Duracell Australia Pty Ltd v Union Carbide Australia Ltd

[1988] FCA 644

c

JUDGMENT No. L%. ../.-L

CATCHWORDS

Trade Practices Act, 6 . 5 2 - Interlocutory injunction - Comparison

advertising - Claim	in	advertisement	that	tests	proved
respondent's battery	lasted	longer	than	applicantis	-

Discretionary factors in such a	case - Principles applicable to
comparison advertising - Ranner in which such advertising	may
mislead - Evidence re tests - Appropriate costs order.

Trade Practices Act 1974 - 6 . 5 2

DURACELL	AUSTRALIA	PTY	LIRITED	-V- UNION	CARBIDE	AUSTRALIA
LIMITED

NSW G.1327 OF 1988

Burchett J.
Sydney

2 November 1988

.

IN THE FEDERAL COURT OF AUSTRALIA

)

NEW SOUTH WALES DISTRICT REGISTRY	)	No. G.1327 of 1988
)
GENERAL DIVISION	1

BETWEEN:

DURACELL AUSTRALIA PTY

LIMITED

Applicant

- AND :

UNION CARBIDE AUSTRALIA

LIMITED

Respondent

MINUTE OF ORDERS OF THE COURT

Judge	Making Orders: Burchett J.
Where Made:	Sydney
Date of Orders:	2 November 1988
THE COURT ORDERS	THAT:

(1) UPON the applicant undertaking to pay to any party

adversely affected by the interlocutory injunction or
undertaking such compensation (if any) as the court
thinks just, in such a manner as the court directs, the
court orders until further order, that the respondent be
restrained by itself, its servants or agents or

otherwise howsoever from:-

(a)	in trade or commerce, in connection with the supply or possible supply of the respondent's Energizer
battery (hereinafter called the "respondent's
product") or in connection with the promotion by any means of the supply or use of the respondent's product:
(i) broadcasting, transmitting, dissemlnating,

reproducing, or publishing; or

(ii) causing, procuring or arranging for the
broadcasting, transmission, dissemination,
reproduction or publication through the
medium of television, radio, wireless or
similar means of communication of,

the television commercials, (hereinafter called the

"Television Commercial") which appear on the

.

L .

videotapes which are exhibits MB1 and MB2 to the

affidavit of Mitchell Baker sworn 26 October 1988.

(b)	In trade or commerce, in connection with the supply or possible supply of the respondent's product or in connection with the promotion by any means of the supply or use of the respondent's product:
(i) broadcasting, transmitting, disseminating,

reproducing or publishing; or

(ii)	causing, procuring or arranging for the broadcasting, transmission, dissemination, reproduction or publication through the medium of television, radio, wireless or
similar means of communication of,

any part of the Television Commercials or any other

television commercial which asserts	or implies
that:

(A) the Energizer batteries currently on the

market and available to the public in
Australia last longer on average than the

Duracell batteries.

(B) the Energizer "AA" size batteries currently on

the market and available to the public in

Australia last longer on average than the

Duracell "AA" size batteries;

(C) the Energizer batteries currently on the

market and available to the public	in
Australia are made according to a	new process
or to new specifications which makes them	last
longer on average than the Duracell	batteries.

(c)	In trade or commerce, in connection with the supply or possible supply of the respondent's product, or
in connection with the promotion by any means of
the supply or use of the respondent's product, causing, procuring, arranging or permitting the transmission, dissemination, broadcasting, reproduction or publication (whether by means of television, motion pictures, audio visual cassettes, wireless, radio, newspapers, periodicals or other publication or by means of any other form of advertising or promotion) of any part of the transcripts (hereinafter called the "Transcripts"), copies of which are Annexures A and B to the
affidavit of Mitchell Baker sworn 26 October 1988.

( 2 )	The applicant's costs of the application for interlocutory relief be its costs in the principal application.
NOTE :	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

.

IN THE FEDERAL COURT	OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY	1	No. G.1327 of 1988
1
GENERAL DIVISION	1

BETWEEN:  DURACELL AUSTRALIA PTY

LIMITED

Applicant

AND :  UNION CARBIDE AUSTRALIA

LIMITED

Respondent

REASONS FOR JUDGMENT

BURCHETT J.

This was application n for an i terlocutory

injunction to restrain the respondent, pending the hearing of

the principal application, from continuing to promote its

batteries by means of a particular television advertising

campaign. The advertisements in question, as telecast since a recent date in October, have taken	two forms, which are not
significantly different. A third version	of the advertisement

is proposed to be telecast in the near future. While insisting

that no admissions were	made, the respondent	put forward the
third version as clarifying one criticised aspect	of each	of

the current versions, while the applicant claimed that the

alleged clarification was	a confession which	did not at all
avoid.

.

Late on the day of the hearing, at the conclusion of

submissions, I made certain orders, reserving my reasons which

I now deliver. I also reserved the question whether those

orders should be amplified by further orders.

Though a small amount of evidence was directed to

discretionary considerations and the balance of convenience, the parties concentrated, in evidence and in submissions, on the issues to be tried. I think they were right in doing so. If the applicant could make out a sufficiently serious case to be tried, I think the other considerations would in this case,

on balance, favour the applicant obtaining relief. It is of

course clear that, in the ultimate exercise of discretion, it

is not necessary to keep the factors rigidly compartmentalised,

but they may be considered together: Aboriginal Development

Commission v. Ralkon Agricultural CO Pty Ltd (1987) 15 F.C.R.

159 at 163-164; Sharp v. Deputy Federal Commissioner of

Taxation (1988) 88 A.T.C. 4259 at 4266-7. In the present

matter, if a sufficient case is made out, the public interest

protected by the Trade Practices Act 1974 (that consumers

should not be deceived - see World Series Cricket Pty Ltd v.

Parish (1977) 16 A.L.R. 181 at 186-187, 191); the nature and

circumstances of the advertising campaign	in question (which
may be seen as a new campaign	aimed at disturbing the status

quo in the market for alkaline batteries which has been shared

fairly evenly between the parties); the very great difficulty

of compensating the applicant adequately by an award of damages

should it be left to that remedy and ultimately succeed; and

the	undisputed	ability	of the	applicant	to	answer	to	its
J.

undertaking as to damages should it fail (though these damages also would be difficult to assess, but not, I think, nearly as

difficult as in the converse case to which I have already

referred), all combine to favour granting relief should a

serious question be shown. It does not necessarily follow that

relief must be granted if a barely sufficient case is

established; as I have said, the ultimate decision may	be made
on a balance that takes	all the considerations into account
together.

Videos of the two versions of the advertisement, and a

video of the proposed version, were tendered in evidence,

together with ranscripts of what is said (including

descriptions of what is seen) when the videos are played. For

the purpose of these reasons, I am content to adopt the

transcripts of the two advertisments annexed to the affidavit of the respondent's product manager, Mr York. I have not attempted to resolve some extremely slight differences between

these transcripts and the transcripts put forward by the

applicant. In any case, in this interlocutory proceeding no

finding is other than provisional. As I have said, the two

versions	of	the advertisement which have appeared are almost
the same, the principal difference being a variation	of	some
buffoonery involving the silencing	of a clownish character	by
whom attention is	gained at	the beginning. In one version,

this is done by	a bucket being put	over his head.	I set out
the description of	the scenes	and record of the dialogue	of

this version from Mr York's affidavit:

"VIDEO AUDIO

1. JACKO IN CLOSE UP. SAYS JACKO: OI! Energizer.

"01". TAKES A DEEP B R E A T H , m a t t e r y lasts....

BUT BEFORE HE GETS (Then muffled under

STARTED A MILD MANNERED bucket)

BOFFIN COMES IN AND

COVERS HIS HEAD WITH	A
BUCKET. BOFFIN LEANS

FORWARD CONSPIRATORIALLY.

JACKO AT FIRST STARTLED, WITH MUFFLED CRIES, FROM HERE ON FOLLOWS THE	BOFFIN: Sorry, but it
VOICE OF THE BOFFIN	m be done.. . .
WHEREVER HE GOES.

2 .	WE BRING ON FROM CAMERA	We Want to gUietly
LEFT A SEPARATE SCENE:	show you why new
TWO AA SIZE BATTERIES,	Energizer Double AA

ONE ENERGIZER THE OTHER batteries last longer

DURACELL. THEY'RE on average than

BEING FILLED BY A PETROL Duracell.

PUMP TYPE DEVICE. GRAPHIC:

"TESTS PROVE IT	IN AA
SIZE".

3 .	THE PUMP FILLING DURACELL	YOU see O U T
PULLS OUT, AND THE	technology means we

DURACELL IS NOW PLUNGED can pump more energy

INTO DARKNESS. A BEAT into new Energizer.

LATER WE WITHDRAW THE	It's like petrol in a
PUMP FILLING ENERGIZER.	car. The more YOU put in the further you go.

4 . WE WIPE OFF THIS SCENE We put more in. We

TO REVEAL BOFFIN. JACKO last longer On

STANDS NEXT O HIM, average. A fact.

NODDING AGREEMENT. BOFFIN

REMOVES THE BUCKET TO

ALLOW JACKO HIS 01. JACKO: Oi !

5 . END WITH THE WORD MVO: New Energizer,

ENERGIZER. LASER EFFECT 33% long lasting

UNDERLINES WORD WITH	battery.
SOUND FX.	WE THEN CREATE

AA SIZE BATTERY AROUND NAME. BATTERY REDUCES IN SIZE AND MOVES INTO

VERTICAL POSITION AND WE CREATE ENERGIZER AA 4 PACK

AROUND IT	."
A careful perusal of the dialogue reveals	that the

claim about the Energizer battery, that	it "last(s) longer	on
average", a claim of	which the video declares "tests prove	it

in AA size", may actually be limited to a new type of

Energizer, and to only the AA size of that type. But the

advertisement	is	screened	for 30 seconds. The applicant's
argument is that the overall impression left	by	it is	what

counts; so brief a message, presented	in such a boisterous
form, does not invite analysis,	but loudly demands acceptance

of what it asserts as a proven fact.

As bearing on what the advertisement would actually

convey to a viewer,	the applicant points out that, until	last
nay,	an advertisement was telecast which any viewer who	had

seen it would be likely to associate with the present

advertisements, because of the similarity of its dramatis

personae, its vi ual impact and its me sage. That

advertisement made claims about the ability of the respondent's

Energizer batteries to last longer than Duracell batteries. The similarity would, it is suggested, be likely to recall the

impression made by those advertisements. This	is significant
in at least two ways: it might lead a viewer to regard the

claim as a repetition of one with which he was already

familiar; and because that claim was general, relating to

Energizer batteries not limited to a new type of Energizer battery, it might cause him to miss ambiguous indications that the present advertisements make a different and narrower claim.

The older advertisement was discontinued as a result of

proceedings in this court, and it was expressly conceded before

me by counsel for the respondent that he did:

"not seek to put forward any tests to

substantiate that the claims apply to the old

technology batteries, and that is why the

advertisements repeatedly say 'new'."

If the two advertisements are considered against that

background, the applicant submits, it is obvious that the

opening statement:

"Oil Energizer. No battery lasts . . . ' l

might not be as guilelessly meaningless as it appears. (The

alternative version does not include the word "lasts", but

there is evidence that in it the character speaking the opening

lines mouths the words "lasts longer".) The word "Energizer"

is not qualified either as to size or type, and the incomplete

sentence would naturally lead the mind to a completion; the

completion likely to be supplied by a viewer who had seen the

earlier advertisements would almost inevitably be that

Energizer lasts longer than the one other	brand of	alkaline
battery commonly available	on the	Australian market, namely,
Duracell.

It is only after attention has been caught with this

emphatic message about Energizer batteries that the second

character in the advertisement declares:

"New Energizer Double AA batteries last longer on
average than Duracell."

l .

It is true that this statement includes the words "new" and

"Double AA", but the viewer's attention is at	that	stage
divided between what is	being said and the video portrayal	of

an Energizer battery and a Duracell battery being filled. In

the portrayal, by the simple device of putting the Duracell

battery further away from the camera, the Energizer appears

bigger and is more clearly defined, It is also represented as

being filled for longer. A written Statement appears	on the
screen:

"TESTS PROVE IT IN AA SIZE".

It is submitted, for the applicant, that the "it" alleged to be

proved might be taken to be the original general statement

about the superiority of Energizer batteries, and not a limited statement about new AA batteries. "It" is proved "in AA size";

but while the proposition is so proved, it remains a general

proposition. From	this point of view, it may be significant
that the spoken words do not	refer to Duracell AA Batteries as
the batteries allegedly inferior,	but perfectly generally to
Duracell.

The very next statement	is:
"You	see our technology means we can pump more
energy into new	Energizer."

This statement is not limited to the	AA	slze, and	the claim
about "our technology" might naturally	be	taken as a	general

one. The advertisement goes on with another general claim:

"We put more in. We last longer on average. A

fact."

A viewer would be unlikely to understand this claim as limited

to batteries of a particular size, manufactured after a

particular recent date. The final message refers to "New

Energizer, - the long lasting battery." It again omits reference

to the one size claimed to have been tested, and although that

size appears visually on the screen, it perhaps does so rather

as a particular example of the Energizer battery than as the

only type of battery about which the claim is truly made.

In connection with aclaim to have asuperior

technology, and an unqualified claim that "We - put more in" and

"We - last longer on average", the use of the expression "AA"

once orally, and ambiguously (at best) in writing, and the use

of the adjective "new", may be an inadequate warning that	the
general message cannot be taken at face value.

The evidence shows that Energizer batteries, of AA

size, are readily available which were not manufactured

according to the new technology. The claims made, even if true

of the new technology, do not apply to those batteries. A

consumer with excellent vision, exceptional powers of

observation, and a retentive memory, might perhaps notice that batteries he was about to buy were not exactly as illustrated

in the television advertisement. The difference 1s minute - it

consists of a line on the outside of the battery, and on the

packet, presenting perhaps a stylized glowing match. The

advertisement does not tell the consumer	that there are large
numbers of Energizer batteries	in the shops which are not the
"new Energizer" batteries referred to	in the advertisement; and

the get-up of the batteries, apart from the symbol I have mentioned, is the same. That get-up is of a visually busy type, so that the one new feature in no way stands out. A

reasonable consumer, particularly if he has a general

recollection of the previous advertising campaign, may well

think that batteries manufactured within the last twelve

months, and presently available in the shops, would be "new"

within the meaning of the advertisement. Especially is this so

in relation to alkaline batteries, which might all with perfect

propriety be referred to as "new" in the sense that they are a

recent development compared with carbon batteries. Carbon

batteries are still on the market in very large numbers.

It is not necessary or appropriate, at this

interlocutory stage, to reach decision a whether the

conclusione suggested above are in fact correct. It is

sufficient, and perhaps more than sufficient, to hold, as I do,

that they are strongly arguable. If it is correct that the

consumers that it is a proven fact that the Energizer AA	advertisement is likely to convey the impression to reasonable
batteries presently available in the shops last longer on
average than Duracell batteries, the advertisement is
significantly misleading. If, too, a similar impression is
conveyed with respect to Energizer batteries generally, by
comparison with Duracell batteries generally, then again the
advertisement is misleading.

I was referred by counsel for the respondent to

Parkdale Custom Built Furniture Proprietary Limited v. Puxu

Proprietary Limited (1982) 149 C.L.R. 191 in support of what

amounted to a proposition that a consumer who bought the old

Energizer batteries on the faith of the advertisement would be

a victim of his own naivety or carelessness, rather than of

anything misleading in the advertisement.	I do not think it is
valid to compare what may reasonably	be expected of a purchaser
of expensive furniture with what may	be expected of a purchaser

of a handful of	small items such as batteries.	For the very
reason that a purchaser	of cheap commodities cannot sensibly	be

expected to devote much time and thought to the weighing	of
statements made about them	by their producers, it seems to me

that an inaccurate statement or an ambiguously qualified

statement may often be found to be misleading. In the area of

comparison advertising, it has repeatedly been said that

particular care is required.	An unfair comparison may, quite
simply, because it is unfair, be misleading.	It may mislead a

consumer into thinking there is a basis for a choice where, in

truth, there is not; or that a choice may be made on grounds

which are not truly valid. See Colgate Palmolive Pty Ltd v.

Rexona Pty Ltd (1981) 37 A.L.R. 391 at 401; State Government Insurance Commission v. J.M. Insurance Pty Ltd (1984) A.T.P.R.

45359 at 45362-45363; Hospitals Contribution Fund of Australia

Limited v. Switzerland Australia Health Fund Pty Limited (1987)
A.T.P.R. 48949 at 48950-48951.

..

The respondent indicated that it proposed to make

changes in the advertisement in the very near future, designed

to limit clearly the claims made to the new type of AA

batteries. I was asked to exercise my discretion against

granting an interlocutory injunction on the basis that this was

about to be done. There	were two reasons why I did not accede
to the submission. In the first place, the suggested	changes

did not appear to me to be adequate. In the second place, a

proposal to telecast acceptable advertisements in the future

would not justify a continuance of unacceptable advertisements

in the meantime. There was no suggestion that a retraction

would be telecast, or that the terms of the new advertisement

would actually draw attention to the problem created by the

the correction be needed, a change so subtly shaded might well old. Far from correcting the matter, if

terms of

escape the attention of a viewer already imbued with the

existing message. The impression originally gained might be reinforced by the repetition of a closely similar message, not corrected.

The applicant also claims that the advertisements,

even if understood as confined to the new technology batteries

in the AA size, would remain misleading. The statement "tests

prove it in AA size" was supported only by a limited number of

tests. These tests were performed in Hong Kong, and the only

evidence concerning the procedures adopted was that supplied by

the brief written reports of the laboratory. These showed, in the case of three tests of samples supplied by the respondent,

the dates reports of three tests done of manufacture of the samples. There were also

at the request of an overseas

company apparently associated with the respondent. In the case

of those tests, no dates	of manufacture of	the samples have
been supplied,	but the tests themselves were performed	on 8
December 1987, 29 December 1987 and 19 January 1988.	If it	is

assumed that these dates refer to the completion of the tests,

each of which appears to have required a lengthy period	f r its
performance, and bearing in mind that these three	tests may

have been requested at the one time, the Energizer batteries

supplied for the purpose of the tests must have been so

supplied long before the improved Energizers became available

for sale in the shops, which was not until March this year. In the absence of any information at all as to the provenance of

the batteries used in the tests, counsel for the applicant

points out that very new Energizer batteries straight from the

factory may have been compared with quite old Duracell

batteries procured from Australia, from whom and from storage

under what conditions, the report leaves to the imagination.

That batteries do deteriorate over time, at a rate depending on

the storage conditions, seems, despite the respondent's

argument6 to the contrary, to follow from the Australian

at stated intervals, and specifies storage requirements. Apart	standard, which provides for tests of their retention capacity
from this problem, there is simply no evidence as to whether or
not appropriate sampling procedures were adopted in the
selection of the batteries submitted for testing in those three
tests.

In this situation, the applicant contended that much

greater weight should be given to the three tests which the

respondent itself commissioned. As to these, there was

'. 13.

evidence of purchased from major retailers. There was also evidence of the random a selection from Duracell batteries

age of the batteries involved. These three tests were tests

known as the Intermittent Lighting Test, the Cassette Player

Test and the Toy Test. Each involved only nine Duracell

batteries and nine Energizer batteries.	All batteries were	of
the AA size.

The Intermittent Lighting test was conducted using

Energizer batteries manufactured in January 1988, with which

were compared four Duracell batteries manufactured in October

1987 and five Duracell batteries manufactured in November 1987.

One of the Energizer batteries was recorded by the Hong Kong

laboratory as giving a result little better than 1/20th of the

average of the other eight Energizer batteries. If the nine

Energizer batteries were simply compared with the nine Duracell

batteries, on this test the Duracell batteries returned a

better average performance. But the respondent excluded the

one extremely poor result from the comparison, and on that

basis the respondent's batteries performed better.

In the Cassette Player Test, six Energizer batteries

manufactured in January 1988 and three manufactured in December

1987 were compared with Duracell batteries,	of which two were
manufactured in August 1987, three in October 1987 and four	in

November 1987.	The	results	favoured	the	respondent's
batteries.

In the Toy Test, nine Energizer batteries manufactured

in December 1987 were	compared with nine Duracell batteries
manufactured in October 1987.	One of the Energizer batteries
is recorded as giving a result approximately l/lOth of	that
returned by the other eight batteries.	If that battery is left
out	of account, the Energizer batteries performed better than

the Duracell batteries in this test, but if it is included the
Duracell batteries produced an average performance fractionally

better than that of the Energizer batteries.

The material produced by the respondent from the

Hong ltong laboratory makes no comment whatever about the two

poor performances in respect of two Energizer batteries. There

was no similar result in respect of any of the Duracell

batteries tested at the request of the respondent. In the

absence of any comment from the laboratory, and assuming normal

scientific procedures had been adopted by it, one might have

been forgiven for assuming that there was nothing defective in

the experimental controls and that, assuming the very limited

number of batteries subjected to the tests could be regarded as

a fair sample from which valid conclusions could be drawn at

all, two such results may indicate failures of quality control
in the manufacture by the respondent of a new type of	battery.

One might have expected a laboratory to make specific comment

if there was any possible query about he xperimental

procedures in respect of these two noticeable results, and	not
simply to have supplied	the results in an unqualified fashion.

. .

15.

But the matter did not end in Hong Kong. one might

also have expected the recipients of the information, who were
themselves scientifically expert, to have sought information

from the laboratory, and perhaps to have conducted further

tests on the two batteries concerned. After all, the laboratory

reports do not suggest that the tests performed would have

destroyed the batteries.	If the explanation is that there were
manufacturing defects, it is difficult to conclude that it	was
proved by these tests that the new Energizer batteries	last

longer on average than Duracell. At any rate, an unqualified

statement to that effect, omitting reference to the possibility

that two out of twenty-seven such batteries would last but

briefly, whereas no Duracell battery	in a random purchase of an
equal number performed so poorly, would	be quite misleading.

There was no evidence proffered of any attempt to

obtain an explanation from the Hong Kong laboratory, or to

obtain and test the batteries in question. The whole	of the
testing having been under the control	of the respondent and the
laboratory chosen	by it, it seems to me that the reasoning

which was expounded, in a different context, in the well known

case JOneS v. Dunkel (1959) 101 C.L.R. 298 is applicable here.

The respondent sought to justify the way It had dealt

with the test results by the evidence of a statistician, Dr

Cooke. I do not think it is necessary to examine in detail the mathematical justification, according to statistical theory,

which was proffered. Dr Cooke was cross-examlned. In

cross-examination, he conceded such results are	not	discarded
where there is good reason to take them into account.	He	said

that he was not given any actual explanation, or any series of

possible explanations, of these two results. He was not told

about the existence	of batteries colloquially referred to as
"duds". If he had known that you do	get from time to time

"duds" among batteries, he said that he would not have excluded

these two results. In that case, to test he remaining

batteries only would not be to test batteries in the market,

but to test, from among batteries in the market, those regarded

as good batteries.

As the evidence showed that in fact you do get from

time to time what were described as "duds" among batteries sold

in the market, it seems to follow from this evidence that it

was wrong to exclude the results which the respondent excluded.

Whether ultimately that conclusion should	be drawn or not,	on
the evidence at present adduced,	and bearing in mind also	the

lack of evidence concerning the xperimental procedures

adopted, or their appropriateness to achieve an objective

assessment in accordance with accepted experimental criteria,

and the other features of the evidence to which I have already

alluded, Iam clearly satisfied that he applicant did

establish a prima facie case that the claim of proof by	tests,
which was made in	the advertisement, was misleading.

For these reasons, I granted certain interlocutory

relief at the conclusion of the hearing, and I now make further interlocutory orders which were then also sought. In the particular circumstances, and having regard to the general rule referred to in Halsbury 4th ed. vol. 24 para. 1085, I order

that the applicant's costs of the application for interlocutory

relief be its costs in the principal application.

I	certify that this and the
preceding	sixteen (16) pages
are a true copy	of the reasons

f o r judgment herein of his

Honour Mr. Justice Burchett.
Associate

Date: 2 November, 1988.

Counsel for the applicant: Mr. R.B.S. Macfarlan, QC
Mr. D.M. Yates

Solicitors for the applicant:	Mallesons Stephen Jaques
Counsel for the respondent:	Mr. P.M. Biscoe
Solicitors for the respondent:	Anisimoff Davenport
Date of hearing:	28 October 1988