Bondpark Pty Ltd v Genex Corporation Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA

) )

VICTORIA DISTRICT REISTRY

VG No. 413 of 1987

)

GENERAL DIVISION

PEIWEEN: BONDPM PTP LTD

Applicant

AND:

GENEX CORPORATION PTY LTD

First Respondent

GRM;ORY HOWISON

Second Respondent

NEIL COTrEE

Third Respondent

MICHAEL KERRISON

Fourth Respondent

KEVIN McMULLIN

Fifth Respondent

FRED LERNER

Sixth Respondent

m: Ryan J

DATE:

29 October 1987

3 OOCT 1987

The applicant has sought an abridgement of time to

enable its application for interlocutory relief to be brought

on for hearing quickly, and has sought interim order6 to

restrain the respondents in the meantime from continuing to

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engage in conduct allegedly in contravention of ss.52 and 53(,c) and (d) of the Trade Practices Act 1974 ("the Act"). The respondents had notice of the application which was made

ex wrtc on 22 October 1986 and appeared by counsel to oppose

the grant of m y interim relief.

The evidence discloses that

Mr Uechtritz, the Managing

Director of the applicant, was, until the end of 1987, like the second, third, fourth fifth and sixth respondents, a director of the first respondent, a wholly owned subsidiary of Rabbit Photo Holdings Ltd. Mr Uechtritz was a

substantial shareholder in Rabbit

Holdings Ltd. having about

9.2511; of its issued capital after

it became a publicly listed

company in 1985.

In December 1986,

after a disagreement with

the third respondent, Mr Cottee, the Chairman of Directors of Rabbit Holdings Ltd, Mr Uechtritz sold his shares in that company and resolved to form his oun company, the applicant, to engage in vigorous competition in the retail and mail

order trade in processing

photographic

films.

Uechtritz's formation of that intention received considerable publicity in the business and financial Press and in journals dealing with the photographic trade.

After its incorporation the applicant, in about March 1987, was advised by

its solicitors that it had been

registered as the proprietor of the business name "Cut Price

Photo" under the business names legislation of the States of

NW South mles, Soutb Australia and Tasmania and in the

Australian Capital Territory.

That advice

respect

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South-Australia was erroneous.

The applicant was further

adyised by its solicitors at about the same time that it could not register the name "Cut Price Photo" in either Victoria or Queensland because the names -flat Price Photography" and "Cut Price Photo" respectively were already registered in those States. The applicant also learned that one Rodney Glen Simmons was the proprietor of the existing registered name in Victoria, and Kodak (Australasia) Pty Ltd

was the proprietor in	Queensland of the name "Cut Price
Photo".

The applicant attempted, without success, to contact Simmons to induce him to cancel,

or assign to the applicant,

his registered business name.

Then,

notwithstanding

the

impediment presented by the prior registration in

Victoria,

the applicant decided to trade under the name "Cut

Price

Photo" at least in New South Wales and Victoria. To that end it leased sites in New South Wales where it presently has ten retail outlets, one of which is attached to its central processing laboratory in the suburb of Carlton. There is no

evidence that the applicant has opened any retail

outlets in

Victoria. However, it has commissioned the production of a "logo" in the form of a stylized shield or tag bearing the name "Cut-Price Photo" surmounting a diamond shaped panel

enclosing a dollar sign struck through with a red tick. It

has also had printed a quantity of note paper bearing that

logo and, at the

foot of each page, the legend:

"298 Railway Parade,

Carlton N.S.W. 2218 Australia

P.O. Box 481, Kogarah, N.S.W.

2217

Phone : (021588-3111 Far. (02)587-2863"

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The,applicant has, since 19 July 1987, advertised its mail order photograph processing service in various newspapers circulating in R e u Soutb Nmhle6, Vfctoria, Queensland. South

Australia and Tasranlcr.

Tho evidence does not disclose, in

respect of advertisements in the "Sun-Herald'' and the "Sunday Telegraph", whether they appeared in the editions of those

newspapers

intended

for

distribution

in Queensland

and

Victoria, or

if so, whether the text

or format of the

advertisement in those editions differed from

that in the

editions intended for distribution in New South Wales.	The
advertisements in evidence, as they appeared in each of	the

"Sun-Herald'' and the "Sunday

Telegraph",

each identif ied

"convenient shop locations" in the Sydney metropolitan area at which films might be left for processing and contained a "cut-out'' mail order form for use in forwarding films by mail addressed to "Free Post 16, Cut-Price Photo P.O. Box 481

KOGARAH NSW 2217".

The applicant's advertisement in the

Victoria, contained the invitation "Enquiries Customer

"Age" newspaper of 16 October 1987, circulated principally in toll-free telephone service connected to an establishment in

New South Wales.

The "Age" advertisement

contained no

reference to any shop locations, but had a "cut-out" mail order form for use in forwarding films by mail addressed to "Free Post 619, Cut-price Photo, G.P.O. Box 2977EE, Melbourne, Vie. 3001".

Since 18 September 1987, the applicant has had

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delivered in Victoria 589,000 "mailers" which are

envelopes

cootaining an order form specifying the applicant's prices for printing specified numbers of exposures and its charges

for postage and packing of prints for return to the owner of

the film. . The envelope also bears statements of a promotional nature emphasising the comparatively low prices charged by the applicant. To facilitate posting of films to the applicant, each nailer is printed with an address:

"Freepost AAA619

CUT-PRICE PHOTO

G.P.O.

BOX 2977EE

MELBOURNE, VIC. 3001"

The applicant has also had printed paper "wallets" for returning photographic prints and negatives to customers, which are designed to be used by the customers in ordering reprints. if desired, from the applicant by mail. Those "wallets" are posted to customers in larger outer envelopes printed with the applicant's "logo", and in Victoria the address "GPO BOX 2977 EE MELBOURNE VICTORIA 3001".

On 1 October 1987, the applicant became aware,

through

its New South Wales solicitors, that the first respondent was

the registered proprietor

the business

name "Cut Price

Photos" in Victoria. Preeumably,

in order to obtain

that

registration, the first respondent had persuaded Hr Simmons to assign to it, or cancel his registration of the name "Cut

Price Photography". The applicant was also requested by the

first respondent's solicitors to cease its activities in Victoria under the name 'Cut Price Photo" by midday on 2 October 1987.

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On the folloving day, after being informed that the

applicant vould not accede to its requcat, the first

respondent indicated its intention to institute court

proceedings and

seek interlocutory relief restraining

the

applicant from using the

name "Cut Price Photo". However,

by letter

dated

October

1987,

the

first

respondent's

solicitors

notified

the

applicant

hat

hey

had

been

instructed not to institute that litigation.

It appears that, on 13 October 1987, Mr Uechtritz

saw

an advertisement placed

by the first respondent in the

"Sun"

(a Melbourne daily newspaper) on 9 October 1987. Under the

heading "Cut Price Photos", the advertisement set out prices

for developing and printing 12, 24 and 36 exposure films, and

invited the reader to "Compare and Save". Below a line in

large block letters reading "DISCOUNT PHOTO PROCESSING",

appeared a "cut-out" coupon designed to accompany a film or

films to be sent by mail

to:

"CUT PRICE PHOTOS Free Post 218,

GPO BOX 9878, Melbourne, Vic. 3001

Tel : 347 2293."

By letter

dated

October

1987,

the applicant's

solicitors demanded of the first respondent undertakings that

it would forthwith

cease to advertise, carry

on or conduct

any businese under any name which included the words "Cut Price Photo", and take all necessary steps to cancel the registration of the business name "Cut Price Photos". The

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letter further indicated that, if those undertakings were not giyen, the applicant would seek injunctive relief and claim clanages or an account of profits from the first respondent.

The solicitors for the respondents indicated, on 14 October

1987, that' the undertakings would not be given. That

indication was confirmed after further discussions between

solicitors on 19 October 1987, and

a draft of the application

herein, and affidavits in support of

the motion for

interim

relief, were served on

the solicitors for the respondent on

21 October 1987. I accept that the applicant has acted with the utmost expedition in bringing the matter to this Court. However, as I was Informed from the Bar table, a further advertisement inserted by the first respondent appeared in

the "Sun" newspaper of 17 October 1987.

I was also told

that the

first

espondent

has

scheduled

similar

advertisements for publication on 30 October and 14

November

1987. I assume that the text and format of each of those

advertisements has been and will be similar to that of the

advertisement of 9 October.

The evidence presently before the Court discloses

that,

since mid-September 1987, the applicant has received more many of those films were posted to the applicant using the "mailers" distributed by it through Australia Post, or how m y were accompanied bp coupons cut from the "Age" or other

than 5,000 rolls of unprocessed film for processing from

newspapers. There I s presently no evidence of the volume of business generated by the first respondent's	advertisements
of 9 and 17 October.

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, Several matters were canvassed in the course of the

hearing on 22 October including the question of whether the application of general equitable principles shoulci operate to preclude the applicant from relief because of its knoving contravention of s.5 of the Business Names Act 1959 (Vic).

That section, so far as relevant, provides:

"5(1) A person shall

not either alone or in

association with

other persons carry on

business in the State under a business

name unless-

business name consists of the name of that person and the name of each other person if MY in association with whom that person is so carrying on business without any addition; or

(a)

the

(b)

the business name is registered under

this Act in relation to that

person

and each other person if any in association with whom that person is

so carrying on business-

and where the business name is so registered such of the provisions of

section twelve

which are

required to be

complied with

by or on behalf of

the

person or persons in relation to whom the name is registered have been complied with.

Penalty :

$ 2 0 0 .

Default

penalty.

I was

referred in the context of that provision

Aeroswtiale Societe Nationale Industrielle v Aeroswtiale Helicopters Ptv Ltd (1986) 65 A.L.R. 477 where an interlocutory injunction was granted restraining the respondent from carrying on business under the name under which it was incorporated on 3 November 1981. However, in

that case the applicant had been incorporated under

its name

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in France in 1970 and, since then,

had

acquired

intmmational reputation in

the production and distribution

of helicopters. By contrast, in the present case the applicant has established any reputation which it may have in Victoria in the processing of photographic film only since mid-September 1987, and has set about establishing that

reputation with the

knowledge that its use of the business

name "Cut Price Photo" is in contravention of Victorian law.

I was also referred to Volt Australia Ltd v Directories (Aust.) Ptv Ltd (1985) 7

A.T.P.R.

40-S73 where the applicant

obtained an interlocutory

injunction

restraining

the

respondent

from

attempting,

any

means,

procure

registration of a company anywhere in Australia under the

name "Australian Directories Services

Pty Ltd", and from

attempting to reserve or to maintain or renew the reservation were themselves registered in Victoria as the proprietors of the business name "Australian Directories Services" and had carried on business under that name for some months before

of the said name anywhere in Australia, and from using, or

causing to be used in trade or commerce, the name "Australian

Jenkinaon J. gave judgment on 16 Hay 1985.

The respondent,

on the other hand, had not carried on

any business under the

name "Australian Directories Services Pty Ltd", and had done no more than apply to reserve that name under s.40 of the Companies Code in each State and Territory.

Hr Fajgenbaum QC, who appeared with Mr. Jopling for the

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respondents, urged that the applicant had not demonstrated

even prima facie that it had acquired any reputation or

goodwill which attached to the name "Cut Price Photo".

referred to the descriptive nature of those words and adopted the observation of Stephen J. in Hornsbv Bulldinq Information

Centre

Pty.

Ltd.

v Sydnev Buildincr Information

Centre

Ltd.(1978) 140 C.L.R.

216 at 230 that:

"To allow this section of the Trade Practices Act

to be used as an instrument for the creation of any monopoly in descriptive names would be to

mock the manifest intent

of the legislation.

Given that a name is no more than merely descriptive of a particular type of business, its use by others who carry on that same type of business does not deceive or mislead as to the nature of the business described. Thus both the

Hornsby and the Sydney Centres are building information centres and no one is being deceived as to the nature of the service which is available there. Any deception which does arise stems not so much from the Hornsby Centre's use

of the descriptive words as from the fact that the Sydney Centre Initially chose descriptive words as its title and for many years thereafter was the only centre in Sydney which answered the

description which those words provide.

consequence members of

the public

have come to

associate its particular business with that

type

of activity. Evidence of confusion in the minds of members of the public is not evidence that the use of the Hornsby Centre's name is itself

misleading or deceptive but

rather

that its

intrusion

into

the

field originally

occupied

exclusively by the Sydney Centre has, naturally enough, caused a degree of confusion in the

public mind.

This is not, however anything at

which s.52(1) is directed."

The use by the applicant

a business name, consisting

exclusively of words descriptive of the nature

of the service

which it offers, carries uith it the risk that confusion may arise in the minds of some members of the public between the applicant's business and the business of some competitor who

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uses aimilar descriptive words as part of a business name

inmotherwise advertising or promoting

the

same

type of

services. However. the existence of such confusion does not necessarily signify that the competitor has engaged in deceptive or misleading conduct within the meaning of s.52 of the Act. (See e.g. McWilliams Wines Ptv Ltd v McDonald's Svstems of Australia Ptv Ltd (1980) 49 F.L.R. 4 5 5 ) . The Inference that the use of descriptive words is misleading or deceptive may be stronger where the same words are used in a business or company name without any distinguishing addition like that provided by the adjectival use of "Sydney" in the corporate and business name of the respondent in Hornsbv

Buildlns Information Centre Ptv.	Ltd.	v Svdnev Buildinq
Information Centre Ltd. (supra).

In this context, counsel for the respondents pointed

evidence that the first respondent in its mail order business

had traded as "Discount Photo" and in New South Wales had

also traded as

"Rock Bottom Photo". From

that evidence I

was taken to examples of the

applicant's

newspaper

advertising which prominently feature the phraees

"Discount

photo processing" and "Rockbottom prices on

all

services".

From those facts, the respondent erected

an argument that, if

by its use of the name "Cut Price Photos" it had

deceptively

or misleadingly suggested its business to be identical to or connected with that of the applicant, the applicant had made a similar suggestion by appropriating to its own advertising, the phrases 'Dlscount Photo" and "Rock Bottom" from trade names used by the respondent. It may later emerge that the

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applicant intended by its use of those phrases

suggest

some identity or connexion between its services and those of

the first respondent.

Hovever,

has not

used

either

phrase as the whole or part of its trade name. and I am not

prepared to conclude on the evidence, as it presently stands,

that the applicant's advertisements have been misleading or

deceptive in the way contended by the respondent.

I consider

that

counsel

for

the

respondents

have

pointed to matters

which individually, and in combination,

indicate formidable evidentiary and other obstacles

which the

applicant must overcome before

it can obtain a favourable

exercise of the court's discretion in the form

f a permanent

injunction.

However,

I am not

persuaded

that

those

obstacles are such that

it can be a a l d

that there is not

serious question as to

whether the applicant should succeed

in obtaining final injunctive

relief.

I	turn then to consider the balance of convenience

against the background that

the Court can afford the parties

a hearing of the application for interlocutory injunctions

10.15 am on 30 October 1987, by which time the respondents will be able to file and serve any affidavits on which	they
wish to rely.

The only active use

by the respondents of the name "Cut

Price Photos" between now and then will be in a further advertisement to appear in the "Sun" newspaper to be

published on the morning of 30 October. Since

the first

respondent's business in Victoria

is at present exclusively

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by mail order in response

to advertisements of that kind,

the

profits to be derived from its use of

the name "Cut

Price

Photos", until any order which may be made on 30 October

has

come into effect,

will be readily ascertainable

for the

purpose of translation into

an award

of damages, should it

ultimately be held that the applicant

has

suffered any.

Correspondingly, any decline in

the volume of the applicant's

business

as a result of the first respondent continuing to

trade until next Friday will be fairly readily measurable. in mid-September has probably been almost exhausted, and if the applicant chooses to seek mail order business by

advertising again

in a Victorian newspaper any decline in

customer response to those advertisements can be measured by

comparing it with

the

numbers

of films

returned

for

processing using the "cut-outs" from the	"Age" advertisement
of 16 October 1987.

On the other hand, the

loss of momentum in building up

its business which would be suffered by

the first respondent

if it were restrained until next Friday from trading, or even

from publishing its scheduled advertisement under

the

name

"Cut Price Photos," would be much less accurately measurable. Accordingly, the Court can be less confident that the damages

offered by the

applicant's

undertaking

will

adequately

compensate the first respondent

if it

successfully resists

the application €or interlocutory injunctions.

It was for these reasons that

I refused the motion for

interim relief.

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I certify that this and the thirteen (13) preceding pages are a true copy of the reasons for Judgment herein

of his Honour Mr. Justice Rpm.

Dated: 29 October 1987

[1987] FCA 585

29 Oct 1987