McDonalds System of Australia Pty Ltd v McWilliams Wines Pty Ltd

McDONALD'S SYSTEM OF AUSTRALIA PTY. LTD. v. McWILLIAMS'S WINES PTY. LTD.
(1979) 41 FLR 429
Trade Practices

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
Franki J.(1)

CATCHWORDS

Trade Practices - Misleading or deceptive conduct - Representations as to approval or sponsorship of goods and of corporation - Principles applicable to grant of interlocutory relief - Trade Practices Act 1974 (Cth), ss. 52(1), 53(c), (d), 80(1).

HEADNOTE

The applicant sought an interlocutory injunction under s. 80(1) of the Trade Practices Act 1974 (Cth.) ("the Act") restraining the first respondent from using the words "Big Mac". The applicant ran eighty-nine retail stores throughout Australia at which were sold hamburgers extensively advertised under the name "Big Mac". The first respondent had published an advertisement showing, inter alia, pictures of bottles of wines with labels featuring the names "McWilliam's" and "Rosedale" and comments by "Top wine writers" about the wine one of which was "I call it the 'Big Mac'". The words "Big Mac" appeared on the top of the advertisement extending over the major part of the top of the page in letters about three and a half centimetres in height and above these words were the words "McWilliam's" in letters about one and a half centimetres in height. The applicant alleged that this advertisement infringed ss. 52(1), 53(c) and (d) of the Act.

Held:(1) The court had to determine whether the applicant had made out a prima facie case for the relief sought and then to consider the balance of convenience.

Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968), 118 CLR 618, applied.

(2) (a) Section 52 (1) of the Act refers to conduct that is misleading or deceptive or likely to mislead or deceive at the time when it takes place. (b) The applicant had at least a probability of success under s. 52(1) of the Act and had just established a prima facie case thereunder that the use of the words "McWilliam's Big Mac" would be likely to deceive or mislead a significant number of purchasers or potential purchasers into considering that the first respondent's goods came from or had some relevant connexion with the applicant.

(3) (a) It could be that the applicant could establish under s. 53(c) of the Act that by the use of the words "Big Mac" the first respondent in connexion with the promotion of the supply of wine had represented that the wine had a sponsorship or approval which it did not have. Weitmann v. Katies Ltd. (1977), 29 FLR 336, referred to. (b) There was an issue to be determined in relation to the applicant's claims in respect of s. 53(d) and it could not be said that the applicant had no prospect of success on this point.

(4) The decisive factor was the balance of convenience which favoured the granting of interlocutory relief to the applicant because: (a) the first respondent would not be likely to suffer any substantial damage as a result of the injunction and would be protected by the applicant's undertaking as to damages. (b) The advertisements complained of were the first respondent's first public use of the words "Big Mac" and it would be able to continue publishing advertisements with the relevant words excised. (c) Although regard should be had to any inconvenience caused to the first respondent, the court should endeavour to preserve the status quo. The protection of the public was the primary consideration in cases under s. 52 of the Act.

HEARING

Sydney, 1979, March 23, 26-27; April 2, 10-11, 20.

#DATE 20:04:1979

APPLICATION

The facts appear from the judgment.

G. Q. Taperell, for the applicant.

D. A. Staff Q.C. and D. P. Wilson, for the first respondent.

Solicitors for the applicant: Baker & McKenzie.

Solicitors for the first respondent: Gregory & Co.

T.J. GINNANE

JUDGE1

April 20.

FRANKI J. delivered the following judgment:

This is an application for interim relief under s. 80 of the Trade Practices Act 1974 (Cth.) ("the Act") seeking to restrain the first respondent from using the words "Big Mac". The applicant also sought to restrain John Fairfax and Sons Ltd., the second respondent, from publishing any advertisement for the first respondent's wine incorporating the words "Big Mac". At an early stage of the proceedings the applicant, because of an arrangement it had reached with the second respondent, no longer sought any interlocutory relief against it. The application is based on an allegation of conduct in contravention of ss. 52(1) and 53 (c) and (d) of the Act. (at p430)

It is no longer necessary to set out in detail the general approach which this Court should make to interim relief in this case. The question of the proper approach has been considered by the High Court in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 CLR 216 ; World Series Cricket Pty. Ltd. v. Parish (1977) 16 ALR 181 ; Commercial Bank of Australia Ltd. v. Insurance Brokers Association of Australia (1977) 16 ALR 161 ; Weitmann v. Katies Ltd. (1977) 29 FLR 336 ; United Telecasters Sydney Ltd. v. Pan Hotels International Pty. Ltd. (1978) TPRS 304 285 and Elna Australia Pty. Ltd. v. A. F. Harding & Co. Pty. Ltd. (1978) ATPR 40,096 (at p430)
The proper approach to interlocutory injunctions in general has also been dealt with by the Full Court of this Court in Victorian Egg Marketing Board v. Parkwood Eggs Pty. Ltd. (1978) 33 FLR 294 and by the New South Wales Court of Appeal in Shercliff v. Engadine Acceptance Corporation Pty. Ltd. (1978) 1 NSWLR 729 (at p430)
I have to consider first of all whether a prima facie case in the relevant sense has been made out and then to consider the balance of convenience. So far as concerns the question of a prima facie case it is clear that I must approach the question upon the basis adopted by the High Court in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968) 118 CLR 618 . I consider it is, however, clear that the court's function in considering this application is not to conduct a preliminary trial or to forecast the result of the case, nor indeed is it necessary that the applicant should establish that it is more likely than not that it would succeed if the evidence remains as it is in the application for interim relief. It is sufficient that "if the evidence remains as it is, there is a probability that at the trial of the action, the plaintiff will be held entitled to relief". (at p431)
There was uncontested evidence before me that the applicant runs eighty-nine retail stores throughout Australia. Stores are run in all States except Western Australia and Tasmania and about half of these are operated by the holders of franchises. These stores fall into the category of what are often called fast food stores. There are facilities for customers to sit down and eat although a significant proportion of customers take their food and drinks away with them. Each of the stores sells substantially the same range of products which include hamburgers, deep fried chicken, potato chips, milk shakes and soft drinks. One of the products sold in the applicant's stores is advertised under the name "Big Mac" and is a particular type of hamburger. The total retail sales in the applicant's stores in Australia in 1978 was about $51,000,000 and it is estimated that this year the figure will increase to about $80,000,000. In 1978 the total number of transactions was in excess of 23,000,000. About twenty per cent of these sales were of the "Big Mac" hamburgers. A great deal of advertising, including extensive television advertising associated with World Series Cricket matches, was in evidence. This advertising was during the 1977-1978 and 1978-1979 cricket seasons in Australia and the words "McDonald's Big Mac" were prominently displayed. A large amount of display material advertising the product "Big Mac" in association with the name McDonald was also in evidence. It seems that the advertising of "Big Mac" has been so extensive that for the purposes of this application I should accept that it has had an impact on many members of the public, at least in a number of capital cities in Australia. (at p431)
The first respondent published a particular advertisement on 14th March, 1979, in the Daily Telegraph and in the Sun and on 15th March, 1979, in the Daily Mirror and the Courier Mail. These newspapers are daily newspapers, the first three being published in Sydney and the last in Brisbane. Each of the advertisements were the same and showed pictures of the three bottles of wine, each two litres in size, and a number of glasses filled with wine. The advertisements also contained various comments by persons described as "Top wine writers". The comments were about "Rosedale Dry Red" and the labels on the bottle featured the name "McWilliam's" and "Rosedale" and described the contents of one bottle as "Dry Red Table Wine", another as "Medium White Table Wine" and the third as "Dry White Table Wine". One of the comments was by a Mr. Peter Wilson who said about the wine that "I call it the 'Big Mac'". (at p432)
The main complaint of the applicant about the advertisement was the appearance on the top of the advertisement of the words "Big Mac" in letters about three and a half centimetres in height and extending over the major part of the top of the page. Above these words appear the word "McWilliam's" in letters about one and a half centimetres in height. (at p432)
Application was made to me on Friday 16th March and I granted an interim injunction which, in substance, restrained the use of the words "Big Mac" by the respondent in trade or commerce, in connexion with advertising wine until the following Monday when the matter was listed before me. I have extended this injunction and it is still in operation. It was not possible to deal with the application without some adjournments and the hearing has occupied the court for the equivalent of almost three days. (at p432)
The applicant claims that the use of the words "Big Mac" by the respondent constitutes, in trade or commerce, engaging in conduct that is misleading or deceptive or is likely to mislead or deceive within s. 52(1) of the Act. It also claims a contravention of s. 53(c) of the Act and alleges that the advertisement constitutes a representation in trade or commerce in connexion with the supply or possible supply of wine or in connexion with the promotion by any means of the supply of wine that the wine has a sponsorship or approval which it does not have. It also alleges a contravention of s. 53(d) of the Act that, in the same way, the advertisement represents that the respondent has a sponsorship, approval or affiliation which it does not have. The applicant said that it relied more on s. 53(c) and (d) than on s. 52(1). (at p432)
There was evidence before me about the way in which the respondent came to use the words "Big Mac" but in these interlocutory proceedings I do not consider it necessary or appropriate to decide precisely how this occurred. (at p432)
There was evidence of a survey which had been conducted by a market research consultant. The evidence was that "trained market research interviewers" went to various suburbs in Sydney with questionnaire forms. These forms asked two questions; (1) "What does a McWilliam's Big Mac mean to you?" and (2) "Where would you expect to buy a McWilliam's Big Mac?". Space was provided for written answers to these questions by the person being interrogated. Forty-seven questionnaire forms were tendered without objection. Even for the purpose of an interlocutory application it is extremely difficult to draw any valid conclusions from answers to such questions. In saying this I am not in any way being critical of the formulation of the questions, or the conduct of the survey but one must be extremely cautious drawing any conclusions from material which is no more than the answers to two questions and where there is no explanation of the background knowledge of the person answering the questions nor are the persons answering subject to any cross-examination. It is, however, clear that a number of people understood the words "McWilliam's Big Mac" to mean a hamburger which would appear probably to be based on a knowledge of the applicant's product. It is also clear that some people were familiar with a reputation in the first respondent for wine. The applicant's promotion of the words "Big Mac" appears to have been as a description of one of its products rather than as an identification of the applicant. However, it seems not unlikely that the applicant's advertisements have been so extensive that a very significant section of the community would associate the words "Big Mac" with the applicant. Of course the only use of the words "Big Mac" by the first respondent has been in association with the word "McWilliam's" and it may well ultimately emerge that this is sufficient to distinguish any product described as "Big Mac" from any product of the applicant, particularly where the applicant's products are, on the evidence, only sold in its own stores. Although the applicant sells soft drinks it does not at present sell any form of alcoholic beverage. (at p433)
I consider that s. 52(1) refers to conduct that is misleading or deceptive or likely to mislead or deceive at the time when it takes place. In Weitmann v. Katies Ltd. (1977) 29 FLR 336 I had to consider ss. 52(1) and 53(c). In relation to s. 52(1) I consider that ultimately the applicant will have to establish that the use of the words "McWilliam's Big Mac" would be likely to deceive or mislead a significant number of purchasers or potential purchasers into considering that its goods came from or had some relevant connexion with the applicant. Whilst this may be a difficult task in view of the use of the words "Big Mac" as a description of one of the applicant's products and the use by the respondent of the qualification "McWilliam's" and the reputation which appears likely to exist in the word "McWilliam's" as identifying wines of the respondent, I consider that the applicant at least has a probability of success although indeed failure may well be more likely than success. (at p434)
Passing now to s. 53(c) I expressed a view in Weitmann v. Katies Ltd. (1977) 29 FLR, at p 344 that the word "sponsorship" in the context of that section seemed to me, when used in connexion with trade marks or trade names, to envisage something more along the lines of a certification mark. However, it may be that the applicant can establish that by the use of the words "Big Mac", even associated with the word "McWilliam's", the first respondent in connexion with the promotion of the supply of wine, has represented that the wine has a sponsorship which it does not have. (at p434)
The same can be said about the applicant's submission that the use by the first respondent constitutes a representation that the wine has "an approval" which it does not have. One person answering the survey thought that McWilliam's was a subsidiary of the applicant and although one such opinion did not appear to be sufficient to satisfy the requirements of s. 53(d) nevertheless, in my opinion, there is an issue to be determined and it cannot be said that the applicant has no prospect of success on this point. (at p434)
I consider that at this stage I should take the same approach to the argument presented by the applicant in respect of s. 53(d). I consider that the applicant has just established a prima facie case, at least in relation to its reliance on s. 52(1). (at p434)
In my opinion this is a case where the balance of convenience is the decisive factor. What I have said so far deals with the first aspect about which I have to be satisfied and that is that the plaintiff has made out a prima facie case. There is evidence of certain "point of sale" material which could not be used but I am impressed by what appears to me to be a lack of substantial damage that is likely to flow to the first respondent if it is restrained from using the words "Big Mac" which could not be made good by the usual undertaking as to damages. The first respondent has sold its "Rosedale" wine since November 1978 and since the grant of interim relief it has advertised that wine in a way almost identical with that of which complaint is made except that the words "Big Mac" have not been used. The newspaper advertisements of 14th March, 1979, were the first public use by the first respondent of the words "Big Mac". The applicant appears to have advertised its hamburgers so widely as "Big Mac" that, although the balance of convenience is mainly to be decided by comparing the likely damage to consumers if no injunction is granted with that which the first respondent is likely to suffer if the injunction is granted, but not made perpetual at the final hearing, I consider that I am entitled to have some regard to the desirability of preserving the status quo. (at p435)
I have not overlooked the difference between a passing off action, where there is a relevant question of protecting the goodwill of the applicant, and a proceeding based on s. 52 where the protection of the public is the primary consideration. (at p435)
On the last day on which this matter was before me the first respondent offered an undertaking to the court that it would not use the words "Big Mac" except in association with the word "McWilliam's". The applicant, of course, has indicated that if any interlocutory relief is continued it will continue the usual undertaking which it has given since my first order in this matter. However, for the reasons I have stated, I do not think the applicant should be required to be satisfied with the undertaking offered by the first respondent. I am of the opinion that, upon the basis that the applicant gives the usual undertaking as to damages, I should grant an injunction until the hearing of the suit or further order. I consider that every effort should be made to have the final hearing as soon as possible and if there is any unreasonable delay on the part of the applicant I am prepared to entertain an application to discharge the interlocutory injunction. The injunction which I propose to grant is that McWilliam's Wines Pty. Ltd. be restrained until the hearing of the action or further order, by its servants or agents, in trade or commerce, in connexion with the supply of wine or the promotion by any means of the supply or use of wine, from publishing or procuring or authorizing the publishing of any advertisement incorporating the words "Big Mac". Liberty is granted to the first respondent to apply to a judge of this Court upon two days' notice to the applicant should it wish to apply to discharge the interlocutory injunction upon the ground of unreasonable delay by the applicant. The parties are left to address me upon the question of costs. (at p435)

ORDER

Orders accordingly.

[1979] FCA 31

20 APRIL 1979