. 2 SIS E2. IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY No. G 137 of 1982 GENERAL DIVISION ) BETWEEN WANDER LIMITED AND Applicant BARLOW GROUP LIMITED Respondent CORAM: SHEPPARD J. 23 August, 1982 REASONS FOR JUDGMENT This is an application for interlocutory relief in which the applicant seeks to restrain the respondent from marketing a preparation known as Medifast. The causes of action upon which the applacant relies are breaches or threatened breaches of s.52 of the Trade Practices Act 1974 and passing off. Woly The-apptreant 18 a company incorporated in Switzerland. OO It 1s a member of a group of companies known as the Sandoz Group which manufactures and markets pharmaceutical products throughout the world. It has for some time marketed in . i Western Europe, but not ancluding the United Kingdom, a product ——_—___ _ known as Modifast which the-epblicens claims to be effective oe in the treatment of obesity. It 1s sold in a box con- I taining 15 packages, each in turn containing a powder a , woich 1s intended, when mixed with water, to replace meals. Instead of partaking of his ordinary meals, the patient consumes at meal times the contents of one of the packages. Thus,—the-esurse of treatment continues over five days. The advantage of the applicant's product is said-to be that 1t provides sufficient nutriment for the daily requirements of the body combined with a very low calorie intake. It is recommended that the product only be taken upon the prescription or recommendation of a medical practitioner, apparently because the-applivons recognises that aiéts of this kind may be harmful to some members OF the community. ie Ww Recently the-apptteant has taken steps to begin market- ing its product in Australia, but these steps are still in their preliminary stages. It was necessary for the applicant to obtain an import permit. This has been granted but subject to a condition to the detail of which I do not refer because it 1s part of the confidentral evidence in the case. The permit was issued on 4 August last. Before Ww putting its product on the market here, the applicant intends to conduct clinical tests, These have not yet commenced and a ~ ee will not be complete before the end of February next year. The product was displayed at a medical congress on obesity held in Rome in 1980. Interest was shown by a number of doctors from various parts of the world, some of whom came from Australia. A follow-up circular letter was written to those doctors. There is a medical publication known as The Inter- national Journal of Obesity. It has some circulation in Australia. An issue of the gournal Circulated earlier this year contained a prominent advertisement for the applicant's product. Towards the end of last year and earlier this year the applicant consulted a number of doctors and dieticians concerning the introduction of its product into Australia. A number of personal contacts have been made and certain letters have been written. Evidence of these contacts was given in the form of cards recording conversations and letters. Both were confidential exhibits and I do not refer to the detail of them. It must be said, however, that these contacts have not been numerous and that the letters are of the circular type. There has been no written response to them, at least so far as the evidence discloses. On 22 January, 1981, the applicant made application for registration of the trademark "Modifast" as a trademark an Part A of the register in respect of dietetic foods for 3. medical use, infants and invalids' foods, food supple- ments containing protein, vitamzns and minerals and slimming diets. On or about 13 August, 1982, the Assistant Registrar of Trade Marks notified the applicant that the application had been accepted, but it has not as yet been advertised. The _rdspondent_is_a_compeny-whieh was incorporated in the United Kingdom on or about 20 January, 1982. On or about 9 March, 1982, 1t was registered in the Australian Capital Territory as a foreign company. In or about the fr month o uly of this year the respondent began to market in Australia its product known as Medifast. Like the W's applicant's preducet, it is claimed to be a treatment for obesity. It involves the substitution either for all ordinary meals, or for the majority thereof, of the prepar- ation which 1s to be mixed with water. The treatment, if ny in full substitution for meals, 1s intended to last over S a period of five days. However, a warning on its packaging Ss says: ~~ "Persons intending to totally replace-al normal méals with Medifast should consult their doctor before starting the Medifast -dtet _——— The product 1s sold in a cardboard box in which there Bo are 15 packages containing the respondent's preparation, one for each meal. Despite statements to the contrary in the evidence of Mr, Allen, who is the manager of the Australian Clinical Dietetics Division of the applicant, there are substantial "> differences between the apptieentts packaging and that of -p- the-vespomdent. The packages themselves are not, when —____E eee looked at together, capable of oausing confusion, let alone deception. No submission to the contrary was made by lWre AN counsel for the applicant. His-ease /is based entirely upon the likelihood of deception of consumers caused, it Bom his submisszen, by the respondent's use of the word Medifast. "Yt Should be mentioned in relation to the applicant's packaging that the only packages in evidence are those apparently used in Europe. I have assumed, as did counsel, that the applicant's Australian packaging will be similar to that of its packaging 1n Europe, but there 1s no evidence that any Australian packaging exists at the present time. The box 1n which the respondent's product is packed suggests that 1t 1s a Barlow product. It displays the word "Barlow" reasonably prominently in three places, and in another the words, "Barlow Pharmaceuticals Division, Barlow Group Limited, Sydney, Australia", There is no statement expressly saying that the product 1s made in Australia. In some advertising material which has been tendered there appear the following words: "WHO ARE BARLOW? The name Barlow may be new to you. The Barlow Group and its associated companies have over twenty years experience in the nutritional and dietary area. Our products are established brand leaders in the dietary market an the United Kingdom and several other countries. Additionally, products developed by us are now being sold throughout the world by several well known pharmaceutical companies. You can rest assured that we are a highly reputable company with considerable experience in the specialist dietary market. You can recommend Medifast with absolute confidence." The brochure which contains those words was evidently intended for circulation amongst medical practitioners and perhaps dietitians as well. The name "Barlow Pharmaceuticals" is registered as a business name, a company Poteme Pty. Limited of 31 Wunulla Road, Point Piper being the registered proprietor of it. According to the registered particulars, the commencing date of the business conducted under the name Barlow Pharmaceuticals was 1 April, 1982. There is evidence as to the shareholders and directors of the company, but I do not find it necessary to refer to these. The only executive of the respondent to be called was a Miss Kennedy, who is its promotions manager. She said, in an affidavit which was originally confidential but which is no longer so except as to certain matters which I shall not mention, that she first contacted doctors in relation to Medifast in late June of this year. At or about the same time the respondent, according to her evidence, contacted wholesalers of pharmaceutical products and some purchased stock immediately. A number of wholesalers in Queensland, New South Wales, the Australian Capital Territory and Victoria from late June 1982 carried, and have since that date carried, stocks of Medifast. A number have placed repeat orders. Miss Kennedy also said that in early July 1982 the respondent received its first orders of Medifast from doctors. It placed advertisements for Medifast in publications known as Modern Medicine and Current Thera- peutics in July 1982. These publications are said to be distributed to doctors in all States of Australia. Miss Kennedy then deposed to the number of orders received from doctors and also as to certain advertising. I do not refer to the detail of this evidence. In cross-examination she said that the respondent operated through representatives who were in the field. She said they had been active in the last six weeks or so. At the company's office at Wunulla Road, Point Piper, she said, there were only herself and a secretary. She added that the sales manager came in when he did what she described as his end of the week books; but as I understood her evidence, normally there were only present a secretary and herself. She said the representatives telephoned for instructions and came in at the end of each week. She said she had contact with one of the directors, a Mr. Lowe, whom ahe described as her "boss", She was asked where the product was made and she said, "I am led to believe it is in Australia as far as I know", She was asked whereabouts in Australia, and she said, "I would not know, I do not know". She was also asked where the respondent's stocks were situated and she said: "Most of our stocks at this stage I believe are stored at TNT. That is Thomas Nationwide Transport, 1s 1t? --~ Yes, that is correct. At their premises in Sydney?--- Yes. Are the goods already packed?--- Yes." One of the respondent's representatives also gave evidence. She is a Mrs. Harman. She said that she had been a sales representative since about the middle of July 1982, Since taking up her position she had visited at least 200 retail pharmacies at Liverpool, Campbelltown and Sydney for the purpose of selling to retail pharmacists the product Medifast. She gave evidence of the quantities sold and also mentioned delivering the product to medical practitioners in Liverpool, Campbelltown and Sydney. In her oral evidence she said that stocks were kept in her house. She said her husband was involved in the packaging of the product and he brought them home, She said that she did not know who made the product. She said that it was made in Australia, that was all she knew. She was asked where 1t was packaged and she said, "I do not - I know it is over - it is around Cronulla; but I could not tell you the address", The evidence I have recounted establishes that the ' applicant and the respondent each market a product claimed to be beneficial in the treatment of obesity. Each product is intended to stand as a replacement for normal meals over a period of five days, subject to the qualification that the respondent's product may be used to replace only some meals. Each product 1s sold in a box containing 15 packages, the contents of which are to be mixed with water. One product is known as Modifast and the other Medifast. If there were no other issue in this interlocutory application I would have little hesitation in concluding i that the marketing of the two would prima facie be likely to cause deception to consumers or potential consumers and would be likely to cause such people to be misled. I say what I have, conscious of the competing submissions which have been put to me on the question and not at all unmindful of the fact that the packaging of the two products, as I have earlier mentioned, is distinctive. But the close similarity of the two names, Modifast and Medifast, and the fact that if the two were on the market together there would, on a prima facie basis, be likely to be deception is not determinative of the outcome of this application. That is because of the limited marketing of the applicant's product which has so far taken place in Australia. Indeed, the reality 1S that no market- ing has taken place at all. Perhaps some may think that the applicant should be commended for its apparent cautious attitude to the marketing of its product and apparent frankness with which 1t has disclosed the source of its manufacture. But the entirety of the evidence is not in and if a view such as this were to be espoused, it could only be formed on a prima facie basis. On the other hand, I feel bound to say - and I realise that evidence on any matter may be incomplete at this interlocutory stage of the case - that I do find it odd that the respondent's promotions manager does not seem quite sure whether the product 1s in fact manufactured in Australia and further does not know where the product is manufactured and packaged. I repeat that there is nothing on the respondent's packaging which indicates the place of manufacture of its product. Be that as it may, I have reached the conclusion that the applicant must fail in the application which it now brings. The respondent's product 1s on the market and is een eee 10. available for sale at a number of pharmacies and tr~- probably from other sources as well. The -appliesstts~ ~~" product is not on the market at all. It is still undergoing trials. Counsel for the applicant faced up to the problem with which this circumstance confronted him by saying that evidence called on behalf of the applicant established, at least on a prima facie basis, that 1t was likely that a not insignificant number of doctors in Australia would be misled or deceived by the marketing of the respondent's product into thinking that it was the applicant's product. They would be aware - either through attending the confer- ence in Rome, receiving a letter thereafter, reading the International Journal of Obesity or through the contacts made orally and 1n writing by the applicant here ~ of Modifast. They would be likely, when Medifast came to their attention, to think that the applicant's product was in fact available on the market. I have given this submission due consider- ation. I think there is substantial weight in it but, as counsel for the respondent stressed, medicine 1s a scientific profession and it would be wrong to assume that there would be the deception which counsel for the applicant claimed would be likely to exist if the marketing of the respondent's product continues, ~ li. Having reflected on the matter, I do not think one could conclude that there 1s, on a prima facie basis, any real risk of people actually being misled or deceived. That situation will continue so long as news of the applicant's product is restricted in the way that 1t presently is. At the most, there may perhaps be confusion, but confusion is not enough. I refer to McWilliam's Wines Pty. Limited v. McDonald's System of Australia Pty. Limited (1980) 33 A.L.R. 394 and to Parkdale Custom Built Furniture Pty. Limited v. Puxu Pty. Limited (High Court of Australia, 11 August, 1982, as yet unreported). Of course, the position may be materially different after February next if, as anticipated, the applicant's product comes on to the market. I should add that in reaching my conclusion I have taken into account the evidence of a Dr. Lalji called on behalf of the applicant. It shows perhaps confusion but no more. Before concluding this judgment, there are some matters I would mention. Both counsel engaged in a helpful review of the authorities, particularly Taco Bell Pty. Limited v. Taco Company of Australia Limited (1982) A.T.P.R. 40-277, Taco Company of Australia Inc. v. Taco Bell Pty. Limited (Federal Court of Australia, 22 July, 1982, unreported) and the Puxu case to which I have earlier referred. Under other .~ circumstances the submissions of counsel would call for 12. some detailed analysis of the judgments in those cases but I do not think this 1s necessary for the outcome of this case, and I bear in mind that this is an interlocutory application which perforce needs to be determined as a matter of urgency. In relation to the authorities, I would say, however, that I do not regard this case as governed by Taco Bell because there the evidence did not disclose at all that the American company's name was known in Australia otherwise than by people who had visited the United States of America. In this regard I refer also to certain trade mark cases cited by Ellicott J. in his judgment at first instance in the Taco Bell litigation (supra at p.43,496) namely the Seven Up Company v. 0O.T. Limited (1947) 75 C.L.R. 203 and re Yanx (1951) 82 C.L.R. 199. Then I should say that a majority of cases arising for ) decision under the Trade Practices Act do not concern pharmaceutical products. Whatever the legal principles in relation to ordinary products < (and_the-dectsion in LO Puxu_ undoubtedly provides a good desl of suidance as to this 5 there 1s~S0metning which causes special concern when one comes to products of the kind in question here. Medicine and pharmacy are, in a sense, international professions. Medical and pharmaceutical literature from all over the world 1s circulated to doctors in this country, and doctors and others 1n this field - dietitians, for instance - hear | ne, 13. about other products overseas when they travel, as they frequentiy do, for the purpose of improving their knowledge. OO It is true that there are stringent restrictions on a the import of goods of this kind into this country and there are other safeguards as well, but it seems to me | that what was said by Lloyd-Jacob J. in Vitamin Lamited's Appircation for a Trade Mark (1956) R.P.C. 1 is as rélevant Tor this case as it was for the one being decided by his — Lordship. He said (p.13): ———iThere 1s a second factor which it seems to me to be right that I should have in mind when éXer- cising a discretionary Jurisdiction, dnd that is that the evidence discloses that the mark haS been used by the Appellant upon and in relation to a remedy Or an allie [ofe) 1ons im human beings. The "fact that the application was made in respect of pharmaceutical substances indic- ates that 1t is in a similar field that user by the Respondents is contemplated. Having regard to the fact that the evidence discloses a genuine business on the part of the Appellants in their country of origin, and that advertisements of such are reaching this country and appearing in libraries or places of reference to which medical men may resort, it seems to me that I am bound to consider the possibility that, with the passage of time, some conflict may occur between the use of the mark by the present Respondents and the advertisement and user of the mark overseas by the present Appellants. Having regard to the inter- national character which medicine and the allied sciences ee ee oe assumed over thre o me that urt nust—be—parLicutarty -carerut to see that in sxercising its—diseretrorn _under—the Act tie public interest is not in ary way imperilled. For my part-i-am not satis- fied that; in allowing to be used by manufacturers in this country as a brand name for a pharmaceutical substance a word which is in fact used by an American Corporation in respect of the same material and 14, "advertised in journals, which on the evidence are received into this country and referred to, the public interest will be best served by per- mitting registration. Accordingly, on both those grounds 1t seems to me that it is my duty to indicate that in the light of the fuller consider- ation which the matter has received in this Court the application should not be permitted to proceed." His Lordship in the exercise of his discretion refused registration of the mark. (Publication of a paragraph not here transcribed prohibited by his Honour except to parties and certain other persons. } Finally I refer to the applicant's case based on passing off. The considerations earlier mentioned indicate that the applicant is not entitled to succeed on a prima facie basis in respect of that cause of action, because it has not established, so far as Australia is concerned, that the word Modifast has become distinctive in this country of any product that it has. For the reasons I have given, the application is dis- missed. There is, however, a further claim made by the applicant for interlocutory relief. Thas is based on matters quite different from any relied upon in the application of which I have just disposed. Directions have been given in this matter and it will proceed for hearing on an interlocutory basis on 20 September next. ! . ser tif y Maat ou, . tHe g Pty2s WBA ieeoOIN, cpt ze ior judgment hersie ct The issncuray'e Mr Justice Shepsard. => 15, Dated 23 Anoyestiqs WANDER LIMITED v. BARLOW GROUP LIMITED (G 137/82) Paragraph omitted from judgment to be circulated. This paragraph RESTRICTED to parties and certain other persons. See order made on 23 August, 1982 That sort of consideration leads me to think that the appropriate health authorities of this country snould be aware of the marketing, or possible marketing, of the two products. Accordingly a copy of this judgment will be sent to the ~~. Attorney-General, with the suggestion that he send it to such authorities as he sees fit. These may include the Commonweal ti Department of Health, one or more of the State Departménts of —— -- Health and "the Trade "Practices Commission, Whether the Attorney-General does send the judgment to any of these 1 $e authorities and what, 17 anything those authorities do, if the matter is referred, is a matter for the Attorney-General and those authorities respectively. I draw attention to the fact that there 1s material in the evidence of both parties | and also in their packaging and advertising which Suggests that the unsupervised use of their products may be harmful - | to the health of some people. — ..00onw>wn nS I certify unat this ar parcucap tot > pages are atrue cop, of T eke 280 43 for judgment herein of The Honcerabie Mr Justice Sheppard. ps Recast olA8>- best Associate Dated as ssh qo