Essential Media Communications Pty Ltd v Emc2 & Partners
[2002] VSC 554
•10 December 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7959 of 2002
| ESSENTIAL MEDIA COMMUNICATIONS PTY LTD | Plaintiff |
| v | |
| EMC2 & PARTNERS AND EDWARD MCDONNELL | Defendants |
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JUDGE: | WILLIAMS J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 19, 20, 21 November 2002 | |
DATE OF JUDGMENT: | 10 December 2002 | |
CASE MAY BE CITED AS: | Essential Media Communications Pty Ltd v EMC2 & Partners | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 554 | |
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TRADE AND COMMERCE – Misleading or deceptive conduct – Passing off – Whether use of acronym constituted misleading or deceptive conduct – S. 9 Fair Trading Act 1999 (Vic) – Interlocutory injunction – Balance of convenience.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M. Bevan-John | Russell Kennedy |
| For the Defendants | Mr J. Williams | O'Neill Behan & Associates |
HER HONOUR:
By a writ filed on 30 October 2002 the plaintiff claimed interlocutory and permanent injunctions restraining each of the defendants from using the names "EMC" or "EMC2" or "EMC2+partners" in connection with their business as a provider of public relations and media communications advisory services. The Indorsement of Claim on the writ alleged misleading and deceptive conduct and the making of false representations by the defendants, in breach of ss 11 and 12 of the Fair Trading Act1985 (Vic) and passing off. The plaintiff also claimed damages and other relief under the Fair Trading Act. (I note that counsel for the plaintiff indicated that the Indorsement of Claim would be replaced by an amended document referring to the relevant provisions of the Fair Trading Act 1999 (Vic)).
By a summons also dated 30 October 2002 the plaintiff sought an interim or interlocutory injunction restraining each of the defendants from using the name "EMC" or "EMC2" in connection with its business in Victoria.
The plaintiff alleged that, since 1996, it had become known by the name "EMC" ("the acronym"), and, since 1998, by a logo used in its stationery and advertising material containing the acronym ("the logo"). It further alleged that the defendants had refused its demand to stop using the names "EMC2" and "EMC2+partners" in connection with their business, thereby having engaged in, and continuing to engage in, conduct which was, and is, misleading or deceptive or likely to mislead or deceive or having passed off their business as that of or one associated with that of the plaintiff.
The second defendant had registered the first defendant's name at Melbourne under the Business Names Act 1962 (Vic) on 9 October 2002. The business name "EMC Essential Media Communications" was registered by the plaintiff on 10 October 2002, the following day.
Grant of an Interlocutory Injunction
The Court has power to grant an interlocutory injunction if it is just and convenient to do so under s 37(1) of the Supreme Court Act 1986 (Vic). Injunctions are to be granted in accordance with equitable principles. The issues are as to whether:
(a)there is a serious question to be tried; and
(b)the balance of convenience favours the granting of interlocutory relief.[1]
[1]See: American Cyanamid Co v Ethicon Ltd [1975] AC 396 per Diplock, LJ at 407; Nicholas John Holdings v ANZ Banking Group [1992] 2 VR 715 at 722-3.
Is there a Serious Question to be Tried?
Section 9(1) of the Fair Trading Act 1999 (Vic) provides as follows:
9. Misleading or deceptive conduct
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The parties proceeded on the basis that the relevant applicable principles in relation to misleading or deceptive conduct were to be found in authorities dealing with the equivalent provision in s 52 of the Trade Practices Act 1974 (Cth).
In S & I Publishing Pty Ltd v Australian Surf Lifesaver Pty Ltd[2] the Full Federal Court considered an application for an injunction restraining the respondent from selling or distributing in Australia a publication using a title reproduced in a particular manner claimed to misrepresent the publication to be a magazine owned by the appellant. In a joint judgment the members of a Full Court of the Federal Court, Hill, RD Nicholson and Emmett JJ, summarised the relevant principles where conduct claimed to be misleading or deceptive involves what is said to be a misrepresentation, restating principles summarised in Equity Access Pty Limited v Westpac Banking Corporation[3]:
[2][1998] 1463 FCA (20 November 1998).
[3](1990) ATPR p 40-994 at 50, 950-51.
"1.There will be no contravention of s 52 unless the error or misconception which occurs results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199-200 per Gibbs CJ and at 209-211 per Mason J; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 91; Tobacco Institute of Australia v Australian Federation of Consumer Organisations (1993) ATPR P41-199 and cf Argy v Blunts & Lane Cove Real Estate Pty Limited (1990) 26 FCR 112 at 132.
2.Conduct will be misleading and deceptive if it leads into error: Parkdale at 198.
3.Conduct will be likely to mislead or deceive if there is a 'real or not remote chance or possibility' of misleading or deceiving regardless of whether it is less or more than 50 per cent: Global Sportsman at 87.
4.Conduct causing confusion or uncertainty in the sense that members of the public might have cause to wonder whether the two products or services might have come from the same source is not necessarily misleading and deceptive conduct: Parkdale at 200; Bridge Stockbrokers Ltd v Bridges (1984) 57 ALR 401 at 413 per Lockhart J; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.
5.In a case such as [S & I Publishing] an applicant must establish that it has acquired the relevant reputation in the name or get-up such that the name or get-up has become distinctive of the applicant's business or products: Sheraton Corporation of America v Sheraton Motels Ltd [1964] RPC 202; BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 12 ALR 363.
6.Conduct may be misleading or deceptive or likely to mislead or deceive notwithstanding that the corporation said to engage in that conduct acted honestly and reasonably and did not intend to mislead or deceive: Parkdale at 197 per Gibbs CJ; Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 223 per Stephen J; Global Sportsman at 88 …
7.In many cases it will be necessary to consider the class of persons to whom the representation was directed: Parkdale at 199 and Taco Bell at 202 …
…
9.The test of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective one for the Court to determine. It is ultimately a question of fact."
It was in issue between the parties as to whether the conduct of each of the defendants was misleading or deceptive, in that it led or was likely to lead the class of persons comprising existing or prospective clients of the plaintiff to the erroneous conclusion that the defendants' business was that of or associated with that of the plaintiff.
As the plaintiff sought to enjoin the defendants from using the acronym in Victoria, it was required to establish that it had acquired a relevant reputation in the name in that particular geographical area.[4] In order to establish that it had acquired a relevant reputation it was necessary for the plaintiff to establish that, at the time at which the defendants were alleged to have engaged in misleading or deceptive conduct, there was a “sufficiently substantial”, being a “commercially relevant”, number of persons aware of its use of the acronym to identify its business.[5]
[4]Applied Business Technology v Grandmaster Computers Pty Ltd (1999) 161 ALR 31 at 34 per Katz J
[5]ibid at 35
Had the Plaintiff acquired a relevant reputation in the acronym in Victoria?
By para 3 of the Indorsement of Claim the plaintiff alleged that it had become known by the acronym from 1996 and, from 1998, by the acronym in association with the logo.
The affidavits of its directors, Mark John Civitella and James Anthony Douglas, a public relations consultant, Sheila O'Sullivan, and a communication consultant and broadcaster, Terence John Laidler, were relied upon as evidence supporting the plaintiff's claims to have been known by the acronym.
The defendants gave notice of cross-examination to Mr Douglas, Mr Civitella, Ms O'Sullivan and Mr Laidler, but only called Mr Civitella to be cross-examined.
Mr Civitella’s evidence was that the plaintiff's full name quickly became contracted to the acronym by staff, clients and the public, after it had commenced business in 1996. He said that the acronym appeared in signage on the front door of the plaintiff's premises and that the logo had been in use from in or about 1998 in association with the plaintiff's business.
The defendants filed affidavits of the second defendant and Maurice Dunlevy, a journalist, in relation to the plaintiff's claims to be known by the acronym. Mr McDonnell, a journalist for 14 years and an editor with The Age, The Australian, The Daily Telegraph and The Australian Jewish News, alleged that, before receiving a letter demanding that the defendants cease using the acronym in association with their business, he had never heard of the plaintiff company in the course of the eight years during which he had been a "leading media adviser". Mr Dunlevy had been involved in the media for 30 years: he had worked as a senior journalist, a personal secretary to a State Premier and for the Federal Government's media unit. For the previous eight years he had been employed by the Melbourne Bureau of The Australian as a senior journalist. He said that he had always known of the plaintiff as "Essential Media Communications" or "Essential Media", but never as "EMC".
Mr Civitella exhibited Hansard extracts relating to the Victorian State Parliament in which the plaintiff was referred to by the acronym. He also exhibited an article from The Age newspaper in which it was described as "EMC". Mr McDonnell and Mr Dunlevy however each purported to explain the references to the plaintiff by the acronym by reference to newspaper style guides indicating that a long full name should be abbreviated upon repetition.
Mr Laidler stated that he regarded the names "Essential Media Communications Pty Ltd" and "EMC" as interchangeable. He said that he had engaged the plaintiff and, in particular, Mr Douglas and Mr Civitella, to provide weekly comment in relation to media and public affairs in the period from 1998 to 2000 in a segment of his 774 3LO ABC radio "drive time" program entitled "The Spin Doctors". He asserted that the segment had "achieved very high recognition". Mr Laidler stated that he had always introduced each of Mr Douglas and Mr Civitella to his audience as representing "EMC" or "Essential Media Communications Pty Ltd". He regarded "EMC" and "Essential Media Communications Pty Ltd" as having an extremely high profile in the public relations industry and a very good reputation.
The affidavit of Ms O'Sulllivan, a public relations consultant and a Fellow of the Public Relations Institute of Australia, referred to her own knowledge of the plaintiff in the public relations industry both under its full name and as "EMC" for more than six years. Ms O'Sullivan expressed the opinion that the plaintiff had "a very high recognition in the industry through work in the union and Government sectors and through industry representation", servicing those sectors using the acronym.
Mr Hellier deposed to having known the plaintiff by both its full name and the acronym since its establishment in 1996. He alleged that he was also familiar with its use of the logo in the market place.
The acronym appeared frequently on the printed stationery and advertising materials exhibited to the Civitella affidavits, as well as in exhibited print-outs of the plaintiff's web site.
The defendants relied upon affidavits of Nelson Yap, an internet web site designer, who deposed to having conducted internet searches for the plaintiff, using the acronym and the plaintiff's full name, without success. He also described the plaintiff's staff using its full name when answering the telephone.
Mr Civitella responded to Mr Yap's affidavit by a further affidavit of 21 November 2002, deposing as to the results of internet searches which he had conducted in relation to the acronym and the words: "essential media communications". Relevant print-outs of the results of his searches were exhibited to his affidavit. There was thus conflict in the evidence as to the extent to which the plaintiff is traceable by the acronym or under its full name through searches of the internet.
The defendants further contested the plaintiff's alleged acquisition of a reputation in the acronym by relying upon the second defendant's affidavits referring to searches of telephone directories and an internet register of trade marks which had failed to refer to the plaintiff in connection with the use of the acronym.
I have taken into account all the evidence and have noted the absence of any direct challenge to the affidavit material of those deponents not cross-examined by the defendants. I am satisfied that the plaintiff has a real prospect of establishing at trial that, by the date upon which the defendants had begun to use the name "emc2" or "emc2+partners" in the manner complained of, the plaintiff had acquired a relevant reputation in the acronym and by use of the logo and that each had become distinctive of the plaintiff's business in Victoria, the geographical area sought to be covered by the injunction.
The class of persons to whom the representation was directed
In relation to the class of persons to whom the alleged misrepresentation was said to be directed, counsel for the defendants submitted that the target audiences of the plaintiff and the defendants were different. He argued that the plaintiff dealt in government media work whilst the defendants engaged in private corporate work.
The plaintiff's advertising materials in evidence listed clients which it submitted were from both the government and the private sectors. The plaintiff relied upon a promotional advertising brochure which stated:
"EMC consultants have experience in the following fields:
· trade unions
· utilities
· petrochemical industry
· pharmaceuticals
· retail
· youth
· welfare/human services
· building/construction industry
· investor relations
· financial institutions
· insurance
· superannuation
· media outlets
· brand promotion
· development of corporate images for legal and accounting firms."
The first defendant's promotional advertising material described it as having counselled many of "Australia's Market leaders" and refers to Australand & Citta Property Group, AV Jennings, Mirvac, Becton, Stockland, The Australian Ballet, Michael Andrew & Buxton, Hudson Conway, Lend Lease, Plenty River Corporation, Gandel Retail Trust, The Como Hotel Melbourne, Lion Equities, The Sebel Hotel St Kilda, Australian Unity and Baron Corporation. It can be seen that the first defendant's material would appear to refer to corporations or firms possibly involved in areas described in the plaintiff's material such as: "building/construction industry", "retail" and "insurance". In my view, the evidence discloses that the plaintiff has a real prospect of establishing at trial that there is overlap between its client base and that of the first defendant.
Misleading or deceptive conduct
The plaintiff submitted that the defendants' use of the acronym together with the number "2" and, or, the words and symbols "& partners" or "+partners" was misleading or deceptive or likely to mislead or deceive by leading persons in their capacity as consumers of goods and services into the error of regarding the defendants' business as being that of or associated with that of the plaintiff. The plaintiff relied upon the similarity between the logo and the presentation of the first defendant's name in its advertising and stationery. It pointed out the defendants' use of the letters "emc" in lower case and a particular font which it submitted mirrored those of the plaintiff's depiction of the acronym in the logo.
Although the Court must decide whether the defendants' conduct was misleading or deceptive or likely to mislead or deceive, evidence from persons in the class to which a representation is directed is admissible and may be persuasive in the determination of the question whether the conduct was indeed misleading or deceptive or likely to mislead or deceive.[6] The plaintiff relied in this regard upon the affidavit of Mr Hellier who might be regarded as falling within such a class, being a participant in the public relations industry, as a communications and design company proprietor. Mr Hellier deposed to having come upon the web site of the first defendant by chance and to having been confused as to whether or not he had found the plaintiff's web site. Although the defendants relied upon what they described as the sophistication of the potential clients and existing clients of each of the parties, I take into account the confusion caused to Mr Hellier who might be regarded as relatively well equipped to deal with potential confusion.
[6]See S & I Publishing at p12.
The apparent similarity between the logo and the style or manner in which the first defendant's name was represented in its advertising material and on its own stationery, and the use of the number "2" and the additional words "+partners" indicate, in my view, that the plaintiff has a real prospect of establishing at trial that the defendants' conduct in its use of the acronym constitutes misleading or deceptive or likely to mislead or deceive members of the plaintiff‘s target class of members of the public in their capacity as consumers of its services, being existing or prospective clients, by leading them to the erroneous conclusion that the defendants' business was that of or associated with that of the plaintiff.
Having taken into account all the evidence, I am satisfied that the plaintiff has a real prospect of establishing at trial that the defendants by their use of the acronym have engaged in conduct which is misleading or deceptive or likely to mislead or deceive in contravention of s 9 of the Fair Trading Act 1999 (Vic).
Passing off
In its Indorsement of Claim, the plaintiff further alleged that the defendants had passed off or were continuing to pass off their business as that of or one associated with that of the plaintiff.
In The Cricketer Ltd v Newspress Pty Ltd and David Syme & Co Ltd[7], Kaye, J stated the essential elements in a passing off action, quoting Menhennet, J in Australian Marketing Development Pty Ltd v Australian Interstate Marketing Pty Ltd,:[8]
"first, that the plaintiff has a business;
secondly, that it has a reputation in a name or use of a name in the sense that the particular name is distinctive of the plaintiff; and
thirdly, that there is a real probability that the plaintiff's clients or prospective clients will be deceived by believing that the defendant's goods are the plaintiff's, causing him damage."
[7][1974] VR 477 at 478.
[8][1972] VR 219 at 221.
The evidence relating to the establishment of the reputation of the plaintiff in relation to the acronym and the likelihood of its existing or prospective clients being misled or deceived by being led to erroneous conclusion that its business was that of or associated with that of the plaintiff has been canvassed above.
It is sufficient that the defendants' practice was likely to mislead and involved an appreciable risk of detriment to the plaintiff, whether in diversion of sales or impairment of credit or commercial repute, without the necessity of proof of actual resulting damage.[9]
[9]See The Cricketer Ltd at 481.
There was no evidence as to any actual loss or damage sustained by the plaintiff as a result of the defendants' conduct. However the evidence of Mr Civitella was to the effect that the plaintiff would not necessarily be aware of possible loss resulting from its clients or prospective clients being misled or deceived. Under cross-examination he said that he would not necessarily know the identity of a successful competitive tenderer in relation to any particular job.
Counsel for the plaintiff submitted that it might also sustain loss if an existing or prospective client were to consider that the first defendant had clients with which it would not want to be associated. Counsel for the plaintiff referred, by way of example, to the possibly conflicting objectives of the plaintiff's clients, listed in its advertising brochure, connected with the environmental movement and the first defendant's listed property developer clients.
I am satisfied that the plaintiff has a reasonable prospect of establishing the appreciable risk of detriment required in relation to its passing off claim.
Accordingly, I am satisfied that the plaintiff has a real prospect of success in relation to its claim of passing off against the defendants.
The Balance of Convenience
The defendants urged the Court to refuse the plaintiff's application for an interlocutory injunction. Counsel for the defendant relied upon passages from the decision of McLelland, J in Kolback Securities Ltd v Epoch Mining NL[10] where His Honour said:
"Where a plaintiff's entitlement to ultimate relief is uncertain, the Court in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled."
[10](1987) 8 NSWLR 533 at 535.
Counsel submitted that, in this case, the grant of the injunction amounted to final relief by causing the first defendant's business to be shut down. He submitted that this case was one in which the Court should evaluate the strength of the plaintiff's case for final relief for the purpose of seeing where the balance of convenience lay. He relied upon what McLelland, J said in Kolback Securities at 536:
"Apart from this, although normally the Court 'does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case' (Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622), there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically 'the balance of the risk of doing an injustice' – see per May, LJ in Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237, cf per Brennan, J in Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 ALJR 288 at 292; 46 ALR 279 at 285), it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief; see, eg. Brayson Motors Pty Ltd v Federal Commissioner of Taxation at 292; 285; Castlemaine-Tooheys Ltd v South Australia at 682; 559. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue, see, eg, NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-1307; [1979] 3 All ER 614 at 625-626 per Lord Diplock; Cayne v Global Natural Resources plc."
The defendants submitted that the damage to their business as a result of the grant of an interlocutory injunction would be irreparable.
The background facts were set out in the 4 November 2002 affidavit of the defendant, Mr McDonnell. He referred to the first defendant's registration for GST in August 2002 and the registration of the name "EMC2 & PARTNERS" under the Victorian Business Names Act 1962 on 9 October 2002. Mr McDonnell deposed to having previously traded as "Corporate Pacific". It was not clear for how long he had used the name "Corporate Pacific" but he stated that he had "operated as a leading media adviser to various leading corporations" for the previous eight years. As at 4 November 2002, Mr McDonnell deposed that "the majority of [his] work [came] from referrals from satisfied clients".
In his 21 November 2002 affidavit, Mr McDonnell deposed to having advised two existing clients of Corporate Pacific's change of name to "emc2+partners". Exhibited were two letters, dated 2 August 2002 and 5 August 2002 respectively; each was written on stationery headed: "Corporate Pacific PR", and advised the client to continue using the former Corporate Pacific e-mail address, until the proposed registration of the emc2 web site occurred at the beginning of September 2002. Mr McDonnell also referred to two proposals to prospective clients which involved use of the name of the first defendant and were dated 12 August 2002 and 18 August 2002, respectively. He referred to banner advertisements in the name of the first defendant which had run on the “crikey.com.au” web site from 9 September 2002 to 9 October 2002, at a total cost of $285.00, and he described the commencement of operation of the first defendant's web site on 5 September 2002.
Although the injunction sought would obviously prevent him from using the first defendant’s name, I am not satisfied that second defendant would otherwise be stopped from carrying on his business. There was only evidence of the notification of a couple of Corporate Pacific’s existing clients of the change of name and Mr McDonnell deposed to the bulk of his work being produced by the referrals from satisfied clients.
Counsel for the plaintiff urged the Court to take the view that the first defendant had not had time to establish a reputation independent of that of Corporate Pacific. He pointed out that all but one of the first defendant's clients listed in its advertising material were clients of the second defendant trading as Corporate Pacific.
The defendants' material indicated that Mr Yap had created stationery, advertising material and a web site for the first defendant, using what he described as "the same concept, design, colours and font" employed for the Corporate Pacific advertisements and stationery which he had previously designed in about March 2002. The redesign took place in about July 2002 and the web site had been loaded onto the internet in or about September 2002.
The only evidence about the first defendant publicising its change of name was that relating to the two existing Corporate Pacific clients and the proposals to the two new clients. The defendants had only been using the first defendant’s name in connection with their business for some months. They had, accordingly, had only a relatively limited time in which to build up goodwill under that name which might be irreparably damaged by the operation of the injunctions sought by the plaintiff. Any moneys thrown away associated with the change of name would be adequately compensated by an award of damages in the event that the defendants were to succeed at trial.
The defendants submitted that the plaintiff had failed to establish any damage arising from the alleged misleading or deceptive conduct of the defendants in the weeks following 8 October 2002 when the plaintiff first became aware of the operation of the first defendant's business.
However the plaintiff adduced evidence of goodwill in the acronym and associated with the logo built up since in or about 1996. I am satisfied that, during the interval before trial, the plaintiff might sustain significant damage to that goodwill which would be irreparable because it could not be compensated by an award of damages by reason of the difficulty involved in identifying loss resulting from any misleading and deceptive conduct found to have been engaged in by the defendants.
In all the circumstances, taking into account the significant potential harm to the plaintiff as a result of permitting the defendants to continue using the acronym in the period leading up to the trial, as well as my evaluation of the strength of the plaintiff’s case, I take the view that the balance of convenience favours the grant of the interlocutory injunctions sought against each of the defendants. (I am not dissuaded from this conclusion by counsel for the defendants' submission to the effect that the existing law does not warrant protection being granted to what he described as a secondary form of description, rather than the principal name of the plaintiff).
I will grant the relief sought upon the plaintiff giving the usual undertaking as to damages.
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