Digby International (Australia) Pty Ltd v Beyond Imagination Pty Ltd

[1995] FCA 161

CATCHWORDS

TRADE MARK - Alleged infringement of trade mark rights - applicant proprietor of word mark "Extreme" - interlocutory relief to restrain respondents' use of word "Extremists" as name of a series of television programs - serious question to be tried - as to whether respondents were using word "Extremists" as a trade mark - as to whether respondents intend to use word "Extreme" as a mark - as to whether the word "Extreme" if used as a mark was capable of being distinctive of Applicant's product - balance of convenience favouring preservation of status quo.

Trade Marks Act 1955 (Cth) - ss 24(1)(d) and (e), 26, 58(1), 62(1) and 64(1)(b)

Clark Equipment Company v Registrar of Trade Marks (1964) 111 CLR 511 Applied
Colbeam Palmer Limited v Stock Affiliates Pty Limited (1968) 42 ALJR 209 Referred to
Johnson & Johnson Australia Pty Limited v Sterling Pharmaceuticals Pty Limited (1991) 30 FCR 326 Applied

Digby International (Australia) Pty Ltd
v Beyond Imagination Pty Ltd & Ors
QG 35 of 1995

Drummond J
Brisbane
24 March, 1995

IN THE FEDERAL COURT OF AUSTRALIA )    No. QG 35 of 1995
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

BETWEEN:  DIGBY INTERNATIONAL (AUSTRALIA) PTY. LTD.

Applicant

AND:     BEYOND IMAGINATION PTY. LTD.

First Respondent

AND:JEFF McLEOD

Second Respondent

AND:NETWORK TEN LIMITED

Third Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:         Drummond J
DATE OF ORDER:              24 March, 1995
WHERE MADE:                 Brisbane

THE COURT ORDERS THAT:

1. The application for interlocutory relief is dismissed.

1. Costs are reserved to the trial judge.

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

IN THE FEDERAL COURT OF AUSTRALIA )    No. QG 35 of 1995
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

BETWEEN:  DIGBY INTERNATIONAL (AUSTRALIA) PTY. LTD.

Applicant

AND:     BEYOND IMAGINATION PTY. LTD.

First Respondent

AND:JEFF McLEOD

Second Respondent

AND:NETWORK TEN LIMITED

Third Respondent

Coram:    Drummond J
Date:     24 March, 1995
Place:    Brisbane

REASONS FOR JUDGMENT

I have before me an application for an interlocutory injunction brought in an action in which the applicant alleges infringement of its mark by each of the respondents.

The applicant is the proprietor of the word mark "Extreme", which is registered in Part A of the Register of Trade Marks in respect of "production of television and radio programs, film production including video tape films; rental of motion pictures, films, video tapes, television programs; publication of books and texts; services in this class provided by movie and film production studios; television, video and motion pictures entertainment being services included in Class No. 41".  Registration was applied for on 14 September, 1993.

After unsuccessfully attempting, in late 1993, to interest one organisation in participating with it in the production of a particular television sports program it had in mind the applicant, in September 1994, approached the third respondent with a proposal to produce for telecasting by that respondent a sports program to be entitled "Extreme", which would show (according to what the applicant's solicitor says) "various sporting personalities engaging in exciting, dangerous and `way out' or `extreme' sporting activities".  The applicant and the third respondent reached an agreement for the telecasting of this program that was conditional upon the applicant obtaining, by a date nominated by the third respondent, two sponsors who would pay the fees required by the third respondent before it would telecast the program.  The applicant entered into negotiations with a number of potential sponsors, including Coca-Cola South Pacific Pty. Ltd. ("Coca-Cola"), the makers of a soft drink, "PowerAde", and gave Coca-Cola its proposed script for the first episode of the program.  The applicant was, however, unable to obtain the necessary sponsorship.

On 26 February and 5 and 12 March, 1995, the third respondent broadcast programs showing sporting activities of the kind I have referred to, which were produced by the first respondent, of which the second respondent is an officer.  Each program was telecast under the name "Extremists".  The applicant contends that this conduct by the respondents amounts to infringements of its trade mark rights.

The applicant made it clear before it commenced proceedings and also repeated at the hearing that it did not seek to restrain the respondents from producing or broadcasting the first respondent's series of programs; the applicant seeks only to prevent the respondents broadcasting programs under the name "Extremists" or any similar name.  The oral content of the respondents' programs contains repeated references to "Extremists" as the program name; the applicant seeks no relief in respect of that.  Its claims are limited to the visual use of the word "Extremists" in these programs.

Mr. Ian Wren, a director of the applicant, says that following the collapse of the applicant's arrangement with the third respondent, the applicant entered into negotiations with Australis Galaxy, the holder of one of the pay television licences in Australia, for the broadcasting of its proposed program; these negotiations have not yet progressed, however, to the stage where an offer to broadcast the program has been received from Australis Galaxy.  Mr. Wren also says that the applicant has secured commitments in principle from a number of organisations willing to provide sponsorship of the program, i.e., to pay Australis Galaxy a sum of money in return for its broadcasting the program in a form which will advertise the sponsors' products.  As yet, however, no binding sponsorship agreement has been entered into by the applicant with anyone.  Mr. Wren says that the respondents' conduct complained of has severely jeopardised the applicant's ability to secure a broadcaster for, and sponsors of, the program and that, if the respondents continue their conduct, he believes that the applicant will not be able to secure any broadcasting or sponsorship agreements.

The first respondent's business is the production of television programs in Australia and elsewhere.  It is a member of the "Beyond" group of companies which has apparently produced and distributed a number of programs which have been broadcast both in Australia and overseas.  Mr. Dawkes, one of its officers, says that, in October 1994, the first respondent had discussions with representatives of Coca-Cola concerning the possibility of making a series of television programs based upon "the concept of extreme sports".  He says that by the expression "extreme sports" he means unusual, dangerous and exhilarating sporting activities such as sky diving, rock climbing, base jumping, skiing, parachuting and wave jumping.  The respondents' solicitor, in his letter of 10 March, 1995, also asserts that the term "extreme sports" is in common use as a description of extraordinary and unusual sporting activities.  The element common to the various examples the solicitor gives is that of obvious danger to the participants.

A production company based in Los Angeles, Trans Atlantic Distributors L.P. ("Trans Atlantic"), has been producing a television series called "The Extremists" since 1992.  This series is devoted to sporting activities of the kind to which Mr. Dawkes refers.  Trans Atlantic's programs have been broadcast extensively in the United States.  In late October 1994, the first respondent began discussions with Trans Atlantic with a view to being licensed to use footage from Trans Atlantic's "The Extremists" programs and, by February 1995, had entered into a licensing agreement with it.  By 31 January, 1995, the first respondent had also reached an agreement with Coca-Cola to produce, with that organisation's sponsorship, a series of programs referred to in the correspondence between the first respondent and Coca-Cola as "PowerAde Extremists".

Mr. Dawkes says that production of the first episode of "PowerAde Extremists" commenced in early February 1995 and that three episodes were telecast on the dates I have mentioned.  A fourth was telecast on 19 March.  By the time of the hearing before me on 17 March, the first respondent had delivered a fifth episode to Channel Ten.  It is committed to delivering 13 episodes in all of the program to the third respondent for telecasting.  Mr. Dawkes also says:

"Beyond Imagination is contractually committed to the Coca-Cola and Transatlantic to use the title "PowerAde Extremists".  Transatlantic would be at liberty to terminate Beyond Imagination's licensing agreement with it in the event that Beyond Imagination continued to use footage provided by Transatlantic if it were used by Beyond Imagination in a program which did not include the word "Extremists" in its title.  Similarly, Coca-Cola would be at liberty to terminate its sponsorship of the program in the event that Beyond Imagination was required to change the title of its program.  I believe that the risk that Coca-Cola would seek to terminate its sponsorship arrangement in the event that the name of the program had to be changed is a considerable one.  The consequences of Coca-Cola doing so would be extremely serious for Beyond Imagination.  I do not believe that it would be practical for Beyond Imagination to obtain a new sponsor for the program having regard to the title which has been used to date.  Without a sponsor the program will have no future.  Beyond Imagination has expended in excess of $150,000 to date in developing and producing the program entitled "PowerAde Extremists".

Mr. Digby Wren, another director of the applicant, estimates that it would cost the first respondent of the order of $7,000-$,9000 to retitle the remaining programs in the first respondent's series.  Mr. Dawkes, however, estimates that such an exercise would cost of the order of $30,000.

If the respondents were to be prevented from using the word "Extremists" in the visual components of the remainder of the programs in the series, there is, in addition to the costs of retitling these programs, the risk that Coca-Cola might cancel its sponsorship agreement with the first respondent.  I do not regard that as a negligible risk, even though there is only Mr. Dawkes' expression of concern in the way of evidence raising this as a possibility.  In the oral content of the programs, the name of the Coca-Cola product, "PowerAde", is repeatedly linked with the word "Extremists", in the context of references to the program content of high risk sporting activities.  Coca-Cola has stipulated, in its agreement with the first respondent, that the programs are to be broadcast under the title "PowerAde Extremists".  I infer from all this that Coca-Cola regards it as important for the program to be broadcast in that way and that the confusion that might flow from the conflict between a different visually represented title and the oral references to "PowerAde Extremists" might be sufficient to cause Coca-Cola to cancel its sponsorship.  Without this, the third respondent will be unlikely to telecast the first respondent's programs.

The respondents submit that the applicant has failed to show that there is a serious question to be tried with respect to certain issues on which the applicant must succeed at trial if it is to be entitled to relief against the respondents.  They submit, firstly, that the applicant has failed to show, to the degree of cogency required, that they are using the word "Extremists" as a trade mark.  (The respondents do not dispute that, if the applicant overcomes this hurdle now, there will be a serious question as to whether the use of that word by them involves the use of a mark deceptively similar to the applicant's registered mark.)

The respondents' submission here has a number of limbs.  Firstly, it is said that the respondents only use the word "Extremists" as part of the title of the series "PowerAde Extremists" and do not use it to suggest the commercial origin of the programs comprising the series.

I have viewed the standard-form lead-in to one of the respondents' programs.  The single word "Extremists" appears in this lead-in in striking graphics.  The word is displayed very prominently.  It is displayed in a way which markedly separates it from the word "PowerAde", which forms part of Coca-Cola's logo that is also depicted in the lead-in.  By clause 7 of the first respondent's licence agreement with Trans Atlantic (the producer of the program "The Extremists" that has been telecast in the United States for some time), Trans Atlantic warrants that it controls all trade mark rights in and to "the programs and the future programs", i.e., in and to episodes 1-13 and 14-46 of "The Extremists".  It is pretty clear that Trans Atlantic is using the expression "The Extremists" in the United States as its trade mark.  By clause 3 of this licence agreement, the first respondent is obliged to "use the Title of the Programs and Further Programs (ie "THE EXTREMISTS"], its visual aspect, presentation and graphic design, in relation to the exploitation of all rights granted to [the first respondent] pursuant to Clause 2" of the licence agreement.  The purpose of this clause appears to be to require the first respondent to use the exact form of the mark that Trans Atlantic uses in the United States in connection with the broadcasting of the licensed programs in Australia, i.e., to require the first respondent to use Trans Atlantic's United States mark as a trade mark in Australia, something which would obviously be to Trans Atlantic's potential commercial benefit.

Having regard to these four matters, I think it is seriously arguable that the respondents are using the word "Extremists", independently of the logo incorporating the word "PowerAde", as a trade mark, i.e., to suggest that each program originates from a single but unidentified source.  The logo provides the viewer with additional information, viz., that each program is also connected with "PowerAde".  But that does not I think preclude the form in which the word "Extremists" is used in the program lead-in being a user of that word as a mark.

Secondly, the respondents submit that they are using the word not as a trade mark, but only in a way that is descriptive of the activities portrayed in the programs.  For the reasons already given, I reject this ground advanced for asserting that the applicant has failed to show a serious question to be tried as to whether the respondents are using the word as a mark.

Associated with this second submission is the respondents' further submission that there are strong grounds for thinking that the applicant's registration of the word "Extreme" as a mark is invalid. It was here said, in reliance on ss. 24(1)(d) and 64(1)(b) the Trade Marks Act 1955 (Cth) ("the Act"), that the applicant's word mark "Extreme" has a direct reference to the character of certain of the goods and services in respect of which registration was obtained, as does the respondents' user of the word "Extremists" in connection with its series, i.e., that both words have a direct reference to television programs depicting extremely hazardous sporting activities.  It was also submitted, for much the same reasons, that the applicant's mark was not distinctive of its planned program within s. 24(1)(e) and s. 26 of that Act.

It is difficult for a defendant to defeat a claim by a plaintiff for an interlocutory restraint on the defendant's user of a trade mark identical with or similar to the plaintiff's registered mark on the basis that there are grounds for questioning the validity of the registration of the plaintiff's mark.  See Lahore and others, Intellectual Property in Australia, vol. 1, para. 4.5.06.  It is true, as I have mentioned, that the applicant, or at least its director, Mr. Ian Wren, believes that the applicant's mark "Extreme" is apt to suggest to relevant members of the public a link between the meanings that word mark conveys and the content of the television programs to which the applicant intends to apply that word mark.  There is also evidence from the applicant's solicitor, as well as from Mr. Dawkes, that suggests that the ordinary English word "Extreme" has come to have a meaning that is already in common usage when that word is used in reference to sporting activities as denoting very hazardous forms of such activities.

In Clark Equipment Company v Registrar of Trade Marks (1964) 111 C.L.R. 511 at 514, Kitto J said in the course of discussing the concept of distinctiveness of trade marks:

"[t]he question whether a mark is adapted to distinguish [must] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives - in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess - will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it."

In Johnson & Johnson Australia Pty. Limited v Sterling Pharmaceuticals Pty. Limited (1991) 30 F.C.R. 326 at 335-336, Lockhart J, in dealing with whether a mark was used both by the proprietor of the registered mark and by the alleged infringer as a trade mark, said:

"The mere fact that a word is descriptive or has a descriptive flavour does not necessarily prevent it being distinctive of somebody's goods ...

If a word is prima facie descriptive the difficulty of establishing that it is distinctive of the plaintiff's goods is considerably increased.  Also, if the plaintiff has not used the word simply for the purpose of distinguishing his own goods from those of others but primarily for the purpose of describing the particular kind of article to which he has applied it and only secondarily, if at all, for the purpose of distinguishing his own goods, it will be more difficult for him to establish that it is distinctive of them.

A word may be so totally descriptive of the goods concerned as to be unregistrable, for example, ELECTRICS for electrical apparatus ...  In less extreme cases the question is one of degree.  There must be a significant degree of distinctiveness to counterbalance the descriptive character of the word ...

Distinctive means distinctive in the sense that the mark distinguishes the registered proprietor's goods from others of the same type in that market, though it does not mean that the goods must specifically identify the plaintiff as the source of those goods.  Often the indentity (sic) of the supplier will be unknown, but what is important is that a significant number of consumers in the relevant market identify the plaintiff's goods as coming from one trade source ..."

Notwithstanding Mr. Wren's beliefs and the difficulties these raise for the applicant in establishing the validity of its registration and notwithstanding the evidence from the applicant's solicitor and from Mr. Dawkes, I do not think that it is sufficiently shown in the proceedings before me that the word "extreme", or derivatives of it such as "extremists", if applied to moving or printed depictions or descriptions of sporting activities, would now be regarded as denoting hazardous and risky forms of those activities by the public or, perhaps more particularly, by that large part of the public who watch sporting programs on television and film and who read sporting publications in Australia. I think it is arguable that that word, when applied to depictions of sporting activities, would not be understood as descriptive of one particular class of those activities, so far as English usage among the relevant segment of the public in Australia at the moment is concerned. I am therefore not prepared to accept the respondents' contention that the applicant's registration very likely convenes s. 24(1)(d) and (e) of the Act, or their contention that their user of "Extremists" cannot be argued to go beyond a use that is descriptive only. I think that it is still at the moment open to the applicant to contend that its registered word mark, which entitles the applicant to exclusive use of that word only for the purpose of denoting the origin of television programs, films and books, when applied to a television program depicting sporting activities, has a sufficient degree of distinctiveness about it to counter-balance the descriptive character of that word. Cf. Johnson & Johnson Australia Pty. Limited v Sterling Pharmaceuticals Pty. Limited, ibid.

The respondents also suggested that the only user the evidence showed that the applicant intended to make of its mark could not involve the use of the mark as a trade mark and, in effect, was a user in respect of which the Act gave the applicant no protection: see ss. 58(1) and 62(1). Mr. Ian Wren says that: "The applicant obtained registration of the mark (the word mark "Extreme") in order to gain protection for the television sports program that it intended to produce under the title of the mark". In brief oral evidence, Mr. Digby Wren acknowledged that the applicant took steps to register the word "Extreme" as a trade mark because it was proposing to use that name as the title of a television program. The respondents rely on this evidence to show that the applicant only intends to use the word "Extreme" as the title of its planned programs and not to use it as a mark. However, I think that a layman who has a mark that he believes is particularly appropriate to use on his product because the mark will suggest meanings to consumers which are linked to the nature of his product, could well express his belief that the mark gives him an advantage over others who might consider marketing similar products in the way Mr. Wren has, while still intending to use the device in question as a trade mark, i.e., as a device to suggest that the product originates from a particular source. Since such an inference is I think open on the evidence here, that is a sufficient answer to the respondents' suggestion without it being necessary for me to reach any conclusion on the point.

However, in view particularly of the evidence before me as to the connotations the various witnesses, including those on the applicant's side, say the word "Extreme" has when used to refer to sporting activities, I do not regard the applicant's case as by any means so strong as to entitle it to the relief now sought, if only it can show that the balance of convenience slightly favours it, a matter to which I now turn.

I am not at all sure that damages would not be an adequate remedy for the applicant, if it were denied relief now but were to succeed at trial:  the applicant would not be entitled to all of the profits made by each of the respondents from the telecasting of the series in question, its entitlement would be limited to only so much of those profits as were attributable to the use of the applicant's mark.  On one view, the greater part of the profits earned by the respondents might well be attributable to the content of the programs.  My understanding is that the third respondent is telecasting, with Coca-Cola sponsorship, a series for the first respondent whose content is much the same as the program which the applicant would have had the third respondent telecast for it, if it had been successful in its attempts to procure Coca-Cola sponsorship:  the respondents' activities appear to involve broadcasting material of much the same content, quality and interest as that which the applicant hopes to have broadcast under its registered mark.  The profits attributable to the infringing use of its mark would therefore be very limited in extent and they would have to be assessed not by precise calculation but by way of a broad assessment.  See Colbeam Palmer Limited v Stock Affiliates Pty. Limited (1968) 42 A.L.J.R. 209 at 216-217. A similar approach would, I think, govern the assessment of the infringement damages that the applicant could recover. However, a correct analysis of the evidence at trial may show that the first respondent would never have been able to procure Trans Atlantic's agreement to using Trans Atlantic's programs without also agreeing to using the infringing mark. On this approach, the applicant would appear to be likely to be entitled, by way of profits or damages, to all the profits made by each respondent from the telecasting of the series in question, amounts that should be fairly readily identifiable.

However, it is possible that, although the applicant has had no success so far in making the commercial arrangements with others that are necessary to enable it to produce and have telecast the programs it hopes to put to air under its mark, it might well suffer additional loss which it would be difficult to compensate it for properly.  I accept that it would be very difficult for the applicant to obtain a sponsor or other associates for a series to be produced under its mark if the respondents are allowed to continue to telecast the first respondent's series under the name "The Extremists" and there is some non-specific evidence from Mr. Ian Wren to the effect that negotiations between the applicant and Australis Galaxy for the broadcasting by it of the applicant's programs under its mark are still alive.

So far as the respondents are concerned, I do not think they would be adequately protected by the undertaking as to damages that would have to be given if the applicant were granted interlocutory relief.  The loss which the first respondent would suffer in the form of re-editing to remove from the programs in the series yet to be telecast visual references to the "The Extremists" should be readily assessable, notwithstanding the conflicting evidence on this issue.  However, if the first and third respondents cannot deliver to Coca-Cola what each has promised, there is I think a real risk that Coca-Cola may cancel its arrangement with the first respondent.  In this event, while any loss that the third respondent suffers in the form of lost profits from lost sponsorship income should be fairly readily assessed, it is likely to be much more difficult to assess the losses that the first respondent may suffer:  in contrast to the applicant, the first respondent has, on the evidence, a degree of standing as a producer of television programs.  Some damage to its commercial reputation in that regard is likely to occur if it turns out at the trial that the grant to the applicant of interlocutory relief now is not justified.  I mention that the query raised by the respondents to the worth of an undertaking as to damages by the applicant was answered by the offer by Mr. Ian Wren of his personal undertaking.  It is not because of any doubt as to the worth, in the present context, of Mr. Wren's undertaking that I think the respondents may be inadequately compensated by damages if relief is now granted but the respondents ultimately succeed.

I have said that I think the applicant's case is not an obviously strong one; my tentative assessment is that damages may be likely to be an adequate remedy to the applicant if final judgment in the action were to demonstrate that a refusal of the relief the applicant now seeks was in error.  I therefore have regard to the desirability of preserving the status quo.  So far as the applicant is concerned, unlike the first respondent, it is still attempting to establish a business in connection with which it plans to use its mark.  The first respondent has commercial arrangements in place with the American program owner and the local program sponsor as well as the third respondent; it should be allowed to complete performance of those arrangements.  The telecasting of the remainder of the series should not be interrupted.
         The applicant's motion for interlocutory relief is therefore dismissed.

I certify that this and the preceding
17 pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.

Associate:

Date:        24 March, 1995

Counsel for the applicant:           Mr. D.M. Logan

Solicitors for the applicant:        Hall & Co.

Counsel for the respondents:         Mr. J.V. Nicholas

Solicitors for the respondents:      Sprusons: Solicitors

Date of Hearing:  17 March, 1995