p . JUDGMENT No. SiI2..7.372.. TRADE PRACTICES - misleading and deceptive conduct - interlocutory injunction - marker pens - similar get-up - not identical - similarities in some prominent features - suggestive of affiliation - serious question to be tried - strength of case and balance of convenience —- interdependence - public interest - factor in discretion - stronger where strong case and wider class of consumers affected - public interest and balance' of convenience. Trade Practices Act 1974 s.52, 82 Co-Operative Bulk Handling Ltd v Waterside Workers' Federation of Australia (1983) 51 ALR 79 Barneys Blu-Crete Pty Ltd v Australian Workers' Union (1979) 43 FLR 463 OD Transport Pty Ltd v Western Australian Government Railways Commission (1986) 71 ALR 190, 192-3 Bullock v Federated Furnishing Trades Society of Australasia (1985) 60 ALR 235 Castlemaine Tooheys Limited v South Australia (1986) 60 ALJR 679 Ricegrowers' Co-Operative Limited v Howling Success Australia Pt Limited (1987) ATPR para 40-778 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 W.T.H. Pty Ltd v Budget Rent-A-Car System Pty Ltd (1984) ATPR 40-479 Budget Rent-A-Car System Pty Ltd v Dewhirst (1984) ATPR 40-485 Commercial Bank of Australia Ltd v Insurance Brokers Association of Australia (1977) 16 ALR 161 2. GEOFF PENNEY (NSW) PTY LTD v SKYJACK COMPUTER & OFFICE SUPPLIES PTY LTD, TOBY LOUIS CARBONI and MALCOLM FRANCIS CRAIG No. WAG 84 of 1987 FRENCH J. PERTH 4 SEPTEMBER 1987 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WAG 84 of 1987 BETWEEN: GEOFF PENNEY (NSW) PTY LTD Applicant and SKYJACK COMPUTER & OFFICE SUPPLIES PTY LTD First Respondent and TOBY LOUIS CARBONI and MALCOLM FRANCIS CRAIG Second Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 4 SEPTEMBER 1987 WHERE MADE: Perth THE COURT ORDERS THAT: Upon the applicant undertaking to pay to any party adversely affected by the interlocutory injunction such compensation (if any) as the Court thinks just in such manner as the Court directs:- 1. The first respondent is hereby restrained by itself, its servants or agents from 12 noon on Monday 7 September 1987 until the hearing and determination of the application or further order, from selling, supplying or offering for sale in Western Australia the Superline 70 core oreee ve = 2. pen of the type exhibited to the affidavit of William Hillman Berg sworn 21 August 1987 and marked WHB2. 2. The first respondent have liberty to apply on 48 hours notice in writing to vary or discharge this injunction. 3. The costs of the claim for interlocutory relief be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. So Se tee Ow wee rae Mae we an IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION ww ew No. WAG 84 of 1987 BETWEEN: GEOFF PENNEY (NSW) PTY LTD Applicant and SKYJACK COMPUTER & OFFICE SUPPLIES PTY LTD First Respondent and TOBY LOUIS CARBONI and MALCOLM FRANCIS CRAIG Second Respondent CORAM: FRENCH J. 4 September 1987 REASONS FOR JUDGMENT The Artline 70 spirit marker pen has been sold in Australia for nearly 20 years. Since 1981 it has been marketed with a creamy yellow barrel bearing 3 wavy red, blue and purple stripes at the non-business end and the number 70 in bold red print next to the word Artline. The pen also has a shaped plastic cap and plastic nib holder. The last few weeks have seen the advent, in some retail outlets in Western Australia,of a similarly styled marker pen called the Superline 70. Like the Artline, it has a creamy yellow eee ae eee een Oe en. ae. xe ~ ty pap eaere ear a Lnmene meee ene my ne oes Sete 2. barrel. It has red and dark blue wavy stripes at the non-business end and bears the number 70 in bold red type, next to the word "Superline". It has a plastic cap and nib holder not identical but broadly similar to those used on the Artline. The manufacturer of the Artline range of marker pens including the Artline 70, is a Japanese company, Shachihata Industrial Co. Ltd ("Shachihata"). In 1966 it appointed Geoff Penney (NSW) Pty Ltd ("Penney") as the sole distributor of its products in New South Wales, Queensland, South Australia and Tasmania. In 1984 the appointment was enlarged to cover all states and territories of Australia. Penney has in turn appointed Vabed Pty Ltd as exclusive distributor of the products in Western Australia. Vabed trades under the firm name Aldon & Co. ("Aldon"). The Superline 70 was introduced into Western Australia by Skyjack Computer and Office Supplies Pty Ltd ("Skyjack") on 20 June 1987. Skyjack, which trades as trustee of the Skyjack Computer and Office Supplies Unit Trust, is a stationery retailer with 8 outlets in the Perth metropolitan area. Penney has instituted proceedings in this Court against Skyjack and its directors, Messrs. Carboni and Craig. It alleges that by selling the Superline 70, Skyjack is engaging in misleading and deceptive conduct in contravention of s.52 of the Ave eee Tt a poyvare, pe eri ae mo 3. Trade Practices Act 1974, is otherwise contravening sub-ss 53(a), (c), (da) and (g) of that Act and 1s passing off its product as the Artline 70. Various forms of injunctive relief and damages are sought pursuant to s.82 of the Trade Practices Act and at common law. Penney also claims against Skyjack interlocutory relief including the following:- "An injunction pursuant to Section 80 of the Act restraining the First Respondent by itself, its agents or servants from ... engaging in misleading or deceptive conduct by distributing, selling or supplying or offering for sale to the trade or general public in Australia, or alternatively, the State of Western Australia the Superline 70 pen". It is the claim for interlocutory relief that now falls for decision. The scope of this relief was narrowed at the hearing. It is now sought only in respect of the State of Western Australia and relies only upon the cause of action arising under s.52. The Court has, by the industry of the parties and their advisors, been favoured with extensive affidavit material and comprehensive submissions. ween ee ne wae cr oe 4. The claim being for interlocutory relief, the Court does not finally decide any issue in the case. The views expressed at this stage are expressed only for the purpose of deciding that claim. Evidence admitted for an interlocutory hearing will not necessarily be admissible at a hearing of the substantive application and other evidence may be adduced for the first time at the trial - Co-Operative Bulk Handling Ltd v Waterside Workers' Federation of Australia (1983) 51 ALR 79, 87; Barneys Blu-Crete Pty Ltd v Australian Workers' Union (1979) 43 FLR 463, 465-6;0D Transport Pty Ltd v Western Australian Government Railways Commission (1986) 71 ALR 190, 192-3. There is evidence that the Artline 70 leads the market for the supply of spirit marker pens. There are however several competing products. Specimens of some of these, namely Pilot, Pentel, Edding and Marvy markers were exhibited to an affidavit by Declan Christopher Ryan, the General Manager of Skyjack. Their shapes and the external configurations of their components are very similar to each other and to the Artline 70 and Superline 70. Each comprises a metallic cylindrical body, surmounted by a plastic (and in one case, metallic) nib holder from the top of which the nib protrudes. In each case the nib is protected by a plastic cap. 5. The colour schemes and external markings of the pens exhibited are, with the exception of the Superline 70, quite dissimilar from those used on the Artline. Skyjack 1S a significant customer of Penney's Western Australian distributor Aldon and in the year ended 30 June 1987 has purchased some $25,000 worth of the Artline 70 markers. The Superline 70 bears on its barrel the name "Fujita" above, but in smaller print than, the word "Superline". The Superline's country of origin is not disclosed on the product or the dozen lot boxes in which it is packed. Mr Carboni in his affidavit disclosed no more than that he "found" the Superline on an overseas trip and that Skyjack purchases it from "overseas". One attraction of the Superline 70 for Skyjack is that its landed price in Perth is significantly less than the cost price of the Artline. As a result, according to Carboni, Skyjack can pass on the benefits by way of discounts to those of its customers who buy in bulk. This, he said, gives Skyjack a marketing edge over its competitors. Since introducing these pens into Western Australia Skyjack has sold approximately 160 dozen of them. ner eta - aanaaae haan aaeenres mentmncae Tes eae 6. Its stocks have, however, become depleted, there being now less than 15 boxes each containing 1 dozen of the pens available for sale. Another shipment of the Superline 70's is due to arrive in Western Australia in mid to late September and is not expected to have cleared customs and be available for collection until late September or early October. Affidavits filed by Penney indicate that Skyjack has been using Artline display stands provided to its retail outlets to display the Superline. According to Warren Arbuckle, the manager of Skyjack's store at the Durack Centre in Perth, distributors who supply display stands do not usually request that the stands be applied exclusively to the display of the products named on them. In the stores that he has managed for Skyjack, Arbuckle has used Artline display stands for holding Artline 70 pens and their competitors. The directors of Skyjack have now given instructions to their store managers to remove the Superline 70 markers from these stands. There was some evidence by Penney of the comparative performance standards of the two pens. This comprised an affidavit by Takeshi Mizutani, an assistant manager in the aoe epee Metco ope es i tern 7. Research and Development Section of Shachihata, who carried out tests to determine their "clear write out lengths". The "clear write out length" is said to be the distance a pen will write clearly. The pens were tested by using a machine designed for the purpose which will test 10 markers at a time. The results of those tests were said to show that the clear write out length of the Artline pens was significantly greater than that of their Superline equivalents. The test evidence must be viewed with caution at this Stage. The sample size used does not appear and its statistical Significance may be controversial. I would not be prepared, on the material at present before me, to draw the conclusion that the Superline 70 is an inferior pen to the Artline 70. Nor would I be prepared to find that Penney has demonstrated a serious question to be tried in that regard. In my opinion, however, there is a serious question to be tried as to whether Skyjack has contravened s.52 of the Trade Practices Act by supplying and selling the Superline 70. Counsel for Skyjack conceded as much in the course of argument. yy 8. While conscious of the provisional nature of such finding in interlocutory proceedings, I think it proper and necessary to go further and say that the case for contravention of s.52 made out by Penney 1s a strong one. The strength of an applicant's case 1S a relevant factor upon a claim for interlocutory injunctive relief. It bears a relationship to the weight that may be given to che balance of convenience between the parties:- ",..an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even." Bullock v Federated Furnishing Trades Society of Australasia (1985) 60 ALR 235 at 241. See also Castlemaine Tooheys Limited v South Australia (1986) 60 ALJR 679 at 682 and Ricegrowers' Co-Operative Limited v Howling Success Australia Pty Limited (1987) ATPR para 40-778. Section 52 of the Trade Practices Act is a provision which is designed to protect the public interest by protecting 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, 202-3. There will be cases therefore, where public interest considerations will play an important part in the exercise of the Po ' ' tke. Se a ns a 9. Court's discretion to award interlocutory injunctive relief under s.80 of the Act. - World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181, 189-190 (Bowen CJ), 204 (Brennan J.), W.T.H. PTY LTD v Budget Rent-A-Car System Pty Ltd (1984) ATPR 40-479 at 45,507 (Lockhart J.), Budget Rent-A-Car System Pty Ltd v Dewhirst (1984) ATPR 40-485 at 45,595 (Davies J.). In Commercial Bank of Australia Ltd v Insurance Brokers Association of Australia (1977) 16 ALR 161 at 168 Bowen CJ said:- "In some cases, the considerations which then apply for determining the balance of convenience, will be very similar to those which apply in a court of equity. In other cases, where the public interest is involved, it may be necessary to weigh the public interest against a countervailing public interest or a private interest." His Honour, in referring to considerations which apply in a court of equity, may have had in mind a contest between private rights only. Gummow J. has pointed out that s.80 does not necessarily produce a result markedly different from the general law for in equity, where an injunction is sought in aid of public rather than private rights, special considerations may apply: Ricegrowers' Co-Operative Limited v Howling Success Australia Pty Limited (1987) ATPR 40-778. In this case while there are differences in detail, the overall similarity between the get-up of the two pens is quite striking, so striking in fact that it is hard to imagine that the designer of one was not consciously modelling it on the other. wr rae see eee rere 10. For a consumer who drew that inference, it would not be a large step to further infer the existence of some institutional or other affiliation between the two products. The similarities are in salient features, namely, the colour of the barrel, the presence of a bold red "70" and broad wavy stripe with similar colour schemes. The figure 70 on the Artline does not, according to the evidence, bear any relationship to the dimensions of the pen or the mark that it makes. It 1S merely a model identification first used by Shachihata. There is nothing to suggest that the figure serves any other purpose on the Superline. The name Superline appears prominently on the Superline pen. So, to a lesser extent, does the name of the manufacturer "Fujita". There is however, by reason of the similarity in salient features of the two products, such an overall resemblance in their get-up that there is a strong case for the proposition that consumers could be led to believe at least that there is some affiliation between the products. To the extent that they are thereby led into error the conduct of offering the pens for sale may be misleading and deceptive within the meaning of s.52. Mr rene a ne ae eee Re eee Veer ie en * t RUTH RAR OTTO HE Tut Yoaes > OSC lil. Turning to the balance of convenience, 1t is apparent that the Superline 70 has, in the short time on the market, proved itself a popular product. Continuing sales of any significance could well erode the market share of Artline and have some long term effect on the goodwill attached to that product. Goodwill being a delicate and complex intangible, damage to it may be incapable of adequate or satisfactory monetary assessment: Ricegrowers' Co-Operative Limited v Howling Success Australia Pty Limited (supra). Skyjack, it is true, is only in the initial stages of marketing the Superline 70 and so if restrained is likely to suffer less from any diminution of goodwill. To the extent, however, that initial sales have built up some market reputation for the product, any interruption in its ability to sell will be detrimental and the detriment may not be easy to quantify. Further, Skyjack has committed itself to a shipment of the pens which are due to arrive in Perth within the next few weeks. It will, if restrained, have to hold the pens in stock or return or otherwise dispose of them. There will obviously be some expense and inconvenience involved in any of these courses. In my view, the balance of convenience tends to favour Penney. Given the strength of the applicant's case and the range of consumers that may be affected by the alleged contravention, Ver = Saeteseiahentndentids ail cuir deakanar ronnie weaw tees 12. the public interest tips that balance further in the direction of a restraint. I am satisfied on the evidence that Penney is of sufficient financial substance to make good the necessary undertaking as to damages. In all the circumstances therefore, I am satisfied that this 1s an appropriate case for interlocutory relief and will make orders accordingly. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment of his Honour Justice French. Associate: Depend Wes pate: 4 Aripember 67. Counsel for the Applicant: Mr S. Owen-Conway Solicitors for the Applicant: Messrs. Downing & Downing Counsel for the Respondents: Mr W.J. Millar Solicitors for the Respondents: Messrs. Okeby & Ginbey Date of Hearing: 1 September 1987 Date of Judgment: 4 September 1987 ey yt iz Aer ge ogre age I y es, ake SIE Ta epee