FEDERAL COURT OF AUSTRALIA Unilever Australia Ltd v PZ Cussons Australia Pty Ltd [2008] FCA 809 PRACTICE AND PROCEDURE – interlocutory injunction – misleading and deceptive conduct – prima facie case – balance of convenience. Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 cited UNILEVER AUSTRALIA LTD (ACN 004 050 828) v PZ CUSSONS AUSTRALIA PTY LTD (ACN 004 164 827) NSD 638 of 2008 TAMBERLIN J 30 MAY 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 638 of 2008 BETWEEN: UNILEVER AUSTRALIA LTD (ACN 004 050 828) Applicant/Cross-Respondent AND: PZ CUSSONS AUSTRALIA PTY LTD (ACN 004 164 827) Respondent/Cross-Claimant JUDGE: TAMBERLIN J DATE OF ORDER: 30 MAY 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant's application for interlocutory relief be dismissed. 2. The respondent's cross-claim for interlocutory relief be dismissed. 3. The costs of the application and cross-claim for interlocutory relief be costs in the cause. THE COURT DIRECTS THAT: 4. The parties consult and send to the Associate of Justice Tamberlin Short Minutes of Order to enable the matter to be heard and determined at the earliest possible date. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 638 of 2008 BETWEEN: UNILEVER AUSTRALIA LTD (ACN 004 050 828) Applicant/Cross-Respondent AND: PZ CUSSONS AUSTRALIA PTY LTD (ACN 004 164 827) Respondent/Cross-Claimant JUDGE: TAMBERLIN J DATE: 30 MAY 2008 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant ("Unilever") seeks an interlocutory injunction against the respondent ("Cussons") on the basis that Cussons has engaged in misleading and deceptive conduct by placing statements on one of its products, known as "Radiant micro Max". The product is a liquid cleaning product used as a cleaning agent when washing clothes. The substance of Unilever's comparative advertising claim is that the script on the Radiant micro Max bottle which states that it is "Proven to Outperform Omo Small & Mighty" ("the Radiant Statement") is misleading. "Omo Small & Mighty", which is produced by Unilever, is a product which performs a similar role to Radiant micro Max. Unilever also claims that Cussons engaged in misleading conduct as to the relative prices and values of the two products. In response, Cussons filed a cross-claim alleging that Unilever has engaged in misleading conduct in respect of certain statements and images used on its Omo Small & Mighty bottle and other products. UNILEVER'S CLAIM 2 The type-face of the Radiant Statement is large, colourful and eye-catching. It is prominently situated towards the top of the bottle. Following the Radiant Statement is an asterisk which directs attention to a qualification in very small print at the bottom of the label on the front of the bottle. The qualification reads: "* On most of the common and tough stain types. Based on recommended dosage". This qualification is very difficult to read and unlikely to be looked at with any great care or attention. Indeed, the type-face of the qualification is so small as to be ineffective as a communication, especially when viewed in comparison with the broad and emphatic type-face of the Radiant Statement. 3 Unilever submits that the Radiant Statement connotes, by its use of the word "Proven", that the truth of the allegation has been established on proper and reliable scientific evidence and testing, and it further contends that a key question at trial will be whether the tests carried out by Cussons are sufficient to establish the truth of the Radiant Statement. 4 Unilever says that the claim made in the Radiant Statement is misleading because the tests conducted and relied upon by Cussons were deficient in a number of critical respects and do not in fact establish the accuracy of the Radiant Statement. In order to resolve this dispute, it will be necessary to consider detailed scientific evidence as to whether the tests can be said to support the representation made by Cussons in the Radiant Statement, having regard to a range of variables such as type of stains, water hardness, temperature of water and amount of liquid wash used. Unilever also relies on the presence of the qualification on the bottle to support the inference that Cussons recognises the need to limit the meaning of the Radiant Statement, but it says that the qualification is inadequate to serve this purpose. 5 A number of observations are made by Unilever in relation to the presentation of Radiant micro Max and Omo Small & Mighty. First, it is said that Omo Small & Mighty is sold in a 475mL pack whereas Radiant micro Max is sold in a 500mL pack. The recommended retail price of Omo Small & Mighty is $5.99, whereas Radiant micro Max is sold for $4.99, which makes it the significantly cheaper product. Unilever observes that the recommended dosage for Omo Small & Mighty is one cap (which equals 33mL), whereas the recommended dosage for Radiant micro Max is one and a half caps (which equals 60mL) for a normal load of washing. For every wash, it is therefore said, significantly more Radiant micro Max is required than Omo Small & Mighty. In addition, a bottle of Omo Small & Mighty provides over 14 washes, while Radiant micro Max provides just less than nine at the recommended dosage. Accordingly, the Radiant micro Max is said to be 30% more expensive than Omo Small & Mighty on a "per wash" basis. It is on the basis of these comparisons that Unilever says Cussons had engaged in misleading conduct when representing that its product was "Proven to Outperform Omo Small & Mighty". 6 Unilever contends that Cussons' representations are misleading because the above matters and comparisons are not effectively brought to the notice of the consumer, and there is no practical or realistic means by which those matters can be ascertained by the consumer at the point of sale. It is said that the consumer is misled as a result of Cussons creating an impression that Radiant micro Max is of superior quality and available at a substantially lower price, when in fact the consumer will have to pay more on a "per wash" basis. For these reasons, Unilever says there is a strong prima facie case that Cussons is engaging in misleading and deceptive conduct, and the grant of an interlocutory injunction is appropriate. 7 In response, Cussons contends that the qualification was appropriately prominent because it appears on the front of the label and is connected by an asterisk to the Radiant Statement. However, without admissions, Cussons has offered to adopt as from 15 May 2008 a new form of front label for Radiant micro Max, which will enlarge and elevate the qualification to form part of the Radiant Statement at the top of the bottle's label. This, Cussons says, precludes any future assertion that the qualification is not sufficiently drawn to the customer's attention. Accordingly, Cussons submits, as a consequence of the use of the new label, the positioning of the stock on the shelves of retailers, the speed of movement of the stock, and the fact that the largest retailer in Australia (Woolworths Limited) is not stocking the version of the bottle with the Radiant Statement means that interlocutory relief should not be granted insofar as it is based on the size or prominence of the qualification. 8 For present purposes, I am satisfied that the relocated qualification will, to some extent, lessen the previous impression created when the Radiant Statement was accompanied by an asterisk and fine print which was difficult to read. However, that finding does not dispose of the issues between the parties because there may still be a final claim for damages on an account of profits and there are other aspects of the label which are said to be misleading. 9 The dispute remaining in relation to Unilever's application turns on (i) the correctness of the Radiant Statement in relation to the assertion that Radiant micro Max has been proven to outperform Omo Small & Mighty on most of the common and tough stain types at recommended dosages; and (ii) the comparisons in price to which I referred at [5] above. 10 Considerable evidence has been filed in relation to both these and a range of other issues. That evidence draws heavily on different scientific tests conducted on Radiant micro Max and Omo Small & Mighty. On the basis of this evidence, Cussons says that any prima facie case which Unilever may be able to raise is very weak and is insufficient to support its claims. It is said by Cussons that this weakness of Unilever's case as well as the balance of convenience should be taken into account and interlocutory relief should be refused. Cussons suggests that the most appropriate way of dealing with the matter is to obtain the earliest possible hearing on a final basis. 11 I will not repeat here the detailed evidence of the parties concerning the performance characteristics of the two products over a range of different stains and textiles. It suffices to say that it is not practicable at the present time to form any confident prediction as to the likely outcome or strength of the case brought by Unilever. To properly consider the detailed evidence filed (and any further evidence which may become available), it will be necessary to have the benefit of interlocutory processes, cross-examination and addresses by counsel. At this time, however, I am persuaded that the application brought by Unilever is sufficient to raise a prima facie case, as that term is defined by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at 82. CUSSONS' CROSS-CLAIM 12 Cussons has brought a cross-claim against Unilever. The cross-claim relates to two of Unilever's laundry liquid wash products, namely, Omo Small & Mighty and "Surf Small & Mighty". Both of these products are marketed in bottles which display the words "3X Concentrate". Both bottles display these words under the name of the product and use a silhouette to demonstrate that each product is equivalent to older products marketed by Unilever which were 1.4L in size. In addition, in the case of Surf Small & Mighty, alongside the words "3X Concentrate", the words "As many washes as Surf 1.4L" appear. 13 Cussons contends that these words which appear on Omo Small & Mighty and Surf Small & Mighty represent that the liquids in those products are three times as concentrated as the liquids in Unilever's older laundry liquid wash products (which, being 1.4L, were also approximately three times the size). These words, it is said, have the effect of representing that, at recommended doses, the performance qualities of Omo Small & Mighty and Surf Small & Mighty are the same as the older and larger products, whereas tests conducted on the liquids demonstrate that their characteristics do not support this representation. Accordingly, Cussons claims that the representations are misleading. 14 On the present material and submissions, it seems to me that, as a matter of construction, the representations would be taken by a consumer not so much as indicating that the precise performance qualities of the liquids are identical or that the chemical composition or characteristics of the liquids are identical to the liquids in the larger containers, but rather go to the result that the same number of washes can be obtained from the smaller Omo Small & Mighty and Surf Small & Mighty as can be obtained from the liquids in the larger containers if the recommended dosages are used. For instance, Surf Small & Mighty describes its equivalence with the older and larger products not by reference to the inherent composition or concentration of the liquid, but by reference to the number of washes which a bottle will provide. In the case of Omo Small & Mighty, however, the way in which it is said to be equivalent to the older and larger products is less clear, and I think it unlikely that a consumer will closely study the back of the bottle to calculate the number of caps that are contained in the bottle, and the number of washes that it will produce. The emphasis for which Unilever contends relates to the end result of the use of the products, namely, the number of washes produced rather than on the character or concentration of the liquid. This, Unilever says, is what the consumer would really be interested to know. While Unilever's position on this point is arguable, in my view Cussons has raised a prima facie case within the meaning of Australian Broadcasting Corporation 227 CLR at 82. Whether Cussons' argument can be said to be strong or weak is not a matter which can be decided on the material filed to date. BALANCE OF CONVENIENCE 15 The parties also addressed submissions to the balance of convenience in granting or refusing interlocutory relief. In my view, provided that an early date for final hearing is fixed, and even though the parties have established their respective prima facie cases, there is nothing in the balance of convenience which requires that the interlocutory relief sought by either party should be granted. 16 Omo Small & Mighty was launched in Australia in early February 2008 and national advertising commenced on 24 February 2008. It now has 9% of all Australian liquid wash sales. Unilever says that Cussons, having conducted its tests quite some time ago in February 2008, has delayed the bringing of its cross-claim for the tactical purposes of ensuring that its product, Radiant micro Max, had entered the market before any litigation commenced. Unilever says that Cussons' deliberate delay points to disentitling conduct which should be taken into account in assessing the balance of convenience of awarding interlocutory relief. Unilever submits that the grant of interlocutory relief against it will disrupt its marketing of an innovative product, will cause substantial loss as a result of any recall, and will damage their brand in intangible ways which cannot be satisfied by a pecuniary award on a final hearing (such as by damaging relations with suppliers and losing shelf space in retailers' stores). Accordingly, Unilever resists the grant of the interlocutory orders sought by Cussons on its cross-claim. 17 Cussons' position in respect of the balance of convenience is that the Court should not grant the interlocutory relief sought against it by Unilever. The reasons advanced to support this proposition are similar to those advanced by Unilever, except framed from the perspective of Cussons. In particular, Cussons says that interlocutory relief against Cussons would causes significant loss and damage to it, would undermine the extensive campaign of marketing and promotion it has conducted, and would be to some extent unnecessary, given that Radiant micro Max will be sold in Woolworths' stores only under its old (and unobjectionable) label. Cussons also says that the damage it would suffer would be unquantifiable, and it offers to cooperate to ensure that the matter progresses to an early final hearing. 18 I consider that the appropriate course in the present case is to not grant any interlocutory relief in respect of either the claim or the cross-claim and to set the matter down for hearing on a final basis as soon as possible so that the evidence can be thoroughly appraised. While I accept that both Unilever and Cussons could suffer some damage of an intangible and unquantifiable nature if subjected to an adverse order for interlocutory relief, I do not think that the balance of convenience falls sufficiently in favour of one party or the other to warrant the grant of such relief. Having regard to the detailed evidence which has been already filed, it is evident that the matter can be determined at an early stage. In such circumstances, interlocutory relief of the kind sought will likely be of little utility. CONCLUSION 19 In summary, although I find that the parties have established their respective prima facie cases, I find that the balance of convenience in this case leads me to refuse to grant the interlocutory relief sought. Accordingly, I dismiss the application and the cross-claim for interlocutory relief. Costs will be costs in the cause. I direct the parties to send to my Associate in chambers Short Minutes of Order to enable the matter to be heard and determined at the earliest possible date. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 30 May 2008 Counsel for the Applicant/ Cross-Respondent: Mr J. Nicholas SC and Mr J. Hennessy Solicitor for the Applicant/ Cross-Respondent: Baker & McKenzie Counsel for the Respondent/ Cross-Claimant: Mr R. Cobden SC and Mr M. Darke Solicitor for the Respondent/ Cross-Claimant: Allens Arthur Robinson Date of Hearing: 15 May 2008 Date of Judgment: 30 May 2008