"50 RO pomRe Trade Practices - misleading or deceptive conduct - claim hy manufacturers of "Pure & Simple" spray-on vegetable oil that distributors of mustard identified as "pure and simple" in breach of 5.52 - existence and scope of market reputation - whether products part of common field of activity - facts relevant to question of whether public led into mistaken belief by use of same name - observations on efficacy of disclaimer under 5.52 Trade Practices Act 1974 ss. 52, 75B Trade Marks Act 1955 5.32 ABUNDANT FEARTH PY. LIMITED & ORS. v. R. & C. PRODUCTS PTY. LIMITED No. G351 of 1984 , we TOOHEY, MORLING & BEAUMONT JJ. SYDNEY ool FEBRUARY 1985 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY GENERAL DIVISTON BETWEEN : No. G351 of 1984 ABUNDANT EARTH PTY. LIMITED First Appellant MARLENE ROTH SNIDER Second Appellant DAVID ROSS SNIDER Third Appellant JOHN AVERY GOODYEAR Fourth Appellant "DAVID GILLAIRD MEREDITH Fifth Appellant pte yp owls R&C PRODUCTS PTY." LIMITED Respondent R_& C PRODUCTS PTY. LIMITED Cross-appellant ABUNDANT EARTH PTY. LIMITED, MARLENE ROTH SNIDER, DAVID ROSS SNIDER, JOHN AVERY GOODYEAR and DAVID GILLATRD MEREDITH Cross-respondents ORDER Judges making order: Toohey, Morling and Beaumont, JJ. Date order made: Where made: SYDNEY 22 FEsRvARqy 'FES THE COURT ORDERS THAT: 1. The orders made herein by C.A. Sweeney, J. on 17 September 1984 be varied by setting aside the liberty therein reserved to the respondent to apply in relation to the claim for passing off. 2, The appeal be otherwise dismissed. 3. The appellants pay the respondent's costs of the appeal. 4. The cross-appeal be dismissed. rettiie - far Ay 5. There be no order as to the costs of the cross-appeal, IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES REGISTRY ) ) ) GENERAL DIVISION No. G351 of 1984 BETWEEN " ABUNDANT EARTH PTY. LIMITED First Appellant MARLENE ROTH SNIDER Second Appellant DAVID ROSS SNIDER Third Appellant t JOHN AVERY GOODYEAR Fourth Appellant DAVID GILLAIRD MEREDITH Fifth Appellant ae * AND: ** RB & C PRODUCTS PTY. LIMITED | Respondent AND: R_& C PRODUCTS PTY. LIMITED Cross-appellant ABUNDANT EARTH PTY. LIMITED, MARLENE ROTH SNIDER, DAVID ROSS SNIDER, JOHN AVERY GOODYEAR and DAVID GILLATRD MEREDITH Cross-respondents CORAM: Toohey, Morling and Beaumont, JJ. DATED: 22 feGevaeg (F&5- REASONS FOR JUDGMENT THE COURT: This is an appeal and cross-appeal against orders made in proceedings brought by the respondent against Av. 2. the appellants alleging contraventions of, inter alia, s.52(1) of the Trade Practices Act, 1974 ("the Act"). Injunctions and damages under the Act were claimed. The respondent also contended that the first appellant had passed off its goods as those of the respondent and claimed injunctive and consequential relief under the general law. The other appellants, who are directors of the first appellant, were joined in the proceedings as persons said to be involved in the contraventions (see s.75B of the Act). ' The appellants did not seek to challenge the findings of fact made by the learned judge as follows: Since 1972, the respondent has marketed in Australia a " vegetable oil in aerosol form under the trade mark "PURE and SIMPLE" ("the spray"). The spray is a cooking aid which is claimed to prevent food from sticking to utensils. It was originally introduced to the Australian market in 1969 under the trade name "Spray & Cook". The spray was relaunched by the respondent on 1 August 1972 under the name "Pure and Simple". On 6 June 1972 the name "PURE and SIMPLE" was registered as a trade mark in Part B of the Register of Trade Marks under the Trade Marks Act, 1955 in respect of the class of goods "edible oils and fats including vegetable oils including lecithin, packaged in an aerosol form for spraying onto cooking surfaces to prevent food being cooked from sticking to the cooking surface". Pursuant to 3.32 of the Trade Marks Act, the proprietor of the trade mark was required, as a condition of registration. to disclaim any right to the exclusive use of the word "PURE" or of the word "SIMPLE", Until approximately late 1979 the spray was the only one of this type on the Australian market. It was estimated that 90% of businesses involved in the grocery trade stocked the spray. The spray has been extensively advertised nationally in magazines and on television. In the years 1981, 1982 and 1983 its retail sales were of the order of $2,000,000.00 per annun. ' The get-up of the front of the cans of the spray has remained basically unchanged since its introduction to the retail market. The words "pure and simple" in lower Pa case lettering (with the word "pure" and the word "simple" in larger print than the word "and") feature prominently. On the more recently manufactured cans, the words "pure and simple" are followed by an asterisk which is explained on the rear of the can by the words "Pure & Simple is a Registered Trade mark of R & C Products P/L.". In its extensive advertising campaigns, the respondent has emphasised various qualities of the spray including its natural ingredients, its ability to stop food sticking to cooking utensils, the number of particular uses to which it can be put and the ease with which it can be used. 4. In 1975 the formulation of the spray was changed to a blend propellant formulation as a result of which one of the fluorocarbons was replaced by a butane/propane mixture. In 1981 the formulation was changed to a water based one. The respondent has contemplated applying this new technology to expand the range of products sold by it in aerosol containers. The four areas of expansion under consideration are: first, dairy products including whipped cream, dairy dessert topping, cheese spread, cheese and spinach filling for Filo pastry and other forms of savoury spread; secondly, sweet products including honey, toppings for _ice-cream, desserts and pavlova, and whole fruit ® toppings} thirdly, avocado spread; and fourthly, condiments including salad dressings and prepared mustard. The respondent intends to market this new range of products under the name "Pure and Simple". Mr. Showyin, the technical director of one of the divisions of the respondent, went to the United States in November 1983 to investigate the new technology. Discussions about the new technology were held with the master licensor in Australia before Christmas 1983. Other steps taken by the respondent in this connection included ,a consideration of the market potential for the new range of products and of the type and capacity of container, and the valve system to be used. 5. The first appellant carries on the business of promoting and distributing health food products in Australia. Since May 1983 it has distributed in Australia some products which it has imported from Pure & Simple Inc. of Corona, California, U.S.A... The first appellant became aware of the distribution of these latter products in the U.S.A. in about November 1982. They are there sold under the name "Pure & Simple". Initially the first appellant imported mustard, ketchup and baby dills but the range of products has since been increased to include mayonnaise, saurkraut, taco sauce and a seltzer. However, argument before the learned judge and on the appeal centred upon the mustard imported in jars from Pure & Simple Inc. and 'distributed by the first appellant ("the mustard). The mustard is distributed by the first appellant only to health food stores in New South Wales, to the discrete health food departments in Grace Bros. stores in New South Wales, to several gourmet or specialty outlets in New South Wales and to specialist health food wholesalers in other States of Australia. The mustard is not distributed to supermarkets. The health food departments of Grace Bros. are specifically designated areas within the store where only health food products are stored and offered for sale. Health food stores do not stock the spray or any other aerosol product. Aerosol products are said to have no place in health food stores because the propellants and other ingredients used in them are alleged to cause harmful effects to the environment. There was some evidence that customers in health food shops regularly read the labels on products available for purchase and are particularly interested in the ingredients which products offered for sale contain. The mustard is packaged and sold in glass jars with screw-top lids. There is a label attached to the front of each jar and another to the rear of the jar. The label on the front of the jar is headed "PURE & SIMPLE" in upper case lettering with the ampersand in larger print than the words. The only word appearing on the label in larger print than "*PURE & SIMPLE" is the word "Mustard". The label on the rear of the ° jar bears the words, amongst others, "Distributed by Pure & Simple, Inc. Corona, CA 91720". Until April 1984, the first appellant sought, without significant success, to ensure that each Pure & Simple product which it distributed, including the mustard, bore a sticker stating "Australian Distributor Abundant Earth Pty. Ltd. 211 Bulwara Road, Pyrmont, N.S.W. 2009". From April 1984, the first appellant instituted a new system to ensure that no Pure & Simple product left its warehouse without a sticker in the above terms andan additional sticker, stating: 7. "NEITHER ABUNDANT EARTH PTY LTD NOR THIS PRODUCT HAS ANY CONNECTION WITH - PURE AND SIMPLE - COOKING SPRAY OR R&C PRODUCTS PTY LTD". During the hearing before the learned judge, the appellants proffered an undertaking to the Court in the following terms: "The respondents and each of them undertake to the Court that they will not by themselves their servants and agents, in trade or commerce, advertise, promote, display, offer for sale, or sell foodstuffs under or by reference to the name 'PURE AND SIMPLE' or 'Pure & Simple' without (a) affixing to the container of all such foodstuffs a clearly legible notice bearing the words - 'Neither Abundant Earth Pty. Ltd. nor this product has any connection with Pure and Simple Cooking Spray or R&C Products Pty. Ltd.' or words to the same effect. (b) including in any advertisement which depicts such foodstuffs a clearly legible notice bearing the words - 'Neither Abundant Earth Pty. Ltd. nor this product has any connection with Pure and Simple Cooking Spray or R&C Products Pty. Ltd.' or words to the same effect. PROVIDED that it shall not be a breach of this undertaking if the words Abundant Earth Pty. Ltd. in the above notices are replaced with the whole or part of the first respondent's name from time to time registered as a business name." The respondent tendered affidavit evidence from members of the public with a view to establishing at least a degree of confusion in the public mind as to the respective sources of the spray and the mustard. The appellants contested the admissibility of this evidence before the learned judge and before us. They submitted that the material relied onwas defective in form, that leading questions were employed and that, in certain respects, deponents were misled. Other criticisms were levelled at the evidence going to its weight. His Honour ruled the material to be admissible but of very little weight. Since, before us, the appellants conceded (as the learned judge found) that the respondent had established an extensive reputation in the name "Pure and Simple" at least in connection with the spray, and since the question whether the conduct complained of is misleading or deceptive or likely to be so is ultimately one for the Court to decide, it is mot necessary for us to consider the impact, if any, of the public evidence on the outcome of the case. In support of its contention that the first appellant had contravened 5.592(1) of tha Act, the respondent submitted to the learned judge that since the spray was widely known to the public in Australia under the name "Pure and Simple" and since it had established a substantial reputation and goodwill in this country, the name "Pure and Simple" had acquired a secondary meaning in that a 9. significant section of the relevant public associated it with products having their trade origin in the respondent. It was said that the distribution in Australia by the first appellant of mustard under the name "Pure & Simple" was conduct in breach of s.52(1) because it caused the public to form the mistaken belief that the mustard came from the same trade source as the spray: it was said to be a natural and reasonable conclusion for a sufficient section of the public to believe that products in the same field marketed under what was substantially the same name came from the same trade source. The learned judge, after analysing the authorities in this area, notably Hornsby Building Information Centre Proprietary Limited v. Sydney Building Information Centre Limited (1978) 140 C.L.R. 216, Parkdale Custom Built Furniture Proprietary Limited v. Puxu_ Proprietary Limited (1982) 149 C.L.R. 191, McWilliam''s Wines Pty. Limited v. McDonald's System of Australia Ptv. Limited (1980) 49 F.L.R. 455, Snoid v. Handley (1981) 54 F.L.R. 202, Taco Company of Australia Inc. v. Taco Bell Pty. Limited (1982) 42 A.L.R. 177 and Lego Australia Pty. Limited v. Paul's (Merchants) Pty. Limited (1982) 60 F.L.R. 465, addressed himself to the question of fact, to be answered objectively looking at the 10. conduct of the first appellant as a whole, whether that conduct was misleading or deceptive, or likely to be so, to "a significant section of the relevant public". His Honour concluded that a contravention of s.52(1) had been made out: "Looking at the question objectively, it seems to me that, when one bears in mind the nature of the products here in question, it would be reasonable for a significant section of the relevant public those interested in buying products such as the spray and the mustard, seeing substantially the same words used as the highlight of the label on the mustard, to believe that it ' originated from the same trade souce as the spray, whether that source be as the manufacturer or as the company entitled to the rights of distribution. We are not dealing as the court was in Lego, with products which are far removed from one another. The evidence here showed that some shoppers in supermarkets and stores who had had an opportunity to become familiar with the spray also shopped from time to time in health stores, which are the outlet for the mustard. Health food shoppers would also have been exposed to the extensive advertising of the spray. Having viewed the applicant's television commercials as part of the evidence, it is easy to understand how they could give rise to an association between the oft repeated 'Pure and Simple' and the spray. The spray and the mustard are not so far removed from each other as were the toys and irrigation equipment which gave rise to the Lego case. It is easy to see how shoppers would form the belief that a company which was the manufacturer, or held the rights of distribution, of the spray included in its business the manufacture or distribution of a condiment such as mustard. That misconception was caused by the conduct of the respondent company. The misconception is natural and human. It is the human tendency to err which 1l. makes it possible for the conduct of the respondent company to be misleading and deceptive. It does not deprive its conduct of that character." The learned judge then considered the possible impact of the undertaking proffered by the first appellant but concluded that it was no answer to the respondent's Claim for relief under s.52: "The whole technique of exposing such low-cost articles for sale, with a get-up ' designed to place no strain upon the prospective purchaser but to induce a quick and positive response tells against attributing to additional stickers such as these any real vaiue in countering that desired response." . . A contravention of s.52(1) by the first appellant having been established and the second, third, fourth and fifth respondents having been held to be persons involved in the contravention within the meaning of s.75B of the Act, the learned judge found it unnecessary to consider the claim that a contravention of s.53 of the Act had also occurred. Further, after referring to some observations on the point by Deane and Fitzgeraid, JJ. in Taco, supra, (at pp.205-6), his Honour did not feel that it was necessary to deal with the respondent's alternative claim for passing off but indicated that he proposed to reserve liberty to the respondent to apply in that behalf. So far as presently material, the orders made by the learned judge were that the 12, first appellant be restrained from advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with mustard and other foodstuffs, other than mustard and foodstuffs marketed by the appellant, under or by reference to the name "Pure and Simple" or any name substantially identical with or deceptively similar to the name "Pure and Simple". Liberty to apply in relation to the claim for passing off was reserved to the respondent. The appellants have appealed against the whole of the judgment below, submitting that the respondent's application for relief should have been dismissed. The respondent has cross-appealed against the order reserving to it liberty to apply in respect of the passing-off claim. By its notice of cross-appeal, the respondent (cross-appellant) contends that the learned judge should have held that the first appellant had passed off its business products as those of the respondent. However, during argument before us, counsel for the respondent indicated that the cross-appeal would only be pressed in the event that the appeal succeeded with the result that the claim under s.52(1) failed. In attacking the judgment below, the appellants emphasise that the word "pure" and the word "simple" are ordinary descriptive English words. They say that the words are related in meaning and that their collocation in a 13. single phrase is natural. Mention is made of the Oxford English Dictionary's reference to the single phrase (Vol. IX Part I SI-ST at p.64) (cf. Roget's Thesaurus, Penguin Ed. at p.20). The appellants argue that because the common law principles of passing off may be of assistance, even if not decisive, in considering the application of s.52 (see Puxu, per Mason, J. at p.205 and the Hornsby Building Information Centre Case, per Stephen, J. at p.227) it is appropriate to adopt, for the purposes of s.52, the heavy burden imposed on a plaintiff to establish a passing off where descriptive words have been used as trade marks or trade names (see in the context of passing off The Cellular Clothing Company, Limited v. Maxton & Murray £1899] A.C. 326 per Lord Davey at p.343; In re Joseph Crosfield & Sons Limited £19103 1 Ch. 118; Burger King Corporation v. The Registrar of Trade Marks (1973) 128 C.L.R. 417, per Gibbs, J. at p.425; cf., in the case of 3.52, the Hornsby Case, per Stephen, d. at p.229; Puxu, per Mason, J. at p.203). The appellants submit that this difficulty is compounded for the respondent by the circumstance that it seeks to restrain the use of the name "Pure and Simple" in connection with goods other than its cooking spray; that is, the argument runs, the absence of a "common field" of activity, if not an absolute bar, makes it even harder for the respondent to demonstrate the likelihood of consumers being misled (see the Lego Case, supra, at p.473). Alternatively, the appellants submit that their disclaimer is sufficient to dispel any confusion. 14, It may be accepted that the use of ordinary descriptive words as a trade name or trade mark and the lack of a common field of activity are material considerations to be taken into account when considering the application of s.52. But, in the end, the matter must fall to be resolved in the light of the particular circumstances of the case in hand. In the present case, the respondent had established a considerable reputation in and to the name "Pure and Simple" which is distinctive of its product. The evidence also established that the respective products of the parties possessed many significant features in common: they each had the same name; in each case, the name is highlighted as the distinctive name of the product; in each case, the product to which the name is applied is related to food; in each case, the product is relatively inexpensive to purchase; and in each case the advertising places considerable emphasis upon the same matter, the natural ingredients, the "purity" of the product. In our view, the present case was properly perceived by the learned judge as one where a name composed of descriptive words had become distinctive of the respondent's products (see B.M. Auto Sales Pty. Limited v. Budget Rent A Car System Pty. Limited (1977) 51 A.L.J.R. 254 per Gibbs, J. at pp.257-8). Further, even if, strictly speaking, there was here no common field of activity, the parties' respective products were marketed at the consumer is. level in closely allied fields. It would be unreal to conclude that there are two distinct classes of consumers, one interested in the first appellant's products and the other in the respondent's products. Nor did the appellants make any such submission. We think that the learned judge was right to hold that the use by the first appellant of the name "Pure and Simple" in the circumstances described provided ample scope for consumers being misled or deceived as to the respective trade sources of the products. This is largely a question of fact and we agree with his Honour's assessment of the likelihood of potential purchasers being misled or deceived into believing that the first appellant's mustard was in some way connected with the respondent (cf. Totalizator Agency Board v. Turf News Pty. Limited [£19671 V.R. 605 per Smith, J. at pp.608-9; Malleys Limited v. Whirlpool Australia Pty. Limited £1984] A.T.P.R. 40-455). Then the appellants say that their disclaimer avoids the possibility of any consumer being misled or deceived. Again, it is not possible to generalise in this area. There may well be cases where a disclaimer is effective to eliminate confusion (see Turner v. General Motors (Australia) Pty. Limited (1929) 42 C.L.R. 352 at p.370; cf. Malleys Limited v. Whirlpool Australia Ptv. Limited, supra, per Lockhart, J. at p.45,282; Bridge 16. Stockbrokers Limited v. Bridges [19851 A.T.P.R. 40-502 per Smithers and Woodward, JJ. at p.46,020, per Lockhart, J. at p.46,022). But, where the competing products are small, inexpensive items the efficacy of a disclaimer, however prominent, cannot be assumed (cf. Puxu, supra). The disclaimer now being affixed to the mustard is less than prominent and, we would expect, of little, if any, utility for present purposes. Nor are we persuaded that any attempt to increase the size or position of the disclaimer would improve the understanding of consumers. In the circumstances, we think that no useful purpose would be served here by any disclaimer (see Powell v. The Birmingham Vinegar Brewery Company Limited £18961 13 R.P.C. 235 per Lindley, L.J. at p.256; per Smith, L.J. at pp.263-4; affd. £18971 A.C. 710). It follows, in our opinion, that the learned judge was right to hold that a contravention of s.52(1) had been established, We are also of the view that his Honour correctly enjoined the first appellant in respect of that contravention. Given the grant of that relief, no need arises to consider the respondent's alternative claim in passing off (see Taco, supra, at pp.205-6). It follows, in our opinion, that it was unnecessary to reserve to the respondent liberty to apply in that behalf. We propose to vary his Honour's orders to that extent. Otherwise, the appeal and cross-appeal will be dismissed. 17. We make the following orders: l. The orders made herein by C.A. Sweeney, J. on 17 September 1984 be varied by setting aside the liberty therein reserved to the respondent to apply in relation to the claim for passing off. 2. The appeal be otherwise dismissed. 3. The appellants pay the respondent's costs of the appeal. 4, The cross-appeal be dismissed. 5. There be no order as to the costs of the cross-appeal. I certify that this and the sixteen preceding pages are a true copy of . the Reasons for Judgment herein of their Honours Mr. Justice Toohey, Mr. Justice Morling and Mr. Justice Beaumont. wo Associate Dated: 272 February 1985