JUDGMENT No. 119 7 SO_ CATCHWORDS TRADE PRACTICES - misleading or deceptive conduct - similar advertising signs - mew technique - whether deliberate copying ~- whether likely to mislead or deceive - whether likely to cause damage. Trade Practices Act 1974 ss.52 and 53 JUST JEANS PTY LTD v WESTCO JEANS (AUST) PTY LTD, LUIGI DE LUTIS, ANNA DE LUTIS and ERCOLE De LUTIS No. VG 108 of 1988 Woodward J. 20 April 1988 Melbourne IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 108 of 1988 wee GENERAL DIVISION BETWEEN: JUST JEANS PTY LTD Applicant and WESTCO JEANS (AUST) PTY LTD, LUIGI DE LUTIS, ANNA DE LUTIS and ERCOLE DE LUTIS Respondents MINUTES OF ORDER COURT: Woodward J. DATE: 20 April 1988 PLACE: Melbourne THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the costs of the respondents. (NOTE: Settlement and entry of orders is dealt with by 0.36 of the Federal Court Rules). IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 108 of 1988 GENERAL DIVISION BETWEEN: JUST JEANS PTY LTD Applicant and WESTCO JEANS (AUST) PTY LTD, LUIGI DE LUTIS, ANNA DE LUTIS and ERCOLE DE LUTIS Respondents COURT: Woodward J. DATE: 20 April 1988 PLACE: Melbourne REASONS FOR JUDGMENT This is a claim for relief under ss.52 and 53 of the Trade Practices Act 1974 ('the Act'). It relates to signs used outside the respective clothing shops of the applicant ('Just Jeans') and the firstnamed respondent ('Westco'). It is alleged by Just Jeans that Westco has deliberately copied the essential features of its main advertising sign used to attract customers, and that this can only have been done for a purpose, namely to mislead potential shoppers into believing that they were entering a Just Jeans store or at least a store which was in some way affiliated with Just Jeans. The parties are competitors in trade, although Just Jeans tends to cater for the upper end of the particular market whereas Westco normally sells somewhat cheaper lines. In the course of hearing an application by Just Jeans for interlocutory relief, it was agreed by both parties that this application should be treated as the trial of the action. There was evidence that Just Jeans operates 179 retail stores throughout Australia, except in Western Australia, whereas Westco operates 29 stores, all in the Melbourne or Geelong areas. Just Jeans produced evidence that early in 1986 a designer employed by it developed a store sign which had a number of characteristic features. These were the use of horizontal strips of red, blue and red colouring which provided the background for the name 'Just Jeans' in large white block letters. The central blue strip, which was wider than the two red strips, consisted of a dark blue background with five horizontal neon strips in lighter blue which were enclosed in metal channels. The sign as a whole was designed to stand out boldly from the front of the shop, above door height, with the ends of the sign returning at an angle to join the front wall of the premises. The overall shape of the sign was that of a trapezium, the top of it being either shorter or longer than the bottom. This sign was first installed at the Northland Shopping Centre in May 1986. Since that time Just Jeans has used the same design for its signs on 41 of its stores throughout Australia, including 10 in Victoria. Counsel for the applicant conceded that red, white and blue are the "colours of the trade". In other words, it is admitted that not only the applicant and the respondent but also other manufacturers of jeans and related clothing all use red, white and blue as their basic colours for advertising and labelling purposes. It was also conceded that the name 'Westco' on the first respondent's signs was clearly visible in large white letters and was different in general appearance from the name 'Just Jeans' as it appeared on the applicant's signs. The essential similarities relied on by the applicant were, first, the way in which the common colours were used, that it to say in the sequence red, blue, red with lettering in white and, secondly, the use of five light blue strips in metal channelling to emphasize the blue background to the name and, thirdly, the way in which the sign stood out from the shopfront and was angled back at each end to the wall. All these elements were present in the sign which was erected by Just Jeans in May 1986 over its store at the Northland Shopping Centre. A sign erected over a Westco shop at Northland later in 1986 was significantly different from the Just Jeans sign. It was set fairly flat against the front of the shop and the lettering of the Westco name was in white neon tubing, which outlined the letters, leaving their centres transparent. There were light blue neon strips at each end of the name, but the letters had a mirrored background. However, in late 1987, Westco placed signs over its shops in Swanston Street, City and Airport West which did bear striking similarities to the applicant's Northland sign. In particular they stood out from the shop front and were angled back at each end. The blue backgrounds consisted of five light blue neon tubes in metal channelling, as had the Frankston sign created in May 1987, and the lettering of the names were now in bold white letters. At first sight this does look like a deliberate copying of the Northland sign, and one can well understand that Just Jeans was annoyed by it. However, having heard evidence from Westco as to the way in which its sign has developed over the years, the inference of deliberate copying becomes much less clear. In the first place, I am satisfied that Westco developed the sequence of colours red, blue, red - with white lettering used boldly for the name - before this sequence was adopted by Just Jeans. Secondly, I am satisfied that in April 1986 Westco used four light blue neon strips to provide its blue background effect on a shop at Highpoint Shopping Centre, Maribyrnong, before Just Jeans used its light blue strips. At this stage the Westco sign employed a mirrored background, and it is clear that both the company and Mr Barlow, the director of Total Sign Service Pty Ltd who designed the Westco signs, were concerned about the lack of colour definition in the signs that they were using. As a result of this, in subsequent signs they experimented with different backgrounds. In a shop at Corio, in August 1986, they tried a white background (which seemed to reflect the blue better) in place of the polished metal which they had used before and, later, in the Parkmore Shopping Centre at Keysborough, they tried a grey background. However they were not fully satisfied in either case. Mr Barlow, in his evidence, said that the idea of Placing the light blue neon strips in dark blue metal channels, to provide colour definition, came to him because he was familiar with the use of channels in lettering and in bordering of signs, although he had not seen it used as part of the background to a name on a shop sign until he saw the Just Jeans sign at Northland. It is clear that Mr Barlow and the fourth respondent both saw the Just Jeans sign at Northland soon after it was erected and, although I have some doubt on the matter, I am inclined to believe - in spite of their denials in the witness box - that they did derive the idea of using metal channels in the Westco sign from seeing this done on the Just Jeans sign at Northland. So far as the use of five light blue strips rather than four is concerned, a feature first occurring at the Frankston Westco shop in May 1987, I am prepared to believe Mr Barlow when he said that this was a natural development, given the required depth of the blue background and the decision to use metal channelling. I am also prepared to accept the evidence of the fourth respondent when he says that he was not even conscious of the number of light blue strips used in the more recent Westco signs. To describe the Frankston sign, with its flat shape and outlined lettering, as using "the Just Jeans sign and mark" —- which was sworn to by the Just Jeans operations manager - I regard as fanciful. The later changes in the Westco signs did, however, lend weight to the Just Jeans case. But in using solid white lettering on the Bourke Street Mall, Swanston Street and Airport West shops, Westco was merely reverting to the style which it had used on a number of previous occasions. It was still significantly different from the Just Jeans style because on the Westco sign all the letters were of the same size and were in capitals, whereas Just Jeans emphasised the capital letters "3' by making them appreciably longer than the other letters in the name, which were in lower case. In addition, the Just Jeans letters were clear at the side, giving a distinct definition to the white front of the letters, whereas the Westco letters were a solid white at the side giving a rather more blurred appearance when illuminated. On the question of angling the ends of the signs back to the wall, this was not done at Frankston by Westco, and the shape of the sign in the Bourke Street Mall was dictated by the shape of the shop front concerned. However, the angling was used by Westco in the stores opened at the end of 1987 at Airport West and at swanston Street, City, although a square return has been designed for a sign being constructed for Greensborough. I find myself in some doubt as to whether this angling of the two signs was copied, consciously or unconsciously, from the Just Jeans sign at Northland; but I am prepared to accept, for purposes of this decision, that there was an element of copying in this feature. Having considered these various features of the respective signs, I have reached the conclusion that the only ones which have been copied from the applicant's Northland sign are (a) the use of dark blue metal channelling for the light blue neon background strips, and (b) the general shape of the sign, namely one which stands out boldly from the front of the store and which is angled back to the face of the building at each end. As against these similarities are the obvious differences in lettering, referred to above, together with the fact that the Westco signs are rectangular, not trapezoid. It was put by counsel for the applicant that evidence of deliberate copying leads almost inevitably to the conclusions that there is an intention to derive unfair competitive benefit by the copying that is done and that the intention is likely to be fulfilled. However I do not believe that this is so. I think that each case must depend upon its particular facts and, while in some cases. the copying is strong evidence of unlawful intent (see, for example, R. Johnson & Co v Archibald Orr Ewing & Co (1882) 7 App. Cas. 219 at 230-1) and the unlawful intent suggests likely success (see Ronson Products Ltd v James Ronson Pty Ltd (No 2) [1957] VR 731 at 739), in other cases the copying is evidence of no more than admiration for a good idea. I am satisfied that Westco used the particular combination of colours involved before Just Jeans and that its use of channelling was simply the adoption of a good idea to overcome a problem it had been having with colour definition. I can see nothing in this or in the general shape of the sign to suggest a deliberate copying with the intention of attracting custom away from Just Jeans. This, of course, is not the end of the matter. There may be liability under the Act even if there has been no intention on the part of a respondent to mislead or deceive. However, on this score, I am not satisfied that customers would be misled by the Westco signs into entering its store, either in the belief that they were entering a Just Jeans store - which in light of the conspicuous use of the name Westco would be most unlikely - or that they were entering a store which was 1n some way related to Just Jeans. The only evidence before me of actual confusion was of one person who claimed to have been misled by the sign seen side on, but he was undeceived as soon as he reached the front of the shop. It is conceded that the colours used are the general colours of the trade, and the applicant cannot complain of the sequence of colours, since Westco used it first. I think it unlikely that potential customers would draw any conclusion about the nature of the relationship between the two companies from the other features of the signs. Counsel for the applicant argued that the existence of similarities placed a special responsibility on the respondent to differentiate its signs. I don't believe any such duty can fairly be imposed on the respondent when it was the first to adopt the colour sequence which both now use. Even if some potential customers were to wonder if the companies were related because of sign similarities, I am not persuaded that anything the respondents have done conveys a misrepresentation, so as to amount to misleading or deceptive conduct within the meaning of the Act (see Taco -10- Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 201-3, nor that their actions have caused, or are likely to cause, damage to the applicant. For these reasons the applicant has failed to make out its case and the application should be dismissed with costs. I certify that this and the nine (9) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward LW dha —~ Dated: 20 April 1988 Counsel for the Applicant: Dr C. Pannam QC & Ms R. Lewitan Solicitors for the Applicant: Darvall McCutcheon Counsel for the Respondents: Mr P. Jopling Solicitors for the Respondents: Holding Redlich