Cue Design Pty Ltd v Playboy Enterprises Pty Ltd

[1982] FCA 245

Re: CUE DESIGN PTY. LIMITED; CLOBBER MANUFACTURING PTY. LIMITED
And: PLAYBOY ENTERPRISES PTY. LIMITED trading as 'THE CUE RESTAURANT'; MALCOLM
ALEX PEARCE; VICKI PEARCE (1982) 65 FLR 383
NSW No. G166 of 1982
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES REGISTRY
GENERAL DIVSION
Fisher J.(1)

CATCHWORDS

Trade Practices - consumer protection - misleading or deceptive conduct - passing off - interim injunction sought - female wearing apparel and restaurant bearing the name "Cue" - principles upon which to exercise discretion - whether misrepresentation of business connection - whether sufficient association between the fields of activity.

Trade Practices Act 1974 ss.53, 53(c)(d), 80.

Trade Practices - Consumer protection - Misleading or deceptive conduct - Passing off - Female apparel bearing name Cue - Registered trade mark - Restaurant conducted under name Cue - Whether applicants had acquired substantial local reputation - Whether misrepresentation of business connexion - Whether sufficient association between fields of activity - Trade Practices Act 1974 (Cth), ss. 52, 53(c), (d), 80.

HEADNOTE

The first applicant manufactured and marketed and the second applicant retailed female apparel under the name Cue. In Adelaide such apparel had been retailed since 1971. The first applicant was the registered proprietor of the trade mark Cue in respect of articles of clothing including boots, shoes and slippers. The applicants promoted the name Cue spending considerable sums of money to do so. The respondents conducted The Cue Restaurant which commenced to trade in Adelaide under that name in August 1982. It had previously been conducted under another name. The applicants sought interlocutory injunctions pursuant to s. 80(2) of the Trade Practices Act 1974 for breaches of ss. 52 and 53(c) and (d) thereof and on the basis of passing off to restrain the respondents conducting their business under the name Cue or using the word Cue in a manner which suggested that the business was connected or associated with that of the applicants.

Held: (1) The applicants had to establish a prima facie case of contravention of the Trade Practices Act.

Michael Edgley International Pty. Ltd. v. Ashton's Nominees Pty. Ltd. (1979) 38 FLR 135, applied.
(2) The applicants had not established some real and significant prospect that if the evidence remained as it was, they would succeed at the trial as - (a) They had not established they had acquired a significant local reputation in respect of their business under the name Cue. (b) The applicants had not established that the respondents, by their conduct, had misrepresented themselves as having a business association with the Cue shop. In particular, the respondents carried on a totally different type of business. Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. (1982) 42 ALR 177, applied. (c) Any wonderment by persons as to whether there was some business association between the two businesses would be the consequence of an incorrect assumption that the applicants had the exclusive right to the use of the name Cue. Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 56 ALJR 715, applied.
(3) No relief could be granted on the basis of passing off as the applicants had not established - (a) sufficient reputation or goodwill in the City of Adelaide; (b) some actual or probable damage. Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd. (1979) AC 731, applied. Annabel's (Berkeley Square) Ltd. v. G. Schock (Trading as Annabel's Escort Agency) (1972) RPC 838, distinguished.
(4) Application for interim relief dismissed.

HEARING

Adelaide, 1982, October 5, 14; November 5. #DATE 5:11:1982

APPLICATION.

The applicants sought interlocutory relief against the respondents pursuant to s. 80(2) of the Trade Practices Act 1974 and on the basis of alleged passing off.

J.J. Garnsey, for the applicants.

J.W. Perry Q.C. and D.W. Tillett, for the respondents.

Cur. adv. vult.

Solicitors for the applicants: Smithers, Warrant & Tobias with Davenport & Mant.

Solicitor for the respondents: Poveys.

T.J. GINNANE

ORDER

1. The application for interlocutory relief be dismissed.

2. Costs of the application reserved. Orders accordingly.

JUDGE1

In this matter Cue Design Pty. Limited ("Cue") and Clobber Manufacturing Pty. Limited ("Clobber") are the applicants in proceedings against Playboy Enterprises Pty. Limited, trading as "The Cue Restaurant" ("The Cue Restaurant") and Malcolm Alex Pearce ("Mr. Pearce") and Vicki Pearce ("Mrs. Pearce"). The applicants claim that the respondents by using the word "Cue" as the name of and in connection with the operations of their restaurant are contravening the provisions of s.52 and s.53 (c) and (d) of the Trade Practices Act 1974 ("the Act"). They seek declarations to this effect and injunctions pursuant to s.80 of the Act restraining the alleged contraventions. The application was also endorsed seeking relief restraining the respondents from passing off their business or goods as being connected or associated with that of the applicants. Interlocutory relief was sought pursuant to s.80(2) of the Act to restrain the respondents conducting their business under the name "Cue" or using the word "Cue" in a matter which suggested that the business was connected or associated with that of the applicants. The applicants went beyond the endorsements on the application and based their claim for interlocutory relief also on the allegation of passing off.

The applicants filed and tendered numerous affidavits, together with many exhibits, in support of their case for an interim injunction. The respondents filed one affidavit and Mr. Pearce gave oral evidence, upon which he was cross-examined and which related primarily to the question of the balance of convenience. However this was the only area in which there was any cross-examination, and it is desirable that I refrain from making, at this interlocutory stage, unnecessary findings. Such findings as I am obliged to make are of course not final, and are only made on the untested evidence as it now stands.

The principles upon which I should approach a matter of interim relief are well settled. I do no more than repeat what I said in Michael Edgley International Pty. Ltd. and Others v Ashton's Nominees Pty. Ltd. (1979) 26 A.L.R. 419 at p.421:
"The principles upon which I should exercise my discretion to grant interim relief are well settled in this court. I refer in particular to the judgment of the Chief Judge of this court in World Series Cricket Pty. Ltd. v Parish (1977) 16 ALR 181 at 186, et seq.

It was at the hearing in this matter not disputed that the onus lies on the applicants to make out a prima facie case of contravention of the sections (or one of them) in the sense explained by the High Court of Australia in Beecham Group v British Laboratories Pty. Ltd. (1968) 118 CLR 618; (1968) ALR 469. I refer to the following passage at p.622 of the judgment of the court: 'The court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v Luck (1884) 27 Ch D 497 at 506; Challender v Royle (1887) 36 Ch D 425 at 436. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks' (CLR at 622; ALR at 470). It is also incumbent on the applicants to show that on consideration of the balance of convenience the respondent should be restrained pending final hearing.

In establishing a prima facie case, in the relevant sense, it is, contrary to the submission of counsel for the respondent, in my opinion, not necessary for the applicants to persuade me that, on the present state of the evidence, it is more likely than not that they will ultimately succeed. Rather the applicants must show that they have some real and significant prospect that if the evidence remains as it is at the moment, they will succeed at trial. The test of "a fair chance of success" was adopted by Bowen CJ in Commercial Bank of Australia Ltd. v Insurance Brokers' Association of Australia (1977) 16 ALR 161 at 168 and taken up by Brennan J. in Victorian Egg Marketing Board v Parkwood Eggs Pty. Ltd. (1978) 20 ALR 129 at 145, and to me seems very appropriate in the present circumstances as indicating how strong the probability needs to be."

It is not disputed that The Cue Restaurant is a corporation for the purposes of the Act and that its relevant operations take place in trade or commerce. Mr. & Mrs. Pearce are before the Court as aiders and abettors of The Cue Restaurant pursuant to s.75B of the Act.

The facts relevant to this application, on the evidence which is at this stage before me, are as follows. Cue and Clobber are incorporated in the State of New South Wales and Cue is the registered proprietor of the trade mark Cue in respect of articles of clothing, including boots, shoes and slippers. Cue manufactures and markets in Australia both as a wholesaler and retailer female wearing apparel, its retail activities being conducted by 5 shops which it or associated companies own and 18 shops which trade under licence. All shops trade under the name "The Cue Shop". Cue wholesales its merchandise through Myer Limited in New South Wales, Victoria, Queensland, South Australia and Western Australia and between 1971 and 1979 through David Jones Limited in Adelaide. Clobber which is 50% owned by companies associated with Cue retails Cue's merchandise in Brisbane, Sydney and Adelaide under the brand name "Cue". Cue commenced its wholesale operations in Adelaide in 1971 and Clobber opened its retail store in Adelaide in 1981 with three stores in Rundle Mall Adelaide City, Westfield Shopping Complex Marion, and the Myer Shopping Complex Tea Tree Plaza respectively. The policy of Cue and Clobber is to promote the name "Cue" amongst its primary market which comprises women between the ages of 15 and 25 years and its secondary market comprising women between the ages of 26 and 35 years. They have spent considerable sums of money through radio, press, motion picture promotions and motion picture screen advertising promoting in Australia the name "Cue". A great deal of the evidence in this regard was referable to activities outside of Adelaide. Furthermore they advertise and promote the name by giving plastic bags bearing the name "Cue" to customers, hanging posters in their retail outlets and giving away stickers, match boxes and labels. The retail store in Adelaide City conducted by Clobber is situated in the Rundle Mall, the retail shopping centre of the City, virtually at the western end thereof abutting King William Street.

The Cue Restaurant holds a Restaurant Licence, issued by the Licensing Court of South Australia as well as a permit to conduct public entertainment on its premises. These premises are situated at 142 North Terrace, Adelaide alongside the Gateway Hotel and opposite Parliament House. Its restaurant had earlier been conducted under the name of "Patches" and commenced under the name of "The Cue Restaurant" on 14 August 1982. Pursuant to the permit to conduct public entertainment, it provides various types thereof between 9.00 a.m. through to 6.00 a.m. the following day on Monday to Saturday of each week. It also has engaged in relatively extensive advertising though in a style very different from that of the applicants. There was evidence to the effect that it also attracted a different class of customer for lunch from the younger people, including females allegedly potential customers of the Cue Shop, who are entertained in the evenings by production type shows, including strip tease acts. The Cue Restaurant premises are located some 400 yards from the Cue shop in Rundle Mall, and neither is visible from the other.

There is of course no association or business connection between the retail store business and other activities of the applicants and the restaurant and entertainment business of The Cue Restaurant. The applicants state that they are concerned that the consequence of the activities of the respondents is that the public will be misled or deceived and the applicants will suffer serious damage or loss. They say that the public confusion and the nature of the restaurant business will undermine the image they have created in Adelaide and that their brand name "Cue" will be associated with the type of entertainment produced at the restaurant. They are also concerned that their reputation with their business and advertising associates will suffer. Most of these concerns relate more directly to the prejudice that the applicants anticipate they are suffering and will suffer rather than the manner in which they contend the public are likely to be misled, namely as to a business connection between the applicants and The Cue Restaurant.

In this latter regard a number of persons were interviewed virtually outside the Cue shop in Rundle Mall. The general pattern was that they were asked if they knew The Cue Restaurant and whether they knew who owned it. The answer in each instance was in the negative. They answered "yes" to the question whether they thought it was connected with any other business, but were not asked what other business. When asked outside the Cue shop, whether they knew the Cue shop and whether they thought it had anything to do with The Cue Restaurant, the answer in each instance was yes. I do not find their evidence very satisfying or convincing, and not only because even if accepted it is only of peripheral significance.

The applicants accepted that they must establish a prima facie case, in the abovementioned sense, that the public, or the relevant section therof, have been misled or deceived, or are likely to be misled or deceived by the conduct of the respondents in the use they make in their business of the name "Cue". The applicants have no right to the monopoly use of this name in respect of the activities of the respondents. However their contention is that by the mere adoption and use of that name the respondents are representing that there is a business association or connection between their activities and those of the applicants. In Taco Company of Australia Inc and Another v Taco Bell Pty. Limited and Others (1982) A.T.P.R. 43,732 Deane and Fitzgerald J.J. refer to a misrepresentation as an essential feature of conduct contravening s.52. At p.43,751 they said:
"Irrespective of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purposes of sec.52, be categorized as misleading or deceptive unless it contains or conveys, in all the circumstances of the case, a misrepresentation."

The question here is whether, in all the circumstances of this case, the applicants "have some real and significant prospect that if the evidence remains as it is at the moment, they will succeed at trial (See Michael Edgley v Ashton's Nominees supra) in establishing that the respondents have misrepresented the fact that there is a business connection between themselves and the applicants. If they have led or are likely to lead, the relevant section of the public, namely females between the ages of 15 and 35, into an erroneous belief that such is the case, their conduct prima facie contravenes s.52, though it may before reaching a final conclusion be necessary to enquire why the erroneous belief has arisen (Hornsby Building Information Centre v Sydney Building Information Centre (1977-78) 140 C.L.R. 216 at p.228).

This erroneous belief on the part of the public can only arise if the applicants have acquired a significant local reputation in respect of their business under the name "Cue". If such be the case, a question will arise whether there exists, or is likely to exist in the minds of the relevant class of the public a belief that there is a connection between the applicants retail store in the Rundle Mall and the respondents' restaurant on North Terrace. It is my opinion that on the evidence before me the answer must be in the negative. There are a number of grounds which confirm me in this tentative view.

I am not satisfied that despite their advertising campaign, which admittedly was substantial on a national basis, the applicants have acquired a significant local reputation. They have only one retail store in the City of Adelaide which has only been operating for about twelve months. Their other two stores are many miles from that in the Rundle Mall. There was no or certainly no satisfactory evidence before me as to the local knowledge of the applicants' business activities under that name. The persons who were interviewed were approached in the Rundle Mall in the vicinity at least of the Cue shop. I am not prepared at this stage to infer from the promotional and other material before me that the applicants have to date established a significant local reputation in the name of the Cue shop. Their activities in the Rundle Mall are just one of many relatively small outlets engaging in the retailing of women's clothing.

However even if, contrary to this tentative view, I accept that among persons of the specified class the applicants' business has acquired in the relatively short period of time this reputation, I do not see the circumstances disclosed by the evidence as producing the relevant erroneous belief. The applicant must establish, to the relevant extent, that by their conduct the respondents have misrepresented themselves as having a business association with the Cue shop. I am not satisfied that this is, or is likely to be the result. The respondents carry on a totally different type of business, catering at least to a substantial extent for the tastes of a different class of the public and in a different area of the City. There is at the present time no overlapping of the two business activities, though the applicants attached significance to the fact that this might occur in the future. Only to a very limited extent can it be said that the two businesses catered for the same class of the public, the applicants relying on the fact that some women in the relevant age groups patronise the restaurant in the evenings. Even though the restaurant is as a matter of distance not very far from the Cue shop, it is not in the main shopping area and it was significant that the persons interviewed in the Rundle Mall were not aware of its existence. It might well be different if the restaurant was in the main retail shopping area, albeit the same distance from the Cue shop.

On the present state of the evidence I am not satisfied that the operations of either business is sufficiently well-known in Adelaide for members of the public to conjecture about the use of the name of the two businesses. However, if any persons did give consideration to this fact, their conjecture as to the use of the name of the restaurant would be as a result of the applicants advertising campaign. They might wonder, as in McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty. Ltd. (1980) 33 A.L.R. 394. whether there was some business association, for how otherwise would the restaurant come to be using the name which they associated with the shop in the Rundle Mall. However such wonderment would be the consequence of an incorrect assumption that the applicants had the exclusive right to the use of the name, and this could be a bar to a finding of misleading or deceptive conduct in the circumstances. Such conduct, if it only causes a member of the public to wonder whether there is a business connection does not amount to a breach of the section (Parkdale Custom Built Furniture Pty. Ltd. v Puxu Pty. Ltd. (1982) 42 A.L.R. 1).

As it was put by counsel for the respondents, the case made out by the respondents founders at this stage at the factual level. I am not satisfied that on the evidence before me the applicants will establish at trial that the conduct of The Cue Restaurant, in using that name, is misleading or deceptive or likely to mislead or deceive the relevant section of the public into believing that there is a connection or association between the two businesses. Viewed objectively I am not satisfied that the conduct of Cue conveys such a representation. It follows that there is no need for me to consider the question of the balance of convenience or the exercise generally of my discretion under s.80(2) of the Act. I make similar findings in respect of the alleged contraventions of s.53.

The applicants contended that I should also consider granting interlocutory relief on the basis of passing off. The essential element of this cause of action is that the use of the trading name incorporating the brand name of the applicant is calculated to deceive members of the public into confusing the business of the respondents with that of the applicants. It seems to me that it is necessary again for me to be satisfied that the applicants had sufficient reputation or goodwill in the City of Adelaide to entitle them to bring this action. It is also necessary for them to establish some actual or probable damage (Erven Warnink Besloten Vennootschap and Another v J. Townend & Son (Hull) Ltd. and Another (1979) A.C. 731 at p.742, referred to by Deane and Fitzgerald J.J. in Taco Company of Australia Inc. v Taco Bell Pty. Ltd. supra at p.43,347). In the present circumstances, particularly as the parties are operating different businesses totally disassociated from each other, the evidence to date is inadequate on this score also.

The applicants' counsel attached considerable importance to the decision of the Court of Appeal in Annabel's (Berkeley Square) Ltd. v G. Schock (1972) R.P.C. 838 as supporting his contention that it was not necessary to establish any overlapping of the fields of activity. In that matter it was, by way of distinction from this present case, conceded that the appellant was the proprietor of a well-known club. Furthermore Russell L.J. who delivered the principal judgment of the Court of Appeal acknowledged that if there was no overlapping, this fact was "in the highest degree relevant in considering whether there is a case for an injunction based on a likelihood of confusion (page 844)".

I would distinguish the case before me from Annabel's case on His Lordship's view of the facts. On the same page he continued in this regard as follows:
"Here I have no doubt at all as at present advised that there is a sufficient association between what the public would consider the field of activity in which Annabel's Club is conducted and the field of activity in which Mr. Schock indulges in the course of his escort business. Both are concerned with what might be described as 'night life' or 'night entertainment'. Put another way, it can be said that Annabel's Club provides facilities to men for dining and dancing with female partners - though not in the sense that they are made available on the premises, as is the case, I understand, in some or perhaps many night clubs, where they are known as 'hostesses'. Turning it round slightly, Mr. Schock's business is concerned with supplying for men facilities of female partners for the purpose, among other things, of dining and dancing with them.
I should have thought there was a relevant association between the fields of activities sufficient to make it impossible to say that the general public could not be confused into thinking that Mr. Schock's business under the name of Annabel's was something to do with or was associated with the plaintiffs' business also under the name of 'Annabel's'."

The fact that there is, on my view of the evidence, no or certainly no significant association between the two fields of activity, is a strong ground to support my view that an interlocutory injunction is not justified. Likewise my finding that the applicants have not, to date at least, established sufficient reputation or goodwill in Adelaide to render likely confusion as to the businesses is fatal to their claim for relief.

The applicants' claim for interim relief is dismissed. The question of the costs of the application is reserved.