CATCHWORDS TRADE MARKS - infringement - interlocutory injunction - whether "Cresta" is deceptively similar to "Crusta" - test of whether general impression created by each mark is such that persons of ordinary intelligence and memory likely to infer that two classes of product come from same source - balance of convenience against grant of interlocutory injunction. Trade Marks Act 1955 (Cth) ss 23, 31, 56, and 62 Trade Marks Regulations 1958 (Cth) reg 6, Sch 4 Federal Court Rules 1976 (Cth) O 10 r (2)(j) The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963) 109 CLR 407 Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 Coca Cola Co. of Canada Ltd v Pepsi Cola Co. of Canada Ltd (1942) 59 RPC 127 No. SG 40 of 1995 CRUSTA FRUIT JUICES PTY LTD v CADBURY SCHWEPPES PTY LTD Branson J Adelaide 13 July 1995 IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No. SG 40 of 1995 ) GENERAL DIVISION ) BETWEEN: CRUSTA FRUIT JUICES PTY LTD Applicant - and - CADBURY SCHWEPPES PTY LTD Respondent MINUTES OF ORDER CORAM: Branson J PLACE: Adelaide DATE: 13 July 1995 THE COURT ORDERS THAT: 1. The application for an interlocutory injunction is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No. SG 40 of 1995 ) GENERAL DIVISION ) BETWEEN: CRUSTA FRUIT JUICES PTY LTD Applicant - and - CADBURY SCHWEPPES PTY LTD Respondent REASONS FOR DECISION CORAM: Branson J PLACE: Adelaide DATE: 13 July 1995 The applicant is a producer and distributor of fruit juices and fruit drinks. It is the registered proprietor of the trade mark "Crusta" in respect of all goods in class 32 including citrus juices (see Trade Marks Act, 1955 (Cth) s31 and Trade Marks Regulations 6 and Schedule 4). The applicant has distributed its fruit drink products in South Australia since 1974 and has caused them to be distributed in Victoria since late 1992 and in Western Australia since October 1993. The Western Australian distribution of the applicant's products is not controlled by the applicant and comprises less than half of one percent of the applicant's turnover. There is no direct evidence before me as to the scale of the applicant's business. However its 1994 annual return filed with the Australian Securities Commission on 12 January 1994 shows it to have experienced an operating profit after income tax for the financial year ending 30 June 1994 of $460,532. The respondent is a wholly owned subsidiary of Cadbury Schweppes plc ("CSPLC"). The Cadbury Schweppes group of companies manufactures, markets and distributes branded beverages and confectionery products in over 190 countries. It appears that CSPLC has been the registered proprietor in the United Kingdom of the trade mark "Cresta" since November 1969 and has used the mark in respect of aerated soft drinks since about 1969 or 1970. On the basis of the success of the Cresta product in the United Kingdom the respondent decided in 1994 to use the name "Cresta" for a new line of soft drink products for the Australian market. The respondent has not used the name "Cresta" in respect of fruit juice drinks in Australia (or, so far as I am aware, elsewhere) and there is no evidence that it plans to do so. The respondent began selling "Cresta" fizzy drinks in Australia in June 1994. Most of its early sales were in Western Australia with later sales spreading to all other States. In the 1994 calendar year the amount received by the respondent for total wholesale sales of "Cresta" products in Australia was $668,397. In the 1995 calendar year to 3 July 1995 the equivalent amount was $1,289,570. Even if the rate of sales of the "Cresta" products does not continue to grow the respondent estimates Australian sales for 1995 to exceed $2,500,000. By application dated 16 June 1995 the applicant has sought, by way of interlocutory relief, an injunction restraining the defendant from infringing the applicant's trade mark and in particular from manufacturing, importing, keeping for sale, advertising for sale or selling a beverage labelled as "Cresta" or using a mark which is substantially identical with or deceptively similar to the applicant's trade mark in the course of trade in relation to goods in respect of which the trade mark is registered. The application also claims interlocutory relief in respect of alleged breaches by the respondent of ss52 and 53 of the Trade Practices Act 1974 (Cth). This claim was not pressed. Mr McCarthy QC, who appeared with Mr Hart for the applicant, indicated to the Court that the applicant would not seek for any interlocutory injunction granted by the Court to extend to the operations of the respondent in Western Australia. Section 62(1) of the Trade Marks Act 1955 (Cth) ("the Act") is concerned with infringement of trade marks. It provides as follows:- "A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or the registered user of the trade mark using by way of permitted use, uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered." It is not contended on behalf of the applicant that the mark "Cresta" is substantially identical with the applicant's trade mark. The case for the applicant is that the mark "Cresta" is deceptively similar to its trade mark "Crusta". The respondent has not contested the validity of the applicant's trade mark. Nor has it contested that the respondent is using the mark "Cresta" in the course of trade and in relation to goods in respect of which the applicant's trade mark is registered. Mr Besanko QC who appeared for the respondent did not concede that there is a serious question to be tried in this matter as to the infringement of the applicant's registered trade mark. He indicated that at trial the respondent will contend that the word "crusta" has a recognised meaning as a class of cocktail drink and that for this reason the mark "Cresta" is not deceptively similar to the trade mark "Crusta". Mr Besanko further indicated that at trial the respondent will place reliance on ss56 and 23 of the Act. It is not desirable that I examine in detail on this application matters which may be in issue on the trial of this matter. For present purposes it is sufficient for me to state that if reliance were to be placed solely on the material presently before me it may be difficult for the respondent to establish that the word "crusta" has the recognised meaning contended for by Mr Besanko to appreciable numbers of potential purchasers of the respective products of the applicant and the respondent. Section 56 of the Act is concerned, for present purposes, with words used as the name or description of an article or substance. So far as is here relevant s56 provides as follows:- "(1)Subject to this section, the registration of a trade mark does not become invalid by reason only of the use, after the date of the registration, of a word or words which the trade mark contains, or of which it consists, as the name or description of an article, substance or service. (2)The succeeding subsections have effect where: (a) there is a well known and established use of a word as the name or description of an article, substance or service by a person or persons carrying on a trade in that article, substance or service, not being used in relation to goods or services connected in the course of trade with the proprietor or a registered user of the trade mark ....; or (b) [not here relevant]. (3)If the trade mark consists solely of that word, the registration of the trade mark, so far as regards registration in respect of the article or substance or of any goods of the same description .... shall be deemed for the purposes of section 22 to be an entry wrongly remaining in the Register." Section 22 of the Act deals with rectification of the Register. As to s56 of the Act, it is sufficient for present purposes, in my view, to note that the evidence presently before me may be thought to fall short of establishing "a well-known" use of the word "crusta" as the name or description of an article or substance. I cannot be satisfied for the purposes of this application that the respondent is a person who could successfully apply pursuant to s22 of the Act for a relevant rectification of the Register. Section 23 of the Act contains provisions with respect to non-use of a trade mark. Mr Besanko contended that before this matter is likely to be listed for a final hearing, his client will become entitled to make an application pursuant to s23(1)(b) of the Act. Section 23(1)(b) provides as follows:- "(1)Subject to this section and to section 93, a prescribed court or the Registrar may, on application by a person aggrieved, order a trade mark to be removed from the Register in respect of any of the goods or services in respect of which it is registered, on the ground: (a) [not here relevant]; or (b) that, up to 1 month before the date of the application, a continuous period of not less than 3 years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of the trade mark in relation to those goods or services by the registered proprietor or a registered user of the trade mark for the time being." There is no evidence before me that the respondent proposes to bring an application pursuant to s23 of the Act. Nor can I be satisfied on the evidence before me that any such application would succeed. It is of particular relevance that on any such application consideration would have to be given to s23(2) of the Act which, in the circumstances of this case, would allow an application under s23(1)(b) to be refused if the fruit drinks in respect of which the applicant uses its trade mark are "goods of the same description" as the goods (i.e. presumably aerated waters) in respect of which the respondent would seek to have the trade mark removed from the Register. This issue was not ventilated at all before me. I express no view on it. As was conceded on behalf of the applicant, the authorities suggest against the mark "Cresta" being "substantially identical" with the trade mark "Crusta" (The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (1963) 109 CLR 407; Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491). In my view, however, there is a serious question to be tried as to whether the two marks are "deceptively similar" within the meaning of s62 of the Act. I accept the test as being that of whether the general impression created by each mark is such that persons of ordinary intelligence and memory would be likely to infer that the two classes of product came from the same source (The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited - supra; Coca Cola Co. of Canada Ltd v Pepsi Cola Co. of Canada Ltd (1942) 59 RPC 127; Polaroid Corporation v Sole N Pty Ltd - supra). Mr McCarthy submitted that I should conclude that the case for the applicant is a strong one. No defence has yet been filed on behalf of the respondent. It is neither possible nor desirable for me on this application to reach a firm view as to the respective strengths of the cases of the parties. On the material presently before me, however, I am willing, for the purposes of this application, to conclude that the claim of the applicant has substance. The real contest on this application is as to the balance of convenience. In this regard it was submitted on behalf of the applicant:- (a) that the applicant has had an established reputation in the market for approximately 20 years; (b) that the applicant's reputation is based on a limited range of fruit juice based products and its financial health is dependent upon the maintenance of the reputation of this limited range of products; (c) that the promotion and sale of relatively cheap aerated drinks in circumstances which might cause buyers to think that they are products of the applicant will be harmful to the reputation of the applicant as a producer of quality fruit juice and fruit drinks; (d) that the applicant has invested heavily in the promotion of its trade mark and damage to its value would have serious consequences for the applicant; (e) that reputation is an intangible thing - difficult to acquire, easily lost and not adequately compensated by way of damages; (f) that the respondent is part of a large, multinational group of companies and thus less financially vulnerable than the applicant; and (g) there is no evidence that the respondent has invested heavily in Australia in promoting the mark "Cresta". Apart from the submission set out in paragraph (c), to which I return below, I accept the above submissions. The applicant sought to place reliance on an affidavit sworn by David Reay Corkindale, Professor of Marketing Management. Mr Besanko objected to the admissibility of much of the affidavit. With the consent of both parties I agreed to receive the opinion material contained in Professor Corkindale's affidavit by way of submission (Federal Court Rules O10 r(2)(j)). On the issue of possible damage to the applicant if "Cresta" products continue to be marketed, Professor Corkindale expressed the following opinions:- "5. Damage and Diminution to Crusta Brand I believe that the confusion and association between the two names can cause damage to the current and future sales of "Crusta" products and to the worth of the "Crusta" Brand Name. The range and sources of this damage and diminution in the value of the name is set out below:- 5.1 Damage to Current Sales Some purchasers of soft drinks plan to buy them and this would include the regular supermarket shopper. Most purchase occasions are unplanned and somewhat impulse driven. In all circumstances it is not a highly considered purchase. Customers rely on the display of familiar names by labels and signs to remind them and prompt their choice. Sales would be lost currently by "Crusta" labelled products in the presence of those labelled "Cresta" because:- 5.1.1 Consumers buying a soft drink for themselves who have some familiarity with "Crusta" and are generally seeking it may be attracted to the name "Cresta" and think they are acquiring a "Crusta" product; 5.1.2 Consumers buying for others (e.g. a parent buying for children) may have been verbally instructed to buy "Crusta" but assume that "Cresta" was meant on seeing the name "Cresta" on a relevant product, a soft drink; 5.1.3 Delicatessens and milk bar operators who acquire their stock at Cash-and-Carry warehouses may confuse "Crusta" and "Cresta" labelled products where there are similar product types. This will mean that some delicatessens and other outlets formerly offering "Crusta" products may inadvertently no longer stock them and therefore there will be a reduction of sales of the "Crusta" products; 5.1.4 The people who buy produce for sale in supermarkets, who place orders for hundreds of products a week, may confuse the name "Cresta" for "Crusta", particularly where they are in the same product category, and order "Cresta" rather than "Crusta"; 5.1.5 Since the "Cresta" products are considerably cheaper in price than the "Crusta" products many people may be stimulated to try a "Cresta" product in the belief that it is a "Crusta" or "Crusta" related product and even greater value for money. 5.2 Damage to Future Sales - Diminution It has been suggested above that it can be assumed that some consumers and purchasers may try "Cresta" products by confusing them with "Crusta" named products. This inadvertent trial of "Cresta" products by those consumers may lead to reduced sales of "Crusta" products in the future because:- 5.2.1 If after trial of the "Cresta" product consumers may judge it to be unsatisfactory and they may attribute this unsatisfactory performance to "Crusta" products and therefore not buy "Crusta" products in the future; 5.2.2 Unsatisfactory experience with a "Cresta" product and its confusion with "Crusta" may lead some consumers to recommend to friends not to buy "Crusta" products in the future; 5.2.3 Complaints to store proprietors about the poor performance of mistaken "Crusta" products and lower sales of "Crusta" products due to the causes cited in paragraphs 4 and 5 above may cause some store owners to order less "Crusta" products or, indeed, to stop ordering them at all. Both these eventualities will cause "Crusta" to sell in less volume in the future." I accept that the identification by Professor Corkindale of sources of possible harm to the applicant is theoretically sound. The contrary was not suggested. The difficulty is to assess the likelihood that the applicant will suffer actual harm in the ways identified and to further assess the extent of likely consequential damage to the applicant. This task is not made easier by the fact that some factors may have a counterbalancing effect. Confusion as to labels, for example, may presumably work both ways. It is argued on behalf of the respondent that the fizzy drinks sold under the mark "Cresta" are different products from the fruit juice and fruit drinks sold under the trade mark "Crusta" and one product is unlikely to be bought in lieu of the other. Reliance is placed on the styles of labelling and packaging of the two sets of products respectively which are distinctive and, it is suggested, likely to counterbalance any possible confusion which might otherwise arise from the marks. A number of examples of the labelling, advertising and packaging of the two sets of products is in evidence before me. I note that in respect of the applicant's products the trade mark "Crusta" is almost invariably used in conjunction with realistic depictions of fruit. In respect of the respondent's products the trade mark "Cresta" is almost invariably used in conjunction with a distinctive cartoon depiction of a polar bear engaged in sporting activity. The respondent's products are sold in 'Pet packs' whilst the applicant's products are sold in cartons and plastic bottles. I further note that the photographic evidence before me of a supermarket display of the two sets of products shows them to be displayed for sale in different ways: the applicant's products being located in a refrigerated case and the respondent's products being sold from opened cartons apparently in a different section of the store. The two ranges of products have now been available in Australia for some time. Even if the Western Australian market is put to one side, the two ranges have, I infer from the evidence, been available in South Australia and Victoria for some months. The applicant has been aware of the marketing of drinks in South Australia under the name "Cresta" since 5 April 1995. No evidence of actual confusion, or of diminishing sales of "Crusta" products, has been placed before me. In my view the theoretical possibilities for damage to sales of the applicant's product identified by Professor Corkindale may be assumed to be low-risk potential sources of harm to the applicant. Provided that this action can be brought to trial relatively promptly, the likelihood of significant losses of sales of "Crusta" products by reason of the "Cresta" products remaining in the market place is, in my view, not great. I consider that the likelihood of damage to the reputation of the "Crusta" mark is also not high. Professor Corkindale envisages the possibility of consumers of "Cresta" products judging them to be unsatisfactory. No doubt a consumer who purchased and drank a flavoured fizzy drink in the belief that he or she had acquired fruit juice might well consider that the drink did not live up to expectation. However, having regard to the distinctive packaging, labelling and appearance of the respective products I do not consider that this scenario is a likely one. There is no evidence before me that the quality of the "Cresta" product is low in comparison with like products - i.e. that they are not fizzy drinks of satisfactory quality. I am not satisfied that there is a real risk that unsatisfactory experiences with "Cresta" products will result in appreciable numbers of individual consumers or store proprietors ordering less "Crusta" products. Nor am I satisfied that the mere fact that "Cresta" products are cheaper than "Crusta" products will result in significant damage to the reputation of "Crusta" products. There is no evidence before me that the "Cresta" products are either cheaper or more expensive than other fizzy drinks. I note that "Crusta" itself markets fruit drinks at a cheaper price than fruit juices. Presumably it does not believe that it is thereby risking damage to the reputation of its trade mark. On behalf of the respondent it is submitted that this is not a case where the respondent has sought to profit from the reputation of the applicant. The introduction into Australia of the mark "Cresta" is, it is said, an extension of the operations of CSPLC in the United Kingdom: it is not an attempt deliberately to profit from the applicant's reputation. I accept this submission. The respondent argues that the grant of an interlocutory injunction in this case would do it significant harm. It has quite recently introduced fizzy drinks under the mark "Cresta" to the Australian market. Its market share is growing. If it were now required to withdraw its product from the market it would lose much of the benefit of its promotional activity to date and, should it be successful at trial, it may be unable for some time to restore its position in the market place. Should it succeed at trial, actual sales lost as a consequence of an interlocutory injunction would, in all probability, be impossible to quantify. Moreover, should the respondent be prevented by an injunction from continuing to supply its product to retailers, it may suffer damage to its reputation as a reliable supplier with consequent longer term, but unquantifiable, damage to sales should it succeed at trial. It is not easy in this case to work out where the balance of convenience lies. As I have mentioned above, the two ranges of products have been together in the market for some months. In my view, with appropriate case management this matter can be brought on for final hearing relatively promptly. It seems appropriate for me to seek to balance the likely damage, over and above such damage as the applicant may already have suffered, which will result to the applicant if no interlocutory injunction is granted, against the damage likely to be suffered by the respondent if the interlocutory injunction is granted. On this basis, and notwithstanding my preliminary assessment that the case of the applicant has substance, I have concluded that the balance of convenience does not favour the granting of the interlocutory injunction sought by the applicant. The respondent has indicated a willingness to maintain until the final hearing of this matter or further order, accounts which will enable the accurate identification of all sales of products made by it under the mark "Cresta" and the volume and value of such sales. In my view it is appropriate that it should do so. The application for an interlocutory injunction will be dismissed. I certify that this and the preceding pages are a true copy of the Reasons for Decision of Justice Branson. Associate: Dated: Counsel for the Applicant : Mr K McCarthy QC with him Mr D Hart Solicitors for the Applicant: Phillips Fox Counsel for the Respondent : Mr A Besanko QC Solicitors for the Respondent : Arthur Robinson & Hedderwicks Hearing Date : 10 July 1995