarded the silhouette of the island as the most distinguishing physical characteristic of the island. He did not associate the silhouette with any particular business but regarded it as descriptive. A large number of exhibits consisting of pamphlets, books, paintings and the like showing the significance of the two mountains and of palm trees in publications about Lord Howe Island were tendered in evidence. It is clear from these that the mountains are a dominating feature of the island terrain and that one of the most pleasing features of the island are the palm trees around it. Samples of letterheads used by other establishments on the island are also in evidence. These contaan differing representations relating to the island. Most make use of the mountains and some of palm trees. None of them shows a combination of the mountains and palm trees in the way they are depicted in the applicant's or respondent's logo. One of them, relating to "Coral Court", contains a stylised silhouette in blue of the two mountains with an irregular blue line underneath to represent the sea. Evidence was also given by Australia Post that in 1978 a postmark was adopted for stamping all mail originating on the island. The stamp, which was designed by the island of il. postmistress, shows the two mountains with two palm trees on one side of the stamp and a map of the island on the other. At the top, above the mountains, appear the words "Lord Howe Island". Trade Practices Act It is in these circumstances that the applicant claims that the respondent, being a corporation, has in trade or commerce in breach of s.52 of the Act engaged in conduct that is misleading or deceptive or is likely to mislead or deceive and has committed breaches of s.53(c) and (da) of the Act. I shall deal first with the alleged breach of s.52. Clearly enough the respondent is a corporation and the conduct complained of has been engaged in by it ian trade or commerce in Australia. The relevant and indeed difficult question is whether 1ts conduct has been misleading or deceptive or 1s likely to mislead or deceive. It is well settled that an applicant under s.52 does not have to prove any relevant reputation. The section is aimed at protecting the public and the market place from deceptive conduct. It is not aimed at protecting the goodwill or reputation of a particular trader. Nor is it necessary for an applicant to establish actual deception or confusion. It is sufficient to establish that the conduct in question is likely to mislead or deceive. In applying s.52 it is proper to have regard to the principles which surround the tort of passing off. The 12. High Court in Hornsby Building Information Centre Pty. Limited v. Sydney Building Information Centre Ltd. ((1978) 140 C.L.R. 216) confarms this. In applying these principles it is important to bear in mand that s.52 is concerned with deceptive conduct on the part of the corporation charged with it. It does not concern itself with confusion or deception which arises from other causes. Where a trader uses what,1in essence,is a descriptive name or descriptive words in relation to the goods or services it provides, confusion or even deception may be caused because the name or words are also used by another trader to describe its similar goods or services. This problem was discussed by Stephen J. in the Hornsby Building Information case (supra at p. 229). In sucha case it can be said that the confusion or deception was not caused by the trader whose conduct is complained of. Such confusion or deception may have to be accepted. This is important, in the present case, because it 1s alleged that the silhouette in the applicant's logo is descriptive. It will ordinarily be sufficient to establish a breach of s.52 that a significant section of the relevant public are led to believe or are likely to be led to believe by a respondent's conduct that something is true about the respondent's business or the goods and services it provides which, in fact, is not true. For instance, af they are led to think or are likely to be led nay 13. to think that there 1s some association between two traders when in fact there is not. This deception can occur not only through the use of similar trade names but also by the use of similar representations or get-up. In the present case,there 1s no evidence of actual deception ,but it is said that it is likely to occur because the respondent is using logos which are similar to that adopted and used by the applicant. JI shall deal first with the use by the respondent of its "palm tree" logo. I am satisfied, on the evidence, that the applicant's logo consisting of the silhouette, the words "Pinetrees" and "Lord Howe Island" -as described earlier, has been used consistently for a period of over seven years in advertisements, stationery, brochures and t-shirts in association with the applicant's business. I am also satisfied that there would be ,as a result of such use on and off the island,a substantial number of members of the public in Australia who have come to associate this logo with the applicant's guest house. The most distinctive part of the logo is the silhouette of the island. Indeed the use of the name "Pinetrees" in the logo only serves to emphasise the connection between "Pinetrees" and the silhouette. The respondent has adopted a silhouette more stylised involving the use of palm trees with the sun in the background. It is possible by comparing the silhouettes to point to differences. For instance, the two mountains in the respondent's are obvious stylised representations. The leaves of the palm trees 1n each are different. There are three palm trees in the applicant's logo and only two , , 14. in the respondent's. In the applicant's logo as represented in colour, the palm trees are in dark blue. In the respondent's they are in dark green. The respondent has a wavy line representing the sea underneath it. The applicant has none. On the left hand side the applicant's logo shows more foliage whereas the respondent's in some instances shows a clearly defined end to the silhouette and presumably to the representation of the island. In determining the question of deception it is not ,jhowever ,sufficient, as I have done, to compare or contrast the two logos side by side. The question is to be answered by considering members of the public acting in the ordinary course of business. They would not ordinarily make such an analysis. Some may, but a substantial proportion would have only a passing and therefore imperfect recollection of the applicant's logo and one which did not retain the detail but only an impression. In actual use, the two logos would sometimes be used on travel brochures in colours which are not, in my view, markedly different even though appearing on different parts of the logo. The shade of blue in each may to a printer er another expert be different but to a member of the public, with a passing acquaintance, I do not think there would be any substantial difference. Similarly the shades of green in the words "Pinetrees" in the applicant's logo and the green in the palm trees in the respondent's,although aifferent, are not markedly different. In press advertisements a Tinta ae Saat 8 i aL NEN ODER CI OI TEI LAR ARE ABELL APTI ET OY ETI UN + BaP AID ETAT rm TAN wy 2 uy 15. it is more likely that the silhouette in the logos as well as the print will appear in black and this is illustrated in the advertisement in evidence in the "Sydney Morning Herald" of October 10, 1980 where one advertisement appears under the other. The ultimate question of whether a significant proportion of the public are likely to be deceived by the respondent's use of the palm tree logo 1s a matter peculiarly for the Judge. Evidence of deception is not necessary nor binding on him. A judgment has to be made of the likelihood of deception occurring with the likely use of the two logos in mind. The evidence shows that the respondent's "palm tree" logo has already found its way onto stationery, brochures, cabin bags, travelling wallets and a variety of advertising literature as well as into press advertisements. Mr Steigrad, a witness called by the applicant, obviously knew the difference between the two but I think an one of his answers he highlights the difficulty which the respondent faces in this case. He was asked:- .«..and it has never been suggested to you, has it, that the Lord Howe Island Tourist Centre is connected by way of business with Pinetrees Lodge ?-~----~-- No. And knowing of both organisations and seeing they use the art work and the words I have just drawn your attention to, you would not think so would YOu? +=---+- I find that question difficult to answer because I doubt that I would recognise that the Lord Howe Island Tourist Centre logo you just showed me at a glance in any advertisement or publication be substantially different at all from that of Pinetrees so I make that point and from my knowledge of Pinetrees I know they are not associated" B 16, Although on close inspection there are obvious differences between the two logos, I do not think that the ordinary member of the public, knowing the applicant's and seeing the respondent's would be likely to notice any substantial difference between them. This, in effect, is what Mr Steigrad was saying. The silhouette is the dominant feature 1n each logo. The reference in each to the particular business is not an my view likely to make any difference to the conclusion which many members of the public knowing the applicant's logo would be likely to draw on seeing the respondent's. I think it is likely that they would think, contrary to the truth, that it was the same business as the applicant's or if they noticed the name "Lord Howe Island Travel Centre" that there was some association between them. In other words the use by the respondent of the "palm tree" logo, in my opinion, amounts to conduct which is likely to mislead or deceive. It passes beyond mere confusion. It was strongly submitted that the silhouette was merely a representation of Lord Howe Island and was therefore descriptive. Anybody, it was submitted, carrying ona business related to Lord Howe Island, should be entitled to use in its advertisement a representation of the island such as this. There can be no question that the two dominating mountains, palm trees and the colours blue and green are associated with Lord Howe Island in the minds of those who know it. This is also probably so of people who have never been there but are famzliar with photographs and art work depicting the island. Many examples of this were put in evidence. 17. Although I do not think it 1s correct, there is, nevertheless, a great deal of force in this submission. It emphasises the dilemma facing the court ina case such as this. I think the answer to it lies in the fact that the applicant's silhouette has sufficient special features about it to be capable of becoming distinctive. Itisa silhouette and not an actual photograph or reproduction. The representation of the island, the palm trees and the vegetation beneath them is completely in blue - not the natural colour of any of these features. Furthermore, the silhouette does not represent a silhouette of an actual scene or view of Lord Howe Island. Mr McFadyen made it clear that he had, himself, been responsible for producing the original work and did not take it from an actual photograph. He described it as a "worm's eye view". In evidence,there were a number of letterheads of other establishments on the island and it is clear that, in differing respects, each has chosen a representation of the island or features of it as its distinctive logo. One of them "Coral Court" has a stylised silhouette of part of the island. "Pacific Palms" has a palm tree with the two mountains in the background. "Blue Lagoon" also has a palm tree with the mountains in the background but in a different relationship. "Ocean View Lodge" has adopted two palm trees. 18. In 1978 Australia Post through the local postmistress adopted a postmark consisting of a representation of the two mountains with palm trees and a map on respective sides. In my opinion, the evidence of what other establishments and Australia Post have done only serves to emphasise the distinctive quality of the applicant's logo notwithstanding that it is a representation of features which are familiar to the island. It 1s perhaps natural that,in the course of trade, each of the establishments on the island adopted a particular representation thereof or of a feature thereof as its own special method of associating its business in the minds of people with Lord Howe Island. In my opinion this is something that each of them is entitled to do. This, in my view, is what the applicant has done in adopting its logo. Although in a sense 1t is descriptive, it has, nevertheless, by use, 1n association with the applicant's business, become distinctive of it. Furthermore, there is such a similarity,in the sense I have described, between the palm tree logo used by the respondent and the applicant's logo that a significant number of relevant members of the public would, in my view, be likely to be misled or deceived into believing, contrary to the truth, that the two businesses were the same or that there was some business connection between them. It 1s worthy of note that the respondent had the opportunity to choose from a number of logos 19. when its "palm tree" logo was adopted. It is clear that it chose that which was closest to the applicant's. Mr Smith, the Managing Director of the respondent, agrees that, at the time it was adopted, a conversation to the following effect took place:- "Mr Estella was dealing with the advertising people and he had a range of logos. He selected one. I told him it was very similar to Pinetrees and if he wanted Pinetrees to @eal with the Lord Howe Island Tourist Centre again perhaps he should not use logos so similar." It is also a fact that the respondent not only chose a logo which was similar to that of the applicant's but about the same time used in ats advertisements representations of palm trees and foliage which had been copied from the applicant's logo. The respondent was not aware of this until it was pointed out and it then stopped using the representations. These facts are not essential to my finding that the respondents have, in adopting the "palm tree" logo engaged in conduct in trade or commerce that is likely to mislead or deceive. They do however emphasise that it went into the matter with its eyes open, having had a past business association with the applicant which had been severed and knowing that the applicant was not anxious to revive it. The applicant also submits that there has been a breach by the respondent of s.53(c) and (d) of the Act. 20. It claims that the respondent in trade or commerce by using the "palm tree" logo has falsely represented that its services have the sponsorship or approval of the applicant (para (c)) and that the respondent has the sponsorship, approval of or an affiliation with the applicant (para (d)). ° I am not satisfied that either of these provisions has been breached by the respondent's use of the "palm tree" logo. It is clear that there is no representation of sponsorship or approval either of the respondent or its services by the applicant. The case on "affiliation" under s.53(d) is stronger but I incline to the view that this provision requires a representation of some positive link. (See McDonalds System of Australia Pty. Limited v. McWilliam's Wines Pty. Limited (1979) 28 A.L.R. 236 per Franki J. at p. 248). The conduct here does not extend this far. The conduct is, as I have held, likely to deceive or mislead some members of the public into believing that there is an association in a business sense between the respondent and the applicant but this does not, in my opinion, amount to a representation of an "affiliation". I have so far directed my remarks to the use by the respondent of its "palm tree" logo. There is now no dispute between the parties as to the "woodhen" logo. It ls not claimed by the applicant that its use constitutes a breach of ss.52 or 53. I thank this is clearly right. If 21. the respondent adopted it as its logo it would remove the likelihood of the public being misled or deceived. The use of the "aeroplane" logo by the respondent 1s,however, claimed by the applicant to be a breach of these provisions. In my view the applicant is not entitled to relief on any ground in relation to the use of this logo. The substitution of an aeroplane for the palm trees is, I think, sufficient to remove the likelihood of deception: It is very much a matter of impression, but I think a person seeing it, whether in colour or in black, who was familiar with the applicant's logo would not be deceived into thinking that they were the same business or that there was a business association between the two. Passing Off The applicant also claims that by use of the logos the respondent has been guilty of passing off. In my opinion, for the reasons I have already given in considering the application of s.52 of the Act, the respondent is guilty of passing off in using the "palm tree" logo. It is not guilty of doing so by using the "aeroplane" or "woodhen" logo. 22. Conclusion In the light of the above findings the applicant 1s entitled to relief against the respondent's use of its "palm tree" logo. I shall determine the precise form of relief including any order as to costs after counsel have had an opportunity to consider these reasons and to put further submissions to me. atrie topy of the | t ot | a | > bevern of hig Hor our