Argibond Pty Ltd v Argen Australia Pty Ltd

[1991] FCA 49

JUDGMENT No. 77 / 9!..-

,=THE	FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES D-ICT	REGISTRY) NO. G 486 of 1989
GENERAL DIV-N	1

Between: ARGIBOND PTY LIMITED

Applicant

and: ARGEN AUSTRALIA PTY LIMITED

First Respondent

-4 MAR I991 and: LEWIS BENJAMIN BLOCH

Second Respondent

REASONS FOR JUDGMENT

gSnfeld a Svdnev 1 March 1991

This is an application by Argibond Pty Ltd for damages and other relief for breaches of sections 52 and 53(d) of the Trade Practices Act and defamation by Argen Australia Pty Ltd and Mr Bloch, a director thereof (the respondents). The application also stipulates breaches of sections 42 and 44 of the Fair Trading Act but these were not separately argued and it was implied in submissions that the success of the latter was directly linked to the outcome of the trade practices actions.

precious metals for dental, jewellery and industrial

applications. It is the registered proprietor of a number of

logos and trade marks relating to Argen and Argen dental alloys around the world. It had a subsidiary in the Netherlands called Linkage B.V., one in Australia called Argen Australia Pty Ltd and one in the USA seemingly called something like APMI of USA. From this point on certainty about the facts is more difficult because of the lack of clarity of the evidence. It appears that the following events then occurred:

1.	On or about April 1 1978 Linkage granted a licence to Argen Australia to manufacture and market the Argen range of alloys. From that time until 1987, Argen Australia was conducted by Issy Penn.
2.	On or about April 2 1987 APMI sold the business and the rights to manufacture, market and use the Argen products and names to a company incorporated in Canada called Gap Dental Supplies P/L (GAP) which was run by Daniel Penn, Issy1s brother.

A company incorporated in South Africa called Argen Precious

Metal Industries Pty Ltd (APMI) manufactured and refined

1. At the same time a company called Precious Dental Alloys Australia Pty Ltd (PDA), owned and controlled by the second respondent, registered the business name "Argen Sales" and proceeded to trade thereunder.

2. At the same time an agreement was made between GAP and Newco, a company which was to be acquired by PDA. This agreement outlines the method of calculation of royalty payments for the marketing of Argen alloys.

5.    On January 13 1989 APMI entered into an agreement to sell its shareholding in Argen Australia to PDA. This agreement was said to take effect as of June 29 1988.

6.    One of the terms of this agreement was that certain trade marks registered in Argen's name in Australia were to be transferred to APMI of USA. This transfer seems to have taken place in July 1990, some time after the events at the heart of the matters in dispute here.

7.   On April 28 1989 GAP'S agent in Australia (Mr Goodman)

advised PDA that the supplier of the alloys, a Mr Micky Millner, would be told to cease doing so, thus effectively terminating the royalty agreement.

8.   On May 1 1989 GAP granted Argibond the right to

distribute Argen products and to use the name Argen in
Australia.

9.   On May 19 1989 Argibond distributed a circular to

dentists introducing itself as the new licensee of the Argen range of products. This circular was in the following form:

Dear Customer

Please note that Precious Dental Alloys no longer have the licence to distribute the ARGEN range of alloys through "Argen Sales" as previously and they will no longer be supplied with stocks of Argen Products.

DON' T WORRY BE HAPPY

You will have continuity but because you will be dealing direct you will have the advantage of better service and competitive prices.

Issy Penn one of the original directors of Argen Australia Pty Ltd will be available to assist you with your requirements on ( 02 ) 958-0078 and Micky Millner who has been manufacturing the entire range for you up till now will continue to do so to the same exacting standards that he has practised for almost 25 years.

We look forward to hearing from you and we will call on you as soon as we can to tell you about an exciting new alloy.

Yours sincerely

ISSY PENN

An Argibond sales representative, Mrs Taylor (who had previously worked for Argen Australia), rang to complete that introduction.

10.  On May 23 1989 Linkage gave notice of the termination of

the licence granted to Argen Australia as from 6 months

thereafter.

11.  On June 5 1989 Argen Australia published a circular (the

circular).  I t reads: 

ARGEN
ARGEN AUSTRALIA PTY LTD

Level 2

60 Park Street

N.S.W Australia
All correspondence to:

P.O. Box E349 St. James

2000 N.S. W.

Telephone ( 0 2 ) 264 8940

T o l l F r e e :  (008) 25 1143

Fax ( 0 2 ) 261 4538

Dear Customer

You may have r e c e n t l y r e c e i v e d a le t ter o r 'phone

c a l l d e l i b e r a t e l y u s i n g a name s i m i l a r t o o u r s .

Do n o t be m i s l e d I

There i s o n l y one ARGEN AUSTRALIA PTY LTD, and we

a r e the very one and o n l y o r i g i n a l ARGEN a s you can

see from o u r l e t t e r h e a d .

Our t e l ephone number remains unchanged,	a s does our
008 number f o r o u t o f town cus tomers .

Our company c o n t i n u e s t o opera t e from the same

p r o f e s s i o n a l	b u s i n e s s	premises	where	we	have	a	f u l l
t i m e	q u a l i f i e d	t e c h n i c i a n	on	the	premises ,	a s	w e l l

a s p r o f e s s i o n a l and l a b o r a t o r y c o n s u l t a n t s i n the

b u i l d i n g .

W e a r e l i c e n s e d and r e u i s t e r e d a t the R e g i s t r a r o f

Trade Harks	and	Corporate A f f a i r s t o u se o u r name
' U N ' .

W e o f f e r q u a l i t y produc t s produced i n h i g h l y

r e p u t a b l e m e t a l l u r g i c a l f a c t o r i e s w i t h on s i te

q u a l i t y c o n t r o l and t e s t i n g equipment.

W e p r i d e o u r s e l v e s on o u r service and o f f e r f a i r

p r i c e s w i t h comfor tab l e t e rms .

Our company i s proud l y w h o l l y A u s t r a l i a n owned and

f inanced. Our cus tomers a r e our main a s s e t , and we

v a l u e you and your l o y a l t y a t a l l t i m e s .

I f there i s a n y i n f o r m a t i o n o r d e t a i l s you may

r e q u i r e before	we	can	i s s u e a	f u l l	s t a t emen t	p l e a s e
c a l l me.

A s s u r i n g y o u o f o u r best service a t a l l t i m e s .

Yours sincerely,

ARGEN (AUSTRALIA) PTY. LTD.,

L.B. BLOCH
m a u i n u Director

The applicant says that this letter is misleading, deceptive and false as well as defamatory, and has caused it loss and damage.

TRADE PRACTICES CLAIMS

Identification

The first issue raised in this case was whether the applicant is sufficiently identified by the circular to ground the causes of action relied on. The second respondent conceded that he intended to refer to the applicant but submitted that intent is not an ingredient in an action under these sections of the Trade Practices Act nor in defamation: see Wilcox J in

a Centre of NSW Ptv Limited v Northern Business Colleae U t e d [l9891 ATPR 40-943.

whether a reasonable person would reasonably believe that the	The applicant submitted that the test of identification is	letter referred to the applicant: Lee v Wilson [l9341 51 CLR 276. The applicant further submitted that evidence may be led from people who made an identification: Moraan v Oldhams Presa
Limited [l9711 All ER 1156. Such evidence was provided by
several witnesses, although some of it was inadmissible or of no weight under the hearsay rule and otherwise. The respondents argued that the applicant failed to prove that anyone received both circulars andlor was the subject of Mrs Taylor's telephone call other than two persons (Dr OfConnor and Mr Casteldini) who were called as witnesses. Therefore they said that the Court must act on the basis that the only persons who received the circular and who understood it as alleged were those two people. The respondent said that Mrs Taylor's evidence as to the contents of the conversations is inadmissible to prove identification. Because the relevant sections of the Trade Practices Act are offences, the respondent said that they should be strictly construed.
The applicant submitted that the circular contained four representations, namely that:
1. the applicant engaged in misleading and deceptive conduct by using a name deceptively similar to that of the

respondent

2.    the applicant is guilty of passing off

1. Argen Australia is licensed to use the name 'Argen'

4.   Argen Australia is beneficially entitled to the trade

mark 'Argen'.

In my view these are the key phrases on which to test whether these representations were misleading, deceptive or false:

-	"deliberately using a name similar to ours"
-	"Do not be misled"
-	"There is only one ARGEN AUSTRALIA PTY LTD and we are the very one and only original ARGEN as you can see from our
letterhead"
-	"Our telephone number remains unchanged ....."

- "Our company continues to operate from our same professional business premises ....."

- "We are licensed and reaistered at the Reaistrar of Trade

. . . to use our name 'm"'

The applicant submitted that the circular should be construed	in the sense in which the ordinary reasonable reader would
understand it: [pypina Centre of NSW at p.50,286, and that there should not be a complex forensic and legal analysis of the text. Furthermore, the applicant submitted that the fact that the readers of the circular are dental technicians and dentists is a relevant consideration.
1. Similar names
Similarity of the names is a matter of fact to be determined by the Court. The applicant submitted that the names are not deceptively similar, the only common element being the letters "kg".
In Hotorcharae Ptv Limited v Motor Card Ptv Limited [l9821 42 ALR 136 Justice Lockhart held (at 144) that the use of the words "motor charge" and "motor card" was likely to mislead or deceive. In m i d and Ors v CBS Records Australia Ltd and Ors [l9811 38 ALR 383, the trial judge held that the names "Popular Mechanics" and "Pop Mechanix" are so similar that members of the public are likely to be deceived and misled (at 390).
The respondent argued here, correctly as it seems to me, that the statement that the applicant "deliberately used a name
similar to" the first respondent was true. But this does not establish that Argibond engaged in misleading or deceptive conduct in that the name was deceptively similar in the objective sense required by the authorities.
2. Passina off
For its submission that the statement in the circular that the applicant was guilty of passing off is untrue, the applicant relies on evidence by the second respondent that "there was never any intention to mislead in terms of the quality of the product". This seems to me to be quite irrelevant. Ricketson in Law of Intellectual Property at 536 states there are three requirements to be satisfied in order to succeed in a passing off action. These are:

1 .    that there is some reputation or goodwill which is attached to his name, mark or get-up

2.   that the defendant has used the same or a deceptively similar name, mark or get-up so as to confuse or deceive the relevant public

3.    that as a result of this conduct on the part of the defendant (the "passing off") damage has been caused, or is likely to be caused, to the plaintiff's business reputation or goodwill

Intention is not the relevant test. It is merely a question

was in fact passing itself or its goods off as the business or	of whether the applicant in its circular and telephone call
goods of the respondent. In this instance the applicant was actually marketing the products to which its circular referred and largely related to the goods. The respondent's submission was that for this allegation to be sustained, the circular must amount to an assertion that Argibond was passing itself off as Argen Australia, not that it was attempting to pass off its goods as the goods of Argen Australia. The circular alleges that a person or entity is "using a name similar to ours". If it is taken to refer to goods, the respondent said that the representation is true because Argibond by selling Argen products was in breach of the respondent's trade mark: cadbury Schweooes Ptv Ltd v Pub Sauash CO Ptv Llmited [l9801 2
NSWLR 85 1.
3. Licence
The applicant submitted that Argen Australia was never licensed to use the name "Argen". Instead, on the evidence of the second respondent, his other company, PDA, held the licence by virtue of the royalty agreement of April 2 1987 with GAP.
The respondents submitted that the word "licensed" should be construed to refer to statutory rights. If so, they said that the representation is true because Argen Australia was
registered as proprietor of the trade mark and was incorporated under that name. In other words, the respondents
rely on the fact of registration as proprietor of the trade marks to prove that it was "licensed" as the circular stated.
4. Trade mark
By the terms of the agreement of January 13 1989, PDA purchased the shares of Argen Australia and was obliged to

- l2 -

cede the trade marks currently registered in the name of Argen Australia to APMI of USA. Although this transfer only took place in fact in July 1990, the applicant submitted that because of its legal obligation in this regard, Argen Australia was not the beneficial owner of the trade marks at the time of the circular. Thus by saying that Argen Australia is registered with the Registrar of Trade Marks to use the name "Argen", the second respondent was stating a half truth and was thus misleading the readers of the circular.

The respondents deny that the circular made this representation. They say that if it is implied into the material, it is not false or misleading. As to its being a half truth, the respondents said that circulars of this kind are not expected to be exhaustive statements of legal and equitable rights, still less in a complex situation when beneficial ownership of the trade mark is disputed.

misrepresentations were defamatory because they suggest a	The applicant argued that the first and second
breach of the law, and that the onus is on the respondents to make good their defences. The applicant said that the defence of qualified privilege under section 22 of the Defamation Act (NSW) fails because:
(a) the purpose of the circular was to promote the

respondents' own business. In fact, the respondents claimed that the circular was designed to answer an attack on their business

(b) the publication was false and could therefore not be

reasonable

(c) the circular was activated by malice as proved by the

second respondent's admitted antipathy to Mr Issy Penn

The applicant submitted that the respondents have not made out the elements of the defence of comment and that in any event it fails because there is malice. The respondents repeat their earlier submissions on identification. If the applicant is identified sufficiently, the respondents say that the comment was justified because of the use of the similar names and the applicant's own circular. They argue that the target audience had an interest in what was going on. The

establish malice.	respondents say that evidence of antagonism is insufficient to
The applicant says that truth and public interest cannot be established because the statements were false. Further, there was no public interest in the personal differences between the parties. The possible defence of contextual truth fails because of the falsities and the respondents did not argue an absence of the likelihood of harm.
It is always difficult to judge cases apparently brought and fought against a background of personal enmity. It is the more complex when the whole atmosphere of the case is based on commercial confrontation rooted in that antipathy. In this case where both those situations exist, the parties appeared to me to have tried to make every effort to hide their own parts in and responsibilities for the problems and sought to present their own cases as a serious objective piece of litigation which they wanted the Court to resolve with the usual intellectual legal detachment. As the moving party, this is the greater for the applicant. Whilst of course the law must be applied to the facts established, the adjudication of the case would be quite unreal if that invitation was accepted without regard to its true basis.
There is no doubt that the circular was intended to identify and strike at the applicant. Because it followed so closely
read by the same or a similar audience, I have little doubt upon the applicant's circular and was obviously aimed at and
that the applicant would have been recognised as the circular's object.
On the other hand, I am unable to conclude that by the circular the respondents have engaged in relevantly misleading or deceptive conduct or misrepresentations, passing off or defamation. The circular presupposes that the reader had seen
the applicant's circular. If not, it would largely have meant nothing. Its whole purpose and phraseology are designed to draw attention to the distinction between the two companies. All the readers (and the evidence implies that it would have been more than the two persons called) would have been interested in the matters being discussed. It is unreal to suppose that they could or would have been misled by the respondents' circular but not by the applicant's, or by parts of the respondents' circular but not by others. Most of the circular is true or arguably so. In my opinion it is not defamatory of the applicant.
As to passing off, this is not the respondents1 suit alleging that the applicant is passing itself off as the respondent about which there can in my opinion be little doubt. It is a claim by the applicant that the respondents' circular made this allegation. I think it did but in doing so it made a correct, not a false or deceptive, assertion. The circular implied that the applicants were passing or attempting to pass
themselves off as the respondents, or their goods as those of the respondents. It did not evidence that the respondents
were passing or attempting to pass themselves off as the applicants, or their goods as those of the applicants. In my opinion, the allegation that the statement in the circular that the respondents were "licensed with the Registrar of Trade Marks" is statutorily misleading or defamatory has no merit at all.
Although in the conclusions I have reached, the applicant does not succeed and therefore damages are irrelevant, I cannot but comment that the applicant's claim for damages was without serious evidence or substance. At best it was minor. This merely provides additional support for my conclusion that the case was largely manufactured to pursue a personal vendetta.
No doubt there is mutuality in this approach to the litigation
and thus the case hardly brings credit on elther side. However, the applicant carries the onus of proving its case and this it has manifestly failed to do.
The application is dismissed with costs.

I certify that this and the \r

preced~ng DPqes are a true copy of the	1
Reas~ns	for Judqment herein of his Honour .
Just~c? F nfckl	whJy
Associate

Counsel and solicitors for	Hr J C Kelly
the applicant	instructed by Abadee Dresdner h Freeman
Counsel and solicitors for	Hr V R W Gray
the respondents	instructed by Landerer h CO
Date of Hearing	29 October 1990
Date of Judgment	l March 1991