uAalliasy & IN THE FEDERAL COURT OF AUSTRALIA ) SOUTH AUSTRALIA DISTRICT REGISTRY ) NO. SA G44 of 1984 GENERAL DIVISION ) NO. VG 310 of 1984 BETWEEN: WOODROOFE BOTTLERS PTY. LIMITED & ORS. Applicants E BEECHAM (AUSTRALIA) PTY. LIMITED Respondent BETWEEN: BEECHAM (AUSTRALIA) PTY. LIMITED Applicant WOODROOFE BOTTLERS PTY. LIMITED & ORS. lg Respondents CORAM: Mr. Justice Jenkinson PLACE: Adelaide DATE: 18 December, 1984 EX TEMPORE JUDGMENT Claims for interlocutory injunctions in each of two proceedings. The claims were heard together and the affidavits read in each were by consent of the parties evidence in the other. Beecham Australia Pty. Limited (which I will call "Beecham") is and at material times was a corporation within the meaning of that word in the Trade Practices Act 1974, as also was each of the other companies parties to the proceedings. Beecham has since August 1983 been the beneficial owner of three trade marks. Since 4 April 1984, Beecham has been registered under the Trade Marks 2. Act 1955 as the proprietor of the three trade marks. The registered trade marks are: (a) No. B 286987 consisting of a Pub Squash label as of 6 May 1975 in Part B of the register in class 32 in respect of 'Lemon drinks of all descriptions included in this class'; (b) No. A 301625 consisting of a pub doors device registered as of 27 October 1977 in Part A of the register in class 32 in respect of 'Non-alcoholic beverages of all descriptions included in this class'; and (c) No. B 308303 consisting of the words 'Pub Squash' registered as of 20 June 1977 in Part B of the register in class 32 in respect of 'Squash beverages and squash-type included in class 32.' Beecham claims further that the word "Pub" is a trade mark under which since 1975 its predecessors, and since August 1983 it, has manufactured and sold soft drinks. It makes a like claim in respect of a get-up which includes the words "Pub" and "Squash" or the word "Pub" with the pub doors device. Beecham acquired the trade marks with, and upon the sale to it by Glaxo Australia Pty. Limited of, a soft drinks manufacturing business. The latter company (which I will call "Glaxo") had acquired the trade marks from The Pub Squash Company Pty. Limited in or about May 1981. In October 1980, a company now named Greenslades Natural Foods Pty. Limited bought the plant, equipment and stock of a soft drink manufacturing business which The Pub 3. Squash Company Pty. Limited had carried on in South Australia. At the same time The Pub Squash Company Pty. Limited granted to Greenslades Natural Foods Pty. Limited the sole right, within South Australia and within a certain radius of Broken Hill and of Alice Springs, to manufacture certain beverages in accordance with formulae and recipes of the grantor "and to bottle, can and to market in bottle or cans or through pre-mix or post-mix equipment the beverages so manufactured under or using the trade names of any of them". The "trade names" to which reference is made include the trade marks of which Beecham is now the registered proprietor. The agreement in writing for the grant of those rights was varied in January 1981 by an agreement in writing entitled "Franchise Amendmeent Agreement." The primary agreement provided that it should be deemed to have come into operation on 17 October 1980 and should, unless previously and lawfully determined by either party, remain in force for a period of 10 years. Greenslades Natural Foods Pty. has been at all material times associated in a group with other companies, Woodroofe Bottlers Pty. Limited, Woodroofe Distributors Pty. Limited, Woodroofe Limited and Har Har Pty. Limited. The group is well known in South Australia under the name "Woodroofe". The name signifies the manufacturer of soft drinks. Since 1980 that group of companies has sold by wholesale soft drinks which it has manufactured in accordance with the formulae and recipes of The Pub Squash Company Pty. Limited. That trade the group carried on under the registered trade marks. It paid royalties, calculated in accordance with the terms of the agreement with The Pub 4. Squash Company Pty. Limited, first to the latter company and then to Glaxo and finally to Beecham. It is the contention of the Woodroofe group that from the conduct of Glaxo and members of the group an agreement between Glaxo and one or more members of the group was to be inferred, the terms whereof were, mutatis mutandis, those of the written agreement which had been subsisting between The Pub Squash Company Pty. Ltd. and Greenslades Natural Foods Pty. Limited when Glaxo acquired the trade marks from the Pub Squash Company Pty. Limited. Glaxo continued to exercise over the manufacture of the beverages sold under the trade marks the control which had been exercised by The Pub Squash Company Pty. Limited by arranging for supply to the Woodroofe group of beverage ingredients, the exact composition of which was not disclosed to the Woodroofe group. Beecham's acquisition of the trade marks from Glaxo was effected in performance of an agreement in writing dated 15 July 1983 for the sale of Glaxo's soft drink manufacturing business. Included in the sale was: "Glaxo's right, title and interest to and under the leases and agreements, particulars of which are contained in schedule 3." Schedule 3 has for a heading the words: "Particulars of the leases and agreements in respect of which Glaxo's right, title and interest thereunder are sold to Beecham." Then follows a list serially numbered of agreements. Between that which is numbered 9 and that which is numbered 10 are the words: "B. Particulars of agreements to be novated or in respect of which fresh agreements are to be obtained.: The agreement numbered 17 is described thus: "Agreement dated 17 October 1980 between Palakras Fruitgrowers Pty. Limited and the Pub Squash Company Pty. Limited receiver and manager appointed." Palakras Fruitgrowers Pty. Limited was in October 1980 the name of Greenslades Natural Foods Pty. Limited. Clause 18 of the agreement provides: "Until 31 October 1983 Glaxo shall, on Beecham's reasonable request from time to time, assist Beecham to novate the agreement, or obtain fresh agreements instead of each of the agreements listed in Part B of schedule 3 as Beecham shall elect." Clause 20 provides: "Beecham shall indemnify and keep indemnified Glaxo in respect of all claims arising in respect of any of the leases and agreements referred to in schedule 3, which shall have been assigned to Beecham or novated insofar as such claims relate to any time after such assignment or novation." By letter dated 14 october 1983 Beecham indicated, in my opinion, its contention that the use by the Woodroofe group of the trade marks had been in pursuance of "an informal arrangement with Glaxo" which might be "terminated by either party at any time". The Woodroofe group paid, and Beecham accepted, royalty payments, the group regarding them as payments under an agreement of which all the terms of the original written agreement with The Pub Squash Company Pty. Limited were, mutatis mutandis, terms, including the term as to ten years' duration, and Beecham regarding the payments as made pursuant to an informal agreement terminable on reasonable notice by itself or by the Woodroofe group. Beecham purported to terminate its agreement with the Woodroofe group by a letter dated 7 August 1984 in these terms: "Mr. Michael Harbison, Woodroofe Bottlers Pty. Limited, 21 Theresa Street, Norwood, South Australia, 5067 .. .. .. . . It is my belief that it would have been in our joint interests to have concluded an arrangement." Beecham has commenced to sell soft drinks in South Australia under the trade marks. The Woodroofe group continues to sell the soft drinks under the trade marks. The Woodroofe group contends that Beecham, having acquired the trade marks with notice of the rights which the group derived with respect to those trade marks, should be restrained by injunction from using the trade marks in South Australia to 7. the material damage of the group, in opposition to the agreement between the group and Glaxo, and in a manner in which Glaxo could not, without breach of that agreement, have used the trade marks. The entitlement to that protective injunctive relief is declared, according to the submissions of counsel for the Woodroofe group, in the reasons for the decision of the Privy Council in Lord Strathcona Steamship Company Limited v. Dominion Coal Company Limited (1926) A.C. 108. The principle of law laid down in that case is, in my opinion, inapplicable to the species of property here in question. A trade mark has for its use the indication of a connection in the course of trade between goods or services - in this case goods - and the owner of the trade mark. The trade mark signifies that the goods are put upon the market as vendible goods under the aegis of the proprietor. When the ownership of that species of property has passed from one to another, an agreement for the use of the mark between the first proprietor and a licensee cannot in my opinion be protected by the application of the principle expounded in the Lord Strathcona Case, because it is no longer true, as it was before the property passed, that the goods are put upon the market as vendible goods under the aegis of that first Proprietor and, unless and until the second proprietor sanctions use by the licensee, use of the trade mark is misleading and deceptive, in my opinion. The use which was sanctioned by Beecham is no longer sanctioned. The Woodroofe group's use is, in my opinion, deceptive and a breach of 8. section 52 of the Trade Practices Act 1974. Mr. Angel, Q.C. who appeared with Mr. Dunne for the Woodroofe group, framed his submissions in several ways. He suggested that the group had an equity which would be protected by injunctive order and that Beecham held the trade marks subject to a constructive trust in favour of the Woodroofe group, or one or other of the members of the group. But, notwithstanding Mr. Angel's candid and careful arguments, I can find no basis on which I can conclude that there is a serious question to be tried, the resolution of which would justify any relief at the suit of his clients against Beecham. On the other hand, I find a strong prima facie case of misleading conduct on the part of members of the Woodroofe group. The use of the trade marks by the group without the sanction of the proprietor of the marks amounts to a representation which is false : that there is a connection in the course of trade between the goods so marked and the proprietor who has the right to use the marks. Either Beecham on the one side or the respondents to its application on the other will be disadvantaged by the refusal or the grant, respectively, of interlocutofy injunctive relief in Beecham's proceeding. In the time available for the hearing of these claims during the court's vacation I have not been able to determine with any confidence that one side would suffer a substantially greater wo disadvantage or a disadvantage irreparable by curial remedy. Exercising the discretionary power conferred by section 80(2) of the Trade Practices Act 1974, I attribute substantial weight to the protection of the public from deception. There will be in the proceeding VG310 of 1984 in Which Beecham Australia Pty. Limited is the applicant, an injunctive order upon the usual undertaking as to damages. In the proceeding SA G44 of 1984, the application for interlocutory relief will he dismissed. :