31% CATCHWORODS TRADE PRACTICES - s.52 - passing off - protection of business name - use of very similar name - evidence of confusion ~ name comprised of descriptive words only - interlocutory injunction refused. Trade Practices Act, s.52 Rent-A-Ute Pty. Limited v. Golden 44 Pty. Ltd. & Ors. Qld G101 of 1987 PINCUS J. BRISBANE 15 JULY 1987 Ov No tL . a ' — , N ms ny ee roueti, .< "T OB ' Ausit BIA FSIS MESISTAY ROL IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G101 of 1987 GENERAL DIVISTON ) BETWEEN: RENT-A-UTE PTY. LIMITED Applicant AND: GOLDEN 44 PTY. LTD. First Respondent AND: KENNETH JOHN PETERSEN Second Respondent AND: ALLAN DOUGLAS PERRY Third Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF QRDER: 15 JULY 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The application for an interlocutory injunction be dismissed; 2. The applicant pay the respondents' costs of and incidental to the application to be taxed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. a IN THE FEDERAL COURT OF AUSTRALTA ) QUEENSLAND DISTRICT REGISTRY ) QLD G101 of 1987 GENERAL DIVISION ) BEIWEEN: RENT-A-UTE PTY. LIMITED Applicant AND: GOLDEN 44 PTY. LTD. First Respondent AND: KENNETH JOHN PETERSEN Second Respondent AND: ALLAN DOUGLAS PERRY Third Respondent PINCUS J. 15 JULY 1987 REASONS FOR JUDGMENT This 1S an application for an interlocutory injunction to restrain use of a business name, brought in reliance upon provisions of the Trade Practices Act. The applicant's business is well established and uses the name Rent a Ute (or, sometimes, Rent-a-Ute). The respondent's has started recently and uses the name Handy Rent A Ute. The history of the applicant's business, which has been quite successful, is as follows. Mr. M. M. Bone and his father operated a service station in 1983 and began to rent out motor utility vehicles for short and long periods. During the same year a few agents were appointed to conduct the same business. In February 1985 Mr. Bone formed the view that he should franchise his business, and approached a number of service station proprietors, inducing them to pay money to participate in the enterprise. More accurately, each franchisee ran a separate business under the guidance of, and with some assistance from, the applicant and made payments to the applicant. There are now 43 franchisees in Queensland, 42 in New South Wales and 22 in Victoria and smaller numbers elsewhere. There 1s a total of over 250 depots; some franchisees have more than one depot. The applicant has, to some extent, advertised its services "either as the direct supplier or latterly as the franchisor". In 1986 and 1987, its total expenditure on advertising 15 said to have been $115,729. That is a substantial amount, but plainly not enough to make much impact across' the nation. There 1s no evidence that consumers or prospective consumers of the relevant kind know the name "Rent a Ute" as a source of utilities for hire. In February 1987, the applicant appointed the third respondent as a franchisee in the Tweed Heads area and began discussing with him the possibility of his taking a franchise in Western Australia and Tasmania. Since that would have involved a large payment by the third respondent, he discussed the position with the second respondent, a solicitor, and the thought occurred to them that it might be easier and cheaper to set up a competing business. They did so, and the first respondent came into being. There is evidence that they cast about for a_ suitable name and lit upon "Handy Rent a Ute". An innocent explanation has been advanced for the selection of the name. I do not find it entirely convincing but am not prepared to decide the case on the basis that there is any likelihood that the selection would be held a dishonest one, at the trial. The third respondent is now out of the business, but the first respondent, owned by the second respondent, is attempting to expand its operations. There is evidence of confusion and I accept that there has been some. Indeed, even in the absence of evidence, one would assume that the use of such similar names by two traders would create confusion. The word "Handy" is not particularly memorable, and the signs used by the first respondent are such that some who see them might take it that ""Handy" 1s a mere word of praise rather than part of the trade name. There 1s also evidence that the first respondent has copied some of the applicant's documents andon the material presently available 1t seems obvious that it has done so. However, that seems to me peripheral. I have had placed before me photographs of the signs used by the contending parties at depots and on their vehicles. They look very different. The applicant has a white sign on a red background, with some yellow and black lettering and figuring. The first respondent uses a yellow sign with a large red "Handy", a black "Rent A Ute" and the price in yellow outlined in black. The style of printing is dissimilar and the first respondent's sign has a symbol of a pointing mailed fist, which has no counterpart in the applicant's sign. Mr. McMillan, who argued the case well for the applicant, pointed out that the prices shown on the signs are of similar style (and the same in amount); nevertheless the signs, as I have said, are dissimilar in appearance. The word "ute" as a contraction of "utility" has come into very common use and many, perhaps most, people use the contraction more commonly than the full word. The combination of words "Rent a" followed by the name of an object 1s also fairly common 1n the business community, "Rent a Car" being extremely common. The main point taken on behalf of the first respondent is that "Rent a Ute" 1s essentially descriptive and can only be protected in unusual circumstances. As Stephen J. said in Hornsby Building Information Centre Pty. Ltd. v. Sydney Buriding Information Centre Ltd. (1978) 140 C.L.R. 216 at p.229: "There 1S a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it 1s descriptive it is equally applicable to any business of a_ like kind, 1ts very descriptiveness ensures that 1t 15s not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that quite small differences ina competitor's trade name will render the latter immune from action ..." It is much easier to find examples of application of this principle than counter-examples. Mr. McMillan relied particularly upon the decision of the High Court in B.M. ms % Auto Sales Pty. Ltd. v. Budget Rent A Car System Pty. Ltd. (1977) Sl A.L.J.R. 254. There, the respondent managed to achieve protection of its name, the Court rejecting such an argument as was here advanced against the applicant. Gibbs J. said at p.257: "... it was argued on behalf of the appellants that the word 'Budget' was an ordinary descriptive word in common use, and that there was no evidence sufficient to establish that the name Budget Rent A Car had become distinctive of the respondent's business. It is true that 'budget' 1s an ordinary word, which nowadays is sometimes used to mean 'inexpensive'. The phrase 'rent a car' contains three ordinary words, and is commonly used to describe a business of a particular kind. However it is clear law that a name composed of descriptive words may become distinctive of the business of a particular person, and if a plaintiff shows that the name in fact distinguishes his business and that the use of the name by the defendant 1s calculated to deceive persons into supposing that the business carried on by the defendant is that of the plaintiff, and 1s likely to cause damage to the plaintiff's business, he will be entitled to relief ... In the present case there was ample evidence from which it could be inferred that the name Budget Rent A Car had become distinctive of the respondent's business in various parts of Australia by the year 1968." The principal point of the Budget Rent A Car case, as Il read 1t, was that Budget succeeded in protecting 1ts name in the Northern Territory although it had only a small presence there. It won because it had made the name nationally well-known. There are of course numerous authorities in this area and assistance 1s able to be gained from studying them as examples of the application of the basic principle. But it is unnecessary to analyse a number of authorities, since there is little doubt as to the side of the line on which this matter falls. A marginal case, decided a little later than the Budget case, is City Link + ade t Travel Holdings Ltd. v. Lakin (£19791 F.S.R. 653. That concerned the use of the business name "City Link" as describing the trade of express delivery of parcels. Whitford J. was of course confronted with the argument that the name was merely or largely descriptive and said at p.663: "Although there is no doubt a strong element of descriptiveness in the words 'city link' in relation to a parcels delivery service, or indeed in relation to other services involving a _ link between cities, it 1s not, I think, quite so strong as the link between 'cellular clothing' and 'clothing' of a cellular construction, or indeed 'office cleaning' and the cleaning of offices. So that I would not say 1t was a case where it would be impossible to establish a secondary meaning, a reputation." His Lordship's references were to the two cases of The Cellular Clothing Company, Limited v. Maxton and Murray Ltd. £18991 A.C. 326 and Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) 63 R.P.C. 39. I think that "Rent a Ute" 1s just as descriptive as, for example, "cellular" applied to a particular sort of cloth. There is an onus in such a case on the applicant to establish his right to exclusive use of the description of such a business by satisfying the test referred to - i.e., to quote again from the Budget Rent A Car case, by showing that the name has "become distinctive of the business of a particular person". It was argued on behalf of the applicant that I should find there 1s a serious question to be tried on that issue. There seems to me to be no evidence upon which it could possibly be found that the name "Rent a Ute" has become distinctive of the applicant's business. It is probable, in view of the hundreds of depots there are scattered throughout parts of the eastern states, that many people will have seen the sign, but it 1s quite unlikely that anyone seeing a sign associated with the respondent's competing business would be deceived "into the belief that he was getting the goods of A. when he was really getting the goods of B." - Reddaway v. Banham (£18963 A.C. 199 at 210 per Lord Herschell. So far I have considered the matter as arising in a passing off suit. The applicant relied, of course, upon the assertion that there has been misleading conduct within the meaning of s.52 of the Trade Practices Act. The extent to which passing off principles restrict the Court in exercising its jurisdiction to grant relief in respect of breaches of s.52 1s, perhaps, still an open question. But simply applying the words of s.52 in their natural meaning, it does not appear to me that' the applicant has advanced a case that the respondents' conduct 15 misleading or deceptive, or likely to mislead or deceive, although there is, as I have said, some evidence of confusion. That evidence is of instances in which some person intending to deal with the first respondent has mistakenly contacted the applicant, and incidents of a similar kind. They will inevitably arise if two people choose to use very similar names for their businesses, but that cannot produce the result that names merely descriptive of a business are necessarily protected. Sections 53 and 53A of the Act were also mentioned by the applicant's counsel, but do not require any separate treatment. Having chosen a merely descriptive name, the applicant must show that its mame has come, inthe course of time, to acquire "a secondary meaning so as to indicate a particular trade source" - Ricketson, "The Law of Intellectual Property" p.541. Here, in my view, it is quite unlikely that the name "Rent A Ute" has acquired such a meaning, in the community generally. Since the applicant has chosen a descriptive name, "Rent A Ute", and there appears to be no ground for thinking that it will, at the trial, prove that the name has during its short life become distinctive of the applicant's business, the application must be dismissed, with costs. } certify that this and the 7 preceding pages are a true copy of the reasons for judgment herein of His Honour Mr Justice Pincus Associate Dated 15 July 1987 Counsel for the Applicant: Mr. W.T. McMillan Solicitors for the Applicant: Samuel Leonard & Associates Counsel for the Respondents: Mr. A. Heyworth-Smith Solicitors for the Respondents: Peterson Cutler & Co. Date of Hearing: 8 July 1987 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G101 of 1987 GENERAL DIVISION ) BETWEEN: RENT-A-UTE PTY. LIMITED Applicant AND: GOLDEN 44 PTY. LTD. First Respondent AND: KENNETH JOHN PETERSEN Second Respondent AND: ALLAN DOUGLAS PERRY Third Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 15 JULY 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The application for an interlocutory injunction be dismissed; 2. The applicant pay the respondents' costs of and incidental to the application to be taxed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. CATCHWORODS TRADE PRACTICES - s.52 - passing off ~ protection of business name - use of very similar name - evidence of confusion - name comprised of descriptive words only - interlocutory injunction refused. Trade Practices Act, s.52 Rent-A-Ute Pty. Limited v. Golden 44 Pty. Ltd. & Ors. Qld G101 of 1987 PINCUS J. BRISBANE 15 JULY 1987 agents were appointed to conduct the same business. In February 1985 Mr. Bone formed the view that he should franchise his business, and approached a number of service station proprietors, inducing them to pay money to participate in the enterprise. More accurately, each franchisee ran a separate business under the guidance of, and with some assistance from, the applicant and made payments to the applicant. There are now 43 franchisees in Queensland, 42 in New South Wales and 22 1n Victoria and smaller numbers élsewhere. There is a total of over 250 depots; some franchisees have more than one depat. The applicant has, to some extent, advertised its services "either as the direct supplier or tatterly as the franchisor". In 1986 and 1987, its total expenditure on advertising 1S said to have been $115,729. That 1s a substantial amount, but plainly not enough to make much impact across the nation. There 15 no evidence that consumers or prospective consumers of the relevant kind know the name "Rent a Ute" as a source of utilities for hire. In February 1987, the applicant appointed the third respondent as a franchisee in the Tweed Heads area and began discussing with him the possibility of his taking a franchise in Western Australia and Tasmania. Since that would have involved a large payment by the third respondent, he discussed the position with the second respondent, a solicitor, and the thought occurred to them that it might be easier and cheaper to set up a competing business. They did so, and the first respondent came into being. IN_THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G101 of 1987 G DIVISION ) BETWEEN: RENT-A-UTE PTY. LIMITED Applicant AND: GOLDEN 44 PTY. LTD. First Respondent AND: KENNETH JOHN PETERSEN Second Respondent AND: ALLAN DOUGLAS PERRY Third Respondent PINCUS J. 15 JULY 1987 REASONS FOR JUDGMENT This 1s an application for an interlocutory injunction to restrain use of a business name, brought in reliance upon provisions of the Trade Practices Act. The applicant's business is well established and uses the name Rent a Ute (or, sometimes, Rent-a-Ute). The respondent's has started recently and uses the name Handy Rent A Ute. The history of the applicant's business, which has been quite successful, is as follows. Mr. M. M. Bone and his father operated a service station in 1983 and began to rent out motor utility vehicles for short and long periods. During the same year a few There is evidence that they cast about for a_ suitable name and lit upon "Handy Rent a Ute". An innocent explanation has been advanced for the selection of the name. I do not find it entirely convincing but am not prepared to decide the case on the basis that there is any likelihood that the selection would be held a dishonest one, at the trial. The third respondent 1s now out of the business, but the first respondent, owned by the second respondent, is attempting to expand its operations. There is evidence of confusion and I accept that there has been some. Indeed, even in the absence of evidence, one would assume that the use of such similar names by two traders would create confusion. The word "Handy" 1s not particularly memorable, and the signs used by the first respondent are such that some who see them might take it that "Handy" 1s a mere word of praise rather than part of the trade name. There 1s also evidence that the first respondent has copied some of the applicant's documents andon the material presently available it seems obvious that it has done so. However, that seems to me peripheral. I have had placed before me photographs of the signs used by the contending parties at depots and on their vehicles. They look very different. The applicant has a white sign on a red background, with some yellow and black lettering and figuring. The first respondent uses a yellow sign with a large red "Handy", a black "Rent A Ute" and the price in yellow outlined in black. The style of printing is dissimilar and the first respondent's sign has a symbol of a pointing mailed fist, which has no counterpart in the applicant's sign. Mr. McMillan, who argued the case well for the applicant, pointed out that the prices shown on the signs are of similar style (and the same in amount); nevertheless the signs, as I have said, are dissimilar in appearance. The word "ute" as a contraction of "utility" has come unto very common use and many, perhaps most, people use _ the contraction more commonly than the full word. The combination of words "Rent a" followed by the name of an object 1s also fairly common in the business community, "Rent a Car" being extremely common. The main point taken on behalf of the first respondent is that "Rent a Ute" 1s essentially descriptive and can only be protected in unusual circumstances. As Stephen J. said in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 C.L.R. 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 1t 1s descriptive 1t is equally applicable to any business of a_ like kind, 1ts very descriptiveness ensures that 1t 15 not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that quite small differences ina competitor's trade name will render the latter immune from action ..." It is much easier to find examples of application of this principle than counter-examples. Mr. McMillan relied particularly upon the decision of the High Court in B.M. rev! Auto Sales Pty. Ltd. v. Budget Rent A Car System Pty. Ltd. (1977) 51 A.L.7.R. 254. There, the respondent managed to achieve protection of its name, the Court rejecting such an argument as was here advanced against the applicant. Gibbs J. said at p.257: ",.. 16 was argued on behalf of the appellants that the word 'Budget' was an ordinary descriptive word in common use, and that there was no evidence sufficient to establish that the name Budget Rent A Car had become distinctive of the respondent's business. It is true that 'budget' 1s an ordinary word, Which nowadays 1s sometimes used to mean 'inexpensive'. The phrase 'rent a car' contains three ordinary words, and 1S commonly used to describe a business of a particular kind. However it 1s clear law that a name composed of descriptive words may become distinctive of the business of a particular person, and if a plaintiff shows that the name in fact distinguishes his business and that the use of the name by the defendant 1s calculated to deceive persons into supposing that the business carried on by the defendant 1s that of the plaintiff, and 1s likely to cause damage to the plaintiff's business, he will be entitled to relief In the present case there was ample evidence from which 1t could be inferred that the name Budget Rent A Car had become distinctive of the respondent's business in various parts of Australia by the year 1968." The principal point of the Budget Rent A Car case, as I read it, was that Budget succeeded in protecting its name in the Northern Territory although it had only a small presence there. It won because 1t had made the name nationally well-known. There are of course numerous authorities in this area and assistance is able to be gained from studying them as examples of the application of the basic principle. But it is unnecessary to analyse a number of authorities, since there is little doubt as to the side of the line on which this matter falls. A marginal case, decided a little later than the Budget case, is City Link ty Travel Holdings Ltd. v. Lakin (19791 F.S.R. 653. That concerned the use of the business name "City Link" as describing the trade of express delivery of parcels. Whitford J. was of course confronted with the argument that the name was merely or largely descriptive and said at p.663: "Although there is no doubt a strong element of descriptiveness in the words 'city link' in relation to a parcels delivery service, or indeed in relation to other services involving a link between cities, it is not, I think, quite so strong as the link between 'cellular clothing' and 'clothing' of a cellular construction, or indeed 'office cleaning' and the cleaning of offices. So that I would not say it was a case where it would be impossible to establish a secondary meaning, a reputation." His Lordship's references were to the two cases of The Cellular Clothing Company, Limited v. Maxton and Murray Ltd. £18993 A.C. 326 and Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) 63 R.P.C. 39. I think that "Rent a Ute" is just as descriptive as, for example, "cellular" applied to a particular sort of cloth. There 1s an onus 1n such a case on the applicant to establish his right to exclusive use of the description of such a business by satisfying the test referred to - i.e., to quote again from the Budget Rent A Car case, by showing that the name has "become distinctive of the business of a particular person". It was argued on behalf of the applicant that I should find there is a serious question to be tried on that issue. There seems to me to be no evidence upon which it could possibly be found that the name "Rent a Ute" has become distinctive of the woe applicant's business. It is probable, in view of the hundreds of depots there are scattered throughout parts of the eastern states, that many people will have seen the sign, but it 1s quite unlikely that anyone seeing a sign associated with the respondent's competing business would be deceived "into the belief that he was getting the goods of A. when he was really getting the goods of B." - Reddaway v. Banham [18967 A.C. 199 at 210 per Lord Herschell. So far I have considered the matter as arising in a passing off suit. The applicant relied, of course, upon the assertion that there has been misleading conduct within the meaning of s.52 of the Trade Practices Act. The extent to which Passing off principles restrict the Court in exercising its Jurisdiction to grant relief in respect of breaches of 5.52 15, perhaps, still an open question. But simply applying the words of s.52 in their natural meaning, 1t does not appear to me that the applicant has advanced a case that the respondents' conduct is misleading or deceptive, or likely to mislead or deceive, although there 1s, as I have said, some evidence of confusion. That evidence is of instances 1m which some person intending to deal with the first respondent has mistakenly contacted the applicant, and incidents of a similar kind. They will inevitably arise if two people choose to use very similar names for their businesses, but that cannot produce the result that names merely descriptive of a business are necessarily protected. Sections 53 and 53A of the Act were also mentioned by the applicant's counsel, but do not require any separate treatment. Having chosen a merely descriptive name, the applicant Must show that its name has come, inthe course of time, to acquire "a secondary meaning so as to indicate a particular trade source" - Ricketson, "The Law of Intellectual Property" p.541. Here, in my view, it is quite unlikely that the name "Rent A Ute" has acquired such a meaning, in the community generally. Since the applicant has chosen a descriptive name, "Rent A Ute", and there appears to be no ground for thinking that it will, at the trial, prove that the name has during its short life become distinctive of the applicant's business, the application must be dismissed, with costs. i certify that this and the 7 preceding pages are a true cony of the reasons for judgment herein of H's Hencur Mr Justice Pincus ae BH] Associate Dated 5 Juty 87 Counsel for the Applicant: Mr. W.T. McMillan Solicitors for the Applicant: Samuel Leonard & Associates Counsel for the Respondents: Mr. A. Heyworth-Smith Solicitors for the Respondents: Peterson Cutler & Co. Date of Hearing: 8 July 1987