Trade Practices - consumer protection - misleading and deceptive conduct - application for interlocutory injunction - sale of Lambrusco wines - similarity in get-up of second respondent's product to that of first applicant - whether words "Lambrusco Amabile" simply descriptive - balance of convenience - whether refusal of injunction will cause irreparable damage to applicants - difficulty in assessing loss to respondents if interlocutory injunction granted and applicants' claim ultimately unsuccessful Trade Practices Act 1974 s.52 GAVIOLI LUIGI & FIGLI S.N.C. and EUROPEAN FOODS WHOLESALERS PTY. LID. v. G.J. COLES & CO. PTY. LTD. and ORIFICI HOLDINGS PITY. LTD. No. WA G55 of 1983 Toohey J. Perth 21 December 1983 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA G of 1983 BETWEEN: GAVIOLI LUIGI & FIGLI S.N.C. First Applicant and EUROPEAN FOODS WHOLESALERS PTY. LTD Second Applicant G.J. COLES & CO. PTY. LID. First Respondent and ORIFICI HOLDINGS PTY. LTD. Second Respondent QO R D E R - JUDGE MAKING ORDER : Toohey J.7~ DATE OF ORDER : 21 December 1983 WHERE MADE 3 Perth THE COURT ORDERS THAT: 1. The applicants' claim for aunterlocutory injunctions against the respondents is dismissed. a 2. The parties have liberty to apply as to the costs of the application for interlocutory injunctions. The parties have liberty to apply for directions as to the hearing of the application. IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) No. WA G of 1983 DISTRICT REGISTRY ) GENERAL DIVISION ) BETWEEN: GAVIGLI LUIGI & FIGLI 5.N.C. First Applicant and EUROPEAN FOODS WHOLESALERS PTY. LTD Second Applicant G.J. COLES & CO. PTY. LTD. First Respondent and ORIFICI HOLDINGS PTY. LTD. Second Respondent CORAM: TOOHEY J. 21 December 1983 REASONS FOR JUDGMENT Lambrusco is a wine qrape grown in the region north of Florence, Italy. There is more than one type of Lambrusco grape; Lambrusco Reggiano, Lambrusco di Sorbara, Lambrusco Grasparossa di Castelvetro, Lambrusco di Parma and Lambrusco Salamino di S. Croce are mentioned in the literature. Mr. Hugh Johnson's Pocket Wine Book 1982 refers to Lambrusco in these terms: "Bizarre but popular fizzy red, generally drunk secco (dry) in Italy but a smash hit in its amabile (sweet) version in the USA". No There is in fact a white Lambrusco though most are red. Some Lambrusces bear the certification Denominazione di Origine Controllata, some do not. Lambrusco Amabile is one that does not. Following a pattern familiar in this country, the name Lambrusco has been attached to light red wines made in Australia though not from any of the Lambrusco grapes. There are, at the present time, at least 8 red "Lambruscos" on the West Australian market. They are: La Modenese Bertolli Cavalli Fonte Viva Mondo Trevelini Vittorio De Bortoli Of these, only the first 3 are imported from Italy; the others are Australian. As well there is an Australian red Lambrusco, Gully, and two imported red Lambruscos, Medici and Giacobazzi, on sale in the eastern states. There is a big demand for Lambrusco style Wines in this country and sales are presently running in excess of 500,000 cases a year. The parties come before the court in the following circumstances. The first applicant, Gavioli Luigi & Figli 5.N.Cc. ("Gavioli"), is a foreign corporation carrying on the business of wine producers and exporters in Bomporto, Modena, Italy. The second applicant, European Foods Wholesalers Pty. Ltd. ("European Foods"), carries on business in Western Australia as an importer and wholesaler of wine products. The first respondent, G.J. Coles & Co. Pty. Ltd, ("Coles"), 15 a well known retailer throughout Australia and part of its business is the retailing of alcoholic beverages under the business name "Liquorland" from some 34 retail (th outlets in this State, 26 of them in the Perth metropolitan area. The second respondent, Orific1 Holdings Pty. Ltd. (""Orifici1 Holdings"), is a distributor of alcoholic beverages in this State and trades under the name "National Liquor Wholesalers". European Foods acts as the main Australian importing agent for Gavioli and, in that capacity, imports into Western Australia 2 wines produced by Gavioli at its vineyards at Bomporto. One of these wines is a red Lambrusco, Lambrusco Amabile, and the other is a white Lambrusco, lLambrusco Bianco. Both carry the trade name La Modenese. It is with the former that this application is concerned. European Foods was appointed as Gavioli's Australian importer in or about 1973. Over the years it has built upa substantial business in the sale of Lambrusco Amabile to the point where its sales of that wine in Western Australia for the year 1983 will be in the order of 250,000 bottles. National Liquor Wholesalers was registered as a business name on 2 September 1982. For the last month it has been marketing in Western Australia under the name Mondo Lambrusco, a red wine produced by De Bortoli, a well known wine maker in New ie South Wales. De Bortoli produces and sells under its own label one or more red Lambruscos. Gavioli and European Foods complain that Orifici Holdings' Mondo Lambrusco is marketed with a label and general get-up that is likely to convey to members of the public an impression that it and Lambrusco Amabile are the same, or are of the same or similar origin, or are made by the same producer or are made by different producers who are in some way affiliated. They say that the bottling for sale by Orifici Holdings of its product and the advertisement and sale thereof constitutes conduct in trade or commerce which 15 misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act 1974. Coles has sold and, as I understand it, continues to sell the applicants' product. It has, for the last 2 weeks or so, sold Orifici Holdings' product. Coles is engaged in an extensive pre-Christmas advertising campaign aimed at promoting Liquorland and liquor sales generally including Mondo lLambrusco. In particular Coles has promoted through an advertisement in the Western Mail, a weekend newspaper, a competition referred to as Mondo Lambrusco Famous Lovers Quiz. The competition requires the entrant to complete the missing name of two pairs of well known lovers, the prize for the winning entry being two Diahatsu Handi cars. This is the only newspaper advertising of the competition; otherwise it is promoted through posters in Liquorland stores. 'SI The applicants new sesk an interlocutory injunction to FESTYAIiN Che cespondents From selling, offering for vale or fad) advertising Mondo Lambrusco in the labelling and get-up in which rf has hitherto been sald or any lasellinag or get-up "which is misleadingly or deceptively similar to that hitherto used by" European Foods in connection with the sale of Lambrusco Amabile. The respondents deny the applicants' entitlement to any relief. A considerable number of affidavits have been filed in support of and in opposition to the claim for an interlocutory injunction. Exhibits to those affidavits include bottles of Lambrusco Amabile, Mondo Lambrusco and other Lambrusco wines sold in Western Australia. The application has been brought on as a matter of urgency, the applicants' contention being that the period just before Christmas 1s a time of high sales for their product and that, unless the respondents are restrained in terms of the injunction sought, sales of Lambrusco Amabile will be adversely affected with consequent financial loss to the applicants. It is not possible in the time available to canvass the very considerable mass of material contained in the affidavits and the exhibits thereto. I shall try to concentrate on what seem to me the main issues for consideration in the context of the present application. Whatever the outcome of the claim for an interlocutory injunction, it seems inevitable that the matter will proceed to a substantive hearing. Lambrusco Amabile is sold in a .720 litre bottle; the shape of the bottle and the colour of its glass are said by the applicants to be in the Bordelaise style, a reference to the type o of bottles in vhich Bordeaux wines are soid. The main label has a black background with printing and art work in red and white colours save for a sash of blue linking a crest and seal. The name "Lambrusco Amabile" 1s in Gothic style lettering, the first letter of each word appearing in red ona gold background and the other letters in white. Some of the other words appearing on the label are in red, somé are in white and some are in gold. There 1s & mixture of cursive script and of printed words. The main label carries at the top the words "Product of Italy" and below them and above "Lambrusco Amabile" appears the word "Vino". Below "Lambrusco Amabile" are the words ""Dell' Emilia Frizzante" which is in part a reference to the region in which the wine is produced and in part a reference to its spritzig characteristic. Further down the label are the words "Italian Mellow Red Wine" and below them "La Modenese Bomporto Modena Italy". Other words on the label refer to the production and bottling of the wine by G.L. & F. Bomporto (MOQ) and its importation by European Foods. There i5 a neck label in black with a red crest superimposed and the words "Serve Chilled". The bottle is corked and has a black foil cover carrying the words "La Modenese Bomporto" 3 times in gold lettering. There are undoubted similarities in the appearance of a bottle of Mondo Lambrusco. It is in fact a 750 ml bottle though in the general shape of the Lambrusco Amabile bottle. It relies upon labelling with a black background and a mixture of white and yold lettering gave for the voras "Product of Australia" which appear at the top of the lapel. The words "Mondo Lambrusco" are in a type of Gothic script not unlike that on the Lambrusco Amabile label though there are differences. The letters M and L at the beqinning of each word are in gold lettering but are not set in any design. The word "Amabile" appears below "Mondo Lambrusco" and below 1t in turn are the words "Mellow Red Table Wine". At the foot of the label is mention that the product is produced and bottled exclusively for National Liquor Wholesalers together with some reference to the alcoholic content of the wine and 750 ml. The Mondo Lambrusco label also has a representation of a seal and crest with a sash running between them. The crest and seal are in gold and the sash in red and, taken on their own, bear little resemblance to the crest, seal and sash on the Lambrusco Amabile bottle. The neck label on the Mondo Lambrusco bottle is black with a gold crest and the words "Serve Chilled". In small letters appear the words "National Liquor Wholesalers". The bottle has a cork with a black foil cover not carrying any words. In an affidavit sworn by one of its directors, European Foods claims that "Mondo" is an intended corruption of the trade name "La Modenese". The words themselves are of course quite different, 'mondo' being Italian for 'world' and 'La Modenese' being a reference to the town of Modena where Lambrusco Amabile is produced. In an answering affidavit Orifici Holdings denies that "Mondo" was arrived at by corrupting "La Modenese"". Mr. Orifici deposes to the fact that the name chosen by his company is simply a word that 1s well known and easily pronounced. As the evidence stands I have no reason to doubt that explanation. The parties have filed a number of affidavits by persons connected with the liquor trade and with marketing. Some of those affidavits stress similarities 1n the qet-up of the two pottles and are intended to show that one may be mistaken for the other. Other affidavits focus on differences in the get-up and claim that one cannot be mistaken for the other. No formal objection was taken to any of these affidavits though 1t was common ground that the question whether the respondents' conduct was misleading or deceptive or likely to mislead or deceive was one for the court. If a comparison is made of the two bottles it may be that the similarities are very marked, particularly when they stand on shelves in liquor stores and are not subject to the meticulous examination conducted by counsel during the course of this hearing. But the two bottles do not stand in isolation. They must be seen in context and in the present case the context has two important aspects. The first is that there are quite a number of wines on sale in Western Australia bearing the name Lambrusco. Thus the applicants cannot claim to have establised a reputation for a product simply known as Lambrusco. Nor is this their claim; the reputation they seek to protect is in respect of a wine bearing the name Lambrusco Amabile bottled in what 1s said tobe a distintive get-up associated with the applicants' product. On at least some other Lambruscos, Cavalli and Trevelini for example, the word "Amabile" appears. The reason why Lambrusco and Amabile are common to other bottles is simply that Lambrusco is descriptive of the grape from which the wine 1s produced and Amabile points up the sweetness or mellowness of the wine. It is true that the Australian products are not made from the Lambrusco grape but no objection was taken by the applicants on that account. It also appears from the Lambrusco bottles tendered in evidence that black labels and Gothic script are not uncommon. Indeed the respondents point to Fonte Viva which is an Australian Lambrusco marketed by European Foods and which itself bears similarities to the get-up of Lambrusco Amabile. Now it may not be ananswer to the applicants' claim to say that there are several Lambruscos on the market resembling Lambrusco Amabile. But the existence of these other wines points up what 1s the strength of the respondents' answer to the claim made against them. Their primary contention is that Lambrusco is simply descriptive of a grape or grape variety which may be used by anyone bottling and selling wine made from that grape or, they would add, from a grape producing a similar type of wine. They argue that the applicants cannot appropriate for themselves a name which 1s no more than descriptive of a grape variety and that the addition of the word Amabile does not reinforce the applicants' case because it is simply a word descriptive of a characteristic of wine. 10. a _ . - Tn Comite Interprofessionel Du Vin De Champaqne v. NL Burton Pry, Ltd. 1981) 38 ALR 564 Franki J. rejected an application fot interlocutory injunctiona to restrain the uge of the word "champagne" in advertisements for wine imported otherwise than from France. I do not suggest that that case 15 on all fours with the present one. f mention it only as an illustration of the reluctance of the courts to find misleading or deceptive conduct in respect of the use of a name descriptive of a particular type of wine as opposed to wine from a particular locality or, I would add in the present case, of a wine associated with a particular producer. The respondents contend that the applicants have largely brought the present situation on themselves by emphasising on their product the words Lambrusco Amabile which are merely descriptive and relegating to aminor position the words "La Modenese" which is in truth their trade name. For their part the respondents say that Mondo Lambrusco is their trade name, that it is prominently displayed and there cannot be any confusion between it and Lambrusco Amabile or, for that matter, La Modenese. The respondents referred to the comments of Stephen J. un Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1977-1978) 140 CLR 216 at p.229: "There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its il, application to other like businesses will not ordinarily mislead the public". In the present case it is not the applicants' trade name which is eloquently descriptive but if is the name which they put at the forefront of their product. In my view that carries with it the disadvantages to which Stephen J. adverted. The respondents' contentions have much force. It may be said that they do insufficient justice to the fact that while a word like "champagne" is well known in this country, Lambrusco may not be readily recognised as a grape variety. But the answer to that, I think, lies in the notion of reasonable members of the class of consumers likely to be affected by the conduct of the respondents (see Gibbs C.J. in Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 42 ALR 1 at p.6-7). The affidavits filed in these proceedings and the arguments of coungel accepted that Lanbrusco was not a sophisticated wine and the class of consumers likely to be involved may well be one that is not overly familiar with wines but is looking for something light and rather sweet to drink. But I do not think that the reasonable consumer can ignore the presence on the market of a range of Lambrusco wines. ""Lambrusco" must be taken to suggest to the reasonable consumer a product not associated with any particular producer. I do not wish to be taken as suggesting that it is the applicants' case that they have a monopoly in their label or that they seek to prevent others from using the words Lambrusco or » bo Amabile either on their own or in conjunction. The applicants rely upon the overall appearance of the1r product, the bottle, the labels and everything that comes under the description get-up. My pount 1s that much of that get-up is descriptive only and that this must be taken into account when considering whether the conduct of the respondents is misleading or deceptive or likely to mislead or deceive. And when it is taken into account 1t 1s hard to see that the reasonable consumer would be misled into taking the respondents' product to be that of the applicants. I do not propose to discuss in any detail the approach to be adopted by this court in considering an application for an unterlocutory injunction. That approach has been considered ina number of decisions, most recently by Lockhart J. in Co-Operative Bulk Handling Ltd. v. Waterside Workers' Federation of Australia (1983) ATPR 40-412. While I am not persuaded that the applicants have made out a prima facie case, I am satisfied that "there is a serious question to be tried" (Gibbs C.J. in Australian Coarse Grain Pool Pty. Ltd. v. Barley Marketing Board of Queensland (1982) 46 ALR 398 at p.398). But it seems to me that this matter falls to be determined by considerations concerning the balance of convenience. In an affidavit sworn by one of its directors, European Foeds argues that: ",.. if no injunctive relief is granted then it is more probable than not that sales of the First Applicant's Product will suffer both immediately in the short term in the lead up. to the Christmas Holidays and the New Year 13. festivities, and in the long term. It has taken the Second Applicant a decade Eo develop a large market which previously did not exist for wine of the type of the First Applicant's product. The activities of the Respondents will prejudice, impair and encroach upon that market and such damage will be Lereparable". Iam not persuaded that any damage which the applicants may sustain by reason of the refusal of an interlocutory injunction will be irreparable. I accept that in a case such as this there is the possibility of damage to general reputation. But to the extent that there may be a loss of sales of Lambrusco Amabile by reason of the presence of Mondo Lambrusco on the market, it is apparent that European Foods keeps detailed records of its sales. In an affidavit sworn on behalf of Coles by Mr. Tippett its merchandise manager, the following statement appears: "The First Respondent maintains a stock control register of liquor purchases and its records detail distribution of liquor to its 'Liquorland' stores. Tf called upon ata later date to provide details of purchases and sales of both the First Applicant's and Second Respondent's product through Liquorland stores that could be done with reasonable accuracy". The availability of records will go a long way to making an assessment of damages possible 1f the applicants are later held to be entitled to such relief. The affidavit of Mr. Tippett, to which TI have just referred, deposes to an extensive pre-Christmas advertising campaign by Coles aimed at promoting Liquorland and liquor sales 14. generally including Mondo Lambrusco. This advertising campagin has involved Coles in considerable expense including "forward advertising and promotion commitments for the Second Respondent's product". Mr. Tippett deposes to his belief that if an injunction is granted, Coles "will incur both a financial loss and 4 loss of goodwill and reputation by failing to undertake its commitment to the public with regard to the competition... """. This 1s a reference to the Famous Lovers Quiz mentioned earlier in these reasons. In a later affidavit Mr. Tippett deposes to the fact that Coles' pre-Christmas advertising and marketing, so far as Liquorland is concerned, centres around 3 wines - Mondo Lambrusco, Jean Pierre Champagne and SBortoli's Vittorio Spumante. Any injunction relating to Mondo Lambrusco would affect the sales of the other wines which are part of the same advertising campaign and promotional material. In summary, Coles' contention is that if an injunction is granted, the Liquorland advertisement and advertisement promoting the Famous Lovers Quiz will have to be withdrawn from the Western Mail; its store displays, promotional material and stocks of Mondo Lambrusco 1n each of its 34 stores will have to be dismantled and stored away; it will lose sales not only of Mondo Lambrusco but also of Jean Pierre Champagne and Bortoli''s Vittorio Spumante and will have no Lambrusco special to promote at this time. In affidavits sworn by Joseph Orifici, one of its directors, Orifici Holdings contends that if an injunction is granted its marketing agreement with Coles and its contract with 15. the Western Mail in respect of the competition will be adversely affected and that the abrupt termination of the competition will injure its general reputation. To comply with an injunction i€ would have to modify the label on future stocks of Mondo Lambrusco; it is not practicabie to relabel existing stocks. It has distributed consignments of Mondo Lambrusco to retailers and faces the prospect that 1t will not be paid for these consignments if an injunction is granted. There is, I think, another consideration. It is not part of the applicants' case, at least at this stage, that the respondents' product is inferior to theirs. The respondents argue that if anyone bought Mondo Lambrusco, believing 1t to he Lambrusco Amabile, they would receive a satisfactory product and there would be no injury to the applicants' reputation. Certainly it is not the applicants' case at this stage that members of the public are likely to be mislead or deceived to their detriment except that they may purchase a product different from the one they intended to buy. The public does have an interest in this matter and ought not to be precluded from access to both products unless there are good reasons for doing so. It is true that the applicants will undertake to pay compensation to any party adversely affected by an interlocutory injunction. But in my opinion the loss to the respondents, if an interlocutory injunction is granted and the applicants are later unsuccessful, will be greater and more difficult to assess than will be the applicants' loss if an injunction is refused and they later make good their case. 16. The applicants' claim for interlocutory injunctions is refused. I shall hear counsel on the question of costs and also as to the directions appropriate to allow this matter to proceed to a hearing. I certify that thas and the fifteen preceding pages are a true copy of the Reasons for Judgment herein of his Fonour Mr. Justice Toohey Associate Dated: 21 December 1983