Australia Co-Operative Foods Ltd (ARBN 010 308 068) v Pauls Ice Cream & Milk Ltd (ACN 009 661 732)

[1993] FCA 953

JUDGMENT No. ........ ........ . 9s3 93 J ,....,.....

IN THE FEDERAL COURT OF AUSTRALIA	)
)

NEW SOU	TH WALES DISTRICT REGISTRY	)	No. NG890 of 1993
)

GENERAL DIVISION )

BETWEEN:

AUSTRALIAN CO-OPERATIVE FOODS LIMITED

JAmN 010 308 0681

AND :

PAULS ICE CREAM AND MILK LIMITED

JACN 009 661 7321

CORAM:	SHEPPARD J.
DATE	1 DECEMBER 1993
- -

REASONS FOR JUDGMENT

SHEPPARD J.: This is an application for an interlocutory injunction in proceedings which concern the get-up of cartons which contain milk. The milk in question is marketed in the Brisbane area, and in relation to the respondent's product, not elsewhere in Australia. The applicant's product on the other hand is marketed throughout Australia. The causes of action upon which the applicant relies are breach of section 52 of the Trade Practices Act 1974 and passing off. In what I am about to say, I have not drawn any distinction for present

purposes between the elements of the two causes of action.
The product which the applicant markets in Brisbane is not fresh milk.	It is a product which is known as long life

milk. It is sold in a carton with a somewhat different shape from cartons in which fresh milk is marketed and usually the product does not appear in the cool or dairy cabinets of supermarkets and other shops but is to be found on the ordinary shelves because it does not require refrigeration, at least until the carton is opened. As some of the photographs that have been tendered show, however, the milk, that is to say the long life milk marketed by the applicant, is sometimes to be found in dairy cabinets.

The milk which the applicant markets is characterised by the words "No Cholesterol". The carton, or at least the face of it which is exposed to the customer, begins with the words "No Cholesterol" in prominent print. Underneath in more prominent print is the brand name, Farmers Best, which is a brand which the applicant has and uses throughout Australia in connection with "no cholesterol" products, not only milk but other products such as ice cream as well. On the face of the

carton is a stamp which is in red with a tick in white

surrounded by the legend, "National Heart Foundation

Approved". Beside and below that stamp is a logo which is at the core of this case. It consists of a depiction of a rising sun which is in yellow and consists of the body of the sun in a semi-circular form with rays emanating from it. Underneath are two slashes of colour, one green and the other blue. The sun and the two slashes of colour are slanted from left to right. That is to say, they rise obliquely across the face of the carton in that way. Below the logo is a glass of milk, another logo which is apparently the logo of Dairy Farmers, the name of which then appears and the contents of the container which is in this case one litre.

The respondent also markets long life milk in the Brisbane area but not as extensively as it markets fresh milk. It has 100 per cent of the fresh milk market in the Brisbane area and has this apparently because of the present provisions of the law which control the supply of milk in Queensland.

It has an extensive share of the market outside the Brisbane area as well. The carton which is in question - that is to say, the respondent's carton - is not used for the purpose of containing milk which has no cholesterol. The respondent does market such milk but in a carton which has a different get-up and which is not in question in this case.

The respondent's carton has at its crimped top the name

"Pauls", which is a reference to the respondent. There is a

perpendicular blue, white and red stripes. Below that on the	logo above and below that name which simply consists of
main area of the carton is the word "Milk" below which are the words "Fresh Full Cream". There is no National Heart Foundation stamp as there is on the applicant's carton and, of course, there is no reference to the milk having no cholesterol, because it does in fact contain cholesterol being a full cream milk. What remains on the face of the carton which is exposed to the customer is the Pauls logo for this carton which also consists of a yellow rising sun. It is of a different design to that on the applicant's carton in that the body of the sun has a rounded bottom edge rather than a flat one, and the rays of the sun which emanate from it are somewhat thicker - indeed, substantially thicker - than the rays which emanate from the applicant's sun. Below the sun are again two slashes of colour but in this case one of them appears to be somewhat in the shape of a bird, the other one perhaps not so. The colours appear in the order of blue and green rather than in the order of green and blue, as on the applicant's carton.
If one examines the two cartons closely one can see differences in the shades of colour which have been used, that is to say, in the yellow, the green and the blue, but if one sees them from a distance, even a distance which is not particularly great, as one might in a supermarket, or if one looks at them in photographs which are in evidence as part of an array in a dairy cabinet or on a supermarket shelf, there
is my perception of what is to be seen - and there is a is similarity about the shades of colour - or, at least, that
similarity about the way the two logos are slanted. The respondent's logo, like that of the applicant, slants from left to right - that is to say, it ascends obliquely from left to right across the face of the carton.
There is a great deal of evidence about the way in which the two cartons came into existence. I have read this evidence and have considered it generally. There is a suggestion on the part of the applicant that the respondent chose a logo for its carton which went as close as it reasonably might have thought it could to the applicant's
logo.
There is evidence on the part of the respondent which refutes that. There has been no cross-examination of witnesses. That is the usual course in an interlocutory application. That question will, no doubt, become an important question at the ultimate trial of the proceedings, but it is not an issue upon which I can express any opinion and I do not. One of the matters which is stressed by counsel for the respondent is the fact that the applicant's product is, as I have said, a no cholesterol product; the respondent's product is a full fresh cream product. So the two are not the same. Furthermore, at least in Brisbane, the only milk which the applicant is able to sell is the long life milk which usually does not appear in dairy cabinets so that the two
products according to the respondent's submission are not the same and that is something upon which substantial reliance is
placed.
However, both products are milk, and a shopper exercising ordinary care in a supermarket, in my opinion, might well be forgiven for thinking, despite the differences to which I have referred in the two logos, that there was some connection between the two. The fact that one carton prominently displays the name Pauls and the other, both Farmers Best and Dairy Farmers, is not, in my opinion, a matter that should weigh heavily with me because it is well known that many companies market similar products by using different brand names or different get-ups and thus create competition for products which come from the same organisation.
In my view the applicant has established a prima facie case based simply on the appearance of the logo on the two cartons. I do not express a view on the strength of that case otherwise than to say that I do not think that it is a weak case. I think it has an element of strength about it and I say that not overlooking the fact that the product which is marketed by the applicant is no cholesterol long life milk and the product marketed by the respondent is fresh full cream milk. But as I said during the course of the argument which followed the evidence, to me the question in this case is the balance of convenience. That is the matter which I think will determine the outcome of it.

Mr P.G.M. Ffrench in paragraph 8 of his affidavit said

that, at the time of swearing the affidavit, the current Pauls' full cream milk packaging on stock was worth approximately $220,000. He said that, if the respondent was forced to cease using that stock, it would be required to develop a new graphic image for its product which, on his experience, would take a minimum of three months and would cost at least $30,000 for, inter alia, advertising agency and market research expenses. W. Ffrench said that, from a

marketing view point it would be extremely damaging to Pauls to be forced to change a graphic representation only recently adopted.

"It is most likely that, if the respondent was forced to cease using the sun graphic on an interim basis, it would cease using it permanently and would be forced to develop and retain a new graphic notwithstanding the result of any trial. It is my opinion, based on my knowledge of the milk industry in Queensland and/or marketing generally, that if the respondent continued to use the sun graphic say another 12 to 18 months and then was forced by a court order to cease using it, that the applicant could, in the time available, before it was allowed to sell fresh milk in the Brisbane franchise area establish a reputation on the Farmers Best design."

Mr Ffrench is the marketing manager of QUF Industries
Limited of which the respondent is a subsidiary. His evidence

given in paragraph 8 of the affidavit was somewhat cut down by

Mr. O'Hara said that, if one were to take the form of carton

the evidence of Mr O'Hara who gave evidence for the applicant.

previously used by the respondent to market its fresh full cream milk, give it to a graphic designer and then have three milllon cartons made by the company which apparently makes all milk cartons, or most of the milk cartons, in Australia, a period of five weeks - perhaps six weeks at the most - would be required. There would be no need in that event for new graphic images or for redesigning. If the respondent wished that done, that could come in due course.

- The evidence establishes, however, and Mr O'Hara does not seem to dispute this, that quite apart from the loss of money that would be incurred in the value of carton stock there would be a problem in relation to damage to the product (in the sense of damage to its image) caused simply by the fact that there was a change in get-up which would occur a comparatively short time after the logo adopted by the respondent had begun to be used. As I understand it, the logo was changed in September of this year and it is only from that time that the respondent has been using it. That sort of damage, so it would seem to me, would be difficult to assess - and although the applicant, if it obtains relief, will be required to give the usual undertaking as to damages, it may be that damages, if the respondent should ultimately be successful in the proceedings, would not be an adequate remedy for what it had to do. That is really why Mr Ffrench said in the paragraph of his affidavit that an interim injunction in effect would cause the respondent to cease using the logo altogether and to develop a new one, irrespective of the

consideration which should be borne in mind.	outcome of the proceedings. To me, that is an important
Another consideration is this. The applicant's case is based on the fact that it has since 1992 begun to establish throughout Australia by sale of products and by a substantial advertising campaign, including television advertising some of which I have seen, a goodwill in a get-up for no cholesterol products of the kind which I have described. The get-up is to be distinguished from the get-up which is used in respect of the products which are still made of fresh full cream milk.
It is said that there are two goodwills which are involved. One was described by Mr Ellicott, counsel for the applicant, as a range goodwill -that is, an existing goodwill consisting of the logo on a range of no cholesterol products including not only milk in Queensland or, at least, in Brisbane, not only long life milk, but also ice cream and, as I understand it, some other products as well, other dairy
products .
There was also the prospect of future damage to an attempt being made to build up a goodwill in dairy products of all kinds which were no cholesterol products throughout Australia 5ecause it is thought that in no more than five years the market for fresh milk in Queensland will be opened up with the consequence that the 100 per cent market share which the respondent now enjoys will be affected. That
circumstance is acknowledged in some of the documents which are in evidence and which have come from the respondent. One
of those documents is confidential and I do not refer to the detail of it but there are some paragraphs of a memorandum which is part of exhibit A which indicate the way that the respondent was thinking about the matter in 1991.
There is no doubt that both companies take the view that they need to establish an identity in the market place now against the day when there will be the opening up of this competition. But the fact is that that position has not yet arrived and as I have said, all that the applicant can market, at least so far as milk is concerned, is the long life milk. It cannot market fresh milk in Brisbane and is unlikely to be able to do so for another five years. That to me is also an important matter. Mr Ellicott has pressed upon me the submission that even the trading for a few months that will need to intervene between now and a final hearing will further damage both the actual goodwill which the applicant has in the range of products which it sells, and in the effect on the applicant's get-up for no cholesterol products. To use his words, it will be diluted by the use of a confusing or misleading get-up on a product which is fresh full cream milk.
I have to engage in the usual balancing exercise which one often finds so difficult in these cases. In reaching a conclusion, I have taken into account, of course, the fact that I do not regard the prima facie case which the applicant
has as weak. It has an element of strength about it and that
is a matter that must weigh with me very much, but I also take into account that even looking at the matter pessimistically, this case can be given a final hearing within the next six to eight months and probably in a shorter period than that. On what counsel told me this morning, the case will not occupy more than three days. From my knowledge of the Court's list, it should be possible once things settle in the early part of next year, to allot it time well before the end of July or
even before the end of May depending on how the Court's list develops and what settlements of existing matters occur.
I agree with counsel for the respondant that, although the applicant plainly has a goodwill in the logo and the get- up, in the way that it is displayed on its cartons and other packaging, it has not established that goodwill yet in relation to fresh milk, because it cannot. That is the position which prevails in Queensland at the moment and is likely to continue to prevail. It seems to me that the position might be very different if one were looking at a much longer period for the hearing, but one is not.
Having taken those matters into account and some others, I have reached the conclusion that the balance of convenience, notwithstanding the prima facie case which has been made out, is against the grant of interlocutory relief. I therefore decline to grant the relief which is sought in the application.

I certify that this and the 10 preceding

pages are a true copy of the reasons f3r

ludgment herein of The Honourable

Nlr Justice Shqpard.

Dated