Comite Interprofessionnel Du Vin De Champagne v N.L. Burton Pty Ltd

[1981] FCA 224

Re: COMITE INTERPROFESSIONEL DU VIN DE CHAMPAGNE and CHARLES BARKER AUSTRALIA
PTY. LIMITED
And: N. L. BURTON PTY. LIMITED T/as FREIXENET SPANISH CHAMPAGNE DISTRIBUTORS
and GARLAND FARWAGI & PARTNERS PTY. LIMITED (1981) 57 FLR 434
No. G.149 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Franki J.(1)

CATCHWORDS

Trade Practices - Consumer protection - Misleading or deceptive conduct - Use in relation to wine made in Spain of words "champagne", "imported champagne" and "unknown imported champagne" - whether interlocutory injunction should be granted.

Trade Practices Act 1974 ss,52, 80

Trade Practices - Consumer protection - Misleading or deceptive conduct - Use in relation to wine made in Spain of words "champagne", "imported champagne" and "unknown imported champagne" - Whether interlocutory injunction should be granted - Trade Practices Act 1974 (Cth), ss. 52, 80.

HEADNOTE

The applicant sought an interlocutory injunction restraining the respondent from promoting, advertising or selling Freixenet wine by the use of, or under the name of "champagne", "unknown imported champagne", or "Spanish champagne", etc. Freixenet wine was produced in Spain using the methode champenoise, and had been marketed in Australia as Freixenet champagne for some fifteen years by the respondent.

The evidence showed that in the trade "imported champagne" has for some years referred not only to "champagne" from France, but also to wine from other countries made by the natural fermentation method. Evidence from consumers was in general that they understood "imported champagne" to mean "champagne" from a country outside Australia.

Held: (1) The applicant had not established that the use of the word "champagne" in connexion with Freixenet wine would be misleading or deceptive, or likely to mislead or deceive a sufficient number of the class of persons likely to be purchasers; so that no prima facie case of a contravention of s. 52 of the Trade Practices Act had been made out.

Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968), 118 CLR 618; Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978), 140 CLR 216, referred to.

(2) Even if a prima facie case had been established, the balance of convenience lay against the granting of an interlocutory injunction since the respondent had been marketing its product in Australia for fifteen years, and its business should not be interrupted unless the benefit to the public would be significant. Although some measure of confusion was possible, no significant number of members of the public was likely to suffer harm if the interlocutory injunction were refused.

World Series Cricket Pty. Ltd. v. Parish (1977), 16 ALR 181, referred to.

(3) The application would be dismissed.

HEARING

Sydney, 1981, November 26-27; December 7. #DATE 7:12:1981

APPLICATION FOR INTERLOCUTORY INJUNCTION.

The facts appear from the judgment.

J. D. Traill Q.C. and W. M. Caldwell, for the applicants.

M. H. McHugh Q.C. and W. M. C. Gummow, for the respondents.

Cur. adv. vult.

Solicitors for the applicants: Gadens.

Solicitors for the respondents: Allen Allen & Hemsley.

R. R. BOADEN

JUDGE1

Comite Interprofessionnel Du Vin De Champagne (hereinafter called "Comite") seeks interlocutory injunctive relief pursuant to s.80 of the Trade Practices Act 1974 ("the Act") alleging a contravention of s.52 by N.L. Burton Pty. Limited T/as Freixenet Spanish Champagne Distributors and Garland Farwagi & Partners Pty. Ltd. ("the respondents"). The application by Comite for interlocutory relief was first before me on 4 November 1981 when I refused to make any orders and I adjourned the matter to a later date to give the respondents sufficient time to properly prepare the matter. At this time undertakings were offered by the first respondent to which I will refer later.

On 10 November 1981 an application was made on behalf of B. Seppelt & Sons Pty. Limited, S. Wynn (S.A.) Pty. Limited, Penfolds Wines Pty. Limited and The Australian Wine & Brandy Producers Association Incorporated to be joined as respondents. I heard that application on 17 November 1981 and gave judgment refusing it on 25 November 1981. I reserved leave to those applicants to apply again after the statement of claim had been filed.

On 26 November 1981 I commenced the hearings for interlocutory relief and I gave leave to add Charles Barker Australia Pty. Limited as an additional applicant.

The original application, inter alia, sought an injunction restraining the respondents in trade or commerce from engaging in conduct that is misleading or deceptive or likely to mislead or deceive which alleged conduct included advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce, dealing with any wine by or with the use of the word "Champagne" alone or in conjunction with other words in relation to or in connection with wine not produced in the district in France known as the Champagne district.

An amended application was filed on 6 November 1981 and the interlocutory injunctive relief for which Comite pressed was:

"1. An order restraining the Respondents by themselves, their servants and agents from, in trade or commerce and in connection with the promotion, advertisement or sale of Freixenet wine -

(a) using the proposed advertisement, a copy of which was Exhibit "A" tendered before His Honour Mr. Justice Franki on 4th November, 1981;

(b) further distributing or displaying the poster, a copy of which was Exhibit "B" tendered before His Honour Mr. Justice Franki on 4th November, 1981;

(c) in any advertisement, poster or promotional material, using the word "champagne";

(d) in any advertisement, poster or promotional material using the expression "unknown imported champagne", or other expression including the words "unknown" and "champagne"."

Exhibits "A" and "B" referred to ultimately became exhibits "J" and "H" respectively and I gave leave on 26 November 1981 to the applicant to add to (a) the words 'and exhibit "G" tendered on 26 November 1981'. Exhibit "G" was an advertisement which appeared in the Melbourne "Age" and was the same as exhibit "J" except that the word "unknown" was not used in conjunction with the words "imported champagne".

The amended application, at least so far as concerns the application for interlocutory relief, was limited to "Freixenet wine" but other orders sought in the amended application, but not sought in the interlocutory proceedings, extended much further.

The essential claim of the applicants was to prevent the respondents in any advertisement, poster or promotional material in connection with the promotion advertising or sale of Freixenet wine from using (i) the word "champagne"; or (ii) the expression "unknown imported champagne" or (iii) any other expression including the words "unknown" and "champagne".

The applicants pressed a claim which extended to preventing the respondents using the words "champagne", "imported champagne" or "Spanish champagne" or "imported Spanish champagne" in relation to Freixenet wine.

The application was based upon the provisions of s.52(1) of the Act which provides:

"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

To obtain the order sought in 1(c) it would be necessary for the applicant to establish that the use of the word "champagne" in connection with Freixenet wine would be misleading or deceptive or likely to mislead or deceive a sufficient number of the relevant class of persons likely to be purchasers either at the wholesale or retail level. Although the amended application as pressed for interlocutory relief has been carefully limited to Freixenet wine, and, in this regard, it is to be distinguished from the original application which was not so limited, the question of whether the conduct of which complaint is made falls within s.52(1) appears to me to extend to all wine (or perhaps only to all imported wine) in respect of which the word "champagne" is used. There is nothing special about Freixenet wine to distinguish it from any other wine except that it is common ground that it is prepared by a process known as "methode champenoise" and that it is made in Spain.

The applicants made it perfectly clear that they do not seek to restrict the use of the word "champagne" by Australian manufacturers manufacturing wine by the "methode champenoise" but where the wine is imported they claim the right to prohibit the use of the word "champagne" in association with that wine unless the wine has been made by the "methode champenoise" in what they call the "Champagne district" in France.

The argument proceeded, and the evidence was presented by both parties, upon the basis that it was necessary to examine what the word "champagne" meant to the relevant purchaser in Australia. This was in accord with the views I expressed in Weitmann v. Katies Ltd. (1977) 1 A.T.P.R. 40-041, where the use of the words "Saint Germain" on T-shirts was being considered. I cite a passage from p.17,442:

"Whether conduct is deceptive in the subject case must be examined in the light of what the alleged deceptive words mean to the relevant purchaser when used on the sleeve of the ladies T-shirts as they are to be sold. This involves two questions, first, who is to be considered as the relevant purchaser and second, what will the words mean to that purchaser? This seems to lead to two of the questions which arise in a passing off action, first, what is the appropriate class of purchasers to be considered and secondly, have the words 'Saint Germain' acquired what is commonly called a secondary meaning, namely do they indicate to the appropriate class of purchasers that the goods have come from a particular source, whether the name of that source is known or not?"

See also the judgment of the Full Court of this Court in Snoid v. Handley 11 November 1981 (unreported) at pp.18-19.

It was put by senior counsel on behalf of the respondents that, in reality, the applicants were claiming that the producers of champagne in what it called the Champagne district of France had a monopoly in the use of the word "champagne" and in my opinion this is the position at least so far as relates to wine not produced by the "methode champenoise" in Australia.

It was submitted for the respondents that the applicants' case must be that:

". . . that there are persons who believe either (1) that the only country from which champagne is imported is France; or (2) that only France and Australia make champagne; or (3) that by the laws of Europe only France can lawfully call sparkling wine champagne, and that those three categoriues of people are misled, because they conclude that the term 'imported champagne' can therefore only refer to a produce of France. That was not the way his case was put, but that must be the way he seeks to put it."

I have had some difficulty in ascertaining what is the applicants' case.

During the hearing of the application by the Australian applicants in the motion to be joined as respondents, senior counsel for Comite said:

"No, it is our contention that Freixenet is a Spanish wine made in Spain, and that under the laws of that country and the treaties which have been signed by Spain that wine has its own appellation, namely, cavas and not entitled to be called champagne, and it is not entitled when exported to be called champagne.

It is no part of our case that wines which are grown in Australia which are produced by the methode champenoise and have been so called on the evidence, as we understand it, for many many years, and Australia not having signed the Treaty of Versailles that restricted the use of that name, that that case just is not made out. It is not part of this application at all.

Your Honour, in those circumstances we would say that there is no issue to which these applicants can properly address themselves as between the plaintiffs and themselves."

It was further submitted by senior counsel for Comite:

"Well, your Honour, if the wine of a sparkling variety is made in Europe according to the rules and regulations and the laws which govern the EECand domestic laws, then if they do not have the right to market that sparkling wine as champagne, then the export of it and the importation into Australia of a wine which is not champagne, when it is grown or leaves the country, we would submit it is misleading to call that wine in Australia champagne."

The correct approach to an application for an interlocutory injunction in a case such as this has been dealt with by this Court many times and it is sufficient to say that one has first to decide whether a prima facie case has been made out as laid down in Beecham Group Ltd v. Bristol Laboratories Pty. Ltd. (1968) 118 C.L.R. 618 and then if the Court is so satisfied to proceed to consider the balance of convenience. It is sufficient to refer to the judgment of Bowen C.J. in World Series Cricket Pty. Ltd. v. Parish (1977) 1 A.T.P.R. 40-040 at p.17,426.

Where I make any finding of fact in this judgment it is only made so far as appears to me to be necessary for the determination of this interlocutory application and is not intended to be a finding of fact for any other purpose. It must be remembered that the views I express are views expressed upon the evidence at present before me and, of course, the evidence at the trial may not be the same.

The word "champagne" appears to have a different meaning in different countries. For example, the Shorter Oxford Dictionary, 3 ed. 1967 gives the following meaning for the word "champagne":

"A province of eastern France; hence, a well-known wine, white and red, and still or sparkling, made in this District."

The Macquarie Dictionary 1981, a new Australian dictionary, gives the following meaning for the word "champagne":

"n. 1. a sparkling white wine produced in the wine region of Champagne, France. 2. a similar wine produced elsewhere. 3. the non-sparkling (still) dry white table wine produced in the region of Champagne. 4. a very pale yellow or cream colour. - adj. 5. having the colour of champagne."

It is of some significance to note the legislation with regard to labels in various states of Australia. For example in New South Wales by regulation 63A(6) made under the Pure Food Act 1908 the use of the word "champagne" is prohibited in the label attached to any package of wine "when the wine is not produced by the traditional method of fermentation in a bottle . . .". A similar provision exists at least in Victoria, Queensland, South Australia and Tasmania.

It is desirable to approach the question of whether the use of the word "champagne" or "imported champagne" is liable to mislead or deceive by an appreciation of the fact that "champagne" and "imported champagne" are descriptive words. The problems which arise where the use of descriptive words is relied upon as being misleading or deceptive is set out in the judgment of Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 C.L.R. 216. At p. 228 his Honour pointed out that it was "of particular importance to identify the respect in which there is said to be any misleading or deception". His Honour noted at p.229 that there was a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name and that ". . . its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to any like business will not ordinarily mislead the public."

In my opinion it is undesirable to discuss the questions of law which arise in any further detail but it is clear that the nature of the words "champagne" and "imported champagne" which, in reality, are claimed to be distinctive of wine produced in what is described as the Champagne district of France, is a very relevant feature.

I pass now to consider the evidence presented, all of which was by affidavit. There was no cross-examination and although the hearing occupied two days I appreciated the efforts made by both senior counsel to present the case fully but expeditiously.

Comite relied on about 32 affidavits. Apart from affidavits from an employee of the second applicant, the affidavits fell into two groups, the first being of persons involved in the liquor trade and the second being of persons who gave evidence mainly concerning what they understood by the term "unknown imported champagne" and whom I will call consumers. These consumer witnesses were shown a copy of exhibit "H" and expressed a view about their belief concerning the product advertised. Exhibit "H" is a poster one third by one half a metre in size. It is in colour and shows two bottles of Freixenet wine against a dark background. The name of the country of manufacture cannot be read because of the way the light falls on the labels of the bottles. "Methode champenoise" and "Cava" are clearly visible. The name "Freixenet" is also clearly visible as is the word "Brut". The words "Unknown Imported Champagne" appear in large letters at the top of the poster. Persons connected with the liquor trade dealt with the categories of sparkling wine sold in Australia. Several persons closely associated with the liquor trade said that they were not aware of any, or any significant, imports of wine other than those from France marketed in Australia as "champagne".

I rejected any expressions of opinion by deponents concerning what other persons would think the word "champagne" meant where objection was taken but one buyer in the wine trade, a Mr. Shanahan, a witness for the applicants, said that in his opinion "the Australian consumer sees champagne as a generic term for sparkling wines and that the prefix 'French' is necessary to indicate the real product of champagne". Almost all of the consumers only expressed a view about the words "unknown imported champagne" appearing at the top of exhibit "H" and in general they expressed the view that they thought the product came from France. One witness said that "unknown imported champagne" would be cheap and nasty. Some deponents referred to the fact that in the advertisement there were no visible words indicating the country of origin. A number of deponents expressed a view such as "I have always associated champagne as coming from France".

The respondents relied upon about 39 affidavits. It appears that Freixenet wine has been sold in the bottle of which complaint is made for some 15 years and that, for example, in the year 1979-1980 the sales of it in Australian had been 12,000 cases and that significant sales were currently taking place.

It also appeared that a Mr. Zalapa, a consultant to the first respondent, had visited Spain recently and had visited the Freixenet establishment where the wine was produced by the recognised "methode champenoise" method. He also said that the first respondent was engaged in fairly extensive promotional activity on behalf of Freixenet wine and that sales of it are steadily increasing. Several issues of Thomson's Liquor Guide, a journal which appears to contain a fairly complete list of liquor available in Australia, was in evidence. This guide is of significance. It contains, inter alia, two sections headed "Champagne, Sparkling and Pearl Wines", one is marked "local" and the other "imported". Taking the issue of July 1977 as an example, the section "Champagne, Sparkling and Pearl Wines (imported)" includes in one way or another as "champagne" wines from Italy, Germany, Bulgaria, England, Yugoslavia, Spain and Hungary. One finds very much the same position in the issue for January 1978. In the January 1979 issue under the same heading "champagnes" are listed as coming from, inter alia, Germany, England, Spain and Hungary.

So far as is relevant for these proceedings it is clear that in the trade "imported champagne" has for some years referred not only to "champagne" from France but also to a wine from other countries. The respondents' other evidence fell into two categories, the first of persons involved in the liquor trade and the second of what might be called consumers. A considerable number of trade witnesses said that they associated "champagne" with a product which was a sparkling white wine made in France and other countries including Australia and that they associated the word "champagne" with a product rather than a wine coming from a particular place. Some said that the word "champagne" described a wine which had been naturally fermented in a bottle. Those who dealt with the words "imported champagne" said, in general, that those words meant "champagne" from outside Australia and made by the natural fermentation method.

The consumers who gave evidence in general said that the word "champagne" conveyed to them various ideas. A fair summary of the evidence of consumers is that they regarded "champagne" as a bubbly drink particularly appropriate for festive occasions. Some said they knew of various brands of "champagne", some French, some Australian. Several witnesses knew of "champagne" from various countries including America, Germany, Italy, Russia and Spain. In general consumers said that "imported champagne" meant "champagne" from a country outside Australia. Some said that "imported champagne" conveyed the idea of an expensive "champagne". There was also evidence from certain Australian manufacturers of "champagne". For example the managing director of B. Seppelt and Sons Ltd. said, inter alia, that his company and its predecessors had produced in Australia approximately 30 million bottles of champagne labelled as 'Great Western Champagne' and that during the year ended 30 June 1981 his company sold in Australia an estimated 45.86% of all bottles of "champagne" (including imports) sold in Australia, that is 3,786,040 bottles out of total sales of 8,254,666 bottles.

Bearing in mind what was said in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (supra), I am not satisfied that the applicants have made out a prima facie case. However, assuming contrary to the view which I have expressed that they have established such a case, I am satisfied that this is not an appropriate case for any interlocutory relief because I consider that the balance of convenience lies against granting it. I do not consider the applicants' position unimportant but the main purpose of s.52 of the Act is to protect consumers. The first respondent has made some sales of wine as Freixenet champagne for some 15 years. Although these sales have not been extensive, the product has been advertised to some extent in New South Wales and in Victoria. It seems clear that there have been some sales in Australia of imported "champagne" from various countries other than France. I consider that there is no significant likelihood of the conduct of which complaint is made being likely to mislead or deceive the trade. There may be a measure of confusion and some private consumers may be troubled even, in some cases, to the extent of being misled until the point of purchase by the use of the words "imported champagne" but I do not think that this is any different to the position which has existed for some little time. I do not think that any significant number of members of the public is likely to suffer any particular harm if I do not grant interlocutory orders.

It seems to me that the questions which arise in this case are of considerable significance. I have in mind in particular the unchallenged use of the word "champagne" for a product made by the "methode champenoise" in Australia and that it seems undesirable to interrupt the first respondent's business unless the benefit to the public is significant. It seems to me that the issues which arise in this matter can best be determined at the trial of the action.

Had I come to the conclusion that a prima facie case had been made out it would have been relevant to give particular attention to the undertakings offered by the first respondent.

When this application was before me on 4 November 1981 the first respondent offered an undertaking that until a date to be specified:

". . . it will not, nor will it cause any other person, in trade or commerce and in connection with the promotion, advertisement or sale of Freixenet Spanish Champagne,

(a) use the proposed advertisement, a copy of which is exhibit 'A' herein,

(b) in any advertisement use the word 'unknown' as it appears in the expression 'the Unknown imported champagne',

(c) further distribute the poster exhibit 'B' herein."

At that time I expressed the view that the undertaking offered by the first respondent was sufficient to deal with the position until the application for an interlocutory injunction could be heard, if indeed there was any need to deal with the position.

The second respondent is an advertising agent employed by the first respondent. It took no part in the proceedings except to submit to any order the Court wished to make. I see no reason to grant any interlocutory relief against it.

By letter of 25 November 1981 the solicitors for the first respondent again offered an undertaking that it would not in future use the poster which was exhibit "B" and is now exhibit "H". The first respondent also offered an undertaking not to use the word "unknown" in connection with advertising, distribution and sale of "Freixenet champagne". All undertakings offered were rejected by the applicants.

The claims now being pressed by the applicants which were not the subject of the undertaking originally offered seek to prevent the use of the word "champagne" in relation to Freixenet wine and the combination of the words "unknown" and "champagne". It seems to me that although the application is limited to Friexenet wine it would be extremely undesirable to prohibit the use of the word "champagne" in relation to it at this stage. It also seems to me quite undesirable now to prohibit the use of a combination of the words "unknown" and "champagne" in relation to that wine.

I dismiss the application. The parties may address me on the question of costs.