ae eee Hy - 656- CATCHWORDS TRADE PRACTICES - respondent marketing rice-based horse feed pellets with similar-sounding name to product cf applicant - claim by applicant of contravention s.52 Trade Practices Act and passing off - whether serious question to be tried - interlocutory relief granted. PRACTICE & PROCEDURE - interlocutory injunction - consideration of nature of relief under s.80 Trade Practices Act and under general law. Trade Practices Act 1974 ss.52, 80. Abundant Earth Pty Ltd v R_& C Products Pty Ltd (1985) 59 ALR 211 ref'd to. Parkdale Custom Built Purniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 cons. World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 ref'd to. Corvisy v Corvisy £19821 2 NSWLR 557 ref'd to. Appleton Papers Inc v Tomasetti Paper Pty Ltd £1983] 3 NSWLR 208 ref'd to. Epitoma Pty Ltd v AMIEU (1984) 3 FCR 55 cons. Associated Minerals Consolidated Ltd v Wyong Shire Council (1974) 48 ALJR 464 ref'd to. Castlemaine Tooheys Ltd v South Australia (1986) 60 ALJR 679 ref'd to. RICEGROWERS' CO-OPERATIVE LIMITED v HOWLING SUCCESS AUSTRALIA PTY LIMITED No. G 576 of 1986 GUMMOW 7. SYDNEY 23 DECEMBER 1986 IN_THE FEDERAL COURT OF AUSTRALIA )} ) NEW SOUTH WALES DISTRICT REGISTRY ) No.G 576 of 1986 ) GENERAL DIVISION ) BETWEEN : RICEGROWERS' CO-OPERATIVE LIMITED Applicant AND: HOWLING SUCCESS AUSTRALIA PITY LIMITED Respondent CORAM: Gummow J. DATE: 23 December 1986 REASONS FOR JUDGMENT (EX TEMPORE) Gummow J. The applicant in these proceedings seeks interlocutory injunctive relief in respect both of contravention of s.52 of the Trade Practices Act 1974 ("the Act") and of passing off. THE FACTS Since 1974 the applicant has carried on a stock feed business, apparently based in Leeton, New South Wales, under the name "Coprice Feeds". Since 1981 it has manufactured and sold a rice based horse feed pellet product which is marketed in three a] categories, Coprice F for foals (with 20 per cent protein and 55 per cent rice), Coprice G for growing horses (with 15 per cent protein and 66 per cent rice) and Coprice M for mature horses (with 12 per cent protein and 72 per cent rice). Registration in respect of these three names has been effected in Victorta and three other States under appropriate State stock food legislation. This product has been promoted as having a "cooling" effect, ie the moderation of the temperament of otherwise over-frisky horses. There are horse feed products emanating from South Australia known as "Cool Blend" and "Cool Stamina" but they are not marketed as being rice based. There is also evidence of a product available in Victoria froma _ stock feed business known as "Barastoc", but this also does not contain rice. There is no evidence of any other horse feed product promoted for its cooling qualities and, until the appearance of the respondent's product herein complained of, no evidence of any other rice based horse feed product. The applicant also uses ""Coprice" to identify other stock food pellet products, for example, for pigs and cows. The applicant's product for horses is sold through general stock feed wholesalers and retailers throughout Australia, and there is evidence of what appear to have been substantial sales since 1981. There is also evidence of extensive advertising in newspapers, trade magazines and on radio. Examples were also given of Coprice Feeds display stands at agricultural shows in New South Wales and Victoria, and promotional efforts at sporting N events in what one might call the horsey world. Since January 1986 the Coprice product involved in this case has been sold in 40 kilogram bags which are coloured orange and white and show in black "COPRICE" and "HORSE PELLETS" in large lettering and "High Energy...Rice Based" in smaller lettering. Previously, the bags were hessian or jute and were stencilled or printed with substantially the same legend. Fach bag has attached to it a label of the size 9 millimetres by 15 millimetres which shows boldly the letter "F", "G" or "M" to indicate the particular category of the product and also contains the specification thereof. The respondent is a Victorian company which in about April 1986 purchased a stock feed manufacturing business from the liquidator of Saltram Nominees trading as VNG Stockfeeds. In about late June 1986 the respondent commenced manufacture of a line of stock feed products under the name "Great Australian Stock Feed". On Friday 4 July 1986 a representative of a riding school in Victoria had a telephone conversation with Mr Robert Kerr, a director of the respondent. On 7 July 1986 Mr Kerr received in confirmation a note with which was enclosed one of the above Coprice labels. The note said in part, "Friday's telephone conversation refers. Herewith COPRICE specs Cmeaning specifications], Please quote us the same type of product. BARASTOC's product is not liked by our mares". In paragraph 5 of his affidavit sworn in these proceedings Mr Kerr says: - "In or about July 1986 the respondent received various inquiries from customers regarding rice based specialized stock feeds. As a result of those inquiries and specifications provided by customers, the respondent decided to manufacture a general rice based horse feed". On 1 September 1986 the respondent applied to the Victorian Department of Agriculture pursuant to the Victorian Stock Feeds Act 1958 for registration of its product under the name "Top-Rice Horse Pellets". The application, after discussion and correspondence with officers of the department, was amended to "Great Australian Stock Feed Top-Rice Horse Pellets". In November 1986 approval was given to the label attached to the respondent's proposed product. The respondent has its own retail outlet but the first retail sale of the respondent's product was made at the Warragul Grain Store in Warragul in Victoria on 24 November 1986. As it happens, the invoice for that sale was tendered in evidence by the applicant, the purchase having been made by one of its representatives. The respondent markets its product only in Victoria and presently does not intend to expand into other states. No evidence was given of the quantity of stock currently held by the respondent of its product or of any sales to date or advertising or promotional costs and commitments. There is evidence of limited newspaper advertising since November 1986. The applicant points in particular to page 36 of the "Warragul Gazette" of 2 December 1986 which contains an advertisement for the Warragul Grain Store. The advertisement includes the following: "THE BIG SPECIAL for people with horses... COPRICE M IN STOCK {Great Australian Stock Feed LogoJ TOP-RICE HORSE PELLETS $10.90 40 kg bag" ' The Coprice product retails for between $12.00 and $13.50 per 40 kilogram bag. The respondent's 40 kilogram bag is currently yellow with red and dark blue printing upon it. It also features the Great Australian Stock Feed logo, to which I have referred, in blue and red printing. The largest words are "Top-Rice" and underneath in smaller but still large print "Horse Pellets". A label, sized 15 millimetres by 12 millimetres is stapled to the top right hand corner of the bag. It bears in black on dark red, "Great Australian Stock Feed Top-Rice Horse Pellets" and the logo. On the back of the label are particulars including the sentence, "By using this feed your horse will remain 'Cool' while still obtaining sufficient energy and protein to remain in top condition". THE LAW "Coprice" might appear as an interplay between "co-operative" from the applicant's title, "Rice" and "Price". It was not strongly disputed but that words or expressions that are not inventive combinations of known words may yet acquire distinctiveness or a secondary meaning for the purposes both of 5.52 of the Act and of passing off: Abundant Earth Pty Ltd v R & C Products Pty Ltd (1985) 59 ALR 211 at 216-217. As I have mentioned, the applicant puts its case on two bases, contravention of s.52 of the Act and passing off, the latter being entertained in the accrued jurisdiction of the Court. In dealing with the passing off claim the Court is concerned with protection of private rights, in particular with the applicant's right to protect its alleged goodwill against tortious interference or appropriation by another trader. On the other hand, as has often been observed, although a rival trader has standing to seek to enjoin contravention of s.52 this is only because of the presence of the term "any other person" in s.80(1) of the Act, and s.52 is designed to protect members of the public in their capacity as consumers of goods and services: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 202-203 (Mason J.). The contrasting charactcr of the rights involved here 1s further reflected in the approach to be taken to an award of interlocutory injunctive relief. Counsel for the respondent submitted that if I came to the question of balance of convenience, I should deal distinctly with s.52 and passing off. This was because in dealing with injunctive relief in respect of the s.52 claim the Court had to consider the prejudice (or lack of it) to the public of a grant or denial of injunctive relief against his client, a different exercise to that in finding the balance of convenience in the passing off claim. In my view, this submission is correct. Section 80 of the Act is not simply the casting into statutory form of the traditional equity jurisdiction to grant injunctive relief for breach of statutory duties or prohibitions. The creation by statute of a remedy identified therein as an "injunction" presents a threshold question. This is whether on its proper construction the statute (a) does no more than import the remedy of injunction developed by courts of equity or (b) adopts or modifies the characteristics that identify an injunction in those courts: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185-187 (Bowen CJ.), 199-200 (Brennan g.); Corvisy v Corvisy [£19823 2 NSWLR 557 at 558-9; Appleton Papers Inc v Tomasetti Papers Pty Ltd £19832 3 NSWLR 208 at 215; Tytel v Australian Telecommunications Commission (1986) 67 ALR 433 at 441; cf South Carolina Insurance Co. v_ Assurantie Maatschappij'de Zeven Provincien' N.V. £19863 3 All ER 487 at 495-6, 499 (HL). Section 80 falls in category (b). Thus, in respect of s.80 the traditional requirement for protection of private rights, that unless an injunction be granted there will follow irreparable injury inadequately compensated in damages, 1s qualified by the terms of subsections.(4)(c) and (5)(c). The power to grant interim relief in this case in respect of the alleged contravention of s.52 is conferred by s.80(2) of the Act, the criterion being whether "in the opinion of the Court it is desirable to do so". It has been assumed generally that this form of words brings with it the traditional concepts of a first stage of "prima facie case" or some variant or explication of that notion leading, if satisfied, to the second stage of considering the balance of convenience. In the present case it was accepted by both parties that the requirement to pass the first stage under s.80(2) was to be expressed as "a serious question to be tried" in accordance with the Full Court decision in Epitoma Pty Ltd v AMIEU (1984) 3 FCR 55. As to the passing off claim it was not submitted that any other formulation of prima facie case applied in the accrued jurisdiction. In respect of the balance of convenience there is, as I have indicated, a distinction to be observed, given that the claim in the accrued jurisdiction is to protect private not public rights. It should, however, be noted that in this respect s.80 does not necessarily produce a result markedly different from the general law. This is because where in a court of equity an injunction is sought in aid of public rather than private rights, special considerations may apply: Associated Minerals Consolidated Ltd v Wyong Shire Council (1974) 48 ALJR 464 at 470 (FC), Castlemaine Tooheys Limited v South Australia (1986) 60 ALJR 679 at 681-2. It is also to be observed that whilst Epitoma Pty Ltd v AMIEU deals with what for s.80(2) is involved in a prima facie case, it may not do so for all branches of this Court's statutory injunctive jurisdiction. For example, where the plaintiff relies upon s.39B of the Judiciary Act 1903 (the language of which is drawn from s.75(v) of the Constitution) to have this Court enjoin an officer of the Commonwealth, close consideration of the adverse effect of interlocutory injunctive relief upon the public interest may in some cases require a probabililty or even a distinct probability of success in order to obtain such relief (Castlemaine Tooheys Limited v South Australia (supra)). In this application, I turn to consider whether the applicant has shown that there is a serious question to be tried and if so whether the balance of convenience favours injunctive relief at this stage. The balance of convenience may, as counsel for the respondent submitted, be itself affected by the Court's evaluation or perception of the seriousness of the question, that is, the weight of the applicant's case: Castlemaine Tooheys Limited v South Australia (1986) 60 ALJR at 682. 10. I should emphasize that the issues presented at this stage are formed by application of the principles abovementioned and that these differ in substance as well as in form from those that will govern the result of a final hearing. Further, the evidence may be expected to undergo some modification at a final hearing, each party having indicated to the other an awareness of deficiencies in what the limitations of time had permitted to he presented to the Court at the interlocutory hearing. There was, as is appropriate and desirable at this stage, limited cross-examination and of course no time for discovery and interrogatories, even assuming those procedures to be appropriate in this case. In short, the Court is not now concerned with whether it ultimately should be held that there is contravention of s.52 of the Act or passing off by the respondent. CONCLUSIONS In my view there is at the interlocutory level sufficient to show prima' facie that ""Coprice" has acquired distinctiveness or a secondary meaning in respect of the rice pellet product, both for the purposes of s.52 of the Act and passing off. The products of the applicant and the respondent have the same general character and seek to meet the same consumer need. The respondent asserts and the applicant denies that there is on visual comparison little likelihood of deception being suffered by consumers who buy by personal shopping in produce stores. il. Mr Kerr gave short evidence of his admittedly brief experience with the applicant's retail outlet and emphasized the impact of display of the goods for sale in such stores. The respondent also stressed the impact of the logo and words "Great Australian Stockfeed" as a house brand or line of product identification. On a side by side comparison there may be much to be said for there being some clear distinctions between the packaging of the products of the parties. However, there is a real measure of visual similarity between "Coprice" and "Top-Rice", even allowing that only the second name may convey a "puffing" endorsement of the rice in question. At this stage the evidence does not enable me to approach the matter on the footing that both products will usually be stocked by the same stores and that, if they are, they will usually be displayed or stored side by side. Nor would I now be correct in concluding that where the goods are bought by personal shopping this is preceded, as the usual practice, by visual inspection of the packaging. Further, the passing off cases are replete with warnings against overstressing dissimilarities that appear ona side by side comparison of packaging, and the same would be true of 5.52. On the evidence as it now stands, including paragraph 6 of the affidiavit of Mr Hanley, I must give some real weight to the prospect of deception of consumers who seek to buy the applicant's product by personal shopping. There is in my opinion a serious question that arises here. 12. As the advertisement from the Warragul Gazette indicates, there is evidence which on one view suggests that concurrent availability of both products at the same retail stores may provide the occasion for advertising by retailers that may give rise to the misleading of customers. What is not apparent at this stage is a sufficiently serious question as to whether for such misleading conduct the respondent would be responsible either in passing off (Brinsmead v Brinsmead (1913) 30 RPC 493 at 511) or under the Act (Parkdaie Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 211). An auditory comparison of ""Coprice" and "Top-Rice" does as a matter of impression suggest a stronger similarity than does a visual comparison. The applicant took this aspect of the case further by tendering fairly comprehensive affidavit evidence as to the practice in the trade of ordering goods of this character by telephone. This the respondent sought to counter by submitting that even if sales be made on the strength of mishearing the trade name, at the end of the day no harm would flow because the goods might be returned or some commercial accommodation reached. Even if, as it presently does not, the evidence showed this would be the way such problems were dealt with in the trade, there would still, on the authorities, have been a passing off (where, after all, the older, narrower formulation of the tort 13. was that the defendant should not sell his goods as those of the plaintiff: Erven Warnink B.V. wv J Townend and Sons Limited £1980] RPC 31 at 91-92) and also contravention of s.52 (cf Stuart Alexander and Co (interstate) Pty Ltd v Blenders Pty Ltd (1981) 37 ALR 161 at 169). More significantly, the respondent points to the circumstance of the "Coprice" product being sold in three grades, "Fe 'G" and "M" and says that any purchasers who place oral orders would be likely to signify the grade and so alert the retailer against construing the order as one for the respondent's product. Further, the respondent whilst conceding that there is some evidence that points unequivocally to the practice of oral orders for retail sales (as in the affidavit of Karen Lyn Pryor), disputes the weight to be given to evidence of deponents who operate both ona retail and wholesale level and depose to a significant practice of telephone orders but do not distinguish in respect of that practice between retail and wholesale customers. The latter, in the respondent's submission, will, even if dealing with a wholesaler who stocks both products, be highly likely to make it clear what product they wish to purchase. All these matters may no doubt be clarified by evidence at the trial and the respondent may then effectively meet what now seems a fairly weighty case on what I call auditory deception. As the evidence stands at present there are in my 14. view serious questions to be tried in respect of contraventions of s.52 and passing off. That brings me to the balance of convenience. The evidence indicates that the applicant has an established trade for its product and as a result it may for present purposes he taken that there is a significant recognition of that product by consumers. Indeed, there is some direct evidence by consumers that they regard the "Coprice" product as efficacious for their horses. The respondent's product is anew one and there has been, so far as is indicated by the evidence offered at this stage by the respondent, limited marketing of this product. There is little if any direct evidence of the expenditure which the respondent has incurred or to which it is committed or as to the degree of disruption an interlocutory injunction would cause, or as to the inadequate nature of the applicant's undertaking as to damages. On the other hand, the applicant points out that sales of its products shall increase in February with the start of preparation of horses for autumn show season. Taken as a whole, these considerations plus the comparative strength of the applicant's case on the prima facie case requirement, indicate that the balance of convenience favours the grant of relief. In respect of the passing off claim the respondent urges that in this, as generally, the keeping of accounts by it should is. suffice and that an injunction is an inappropriate interlocutory remedy. There are observations arguendo to the effect that in many instances the keeping of accounts would be an absolutely adequate remedy: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 217-8. However, it must be remembered that, as I have mentioned, equity restrains passing off to protect goodwill against interference and also that it does so because injury to so delicate and complex an intangible as goodwill is plainly difficult of adequate or satisfactory monetary assessment: Turner v_ General Motors (Australia) Pty Ltd (1929) 42 CLR 352 at 362-3 (Isaacs J.) 368 (Dixon J.); Erven Warnink B.V. (supra) at 92-93 (Lord Diplock), 101-3 (Lord Fraser). In respect of the s.52 claim, the respondent submitted that special regard should be paid upon assessing the balance of convenience to the circumstances that (a) there was no claim at this stage of the proceedings that its product was of inferior quality, nor was it shown the consumers derived any particular benefit from the applicant's product not also found in the respondent's product, and (b) the cheaper retail price benefitted consumers. I have taken these matters into account, but I also must give substantial weight to the applicant's submission that consumers should be supplied with the product of the particular Provenance that they identify from the reputation of "Coprice" with consumers. 16. Finally, although I am by no means persuaded that it was necessary to do sao, I have taken into account in respect of both head of relief the considerations that whilst it knew of the applicant''s product at least by July 1986, the respondent was at pains to comply and does appear to have complied in the manner I have described with the Victorian stock foods legislation, and that it may have been unaware of the general application of 5.52 of the Act. I conclude that there are, as indicated, serious questions to be tried and that the balance of convenience favours interlocutory relief by injunction. This is true both of passing off and s.52, but the one order will suffice to give the applicant appropriate protection. The orders I propose to make are: 1. Upon the applicant by its consent giving the usual undertaking as to damages, order that the respondent by itself, its servants and agents, be restrained until further order from, in trade or commerce, advertising, promoting, displaying, offering for sale or selling any stockfeed product under or by reference to any name comprising or including ""Top-Rice", "Coprice", or any name misleadingly or deceptively similar to ""Coprice". 2. I grant liberty to apply on three days' notice. 17. 3. Costs of this application including any reserved costs be costs in the proceedings. I certify that this and the WA preceding pages are a true copy of the Reasons for Judgment of his Honour Mr Justice Gummow. / Associate: Tibor. Kae Date: 3 Decen har 19S, Counsel and Solicitors for the Applicant: Counsel and Solicitors for the Respondent: _ Date of Hearing: Date of Judgment: Mr M.R, Ellicott instructed by Williams Niblett Mr J.C. Campbell instructed by Ellison Hewison & Whitehead (Melbourne) 18 December 1986 23 December 1986