Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd

Re: MAKITA (AUSTRALIA) PTY LIMITED
And: BLACK AND DECKER (AUSTRALASIA) PTY LIMITED
No. G66 of 1990
FED No. 236
Trade Practices
18 IPR 270

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J.(1)

CATCHWORDS

Trade Practices - Misleading conduct - Advertisement for electric drill - Television advertisement portraying the respondent's drill operating in opposition to a drill distributed by the applicant - Applicant's drill unidentified - Possibility that applicant's drill would be mistaken for another of the applicant's drills in relation to which the result of the contest would be different - Possibility of overcoming this problem by superscription and "voice over" identifying the drill concerned - Film used in advertisement edited to reduce period before applicant's drill emitted smoke - No smoke emitted from respondent's drill, in contrast with test results on drill actually available on market - Significance of visual impression - Claim for corrective advertising - Limited corrective advertising ordered.

Trade Practices Act 1974 s.52

HEARING

SYDNEY

#DATE 30:5:1990

Counsel for the Applicant: Mr R B S Macfarlin QC

and Mr M R Ellicott

Solicitors for the Applicant: Barker Gosling

Counsel for the Respondent: Mr D Shavin

Solicitors for the Respondent: Blake Dawson Waldron

ORDER

1. The respondent its servants and agents be restrained

from publishing, in whole or in part, in trade or commerce, the advertisement which is ex "A" in this proceeding.

2. The respondent publish in the next available issue of

"Australian Hardware Journal" an advertisement in the following form:

"IMPORTANT ANNOUNCEMENT BY BLACK and DECKER (AUSTRALASIA) PTY LIMITED Earlier this year Black and Decker

(Australasia) Pty Limited caused to be broadcast a television advertisement which portrayed a contest of strength between a Black and Decker model 1166 drill and the drill of a competitor. The Federal Court of Australia has found the advertisement to be misleading in that it gave an incorrect impression of the effect of such a contest on each of the drills. The Court has restrained any further publication of the advertisment and has ordered Black and Decker to publish this announcement for the information of readers".

3. The respondent pay the costs of the applicant of the

proceeding.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. (See also Order 37 rule 2(3)).

JUDGE1

This is a contest between rival traders as to whether one of them is entitled to screen a television commercial comparing the performance of their respective products. The applicant claims the commercial contains misrepresentations so that its publication constitutes misleading conduct in breach of s.52 of the Trade Practices Act 1974.

The applicant, Makita (Australia) Pty Ltd, and the respondent, Black and Decker (Australasia) Pty Ltd, are each subsidiaries of overseas companies. The parties' functions include the distribution within Australia of products manufactured outside Australia by or on behalf of their overseas parent. Each of the parties distributes a range of power tools, including electric drills.
The evidence indicates that the market for power tools comprises partly professional tradesmen who use such tools during the course of their work and partly amateurs engaged in hobbies or home repairs. Black and Decker distinguishes between these two categories of purchasers, referring to the former as the "industrial" market and the latter as the "home handyman" market. Makita makes no such distinction, believing that its products are equally suitable for either category of purchaser.
During recent years Black and Decker has held only a small portion of the "industrial" power tools market. Accordingly to Mr T T Bilbrough, its Marketing Manager - Industrial Power Tools, the reason for this has been a perception in the Australian community that Black and Decker's power tools are less powerful than those marketed by its competitors. Accordingly, during 1989, Black and Decker decided to promote a new range of "industrial" power tools using advertisements which emphasised their power. One of the items selected for promotion in this way was a new electric drill produced in America and known within the company as No. 1166.
The first sample of the 1166 drill which was sent from Black and Decker's American headquarters to Australia was a "one off" handbuilt prototype fitted to operate on a 240 volt electricity supply, as distinct from the 120 voltage usual in the United States. Black and Decker's advertising consultant suggested that an appropriate method of emphasising the power of the 1166 drill would be to film a "torture test" wherein a 1166 drill was pitted against the drill of a leading competitor. Makita is, apparently, the leading supplier of electric drills in the Australian market. Accordingly, Mr Bilbrough decided upon a trial of strength with a drill from the Makita range. For that purpose he selected the Makita 6010BVR, a drill retailing at about the same price as the proposed recommended price for the 1166. The 6010BVR is also about the same size and weight as the 1166 drill and it takes shafts of the same calibre (10mm). The two drills were fixed in position, facing each other chuck to chuck, and linked by a single 10 millimetre shaft. The Makita drill was turned on first. It rotated the shaft. The Black and Decker drill was then turned on. Almost immediately, the Black and Decker drill succeeded in reversing the movement of the shaft. The strain imposed by the Black and Decker drill upon the Makita drill caused that drill to overheat, leading to the burning of the insulation around its motor and the emission of smoke.
Following this demonstration, Black and Decker decided to proceed with the filming of a 30-second television commercial based on such a "torture test". However, for this purpose, it was necessary to have a supply of new 1166 drills and other 240 volt drills were not available in Australia. Consequently, Mr Bilbrough arranged for a supply of 120-volt 1166 drills to be sent from the United States. Arrangements were made for a transformer to be available at the time of the filming, in order to break down the 240 volt supply to 120 volts.
On 17 October, 1989 a film company, the Sherwood Film Company Pty Ltd, carried out the filming necessary to create three 30-second commercials for Black and Decker. One of these illustrated the duel between the Black and Decker 1160 drill and the Makita 6010BVR drill. There were five "takes" of this duel, one of which was aborted because the drills had been put into reverse rather than forward. New drills were used for each "take".
The four completed "takes" showed a similar sequence of events. In each case the drills were mounted facing each other, as in the demonstration already described. In each case the Makita drill was turned on first, followed a few seconds later by the Black and Decker drill which almost instantaneously reversed the Makita drill's shaft rotation. In each case, at an interval of time varying from 5.84 seconds to 9.57 seconds, visible smoke emanated from the Makita drill, followed 8 to 12 seconds later by intense smoke. During the filming of each of the "takes" a growling noise emanated from each of the drills due to the strain under which they were labouring.
The film company selected the first "take" for use in the commercial which it then prepared. The total footage filmed for this commercial exceeded the desired 30 seconds. Consequently, the film was edited by omitting some of the footage of the period between the Black and Decker drill reversing the Makita drill and the Makita drill commencing to smoke. On the edited film, the period which elapsed between the time when the Black and Decker drill was turned on and the first emission of smoke from the Makita drill was reduced to 2.7 seconds. Additionally, while smoke obscured a good deal of what was happening during the "takes", it is apparent that in two "takes" at least, the Black and Decker drill eventually stalled, and that on one take a brief puff of smoke was emitted by the Black and Decker at the very end of the demonstration. None of this footage appeared in the final commercial. Finally, in order to accommodate a "voice over" narration the growling noise was reduced, leaving on the soundrack only the noise of drills at normal load.
The commercial was then completed with the "voice over" narration in which a male voice said the following words:

"Here is an amazing demonstration. Two 10mm industrial drills are linked by a common shaft. The blue drill is turned on first. Then, the new Black and Decker industrial. With superior power, it's actually reversing the spin of the other drill.

Now you can see the better choice, Black and Decker industrial - in the right hands we're unbeatable".

The film finished with a "tail" identifying of Black and Decker.
Black and Decker's advertising strategy was described as a "drip, drip" strategy, using the commercial occasionally over a lengthy period. The company's marketing consultants identified the "target" group as males, predominately blue collar workers and so they recommended that the commercial be screened in conjunction with the televising of sporting events. Accordingly, the first advertisements were screened, in Sydney and Melbourne, during cricket telecasts in January and February 1990. However, Makita became aware of the commercial and, on 15 February 1990, commenced this proceeding. On the same day the applicant obtained from Davies J. an ex parte injunction restraining publication of the commercial until 4pm on 19 February, 1990. Subsequently, the injunction was replaced by an undertaking. As a result, save for one inadvertent transmission on 18 February, 1990 through an oversight at a television station, the advertisement has not been screened since this proceeding commenced.
The Points of Claim filed on behalf of the applicant identified no less than 25 alleged misrepresentations arising out of the advertisement. However, in a summary presented to the Court, counsel for the applicant pressed only nine of them. These were:

"1. That the B and D drill depicted in the Advertisement was a new B and D Industrial Drill suitable for sale and use in Australia.

In fact, it was a US 120 volt drill which required a number of changes before it could be used or sold in Australia.

2. That the B and D drill was available for sale in Australia.

In fact, although the Advertisement was first broadcast on television on 21/1/90, production was not scheduled to commence in the US until 12/2/90. Production units did not arrive in Australia until 25/2/90 and they were in any event rejected by the Respondent.

3. That the B and D drill depicted in the Advertisement was of the same power and predicted life span as the drills which the Respondent had made or would make available for sale.

In fact, the drills which were planned for production and sale were of substantially less power than that in the Advertisement and those now planned to be sold by the Respondent have substantially shorter predicted life spans.

4. That the power ratings of the drills depicted in the Advertisement were the same (otherwise there would be nothing "amazing" about the demonstration). In fact, that for the B and D was 450 watts input and that for the Makita was 305 watts input.

5. That the drills depicted in the Advertisement were in all other material respects the same.

In fact, the Makita usually sold for at least $15.00 less than the B and D intended price.

6. That the demonstration in the Advertisement gave a reasonably fair reflection of the loads placed on drills in ordinary usage.

In fact, the test is a "torture test", bearing no relationship whatsoever to ordinary usage.

7. That the Respondent's new Industrial 10mm drills are substantially more powerful than those of Makita. In fact, it largely depends on the power rating of the relevant drills. Makita's 570 watt 10mm drill would for example easily overpower the 450 watt B and D 10mm drill shown in the Advertisement.

8. That the Respondent's new Industrial power tools, and in particular drills, are substantially more powerful than those of Makita.

In fact, it largely depends on the power ratings of the relevant tools (see above).

9. That the demonstration depicted in the Advertisement depicted that which actually occurred and/or would ordinarily occur in such a demonstration. In fact:-

(a) The film was edited so that smoke appeared from the Makita far earlier than in fact.

(b) The smoke coming from the Makita was enhanced by special effects.

(c) The loud growling noise heard by the Respondent's expert in his tests is not heard on the Advertisement.

(d) A variable transformer was used for the B and D drill as it was a US 120 volt model. This may have had the effect of boosting the voltage to the B and D drill.

(e) The experts' tests resulted in smoke being emitted from the B and D drill and, at least in the case of the Applicant's experts' tests, damage to the B and D drill. Neither is depicted or suggested by the Advertisement.

The facts set out in counsel's document, in relation to representation (1), are correct but they require some expansion. Black and Decker always intended that 1166 drills adapted to take a 240-volt supply be manufactured in the United States for distribution in Australia. When a batch of these units was received, late in February 1990, the drills were tested. It was found that they generated less power than either the prototype which had been demonstrated in Australia in 1989 or the 120-volt units used for the television commercial. Mr Bilbrough complained to the United States company and these drills were replaced, at about the end of March 1990, by drills of satisfactory power. The complaint made about representation (1) is that the Black and Decker drill depicted in the advertisement was not identical with the drill which could be obtained by a purchaser at a store in Australia. This is correct: the drill depicted in the advertisement was a 120-volt drill. However, I do not interpret the advertisement as suggesting that this precise drill would be available. I believe the advertisement is concerned with "the new Black and Decker industrial": that is, the new 1166 model drill. The advertisement should be understood as referring to the capacities of that model of the 1166 drill which was, or would become, available to a purchaser in Australia. It was representing how that "new" model would perform. As will appear, that conclusion has some significance, in favour of the applicant. But I reject the submission that the advertisement was misleading because it falsely suggested that the particular drill depicted in the advertisement was precisely the same as the drills which would be available to purchasers in Australia.
The basis of the second alleged misrepresentation is that, at the time of the screening of the commercial in January and February 1990, there were no 1160 drills available in Australian retail stores. As mentioned, the first batch of 240-volt drills was not received until late February, after the commercial had ceased to be screened. Because of the quality control problem they had to be replaced and Black and Decker have only recently received sufficient drills to supply the expected demand. But I do not think that the advertisement can rationally be understood as conveying a representation that the "new Black and Decker industrial" drill was presently available to purchasers. The advertisement is a statement about the quality of the "new" Black and Decker industrial drill. The 1166 drill was new, whether or not actually on the market.
As to the third representation summarised in counsel's document, the evidence is that the complaint which was made by Mr Bilbrough caused the American company to increase the wiring in the 240-volt drill to increase power, with a consequent reduction in the likely life of the brushes. I do not understand the advertisement to say anything about brush life.
The complaint made in respect of representation (4) has more force. The evidence establishes the facts claimed by counsel; that is, that the Black and Decker drill uses a power input of 450 watts whereas the Makita's power input is only 305 watts. Counsel says that, under these circumstances, there was nothing "amazing" about the demonstration. There is always some difference between an electrical appliance's power input and its output. Some energy is lost in the course of operating the appliance, dissipated in the form of heat, noise, etc. Some appliances are more efficient than others, so that their power output is a higher proportion of their power input. Nonetheless, say counsel, it is to be expected that a drill which has a power input almost fifty percent higher than another drill will be the more powerful of the two, and be capable of overpowering the other in a chuck-to-chuck contest such as depicted in the advertisement. The subject advertisement did not disclose that the Black and Decker drill had a greater power input than the Makita drill and counsel say that this non-disclosure constituted a misrepresentation. Counsel argue that the word "amazing", which is strongly emphasised in the "voice over", suggests that what the viewer is about to see is something surprising or contrary to normal expectations; whereas the result of the contest was what anyone knowing the respective power inputs would expect.
Counsel for Black and Decker describes the word "amazing" as mere puffery designed to draw the viewer's attention to what is about to follow. He suggests that the demonstration was "amazing" in the sense that it was an unusual demonstration, something that viewers had not previously seen and which was likely to cause some wonderment. Reference is made to the comment of Lockhart J. in Stuart Alexander and Co (Interstate) Pty Ltd v. Blenders Pty Ltd (1981) 53 FLR 307 at p 311:

"However, I think a robust approach is called for when determining whether television commercials of this kind are false, misleading or deceptive. The public is accustomed to the puffing of products in advertising. Although the class of persons likely to see this commercial is wide, it is inappropriate to make distinctions that are too fine and precise."

Counsel for Black and Decker points out that the very purpose of the advertisement was to emphasise the power of his client's product and asserts that viewers would not be concerned about the relative power inputs of the two drills.
In my opinion there is a problem about the use of the word "amazing" in the "voice over". The actual words used are "here is an amazing demonstration". As I have said, the word "amazing" is heavily emphasised by the speaker. Any viewer of the advertisement would surely derive from this introduction an impression that what he or she was about to see was something highly unusual and surprising, something contrary to the natural order of things. In fact, when one realises the relative power inputs of the two drills the result is what one would expect. However, this difficulty which I discern is only part of a wider problem, which I will discuss shortly, arising out of the advertiser's failure precisely to identify the blue drill. Any amendment of the advertisement which would cover that wider problem could easily overcome this particular objection and I therefore need not deal with it separately.
Representation (5) is, I think, well founded in the sense that a viewer would take from the advertisement an impression that the two drills are comparable in material respects, including price. But the fact asserted by counsel in their document is only part of the story. The "recommended retail price" for the Black and Decker drill is intended to be $180. Makita does not have a "recommended retail price", so called, but it does publish a price list which includes a series of prices under the title "consumer buying guide". In evidence it was explained that these were figures to which employees of the company or dealers could refer, in case customers enquired what they should expect to pay for a particular item. I think that it is reasonable to assume that the figure shown under the heading "consumer buying guide" would be treated in much the same way as a "recommended retail price". Makita's "consumer buying guide" price for its 6010BVR drill is $185. However, the evidence is that retailers customarily sell the Makita drill at less than this price. There is affidavit evidence, from both sides of the record, regarding the prices charged by various retailers for the Makita 6010BVR drill. This evidence shows prices ranging from $142 to $185. Only one retailer asked $185. The next highest price was $173. The average price, taken over 22 separate retailers, was $158.64. Mr Bilbrough conceded in cross examination that he would regard it as unfair to compare two products with substantially different prices and he thought that a variation of more than 10 percent would constitute a "substantially different" price. Basing themselves upon this evidence, counsel for the applicant suggest that it was unfair to compare the Makita drill, selling at an average price of $158.64, with the Black and Decker drill with a "recommended retail price" of $180 and that the advertisement was misleading in suggesting that the two drills were comparable in terms of price.

However, the problem about this submission is that it compares a price based on actual market place experience with a "recommended retail price". As the Black and Decker drill is not yet in the stores it is not possible to know what price will be asked by retailers. But there is no reason to doubt that they will be prepared to operate on the same margin for the Black and Decker drill as they do for the Makita drill. The price Black and Decker intends to charge retailers for the 1166 drill is $108.93. This compares with a "bulk price" for the Makita drill - that is the price charged by Makita to persons who buy more than one unit - of $109.50. It seems to me extremely likely that the Black and Decker 1166 will sell in shops for much the same price as the Makita 6010BVR. I do not think that there was any unfairness, so far as price was concerned, about the comparison. The argument in respect of representation (5) should be rejected.
Representation (6) is hardly arguable. Of course the test depicted in the commercial was a "torture test" bearing no relationship whatsoever to ordinary usage. However this fact was obvious to the viewer. I do not think that anybody could have believed the advertisement portrayed the ordinary use of the drills.
Representations (7) and (8) raise a problem of generalisation. The advertisement does not identify the blue drill depicted in competition with the Black and Decker drill. This omission was deliberate. Prior to the filming, steps had been taken to paint over the name "Makita" on the drill. Mr Bilbrough explained in evidence that the purpose of the advertisement was not to denigrate the product of any competitor, but merely to emphasise the powerfulness of the new Black and Decker drill and thereby to counter the widespread impression that Black and Decker tools were, as he put it, "toy tools" with little power. I accept this explanation and I think that the elimination of the make "Makita" reflects some sensitivity by those concerned with the meaning of the advertisement. However, a consequence of the failure to specifically identify the blue drill is that viewers who reasonably, but wrongly, identify the blue drill, may be misled.
Apparently, several manufacturers of electric drills paint their products blue. But there are differences in the colour tones. The Makita drills are painted in a distinct tone, identified by some of the witnesses as "Makita blue". Given Makita's market share, apparently about 50 percent, there must be many people who would associate that colour with Makita products.
There are currently four 10mm Makita drills on the market: the 6010 BVR model, the 6010B model, the 6402 model and the HP1030 model. The 6010B model is almost identical to the 6010BVR model. The only difference between the two models is that the 6010BVR model has a reversible action whereas the 6010B model does not. One result of this difference is that the 6010B model sells at a price only slightly more than half that of the 6010BVR model, putting it into a price range remote from the Black and Decker 1166. Yet the 6010BVR model and the 6010B models are almost indistinguishable in appearance - the only external difference between them is that the former has a small reverse switch at the bottom of the handle, and the latter does not. This switch is not readily obvious, so that a viewer of the advertisement who was familiar with the 6010B model might think that the advertisement depicted that model. Although the viewer would correctly take from the advertisement an impression that the Black and Decker 1166 drill was more powerful than the Makita 6010B drill, he or she would be doing so under the belief that the drills were otherwise reasonably comparable, including in relation to price. This impression would be false.
The 6402 drill is not identical in appearance to the 6010BVR model. It is longer and thinner. However, it is painted in the same "Makita blue". The general configuration is similar and the difference in shape is not so great as to satisfy me that people who were familiar with the 6402 model would necessarily realise that the blue drill shown on the advertisement was not a 6402 model. Some people might pick the difference, but I think that others would not. This would cause them to be misled as to the relative power of what they believed to be the 6402 model and the Black and Decker 1166. This is a matter of some significance because the Makita 6402 drill has a rated power input of 570 watts, greater than the Black and Decker 1166. No comparative test has been made and, because of the possibility of markedly different energy efficiencies, Mr Bilbrough was not prepared to concede that the Makita 6402 model would outperform the Black and Decker 1166. However, he did concede that he would "not expect to get the result we got in the ad against that drill". Having regard to the evidence, accepted by both parties, that there is at least a rough correlation between input power and output power, this concession is obviously justified. Moreover, to publish an advertisement suggesting that one product will outperform another product, without there being any tests to demonstrate the truth of the claim, is itself to engage in misleading conduct: see Colgate Palmolive Pty Ltd v. Rexona Pty Ltd (1981) 58 FLR 391 at p 402. To the extent that viewers are likely to mis-identify the blue drill as a Makita 6402 drill, they are likely to be misled by the advertisement.
The remaining Makita drill, the HP1030 model, is a hammer drill. However, that fact is not presently significant. It merely means that the drill has a hammering function as well as a drilling function. The drill may be operated simply as a drill. It is susceptible to the type of contest which was depicted in the advertisement. Indeed, Dr Colin Grantham, a Senior Lecturer in the School of Electrical Engineering and Computer Science at the University of New South Wales, who carried out some tests on behalf of the applicant, matched the Black and Decker 1166 drill against the Makita HP1030 drill. He found that the Black and Decker 1166 drill succeeded in reversing the turn of the Makita HP1030 drill; which is not surprising as the rated power input of the HP1030 drill is 430 watts; that is, lower than the 450 watts of the Black and Decker 1166. However, the impression of comparative power given by this test was markedly different from that of the advertisement. Approximately 7.5 seconds after the Black and Decker drill was switched on and began reversing the Makita drill, it also stalled. About 2.5 seconds later both drills commenced to smoke. Some 10 seconds later the Makita drill failed completely and the test was terminated. In a report which was not challenged, Dr Grantham stated that in this test "a result similar to that shown on the television advertisement could not be achieved even though the Black and Decker drill had an advantage over the Makita drill in both power and speed".
I think that it follows that, to a viewer who wrongly identified the blue drill as a Makita HP1030 drill, the television commercial would be misleading. And this might happen. The HP1030 drill is also painted in "Makita blue". It is approximately the same size and shape as the 6010BVR drill, although once again it is longer and trimmer. Unlike the position of the 6402 drill, there is a significant difference in the guard at the top of the drill. The HP1030 drill has a small metallic guard, in contrast to the larger moulded guard of the 6010BVR drill used in the advertisement. The guard on the drill used in the advertisement is obvious to viewers and the difference in guards would probably reduce the chances of viewers mistaking the depicted drill for a HP1030. However, given the brevity of the advertisement and the likelihood that many viewers might not examine it with care, it is probable that some people would be misled. To the extent that they were, then the depicted result would mislead them.
The risks involved in comparative advertising have been mentioned in many judgments in this Court. In Stuart Alexander at p 310 Lockhart J. said:

"When a person produces a television commercial that, not only boosts his own product but, as in this case, compares it critically with the product of another so that the latter is shown up in an unfavourable light by the comparison, in my view he ought to take particular care to ensure that the statements are correct."

This comment was endorsed in State Government Insurance Commission v. J M Insurance Pty Ltd (1984) ATPR 40-465 at p 45,362 where Fisher J. spoke of the "heavy responsibility" of an advertiser to ensure that its comparisions are accurate. See also my own comments in Hospitals Contribution Fund of Australia Ltd v. Switzerland Australian Health Fund Pty Ltd (1988) 9 ATPR 40-830 at pp 48,950-1. The effect of making a comparison between a Black and Decker 1166 drill and an unidentified Makita drill is that the accuracy of the comparison falls to be judged by reference to each of the Makita drills for which the depicted blue drill may reasonably be mistaken. In my judgment these drills include not only the 6010B drill but also the 6402 and HP1030 model drills.
When this matter was raised with him, counsel for the respondent suggested that an appropriate method of avoiding the difficulty would be for the advertisement to identify the blue drill. He suggested that there could be superimposed on the footage depicting the demonstration words identifying the two drills involved, and also stating their respective power inputs. A sample of how this could be done was tendered in evidence. Counsel also offered to amend the "voice over" so as to identify the Makita drill. This would be desirable. The advertisement is short and the attention of some viewers might be concentrated on the drills themselves rather than on any words on the screen.
If these steps were taken they would overcome the problems identified by the applicant in respect of representations (4), (7) and (8).
However, the applicant says that, even with those amendments, the advertisement is still objectionable because it portrays events different from those which actually occurred; or, alternatively, what would occur in a comparison between the Makita 6010BVR drill and the Black and Decker 1166 drills which will actually be available to purchasers.
The tests which were undertaken by Dr Grantham, on behalf of the applicant, and by Dr David Giesner, a Senior Lecturer in the Department of Electrical and Computer Systems Engineering at Monash University, showed results somewhat less favourable to Black and Decker than those depicted in the television advertisement. In each of these tests the Black and Decker 1166 drill succeeded in reversing the turn of the Makita 6010BVR. However, the Black and Decker victory was not so overwhelming as that portrayed on the television advertisement. In the first place Dr Grantham and Dr Giesner found a greater delay before smoke was emitted from the Makita drill than the 2.7 seconds delay shown on the commercial, or even the range of 5.84 seconds to 9.57 experienced in the "takes". In each of the two tests undertaken by Dr Grantham, matching the Makita 6010BVR drill against the Black and Decker 1166 drill approved for distribution, the delay was 16 seconds. Dr Giesner's four tests showed delays of 14, 16, 20 and 18 seconds respectively. Moreover, in three out of the four tests conducted by Dr Giesner and in Dr Grantham's two tests, smoke was emitted from the Black and Decker drill, as well as from the Makita drill. In one of Dr Giesner's tests the Black and Decker drill emitted smoke before the Makita drill.
Only one of the television commercial "takes" shows the emission of any smoke from the Black and Decker drill. A question was raised at the trial as to the reason for this. There was also a question whether the amount of smoke emitted by the Makita drill had been artificially enhanced. However, evidence was given by both Mr Bilbrough, who attended the filming, and Mr L S White, the producer of the advertisement, that the Makita smoke was not artificially enhanced. I accept this evidence. Mr White did say that the drills were backlighted, so as to ensure that the smoke which was emitted would be visible to the viewer, but he said that all smoke shown on the commercial came from the Makita drill.
It is not possible to say why the result depicted on the advertisement presents a visual image more favourable to Black and Decker than the results of Dr Giesner's and Dr Grantham's tests. The explanation may be related to the use of the transformer at the time of the filming. Perhaps the transformer gave the Black and Decker drill more power than it would ordinarily derive from a 240-volt connection. This is mere speculation advanced by counsel. There is no evidence to support that hypothesis. The matter was not addressed by the experts. But, whatever the position, the appropriate comparison is with the type of drill which is available in the market; that is, a 240-volt drill. The unchallenged evidence is that, in five out of the six contests which the experts staged between a 240-volt Black and Decker 1166 drill and a Makita 6010BVR drill the Black and Decker drill emitted smoke. This, therefore, must be regarded as the typical situation. It is a situation different from what was depicted on the television commercial.
Counsel for the respondent argues that the point sought to be made by the commercial was the superior power of the Black and Decker drill. He says that, as between the Black and Decker 1166 and the Makita 6010BVR, this point is accurate; the Black and Decker is the more powerful of the two drills. I accept that this is so. However, smoke emanating from the Makita drill provides a striking visual image. The impression given by the advertisement is not merely of a contest between two drills in which one of them demonstrates its superior power by reversing the turn previously achieved by the other; but, rather, of a contest in which one drill is completely devastated, quickly overheating and smoking, whilst the other drill is apparently unaffected by the ordeal.
I have considered whether the misleading effect of the film could be removed by the affixing of a suitable superscription indicating that it had been edited. Counsel for the respondent indicated that his client would be prepared to accept a reference to editing. If the only problem was the reduction of the period between the reversal of the drill and the Makita smoking, it might be possible to adopt this solution. Viewers might realise from such a superscription that the damage to the Makita took longer to occur than the time which elapsed in the advertisement. However, such a superscription would not deal with the absence of smoke from the Black and Decker drill. I think that this is an important element in the matter. The advertisement is dealing with comparative power. It does so by using visual images to foster an impression in the minds of viewers. Accordingly, it is important that the impression conveyed by the advertisement be a fair reflection of the true position. Without the Black and Decker smoke, I do not think that this advertisement does fairly reflect that position. To state that one boxer is capable eventually of knocking out an opponent is one thing; to suggest that he is able to do so almost immediately, without injury or even raising a sweat, is another.
The subject advertisement is ingenious. I accept that it was made without any intention of denigrating competing products and that its central message is true. Under those circumstances, I am reluctant to preclude its future use. However, I have come to the conclusion that the advertisement is misleading in important respects, so that it ought not be allowed to be screened in its present form. Some of those misleading elements could be removed by suitably worded superscriptions but superscriptions cannot overcome all the problems. The appropriate course is, therefore, to make an injunction restraining the further use of the advertisement.
The applicant also seeks an order for corrective advertising. The suggestion is that the respondent should be ordered to publish an advertisement in the "Australian" newspaper and in the "Australian Hardware Journal" stating that the Court has found the television advertisement to be misleading and has restrained its further use. There is no doubt as to the power of the Court to make such an order, in a suitable case: see Hospitals Contribution Fund of Australia Ltd v. Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 at p 491. The question, in any given case, will always be whether this is an appropriate course to take having regard to the nature and likely effect of the advertisement and of the proposed corrective advertising. The time which has elapsed since the publication of the misleading advertisement will usually be a relevant matter. In Hospitals Contribution Fund, Morling J., with whom Fox and Davies JJ. agreed, ruled against corrective advertising. His Honour noted that it was then about five weeks since the last misleading advertisement had been published.
Counsel for the respondent points out that it is now about three months since the last screening of the television commercial. He says that this case is a fortiori the situation dealt with in Hospitals Contribution Fund, so that there can now be no case for corrective advertising. However, that submission treats Morling J. as having laid down a general rule that there can be no corrective advertising after five weeks. I do not understand his Honour to have done that. If the Court were to adopt a rule that, after a period of five weeks, an application for corrective advertising must necessarily be rejected, it would effectively be discarding this weapon from the armoury of orders which might, in appropriate cases, be made in order to do justice between the parties. Having regard to rights of appeal, it would be a very rare occurrence if a matter was finally disposed of within five weeks of the last publication of the subject advertisement. The critical element in the reasoning of Morling J. was described in this way, at p492:

"In my opinion any person whose mind might have been swayed by the advertisements which appeared before 11 November would have already made a decision to join the appellant's fund. Having regard to the time which has elapsed since the last publication of any of the appellant's advertisements containing the statement which I think is misleading, I do not think that there is now any real purpose to be served by the publication of a correcting advertisement".

The situation is different in the present case. The Black and Decker 1166 drill is not yet available in retail stores. Consequently, people who saw the advertisement have not yet had the opportunity to purchase it. On the other hand, it seems to me that publication of an advertisement in the "Australian" would be a very imperfect method of rectifying any misleading impression which might have been gained by a viewer of the television advertisement. That newspaper is read by only a small proportion of the Australian population, and not necessarily by that segment of the population who saw the television advertisement. Although there is no evidence on the point, I believe that I may take judicial notice of the fact that there are daily newspapers more favoured by "blue collar" workers - the target audience - than is the "Australian". Thus corrective advertising likely to reach the audience who saw the advertisements last January and February would have to take the form either of extensive television advertising or newspaper advertising in several newspapers. Counsel for the applicant do not ask for corrective advertising on that scale. They apparently consider that such advertising would be disproportionate to the degree of exposure of the television commercial. I do not propose to order publication of an advertisement in the "Australian".

On the other hand, there is a strong case in favour of an order requiring an advertisement to be published in the "Australian Hardware Journal". The evidence shows that Black and Decker used the television commercial, in video form, to promote its new range of products, including the 1166 drill, with dealers. In a memorandum of 1 March, 1990, Mr Bilbrough reported to the United States that, in the three weeks the advertisement was on-air, "it was having a tremendously positive effect on our image with users and dealers". A corrective advertisement in the "Australian Hardware Journal", a publication presumably read by most dealers in power tools, would be likely to reach an important segment of the audience affected by the misleading advertisement. Such a requirement would not be disproportionate to the extent of publication of the misleading advertisement.
As to costs, counsel for the respondent submits that, even if his client is generally unsuccessful, it ought not be required to pay all of the costs incurred by the applicant. Counsel points out that the applicant raised many grounds of complaint which have been abandoned or rejected. He further points out that Dr Grantham carried out some tests, on 14 and 15 March 1990, on the first batch of 240-volt drills imported into Australia, notwithstanding that the respondent had informed the applicant that these drills did not meet its quality control requirements. It is suggested that, under those circumstances, the applicant should have realised that it would be a waste of expense for Dr Grantham to undertake these tests.
Although costs orders are discretionary, the general principle is that a successful applicant is entitled to recover its costs of the proceeding. This is subject to a rider that the costs order may exclude recovery of an applicant's costs in relation to a discrete issue raised on which it has failed. The respondent says that the allegation that the advertisement represented that the 1166 drills were presently available was such an issue. However, it does not appear that the raising of this issue caused the applicant to incur any costs which it would not have otherwise incurred. Consequently, it would not affect the result if I excluded recovery of costs on that issue.
So far as the tests of 14 and 15 March are concerned, the applicant was in a dilemma. It is true that the respondent's solicitors had indicated that the recently imported drills did not meet their client's quality controls; but the applicant was facing a hearing listed for 29 March. The respondent applied for a postponement of that hearing only after 15 March. It was not unreasonable for the applicant, two weeks before the projected hearing date, to test the drills most recently made available to it by the respondent. The appropriate order is that the respondent pay the costs of the applicant of the proceeding.

[1990] FCA 236

30 MAY 1990