Dairy Vale Metro Co-op Ltd v Brownes Dairy Ltd

[1981] FCA 63

Re: DAIRY VALE METRO CO-OPERATIVE LIMITED
And: BROWNES DAIRY PTY. LIMITED (1981) 54 FLR 243
No. SA G33 of 1981
Trade Practices - Copyright - Injunctions

COURT

IN THE FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.(1)

CATCHWORDS

Trade Practices - Copyright - Interlocutory injunction Similar products - similarity of packaging and television advertising - breach of Copyright Act - breach of Trade Practices Act - Relevant market under Trade Practices Act. Copyright Act 1968 (Cth.), ss. 10, 32, 35, 77, 115, 117 Trade Practices Act 1974 (Cth.) ss. 52, 80, 82

Copyright - Infringement of copyright - Application for interlocutory injunction to restrain infringement - Whether applicant owner or exclusive licensee of copyright - Copyright Act 1968 (Cth), ss. 10, 32, 35, 77, 115, 117.

Trade Practices - Misleading or deceptive conduct - Application for interlocutory injunction to restrain misleading or deceptive conduct - Respondent marketing and advertising its products in similar manner to applicant - Respondent being first in market with its product - Whether relevant public likely to be misled or deceived - Trade Practices Act 1974 (Cth), ss. 52, 80, 82.

Injunctions - Interlocutory injunction - Balance of convenience - Availability of damages as appropriate remedy - Undesirability of creating monopoly situation.

HEADNOTE

The applicants distributed yoghurt under the brand name "Eve", and after an advertising campaign commenced to market "Eve" yoghurt in Western Australia on 6th May, 1981. On 4th May, 1981, the respondent commenced to market "Temptation" yoghurt in Western Australia, and on 5th May, 1981, television advertisements for "Temptation" yoghurt were first broadcast in Western Australia. There was a strong similarity between the containers used for each brand of yoghurt, and between the respective television advertisements although the applicants' television advertisements were not broadcast in Western Australia. The applicants sought an interlocutory injunction against the respondent.

Held: (1) Even if the artwork and design of the applicants' containers and advertisements were original unpublished works, the applicants had not established that they, rather than the author of the works, were either the owners or exclusive licensee of the copyright and so entitled to bring action for its infringement.
(2) Since the respondent's yoghurt was marketed and advertised on television in Western Australia before that of the applicants, and there was no evidence that the relevant public knew of the applicants' yoghurt prior to this; the applicants had not demonstrated that the respondent's conduct was likely to mislead or deceive the public.

Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978), 140 CLR 216; McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. (1980), 49 FLR 455; Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. (1954), 91 CLR 592; Puxu Pty. Ltd. v. Parkdale Custom Built Furniture Pty. Ltd. (1980), 43 FLR 405; Bradmill Industries Ltd. v. B. & S. Products Pty. Ltd. (1980), 53 FLR 385, referred to.
(3) The availability of damages as a remedy, should the applicants succeed at trial in proving either infringement of their copyright or misleading or deceptive conduct by the respondent, and the undesirability of creating a monopoly for the applicants, rendered interlocutory injunctive relief inappropriate on the balance of convenience.

HEARING

Darwin, 1981, May 19-20, 27. #DATE 27:5:1981

APPLICATIONS FOR INTERLOCUTORY INJUNCTION.

The facts appear from the judgment.

D. Clayton, for the applicants.

P. L. Seaman Q.C. and W. Martin, for the respondent.

Cur. adv. vult.

Solicitors for the applicants: Finlaysons.

Solicitors for the respondent: Keall Brinsden & Co.

R. R. BOADEN

Orders accordingly.

JUDGE1

Two applications for interlocutory injunctions are before the Court. As a matter of convenience they have been heard together, the evidence in one to be evidence in the other. Indeed they have a common origin in a joint application lodged in the District Registry of South Australia. They have emerged as two applications, this one by Dairy Vale Metro Co-operative Limited, transferred by order of Fisher J. to the District Registry of Western Australia, and another by George Weston Foods Limited begun in Western Australia. It is appropriate to discuss both matters in one set of reasons.

Dairy Vale was incorporated in South Australia. George Weston was incorporated in New South Wales and is registered in Western Australia as a foreign company. Both companies and the respondent Brownes Dairy Pty. Limited are concerned in the production and distribution of dairy products including yoghurt. Since about May 1980 Dairy Vale has produced and distributed within South Australia yoghurt under the name of "Eve". It is sold in cartons of different sizes, all bearing a distinctive combination of name and picture. On 1 April 1981 Dairy Vale entered into a franchise agreement with George Weston whereby the latter was granted an exclusive licence to sell yoghurt products under the Eve label in Western Australia. The agreement is expressed to continue for a period of three years and to be extended automatically from year to year thereafter until determined by notice as provided in cl.7 of the franchise agreement The considerable success of this product in South Australia induced George Weston to enter into the franchise agreement for Western Australia.

In order to sell yoghurt in Western Australia it was necessary for George Weston to obtain the approval of the Dairy Industry Authority; this was obtained in October 1980. George Weston then spent considerable sums of money on the purchase of equipment, on packaging and manufacture, on advertising and promotion, on the franchise agreement and on television commitments. These amounted to more than $200,000.00. George Weston was to distribute its product in a packaging identical to that of Dairy Vale except that the name "Watsonia" would be substituted for "Dairy Vale" above the fruit shown on the container and some changes of language were required to comply with the demands of the Health Department of Western Australia. The range of flavours was almost the same.

George Weston had arranged the initial public promotion and release of Eve yoghurt in Perth on the night of Wednesday 6 May 1981. This took place but on 5 May Donald Edward Nelson, the manager of the dairy division of Watsons Foods Holdings Pty. Ltd., a subsidiary of George Weston, saw on public television in Perth an advertisement for "Temptation" yoghurt, a product manufactured and marketed by the respondent. The advertisement has appeared regularly and frequently on Perth television since that time. Temptation yoghurt went on sale in Western Australia on 4 May 1981, also in a distinctive format, two days before the release of Eve yoghurt. An affidavit filed on behalf of George Weston suggests that there may have been an earlier release of Eve in Bunbury but there is an issue between the parties and on the material available I am not justified in reaching such a conclusion. I must proceed on the basis that Temptation beat Eve to the Western Australian market, if only by some 48 hours. The respondent's product has been promoted through supermarkets and chain stores in Western Australia.

Each applicant has a television advertisement, one designed for South Australia and the other for Western Australia. They are identical except that the container shown in the South Australian advertisement carries the name Dairy Vale and that shown in the West Australian advertisement the name Watsonia. As already mentioned, the containers themselves carry some differences in wording but this is not apparent on the television screen. The television advertisement designed for Western Australia has not been shown; the reason for this did not emerge. However George Weston has proceeded to market its product although it claims to have encountered some resistance from distributors because of the presence of "Temptation" yoghurt on their shelves. Evidence tendered late in the hearing showed that Eve and Temptation are to be found together on the shelves of two chain stores.

Dairy Vale relies upon three causes of action, breach of s.52 of the Trade Practices Act 1974, passing off of its product and breach of copyright. It does not rely upon the passing off action for the purpose of these interlocutory proceedings and it has abandoned for all purposes relief sought by way of mandatory injunction.

George Weston also pleads the same three causes of action. It too does not pursue the passing off action in the interlocutory proceedings. Nor is it seeking a mandatory injunction at this stage although it intends to pursue this relief at the substantive hearing.

The pleadings were filed in some haste, largely to point up the issues between the parties. The defences in the main traverse the allegations in the statement of claim but descend to some particularity in the matter of the copyright claim. They plead that neither the container nor the design and its presentation were original or unpublished works within s.32 of the Copyright Act, deny that Dairy Vale is the owner of copyright and say that the containers and designs are industrial designs applicable to the purpose of the ornamentation or pattern or shape or configuration of the containers and have been applied industrially to those containers.

Dairy Vale approached its application for interlocutory relief in accordance with the principles laid down in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1967-1968) 118 C.L.R. 618. George Weston adopted Dairy Vale's position and the respondent was content to argue the matter in accordance with those principles. The Court addresses itself 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 . . . How strong the probability needs to be depends, no doubt, on the nature of rights he asserts and the practical consequences likely to flow from the order he seeks . . . The second inquiry . . . is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." (at pp 622-623).

I propose to look at each cause of action presently relied upon by the applicants in the light of those principles. First however I should say that in my view there is a strong similarity between the containers in which Eve and Temptation are sold and a very strong similarity indeed between the two television advertisements. Naturally it is possible to identify, as the respondent did, differences between the containers and the advertisements. That is made easier when they are viewed together in the artificial situation of a court hearing with counsel meticulously pointing to the differences that exist. But as a matter of general impression and as a matter of first impression it is the similarities that prevail. I do not propose to list the similarities and differences; they are apparent from the containers and the video tapes of the television advertisements. Of course the name of each product is different but images conjured up by "Eve" and "Temptation" are similar. In the context of containers in which the general get-up is much the same, especially the way in which the fruit is depicted, there is an over-all impression of likeness. The resemblances between the television advertisements are even more striking. The general presentation, the background music of heavy strings, the use of a naked woman and the seductive tones of the announcer make the difference of minimal importance.

But to say that is to do no more than make apparent the factual situation. The question still remains - has either applicant made out a case for interlocutory relief in terms of a prima facie case and the balance of convenience?

Neither applicant spent much time in argument on the matter of copyright. In an affidavit filed in support of Dairy Vale's application, its general manager and director John Graham Spinkston deposed:
"Dairy Vale is the owner of the copyright which subsists in the artwork and design of the container and the advertising material consisting of a television commercial and points of sale. It has paid its advertising agency for container artwork and design in preparation of the television advertisement and point of sale material. The point of sale material comprises two sizes of posters which depict the woman shown in the television commercial."
For the purposes of this application I must disregard the point of sale material. The posters were not tendered or referred to in evidence or in submissions. The assertion of ownership of copyright should be read in conjunction with the balance of para.2 of the affidavit which refers to the engagement by Dairy Vale of an advertising agency to complete the artwork and the design for the container and also to produce a suitable television advertisement and the expenditure by Dairy Vale of approximately $50,000.00 "in connection with the development of the product, market research and creative work for the container and advertisement".

Section 10 of the Copyright Act 1968 defines "exclusive licence" to mean
"a licence in writing, signed by or on behalf of the owner or prospective owner of copyright, authorising the licensee, to the exclusion of all other persons, to do an act that, by virtue of this Act, the owner of the copyright would, but for the licence, have the exclusive right to do . . ."
"Exclusive licensee" has a corresponding meaning.

Section 115 empowers the owner of copyright to bring an action for infringement and, except in certain cases, relief may be by way of injunction and damages or an account of profits. In broad terms, Division 3 of Part V confers upon an exclusive licensee the same remedies.

The respondent submitted that neither applicant had established a prima facie case of ownership of copyright. The applicants' reply was that the affidavit of Mr. Spinkston asserted ownership in Dairy Vale, and an assertion should be taken at its face value in the absence of evidence to the contrary. George Weston was an exclusive licensee by virtue of the franchise agreement. The difficulty about those propositions is that copyright is not simply a matter of fact. It depends upon the existence of material that is capable of being the subject of copyright and upon a consideration of provisions of the Copyright Act. It should be noted that there is no question here of a registered design or trade mark.

Whether the artwork and design of the applicants' containers and of advertising material in their television commercials are truly original unpublished works is a difficult question and one about which not much was said during the course of the submissions. I prefer to reach my decision, for the purposes of this application, by reference to other considerations. Section 35(2) of the Copyright Act provides that subject to the section "the author of a literary, dramatic, musical or artistic work is the owner of any copyright subsisting in the work by virtue of this Part". The section then goes on to make specific provision for certain situations; the operation of those provisions may be excluded or modified by agreement. I am not satisfied that any of the provisions of sub-ss. (4), (5) and (6) of s.35 operate to vest ownership of any copyright in the containers and advertisement in Dairy Vale. And while cl.4(h) of the franchise agreement obliges Dairy Vale to make available to George Weston "all television radio and other media advertising and promotional material as the licensees shall consider appropriate", I am not satisfied that this constitutes George Weston an exclusive licensee.

Furthermore, although the point was not argued at any length, the terms of s.77(2) of the Copyright Act arguably prevent either applicant from establishing infringement of copyright in regard to the containers on the ground that they are articles to which a "corresponding design" has been applied but which design has not been registered under the Designs Act 1906.

Section 52(1) of the Trade Practices Act reads: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive".

Section 82 provides that a person who suffers loss or damages by conduct of another done in contravention of Part IV or V of the Act (and s.52 falls within Part V) may recover the amount of the loss or damage by action against that person.

Section 52 is concerned with conduct which is deceptive of members of the public in their capacity as consumers of goods or services. At the same time, because "any person" may claim relief under s.80 for a contravention of s.52, it is possible for a trader injured by the competition of his trade rival to gain a remedy under the Trade Practices Act. Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 18 A.L.R. 639. As Stephen J. there pointed out:
"The remedy in such a case will not, as in passing off, be founded upon any protection of the trader's goodwill but, being directed to preventing that very deception of the public which is injuring his goodwill, it will nevertheless be an effective remedy for that of which he complains." (at p.645).

During argument counsel directed some attention to the extent to which the respondent was previously aware of the applicants' products and of the television advertisements. For its part, the respondent was at pains to establish that the format of its product and of its television advertisement came about independently of and without reliance upon the applicants' products and advertisements. This is not a matter upon which I need express any view and I am of the opinion that I ought not, in the absence of such further evidence as the parties may wish to adduce on the subject and in the absence of any cross-examination of deponents which they may wish to make. Whether in the end this aspect will have relevance remains to be seen; for the purposes of s.52 conduct may be misleading or deceptive if it has a capacity to mislead or deceive, intention to mislead or deceive not being necessary.

Oversimplifying the position of the respective parties but reducing it to essentials for the purpose of the present application, the arguments were put this way. The applicants pointed to the similarities between the respondent's product and theirs and to the similarities between the respondent's television advertisement and theirs. They also referred to instances where persons had seen the Temptation television advertisement and assumed it to relate to Eve or had bought Temptation off the shelves believing it to be Eve, their knowledge of the latter product deriving from a sample they had seen or been given.

The respondent answers: "It may be that customers are confused between Eve and Temptation yoghurt but that is to our detriment as much as it is to the applicants'. In any event we were in the market in Western Australia first and the applicants can complain of no more than that the public may be confused between the two products". The applicants reply: "Market cannot be confined to Western Australia when Dairy Vale had an established reputation for Eve yoghurt in South Australia. State boundaries are artificial, the Trade Practices Act is a piece of Federal legislation and the situation must be viewed on an Australia-wide basis".

There is an element of truth in all these submissions. The matter should be seen in the light of the activities of the applicants and of the respondent wherever those activities are carried on. But the applicants seek to restrain the respondent in regard to the sale and distribution of its product in Western Australia and in considering whether conduct is likely to deceive or mislead members of the public, I am of the opinion that it is the public in Western Australia that is under scrutiny. It is not a matter of state boundaries but rather of marking out the area of the respondent's conduct under examination by the Court. This does not exclude consideration of any reputation Dairy Vale's products may have gained elsewhere but unless those products are known to the public in Western Australia, it is hard to see how that public may be misled or deceived.

As Stephen J. pointed out in the Hornsby case:
"When, as in s.52(1), the focus is upon the misleading of others rather than upon the injury to a competitor, it becomes of particular importance to identify the respect in which there is said to be any misleading or deception . . . The Sydney Centre tendered some evidence that persons had been misled in this way and for present purposes I will assume that this has occurred. But to determine whether there has been any contravention of s.52(1) it is necessary to inquire why this misconception has arisen in the minds of others". (at p.647).

The Court was there concerned with the use by two organisations of descriptive names, the Sydney Building Information Centre having been in use for many years. The use of the name Hornsby Building Information Centre was held not to be in breach of s.52 because although a degree of confusion may have been created in the public mind, no-one was being deceived as to the nature of the business described.

In McWilliam's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. (1980) 33 A.L.R. 394, McDonalds who sold a hamburger under the name "Big Mac" sought to restrain McWilliams from marketing wine under the same name. The Court there emphasised the distinction between conduct which leads to some confusion in the minds of the public and conduct which misleads or deceives.

The dictum of Kitto J. in Southern Cross Refrigerating Co. v. Toowoomba Foundry Pty. Ltd. (1953-1954) 91 C.L.R. 592 at p.595 relating to competing trade marks that "it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products came from the same source" must be read in the context of the reputation the appellant's goods had acquired under its registered marks. I suggest that reliance by Lockhart J. upon this dictum in Puxu Pty. Ltd. v. Parkdale Custom Built Furniture Pty. Ltd. (1980) 31 A.L.R. 73 at p.100 and in Bradmill Industries Ltd. v. B. and S. Products Pty. Ltd. (1980) A.T.P.R. 40-191 at p.42, 617 must be read in a comparable context.

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 good will, 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.

In the present case it was the respondent's product that was on the market in Western Australia first. It was the respondent's television advertisement that was shown first; indeed at the time of hearing of this application George Weston's television advertisement had not been shown in Western Australia at all. Before Eve went on the market in Western Australia, how can it be said that the sale of Temptation was likely to mislead or deceive the members of the public who bought it? Deceived or misled about what? If they knew nothing of Eve yoghurt, they could hardly be deceived. In saying this I do not suggest that the absence of Eve from the Western Australian market is fatal to an argument based on misleading or deceptive conduct. It may be that the product was sufficiently well known by reason of its sales elsewhere that the purchasers of Temptation were likely to be deceived into thinking that they were buying Eve. But that is not the evidence.

Let us take the matter one step further to the point where Eve begins to be marketed in Western Australia. It may well be that the yoghurt buying public becomes confused between the two, being unsure whether they are buying one or the other and perhaps believing that there is some connection between the two. But in my view it does not follow that it is the sale of Temptation that deceives or misleads the public.

I do not wish to say any more than is necessary to dispose of this application. It may well be that the evidence as it finally emerges presents a different picture but I must deal with the matter according to the material available at the hearing. I am not persuaded that the respondent by the sale of Temptation yoghurt or advertising on television has engaged in conduct misleading or deceptive to the public, that is persuaded in terms of a prima facie case.

That is enough to dispose of the matter but I propose to say something about the balance of convenience. Whatever the outcome of this application Dairy Vale and George Weston are free to continue the sale of their products and are free to advertise them on television. Some financial loss may be caused to George Weston and in turn Dairy Vale through the absence of an injunction. Damages are of course available to both companies if they make good a cause of action. It may be difficult to assess with any precision the quantum of those damages but this is a matter the courts have to cope with on many occasions and, however difficult, some assessment of damages should be possible. Section 115(4) of the Copyright Act contains an extensive power to award damages in the circumstances there described. On the other hand to grant an injunction would effectively restrain the respondent from selling its product at all. If it is held to be engaging in misleading or deceptive conduct that may well be its fate. But to restrain it at this stage will be to create a monopoly in the applicants, a situation which should not be reached lightly.

In my view this application should be refused. I have already discussed with counsel a speedy hearing date and a timetable in broad terms has been established. It is enough to say that the Court is able to deal with the substantive hearing as soon as the parties are in a position to proceed.