JUDGMENT No. £2.29. £220 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No G 494 of 1997 ) ) GENERAL DIVISION BETWEEN: ARMOR ALL PRODUCTS CORPORATION First Applicant ARMOR ALL PRODUCTS (AUST) PTY LTD (ACN 069 201 163) Second Applicant AND: SELLEYS CHEMICAL COMPANY PTY LIMITED (ACN 000 049 427) Respondent Coram: Davies J. Date: 11 July 1997 Place: Sydney REASONS FOR JUDGMENT In these proceedings the applicants, Armor All Products Corporation of the United States and Armor All Products (Aust) Pty Limited, seek an interlocutory injunction against the respondent, Selleys Chemical Company Pty Limited. The applicants are the proprietors of car care products put out under the name "Armor All". In issue in these proceedings are a group of car care products called protectants which are designed for the protection of tyres, the fabric and the interior of cars and generally for protecting vehicles against the sun. In 1987, Selleys became the Australasian distributor of the Armor All protectants. It was not only the distributor but performed part of the task of bringing the ingredients together. The goods were described during this period of distribution as manufactured by Selleys. A term of the user agreement between Armor All and Selleys was:- "5, USER recognizes PROPRIETOR's ownership and title to the Trademarks as well as PROPRIETOR's ownership of any distinctive Jeatures of the packaging used in connection with the Trademarks and it is understood that throughout the term of this Agreement and thereafter, USER shall not contest the validity of the Trademarks, use the Trademarks as part of USER's name, claim adversely to PROPRIETOR any right, title, or interest in and to the Trademarks, or distinctive features of the packaging used in connection with the Trademarks and shall not register or apply to register the Trademarks or confusingly similar trademarks in the Territory or elsewhere." It has been put by counsel for Selleys that the trademarks which were annexed to that user agreement were not the precise trademarks which are now used by Armor All. It has been submitted that the agreement was therefore inapplicable. In my opinion, however, it is arguable that the trademarks which, since 1993, have been used by Armor All and have been placed on the packaging of the goods distributed by Selleys, are covered by the agreement, it being treated as an agreement generally setting out the relationship between the companies. The distribution agreement ceased on 31 May of this year. For some years Selleys had sold its own protectant products throughout Asia under a combination of two names, its brand name, "Polyglaze", and a particular name for the protectants, "Solar Warrior". These proceedings were instituted after Selleys had commenced to distribute its Solar Warrior protectants in the Australasian region. It did so using the Polyglaze brand and the name Solar Warrior. The applicants allege that there has been deception or a likelihood of deception by reason of the get-up of the Australasian Solar Warrior products, particularly in the context of their distribution as Selleys products and therefore in the context that they will be positioned on some of the marketing shelves in place of the Armor All products which are now sold apart from the Selleys' products. The context relied upon also has this aspect that both products are, for the time being, until Armor All has completed the sale of its existing stock, described as manufactured by Selleys. My task is not to decide the issues between the parties; that should be done after a full hearing. The only issue is whether an interlocutory injunction should be issued. The principle to be applied was stated by Lord Diplock in American Cyanamid Co v Ethicon Ltd [1975] AC 396 where his Lordship said at 407-8:- "It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of an interlocutory injunction was that 'it aided the court in doing that which was its great object, viz. abstaining from expressing any opinion upon the merits of the case until the hearing': Wakefield v. Duke of Buccleugh (1865) 12 L.T. 628, 629. So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought." Accordingly, I have not sought to form any firm view about the merits of the case, merely to determine whether there is a serious case to be tried. Mr B.R. Edwards, the marketing director of Selleys, has given evidence that Selleys wished to create a scheme or get-up that was unique. However, having placed the goods side by side so that the competing products can be seen one against the other, I have come to a view that there is such a general similarity in appearance that it is arguable that the Selleys' get-up was designed to replicate the general appearance of the Armor All products. I do not propose to discuss the individual similarities and differences. That is a matter that the judge at the trial will have to deal with, and he or she will deal with it in detail. It is sufficient for the moment that, looking at them together, it appears to me that there is a general similarity in their get-up and that it could be argued that that was intentional on the part of Selleys. The argument would find some support in the fact that, in Australia, the Solar Warrior get up used in Asia has not here been used, In Asia, the Solar Warrior name figured prominently for it was set out at the top of the label on a red background. In the Asian label, the Warrior depicted was placed on the bottom half of the label. The Australian labels are much more similar in their set up to the set up of the Armour All labels. Moreover, in the case of the car cleaner product, Armor All had adopted a general blue colour for its label, different from the other protectant labels, and this was replicated, and we know by the evidence that it was deliberately replicated, by Selleys. That argument that the labels were designed to have a generally similar appearance, and therefore that they have a potential to mislead is not, I think, totally destroyed by the fact that, if you put the two products together, side by side, and look at them, they are obviously different products. Even if the argument were accepted that Selleys had gone out of its way to adopt the general get-up of Armor All, that itself would not conclude the matter. It is sufficient for me to refer to, eg., Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited (1982) 149 CLR 191. At 196, Gibbs CJ referred to the fact that in that case it was difficult to escape the conclusion that the appellant had deliberately copied the design and appearance of the respondents chairs. His Honour went on to say:- "However, it does not follow that the appellant had any intention to mislead or deceive. One manufacturer may copy the product of another, because that product has proved successful and with the intention of taking advantage of an available market for a product of that kind, but with no intention of passing off his own product as the product of the original manufacturer." In that case, it was held that there had been no breach of section 52. A somewhat similar case is Brock y Terrace Times Proprietary Limited (1981) 40 ALR 97, where at page 102, Bowen CJ and Franki J said in relation to certain books that:- "Potential purchasers may consider that the appellants had copied the concept of the Terrace times books. However, this view would serve rather to distinguish the books." But the problems raised in cases such as Puxu and Terrace Times are not easy problems and in both those cases there were differences of opinion between the judges. It is not the type of issue which I could resolve or which I could attempt to resolve on an application for an interlocutory injunction. It is sufficient for the purposes of interlocutory injunction that there is a serious matter to be tried. Tn my opinion, there is a serious question on the issues of passing off, s.52 of the Trade Practices Act 1974 (Cth) and breach of contract having regard to the get up of the products and to the fact that they will be sold in the context that, for some time, the products will both be shown as manufactured by Selleys and that some of the Selleys products will simply take the place on shelves that the Armor All products previously had. I do not wish to say anything about the question of trademark. For the moment, I assume that the applicants would not succeed on the allegation of breach of trademark if that were the only issue. I have not given the matter of trademark infringement any attention. I therefore turn to the balance of convenience. Armor All has the established market. Its goodwill and brand loyalty are at risk. If it is successful it is unlikely that damages will be an adequate remedy. It will be difficult to distinguish the effect of the Selleys' get-up from the effect which the mere change in the distribution arrangements is likely to have upon Armor All's market and also from the effect that the sale by Selleys of its products at a much lower price will be likely to have. This is the type of case where interlocutory injunctions generally are issued. In American Cyanamid, Lord Diplock said at 408:- "Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial." Accordingly, I am of the view that an interlocutory injunction should issue. I have not been addressed on the form the injunction and that the form can be considered. I do not think there should be any exception made for the Fathers' Day products. I am of the view that, if an injunction issues, it should cover all products from this day. I am not at the moment inclined to give a mandatory injunction requiring a recall. I think, if that were to be done, I would want further evidence as to what sales have been made and when, and something to show what the general usefulness of such an order might be. It is possible that it would be appropriate for Selleys to inform the persons with whom Selleys deals, at least the major distributing houses, of the existence of the interlocutory injunction. That may be a step to which the applicants would be entitled. Counsel should address me on the form and content of the orders sought. Counsel for the applicant: Solicitors for the applicant: Counsel for the respondent: Solicitors for the respondent: Date of hearing: Date of judgment: I certify that this and the preceding 5 pages are a true copy of the reasons for judgment of the Honourable Justice Davies. Associate: ee: N eth, Date: 11 July 1997 Mr T.K. Tobin QC with R. Webb Baker & McKenzie Mr N.C. Hutley SC with R. Cobden Minter Ellison 11 July 1997 11 July 1997