Balfour Wauchope Pty Ltd v Great Southern Pie Co Pty Ltd

[1999] FCA 1028

FEDERAL COURT OF AUSTRALIA

Balfour Wauchope Pty Ltd v Great Southern Pie Co Pty Ltd [1999] FCA 1028

BALFOUR WAUCHOPE PTY LTD v THE GREAT SOUTHERN PIE COMPANY PTY LTD

S 57 of 1999

FINN J
27 JULY 1999
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 57 OF 1999

BETWEEN:	BALFOUR WAUCHOPE PTY LTD ACN 007 870 233 Applicant
AND:	THE GREAT SOUTHERN PIE COMPANY PTY LTD ACN 082 655 829 Respondent
JUDGE:	FINN J
DATE OF ORDER:	27 JULY 1999
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.        the notice of motion be dismissed;

2.        the costs of the motion will be costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 57 OF 1999

BETWEEN:	BALFOUR WAUCHOPE PTY LTD ACN 007 870 233 Applicant
AND:	THE GREAT SOUTHERN PIE COMPANY PTY LTD ACN 082 655 829 Respondent

JUDGE:	FINN J
DATE:	27 JULY 1999
PLACE:	ADELAIDE

EX TEMPORE REASONS FOR JUDGMENT

1. On the evidence before me, the present notice of motion seeks in substance the grant of an interlocutory injunction to compel the respondent company to police manufacturing and distribution agreements it has with a third party, whose acts and omissions ground the applicant’s claims of actual and of apprehended continuing or future infringement of its trademark. 

   Background and Evidence

2. The applicant, Balfour Wauchope Pty Ltd (“Balfours”), is the registered proprietor of a trademark, “Footy Pie”, the application for this mark being registered on 17 January 1995.  Balfours has manufactured and distributed its pie as “Footy Pie” since 1994.  While its primary market is in South Australia it also has distributed Footy Pies in the Northern Territory, Victoria and New South Wales. 

3. The respondent, the Great Southern Pie Company Pty Ltd (“GSP Co”) commenced business in Victoria in 1998.  It obtained the licence from the Australian Football League (“the AFL”) to sell foodstuffs, including pies, in packaging bearing AFL and AFL club logos, trademarks, designs, etcetera.  GSP Co originally proposed to and did call its pies the Footy Pie, and it developed packaging and promotional material so describing the pie. 

4. On 24 November 1998 by letter to Balfours, GSP Co in effect acknowledged that an infringement of Balfour’s mark had occurred.  It indicated that it had stopped all its “Footy Pie” packaging entering the market.  Before indicating the steps it so took it is necessary to refer to the distribution arrangements adopted by GSP Co. 

5. The company intended to have its product available in each State.  The arrangement it adopted for this was to have a separate and independent company in each State manufacture and distribute “its” product under manufacturing and distribution agreements.  In South Australia the local company was GSP (SA) Pty Ltd (“GSP SA”) which entered into the two agreements referred to on, respectively, 1 September and 1 October 1998.  The manufacturing agreement dealt, inter alia, with packaging of the pies (see clause 6 of that agreement); the distribution agreement with advertising and promotion (see clause 10 of that agreement). 

6. While the early alleged infringement involved packaging as well as promotional material, the matters with which I am now concerned relate, for practical purposes, only to promotional materials taking the form (a) of posters (called corflutes) and (b) of A4 size counter stands.  Having produced corflutes and counter stands displaying the words “Footy Pie” GSP Co proceeded in several steps to correct the matter.  Rather than destroy its promotional material, it went through the process of having produced stickers that would block out and/or contain substitute words for the offending words.

7. Though it is difficult on the material before me to be accurate as to the precise timing of the following events, it would seem that GSP Co (i) produced or had produced a blank sticker that blocked out the word “Pie” on its promotional material so that the corflutes and counter stands now carried only the word “Footy” but over the picture of a pie (this being part of the original material);  (ii) had produced a sticker with the words “AFL Football Pie” to block out “Footy Pie” entirely;  and (iii) finally had produced a block-out sticker containing the words “AFL Pie”.  Additionally in early 1999 GSP Co appears to have used the language “football pie” in radio advertisements in South Australia.

8. Balfours objects now to all of the above usages save “AFL Pie”.  Insofar as the first was concerned, ie “Footy” alone, it wrote a letter of complaint to GSP Co on 30 November 1998.  On 14 December GSP Co advised in response that it had removed all point-of-sale advertising for pies bearing the word “Footy” though it did not accept that it was infringing the applicant’s mark.

9. No objection appears to have been taken until the day of the hearing of the motion before me to the second sticker produced, that is “AFL Football Pie”, that objection being taken when a corflute carrying those words was noticed outside a cafe adjacent to this Court’s premises in Adelaide.  The actual sticker itself appears to have been produced in November-December 1998.

10. It is clear on the material before me that by at least 15 March 1999, and probably well before this, GSP Co was giving directions to its supplier of its promotional materials that that material “must have AFL pie, not AFL football pie” on it.  From the oral evidence of Mr Nicholson, a director of GSP SA, the reason given for the removal of the word “Football” from the stickers was that the AFL refused to approve of advertising using that word.  The objection to the radio advertisements was made on 18 January and apparently that usage desisted.

11. Turning now to the events that occurred in this State since GSP SA entered into its agreements with GSP Co. 

12. (1)       After entering into the agreements to which I have referred, GSP SA entered in turn into agreements with (a) Cowleys that was to manufacture the pies, and (b) Tradelink that was to merchandise the products, this latter agreement being made in about February 1999. 

13. (2)       The advertising and packaging material supplied by GSP Co initially bore the words “Footy Pie”.  It is Mr Nicholson’s evidence that in October-November 1998 advertising material was supplied by GSP Co directly to Cowleys but that thereafter it was supplied to GSP SA and that when this change occurred Mr Nicholson went to Cowleys and recovered the advertising material it had from it. 

14. (3)       Mr Nicholson’s evidence is that while he showed “Footy Pie” advertising materials to prospective clients in late 1998, none was put on display by those clients.  It was also his evidence that while he gave away pies that were wrapped in offending packages, he did not sell any pies until January 1999 by which time innocent packaging was in use.  I have to say in passing that I do not find Mr Nicholson’s evidence on the matter of sale altogether convincing. 

15. (4)       It seems to be the case that in mid‑November 1999 Mr Nicholson was informed by GSP Co not to sell pies in “Footy Pie” packaging.  This instruction to Mr Nicholson was itself mentioned to Mr Koot, the chief executive officer of Balfours in a letter from GSP Co of 24 November 1998. 

16. (5)       It is Mr Nicholson’s evidence that in December 1998, that is after he had recovered the advertising material from Cowleys, he received a supply of “AFL Football Pie” stickers.  The source of the stickers is not altogether clear to me.  They may have been of local manufacture, Mr Nicholson referring in his oral evidence to an instruction from Melbourne to use a local source of supply, or they may have originated in Melbourne.  I need make no finding on this. 

17. What is clear is that at least one such sticker found its way onto a corflute that was provided to a customer of GSP SA, that is the cafe adjacent to this Court.  That supply can only have occurred after mid-December 1998 when on Mr Nicholson’s evidence he had retrieved the advertising material from Cowleys.  Nonetheless Mr Nicholson, when asked to explain how the cafe could have obtained such a corflute, attributed this to Cowleys and to its receiving the sticker from the local manufacturer of it that allegedly had premises next-door to Cowleys.  Cowleys in turn is said to have given the corflute to Tradelink apparently after February 1999 when Tradelink was engaged by GSP SA, and Tradelink in turn is said to have given it to the cafe.

18. I find the above evidence of Mr Nicholson unconvincing.  I am satisfied for present purposes that GSP SA, whether intentionally or otherwise, made some probably very limited use of the “AFL Football Pie” stickers on at least corflute advertising.  It would not be unreasonable to infer that the corflute advertisement next to the Court in Adelaide may well not be the only such advertisement on display in South Australia. 

19. (6)       On 12 July 1999 Mr Koot of Balfours visited the Coles Supermarket at Marion in South Australia.  He observed what he called a GSP Co – it was in fact a GSP SA - trade promotion.  The advertising display contained, he alleges, an A4 counter stand using the words “Footy Pie”.  He said in oral evidence he gave instructions to an employee by telephone to obtain the counter stand.  He did not see this occur, although he was later supplied with such a stand that was tendered in evidence.  Though more oblique in character, the respondent relies upon the hearsay evidence of the person who conducted the Coles demonstration who said that to the best of her recollection she did not use a counter stand marked “Footy Pie” and that she did not give a copy of a counter stand to anyone.  For present purposes, as the respondent concedes, there is on the evidence a serious issue to be tried as to whether an infringement occurred on 12 July 1999. 

20. (7)       Mr Nicholson’s evidence is that since the Coles event he has inspected all packaging and promotional material at the premises of GSP SA, Cowleys and Tradelink and that on each occasion all A4 counter stands bore the words “AFL Pie” and none the words “Footy Pie”.  In his first affidavit Mr Nicholson claims that in December 1998 he disposed of all the “Footy Pie” A4 counter stands, both that he had on hand and that he recovered from Cowleys and that the A4 stands he has used were all freshly supplied by GSP Co in December 1998.  He also gave oral evidence that about 60 corflutes are in use in South Australia but the rest have been destroyed.  No reason for their destruction apparently was given.  Again I would have to say I find this evidence on corflutes unconvincing, given the efforts Mr Nicholson says are being made to establish the AFL Pie in South Australia. 

21. (8)       GSP Co obviously retained for quite some time an interest in being able to use the words “Footy Pie”.  On 27 May 1999 it informed Balfours that it intended taking steps to have Balfour’s trademark registration removed for non‑use outside of South Australia.  The following day on advice from patent attorneys it applied for registration of the mark “Footy Pie”, though without informing Balfours of this.  It withdrew that application after the commencement of this proceeding. 

22. (9)       Mr Kenmar, the lawyer employed by the group of which GSP Co is a member, provided affidavit evidence that on notification of the problems with the use of the words “Footy Pie” the company took steps to have new packaging and promotional material prepared.  In October 1998 distributors were instructed not to use materials containing the words “Footy Pie”.  Only about half of the material bearing the offending words were distributed, that is about 500 A4 cards, 250 posters and 200 T-frame posters.  GSP SA was instructed that all material bearing the GSP Co logo must be viewed and approved by GSP Co.  The company’s national advertising campaign began in March 1999 and promoted the product under the name “AFL Pie” and over 100,000 AFL Pies have been sold in South Australia. 

    The Parties Contentions and Conclusions

23. I note at the outset that the respondent has indicated that it does not intend to and does not use the words “Footy Pie”, “Footy” alone with a picture of a pie, or “AFL Football Pie” or “Football Pie” in its promotional material or packaging. 

24. Balfour’s case put shortly is that GSP Co clearly breached its mark when supplying offending corflutes and A4 cards to GSP SA in November‑December 1998;  that the use of “Footy” over the picture of a pie, the radio advertisement of “Football Pie” and the corflute “AFL Football Pie” all constitute clear infringements as does the use of the “Footy Pie” A4 counter stand at the Coles display on 12 July 1999.  These events are all examples of the respondent’s brinkmanship it is claimed - a claim, it is said, that is reinforced by the undisclosed trademark application. 

25. It claims, furthermore, that it has its own extensive advertising to protect and that the balance of convenience favours the grant of an interlocutory injunction.  I would note in passing that the form of order sought is:

    "Until further Order an injunction pursuant to section 126 of the Trade Marks Act 1995 restraining the respondent by its servants, agents, contractors or otherwise from infringing the applicant’s registered trademark No 627977."

    I would emphasise the generality of the order sought and the failure to identify in any fashion the conduct to be prohibited.

26. One of the matters that is a cause of difficulty in this case is that GSP SA has not been made a party to the proceedings.  I raised this matter with the respondent but no objection as to parties was taken, the respondent conceding, apparently, that it has via its agreements such control over GSP SA as could implicate it in infringement proceedings resulting from GSP SA’s conduct, though I would add that its submissions opposing injunctive relief proceeded in part on its distance and independence from GSP SA, Cowleys and Tradelink, one or more of which may have made an offending use.

27. On the view I take of the evidence the non-joinder of GSP SA is not insignificant.  I am prepared to assume that (1) GSP Co committed an infringement of Balfour’s mark up until at least November 1998 in promoting and providing promotional material and packaging using the words “Footy Pie”;  and (2) GSP Co was slow to act decisively to rectify its infringing conduct, this being manifest in its brief adoption of a sticker deleting “Pie” from “Footy Pie” - there is a serious question to be tried as to whether its so doing constituted an infringement - and its flirtation with the “AFL Football Pie” sticker before apparently the AFL vetoed this.

28. I am, however, satisfied that by at least February-March 1999, GSP Co had taken what it considered to be appropriate steps to ensure first that its promotional and packaging material supplied to its distributors not only did not use the words “Footy Pie” but also only used the words “AFL Pie” and secondly, that it had instructed its distributors to this effect.  I am not satisfied on the material before me that GSP Co intends to or would take steps directly itself that would infringe the applicant’s mark in the future or that it has persisted in brinkmanship after its initial indecisive action to rectify matters.  It has, as I have indicated, maintained an interest in obtaining use of the words “Footy Pie”, an interest which is understandable given its agreement with the AFL.

29. The difficulty, though, is that in the past GSP Co took steps that have the continuing potential to allow others, and particularly GSP SA, to commit infringements, whether as a result of inadvertence, indifference or otherwise on their part.  In October-November and possibly December 1998, GSP Co supplied first Cowleys and then GSP SA with corflutes and A4 counter stands that were in themselves offensive if not altered by stickers that were themselves inoffensive.  It gave instructions that “Footy Pie” advertising was prohibited and from at least January 1999 (by when at least it seems that “AFL Pie” stickers were provided) it provided the means for inoffensive promotional materials to be used.  Whether materials so rendered inoffensive were always used by GSP SA and later Tradelink and Cowleys would depend on how scrupulous the three companies were in their various contractual arrangements.  I will return to this.

30. I should interpolate that I am for present purposes prepared to assume that the continuing use of the term “AFL Football Pie” in one, and I would infer probably more than one, instance raises a serious question of infringement to be tried. 

31. When one looks at the evidence on alleged infringing conduct in its entirety, it falls, as I have foreshadowed, into two categories.  The first relates to steps taken by GSP Co from October-November 1998 to February 1999 that resulted both in actual or possible infringements and in corrective actions taken at that time.  The second relates to subsequently occurring or subsequently discovered events that could only have occurred because of GSP Co’s provision of materials to GSP SA that could if used, or used in a particular way, occasion an actual or potential infringement.

32. As I earlier indicated, I have not found Mr Nicholson’s evidence to be altogether satisfactory, particularly in relation to how the “AFL Football Pie” corflute was provided to the cafe to which I have referred.  It seems likely, in my view, whether because of inadvertence or indifference, that Mr Nicholson, or those for whom GSP SA is responsible, made a small use of both “Footy Pie” and “AFL Football Pie” materials.  There is no reason on the material before me to conclude that the instances of such occurring were other than few and isolated, but likewise there is reason to believe that not all offending “Footy Pie” signs in South Australia were either destroyed or properly altered and that the words “AFL Football Pie” were used other than in the one instance to which I have referred.

33. The possibility that a further infringement resulting from the use of an A4 counter stand will occur during promotion activities undertaken on behalf of GSP SA is in my view slight in light of the evidence as to the inspections undertaken at the GSP SA, Cowleys, and Tradelink premises.  The area where the apprehension of a possible continuing or fresh infringement occurring is reasonable is with, in particular, corflutes and possibly A4 counter stands provided to customers of GSP SA.  That possibility relates primarily to use of a corflute with “AFL Football Pie” on it, a possibility arising because GSP Co armed GSP SA with the means of making such an infringing use, albeit unauthorisedly. 

34. I am not persuaded that there is any significant likelihood of this occurring other than on a handful of occasions.  Equally I am of the view that a simple expedient, ie the confirmation with customers of GSP SA as to the wording of their signs, would for practical purposes remove the one reasonable source of apprehension that an infringement is possibly continuing or could occur.  While I am of the view that GSP SA, as a supplier to those customers, would have been the appropriate body to take such corrective action or for that matter face the prospect of an injunction, GSP Co is not itself entirely blameless in the state of affairs it has created.

35. The applicant is entitled to have the integrity of its right maintained even if (i) the injury it might suffer is or will be relatively slight in any event from any past, continuing or apprehended infringement; and (ii) the probability of more than a handful of continuing or apprehended breaches is also slight.  While I am satisfied that damages are not an adequate remedy, should such occur in the circumstances of this case, I equally am reluctant to award interlocutory relief against GSP Co.  I am being asked to achieve indirectly via GSP Co what in the circumstances should be achieved directly, if at all, via GSP SA. 

1. GSP Co has taken what I assume it considers to be reasonable and appropriate remedial action to rectify matters to ensure the inoffensive marketing of its pies.  Nonetheless, it has armed GSP SA with the means of committing a continuing or a future infringement of Balfour’s mark.  It has furthermore the means available to it under its agreements with GSP SA to coerce further appropriate corrective action to ensure the occurrence or prospect of such infringement will be stopped or precluded in the area in which I consider the possibility of such infringement exists.  This is by customers of GSP SA who have been provided with advertising material.  The integrity of that material needs to be established.  That is action which GSP Co should procure being taken and which I consider Balfours is entitled to expect of it, the more so as Balfours is unaware of the identity of all of those customers.

2. Having regard to the extent of the harm to which Balfours is likely to be exposed in the event of continuing or possible future infringements and to the indirect means sought to be used in this motion to avoid such harm, I will not, having regard to the balance of convenience, accede to the motion for interlocutory relief.  I have indicated a course I consider proper nonetheless for GSP Co to take in the circumstances.  Its failure so to do and the detection or occurrence of a further possible infringement in consequence are obviously matters of which account could be taken in a further prosecution of this proceeding.  I should add that even if I was satisfied that the case was otherwise one appropriate for the award of an injunction, I would not, given the conduct complained of, have awarded relief in the broad terms proposed by the applicant.  I will order that the notice of motion be dismissed. 

3. The costs of the motion will be costs in the cause. 

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate:

Dated:             3 August 1999

Counsel for the Applicant:	Mr G Coppola
Solicitor for the Applicant:	Donaldson Walsh
Counsel for the Respondent:	Mr G Clarke
Solicitor for the Respondent:	Freehill Hollingdale & Page
Date of Hearing:	26 July 1999
Date of Judgment:	27 July 1999