FEDERAL COURT OF AUSTRALIA Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd [2016] FCA 820 File number: VID 261 of 2015 Judge: MOSHINSKY J Date of judgment: 21 July 2016 Catchwords: INTELLECTUAL PROPERTY – misleading or deceptive conduct and passing off – applicants and respondents were both producers of craft beer named 'Pacific Ale' – whether respondents had represented that their beer was the applicants' product – whether respondents had represented that there was an association or connection between their product and the applicants or their product – whether labelling and packaging of the products were different – whether colours used on the products were different – whether 'Pacific' was used descriptively TRADE MARKS – infringement – deceptive similarity – whether the words 'Pacific Ale' or 'Pacific', which were used by the respondents in connection with beer, were deceptively similar to the registered trade mark – whether the words 'Pacific Ale' were an essential feature of the registered trade mark TRADE MARKS – groundless threats of legal proceedings – whether registered owner with due diligence began and pursued an action against the threatened person for infringement of the trade mark Legislation: Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, ss 18, 29 Copyright Act 1968 (Cth), s 202 Patents Act 1990 (Cth), ss 128, 129 Trade Marks Act 1995 (Cth), ss 6, 17, 120, 122, 129 Trade Practices Act 1974 (Cth), ss 52, 53 Cases cited: Advanced Data Integration Pty Ltd v ADI Ltd (2004) 138 FCR 520 Angelides v James Stedman Hendersons Sweets Limited (1927) 40 CLR 43 Anheuser-Busch Inc v Budejovický, Národní Podnik (2002) 56 IPR 182 Australian Postal Corporation v Digital Post Australia (2013) 308 ALR 1 Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2008) 78 IPR 586 Burberrys v JC Cording & Co Ltd (1909) 26 RPC 693 CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 Campomar Sociedad, Limitada v Nike International Limited (2002) 202 CLR 45 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154 Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 61 IPR 212 de Cordova v Vick Chemical Co (1951) 68 RPC 103 Fabre v Arenales (1992) 27 NSWLR 437 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 HP Bulmer Ltd v J Bollinger SA [1978] RPC 79 Johnson v Johnson v Sterling Pharmaceuticals [(1991) 30 FCR 326] Jones v Dunkel (1959) 101 CLR 298 Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152 Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 Montana Tyres Rims & Tubes Pty Ltd v Transport Tyre Sales Pty Ltd (1998) 155 ALR 489 Nutrientwater Pty Ltd v BACO Pty Ltd (2010) 84 IPR 452 REA Group Ltd v Real Estate 1 Ltd (2013) 217 FCR 327 Reckitt & Colman Products Ltd Borden Inc [1990] 1 All ER 873 Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 Saville Perfumery Ltd v June Perfect Ltd (1939) 58 RPC 147 Shell Company of Australia Limited v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549 Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592 Telstra Corp Ltd v Phone Directories Co Pty Ltd (2014) 316 ALR 590 TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 Transport Tyre Sales Pty Ltd v Montana Tyres Rims and Tubes Pty Ltd (1999) 93 FCR 421 Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286 Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 105 Workwear Industries Pty Ltd v Pacific Brands Workwear Group Pty Ltd (2013) 104 IPR 1 Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (2010) 90 IPR 117 Date of hearing: 11, 12, 13 and 15 April 2016 Registry: Victoria Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 245 Counsel for the Applicants/Cross-respondents: Mr PD Crutchfield QC with Mr LA Merrick Solicitor for the Applicants/Cross-respondents: Omond & Co. Counsel for the Respondents/Cross-claimant: Mr CD Golvan QC with Mr P Creighton-Selvay Solicitor for the Respondents/Cross-claimant: HWL Ebsworth ORDERS VID 261 of 2015 BETWEEN: STONE & WOOD GROUP PTY LTD (ACN 124 373 324) First Applicant STONE & WOOD BREWING PTY LTD (ACN 124 487 510) Second Applicant AND: INTELLECTUAL PROPERTY DEVELOPMENT CORPORATION PTY LTD (ACN 116 569 665) First Respondent ELIXIR SIGNATURE PTY LTD (ACN 135 297 988) Second Respondent JUDGE: MOSHINSKY J DATE OF ORDER: 21 JULY 2016 THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicants pay the respondents' costs of the proceeding (other than the cross-claim) including any reserved costs, to be taxed if not agreed. 3. If any party seeks a variation of the costs order, it may give written notice to the Court and the other parties within two business days. 4. In relation to the cross-claim, the parties submit agreed minutes of proposed orders to give effect to these reasons within seven days. If the parties cannot agree, each party provide its minutes of proposed orders, together with a short outline of submissions, within seven days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MOSHINSKY J: Introduction 1 The applicants (together, Stone & Wood) operate breweries in the Byron Bay and Murwillumbah areas of New South Wales. Stone & Wood launched its first beer in 2008 – it was known as 'Draught Ale'. In November 2010, the Draught Ale was re-named 'Pacific Ale' (Stone & Wood Pacific Ale). Stone & Wood decided to change the name when it started to sell this beer in bottles – it seemed odd for a beer named 'draught' to be available in bottles. Stone & Wood chose the name 'Pacific Ale' for two reasons. First, it reflects the place where the beer is brewed and the story behind the brewery. Secondly, the word 'Pacific' generates (in the words of one of the directors) a "calming, cooling emotional response". Over time, the range of beers brewed and sold by Stone & Wood has increased. The four main beer products now produced by Stone & Wood are Pacific Ale, Green Coast, Jasper Ale and Garden Ale. Since the brewery was established in 2008, sales of Stone & Wood beers have steadily increased. Stone & Wood sells its products mostly across the eastern seaboard of Australia, in particular in the Northern Rivers area of New South Wales, South East Queensland, Sydney and Melbourne. The Pacific Ale beer is Stone & Wood's best-selling product, accounting for approximately 80-85% of Stone & Wood's beer sales. 2 The second respondent (Elixir) operates a brewery in Brunswick, Melbourne, Victoria. It began brewing production operations in May 2010. Elixir distributes and sells beer under a number of brands, including 'Thunder Road'. The Thunder Road logo is used in conjunction with a stylised image of Thor, the Norse god of thunder, a shield and, sometimes, the slogan, 'Beer Without Borders'. Elixir produces a number of different beer products under the Thunder Road brand, including Pilsner, Golden, Pale Ale and Amber. In about January 2015, Elixir launched a beer named 'Pacific Ale' under the Thunder Road brand (Thunder Road Pacific Ale). Later, following letters of demand from Stone & Wood, this beer was re-named 'Pacific' (Thunder Road Pacific). Elixir sells its Thunder Road beer products in both 'on premise' and 'off premise' channels in Victoria, New South Wales, Western Australia and Tasmania. The 'on premise' channels consist of hotels, restaurants, cafes and bars, where the product is sold both in kegs and in packaged (bottle) format. The 'off premise' channels include bottle shops. Through this channel, the Thunder Road beers are sold in bottles. 3 Both Stone & Wood Pacific Ale and Thunder Road Pacific Ale may be described as 'craft beers'. The craft beer market is difficult to define. Craft beer has come to be regarded by the market as beer which is outside of the traditional mainstream beer category, which comprises primarily pale lagers made by large multinational brewing businesses; the term 'craft' tends to describe beers (and brewers) that put greater emphasis on the flavours of a beer's ingredients and that are made using less industrialised brewing processes. 4 Images of the 330 ml bottles of the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale are set out below. (The bottle for Thunder Road Pacific, set out later in these reasons, was similar to the Thunder Road Pacific Ale bottle.) 5 Images of the six-packs for the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale are set out below: 6 Images of the beer tap 'decals' (affixed to the taps in licensed venues selling draught beer) for the Stone & Wood Pacific Ale and the Thunder Road Pacific are set out below: 7 Stone & Wood claims that Elixir and the first respondent (Intellectual Property Development Corporation), which is an intellectual property holding company related to Elixir, have engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) and made false or misleading representations in contravention of ss 18 and 29 of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) (Australian Consumer Law) and have engaged in passing off. Stone & Wood contends that these causes of action are made out in two ways. (a) First, Stone & Wood submits that it is likely that the respondents' use of the names 'Pacific Ale' and 'Pacific' will lead consumers to order or buy the Thunder Road beer when they intend to order or buy Stone & Wood Pacific Ale. (b) Secondly, Stone & Wood submits that the respondents' use of the names 'Pacific Ale' and 'Pacific' represents to consumers that there is a connection or association between the Thunder Road beers (and, consequently, the respondents) and Stone & Wood or Stone & Wood Pacific Ale. As there is no such connection, it is submitted that this is an actionable misrepresentation which will cause damage to Stone & Wood's reputation and goodwill. 8 In support of these causes of action, Stone & Wood contends that Stone & Wood Pacific Ale has been promoted and sold on an extensive scale around Australia; that Stone & Wood has developed a substantial reputation and goodwill in relation to Stone & Wood Pacific Ale and the mark 'PACIFIC ALE' (both alone and when used with the (predominantly) orange and green get-up of Stone & Wood Pacific Ale); and that Stone & Wood Pacific Ale is known and referred to by members of the trade and many consumers as 'Pacific Ale'. 9 Also, the first applicant (Stone & Wood Group) claims that, through the respondents' use of the names 'Pacific Ale' and 'Pacific' in relation to the Thunder Road beer, the respondents have infringed its registered trade mark under s 120(1) of the Trade Marks Act 1995 (Cth) (Trade Marks Act), namely the following mark which is registered in class 32 in respect of beer (the Registered Trade Mark): 10 Elixir has cross-claimed against Stone & Wood contending that Stone & Wood made groundless threats to bring an action for infringement of a registered trade mark, within the meaning of s 129 of the Trade Marks Act. Stone & Wood relies on s 129(4) and (5) to resist the cross-claim, contending that: the acts of the threatened person (Elixir) in respect of which Stone & Wood threatened to bring an action constitute an infringement of the Registered Trade Mark; further or alternatively, Stone & Wood with due diligence began and has pursued an action against the threatened person (Elixir) for infringement of the trade mark. 11 In summary, my conclusions with respect to the claims and the cross-claim are as follows: (a) In relation to Stone & Wood's claims that the respondents have engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) and made false or misleading representations in contravention of the Australian Consumer Law, and engaged in passing off, I conclude that these claims are not made out. In order to make good these causes of action, it is necessary for Stone & Wood to establish that the representations alleged in its pleading were made by the respondents. The first alleged representation is to the effect that the Thunder Road Pacific Ale (or the Thunder Road Pacific) is Stone & Wood Pacific Ale. The second, third and fourth alleged representations are to the effect that there is an association or connection between the relevant Thunder Road products and Stone & Wood or the Stone & Wood Pacific Ale. Stone & Wood has not established that the respondents made the alleged representations. There is no reference to Stone & Wood on any of the labels or packaging of the Thunder Road products. The labels and packaging of the Thunder Road products look very different to the labels and packaging of the Stone & Wood Pacific Ale. The colours used in the labels and packaging are quite different. I do not think the adoption of the name 'Pacific Ale' or 'Pacific' conveys an association or connection between the Thunder Road products, on the one hand, and Stone & Wood or Stone & Wood Pacific Ale, on the other. (b) In relation to Stone & Wood Group's claim that the respondents have infringed the Registered Trade Mark, I conclude that this claim is not made out. In my view, the words 'Pacific Ale' and 'Pacific', which have been used by the respondents in relation to beer, are not deceptively similar to the Registered Trade Mark. (c) I conclude that Elixir's cross-claim based on s 129 of the Trade Marks Act is made out. Stone & Wood threatened to bring an action against Elixir for infringement of the Registered Trade Mark. Stone & Wood has not established that either s 129(4) or (5) applies. Specifically, it has not established that the acts of Elixir constituted an infringement of the Registered Trade Mark; nor has Stone & Wood established that with due diligence it began and pursued an action against Elixir for infringement of the trade mark. Procedural background Parties 12 The parties to the proceeding are as follows. The first applicant is Stone & Wood Group. This company owns the assets (including intellectual property) associated with the business known as 'Stone & Wood'. Stone & Wood Group is and has at all material times been the registered owner of Australian trade mark number 1395188 for the device set out in paragraph [9] above in class 32 in respect of beer. Stone & Wood Group uses the Registered Trade Mark in connection with Stone & Wood Pacific Ale. The second applicant (Stone & Wood Brewing) is the trading entity which operates the business known as 'Stone & Wood'. Stone & Wood Brewing is a wholly-owned subsidiary of Stone & Wood Group. As noted above, in these reasons, I will refer to the applicants together as Stone & Wood. 13 The first respondent is Intellectual Property Development Corporation. This company is an intellectual property holding company and does not otherwise trade. The second respondent is Elixir. This company manufactures, distributes and sells beer. The respondents are related entities. 14 The cross-claimant is Elixir. The cross-respondents are Stone & Wood Group and Stone & Wood Brewing. Pleadings 15 The proceeding was commenced on 20 May 2015. The applicants subsequently amended the originating application and the fast track statement. By the amended originating application dated 24 July 2015, Stone & Wood seeks: (a) declarations that the respondents have contravened ss 18, 29(1)(g) and 29(1)(h) of the Australian Consumer Law; (b) permanent injunctions restraining the respondents from making certain representations by using in any manner in the promotion or presentation of beer the trade mark 'PACIFIC ALE' or any trade mark which is misleadingly or deceptively similar to the trade mark 'PACIFIC ALE', including the name 'PACIFIC' – it should be noted that the references in the amended originating application to the trade mark 'PACIFIC ALE' are not to the Registered Trade Mark, which is the subject of separate treatment, described below; (c) further or alternatively to (b), a permanent injunction restraining the respondents from engaging in such conduct in conjunction with a get-up prominently incorporating the colours green and orange; (d) damages and compensation pursuant to ss 236 and 237 of the Australian Consumer Law; (e) declarations that the respondents have engaged in passing off; (f) permanent injunctions restraining the respondents from engaging in passing off (in various ways described in the originating application) by using in any manner in the promotion or presentation of beer the trade mark 'PACIFIC ALE' or any trade mark which is misleadingly or deceptively similar to the trade mark 'PACIFIC ALE', including the name 'PACIFIC'; (g) further or alternatively to (f), a permanent injunction restraining the respondents from engaging in such conduct in conjunction with a get-up prominently incorporating the colours green and orange; (h) damages or equitable compensation for passing off; (i) exemplary damages for passing off; (j) further or alternatively, an account of profits; (k) a declaration that the respondents have infringed the Registered Trade Mark –it is to be noted that the claims in relation to the Registered Trade Mark were introduced when the originating application was amended; (l) a permanent injunction restraining the respondents from infringing the Registered Trade Mark, in particular, by using the Registered Trade Mark or any mark which is substantially identical with, or deceptively similar to, the Registered Mark, in respect of any of the goods in respect of which the Registered Trade Mark is registered, any goods of the same description as the registered goods, or any services that are closely related to any of the registered goods (not manufactured or provided by or under the licence or authority of Stone & Wood Group); (m) damages and additional damages for infringement of the Registered Trade Mark; (n) further or alternatively, an account of profits for infringement of the Registered Trade Mark; (o) delivery up of certain goods as described; (p) alternatively, a mandatory order for destruction of certain goods as described; (q) costs and interest. 16 In its amended fact track statement dated 24 July 2015 (Fast Track Statement), Stone & Wood describes the nature of the dispute, stating that the dispute concerns Stone & Wood's rights in the trade mark 'PACIFIC ALE' (which is subsequently referred to in that document as the "Pacific Ale Trade Mark"). The Pacific Ale Trade Mark as so defined is to be distinguished from the Registered Trade Mark, which is referred to separately in the Fast Track Statement. 17 The Fast Track Statement states that Stone & Wood promotes, distributes and sells a beer under or by reference to: the Pacific Ale Trade Mark and a get-up prominently incorporating the colours green and orange (which is defined in that document as the "Pacific Ale Get Up"). The Fast Track Statement states that Stone & Wood's Pacific Ale beer incorporating those features will be referred to as the "Pacific Ale Beer"; however, to avoid confusion, in these reasons I will refer to this as Stone & Wood Pacific Ale. The Fast Track Statement states that Stone & Wood contends that it has a significant reputation in Stone & Wood Pacific Ale and the Pacific Ale Trade Mark (both alone and in conjunction with the Pacific Ale Get Up). 18 The Fast Track Statement refers to Stone & Wood Group's ownership of the Registered Trade Mark and then sets out images of the relevant products. (As with the amended originating application, the claims relating to the Registered Trade Mark were introduced when the document was amended.) 19 It is then contended that the respondents have commenced promoting, distributing and selling a beer under or by reference to: the Pacific Ale Trade Mark, or one or more trade marks which are misleadingly or deceptively similar to the Pacific Ale Trade Mark; and a get-up prominently incorporating the colours green and orange. The Fast Track Statement refers to the respondents' impugned beer as the "Respondents' Pacific Beer". I will adopt this terminology in summarising the Fast Track Statement, but elsewhere in these reasons I will refer to Thunder Road Pacific Ale and Thunder Road Pacific. 20 The Fast Track Statement sets out more detailed contentions relating to Stone & Wood Pacific Ale, including the way in which it is sold by Stone & Wood and the geographical areas where it is sold. Stone & Wood contends that, as a result of these matters: (a) the Pacific Ale Trade Mark in Australia means, and distinctively and exclusively indicates, Stone & Wood, Stone & Wood Pacific Ale or an association with them; (b) Stone & Wood has developed a valuable reputation and substantial goodwill among distributors, wholesalers, re-sellers and consumers of beer in Australia in relation to Stone & Wood Pacific Ale and the Pacific Ale Trade Mark; (c) the Pacific Ale Trade Mark used in conjunction with the Pacific Ale Get Up in Australia means, and distinctively and exclusively indicates, Stone & Wood, Stone & Wood Pacific Ale or an association with them; (d) Stone & Wood has developed a valuable reputation and substantial goodwill among distributors, wholesalers, re-sellers and consumers of beer in Australia in relation to Stone & Wood Pacific Ale and the Pacific Ale Trade Mark used in conjunction with the Pacific Ale Get Up. 21 The Fast Track Statement contends that the respondents have promoted, distributed and sold the Respondents' Pacific Beer to licensed venues in kegs for re-sale as a draught beer to on-premise customers, and to licensed venues and liquor retailers in bottles, without the licence or authority of Stone & Wood. Stone & Wood contends that the respondents selected the name 'PACIFIC ALE' for their beer to capitalise on the reputation and goodwill which Stone & Wood has developed in Australia in connection with Stone & Wood Pacific Ale and the Pacific Ale Trade Mark. Further, it is contended that the respondents selected an orange and green colour scheme for the packaging and branding of the Respondents' Pacific Beer to capitalise on the reputation and goodwill which Stone & Wood has developed in Australia in connection with Stone & Wood Pacific Ale, the Pacific Ale Trade Mark and the Pacific Ale Get Up. 22 Stone & Wood contends in the Fast Track Statement that, by reason of the conduct referred to in the document, the respondents have represented that: (a) the Respondents' Pacific Beer is Stone & Wood Pacific Ale; (b) the Respondents' Pacific Beer is promoted, distributed and/or sold with the licence or authority of Stone & Wood; (c) the Respondents' Pacific Beer has the sponsorship or approval of Stone & Wood; and (d) the respondents have the sponsorship or approval of, or an affiliation with, Stone & Wood. These four representations are defined in the Fast Track Statement as the "Representations". 23 After alleging that the conduct of the respondents was engaged in in trade or commerce (which is not contentious), Stone & Wood alleges that the Representations were misleading, deceptive and false because: (a) the Respondents' Pacific Beer is not Stone & Wood Pacific Ale; (b) the Respondents' Pacific Beer is not promoted, distributed and/or sold with the licence or authority of Stone & Wood; (c) the Respondents' Pacific Beer does not have the sponsorship or approval of Stone & Wood; and (d) the respondents do not have the sponsorship or approval of, or an affiliation with, Stone & Wood. 24 On the basis of these contentions, it is alleged that the respondents have engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law, and that the respondents have made false or misleading representations in contravention of ss 29(1)(g) and 29(1)(h) of the Australian Consumer Law. 25 Stone & Wood next contends that the conduct of the respondents is and was calculated to injure, has injured and is likely to injure the reputation and goodwill of Stone & Wood, Stone & Wood Pacific Ale, and the Pacific Ale Trade Mark (whether alone or used in conjunction with the Pacific Ale Get Up); and that by reason of the reputation that Stone & Wood has in Stone & Wood Pacific Ale and the Pacific Ale Trade Mark (whether alone or used in conjunction with the Pacific Ale Get Up), the respondents, by their conduct have passed off, are passing off and/or threaten to pass off: (a) the Respondents' Pacific Beer as Stone & Wood Pacific Ale; (b) the Respondents' Pacific Beer as a beer which is promoted, distributed and/or sold with the licence or authority of Stone & Wood; (c) the Respondents' Pacific Beer as having the sponsorship or approval of Stone & Wood; and (d) themselves as having the sponsorship or approval of, or an affiliation with, Stone & Wood. 26 By amendment, Stone & Wood incorporated in the Fast Track Statement contentions that: the respondents have promoted, distributed and sold or caused to be promoted, distributed or sold the Respondents' Pacific Beer to: (a) licensed venues in kegs for re-sale as a draught beer to on-premise customers; and (b) licensed venues and liquor retailers in bottles, bearing a mark which is deceptively similar to the Registered Trade Mark, without the licence or authority of Stone & Wood Group; and by reason of this conduct, the respondents have infringed, are continuing to infringe and/or threaten to infringe the Registered Trade Mark under s 120(1) of the Trade Marks Act. 27 In the amended fast track response (Fast Track Response), the respondents state that Elixir distributes and sells beer under the brand name 'Thunder Road', described as 'Pacific Ale' (when sold to customers in bottles) and 'Pacific' (when sold to customers from a beer tap). (These are referred to together in the Fast Track Response as "THUNDER ROAD Pacific Ale". However, for the sake of clarity, I will refer to Thunder Road's relevant beers as Thunder Road Pacific Ale or Thunder Road Pacific (depending on the name used) and refer to them together as Thunder Road Pacific Ale / Thunder Road Pacific.) 28 The respondents admit that Stone & Wood Brewing, the second applicant, has distributed and sold Stone & Wood Pacific Ale to licensed venues and liquor retailers for re-sale in bottles, and to licensed venues in kegs for re-sale as draught beer, but deny that these activities have been on an extensive scale throughout Australia. The respondents contend that: (a) the Stone & Wood Pacific Ale has been sold under and by reference to the prominent 'Stone & Wood' brand name, not the term 'Pacific Ale' or the colours green and orange (defined in the document as the "Claimed Colours"); (b) the term 'Pacific Ale' has been used, in conjunction with the term 'Handcrafted', in a subsidiary position by Stone & Wood Brewing on its labelling, to describe certain characteristics of Stone & Wood Pacific Ale, namely, that it is a handcrafted pacific ale; (c) Stone & Wood has repeatedly confirmed that 'Pacific Ale' is a description of a style of beer and not a brand name; (d) the term 'Pacific Ale' has been used on the Stone & Wood Pacific Ale in the same position as Stone & Wood has used other descriptions of beer styles, such as 'Lager', 'Pale Lager' and 'Draught Ale' (the former name of 'Pacific Ale'), to describe the style of beer being sold, as illustrated in following images: 29 In the Fast Track Response, the respondents deny that the Pacific Ale Trade Mark in Australia means and distinctively and exclusively indicates Stone & Wood, Stone & Wood Pacific Ale or an association with them, and contend that: other traders have, in Australia, used the term 'Pacific Ale' to describe the style of their beer; other traders throughout the world have used the term 'Pacific Ale' in a generic form to describe the style of their beer; and the term 'Pacific Ale' is used in Australia to describe a relatively fruity style of beer, often characterised by the use of Australian Galaxy hops or similar style New Zealand hops. 30 The respondents deny that the Pacific Ale Trade Mark used in conjunction with the Pacific Ale Get Up in Australia means and distinctively and exclusively indicates Stone & Wood, Stone & Wood Pacific Ale or an association with them, and contend that: (a) the predominant colour used by Stone & Wood in connection with Stone & Wood Pacific Ale is a mustard colour not the Claimed Colours; (b) other traders have in Australia used the Claimed Colours and/or a yellow or mustard colour in connection with their beer. 31 The respondents in the Fast Track Response deny they selected the name 'Pacific Ale' to capitalise on the reputation and goodwill which Stone & Wood has developed in Australia in connection with Stone & Wood Pacific Ale and the Pacific Ale Trade Mark, and contend that: (a) the name of Thunder Road's beer is not 'Pacific Ale' or 'Pacific' simpliciter, but 'THUNDER ROAD Pacific Ale'; (b) the terms, 'Pacific Ale' and 'Pacific' are used: (i) as a geographical indicator, to reinforce the Australian/Pacific roots of Thunder Road Pacific Ale / Thunder Road Pacific and Elixir; and (ii) to describe the style of beer being offered for sale, namely, a beer with an "uplifting aroma of passionfruit from Australian Galaxy hops" (as explained on the bottle of Thunder Road Pacific Ale / Thunder Road Pacific); (c) before Elixir commenced any use of the terms 'Pacific Ale' or 'Pacific', the person who was then the head brewer for Elixir informed Elixir that 'Pacific Ale' is a style; (d) the term 'Pacific Ale' is used in respect of bottles of Thunder Road Pacific Ale in precisely the same way as the terms 'Pilsener', 'Pale Ale', 'Amber', 'Golden' and 'IPA' are used in respect of other bottles of Thunder Road beers, namely to describe the style of beer being offered for sale, as illustrated by the following image: 32 The respondents deny that they selected an orange and green colour scheme for the packaging and branding of their beer to capitalise on the reputation and goodwill which Stone & Wood has developed in Australia in connection with Stone & Wood Pacific Ale, the Pacific Ale Trade Mark and the Pacific Ale Get Up, and contend that: (a) the colours used by Elixir in connection with Thunder Road Pacific Ale / Thunder Road Pacific are, in roughly equal proportions, green, orange, white and cream; (b) the colour green is used by Elixir as a corporate colour, across the range of Thunder Road beers; (c) in addition to the use of the corporate colour green, the use of white in the Thunder Road logo, and the use of cream as a background colour, Elixir also uses, across the range of Thunder Road beers, a separate colour for each style of beer to operate as a style differentiator (for example, amber for Amber Ale, gold for Golden Ale and green for Pale Ale); (d) the colour orange is used by Elixir in connection with Thunder Road Pacific Ale / Thunder Road Pacific as a style differentiator, consistent with the style of that beer, namely, "Fruity, Zesty, Blonde" (as explained on the bottle). 33 In response to the allegations described in paragraph [22] above, the respondents refer to matters already contended in the Fast Track Response and also contend that: (a) the brand name 'Thunder Road' is used prominently on the caps, necks, fronts and backs of bottles of Thunder Road Pacific Ale / Thunder Road Pacific; all packaging concerning Thunder Road Pacific Ale / Thunder Road Pacific; beer taps from which Thunder Road Pacific is served at licensed venues; (b) Elixir has a substantial and valuable reputation in the brand name 'Thunder Road' by reason of, inter alia: Elixir has sold beer under and by reference to the brand name 'Thunder Road' on an extensive scale, in bottle form and on tap, since 2011; Elixir has engaged in extensive promotional and marketing activities under and by reference to the brand name 'Thunder Road' since 2011; Elixir is recognised within the beer industry and the broader community as one of the leading brewers of craft beer in Australia; (c) the 'Stone & Wood' brand name is not, and never has been, used in respect of Thunder Road Pacific Ale / Thunder Road Pacific; (d) the overall impression and look and feel of Thunder Road Pacific Ale / Thunder Road Pacific bottles bears no similarity or resemblance to Stone & Wood Pacific Ale bottles, and is entirely distinctive; (e) the overall impression and look and feel of the packaging in which Thunder Road Pacific Ale / Thunder Road Pacific bottles are sold bears no similarity or resemblance to the packaging in which Stone & Wood Pacific Ale bottles are sold, and is entirely distinctive; (f) the overall impression and look and feel of Thunder Road Pacific beer taps bears no similarity or resemblance to Stone & Wood Pacific Ale beer taps, and is entirely distinctive. 34 The respondents deny the claim of infringement of the Registered Trade Mark, and contend in the Fast Track Response that neither of the respondents has used the terms 'Pacific Ale' or 'Pacific' as a trade mark; and the terms 'Pacific Ale' and 'Pacific' are not deceptively similar to the Registered Trade Mark. The respondents also contend that they have not infringed the Registered Trade Mark because Elixir has, within the meaning of s 122(1)(b)(i) of the Trade Marks Act, only used the terms 'Pacific Ale' and 'Pacific' in good faith to indicate the matters referred to in paragraph [31](b) above. 35 In the fast track cross-claim dated 18 June 2015, Elixir contends that: (a) Stone & Wood Brewing distributes and sells, under the brand name 'Stone & Wood', beer described as 'Pacific Ale'; (b) Stone & Wood Group is the registered owner of the Registered Trade Mark; (c) prior to the commencement of this proceeding, Stone & Wood alleged that Elixir had, by distributing and selling under the brand name 'Thunder Road' beer described as 'Pacific Ale', infringed the Registered Trade Mark; (d) Stone & Wood has not pursued any claim for infringement of the Registered Trade Mark; Elixir has arranged, at its own expense, for branding to be modified to describe the beer as a 'Pacific' beer rather than as a 'Pacific Ale', which it did without any admission of liability; (e) by alleging, prior to the commencement of this proceeding, that Elixir had infringed the Registered Trade Mark, Stone & Wood made groundless threats within the meaning of s 129 of the Trade Marks Act. 36 Elixir in the cross-claim seeks declaratory relief, injunctive relief and damages. 37 After the cross-claim was filed and served, Stone & Wood amended the originating application and the fast track statement to incorporate a claim that the respondents have infringed the Registered Trade Mark, as described above. 38 In its fast track response to cross-claim, Stone & Wood denies the allegations in the cross-claim on the basis that: (a) there were grounds for making any threats that Stone & Wood made; (b) the impugned conduct of Elixir constitutes an infringement of the Registered Trade Mark; and (c) Stone & Wood Brewing (that is, the second respondent) has not made any relevant threats. Stone & Wood refers to ss 129(2) and (4) of the Trade Marks Act in relation to these responses. 39 Stone & Wood also contends that, by the amended originating application and the Fast Track Statement, Stone & Wood Group has alleged that Elixir has infringed the Registered Trade Mark; accordingly, Stone & Wood contends that the cross-claim should not proceed, relying on s 129(5) of the Trade Marks Act. 40 Elixir filed a fast track reply to the response to cross-claim. By this document, Elixir admits that, in the amended originating application and the Fast Track Statement (following the amendments), Stone & Wood Group has alleged that Elixir has infringed the Registered Trade Mark, but says that the cross-claim should proceed because Stone & Wood Group did not begin and pursue "with due diligence" an action for infringement of the Registered Trade Mark, within the meaning of s 129(5) of the Trade Marks Act. Trial 41 It was ordered that issues of liability be heard and determined separately and prior to any issues of quantum. Evidence in chief was mostly by affidavit. 42 Stone & Wood adduced evidence from the following witnesses: (a) Jamie Cook, a director of both Stone & Wood Group and Stone & Wood Brewing. He gave evidence about the business known as 'Stone & Wood' and the history, marketing and sale of Stone & Wood Pacific Ale. (b) Matthew Kirkegaard, a freelance beer writer, commentator, educator and consultant focused on the craft beer market. He gave expert evidence about the craft beer market in Australia, beer styles and the significance of the name 'Pacific Ale' in the craft beer market. (c) Professor Lawrence Lockshin, who holds the positions of Professor of Wine Marketing and Head of School of Marketing at the University of South Australia. He gave expert evidence relating to the marketing of consumer goods and consumer behaviour. (d) Matthew Coorey, the Managing Director of the Boardwalk Tavern, a venue located in Hope Island on the Gold Coast, Queensland. He is a co-owner of the Boardwalk Tavern. (e) Corey Crooks, the Managing Director and co-owner of The Grain Store Craft Beer Café in Newcastle, New South Wales. (f) Jessica McGrath, a director and co-owner of a company trading as the Palace Hotel in South Melbourne. (g) James Omond, the solicitor for Stone & Wood. He gave evidence about some instances of the promotion of Thunder Road Pacific Ale. He was not cross-examined. 43 The respondents adduced evidence from the following witnesses: (a) Philip Withers, the Managing Director of the respondents. (b) Peter Camilleri, who holds the positions of Senior Vice President of the ICB Group (which group includes the respondents) and General Manager of Marketing for Elixir. (c) Alan Jane, the Managing Director of Disegno, a creative brand development agency. He gave expert evidence in relation to brand design. (d) Domenic Piperno, who owned and operated two liquor stores specialising in craft beer and specialty wine, one in Brunswick, Melbourne and the other in Carlton North, Melbourne. He has worked in the retail liquor industry for approximately 40 years. (e) Greg Curran, one of the owners of Sunshine Coast Brewery, which is a boutique brewery based in Kunda Park on Queensland's Sunshine Coast. (f) Tasos Eleftheriadis, a freelance web developer and brand designer. He was not cross-examined. (g) Ian Morton, a graphic designer. He was not cross-examined. (h) Adrian Cleaver, the National Sales Manager for Thunder Road beer, employed by Elixir. He was not cross-examined. 44 Each of the witnesses who gave evidence in this case did so honestly and their evidence was, in my view, generally reliable. To the extent that there were differences between Mr Withers's evidence and that of Mr Camilleri regarding the choice of the name 'Pacific Ale' and the branding of Thunder Road's product, I give more weight to Mr Camilleri's evidence as he appeared to have a clearer recollection of the relevant decisions. 45 Parts of Stone & Wood's affidavit material were read on a provisional basis, as those parts were responsive to parts of the respondents' affidavit material which were the subject of objection (which objections had not been ruled on at the time the Stone & Wood witnesses were giving evidence). I have treated this provisional material as not having been read where the paragraph of the respondents' material to which it responded was not admitted into evidence. 46 At trial, both sides adduced confidential evidence relating to sales. It is not necessary to disclose the confidential evidence in these reasons. To the extent that I refer to evidence about sales, I will refer to it in the same way as it was referred to in open court and in the parties' submissions, which does not disclose the confidential information. Factual findings 47 In this section I set out my factual findings based on the affidavit evidence and oral evidence at trial. Where I do not indicate an evidentiary source, the factual finding is based on affidavit material which was unchallenged or propositions which were put to witnesses in cross-examination which they accepted (and thus appear to be uncontentious). Stone & Wood 48 Stone & Wood operates breweries in the Byron Bay and Murwillumbah areas of New South Wales. It produces a range of beers (both in draught and bottled formats) which it markets and distributes throughout Australia. Mr Cook is a co-founder of Stone & Wood and has been a director of Stone & Wood Group and Stone & Wood Brewing since March 2007, when the companies were formed. He has about 30 years of experience working in brewing companies in Australia; much of his working life has been spent promoting both commercial beers and craft beers. 49 In 2008, the Stone & Wood Brewery brewed its first beer for sale to market – the 'Draught Ale'. It was given this name because it was originally sold in kegs only. It was re-branded 'Pacific Ale' in November 2010, as described below. Stone & Wood launched its second beer, called 'Pale Lager', in 2009. That beer was re-branded 'Lager' in November 2010 and was re-branded again (in June 2015) to 'Green Coast'. Over time, the range of products manufactured and sold by Stone & Wood has grown. The four main beer products now produced by Stone & Wood are Pacific Ale, Lager (now Green Coast), Jasper Ale and Golden Ale. 50 Since the brewery was established, sales of Stone & Wood beers have steadily increased and the business has grown as a consequence. Stone & Wood now employs approximately 50 people, including 39 at its breweries in Byron Bay and Murwillumbah. In late 2008, sales were largely limited to the area around the brewery (namely, the Northern Rivers and South East Queensland). In about mid-2009, the brewery launched its products in the Melbourne and Sydney markets. In about mid to late 2010, Stone & Wood began making sales through national accounts, including through Dan Murphy's, First Choice Liquor and Vintage Cellars (large chains of liquor outlets). Stone & Wood also supplies its beers for sale at independent bottle shops throughout Australia. 51 Stone & Wood sells its products mostly across the eastern seaboard of Australia. The approximate geographical breakdown of sales is currently (and has been since 2010): (a) Northern Rivers and South East Queensland: 40-45%; (b) Sydney: 25%; (c) Melbourne: 20%; (d) Other parts of Australia: 5-10%. 52 Since about 2009, Stone & Wood has had a significant online and social media presence, through which it promotes its products including the Stone & Wood Pacific Ale. The combined total of social media followers and newsletter subscribers is approximately 34,000. In addition to social media, Stone & Wood has also operated a website since about 2008 through which it has promoted its products (including the Stone & Wood Pacific Ale). Between August 2014 and July 2015, the website has averaged approximately 8,200 unique visits each month. 53 Mr Withers accepted during cross-examination that Stone & Wood has and had (at the time of the launch of Thunder Road Pacific Ale) a good name in the craft beer market. I accept this evidence. Elixir and Thunder Road 54 Elixir commenced its brewing business in 2010. Mr Withers said during cross-examination (and I accept) that his background is in the manufacture of fast-moving consumer goods, including household consumer products such as garbage bags, cling wrap and aluminium foil; he is also involved in the manufacture of gloves and a business in America that makes environmental cleaning products; he has invented a number of products which have been patented; intellectual property is a key driver of the business; and he entered the liquor market with an interest in diversifying the business. 55 The trading name 'Thunder Road Brewing Company' was chosen in-house, as a result of a collaborative process. Mr Withers said during cross-examination (and I accept) that the Thor symbol was chosen for the Thunder Road range after the team looked at hundreds of different visuals; he said, "We thought that was a pretty powerful image. … A guardian of quality." Elixir sells its Thunder Road beer products in both 'on premise' and 'off premise' channels in Victoria, New South Wales, Western Australia and Tasmania. The 'on premise' channels consist of hotels, restaurants, cafes and bars, where the product is sold in both kegs and packaged format. The 'off premise' channel includes bottle shops. Through this channel, the Thunder Road beer products are sold in a packaged format. Elixir began manufacturing beer under the Thunder Road name in bottles in 2014 and launched its bottled beer in 2015. The bottled beer is brewed in Belgium. One of the reasons for this is that Elixir does not have a bottling facility in Brunswick. 56 Thunder Road was a major trophy winner at beer awards in 2014 and 2015. It won a gold medal and was a finalist for best Australian-style lager as well as receiving the most medals of any one single brewery. Mr Withers said during cross-examination (and I accept) that Thunder Road has established a good name in the craft beer market in Australia. 57 In addition to the Thunder Road products referred to above, Elixir sells a number of other beers using the Thunder Road logo, including Brunswick Bitter. Elixir also sells another line of beer under the brand name 'Globe Brewing Company'. Elixir sells some beer directly to consumers in re-usable bottles. The craft beer market 58 The craft beer market is difficult to define. Mr Kirkegaard in his first affidavit stated that craft beer has come to be regarded by the market as beer which is outside of the traditional mainstream beer category, which comprises primarily pale lagers made by large multinational brewing businesses; the term 'craft' tends to describe beers (and brewers) that put greater emphasis on the flavours of a beer's ingredients and that are made using less industrialised brewing processes. Mr Kirkegaard also stated that, in his experience, craft brewers are often regarded as brewers that are independent of the larger, multinational brewing businesses; however, to some other consumers, a number of the smaller brands which are fully owned by the large brewers, such as James Square (Lion) and Matilda Bay (CUB), can be included in some definitions of craft beer. 59 Mr Kirkegaard stated in his first affidavit that the current craft beer movement in Australia started very slowly, tracing back to the late 1990s; having slowly gained momentum, the craft beer movement has grown quickly and substantially over the last two to three years, with a wider range of venues opening specifically to offer craft beer; consumer awareness and demand for the beer has grown dramatically. 60 Mr Kirkegaard accepted during cross-examination that 'craft beer' is a "kind of shorthand for a boutique-style beer". He added that, "You could spend a considerable period of time discussing exactly what it means". He accepted that it is a premium product. He said the breweries tend to be smaller breweries. He also said that recently the number of such breweries in Australia has reached the hundreds, as craft beer has become more popular; craft beers are to be contrasted with mainstream beers, such as Carlton & United; mainstream beers include mainstream premium beers. 61 Mr Kirkegaard also said during cross-examination that most of the 'imported' beers are in fact brewed under licence in Australia these days. He said that there are a large number of such beers that would be called craft beers. 62 In his first affidavit, Mr Kirkegaard said that, in his experience, the sudden growth of craft beer over recent years has largely been driven by two broad groups. (a) The first comprises younger consumers looking to drink something different from the generic lagers. These consumers are often well informed about the products and could be described as 'involved' consumers. (b) The second is a more general group of beer consumers. In Mr Kirkegaard's experience, these consumers are looking for a premium (perhaps 'boutique') experience, but have less interest in, or understanding of, the issues relating to craft beer. These consumers are less likely to research brewery ownership and brewing practices and more likely to rely on a brewery's marketing and brand image to form their view of whether a beer is 'craft' or satisfies their "non-flavour demands". This part of the consumer base for craft beers has grown considerably as craft beers have become more widely available alongside mainstream beers. During cross-examination, Mr Kirkegaard accepted that the first group he had described were "very much in tune with … what's called the Brewery Story". With respect to the second group, Mr Kirkegaard said during cross-examination that they "can be swayed by what they read on the bottle" and are quite willing to make purchasing decisions based on this. He believed this group "would be people who would look at the bottle carefully and would look at the packaging". He accepted that these consumers were looking for a premium experience and that this "means they're engaged in a thought process of trying to select a premium product". 63 In his first affidavit, Mr Kirkegaard said that, in his experience, many consumers of craft beer are not only motivated by how the beer tastes; they are interested in what a brand promises in terms of independence, local production, small batch production and other ancillary aspects of the brand. In this context, ancillary aspects of the brand are marketing features that target personal preferences, but do not relate to how the beer actually tastes. In craft beer, many consumers are drawn to the independence of small breweries (and the stories behind them), being small local companies, or their 'anti-establishment' attitudes. During cross-examination, Mr Kirkegaard accepted that Stone & Wood communicates a brand promise, which was "[v]ery much from the northern rivers of New South Wales, very laidback lifestyle, very plugged into the community". 64 Mr Kirkegaard said during cross-examination that, while it is very hard to pigeonhole craft beer consumers, they tend to be willing to spend more than the mainstream beer consumer. He also said that: … particularly in the craft beer sphere, people tend to be very experimental and they will – if they like a particular class or style or flavour profile of beer, the brand isn't necessarily what they're buying for. They're buying to experience others in that style. 65 Mr Withers said during cross-examination that the craft beer market constitutes four to five per cent of the total beer market in Australia. He said that the value of the beer market is $5.9 billion and the value of the craft beer market, depending on how you define it, is approximately $160 to $200 million. He also said it was growing steadily, from a low base. 66 I accept the evidence of Mr Kirkegaard as set out in paragraphs [58]-[64] above. There was no real challenge to this evidence by the respondents; indeed, parts of this evidence were embraced by the respondents in their submissions. Mr Kirkegaard's description of the craft beer market and the different broad groups of consumers of craft beer provides important context in which to consider the legal issues that arise in this case. I also accept the evidence of Mr Withers set out in paragraph [65] above. Stone & Wood Pacific Ale 67 As noted above, in November 2010, Stone & Wood re-named Draught Ale as 'Pacific Ale'; Stone & Wood decided to change the name when it started to sell this beer in bottles – it seemed odd for a beer named 'draught' to be available in that format. At the time it was launched, the Stone & Wood Pacific Ale was the only beer sold in Australia named 'Pacific Ale'. 68 The description of the Stone & Wood Pacific Ale on the label on the side of the bottle reads: Born and raised in Byron Bay, Stone & Wood take a fresh approach to brewing handcrafted beer in the Northern Rivers of NSW, one of the greatest places on earth. Inspired by our home on the edge of the Pacific Ocean and brewed using all Australian barley, wheat and Galaxy hops, Pacific Ale is cloudy and golden with a big fruity aroma and a refreshing finish. 69 Mr Cook in his first affidavit stated that, based on his experience in the brewing industry, the Stone & Wood Pacific Ale is a distinctive beer; it is cloudy and golden with a big fruity aroma and a refreshing finish. He also stated that it is brewed using Australian wheat, barley and Galaxy hops (which are grown in Tasmania and north east Victoria). 70 Mr Kirkegaard in his first affidavit said that, when it was released as 'Draught Ale', what is now known as Stone & Wood Pacific Ale was, in his view, a distinctive beer and significantly different from other beers on the market. He described the character of the beer in the following way in paragraph 63 of his first affidavit: The Stone & Wood Pacific Ale incorporated a bursting hop aroma of tropical fruit more commonly experienced in beer styles such as American Pale Ale or India Pale Ale, but over a much lighter, crisper body more closely associated with an Australian Pale Ale. The hop aroma was very distinctive, showcasing the signature passionfruit and lychee notes of Galaxy hops but in a much bolder manner than other beers that had used that variety of hops. 71 Mr Cook said in his first affidavit (and I accept) that Stone & Wood chose the name 'Pacific Ale' for its product for two reasons. First, one of the Stone & Wood breweries is located in Byron Bay (the only Stone & Wood brewery that was in operation in 2010), which is the most easterly part of Australia and is situated on the Pacific Ocean; the story behind the brewery, including its location, is very important to the overall Stone & Wood brand, and the name 'Pacific Ale' is a reflection of that. Secondly, the use of the word 'Pacific' in the name was also designed to generate a calming, cooling emotional response in consumers, consistent with the idea behind (and flavour of) the Pacific Ale product. Mr Cook said during cross-examination (and I accept) that from his experience in marketing and promoting beer, he understood the importance of emotional branding as a marketing tool, which he regarded as considerable. In cross-examination, Mr Cook accepted that he wanted consumers to be aware of the story of the brewery, and that the brewery would be known to consumers as Stone & Wood. 72 In an article on Stone & Wood's website entitled, "What's in a Name?" and dated 30 November 2010, the change in name from Drought Ale to Pacific Ale was explained as follows: Back in November 2008 when we proudly rolled out our first brew we were hell bent on keeping things simple. Brewed to no existing style, our cloudy, dry hopped ale was to be a draught only beer. We didn't want to give it some crazy quirky critter name, we just called it what it was, an ale drawn fresh from the tank and available only on draught – so Draught Ale it was. Over the next year and a half or so of pumping out the hoppy goodness we were constantly asked to have our Draught Ale available in bottles. Rolling out a Draught Ale in bottles seemed a bit weird but hey, we had a whole bunch of people who knew the beer as Draught Ale, so the same beer out of the tank was put into kegs and bottles and away we went. On another angle, ever since we launched our ale, people have continually been asking us, "what style of beer is it?" As independently minded brewers we don't want to be limited to brewing beers from an existing style register. There is nothing stopping brewers from developing new approaches, and using new ingredients to create new styles of beer that don't fit the strict criteria of traditional beer styles. That's the mindset that drives our approach to brewing, and its what led us to develop our ale. After a couple of years of living and brewing in this little town and watching people enjoying our Draught Ale here and afar, we are convinced that it has developed its own style, its own special place in the small beer world. So we have changed the name of our Draught Ale but the beer remains the same. Our ale deserves a name that speaks to where it is created, its home, a name that helps it establish its own place and its own beer style. The answer has been staring us in the face all along. It's now called Stone & Wood Pacific Ale. Inspired by our home on the edge of the Pacific Ocean and brewed using all Australian barley, wheat and Galaxy hops, Pacific Ale is cloudy and golden with a big fruity aroma and a refreshing finish. So when someone asks us "what style of beer is it?", we will simply say it's a Pacific Ale. 73 On 3 December 2010, "Australian Brews News", an online publication, published an article by Mr Kirkegaard titled, "A rose by any other name". The article quoted Mr Cook in relation to the change in name from Draught Ale to Pacific Ale; his statements were to similar effect as the article on the Stone & Wood website set out above. Statements to similar effect were also made by Mr Cook as quoted in an article in "The Crafty Pint" dated 29 November 2010. 74 Mr Kirkegaard was asked during cross-examination whether 'Pacific' was an apt descriptor for Stone & Wood's ale product. He answered, "It's an apt descriptor for where the brewery is located, I guess". 75 Stone & Wood Pacific Ale is sold both in bottles and in kegs (that is, as draught beer). There are two bottle sizes, 330 ml and 500 ml. Bottle sales have been predominantly of the 330 ml size. 76 Since November 2010, Stone & Wood has promoted and sold the Stone & Wood Pacific Ale as shown in paragraphs [4], [5] and [6] above. The branding has remained largely unchanged during this period. Some minor changes were made to the packaging and labelling of the product in 2013, but those changes did not impact the overall appearance of the product. 77 During cross-examination it was put to Mr Cook, but he did not accept, that the use of a mustard colour on the label for the Stone & Wood Pacific Ale "creates a kind of traditional look"; that the copper look of the lid was designed to create a "rather traditional look around the bottle"; and that the use of the symbol '&' rather than the word 'and' was designed to "give a sense of establishment or tradition around the branding Stone & Wood". Mr Cook did not accept the proposition that the way the '&' passes through the two Os of 'wood' looks like a very established brand, and said that the ampersand was "designed to hook the three Os together in the way there were three founders". 78 Mr Cook accepted during cross-examination that the way in which the words 'Pacific Ale' and 'Handcrafted' appear on the bottle of Stone & Wood Pacific Ale is consistent with the way in which Stone & Wood refers to the other beer products in its range. He was taken to the image which is reproduced in paragraph [28] above and accepted that the way in which 'Pacific Ale' is presented on the label of Stone & Wood Pacific Ale is typical of the way in which Stone & Wood presents the reference to the type of beer on its other products. He said that the same branding is used on Jasper Ale and Garden Ale. 79 Mr Cook was asked during cross-examination what the reference to 'handcrafted' meant and answered that "it evokes an imagery in people's minds that the beer is carefully manufactured, carefully brewed". He accepted that in reality the beer is produced using modern machines with skilled staff who work the machines. 80 Stone & Wood has received several awards for the Stone & Wood Pacific Ale, both in Australia and internationally. 81 Stone & Wood Group is the registered owner of Australian Trade Mark number 1395188 in class 32 in respect of beer for the mark set out in paragraph [9] above. 82 On the basis of the facts and evidence set out in paragraphs [67]-[81] and my own observations of the bottles, packaging and decal which were in evidence as physical exhibits, I make the following findings in relation to the Stone & Wood Pacific Ale: (a) I accept the evidence of Mr Cook, supported by Mr Kirkegaard's description, that the Stone & Wood Pacific Ale is cloudy and golden with a big fruity aroma and a refreshing finish. I accept that it is brewed using Australian wheat, barley and Galaxy hops (which are grown in Tasmania and north east Victoria) – these matters did not appear to be contentious. I accept the evidence of Mr Cook and Mr Kirkegaard that, when it was launched, the Stone & Wood Pacific Ale had a distinctive character. (b) I accept that the word 'Pacific' was chosen because of the location of the Stone & Wood brewery and to generate a "calming, cooling emotional response". (c) Based on my observation, the dominant feature of the Stone & Wood Pacific Ale bottle is the Stone & Wood logo. The name 'Pacific Ale' is much smaller and occupies a subsidiary position. The same is true of the packaging for the six-pack and the decal for the beer taps. The dominant colour on the bottle label is the background colour. In my view, this colour is aptly described as a mustard colour (which may be considered to be a type of orange). The same or a similar colour is used on the six-pack packaging and the decal. (d) The format of the Stone & Wood Pacific Ale bottle is the same as for the other main beers in the Stone & Wood range, namely, Lager (now Green Coast), Jasper Ale and Golden Ale (the format is indicated by the image in paragraph [28] above). In each case, the dominant feature is the Stone & Wood brand and the name of the product appears in smaller print underneath the logo. Stone & Wood Pacific Ale sales 83 In the 2014-2015 financial year, Stone & Wood sold in excess of 45,000 kegs, 200,000 cartons of 24 x 330 ml bottles and 22,000 cartons of 12 x 500 ml bottles of Stone & Wood Pacific Ale. 84 There was confidential evidence comprising the sales figures for Stone & Wood Pacific Ale for the 2013-2014 and 2014-2015 financial years (CB 1038, 1039) and the aggregate sales of Draught Ale and Pacific Ale to date (Ex A9). Without disclosing confidential material, it is possible to say that Stone & Wood's sales of the Stone & Wood Pacific Ale are substantial and have increased significantly in recent years. 85 Mr Cook said in cross-examination (and I accept) that the bottled product has represented about half, or a little more than half, of the sales of the Stone & Wood Pacific Ale; and that sales of Stone & Wood Pacific Ale represent and have represented between about 80 and 85 per cent of Stone & Wood's total sales. Stone & Wood Pacific Ale marketing 86 Mr Cook gave evidence in his first affidavit that, since its establishment, Stone & Wood has promoted its products (including Stone & Wood Pacific Ale) throughout Australia. During cross-examination, Mr Cook gave the following further evidence: the expenditure on communications is primarily for advertising; this includes advertising in magazines and on websites; Stone & Wood also attends consumer beer festivals at which it provides free tastings; and Stone & Wood supports local charities in the Byron Bay area through a community donation program and sponsors events such as the Mullumbimby music festival and surfing events. Mr Cook accepted in cross-examination that a "strong portion" of the sponsorship expenditure related to the Byron Bay area. He also accepted in cross-examination that all of the marketing activity is conducted by reference to the Stone & Wood brand. Mr Cook was taken during cross-examination to an advertisement in the "Echo", the local newspaper in Byron. He accepted that the advertisement was primarily an advertisement for Stone & Wood (although the product depicted in the advertisement is Stone & Wood Pacific Ale). 87 Mr Cook was taken in cross-examination to posters showing a glass of beer, with the words 'Stone & Wood' on the glass and a circle with the text, "$5 Pacific Ale". He said that these posters were for promotion in bars, and that they could be posted in the bar or on tables. He said that the posters promoted "both our primary brewer brand and our secondary beer brand". He was also taken to an image called a "bottle shop screen", showing two bottles of beer, the Stone & Wood Lager and the Stone & Wood Pacific Ale. Mr Cook said that these images were of packaging which highlights "our parent brand and our sub-brand". In response to a further question about this image, Mr Cook accepted that the word 'lager' was being used as a style not a brand. 88 Mr Cook was taken during cross-examination to a picture of a "venue blackboard" from a bar in Melbourne, in 2013, which was annexed to his affidavit. The blackboard referred to Thunder Road Pacific Ale and then, a few rows below, to Stone & Wood Pacific Ale. He accepted that it was clear that the customer was being told that there was a brand of beer sold under the name Thunder Road and there was a brand of beer being sold under the name Stone & Wood. 89 Mr Cook was taken during cross-examination to some photographs annexed to his affidavit of the set-up for certain events, such as a food festival event. The boards for these events had the name 'Stone & Wood' at the top of the board and then listed various products beneath this. Mr Cook accepted that Stone & Wood promoted the brands or products "by reference to the brand Stone & Wood in quite a distinctive way". 90 In paragraph 58 of his first affidavit, Mr Cook estimated that the total reach at all of the festivals and major events attended by Stone & Wood since 2009 would be in excess of 1.1 million visitors. He accepted during cross-examination that the calculation was based on figures told to him by others or obtained from a website. He accepted that there was no evidence of the visual displays at the festivals and that the displays may have been different at each place and from year to year. 91 On the basis of the evidence referred to in paragraphs [80], [83]-[85] and [86]-[90] above, I find that the Stone & Wood Pacific Ale has, and had (in January 2015), a substantial reputation in the craft beer market. In relation to Stone & Wood's marketing activities, on the basis of the evidence referred to in paragraphs [86]-[90] above, I find that Stone & Wood undertakes marketing activities for the Stone & Wood Pacific Ale in Australia generally; that the 'Stone & Wood' brand name is a significant focus of these activities; and that the words 'Pacific Ale' appear in conjunction with 'Stone & Wood' (rather than on their own) in almost all cases. Thunder Road Pacific Ale 92 In about January 2015, Elixir launched the Thunder Road Pacific Ale in the bottled format. Later, in about May 2015, Elixir launched the keg format of the beer, but as 'Thunder Road Pacific' (see below). From about September/October 2015, Elixir started selling the bottled format of the beer as 'Thunder Road Pacific' (see below). 93 Thunder Road Pacific Ale formed part of Thunder Road's 'double fermentation' series of beer. The series comprises products referred to as Golden, Pale Ale, Amber, IPA, Pilsner and Pacific Ale: see the image in paragraph [31](d) above. The Pacific Ale was the last to be added to the series. 94 The label on the back of the bottle of the Thunder Road Pacific Ale describes the beer as follows: Thunder Road Pacific Ale is designed with thirst crunching drinkability in mind. An uplifting aroma of passionfruit from Australian Galaxy hops leads into a mild bitterness. We use two rare yeast strains in our double fermentation process for more flavour and stability. … 95 Mr Withers said in his first affidavit that the Thunder Road Pacific Ale / Thunder Road Pacific is a light bodied beer made from Australian Galaxy hops and is characterised by a distinct hop aroma, with pineapple, passionfruit and citrus notes. 96 Mr Piperno (who, as noted above, owned two liquor stores which specialised in craft beer and specialty wines) gave evidence during cross-examination about the characteristics of Stone & Wood Pacific Ale and Thunder Road Pacific Ale. He said that "this whole new craft beer segment, … whether it's a Golden Ale, Bright Ale or Summer Ale, Pacific Ale, they tend to have the same characteristics like … jam-packed full of passionfruit, tropical flavours, melon, grapefruit. … It's really, really hard to distinguish one from another, from my perspective". He said that the "taste profile" of the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale were probably identical. He said that, insofar as the taste and aroma are concerned, they are "[p]retty much the same". 97 In his first affidavit, Mr Withers said that he selected the name 'Pacific Ale' because the terms 'Pacific Ale' and 'Pacific' are used: (a) as a geographical indicator, to reinforce the Australian/Pacific roots of Elixir; (b) to describe the style of beer being offered for sale, namely, a beer with an "uplifting aroma of passionfruit from Australian galaxy hops" (as explained on the bottles of Thunder Road Pacific Ale / Thunder Road Pacific); and (c) because he was aware that some American breweries were describing their beers with new fruity Australian hops (such as galaxy hops) as pacific ale styles (eg, Sweet As Pacific Ale). Mr Withers said in his first affidavit that before Elixir commenced any use of the terms 'Pacific Ale' or 'Pacific', he was keen to ensure that using the name Pacific was not going to cause any confusion in the market place with Stone & Wood's beer; that the Thunder Road brand is a successful brand in its own right and he had no desire for it to be associated with a competitor; he asked Colin Paige, who was at the time Head Brewer for Elixir and is now Head of Production for Stone & Wood, to confirm that it was acceptable to use 'Pacific Ale' as a descriptor of a style of beer; Mr Paige sent an email to Mr Withers on 26 August 2014 which stated in its subject header, "Pacific ale = style" and stated in the body of the email (below a link) that, "One of the founders admitting Pacific Ale is a style"; Mr Withers understood the reference to "one of the founders" to mean one of the founders of Stone & Wood; the link was to an article by Mr Kirkegaard in "Australian Brews News" dated 3 December 2010. (The article is described in paragraph [73] above.) The respondents contend that an adverse inference (Jones v Dunkel (1959) 101 CLR 298) should be drawn from the failure of Stone & Wood to call Mr Paige to given evidence. However, I do not think an adverse inference is to be drawn from the failure to call Mr Paige. The position is complicated because Mr Paige used to work for Elixir but now works for Stone & Wood. In these circumstances, I do not think it can be assumed that Mr Paige would divulge to Stone & Wood matters pertaining to his previous employment. One of the circumstances in which an adverse inference is not to be drawn is where the party "may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him": Fabre v Arenales (1992) 27 NSWLR 437 at 449-450 per Mahoney JA, Priestley and Sheller JJA concurring; Heydon JD, Cross on Evidence (10th ed, LexisNexis Butterworths, 2015), [1215]. Further and in any event, the email speaks for itself and thus it was unnecessary for Stone & Wood to call Mr Paige. 98 Mr Withers accepted during cross-examination that at the time Elixir launched the Thunder Road Pacific Ale, he knew about the Stone & Wood Pacific Ale. He said that he knew Stone & Wood were very visible in the market place, but he did not know what level of success they had achieved. He said he thought they were a medium-sized player in the craft beer market. Mr Withers said during cross-examination that he did not know that Pacific Ale was "by far and away the most popular" of the Stone & Wood beers. He accepted that he knew it was a successful beer. 99 The label on the bottle and the packaging for the Thunder Road Pacific Ale use green, orange and beige colours. The format follows the same design as the other bottles in the 'double fermentation' series. Green is the colour used for the Thunder Road brand generally. Mr Withers said in cross-examination that the bright green colour was used because it was a unique colour, which distinguished the brand from other beer brands, and because it was "a green that symbolises what we represent, which is high quality freshness". He said the beige colour (which is used in relation to the 'double fermentation' series generally) "gives it that craft aspect". In addition, each product in the series has a particular colour. 100 Mr Eletheriadis was retained by Elixir to design the labelling and packaging for the 'double fermentation' series except Pacific Ale. He stated in his affidavit that, apart from the company's signature green colour, the main purpose of the colours used in the design was to differentiate between the beer varieties within the range of beer in the 'double fermentation' series; each beer variety was assigned a different colour; each colour was also intended to match the flavour of the beer. His evidence was unchallenged and I accept it. 101 Mr Morton was retained by Elixir to design the labelling and packaging for the Thunder Road Pacific Ale, using the style guidelines created by Mr Eleftheriadis for the 'double fermentation' series. Mr Morton stated in his affidavit that he was asked by Mr Camilleri only to change the descriptor that appeared on the label and packaging to 'Pacific Ale' and to change the colour to orange; and that the Stone & Wood Pacific Ale and its colours were not mentioned by Mr Camilleri when he briefed him to carry out this work. Mr Morton's evidence was unchallenged and I accept it. 102 Mr Withers was asked questions during cross-examination about the choice of the colour orange in the get-up for Thunder Road Pacific Ale. He accepted that other colours can be used to identify something that is tropical or has passionfruit, pineapple and citrus notes. In response to a question about why purple, for example, had not been chosen, Mr Withers said that purple does not relate to the flavour profile – pineapple, citrus, passionfruit – and does not have a tropical connotation. Mr Withers during cross-examination described the Thunder Road Pacific Ale colour as "fluoro orange". It was put to Mr Withers during cross-examination that the colours of Stone & Wood Pacific Ale and Thunder Road Pacific Ale look similar and that he chose the same colours (orange and green) as Stone & Wood Pacific Ale because he knew that these things can operate as a hook for consumers. He rejected this. 103 Mr Withers was taken during cross-examination to an image of the packaging, the bottles and the six-pack for the Thunder Road Pacific Ale. He agreed with the proposition that 'Pacific Ale' is very prominent on the packaging. It was put to him that this was the 'hook' for the consumer; he responded that it is the descriptor. He said that the total get-up was designed to be a fifty-fifty split between the 'Thunder Road' and 'Pacific Ale'. In reference to the bottle, he said "there's clearly a strong Pacific Ale and there's clearly a strong Thor". Mr Withers accepted during cross-examination that at the time Elixir launched the Thunder Road Pacific Ale, the Pacific Ale style had come to be closely associated with Stone & Wood as a style. It was put to him that Elixir had emphasised the word 'Pacific' in its decal, its marketing on the packaging and on the bottles, because Mr Withers knew that Stone & Wood had established a good name in respect of the Pacific Ale style. He rejected this and said: "We are promoting a style of beer from Thunder Road. The entire range is about Thunder Road with a descriptor of styles. ... One of those is a Pacific Ale". Mr Withers rejected the proposition that he knew that 'Pacific Ale' was an important name for consumers because they associated it with the Stone & Wood Pacific Ale. 104 It was put to Mr Withers during cross-examination that his evidence that the Australian/Pacific roots of Elixir were a reason the name 'Pacific' was chosen, was inconsistent with the bottled beer being produced in Belgium. He responded that "this is a Australian style beer from an Australian brewery and we brew on the basis of our philosophy, as is shown in the label[,] Beers Without Borders, wherever it's best. Just as Stella brews a Belgium [lager] in Melbourne. So we're promoting … Thunder Road's Australian roots. … All our beers have Australian hops in them." It was put to Mr Withers that the reason the word 'Pacific' was chosen was not because he wanted the consumer to draw a link between the product and Galaxy hops. He responded that the recipe with Galaxy hops was up to the brewers; they identified the new, emerging style, Pacific Ale; and they said, "You need to have one of these new beers, they're getting very popular all over the world and it's highlighting a new style of hops". Mr Withers said: … I didn't disagree with them [the brewers] that we needed, in addition to the classical beer styles, new emerging beer styles, because, at the end of the day, that's what craft beer is all about, is, you know, bringing out to the market new and exciting things, new evolving beer styles that are coming out all the time. 105 The following exchange took place between senior counsel for Stone & Wood and Mr Withers during cross-examination in relation to the choice of the name 'Pacific Ale': And because you thought it was highly descriptive, what I want to suggest to you is you were happy to springboard off Stone & Wood's reputation that it [had] built up in the market place in connection with Pacific Ale; what do you say?---Well, I – I say that we're promoting a beer style in a … typical way that will attract craft beer consumers to a new type of beer that, not only we wanted to – to launch, but others were doing so. But you knew it was advantageous for you that Stone & Wood had done the hard work and developed the name "Pacific Ale" in the market place?---No. No. You deny that, do you?---I … deny that Stone & Wood was referenced in any significant way in the decision to launch [an] additional style … called "Pacific Ale." 106 It was put to Mr Withers during cross-examination that he "chose the Pacific Ale name to suggest an association with Stone & Wood Pacific Ale". He rejected that proposition. It was also put to him that "you chose the name Pacific Ale, because you wanted to fast-track the sale of your Thunder Road Pacific Ale beer jumping on Stone & Wood's good name in connection with that beer". He also rejected that proposition. 107 Mr Camilleri said in his affidavit and during cross-examination that when Elixir released the Pacific Ale product, he was aware that Stone & Wood was producing a Pacific Ale. Mr Camilleri accepted during cross-examination that, at the time of the launch of Thunder Road's product, he knew that there were a lot of consumers in the craft beer market who, when they saw the name Stone & Wood, would think of Stone & Wood Pacific Ale. In accepting this proposition, Mr Camilleri noted that the Pacific Ale had "more distribution" than Stone & Wood's other products. Mr Camilleri accepted that, at the time Thunder Road launched its Pacific Ale, the only company selling beer in Australia under the name 'Pacific Ale' was Stone & Wood. He said that there were other Pacific Ales around the world. 108 Mr Camilleri said in his affidavit that, in developing the colours, labels and packaging for Thunder Road Pacific Ale no regard was had to Stone & Wood Pacific Ale, except to ensure that Thunder Road Pacific Ale did not have any similarities in appearance to Stone & Wood Pacific Ale. He accepted during cross-examination that he had seen Stone & Wood's packaging, branding styles and colours. He said that the Stone & Wood colours were an olive green and a mustard colour. He said that Thunder Road's shades were different. He was asked why orange was chosen and said: "When we developed the double-fermentation range, Pacific was one of the last of the styles that we developed and we had, more or less, gone through the colour palette". He also said that they were "looking for something that was going to communicate a refreshing, fruity, sort of, flavour" and hence they decided on "this particular vibrant orange". 109 Mr Camilleri accepted during cross-examination that at the time Elixir launched Thunder Road Pacific Ale, the name 'Pacific Ale' was unique to the beer produced by Stone & Wood in Australia; that the name 'Pacific Ale' had come to be very closely associated with Stone & Wood in Australia; and that he knew that Stone & Wood Pacific Ale had a good reputation in the craft beer market. He also said that he thought consumers had become familiar with the style 'Pacific Ale' through Stone & Wood, and recognised it as a different style of beer; "there was some recognition that this was a new and emerging style". Mr Camilleri rejected the proposition that he was seeking to use "clever marketing" to "springboard" off Stone & Wood Pacific Ale's reputation. The following exchange took place between senior counsel for Stone & Wood and Mr Camilleri during cross-examination: Do you think there's any possibility consumers might think that Thunder Road is selling its ale, its Pacific Ale, in collaboration with Stone & Wood?---None whatsoever. Why?---Because they look completely different, and there's not one mention of Stone & Wood on any of our packaging. 110 On 6 May 2015, Mr Kirkegaard sent an email to Mr Withers headed, "Trade marks". The email stated: Hope you're well. I saw the new labels – very sharp! I was surprised to see a "Pacific Ale" amongst the range though…apart from Stone & Wood's trademark application, don't you consider that it's clearly identified with their brewery? Given your history of trademark battles, I am surprised you have chosen this name… 111 Mr Withers asked Terry Alberstein, who was assisting Elixir in relation to social media, to respond to the email. On 7 May 2015, Mr Alberstein sent the following email to Mr Kirkegaard: Hi Matt – Please note our response below and please feel free to quote me as communications director if you are working on a piece by any chance. Thanks and might give you a call to discuss in more detail. Cheers. Terry We're really excited about our new Double Fermentation Series range of bottled beers. The range includes our interpretation of six styles: a pilsner, an amber, a pale ale, a pacific ale, a golden and an IPA. Each is twice fermented and bottle conditioned, for great taste and maximum shelf life. The pacific ale is just another style in our range – there is no trade mark issue. Stone & Wood has always marketed it as a style – even its head brewer was quoted in the Age as saying: 'We called it Pacific Ale to reflect both the general region we live in and the fact it's a unique beer style.' I think you mused yourself back in 2010 whether pacific ale would end up in the BJCP style guidelines some day. Here's hoping! 112 During cross-examination, Mr Withers said that he did not see a draft of this email. He also said that there was nothing in it that he particularly disagreed with. 113 There was an exchange of emails between Mr Kirkegaard and Mr Alberstein between 8 May and 25 May 2015. It appears from an email dated 22 May 2015 from Mr Kirkegaard that Elixir entered the Thunder Road Pacific Ale into a beer competition as an Australian Ale and that Stone & Wood entered its Pacific Ale in the English Summer Ale class, and that both won a silver medal. 114 On the basis of the evidence set out in paragraphs [92]-[113] above, and my own observations of the bottles and packaging which were in evidence as physical exhibits, I make the following findings in relation to the Thunder Road Pacific Ale: (a) I accept Mr Withers's description of the Thunder Road Pacific Ale as a light bodied beer made from Australian Galaxy hops, characterised by a distinct hop aroma, with pineapple, passionfruit and citrus notes. I accept Mr Piperno's evidence to the effect that the Thunder Road Pacific Ale has a similar character, in terms of taste and aroma, as the Stone & Wood Pacific Ale – this did not appear to be contentious. (b) At the time Thunder Road Pacific Ale was launched, the only beer named 'Pacific Ale' being sold in Australia was the Stone & Wood Pacific Ale. (c) I accept that Mr Withers was keen to ensure that using the name 'Pacific' was not going to cause confusion with the Stone & Wood Pacific Ale; that he asked Mr Paige to confirm that it was acceptable to use 'Pacific Ale' as a descriptor of a style of beer; and that Mr Paige responded with the email described above to the effect that one of the founders of Stone & Wood admitted that Pacific Ale is a style. (d) At the time Thunder Road Pacific Ale was launched, Elixir was aware that Stone & Wood were producing a beer named 'Pacific Ale'; knew that there were a lot of consumers who, when they saw the name Stone & Wood, would think of Stone & Wood Pacific Ale; knew that the name 'Pacific Ale' had come to be very closely associated with Stone & Wood in Australia; and knew that Stone & Wood Pacific Ale had a good reputation in the craft beer market. (e) The labelling and packaging of the Thunder Road Pacific Ale are, to my observation, very different from the labelling and packaging of the Stone & Wood Pacific Ale. In particular, in relation to the bottles, the dominant feature on the Stone & Wood Pacific Ale is the Stone & Wood logo, while the dominant feature on the Thunder Road Pacific Ale is the name 'Pacific Ale'; the dominant colour on the Stone & Wood Pacific Ale is the background colour which I have described as mustard, while the Thunder Road product contains both bright green and bright orange in roughly equal proportions (to the extent that the label for the Stone & Wood product incorporates green, it is a darker green, and plays a minor role); the orange colour on the Thunder Road Pacific Ale is quite different from the background colour on the Stone & Wood product – the orange used on the Thunder Road product is a bright and vibrant orange; the shape of the label is different – the Stone & Wood label is rounded, while the Thunder Road label has a straight edge across the top; the Stone & Wood product does not have a small label near the top of the bottle, while the Thunder Road product does; the cap on the Stone & Wood product is a copper colour, while the cap on the Thunder Road product is green; the Stone & Wood product does not have a Thor symbol, while the Thunder Road product does. Taking these matters into account, the overall 'look and feel' of the two products is very different. (f) Similar differences exist in the packaging of the six-packs for the two products. They also look very different. (g) In designing the labelling and packaging for the Thunder Road Pacific Ale, Elixir did not seek to emulate the labelling and packaging of the Stone & Wood Pacific Ale. The format for the Thunder Road Pacific Ale followed the design already developed for the other products in the 'double fermentation' series of beers, save for the colour orange. The colour orange was chosen as the particular colour for the Pacific Ale (from those colours that had not already been used for other products in the series) to reflect the character or flavour of the product. I do not think it is established that it was chosen in order to emulate the Stone & Wood Pacific Ale background colour or to create an association in consumers' minds with Stone & Wood Pacific Ale. It is quite a different colour from the background colour on the Stone & Wood Pacific Ale bottle label. I accept the evidence of Mr Camilleri that Elixir chose the colour orange in order to communicate a "refreshing, fruity" flavour. (h) Given that Elixir was aware of the Stone & Wood Pacific Ale and its good reputation in the craft beer market, I infer that in choosing the name 'Pacific Ale', Elixir was, to some extent, seeking to take advantage of the success of the product of that name in the Stone & Wood range (for example, by consumers familiar with the Stone & Wood product wanting to try the Thunder Road offering with the same name or description). This is also to be inferred from the fact that the character of the Thunder Road Pacific Ale was similar to that of the Stone & Wood Pacific Ale. To the extent that Mr Withers and Mr Camilleri gave evidence that they were not seeking any such advantage, I do not accept that evidence in light of the matters to which I have just referred. However, I do not think it is established that Elixir intended to obtain any such advantage through consumers thinking that the Thunder Road product was Stone & Wood Pacific Ale or that there was an association between the Thunder Road product and the company, Stone & Wood, or its product. As set out above, in my view the labelling and packaging of the two products are very different. This strongly suggests that Elixir did not intend to obtain an advantage by consumers thinking that the Thunder Road product was Stone and Wood Pacific Ale or that there was an association between the Thunder Road product and Stone & Wood or its product. Thunder Road Pacific 115 On 26 February 2015, the solicitors for Stone & Wood wrote to Intellectual Property Development Corporation and Elixir threatening legal action (see below). Further letters were sent between the parties, as set out below. Elixir then made a decision to change the name of its product from 'Pacific Ale' to 'Pacific'. Since about May 2015, it has sold the beer in kegs under the name 'Pacific'. There were no keg sales under the name 'Pacific Ale'. In about September/October 2015, Elixir changed the labels and packaging from 'Pacific Ale' to 'Pacific' for the bottled format of the beer. 116 Apart from the change to the name, the rest of the get-up for the bottled product remained largely the same. An image of the bottle for Thunder Road Pacific appears below: 117 An image of a six-pack of Thunder Road Pacific appears below: 118 As noted above, the name of Thunder Road's product was changed after Stone & Wood threatened legal action. Mr Withers said during cross-examination (and I accept) that Elixir did not want to change the name, but did so because it was threatened. 119 On the basis of the evidence set out in paragraphs [115]-[118] above, and my own observations of the bottles, packaging and decals in evidence as physical exhibits, I make the following findings in relation to the Thunder Road Pacific: (a) In relation to the bottled product, the labels and packaging of the Thunder Road Pacific are virtually the same as the Thunder Road Pacific Ale. It follows that the observations and findings I made in relation to the labelling and packaging of the Thunder Road Pacific Ale apply equally. (b) In relation to the decal for the beer taps for the Thunder Road Pacific (see paragraph [6] above), the Stone & Wood Pacific Ale decal and the Thunder Road Pacific decal are quite distinct. In particular, the dominant branding on the Stone & Wood decal is the name 'Stone & Wood', whereas the dominant feature of the Thunder Road decal is the name 'Pacific'; and the main colour of the Stone & Wood decal is a mustard colour, whereas the main colour of the Thunder Road decal is a bright and vibrant orange. Thunder Road Pacific Ale / Thunder Road Pacific sales 120 Mr Withers said in his first affidavit (and I accept) that currently Thunder Road Pacific accounts for about seven per cent of sales of Thunder Road keg beer; and Thunder Road Pacific Ale (and, I would infer, Thunder Road Pacific) accounts for approximately 29 per cent of Thunder Road packaged beer. Mr Withers said during cross-examination (and I accept) that, in relation to Thunder Road Pacific Ale / Thunder Road Pacific, Elixir sells a lot more of the keg beer than the bottles; and that, of the six beers in the Thunder Road 'double fermentation' range, Thunder Road Pacific Ale / Thunder Road Pacific has been the best seller. 121 There was confidential evidence about sales of Thunder Road Pacific Ale and Thunder Road Pacific. Mr Withers gave oral evidence in chief (which I accept) that, in relation to the keg format, at least 80 per cent of Victorian customers are located in Melbourne and Victorian sales for 2016 were about 20 per cent higher than for 2015; and that, in relation to bottle sales, about 80 per cent of Victorian customers are located in Melbourne and sales for 2016 were about 20 per cent higher than 2015. Other beers using 'Pacific Ale' or 'Pacific' 122 In about 2009, Sunshine Coast Brewery, which is a boutique brewery based in Kunda Park on Queensland's Sunshine Coast, brewed a small commercial batch (14 kegs of 50 litres) of a Pale Ale which Mr Curran called 'Pacific Pale Ale'. Mr Curran said during cross-examination that only one batch was produced. Given the small size of the batch and that it was only produced once, this can be put to one side for present purposes. 123 In about 2013, Australian Brewery launched a beer named 'Pale Ale'. A picture of the can for this product was in evidence. The words 'Pacific Pale Ale' appear in smaller print on the lower part of the can. Mr Cook accepted in cross-examination that he was aware of the product being sold. He said that he became aware of this product at about the time it was launched, which was in about 2013. Mr Kirkegaard stated in his first affidavit that, in appearance and flavour, this beer is very similar to the Stone & Wood Pacific Ale; while the marketing around this beer describes it as being inspired by "Australia's very own Pale Ale", the use of Galaxy hops to provide the pungent passionfruit aroma was first executed (to Mr Kirkegaard's knowledge) in the Stone & Wood Pacific Ale, which he considers to be the inspiration for this beer. In cross-examination, Mr Kirkegaard said that he thought this beer was actually modelled on the Stone & Wood Pacific Ale. In March 2013, there was an exchange of emails between Mr Kirkegaard and Brad Rogers (Stone & Wood's brewer) about this beer. On 27 March 2013, Mr Kirkegaard sent an email to Mr Rogers which included: Two quick questions for you. The Australian Brewery has recently released a number of beers in cans, including a Pacific Pale Ale. Given you guys have trademarked the Pacific Ale name and there is no such style beside your[s], do you guys have any issues with their calling their beer a Pacific Pale Ale? Mr Kirkegaard said during cross-examination that his understanding at the time was that Stone & Wood had a registered trade mark 'Pacific Ale', although Stone & Wood had not told him this. Mr Rogers responded the next day: Not much we can really do with pacific pale ale, as it's a different name. 124 Mr Cook was taken to these emails during cross-examination. He said that if he had been responding to Mr Kirkegaard's email, he would have said "that Pacific Pale Ale is used as a product descriptor in the … bottom part of their can". The following exchange took place between senior counsel for the respondents and Mr Cook during cross-examination: Well, when he [Mr Rogers] says it's a different name, do you agree it's a different name?---It's a different term. Yes. And how is Pacific there used in a way that's different to the way that you used it in Pacific Ale?---Because – because in our Pacific Ale case we have Stone & Wood as our primary brewer brand and Pacific Ale as our secondary beer brand. In their use, see, they have Australian Brewery as the brewer name and they're using the word Pale Ale as their dominant product name." 125 Mr Cook accepted in cross-examination that Stone & Wood had not taken any action against Australian Brewery in respect of the product and it was still on the market. 126 In about May 2015, a New Zealand brewer, Yeastie Boys, approached Stone & Wood seeking permission to sell in Australia a beer named 'Stairdancer Pacific Ale'. Stone & Wood and Yeastie Boys entered into a licence which enabled Yeastie Boys to phase out its existing supply of printed labels. A copy of the licence dated 2 June 2015 was in evidence (Ex R13). This granted Yeastie Boys a licence to use the trade mark 'PACIFIC ALE' in Australia on up to 50,000 labels on its Stairdancer beer, in consideration of payment of a licence fee of $10. Yeastie Boys was permitted to do this without needing to make reference to Stone & Wood. An advertisement containing an image of a four-pack of bottles of the Yeastie Boys Stairdancer Pacific Ale was in evidence. The beer is described as a "light and breezy 'lawnmower beer', where delicate golden malts are intertwined with orange and passionfruit hop notes". 127 In or about 2015, a New Zealand brewery named 'Garage Project' commenced selling a beer named 'Hapi Daze Pacific Pale Ale'. The evidence included an image of a can of this beer. Mr Kirkegaard gave evidence that he is aware of this beer and that it is available in Australia. He said that Garage Project is one of the larger, more significant breweries in New Zealand. Mr Cook said during cross-examination that he became aware of this beer in 2015 and that Stone & Wood had not complained to this company about its use of the term 'Pacific Pale Ale'. 128 A beer referred to as 'Pacific Beverages Radler' is currently being sold in Australia. An image of a 330 ml bottle of this beer, taken from a First Choice Liquor website, was in evidence. The label has the word 'Pacific' prominently across the centre and the word 'Radler' in smaller print beneath that word. Mr Cook said that Stone & Wood had not objected to the use of the word 'Pacific' in this way "given that it's a lager". In re-examination, Mr Cook explained that a radler is a beer that is mixed with a lemon or orange-based soft drink, "effectively what we call in Australia a shandy". 129 An imported beer called 'Pacifico Clara' has been sold in Australia for some time. An image of a bottle of this beer was in evidence. The word 'Pacifico' appears prominently on the label, with the word 'Clara' in smaller print. The beer is imported from Mexico. It appears that only small quantities of this beer are sold in Australia. 130 During the course of cross-examination, the following exchange took place between senior counsel for the respondents and Mr Kirkegaard regarding the use of the term 'Pacific': … The term "Pacific", insofar as it may be used as a form of description, is an apt description for the type of hops being used, that's to say, Australian or New Zealand hops, isn't it?---Well, I – I guess that's up to debate, and, I guess, it depends on the – the context that it has been used in. For example, Pacific Northwest is often used to describe hops from – well, Pacific hops can be used to describe hops from the Pacific Northwest, which is the north of America, or it can be used to describe hops from the oceanic region of Pacific as well. All right. But in the context of the Australia/New Zealand environment it's fair to say, is it not, that if the term "Pacific" is being used, it does serve a function of describing beers made from hops from Australia or New Zealand?---More recently it has, yes. Yes?---I – I don't think – and again, if you went back five – six – seven years, the term … tended to be "new world hops" to describe Australian and New Zealand hops. All right. But in recent years that has been an apt description?---It – it has come to be used, yes. … Now, so you refer to recent years where that – the term "Pacific" has become an apt describer of this origin of the hops; right?---It – it has come be used, yes. Come to be used. So, like, since 2013?---Yes, it has gradually evolved over the last three or four years, yes. (Emphasis added.) 131 In re-examination, Mr Kirkegaard was asked who uses the word 'Pacific' in connection with Australian or New Zealand hops – brewers or consumers or both? He said that it was predominantly used by brewers and hop growers and said, "I don't know that it's a generally used consumer term". 132 In his second affidavit, Mr Kirkegaard said that, in his view, 'Pacific Ale' would only have meaning to beer consumers if they had consumed the Stone & Wood Pacific Ale or, more recently, the Thunder Road Pacific Ale product. He was taken to this evidence during cross-examination and the following exchange then occurred between senior counsel for the respondents and Mr Kirkegaard: Is that a comment on consumers having an appreciation for the character of the product?---Yes. What I was alluding to there is that the term "Pacific ale" has no inherent meaning. It only derives its meaning subsequent to the Stone & Wood Pacific Ale. Before then, "Pacific ale" I don't believe was used, except in a most general sense and it could have been across any number of styles and for any number of reasons, but I think the growing use of "Pacific" these days, primarily in New Zealand and other parts of the world, derives from the understanding that "Pacific ale" to mean a certain class of ale comes from a Stone & Wood Pacific Ale style beer or like beer. Yes. And that's because you say Stone & Wood introduced the Pacific ale character beer - - -?---Yes. - - - in 2010 - - -?---A beer with those characters. Yes. - - - and since that time it has become associated with the use of Australian Galaxy hops?---That's correct. Yes. And it has become associated with the character that you described at paragraph 63 of your – of your first affidavit?---That's correct. Yes. And that has happened over a period of the last two or three years or so?---I believe that's – it goes back to Stone & Wood calling their beer Pacific Ale, and we've gradually seen – and it's almost like ripples in a pond. They gradually spread. Yes. And one of those ripples that we can identify certainly is the coming into the market in March 2013 of the Australian Brewery product that we've been talking about?---Yes. (Emphasis added.) In the above passage, Mr Kirkegaard was asked a question with reference to paragraph 63 of his first affidavit. That paragraph of his first affidavit is set out in paragraph [70] above. 133 I note for completeness that Mr Withers also gave oral evidence in chief about a beer named 'Sweet As Pacific Ale', which he became aware of in America in about 2013. I also note that there was evidence of internet searches which Mr Withers carried out recently in relation to the use of 'Pacific' or 'Pacific Ale' in relation to beer. A number of pages, being the results of those searches, went into evidence. 134 On the basis of the facts and evidence set out in paragraphs [122]-[133] above, I make the following findings in relation to other beers using 'Pacific Ale' or 'Pacific' in the Australian market: (a) Apart from the products which are the subject of this case, there are three examples of beers available on the Australian market which incorporate 'Pacific' or 'Pacific Ale' in the name of the company or product. These are Yeastie Boys' Stairdancer Pacific Ale (where a licence has been entered into with Stone & Wood); Garage Project's Hapi Daze Pacific Pale Ale; and the Pacific Beverages Radler. Only one of these – the first – is named 'Pacific Ale'. It is to be inferred that it commenced to be sold in Australia in or about May/June 2015 (that is, after the launch of Thunder Road Pacific Ale). (b) In addition, there is one beer available for sale on the Australian market which uses the word 'Pacific' in the description of the beer. This is Australian Brewery's Pale Ale. The words 'Pacific Pale Ale' appear on the lower part of the front of the can. (c) Although the position was different when Stone & Wood launched its Pacific Ale product, since then the term 'Pacific' has come to "serve a function of describing beers made from hops from Australia and New Zealand", as was accepted by Mr Kirkegaard; the term has come to be associated with the use of Australian Galaxy hops (as was also accepted by Mr Kirkegaard). (d) I accept that a beer named 'Sweet As Pacific Ale' has been sold in America. The internet searches of other uses of the words 'Pacific' or 'Pacific Ale' in relation to beer do not provide a sufficient basis to reach conclusions as to whether those products have been sold in Australia. 'Styles' of beer 135 One of the matters addressed in the evidence was whether or not 'Pacific Ale' is a 'style' of beer. Part of Stone & Wood's case is that Pacific Ale is not a style, while the respondents contend that it is. 136 Mr Kirkegaard in his first affidavit stated that the concept of beer 'styles' is relatively new; as recently as the 1950s and 1960s, beer was often classified generally as beer, ale, stout and lager; the concept of 'styles' as we now refer to them has evolved largely since the 1980s, in line with the growth of craft beer; the number of recognised styles has grown dramatically since that time, both because the number of recognised styles and sub-styles has grown and because new styles and sub-styles have been created. Mr Kirkegaard also stated: (a) Style guidelines are important in providing the criteria for judging beers in competitions. However, outside of the strict adherence to style guidelines for beer competitions, the idea of beer style can be a little "blurry" in that there is often no clear delineation between closely related sub-styles. (b) While beer styles can be a useful way of describing what consumers can expect from a beer in terms of flavour and characteristics in a general sense, in Mr Kirkegaard's experience, there can be considerable scope for difference within styles. (c) The style name given to a beer can often relate to the marketing choices of the brewer as much as to the physical characteristics of the beer. (d) The authoritative beer style classifications are documented in guidelines from major beer competitions around the world. These include the Brewers Association (United States) Beer Style Guidelines, which are referenced by the Australian International Beer Awards and the Craft Beer Industry Association Craft Beer Awards (with the exception of certain local styles such as Australian Style Lagers and Australian Style Pale Ales). Another influential style guide is that used in the Beer Judge Certification Program. (e) 'Pacific Ale' does not appear in the Brewers Association Beer Style Guidelines; nor does any reference to 'Pacific'. The term 'Pacific' is referenced in the Beer Judge Certification Program guidelines as an indexing tag pertaining to beer styles from Australia and New Zealand, though it is not used in reference to a particular style. 137 Mr Kirkegaard accepted during cross-examination that the style guidelines are not intended to be used by consumers. He said that the styles that are contained in style guides tend to be about judging and are very prescriptive; he doubted whether the majority of consumers would be aware that style guides exist. Mr Kirkegaard said during cross-examination that he did not accept that there is a 'style' of beer called 'Pacific Ale'. Mr Kirkegaard made clear that he was using the word 'style' in his evidence in the following sense: Given this case, I've been very careful to use 'style' in a very particular meaning that style means a – a widely accepted, commonly used, you know, defined, classification of beers, as in beer styles used in the Brewers Association beer style guidelines or the Beer Judge Certification beer style guidelines. 138 As set out in paragraph [72] above, statements on Stone & Wood's website at the time its beer was renamed 'Pacific Ale' referred to the beer as a new style of beer. Statements to similar effect were made by Mr Cook in the article written by Mr Kirkegaard which is referred to in paragraph [73] above. 139 As noted in paragraph [97] above, before the launch of Thunder Road Pacific Ale, Mr Withers asked Mr Paige to confirm that it was acceptable to use 'Pacific Ale' as a descriptor of a style of beer, and Mr Paige sent him an email which referred to Mr Cook's statements in the 3 December 2010 article by Mr Kirkegaard. 140 Mr Withers in his evidence expressed the view that 'Pacific Ale' is, and has been since 2011, a style of beer. He said during cross-examination: Well, the definition of "style" is not official. There … [are] no style guidelines. There … are guidelines that people refer to for competitions, but styles in beer have evolved and are continually changing and have been around for hundreds of years, so when a new flavour profile develops, then it's apt that there is a descriptor, and by definition you need to find a suitable descriptor and by having a descriptor for a new flavour profile you end up with a style. 141 A number of other witnesses gave evidence about whether 'Pacific Ale' is a style of beer. Ms McGrath stated in her affidavit that she does not consider it to be a style, but rather the name of Stone & Wood's product. Mr Crooks stated in his affidavit that he considers 'Pacific Ale' to be the name of Stone & Wood's product, not a style of beer; the Stone & Wood Pacific Ale has its own characteristics, but he is not aware of any 'Pacific Ale' style of beer; to him, it is a light pale or summer ale style. Mr Piperno stated in his affidavit that he considers the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale to be examples of a new style of beer, namely a 'Pacific Ale', and that is how he described those beers if asked about them by customers. During cross-examination he was asked whether he considered Pacific Ale to be a style of beer "in the same way in which a summer ale is a style of beer and they're all the same style"; he agreed with this proposition. I do not think that Mr Piperno was intending, by this answer, to resile from the statement in his affidavit that he considers Pacific Ale to be a style of beer. 142 In light of the evidence as set out in paragraphs [135]-[141] above, I conclude that 'Pacific Ale' is not a 'style' of beer in the technical sense of a style identified in style guides used in beer competitions. It is possible that some consumers may regard 'Pacific Ale' as a style of beer in a non-technical sense, but the evidence does not establish that a substantial number of consumers would so regard it. Sale of beer at licensed venues 143 In the bar or hotel environment there are typically two types of transactions: one is the tap purchase; the other is where the customer purchases a bottle of beer. In relation to the first, the beer taps typically have the brands displayed on them. In the scenario where the customer purchases a bottle, the customer is not able to take the bottle him or herself; the bottle is handed to the customer by someone at the bar. 144 In his first affidavit, Mr Kirkegaard stated that it has been his experience that many consumers refer to the Stone & Wood Pacific Ale simply as 'Pacific Ale'; and that, in more recent times, particularly in Queensland, he has noticed that some consumers have abbreviated the name to 'Pac Ale'. Mr Kirkegaard was asked some questions during cross-examination about how people tend to order beer in the bar or hotel environment. He said that people were more likely to ask, "What pale ales have you got?" than simply to say that they wanted a pale ale, because of the range of different pale ales. He accepted that people will ask for a type of beer and then often ask for the beer by reference to the brand name, like James Squire. Mr Kirkegaard accepted during cross-examination that, if a customer asked for a pale ale, the person behind the bar might say something like, "I've got a James Squire or other brands. Which one would you like?" or might say, "I've got a range of different brands available. Would you like X or Y?" 145 Mr Coorey gave evidence about the sale of beer at the Boardwalk Tavern in Queensland. The tavern sells a range of beer products, including craft beers; it sells about 10 to 15 craft beers in bottled form and four or five beers on tap; Stone & Wood Pacific Ale is one of the craft beers sold. As the owner, Mr Coorey spends limited time in the bar; during the first three years in the business (that is, from the end of 2011) he spent more time working at the bar than in the last 12 months. In his affidavit, Mr Coorey stated that, in his experience Stone & Wood Pacific Ale (which he refers to in his affidavit as "Pacific Ale") has always been very popular with customers at the venues he has managed or operated; during the period that it has been on tap at the Boardwalk Tavern, he estimates that it outsells other craft beers by about three to one; to him, Pacific Ale has a distinctive (and, in his experience, quite unique) taste; it is mildly bitter with a bit of fruitiness; when he is asked by customers to describe the style of Pacific Ale, he usually describes it as an "Australian pale ale"; for him, Pacific Ale pioneered that style and he was not aware of other beers like it until he tasted Pacific Ale (originally as Draught Ale). He gave evidence in his affidavit about what he says when customers ask him what the Pacific Ale tastes like. During cross-examination, Mr Coorey accepted that this would occur when he was at the bar and the customer was looking at the branding on the tap. In his affidavit, Mr Coorey stated that when customers ask him what the Pacific Ale tastes like, he mostly pours them a sample so they can try the product for themselves; sometimes he compares it to a James Squire Golden Ale (although it is not as fruity and is less bitter). He said during cross-examination that the price of a 425 ml glass (or schooner) of XXXX or Tooheys is about $6.00 to $6.20, while the price of a Stone & Wood Pacific Ale is about $8.20 to $8.30. He accepted during cross-examination that on occasions when working behind the bar he would have a discussion with the customer about the product. In his affidavit, Mr Coorey said that when he is introducing a new customer to the product, he refers to it as 'Stone & Wood Pacific Ale' because, when selling craft beer, he thinks it is important to introduce the customer to the brewery as well as the beer itself; "[b]eing able to tell an interesting story behind the beer is one of the best selling tools for craft beer". He accepted during cross-examination that, when he referred in his affidavit to introducing a new customer to a new product, the customer comes up to the bar and he or she is looking at the tap heads. He was asked during cross-examination what he tells new customers about the Stone & Wood brewery. He responded: Just about how it was started up. The location in Byron Bay. You know, the use of the – you know, the water that they use. It's natural waters of Byron Bay. Tell them about the – the fact that it's a family business with the three guys, you know, starting it up as they did. You know, talk about the growth and where it has gone from to where it is now. In his affidavit, Mr Coorey said that, in his experience, most customers of the Boardwalk Tavern who order a Pacific Ale ask for a 'Pacific Ale' (if they refer to the beer by name, rather than simply pointing at the tap); some customers ask for a 'Stone & Wood'; in some cases, he has asked such customers which Stone & Wood they want (for example, when they have had other Stone & Wood beers on tap or in bottle) and in his experience, many of those customers then identify the beer they want by name (such as 'Pacific Ale' or 'Jasper Ale'). During cross-examination, he accepted that, by saying "simply pointing at the tap", he meant that they say, "I'll have one of those" and point at the beer tap with the Stone & Wood Pacific Ale markings on it. He said that the customer could be at the other end of the bar and simply ask, "Can I have … a Pacific Ale?" He said that, in such cases, the customer would have ordered Pacific Ale before and this was his or her second or third drink. During re-examination, Mr Coorey said that if a customer was standing at one end of the bar it is about a metre and a half from the beer taps for craft beer; if they are at the other end, it is about one metre. 146 Mr Crooks gave evidence about beer sales at The Grain Store Craft Beer Café in New South Wales. The Grain Store specialises in the sale of craft beer; it does not sell mainstream beer. It has a capacity of 100 people, with a restaurant and a bar. The craft beers are mainly sold on tap; the bottle sales are minimal. Mr Crooks stated in his affidavit that Stone & Wood Pacific Ale is the best-selling beer at The Grain Store and is the 'go to' beer for staff; it outsells other beers 2:1; each week, depending on how busy the venue is, he sells approximately six kegs of Stone & Wood Pacific Ale and about two to three kegs of other beers on tap; Stone & Wood Pacific Ale is one of four beers permanently on tap at the venue; he currently has two Stone & Wood beers on tap at The Grain Store – the Pacific Ale and the Golden Ale; based on his interactions with customers, he estimates that over 90% of the people who order a Stone & Wood Pacific Ale refer to it as 'Pacific Ale' (assuming the customer says the name of the beer); more recently (in the last 12 months or so) he has noticed some customers (and many staff) shortening the name to 'Pac Ale', but the majority of customers he serves still call it 'Pacific Ale'; when speaking with customers about the beer, he typically refers to it as 'Pacific Ale'. Mr Crooks said during cross-examination that The Grain Store has a fairly large draught fountain, with 21 taps; each of the taps has brands on them; an ordinary schooner glass of Stone & Wood beer sells for about $7; the beers range from about $7 to $10 per glass, depending on the alcohol content; the beer taps are at the back of the bar, so when customers are ordering they usually refer to the beer by name rather than pointing at the beer tap; The Grain Store has a sheet which is printed each day, describing what is on the various taps. An example of this sheet, headed "Today's Tap List @ The Grain Store Newcastle", was produced and went into evidence. It lists the two Stone & Wood beers as numbers 8 and 20 in a list of 21 beers. They are referred to as "Stone & Wood – Pacific Ale – Murwillumbah NSW" and "Stone & Wood – Garden Ale – Byron Bay NSW" respectively. The description of Stone & Wood Pacific Ale reads: Born in Byron Bay & Brewed in Murwillumbah – Our Number 1 selling beer here at the Grain Store! Brewed using all Australian barley, wheat and Galaxy hops, Pacific Ale is cloudy and golden with a big fruity almost passionfruit like aroma and a refreshing finish. Recently returned as #1 Beer in the H100 popularity contest of Australian beers. Mr Crooks said during cross-examination that he interacts with customers and tells stories of the beers that The Grain Store sells. 147 Ms McGrath gave evidence about beer sales at the Palace Hotel in South Melbourne. Ms McGrath purchased the hotel with a partner in 2013. She has co-owned and worked at the hotel since then. In her affidavit, Ms McGrath stated that when she and her partner took over the Palace Hotel, they intended to make the venue a destination for craft beer in South Melbourne. During cross-examination, she said that, at that time, there were very few places nearby that sold predominantly craft beer; the hotel sells Stone & Wood Pacific Ale but not Thunder Road Pacific Ale; they started with eight taps (two fountains of four taps) and have added more over the years; they now have 13 taps; the best-selling beer is Carlton Draught; Stone & Wood Pacific Ale is their second best-selling beer; both Carlton Draught and Stone & Wood Pacific Ale are permanently on tap; apart from Carlton Draught, the rest of the beers on tap are craft beers; when customers come into the bar, they can see the taps, including the branding on the taps; each beer tap has a different decal on it. Ms McGrath accepted during cross-examination that whenever they sell Stone & Wood Pacific Ale, it is referrable to the beer tap which has a Stone & Wood brand on it (as shown in paragraph [6] above). There is also a list on the wall. They sell beer in pots and pints. The pots are 285 ml; the pots are 570 ml. The price of a pint size glass of Stone & Wood Pacific Ale is $11. The price of the same size glass of Carlton Draught is $9.60. The craft beers range between about $11 and $15 for a pint size glass. The alcohol content usually determines the price of the beer. She stated that they sell about six kegs of Stone & Wood Pacific Ale per week; with the other beers on tap (other than Carlton Draught), they sell about one or two kegs a week; the hotel used to sell the bottled form of Stone & Wood Pacific Ale but no longer does so. Ms McGrath works behind the bar during lunch time. In her affidavit, Ms McGrath said that, when customers order Stone & Wood Pacific Ale, if referring to the beer by name, in her experience approximately 50% of people refer to the product as 'Pacific Ale' and approximately 50% of people refer to the product as 'Stone & Wood'; and that, from time to time, the hotel also has other Stone & Wood products on tap – when this is the case, she clarifies with the customer whether he or she meant to order a Pacific Ale or a different Stone & Wood product. She also stated that, to her, the name 'Pacific Ale' is synonymous with the Stone & Wood brand; generally speaking she refers to the beer as 'Pacific Ale'; and that is what she calls the beer when introducing a customer to the product. She gave evidence during cross-examination about the types of conversations that may occur with customers who are trying to decide which beer to purchase. As part of this evidence, Ms McGrath accepted that if the customer says that he or she likes a lighter beer, she might be inclined to say, "Would you like one of these Pacific Ales[?]" She said that they often give out samples of the different beers; she explained "we're a craft beer venue, so … we like people … to be happy with what they're drinking". In re-examination, Ms McGrath said that there were instances when customers might order the Stone & Wood Pacific Ale in her bar when they were not next to or in front of the decal on the beer tap; they could be anywhere in the bar. She said that they have two blackboards with the lists of beers on them. 148 Mr Omond stated in his first affidavit that on 23 October 2015 he attended Bar Nacional, a licensed bar in the Melbourne CBD; the bar had a sign advertising the drinks which were on special during the 'happy hour' (4.00 pm to 9.00 pm). His affidavit includes a photograph of the sign which list six drinks. The first of those was written as "Pacific Ale". After setting out that photograph, Mr Omond stated in the affidavit that the beer being served at the bar was the Thunder Road Pacific, and that one of the beer taps had this branding on it; Stone & Wood Pacific Ale was not for sale. 149 I accept the evidence of Mr Kirkegaard, Mr Coorey, Mr Crooks, Ms McGrath and Mr Omond as set out in paragraphs [143]-[148] above as accurately describing their experiences. On the basis of this evidence, I make the following findings: (a) In many cases, the beer taps (with the decals) are visible to the customer when ordering a beer on tap at a bar or hotel. (b) In many cases, a licensed venue will only sell one or the other of Stone & Wood Pacific Ale or Thunder Road Pacific on tap, rather than both. (c) In the context of craft beers, in some cases there will be interaction between the bartender and the customer about the brewery and particular product. A theme running through the evidence of several witnesses was that, in the context of craft beers, bartenders will on occasion tell customers about the brewery and the beer. (d) In some licensed venues which sell Stone & Wood Pacific Ale, there is a close association between 'Stone & Wood' and 'Pacific Ale' among customers who have purchased the Stone & Wood Pacific Ale, and many of those customers refer to the product simply as 'Pacific Ale' or 'Pac Ale'. (e) I do not think it is established that there is any actual or likely confusion (as between the Stone & Wood Pacific Ale and the Thunder Road Pacific) among customers who purchase beer at licensed venues. There is no evidence of any actual confusion. As noted above, in many cases, licensed venues only sell one or the other of the products, rather than both. The decals for the beer taps are often visible (although not always) to customers when ordering tap beer, and these make quite clear whether the product is the Stone & Wood Pacific Ale or the Thunder Road Pacific. To the extent that, as noted above, at some licensed venues, customers refer to the Stone & Wood Pacific Ale simply as 'Pacific Ale' or 'Pac Ale', this usage is in a context where the venue sells the Stone & Wood Pacific Ale (and not the Thunder Road product) and the customer has previously purchased the product. As I see it, it is an abbreviation for the product in that context. It does not follow that the customer would be likely to use that expression at a different venue which sells the Thunder Road product, not see the beer tap decal or other information indicating the product is the Thunder Road product, and thus mistakenly order the product thinking it is Stone & Wood Pacific Ale. There is no evidence of such confusion occurring and I think the prospect of it occurring is remote. (f) I do not think the photograph annexed to Mr Omond's first affidavit, and the evidence in his affidavit, demonstrates any actual or likely confusion among customers. Notwithstanding the ambiguity of the words 'Pacific Ale' on the sign, any customer is likely to see the beer taps before ordering; the decal for the Thunder Road Pacific is likely to make clear to the customer that this is the product being offered. In any event, the sign was presumably prepared by the bar; there is no suggestion that it was prepared by the respondents. Thus it is hard to see how the respondents could be held responsible for any confusion arising from the sign. Sale of beer at bottle shops and other retail liquor stores 150 Mr Kirkegaard was asked questions during cross-examination about the sale of craft beer in bottle shops. He accepted that, with the increasing popularity of craft beers, one might see quite a number of craft beers for sale in a bottle shop. Mr Kirkegaard gave evidence in his second affidavit and during cross-examination that, in his experience, some retailers arrange their beers by brewery, but it is more common for retailers to group beers by categories or broad flavour characteristics; for example, all pale ales would be together. Mr Kirkegaard said that if a shop was arranging beers in this way, the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale / Thunder Road Pacific would be likely to be "roughly in the same precinct within the shop". Mr Kirkegaard accepted during cross-examination that "there's a bit of a deliberative decision-making process when the consumer goes into the [bottle] shop not quite sure what to buy"; that the first decision is, "What type of beer do I want?"; that there might be a range of products to be selected in a beer type, for example in categories such as pale ale and summer ale; and that there would be more than one choice available at a particular shop. Mr Kirkegaard accepted that in the ordinary purchase situation there could be a "bewildering array of options" and that the process of deciding which beer to buy "could take more than a few moments". 151 Mr Piperno gave evidence about sales of craft beer in the bottle shop environment. As noted above, he owned two liquor stores specialising in craft beer and speciality wine; one was in Brunswick, Melbourne and the other in Carlton North, Melbourne. These were owned with his brother from 2011. The store in Brunswick was the flagship store and the store in Carlton North was smaller. They sold the Carlton North store in 2013 and the Brunswick store in September 2015. Although he was responsible for all the buying and promotions for both stores, he spent a lot of time on the shop floor selling products. In their stores, the craft beers were displayed by supplier. For example, Lion, which produces the James Squire range, would allocate fridges to the stores so that the seven or eight different James Squire craft beers were displayed together. Mr Piperno said during cross-examination that this worked because he could tell a story about the brewery. He stated in his affidavit that he sold both Stone & Wood Pacific Ale and, once it was released, Thunder Road Pacific Ale; he "was not aware of a single instance of any customer confusing the Thunder Road Pacific Ale with the Stone & Wood Pacific Ale"; invariably, customers asked for the Stone & Wood Pacific Ale by its full name or, alternatively, they simply asked if the store stocked "Stone & Wood"; he is not aware of any instance where a customer asked for Stone & Wood Pacific Ale without reference to the name 'Stone & Wood'. He said during cross-examination that they stocked Stone & Wood beers when they could get them but they were "very, very scarce". He said that people would walk in and say, "Do you have Stone & Wood?" and nine times out of 10 the answer was "No", because he could not get supply. He said that, after Thunder Road launched its Pacific Ale in 2015, there were two Pacific Ales in the Brunswick store. They were on separate shelves, as the beers were displayed by supplier. He said that, as the standard cool room door is about 700 centimetres wide, and they were behind separate doors, the products were about a metre apart. 152 In Mr Omond's second affidavit he stated that on 15 February 2016 he went to the Thirsty Camel bottle shop on North Road, Caulfield South, and purchased a carton of Thunder Road Pacific. The affidavit includes a photograph that he took of the floor display of the Thunder Road Pacific. In the photograph, there are three cartons with the Thunder Road Pacific branding on them (which is similar to that on the six-pack, as set out on the right in paragraph [5] above). There are two signs above the cartons. The top sign states that Thunder Road is better and cheaper than Stone & Wood. The lower sign states, "Thunder Road Pacific Ale" and the price. 153 Mr Cleaver's affidavit annexes photographs he took at a bottle shop named Grand Cellars, located in Brunswick, Melbourne. The photographs show the Stone & Wood Pacific Ale and the Thunder Road Pacific being offered for sale at the bottle shop. In the photograph, six-packs of the beers are located side by side behind a glass door of a refrigerator. It is apparent from this photograph that the Stone & Wood Pacific Ale six-pack packaging is open at the end (and thus the bottles themselves can be seen) whereas the Thunder Road Pacific six-pack packaging is closed at the end (with cardboard displaying the words 'Thunder Road' and 'Pacific'). Side by side, the six-packs look quite distinct, for the reasons discussed above in relation to the labels and packaging of the products. 154 I accept the evidence of Mr Kirkegaard, Mr Piperno, Mr Omond and Mr Cleaver as set out in paragraphs [150]-[153] above as accurately describing their experiences. On the basis of this evidence, I make the following findings in relation to the sale of beer at bottle shops and other retail liquor stores: (a) I do not think it is established that there is any actual or likely confusion (as between the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale or Thunder Road Pacific) among customers who purchase beer at bottle shops or other retail liquor stores. There is no evidence of any actual confusion. Some bottle shops which sell craft beer arrange the beers by the brewery, while others arrange them by categories or broad flavour characteristics. If the beers are arranged by category, and the bottle shop sells both the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale / Thunder Road Pacific, there is unlikely to be confusion between the two products. They are likely to be located near to each other in this scenario, and the differences in the labelling and packaging would make clear that they are different products. Even if the beers are not located close to each other, the prospect of any confusion is low in light of the distinct labelling and packaging (as discussed above). Also, if all the products from one brewery are located together, the effect would be to emphasise the identity of that brewery, making confusion unlikely. (b) The situation described in Mr Omond's second affidavit does not suggest any actual or likely confusion between the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale / Thunder Road Pacific. The sign above the cartons contrasted the two brands, Stone & Wood and Thunder Road, thus emphasising that they are different. Further, the packaging on the Thunder Road cartons clearly identified Thunder Road as the producer. Consumer purchasing behaviour 155 In this section of these reasons, I consider the evidence of Professor Lockshin, who gave expert evidence in relation to consumer buying behaviour in retail stores; Mr Jane, who gave expert evidence about brand design; and Mr Camilleri, who gave evidence about marketing. 156 The gist of Professor Lockshin's evidence, as summarised in the abstract to his report, was that consumers do not shop and purchase items from retail stores based on a side-by-side comparison with other products in the same category; rather, consumers 'learn' what products fulfil their needs and preferences and then make purchase decisions using their subconscious memory of the cues that link to the product; these cues are often a single word, colour or logo. Professor Lockshin did not carry out any tests in relation to the products in issue, namely Stone & Wood Pacific Ale and Thunder Road Pacific Ale / Thunder Road Pacific. He was not asked to do so. Professor Lockshin accepted that it would be possible to test the propositions in his report in relation to the products in issue. 157 In paragraphs 17-21 of his report, Professor Lockshin addressed the question what aspects of the presentation of Stone & Wood Pacific Ale consumers are most likely to recognise or identify (terms that he prefers to 'recall'). In paragraph 20, he expressed the view: Obviously the Stone & Wood name … is the most prominent feature of the packaging of the Stone & Wood Product and would likely be the first cue recognised by consumers when they are learning about the beer (trying for the first time or two). In paragraph 21 of his report, he stated that the name is used on a range of different sub-brands of beer (Jasper Ale, Pacific Ale, Garden Ale, Green Coast) and by itself does not call to mind the characteristics of the beer the consumer prefers or is seeking. He stated that there is a wide range of beer styles with quite different characteristics, each of which may appeal to different consumers. "So, most consumers coming across the Stone & Wood packaging for the first time or two would learn to use the colour along with the sub-brand of beer to make their purchasing decision. The overall brand name, while likely an indicator of quality, does not call to mind the characteristics of the various sub-brands of beer. Consumers learn through experience which of the sub-brands they prefer." These opinions were not based on any tests in relation to the Stone & Wood products. 158 In paragraphs 26-27 of his report, Professor Lockshin addressed the Thunder Road Pacific Ale. He stated that the Thunder Road Pacific Ale reverses the size of font associated with the Stone & Wood Pacific Ale. Here, the largest font is for 'Pacific Ale', followed by a smaller font for the Thunder Road brand. He stated that the Thunder Road product uses a brighter orange colour than the Stone & Wood product and adds a green secondary colour. "It is easy to see that the Thunder Road Product focused on the words 'Pacific Ale' as the key identifier of its sub-brand …" He also stated that the colour scheme of this brand is of a different shade of orange with less brown tones than the Stone & Wood product. 159 In paragraphs 29-30 of his report, Professor Lockshin addressed the revised Thunder Road packaging, which uses the word 'Pacific' rather than 'Pacific Ale'. He stated that his comments were the same as for the earlier Thunder Road product. "The key to recognition (not recall) would be the word 'Pacific', as it is the largest and most prominent cue." These observations were not the subject of any tests in relation to the Thunder Road products. 160 In paragraphs 31-37, Professor Lockshin addressed the question whether consumers would consider there to be any relationship between the Stone & Wood Pacific Ale and Thunder Road Pacific Ale / Thunder Road Pacific. Again, the statements in these paragraphs were not the subject of any tests or research in relation to the actual products. In paragraph 31, Professor Lockshin expressed the opinion that, on a side-by-side comparison, "the answer is likely to be: no, they don't seem to be related". He stated: "Side-by-side, these look like two different brands with similar but not identical colour schemes and different brand names (Stone & Wood and Thunder Road)." In paragraph 32, Professor Lockshin expressed the view that the major issue is not whether consumers perceive a relationship when 'thinking' about the two products and their packaging (that is, when comparing them side by side and identifying differences between them). In paragraph 33, he stated: … consumers do not typically use their cognitive processes when buying consumer packaged goods. They rely on learned behaviour and make their choices using the 'fast' (Kahneman, [Thinking Fast and Slow] 2011) subconscious part of their brain without actively engaging the 'slow' or cognitive part of their brain. Consumers make their 'choices' based on the cues they have learned to identify products they like. Professor Lockshin accepted during cross-examination that in expressing these opinions he had not addressed the attributes of the typical consumer who would buy this product, but said that there is a lot of research that shows that many different people buy the same product for lots of different reasons, so that the demographics or the characteristics of consumers in many cases are not predictive of what they are going to buy. He said during cross-examination: It's my opinion that most people, when shopping, are not cognitively registering what they're seeing. They're thinking of little cues and that causes – that activates something in their subconscious to get them to pick a product and I don't think that action is dependent on the characteristic of the person making that action. Professor Lockshin said that these comments referred to buying a whole range of categories of consumer packaged goods. He accepted that his opinions were based on studies relating to wine and not beer. He said that, "We've done some research on beer, but not on this product, but I'm making an extension from looking at lots of different product categories". 161 In paragraph 35 of his report, Professor Lockshin expressed the opinion that "it is likely that consumers have learned to identify the different Stone & Wood products by their sub-brand names and learned which sub-brand they prefer". He also stated: A substantial number of consumers have learned about Stone & Wood Pacific Ale and many would have returned to buy it repeatedly. This has grown the brand. Over a period of more than five years, this Stone & Wood sub-brand, Pacific Ale, has garnered a loyal clientele, who learned to identify the beer they liked as Pacific Ale and, as I understand, in the Australian tradition, many shortened it to PacAle. Professor Lockshin said during cross-examination that the first sentence in the extract set out above was based on Stone & Wood's sales, but accepted that he had not seen any evidence of their sales. He then said that he noted from Mr Kirkegaard's affidavit that it is a successful craft beer brand. He accepted that Mr Kirkegaard did not necessarily direct one to whether it was a substantial number or what number it might be. In relation to the statement that "many would have returned to buy it repeatedly", it seems that there was no specific evidentiary base for this statement, but rather it was an assumption from the fact that the beer had been on the market for five years. In relation to the statements that consumers have "learned to identify the beer they liked as Pacific Ale", it appears that this was also an assumption. Professor Lockshin said during cross-examination: "It's speculation based on the fact that rarely does anyone buy a brand once". In relation to the statement that "many shortened it to PacAle", Professor Lockshin said this was based on Mr Kirkegaard's affidavit and he accepted that Mr Kirkegaard had said that "some" – rather than "many" – consumers have abbreviated the name in this way. 162 After referring in paragraph 36 to the work of Professor Ehrenberg (to the effect that consumers typically buy a number of brands within a category, because they see them as essentially similar), Professor Lockshin stated in paragraph 37 that in his opinion this is likely to be occurring between Stone & Wood Pacific Ale and Thunder Road Pacific Ale / Thunder Road Pacific. "The cue or distinctive asset for these products has become the sub-brand 'Pacific Ale'. This is what consumers have learned to use to recognise the beer they like. Whether shopping or buying a beer in a bar, the identifying cue is the same: the words Pacific Ale have become the distinctive asset." Professor Lockshin accepted that these propositions could be tested. But they were not the subject of any tests. 163 Mr Jane, in paragraphs 25-31 of his affidavit, expressed the opinion that different industries adopt distinctive design styles or cues when using logos, images and colours in the promotion and packaging of products. In paragraphs 32-36, Mr Jane expressed the view that the craft beer market adopts distinctive design styles or cues when using logos, images and colours in the promotion and packaging of beer products; the craft beer market is following a trend that borrows from the past, using cues to convey rustic, handmade, heritage and artisanal qualities in both product and design. Mr Jane accepted during cross-examination that traders use these design styles or cues to make products seem familiar to consumers. He also accepted that this is so that the product is easy to spot and place in a category. In paragraphs 43-44, Mr Jane stated that colours are specifically used to entice the targeted shopper demographic to purchase and become a repeat consumer; in his opinion, colours do play a major influence on consumers of beer; the choice of colour delivers a subliminal message; colour is the best way to identify, not only a brand, but also a flavour or a style. Mr Jane in paragraphs 50-56 of his affidavit described some of the differences between the presentation of the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale / Thunder Road Pacific. He stated that each company used a different design hierarchy which clearly pulls each offering apart from the other; Stone & Wood is what he would consider to be a company that is brand led, meaning that the company logo is front and centre on all its communication; Thunder Road is style led, as the style of beer is clearly the most impactful graphic on the bottle label and carton packaging. This evidence related to the bottled products. Mr Jane accepted in cross-examination that in these paragraphs he was identifying differences observable in a side-by-side comparison. Mr Jane accepted during cross-examination that he was not an expert in relation to the craft beer industry. 164 In paragraphs 38-43 of Professor Lockshin's report, he responded to Mr Jane's evidence regarding packaging design. In paragraph 40, Professor Lockshin stated: "In this matter, the colour schemes may not be the most important cue for consumers in choosing their preference for 'Pacific Ale'; the words may fulfil that purpose." Professor Lockshin accepted that this matter had not been tested. In paragraph 42, Professor Lockshin stated that when consumers are using the subconscious (fast) part of their brains to make a decision, the cue they are likely to use is the sub-brand – Pacific Ale or Pacific. After stating that Mr Jane seemed to agree that these words are the most impactful aspect of the Thunder Road labels, Professor Lockshin expressed the view that this is what consumers are subconsciously using to make their product selection and not the colour scheme as stated by Mr Jane. Professor Lockshin accepted during cross-examination that this is capable of being tested. In paragraph 43 of his report and during cross-examination, Professor Lockshin acknowledged that, while there had been "wine involvement" studies to monitor the difference in behaviour between people who enjoyed a product category, there were no comparable studies in relation to beer. Professor Lockshin stated in paragraph 43 of his report that "prior evidence from wine, foods, fashion, retail shopping, appliances and many other product categories strongly suggests there would be high and low involvement beer consumers". He accepted that this could be tested, just as it has been in the other categories. 165 Mr Camilleri accepted during cross-examination that the way in which a product is named can be an important hook or cue for consumers. He also accepted that, generally speaking, colours can be an important hook or cue for consumers. He accepted that, once a brand or product gains a reputation, consumers can quickly register a name that is used in connection with a product and then associate things with that product. He acknowledged that once consumers have registered a colour or colours they retain a recognition and association of that colour with the product. He accepted that the recognition can be conscious and that it can possibly be subconscious. 166 On the basis of the evidence set out in paragraphs [155]-[165] above, I make the following findings in relation to consumer purchasing behaviour: (a) I accept that, generally speaking, consumers purchasing goods do not shop and purchase items from retail stores based on a side-by-side comparison with other products in the same category; rather, consumers 'learn' what products fulfil their needs and preferences and then make purchase decisions using their subconscious memory of the cues that link to the product; these cues are often a single word, colour or logo. This was the effect of Professor Lockshin's evidence. Mr Camilleri's evidence was consistent with this. (b) However, I do not think it is established, in the absence of tests in relation to the products in issue, that consumer purchasing behaviour in relation to the Stone & Wood Pacific Ale and the Thunder Road Pacific Ale / Thunder Road Pacific is likely to occur in the way described by Professor Lockshin. Having stated (in paragraph 20 of his report) that "[o]bviously" the Stone & Wood name is the most prominent feature of the packaging of Stone & Wood Pacific Ale, and would likely be the first cue recognised by consumers when they are learning about the beer, Professor Lockshin expressed the opinion (in paragraph 35) that "it is likely that consumers have learned to identify the different Stone & Wood products by their sub-brand names and learned which sub-brand they prefer". However, a plausible alternative is that consumers have learned to identify the brand 'Stone & Wood', or the composite brand and product 'Stone & Wood Pacific Ale', with the product they prefer. Thus the "cue" or "distinctive asset" (cf paragraph 37 of the report) for the product may be 'Stone & Wood' or 'Stone & Wood Pacific Ale' rather than 'Pacific Ale'. Further, the particular context of craft beer may affect the way consumers approach purchasing decisions – see, for example, Mr Kirkegaard's evidence set out in paragraphs [62] and [64] above. In the absence of testing, I am not satisfied that consumer purchasing behaviour in relation to the products in issue would follow the pattern described in Professor Lockshin's evidence. Threat of legal action 167 For the purposes of the cross-claim, it is necessary to refer to the correspondence before the proceeding was commenced, threatening legal action. 168 On 26 February 2015, the solicitors for Stone & Wood wrote to Intellectual Property Development Corporation and Elixir. The subject of the letter was: "Infringing Use of 'PACIFIC ALE'." The letter commenced with a statement that the solicitors acted for Stone & Wood Group and Stone & Wood Brewing, jointly referred to in the letter as "Stone & Wood". The letter stated that the solicitors had been instructed to write "in connection with your use of the PACIFIC ALE trade mark on one of your 'Thunder Road' beers". After referring to Stone & Wood's goodwill and reputation, the letter stated that Stone & Wood was also the proprietor of a trade mark registration (referred to in the letter as the "Stone & Wood registration"); details of Australian trade mark number 1395188 were then set out, including the mark set out in paragraph [9] above. The next section of the letter was headed, "Your conduct and Stone & Wood's complaint against you". This included the statement: It has recently come to Stone & Wood's attention that your company has used the mark "PACIFIC ALE" (the Infringing Mark) on a beer brewed in Belgium, which you have imported into Australia, and are currently marketing and selling in Australia. We have been instructed by our client that you do not have any connection with Stone & Wood and are not authorised to use any of its trade marks or any substantially identical or deceptively similar mark on your goods and services. … For the reasons set out below your activities amount to trade mark infringement, passing off and/or misleading or deceptive conduct or false representations. 169 The letter then contained a section headed, "Infringement of Stone & Wood registration". Sections 120(2) and (3) of the Trade Marks Act were set out. The letter stated that the "Infringing Mark is deceptively similar to the Stone & Wood registration". It also stated that the "Stone & Wood registration is well-known in Australia amongst the craft beer-buying trade and public, and use of the Infringing Marks would clearly be taken as indicating a connection between your beers and our client. This is likely to adversely affect our client's interests and therefore amounts to an infringement of Stone & Wood's registration under section 120(3)" of the Trade Marks Act. After sections headed "Breaches of Australian Consumer Law", "Passing Off" and "Remedies", the final section of the letter was headed, "How this issue may be resolved". This included the statement: "Our client protects its commercial reputation and its intellectual property rights vigorously and, if necessary, will commence proceedings to protect and enforce its rights". After stating that the client was prepared to resolve the matter without resorting to legal proceedings if the undertakings attached to the letter were given, the letter stated that if the undertakings were not received within 14 days, "our client reserves the right to commence legal proceedings against you without further notice" (emphasis in original). 170 On 11 March 2015, the solicitors for Elixir and Intellectual Property Development Corporation sent a letter in response to the letter dated 26 February 2015. The 11 March letter stated that the solicitors' clients "rejected the assertions" in the 26 February letter and provided a detailed response. Near the end of the 11 March letter it was stated: "We trust that this matter is at an end and draw your attention to the prohibitions on groundless threats of legal proceedings set out in section 129 of the Trade Marks Act". 171 On 15 April 2015, the solicitors for Stone & Wood responded to the 11 March 2015 letter. After responding to several of the arguments made in the 11 March letter, the 15 April letter concluded: "we invite your clients to reconsider their response to our letter". Two questions were then set out; one related to which corporate entity was responsible for the production, distribution and sale of the impugned product; the other was whether the solicitors had instructions to accept service of court proceedings. 172 As noted above, on 20 May 2015, the proceeding was commenced. It did not initially include a trade mark infringement claim. On 18 June 2015, the cross-claim was filed. On 19 June 2015, the first case management conference took place, before a judge of this Court. Orders were made permitting Stone & Wood to file and serve an amended fast track statement and amended originating application (to add a claim for infringement of the Registered Trade Mark) by 24 July 2015. On 24 July 2015, Stone & Wood filed and served its amended fast track statement and amended originating application, which incorporated the trade mark infringement claim. Misleading or deceptive conduct and related claims, and passing off 173 It will be convenient, first, to set out the principles applicable to the misleading or deceptive conduct claim and the related claims based on the Australian Consumer Law; second, to set out the principles applicable to passing off; and then to deal together with the application of these principles to the facts of this case. This is consistent with the way Stone & Wood dealt with the matter in its submissions. Applicable principles – misleading or deceptive conduct and related claims 174 Stone & Wood relies on ss 18, 29(1)(g) and 29(1)(h) of the Australian Consumer Law, which relevantly provided as follows: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. … 29 False or misleading representations about goods or services (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: … (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or (h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; … 175 As the Full Court of this Court observed in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at [98], there is an overlap between causes of action arising under Pt V of the Trade Practices Act 1974 (Cth) (see now, Pt 2-1 of the Australian Consumer Law) and the common law tort of passing off. "However, the causes of action have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting. Passing off protects a right of property in business or goodwill whereas Pt V is concerned with consumer protection. Part V is not restricted by common law principles relating to passing off and provides wider protection than passing off": Cadbury (2007) 159 FCR 397 at [98] per Black CJ, Emmett and Middleton JJ. The Full Court also said (at [99]): Whether or not there is a requirement for some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Pt V of the Trade Practices Act. The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. 176 As Kenny J said in Nutrientwater Pty Ltd v BACO Pty Ltd (2010) 84 IPR 452 at [85], under the statutory misleading or deceptive conduct provisions, whether or not a representation is misleading or deceptive or likely to mislead or deceive is a question of fact, which must be determined by the court having regard to all the relevant circumstances, including the history of the claimant's product, the circumstances in which the respondent's get-up was adopted, and the circumstances prevailing in the market at the relevant time. Her Honour also noted that, in considering the statutory question, there are a number of well-recognised principles to be borne in mind. "Chief among these is the principle that conduct may be found misleading or deceptive or likely to mislead or deceive notwithstanding that the respondent acted honestly and reasonably and did not intend to mislead or deceive. Should the court find that the respondent had such an intention, as in the case of passing off, the court may more readily find that the conduct was in fact misleading and deceptive": Nutrientwater at [85]. Her Honour then said (at [86]-[88]): 86 The latter proposition is, however, subject to much the same qualification as for passing off. As with passing off, the mere fact that one trader may have copied the design or get-up of another trader's product is not sufficient of itself to establish a contravention of ss 52 or 53 of the [Trade Practices Act], so long as the copyist has sufficiently distinguished its products and made it clear that they are not the goods of the trader whose design or get-up is copied: see Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281; [1999] FCA 461 at [336]-[337] (Dr Martens) (affirmed on appeal: see (1999) 95 FCR 136); 47 APR 499; [1999] FCA 1655), citing Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 196, 199-200; 42 ALR 1 at 4, 6-7; 1A IPR 684 at 686, 688-9 (Puxu) per Gibbs CJ, CLR 209-210; ALR 16; IPR 686 per Mason J, CLR 225-226; ALR 27; IPR 706 per Brennan J. In Dr Martens at [339]-[347], Goldberg J referred to a number of decisions, including Reckitt & Colman, in which the labelling of a product had been insufficient to prevent passing off, but held that the decisions were distinguishable on their facts. 87 As with passing off, whether or not impugned conduct is misleading or deceptive, or likely to mislead or deceive, is to be determined at the time the impugned conduct commenced …: see Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 195-196 and 203-204 (Taco Bell) per Deane and Fitzgerald JJ; Thai Wood Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289 at 302 per Gummow J; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182; [2002] FCA 390 at [230]-[236] per Allsop J; Dr Martens at [322]-[337] per Goldberg J; and Natural Waters of Viti Ltd v Dayals (Fiji) Artesian Waters Ltd (2007) 71 IPR 571; [2007] FCA 200 at [56]-[60] (Natural Waters) per Bennett J. 88 For the purposes of the statutory claims, in determining whether a misrepresentation has been made, the court must consider the effect of the impugned conduct on the "ordinary" or "reasonable" member of the class to whom the conduct is directed, rejecting reactions which are extreme, fanciful or capricious. As the court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45; 169 ALR 677; 46 IPR 481; [2000] HCA 12 at [105] (Campomar) said, "[t]he initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly attributed to the ordinary or reasonable members of the classes of prospective purchasers". Much the same standard is applied in a claimed case of passing off in assessing whether a representation of the relevant kind was made and its likely effect on the potential purchaser: see Ricegrowers at [63]-[66]. The ordinary or reasonable member of the class need not be particularly intelligent or well informed; equally he or she is not to be considered as if careless or indifferent to the matter in question: compare Australian Woollen Mills at 658. 177 Although not expressed in the context of statutory misleading or deceptive conduct provisions, the following passage from the judgment of Dixon and McTiernan JJ in Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 is potentially relevant. Their Honours said (at 657-658): The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public. But the practical application of the principle may sometimes be attended with difficulty. … 178 The approach discussed in the above passage may have application where, for example, it can be shown that a trader, by its labelling or packaging, intended to mislead or deceive consumers into thinking that its product was the product of its competitor. But, as the Full Court (Sundberg, Emmett and Hely JJ) said in Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286, the "potency of the admission inherent in a finding of intention to deceive may depend upon the extent of the evidence as to the practical operation of the marketplace in question. The more complete the picture portrayed by that evidence, the less likely that an admission constituted by intended effect will carry the day, if it is inconsistent with the picture otherwise established" (at [34]). 179 The mere fact that a trader has copied elements of a competitor's get-up or marketing, or has taken advantage of a market a competitor has created, does not establish that the trader has engaged in misleading or deceptive conduct. In Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 (Privy Council), a passing off case, the plaintiffs/appellants were a group of companies that manufactured and sold a soft drink called 'Solo'. They commenced a proceeding against a company (the defendant/respondent) which manufactured and sold a soft drink called 'Pub Squash' alleging that, in promoting its product, the defendant had so confused and deceived the market that it had passed off its product as that of the plaintiffs. The trial judge concluded that that there was no "relevant misrepresentation" and no deception or probability of deception; he found that the "competition developed by the respondent and its officers took advantage of the appellants' promotion of their own product, but never went so far as to suggest that 'Pub Squash' was the product of the appellants, or merely another name for 'Solo'" (see 861). The Privy Council upheld the decision of the trial judge to dismiss the passing off claim. Lord Scarman, delivering the judgment of the Privy Council, said (at 861): Once it is accepted that the judge was not unmindful of the respondent's deliberate purpose (as he found) to take advantage of the appellant's efforts to develop "Solo", the finding of "no deception" can be seen to be very weighty: for he has reached it notwithstanding his view of the respondent's purpose. But it is also necessary to bear in mind the nature of the purpose found by the judge. He found that the respondent did sufficiently distinguish its goods from those of the appellants. The intention was, not to pass off the respondent's goods as those of the appellants, but to take advantage of the market developed by the advertising campaign for "Solo". Unless it can be shown that in so doing the respondent infringed "the plaintiffs' intangible property rights" in the goodwill attaching to their product, there is no tort: for such infringement is the foundation of the tort: see Stephen J, in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd. (Emphasis added.) 180 The judgment of the Privy Council in the Pub Squash case was referred to by Lockhart J in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 345 and by Kenny J in Nutrientwater Pty Ltd v BACO Pty Ltd (2010) 84 IPR 452 at [82] and[108]. In ConAgra, Lockhart J said that "deliberate copying of the plaintiff's goods does not always evidence an intention to deceive; it may indicate nothing more than realisation that the plaintiff has a useful idea which the defendant can turn to his own advantage, though not intending to pass off his goods as those of the plaintiff" (at 345). In Telstra Corp Ltd v Phone Directories Co Pty Ltd (2014) 316 ALR 590, Murphy J said (at [540]): It is also necessary to keep in mind that it is no part of the Court's task to be critical of the respondents for taking an element of Telstra's get up unless they have engaged in misleading or deceptive conduct or passing off: Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281 at [306]-[307] per Goldberg J. The authorities are replete with examples where traders "sail close to the wind" by copying elements of a competitor's get up, but maintain sufficient differences such that misleading or deceptive conduct or passing off cannot be made out. The question is whether the trader goes too far and steps over the line into misrepresentation. (Emphasis added.) 181 A number of cases have considered the application of the statutory misleading or deceptive conduct provisions in the context of the use of descriptive words. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216, which concerned a claim by the Sydney Building Information Centre that the use of the name Hornsby Building Information Centre was misleading or deceptive, or likely to mislead or deceive, Stephen J (with whom Barwick CJ and Jacobs J agreed) said (at 229-230): There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that quite small differences in a competitor's trade name will render the latter immune from action (Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. [(1946) 63 RPC 39, at p 42], per Lord Simonds). As his Lordship said [(1946) 63 RPC 39, at p 43], the possibility of blunders by members of the public will always be present when names consist of descriptive words—"So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be." The risk of confusion must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe. If this be so in the case of passing off actions the case of s. 52(1), concerned only with the interests of third parties, is a fortiori. To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation. Given that a name is no more than merely descriptive of a particular type of business, its use by others who carry on that same type of business does not deceive or mislead as to the nature of the business described. 182 In the context of passing off, in Burberrys v JC Cording & Co Ltd (1909) 26 RPC 693, Parker J (as his Lordship then was) said (at 704): Though I do not agree with the argument that a word cannot be at the same time both descriptive and distinctive, I think the fact that it retains its primâ facie descriptive signification increases the difficulty of providing that it is distinctive of the goods of any particular manufacturer. If a word is primâ facie the name of or description of an article, evidence that it is also generally associated with the name of a particular manufacturer is, in my opinion, by no means conclusive that it has become a distinctive word which cannot be used of the same article when made by others without risk of deception. If the article in question is made exclusively or mainly by a particular manufacturer, it is almost bound to be associated with the name of that manufacturer by the trade and the public, for each trader and each member of the public will naturally associate the article with the name of the manufacturer who supplies it to him and who may possibly be, in his opinion, the only person who supplies it at all. When a witness says that he knows the word "Slip-on" as meaning, not only a particular kind of coat, but the coat of a particularly manufacturer, it is material to know whether he is acquainted with the article as made by any one else. If he is not, the word, however it may be associated in his mind with the particular manufacturer, is not really to him a distinctive word. (Emphasis added.) 183 This passage was quoted with approval by Isaacs ACJ in Angelides v James Stedman Hendersons Sweets Limited (1927) 40 CLR 43 at 61-62. (Although Isaacs J dissented in the result, this did not affect his statements of principle. The judgment of Isaacs ACJ was cited by the High Court in Campomar Sociedad, Limitada v Nike International Limited (2002) 202 CLR 45 at [108].) Consistently with the above passage, it has been held in a number of cases that the fact that a word is descriptive does not mean that it cannot also be distinctive: see Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152 at 165-166 per Burchett J; Workwear Industries Pty Ltd v Pacific Brands Workwear Group Pty Ltd (2013) 104 IPR 1 at [150] per Siopis J; REA Group Ltd v Real Estate 1 Ltd (2013) 217 FCR 327 at [105]-[108] per Bromberg J. In the context of considering the notion of trade mark use, in Anheuser-Busch Inc v Budejovický, Národní Podnik (2002) 56 IPR 182, Allsop J (as his Honour then was) said (at [189]): "The usage of a word may fulfil more than one purpose on a label. For example a word may have a descriptive element, but also an element of trade mark or branding or distinguishing role: Johnson v Johnson v Sterling Pharmaceuticals [(1991) 30 FCR 326] at 335. Equally, a word may have a role in identifying a geographical location, but also a trade mark or branding or distinguishing role. It depends on context." 184 The parties referred to two cases, in particular, as providing useful illustrations of the application of the principles relating to misleading or deceptive conduct in circumstances which may bear some similarity with the facts of the present case. The first case is Anheuser-Busch Inc v Budejovický, Národní Podnik (2002) 56 IPR 182; the second case is Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (2010) 90 IPR 117. 185 In Anheuser-Busch Inc v Budejovický, Národní Podnik, the applicant was a company incorporated in the United States of America which made and sold beer in the United States and sold beer in various countries around the world. The applicant had at all relevant times been the registered proprietor of the marks BUDWEISER, BUD and BUDWEISER KING OF BEERS. It sold its beer in Australia and elsewhere under the brand 'Budweiser'. The beer was also labelled with the word 'Bud', and the phrase 'King of Beers'. The applicant's beer was well known in Australia; at least among English speakers in Australia, the only meaning of the word 'Budweiser' was the applicant's beer (at [8]-[9], [26]). The first respondent was a Czech company, wholly owned by the Czech Republic, which manufactured and sold beer. Its principal European brewery was located in a town in the Czech Republic called Ceské Budejovice (in the Czech language) or Budweis (in the German language). The town names had adjectival or possessive forms in Czech and German, being Budejovický and Budweiser respectively. The first respondent exported beer to Australia. The applicant contended that the first respondent had infringed, or threatened to infringe, its registered trade marks. The applicant also claimed relief on the basis of contravention of ss 52, 53(c) and (d) of the Trade Practices Act 1974 (Cth) and passing off. Although the focus for present purposes is on the part of the judgment dealing with the Trade Practices Act and passing off, it is necessary to say something briefly about the trade mark infringement issues in order to provide context. 186 The applicant contended that the first respondent had infringed the registered trade marks in several ways: by using the phrase 'Budejovický Budvar' on the seal on the neck, or on the large white front label, or on the smaller white back label; or by using the word 'Budejovický' in those places, or the word 'Budvar' in those places; or by using the phrase 'Budweiser Budvar' on the lower red strip on the front of the label, or the word 'Budweiser' there, or the word 'Budvar' there (see at [132]). Allsop J concluded that the use of Budejovický Budvar on the front white label, rear white label and seal on the neck label was not an infringement of the marks BUDWEISER, BUD and BUDWEISER KING OF BEERS under s 120 of the Trade Marks Act (at [181], [220]-[228]). Further, until May 1998 there was an orange strip with the phrase 'Budweiser Budvar' above 'National Enterprise'; after May 1998 there was (and the intention was that there would be in the future) a red strip with the phrase 'Budweiser Budvar' on the same line as 'National Corporation' (at [181]). Two issues arose. The first was whether the use of the word 'Budweiser' or the phrase 'Budweiser Budvar' in the corporate name was use as a trade mark. If it was, and if characterised as trade mark use of the word 'Budweiser', there was no dispute that it was substantially identical with the trade mark BUDWEISER or, if characterised as trade mark use of the phrase 'Budweiser Budvar', it was one identical with, or deceptively similar to, the trade mark BUDWEISER (at [183]). The second issue was whether the first respondent was entitled to the protection of s 122 of the Trade Marks Act. In the course of discussing the first of these issues, his Honour said, "BUDWEISER is a well-known mark. It is a word which has a brand reputation. It is not a descriptive word to Australian English speakers" (at [187]). His Honour concluded that "Budweiser" and "Budweiser Budvar" were being used as trade marks (at [190], [192]) and that use was not saved by s 122 (at [216]-[218], [222]). 187 In relation to the Trade Practices Act and passing off claims, his Honour held that, apart from the use of 'Budweiser Budvar' on the coloured strip of the first respondent's product, there was no misleading or deceptive conduct or passing off; for the same reasons as had been given in relation to the trade mark infringement part of the case, his Honour did not think the mark BUDEJOVICKý BUDVAR (on the first respondent's product) evoked Budweiser or Bud as it appeared on the labels and neck seal (of the applicant's product); further, the get-up of the first respondent's product, its colour, style and Europeanness, all created and reinforced a product distinct from that of the applicant (at [245]). His Honour then said (at [246]), in relation to the front label of the first respondent's product: However, on the front label appears the word "Budweiser". It is visible. It can be plainly seen from a number of feet. In Exhibits GRB 11 and TH 10, of course, the word "Budweiser" could be seen from a greater distance than could the word appearing on Exhibits GRB 12, TH 11 and TH 101. In Exhibits GRB 11 and TH 10 "Budweiser" is in clear white letters against a strong contrasting colour. Ms Strachan's view was that the totality of the effect of the label, its Gestalt, was sufficiently strong as to overwhelm any effect of "Budweiser" on the strip, or that people would not read or look at this part of the label. I do not agree. The word is tolerably well-known. It means or evokes the applicant's beer. It is used on the front label. It tells the reader of an association with "Budweiser". That the brewery is in the Czech Republic (as the smaller writing says) does not deny the association brought about by the word. The bottle may well be placed adjacent or near to the applicant's beer in the specialty beer section of shops. I accept that perhaps not everyone looking at the bottle will take in this part of the label, but a significant number, I think, will. For them, this is the hook which associates the first respondent's beer with the applicant's. I do not think that the balance of the get-up or information on the bottle would prevent the assumption being created in a consumer that this was a European version of the applicant's beer. Whilst this would be contrary to the applicant's promotion of the values referred to at [25], it would be a result, I think, of the usage of "Budweiser" with its clear associations with the applicant, and could be perceived as a product or brand extension. (Emphasis added.) Accordingly, his Honour concluded that, in this respect, the misleading or deceptive conduct and passing off cases were made out. 188 In Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (2010) 90 IPR 117, the applicant (Yarra Valley) had for many years produced and marketed a marinated cheese as PERSIAN FETTA. Its product was sold in a distinctive 'paint tin'. Yarra Valley applied to register, and registered, PERSIAN FETTA as a trade mark in relation to "dairy products including cheese". The first respondent (Lemnos) began using the PERSIAN FETTA mark on its website, then on its marinated cheese product, which was sold in a 'paint tin' similar in size and shape to that used by Yarra Valley. Both Yarra Valley's and Lemnos's products were sold through Coles supermarkets. Yarra Valley brought a proceeding alleging trade mark infringement. In response, Lemnos submitted that Yarra Valley's trade mark registration should be cancelled. Yarra Valley also claimed relief on the basis of the tort of passing off and the statutory misleading or deceptive conduct provisions. Yarra Valley's claims were unsuccessful. In relation to the passing off and misleading or deceptive conduct claims, Middleton J held (at [268]-[270]) that Yarra Valley's case could not succeed because there was an insufficient likelihood that consumers would have been misled by the packaging of Lemnos's product to think that Lemnos or its product were associated with Yarra Valley. The distinctiveness of Lemnos's product was reinforced by a number of contextual matters (at [271)]. Thus, notwithstanding the use of similar tins, Lemnos had clearly distinguished its product from that of the applicant (at [272]). Middleton J said (at [274]-[277]): 274 I have reached the above conclusions, even though the evidence establishes a clear intention on the part of Lemnos to adopt the key indicia of the PERSIAN FETTA product. It is apparent from Lemnos' contemporaneous documents and the oral evidence of Mr Raman and Mr Karamoshos that the Lemnos Persian Fetta/Persian Marinated Cheese product was consciously modelled on the Yarra Valley Persian Fetta product. 275 The three key indicia of Yarra Valley's PERSIAN FETTA product were: (i) The product itself, being a cow's cheese marinated in extra virgin olive oil, garlic, thyme, black peppercorn and bay leaf; (ii) The term "Persian"; and (iii) The distinctive paint tin. 276 Undoubtedly, these are the indicia that a consumer recalls. In addition to these key indicia, the use of similar wording "in the finest blend of herbs and oil", and the use of the same recipe and ingredients could increase the risk of persons being misled and deceived. 277 However, I do not accept that the composition of the product, the prominent use of the word "Persian" and the characteristic paint tin, when used in marketing Lemnos' product, individually or cumulatively form a representation that Lemnos' product is Yarra Valley's PERSIAN FETTA or that it is associated with the maker of the PERSIAN FETTA product. I do not accept that consumers would be likely to be misled or deceived. Applicable principles – passing off 189 In ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302, Gummow J said (at 355) that attempts to produce a definition of the tort of passing off which is both sufficient and comprehensive have had mixed success. After referring to "the classical trinity" of (1) reputation; (2) misrepresentation; and (3) damage, and observing that the law of passing off "contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form", Gummow J said that the classical trinity "does serve to emphasise three core concepts in this area of the law" (at 355-356). 190 In TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43, the Full Court of this Court (Wilcox, Kiefel and Emmett JJ) said (at [25]): In Reckitt & Coleman Products Ltd v Borden Inc (1990) 17 IPR 1, Lord Oliver expressed a similar idea when he listed the three elements that have to be demonstrated in a passing off action: "(1) that the trader's get-up, including any brand name, is recognized by the public as distinctive, specifically of the plaintiff's goods; (2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff's goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, eg by means of a brand name which is in fact the plaintiff's); (3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the course [sic] of the defendant's goods is the same as the source of those offered by the plaintiff." This passage from TGI Friday's was quoted with approval by Weinberg and Dowsett JJ in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549 at [60]. 191 In Campomar Sociedad, Limitada v Nike International Limited (2002) 202 CLR 45, Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ said (at [109]): The tort of passing-off is but one of the greatly differing contexts in which the courts have been called on to define and identify the nature of goodwill. The injuries against which the goodwill is protected in a passing-off suit are not limited to diversion of sales by any representations that the goods or services of the defendant are those of the plaintiff. In Spalding itself, the misrepresentation was that one class of the plaintiff's goods was another class. In more recent times there has been development both in the nature of the "goodwill" involved in passing-off actions and in the range of conduct which will be restrained. In Moorgate Tobacco, Deane J spoke with evident approval of: "[t]he adaptation of the traditional doctrine of passing off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others." (Footnotes omitted.) 192 The relevant date for determining whether an applicant has the necessary reputation in relation to the goods in question is the date on which the respondent launched its goods in the Australian market: Nutrientwater Pty Ltd v BACO Pty Ltd (2010) 84 IPR 452 at [80] per Kenny J and cases there cited. 193 The tort of passing off can be made out without proof of actual deception and without proof of any "actual, subjective intention to mislead" on the part of the tortfeasor: Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549 at [62] per Weinberg and Dowsett JJ. "It is sufficient that there be a misrepresentation that is likely to lead the public to believe that the tortfeasor's goods are those of the claimant. This is a question of fact that the court must decide, having regard to the relevant circumstances": Nutrientwater at [81]. 194 Where a claim of passing off relates to the use of a descriptive word, the cases and expressions of principle discussed in paragraphs [181]-[183] above are applicable. Application to present case 195 Stone & Wood submits that the respondents' conduct in relation to the relevant Thunder Road products contravenes ss 18, 29(1)(g) and (h) of the Australian Consumer Law, and constitutes passing off, and that these causes of action are made out in (at least) two ways. (a) First, Stone & Wood submits that it is likely that the respondents' use of the names 'Pacific Ale' and 'Pacific' will lead consumers to order or buy the Thunder Road products when they intended to order or buy the Stone & Wood Pacific Ale. (b) Secondly, Stone & Wood submits that the respondents' use of the names 'Pacific Ale' and 'Pacific' represents to consumers that there is a connection or association between the Thunder Road products (and, consequently, the respondents) and Stone & Wood or the Stone & Wood Pacific Ale. As there is no such connection or association, this is an actionable misrepresentation, which will cause damage to Stone & Wood's reputation and goodwill. 196 In relation to the first contention (product substitution), Stone & Wood submits that two examples suffice to illustrate this point. (a) The first concerns the photograph taken by Mr Omond at Bar Nacional (the 'happy hour' drinks photograph described in paragraph [148] above). Stone & Wood submits that a person visiting this bar who is familiar with the Stone & Wood Pacific Ale (as, it submits, many consumers in Melbourne can be taken to be) is likely, upon seeing this list of drinks, to order a 'Pacific Ale' thinking the reference was to the Stone & Wood Pacific Ale. Stone & Wood submits that it would not be uncommon for a person to place such an order without seeing the beer tap or interrogating the bartender about the source of the beer; in such a case, a consumer will have ordered the Thunder Road Pacific thinking it to be the Stone & Wood Pacific Ale. (b) The second example involves the Thunder Road decal (an image of which appears in paragraph [6] above). Stone & Wood submits that the most striking features of this decal are: the dominant use of the word 'Pacific'; and the colour scheme, which is predominantly orange, with some green features. Stone & Wood submits that when draught beer is ordered in a pub, bar or restaurant, it will frequently be the case that the consumer will not be able to see the beer taps at close range; further, consumers ordering a drink in such venues will often be distracted by the social occasion or the noise and movement of the environment – the decision will often be spontaneous and made without careful deliberation; in these circumstances, a consumer who is familiar with the Stone & Wood Pacific Ale and who sees a beer tap bearing the Thunder Road decal at a distance is likely to order a 'Pacific Ale' as a result of the prominent use of the name 'Pacific' and the familiar colour scheme on the decal; as in the Bar Nacional example, the consumer will have ordered the Thunder Road product thinking it to be the Stone & Wood Pacific Ale. 197 Stone & Wood also submits that its first contention may also be demonstrated in relation to the sale of the relevant Thunder Road products in retail outlets. Stone & Wood submits that the following example illustrates the point for present purposes: a consumer discovers and drinks the Stone & Wood Pacific Ale at a pub; it has been described to him or her by the bartender as 'Pacific Ale'; the consumer does not see or closely examine the bottle or the beer tap; he or she likes the beer and goes to the bottle shop to find it; at the bottle shop, he or she finds the Thunder Road product, which is the only 'Pacific Ale' in the store; in these circumstances, the consumer is likely to buy the Thunder Road product thinking it to be the Stone & Wood Pacific Ale that he or she enjoyed at the pub. 198 In relation to its second contention (connection or association), Stone & Wood submits as follows. (a) The trade mark 'Pacific Ale' (that is, the words 'Pacific Ale' as distinct from the Registered Trade Mark) has become very well-known to consumers around Australia since 2010 in relation to Stone & Wood and the Stone & Wood Pacific Ale. The evidence of Mr Kirkegaard and the trade witnesses is to the effect that the trade mark 'Pacific Ale' has become very strongly associated with Stone & Wood and the Stone & Wood Pacific Ale. (b) From early 2015, the respondents adopted the names 'Pacific Ale' and 'Pacific' for their products. The respondents use the names 'Pacific Ale' and 'Pacific' very prominently. They are the dominant message of the branding used by the respondents for the relevant Thunder Road products. (c) In doing so, the respondents are expressly calling upon and exploiting the reputation and goodwill of the Stone & Wood Pacific Ale and the trade mark 'Pacific Ale' for their benefit. This is a misrepresentation of the type discussed in Reckitt & Colman Products Ltd Borden Inc [1990] 1 All ER 873 at 890; HP Bulmer Ltd v J Bollinger SA [1978] RPC 79 at 99, 117; Campomar Sociedad, Limitada v Nike International Limited (2002) 202 CLR 45 at [109]. (d) This aspect of the respondents' conduct is exposed by the evidence of Professor Lockshin. (e) To use the language adopted by Allsop J in Anheuser-Busch Inc v Budejovický, Národní Podnik (2002) 56 IPR 182 at [246], the names 'Pacific Ale' or 'Pacific' are being used by the respondents as the hook to attract consumers to the Thunder Road products. As Professor Lockshin explains, this hook operates at a subconscious level to influence consumers to associate the Thunder Road products with the Stone & Wood Pacific Ale to which they have become accustomed. Having regard to the way consumers purchase items such as beer, this hook is likely to impact on consumer purchasing decisions and to cause consumers to purchase the Thunder Road products on the strength of the favourable association they have with the name 'Pacific Ale'. For such consumers, the decision to purchase the Thunder Road product is actuated by the association with the Stone & Wood Pacific Ale that is integral to, and the dominant feature of, the Thunder Road product's branding. (f) Mr Jane's evidence supports these submissions. (g) Taking the matters referred to above together, they lead to the following conclusion. Craft brewers use common forms of packaging and design elements to permit consumers to readily identify their products as craft beers. The starting point for consumers is, therefore, a sense of the familiar. The names used on craft beers are an important purchasing cue for consumers (along with other things such as colour and label appearance). In the case of the Thunder Road products, the get-up adopted by the respondents places the greatest emphasis on the words 'Pacific Ale' or 'Pacific'. This would be the most "impactful" feature for consumers. The names 'Pacific Ale' or 'Pacific' are being used by the respondents as the hook to attract consumers to the Thunder Road products. (h) In light of these matters, the respondents' conduct contravenes ss 18 and 29 of the Australian Consumer Law, and constitutes passing off, by misrepresenting to consumers that there is an association or connection between the Thunder Road products (and, consequently, the respondents) and Stone & Wood or Stone & Wood Pacific Ale. It is not necessary for Stone & Wood to articulate the precise legal form of that connection or association as perceived by the consumer, as consumers do not relate to consumer products in these terms. 199 Stone & Wood also submits that the recent transition from using the name 'Pacific Ale' to using the name 'Pacific' does not address the problem, and makes the following submissions: (a) Having entered the market under the name 'Pacific Ale', the respondents' beer has established its foothold by reference to that name; it will continue to benefit indefinitely from having appropriated Stone & Wood's Pacific Ale trade mark (that is, the word 'Pacific Ale'). (b) The abandonment by the respondents of the descriptor 'Ale' does not correct the misrepresentation conveyed by the respondents' conduct. There is no doubt that the word 'Ale' is a descriptive and widely used term in respect of beer (for example, Pale Ale, Golden Ale, Summer Ale). The word 'Ale' is neither the distinctive nor memorable part of Stone & Wood's Pacific Ale trade mark (that is, the word 'Pacific Ale'). This is illustrated by the Thunder Road double-fermentation series, where the Amber Ale and Golden Ale have both been abbreviated to Amber and Golden on the label. Consumers do not use the word 'Ale' to recognise the Stone & Wood Pacific Ale and distinguish it from other products. The word 'Pacific' performs that role, albeit supported by the generic descriptor 'Ale'. Further, it is common to abbreviate the names of beers in Australia. Dropping the 'Ale' off 'Pacific Ale' is consistent with that tendency and would not alter the identity of the Stone & Wood Pacific Ale trade mark in the eyes of consumers. (c) The respondents' recent transition seizes upon the essential feature, or 'hook', of Stone & Wood's Pacific Ale trade mark (that is, the word 'Pacific Ale') and increases its prominence on the bottled Thunder Road product. Further, the respondents use this mark in conjunction with a colour scheme (predominantly orange, with some green) which coincides with the colour scheme used by Stone & Wood in relation to the Stone & Wood Pacific Ale (albeit that the shades of orange and green used are different). (d) Stone & Wood's claim is not an assertion of an unfettered monopoly in the word 'Pacific'. Rather, Stone & Wood's case is directed at the misleading effect of the respondents' use of the names 'Pacific Ale' and 'Pacific' in relation to the Thunder Road products, taken in its proper context. Stone & Wood recognises that the word 'Pacific' may be used by other breweries in ways that do not necessarily involve the misrepresentation complained of in this proceeding. 200 In my view, for the reasons that follow, Stone & Wood has not established that the respondents engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, or made false representations, in contravention of ss 18 and 29 of the Australian Consumer Law, or that they engaged in passing off. 201 In order to make good the causes of action based on ss 18 and 29 of the Australian Consumer Law, and passing off, it is necessary for Stone & Wood to establish that the representations alleged in the Fast Track Statement, set out in paragraphs [22] and [25] above, were made by the respondents. Those alleged representations are to the following effect: (a) the Thunder Road Pacific Ale / Thunder Road Pacific is Stone & Wood Pacific Ale; (b) the Thunder Road Pacific Ale / Thunder Road Pacific is promoted, distributed and/or sold with the licence or authority of Stone & Wood; (c) the Thunder Road Pacific Ale / Thunder Road Pacific has the sponsorship or approval of Stone & Wood; and (d) the respondents have the sponsorship or approval of, or an affiliation with, Stone & Wood. 202 The first alleged representation is to the effect that the Thunder Road Pacific Ale (or the Thunder Road Pacific) is Stone & Wood Pacific Ale. A starting place in considering this alleged representation is the simple fact that nowhere on the relevant Thunder Road products is there any reference to Stone & Wood. Thus there is certainly no express representation that either of the Thunder Road products is Stone & Wood Pacific Ale. The next point to note is that, as described in paragraphs [114] and [119] above, the labelling and packaging of the Thunder Road products are very different from the labelling and packaging of the Stone & Wood Pacific Ale. The dominant feature of the Stone & Wood Pacific Ale is the 'Stone & Wood' brand name, while the dominant feature of the Thunder Road products is the word 'Pacific'. The colours are different. There are many other differences as well. All in all, the overall 'look and feel' of the Stone & Wood Pacific Ale is very different from the Thunder Road Pacific Ale / Thunder Road Pacific. In these circumstances, it is not established that the respondents represented that each of the Thunder Road products is the Stone & Wood Pacific Ale. 203 Stone & Wood's submissions summarised in paragraphs [196]-[197] above appear to relate to the first alleged representation, but do not establish that that representation was made. In particular: (a) In relation to the first example relied on by Stone & Wood, namely the 'happy hour' drinks photograph, I do not think it establishes any likelihood of customers ordering a drink thinking that they are ordering the Stone & Wood Pacific Ale when in fact they would be ordering the Thunder Road Pacific. As discussed in paragraph [149] above, the beer tap decal is likely to be seen, making clear to the customer that the beer being sold is the Thunder Road Pacific. Even if the decal were not seen, I do not think the evidence establishes that the customer is likely to be mistaken. The evidence that some customers use the expression 'Pacific Ale' to refer to the Stone & Wood Pacific Ale does not take the matter any further, for the reasons given in paragraph [149] above. Further and in any event, in the Bar Nacional example, the respondents did not prepare the 'happy hour' sign and therefore cannot be held responsible for any product substitution that may have occurred as a result of that sign. (b) In relation to the second example put forward by Stone & Wood, which relates to ordering in a pub, bar or restaurant, I think it unlikely that the customer in that example would order one product thinking he or she was ordering the other as submitted by Stone & Wood. The decals are quite distinct. The words 'Stone & Wood' are not present on the Thunder Road Pacific decal and the colours are different. Taking these matters into account, I think it is unlikely that a customer who orders the beer at a distance (the scenario posited by Stone & Wood), seeing the word 'Pacific', will think he or she is ordering the Stone & Wood Pacific Ale. It is also relevant to take into account that, in the context of craft beer, as the evidence described above indicates, there tends to be a higher level of customer involvement in the choice of the beer, and a greater degree of interaction between bartender and customer about the choice of beer, than in relation to mainstream beer. In any event, in circumstances where the respondents' decal has the words 'Thunder Road' on it, the proposition that the respondents have, through the use of that decal, represented that their product is the Stone & Wood Pacific Ale, is not established. (c) In relation to bottle shops or retail liquor outlets, for the reasons given in paragraph [154] above, I do not think the example given by Stone & Wood is likely to occur. In any event, the question is whether the respondents made the first alleged representation. In circumstances where the labels and packaging of the Thunder Road products do not contain any reference to Stone & Wood, contain clear references to Thunder Road, and look very different, it is not established that the respondents represented that each of the Thunder Road products is Stone & Wood Pacific Ale. 204 The second, third and fourth alleged representations all are to the effect that there is an association or connection between the relevant Thunder Road products and Stone & Wood or the Stone & Wood Pacific Ale. The starting point with these alleged representations is again that there is no reference on any of the labels or packaging of the Thunder Road products to Stone & Wood. The next point to note is that the labels and packaging of the Thunder Road products are very different from the labels and packaging of the Stone & Wood Pacific Ale. As discussed above, the Stone & Wood branding is the dominant feature of the Stone & Wood Pacific Ale, while the dominant feature of the Thunder Road products is the name 'Pacific Ale' or 'Pacific'; the colours are different; there are other differences as well. It is also relevant to note that the overall format of the labels and packaging of the Stone & Wood Pacific Ale follows the format of other beers in its range (as illustrated in paragraph [28](d) above), while the Thunder Road Pacific Ale and Thunder Road Pacific follow the format of the other beers in Thunder Road's range (see paragraph [31](d) above). This tends against the proposition that the respondents have represented that there is an association or connection between their product and the Stone & Wood Pacific Ale. 205 In my view, the word 'Pacific' has a descriptive aspect to it when used in relation to both Stone & Wood's and the respondents' products. 'Pacific' is, of course, the name of the Pacific Ocean. It can be used adjectively to refer to someone or something that pertains to the Pacific Ocean (for example, Pacific islander, Pacific solution). It is also an adjective which means peaceful or calm (among other meanings). That the word has a descriptive aspect is underlined by the reasons why Stone & Wood chose the name in the first place. The first was that one of the Stone & Wood breweries (the only one in operation in 2010) is located in Byron Bay, which is situated on the Pacific Ocean. The second reason was to generate a calming, cooling emotional response in consumers. This evidence calls to mind the observation of Stephen J in Hornsby, quoted above: "There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name". In the present case, by choosing a name for its product that has a descriptive aspect to it, Stone & Wood ran the risk that others in the trade would use it descriptively and that it would not distinguish its product. 206 Further, although the position was different when Stone & Wood launched its Pacific Ale product, since then the term 'Pacific' has come, as Mr Kirkegaard accepted, to "serve a function of describing beers made from hops from Australia and New Zealand" (see paragraph [134] above). Thus the word 'Pacific' has come to be used descriptively in this sense. In these circumstances, it is difficult for Stone & Wood to establish that the name 'Pacific Ale' distinguishes its beer from the beer of other traders. 207 It is true that I have concluded, in paragraph [142] above, that 'Pacific Ale' is not a 'style' of beer in the technical sense of a beer identified in the style guides used in beer competitions and that the evidence does not establish that a substantial number of consumers would regard it as a 'style' of beer in a non-technical sense. But this does not gainsay the proposition that the word 'Pacific' has a descriptive aspect to it, as described above. 208 It is important to note the dominance of the Stone & Wood branding in the labelling and packaging of the Stone & Wood Pacific Ale. This applies to the marketing of the Stone & Wood Pacific Ale as well. As has been noted, it is the dominant feature of the label on the bottle of the Stone & Wood Pacific Ale and the decal for that product. It is also to be noted that 80 to 85 per cent of Stone & Wood's sales are of the Stone & Wood Pacific Ale. In these circumstances, there is reason to think that some or many consumers will recognise or identify the name 'Stone & Wood' or the composite expression 'Stone & Wood Pacific Ale' rather than the words 'Pacific Ale' on their own. This makes it less likely that the words 'Pacific Ale' on their own would distinguish Stone & Wood's product from the products of others. Moreover, it makes it less likely that consumers would think or assume there to be an association or connection with Stone & Wood or its product in the absence of the brand name 'Stone & Wood': cf Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (2009) 81 IPR 354 at [32] per Perram J. To the extent that Stone & Wood relies on the evidence of Professor Lockshin, for the reasons given in paragraph [166] above, I do not think it is established, in the absence of tests in relation to the products in issue, that consumer purchasing behaviour in relation to the products in issue is likely to occur in the way described in his evidence. 209 It is also relevant to take into account the impact of the Thunder Road branding on the Thunder Road Pacific Ale and the Thunder Road Pacific. While it is true that the name 'Pacific Ale' or 'Pacific' is the dominant feature on the bottle labels, the brand 'Thunder Road' is not an insignificant feature. The bright green label near the top of the bottle has the words 'Thunder Road' on it, as does the bright green bottle cap. The words 'Thunder Road' are also clearly presented on the decal. The branding of the products in this way makes it difficult to sustain the proposition that the respondents have represented that their product has an association or connection with Stone & Wood or its product. 210 In paragraph [114] above, I found that Elixir was, to some extent, seeking to take advantage of the success of the Stone & Wood Pacific Ale (for example, by consumers familiar with the Stone & Wood product wanting to try the Thunder Road offering with the same name), but that it is not established that Elixir intended to obtain any such advantage through consumers thinking that the Thunder Road product was Stone & Wood Pacific Ale or that there was an association or connection between the Thunder Road product and Stone & Wood or its product. As discussed in paragraphs [179]-[180] above, taking advantage of a market created by a competitor is insufficient to establish misleading or deceptive conduct; the question is whether the respondents have stepped over the line by making misrepresentations. 211 The present case is, in my view, quite different from Anheuser-Busch Inc v Budejovický, Národní Podnik (2002) 56 IPR 182. In that case, as noted in paragraph [186] above, his Honour said, "BUDWEISER is a well-known mark. It is a word which has a brand reputation. It is not a descriptive word to Australian English speakers". In contrast, in the present case, I do not think 'Pacific' is a well-known mark; I do not think it has reputation as a brand (notwithstanding Mr Cook's reference to it as a sub-brand); and, for the reasons discussed above, it does have a descriptive aspect to it. In these circumstances, I think Stone & Wood's reliance on the passage from the judgment of Allsop J set out in paragraph [187] above is misplaced. Stone & Wood relies in particular on the emphasised sentences in the extract set out in that paragraph, where his Honour said that the use of the word 'Budweiser' in the strip on the front label was "the hook which associates the first respondent's beer with the applicant's" and that he "[did] not think that the balance of the get-up or information on the bottle would prevent the assumption being created in a consumer that this was a European version of the applicant's beer." But in that case the word operated as such a hook because the word 'Budweiser' was a well-known mark, with brand reputation, and was not a descriptive word to Australian English speakers. In the absence of these features, I do not think the use of the word 'Pacific' is likely to operate as a 'hook' which associates the relevant Thunder Road products with Stone & Wood or Stone & Wood Pacific Ale. 212 For these reasons, it is not established that the respondents, by their use of the name 'Pacific Ale' or 'Pacific', either alone or with the get-up of their products, made a representation to the effect that there was an association or connection between the Thunder Road products and Stone & Wood or its product. In particular, it is not established that the respondents made any of the second, third and fourth alleged representations. 213 It follows from the above that Stone & Wood has not established that the respondents engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, or that they made false representations, or engaged in passing off. Trade mark infringement claim Applicable principles 214 Section 120(1) of the Trade Marks Act provided: A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. 215 The expression "registered trade mark" was defined in s 6 of the Trade Marks Act as meaning "a trade mark whose particulars are entered into the Register under this Act". The expression "trade mark" was defined in s 17 as follows: A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. 216 The word "sign" was in turn defined in s 6 as follows: sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent. 217 Section 10 provided the following definition of "deceptively similar": For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion. 218 It is unnecessary to consider the aspect of s 120(1) concerned with substantial identity, as the applicants rely only on the aspect concerned with deceptive similarity. In determining whether trade marks are deceptively similar, the Court must avoid a side-by-side comparison: see Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 at 658 per Dixon and McTiernan JJ; Shell Company of Australia Limited v Esso Standard Oil (Australia) Ltd (1961) 109 CLR 407 at 415 per Windeyer J. In Australian Woollen Mills, Dixon and McTiernan JJ said (at 658): … in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained. In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold gives, it may be said, the setting, and the habits and observation of men considered in the mass affords the standard. Evidence of actual cases of deception, if forthcoming, is of great weight. 219 In Shell, Windeyer J said at 415: On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question. The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of trade mark law. It is between, on the one hand, the impression based on recollection of the plaintiff's mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant's television exhibitions. To quote Lord Radcliffe again: "The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him … It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole": de Cordova v Vick Chemical Co [(1951) 68 RPC 103, at p 106]. 220 In relation to the comparable provisions of earlier legislation, it was said: "It is not necessary in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough – for there must be a real, tangible danger of its occurring … it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source": Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592 at 595 per Kitto J, affirmed at 608 by Dixon CJ, McTiernan, Webb, Fullagar and Taylor JJ. See also Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [43], [50] per French J (as his Honour then was), Tamberlin J agreeing at [104]; Australian Postal Corporation v Digital Post Australia (2013) 308 ALR 1 at [70] per North, Middleton and Barker JJ. 221 In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods: Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592 at 595; Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50], [104]. 222 The respective trade marks are to be compared both visually and aurally: Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 105 per Sheppard J, Wilcox J agreeing at 116. 223 The text of the statute and the statements of principle set out above suggest that, when considering the question of deceptive similarity (or substantial identity), regard is to be had to the whole of the registered trade mark and the whole of the impugned mark (rather than merely part of either mark). Section 120(1) provided that a person infringes a registered trade mark if the person uses as a trade mark "a sign" that is substantially identical with, or deceptively similar to, "the trade mark" in relation to goods and services in respect of which the trade mark is registered. Section 10 of the Trade Marks Act provided that a trade mark (being the impugned mark) is taken to be deceptively similar to another trade mark (being the registered trade mark) if "it" (the impugned mark) so nearly resembles "the other trade mark" (the registered trade mark) that it is likely to deceive or cause confusion. In the passage from Shell set out above, Windeyer J referred to a comparison between, on the one hand, the impression based on recollection of the plaintiff's "mark" that persons of ordinary intelligence and memory would have and, on the other, the impression such persons would get from the impugned mark. 224 Some cases have discussed the notion of deceptive similarity in a context where a defendant/respondent has used, what is said to be, an "essential feature" of the plaintiff/applicant's mark. In Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 61 IPR 212, the Full Court of this Court (Moore, Sackville and Emmett JJ) considered these issues. The applicant at first instance conducted a business of retail sale of mobile telephones under the name 'Crazy John's' and was the owner of two registered trade marks. The first (the 1995 mark) consisted of both the word 'Crazy John' in haphazard letters and a cartoon image of man holding a mobile phone sitting on top of a globe (see at [18]). The second (registered in 1999) consisted of the word 'Crazy John's' in haphazard letters (see at [20]). The respondent at first instance commenced carrying on a business of retail sale of mobile telephones under the name 'Crazy Ron's'. The primary judge found, relevantly for present purposes, that the respondent had infringed the 1995 mark by its use, orally and in writing, of the names 'Crazy Ron's' and 'Crazy Ron'. In so finding, the primary judge found that one of the "essential features" of the 1995 mark was the phrase 'Crazy John'. On appeal, the appellants submitted that the primary judge has erred in finding that one of the "essential features" of the 1995 mark was the phrase 'Crazy John' (at [55]). The Full Court considered the legal principles in detail (at [72]-[90]). A series of five principles was discussed. The first of these was the principle that the question of deceptive similarity of marks, unlike substantial identity, is not to be judged by a side-by-side comparison (at [73]). The passage from Shell, set out above in these reasons, was quoted. The second principle was that the question of deceptive similarity involves factual issues in respect of which similarities of sound may be important (at [75]). The third was that it is necessary to show a tangible danger of deception or confusion (at [76]). The fourth was that the court must make allowance for the imperfect recollection a person may have of the registered trade mark in determining whether another mark so nearly resembles the registered mark that it is likely to deceive or cause confusion (at 77]). The fifth principle was as follows: Fifth, the authorities also recognise that the concept of imperfect recollection may be applied to trade marks other than those consisting simply of an invented word (as in Aristoc v Rysta [[1945] AC 68] and Berlei v Bali [[1969] 2 All ER 812]). If a registered trade mark includes words which can be regarded as an essential feature of the mark, another mark that incorporates those words may well infringe the registered trade mark. The other mark may also infringe if there is a tangible danger of deception or confusion by reason of consumers retaining an imperfect recollection of the words constituting an essential feature of the registered mark. 225 The Full Court said (at [80]) that these principles were illustrated by Saville Perfumery Ltd v June Perfect Ltd (1939) 58 RPC 147. In that case, an infringement action was brought by the proprietor of a trade mark consisting of the word 'June' printed in a special manner. The word appeared with a bar as a background behind the letters. The word 'June' therefore occupied a prominent position in the mark. A relatively small garland of flowers joined the ends of the bar in the form of an arc. The appellant's trade mark was registered in respect of perfumery, including toilet articles and had been extensively used and advertised. The respondent sold toilet articles under the name 'June'. It was found that some members of the public asked for the respondent's preparation by the name 'June'. The Full Court said (at [81]) in relation to Saville: Viscount Maugham (with whom Lord Russell of Killowen and Lord Romer agreed) said that it was manifest from an inspection of the respondent's mark that the distinguishing feature was the word 'June' in a special script. It was that essential feature that the appellant had used as a mark for goods of the class for which the respondent's mark was registered. That use was one which (at 175) was: 'likely to deceive or cause confusion in the minds of purchasers with a normally imperfect recollection of the precise picture representing or containing the registered mark'. This passage suggests that the notion of imperfect recollection is based on the assumption that consumers will see the registered mark itself. 226 The Full Court noted (at [83]) that Saville was applied by the Privy Council in de Cordova v Vick Chemical Co (1951) 68 RPC 103, an appeal from Jamaica. The Privy Council held that registered trade marks containing the word 'VapoRub' had been infringed by the importation and use of an ointment bearing on the jar the trade name 'Karsote Vapour Rub'. The first of the registered marks consisted of the words 'Vicks VapoRub Salve' and a triangle with the words 'Vicks Chemical Company' printed on the sides and other subsidiary words below the triangle. The second registered mark consisted of the single word 'VapoRub'. The Full Court said (at [84]) in relation to de Cordova: Lord Radcliffe emphasised (at 105-106) that the infringer had used one of the "essential features" of the registered trade marks: They have not used the mark itself on the goods that they have sold, but a mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features. The identification of an essential feature depends partly on the Court's own judgment and partly on the burden of the evidence that is placed before it. A trade mark is undoubtedly a visual device; but it is well-established law that the ascertainment of an essential feature is not to be by ocular test alone. Since words can form part, or indeed the whole of a mark, it is impossible to exclude consideration of the sound or significance of those words. Thus it has long been accepted that, if a word forming part of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result. The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him, for orders are not placed, or are often not placed, under such conditions. It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole. [Emphasis added.] Since the evidence showed that "VapoRub" was commonly used by members of the public to mean "Vicks VapoRub", Lord Radcliffe considered that "VapoRub" had to be treated as an essential feature of Mark 1852: see also Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227; 114 ALR 157; 26 IPR 246 (Burchett J). 227 The Full Court then discussed CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 and referred to Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365, in relation to the issue of the relevance, if any, of the applicant's reputation in the registered trade mark (at [85]-[90]). I do not take the Full Court in Crazy Ron's to be suggesting that, in considering whether the test of deceptive similarity is made out, attention can be confined to part of the registered trade mark (being its essential feature); rather, in applying the test of deceptive similarity as described in Shell, it may be relevant to take into account an essential feature of the registered mark. Application to present case 228 Stone & Wood Group submits that, by their use of 'Pacific Ale' and 'Pacific' as trade marks in relation to the Thunder Road products, the respondents have infringed the Registered Trade Mark under s 120(1) of the Trade Marks Act. Stone & Wood Group submits as follows: (a) There can be little doubt that the prominent use of the words 'Pacific Ale' and 'Pacific' is operating as a brand and a trade mark on the Thunder Road products. (b) The words 'Pacific Ale' are the essential feature of the Registered Trade Mark. The trade evidence shows that, when interacting with the Registered Trade Mark in use in the trade, members of the trade and many consumers use the words 'Pacific Ale' to identify the beer sold under the Registered Trade Mark. This is persuasive evidence that, in the eyes of the trade and consumers, the words 'Pacific Ale' have risen to be the essential feature of the Registered Trade Mark. (c) Thunder Road's use of 'Pacific Ale' and 'Pacific' is likely to cause confusion. Consequently, the words 'Pacific Ale' and 'Pacific' are deceptively similar to the Registered Trade Mark. 229 For present purposes, I will assume (without deciding) that the words 'Pacific Ale' and 'Pacific' were used as trade marks by the respondents. In my view, the words 'Pacific Ale' and 'Pacific' are not deceptively similar to the Registered Trade Mark (set out in paragraph [9] above). The test of deceptive similarity is set out in s 10 of the Trade Marks Act and the cases discussed above. It is not a side-by-side comparison. It is enough if the impugned mark so closely resembles the registered mark "that it is likely to deceive or cause confusion". The test is further described in Shell and the other cases discussed above. Here, there are significant differences between the Registered Trade Mark, on the one hand, and the words 'Pacific Ale' and 'Pacific', on the other. The dominant feature of the Registered Trade Mark is the name 'Stone & Wood'. Those words are not present in the impugned marks. The Registered Mark also includes an ampersand symbol in the middle of the words 'Stone & Wood' and the word 'Handcrafted' across the top. Those aspects are not present in the impugned marks. Stone & Wood relies on the part of the Registered Trade Mark which comprises the words 'Pacific Ale'. But I do not think this is an "essential feature" of the Registered Trade Mark in the sense discussed in the cases referred to above. The words appear in small print relative to the words 'Stone & Wood'. They occupy a subsidiary place in terms of size and positioning. If anything is an essential feature, it is the words 'Stone & Wood'; the words 'Pacific Ale' are not an essential feature of the Registered Trade Mark. Taking these matters into account, and whether the matter is approached visually or aurally, I do not think the impugned mark (whether this be 'Pacific Ale' or 'Pacific') so closely resembles the Registered Trade Mark that it is likely to deceive or cause confusion. 230 In light of the above, it is unnecessary to consider the application of s 122(1)(b)(i) of the Trade Marks Act, which was relied on by the respondents. This was not the subject of detailed submissions by the parties. 231 For the above reasons, it is not established that the respondents infringed the Registered Trade Mark. Cross-claim Applicable principles 232 Section 129 of the Trade Marks Act provided: 129 Groundless threats of legal proceedings (1) If a person threatens to bring an action against another person (threatened person) on the ground that the threatened person has infringed: (a) a registered trade mark; or (b) a trade mark alleged by the person to be registered; any person aggrieved by the threat (plaintiff) may bring an action (either in a prescribed court or in any other court having jurisdiction) against the person making the threat (defendant). Note: For prescribed court see section 190. (2) The purpose of the action is to obtain from the court: (a) a declaration that the defendant has no grounds for making the threat; and (b) an injunction restraining the defendant from continuing to make the threat. The plaintiff may also recover any damages that he or she has sustained because of the defendant's conduct. (3) The action may be brought whether or not the defendant is the registered owner, or an authorised user, of the trade mark alleged to have been infringed. Note: For authorised user see section 8. (4) The court may not find in favour of the plaintiff if the defendant satisfies the court that: (a) the trade mark is registered; and (b) the acts of the threatened person in respect of which the defendant threatened to bring an action constitute an infringement of the trade mark. (5) An action may not be brought, or (if brought) may not proceed, under this section if the registered owner of the trade mark, or an authorised user of the trade mark having power to bring an action for infringement of the trade mark, with due diligence, begins and pursues an action against the threatened person for infringement of the trade mark. Note: An authorised user of the trade mark may not have power to bring an action for infringement of the trade mark because of the terms of the agreement between the authorised user and the registered owner of the trade mark (see section 26). (6) This section does not make a lawyer, registered trade marks attorney or patent attorney liable to an action for an act done in a professional capacity on behalf of a client. Note: For lawyer, registered trade marks attorney and patent attorney see section 6. 233 It appears from the text and structure of s 129 that, where the terms of s 129(1) apply, subject to sub-sections (5) and (6), a defendant to an action under s 129 can only succeed if the defendant satisfies the court of the matters referred to in s 129(4), namely that the trade mark is registered and that the acts of the threatened person in respect of which the defendant threatened to bring an action constitute an infringement of the trade mark. Thus it is insufficient for the defendant to show, for example, a bona fide belief that the acts of the threatened person constituted infringement; the defendant must establish infringement: cf Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154 at 193 per Drummond J, in relation to s 202 of the Copyright Act 1968 (Cth); and Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2008) 78 IPR 586 at [39] per Emmett J, in relation to ss 128 and 129 of the Patents Act 1990 (Cth). 234 Sub-section (5) of s 129 was considered in Montana Tyres Rims & Tubes Pty Ltd v Transport Tyre Sales Pty Ltd (1998) 155 ALR 489; Transport Tyre Sales Pty Ltd v Montana Tyres Rims and Tubes Pty Ltd (1999) 93 FCR 421 (which allowed an appeal from the first instance decision in Montana Tyres); and Advanced Data Integration Pty Ltd v ADI Ltd (2004) 138 FCR 520. 235 In the first instance decision in Montana Tyres, the primary judge held that there had not been due diligence in commencing the action. On appeal, the Full Court, after setting out the chronology of events (at [102]) and a passage from the primary judge's reasons (at [103]), said that it did not agree that Transport Tyre's conduct in suing for infringement should be characterised as so dilatory; "[o]n the contrary, when viewed in their proper context, the steps taken by Transport Tyre in prosecuting its claim of infringement should, we think, be seen as action undertaken with a diligence that is fairly to be described as 'due' in those circumstances" (at [104]). As the chronology of events in [102] indicates, on 17 June 1997, Transport Tyres made a first threat to sue for infringement; on 9 July 1997, Transport Tyres made a second threat to sue for infringement; on 11 July 1997, Montana commenced the proceeding before the Court under s 129 and process was served that day; the first directions hearing in the proceeding was due to take place on 5 August 1997; at that directions hearing, Transport Tyres sought and obtained a direction that it file a cross-claim for infringement by 2 September 1997. The Full Court said that "the process of characterising inaction as a lack of 'due diligence' does require an understanding of the reason for the delay" (at [105]). In the Full Court's opinion, the reason for the delay put forward by Transport Tyre was a good one, namely "the circumstance that other proceedings had already been commenced by Montana and were not returnable until 5 August 1997. Given that time frame, we think that it was unnecessary for Transport Tyre to institute separate proceedings in July" (at [105]). The Full Court considered that time should be treated as running for the purposes of that case from 5 August 1997, the date of the first directions hearing in the other proceedings. On that date, Transport Tyre had sought and obtained a direction for the filing of its cross-claim by 2 September 1997. In those circumstances, the Full Court held that the action has been commenced with due diligence. 236 In Advanced Data, Kiefel J considered both the first instance and appeal decisions in Transport Tyres and said (at [13]-[14]) in relation to sub-section (5) of s 129: 13 I agree that it seems odd that legislation would provide a remedy such as damages to the person threatened and then effectively prevent the remedy being pursued if a trademark owner brings proceedings for infringement. The words of subs (5) are however clear. It is not intended that an action brought under subs (1) is to continue in that circumstance. 14 Reading the subsections together, it would seem that the right to bring proceedings under subs (1) is predicated upon the trademark owner not having brought infringement proceedings, after threatening to do so, with due diligence. If proceedings are brought orders in the nature of declarations and injunctions referred to in subs (2) will no longer be necessary, the threat having been overtaken by the proceedings. So far as concerns damages, it must have been thought that they would not be necessary where infringement proceedings are brought with due diligence. In such a situation the party threatened will be left to any other remedies it may have if it has in fact suffered damage as a result of the threats and they prove to be unjustified. 237 The chronology of events in Advanced Data was, briefly, as follows: on 23 September 2003, the respondent wrote to the applicant alleging infringement and threatening proceedings; correspondence ensued between the parties; on 18 November 2003, the applicant commenced a proceeding in the Court; on 20 November 2003, the respondent commenced a separate proceeding in the Court for infringement. Kiefel J held that the respondent's action was brought with due diligence and s 129(5) applied (at [22]). Her Honour said that the correspondence did not contain gaps suggestive of delay (or inaction) on the part of the respondent; it was apparent that the respondent did not bring a proceeding immediately because it was hopeful that the matter might be resolved; the correspondence did not suggest that at some point it was obvious that it could not be resolved; the first complete response by the applicant was on 28 October 2003; after that response the respondent had one more attempt to resolve the matter; the applicant brought its proceedings six days after that deadline, on 18 November 2003, and the respondent commenced its action two days later; almost certainly the respondent's preparations to do so would have commenced earlier; none of this suggested delay on the respondent's part. Application to present case 238 In response to Elixir's cross-claim under s 129 of the Trade Marks Act, Stone & Wood submits that: (a) the cross-claim should not be permitted to proceed because Stone & Wood Group has commenced, and pursued, its claim for infringement of the Registered Trade Mark with diligence (s 129(5)); (b) alternatively, the cross-claim should be dismissed because the respondents have infringed the Registered Trade Mark (s 129(4)); (c) alternatively, in relation to Stone & Wood Brewing, the cross-claim should be dismissed because it did not make any relevant threat. Subject to these points, there does not seem to be any issue that Elixir has made out the elements of s 129. The letter dated 26 February 2015 constituted a threat to bring an action against another person (relevantly, Elixir) for trade mark infringement within the terms of s 129(1). Elixir, being one of the recipients of the letter, is a person aggrieved for the purposes of s 129(1). 239 In relation to the contention that the trade mark infringement claim was commenced and has been pursued with due diligence, Stone & Wood submits that: (a) It was appropriate for the letters from Stone & Wood's solicitors to refer to the Registered Trade Mark. The parties had an obligation to attempt to resolve their dispute before coming to the Court. It was appropriate for Stone & Wood to identify its rights and assertions in a comprehensive manner in its pre-action correspondence. (b) It was also open to, and appropriate for, Stone & Wood to pursue this proceeding on the causes of action which it considered sufficient to meet its objectives. The Court should not encourage parties (whether through the application of s 129 of the Trade Marks Act or otherwise) to pursue additional causes of action for the sake of it. The pursuit of such causes of action would be contrary to the requirement that proceedings be resolved quickly, inexpensively and efficiently. (c) When Elixir introduced the Registered Trade Mark (and, by necessity, the question whether it had been infringed) to the dispute on 18 June 2016 (one day before the first case management conference), Stone & Wood took prompt steps to pursue its trade mark infringement claim. It obtained an order the next day from the judge permitting it to amend its originating application and fast track statement. Further, it filed and served its amended originating application and amended fast track statement in accordance with that order. (d) Stone & Wood has pursued its claim for trade mark infringement to trial. 240 In my view, Stone & Wood has not established that it began an action against the threatened person (Elixir) for trade mark infringement "with due diligence" within the meaning of s 129(5). The sequence of events is set out in paragraphs [168]-[172] above. In summary, the threat to bring an action for trade mark infringement was made by letter dated 26 February 2015, there was a letter in response dated 11 March 2015, and Stone & Wood then sent a further letter on 15 April 2015. The fact that Stone & Wood did not commence an action during the period up to 15 April 2015 did not constitute a lack of due diligence, because it was, during this period, seeking to resolve the matter through the exchange of correspondence. However, by 15 April 2015, or shortly thereafter, it was apparent that the dispute was not going to be resolved. Stone & Wood commenced this proceeding on 20 May 2015, approximately four weeks later. But it did not include a claim for trade mark infringement in the originating application or fast track statement. It was not until 19 June 2015, and following the commencement of the cross-claim on 18 June 2015, that Stone & Wood applied for leave to amend to bring a claim for trade mark infringement, and the amended documents were then filed and served on 24 July 2015 (consistently with the leave that had been granted). But for the cross-claim, it is doubtful whether the trade mark infringement claim would have been brought at all. 241 In these circumstances, there has been delay in commencing the claim for trade mark infringement. It was not included in the proceeding when commenced on 20 May 2015, but only later, with the application to amend being made on 19 June 2015, and the amended documents being filed and served on 24 July 2015. I do not think any satisfactory reason has been put forward to explain the delay (whether one looks at the date of the application to amend or the date the amended documents were filed). No evidence has been put on to explain the delay. When the trade mark infringement claim was included by amendment, the amendments were relatively short and confined. There does not appear to have been any practical reason (such as needing time to draft pleadings) that would explain why the trade mark infringement claim was not originally included. As noted above, Stone & Wood contends that it was "open to, and appropriate for, Stone & Wood to pursue this proceeding on the causes of action which it considered sufficient to meet its objectives". I do not think this provides a satisfactory reason for the purposes of s 129(5). It is not an explanation for the delay in commencing the action for trade mark infringement; it is, rather, an explanation for why a trade mark infringement claim was not commenced. I do not think the question whether the claim was commenced with "due diligence" is to be approached mechanistically by focussing on the time between the threat to take action and the commencement of the infringement claim or the time between the last letter in the sequence of letters and the commencement of the infringement claim. Rather, all of the circumstances are to be taken into account. Here, there was delay in commencing the trade mark infringement claim and there is no satisfactory explanation for the delay. In these circumstances, Stone & Wood did not commence the trade mark infringement claim with "due diligence". 242 Stone & Wood's second contention is that, leaving to one side the operation of s 129(5), the cross-claim should be dismissed pursuant to s 129(4) on the basis that the respondents have infringed the Registered Trade Mark. For the reasons set out above, this is not established. 243 Stone & Wood's third contention is that Stone & Wood Brewing did not make any relevant threat. Stone & Wood submits that the respondents responded to the letters of demand sent by Stone & Wood's solicitors through their lawyers; as experienced legal practitioners with a working knowledge of the Trade Marks Act, the respondents' lawyers would have understood that any threat of trade mark infringement proceedings was being made by the registered owner of the Registered Trade Mark (Stone & Wood Group), rather than Stone & Wood Brewing. In my view, the threat to bring a proceeding for infringement was made by both companies. The letter dated 26 February 2015 letter (described in paragraphs [168]-[169] above) commenced with a statement that the solicitors acted for both Stone & Wood Group and Stone & Wood Brewing and that they would be jointly referred to in the letter as "Stone & Wood". The letter then stated that "Stone & Wood" was the proprietor of a trade mark registration, and defined the trade mark registration as the "Stone & Wood registration". There is nothing in the letter to confine the threat of proceedings as one being made by Stone & Wood Group rather than Stone & Wood Brewing. To the contrary, given the definitions that I have referred to, the letter reads as a threat by both companies to bring proceedings for infringement. 244 It follows from the above that the cross-claim is made out. Elixir sought the opportunity to make submissions as to the form of orders to be made following the publication of these reasons. I note that any issue of quantum of damages did not form part of the trial and therefore may need to be the subject of a further hearing. Conclusion 245 I have concluded that Stone & Wood's causes of action are not established. It follows that the application should be dismissed. There is no apparent reason why costs should not follow the event. I will therefore make an order that the applicants pay the respondents' costs of the proceeding (other than the cross-claim), but will give the parties the opportunity to give written notice within two business days if they seek a variation of the costs order. In relation to the cross-claim, as noted above, Elixir sought the opportunity to make submissions on the form of orders following the publication of my reasons. I will therefore order that, in relation to the cross-claim, the parties submit agreed minutes of proposed orders or, if they cannot agree, each party provide its minutes of proposed orders together with a short submission. I certify that the preceding two hundred and forty-five (245) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky. Associate: Dated: 21 July 2016