ConAgra Inc v McCain Foods (Aust) Pty Ltd

Re: CONAGRA INC.
And: McCAIN FOODS (AUST) PTY LTD
No. G154 of 1991
FED No. 299
Passing Off - Trade Practices
(1991) 13 ATPR 41-121
(1991) AIPC 90-820/101 ALR 461
(1991) 22 IPR 175

COURT

THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Passing Off - applicant manufacturer of frozen dinners marketed under brand name "Healthy Choice" in United States - respondent manufactures "McCain Healthy Choice" frozen foods in Australia - applicant's packaging used in development of respondent's pack - attributes of applicant's pack not commonly used in Australia used on respondent's pack - "trade presenter" brochure used to launch respondent's product in Australia - whether use of name "Healthy Choice" alone or together with packaging features and get up signified to persons in Australia an association or agreement between applicant and respondent - whether trade presenter carried a like signification - principles applicable in passing off action discussed - rights protected by passing off action - whether applicant required to carry on business in jurisdiction - role of fraud in passing off action - evidence of constant movement of citizens between Australia and United States - International magazines containing applicant's advertisement available in Australia - whether sufficient to establish a reputation in Australia.

Trade Practices - whether respondent's conduct misleading or deceptive or likely to mislead or deceive - relationship between s.52 claim and an action in passing off - whether packaging and get up of respondent impliedly represented an association or sponsorship between the two products in contravention of s.53(c) Trade Practices Act - relevance of reputation.

Trade Practices Act 1974 (Cth): ss.52, 53(c)

HEARING

SYDNEY

#DATE 4:6:1991

Counsel and Solicitors J.M. Ireland QC and R.J. Webb
for Applicant: instructed by Baker and McKenzie

Counsel and Solicitors B.J. Hess instructed by
for Respondent: Alfred Tatlock

ORDER

The matter be adjourned to a time and date to be fixed with counsel for argument as to costs and form of orders.

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

JUDGE1

The applicant, ConAgra Inc., ("ConAgra") is a company incorporated in the United States of America. It carries on business in that country through separate divisions, one of which is the ConAgra Frozen foods division. It also has a number of subsidiaries which operate in diverse areas, generally related to food. The frozen food division was established in 1985, although ConAgra had entered into the frozen food business in the United States in 1981, with the acquisition of the Banquet brand of frozen food products.

At the present time ConAgra manufactures and markets, in the United States, frozen food under a number of brand names, which in addition to Banquet, include, the names Morton, Chun King, Patio, Armour and, relevant to the present case, Healthy Choice. The concept of the product, which ConAgra now markets under the Healthy Choice name, originated in September 1985, following a heart attack of the Chairman and Chief Executive Officer of ConAgra, who, following that attack was unable to find good-tasting food that fell within his restricted diet, that is to say, food that was low in fat, low in cholesterol and low in salt.
Development of the concept took until 1988 and led to an initial range of ten frozen dinners. The name "Healthy Choice" was the result of a brainstorming session in June 1987. Packaging design for the product was formulated so that the product would stand out from all other frozen food packaging, would communicate the twin ideas of good taste and good health and would prominently feature the nutritional claims of "low fat, low cholesterol and low sodium". The colour green was chosen as the primary background colour of the packaging to differentiate the Healthy Choice product from other products and a small figure of a running man appeared on the packet as, so it was said, an image of health and vitality. A black tray accompanied the product, which was at the upper end of the price range for frozen food products, to help create, it was said, an elegant image. At that time no product available in the United States market used black trays. The tray contained moulded dividers to separate the different foods that made up the dinner. That tray, with a depiction of the food upon it, appeared also on the packaging.
ConAgra sought, and obtained, trade mark registration in the United States for the mark "Healthy Choice" in connection with a number of food items. In addition ConAgra applied for the registration of the trade mark "Healthy Choice for Kids". Limited quantities of products bearing the name "Healthy Choice" were sold in June 1988, but only in Omaha, Nebraska and in Council Bluffs, Iowa. The launch of the range of ten frozen meals took place only in January 1989. At that time, distribution took place through wholesale and retail outlets in eighteen cities in the United States that were chosen as representative of 25% of the population of that country. It was not until approximately September 1989 that the product was sold throughout the whole of the United States. By that date, it was available in more than 90% of all retail grocery stores in that country.
The launch in January 1989 was accompanied by advertising in the form of television commercials and in the print media. Television commercials often ended with a message to the effect "Listen to your heart. Make a (sometimes "the") Healthy Choice". Much of the advertising in magazines and newspapers was "coupon advertising" which included a coupon which enabled customers to obtain a refund on products purchased. Advertising in the peak periods relevant to frozen foods (in the United States this period runs from September through to March) has continued since. Since the launch of the initial ten products the range has been expanded so that at the present time the range comprises some 79 products.
Sales of frozen food products by ConAgra in the United States amount to approximately $US 1.1 billion a year. Sales of the Healthy Choice products, in the twenty seven month period following the national launch, amounted to $US 458,210,000; and for the period of twelve months ending 17 March 1991 were $US 238,533,000; the brand has 7.6% of the overall frozen dinner and entree market in the United States. By way of comparison, the dollar share for premium standard portion dinners, the segment of the market in which the Healthy Choice dinners are positioned, was 16.6%, indicating that the product has, in sales, almost 50% of that market segment. Total expenditure by the applicant on television and national print advertising, from the date of the launch to December 1990, was $US36,160,100. Together with coupon advertising, the annual cost of advertising the Healthy Choice product in the United States was approximately $US50,000,000 in 1990. The target market for advertising is adults, aged thirty five years and over, where the head of the household earns over $US3O,000 a year. Brand awareness of the Healthy Choice product is 47% of the general population, and among buyers of frozen food dinners at the premium end of the market, around 68%.
Having regard to the geographical position of the United States, there is a spillover of the product both into Canada and Central America. ConAgra does not presently manufacture the Healthy Choice products other than in the United States.
In March 1986, ConAgra entered into a licence agreement with Wattie Frozen Foods Ltd ("Wattie"), whereby Wattie was licensed to introduce and distribute ConAgra frozen foods in both Australia and New Zealand and other Pacific markets. Subsequently, probably in January 1991, Australia was deleted from this agreement. This coincided with a view formed by Mr McNamara (Vice-President, International Business of ConAgra Frozen Foods) in December 1990, that Australia was a strategic market in which to do business. Some research into the possibility of commencing manufacture in Australia is presently underway but no firm decision to do so has, it would seem, yet been made. It is Mr McNamara's present intention, however, to introduce the product range Healthy Choice to Australia in the next twelve months.
The interest in Australia coincided in part, at least, with the purchase by ConAgra of part of the Elders IXL operation in Australia, and particularly the F.J. Walker business, which included facilities for the manufacture and warehousing of frozen food. This acquisition confirmed and accelerated Mr McNamara's plans for Australia. However, Mr McNamara does not himself have the authority to commit ConAgra to a venture in Australia, so that his role has been largely exploratory. The evidence, however, suggests that those superior to him have, at least in principle, authorised him to proceed on the assumption that it is economically worthwhile to invest in the Australian market.
In the meantime, and under Mr McNamara's guidance, launch of the Healthy Choice range is scheduled in Canada for June 1991 (manufacture being from the United States) and some steps are underway for a possible launch of the products in Japan and Europe.
The success of the applicant's "Healthy Choice" products in the United States spawned a number of competitive products in that country. It can, perhaps, also be gauged by the fact that when Mr Boyle, the then marketing director of the respondent, McCain Foods (Aust) Pty Limited ("McCain") travelled to the United States and Canada in October 1989, he noticed the applicant's product on the shelves in supermarkets in Toronto, Maine, Los Angeles and Honolulu, being the only cities he visited on that trip. Mr Boyle was sufficiently impressed that he obtained five examples of the packaging and took them back with him to Australia (along with packets of other products, which he presumably also found interesting).
McCain is a wholly owned subsidiary of a Canadian company. In Australia, it estimates its sales turnover for 1990/1991 as $AUD 206,000,000. It commenced operations in Australia in 1968 selling imported French fries, turned to producing frozen pizzas and frozen vegetables and in 1987, as a result of an acquisition, moved into manufacturing and marketing frozen food dinners. It now has some 21% of the total frozen food market in Australia, second only to the food brands sold by the Petersville Group of Companies and ahead of the competing brands of Nestle and Sara Lee. Its estimated market share of the frozen dinner market in Australia is 23% based on statistical research carried out by A.C. Nielsen Australia Pty Limited.
McCain had, in February 1989, commenced manufacturing and selling a low cholesterol range of French fries under the name "McCain Superfries". The success of that product prompted Mr Quinton Wilkinson, the Research and Development Manager of McCain to write in October 1989 a memo to Mr Yung, a product manager of McCain, with a copy to Mr Boyle, that consideration should be given to producing low cholesterol dinners. That memorandum did not, however, at that time come to Mr Boyle's attention as the latter was overseas at the time.
Upon Mr Boyle's return to Australia, he prepared a report on his North American visit to his senior management in which, inter alia, he wrote:

"The new Armour product 'Healthy Choice' (low cholesterol) is getting very favourable comments in the U.S. We should look closely at this one."

The reference in the report to "Armour" was a mistake, arising from Mr Boyle's understanding that the Healthy Choice product was part of the Armour range.
Mr Boyle spoke to Mr Wilkinson and said to the effect:

"We'd better raise the priority of this one. Can you tell me if it's possible to do this in Australia."

The reference to "possible" in that conversation was said by Mr Boyle to relate to the legal ramifications of the claims, low cholesterol, low fat and low sodium.
Mr Boyle instructed a member of McCain's staff to request the respondent's patent attorney to lodge an application for registration of the trade mark "Healthy Choice" on or around 4 December 1989. The patent attorney advised there was no point in applying for the registration of the words "Healthy Choice" as a trade mark, as the words were either descriptive of the goods with which it was to be used or deceptive. He subsequently was instructed to lodge applications for the words together with the McCain logo on 5 July 1990. No other attempt was made by McCain following Mr Boyle's return to register other trade marks related to frozen food dinners.
Nothing much appears to have happened until May 1990 when, at a research and development meeting of the respondent held on 25 May 1990, and referred to as "Priority A" (presumably the highest priority) reference is made, under the heading "Healthy Choice Meals" to the need for eight varieties, "6 to be launched". The minutes of the meeting of the same committee held on 25 July 1990, under the heading "Healthy Choice" record:

"Concepts only required to assist choice of products. Products from USA re Healthy Choice and Right Choice to be obtained."

The reference to "Right Choice" is a reference to a competing product to that of ConAgra manufactured by Nestle in the United States. Both Mr Boyle and Mr Yung attended these two meetings, along with Mr Wilkinson. On the same day, Mr Wilkinson prepared a Product Development Report for distribution to the Canadian parent company in which he said of the product "Healthy Choice Meals":

"Packaging viewed on USA meals. Various samples of low cholesterol meats being investigated. Requirements for claims have been checked."

As the next step in the project, Mr Wilkinson identified the following:

"Obtain USA information on sales performance. Obtain samples from USA. Prepare laboratory samples, range of four to add to plated meal range."

In July 1990, Mr Yung prepared a written brief to McCain's advertising agency, Badjar Advertising Agency ("Badjar"). The brief noted that the growth in the dinner market was expected to slow in the financial year 1991, and that the traditional range was insufficient. It was said that there was a need for a new range of dinners to "generate some excitement back into the market". The shift towards healthier eating was noted, with dinners being "positioned as a low fat, low cholesterol, low sodium meal". The "insights" said to support this position were:

"1. The success of `Healthy Choice' in the US.

2. Because of `Healthy Choice's' success, Nestle has followed them by launching `Right Course' in the U.S. nationally.

3. The success of Polyunsaturated Fries in Australia."

The brief recorded McCain's intention to "Launch a McCain Healthy Choice range of dinners. The range would consist of 4 dinners." It discussed a shortage of media funds and a need for there to be but one media campaign which would "tie in Healthy Choice with Traditional dinners". It noted a launch date of February 1991. The agenda for the meeting listed one of the items for discussion as being how to make Healthy Choice fit the McCain brand image. It would seem that at that time no attempt had been made to design a package for the product.
The meeting with Badjar (Mr Jeffery was the relevant account executive) took place on 27 July 1990. Both Mr Yung and Mr Boyle were present. It was resolved that "Healthy Choice" should become a line extension of the existing range of frozen food dinners rather than a new brand. The form of television advertising was discussed and it was noted that "pack designs and menu variants" were to be supplied to the agency as soon as possible.
Prior to that meeting, and unconnected with the proposed Healthy Choice product, a decision had been made to alter the packaging of existing frozen dinners to bring the existing range up market. It was decided that all McCain's frozen dinners should have the one basic colour on the pack so as to produce, when displayed at the supermarket, what was referred to as a "blocking or a stopping effect". At the meeting (although this was denied by Mr Jeffery) Mr Boyle gave Mr Jeffery examples of the packaging of ConAgra's Healthy Choice product. Both Mr Boyle and Mr Yung conceded that this was so, and in this respect I would not accept Mr Jeffery's evidence to the contrary. Mr Jeffery was also given samples of other packaging from the United States, as well as packaging from Australia. It was realised by Mr Boyle at this time that there was an urgent need to get the new product on the market for February or March 1991, so as to capture the winter sales for the 1991 calendar year.
In August 1990, Mr Wilkinson investigated whether there were any problems with using the name "Healthy Choice" under Australian food laws and regulations. The advice received was ultimately favourable.
The next step in the product launch was package design. For this purpose McCain engaged David Lancashire Designs. That firm was at the same time briefed to redesign the packaging of the traditional line of frozen dinners to produce the blocking effect to which I have already referred. Samples of the ConAgra product were supplied also to that firm, along with other packages. A meeting was held with Mr Lancashire at which, inter alia, Mr Yung attended. The Conference Report, issued after this meeting stated in part:

"Complete Dinners/Healthy Choice Client advised that they will be launching a product similar to `Healthy Choice' (ConAgra) which is not a calorie story but a health/cholesterol story. Client to confirm product name. Client advised that competition in the market place is `Lean Cuisine' which is positioned as a lower calorie dinner. Client supplied samples of packaging from USA. The launch of this range (4 different meal types ...) will act as the spear head for the rest of the dinner range (10 varieties)... Client advised that the plate and outer packaging will be the same as the existing dinner range. The design concepts can't move too far away from the existing design - product to be positioned as a new healthy choice from McCains complete dinners. However, client requested DLD update the rest of the range - a little more upmarket and corporate, Mandatories for front of pack - Healthy Choice: Low Cholesterol, Low Fat, Low Sodium and a calorie flash (to be clarified by information on back of pack)."

Mr Lancashire was instructed to produce two options for packaging design within two weeks. By 30 August 1990, Mr Yung had produced a progress plan showing a proposed product launch for Healthy Choice in February 1991. On 13 September, a further meeting was held with Mr Lancashire to consider the packaging designs which he had created. Both Mr Boyle and Mr Yung attended this meeting. The outcome was that Mr Boyle was not happy with the concept which Mr Lancashire had presented, because the packaging of the Healthy Choice product was too dissimilar from that of the traditional products. A further meeting was held on 5 October 1990, at which further design concepts were considered. It was at this meeting that, for the first time, packaging was proposed with a common green border, information panel and background colour, thereby allowing the larger food picture to indicate the different products. A report of the meeting, prepared by a staff member of David Lancashire Designs, stated:

"Client advised reservations regarding the flash with the comment that the `Healthy Choice' may not be strong enough. Client further commented that there may be some legal problems associated with Healthy Choice and that it may be necessary to refer to the product as McCains Healthy Choice (utilising the logo and not just type)."

Cross-examined on this report, both Mr Boyle and Mr Yung were adamant that the reference to "legal problems", was a reference to ascertaining whether there were any Health Department restrictions on using the words "Healthy Choice". On their own evidence these checks had already been made, although it is perhaps possible that the results had not been received. There is a strong probability that the reference was rather a reference to the trade mark position, but ultimately nothing turns on this.
In early October 1990, McCain commissioned a market research company, Sutherland Smith Pty Ltd, to conduct qualitative research on difficulties being experienced with the traditional dinner range and the proposed extension of that range to include Healthy Choice. The research brief noted:

"In the US ConAgra is doing tremendously well with their range of Healthy Choice dinners. These dinners are positioned as a low cholesterol, low fat, low sodium meal. Calories are under 300. The low cholesterol claim is the main selling point.

Healthy Choice has been so successful in the US that, Nestle has launched its brand -Right Choice - as competition. Nestle did not even bother to test market, they rolled out nationally. Opportunity

Launch McCain Healthy Choice in Australia."

The Sutherland Smith research was conducted through four focus meetings. At two of these, consumers, presumably representing the general public, were shown and asked their reactions to the ConAgra US packaging, along with a large number of other packages. At those meetings reaction was obtained to an "animatic" add, (a draft advertisement) prepared by Badjar, with drawings and voice over, which adapted a theme taken from previous McCain advertising, (using the depiction of a vicar) to the Healthy Choice product. It is important to note that never was any name other than Healthy Choice suggested by the McCain representatives as the name of the product, and the only name tested by Sutherland Smith was the Healthy Choice name. While it is true that participants in the survey were asked to think of other names, their suggestions were never taken further. In particular, McCain never asked Sutherland Smith to test for alternative names in the brief to that firm.
Further packaging designs were presented by David Lancashire Designs on 11 October 1990. The conference report of that meeting notes that Mr Yung stated McCain's preference for:

"maintaining the association of logo to `Healthy Choice' for reasons of legal ease".

The artwork for the packaging was completed in early December 1990. On 18 December 1990 Mr Yung, in consultation with Mr Boyle prepared a "launch proposal" for the McCain Healthy Choice product. That proposal stated as the "rationale":

"Consumers seem ready to gobble up food products that combat fat and cholesterol. In the U.S., ConAgra has been most successful in marketing and providing nutritious food in the Dinner market. They launched Healthy Choice in 1989, which became a $150M brand in its first year. Nestle responded to this by launching Right Course nationally just 6 months later. Healthy Choice is now a $198M brand in the U.S., which represents a 4.4% share of the total Dinner market.... Consumer concern about cholesterol levels is very strong and given the success of our own Polyunsaturated Fries and Healthy Choice in the U.S., the climate is right to launch a range of "low cholesterol" dinners."

The Sutherland Smith report recommended the use of black plastic plates for the McCain product to achieve "upmarket appeal" and differentiate the product from the buff coloured plastic plates used in the McCain traditional dinner range. To give effect to this recommendation, orders were placed with a supplier for black plates. Although of the same colour as the plates used by ConAgra for its Healthy Choice products, the plates were not to be moulded with divisions as those used in America were. The plates were, however, not available for supply in time for the launch of the product and traditional buff coloured plates were used, albeit that the photo of the dinner on the package showed black plates.
At the time when the final art work for the packaging was presented by David Lancashire Designs in late December 1990, it occurred to Mr Yung, so he said, that the packaging would be improved by the addition of some sort of depiction device which would give the feeling that the product was more healthy, such as the insertion of a running man figure. He sought and obtained approval for this from Mr Boyle. Mr Yung admitted that his suggestion would have come from his knowledge of the ConAgra packaging. That it was a coincidence would scarcely be credible. What instructions Mr Yung gave to David Lancashire Designs does not appear in evidence and Mr Lancashire was not called. In the result the initial package incorporated the running man logo used by ConAgra in America.
It should be here observed that after the product was launched, a competitor contacted McCain and pointed out the registration by ConAgra of the Healthy Choice mark. On investigating it was noted, for the first time so it was said, that the running man symbol was identical to that used by ConAgra and steps were taken, before the present proceedings were implemented, to change the packaging to delete the running man symbol.
The launch by McCain of the McCain Healthy Choice product in February 1991 was accompanied by what is referred to as a "Trade Presenter". Fifty two copies of this document were distributed to the persons responsible for the ordering, largely by wholesale but also by retail, of frozen food products in Australia. The document was prepared by Mr Yung with the approval of Mr Boyle. Under the heading "Background" appeared the following:

"* Healthy Choice has been most successful company in the US marketing healthy and nutritious food

* Now a $200 Million brand."

Under the heading "McCain Dinners" and a sub-heading "Healthy Choice", appear the following words:

"* Healthy Choice in the US is a $200 million dollar (sic) after just two years.:"

Statement of Claim

In its statement of claim the applicant alleged that the advertising, promotion or sale in Australia by the respondent of frozen food products either under the name Healthy Choice alone or under the name Healthy Choice together with the packaging features and get up of the packaging, signified to persons in Australia that the products of the respondent are made by or with the licence or approval of the applicant or some company associated with it. It was further alleged that the trade presenter carried a like signification. Either or both were alleged to have been adopted with the intention of appropriating and/or taking advantage of the reputation and/or goodwill of the applicant such as to constitute passing off by the respondent of the respondent's frozen food products as and for the products of the applicant or as and for products made by or with the licence or approval of the applicant or some company associated with it.
In the alternative, it was said that the respondent's conduct in the advertising, promotion or sale in Australia of the McCain Healthy Choice products, and by the trade presenter, constituted misleading or deceptive conduct on the part of the respondent or conduct that was likely to mislead or deceive in contravention of s.52 of the Trade Practices Act 1974 (Cth) ("the Act"). In the alternative, it was alleged that the respondent in trade or commerce in connection with the supply of goods and in connection with the promotion of the supply of goods, had represented that the goods had sponsorship or approval that they did not have and thereby contravened s.53(c) of the Act.
The Claim in Passing Off
The applicant based its primary case upon the law of passing off and accordingly it is convenient to discuss that aspect of the case first. In so doing, however, the applicant did not seek in any way to denigrate from the case which it alleged it had under the Act.
The modern law of passing off was authoritatively formulated in the United Kingdom in Warnink v Townend and Sons (1979) AC 731 in the speeches of Lord Diplock (at 742), and Lord Frazer (at 755-6) referred to with approval by the Privy Council in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1980) 2 NSWLR 851 at 856. Lord Diplock, while not purporting to formulate a test applicable in all cases to determine whether the elements of a passing off action were present, identified what his Lordship referred to as "five characteristics which must be present in order to create a valid course of action for passing off." These were:

"(1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."

Lord Frazer in a complementary analysis expressed the principle underlying passing off actions to be:

"that the plaintiff is entitled to protect his right of property in the goodwill attached to a name which is distinctive of a product or class of products sold by him in the course of his business."

His Lordship continued:

"It is essential for the plaintiff in a passing off action to show at least the following facts:-

(1) that his business consists, or includes, selling in England a class of goods to which the particular trade name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached. Provided these conditions are satisfied, as they are in the present case, I consider the plaintiff is entitled to protect himself by a passing off action."

As Lord Oliver pointed out in Reckitt and Colman Products Ltd v Borden (1990) 1 WLR 491 at 510-511, doubt has existed for some time as to the precise rights which are entitled to protection in a passing off action. Such doubts were, however, put to rest in A.G. Spalding and Bros v A.W. Gamage Ltd (1915) 32 RPC 273 at 284 where Lord Parker identified the relevant proprietary right being protected as the property in the business or goodwill of the applicant. See too per Lord Diplock in Star Industrial Co Ltd v Yap Kwee Kor (1976) FSR 256.
There is no doubt that for the applicant to succeed, it must prove that it had a reputation in Australia. So much was conceded by the applicant. The emphasis placed upon the twin concepts of goodwill and business, raises immediately the further question whether for the applicant to succeed in a passing off action it must also establish that it was carrying on business in Australia. The evidence admittedly fails to establish the existence of any business in Australia of the applicant.
The preponderance of case law presently favours the respondent. As indicated above, the proprietary right which a passing off action is designed to protect, is the business of the applicant or the goodwill of the applicant. Since the jurisdiction of the court in passing off was exercised at the instance of a trader rather than a non-trader, it is not surprising that courts in the United Kingdom placed emphasis upon the need for there to exist a trade in the United Kingdom, which the plaintiff was entitled to protect by the bringing of a passing off action, see per Evershed M.R. in R.J. Reuter Co Ltd v Mulhens (1953) 70 RPC 235 at 253. The second explanation stems from the well known analysis of the concept of goodwill as enunciated by Lords Macnaghten and Lindley in Commissioners of Inland Revenue v Muller and Co's Margarine Ltd (1901) AC 217. In that case Lord Macnaghten said (at 224):

"goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business and the goodwill perishes with it, though elements remain which may perhaps be gathered up and be revived again."

In the same case Lord Lindley commented (at 235):

"Goodwill regarded as property has no meaning except in connection with some trade, business, or calling ... In this wide sense, goodwill is inseparable from the business to which it adds value, and, in my opinion, exists where the business is carried on. Such business may be carried on in one place or country or in several, and if in several there may be several businesses, each having a goodwill of its own."

As goodwill is inseverable from the business it follows that if no business is carried on in the jurisdiction then no goodwill exists in the jurisdiction to protect. Hence if passing off exists to protect goodwill in the jurisdiction, it must follow that the plaintiff must carry on business in the jurisdiction.
The rules as to passing off were, of course, formulated in simpler times when business was less internationally based, and when communications between countries in the form of advertising messages and travel, were virtually non-existent. In times gone by, a company not carrying on business in the jurisdiction, not selling its goods there, might be presumed in any event to have had no reputation in the jurisdiction. With the advent of mass international communications, with television beaming from one country to another, with newspapers, magazines and journals being almost instantaneously available in countries other than the country of publication, there is much to be said for rethinking the basis of the action in passing off to the extent that it truly is confined to the existence of a business within the jurisdiction rather than the existence of a reputation in the jurisdiction.
The problem was one which early exercised the attention of the High Court in Turner v General Motors (Australia) Pty Ltd (1929) 42 CLR 352. In that case, General Motors Australia Pty Ltd, a subsidiary of General Motors in the United States, sought an injunction against a dealer in second hand motor cars who carried on business under the name "General Motors". The majority, Knox C.J. and Dixon J., were of the view that at the relevant time the plaintiff had established a business in Australia entitling it to maintain an action for passing off. Isaacs J. was prepared to accept that the Australian second hand dealer had actually begun his business before the respondent commenced its business. Even so, in his Honour's view, the respondent was entitled to succeed for the appellant had, to use his Honour's expression, "dug a commercial pit in advance". His Honour said (at 364):

"If there ensued injury, or a probability of injury, there is surely a remedy. ... Having the undoubted intention to commence business, it could, in the circumstances, in my opinion, have obtained protection against the injury that the appellants were preparing in advance. Intention in such a case is an important factor."

It is interesting to note, however, that Dixon J., who together with Knox C.J. formed the majority, expressed the view (at 368 ) that:

"... business reputation, in the view of the Courts of Equity, is a right of property which should be protected from misappropriation ..."

More recently, the question appeared to arise in the High Court in BM Auto Sales Pty Ltd v Budget Rent-a-Car System Pty Ltd (1977) 51 ALJR 254. In that case the respondent successfully obtained an injunction against the appellant, restraining use of the name "Budget Rent-a-Car" in the Northern Territory. Barwick C.J., in a brief concurring judgment, made no reference to the question whether the respondent was carrying on business in the Northern Territory. His Honour refers only to the evidence entitling the trial judge to find reputation in the Territory. Murphy J., who also agreed with the judgment of Gibbs J., referred to the national reputation of the respondent, but again made no reference to its carrying on business in the Territory. Gibbs J. referred to the matter (at 258) in the following terms:

"It was said that it was not proved that the respondent had at any material time acquired a reputation under its business name in Darwin and that the fact that it had acquired a reputation elsewhere was not enough. Particular reliance was placed on the decision in Alain Bernadin et Compagnie v Pavilion Properties Ltd (1967) RPC

581. In that case, and in the later case of Amway Corporation v Eurway International Ltd

(1974) RPC 82, it was held that in order for a plaintiff to succeed in maintaining in the English courts an action for passing-off, the plaintiff must have required a business reputation in the United Kingdom which was entitled to be protected, that this could only be acquired by some sort of user in the United Kingdom, and that some knowledge of the name of the plaintiff, without any business activities of the plaintiff, in the United Kingdom, would not be sufficient. However, very slight activities in England have been held to suffice; for example, it was enough that the plaintiff took bookings in England (Sheraton Corporation of America v Sheraton Motels Ltd., (1964) RPC 202) or carried out orders in England (Poiret v Jules Poiret Ltd (1920) 37 RPC 177. The judgments of Knox C.J. and Dixon J. in Turner v General Motors (Australia) Pty Ltd (1929), 42 CLR 352 are consistent with these authorities. It was there held that an American company which had commenced to erect a factory in Australia, and had widely advertised in Australia, before the defendant committed the acts complained of, had done sufficient to enable it to maintain an action for passing-off (see at pp 360, 368-369). The third member of the Court, Isaacs J., appears to have taken a different view, and to have thought that it would not have mattered if the company had not had any business activities in Australia (see at p 364). It is unnecessary to discuss this apparent difference of opinion or to consider whether any distinction should be drawn between cases in which the plaintiff's business reputation has been acquired in a foreign country and those in which the reputation has been acquired in a part of Australia other than that in which the proceedings are brought. In the present case the respondent had commenced business activities in the Northern Territory before the first appellant began to use the name Budget Rent-A-Car."

The case of Alain Bernadin et Compagnie v Pavilion Properties Ltd (the Crazy Horse Case) (supra) to which Gibbs J. referred, is one of a number of cases in the United Kingdom where it has been said that business and goodwill must exist in the jurisdiction before passing off proceedings can succeed. Cf Amway Corporation v Eurway International Ltd (1974) RPC 82; Athletes Foot Marketing Associates Inc v Cobra Sports Ltd (1980) RPC 343; Anheuser-Busch Inc v Budejovicky Budvar (1984) 4 IPR 260 (Court of Appeal) (the Budweiser Case). A similar view was taken in this court by Northrop J. in Merv Brown v David Jones (Australia) Pty Ltd (1987) 73 ALR 504. However, on appeal Lockhart J., with whose judgment Sweeney and Spender JJ. agreed, commented that very slight activities had been held to be sufficient to establish that a name had become distinctive see Miki Shoko Co Ltd v Merv Brown Limited (1988) ATPR 40-858 at 49,278.
In other common law countries, there has been a move towards not regarding the carrying on of business of the plaintiff in the jurisdiction as an essential element to the tort, provided there is reputation in the jurisdiction.
Thus, in Orkin Exterminating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR (4th) 90, the Ontario Court of Appeal upheld the granting of an injunction to an American company which did not carry on business in Canada but had a reputation there. Morden J.A. delivering the judgment of the court, suggested that the United Kingdom decisions on the one hand and the Canadian and United States authorities on the other might be distinguished on the basis that in North America "having regard to the travel patterns of the population and mass advertising through television, radio and various publications, the flow of trans-border goodwill is almost inevitable... " (at 107).
In New Zealand, Cook P. of the Court of Appeal of New Zealand with whose judgment Richardson and McMullin JJ. agreed, in Dominion Rent A Car Ltd v Budget Rent-A-Car System (1970) Ltd (1987) 9 IPR 367, expressed the requirement as one necessitating a form of business connection with the jurisdiction rather than as one necessitating the actual carrying on of business in the jurisdiction. His Honour expressed a view that an international business might have one individual, international goodwill, rather than one divided goodwill split between localities. However, his Honour said (at 380):

"(4) In accordance with what appears to be the general trend of judicial opinion, I think that an Australian company's reputation and goodwill can extend to New Zealand (and vice versa) and, at least if there is a sufficient business connection with this country, will be entitled to protection here. Except in special cases ... it seems to me artificial to analyse such a state of affairs by saying that the company has one goodwill in Australia and another in New Zealand. Rather the goodwill transcends territorial boundaries.

(5) Another consequence of the internationalisation of trade is that the possibility of confusions of names tends to increase, because more situations arise in which it would be inequitable to refuse to allow traders to use similar names, adopted bona fide in the territories where their respective businesses began. As Lord Diplock put it in the passage in the GEC Case previously mentioned, 'With the rapid improvement in communications ... in the first half of the nineteenth century markets expanded; products of two traders who used similar marks on their goods could thus come to be on sale to the same potential purchasers with the consequent risk of their being misled as to the origin of the goods'."

Somers J. (at 398), with whose judgment Richardson J. also agreed, said:

"In the case of a business having an international reputation which extends to New Zealand not much in the way of activity in New Zealand would, I think, be required to establish a goodwill. In such cases the reputation itself may be almost tantamount to goodwill, activity having importance in localising that reputation in New Zealand."

Sears J. of the Supreme Court of Hong Kong in Tan-Ichi Company Limited v Jancar Limited (1990) FSR 151, granted interlocutory relief to the owners of a chain of Japanese restaurants, not operating in Hong Kong, to restrain the defendants from opening a Japanese restaurant in Hong Kong under the same name and written in identical style of ideograms.
In Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd (1981) 1 NSWLR 196, Powell J., also in interlocutory proceedings, expressed (at 205) the view that the relevant question was: "does the plaintiff have the necessary reputation?" rather than "does the plaintiff itself carry on business here?".
Cases referred to by his Honour in support of this view include: La Societe Anonyme des Anciens Etablissements Panhard et Levassor v Panhard-Levassor Motor Company Ltd (1901) 2 Ch 513; Baskin-Robbins Icecream Co v Gutman (1976) FSR 545; C. and A. Modes v C. and A. (Waterford) Ltd (1976) IR 198; Maxim's Ltd v Dye (1977) 1 WLR 1155.
The Maxim's Case, concerned with the name of a well-known Parisienne restaurant, declined to follow the decision of Alain Bernadin and Compagnie v Pavilion Properties Ltd in which an injunction had been refused restraining the use of the name "Crazy Horse" for an establishment in London, that being the name of a well-known Parisienne establishment.
Like Powell J. in Fletcher Challenge, I am of the view that the time has come to recognise that although the tort of passing off is based upon the existence of a business or trade, it does not matter whether that trade or business is in fact itself carried on in the jurisdiction, provided that there is in respect of that trade or business, extant, a reputation in the jurisdiction. However, neither the decisions of the High Court nor full Federal Court presently go so far and such comments on the matter as there are point in the other direction. I think, therefore, that the issue should be addressed and resolved by an appeal court rather than by a single judge. As will become apparent, the question is of little practical moment in Australia because in proceedings taken under the Act there clearly can be no need to establish that the plaintiff is carrying on business in Australia or has goodwill in Australia if the issue is whether the respondent is engaged in conduct which is misleading or deceptive.
D.R. Shanahan in his work Australian Law of Trademarks and Passing Off 2nd ed., Law Book Co., 1990, (at 379-81) suggests that consideration be given to the place of fraud in the action of passing off. In particular the learned author places emphasis on what was said by Gummow J. in 10th Cantanae v Shoshana (1987) 79 ALR 299. In that case, his Honour discusses the development of the tort of passing off and the emphasis placed initially upon fraud rather than on injury to property at common law and the emphasis placed in equity upon protection of property. His Honour, while accepting that it is no longer necessary to prove fraud to succeed in passing off, suggests that where fraud is proven it may provide a remedy where none is otherwise available to protect goodwill. His Honour continues at (321-2):

"One example of relief on the basis of fraud but not goodwill is as follows. Various decisions have proceeded on the footing that where the court intervenes to protect the goodwill of the plaintiff, it does so to protect property rights situated in the forum, with the result that if the plaintiff's goodwill is `international' but not `local` because the plaintiff has no place of business in the forum, no case is made out; this has been held to be so even though local customers of the defendant believe they are dealing with the plaintiff or purchasing the plaintiff's goods or services; Athletes Foot Marketing Associates Inc v Cobra Sports Ltd

(1980) RPC 343. The apparent stringency of such a rule has been alleviated in some decisions by treating as sufficient to establish local goodwill, both sales by local distributors of products made abroad by the plaintiff ... and other business activities falling short of actual establishment of a local place of business... The decision of Way C.J. in Weingarten Bros v G and R Wills and Co. (1906) SALR 34 at 53-5 shows that where fraud has been established against the defendant, the plaintiff may succeed without showing a local goodwill arising from the conduct of a local business. In this way the `pirate' who sets out to attract to his business local persons who know of the fame of the `international' business of the plaintiff, may be brought to account. Where there are several persons joined as defendants in respect of a joint piratical enterprise, the tort of conspiracy may provide an additional ground for relief: Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd... In either case there is a liability for damages, and injunctive relief also is available, not in aid of the `local' goodwill of the plaintiff, but to restrain commission or repetition of tortious acts and to avoid the multiplicity of actions for damages: Angelides v James Stedman Hendersons Sweets Ltd

(1927) 40 CLR 43 at 65-6."

The judgment of Gummow J. was a dissenting judgment and the majority, having taken a different view of the facts, found it unnecessary to consider what his Honour had there said.
His Honour returned to the same theme in Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437. In that case his Honour said (at 446):

"Fraud is a concept of continued significance in the substantive law of passing off given the origins of the tort as an action at law in deceit before equity intervened to protect goodwill by injunction even without proof of fraud ... It is of course an added burden to a plaintiff to prove fraud, but if this is done, the result may be to widen the scope of relief. That is to say, in some cases conduct by a defendant may be enjoined only if fraud is proved. What are these cases? They fall into perhaps two classes. First where the plaintiff has a local reputation based on international rather than local business activities, an intent to take advantage of that reputation may render a defendant liable despite the lack of local business goodwill: See 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1988) ATPR 40-833 at 48,998-49,002 (a reference to his Honour's dissenting judgment)."

His Honour added that fraud did not substitute for the existence of a reputation giving rise to a misrepresentation. When the issue was one of reputation then in his Honour's view the existence of fraudulent intention was evidentiary rather than of substantive significance.
His Honour's judgment in Telmak was by majority overruled by the full court, see Coles Myer Ltd v Telmak Teleproducts (Australia) Pty Ltd (1989) 89 ALR 48. Again, their Honours on appeal found it unnecessary to discuss the issue, and indeed the comments of Gummow J. were in any event, dicta, as the applicant had marketed frypans in Australia and indeed manufactured them here.
If indeed it be the law that there be a necessity for business to be carried on in Australia in the ordinary case as a prerequisite to the bringing of an action in passing off, then I think there is much to be said, with respect, for the analysis of his Honour. The difficulty, however, in the present state of authority, is that no modern formulation of the law of passing off distinguishes between cases involving fraud and cases which do not other than to indicate that proof of fraud makes a plaintiff's case more easy in an evidentiary sense. Indeed, the emphasis placed in the recent authoritative decisions upon the existence of business and goodwill as a precondition to a passing off action makes it difficult to accept that the modern law permits of a distinction in cases where fraud is proved and those where it is not. It follows, that with some regret I feel constrained to decide that the tort of passing off requires the existence of a business in Australia (albeit slight activities will suffice) and that as the applicant has no business in Australia it must fail in a passing off action.
Since it is likely that the present case may go on appeal, I propose to set out my findings of fact on the other matters relevant to the tort of passing off, including the question whether there was in the relevant sense, fraud, before turning to the issues arising under the Act.
The evidence, as I have found it, makes it abundantly clear that Messrs Boyle and Yung adopted the name Healthy Choice having regard to the success of the marketing by ConAgra of its product in the United States. Although I accept that the possibility always existed that a low cholesterol product might be marketed by McCain under some other name, that is, to use the language of the witnesses, that at the outset the name Healthy Choice was adopted as a "working name", at no stage was any other name given any serious consideration.
It was urged upon me that I should distinguish between the adoption of the product on the one hand and the name and other aspects of packaging on the other. The distinction is an obvious one. To embark upon the course of marketing a healthy food product could involve no infringement of ConAgra's rights. However, to embark upon a course of deliberately appropriating the name used by ConAgra (assuming it to be a distinctive name) and aspects of its packaging in such a way as could cause confusion between the two products or cause consumers to believe that the McCain product was in some way connected with the ConAgra product is quite a different thing.
But it was not only the appropriation of the name that was important. Equally important to McCain was the use of the words "low cholesterol, low fat, low sodium," separated by dots in the same way on the McCain pack as on the ConAgra pack. Evidence given both by Mr Boyle and Mr Yung to the effect that the word "sodium" was used because of legal problems said to exist in using the word "salt" is not credible and in this respect I do not accept them as witnesses of truth. A perusal of the relevant health regulations indicate that the use of the word "salt" or the use of the word "sodium" has precisely the same consequences.
In his evidence, Mr Yung maintained that there were products in the market in Australia where the word "sodium" was used rather than the word "salt". No attempt was made, on behalf of the respondent, to tender any examples of such usage and when challenged to indicate the name of any product that made claims regarding sodium, Mr Yung was unable to do so. While I have no doubt that many products are sold on the market as being low cholesterol or low fat or both, the evidence does not support the use of the word "sodium", at least commonly, in Australia. I find on the balance of probabilities that products are not commonly marketed in Australia with the trio of claims that they are low cholesterol, low fat and low sodium.
There can be no doubt that the package design adopted by McCain was also consciously influenced by the ConAgra Healthy Choice product. Samples of the ConAgra product were given to the firm responsible for designing the packaging. No witnesses were called from that firm to indicate what the instructions were that they were given. It may therefore be inferred that their evidence would have been of no assistance to the respondent and the failure to call such witnesses without explanation enables me more easily to draw the inference available from the coincidence of the adoption of the green package and the initial running man logo, that the adoption of such similarities as existed in the packaging was not a matter of chance.
In a passing off action, fraud has been said to be not necessarily such as would support an action in deceit but would be constituted by persistence after notice: Turner v General Motors (Australia) Pty Ltd (supra at 362) per Isaacs J. The present is not a case where initially the adoption of the reputation of the applicant occurred unwittingly. From the very outset the respondent was aware that it had adopted the name of ConAgra's product and aspects of its packaging. It was submitted, nevertheless, that all that the respondent had done was to do that which it was legally entitled to do. It may very well be that neither Mr Boyle nor Mr Yung believed that ConAgra had any rights to proceed against them or had any relevant reputation in Australia, but this is irrelevant. Should it turn out that this belief was mistaken, they are as much engaging in fraudulent conduct by their actions than if they had done the same acts knowing that what they were doing infringed the applicant's rights.
Accordingly I find that the respondent was guilty of fraud and, if the other elements of the tort of passing off are made out, they must be held responsible for the consequences of their actions.
Was there a misrepresentation?
For the purpose of this discussion I shall assume that ConAgra has a trade reputation in Australia, for it could only be if it did that any representation could be said to be false. A reading of the trade presenter leaves me in no doubt at all that, fairly read, it amounts to a representation that the respondents, either themselves market a successful product under the name Healthy Choice in the United States, or in the alternative that the respondent's product Healthy Choice is related to the Healthy Choice product in the United States which has sales of $200,000,000 after being two years on the market.
It is, of course, true that any representation must be seen in the context in which it is made. That context will include the persons to whom a particular representation is directed. In the present case, the trade presenter was directed to persons in the wholesale or retail frozen food industry whose job it was to purchase for resale frozen food dinners. Those persons may have a special expertise, in that it may well be that they read trade journals from overseas as part of their job. It is likely that many of them will have heard of the ConAgra Healthy Choice product.
The applicant, in accordance with orders made at an interlocutory hearing before Gummow J., had been supplied with the names of all of the persons to whom the brochure was given. The applicant called but one of those persons, a Ms Hannon, employed as a promotions manager for Pacific-Seven Pty Ltd of New South Wales. In an affidavit, read without objection, Ms Hannon, referring to the trade presenter and an oral presentation which she had attended said:

"He said it was a top seller in the US and that trends follow on here in Australia. It's an established product in the US. That's only my recollection. I assumed it was, an established product in the US by McCain's - that was only my understanding, I can't be sure."

She indicated that she had not heard about Healthy Choice anywhere else.
For the respondent it was submitted that the applicant had failed to call any other trade witnesses and on the basis of the rule in Jones v Dunkel (1959) 101 CLR 298, that this failure entitled the court to draw the inference that none of the trade witnesses, if called, would have supported the applicant's case.
I do not think, however, that the rule in Jones v Dunkel has any real application in the present circumstances, at least as to the question of representation. The trade presenter contained on its face a misrepresentation and this misrepresentation is confirmed by the evidence of Ms Hannon. While the onus of proof remained always on the applicant, the tactical onus lay upon the respondent, if it wished to show that the persons (apparently other than Ms Hannon) to whom the trade presenter went, were persons of such sophistication that they would not be likely to be misled so that in the context in which the trade presenter appeared it did not contain a misrepresentation, to call them. The respondent itself failed to call any evidence as it was free to do, leaving the situation that there was no evidence which suggested that the group of persons to whom the trade presenter went were of the sophistication suggested.
The question of the packaging is, however, more difficult. To understand the competing views it is necessary for me to describe in more detail the packaging. The current pack of the applicant's Healthy Choice product has a front panel which is printed in green which shades from a dark green at the top of the package to a lighter green at the bottom. In white letters of approximately 1.5 to 2 centimetres in height enclosed by a white line at the top and at the bottom are the words "Healthy Choice". Between the words appears the logo of the running man. After the words Healthy Choice, in a small white circle appears the letter "R". Underneath the name and in yellowish fine lettering of 1 centimetre in height appear the words "low fat . low cholesterol . low sodium meal".
Underneath those words appears a depiction of a black plate with dividers containing a meal. On the left hand side of the plate appears a flag approximately 1.5 centimetres in height edged with red and printed on cream the number of calories in the product. On the left hand bottom side of the plate there appear words in small print "serving suggestion" and underneath that "keep frozen" and underneath that "microwavable". On the right hand side bottom of the plate appears the net weight of the product which is approximately half a centimetre high. Immediately underneath the depiction of the plate and meal, in lettering approximately one centimetre high, appears the name of the particular dinner in cream printing and in smaller printing underneath a description of the product. Each of the side flaps contains, in lettering approximately 1.25 to 1.5 centimetres high, in white print, the words "Healthy Choice" in a white border in the middle of which is the running man logo. On the side flaps, this is printed on dark green merging to a lighter green; on one flap on lighter green and on the other flap black or dark green. On three of the four flaps there is a depiction of the plate and the meal.
On the back of the pack there is contained a panel describing the dinner and giving details of the fat, cholesterol and sodium in the meal, together with instructions for heating in microwave and conventional ovens. On some, there is information about particular promotions (eg winning a trip for two to a world famous health spa). Finally, there is at the bottom of the back of the pack, nutritional information in white print and detailed information of the ingredients. It might be noted that the applicant's name appears only twice on the product. On one occasion on the back panel at the bottom left hand side of that panel in white print of approximately 2mm high. The other appearance of the name is on one of the side flaps in lettering of approximately the same size. The overall dimensions of the pack are 20cm x 20cm x 3.5cm.
The respondent's product, as now distributed following the withdrawal of the package with the running man logo, is printed on dark green board approximately the same colour as the darkest green on the applicant's product. The package size is virtually identical being 20.5cm square. At the left hand top of the front panel, enclosed in a box 7cm x 3cm, appears in large white cursive writing the word "McCain" and a symbol which is presumably the respondent's logo. Underneath, in a cream panel with a small dark green border, the panel having dimensions 16.5cm x 6.5cm, appear in dark green letters, the capitals of which are approximately 1.25cm in height, the words "Healthy Choice". Underneath, in red printing, the capitals of which are 0.5cm high, appear the words "low fat . low cholesterol . low sodium" (underneath appear the words "frozen" together with the name of the particular dinner). The remaining half of the package is taken up with a depiction of approximately 2/3 of the black plate containing the meal and a photograph of the meal itself. One part of the plate is depicted in such a way as it might be assumed that there was a black divider in the plate. At the bottom right hand side of the front panel, obscuring part of the plate, is given the number of calories, the net weight and in white letters on dark green the words "no added MSG". On each of the side top and bottom flaps appears a small replica of the McCain panel and logo as appears on the front, a description of the particular meal and in red printing on a cream background, in lettering 0.25 x 2.25cm high the words "low fat, low cholesterol, low sodium". On the back panel there appears again the McCain name and logo in cursive script and a large cream panel surrounded by a dark green border setting out details of the product, heating instructions and ingredients. At least apart from the name, there is nothing on the back panel of the respondent's pack that in any way resembles the applicant's product.
When the running man symbol was used on the pack by the respondent, that symbol was identical to that of the applicant and positioned as in the case of the applicant between the words "Healthy" and "Choice" on the front cover. Otherwise the cover was identical to that described above. It seems to me inevitable, notwithstanding the prominent use of the McCain name and logo, that at least while the running man symbol was on the pack, the use of that symbol, together with the other attributes of the pack to which I have referred, contained a representation of connection between the McCain Healthy Choice product and that of ConAgra. Once the running man logo is removed, there are only really the four attributes of the pack which can be pointed to as together constituting the misrepresentation upon which the applicant relies. First, there is the colour of the pack, which in part is similar, second, there is the black plate, third, there is the name Healthy Choice and finally there are the words "low fat, low cholesterol, low sodium".
It is interesting to note that Mr Jeffery, the advertising agent who claimed that he had not seen the American package before the hearing (a claim which I do not accept) when shown a copy of the American product identified it as the McCain packaging. This, of course, is not determinative for ultimately the question whether there is a sufficient similarity in name or get up is a question for the court. Nevertheless, in reaching a conclusion the court may be aided by evidence of persons who are actually deceived.
The substantial difficulty in the way of the applicant is that the most significant similarity between the two packages lies in the use of the name itself and that the name is one which uses ordinary English words appropriate to and perhaps descriptive of the product itself. In Equity Access v Westpac Banking Corporation (1989) 16 IPR 431 at 444-48, I discussed the problems which arise with the use of descriptive names and the significance of the fact that the names were descriptive. It is unnecessary for me to repeat in detail what I there said. Suffice it to say that in my view there is no black and white distinction between names which are descriptive and names which are "fancy names", but rather a continuum stretching from the one to the other. The closer one comes to a name which is descriptive the more the onus will be on a plaintiff in a passing off case, or for that matter a case under the Act, to show that the name has obtained a secondary meaning equating it with the products of the plaintiff.
As pointed out by Stephen J. in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 229:

"There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public. In cases of passing off, where it is the wrongful appropriation of the reputation of another or that of his goods that is in question, a plaintiff which uses descriptive words in its trade name will find that, quite small differences in a competitors trade name will render the latter immune from action (Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39, per Lord Simonds at 42). As his Lordship said (at 43), the possibility of blunders by members of the public will always be present when names consist of descriptive words - `So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be.' The risk of confusion must be accepted, to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe."

It is clear that although words may be ordinary English words and descriptive, they may nevertheless become distinctive of the business of a particular person. In such a case, as Gibbs J., with whom Barwick C.J. and Murphy J. agreed, said in BM Auto Sales Pty Ltd v Budget Rent-A-Car System Pty Ltd (supra at 257-8).

"If a plaintiff shows that the name in fact distinguishes his business and that the use of the name by the defendant is calculated to deceive persons into supposing that the business carried on by the defendant is that of the plaintiff, and is likely to cause damage to the plaintiff's business, he will be entitled to relief."

Nevertheless, as Wilcox and Einfeld JJ. said in Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1989) 89 ALR 48 at 64, the courts will jealously guard the entitlement of people to use ordinary English words to describe their business and their goods. Their Honours said:

"To give to the first comer, in effect, a monopoly of the use of ordinary English words may be to preclude others from using the words which most aptly describe their own businesses or goods; a result which is scarcely conducive to the public interest. Accordingly, protection will not be granted against the use by another of descriptive words unless the person claiming protection is able to establish that those words have acquired, amongst members of the public, a secondary meaning distinctive of that person's business or goods. In the relatively rare cases in which this can be shown the court will restrain the use by another of the words, whether or not that use results from an intentional copying. The reason is that otherwise the public would be likely to be mislead into thinking that the subject business or goods was that of the plaintiff."

Given that the words Healthy Choice are used on the respondent's package in conjunction with the McCain trademark and logo prominently displayed, it seems to me quite clear that no-one seeing the McCain product would believe that they were purchasing a product of the applicant. That was virtually conceded by counsel for the applicant. This is at least in the case where the running man logo no longer appears. The question, therefore, can only be whether the use of the name and the associated packaging matters to which I have referred, by the respondent, leads to the conclusion that there is a relationship between the respondent or the respondent's product on the one hand and the applicant or the applicant's product on the other, be that one of licence or whatever. None of the original matters upon which the applicant relies is of itself sufficient to constitute the necessary representation. At the end of the day, however, I am of the view that the packages do suggest to a purchaser, or at least one familiar with the applicant's product, that there is a relationship of some kind between the applicant and the respondent or their respective products. I am drawn to this conclusion in large part by the particular emphasis on low fat, low cholesterol, low sodium, the positioning of these words and in particular the use of the Americanism "sodium" for the common English word "salt", all in association with a green package on which the name Healthy Choice appears. This connection would only be apparent to a person familiar with the ConAgra product, so it is to the evidence of reputation in Australia to which I now turn.
Reputation in Australia
Evidence adduced by ConAgra of reputation in Australia took two forms.
First, reference was made to ConAgra advertising in magazines and journals in the United States. Although it was clear, and admitted by ConAgra, that the advertising in question was not directed at a non United States audience, five of the magazines had a small number of sales in Australia. Advertisements appeared as well in a number of well known international magazines, such as Time, Reader's Digest, News Week, Life, National Geographic and Sports Illustrated. The evidence suggests that most, if not all, such international magazines publish special editions for circulation in Australia with Australian advertising replacing that published in the United States. The ConAgra advertisements did not appear in the Australian editions, only in the edition published in the United States. These international magazines may accordingly be ignored. Details of the dates of advertisements, placed in magazines with sales in Australia, and the Australian sales per issue appear in the following table:
Magazine Date of Australian Sales

Advertisement Per Issue

Bon Appetit August 1990 174

February 1991 174

Better Homes and August 1990 896

Gardens November 1990 896

Redbook February 1991 84

Midwest Living December 1990 25

April 1991 25

Working Woman September 1990 154

November 1990 154

In addition, there was an article which appeared in a trade journal "Food Business". This was an American journal received in Australia by the respondent and in fact read by both Mr Boyle and Mr Yung. The copy tendered had been the subject of underlining by either or both of Mr Boyle and Mr Yung and some of the information in it had obviously been referred to by Mr Yung in preparing the Trade Presenter. The evidence is silent on the matter but it may be inferred that some persons in the trade in Australia, other than Messrs Boyle and Yung would receive the journal and peruse the article.
The second form of evidence was from persons presently in Australia, who were aware of the ConAgra Healthy Choice product.
ConAgra read, without objection, affidavits from a number of persons who had had some connection with the United States of America, albeit now living in Australia.
Mr Balson, an American citizen who had lived in the United States until August 1990 and is now temporarily resident in Australia, when shown the respondent's packaging recognised the name although not the packaging, and referred to advertising in America of ConAgra's product. A Ms Barnes, a dietician, permanently resident in Australia, was aware of the name Healthy Choice from visits to the United States and shopping there. Another affidavit was from a Mr Carrington, an investment banker in the United States, who was, at the time of swearing his affidavit, in Australia for business purposes on a short visit. He, when shown a package of the respondent's Healthy Choice product, recognised it as the ConAgra product. He recalled details of ConAgra advertising.
Another affidavit was from a Mr Michels, a United States citizen in Australia for a one year stay. He recognised the name Healthy Choice, although not the name McCain when shown the respondent's product, and said that if he saw it in a store he would immediately think that it was the United States product and buy it. Another affidavit was from a Ms Tarlington, an Australian citizen who had lived in the United States for a period. She remembered Healthy Choice frozen dinners although not the McCain name from her time in the United States. Other Australians who had lived in the United States for periods and then returned to Australia who recognised the product from their United States experience included a Mr Ward, a Ms Stanton (a dietician) and a Mrs Trude. An affidavit was also read from a Mr Swendt, a chef, an American citizen now living in Australia who had seen a product in the United States and was reminded of it by the words "low fat, low cholesterol, low sodium".
The next step in the evidentiary chain was proof adduced by the applicant of movements between Australia and the United States. In the financial year 1989/90, 534,010 persons departed Australia to go to the United States. Of that number only 2,223 were Australian residents departing permanently, 257,171 were short-term visitors who were departing, 110 were long-term visitors departing, and 234,603 were, as I understand it, residents departing for a short-term. Evidence was also given of the frequent airline traffic from the United States to Australia and from Australia to the United States. From this evidence I was asked to infer that there were a substantial number of people who went from Australia to the United States, as well as a substantial number of people from the United States who came to Australia. All of these persons would have been exposed to advertising in the United States of the applicant's Healthy Choice product and to seeing the product itself on shelves in that country. To this evidence must be added the evidence adduced by the applicant that on prompted survey techniques, 67% of persons tested in the United States were aware of the ConAgra Healthy Choice product.
The respondent relied upon evidence of Mr Smith, a market researcher employed by the respondent on an ongoing basis to conduct continuous tracking market research in respect of its frozen dinner products. In this research, 25 persons were interviewed each week in Melbourne and 25 in Sydney. Those persons who had bought frozen foods at least once a month were then asked questions seeking to elicit, inter alia, their unprompted brand awareness. Since continuous tracking commenced, 6,000 current buyers of frozen food dinners had been interviewed, and since March 1989 4,000 current buyers had been interviewed. None of those interviewed had used the words "Healthy Choice". It may be noted that while the applicant launched its range in January 1989 in the United States it was not until September of that year that the product was sold throughout that country. The evidence of Mr Smith was further that in a period of seven days commencing on 22 April 1991, 50 persons had been interviewed, 25 in Sydney and 25 in Melbourne. Those interviewed were shown a coloured photograph of the packages of the applicant and of the respondent, and asked which of the products, if any, they had seen. Of the 50 persons interviewed only three reported that they had seen the McCain Healthy Choice product. None said that they had seen the ConAgra product.

Finally, the researcher reported having conducted in October 1990 the four focus group discussions each of eight persons, already referred to, in connection with the package design for the McCain product. Not one of the persons attending those meetings mentioned having heard or seen the ConAgra package.
The evidence of the respondent was open to criticism. First, the continuous tracking research was concerned only with unprompted recognition, which, as the applicant's evidence showed, produced considerably lower recall, in the United States in any event, than prompted research did. This must be particularly so when the interview is conducted in conjunction with a questionnaire concerned obviously with recent purchases of frozen food dinners in Australia. There is a distinct possibility that the context of the interview might well have prompted the result.
Second, the prompted research, adopting a sample of 25 persons in Sydney and 25 persons in Melbourne, hardly sampled a representative selection of the populations of either city. The same can be said of the four focus groups. In the result I do not think that the evidence adduced by the respondent is of much assistance in resolving the case.
In determining whether there existed, at the relevant time, a reputation in Australia in respect of the ConAgra Healthy Choice product, it is necessary to look at the persons to whom the particular misrepresentation alleged was addressed. Mr Yung believed (and I have no reason to reject his evidence) that trade buyers would have been aware of the ConAgra product in the United States. Among that class of person, to whom the trade presenter was sent, it is clear that the ConAgra product had therefore a significant reputation.
The same cannot be said of members of the public in Australia to whom the actual McCain Healthy Choice product advertising was directed and who were the respective purchasers of frozen food dinners. The advertisements in journals selling in Australia did not, in my opinion, demonstrate a sufficient reputation in this country. On the contrary, that evidence suggested that such reputation as existed was insignificant. However, that evidence cannot be viewed in isolation.
The evidence adduced by the applicant makes it clear that there are to be found in Australia some number of persons, either originally from the United States or being residents of Australia who have visited the United States and returned, who would be likely to have seen the ConAgra product on supermarket shelves or advertised in journals or on television there, and who would know of or recognise the ConAgra product. These are persons to whom the name Healthy Choice may well have acquired a secondary meaning at the time the respondent launched its Healthy Choice product on to the Australian market. The question is whether this evidence demonstrates a sufficient reputation in Australia to found an action in passing off.
In Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 at 176, in a passage cited with approval by Franki J. in Taco Co v Taco Bell (1982) 42 ALR 177 at 190, Viscount Maugham said as to the extent of reputation necessary to found an action in passing off:

"No doubt the plaintiff has to prove that to a substantial proportion of persons who are purchasers or probable purchasers of goods of the kind in question the name, mark or other symbol of origin, indicates the goods of the plaintiff; but it is a mistake to think that all or almost all such purchasers must entertain that view."

Put another way, there need be shown a substantial proportion of persons who are aware of the applicant's product, cf Wilberforce J. in Norman Kark Publications Ltd v Odhams Press Ltd (1962) RPC 163 at 168.
In the Budget Rent-A-Car Case in the High Court the reputation in the Northern Territory held to be significant, was proved by showing that a considerable number of prospective customers in Darwin were people who had travelled there from other parts of Australia where the respondent's business was established. In principle, there seems to be no reason why reputation cannot be proved by the evidence of persons who have travelled from the United States to Australia in the same way as evidence was adduced in Budget Rent-A-Car of persons who had travelled from other parts of Australia to Darwin.
In Alain Bernadin et Compagnie v Pavilion Properties Ltd (supra, the Crazy Horse Case), there was evidence that advertising in respect of the French establishment was circulated in the United Kingdom and that the French establishment was visited by a large number of tourists from the United Kingdom. Nevertheless, it was said by Pennycuick J. (at 584):

"... I do not think that the mere sending in to the country by a foreign trader of advertisements advertising his establishment abroad could fairly be treated as user in this country ... It may well be that the owner of a foreign hotel or restaurant acquires in this country a reputation for the name of his hotel or restaurant in the wide sense, that the travel agents or other persons to whom he sends advertisements knows of his establishment. Again he may acquire a reputation in a wide sense in the sense of returning travellers speaking highly of that establishment, but it seems to me that those matters, although they may represent reputation in some wide sense, fall far short of user in this country and are not sufficient to establish reputation in the sense material for the purpose of a passing off action."

What is said in the Crazy Horse Case was of course dependent upon the view of the court that goodwill in the jurisdiction, in the sense of carrying on business there, was a necessary condition precedent to success in a passing off action. The case should not be seen, however, as establishing a proposition of law that proof from travellers could not establish a reputation. If it was so seen it would be contrary to the decision of the High Court in the Budget Rent-A-Car Case.
So too, in Miki Shoko Co Ltd v Merv Brown Pty Ltd (supra) while it was held that advertising in Japan, not directed to sales and purchases of a product in Australia, was insufficient to establish an Australian reputation, notwithstanding that persons in Australia had read the magazine, that case does not stand as authority for the proposition that reputation might not as a matter of law be established in this way.
The problem, however, with the applicant's evidence is that while there is no doubt that there are persons in Australia aware of the ConAgra product and while the evidence establishes that there is a potentially large number of such persons, I am unable to be satisfied on the evidence on the balance of probabilities that there does exist in Australia a sufficiently substantial number of persons who are aware of the ConAgra product and for whom the name Healthy Choice would have acquired a secondary meaning, that is to say, the meaning signifying the ConAgra Healthy Choice product.
It follows, therefore, that in respect of the name and get up on the packaging there was not a misrepresentation. I prefer to leave open the question of passing off in relation to the trade presenter and deal with that as a matter arising under the Act. It follows, therefore, that the applicant's claim founded on passing off on this basis must fail.
Damage, actual or probable
It is a prerequisite of a passing off action that the applicant prove either actual damage or, in a quia timet action, probable damage. No actual damage has been proved for the applicant does not manufacture or market in Australia its Healthy Choice product.
I have already summarised the evidence of the applicant's proposal to market Healthy Choice in Australia. There remains only the need to express my conclusions. The evidence suggests that the applicant has not yet made a final decision whether to market in Australia. There is a clear possibility that it will do so and I am satisfied that it is likely that it will do so. In these circumstances I would conclude that it is more probable than not that the applicant will commence, at some time in the future, the manufacture and marketing of its Healthy Choice product in Australia. Should it do so, then it is clear that the applicant would suffer damage by there being on the market another product with the name Healthy Choice. That damage would be great if the name Healthy Choice had by then developed a secondary meaning equating it to the respondent's product, albeit that the respondent's prominent use of the McCain trade mark in conjunction with the name Healthy Choice may mitigate this damage. Nevertheless, I am of the view that the applicant has shown a probability that it would suffer damage sufficient to found a passing off action.
The claim under the Trade Practices Act
It has been pointed out on a number of occasions, eg by Stephen J. in Hornsby Building Information Centre v Sydney Building Information Centre Ltd (supra at 227), that while some of the principles relevant to passing off may be applicable in proceedings instituted under s.52 of the Act, the statutory background to s.52 differs greatly from that relevant to the law of passing off, and the purposes and interests which both bodies of law primarily protect are, to use the language of Deane and Fitzgerald JJ. in Taco Bell (supra at 197) "contrasting". Notwithstanding, however, there is some element of overlap between a claim under s.52 and a passing off case in a case such as the present.
Generally speaking, an applicant in this court in a case such as the present will more likely succeed under s.52 than under the general law of passing off. It was no doubt for that reason that Deane and Fitzgerald JJ. in Taco Bell counselled against a judge at first instance, where a passing off claim would give no wider relief than a claim under s.52, proceeding to consider the passing off claim. My failure to adopt the course suggested by their Honours stems solely from the fact that the applicant put its primary case not upon the Trade Practices Act but upon the law of passing off.
In Equity Access Ltd v Westpac Savings Bank Ltd (supra at 440-42) I summarised the leading cases in a series of propositions there set out. Counsel for the respondent accepted that the summary there given represented a correct statement of the law and, perhaps subject to one matter, counsel for the applicant did not submit to the contrary.
It seems clear to me that whether or not it is necessary to establish that a plaintiff in a case such as the present has goodwill in the country to succeed in a passing off action, that is not the case in an action initiated under s.52. The reason, of course, is that s.52 is not at all concerned with protecting the goodwill of a person who is affected by the misleading or deceptive conduct, it is a section designed to protect consumers.
Nevertheless, for conduct to be misleading or deceptive or likely to mislead or deceive it will, in a case such as the present, be necessary for the applicant to establish a reputation in the country. This is so because, if the applicant has no reputation in Australia then the respondent's conduct in adopting the Healthy Choice name and get up cannot be said to be misleading because it would not cause persons in the community to be misled. As Toohey J. said in Dairy Vale Metro Co-operative Ltd v Brownes Dairy Ltd (1981) ATPR 40-215 at 42,943:

"While action under the provisions of the Trade Practices Act is not founded upon and does not require as an essential element protection of a trader's goodwill, for the public to be misled or deceived it seems to me that there must be in the minds of the relevant public some established truth against which the notion of misleading or deceptive conduct can be measured."

However, at the end of the day, the question is not so much whether an applicant has shown a sufficient reputation, looked at in the abstract, rather, whether the launching of a product under a name and get up which would lead persons familiar with the applicant's product to believe the two products were associated is, in Australia, conduct which is misleading or deceptive or likely to mislead or deceive having regard to the state of knowledge of consumers in Australia of the applicant's product? It may well be said that it is unnecessary for an applicant to succeed that it establish that a substantial proportion of consumers were aware of the applicant's product such that the name Healthy Choice had acquired the necessary secondary meaning to be distinctive of the applicant's products. Rather, it seems to me that provided that the applicant shows on the balance of probabilities that a not insignificant number of persons have such knowledge, the applicant should be entitled to succeed. If the number of persons with the necessary knowledge is insignificant, then a fortiori the conduct complained of will not be able to be characterised as conduct that is misleading or deceptive. Once it passes, however, the threshold of insignificance, then there is much to be said for the view that the conduct in question has become misleading.
While, therefore, the threshold under the Trade Practices Act may well be lower than that required to establish reputation in passing off, I do not think that the applicant here has satisfied the onus of proof of showing that the number of persons for whom the name Healthy Choice and the package design would have the necessary secondary meaning, is other than insignificant.
The situation is, however, different, I think, as regards the trade presenter. Read objectively, that document advises that there is a product in the United States which is a successful product with large sales called Healthy Choice. The implication is overwhelming that the product referred to as Healthy Choice in the United States is either the McCain product or a product associated with it. Whether or not the evidence suffices to establish sufficient reputation known to the buyers of frozen food dinners to whom the trade presenter was addressed is immaterial. The clear representation made by the trade presenter is one which refers to the United States product and in terms which allow only two conclusions to be drawn, the first, that the two products are the same, and the second, that the two products are associated.
Accordingly, I am of the view that in distributing the trade presenter the respondent was guilty of conduct which was misleading or deceptive or capable of misleading or deceiving contrary to the provisions of s.52. Otherwise, the applicant's case under s.52 must fail.
The case under s.53(c) can be dealt with shortly. Section 53(c) provides relevantly:

"A corporation shall not, in trade or commerce, in connection with the supply of goods or ... the promotion by any means of the supply ... of goods - ...

(c) represent that goods ... have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;"

No express representation is to be found on the package, or for that matter in any advertising, suggesting that the product in question has an association with the applicant's products. If, therefore, s.53 is to be relied upon it must be because the use of the name and packaging etc involves, to those to whom the packaging or name comes, an implied representation as to the relationship between the respondent's product and that of the applicant.
In Weitmann v Katies Limited (1977) 29 FLR 336 where use of the words "St Germain" on clothing in Australia was considered, Franki J. expressed the view (at 344) that:

"the mere placing of an article on display for sale in a shop, is, in general, sufficient to make any relevant words thereon, which are clearly visible, a representation by the trader without any specific attention being directed to the words, or without any statement by the trader."

The same can be said of the case where a manufacturer distributes his product knowing that it will be available in shops and supermarkets throughout the country. Where, however, the item contains no express representation, the question whether there is an implied representation must be determined having regard to the class of potential purchasers of the product to whom the product is addressed. In the present case, that is the class of potential purchasers of frozen food dinners in Australia. If, to that class, no representation of the kind referred to in s.53 would be implied, then the section could have no application. Put another way, it would be necessary, in a case such as the present, that the use of a trade name on a package would need to be such that the name had acquired a secondary meaning before that use could be said to be a representation as to sponsorship or approval. The same can be said of the use of a get up similar to that used for another product.
Since, however, I have found that the applicant has no significant reputation in Australia, it must follow that the use of the Healthy Choice name and the similarities of packaging to which I have already referred, could not constitute a representation by McCain that its product was associated with the ConAgra Healthy Choice product. There is thus no need to consider whether a representation of association such as is here alleged could properly be said to be a representation of "sponsorship" cf Weitman v Katies Ltd (supra at 344).
It follows, therefore, that in my view the respondent has breached s.52 of the Act in disseminating the trade presenter and to that extent the applicant has been successful. Otherwise the application, so far as it concerns the use of the name Healthy Choice and the get up must be dismissed. The interlocutory injunction granted by Gummow J. must also be dissolved. I will hear counsel as to the question of costs and as to the form of orders to be made.

[1991] FCA 299

04 JUNE 1991