Kettle Chip Company Pty Limited v Pepsico Australia Pty Ltd

[1996] HCATrans 296

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S25 of 1996

B e t w e e n -

THE KETTLE CHIP COMPANY PTY LIMITED

Applicant

and

PEPSICO AUSTRALIA PTY LIMITED

First Respondent

PFI AUSTRALIA PTY LIMITED

Second Respondent

(First and Second Respondents trading as
FRITO-LAY AUSTRALIA)

Application for special leave to appeal

BRENNAN CJ

DAWSON J
TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 30 SEPTEMBER 1996, AT 12.01 PM

Copyright in the High Court of Australia

MR D.K. CATTERNS, QC:   May it please the Court, I appear with my learned friend, MS S.J. GODDARD, for the applicant.  (instructed by Freehill Hollingdale & Page)

MR F.M. DOUGLAS, QC:   May it please the Court, I appear for the respondent.  (instructed by Allen Allen & Hemsley)

BRENNAN CJ:   Yes, Mr Catterns.

MR CATTERNS:   May it please the Court.  Your Honours, we submit that this is a perfect little trade mark case in which there is no dispute on the facts and where there is the single question of law or, perhaps, three aspects of the same question of law which clearly arises on those facts.  The question is a vital one in trade mark law, namely, what constitutes use as a trade mark.  Justice Gummow, in the Caplets Case, which we refer to here, says it is a pivotal question in trade mark infringement. 

Your Honours, we have to face up immediately to the chip packets, and may I ask the Court to go, first, to our packet, at 140 of the application book?

Your Honours, that is the ultimate form our packet took with the word “Kettle” and “TM” on it.  It is clear that, as our friend refers to in his written submissions, there were a number of early uses by us which were clearly what we might call generic uses of the trade mark but that was not determinative of the issue because Justice  Lindgren and the Full Court held that we, nevertheless, had our reputation our secondary meaning.  Your Honours, the question all turns on page 142, which is our friend’s pack, where “Thins” - which is a powerful existing trade mark of his is used ‑ “Double Crunch” and then the words, “Kettle Cooked Potato Chips”.

Now, your Honours, we accept that just looking at that a natural response is to say, “Isn’t that just an ordinary English word?  It can describe a cooking vessel and, therefore, by extension, a type of chip.  The cooking process, perhaps, and then a type of chip.”  Your Honours, we accept, and accepted before both courts, that if that is solely how the word “kettle” is used there, there is no trade mark infringement.  Even though we own the trade mark of the word “kettle”, if it is used purely to describe the cooking process, or the cooking vessel, that is not used as a trade mark. 

But, your Honours, here is where the concept which is critical to trade mark law arises; the concept of secondary meaning or, as the cases called it 100 years ago, secondary signification.  Your Honours, words, can, of course, have their primary meaning - a dictionary meaning, or any number of dictionary meanings, namely, here, a cooking vessel.  But they can also - and, indeed, the most powerful types of trade marks are words which do have a descriptive force but which also acquire what is called a secondary meaning, namely, they serve to indicate or distinguish the trade mark owners, or in the case of passing off, the person who has the reputation’s goods.

So, that is what this case is about, your Honours.  Where there is a case of secondary meaning, and the respondent uses our trade mark in such a way as to invoke our secondary meaning - in other words, he is not merely describing it, but he is describing it, in effect, via us, he is invoking our secondary meaning. we say that that is trade mark infringement.

DAWSON J:   What is the contested proposition of law?

MR CATTERNS:   Your Honour, that where an alleged trade mark infringer uses a mark in a way that is partly descriptive but also partly to invoke or evoke the secondary meaning of the proprietor, that constitutes trade mark infringement.

DAWSON J:   Yes.  Well, no one contests that if you invoke the secondary meaning that constitutes trade mark infringement.

MR CATTERNS:   We respectfully disagree, your Honour.  We would submit that both Justices Sheppard and Sackville, with whom Justice Lockhart agreed, in a single sentence say that - accept his Honour Justice Lindgren’s finding that they did invoke - our friend did invoke the secondary meaning but, in the same sentence that we say constitutes infringement, their Honours say it does not.

DAWSON J:   They are not contesting the proposition at law, are they?  It is a question of their impression.

MR CATTERNS:   But, your Honour, they do not disagree with his Honour as a matter of impression.  His Honour held, as a matter of impression - - -

DAWSON J:   Well, take us to the part where they deny the proposition of law that you have been putting.

MR CATTERNS:   Yes, your Honour.  Would your Honours mind going, first, to - - -

TOOHEY J:   Just before you do, Mr Catterns, can you identify the secondary meaning?

MR CATTERNS:   Yes, your Honour.

TOOHEY J:   I know you have used a couple of terms.

MR CATTERNS:   Yes, your Honour.    If your Honour Justice Dawson does not mind, it might be convenient to do that first.

DAWSON J:   I do not mind, no.

MR CATTERNS:   At the bottom of 83, your Honours, in the judgment of Justice Sheppard, his Honour quotes Justice Lindgren’s findings.  His Honour breaks them up into two classes, which I do not think are important here.  At the bottom of the page:

those familiar with the Kettle chip are in a different position.  Kettle has attracted to the word ‘Kettle’ when used in relation to potato chips, a secondary meaning, namely, a relatively recently introduced hard bite strongly flavoured potato chip of the kind sold under the name ‘Kettle’.

That is the secondary meaning.  Your Honours, then there is the finding that it is invoked - it is on the same page, at the bottom of the quotation at about line 13 - with certain customers:

It is the word ‘Kettle’ which is calculated to impress -

them.

The secondary meaning of the word is immediately suggested. 

So, your Honours, that is a finding that looking at that packet, the secondary meaning is invoked.

BRENNAN CJ:   Let us look at that secondary meaning for a moment.

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   It is (a) descriptive of a quality of the chip, and (b) sold under the name “Kettle”.

MR CATTERNS:   Yes, your Honour.  And, your Honour, that - - -

BRENNAN CJ:   Well, now, if it is just a description of a quality of the chip, is that a secondary meaning?

MR CATTERNS:   Yes, your Honour, if it is our chip.  That raises what we put as the first of the special leave questions, but they are all aspects of the one question.

BRENNAN CJ:   It is your chip.

MR CATTERNS:   Yes, your Honour.  If you evoke the qualities of your chip via mine - via my secondary meaning - even if you do not distinguish yourself from me, as Justice Sackville says, you are using my trade mark.  Justice Gummow says, in the Caplets Case, in the passage we quote here, it is an old concept - the concept of a trade mark as a “badge of origin” only relates to manager - I beg your pardon, to manufacturer.  The modern concept, and it is a growing concept, is that it can involve the origin of qualities.

You, of course, do not have to know who the particular source of those qualities is but, we submit - and that is the question that is raised squarely here - that if you evoke qualities by invoking my secondary meaning, then you are using my trade mark.

BRENNAN CJ:   So that, if somebody wants to register “Tasty” for selling Tasty sausages, nobody else can say they have tasty sausages?

MR CATTERNS:   Your Honour, if the Court holds that “tasty” has acquired a secondary meaning in the context of sausages as indicating “my sausages”, what your Honour says is right; it is a trade mark infringement.  That is precisely the issue.

DAWSON J:   But only if the word “tasty” is to identify the Tasty Sausages with your tasty sausages.

MR CATTERNS:   Exactly, your Honour, that is the secondary meaning.

DAWSON J:   Or tasty sausages having your qualities.

MR CATTERNS:   Exactly, your Honour.

DAWSON J:   But you cannot have a monopoly on the use of the word “tasty”.

MR CATTERNS:   No, your Honour.  But all of the trade mark cases where a descriptive word, or an ordinary English word, is used as the mark involve that question.

DAWSON J:   Yes, but it depends how ordinary the word is.  I mean, “Tub Happy”, well, that is one thing; but a “kettle”, or “tasty”, that is another thing.

MR CATTERNS:   Well, your Honour, the word “tasty” can, as a matter of fact - it is a factual question to get to the secondary meaning - but the word “tasty”, as a matter of fact - if McDonalds spent $20 million a year advertising sausages instead of hamburgers, and called it the “Tasty Sausage”, as a factual matter, they are capable of establishing a reputation or a secondary meaning.  And then if I, with my rival hamburger sausage chain, use the word “tasty” so as to invoke them - so as to invoke them, your Honour.

DAWSON J:   Yes, that is the important thing, you cannot highjack a word.

MR CATTERNS:   No, your Honour, precisely.  But if I use it so as to invoke them, then I infringe the trade mark.

BRENNAN CJ:   In this case, is it right to describe the chips of both parties as being “kettle cooked”?

MR CATTERNS:   Well, they are cooked in large vessels as big as your Honour’s associate’s table.

BRENNAN CJ:   Well, we all know what they are but, I mean, is it right to describe them as “kettle cooked”?

MR CATTERNS:   Yes, your Honour.  The trade calls those vessels “kettles”.

BRENNAN CJ:   Right, so they are “kettle cooked”.

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   Now, the reason why you say it describes yours is because you were in the market first, you established a connection between your chips and the name “Kettle”, is that right?

MR CATTERNS:   Precisely, your Honour.

BRENNAN CJ:   So, therefore, you say that nobody can thereafter describe their chips as “kettle cooked”.

MR CATTERNS:   Because I have a trade mark, which is, of course, a monopoly.  If they use my mark as a trade mark - - -

BRENNAN CJ:   But if they are using their mark to call it “Thins”, and then they describe their “Thins” as being “kettle cooked”, how does that pass theirs off as yours?

MR CATTERNS:   Well, your Honour, with respect, that is not the question because as the Court notices - of course it is not a passing off question.

BRENNAN CJ:   No, it is a question.

MR CATTERNS:   Your Honour, “Thins” is a good example.  They have got a perfectly beautiful trade mark on “Thins” in respect of thin potato chips.  It is purely a factual question in trade mark law, whether you can move from an ordinary descriptive word.  And, of course, you fence off part of the English language.

DAWSON J:   But you say kettle cooked chips are superior to non-kettle cooked chips?

MR CATTERNS:   Yes, your Honour.

DAWSON J:   The other ones go through a different process.

MR CATTERNS:   I do, your Honour.

DAWSON J:   And you did have a case, a successful case, against someone who - - -

MR CATTERNS:   A section 52 case.

DAWSON J:   - - - advertised their chips as kettle cooked, when, in fact, they were not.

MR CATTERNS:   But, your Honour, we did not win on that.  We won on passing off - pure passing off.

DAWSON J:   Yes.  Yes, but their chips were not kettle cooked, but they said they were.

MR CATTERNS:   Yes, your Honour, they - - -

DAWSON J:   Now, here, both chips are kettle cooked.

MR CATTERNS:   Yes, your Honour.  And, your Honour, to those people who take “kettle cooked” as meaning cooked in a kettle and, therefore, fried in some crunchy way, there is no trade mark use.

DAWSON J:   But we are getting to the question of impression here.  You were going to identify, as I understand it, the secondary meaning.  You have done that.

MR CATTERNS:   Yes, your Honour.

DAWSON J:   And you were going to identify where the court went wrong in not giving enough emphasis to that.

MR CATTERNS:   Precisely, your Honour.  Your Honour, may I just identify the second aspect?  His Honour has identified the secondary meaning there.  His findings are - that the secondary meaning is invoked is the one I mentioned a 84, lines 13 to 15:

The secondary meaning is immediately suggested.

So, that is a factual finding that, in use, our friends have invoked our secondary meaning.  Similarly, at the very bottom of the page, 24, to the bottom, for a class of people:

the word ‘Kettle’ immediately suggests the hard bite aggressively flavoured kind of chip associated with the word ‘Kettle’.

et cetera.  Your Honours, in answering your Honour Justice Dawson directly, page 87, beginning at about line 10:

And with respect, his Honour  -

Justice Lindgren -

is correct when he concludes that the word “kettle” in the context.....will convey to the customer the message that the potato chip.....crunchy and of the hard bite variety.  One asks how did the customer gain this impression. 

It may be from “Double Crunch”, but then the critical words, your Honour:

But I think it would be right to say that others, and perhaps the majority, would gain the impression because of familiarity with the style of chip manufactured by Kettle.

Et cetera:

That would be because of Kettle’s marketing and selling of products having those characteristics.

Your Honours, we say that is a finding of trade mark infringement; our friend says it is not.  Similarly, your Honours, Justice Sackville, at 130 - - -

BRENNAN CJ:   Just pausing there for a moment.  Correct me if I am wrong, but the way I am reading it at the moment is this; your company got into the market first with this variety of chips.

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   And they sold it under your name “Kettle”, that it was - had two meanings, your use of the word “kettle”; one is it was your trade mark, and the second was it was descriptive of the process that was used.

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   But you did not have a patent on the process; others could use that.

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   And if they did, then their chips too would be kettle cooked.  And then, what it says here is that people who are familiar with kettle cooked chips through buying your chips would know that these kettle cooked chips would be hard, crunchy and tasty.

MR CATTERNS:   Yes.  Interestingly, your Honour, the flavour of course is not imparted by the kettle.  As Justice Sackville points out at page 98, flavours are added, powders are - strong chilies, or whatever, are added.  So, it is not inherent in the word “kettle” that you are going to have strong flavour.  One gets to the strong flavour via our reputation, via our secondary meaning.  That is the question, your Honour, which I hope I will not say more than another eight times - we submit that to invoke our secondary meaning in that way is trade mark infringement.  Our friend says it is not.

BRENNAN CJ:   Well, leave aside the flavour for the moment.  Say if it was simply that kettle cooking produces crunchy chips.  Under the trade name “Kettle” you produce crunchy chips.  They are the only ones on the market.  Somebody else comes along and says, “These are kettle cooked chips too, and they are crunchy.”  That is infringing your - - -

DAWSON J:   Well, even more, they say they are “double crunchy”.

BRENNAN CJ:   They are “double crunchy”, yes.  That is infringing your trade mark?  I mean, that seems a very strange thing to me.

MR CATTERNS:   Your Honour, it would all depend on the facts there.

DAWSON J:   That is the point, it does all depend on the facts.

MR CATTERNS:   Yes, of course, your Honour.  But here there are findings of fact which are not disputed.  The Full Court accepts, fair and square, Justice Lindgren’s finding which, to pick his Honour the Chief Justice’s example, the factual question is, did the person in the case his Honour the Chief Justice put to me just then - did that person invoke the secondary meaning.  Held “Yes” as a matter of fact, we then submit it follows automatically that that is trade mark infringement.  Your Honours, it is clear that we are at issue on that with the Full Court, I submit, from Justice Sackville’s reasons also.

Still attempting to answer what your Honour Justice Dawson put to me:  at the bottom of 130 is a passage from Justice Lindgren which we say is the right holding.  The:

“unfamiliar and idiosyncratic use of the word [“Kettle”], its strong secondary meaning and the likely circumstances.....combine to give it, to a substantial extent, the purpose and effect of distinguishing between Frito-Lay’s potato chips and those of other manufacturers.”

That paraphrases what Justice Williams says.

DAWSON J:   But really, is the Court of Appeal here bound to accept, even if it is a question of fact, the finding of Justice Lindgren?  I mean it does not depend on witnesses or - - -

MR CATTERNS:   No, your Honour.

DAWSON J:   They can depart, can they not?

MR CATTERNS:   They could, your Honour.  In fact, Justice - - -

DAWSON J:   Is it not a question of impression?

MR CATTERNS:   Yes, your Honour, and so far as that goes - - -

DAWSON J:   What greater clues are going to be revealed by our giving our impression?

MR CATTERNS:   But, your Honour, Justice Sackville says, at 137 - I made the submission about impression, your Honour.  He says:

I have not departed from his Honour’s findings of fact.  To the extent that they were based on impression, they have been accepted for the purposes of this judgment.

So, your Honours, we submit it arises absolutely clearly.  There is no dispute about the facts.  His Honour’s factual holdings were accepted but the court held that, contrary to Justice Lindgren’s legal view, the little passage quoted at page 130 that I have just gone to, they say it does not.

DAWSON J:   Well, they do not.  They say, “Well, look, we are prepared to accept that secondary meaning but we will not accept that, looking at these two particular labels, the inference you would draw from the “Thins” label is that these chips either have their origin in your client or that they have precisely the qualities that you client’s chips have, other than the qualities which come from being kettle cooked.”

MR CATTERNS:   Well, that is where I respectfully disagree with your Honour, because we submit that not only did they accept his Honour holding that there was a secondary meaning, but they are holding that the secondary meaning was invoked, or a number of consumers would respond to it by taking into account the secondary meaning.  We submit that that is the last step we need as a factual matter to be, as a matter of law, trade mark infringement.

DAWSON J:   What I am really putting to you is that if you were to get special leave and this Court were to consider the matter, it is not going to elucidate anything very much by doing so, is it?

MR CATTERNS:   I respectfully submit it will, your Honour.  It is a matter that has not been before the Court for 40 years, except tangentially in the Shell Case.  Their Honours here distinguished the Mark Foy’s Case because it was a coined word and, therefore, the question of secondary meaning did not arise in the Mark Foy’s Case.

BRENNAN CJ:   Is this the problem here, Mr Catterns, that the secondary meaning attributed to it has two aspects to it.  One is quality of the product; the second is origin?

MR CATTERNS:   Yes, your Honour.

BRENNAN CJ:   Now, what I read the Full Court as saying is that the people who bought these Thins chips would buy them believing that they had the quality that the word means.  But they did not make the finding, even though they said they followed the primary judge, that they would regard them as having the origin of Kettle.

MR CATTERNS:   But, your Honour, with great respect, that is the false dichotomy that the Full Court fell into of thinking that the phrase “origin” in the case of trade marks means only “so and so is the manufacturer.”  We quote, in our written submissions, a passage from Justice Gummow in the Caplets Case where he says:

The registered mark serves to indicate, if not the actual origin of the goods or services, nor their quality as such, the origin of that quality in a particular business -

And, your Honours, in this - - -

DAWSON J:   The origin of the quality in that particular business.

MR CATTERNS:   Yes, your Honour.

DAWSON J:   But not from the particular process, and that is the difference.

MR CATTERNS:   But, your Honour, the finding of secondary meaning is that the quality came from our goods.  That is the secondary meaning finding.

DAWSON J:   It came from the particular process, that is the difference.

MR CATTERNS:   But, your Honour - well, your Honour, I see the red light but, your Honour - - -

BRENNAN CJ:   Finish your sentence, Mr Catterns.

MR CATTERNS:   Thank you, your Honour.  We submit that the finding is that the quality means us.  There is a connection in the course of trade with us.  That is what the finding of secondary meaning means and that is why we submit that the passage on 130, going over to 131, does constitute, properly looked at, a finding of trade mark infringement.  May it please the Court.

BRENNAN CJ:   We need not trouble you, Mr Douglas.

The case does not raise a question of principle that evokes a grant of special leave.  The result arrived at by the Full Court of the Federal Court depends on the meaning which that Court attributed to the defendant’s use of the term “KETTLE COOKED”.  The result is not attended with sufficient doubt to justify a grant of special leave.  For these reasons, special leave will be refused.

MR DOUGLAS:   I would ask for costs, if the Court pleases.

BRENNAN CJ:   You have nothing to say about that, Mr Catterns?  Special leave will be refused with costs.

AT 12.26 PM THE MATTER WAS CONCLUDED