Balfour Wauchope Pty Ltd v Great Southern Pie Co Pty Ltd [1999] FCA 1028

FEDERAL COURT OF AUSTRALIA

Balfour Wauchope Pty Ltd v Great Southern Pie Co Pty Ltd [1999] FCA 1028

BALFOUR WAUCHOPE PTY LTD v THE GREAT SOUTHERN PIE COMPANY PTY LTD S 57 of 1999 FINN J 27 JULY 1999 ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 57 OF 1999

BETWEEN: BALFOUR WAUCHOPE PTY LTD

ACN 007 870 233

Applicant

AND: THE GREAT SOUTHERN PIE COMPANY PTY LTD

ACN 082 655 829

Respondent

JUDGE: FINN J

DATE OF ORDER: 27 JULY 1999

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT: 1. the notice of motion be dismissed; 2. the costs of the motion will be costs in the cause. 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 S 57 OF 1999

BETWEEN: BALFOUR WAUCHOPE PTY LTD

ACN 007 870 233

Applicant

AND: THE GREAT SOUTHERN PIE COMPANY PTY LTD

ACN 082 655 829

Respondent

JUDGE: FINN J

DATE: 27 JULY 1999

PLACE: ADELAIDE

EX TEMPORE REASONS FOR JUDGMENT 1 On the evidence before me, the present notice of motion seeks in substance the grant of an interlocutory injunction to compel the respondent company to police manufacturing and distribution agreements it has with a third party, whose acts and omissions ground the applicant's claims of actual and of apprehended continuing or future infringement of its trademark.

Background and Evidence 2 The applicant, Balfour Wauchope Pty Ltd ("Balfours"), is the registered proprietor of a trademark, "Footy Pie", the application for this mark being registered on 17 January 1995. Balfours has manufactured and distributed its pie as "Footy Pie" since 1994. While its primary market is in South Australia it also has distributed Footy Pies in the Northern Territory, Victoria and New South Wales. 3 The respondent, the Great Southern Pie Company Pty Ltd ("GSP Co") commenced business in Victoria in 1998. It obtained the licence from the Australian Football League ("the AFL") to sell foodstuffs, including pies, in packaging bearing AFL and AFL club logos, trademarks, designs, etcetera. GSP Co originally proposed to and did call its pies the Footy Pie, and it developed packaging and promotional material so describing the pie. 4 On 24 November 1998 by letter to Balfours, GSP Co in effect acknowledged that an infringement of Balfour's mark had occurred. It indicated that it had stopped all its "Footy Pie" packaging entering the market. Before indicating the steps it so took it is necessary to refer to the distribution arrangements adopted by GSP Co. 5 The company intended to have its product available in each State. The arrangement it adopted for this was to have a separate and independent company in each State manufacture and distribute "its" product under manufacturing and distribution agreements. In South Australia the local company was GSP (SA) Pty Ltd ("GSP SA") which entered into the two agreements referred to on, respectively, 1 September and 1 October 1998. The manufacturing agreement dealt, inter alia, with packaging of the pies (see clause 6 of that agreement); the distribution agreement with advertising and promotion (see clause 10 of that agreement). 6 While the early alleged infringement involved packaging as well as promotional material, the matters with which I am now concerned relate, for practical purposes, only to promotional materials taking the form (a) of posters (called corflutes) and (b) of A4 size counter stands. Having produced corflutes and counter stands displaying the words "Footy Pie" GSP Co proceeded in several steps to correct the matter. Rather than destroy its promotional material, it went through the process of having produced stickers that would block out and/or contain substitute words for the offending words. 7 Though it is difficult on the material before me to be accurate as to the precise timing of the following events, it would seem that GSP Co (i) produced or had produced a blank sticker that blocked out the word "Pie" on its promotional material so that the corflutes and counter stands now carried only the word "Footy" but over the picture of a pie (this being part of the original material); (ii) had produced a sticker with the words "AFL Football Pie" to block out "Footy Pie" entirely; and (iii) finally had produced a block-out sticker containing the words "AFL Pie". Additionally in early 1999 GSP Co appears to have used the language "football pie" in radio advertisements in South Australia. 8 Balfours objects now to all of the above usages save "AFL Pie". Insofar as the first was concerned, ie "Footy" alone, it wrote a letter of complaint to GSP Co on 30 November 1998. On 14 December GSP Co advised in response that it had removed all point-of-sale advertising for pies bearing the word "Footy" though it did not accept that it was infringing the applicant's mark. 9 No objection appears to have been taken until the day of the hearing of the motion before me to the second sticker produced, that is "AFL Football Pie", that objection being taken when a corflute carrying those words was noticed outside a cafe adjacent to this Court's premises in Adelaide. The actual sticker itself appears to have been produced in November-December 1998. 10 It is clear on the material before me that by at least 15 March 1999, and probably well before this, GSP Co was giving directions to its supplier of its promotional materials that that material "must have AFL pie, not AFL football pie" on it. From the oral evidence of Mr Nicholson, a director of GSP SA, the reason given for the removal of the word "Football" from the stickers was that the AFL refused to approve of advertising using that word. The objection to the radio advertisements was made on 18 January and apparently that usage desisted. 11 Turning now to the events that occurred in this State since GSP SA entered into its agreements with GSP Co. 12 (1) After entering into the agreements to which I have referred, GSP SA entered in turn into agreements with (a) Cowleys that was to manufacture the pies, and (b) Tradelink that was to merchandise the products, this latter agreement being made in about February 1999. 13 (2) The advertising and packaging material supplied by GSP Co initially bore the words "Footy Pie". It is Mr Nicholson's evidence that in October-November 1998 advertising material was supplied by GSP Co directly to Cowleys but that thereafter it was supplied to GSP SA and that when this change occurred Mr Nicholson went to Cowleys and recovered the advertising material it had from it. 14 (3) Mr Nicholson's evidence is that while he showed "Footy Pie" advertising materials to prospective clients in late 1998, none was put on display by those clients. It was also his evidence that while he gave away pies that were wrapped in offending packages, he did not sell any pies until January 1999 by which time innocent packaging was in use. I have to say in passing that I do not find Mr Nicholson's evidence on the matter of sale altogether convincing. 15 (4) It seems to be the case that in mid‑November 1999 Mr Nicholson was informed by GSP Co not to sell pies in "Footy Pie" packaging. This instruction to Mr Nicholson was itself mentioned to Mr Koot, the chief executive officer of Balfours in a letter from GSP Co of 24 November 1998. 16 (5) It is Mr Nicholson's evidence that in December 1998, that is after he had recovered the advertising material from Cowleys, he received a supply of "AFL Football Pie" stickers. The source of the stickers is not altogether clear to me. They may have been of local manufacture, Mr Nicholson referring in his oral evidence to an instruction from Melbourne to use a local source of supply, or they may have originated in Melbourne. I need make no finding on this. 17 What is clear is that at least one such sticker found its way onto a corflute that was provided to a customer of GSP SA, that is the cafe adjacent to this Court. That supply can only have occurred after mid-December 1998 when on Mr Nicholson's evidence he had retrieved the advertising material from Cowleys. Nonetheless Mr Nicholson, when asked to explain how the cafe could have obtained such a corflute, attributed this to Cowleys and to its receiving the sticker from the local manufacturer of it that allegedly had premises next-door to Cowleys. Cowleys in turn is said to have given the corflute to Tradelink apparently after February 1999 when Tradelink was engaged by GSP SA, and Tradelink in turn is said to have given it to the cafe. 18 I find the above evidence of Mr Nicholson unconvincing. I am satisfied for present purposes that GSP SA, whether intentionally or otherwise, made some probably very limited use of the "AFL Football Pie" stickers on at least corflute advertising. It would not be unreasonable to infer that the corflute advertisement next to the Court in Adelaide may well not be the only such advertisement on display in South Australia. 19 (6) On 12 July 1999 Mr Koot of Balfours visited the Coles Supermarket at Marion in South Australia. He observed what he called a GSP Co – it was in fact a GSP SA - trade promotion. The advertising display contained, he alleges, an A4 counter stand using the words "Footy Pie". He said in oral evidence he gave instructions to an employee by telephone to obtain the counter stand. He did not see this occur, although he was later supplied with such a stand that was tendered in evidence. Though more oblique in character, the respondent relies upon the hearsay evidence of the person who conducted the Coles demonstration who said that to the best of her recollection she did not use a counter stand marked "Footy Pie" and that she did not give a copy of a counter stand to anyone. For present purposes, as the respondent concedes, there is on the evidence a serious issue to be tried as to whether an infringement occurred on 12 July 1999. 20 (7) Mr Nicholson's evidence is that since the Coles event he has inspected all packaging and promotional material at the premises of GSP SA, Cowleys and Tradelink and that on each occasion all A4 counter stands bore the words "AFL Pie" and none the words "Footy Pie". In his first affidavit Mr Nicholson claims that in December 1998 he disposed of all the "Footy Pie" A4 counter stands, both that he had on hand and that he recovered from Cowleys and that the A4 stands he has used were all freshly supplied by GSP Co in December 1998. He also gave oral evidence that about 60 corflutes are in use in South Australia but the rest have been destroyed. No reason for their destruction apparently was given. Again I would have to say I find this evidence on corflutes unconvincing, given the efforts Mr Nicholson says are being made to establish the AFL Pie in South Australia. 21 (8) GSP Co obviously retained for quite some time an interest in being able to use the words "Footy Pie". On 27 May 1999 it informed Balfours that it intended taking steps to have Balfour's trademark registration removed for non‑use outside of South Australia. The following day on advice from patent attorneys it applied for registration of the mark "Footy Pie", though without informing Balfours of this. It withdrew that application after the commencement of this proceeding. 22 (9) Mr Kenmar, the lawyer employed by the group of which GSP Co is a member, provided affidavit evidence that on notification of the problems with the use of the words "Footy Pie" the company took steps to have new packaging and promotional material prepared. In October 1998 distributors were instructed not to use materials containing the words "Footy Pie". Only about half of the material bearing the offending words were distributed, that is about 500 A4 cards, 250 posters and 200 T-frame posters. GSP SA was instructed that all material bearing the GSP Co logo must be viewed and approved by GSP Co. The company's national advertising campaign began in March 1999 and promoted the product under the name "AFL Pie" and over 100,000 AFL Pies have been sold in South Australia.