John Engelander & Company Pty Ltd v Ideal Toy Corporation

[1981] FCA 75

Re: JOHN ENGELANDER & CO. PTY. LIMITED
And: IDEAL TOY CORPORATION and IDEAL LEISURE PTY. LIMITED
Re: POLITECHNIKA IPARI SZOEVETKEZET IDEAL TOY CORPORATION and IDEAL LEISURE
PTY. LTD.
And: JOHN ENGELANDER AND CO. PTY. LTD. BIAM NOMINEES PTY. LTD., MICHAEL JOHN
WILTON and LORIS JEAN WILTON (1981) 54 FLR 227
Nos. VG 63 & 68 of 1981
Cross Applications for Interlocutory Injunctions - Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA REGISTRY
GENERAL DIVISION
Fox J.(1)

CATCHWORDS

Cross Applications for Interlocutory Injunctions - Misleading Conduct - Passing Off - Sale of Similar Puzzles by Two Traders - Descriptive Trade Name - Distinctive Get Up - Distinctive Display of Trade Name - Injunction to Protect - Advertised Claim by One Trader of Sole Right to Use Name - Threats to Customers of Other Trader - Injunction to Prevent Repetition of Claim and Threats.

Secns 52(1) and 80, Trade Practices Act 1974

Trade Practices - Misleading and deceptive conduct - Passing off - Sale of similar puzzles by two traders - Descriptive trade name - Distinctive get-up - Distinctive display of trade name - Injunction - Advertised claim by one trader of sole right to use name - Threats to customers of other trader - Injunction to prevent repetition of claims - Trade Practices Act 1974 (Cth), ss. 52 (1), 80.

HEADNOTE

The applicants and the respondents who were the applicants in proceedings heard together each imported and marketed in Australia a puzzle known as Rubik's Cube. The respondent Ideal Toy Corporation and a subsidiary sold the puzzle under the name of "Rubik's Cube", the name being printed in a distinctive style; while the applicant John Engelander & Co. Pty. Ltd. sold the puzzle under the name of "Wonderful Puzzler", and used a similar get-up. Following complaints by the other applicant, this get-up was subsequently altered, and the name changed to "Fantasy Block".

A booklet containing a solution to the puzzle was published separately, but was generally displayed for sale in close proximity to the puzzles. The front cover showed a picture of the puzzle, including the distinctive "Rubik's Cube" logo of one respondent.

The respondents marketing the "Rubik's Cube" had by advertisements in trade journals and newspapers, and by letters from their patent-attorneys, asserted an exclusive right to use the name "Rubik's Cube"; and had pressed excessive claims to rights in relation to marketing the puzzle in Australia.

Held: (1) The name "Rubik's Cube" was a descriptive name by which the puzzle had become well known, and the respondents could not gain an exclusive right to the name by advertising it in association with their own name or particular mark. The fact that the name had become associated with the applicants did not enable them to maintain a passing off action, nor to claim that the use of the name by others was misleading or deceptive conduct.

Burberrys v. J. C. Cording & Co. Ltd. (1909), 26 RPC 693; Office Cleaning Services Ltd. v. Westminster Office Cleaning Association Ltd. (1946), 63 RPC 39, applied.
(2) The parties were entitled to protect the mark or get-up which distinguished the puzzles which each sold; and by altering the name and get-up of the "Wonderful Puzzler", the applicant had fulfilled its obligation of marketing its puzzle so as not to deceive or confuse.
(3) To reduce the possibility of confusion the respondents marketing the "Rubik's Cube" were entitled to an injunction to restrain the presentation of the solution booklet in close conjunction with the "Fantasy Block".
(4) The respondents marketing the "Rubik's Cube" would be enjoined from conducting themselves so as to lead purchasers to believe that they had an exclusive right to manufacture or sell the puzzle in Australia, or an exclusive right in Australia to the name "Rubik's Cube".

HEARING

Melbourne, 1981, April 27-28, 30; May 12. #DATE 12:5:1981

APPLICATIONS FOR INTERLOCUTORY INJUNCTIONS.

The facts appear in the judgment.

S. M. Crennan, for the applicants in proceedings V.G. 63 of 1981 and the respondents in proceedings V.G. 68 of 1981.

J. McL. Emmerson, for the applicants in proceedings V.G. 68 of 1981 and the respondents in proceedings V.G. 63 of 1981.

Cur. adv. vult.

Solicitors for the applicants: Jennifer Eastick & Associates.

Solicitors for the respondents: Mallesons.

R. R. BOADEN

ORDER

1) The injunction granted on 30 April 1981 in action No. VG68 of 1981 be dissolved.

2) In action No. VG68 of 1981 upon counsel for the applicants giving the usual undertaking as to damages -
a) John Engelander & Co. Proprietary Limited by itself its servants and agents be restrained until the hearing of the action or further order from selling or offering for sale in Australia a Rubik's Cube puzzle under whatever name, not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty Ltd in a get-up the same or deceptively similar to that at present used by those parties for the sale of the same puzzle or in response to an order in Australia for the puzzle supplied by those parties or either of them under that name.

b) Biam Nominees Pty Ltd., Michael John Wilton and Loris Jean Wilton by themselves their respective servants and agents be restrained until the hearing of the action or further order from selling or offering for sale a Rubik's Cube puzzle under whatever name not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty Ltd in a get-up the same or deceptively similar to that at present used by those parties for the sale of the same puzzle or in response to an order for the puzzle supplied by those parties or either of them under that name and that they be further restrained by themselves their respective servants and agents until the hearing of the action or further order from displaying for sale a Rubik's Cube puzzle under whatever name not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty. Ltd. in close conjunction with a copy of the book by Doctor D. Taylor entitled "Mastering Rubik's Cube" so long as the same depicts on its front cover the words "Rubik's Cube" in the distinctive print and style used by those two parties as part of the get-up of their puzzle, or in close conjunction with any other material displaying prominently the said words in the said distinctive style and print.

3) In action No. VG63 of 1981 upon counsel for the applicant giving the usual undertaking as to damages the respondents by themselves their respective servants and agents be restrained until the hearing of the action or further order from so conducting themselves as to lead purchasers to believe that they or either of them has an exclusive right to manufacture or sell in Australia the Rubik's Cube puzzle or an exclusive right to use in Australia in connection with that puzzle the name Rubik's Cube, provided that this injunction does not extend to preventing them maintaining or developing a reputation for the presentation of those words in a distinctive form or style in connection with the sale of the said puzzle.

4) Ideal Toy Corporation and Ideal Leisure Pty Limited pay one third of the costs of the other parties in both interlocutory applications.

5) The parties to have liberty to apply in relation to the form of the injunctions and generally.

6) The directions hearings be stood over to a time, date and place to be fixed by the Registrar.

JUDGE1

I am hearing cross-applications for interlocutory injunctions. They arise in different actions, but by agreement the applications have been heard together, the evidence in one being evidence in the other.

The applications relate to a fascinating and tantalizing manually operated puzzle commonly known as the "Rubik's Cube". It is named after its inventor, a Professor Erno Rubik of the School for Commercial Artists in Budapest, Hungary. I take a description of it from a booklet intended as an aid to solution of the puzzle written by Dr Don Taylor, who was, at the time of publication, in 1980, senior lecturer in pure mathematics at the University of Sydney:
"It looks like a solid block of twenty-seven small cubes ingeniously linked so that each layer of nine cubes can be rotated about its centre without the whole thing falling apart. Of course the internal construction is a little more complicated than just a simple block of twenty-seven cubes. The six centre pieces are attached to the middle by spring-loaded spindles, and the eight corner pieces and twelve edge pieces have plastic flanges which allow the layers to turn but at the same time prevent them from coming apart. "The visible faces of the small cubes are coloured squares and the cube comes packaged with the nine squares on each of the six large faces all the same colour. By turning the layers the patterns formed by these colours can be changed. The object of the puzzle is to find out how to manipulate the cube so that a confused pattern can be restored to the starting pattern."

The principles of operation were devised by Professor Rubik in about 1975, and an application for a patent respecting it was made in his name in Hungary in that year. Within a year or two the puzzle was developed and it soon acquired a world market, becoming popular in Europe, Northern America and elsewhere.

In the course of 1980, steps were being taken independently by two traders to introduce them on a large scale into Australia. One was the Ideal Toy Corporation of the USA (Ideal Toy), which was going to have them manufactured in Hong Kong and marketed in Australia by its wholly-owned subsidiary Ideal Leisure Pty Ltd (Ideal Leisure) a company incorporated in Victoria. The other was John Engelander & Co. Proprietary Limited (Engelander), also a company incorporated in Victoria, which was seeking to obtain supplies of Taiwanese manufacture from a company, Three Knights International Co. Ltd., which was incorporated there. Engelander started firm inquiries from the manufacturers in March 1980 and among potential customers in July 1980. Ideal Toy applied for the trade mark in Australia of "Rubik's Cube" in Class No. 28 in respect of "puzzles and all other goods in this class" on 13 May 1980. This application is still pending. Ideal Leisure first sold puzzles in Australia in September 1980, and between then and the end of December sold 41,800 of them. It ran out of stock in mid-December and did not resume sales until late February of early March 1981. The evidence is that by 16 April it would have sold and delivered a further 46,000, and it is estimated by Mr Hutchens, a director of Ideal Leisure, that about 250,000 will be sold in Australia this year. They at present retail at about $10 or $11 each. Although Engelander made attempts to secure supplies in mid-1980, there were manufacturing difficulties in Taiwan and it did not distribute its puzzles in Australia until late January or early February 1981. During January, February and March it sold 20,000 and it has recently obtained 10,000 of a further order of 50,000.

Before putting its puzzle on the market, Ideal Toy and Ideal Leisure engaged in a substantial advertising campaign for the article "Rubik's Cube". However, much of the literature appearing at about that time referred to the cube and its fascinations without reference to Ideal Leisure, or Ideal Toy, or any mark of either of them, or, for that matter, to there being only one source. The puzzle, and its history, plainly had news value. Some prominence was given to Dr Taylor and his book.

Ideal Leisure sold its puzzle in a plastic container, with the cube clearly visible inside, and the name "Rubik's Cube" prominent in gold print against a black background on a band around the container. The first 30,000 sold did not have any trade mark on the cube itself, but thereafter there was an imprint on one of the small surfaces depicting "Rubik's Cube" in a special style of print.

The first 1,000 sold by Engelander were sold under the name "Wonderful Puzzler", which was a trade mark registered in Taiwan and used by the Taiwan suppliers for the cube and other puzzles. These were also sold in a plastic container, similar to that used by Ideal Leisure, but the name was in bold print in black on a gold background on a strip around the container. It was not until November 1980 that Mrs Engelander, a principal deponent for Engelander, became aware of the name Rubik's Cube. Warnings were issued by Ideal Toy by newspaper advertisement and in a trade journal in November and December 1980, in which it asserted its rights to Rubik's Cube and its intention to "vigorously enforce such rights". I shall return to examine these notices. When the Wonderful Puzzler was on the market, letters were sent by Ideal Toy's patent attorneys warning Engelander and several retail stores buying from it of the former's rights and making a number of demands in relation thereto. These led to apologies and undertakings being given by the addressees, and I shall refer more fully to these later. It is sufficient for present purposes to say that Engelander changed the label and get-up of its Wonderful Puzzler and thereafter sold the puzzle under the name "Fantasy Block", with a different get-up. Further threatening letters were then received by its customers from the patent attorneys.

The first application to this Court (VG 63 of 1980) was made by Engelander, and Ideal Toy and Ideal Leisure are the respondents thereto. A few days later proceedings (VG 68 of 1981) were commenced by three companies, Politechnika Ipari Szoevetkezet and the two Ideal companies against Engelander, Biam Nominees Pty. Ltd., which conducts a retail store under the business name "Let's Play Games", and against Michael John Wilton and Doris Jean Wilton, who are the proprietors of a retail store called "Bernard's Magic Shop". The statement of claim and application in VG 68 of 1981 assert that the firstnamed applicant is a corporation under the laws of Hungary. There is evidence that it filed a patent application in Australia on 15 May 1980 entitled "Toy", but the application has not been published. Counsel in that action announced when the hearing commenced that on the present application for interlocutory relief he did not appear for that party. I raised at that time the question whether he could appear for some only of the applicants, but allowed the matter to proceed while counsel considered the position. The corporation concerned is named as an applicant in both the statement of claim, and in the application, which were filed on the same day. It is also named as an applicant for interlocutory relief. Williams Supreme Court Practice (2nd Edn., para. 16.1.5) says: "An application in the course of a pending action cannot be made by one or some only of several plaintiffs independently of the others". This proposition is supported by the authorities cited and is of general application. I had intended to deal with the situation now, probably by ordering that the applicant in question be struck out as an applicant and made a respondent. However, the position altered in the course of final submissions, when counsel announced that he now had instructions from the Hungarian company, and appeared for it. As there was no opposition to this course, I allowed the belated appearance, but on the basis that the case was to proceed and be decided on the evidence and submissions which had already been made, without addition or qualification. Counsel for Engelander appears as well for the other respondents in action No. VG68 of 1981.

Ideal Toy and Ideal Leisure seek relief based on secns. 52, 53 and 55 of the Trade Practices Act, 1974, in conjunction with s.80 of the Act, and on equitable remedies for passing off. The principal application contains a claim for infringement of copyright but this was not pursued in the present case. This claim, as particularised in the statement of claim, related to drawings illustrating the puzzle and its construction.

The core of the matter lies in the rights respecting trade in the puzzle itself, the use of the name "Rubik's Cube" in connection with it (in more than one style of print), the get-up in which the applicants sell the article, and the use of the mark "Ideal" within an oval shape.

It is plain that the applicants do not in this country have any monopoly rights in respect of the puzzle itself, in terms of its operation or appearance. They do not assert rights under a patent or registered design. The article is well known in a large part of the world. In days of substantial immigration and ready communication by all media this alone would mean that some people in Australia, in the trade or as members of the general public, would also have knowledge of the cube. Over the past 6 months it has become quite well known in Australia. It is manufactured by different manufacturers in at least two countries, and quite possibly by a number of others besides.

Although for the purposes of interlocutory relief it is only necessary to see whether the applicants have a sufficiently arguable case, the problem of balance of convenience is in this case a marginal one, and it is more helpful if I express myself where possible in more final terms, although, of course, only on the evidence so far adduced.

It is clear, in my view, that the applicants in action No. VG 68 of 1981 do not have a right to prevent others using the name "Rubik's Cube". This is a descriptive name which embraces the name of the inventor of the puzzle and its shape. The material tendered on both sides shows that considerable publicity has been given overseas, and more lately in Australia, to the name and occupation of the inventor, and the shape and nature of the invention. It has been described, in greater or less detail, in many publications, and is commonly referred to as Rubik's Cube or Rubik's cube; sometimes as the Magic Cube. The fact that the name has become associated with the applicants is plainly not enough to enable them to maintain a passing off action, or, for that matter, to maintain that its use by others is misleading or deceptive. In the judgment of Parker J in Burberrys v Cording (1909) 26 RPC 693 at 704 there appears a passage as follows, which is cited in Kerly's Law of Trade Marks and Trade Names, 10th Edn., para. 16-41:
"Where a word is prima facie the name of description of an article, evidence that it is also generally associated with the name of a particular maker is by no means conclusive that it has become a distinctive work which cannot be used of the same article when made by others without risk of deception."
(See also Kerly op.cit.16-51.)

The applicants have chosen to use the descriptive name for the purposes of sale. This they are entitled to do, but they cannot complain if others do the same (see Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39, 42). They do not gain an exclusive right to the name by advertising it, even if they associate with the advertisements their own name or a particular mark such as the circumscribed "Ideal" to which I have referred.

What they are entitled to protect is a mark or get-up which distinguishes the Rubik cube puzzles they sell; something distinctive on or in connection with the puzzle which by reason of a substantial reputation relates back to them.

From the point of view of the Trade Practices Act, they are entitled to be protected against conduct which is misleading or deceptive to purchasers (vide s.52) or representations which come under s.53(a) or (c) or against conduct within the meaning of s.55. From the point of view of passing off they are entitled to be protected against express or implied representations, intentional or otherwise, which suggest that their puzzles are the puzzles of others or which confuse unnecessarily or unduly the apparent or perceived origins.

The use by Engelander of the name Rubik's Cube, without more, does not amount to a passing off or to misleading or deceptive conduct or a breach of the other provisions of the Trade Practices Act referred to.

I shall go on to deal with matters more particularly related to the present application by Engelander but which go also to the question of the relief, if any, Ideal Toy and Ideal Leisure are entitled to. Engelander's application relies upon s.52(1) and paras. (a) and (c) of s.53, in conjunction with s.80.

The warning notices to which I have referred were based on what Mr Hutchens has said in evidence was "a concern of the second applicant overseas in relation to imitations of the 'Rubik's Cube' puzzle apparently becoming available in Taiwan and elsewhere in late 1980". They were inserted on behalf of Ideal Toy, in November and December 1980. So far as I can see, the notices were in common form, although the one in the trade journal was more widely spaced. They had at the top representations of two cubes, one of which was apparently intended to show the movement of the slices of the cube. At the foot was the "Ideal" logo to which I have referred. The text was as follows:
"WARNING NOTICE

The well known "RUBIK'S CUBE" puzzle is the subject of copyright and Common Law rights relating to that product. A valuable reputation has been established in respect of the "RUBIK'S CUBE" puzzle in Australian and Ideal Toy Corporation will do all that is necessary to protect that reputation through the legal processes available in this country.

In particular, Ideal Toy Corporation hereby gives notice of its intention to vigorously enforce such rights as it possesses in Australia against imitations of the "RUBIK'S CUBE" puzzle as may be offered on the Australian market.

Ideal Toy Corporation of 184-10 Jamaica Avenue, Hollis, New York, 11423, United States of America. Inserted on behalf of Ideal Toy Corporation by Phillips, Ormonde & Fitzpatrick, Patent Attorneys."

Mr Hutchens says that in about late January 1981 he became aware that "imitations of the Rubik's Cube puzzle were being offered for sale in Australia". These were seemingly those marketed by Engelander under the name "Wonderful Puzzler". Communication thereafter took place between the parent attorneys for Ideal Toy and Ideal Leisure, on the one hand, and the proprietor (Mr Hipkins) and his solicitors of a business called Mind Games, and the patent attorneys for Engelander on the other hand. A letter to Mr Hipkins dated 9 February 1981, which was lengthy and contained peremptory demands asserted, inter alia, that Ideal Toy was "the proprietor in Australia and elsewhere of the trade mark "Rubik's Cube". Ideal Toy did not have a registered trade mark. I cannot say whether the words quoted meant to Mr Hipkins that it had, but certainly that form of words, as with the free use of the initials "T.M." (meaning trade mark) could have such an effect on those not informed in trade mark law. As a result of the letter Mr Hipkins signed a document addressed to Ideal Toy and Ideal Leisure, and dated 17 March 1981, which was in the following terms:
"I, LEIGHTON JOHN HIPKINS of 591 Chapel Street, South Yarra, Victoria trading as Mind Games HEREBY UNDERTAKE to you that I will not hereafter directly or indirectly by myself, my officers, servants or agents or otherwise howsoever sell:

(a) The "Wonderful Puzzler" a sample of which was supplied with my business docket No. 34 dated 4/2/81 to the purchaser,

(b) any other cube puzzle in a deceptively similar get up or presentation to the "Rubik's Cube" manufactured and distributed by you;

(c) any other cube puzzle as a "Rubik's Cube";

(d) any other cube puzzle not a "Rubik's Cube" except by specifically drawing the customer's attention to the fact that it is not a Rubik's Cube.

I hereby deny any liability in respect of any claims you may have in respect of or arising out of previous sales by me of the "Wonderful Puzzler". "

Engelander executed a document on 3 March headed "Undertaking" which was as follows:
"We, JOHN ENGELANDER & CO. PTY LIMITED, a Victorian company of 390 Spencer Street, Melbourne, Victoria, Australia, hereby undertake that we shall not hereafter directly or indirectly by our officers, servants or agents or otherwise howsoever sell:

(a) the "Wonderful Puzzler"; or

(b) any other product deceptively similar in get up or presentation to the "Rubik's Cube" manufactured and distributed by Ideal Toy Corporation and Ideal Leisure Pty. Ltd."

Engelander also inserted "public notices" in three newspapers: The Weekend Australian of 7-8 March, The Age of 7 March, and the Daily Mirror (which, I believe, circulates in Sydney) of 10 March. They were prominently presented, and in the same terms as each other, but not the same as the document of 3 March to which I have just referred. I set out that in The Age newspaper:
" RUBIK'S CUBE

John Engelander & Co. Pty. Limited has recently imported and sold a product identified as "Wonderful Puzzler" similar in appearance and get-up to the well known "Rubik's Cube" manufactured by Ideal Toy Corporation and distributed in Australia by Ideal Leisure Pty. Limited.

At the time we were not aware of the similarity of the two articles and we regret and apologise for any deception, confusion or inconvenience resulting from the unintentional infringement of the rights of Ideal Toy Corporation and Ideal Leisure Pty. Limited."

The next stage was reached after Engelander changed the name of the article it sold to Fantasy Block, and sold it without individual plastic covers, or any cover at all, but for sale to consumers from a white cardboard box marked "Fantasy Block its Fantastic". At about the same time, it had a circular label attached to one of the small surfaces of each cube upon which was printed "Fantasy Block". (It is said that these sometimes came off before sale). The "Rubik's Cube" mark which Ideal Leisure after a time had put on its puzzle was also on a similar small surface but it was printed into the surface itself, and was not a superimposed label. The cubes themselves were closely similar. Their shape and size were the same, each had black margins and divisional lines, and the colours of the six faces were virtually identical, except that at least two colours, the red and the orange, on Ideal Leisure's puzzle were brighter than on the other. As a general observation, I would think that most customers would regard Ideal Leisure's product as slightly more attractive in appearance and get up than the Fantasy Block, and may think that the former also works a trifle more easily. In short, they may see it as a slightly superior product.

Letters were sent by the patent attorneys for Ideal Toy and Ideal Leisure to customers of Engelander. They were, I believe, in the same or similar terms. One, dated 20 March, was sent to MSD Pty. Ltd. of Melbourne. Another, of the same date, was sent to Bernard's Magic Shop whose proprietors are parties to these proceedings. It was as follows:
"Ref: (RNC:WD) RUBIK'S CUBE

Dear Sirs,

We act for Ideal Toy Corporation of the U.S.A. in relation to the above product, as well as that company's Australian associate Ideal Leisure Pty. Ltd.

A warning notice in relation to RUBIK'S CUBE (copy enclosed) was published last year in "The Australasian Sportsgoods and Toy Retailer", as well as in daily newspapers circulated throughout Australia. On the basis of rights of Ideal Toy Corporation referred to in that notice, Ideal Toy Corporation is vigorously defending its interests in the RUBIK'S CUBE product around the world. It or its local associate has sued and obtained injunctions in relation to unauthorized products in Switzerland and West Germany. Similar action has been successful in Japan, while further action is under way in the U.K. and France and is being initiated in Hong Kong, the U.S.A. and the Benelux countries. Additionally, we have been successful on behalf of our clients in restraining Australian sales of unauthorized products.

We are advised that your firm has offered for sale in Australia an unauthorized product in contravention of the rights of Ideal Toy Corporation. In particular, we are advised that, in response to customers requesting the RUBIK'S CUBE product, your firm is offering for sale the unauthorized product and thereby passing-off the latter as the authorized product. We have a sample of the unauthorized product sold by your store at 211 Elizabeth Street, Melbourne, together with a receipt for this purchase. We have advised our clients that such action is a contravention of rights in their product and, in view of this, our clients require your immediate attention to the following:

(1) Withdrawal of all stock of unauthorized product from sale in Australia at all of your firm's outlets.

(2) Provision of a full identification, including names and addresses, of all retailers and wholesalers who are known to you to have carried and are carrying stock of the unauthorized product.

(3) That you advise as to the number of unauthorized products already sold in Australia by your firm.

(4) That you advise as to the number of the unauthorized products held in stock by your firm, including shipments now in transit from your supplier to the manufacturer.

(5) That you advise as to the name and address of the or each manufacturer or supplier who supplies your firm with the unauthorized product.

(6) The provision of a written undertaking not to again offer the unauthorized product, or other similar product, for sale in Australia.

The foregoing is not to be considered exhaustive of the requirements of Ideal Toy Corporation in this matter. For example, it is probable that our client will require compensation for loss of business arising out of the sale of the unauthorized product in this country, and we shall return to that aspect in due course.

It is required that you telephone the undersigned after consideration of this letter and advise as to your intentions. If you fail to advise of agreement with the requirements set out above by 5 p.m. Friday, 27th March, 1981, legal proceedings may be commenced without further notice.

We additionally advise that the RUBIK'S CUBE product is the subject of a pending Australian patent application which presently is not open to public inspection. However, as you will appreciate, publication of that application can be arranged at short notice, at the request of the applicant."

A letter in the same terms, dated 27 March 1981, was sent to Lets Play Games, whose proprietor is also a party.

Evidence has been given of a number of trap orders, but adequate notice of them was not given by Ideal Toy or Ideal Leisure to Engelander or the other parties, or to other retail stores selling Engelander's puzzle. They were mostly based on an assumed right to the exclusive use of the mark Rubik's Cube.

Engelander claims that its business has been injured by the oral and written allegations made by or on behalf of Ideal Toy and Ideal Leisure, and that it will suffer more damage if they are allowed to continue. It filed its application on 6 April 1981.

Engelander and each of the respondents in action No. VG68 of 1981 has offered undertakings in their affidavits in the following terms:
". . . not to use the phrase or name "Rubik's Cube" in connection with the selling or offering for sale or distributing of "Fantasy Blocks" provided such an undertaking does not require my company to police any usage of the phrase "Rubik's Cube" by my company's customers or by the purchasing public as a generic, descriptive phrase."

For reasons which I have explained, I am of the view that Ideal Toy and Ideal Leisure went too far in endeavouring to establish and maintain an exclusive right to the name Rubik's Cube. They were however able to persuade at least one of Engelander's customers to the view that they had such a right. As soon as Engelander was aware of the similarity of the Wonderful Puzzler get-up to that of Ideal Leisure's it took steps to change the get-up of the puzzle it sold, and, for good measure, the name which it had been using. In my opinion what it now markets is distinctive of its own puzzle, so far as concerns attribution between competitors in the sale of the same or closely similar articles. It has never been alleged that Engelander has used the particular mark of Ideal Toy, namely the "Ideal" mark to which I have referred.

The only legitimate question concerns the plastic cover and associated get-up of Ideal Leisure's puzzle. No one has given evidence of a reputation in relation to that appearance or manner of presentation, or any direct evidence of confusion between it, and the puzzle now marketed by Engelander. I am nevertheless of the opinion that the total appearance of the Rubik's Cube as marketed here by Ideal Toy and Ideal Leisure was and is distinctive. The shape and transparency of the plastic cover, the method of labelling, the colour scheme of the labelling, the special arrangement and style of the print used, especially for the name "Rubik's Cube" and the sharpness of finish and brightness of colouring of the cube itself combined to make it distinctive, among the trade and with the public. My conclusion in this regard derives support from the action taken by Engelander itself to move away from the Wonderful Puzzler get-up and its undertakings, given or offered. The Ideal Leisure puzzle has its origin marked: "Made under Licence Ideal Leisure P/L Australia". This doubtless suggests manufacture in Australia, in which case it is false, but the Hong Kong manufacture may have been arranged by Ideal Leisure, rather than Ideal Toy, and under licence from the latter. It also has an Ideal logo stuck on the top of the plastic container.

Engelander did in my view have an obligation to move away from the presentation of Ideal Leisure's product so as not to deceive or confuse. It has done so. Its present pack is in my view as distinctive of what it sells, as is the other pack distinctive of what Ideal Leisure sells. There is one possible complication. The booklet of Dr Taylor to which I referred earlier (which comprises 26 pages of text) deals with Rubik's Cube, without reference to manufacturer or marketing source, and does not infer a single source, beyond the original source with Professor Rubik. The booklet was not published by or for Ideal Leisure or Ideal Toy, nor does it acknowledge assistance from them. It is sold separately at a price of about $2.00. It is clear from the text that the booklet is not simply concerned with solving (or "mastering", to use the word on the cover) Ideal Leisure's puzzles only. In fact, on the back cover it is said that Dr Taylor "first saw Rubik's Cube, then known as Buvos Kocka the Hungarian Magic Cube, in 1978" and, later, "Rubik's cube" (sic) is a modern day mechanical marvel". Mr Hutchens says, however, that "The distinctive "Rubik's Cube" logo on the cover of the book was used with the permission of the second applicant" (which I take to be Ideal Toy). It is not clear what Mr Hutchens refers to, but probably it is to the name Rubik's Cube which is reproduced in a print and style which corresponds closely to that on the package to which I have referred. I have earlier referred to is as a distinctive element on the pack. If the booklet is displayed in close conjunction with the puzzle there is some risk that a puzzle not being one from Ideal Leisure will be mistaken as coming from that source.

The Engelander Rubik's Cube has been offered for sale by Biam Nominees Pty. Ltd. and the respondetn Wiltons, and by other retailers, in close association with Dr Taylor's book. It would be well known that people using the puzzle would find it desirable, if not necessary, to have the aid of that publication. The resultant possibility of confusion derives largely from the use of a common or descriptive name (see Hornsby Building Information Centre Pty. Ltd v. Sydney Building Information Centre Ltd (1978) 140 CLR 216 per Stephen J at 229, 230). Questions of degree are involved, and the line of demarcation is a fine one. What is in question is the distinctiveness of visual presentation of a descriptive name. On the whole, I believe that there is a sufficient case at this stage that Ideal Toy or at least Ideal Leisure (and I shall not draw any distinction between them in this regard) has a reputation for the use of the words in the distinctive form mentioned and that an injunction should go to protect Ideal Toy and Ideal Leisure from the presentation of the book in close conjunction with the Fantasy Block. This is not to say that the book cannot be sold in the same shop as Engelander's puzzles. I should add that there is no reason why the two puzzles should not be sold in the same shop, and in a reasonably close juxtaposition to each other. All that is sought to be minimised is confusion between the two.

It follows from what I have said that there was for a short time a passing off, which I will accept was inadvertent, of Engelander's puzzle for that of its rivals. I am of the view that there was also a breach of s.52(1) of the Trade Practices Act at the same time and arising in the same way. In most cases, the fact that the conduct ceased, and steps were taken to avoid the passing off, several months ago, would mean that an injunction should not now be ordered or a declaration now made. However, the circumstances are unusual in a number of respects, and as trade rivalry continues, it is in my view in the public interest as well as in the interests of both parties that I should now grant an appropriate interlocutory injunction. In relation to the presentation of Dr Taylor's book (which has been noticed more recently, and may be continuing), there may have been a breach of s.52(1) by Biam Nominees Pty Limited, but in my view any interlocutory injunction is justified on passing off principles and I shall not consider more closely the application of that or other sections of the Trade Practices Act.

In action No. VG63 of 1981, Engelander asks for damages as well as an injunction, but at this stage interlocutory relief by way of injunction pursuant to s.80 of the Trade Practices Act. It is convenient to set out the relevant part of the application:
"On the grounds appearing in the accompanying Statement of Claim the applicant claims: -

(1) An injunction, pursuant to Section 80 of the Trade Practices Act 1974, restraining the respondents and each of them by themselves or by their officers, servants or agents from representing or making statements to any person to the effect that:

(a) the Applicant has sold, offered for sale and supplied blocks that infringe any proprietary right of the Respondents;

(b) that any unpublished application for either a design registration or Letters Patent in the name of either Respondent is capable of valid registration;

(c) that the Applicant or the applicant's customers are engaged in passing off the goods of the Respondents;

(d) that the Applicant and its officers were unreliable and acting wrongfully in selling and supplying block games or puzzles;

(e) that the Applicant's products are or were 'unauthorised' in any manner.

There is no doubt in my mind that the two respondents to this action have made and pressed excessive claims to rights in relation to the product in question and that that has been and remains deleterious to the business of the applicant. Whether those respondents could obtain registration of the trade mark the rights to which were so unequivocally asserted must have seemed to them at least doubtful.

In my view the respondents have been guilty of misleading conduct within the meaning of s.52(1) of the Act, and the applicants are entitled to an injunction pursuant to s.80 of the Act. The injunction can be obtained at the suit of Engelander, notwithstanding Engelander is a trade competitor. Counsel has said that Engelander will give the usual undertaking as to damages. The injunction should however be related more to the specifics of the problem than is the case with those sought. It is not necessary to consider the application of s.53 or s.55 of the Act.

Although I have expressed some conclusions of fact and law without explaining that those conclusions are based on the evidence as it stands, what I have said is to be understood in that sense. These are interlocutory applications and action now taken by the court must be guided by the well established principles governing applications of that nature. I did say to the parties that, if they wished, the court could deal with final applications at any time after three or four weeks from the present hearing, but this did not evoke a positive reply, and I am left in quite some doubt as to how long away the parties expect a final hearing to be.

When it comes to questions of balance of convenience, a balance has to be struck in relation to both applications, at the one time. Engelander is poised to put many more puzzles on the market, while Ideal Toy and Ideal Leisure are continuing to sell their puzzles in large numbers. Both sides have said that while the puzzle might be expected to have a large market in the first year, the demand is likely to drop considerably thereafter. The immediate present is therefore a critical time.

Having this in mind, Ideal Toy and Ideal Leisure applied during the course of the present proceedings for an immediate injunction. Engelander, and the other respondents in Action No. VG68 of 1981, were prepared to give undertakings which it seemed to me went very close to meeting the application, but I thought it better to grant an interlocutory injunction, intended to run no longer than the time at which I delivered judgment in these applications. It was as follows:
"The Court orders that:

The respondents and each of them, by themselves their servants and agents, be restrained until further order, from distributing, offering for sale or selling in Australia puzzles which are not the applicant's puzzles under or by reference to the name "Rubik's Cube" or any other name substantially identical or deceptively similar thereto or in association with material using the name "Rubik's Cube" or in response to a request for a "Rubik's Cube" or "Cubes"."

I now order that this injunction be dissolved.

In action No. VG 68 of 1981 I also order as follows:

1) That upon counsel for the applicants giving the usual undertaking as to damages

a) John Engelander & Co. Proprietary Limited by itself its servants and agents be restrained until the hearing of the action or further order from selling or offering for sale in Australia a Rubik's Cube puzzle under whatever name, not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty Ltd. in a get-up the same or deceptively similar to that at present used by those parties for the sale of the same puzzle or in response to an order in Australia for the puzzle supplied by those parties or either of them under that name.

b) That Biam Nominees Pty. Ltd., Michael John Wilton and Loris Jean Wilton by themselves their respective servants and agents be restrained until the hearing of the action or further order from selling or offering for sale a Rubik's Cube puzzle under whatever name not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty. Ltd. in a get-up the same or deceptively similar to that at present used by those parties for the sale of the same puzzle or in response to an order for the puzzle supplied by those parties or either of them under that name and that they be further restrained by themselves their respective servants and agents until the hearing of the action or further order from displaying for sale a Rubik's Cube puzzle, under whatever name, not being one supplied by Ideal Toy Corporation or Ideal Leisure Pty. Ltd. in close conjunction with a copy of the book by Doctor D. Taylor entitled "Mastering Rubik's Cube" so long as the same depicts on its front cover the words "Rubik's Cube" in the distinctive print and style used by those two parties as part of the get-up of their puzzle, or in close conjunction with any other material displaying prominently the said words in the said distinctive style and print.

In action No. VG 63 of 1981,

I order that upon counsel for the applicant giving the usual undertaking as to damages the respondents by themselves their respective servants and agents be restrained until the hearing of the action or further order from so conducting themselves as to lead purchasers to believe that they or either of them has an exclusive right to manufacture or sell in Australia the Rubik's Cube puzzle or an exclusive right to use in Australia in connection with that puzzle the name Rubik's Cube, provided that this injunction does not extend to preventing them maintaining or developing a reputation for the presentation of those words in a distinctive form or style in connection with the sale of the said puzzle.

In relation to costs, both sides have been successful to date, Engelander probably more so than its rivals. In very general terms, the view I have is that the marketing policy of the latter, and what I have described as its excessive claims, have been responsible for what has happened, and for the dispute reaching court. On the other hand Engelander gave the undertakings and inserted the public notice to which I have referred, and these actions probably had the result of encouraging the pursuit of the claims by its adversaries, and engendering mistrust when the cube was still brought on the market by Engelander, but with the name of Fantasy Block. Ideal Toy and Ideal Leisure have however obtained less relief than they sought. I have in mind, too, the undertakings offered, but not accepted.

Having in mind that the two proceedings have been heard together, and the cross-referencing between the evidence difficulties of taxation will arise if I treat the costs of each application separately. What I propose to do is to order Ideal Toy and Ideal Leisure to pay one third of the costs of the other parties in both interlocutory applications.

The parties are to have liberty to apply in relation to the form of the injunctions and generally.