Kudos Pty ltd v Tully Corporation Pty Ltd

[1983] FCA 310

Re: KUDOS PTY. LTD.
And: TULLY CORPORATION PTY. LTD. AND CHARLES JOHN JAMES GREEN
No. WA G51 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

TRADE PRACTICES - consumer protection - misleading and deceptive conduct - application for interlocutory injunction - distribution of magnetic field therapy machines - distributor seeking to prevent use of name "Magnetopulse" in connection with newly developed machine - whether brand name or trade name - whether any damage suffered by applicant pending hearing may be adequately compensated by award of damages

Trade Practices Act ss.52, 53(c), 53(d)

HEARING

PERTH

#DATE 31:10:1983

ORDER

1. The application for an interlocutory injunction be dismissed.

2. The applicant pay the respondents' costs of the application for an interlocutory injunction in any event.

3. There be liberty to apply for directions.

JUDGE1

The applicant alleges contravention by the respondents of ss.52, 53(c) and 53(d) of the Trade Practices Act 1974.

In this application for an interlocutory injunction, the applicant seeks to restrain the respondents from selling or advertising any product under the name of "Magnetopulse", from representing that any products sold or offered for sale by them are connected with the product known as Magnetopulse and from doing anything calculated to mislead or deceive the public into believing that the respondents' products are connected with Magnetopulse or into believing that the Magnetopulse product offered for sale by the applicant is not in truth that product.

"Magnetopulse Australia" is the registered business name of the first respondent and has been since January 1983. The name magnetopulse is descriptive of a system of magnetic-field therapy used for treating bone damage, tissue damage and inflamation in humans and animals. The parties to this application are concerned only with the use of such a system as it relates to animals and, in this respect, the evidence contains a number of testimonials from horse trainers of repute in Australia and elsewhere praising the success of the system.

The parties are business competitors. Between January and June this year they were business associates at a time when the respondents were distributors for Mike Doyle Marketing Ltd., an English company, of a magnetic field therapy machine with the brand name "Magnetopulse". In July 1983 Mike Doyle Marketing Ltd., purported to determine the distributorship agreement. The respondents do not accept that the agreement was lawfully determined and the first respondent, in August 1983, brought proceedings in the Supreme Court of Western Australia against Mike Doyle Marketing Ltd., and others including Bernard Walter Tronzik, a director of the present applicant. On 25 August 1983 an application for an interlocutory injunction restraining Mr. Tronzik and other defendants from selling or supplying Magnetopulse equipment and for other relief was dismissed. No step has been taken in the Supreme Court action since then.

In an affidavit filed in support of the application for an interlocutory injunction, Mr. Tronzik alleges that since 25 August 1983 the applicant has been appointed "sole distributor of the Magnetopulse field therapy system by Mike Doyle Marketing Limited and Magnetopulse Limited and is distributing to the public that system by its name 'Magnetopulse'". In their answering affidavit the respondents do not expressly challenge that statement but it is apparent, both from that affidavit and from the statement of claim in the Supreme Court action, that they regard the distributorship agreement made between Mike Doyle Marketing Ltd. and them as still on foot.

The applicant's complaint is that the respondents are continuing a form of advertising almost identical with that they were using when acting as distributors for the Magnetopulse manufactured by Mike Doyle Marketing Ltd., even though the respondents now sell a system which is of their own devising and which they say is quite different from the system distributed by the applicant. In the applicant's submission, this is likely to mislead members of the public into thinking that the respondents' system of magnetic-field therapy is the system developed and manufactured by Mike Doyle Marketing Ltd. and now distributed by the applicant.

The respondents contend that the magnetic-field therapy system was developed, not by Mike Doyle Marketing Ltd. but by M.H. Electronics Ltd., also an English company. They say that the name Magnetopulse is not identified with Doyle, that Doyle's therapy machine was never marketed by him on a world wide basis, as alleged by the applicant and indeed that it could not be, because other companies hold the registered name "Magnetopulse" in a number of other countries. They say that the applicant has no entitlement to the exclusive use of the name.

There has been litigation in England between M.H. Electronics Ltd. and Adrian John Mason, its principal director and shareholder, as plaintiffs on the one hand and Michael Doyle, Michael Doyle Marketing Ltd. and Magnetopulse Ltd. as defendants on the other. In September 1983 that litigation was settled on terms which included the transfer by the plaintiffs to the defendants of "all rights to and goodwill attached to the name Magnetopulse throughout the world", the plaintiffs agreeing "that all rights in the said name Magnetopulse belong to the defendants including the exclusive right to license the use of the said name". The significance of that litigation for present purposes is that it provides some evidence that until September 1983 goodwill in the name Magnetopulse attached to M.H. Electronics Ltd. rather than to Michael Doyle Marketing Ltd. The latter name and Mike Doyle Marketing Ltd. seem to have been used interchangeably, so too the names Michael Doyle and Mike Doyle.

The respondents acknowledge that at one time they were advertising their product on terms which included the following, "Magnetopulse Australia are the only distributors of the original machine. If the name M.H. Electronics does not appear on the machine it is a copy". However they have ceased that form of advertisement. They say that the word "Magnetopulse" is only used by them in association with the word "Australia", in a manner to indicate that "Magnetopulse Australia" is a subsidiary of the first respondent and that Magnetopulse is not a brand name.

That is not a particularly persuasive argument when regard is had to the form of advertisement. The word "Magnetopulse" is featured in a striking fashion, almost independent of the word "Australia" and with the reference to "A subsidiary of Tully Corporation P/L" even more subdued. The magnetic-field therapy machine itself carries the name Magnetopulse, though it is true that both machine and advertisement feature prominently the description "PMF System", the former also bearing the name M.H. Electronics Ltd.

The respondents' products Ovascan (an ovulation detector) and Boveq (a pregnancy detector) are advertised with the name Magnetopulse more clearly linked to the word Australia and more clearly indicated to be a business name of a subsidiary of the first respondent. The applicant does not manufacture any product comparable to Ovascan or Boveq; the most that can be said of this advertising is that it may lead people to wonder whether these are the applicant's products.

The applicant alleges that since August 1983 it has been the sole distributor of the magnetopulse field therapy system manufactured by Mike Doyle Marketing Ltd. and Magnetopulse Ltd., that it is distributing to the public that system by the name Magnetopulse and that the respondents' advertising of their system is likely to mislead the public into believing that the respondents are distributing the magnetic-field therapy system developed by Mike Doyle Marketing Ltd.

There is nothing in the affidavits filed or in other material before the court to indicate the form of advertising engaged in by the applicant or indeed anything to indicate the extent of the applicant's activities other than the statement that it is distributing the magnetopulse field therapy system for which it has been appointed sole distributor by Mike Doyle Marketing Ltd. and Magnetopulse Ltd.

The respondents claim to have spent more than $200,000 in advertising and promoting the business name Magnetopulse Australia throughout this country and in promoting their products. They contend that Mike Doyle Marketing Ltd., Magnetopulse Ltd. and, for that matter, M.H. Electronics Ltd. have no reputation in Australia and so there can be no misunderstanding in the mind of the public about the respondents' advertising. They say that neither the applicant nor Doyle has advertised to any extent on a national basis and that the applicant has carried out limited local advertising only.

It must be remembered that it was the respondents who were first appointed distributors in this country by Mike Doyle Marketing Limited. It was in response to that appointment that they registered the name Magnetopulse Australia and have traded under that name. There is a dispute, before the Supreme Court, as to whether that distributorship was lawfully determined. Nevertheless the respondents have now embarked on the sale of their own field therapy machine and other products.

Real questions arise in this case as to the distinction between being mislead or deceived on the one hand and being confused on the other. Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 42 ALR 1, Fire Nymph Products Ltd. v. Jalco Products (WA) Pty. Ltd. (1983) 47 ALR 355. Real questions also arise regarding the existence of any reputation gained by the applicant since August 1983. As I pointed out in Dairy Vale Metro Co-Operative Ltd. v. Brownes Dairy Ltd. (1981) 35 ALR 494 at p. 501:

"While action under the provisions of the Trade Practices Act is not founded upon and does not require as an essential element protection of a trader's goodwill, for the public to be misled or deceived it seems to me that there must be in minds of the relevant public some established truth against which the notion of misleading or deceptive conduct can be measured".

The relevant public here is relatively small and, for the most part, well qualified on matters relating to horses' ailments and their treatment.

I accept that, in the language of Gibbs C.J. in The Australian Coarse Grain Pool Pty. Ltd. v. The Barley Marketing Board of Queensland (1982) 57 ALJR 425 at p.426, there is "a serious question to be tried".

But I am not persuaded that the balance of convenience is in favour of granting, by way of interlocutory relief, the injunctions sought by the applicant. The respondents' advertising of Ovascan and Boveq is not likely to mislead or deceive the public to the detriment of the applicant. As to the respondents' advertising of their field-therapy system, they have discontinued the form of advertisement most likely to mislead or deceive. That is not to say that the current advertisement may not do the same, particularly as it adopts in large measure the form used by the respondents when they were distributors for Mike Doyle Ltd. At the same time current brochures and newspaper advertisements speak of the "Australian made machine". But these are matters that must await the substantive hearing.

It may be that in the end the applicant can demonstrate that the respondents' advertising of their PMF System is likely to mislead or deceive the public and that the respondents should be enjoined from that advertising. I express no view on that matter. But to grant an injunction at this stage would effectively preclude the respondents from using the business name Magnetopulse Australia both as part of their advertising program and on the machines themselves. This would constitute a serious detriment if they are successful in the litigation. I am not persuaded that any damage the applicant may suffer pending a hearing (and there is no evidence of any) cannot be cured by an award of damages.

For these reasons I am of the opinion that the present application should not succeed.