High Court of Australia Gibbs C.J. Mason, Murphy, Aickin and Brennan JJ. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 Cur. adv. vult. The following written judgments were delivered:— 1982, Aug. 11 Gibbs C.J. This is an appeal from a judgment of the Full Court of the Federal Court of Australia, which, by a majority, reversed the decision given by the judge at first instance, and granted an injunction restraining the present appellant, Parkdale Custom Built Furniture Pty. Ltd. by itself, its servants and agents, from engaging in trade or commerce in conduct that is misleading or deceptive or that is likely to mislead or deceive by selling, offering for sale, dealing with, displaying or advertising any lounge suites, lounges or lounge chairs so as to mislead or deceive members of the public into believing that they are lounge suites, lounges or lounge chairs manufactured by Puxu Pty. Ltd., the present respondent. The case was referred back to a single judge of that court to hear and determine any question of damages. The respondent, which was the plaintiff in the action in the Federal Court, based its claim against the appellant on s. 52(1) of the Trade Practices Act 1974 Cth, as amended, ("the Act"), which provides as follows: A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. By s. 80 of the Act, the Federal Court is empowered to grant an injunction restraining a person from engaging in conduct that constitutes or would constitute, inter alia, a contravention of s. 52, and by s. 82 a person who suffers loss or damage by conduct done in contravention of, inter alia, s. 52 may recover damages. The respondent has since June 1978 manufactured and sold, under the name "Post and Rail", furniture which includes lounge suites, which consist of lounges and chairs of distinctive appearance and design known as the "Contour" range. These lounges and chairs had been designed by the respondent's predecessors in business and had been sold by them since some time late in 1976 or early in 1977. The lounge suites were the subject of fairly extensive advertising and had acquired an established reputation. The design of this furniture was not the subject of copyright under the Designs Act 1906 Cth, as amended. At some time after the "Post and Rail" "Contour" lounge suites were first sold and marketed, the appellant began to manufacture and sell, under the general names "Parkdale Custom Built Furniture" and "Custom Built Furniture", lounge suites known as the "Rawhide" range. It is convenient for present purposes henceforth to speak only of the chairs manufactured by both parties, although what is said with regard to them applies equally to the lounges. The chairs made by the appellant closely resemble those made by the respondent. However, there was sewn into the front of each of the appellant's chairs a label, in size about 6.35 centimetres (two and a half inches) square, which set out that the chair was "Parkdale Custom Built Furniture" of the "Rawhide" range. The label could be tucked under the upholstery of the chair and would not then be visible and it might easily enough be removed by cutting it off from the chair. Nevertheless it appears to have been the practice of manufacturers to identify chairs by labelling them in that way, and in fact the respondent's chairs bore labels of a similar kind, but somewhat smaller. Having regard to the fact that all chairs which left the appellant were delivered to retailers and were labelled so as to identify the appellant as the manufacturer, and having regard to evidence as to some differences between the chairs respectively manufactured by the parties, the learned primary judge refused to find that the appellant intended to mislead or deceive any potential purchaser into believing that the "Rawhide" chairs were "Contour" chairs. The Full Court did not make any finding to the contrary. It appears to me that the learned primary judge placed undue importance on the differences in appearance between the chairs of the appellant and those of the respondent. In his opinion, some of those differences would be likely to be observed by an ordinary member of the public who had looked at the "Contour" chair as a potential purchaser, other differences might not have been detected except by a careful buyer who had a particularly clear picture in his mind of the respondent's chair as a result of an examination of it on a prior occasion, and there were other differences which even a careful buyer with a clear recollection of the respondent's chair would not be likely to see. An ordinary buyer would not be expected to make a detailed comparison of one chair with another, and the general impression given by the appellant's chairs was substantially the same as that given by the respondent's. Further, it is difficult to escape from the conclusion that the appellant deliberately copied the design and appearance of the respondent's chairs. However, it does not follow that the appellant had any intention to mislead or deceive. One manufacturer may copy the product of another, because that product has proved successful and with the intention of taking advantage of an available market for a product of that kind, but with no intention of passing off his own product as the product of the original manufacturer. The fact that the appellant sold its products to retailers, and labelled them before delivery, and the absence of any evidence of any improper agreement between the appellant and any retailer, support the conclusion that the appellant had no intent to mislead or deceive. There was evidence which suggested that the appellant's chairs were inferior in quality to those of the respondent. However they were lower in price. The learned primary judge rejected the argument that any conduct of the appellant would have been likely to mislead or deceive prospective purchasers as to the quality of the appellant's chairs. The learned members of the Full Court did not disagree with this conclusion and it was not challenged before us. It follows from what I have said that the respondent's claim that the conduct of the appellant was misleading or deceptive, or likely to mislead or deceive, rests solely on the fact that the appellant sold goods which were virtually identical in appearance to those sold by the respondent. There is no suggestion of false labelling or false description. Evidence was given of particular instances in which persons were actually misled by the resemblance in appearance of the chairs. I may deal with this evidence very briefly, since it does no more than reinforce the view that an ordinary observer, not seeing the label, might mistake one chair for the other. Two persons, Mrs. Hogg and Mr. Klug, bought "Rawhide" chairs believing them to be "Post and Rail" chairs. In each case, however, the labels had been removed from the chairs, and there is no suggestion that the appellant had been in any way responsible for their removal. Moreover, in each case a salesman employed by the retailer gave misleading information to the buyer. Another witness, Mr. Layton, the marketing manager for a retail company, included in an advertisement a bromide photograph of the respondent's lounge suite, thinking that it was a photograph of the appellant's suite. The evidence of these witnesses shows that the resemblance between the appellant's chairs and the respondent's chairs was so close that a person looking at the appellant's chairs, without looking for and finding the label on them, would be likely to be misled into thinking that they were the respondent's chairs. But an ordinary person who read the label could not possibly be deceived or misled. In these circumstances the conduct of the appellant of which the respondent complains was to manufacture and sell by wholesale chairs whose appearance and design were copied from those of the respondent and which closely resembled the respondent's chairs, but which were properly labelled with the name of the appellant. The question is whether this conduct was misleading or deceptive, or likely to mislead or deceive, within the meaning of those expressions in s. 52. The words of s. 52 have been said to be clear and unambiguous: Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [13] . Nevertheless they are productive of considerable difficulty when it becomes necessary to apply them to the facts of particular cases. Like most general precepts framed in abstract terms, the section affords little practical guidance to those who seek to arrange their activities so that they will not offend against its provisions. It has been held that the section is not confined to conduct that is intended to mislead or deceive: Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. There is nothing in the section that would confine it to conduct which was engaged in as a result of a failure to take reasonable care. A corporation which has acted honestly and reasonably may therefore nevertheless be rendered liable to be restrained by injunction, and to pay damages, if its conduct has in fact misled or deceived or is likely to mislead or deceive. The liability imposed by s. 52, in conjunction with ss. 80 and 82, is thus quite unrelated to fault and it need not involve any infringement of a right to a trade name, trade mark, copyright or design. It may have been thought that the unequal position of consumers as against the corporations which supply them with commodities justified a measure that from the point of view of the latter seems draconic, but although s. 52 is intended for the protection of consumers, it is enforceable by a trade competitor who is not a consumer (Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd. [1] ) and it is not infrequently used by one trader against a rival to protect a trade name or to prevent a passing-off. The section may have been designed to protect the weak from the powerful, but it may be used by a large and powerful corporation to restrain the activities of a smaller competitor. I am, with all respect, unable to see any reason why a section so broadly expressed and so drastic in its possible consequences should be beneficially construed. I do not suggest that the words of s. 52 should be given "some unnaturally confined meaning" (to use the words of Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [2] ), or that they should be construed to conform with the common law (see World Series Cricket Pty. Ltd. v. Parish [3] ), but simply that they should be given their plain and natural meaning, and should not be understood in some loose or expanded sense. 1. (1978) 140 C.L.R. 216, at p. 225. 2. (1978) 142 C.L.R. 113, esp. at pp. 120-121, 128. 3. (1978) 140 C.L.R., at p. 225. 4. (1977) 16 A.L.R. 181, at pp. 198-199. The words of s. 52 require the Court to consider the nature of the conduct of the corporation against which proceedings are brought and to decide whether that conduct was, within the meaning of that section, misleading or deceptive or likely to mislead or deceive. Those words are on any view tautologous. One meaning which the words "mislead" and "deceive" share in common is "to lead into error". If the word "deceptive" in s. 52 stood alone, it would be a question whether it was used in a bad sense, with a connotation of craft or overreaching, but "misleading" carries no such flavour, and the use of that word appears to render "deceptive" redundant. The words "likely to mislead or deceive", which were inserted by amendment in 1977, add little to the section; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone. In McWilliam's Wines Pty. Ltd. v. McDonalds System of Australia Pty. Ltd [4] it was rightly held by Smithers J. and by Fisher J. that to prove a breach of s. 52 it is not enough to establish that the conduct complained of was confusing or caused people to wonder whether two products may have come from the same source, and that Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. [5] , a decision on the Trade Marks Act 1905 Cth, as amended, is distinguishable. I need not add to what their Honours said on this subject [6] . I agree too with those learned judges that the court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive, and that evidence that members of the public have actually been misled is not conclusive. [7] . I would add that evidence that members of the public were misled, not by any conduct of the defendant, but by other circumstances for which the defendant was not responsible, would be quite irrelevant. 1. (1980) 49 F.L.R. 455; 33 A.L.R. 394. 2. (1954) 91 C.L.R. 592. 3. (1980) 49 F.L.R., at pp. 458-459, 475-476; 33 A.L.R., at pp. 397-398, 412-413. 4. (1980) 49 F.L.R., at pp. 461, 476-477; 33 A.L.R., at pp. 399-400, 413-414. Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will or course depend on all the circumstances. The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture. The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of acts. In the present case the conduct of the appellant was not simply to manufacture and sell furniture that resembled that of the respondent. The appellant sold only furniture that had been labelled, in the ordinary way, so as to show the name of the manufacturer. If the appellant's conduct was likely to mislead possible purchasers, it is difficult to see why the respondent's conduct in selling its furniture would not also be likely to mislead. However that may be, in my opinion, the conduct of the appellant did not contravene s. 52. Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s. 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. If the lable is removed by some person for whose acts the defendant is not responsible, and in consequence the purchaser is misled, the misleading effect will have been produced, not by the conduct of the defendant, but by the conduct of the person who removed the label. For these reasons I have reached the conclusion that the conduct of the appellant was not of the kind to which s. 52 refers. I would accordingly allow the appeal and restore the judgment of the learned primary judge. Mason J. This is an appeal from a decision of the Federal Court (C. A. Sweeney and Lockhart JJ.; St. John J. dissenting) allowing an appeal against the refusal of Keely J. to grant an injunction pursuant to s. 80 of the Trade Practices Act 1974 ("the Act"). The issue was whether the present appellant was contravening s. 52(1) of the Act which provides "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive". The respondent manufactured and sold furniture called "Post and Rail". The Post and Rail furniture relevant to these proceedings is that part of the "Contour" range comprising two or three seater lounges and lounge chairs. They have an unusual and distinctive appearance and had been extensively advertised. The Post and Rail "Contour" chair was first manufactured and sold in its present form in late 1976 or early 1977. Registration of the design under the Designs Act 1906 Cth was not possible because of prior publication before application for registration. The appellant has manufactured and sold furniture under the name "Parkdale" including lounge suites and chairs as part of its "Rawhide" range. The appellant had commenced to manufacture and sell the "Rawhide" lounge suite and chairs by June 1978 after the date of manufacture and sale of the respondent's "Contour" lounge suite and chairs. The relevant "Rawhide" and "Contour" furniture bear a very close resemblance. The trial judge set out particular details in which the parties' exhibited chairs were identical or closely resembled each other as well as ways in which they differed. His Honour considered that some of the differences would be likely to be observed by an ordinary member of the public who had previously looked at the Post and Rail "Contour" chairs as a potential purchaser. The Full Court appears to have proceeded on the assumption that the items of furniture were substantially identical in appearance. C. A. Sweeney J. considered that Keely J.'s "careful and detailed analysis of the resemblances and differences between the two products was far removed from the processes likely to be involved in consumers' observations and recollections in the market place". No challenge was made to the analysis of the Full Court on this issue and it is therefore appropriate to proceed on the footing that the items are almost identical in appearance and that any differences are not readily observable. Keely J. was not prepared on the evidence to find that the appellant copied the respondent's product for the purpose of selling it as the respondent's goods. However, he did infer that the appellant intended to lead people who saw the relevant "Rawhide" furniture advertised by retailers or in retailers' shop windows to see that the "Rawhide" products closely resembled the "Contour" suite and chairs manufactured by the respondent and to enter the retailer's shop to examine and consider purchasing the "Rawhide" furniture. Keely J. found that the appellant's practice was to have a label stating its name and trademark sewn to each lounge suite and lounge chair — before it left the appellant's factory for delivery to a retailer. The label was approximately two and a half inches square (slightly larger than the respondent's label) and was affixed according to the ordinary practice of the trade in much the same position as the respondent's label, namely at the bottom of the upholstery. His Honour concluded that the extent to which the label is readily observable depends upon whether it has been left hanging down or has been physically pushed up behind the upholstery. In the latter case, a person desiring to read the label would need to feel for it and pull it out from below the upholstery. Although there was evidence from two purchasers of the appellant's lounge suite, Mrs. Hogg and Mr. Klug, that the lounge suites did not have the appellant's label on them at the time of sale the trial judge inferred that an employee of the retailer removed the appellant's label in each case. This finding has not been attacked. The basic question is whether manufacturing a product and distributing it to retailers for advertisement and sale to the public is conduct prohibited by s. 52(1) when the product, though properly labelled with the name of the manufacturer, very closely resembles and is intended to be seen to closely resemble an earlier product of another manufacturer which is still being marketed and advertised. The respondent complains that the manufacture by the appellant of the "Rawhide" suites and chairs was misleading and deceptive and was likely to mislead or deceive potential purchasers who saw the "Rawhide" furniture into believing that it was the Post and Rail "Contour" furniture. The case has been fought on the footing that the deception was with respect to the source of manufacture as distinct from deception as to the quality of the goods. The respondent initially argued that potential purchasers were likely to be misled into believing that the appellant's lounge suite or chair was a product of Post and Rail quality. This argument was rejected by Keely J. and was not disturbed on appeal. Section 52(1) is expressed in terms of broad generalities which are explicitly preserved by s. 52(2). The general words of s. 52(1) should be widely interpreted without being read down by reference to the heading of Pt V " consumer protection " or to the more specific succeeding sections (see Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. [8] ). Although s. 52(1) is intended to protect members of the public in their capacity as consumers of goods and services, competitors may seek an injunction to restrain breaches (s. 80(1)(c); Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd. [9] ). The remedy to prevent deception of the public often has the incidental effect of protecting a competing trader's goodwill which would be also injured by that deception. 1. (1978) 140 C.L.R. 216, at p. 225. 2. (1978) 142 C.L.R. 113. Nevertheless, it is important to recall that s. 52(1) is "not concerned, as such, with any unfairness of competition in trade as between two traders" (Hornsby [10] ; cf. s. 5 of the United States Federal Trade Commission Act 1914). It is not directed exclusively or even primarily to situations of passing-off; it extends to any conduct that is likely to mislead or deceive as, for example, the making of negligent statements and false representations as to the quality of goods. It is not enough that conduct damages a rival trader; it must mislead or deceive or be likely to mislead or deceive members of the public in their capacity as consumers. Hornsby and McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. [11] show the importance of examining why the alleged misconception arose. Thus in Hornsby it was assumed that the name "Hornsby Building Information Centre" led persons to believe that the Hornsby Centre was a branch of, or otherwise associated with, the Sydney Centre. However, the use of that name did not contravene s. 52(1). The misconception occurred since the very descriptive name adopted by the Sydney Building Information Centre was "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" [12] . It was important that a trader adopting descriptive words did not thereby secure an unfair monopoly in those words. 1. (1978) 140 C.L.R., at p. 226. 2. (1980) 49 F.L.R. 455; 33 A.L.R. 394. 3. (1978) 140 C.L.R., at p. 229. Similarly in McWilliam's the Federal Court (Smithers, Northrop and Fisher JJ.) in holding that s. 52(1) had not been breached by McWilliam's use of the expression " big mac " in advertising one of its brands of wine, considered why potential purchasers of that McWilliam's wine and/or the McDonald's hamburgers might have been confused as to whether there was a business connexion between the two companies. Smithers J. (with whom Northrop J. generally agreed) held that such confusion only arose by reason of the erroneous assumption of some potential purchasers that due to McDonald's frequent use of the words " big mac ", "there is some legal or other restriction on the use of those words much wider than that which actually exists" [13] and that conduct could not be relevantly misleading or deceptive if 1. (1980) 49 F.L.R., at p. 464; 33 A.L.R., at p. 403.