Beecham Group Plc v Colgate-Palmolive Pty Ltd

[2004] FCA 1482

FEDERAL COURT OF AUSTRALIA

Beecham Group PLC v Colgate-Palmolive Pty Ltd [2004] FCA 1482

INTELLECTUAL PROPERTY – trade marks – infringement – leave to appeal from interlocutory decision to grant an injunction – sufficient doubt – factual errors did not affect the conclusions of the trial judge

Trade Marks Act1995 (Cth)

Décor Corp Pty Ltd v Dart Industries (1991) 33 FCR 397
Wellness Pty Ltd v Pro-Bio Living Waters Pty Ltd (2004) 61 IPR 242

BEECHAM GROUP PLC AND GLAXOSMITHKLINE AUSTRALIA PTY LTD (ABN 47 100 162 481) v COLGATE-PALMOLIVE PTY LIMITED (ABN 79 002 792 163)

NSD 1425 OF 2004

BENNETT J
29 OCTOBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1425 OF 2004

BETWEEN:

BEECHAM GROUP PLC
FIRST APPLICANT

GLAXOSMITHKLINE AUSTRALIA PTY LTD
(ABN 47 100 162 481)
SECOND APPLICANT

AND:

COLGATE-PALMOLIVE PTY LIMITED
(ABN 79 002 792 163)
RESPONDENT

JUDGE:

BENNETT J

DATE OF ORDER:

29 OCTOBER 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

The application for leave to appeal be refused.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1425 OF 2004

BETWEEN:

BEECHAM GROUP PLC
FIRST APPLICANT

GLAXOSMITHKLINE AUSTRALIA PTY LTD
(ABN 47 100 162 481)
SECOND APPLICANT

AND:

COLGATE-PALMOLIVE PTY LIMITED
(ABN 79 002 792 163)
RESPONDENT

JUDGE:	BENNETT J
DATE:	29 OCTOBER 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application for leave to appeal against a decision of Tamberlin J whereby his Honour made interlocutory orders on the application of the applicants in respect of the alleged infringement by the respondent (‘Colgate’) of the trade mark MACLEANS.  I heard this matter as duty judge.  I gave my decision, that the application for leave to appeal be dismissed, with reasons to be given later.  These are the reasons.

2. The subject matter of the dispute is Colgate’s use of the word MAXCLEAN on the packaging of toothbrushes.  The word appears next to the Colgate trade mark. 

3. There is no dispute as to the principles which guide the Court in determining when to grant or refuse leave to appeal from an interlocutory order as enunciated in Décor Corp Pty Ltd v Dart Industries (1991) 33 FCR 397 at 398 and 400:

   ·     Whether in all the circumstances the decision is attended with sufficient doubt to warrant it being reconsidered by the appellate court; and

   ·     Whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

   The parties agreed that there was no disentitling delay on the part of the applicants.

4. As to whether there was a serious question to be tried, his Honour considered two issues: 

   ·     Whether MAXCLEAN is used as a trade mark

   ·     Whether MAXCLEAN is deceptively similar to MACLEANS

   Whether MAXCLEAN is used as a trade mark

5. Tamberlin J referred to s 120 of the Trade Marks Act1995 (Cth) and noted at [8] that the first question that arises is whether the trade mark in question is being used as a trade mark:

   ‘In this case, this question depends on whether the “MAXCLEAN” sub-brand is being used by Colgate for the purpose of indicating a connection in the course of trade between the MAXCLEAN toothbrush and a particular trade source: see Johnson & Johnson Australia Pty Limited v Sterling Pharmaceuticals Pty Limited (1991) 30 FCR 326 at 351. This in turn gives rise to the question whether “MAXCLEAN” appears as a mark for distinguishing the MAXCLEAN toothbrush from other toothbrushes in the course of trade: see Mark Foys Limited v Davies Coop & Co Limited (Tub Happy Case) (1956) 95 CLR 190 at 198-200 (the “Tub Happy case”). These questions are to be assessed from the perspective of a person looking at the label, and on the assumptions that a reasonable person would make as to the purpose of the product and nature of its use. In considering these questions, importance is attached to the position and prominence of the disputed word on the packaging, and in its promise in promotion of material: see Shell Co of Australia Limited v Esso Standard Oil (1963) 109 CLR 407 at 422-5. The addition of words or signs, such as, for example, “Colgate (R)” adjacent to “MAXCLEAN”, or any other references to Colgate will not avoid trade mark infringements. This distinguishes an infringement action from a passing off suit. As was pointed out by Williams J in the Tub Happy Case at 205:“…if the defendant uses the words of the plaintiff’s trade mark as indicating origin it is still an infringement notwithstanding that the defendant always adds his own name.”’

6. His Honour considered the word MAXCLEAN and its format, location and context.  He directed his attention to the fact that the word MAXCLEAN was used together with or adjacent to “Colgate” on the packaging and to the question whether that fact means that it is not used as a trade mark.  He found that there was a serious case raised by the applicant, on the material before him on the question whether the word MAXCLEAN is used as a trade mark.  He concluded that ‘“MAXCLEAN” is used as a distinguishing mark of the toothbrush, both among other toothbrushes in the Colgate range, and from competing products’.

7. Mr Ellicott QC who appeared with Mr Hennessy for Colgate, submitted that there must be serious doubt as to whether MAXCLEAN or, as it is presented in Colgate’s written submissions MAX CLEAN, was used as a trade mark.  Mr Ellicott submitted that his Honour had failed to take account of evidence on this issue, including advice from Australian patent attorneys that the word was descriptive and that he failed to conclude that the word was, in fact, descriptive and not used as a trade mark.  Mr Ellicott relied upon the totality of the packaging which, he submitted, had not been sufficiently considered by Tamberlin J.  Mr Ellicott also submitted that his Honour had not devoted sufficient attention to whether MAXCLEAN was one word or two.

8. Colgate raised a number of factors which it asserted relate to issues of use as a trade mark, including the appearance of the word MAXCLEAN, the context in which it is used and its descriptive character.  It was argued that Tamberlin J failed to take these matters into account.  In my view, a proper reading of his Honour’s reasons make it apparent that he did.  In any event, while Colgate is fully entitled to rely on these matters it cannot be said that there is not a serious question to be tried in circumstances where, for the reasons his Honour gave, his Honour came to the conclusion that MAXCLEAN is used as a distinguishing mark of the toothbrush.

9. Colgate is not in a position now to challenge whether there is a serious question to be tried on use of MAXCLEAN as a trade mark.  It is clear from the transcript that senior counsel who then appeared for the applicant conceded that there is.  It was also conceded in the evidence.  The issue for trial identified before Tamberlin J was whether the marks were deceptively similar.  In any event, his Honour applied the correct test and, for the reasons that he gave, came to the conclusion that there was a serious question to be tried that there was use as a distinguishing mark.

10. I do not consider that his Honour’s conclusion on this aspect of Colgate’s case is attended by sufficient doubt to warrant my granting Colgate’s application for leave to appeal.  No error has been shown in his Honour’s approach nor in his conclusion.  He was entitled on the evidence to conclude that, in context, the use was, as acknowledged before his Honour, use as a ‘sub-brand’.  Further, the fact that the word MAXCLEAN could be descriptive does not mean that it cannot be used as a trade mark (Wellness Pty Ltd v Pro-Bio Living Waters Pty Ltd (2004) 61 IPR 242 at [29] – [34]). It can not be said that his Honour did not consider whether MAXCLEAN is one word or two, when he made a specific finding, at [13], that ‘there is a lack of a gap between the “X” and the capital “C”, which creates a new word, which can be said to be associated with the product.’

    Deceptive similarity

11. Justice Tamberlin set out the principles which guide a Court in determining whether two marks are deceptively similar.  There is no suggestion that the principles applied were inappropriate.  His Honour considered the appearance and aural sound of the marks MAXCLEAN and MACLEANS and concluded at [15] – [16] that there was a serious question raised as to whether a prospective buyer would wonder whether the Colgate product originated from MACLEANS.  In response to a submission that the case advanced by the applicants on deceptive similarity was ‘so weak’, he concluded at [31] that the applicants’ case was ‘far from lacking substance’.  That conclusion has not been demonstrated to be attended by doubt.

12. His Honour also relied upon evidence that Colgate’s marketing experts were aware of the competing MACLEANS mark when they were considering the MAXCLEAN name and were targeting the MACLEANS mark.  He concluded at [16] that those experts considered that the MAXCLEAN sub-brand would have an adverse effect on MACLEANS products and possibly ‘kill and bury them, to use the colourful language of the marketing experts’, referring to a document which was the result of a brainstorming session involving members of Colgate’s in-house marketing team and representatives of Colgate’s media agency (‘the weakness document’).  That document records brand weaknesses that reflect a pessimistic outcome of a launch of the MAXCLEAN product.  The weakness document contained the words “RIP MAXCLEAN”.  His Honour considered this hope or expectation of confusion as relevant and ‘of importance in the present application’ (at [16]).  If that were the evidence, it would be of importance on the basis of the authorities there cited.  However, it is apparent that his Honour misinterpreted the evidence.  The weakness document did not contain the words “RIP MACLEANS” but rather it contained the words “RIP MAXCLEAN”.  To that extent, reliance on that part of the document was misplaced.  However, the document also contained the words ‘confusing sub-brand name’ and referred to ‘Maxclean from the Macleans family’.  This was acknowledged in the cross-examination of Ms Dillon, Colgate’s Marketing Manager for Consumer and Professional Oral Care, to refer to an understanding on the part of the marketing experts that there was potential confusion between MAXCLEAN and MACLEANS.

13. The misunderstanding of the evidence does not affect the conclusion that there is a serious question to be tried on deceptive similarity.  Tamberlin J came to this conclusion at [15] on the basis of the appearance of the marks and their aural sound.  The reference to the weakness document in his Honour’s reasons at [16] came after that conclusion and was preceded by ‘Furthermore’.  It was not the basis for the conclusion.  In any event, the weakness document did represent an understanding on the part of the marketing experts that was relevant to the question of deceptive similarity.

    Balance of convenience

14. The chronology of the use by Colgate of the MAXCLEAN mark is relevant to an understanding of the balance of convenience and his Honour’s assessment of the evidence in that regard.

    ·     1 May 2004: Australian patent attorneys advice to Colgate (US) and copied to Colgate (Aust) that MAXCLEAN was unlikely to be registrable as a trade mark because it is both descriptive and laudatory.

    ·     11 May 2004: Ms Dillon was informed that the brand name for the product would be “COLGATE MAXCLEAN”.

    ·     7 June 2004: Colgate (Aust) approved packaging for a power toothbrush styled as “COLGATE MAXCLEAN”.

    ·     12 August 2004: Colgate (Aust) was first informed by Colgate (US) that the name of the product was to be changed.

    ·     19 August 2004: the COLGATE MAXCLEAN product was first manufactured in Chipaua, China.

    ·     27 August 2004: the COLGATE MAXCLEAN product first arrived in Australia.

    ·     2 September 2004: the COLGATE MAXCLEAN product first appeared for sale through retailers.

    ·     Early September 2004: The weakness document was produced.

    ·     22 November 2004: The newly-named power toothbrush is scheduled to arrive in Australia.

    ·     Mid December 2004: Colgate expects to supply the newly-named power toothbrush to the supermarkets.

15. As this chronology makes clear, it has taken nearly three months from the  approval of the packaging to the first arrival of the product in Australia.  Further, Colgate (Aust) was informed by Colgate (US) that the name of the product was to be changed well prior to the launch of the product in Australia.  As his Honour noted, the MAXCLEAN name was to be abandoned in part because of ‘the legal risk associated with Colgate’s use of “MAXCLEAN” due to its phonetic and visual similarity with the MACLEANS marks’.  That was apparent from an e-mail from Colgate’s New York office to Ms Dillon and others dated 12 August 2004.  By reason of the email, Tamberlin J concluded: ‘Accordingly, the product was manufactured goods were imported and deliveries made after Colgate was well aware of the closeness of the resemblance between MAXCLEAN and the MACLEANS marks and the proposed abandonment’.  The conclusion that Colgate embarked on its marketing project well aware of the obvious risk it was running in the face of the MACLEANS marks was reached by his Honour by reference to the email and the brainstorming session that produced the weakness document.  Reliance on the weakness document was erroneous, as the brainstorming session that produced it did not take place, as his Honour found, prior to 12 August 2004.  It is not in dispute that this event occurred in early September, after the launch of the product in Australia.  His Honour’s finding is, however, available on the email alone.  Accordingly, the conclusion has not been shown to be incorrect,  unavailable or irrelevant to the grant of injunctive relief.

16. Mr Ellicott made much of the error in the dates but I do not see that it affects his Honour’s conclusion or raises a doubt as to the correctness of it. His Honour did not make reference to the advice of the Australian patent attorneys but neither does the email.  Mr Ellicott also submitted that the email referred to an assessment of risk emanating from the United States and not Australia. However, it is clear that the decision maker on the subject of withdrawal of the product was in the United States and that the decision was, relevantly, based on a ‘legal assessment of risk’, without specific reference to the advice that constituted the legal assessment.

17. The fact remains that the evidence established, as Tamberlin J found at [35], that ‘Colgate embarked on its marketing project well aware of the obvious risk it was running in the face of the MACLEANS marks’.  This affected the reliance by Colgate on any disruption to its business activities.  In other words, the potential losses relied upon by Colgate flow from a decision made after a legal assessment that there was risk due to the visual and phonetic similarity with MACLEANS.

18. Colgate also relied on some general evidence in respect of supermarket shelf space which had been reserved for the MAXCLEAN toothbrushes.  The evidence was that Colgate sells the majority of its toothbrush products to Coles Myer and Woolworths supermarkets.  Ms Dillon’s belief, as noted by Tamberlin J at [25], was that Colgate could lose shelf space if the supply of the MAXCLEAN toothbrushes to the supermarkets ceased. However, she agreed in cross-examination that every step would be taken by Colgate to ensure that such shelf space would not be lost. 

19. His Honour noted at [26] that there were no calculations to support the assertions that the cessation of supply for two or more weeks, combined with resulting loss of shelf space, would cause Colgate to incur substantial losses.  Colgate submitted that there was specific evidence including evidence to support an assertion of a possible return of inventory.  However, these factors did not form the basis of his Honour’s conclusions on the balance of convenience.  Tamberlin J accepted that there may be a risk of loss to the Colgate.   However, it is also the case that any likely loss suffered would be of finite duration and would relate only to stock already manufactured, as Colgate has decided to cease using the name MAXCLEAN.  Such loss should be quantifiable and would be covered by the undertaking as to damages.

20. Justice Tamberlin’s conclusion at [38] was that the balance of convenience ‘comes down strongly’ in favour of Colgate:

    ‘My conclusions in the present case are that there is a serious question to be tried.  The case cannot be described as so weak or fanciful or lacking in substance such as to weigh against the grant of injunctive relief.  As to the balance of convenience, I consider that this comes down strongly in favour of MACLEANS, particularly having regard to the undertaking as to damages, the circumstances in which the Colgate product came to be marketed, the inadequacy of damages to counter the harm complained of by MACLEANS as a result of the possible infringement, and the evidence that any damage to Colgate will be reduced, especially in view of the fact that the word “MAXCLEAN” is no longer intended to be used in relation to the battery operated toothbrush.’

    This conclusion has not been shown to be attended by doubt.

    Conclusion

21. It cannot be said that the conclusion that there is a serious question to be tried on the use of MAXCLEAN as a trade mark and as a trade mark deceptively similar to MACLEANS is attended with sufficient doubt to warrant it being reconsidered by a Full Court.  There is in my view a serious question to be tried that use of MAXCLEAN infringes the applicants’ trade marks.  The balance of convenience favours the applicants.  That conclusion on the part of Tamberlin J is also not attended by sufficient doubt.  

22. Colgate proceeded to launch the MAXCLEAN product in Australia after it was aware, or the persons who made the decision to launch the product were aware, of the likelihood of infringement.  Colgate has not established that substantial injustice will be caused if leave to appeal is not granted, supposing the decision to be wrong.

23. The application for leave to appeal should be refused.  The applicants have foreshadowed an application with respect to costs after reasons are given.  Accordingly, I will not make an order for costs at this time.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated:             18 November 2004

Counsel for the First and Second Applicants:	AJL Bannon SC
Solicitor for the First and Second Applicants:	Freehills
Counsel for the Respondent:	RJ Ellicott QC with J Hennessy
Solicitor for the Respondent:	Dibbs Barker Gosling
Date of Hearing:	28 October 2004
Date of Orders:	29 October 2004
Date of Written Reasons:	18 November 2004