Cable and Wireless Optus Ltd v Telstra Corp Ltd
[1998] FCA 1374
•2 NOVEMBER, 1998
FEDERAL COURT OF AUSTRALIA
INTERLOCUTORY INJUNCTION – whether serious issue to be tried - balance of convenience.
TRADE PRACTICES – Misleading and deceptive conduct.
Trade Practices Act (1974) (Cth), s 52
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, cited.
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, followed.
Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515, cited.
CABLE & WIRELESS OPTUS LIMITED AND OTHERS v TELSTRA CORPORATION LIMITED
NG 1140 OF 1998
SACKVILLE J
SYDNEY
2 NOVEMBER 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 1140 OF 1998
BETWEEN:
CABLE & WIRELESS OPTUS LIMITED
FIRST APPLICANTOPTUS MOBILE PTY LTD
SECOND APPLICANTOPTUS NETWORKS PTY LIMITED
THIRD APPLICANTAND:
TELSTRA CORPORATION LIMITED
RESPONDENT
JUDGE:
SACKVILLE J.
DATE:
2 NOVEMBER, 1998
PLACE:
SYDNEY
THE COURT ORDERS THAT:
The application for interlocutory relief be dismissed.
Costs be reserved.
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
NG 1140 of 1998
BETWEEN:
CABLE & WIRELESS OPTUS LIMITED
FIRST APPLICANTOPTUS MOBILE PTY LIMITED
SECOND APPLICANTOPTUS NETWORKS PTY LIMITED
THIRD APPLICANTAND:
TELSTRA CORPORATION LIMITED
RESPONDENT
JUDGE:
SACKVILLE J.
DATE:
2 NOVEMBER 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The applicants (“Optus”) seek an interlocutory order in the following terms:
“An order that the respondent be restrained until further order from whether by itself its servants or agents from publishing, causing to be published or broadcasting or transmitting or causing to be broadcast or transmitted or causing to be publicly displayed any advertisement which is the same as or which is substantially identical to the Telstra advertisement which contains the phrase ‘What are you looking forward to?’ or which is the same or is identical to the Telstra advertisement broadcast on 28 October 1998 between 8.30 pm and 9.30 pm on Channel 7, Sydney.”
Optus bases its claim on an alleged contravention by Telstra of s 52 of the Trade Practices Act 1974 (Cth) (“TP Act”).
Optus commenced the proceedings on Thursday 29 October 1998. Later on that day Optus sought ex parte relief from me as Duty Judge. I declined to grant an injunction ex parte, but made orders providing for the application for interim injunctive relief to be made returnable before me at 2.15 pm on Friday 30 October 1998.
At that time, Mr Ellicott appeared for Optus. Mr Griffiths appeared for Telstra. Each side read affidavits and there was some brief cross-examination. Both parties approached the claim for interim relief on the basis that the outcome was very likely to determine the principal proceedings, at least insofar as Optus’ claim for injunctive relief was concerned. Having regard to the nature of the advertising campaigns undertaken by Telstra and Optus within the last few days (to which I refer in more detail shortly), I indicated at the conclusion of the hearing that I would make no orders at that stage, but would deliver judgment at 10 am on Monday, 2 November 1998.
Optus’ claim arises out of an advertisement which was televised in all capital cities and major regional centres on Sunday 25, Monday 26 and Tuesday 27 October 1998. The advertisement was screened at prime time. The background to the advertisement was explained by Optus’ Director of Marketing, Mr Cameron.
In August 1998, Optus’ advertising agency proposed a campaign based on the slogan “What are you looking forward to in the future?”. This proposal was accepted and advertisements for the campaign were prepared during October 1998. The advertisement in question was prepared in two versions, the first to be broadcast before the second. The first version contained no brand identification. The second version was identical to the first, except that it contained at the end a brand identification of Optus, including the word “Yes”. There is evidence from which I infer that a key theme in Optus’ advertising in the past has been through the use of the word “Yes”, symbolising Optus’ positive approach to its customers.
Optus intended by this strategy to establish the core proposition “What are you looking forward to ?” in consumers’ minds, without at first linking that proposition to Optus. It was intended that the customer would be intrigued by the mystery of the unbranded advertisements. The second stage of the campaign, involving the screening of the branded advertisement, was to commence on Sunday, 1 November 1998.
It was the first, unbranded version of the 60 second advertisement that was televised on 25, 26 and 27 October 1998. Unfortunately, no transcript of that advertisement was in evidence, although the advertisement was shown in court. However, the advertisement features the concept of children in different situations, stating what they are looking forward to. On three occasions children featured in the advertisement use the expression “I’m looking forward to” or “I’m really looking forward to”. The things the children say they are looking forward to include being the best soccer player in the world or being a famous swimmer. At the end of the advertisement, a banner appears on the screen as follows:
‘WHAT ARE YOU LOOKING FORWARD TO?’
The advertisement does not identify Optus as its source, nor that Optus’ services are those being promoted.
On the evening of Wednesday 28 October 1998, Telstra caused a 60 second advertisement to be televised at prime time. The script of this advertisement, referred to in evidence as the “montage” advertisement, is as follows:
VIDEO AUDIO We see images taken from Bionic Ear and Ultra Sound plus grabs of footage from existing brand commercial. SFX: Telstra music up and under
MVO: So what do we have to look forward to?.Amelia ex Bionic Ear footage. Footage of kids on computers and Chinese class doing Tai Chi etc CHILD 1: I’m looking forward to the universe being my school and classrooms without walls. Cut to footage predominantly from Ultra Sound FMV: I’m looking forward to Australians everywhere getting better access to the finest medical treatment. Children and computers ex existing brand commercial. CHILD 2: I’m looking forward to my computer being able to understand my voice. Footage of floods and fire and starving livestock ex rural commitment commercial. MV1: I’m looking forward to the hard times being made a little easier. Reprise kids hearing ex Bionic Ear. Little girl from Ultra Sound and the most emotive places from existing footage. MVO: So what do we have to look forward to?
An easier tomorrow, because of what we have already achieved today.Telstra end frame. SFX: Making it easy for you.
It will be seen that this advertisement, which features images of both children and adults, uses the expression “I’m looking forward to” on four occasions and a similar expression on two further occasions. The advertisement identifies Telstra as the brand being promoted.
The background to the appearance of this advertisement was explained by Ms Duffy, Telstra’s Marketing Manager. In April 1997, Telstra launched its “Making Life Easier” campaign. In July 1998, a proposal was put forward for a series of advertisements elaborating on the concept of “Making Life Easier”. The proposal envisaged a series of four to six television advertisements, the theme of which was to inspire optimism in consumers by showing them examples of positive projects and technological developments involving Telstra. According to Ms Duffy, whose evidence I accept for the purposes of the present motion, it was intended that each of the advertisements would include or refer to the concept of “Looking Forward To”. Her evidence was supported by a proposal prepared in July 1998 which identified the following as its “key strategic thought”:
“TOGETHER WE HAVE SO MUCH TO LOOK FORWARD TO
SPECIFICALLY, BECAUSE TELSTRA CONTINUES TO MAKE LIFE EASIER, AUSTRALIANS HAVE MUCH TO LOOK FORWARD TO”
Telstra intended to run each of several advertisements on this theme in isolation for several weeks. It then intended to run the individual advertisements in rotation with an “umbrella” advertisement. The latter would draw together the themes used in the individual advertisements in a single “Something to Look Forward To” advertisement.
In fact, Telstra prepared two individual advertisements. The first was the “Bionic Ear” advertisement, launched in September 1998. The second was the “Ultrasound” advertisement, launched in late September 1998. The scripts of the two advertisements are set out below:
“BIONIC EAR ADVERTISEMENT
VIDEO AUDIO Open on the face of Professor Graeme Clarke, the inventor of the Bionic Ear. This is intercut with expressions of wonder on the faces of people hearing for the first time and bytes of technical footage. Prof Clarke: Some people thought I was crazy…
Girl: Professor Clarke had an idea to help some people hear…
Prof Clarke: The Bionic Ear
Girl: This required a tiny implant…
MVO: Australia’s Leading Communications Network. Making it easier for Australians to achieve what we once imagined impossible.
Boy: Very small…
Prof Clarke: But it was only possible with the help from telephone engineers here in Melbourne.
Girl 2: They miniaturised the circuitry…
Prof Clarke: And this lead to the development of what we now know as the Bionic Ear. If we can achieve that, can you imagine the wonderful things we have to look forward to.
“ÚLTRASOUND ADVERTISEMENT
Open on the image of a foetal ultra sound and a monitor inter-cut with a patient during an ultra sound consultation.
DR CHAN: ‘Kathryn, we’re looking at your unborn baby’s heart…’
GRAPHIC: DR FUNG YEE CHAN, MATER MOTHERS’ BRISBANE
‘You might have thought you’ve seen this before, a heart beating, no big deal. What’s so special about this heart beating is, its beating 2000 km away from us.’
Cut to Dr Chan on teleconference monitor.
‘Are you alright Kathryn?’
KATHRYN:‘I’m okay, thank you.’
Cut to Dr Chan 100% inter-cut with the ultra sound image.
DR CHAN:‘And to do that in real time – we’re using 30 telephone digital (ISDN) lines to see this.’
GRAPHIC:MAKING LIFE EASIER TO SHARE VITAL KNOWLEDGE FASTER
Kathryn 100%
KATHRYN ‘At times like this you need all the help you can get.’
DR CHAN: ‘They ???, they move, they wave’.
Kathryn 100% inter-cut with her walking down the hospital corridor holding little Lauren’s hand.
KATHRYN:‘If Dr Chan and her team can do something like this, just imagine the future for our babies.’
Dr Chan 100% inter-cut with Kathryn and Lauren travelling home.
DR CHAN:‘Ultimately, we want the baby to be born with the best chance to life…and be healthy.’
GRAPHIC:TELSTRA MAKING LIFE EASIER.”
It will be seen that the “Bionic Ear” advertisement uses the expression “the wonderful things we have to look forward to”. The advertisement identifies Telstra as the advertiser.
When Ms Duffy saw Optus’ advertisement screened on 25 October 1998, she interpreted this as an attempt to “hijack” Telstra’s marketing campaign. As a “defensive” move, to use her word, she directed Telstra’s advertising agency to accelerate the production and showing of the umbrella advertisement. That advertisement was prepared on Monday 26 October 1998. It uses images exclusively drawn from Telstra’s previous advertisements and in that sense is a “montage”. Ms Duffy accepted that Telstra had not previously used the expression “I’m looking forward to” four times in the one advertisement. Telstra’s advertising agency also had available to it a copy of Optus’ advertisement, screened the previous night.
Following the screening of Telstra’s advertisement on Wednesday, 28 October 1998, Optus decided to bring forward the second stage of its advertising campaign. The branded advertisement was screened during prime time on Thursday 29 October 1998. Thus the “mystery” of the unbranded advertisement has now been revealed to viewers, some three days ahead of schedule. Mr Cameron gave evidence that Optus has been able to purchase additional television and print coverage to bolster the reach and frequency of its campaign “to reinforce the link between the Optus brand and [its] new core proposition”. This involved additional expense of some $400,000.
Mr Ellicott, on behalf of Optus, submitted that Optus had established at least a limited reputation by creating its “mystery” advertisement. Consumers viewing the unbranded Optus advertisement would be wondering who placed it. Telstra “jumped in” and sought to appropriate Optus’ concept. Telstra’s conduct was likely to confuse consumers, who had seen Optus’ first advertisement. Those consumers, upon seeing the Telstra advertisement, would be misled into thinking that Telstra had placed Optus’ unbranded advertisement and would or might mistakenly identify the message and concept with Telstra. Thus Optus had established that there was a serious issue to be tried as to whether Telstra had contravened s 52 of the TP Act.
Mr Ellicott also submitted that the balance of convenience lay in granting an injunction in the terms sought by Optus. He contended that Optus would find it difficult to identify the consumers who had been misled and thus could not readily quantify its losses.
The current dispute between Telstra and Optus is not the only example of litigation between them arising out of the placement of an advertisement. In another such case, Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515, at 522, Merkel J conveniently restated the relevant principles:
“The principles applied by the court in an application for an interlocutory injunction are well established: see Bullock v Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464. The court is required to be satisfied that the evidence establishes that there is a serious question or issue to be tried, that the balance of convenience is in favour of the grant of injunctive relief and that there are no discretionary reasons for refusing the grant of the relief sought. Once the court is satisfied that there is a serious issue to be tried, the strength or weakness of the applicant’s case may become a relevant factor but only in relation to considerations touching on the balance of convenience or the exercise of the discretion. In that regard in Bullock, Woodward J (in a judgment concurred in by Smitheres and Sweeney JJ), after discussing the two legs of a serious issue to be tried and balance of convenience, said, at 472:
The only point I would wish to add for myself is that, when it becomes necessary to consider the balance of convenience, it is, I believe, quite proper to continue to bear in mind the apparent strength of the applicants’ case; the two legs of the test need not be considered in isolation from each other. Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises ‘a serious question to be tried’) may still attract interlocutory relief if there is a marked balance of convenience in favour of it. This view received support from the High Court in Beecham’s case at the page cited above.
In assessing the strength of the applicant’s case the court does not forecast the result at trial; it assesses the strength of the case on the basis of the evidence and submissions before it at that interlocutory stage.”
See also Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 (McLelland J), at 536.
As I have indicated, Optus’ claim rests on the contention that it created an incipient reputation or goodwill on the theme of its unbranded advertisement. It says that Telstra’s intervention, in the form of its advertisement, was calculated to and, in any event, was likely to mislead some consumers of the relevant class (cf Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, at 202-203 per Deane and Fitzgerald JJ). Consumers would be misled because they would be likely erroneously to associate Telstra with the theme “Looking Towards the Future”, embodied in Optus’ unbranded advertisement.
In my view, Optus has satisfied the requirement that there be a serious question or issue to be tried, although not by a great margin. On the material adduced on the present application, I do not regard Optus’ case as a particularly strong one. Of course, that situation could change in the light of further evidence.
In a claim of this nature based on misleading and deceptive conduct in contravention of s 52, it is necessary to establish not only that members of the public have been or are likely to be deceived, but the reasons for this state of affairs: Taco Bell, at 202. There is no direct evidence that any consumers were actually confused as to the source of Optus’ unbranded advertisement. However, I am prepared to assume (although I do not think it self-evident) that some became or might have become confused in consequence of Telstra’s advertisement of 28 October 1998, or some subsequent screening of that advertisement. The question would remain as to why any such confusion has arisen or might arise.
Optus has chosen to adopt a strategy involving the screening of an unbranded advertisement. The theme of the advertisement is reflected and reinforced by the use of the expression “I’m looking forward to”. This, of course, is a common expression. More importantly, for present purposes, it is very similar to the concluding words used by Telstra in its “Bionic Ear” advertisement. To the extent that consumers have been or might be confused by the Telstra advertisement, it is at least arguable that the confusion is attributable to Optus’ decision to adopt a theme in its unbranded advertisement similar, albeit not identical to that already disseminated widely by Telstra.
In this connection, it may be of some importance that the Telstra advertisement can be regarded as a follow-up to the campaign already launched by it, notwithstanding that its timing was clearly determined by the screening of the Optus unbranded advertisement. The images in the Telstra “montage” advertisement are derived from Telstra’s existing campaign. They key expression used in the Telstra advertisement is, in substance, that already used in the “Bionic Ear” advertisement and is consistent with the theme of that campaign. In my opinion, the present is not easily classified as a case of a competitor formulating and implementing an advertising strategy in order to take advantage of reputation or goodwill (incipient or otherwise) generated by an unbranded advertisement. I appreciate that a contravention of s 52 of the TP Act does not require proof of an intention to mislead. But the circumstances in which Telstra’s advertisement came to be screened are relevant in assessing the reasons for any confusion among consumers.
Although I consider that there is a serious issue to be tried, in my opinion the balance of convenience favours denying Optus the relief it seeks at this stage. A number of factors point to this conclusion:
Optus has brought forward its branded advertisement. Moreover, it has allocated a substantial additional sum to promote the association in the minds of consumers between Optus and the concept underlying its unbranded advertisement. I infer from the evidence that Optus does not intend to screen its unbranded advertisement in the immediate future.
On the assumption that some consumers seeing the Optus unbranded advertisement and the Telstra “montage” advertisement would be confused, it is very likely that their confusion would be dissipated once they see the Optus branded advertisement. Mr Ellicott did not suggest otherwise.
To the extent that Optus has or will incur expenditure in advertising that has been wasted by Telstra’s accelerated campaign (assuming it to contravene s 52 of the TP Act), damages will be a sufficient remedy. It was not suggested that there would be any difficulty in assessing damages of this kind, should Optus’ claim that Telstra has contravened s 52 of the TP Act ultimately be upheld.
It is difficult to see how the interim relief sought by Optus would solve the problem identified by it. Optus seeks an order preventing Telstra from screening any advertisement which is “the same as or identical to” its “montage” advertisement. It seems to accept that Telstra is entitled to continue advertising the theme embodied in the “Bionic Ear” advertisement to emphasise what “Australians have to look forward to”. If Telstra follows this course, it would seem inevitable (assuming Optus’ argument as to consumer confusion to be correct) that some consumers will continue to be confused.
I have taken into account that, on Optus’ argument, there may be some consumers who will be confused by further screenings of Telstra’s montage advertisement. Presumably (although Mr Ellicott did not elaborate the point) there would be people who have seen Optus’ unbranded advertisement and Telstra’s montage advertisement, but have not seen, or not yet seen, Optus’ branded advertisement. There is no evidence to suggest that, numerically, this is likely to be a significant group. Having regard to Optus’ intention to pursue its theme in a campaign of branded advertisements I would not be prepared to infer on the evidence that a large number of consumers fall into this category.
Nor have I have overlooked Optus’ submission that consumers of telecommunications services are fickle and may change allegiance rapidly. The evidence that some might switch their allegiance by reason of a mistaken association of Telstra with the Optus unbranded advertisement was (perhaps necessarily) vague. Moreover, it did not address the likelihood that consumers would switch their allegiance from Optus, having regard to Optus’ decision to accelerate and continue the screening of its branded advertisement. I do not regard the evidence at this stage as establishing that Optus is likely to sustain a significant unquantifiable loss.
I should add that I would have reached the same conclusion on the balance of convenience, even if I had formed the view that Optus’ case was stronger than I have suggested. However, I am reinforced in that conclusion by my assessment of the strength of Optus’ case.
It follows that Optus’ application for interlocutory relief should be dismissed. I shall reserve the question of costs.
I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville
Associate:
Dated: 2 November 1998
Counsel for the Applicant: Mr M R J Ellicott Solicitor for the Applicant: Minter Ellison Counsel for the Respondent: Mr J Griffiths Solicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 30 October 1998 Date of Judgment: 2 November 1998
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