Farrow & Ball Ltd v Porter's Paints Pty Ltd [1997] FCA 922

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 281 of 1997

BETWEEN: farrow & ball limited

Applicant

AND: porter's paints pty limited

Respondent

JUDGE: WHITLAM J

DATE: 11 september 1997

PLACE: SYDNEY

REASONS FOR JUDGMENT The applicant is an English company. It manufactures paint. So does the respondent, which is the registered owner under the Trade Marks Act 1995 of the trade mark "FARROW AND BALL" in respect of paints. In this proceeding the applicant seeks (inter alia) orders restraining the respondent from using the name "FARROW & BALL", an order under s 80 of the Trade Practices Act 1974 requiring corrective advertising, a declaration that the respondent is not the owner of the registered trade mark, a declaration that the respondent obtained the entry of the trade mark in the Register of Trade Marks as a result of fraud, false suggestion or misrepresentation, an order requiring the respondent to assign the trade mark to the applicant, damages under s 82 of the Trade Practices Act 1974 and damages for passing off. In the alternative, the applicant seeks an order under s 88 of the Trade Marks Act 1995 cancelling the registration of the trade mark and an account of profits for passing off. When this proceeding was commenced, orders were made abridging the time for service of the application and accompanying affidavits upon the respondent. This was done because it was suggested that the respondent may have been about to launch a new product at a design exhibition held in Melbourne between 1-4 May 1997. Although it had become apparent prior to the date fixed for hearing of the applicant's claim for interlocutory relief that no such launch was planned, the hearing proceeded on that date, notwithstanding that the claim was no longer urgent. The affidavits filed with the originating process were made by Jane Owen, Prue Cook and Sheryl Martin. Ms Owen is the applicant's solicitor. Most of the statements in her affidavit are made on information and belief, and the principal source of such information is Martin Ephson, a director of the applicant. Several documents were exhibited or annexed to these affidavits. The following facts appear from so much of this material as was admitted in evidence. The business of the applicant was founded by John Farrow and Dick Ball in Dorset. The applicant was incorporated fifty years ago. During the 1950s it grew to become a significant producer of industrial and decorative paints, with five depots in the United Kingdom and one in Guernsey. The applicant is now based on an industrial estate outside the town of Wimborne, where it has its factory. In addition, it has a London showroom shop in Chelsea. The applicant manufactures paints, primers, varnishes, scumble, stainers, linseed oils and paint remover. It also manufactures wallpapers and carpets. The applicant sells its paints under the trade mark "Farrow & Ball" and has done so since the inception of the business. It paints are produced by traditional methods which are labour-intensive. They are more highly priced than mass-produced paints. The applicant's sales strategy is now aimed at the "top end" of the home decorating market. Seventy per cent of sales are made by mail order. Display and classified advertising is designed to elicit telephone inquiries for colour cards and brochures. This advertising is placed throughout the year in a wide variety of specialist periodicals and newspaper sections likely to be of interest to home decorators, architects and interior designers. The applicant maintains a mailing list of over 100,000 customers. Under the present directors since the 1992 financial year, turnover has significantly increased each year. The applicant's annual advertising expenditure approximates eight per cent of turnover. The applicant has sought to enhance brand awareness of its paints by obtaining editorial coverage in glossy magazines and specialist publications and, sometimes, even in books and television programs. Since the 1960s the applicant has supplied specialist paint to The National Trust in England for use in the refurbishment, restoration and maintenance of the Trust's properties. This has resulted in the development of a variety of paints in up to fifty-seven colours, which are marketed by the applicant as The National Trust Range of Paints. The colours in this range have distinctive names, the source of which is explained in a colour card. Some of the paint names stem from particular locations, such as Sudberry Yellow, an interpretation of the wall colour for the staircase at Sudbury Hall in Derbyshire. In the March 1997 edition of National Trust magazine Alan Mercer could thus gush: "These grand associations have given the National Trust range a special kind of distinction which transfers easily to less illustrious home environments." The launch of the National Trust range received extensive publicity in an article by Sarah Howell in the July/August 1991 issue of The World of Interiors magazine. The article included four pages of photographs of the paint colours. In 1991 Prue Cook purchased this magazine in New Zealand. In 1987 Ms Cook had established in New Zealand a business wholesaling and retailing paint products. She traded under the name "Country Colours" and held the sole agency to manufacture and distribute the respondent's paints in New Zealand. When Ms Cook read Ms Howell's article, she was impressed by the apparent quality of the paints and the colours and by the fact that the applicant "was targeting the top quality, selective home end rather than the general trade market". By 1992 Ms Cook had formed a company to carry on her business. This company is now called Aalto Country Colours Limited ("ACC"). In June 1993 the applicant agreed to grant ACC the exclusive right to distribute its paints in New Zealand. ACC does not, in fact, sell the applicant's paints in New Zealand. The applicant provides ACC with its colour cards and formulas for the colours. These colours are mixed with paint manufactured for ACC by Southern Cross Paints Limited. This paint is sold in a tin labelled AALTO. In a space on the bottom of the label, there are typed the words "FARROW & BALL", the colour name and its number from the colour chart. ACC pays the applicant a royalty on sales of these products. Peter Lewis is the managing director of the respondent. He visited New Zealand in 1993 and Ms Cook says that she gave him one of the applicant's colour cards for the National Trust range. Afterwards she received from the respondent a new colour card for its Boncote cement paint. Ms Cook noticed that many of the colour names on this card were the same as those in the National Trust range. She telephoned Mr Lewis shortly after receiving the Boncote card and remonstrated that the respondent should not be using the applicant's names. She said: "You are putting me in an embarrassing position because you know I am their agent as well as yours." In 1994 the applicant granted ACC the exclusive right to distribute its paints in Australia. In June 1995 Sheryl Martin, a New Zealander who had seen the applicant's colour cards and used the paint made up by ACC when renovating her own home in 1994, approached Ms Cook about setting up a distributorship for ACC in Perth. A franchise arrangement was concluded in September 1995, and Ms Martin opened the aalto Country Colours shop in the Perth suburb of Subiaco in January 1996. Between mid-1995 and January 1996 Ms Cook frequently discussed with Mr Lewis the prospect of Ms Martin selling the respondent's paints in Perth. ACC provides Ms Martin with paint and with a "master set" of colour cards, which she uses to mix Farrow & Ball colours. Ms Martin says that she promotes Farrow & Ball colours in her store which has a Farrow & Ball "sign" on it. She also advertises, and a copy of an advertisement for the National Trust range placed in an April 1996 issue of the "West Australian" newspaper is in evidence. Ms Martin shows potential customers the applicant's colour cards. If a customer is interested in a particular colour, she gives them a postcard size card of that colour with its name on the back above the words Farrow & Ball. If the customer wishes, she will then make up a small test pot of the colour using the formula provided by ACC. These pots are small glass jars with a black cap upon which there is a green label with a two colour logo for aalto Country Colours. The name Farrow & Ball together with the colour name and number is typed on clear adhesive tape placed on the side of the jar. If the customer then wishes to purchase the paint, Ms Martin mixes the colour tints in the paint manufactured for ACC in New Zealand. This is sold in tins with the same labels as ACC uses, with the colour and the notation "F&B" marked on the label, which appears to be done with a marker pen and is difficult to read. Ms Martin estimates that "25% of my total turnover is generated from sales of Farrow & Ball". She says that she has sold "Farrow & Ball" in Queensland and New South Wales. Ms Martin says that architects and interior designers will specify "a particular Farrow & Ball colour". Ms Howell's original article was also apparently "read with great interest and enthusiasm" by Robert Ness, an architect in Sydney. He wrote to the applicant on 23 September 1991 asking about the National Trust range of paints. It does not appear whether this inquiry was ever acknowledged. In any event, Mr Ness wrote again to the applicant on 18 July 1996. Correspondence ensued. Mr Ness raised the possibility of his company marketing the applicant's paints in Australia and Mr Ephson referred him to ACC as the applicant's "licensee". When Mr Ness learned that ACC did not supply paints in a Farrow & Ball tin, he wrote to Mr Ephson asking whether the applicant would supply its products to his company. Mr Ephson responded on 4 September 1996 that the applicant would be prepared to ship its product direct to Mr Ness for specific major restoration contracts. However, he also said: "Aalto Country Colours in New Zealand has an excusive contract with ourselves which includes Australia. So all products produced by them in our livery will have to be purchased directly from them once they are in a position to supply." At some time prior to 4 February 1997 Mr Ness's company apparently provided the Australian magazine Vogue Living with "editorial material" about the applicant's paints. On that day Mr Ness received a letter from the respondent's solicitors. They said that the respondent was the common law proprietor and registered owner of the trade mark FARROW & BALL, and that the respondent had used the trade mark in respect of paints since "at least late 1995 to early 1996". The respondent demanded a series of undertakings, including one to withdraw the intended publication. On 5 February 1997 Mr Ness wrote to Vogue Living asking that the proposed editorial be withdrawn. In mid-February 1997 Ms Cook received in the mail from the respondent a label that she had not seen before. The label was for a product called Farrow & Ball Post & Rail Fencing Paint. The product information on the label said the paint "is designed for application to timber fencing to resist rot and water damage, attack by borers etc. Farrow & Ball deters stock from chewing fences by its anti-chew formula, while at the same time being non-toxic". The paint was available in two colours, black and white. Ms Cook was surprised when she received this label because the respondent had previously only distributed products under the name "Porter's Paints". On 28 February 1997 Ms Owen wrote to the respondent on behalf of the applicant, complaining about "Farrow & Ball Post & Rail Fencing Paint". On 18 March 1997 Ms Owen telephoned the respondent's premises and asked whether the respondent sold Farrow & Ball paints. She says that a man asked which Farrow & Ball paints she was looking for, that she said "the heritage range colours", and that the man said the respondent did not sell those paints. Ms Owen made a file note of this conversation which records that she also asked whether the respondent sold "any Farrow & Ball paints", to which the man replied that the respondent sold "a fence and rail post lime wash and distemper that was a Farrow & Ball paint". The respondent's application for registration of the trade mark FARROW AND BALL was filed on 19 April 1996. The applicant also filed a trade mark application on 10 January 1997. (How it came to do so is not explained.) Four further affidavits were read in the applicant's case in chief, two by Ms Owen and two by a solicitor employed in her firm, Shirley Benneworth. Exhibited to Ms Owen's third affidavit were a brochure, price lists and newsletters provided by the respondent to "agents, stockists and outlets". The brochure contains photographs of the respondent's main office and factory at Waterloo and of its shops at Willoughby and Bondi Junction. The visible signs say "Porter's Paints", "Boncote Cement Paint" and "Porter's Original Lime Wash". Ms Benneworth confirms that there are no signs with the words "Farrow & Ball" displayed at the Waterloo premises. The only mention of Farrow & Ball in this material is in the respondent's February 1997 newsletter under the heading "New Products". This item refers to "Farrow & Ball Fence Paint" described in the label mentioned above. Photographs of Ms Martin's store in Subiaco clearly show the Farrow & Ball sign on a window above the words "aalto paints". Other photographs show on display on shelves in the store the sample pots which I have previously described. After lunch on the first day of the hearing, counsel for the applicant tendered without objection a number of magazines purchased that morning in the precincts of the Law Courts Building. This was said to demonstrate the easy availability in Australia of many of the British magazines in which the applicant advertises and promotes its products. Indeed, two of these magazines, the March 1997 issues of Country Living and The World of Interiors, contain classified advertisements for the applicant. One of them also has editorial coverage of the applicant's products in an article on bathroom colours together with contact details on a "Where to buy" page. In opposition to the claim for interlocutory relief, the respondent relied upon an affidavit of Mr Peter Lewis. On 5 March 1993 he became registered under the Business Names Act 1962 (NSW) in respect of the business name "Farrow and Ball". He says that the respondent sells its post and rail fencing paint under the trade mark FARROW AND BALL. He claims that the respondent has advertised this product in horse industry magazines and sent direct mail letters about it to horse studs and riding schools in 1994 and 1996. In a copy of what Mr Lewis says is a letter that the respondent sent on 20 September 1996, the fencing paint is described as "one of our latest products". He says that the respondent did not include the fencing paint in its price list until April 1997 because "it wished to keep the fencing paint separate from its other products" and "to create a separate agricultural range of paint products". Mr Lewis says that the respondent commenced selling the fencing paint in 1994 and gives estimates of increasing sales in each year. He annexes orders for two sales of fencing paint in, respectively, December 1996 and February 1997. Until this year he says that the respondent used handwritten labels for the fencing paint cans. The respondent recently had new labels designed and printed. Mr Lewis estimates the cost of the respondent's current price lists to be $510, the cost of the fencing paint labels (including artwork) to be just over $1500, the "retail value" of current stocks of fencing paint to be $3,000 and the inventory cost of materials used only in the manufacture of fencing paint to be $300. Mr Lewis confirms that he was the man to whom Ms Owen spoke on 18 March 1997. He explains that he told her that the respondent sells "Farrow & Ball post and rail paint" but that, when asked whether the respondent sells the Farrow & Ball heritage range of paints, she was told that the respondent sells "distempers, lime washes and bond coats". In reply, counsel for the applicant read a further affidavit by Ms Benneworth. She visited the respondent's shop at Willoughby on Saturday morning, 26 April 1997. She obtained the respondent's retail price list dated February 1997 and its trade price list dated 1 April 1997. The Farrow & Ball fencing paint was only listed in the April publication. Ms Benneworth did not observe any product or promotional literature for the fencing paint. When she asked a sales attendant, she was told the fencing paint was not in stock but it could be ordered. The sales attendant told her that the respondent had been selling the fencing paint for a few months. Ms Benneworth also telephoned a number of the respondent's stockists on 28 and 30 April 1997. Only one had the fencing paint in stock. Mr Lewis was cross-examined. He is evidently a painter by trade. Mr Lewis said that he first heard of Farrow & Ball when he was working in London in the 1980s with a master painter used by "John Fowler, the famous designer decorator who is dead now". He knew the applicant as a "small, country paintmaker". He was not sure that Ms Cook had given him the applicant's colour card in 1993, but thought that she may only have shown him the card. Mr Lewis seemed to recall, however, Ms Cook's subsequent telephone conversation about the respondent's use of the colour names. He concedes that the respondent might have used a name from the applicant's colour card, but he says that he told Ms Cook that some of the names are from the "V&A" and are used traditionally throughout England. Mr Lewis's evidence about his knowledge of ACC's links with the applicant was hard to follow. He was adamant that ACC never distributed the applicant's paints, but he eventually acknowledged that he knew ACC was copying the applicant's colours with permission. Mr Lewis agreed that Ms Cook had discussed with him the proposal to set up a store in Perth, but was reluctant to go beyond saying that he had suggested she contact his exclusive distributor in Western Australia about selling the respondent's paints. He said that in July 1996 he had not been "aware of a third party gearing up to use the trade mark FARROW & BALL in Australia", despite having made a statement to that effect in a statutory declaration made on 12 July 1996 in support of a request for expedited examination of the respondent's trade mark application. Mr Lewis was pressed about the sales of fence paint by the respondent. He agreed that it was shown as a new release in the September 1996 mail-out, but said that the paint had been manufactured much longer and that there had also been a mail-out about it in 1994. Mr Lewis accepted that the artwork for the labels was recently developed, but said that the respondent had used the name Farrow & Ball for the paint although it was using a handwritten label with the name Porter's printed on it. His evidence about the sale of the fencing paint was not very clear. Certainly it appears that no reliable records of sales have been kept by the respondent. (Somewhat curiously Mr Lewis seems to have been personally involved in negotiating the February 1997 sale of fence paint on trade terms with a used-car dealer who had an interest in a horse stud.) Notwithstanding the cross-examination of Mr Lewis, I do not think it is necessary or desirable to make any findings of fact on the evidence at this stage. I have attempted above to state relatively neutrally the facts as they emerged during the course of evidence. The applicant seeks interlocutory orders in the following terms: "1. An order that, pending the determination of the proceedings or further order, the Respondent be restrained from, whether by itself, its servants or agents or otherwise, using in the course of trade the words 'FARROW & BALL', whether alone or as part of any other name or mark or any other word or words substantially identical or deceptively similar to the words 'FARROW & BALL' in respect of any of the promotion by any means, the advertising, marketing, manufacture, distribution, offer for sale or supply and supply of any paints, colourants, mordants, varnishes, preservatives against rust and deterioration of wood, resins, other surface coverings and finishes and similar goods ('Paints') and any services relating to any of the choice, specification, application, preparation or making of the Paints (the 'Services'). 2. An order that, pending the determination of the proceedings or further order, the Respondent be restrained from, whether by itself, its servants or agents or otherwise, representing whether by circulars, advertisements, letters or otherwise: (a) that it is the legitimate owner and originator of the name 'FARROW & BALL'; (b) that it is entitled to prevent the Applicant, or persons licensed or permitted by the Applicant or any licensee or distributor of the Applicant, from using the name 'FARROW & BALL' or any name substantially identical or deceptively similar, or any name of which that name forms part, in relation to any one or more of the Paints, the Services or any components of the Paints originating from the Applicant; (c) that any person using or desiring to use the name 'FARROW & BALL' in relation to any Paints or any Services in Australia may only do so with the consent of the Respondent; (d) that by any use of the name 'FARROW & BALL' by any of the Applicant or any person licensed, permitted or approved by the Applicant or any distributor or licensee of the Applicant that person is thereby passing off themselves as and for the Respondent, or from making threats in terms of the letter dated 4 February 1997 from Gilbert & Tobin on behalf of the Respondent to the directors, Authentic Interiors, or threats to any similar effect. 3. An order that, pending the determination of the proceedings or further order, the Respondent be restrained from, whether by itself, its servants or agents or otherwise, publishing or causing to be published any advertisement promoting or advertising 'Farrow & Ball Post & Rail Fencing Paint' or any similar Paints, or Services relating to such paints." As I have indicated earlier, the respondent opposes the grant of such relief. It has offered an open undertaking that, until the final determination of the matter, it will not sell any paint under the name Farrow & Ball other than the Farrow & Ball Post & Rail Fencing Paint. The respondent has also offered to keep accounts. In order to secure an interlocutory injunction the applicant must show (1) that there is a serious question to be tried or that the applicant has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial the applicant will be held entitled to relief; (2) that it will suffer irreparable injury, for which damages will not be an adequate compensation, unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 per Mason CJ at 153. Mr Lewis was not asked, and did not say, how the respondent came to use the name Farrow & Ball or why it might be thought appropriate for a range of agricultural products. Counsel for the respondent did not, however, argue that there was not a serious question to be tried as to contravention of s 52 of the Trade Practices Act 1974 and passing off by the use of the name. The tests of reputation in a passing off action are authoritatively explained in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302. Plainly the applicant does not carry on business in Australia. Nor are its products sold here. The effect of the evidence is that the applicant's colour cards are used as a point of sale aid in Ms Martin's store, that she advertises the colours in the applicant's National Trust range, and that formula information provided by the applicant is used to tint paint manufactured in New Zealand for ACC. The "livery" on the applicant's paint tins is shown somewhat indistinctly in the photocopy of the applicant's Autumn 1996 brochure that is in evidence. However, that livery does not appear to resemble in any way the get up of the labels on the ACC paint ("AALTO semi-gloss acrylic") or those on the respondent's fence paint. Counsel for the applicant relies particularly on the reputation acquired by the applicant in Australia as a result of readership of the magazines and periodicals in which it advertises and in which its paints are promoted. The evidence shows that many of these publication are readily available in Australia. But I would not quickly infer from that fact that the applicant's paints have a reputation in Australia, let alone what kind of reputation. The evidence on that topic is very slight. Mr Ness was obviously impressed, but he was able to contain his enthusiasm for about five years before again pursuing the supply of the applicant's products. When he did, he was apparently less than satisfied with the packaging that ACC could supply. The editorial copy intended for Vogue Living magazine (that Mr Ness subsequently had pulled) is not in evidence. I have already mentioned that Ms Martin seems to sell Farrow & Ball colours, for it is these that architects specify. She does not sell the applicant's paints, but I accept that Ms Martin obviously attaches some commercial value to the name Farrow & Ball on the window of her paint shop. It may be that the extent of reputation to be proved could be less in the case of the Trade Practices Act cause of action: Emap Elan Ltd v Pacific Publications Pty Ltd (1997) 37 IPR 1. Nonetheless, this important aspect of the applicant's case derives its only real strength from the inferences that may be drawn from the respondent's registration of the trade mark and its actual use of the applicant's name. The applicant is concerned that the use of its name in promotion of fence paint may tarnish or devalue its reputation. But counsel for the respondent submits, correctly in my view, that in an application for an interlocutory injunction the extent of trading within the jurisdiction may be a more important factor than at the final hearing. He points to there being no evidence of any financial detriment to Ms Martin's business from the release of the respondent's fence paint. At this stage there is no evidence that anybody interested in paints made up by Ms Martin was likely to be confused or deceived that there was some association between the applicant and the respondent. The fence paint does appear with the Farrow & Ball name in the April 1997 price list. But it is plainly not the kind of product likely to be of interest to home decorators inspired by a paint manufacturer's associations with The National Trust in England. Importantly none of the respondent's other products (with which the applicant's products may one day conceivably compete in Australia) are sold under the name Farrow & Ball. The other two matters to be considered are affected by the strength of the case to be tried. The applicant presently makes no sales in Australia. There is no evidence of the amount of royalties received by the applicant from sales of the ACC paint in Australia. As I have said, it is difficult to see any such royalties being adversely affected prior to trial. However, if they were, there is no reason to suppose any loss could not be quantified in an award of damages. The balance of convenience hardly arises. The applicant is not restrained in its present activities. (I cannot speculate about the contents of the Vogue Living editorial.) It is true that the respondent appears to sell very little fence paint and that at present that product is not held in stock by most of the outlets for the respondent's products. The cost of the price lists and labels is very modest. Price lists are, no doubt, updated every so often and, if the respondent is eventually successful, the labels can be used later on. I accept that inconvenience caused to the respondent would not be great. However, if the retention of the status quo is a matter to be weighed in the balance (as I think it is), there is nothing in the current or threatened conduct of the respondent that needs to be restrained in order to maintain the status quo from the applicant's point of view. The prospect of any damage to its reputation in Australia from the present level of the respondent's sales activities for its fence paint is extremely remote. I note that the applicant "has never evinced an unwillingness to provide security on the usual undertaking to pay damages if the Court sees fit to make such an Order". Be that as it may, I think that, in all the circumstances, damages would be an adequate remedy and that the balance of convenience does not favour granting the injunction. Accordingly, the claim for interlocutory relief in the application is refused.