CATCHWORDS INTERLOCUTORY ~ INJUNCTION - respondents restrained from using a name in advertising or sale of female clothing until trial or further order - use of identical names shown, sufficiently for ' present purposes, to be likely to mislead. HARTLAND INVESTMENTS PTY LIMITED v. COLES K.M.A. LIMITED (first respondent) and CRYSTAL CLOTHING INTERNATIONAL PTY LIMITED (second respondent Qld G116 of 1983 FITZGERALD J. BRISBANE 12 DECEMBER 1983 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISTON BETWEEN : ) ) QLD Gilé of 1983 HARTLAND INVESTMENTS PTY LIMITED AND: COLES K.M.A. AND: LIMITED Applicant First Respondent CRYSTAL CLOTHING INTERNATIONAL PITY. LIMITED DATE OF HEARING: DATE JUDGMENT DELIVERED: COUNSEL : - for the applicant . for the respondent 12 DECEMBER 19383 Second Respondent 7 NOVEMBER 1983 12 NOVEMBER 1983 Mr Robin instructed by Messrs Allan Atherton and Co., Town Agents for Messrs Allan and Co Mr Patterson instructed by Messrs Chambers McNab Tully and Wilson Town Agents for Messrs Robert Ritchie Bruce J.L. DAVISON ASSOCIATE TO FITZGERALD J. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G116 of 1983 GENERAL DIVISION ) BETWEEN : HARTLAND INVESTMENTS PTY LIMITED Applicant COLES K.M.A. LIMITED First Respondent CRYSTAL CLOTHING INTERNATIONAL PTY. LIMITED Second Respondent FITZGERALD J. 12 DECEMBER 1983 REASONS FOR JUDGMENT On Wednesday this week, 7 December 1983, I made an order, upon the usual undertakings as to damages by the applicant, restraining each of the respondents until trial or earlier order from using the name "Shapes" or any deceptively similar name in or in connection with the advertising or, on or after 17 December 1983, in or in connection with the sale of articles of female clothing. Directions were given which, if they . are complied with, will mean that the matter is ready for trial by the end of February 1984 and costs were reserved. The injunction was granted at the end of the hearing and I then indicated that I would provide reasons as soon as possible, which I now do. The applicant carries on business as the trustee of a discretionary trust, the beneficiaries of which are members of the family of Mr Barry William Ferguson. The applicant manufactures and sells a full range of women's clothing under the - brand name "Shapes". The articles are priced "in a medium bracket". The applicant also purchases "T-shirts" which it screen prints, re-labels with the brand name "Shapes", and resells. The business has been carried on by the applicant since 1981 and prior to that time was carried on by a partnership consisting of Mr and Mrs Ferguson, There is a registered business name "Shapes" but no registered trade-mark and it seems to be accepted that registration of the word ""shapes" as a trade-mark is not possible. The applicant owns or leases shops in Cairns, Townsville, Kawana Waters, and Redcliffe, as well as two shops in Surfers Paradise. All the shops except those at Cairns and Townsville trade under the name "Shapes" or "Le Shapes" and the shops in Cairns and Townsville are in the process of being converted to the use of the name "Shapes". The applicant ' proposes to open further shops in Albany Creek Road, North Brisbane, and in Bundaberg, Mackay and Rockhampton. The applicant also wholesales its "Shapes" brand articles of women's clothing to certain department stores in Queensland and at Tweed Heads in New South Wales near the Queensland border, and to "selected boutiques throughout Queensland, Sydney, Melbourne, Perth, Darwin and Adelaide". The applicant does not sell articles of women's clothing under any brand name other than "Shapes". In some instances, articles of women's clothing manufactured and sold by the applicant have the name "Shapes" printed on them but, for the most part, the name only appears on labels inserted in the garments and on "swing-tags". There is, or at least has been, some differences of configuration in the depiction of the word "Shapes" by the applicant but the word is consistently used and used in isolation, except on the exterior of those of the applicant's shops which are called "Le Shapes". The name "Shapes" has only been used in connection with the stores as distinct from the garments for about 18 months to 2 years and the stores were previously called "Flashes". The second respondent also manufactures, inter alia, women's clothing. Since about March 1982, the name "Shapes" has been used by it in relation only to a range of women's and children's clothes manufactured by it which it sells only to the first respondent and its associated company, G.J. Coles and Co Ltd, for resale "all over Australia". Some of the stores of the first respondent or of G.Jd. Coles and Co Ltd are located near stores conducted by the applicant. The first respondent has developed a particular configuration of the word "shapes" which it consistently uses. That configuration is significantly different from at least some of the depictions of the word "shapes" utilized by the applicant. The applicant seems not to have been aware of the respondents' use of the name "Shapes" until on or about 20 October 1983 and the respondents seem not to have been aware of the applicant's use of the name "Shapes" until about 27 October 1983. After correspondence, these proceedings were commenced on 29 November 1983. As I have stated, the application for directions and an application for an interlocutory injunction came before me on 7 December 1983. The second respondent's manufacturing business is considerably larger than that of the applicant and the second respondent's sales of "Shapes" garments has considerably exceeded the applicant's sales of "Shapes" garments during the period since the second respondent commenced to use that name. The first respondent retails "Shapes" brand garments for considerably less than the retail price of the applicant's "Shapes" brand garments but there is evidence, upon which it is appropriate that I act for present purposes only, that the second respondent's garments are of comparatively inferior quality as well as being relatively inexpensive. All businesses involved seem to be trading profitably. Evidence was given that each of the respondents kept records which would permit accounts of profits to be taken if the applicant succeeds in these proceedings. Evidence was also given that the business of the s3cond respondent would be adversely affected if an injunction was granted but no explanation was afforded why that would be so and no attempt was made to indicate the nature of the loss. No suggestion was made that the first respondent would lose business as a result of an injunction. Evidence from an employee of the first respondent or its associated company G.J. Coles and Co Ltd was that purchasers of women's clothing in their stores "look at the style and quality and price of the garment and subsequently the fit of the garment when they try it on in one of the store's fitting rooms. Customers do not ask for garments by reference to trademarks or enblems in the price ranges available". The employee acknowledged that within a period of about a week the brand name "Shapes" could be removed from the garments presently held and there was no suggestion that there would be particular effort or expense involved. The managing director of the second respondent gave evidence that "there are approximately five hundred thousand dollars worth" of articles of clothing for sale by it to the first respondent or G.J. Coles and Co Ltd bearing the name "Shapes" which are "in various stages of manufacture or in the process of being imported" but no suggestion was made that a different name could not be substituted in relation to all or any such garments or, apart from the general evidence that an injunction would adversely affect the business of the second respondent, that to do so would involve the second respondent in undue effort, expense or loss. Obviously, what [I have recited above involves no findings on my part, for example in relation to disputed questions such as the relative quality of the products of the applicant and the second respondent and the respective states of knowledge the parties had or did not have of each other's products prior to October this year. I have not attempted to resolve any disputed issue or to make any assessment of credibility. In relation to the merits of the dispute, I have concerned myself only with whether, if its evidence be accepted, the applicant has a sufficient prospect of success at the trial. I formed the opinion that it did, whether the appropriate test at the stage of an interlocutory injunction is to be found in Beecham Group Ltd v. Bristol Laboratories Pty Ltd (1968) 118 C.L.R. 618 or, as Gibbs C.J. thought in Australian Coarse Grain Pool Pty Ltd v. Barley Marketing Board of Queensland (1982) 46 A.L.R. 398, it is only necessary to see whether there is a serious question to be tried, the test preferred by the House of Lords in American Cyanamid Co v. Ethicon Ltd (1975) A.C. 396. There is no evidence of any instances of confusion between the respective products and no evidence of circumstances from which such an inference might be drawn; e.g., the return of products purchased from the first respondent or its associated companies onthe basis that they have been purchased under a misunderstanding. On the other hand, the applicant seems to have only recently become aware of the respondents' activities, and, for obvious reasons, has pressed its claim as a matter of urgency. This is a busy shopping period. The retail outlets for the sale of the applicant's "Shapes" brand products are extensive and the outlets for the sale of the second respondent's similarly named products even more so. Irrespective of any differences which are able to be pointed to in the respective configurations of the use of the word "shapes" by the parties, each uses precisely the same name in relation to articles of women's clotning. It is adequately established for present purposes that when the respondents commenced to use the brand name "shapes" that name was associated with the applicant's products in the minds of a sufficiently large number of the section of the public concerned with the purchase of female apparel. Such a conclusion is warranted for the purposes of this interlocutory application by reference to the use of the brand name in relation to the garments without any regard to the use of the name as a trade name for the shops. The relevant section of the public will plainly include not only the astute, the intelligent and the careful. There is a sufficient degree of risk that products bearing the name "Shapes" may be purchased from the respondents by persons misled by that name into believing that they are "Shapes" products as manufactured by the applicant and sold by it in boutiques and other department stores or are a cheaper version of such products. Were that to happen, the consequences to the applicant would be likely to be substantial, not so much in relation to lost retail sales but in connection with a possible loss of reputation of its product and potential loss of wholesale sales. Differences of product and price perhaps make it unlikely thet the applicant or those selling its products would lose any retail sales but that in turn only means that its damages may be difficult to quantify and that the balance of convenience cannot be met by an accounting of profits made by the respondents or either of them. Further, the public interest seems to be better served if, at least until matters are fully investigated, the public is not exposed to two products of the same category each using precisely the same name. Mere confusion or risk of confusion has been held to be insufficient to justify resort to s.52 of the Trade Practices Act 1974: see, e.g. Taco Co of Australia Inc v. Taco Bell Pty Ltd (1982) 42 A.L.R. 177. But here, the likely confusion would arise because the use of the identical names seems to convey an association which does not in fact exist. The use of the identical names is shown, sufficiently for present purposes, to be likely to mislead. At the trial, that may not be proven, or, indeed, there may be a counter-claim against the applicant. But those questions are in the future. The only application before me was an application for an interlocutory injunction by the applicant. I granted that injunction because I was satisfied to the requisite degree of the likelihood that the respondents' use of the name "Shapes" might mislead. Further, both the balance of convenience between the parties and the public interest seem to me to favour the grant of an injunction rather than the refusal of an injunction leaving the applicant to pursue the respondents for either damages or an account of profits. I certify that this andthe 2 — preceding pages are a true copy of the reasons for judgment herein of His Honour Mr. Justice Fitzgerald Poe Cet cw Associate