Caterpillar Tractor Co v Caterpillar Loader Hire (Holdings) Pty Ltd

[1981] FCA 196

Re: CATERPILLAR TRACTOR CO.
And: CATERPILLAR LOADER HIRE (HOLDINGS) PTY. LIMITED (trading as Willoughby's
Caterpillar Loader Hire Service) And: MILJAN ANTON WILLOUGHBY and BARBARA JEAN
WILLOUGHBY (1981) 56 FLR 175
No. SA G36 of 1981
Trade Marks

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Evatt (1), Fisher (1) and Ellicott (1) JJ.

CATCHWORDS

Trade Marks - Appeal from the Supreme Court of South Australia - use of trade mark "Caterpillar" - interim injunction pending hearing of the action - balance of convenience - flexibility of interlocutory injunctions.

TRADE MARKS ACT 1955 ss.58(1), 62(1), 64(1)(b).

Trade Marks - Alleged infringement of Caterpillar trade marks - Refusal of interim injunction - Appeal from refusal - Balance of convenience - Trade Marks Act 1955 (Cth), ss. 58 (1), 62 (1), 64 (1) (b).

HEADNOTE

The appellant was the registered proprietor under the Trade Marks Act 1955 of the trade mark "Caterpillar" in respect of certain machinery. The respondent company carried on business of hiring out loaders under the name Willoughbys' Caterpillar Loader Hire Service. The appellant commenced proceedings against the respondents in the Supreme Court of South Australia seeking an injunction to restrain them from infringing its registered "Caterpillar" trade marks. It applied unsuccessfully for an interim injunction.

On appeal,

Held: Per curiam - (1) If a breach of the plaintiff's rights was admitted or was, in the opinion of the judge, beyond argument, interlocutory relief should only be refused in special circumstances.

Hubbard v. Vosper, (1972) 2 QB 84, referred to.

Hampstead & Suburban Properties Ltd. v. Diomedous, (1969) 1 Ch 248, not followed.

(2) The appellant had not made out a case in law against the respondent company which was clearly unanswerable. There were still difficult questions of fact and law to be decided concerning the legality of the respondent company's use of the word "Caterpillar".

(3) The respondents had an arguable case in respect of these matters as the appellant had conceded the balance of convenience lay against the grant of interlocutory relief.

HEARING

Adelaide, 1981, October 1-2; November 3. #DATE 3:11:1981

APPEAL.

Appeal from an order of the Supreme Court of South Australia refusing the appellant's application for an interim injunction.

H. C. Williams Q.C. and W. A. Ross, for the appellant.

J. W. Perry Q.C. and R. M. Lunn, for the respondents.

Cur. adv. vult.

Solicitors for the appellant: Ross, McCarthy & Nosworthy.

Solicitors for the respondents: McNamara Boundy & Co.

T. J. GINNANE

ORDER

The appeal be dismissed with costs.

Appeal dismissed.

JUDGE1

On 18 December 1980 Caterpillar Tractor Co. (the appellant) commenced proceedings against Caterpillar Loader Hire (Holdings) Pty. Limited and its directors Miljan Anton Willoughby and Barbara Jean Willoughby (the respondents) in the Supreme Court of South Australia seeking an injunction restraining them from infringing its registered "Caterpillar" trade marks. The mark "Caterpillar" is registered in the appellant's name under the Trade Marks Act 1955 (the Act) in Part A of the Register of Trade Marks in relation (inter alia) to rental and leasing services in respect of machinery and equipment (being services included in class 36) and in relation (inter alia) to rental and leasing services in respect of machinery and equipment including the hire of bulldozers and other earth moving machines (being services included in class 37).

A statement of claim was delivered by the appellant on 18 March 1981 and on 9 April 1981 a summons was taken out by it for an interim injunction restraining the defendants from infringing the trade marks pending the hearing of the action. The summons, which was opposed by the respondents, was heard by Zelling J. who gave judgment, on 14 July 1981, dismissing the application.

The appellants have appealed to this court seeking a finding that His Honour was in error and an order that an interim injunction be granted.

Most of the facts relevant to the consideration of this appeal are set out in the reasons for judgment of Zelling J.

It appears that the appellant's registration as proprietor of the trade mark "Caterpillar" came into force on 23 June 1980. On 17 July 1980 Cavill Power Products Pty. Limited, a company incorporated in South Australia was registered as a registered user of those trade marks. It has been, since October 1972, the sole dealer in South Australia and Western New South Wales of "Caterpillar" equipment manufactured by the appellant in the United States and exported to Australia. Machinery and equipment manufactured by the appellant has been sold under the name "Caterpillar" in Australia for about 55 years. From approximately 1925 until October 1972 the dealer in that equipment for South Australia was the S.A. Tractor Company. The equipment sold under the name "Caterpillar" in Australia consists of all earthmoving construction equipment including tractors, track type loaders, wheel loaders, and off highway trucks. Fork lift trucks and industrial and marine engines are also sold under the name "Caterpillar".

From 13 August 1974 until the respondent company was incorporated in November 1976 the individual respondents carried on a hiring business under the name "Caterpillar Loader Hire Service".

In November 1976 the respondent company took over that business and thereafter continued to carry it on under that name. In June 1977 it changed the name of the business to "Willoughbys Caterpillar Loader Hire Service" and has since continued to carry it on under that name.

The business which the respondent company has carried on and still carries on under the name "Willoughbys Caterpillar Loader Hire Service" is the hire of front-end loaders manufactured by the plaintiff company and consists of hiring out each of the loaders with an operator at an hourly rate. It owns four such machines. It operates three vans each with the business name on it in large lettering. Its letterheads and uniforms also bear the name. There is an entry under that name in the white and yellow pages of the Adelaide telephone directory inserted by the respondent company. There is no evidence of the appellant objecting to the respondent company's use of the name until the correspondence which passed between the parties or their solicitors shortly before the proceedings were instituted.

Section 58(1) of the Act provides that subject to the Act the registration of a trade mark in Part A of the Register, if valid, gives the registered proprietor the right to the exclusive use of the trade mark in relation to the services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by the Act.

Also relevant for present purposes are ss.62(1) and 64(1)(b) which provide:-

"62.(1) A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or a registered user of the trade mark using by way of permitted use, uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered.

64.(1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of a trade mark:
. . . . . . . . . . . . . . . . . . . . . . .

(b) the use in good faith by a person of a description of the character or quality of his goods or services;"

In giving judgment his Honour said he was content to assume, for the purpose of disposing of the case, that the plaintiff had proved a breach of s.62 of the Act. However, his Honour held that the defendant had established a defence under s.64(1)(b) holding that the use of the word "Caterpillar was a use in good faith by the defendant company of a description of the character or quality of the defendant company's services.

Having so decided however, his Honour went on to hold that, even if he were wrong in his view about the application of s.64(1)(b) to the facts of this case, he would have refused an interlocutory injunction on the basis that the balance of convenience was all on the side of the defendants and therefore was in favour of preserving the status quo. He stated that Mr Williams, Counsel for the plaintiff, did not contend otherwise.

A plaintiff seeking an interlocutory injunction, in a case such as this, must make out a prima facie case in the sense that, if the evidence remains as it is, there is a probability that, at the trial of the action, the plaintiff will be held entitled to relief (See Beecham Group Limited -v-Bristol Laboratories Pty. Limited (1968) 118 C.L.R. 618 and World Cricket -v- Parish (1977) 16 A.L.R. 181 per Bowen C.J. at p.186). If satisfied of this, the Court must then determine whether, in the exercise of its discretion, it should grant an injunction. It is said that, in doing so, it has regard to "the balance of convenience". This includes consideration of hardship to any parties including third parties of granting or refusing an injunction and also of delay, acquiescence, the adequacy of damages, the existence of alternative remedies and the strength of any available defence.

Here it is agreed that if the balance of convenience arises for consideration it is clearly in favour of maintaining the status quo and therefore in favour of refusing interlocutory relief. The appellant argues however, that it's case against the respondents is so strong that questions of balance of convenience do not arise and that an interlocutory injunction should be granted as of course.

Although there is authority for the proposition that, where a clear breach of the plaintiff's rights is established, questions of balance of convenience do not arise (Hampstead and Suburban Properties Limited -v- Domedius (1969) 1 Ch 248; Halsbury's Laws of England 4th ed. vol. 24, par.956), we think that the better view is that the relative strength of the plaintiff's case is only one of the factors to be weighed by a Judge in exercising a discretion as to whether on the balance of convenience an interim injunction should be granted. If a breach of the plaintiff's rights is admitted or is, in the opinion of the Judge, beyond argument, the Judge should no doubt only refuse interlocutory relief in special circumstances. However, the courts have deliberately taken the view that the remedy by way of interlocutory injunction should remain flexible and it would therefore be unwise to deny the possibility of special circumstances existing which could justify the refusal of such relief even though breach of the plaintiff's rights was clearly established at the interlocutory stage.

The need for flexibility of approach was emphasised by Lord Denning M.R. in the following passage from his judgment in Hubbard -v- Vosper (1972) 1 A11 E.R. 1023 at p.1029:-

"In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and then decide what is best to be done. Sometimes it is best to grant an injunction so as to maintain the status quo until the trial. At other times it is best not to impose a restraint on the defendant but leave him free to go ahead . . . . . . . . . The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules."

In this case Zelling J. held that the plaintiff had not shown that, on the balance of probabilities, it would succeed at the trial. Indeed, his Honour was of the view that the plaintiff would not be able to establish infringement because of the provisions of s.64(1)(b) of the Act.

Before us, Counsel for the appellant claimed that his Honour was clearly wrong and that, as a matter of law, on the undisputed facts before the court, there was no defence to the plaintiff's case and that therefore an interim injunction should be granted. He conceded however that if the respondents had an arguable case the balance of convenience would clearly rest with the matter going to trial without interlocutory relief.

He argued that, by virtue of s.58 of the Act, the appellant as registered proprietor, had the right to the exclusive use of the trademark "Caterpillar" in respect of loader hiring services, that a company that used the name "caterpillar" to indicate a connexion in the course of trade between it and its loader hiring service was clearly in breach of that right, that the respondent company was so using the name in its business name and that therefore it had no defence in law to these proceedings. It was further argued that there was nothing, on the facts before his Honour, which could justify his Honour's finding that the word "Caterpillar" had become descriptive of the type of tractor in question or that its use in the name "Willoughby's Caterpillar Loader Hire Service" was descriptive. Counsel referred us to a number of authorities relevant to these propositions.

We are not prepared to hold that the appellant has on the facts, as they stand, a case in law against the respondent company which is clearly unanswerable.

We have some doubt as to the correctness of his Honour's view, on the facts, that the word "Caterpillar" has for many years been used in South Australia as an ordinary descriptive word relating to the type of tractor in question. The tractors hired out by the respondent company are not a crawler type tractor. They are four wheeled vehicles. Furthermore, as appears from evidence of trade mark registrations available to his Honour and tendered before us, the appellant has been since 1911 and still is the registered proprietor in Australia of the mark "Caterpillar" in respect of machinery including tractors.

However, even if the word "Caterpillar" is not descriptive there are still difficult questions of fact and law to be considered and decided before a court could find the appellant entitled to relief. In addition to the question whether the word "Caterpillar" has come to be descriptive of the particular type of tractor, there are other issues of fact and law to be determined, e.g. whether the use of the word "Caterpillar" in the business name "Willoughbys Caterpillar Loader Hire Service" is a descriptive use of the word "Caterpillar" and whether it is used for the purpose of indicating a connexion in the course of trade since the tractors used by the respondent company in its hiring services are tractors manufactured by the appellant. This is not necessarily an exhaustive statement of the issues involved. However, in relation to them it is clear, in our opinion, that the respondents have an arguable case.

In these circumstances, having in mind the appellant's concession that the matter should go to trial without interlocutory relief if the respondents have an arguable case, it is unnecessary for us to express a view as to whether the plaintiff has established, on the balance of probabilities, that it will succeed at the hearing. It may, but this will depend on the resolution of issues such as those we have mentioned.

In these circumstances we do not propose to interfere with the exercise of his Honour's discretion and are of the opinion that the appeal should be dismissed with costs.