Melhero Pty Ltd v Club X Pty Ltd
[1997] FCA 118
•20 JANUARY 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG963 of 1995
)
GENERAL DIVISION )
BETWEEN:MELHERO PTY LIMITED
First applicant
MITCHELL PRODUCTS PTY LIMITED
Second applicant
ANDCLUB X PTY LIMITED
First respondent
WALTER DELL PTY LIMITED
Second respondent
ASHWOOD WAY PTY LIMITED
Third respondent
SHAFT THEATRES PTY LIMITED
Fourth respondent
SILKEN HALL PTY LIMITED
Fifth respondent
TEXAS PARK PTY LIMITED
Sixth respondent
AND BETWEEN: WALTER DELL PTY LIMITED
First cross-claimant
ASHWOOD WAY PTY LIMITED
Second cross-claimant
ANDMELHERO PTY LIMITED
First cross-respondent
MITCHELL PRODUCTS PTY LIMITED
Second cross-respondent
CORAM: BEAUMONT J.
DATE: 20 JANUARY 1997
CORRIGENDA
Page 93, paragraph 3, line 1, has been amended by deleting the words “misleading or deceptive” and inserting the words “likely to deceive”.
CATCHWORDS
TRADE MARKS AND TRADE NAMES - Trade Marks Act 1955 and Trade Marks Act 1995 - infringement, passing off - whether conduct in contravention of s.52 Trade Practices Act 1974 - rectification of the Register.
Nike International Limited v. United Pharmaceutical Industries (Aust.) Pty Limited (1996) 35 IPR 385.
Ritz Hotel Limited v. Charles of the Ritz Limited (1988) 12 IPR 417
Westinghouse Electric Corporation v. Thermopart Pty Limited (1967) 1A
IPR 647
Caterpillar Loading Hire (Holding) Pty Limited v. Caterpillar Tractor Co. (1983 48 ALR 511
Re Trade Mark "Thunderbird" (1974) 48 ALJR 456
Southern Cross Refrigeration Co. v. Toowoomba Foundry Pty Limited (1954) 91 CLR 592
Carnival Cruise Lines Inc. (1994) 120 ALR 495
Top Heavy Pty Limited v. Killin (1996) 34 IPR 282
Canon v. Brook (1996 36 IPR 88
MELHERO PTY LIMITED & ANOR v. CLUB X PTY LIMITED & ORS
No. NG963 of 1995
BEAUMONT J.
SYDNEY
20 JANUARY 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG963 of 1995
)
GENERAL DIVISION )
BETWEEN:MELHERO PTY LIMITED
First applicant
MITCHELL PRODUCTS PTY LIMITED
Second applicant
ANDCLUB X PTY LIMITED
First respondent
WALTER DELL PTY LIMITED
Second respondent
ASHWOOD WAY PTY LIMITED
Third respondent
SHAFT THEATRES PTY LIMITED
Fourth respondent
SILKEN HALL PTY LIMITED
Fifth respondent
TEXAS PARK PTY LIMITED
Sixth respondent
AND BETWEEN: WALTER DELL PTY LIMITED
First cross-claimant
ASHWOOD WAY PTY LIMITED
Second cross-claimant
ANDMELHERO PTY LIMITED
First cross-respondent
MITCHELL PRODUCTS PTY LIMITED
Second cross-respondent
CORAM: BEAUMONT J.
DATE: 20 JANUARY 1997
MINUTES OF ORDER
THE COURT ORDERS:
Direct the applicants to bring in short minutes of orders in accordance with these reasons for judgment.
Costs reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG963 of 1995
)
GENERAL DIVISION )
BETWEEN:MELHERO PTY LIMITED
First applicant
MITCHELL PRODUCTS PTY LIMITED
Second applicant
ANDCLUB X PTY LIMITED
First respondent
WALTER DELL PTY LIMITED
Second respondent
ASHWOOD WAY PTY LIMITED
Third respondent
SHAFT THEATRES PTY LIMITED
Fourth respondent
SILKEN HALL PTY LIMITED
Fifth respondent
TEXAS PARK PTY LIMITED
Sixth respondent
AND BETWEEN: WALTER DELL PTY LIMITED
First cross-claimant
ASHWOOD WAY PTY LIMITED
Second cross-claimant
ANDMELHERO PTY LIMITED
First cross-respondent
MITCHELL PRODUCTS PTY LIMITED
Second cross-respondent
CORAM: BEAUMONT J.
DATE: 20 JANUARY 1997
INDEX TO REASONS FOR JUDGMENT
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 1
THE CASE PLEADED BY THE APPLICANTS........ ........ ........ ........ ........ ........ ........ ........ .. 3
THE CASE OPENED FOR THE APPLICANTS........ ........ ........ ........ ........ ........ ........ ........ .. 5
THE APPLICANTS’ AFFIDAVIT EVIDENCE........ ........ ........ ........ ........ ........ ........ ........ .... 6
(a) The affidavit of Mr Mark Franks sworn on 21 December 1995........ ........ ........ ........ .... 6
(b) The affidavit of Mr Mark Franks sworn on 5 April 1996........ ........ ........ ........ ........ ...... 7
(c) The affidavits of Mr Mark Franks sworn on 11 and 12 April 1996........ ........ ........ ....... 9
(d) The affidavit of Mr John Buckland sworn on 20 December 1995........ ........ ........ ...... 12
(e) The affidavit of Mr John Buckland sworn on 9 January 1996........ ........ ........ ........ .... 19
(f) The affidavit of Mr John Buckland sworn on 25 March 1996........ ........ ........ ........ .... 25
(g) The affidavit of Mr John Buckland sworn on 11 April 1996........ ........ ........ ........ ....... 27
(h) The affidavit of Ms Sarah Caroline Webb sworn on 20 December 1995........ ........ .... 27
The affidavit of Ms Anna Katherine Warne affirmed on 11 March 1996........ ........ .... 30
(j) The affidavit of Ms Anna Katherine Warne affirmed on 25 March 1996........ ........ ... 31
(k) The affidavit of Mr David Phillip Nichols affirmed on 23 February 1996........ ........ .. 31
(l) The affidavit of Mr Samuel Montague Webster affirmed on 22 March 1996........ ..... 32
THE ORAL EVIDENCE OF THE APPLICANTS’ WITNESSES........ ........ ........ ........ ..... 33
Mr John Buckland........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 33
Mr Mark Franks........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 41
THE CASE PLEADED BY THE RESPONDENTS IN THEIR DEFENCE........ ........ ...... 49
THE CASE PLEADED BY THE SECOND AND THIRD RESPONDENTS
IN THEIR CROSS-CLAIM........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 52
THE EVIDENCE IN THE RESPONDENTS’ AND CROSS-CLAIMANTS’ CASE........ 53
(a) The affidavit of Mr Malcolm Royal sworn on 3 January 1996........ ........ ........ ........ .... 54
(b) The affidavit and oral evidence of Mr Edward Fraser Oxlee........ ........ ........ ........ ...... 55
(c) The affidavit and oral evidence of Mr Eric Hill........ ........ ........ ........ ........ ........ ........ ... 56
CONCLUSIONS ON THE TRADE MARKS ISSUES........ ........ ........ ........ ........ ........ ...... 79
(a) Introduction........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 79
(b)Is the Trade Marks Act 1955 or the 1995 Act applicable to the applicants’
claim for rectification of the Register?........ ........ ........ ........ ........ ........ ........ ........ ........ . 80
(c)The applicants’ claim for rectification of the Register........ ........ ........ ........ ........ ........ . 80
CONCLUSIONS ON TRADE PRACTICES ISSUES........ ........ ........ ........ ........ ........ ....... 96
CONCLUSIONS ON PASSING OFF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 98
CONCLUSIONS ON THE CROSS-CLAIM........ ........ ........ ........ ........ ........ ........ ........ ...... 98
APPENDIX........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 100
THE POSITION UNDER THE 1955 ACT........ ........ ........ ........ ........ ........ ........ ........ ........ 100
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG963 of 1995
)
GENERAL DIVISION )
BETWEEN:MELHERO PTY LIMITED
First applicant
MITCHELL PRODUCTS PTY LIMITED
Second applicant
ANDCLUB X PTY LIMITED
First respondent
WALTER DELL PTY LIMITED
Second respondent
ASHWOOD WAY PTY LIMITED
Third respondent
SHAFT THEATRES PTY LIMITED
Fourth respondent
SILKEN HALL PTY LIMITED
Fifth respondent
TEXAS PARK PTY LIMITED
Sixth respondent
AND BETWEEN: WALTER DELL PTY LIMITED
First cross-claimant
ASHWOOD WAY PTY LIMITED
Second cross-claimant
ANDMELHERO PTY LIMITED
First cross-respondent
MITCHELL PRODUCTS PTY LIMITED
Second cross-respondent
CORAM: BEAUMONT J.
DATE: 20 JANUARY 1997
REASONS FOR JUDGMENT
INTRODUCTION
By their application made under Part V of the Trade Practices Act 1974 and in the accrued jurisdiction of the Court, filed on 20 December 1995, Melhero Pty Limited, (the first
applicant) and Mitchell Products Pty Limited (the second applicant) claimed relief against Club X Pty Limited (the first respondent), Walter Dell Pty Limited (the second respondent), Ashwood Way Pty Limited (the third respondent) and Shaft Theatres Pty Limited (the fourth respondent). Silken Hall Pty Limited and Texas Park Pty Limited (the fifth and sixth respondents) were subsequently added as parties on 27 February and 21 March 1996 respectively.
The applicants are companies controlled by Mr Mark Franks, a citizen and resident of the United States who for some time has been engaged in this country, and internationally, in the business of supplying and distributing “adult” videos and products. The respondents are companies controlled by Mr Eric Robert Hill, Mr Kenneth Hill and other members of their families. Mr Eric Hill has for some time been involved in the “adult” sex services and products industry.
In their application, the applicants claimed that the use by the respondents in trade or commerce of the words “Adam & Eve”, or any similar words, was likely to mislead and constituted passing off. The applicants sought injunctive and other relief in that connection.
By their amended application, filed on 27 February 1996, the applicants claimed, in addition to the relief originally sought, an order for the cancellation of the registration of the trade mark “Adam & Eve” ( No.A635943) (“the Trade Mark”) for services in Class 42 (being “services that cannot be placed in other classes” in Schedule 1 of the Regulations) namely the “wholesaling and retailing of adult products namely aphrodisiacs, sound and image films and video tapes, body stimuli apparatus, equipment and devices including vibro massage and vibro stimuli apparatus and devices and vibrators for personal use, hygienic rubber articles including condoms; restaurant services and provision of food and drink; brothels, massage parlours; social and relaxation centres and meeting places” in respect of which Walter Dell and Ashwood Way became the proprietors as from 26 July 1994; alternatively, an order was sought that a condition be inserted in the Register limiting the registration of the Trade Mark to the metropolitan region of Melbourne; or, alternatively to the State of Victoria; or, alternatively, that it not extend to the Australian Capital Territory or New South Wales.
THE CASE PLEADED BY THE APPLICANTS
The material allegations pleaded by the applicants in the further amended statement of claim are as follows:
The applicants (or further or alternatively, the applicants and their predecessors in business) have, since at least 1991, conducted a business in the “adult” industry known as “Adam & Eve”. In the course of these activities, the applicants (and their predecessors) have used marks containing the words “Adam & Eve” in connection with the supply and promotion of their goods and services. Under, and by reference to, the mark “Adam & Eve”, the applicants have extensively conducted, and advertised and promoted themselves and their goods and services to the public.
Walter Dell and Ashwood Way, who applied for registration of the Trade Mark on 26 July 1994, have licensed Club X, Shaft Theatres, Silken Hall and Texas Park to use the Trade Mark in connection with adult businesses operated by them; and the respondents have commenced using the Trade Mark in connection with the promotion or supply of goods and services in the adult industry in New South Wales.
(In truth) as at 26 July 1994, Walter Dell and Ashwood Way were not, within the meaning of s.58 of the Trade Marks Act 1955, the owners of the Trade Mark; or alternatively, they were not the owners: (a) anywhere in Australia other than in Melbourne; or (b) alternatively, other than in Victoria; or, (c) alternatively, they were not the owners in the Australian Capital Territory or in New South Wales.
As at 26 July 1994, and since, the words “Adam & Eve” signified, to the trade and the public in Australia, when used in connection with services in respect of which the Trade Mark is registered, that those services were the applicants’ services, or are services supplied in association with, or with the licence and approval of, the applicants; and the applicants have acquired a large and valuable reputation in Australia, or alternatively, the foregoing parts of Australia, in the name of “Adam & Eve” in relation to their goods and services.
Thus (it is claimed by the applicants) for the purposes of s.41 of the Trade Marks Act 1995, the Trade Mark is not capable of distinguishing the respondents’ services; its use is, for the purposes of s.42, contrary to law; and its use is likely to deceive or cause confusion. The Trade Mark, within the meaning of s.88, wrongly remains in the Register and ought to be expunged; alternatively, the Register ought to be rectified by inserting, by way of territorial limitation, one of the conditions previously mentioned.
In the circumstances, the respondents have, in trade or commerce, engaged in misleading or deceptive conduct, contrary to s.52, have passed off their goods and services as those of the applicants, and represented that their goods and services have a sponsorship, approval or affiliation they do not have, contrary to s.53(c) of the Trade Practices Act.
THE CASE OPENED FOR THE APPLICANTS
Senior Counsel for the applicants opened their case on the basis that their business “is centred” in Canberra; that they carry on business out of two shops, one in the suburb of Fyshwick (from January 1993), the other in the suburb of Mitchell (from June 1995); that in connection with the operation of those businesses, and in connection with the goods sold in those shops, they have significantly used the name “Adam & Eve”; and that there is a “spill-over” of reputation out of the Australian Capital Territory and into New South Wales, principally Sydney, through radio and television advertising and by virtue of persons resident elsewhere “coming [to] and going from” Canberra.
In order to understand the issues that arise for determination, it will be necessary to summarise the evidence, given by affidavit and orally, tendered by the parties.
THE APPLICANTS’ AFFIDAVIT EVIDENCE
(a)The affidavit of Mr Mark Franks sworn on 21 December 1995
In this affidavit, Mr Franks said that he is involved in the business of producing, supplying and distributing adult videos and adult products in the United States, Canada, Europe and Australia; that in 1991 he decided to set up an outlet for his business in Australia; that in May 1992 he caused Melhero, and in September 1991 Mitchell Products, to be incorporated; and that Melhero’s business is the operation of a retail store selling adult products, and that of Mitchell Products was (but no longer is) the operation of a mail order business.
Mr Franks said that Melhero opened an adult retail store called “Adam & Eve” in Gladstone Street, Fyshwick in January 1993; that a second store, known as “Adam & Eve 2” was opened at Grimwade Street, Mitchell in June 1995; and that Mitchell Products, which is the proprietor of the registered business name “Adam & Eve of Australia” in the Australian Capital Territory, New South Wales and South Australia, has granted Melhero a licence to use the name. (It appears later that Mitchell Products originally registered the business name “Adam & Eve of Australia” in New South Wales on 15 April 1992).
Mr Franks said that the respondents operate adult retail stores in Melbourne, Canberra, Sydney and Western Australia under the name “Club X”; and that he first became aware that the respondents were using the name “Adam & Eve” at a “Club X” store at 78 Darlinghurst Street, Kings Cross in late November 1995.
Mr Franks said that until December 1995, he was not aware that Walter Dell and Ashwood Way had applied in July 1994 for registration of the Trade Mark.
Mr Franks said that he had visited all of the “Club X” stores in Melbourne, Canberra and Sydney, and that, in his opinion, they “have a presentation which is inconsistent with the image that [Melhero] has sought to present to its customers”; that the “Club X” stores are “small, often dark and inexpensively furnished”. Mr Franks said that the “Club X” store in George Street, Sydney has “peep machines”, where “x-rated” videos are shown “in full view of the customers”. In his opinion, the “Club X” stores, by “focus[sing] mainly on hard core magazines and sex toys”, do not stock the range of products that are sold by the applicants’ stores; and the staff in the “Club X” stores are mainly men.
(b)The affidavit of Mr Mark Franks sworn on 5 April 1996
In this affidavit, Mr Franks said that Mitchell Products was “set up” to distribute videos via mail order, and also to wholesale videos to retail outlets. It commenced trading in February 1992 under the name “Champions Videos of Australia”, supplying nationally adult x-rated videos by mail order “to the gay market”.
As has been noted, the business name “Adam & Eve of Australia” was registered in New South Wales on behalf of Mitchell Products in April 1992.
The Franks Family Trust, of which Mr Franks and his wife Barbara are trustees and beneficiaries, is beneficially entitled to all of Mitchell Products’ issued shares, except for a share held by Mr Franks on trust for the Franks Family Irrevocable Trust.
Mr Franks said that Melhero was incorporated in May 1992 to operate an adult retail store in Fyshwick, Australian Capital Territory, which opened in January 1993 under the name “Adam & Eve”. The majority of Melhero’s shares are held on trust for the Franks Family Irrevocable Trust.
Mr Franks said that in June 1993, Kitloft Pty Limited, another company ultimately controlled by him, was incorporated to operate an “adult” retail store at 159 Oxford Street, Sydney. Between September 1993 and August 1995, Kitloft carried on business there under the name “Campus 159”. Between August 1995 and January 1996, the store was closed for refurbishment. Since January 1996, with the licence of Mitchell Products, Kitloft has carried on business at that site under the name “Adam & Eve”.
Mr Franks said that in late 1992 or 1993, he gave instructions to Jeffrey Morton, then Mitchell Products’ manager, for an application to be made by Mitchell Products for the registration of the trade mark “Adam & Eve”, but it appears that the instructions were not effectively communicated, and no such application was made.
(c)The affidavits of Mr Mark Franks sworn on 11 and 12 April 1996
By his affidavit sworn on 11 April, Mr Franks said that in 1992 Mitchell Products (then known as Truefeat Pty Limited) placed advertisements in a large number of the “Yellow Pages” telephone directories published in the several telephone areas of Australia (Ex. “N”). The entries tendered for the areas in 1993 for Sydney, Hobart, Perth, Adelaide, Northern Territory, Brisbane, Melbourne, Launceston, Bairnsdale, Burnie, Newcastle, Wollongong and Central Coast, list under the title “Adult Products &/or Services” the service “Adam & Eve Videos of Australia - phone for free brochure” (or similar words) and give the address “42 Hoskins Mitchell ACT” and the number “free call... 008 806 900”. (Ex. “Q”).
Mr Franks said that all of Melhero’s sales income since 1993 has been derived from products sold by retail at the Fyshwick “Adam & Eve” store. A separate company, Budtint Pty Limited, operates the Arcade of adult video viewing booths located at the Fyshwick store.
Mr Franks said that prior to the opening of the Fyshwick store by Melhero in January 1993, Mitchell Products (then Truefeat Pty Limited) had since 1992 operated an adult video mail order business at Mitchell with two divisions: “Champions” - supplying gay adult videos; and “Adam & Eve” - supplying the heterosexual adult market. At the Mitchell premises, there was also a small retail store for the “over the counter” sales of the two ranges of adult videos and some other products. The second
“Adam & Eve” store was opened in June 1995 in the same group of buildings at Mitchell, selling by retail products similar to those sold by Melhero at Fyshwick.
Melhero’s accounts for the year ended 30 June 1994 record Fyshwick sales of “Adam & Eve” products of $787,420; and for that period, Budtint’s Arcade takings were $210,650. The sales recorded by Mitchell Products in that period were $2,272,013 in respect of videos traded by mail order in its “Adam & Eve” and “Champion” divisions.
By his affidavit sworn on 12 April Mr Franks said that until July 1994, Jeffrey Morton was a director and shareholder of Melhero and of Mitchell Products. A dispute arose about his shareholding and proceedings were instituted in this Court which were ultimately determined in favour of Mr Franks. In the course of the dispute, Mr Franks applied to the Court for the appointment of an interim receiver of Mitchell Products’ assets. John Vouris of the firm Court & Co. was so appointed on 1 November 1994.
Mr Franks said that in the course of this litigation in 1994, Mitchell Products continued its mail order business and associated shop. The operations of Melhero’s “Adam & Eve” store at Fyshwick were not affected by the litigation.
On the conclusion of the litigation, Mitchell Products’ directors appointed Mr Vouris as its voluntary administrator under the Corporations Law. Subsequently, a
Deed of Arrangement was proposed, ratified by a majority of Mitchell Products’ creditors and approved by the Court.
Annexed to Mr Frank’s affidavit is a copy of an agreement dated 21 December 1994 for the sale to him of assets of Mitchell Products there specified. Mr Vouris, as Mitchell Products’ administrator, was a party to this agreement which provided for payment of a price of $275,000. The assets sold comprised the shop fittings, equipment, vehicle and stock at the Mitchell premises. Provision was made with respect to the exercise of an option in the lease of the premises, or for the grant of a new lease. The vendor was to transfer to the purchaser any claim it may have had over the mailing lists.
Mr Franks said that he negotiated a sale to Fort Bacon Pty Limited (known as “Axis”) of certain of the assets of Mitchell Products then sold to him, being assets “relating to the publication of video tapes and the “Adam & Eve” mail order business which had previously been conducted by [Mitchell Products]”. The balance of the assets acquired by him were sold back to Mitchell Products under an agreement dated 8 February 1995 for a price of $195,000.
Mr Franks said that Mitchell Products’ retail store operations continued throughout the period from July 1994 “up to and after 8 February 1995”.
(d)The affidavit of Mr John Buckland sworn on 20 December 1995
Mr Buckland said that he has managed Melhero’s “Adam & Eve” stores in Canberra since January 1993, in the case of the Fyshwick store, and since June 1995 in the case of the Mitchell store. At the time of the opening of the Mitchell store, Mr Buckland sent a media release to the “Canberra Times” and the “Eros Foundation”, a lobby group established in Canberra to support the adult industry, stating that “Adam & Eve, Australia’s most exciting adult store... are celebrating two years of innovative erotic retailing in Canberra with a new store in Mitchell and a ladies only coffee morning... In the past regular women’s nights have been held at the Fyshwick store”. It was also claimed in the release that “women demand [a] new adult shop in Canberra”.
Mr Buckland said that the two stores are retail outlets which sell adult products such as adult toys, “naughty” gifts, collectable items, videos, magazines, greeting cards, board games, massage oils and instruction manuals, and a wide range of lingerie for men and women. The stores, which seek to target couples and single women rather than men, are furnished with quality finishes including timber benchtops, carpet and glass displays. The staff are required to dress in smart casual clothing. In Mr Buckland’s opinion, the presentation of the stores is quite different from other adult stores, and more akin to the presentation in a department store.
Mr Buckland said that since January 1995, the stores send catalogues to customers on their mailing list monthly.
Mr Buckland mentioned several references to the Canberra stores in magazine and newspaper articles (Ex. “A”) in recent years as follows:
(1)In an article by Peter Fray entitled “Sultans of Sleaze” published in the national magazine “The Bulletin” dated 15 February 1994, it was reported that:
"Unclassified and illegal material is available in most cities, especially Sydney. But in the nation’s capital - the only place where it is legal to both duplicate and sell X-rated porn - the industry is keen to stay within the law. ‘We do not,’ says Gerry Hercus, the undisputed king of video porn and owner of Rob and Tony’s workplace, ‘try and promote sex as such, except that we are promoting a product, much like Myers. The real issue is not sex, it’s violence.’"
“With Melbourne’s Hill brothers, Ken and Eric, who run the Club X retail chain, [Darwin-based] Hercus and Jeff Morton from Champions Video control more than 80% of the legal market [in the ‘porn industry’]”. It was also reported that turnover then of videos, magazines and sex aids was said to be $40 to $60 million a year. It was further reported that: “John Buckland, the retail manager for Champions, claims that 70% of people using his main Canberra store, Adam And Eve, are couples”.
The report went on:
“Next to the plumbing supplies stores and the paint and furniture shops, Adam and Eve is in marked contrast to the sleaze and subterfuge of sex shops in other cities. It has a bright and breezy window display, while inside its layout is akin to that of an up-market city boutique. It sells vibrators, leather gear and an endless supply of videos and magazines. Porn’s modern face can be found in the dim recesses of Adam and Eve’s 32-channel video booth arcade. There’s nothing new about providing facilities for individuals - nearly always men - to masturbate while watching X-rated videos, or cutting glory
holes in the walls of some booths for homosexual men to have anal or oral sex. But Champions, a local branch of a massive US chain headed by 43-year-old Californian Mark Franks, has extended the concept to offer wheelchair access, quads (featuring two televisions, one split into quarters to show four different videos at once) and the “buddy booth”. At first glance, these booths appear like any other - with a TV monitor and slots for coins - but there is something irregular about the frosted glass partition separating it from next door. By pressing a button in the booth, the glass defrosts to reveal the person in the next booth. If she or he doesn’t want to have a mutual pornographic experience, then a button on his or her side frosts the wall again. Buckland stresses the de-frosting only happens if both booth customers are willing.Simple:Adam and Eve and other Canberra outlets sell legally classified X-rated videos for between $30 and $60, but in under-the-counter shops unclassified and violent videos can often be picked up for as little as $20. In a bookshop in central Sydney, buying an unclassified video is a simple transaction. The shop’s collection of videos can be found in a small room full of video covers, known as slicks. As an employee explains, the piles are split into sex preferences... straight sex, anal, S & M, girls with girls... and so on. Judging by their dress, the men flicking through the slicks on the day The Bulletin visits are from all walks of life. Few people speak; even fewer look up from the slicks or at anyone entering the room. When a customer picks a slick - in The Bulletin’s case, an unclassified Japanese sex torture movie which promises women howling ‘like wounded animals for more pain’ - the employee gets the actual tape from a nearby storeroom. For $20, with the offer of $5 back on exchange, Bushido 7 is tucked into a brown paper bag.
The activities of such shops - and the brisk mail-order trade in pirated videos by backyard operators in Sydney (who often use ACT mail boxes to appear legal) - are the bane of the industry’s life. Just before Christmas, NSW police raided the shop, seized 4000 videos and charged the owner with selling unclassified material. A month later the shop was offering the same products; ...."
(2)The “Canberra Times” in June 1994 carried an advertisement by the “Adam & Eve Adult Emporium”, Fyshwick, showing the first “Adam And Eve’s” ‘Ladies Only’ event held on 27 June 1994, together with an article
about a further “Adam & Eve” ‘Ladies Only’ event to be held on 15 August 1994. The “events” included “workshops” dealing with “safe sex information”, “sensual massage”, “latest in erotic lingerie”, “videos designed for ladies”, “massage”, “aroma therapy”, “exercises”, “tips on safe sex” and “marital aids”. Booking was “essential”, a light supper was to be served on 15 August and there was to be no cover charge.
(3)In August 1994, the “Canberra Times” carried similar advertising for the “Adam & Eve Adult Emporium”, Fyshwick, together with an article describing an “Adam And Eve Lingerie Parade”. According to the article, the parade was “a very well choreographed and professional show. Far from being sleazy this was complete entertainment”.
(4)In March 1995, an article by Andrea Jones in the “Sydney Morning Herald” entitled “Erotica for Two” reported that: “Porn merchants have seen the future - and it’s not men in trench coats. More and more women are turning on to erotica with their partners”.
The article stated that:
"Amid the factories and offices in the Canberra suburb of Mitchell is what looks for all the world like a department store, but the merchandise is a little unorthodox.
In the front are displays of chocolates, except they’re in naughty shapes. Then there is a department of slinky lingerie. Further in are shelves of videos, the covers showing couples locked in embrace. Out back are movie booths where shoppers can plug into 32 erotic channels.
Adam & Eve is a new-style sex shop designed especially for women and couples. And it’s not alone. In Canberra, Melbourne, Adelaide and soon Perth, the adult chain, Club X, has targeted women with Club Femme stores which are softer and less confrontational than traditional sex shops.
‘Couples are the future,’ says Club X operations manager David Newall. ‘The number of couples is very visible to us as an increasing part of the market.’
The sexual revolution of the 90s is couples’ burgeoning taste for porn. While pornography once conjured images of men in trench coats and sand shoes, it is becoming part and parcel of foreplay in respectable bedrooms across Australia.
Adam & Eve’s retail manager John Buckley [sic] said that on Valentine’s Day they had a rush on videos by Candida Royalle, a former porn star who now makes erotic moves aimed at women."
The article went on to refer to a study of more than 100 women aged from 18 to 70 by the University of New England indicating that 72% had watched at least one x-rated video, “almost exclusively watched the video with a man” and “purely for entertainment”.
(5)The “Canberra Times” dated 5 June 1995, in an article by Liz Armitage entitled “Adult shops shed an old image”, repeating the theme of the “Sydney Morning Herald” article, reported that 50 women had attended “Adam And Eve in Mitchell for a ladies-only coffee morning”; and that: “These mornings are a regular event at the Adam And Eve shops in Fyshwick and Mitchell...”.
(6)“New Woman”, a national magazine, in its issue in August 1995 also picked up this theme in an article entitled “Foreplay” by Angela Matheson who reported that she “shop[ped] for erotica in Canberra, find[ing] the shelves laden with devious delights and discover[ing] that women want more” at “Canberra’s Adam And Eve sex shop” which was reported to have a “Tupperware-party atmosphere... [and] continu[ing] to notch up record porn sales...”.
The article went on to report: “Despite Adam And Eve’s best intentions, the bulk of merchandise looks like it belongs in a junk shop. Despite arguments to the contrary, good quality erotica is almost impossible to find”.
(7)In the September 1995 issue of the national magazine “Cosmopolitan”, Paula Kennedy picked up the theme previously mentioned in an article entitled “Pornography - who says we don’t like to watch”, with the sub-title: “Who says pornographic videos are the domain of boys’ nights and the raincoat brigade. There’s a new style of erotica hitting the screen and more and more women are watching.”
According to the article:
"“Nowhere is [the sexual] empowerment [of women] more evident than in the growing ranks of adult shops lining the streets of Fyshwick, an erotaholics paradise on Canberra’s outskirts. There, adult shop Adam and Eve is set up in the mould of a classy boutique. In a bid to attract a female clientele, it has an up-market window display featuring six mannequins wearing the latest lingerie... Tonight it’s ladies night at Adam And Eve’s and the 150 women cruising the aisles are, to put it plainly, on heat. Their arms are overflowing with vibrators, flavoured condoms and leather lingerie - and that’s before they’ve even reached the sensual video section...”.
The article quotes the President of the Eros Foundation:
"In the past, [the] women [who are customers of Adam & Eve] let their partners bring home the erotic videos, because they didn’t like the sleazy atmosphere of illegal adult shops... But given the opportunity to select erotica in a safe, appealing environment, they’ve discovered there’s plenty to see”.
At the end of the article, under the heading “Shopping for Erotica”, the following is stated:
"Shopping For Erotica
Erotic material that is sold through legal outlets in the ACT and Northern Territory is classified by the chief censor’s office to make sure it contains no coercion, underage sex or violence. Because there is such a big demand, the ACT and NT are catering to an estimated 250,000 who buy in person. Approximately 500,000 clients also mail-order by catalogue from other states, where the range of erotica in back street adult shops is very limited. If you would like more information about buying erotic videos call: Video Ray, distributor of Candida Royale’s Femme Films ( (02) 908 4422 and Adam And Eve ( (06) 239 1121.”
Mr Buckland said that the “Adam & Eve” stores in Canberra employ a total staff of 22 and have an average weekly turnover of $16,000; on average, $4,000 per month is spent on advertising expenses.
(e)The affidavit of Mr John Buckland sworn on 9 January 1996
Mr Buckland said that in respect of the period 22 to 31 December 1995, a record was kept of the “State origin” of each customer of the Fyshwick store as follows:
22 December 1995
ACT44
NSW24
VIC16
SA5
WA2
TAS1
23 December 1995
ACT41
NSW15
QLD1
VIC2
SA1
26 December 1995
ACT36
NSW14
QLD1
VIC1
WA1
TAS1
27 December 1995
ACT28
NSW19
QLD1
VIC7
28 December 1995
ACT12
NSW22
QLD4
VIC4
TAS2
29 December 1995
ACT20
NSW13
QLD1
VIC1
SA1
30 December 1995
ACT28
NSW23
QLD2
VIC1
NT1
WA2
31 December 1995
ACT16
NSW7
QLD1
VIC1
Mr Buckland said that there are 1582 customers on the stores’ mailing list, of which 740 are from New South Wales. (These figures were later corrected, although not substantially, by Mr Buckland in a later affidavit, to be mentioned below).
Mr Buckland identified photographs (Ex. “B”) of each of the Canberra stores. Both display signage with the name “Adam & Eve” prominently on the outside of the premises, along with a drawing of an apple and, in the case of the Fyshwick premises, a drawing of a serpent. The nature of each of the premises, internally, as indicated in the photographs, appears to be as described in the publications previously mentioned. The photographs of the Fyshwick premises are as follows:
The photographs of the Mitchell premises are as follows:
Mr Buckland referred to a mail order video catalogue (Ex. “C” - issue 36) published in the middle of 1995 by “Axis”, described as “Australian X-rated Industry Sales and Service” with a Darwin postal address, containing an advertisement inserted by Mr Franks, of the “Adam & Eve” Fyshwick store, advertising under that name the range of videos and lingerie at “Australia’s most exciting adult stores” and “Australia’s only 32 multi-channel video arcade...” as follows:
The x-rated videos in the first part of the catalogue are said to be “U.S. releases” under the name “Video Ekstase”.
According to a statement made in the catalogue by Gerard Hercus, as the manager of “Axis”, Axis is “Australia’s largest ‘adult’ mail order distributor” with a “new purpose built facility in the ACT”.
A mail order form for “Axis” then appears in the catalogue.
After this, appear advertisements for “U.S. releases” being x-rated videos issued under the name “Adam & Eve” as follows:
It will be noted that the name “Adam & Eve” is written here differently and in different colours, from the name in the Fyshwick advertisement; and that each of the advertisements features a drawing of an apple, although they are drawn differently.
(f)The affidavit of Mr John Buckland sworn on 25 March 1996
Mr Buckland referred to advertisements by “Adam & Eve”, Fyshwick in the “Canberra Times” since February 1993, together with advertisements in other newspapers in the region. He also referred to advertising of “buddy booths” in that store in several Sydney publications, the “Sydney Star Observer”, described as “the gay and lesbian communities’ newspaper”, with a circulation in 1993 of approximately 20,000 (in issues between January and September 1993), “Capital Q” (in issues between May 1993 and February 1994) and “Campaign” (in issues between March 1993 and February 1994). He referred also to advertising by that store in “Outrage”, a Melbourne publication, in January 1993, and in “Pride”, a Queensland publication, between February 1993 and January 1994.
Mr Buckland then referred to advertising by “Adam & Eve”, Fyshwick on two Canberra radio stations between July 1993 and April 1994; and on radio stations at Goulburn and Cooma between August and November 1993, with a view, he said, to “target[ing] Sydney people travelling to and from the snow fields...”. He referred also to advertising by this store on Wollongong television in August and September 1993, featuring a “Father’s Day” promotion (Ex. “L”).
Mr Buckland said that between August 1994 and January 1996, Melhero spent a total of $157,487 on advertising; and that Mitchell Products spent $54,214 on advertising between April 1995 and January 1996. He further said that between July 1994 and June 1995, Melhero spent $37,586 on “Canberra Times” advertising; and $42,177 between July 1995 and January 1996.
There were later tendered in evidence (Ex. “R”) circulation figures of the several publications in which the applicants’ businesses were advertised or otherwise referred to in the relevant periods in question (between 1993 and 1995). The circulations were said to be approximately as follows:
“Canberra Times”: 42,000 (Monday - Friday) 68,000 (Saturday).
“Sydney Morning Herald”: 240,000
“New Women”: 111,000 (in the period July to December 1995)
“Cosmopolitan”: 265,000 (in the period October 1994 to September 1995)
“The Bulletin”: 103,000
“Capital Q”:4,000
The circulation of the “Sydney Star Observer” has already been mentioned.
Mr Buckland identified price units for the “Adam & Eve” stores range of products, which include magazines, condoms, lubricants, sprays, massage oil, vibrators, massage books and body lotions at prices as high as $300 and as low as 50¢.
(g)The affidavit of Mr John Buckland sworn on 11 April 1996
Mr Buckland referred again to the mailing lists in the period October 1994 to January 1996 for the “Adam & Eve” Canberra stores, as mentioned in his affidavit sworn on 9 January 1996. He said that names are entered on the mailing lists by two methods, namely by customers writing their names on forms held at the counter in the stores, or by a member of staff entering the name on the list as a result of a telephone enquiry from a potential customer. Mr Buckland said that, in analysing these lists, he excluded those forwarded on behalf of the applicants’ “Mustang Ranch” store in Canberra (to be mentioned below) and the “Campus 159” store in Sydney (also to be described below). He said that his analysis showed the following places of residence: ACT - 259; NSW - 693; VIC - 178; QLD - 159; SA - 62; TAS - 27; WA - 73; NT - 3; overseas - 6; total - 1,460. He said that the discrepancy between the figure of 1,460 and that of 1,582 mentioned in his affidavit sworn on 9 January 1996 was the result of an oversight in that the figure of 1,582 incudes some customers of “Mustang Ranch” or “Campus 159” stores.
(h)The affidavit of Ms Sarah Caroline Webb sworn on 20 December 1995
Ms Webb, a paralegal employed by the applicants’ solicitors, said that she took photographs of the premises of “Club X” at 78 Darlinghurst Road, King’s Cross (see Ex. “G”) in November 1995. She said that she then observed a neon sign “Adam & Eve” in the entrance hall to the premises. The photographs also show a neon sign outside the premises indicating “Club X” and “videos”, “books” and “toys”. The photographs are as follows:
(i)The affidavit of Ms Anna Katherine Warne affirmed on 11 March 1996
Ms Warne said that on 4 March 1996, she visited an adult bookshop at the premises 799 George Street, Sydney where an “Adam & Eve” sign was visible outside the shop together with a “Love Art Shop” sign, advertising “adult shop - magazines videos books and marital products” (see Ex. “H”).
Photograph of the premises is as follows:
It seems that the placing of the “Adam & Eve” sign there had only recently occurred. The applicants’ solicitors raised the matter in correspondence with the respondents’ solicitors, who asserted that the respondents had the right to use the name.
(j)The affidavit of Ms Anna Katherine Warne affirmed on 25 March 1996
Ms Warne referred to correspondence from the Sydney publisher of “Capital Q Weekly”, a magazine in which, it appears, the applicants advertised their “Adam & Eve” Canberra stores in late 1993 and early 1994. The correspondence stated that, at this time, the magazine had a distribution of about 14,000 copies, the bulk of which were distributed in Sydney’s inner city, eastern suburbs and inner west; and that copies “were also available in all [S]tates at various venues and bookshops”.
(k)The affidavit of Mr David Phillip Nichols affirmed on 23 February 1996
Mr Nichols, the manager of the “Adam & Eve” adult retail store located at 159 Oxford Street, Sydney since its opening on 31 January 1996, said that he had previously worked at the premises as the manager of the business known as “Campus 159” between October 1993 and August 1995. He said that the “Adam & Eve” Sydney store sells “adult” products including adult toys, “naughty” gifts, collectible items, magazines, greeting cards, board games, massage oils and instruction manuals, together with a range of lingerie. Also, there are daily shows on the premises “featuring exotic dancers”. He referred to advertisements of the business in February 1996 in the “Wentworth Courier”, circulating in Sydney’s eastern suburbs, and in the “Sydney Star Observer”, advertising that “ ‘Adam & Eve’ is now in Sydney”.
Mr Nichols estimated that between six and eight customers have appeared to be confused about the supposed relationship between the Oxford Street store and the “Club X” Adam & Eve store at Kings Cross. He gave details of conversations with two such customers. He had also received telephone calls from two customers asking about the association between the Oxford Street store and the Canberra “Adam & Eve” stores.
(l)The affidavit of Mr Samuel Montague Webster affirmed on 22 March 1996
Mr Webster is a marketing consultant, in the adult entertainment industry, to Austereo Limited, the owner of major commercial radio stations in Sydney, Melbourne, the Gold Coast, Darwin, Perth and Canberra. Mr Webster said that in August 1993 he was engaged by Melhero to implement an advertising strategy to target traffic passing through Canberra from Sydney to the snow fields around Jindabyne, NSW. The strategy he developed was to use a combination of radio stations that persons travelling from Sydney down to Jindabyne would listen to. Accordingly, advertising space promoting the “Adam & Eve” store in Fyshwick was booked with radio stations in Goulburn, Canberra and Cooma, especially in holiday periods, in 1993-4. Between September 1993 and December 1993, 187 “spots” on Canberra radio FM 104.7 were purchased at a cost of $11,220; 187 “spots” on Canberra radio 2CA at a cost of $3,927; 240 “spots” on radio station 2GN Goulburn at a cost of $7,200; and 260 “spots” on radio station 2XL Cooma at a cost of $7,800. In
the period January to April 1994 a total of 187 “spots” on station 2CA Canberra at a cost of $3,927.
THE ORAL EVIDENCE OF THE APPLICANTS’ WITNESSES
Reference should next be made to the oral evidence given by the applicants’ witnesses in further examination in chief, in cross-examination and in re-examination.
Mr John Buckland
Mr Buckland said that a tourist bus on the way to the Snowy Mountains will usually stop at the Fyshwick store on a weekend, particularly in the winter (T.p.27).
Mr Buckland said that it is the practice to send the applicants’ catalogue to customers on their mailing list (T.p.33). A catalogue was tendered (Ex. “M”).
The front page of the catalogue is entitled:
“SIN-Sations - Australia’s most SINtilating Adult Catalogue”.
Then appears the statement:
"Introducing OUR LATEST RELEASES IN Videos Leather Lingerie Novelties Condoms Adult Toys Reds Leather Massage Oils - shop in complete comfort at Australia’s most exciting ADULT STORES."
There is also on this page a drawing of an apple, partly eaten, with the statement:
“Be Tempted”.
On the second page there is this message:
"Dear Valued Shopper,
Welcome to the first of SIN-Sations Home Shopper Catalogues. The Adam & Eve chain of Stores are the New Generation in Adult Stores. We offer the greatest range of Adult products in a relaxed, comfortable environment - ideal for first-time and regular Adult shoppers alike. The Adam & Eve stores are designed so that single males, females and couples fee relaxed browsing through...
Orgasmic shopping,
SIN-Sations”
Several pages of advertisements of the products mentioned on the front page follow.
There is also an advertisement for: “Live. The SIN-Sations. Australia’s newest all female review for hotels clubs & private functions. Ten beautiful ladies in a fully choreographed extravaganza of fashion light & sound”. Bookings are to be made through a given telephone number.
On the last page of the catalogue there is the statement:
“Visit one of our three modern showrooms”.
There follow references to:
(1)“FYSHWICK A.C.T. 125 Gladstone St [telephone and fax numbers are stated].”
Below this are photographs of those premises, external and internal, the former showing, although not prominently, the name “Adam & Eve”.
Below this the following is stated:
"X-Rated VIDEO Sales & Rentals Enormous range of Adult Books VIBRATORS, TOYS & GIFTS Lingerie, Leather, Kits for Couples, Swingers, Partners, LINGERIE PARADES LADIES ONLY EVENINGS".
(2)“MITCHELL A.C.T. 32 Grimwade St [telephone and fax numbers are stated].”
Below this are photographs of the premises, external and internal, the former showing, again not prominently, the name “Adam & Eve”.
Below this the following is stated:
“Introducing Australia’s only 32 MULTICHANNEL ADULT VIDEO ARCADE Raunchy Pasta PREVIEWS RENTALS
VIDEO & MAGAZINE EXCHANGES EROTIC ART GALLERY, LIVE SHOWS COMING..."
(3)“SYDNEY N.S.W. 159 Oxford St Darlinghurst [telephone and fax numbers are stated]”.
Below this are photographs, internal and external, of the premises, showing in the latter case again not prominently, the name “Campus 159”.
Below this appears the following:
"XXX LIVE EROTIC ALL-MALE SHOWS XXX Multi Channel Adult Video Arcade, Huge range of Toys for Girls & Boys, Leather, Lubes & Lotions, Magazines, Condoms, Cards, T-Shirts & More! Hundreds of XXX Videos...Latest releases 7 Styles of AROMA"
Also on the last page of the catalogue appears an advertisement for “Mustang Ranch” , another Melhero business, as follows:
"Stage 1: Opening late June...OVER 5,000 XXX TAPES!
Stage 2:Opening September: Beautiful Erotic Dancers Appearing LIVE!! AUSTRALIA’S LARGEST LIVE ENTERTAINMENT & RETAIL COMPLEX SEVEN UNIQUE VENUES ALL UNDER THE ONE ROOF Molonglo Mall, FYSHWICK A.C.T...."
In cross-examination, Mr Buckland said that the Mitchell store runs between Hoskin and Grimwade Streets (T.p.34). At the Grimwade Street end is the “SIN-
Sations” nightclub (T.p.35). At that end, there are signs for both “Adam & Eve” and “SIN-Sations” (T.p.36); Ex. “B”).
He agreed that in the catalogue, Ex. “M”, the “lead” name is “SIN-Sations”. That name was first used in September 1995 (T.p.35).
With reference to another “Axis” catalogue (Ex. “1” - issue 37 apparently published after the middle of 1995), it was Mr Buckland’s understanding that the applicants purchase videos from the Fort Bacon company, trading as “Axis”, a company at arms’ length with the applicants, controlled by Mr Hercus (T.p.39).
In the “Axis” catalogue issue 37 (Ex. “1”), there is an introductory statement on p.3 by Mr Hercus explaining the business operations of “Axis” in terms similar to his statement on p.12 in Ex. “C” (issue 36). Below the statement on p.3 of Ex. “1”: “Thank you for shopping with Axis!”, there are advertisements for five stores, including “Adam & Eve Shop 1” at Fyshwick, and “Adam & Eve Shop 2” at Mitchell.
Mr Buckland said that Mitchell Products used the name “Champions” to sell pornographic gay videos, adult toys and “straight” videos for male and female audiences, until early 1995 (T.p.43). He agreed that in 1993-4, “Champions” was the main name used by the applicants in Canberra (T.p.45).
With reference to the “Bulletin” article previously mentioned, Mr Buckland said that the Fyshwick premises may be described as a “David Jones-type store”, notwithstanding the proximate location of the “arcade” and the provision of facilities for individuals, nearly all men, including the “buddy booths” (T.pp.48-9), which he describes as “two booths side by side that has interactive glass...[and] an electric current goes through the glass when you put your tokens in to watch a video and you can actually see through that wall to the next cubicle - no interaction but you can see the person next door” (T.p.50).
Mr Buckland agreed that in a later “Axis” catalogue, issue 43 (Ex. “2”), there is a section advertising U.S. “Adam & Eve” videos, but the catalogue contains no reference to any of the applicants’ stores (T.p.56). The only telephone number mentioned in the catalogue is the “Axis” number in Darwin.
Mr Buckland said that in January 1996, Mr Franks instructed him to erect an “Adam And Eve” sign at the Oxford Street, Darlinghurst premises (T.pp.58-9). The instruction came through a fax from Joel Kaminsky, on behalf of Bay Management Pty Limited. Mr Kaminsky, with the agreement of Mr Franks, handled the day-to-day management of the applicants’ stores “in unison with” Mr Buckland (T.p.116).
Mr Buckland agreed that he became aware of the establishment of the “Club X Adam And Eve” store in King’s Cross, Sydney in September 1995, but he had “no idea” whether the decision to use the name “Adam And Eve” in relation to the Oxford Street premises was prompted by the opening of the Club X premises (T.pp.59-60).
Mr Buckland agreed that it is possible to see through the “Adam & Eve” perspex sign outside the Oxford Street store to a “Campus 159” sign underneath it (T.p.61; Ex. “4”). Other photographs of the ground floor of the Oxford Street premises in evidence (Ex. “5”) show first, another “Adam & Eve” sign, with a drawing of the serpent and the partially eaten apple previously described; and secondly, a smaller “Campus 159” sign.
These photographs are as follows:
Mr Buckland said that when he commenced employment with the applicants in 1993, Mitchell Products was distributing two kinds of catalogues - one an “Adam & Eve”, the other a “Champions”, catalogue (T.p.64). Two of the “Champions” catalogues published by Axis in 1996 (Issues 14 and 15) (Ex. “6”, Ex. “7”) carry advertisements for “Campus 159” at 159 Oxford Street as “a unique adult store”, described as “home of Sydney’s only live male erotic shows” (T.p.65).
Mr Buckland said that he provided the information for the media release, prepared by the Eros Foundation, for the opening of Melhero’s “Mustang Ranch” (T.p.67) at separate premises (T.p.70). The release (Ex. “8”) quotes Mr Buckland as saying that the “multi-faceted complex... cater[ing] for women’s, men’s and couples theme nights” is “a little like a cross between Okalahoma and a Devo rock music clip... No expense has been spared in recreating the very wild west...”. ... “Canberra is becoming the Copenhagen of the southern hemisphere and will reap the economic rewards of this move in the very near future.”
Mr Mark Franks
In cross-examination, Mr Franks said that he “owns” both Melhero and Mitchell Products and the licence agreement between these companies for the use by Melhero of the name “Adam And Eve” was an oral, “casual” agreement. No licence fee was involved (T.p.81).
Mr Franks agreed that when, in 1992, he instructed Mr Morton to apply for the trade mark, it was for the words “Adam & Eve of Australia” with graphics described as “apple with bite missing” (T.p.82) and for the goods in Class 9 of: “Video Cassettes” (Ex. “9”).
Class 9 in Part 1 (“Classes of Goods”) was (and remains) in these terms:
"Scientific, nautical, surveying, electric, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire extinguishing apparatus."
Although Mr Franks said that he did not see the documentation relating to the rejection of the trade mark application (T.p.83), material in evidence produced by the Trade Marks Office (Ex. “10”) indicates that the application was lodged on 11 June 1992, that a notice of non-acceptance was given on 8 October 1993 and that the application lapsed on 10 March 1994.
Mr Franks agreed that Mitchell Products’ business name registration is for “Adam & Eve of Australia” (T.p.83; Ex. “11”). He accepted that Melhero has not applied for business name registration for “Adam & Eve” (T.p.84).
(It is convenient to note here that there is in evidence, tendered by the respondents (Ex. “11”), a list of business name registrations of the name “Adam & Eve” or “Adam and Eve” in most States and Territories. The registered proprietors include persons other than the applicants and the respondents. The nature of the businesses include the sale of clothing (including lingerie), gardening, hairdressing, introduction agency, sale of wedding stationary, sale of gift baskets and cards, beautician, wedding car services, escort agency, sale of massage oil, sale of household goods, cafe and restaurant, and modelling.)
Mr Franks agreed, in evidence given on 11 April 1996 (i.e. before his affidavit sworn on 12 April 1996 previously mentioned), that Mr Vouris was appointed as administrator (receiver) of Mitchell Products (then Truefeat) in July 1994 on the application of Mr Franks as a creditor of the company (T.p.85); that in November 1994, Mr Vouris advertised the whole of the business for sale (T.p.88; Ex. “13”); and that in December 1994 his solicitors, acting for the Franks Family Trust, Benelan Pty Limited and the Planet Group Incorporated offered to buy Mitchell Products’ assets for the sum of $275,000. The offer was to include any claim that Truefeat may have had in respect of the mailing lists; Benelan was prepared to release Truefeat (Mitchell Products) and the receiver and administrator from any claims it may have had “for licence fees for the use of the mailing list”; and the offer was conditional upon the administrator securing the exercise of the options under the lease of the Mitchell premises (T.p.89; Ex. “14”).
Mr Franks’ view was that the applicants’ mail order business was “very limited”; their business was essentially a “retail operation (that is to say) stores that customers walk into... store fronts... the... mailing list... is very insignificant” (T.p.115). Mitchell Products’ mail order business ceased when it went into administration (T.p.117). Melhero never had a mail order business (T.p.117).
Mr Franks was cross-examined (T.p.117) about the Heads of Agreement, dated 24 November 1994, made between him, his Family Trust, Dominion Publishing Limited, Benelan Pty Limited (both controlled by Mr Franks) and Fort Bacon Pty Limited (controlled , as has been noted, by Mr Hercus) (Ex. “16”) arising out of negotiations for the sale to Fort Bacon of all the shares held by Mr Franks, his Family Trust and Dominion in Benelan. It was there provided, inter alia, that there should be included in the sale “as part of the assets of Benelan the mailing list presently owned by [Dominion] [operated by Truefeat Pty Limited to date]...” (cl. 4).
By cl. 10 it was provided:
"10.The parties agree that [Dominion] shall licence the use of the name Adam & Eve to Fort Bacon for the proposed Adam & Eve mail order business of Fort Bacon in Australia. In return Fort Bacon shall place an advertisement in an order catalogue or brochures in regard to the Adam & Eve mail order business advertising the stores owned by Franks or [Dominion] or affiliates operating under the name “Adam & Eve in Australia”. In this regard [Dominion] or its affiliates will prepare an advertisement... and submit it to Fort Bacon."
Despite the evidence that Mr Oxlee’s business had undoubtedly used the mark for a number of years prior to the commencement by the applicants of the use of the mark, at the time of registration of the mark by the respondents, the applicants had also been trading under the name “Adam and Eve” and had already gained a substantial reputation in the name in respect of the same goods and services in relation to which the mark was registered. Notwithstanding the geographically localised nature of the two businesses, the evidence, including the fact that much trade was done by mail-order, indicates that it is likely that there would be confusion between the two businesses.
It follows, in my opinion, that Mr Oxlee, and thus the applicants for registration, could not have satisfied the “distinctiveness” criteria of s.41. In my view, as at July 1994, the name “Adam & Eve” was not capable of distinguishing their services (or goods) from the goods or services of other persons. It further follows from the language of s.41(2) that any application for registration must be rejected. The Register should, accordingly, be rectified by cancelling the registration.
Although not necessary to do so, I will also mention the possible operation of s.43 of the 1995 Act in the present circumstances.
By s.43 it is provided that an application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.
Whether a mark is misleading or deceptive is essentially a question of fact. It is directed at ordinary members of the public and in particular the normal buyers of the goods or services in question. The test is well-known; a mere possibility of confusion is not enough. There must be a real, tangible danger of its occurring. It is sufficient if the result of the user of the mark will be that a number of persons will be caused to “wonder” whether the two products may have come from the same source. Southern Cross Refrigerating Co. v Toowoomba Foundry Pty Limited (1954) 91 CLR 592 at 595 per Kitto J.
In my opinion, on the assumption (contrary to my earlier holding) that Mr Oxlee could establish that the mark was distinctive of its services (or goods), the use of the mark would, by July 1994, have been likely to deceive or cause confusion in some limited circumstances. It is true that both Melhero and Mr Oxlee were trading under the same name and selling by retail the same or very similar products, the area of Mr Oxlee’s operation and reputation was, as has been found, territorially limited to St. Kilda and Brunswick, and most of Melhero’s business was sourced in Canberra. Nonetheless, there must have been a real possibility that at least some of the potential customers of each of their businesses would “wonder about” the source or original of the services (or goods) on offer, so that s.43 could apply (cf. Carnival Cruise Lines Inc. (1994) 120 ALR 495).
As has been noted, by s.89(1)(b), the court may decide not to grant an application for rectification made on the ground that the trade mark is liable to confuse or deceive, if the registered owner of the trade mark satisfies the court that this ground has not arisen through any act or fault of the registered owner.
In my opinion, if, as I think, there would have been a likelihood of confusion as at July 1994, it did not arise through the conduct of Mr Oxlee. He had been using the name, in good faith, since 1984, whereas Melhero did not commence its operations until January 1993. It is true that Mr Hill was aware or Melhero’s business name, and of Truefeat’s lapsed application, when he applied for registration. But, for present purposes, it is Mr Oxlee’s position that is relevant as the immediate predecessor in title in the senses previously discussed. Thus, in my view, the Court’s jurisdiction under s.89(1)(b) is available to be exercised in an appropriate case. But, it is another question whether the discretion conferred by s.89 ought to be exercised, so that the application for rectification would be refused.
I have difficulty in accepting that the discretion should be exercised in favour of Mr Hill and his companies. Whilst Mr Oxlee is free of any blame, he did not seek to claim registration of a trade mark. But Mr Hill did so, knowing of Melhero’s similar activities and identical business name, and knowing also that one of Melhero’s associates had applied for, if not ultimately pursued, an application to register that mark. Moreover, Mr Hill agreed in his evidence, as has been noted, that he was aware that in about April 1994 negotiations had been carried on with Mr Morton, who was then obviously dissatisfied with Mr. Franks. In all of those circumstances, for Mr Hill to proceed with the application for registration of the Trade Mark must have been, to his knowledge, a risky step. It is not a case, then, where, in my view, a discretion in his favour ought to be exercised.
Nor, in my view, is there any “public interest” reason, as was urged on behalf of the respondents, in favour of declining to order the removal of the trade mark.
(As has previously been mentioned, I have included in the Appendix to these reasons, an opinion on what would have been the position if the 1955 Act had applied.)
CONCLUSIONS ON TRADE PRACTICES ISSUES
On behalf of the applicants it is contended that the respondents, in choosing to use the signage “Adam & Eve” at the Darlinghurst Road premises in September 1995, have engaged in conduct which is likely to mislead or deceive. The applicants argue that, as at September 1995, their reputation and goodwill in the name “Adam & Eve” in connection with the mail order and retail sale of adult videos and “adult services” was such that the use of the name “Adam & Eve” by the respondents at their King’s Cross premises was likely to lead to a “conclusion” by a “significant” number of people that there was some association between the business conducted a those premises and the applicants’ established business. (It should be noted that it is now well established by the authorities that the trade mark test of “wondering” about the question is not the test here.)
It may be accepted that if the facts here justified the “conclusion” by members of the public contended for by the applicants, a prima facie contravention of s.52 of the Trade Practices Act would be established. But I am unable to agree that the evidence warrants a finding that a “significant” number of persons would be likely to conclude in September 1995 that there was some association between the business conducted at Darlinghurst Road and the applicants’ businesses.
In this area, it is now also well established by the authorities that the test under s.52 is, in essence, a factual inquiry. As has been noted earlier, although both sides here have used the same name in carrying on similar businesses, there are important differences between them: First, Mr Oxlee’s business, as developed by the respondents in conjunction with the “Club X” and “Femme” names, may be seen as less “upmarket”, and much smaller, than the applicants’ businesses. Secondly, the applicants’ businesses have always, in its mail-order aspects, emphasised the special x-rated standing of Canberra and Darwin as exclusive locations (in the Territories) for the conduct of that special kind of operation. Thirdly, the applicants have also made extensive use of the names “Champions” and “SIN-Sations” in conjunction with the name “Adam & Eve”; and, significantly, in Sydney they have continued to use the name “Campus 159” in conjunction with “Adam & Eve”. Fourthly, the “Axis” catalogues distributed by the applicants advertise “Adam & Eve” videos produced in the United States, distinguishing them from videos from other x-rated videos, for instance, European ones. Next, and perhaps most important, the name “Adam & Eve” appears, on the evidence, to have very little significance in Sydney. When the territorial aspects of the parties’ respective reputations are considered, in essence, Mr Oxlee’s businesses and the respondents’ business should, as I have said, be seen as centred in St. Kilda and Brunswick, whereas the applicants’ businesses should be viewed as Canberra-based; and until September 1995, shortly before the institution of these proceedings, there was no use of the name “Adam & Eve” in Sydney in this field of business. Finally, it is also material to bear in mind, in the present connection that, as has been previously mentioned, the names of “Adam” and “Eve” are extremely well known in many other contexts. Indeed, it is difficult to think of names that would be more familiar to the public.
In my view, no contravention of s.52 has been established in the respect alleged by the applicants. In the absence of any real threat by the respondents to use the name “Adam & Eve” in the Australian Capital Territory, there is no basis for the Court to intervene in that regard.
CONCLUSIONS ON PASSING OFF
For similar reasons, the claim of passing off must, in my view, also fail.
For our purposes, the relevant principles are as stated by Shanahan op. cit. (at 373) as follows:
"Where it is alleged that the misrepresentations being effected by the use of some trade mark, trade name or get-up, the plaintiff’s own indicium must be known in the relevant market. Its ‘reputation’ must extend to the geographical area in which the defendant is making the representation and to the class of purchaser to which the representation is addressed."
Although the position may well have been different if the respondents had sought to establish in the Australian Capital Territory a business under the name “Adam & Eve”, there is, as has been said, no real threat by the respondents to do this. As has been noted, the parties’ respective businesses operate in different geographic areas and are otherwise different in the respects previously mentioned.
In the circumstances, there is no need to deal with the discretionary defences raised by the respondents.
CONCLUSION ON THE CROSS-CLAIM
Given the conclusion that the Trade Mark ought to be cancelled, the cross-claim must fail. It may be noted that if the Trade Mark had remained on the Register, a question would have arisen as to the significance, in this context, of the use, by both sides, of the other names mentioned (“club X”, “Femme”, “Champions”, “SIN-Sations” and “Campus 159”), in conjunction with the trade name “Adam & Eve” (cf. Carnival Cruise, above, per Gummow J. at 513).
ORDERS
Direct the applicants to bring in short minutes of orders in accordance with these reasons for judgment.
Costs reserved.
APPENDIX
THE POSITION UNDER THE 1955 ACT
In my reasons I have held that any mark, as distinct from a trade name, used by Mr Oxlee in respect of services (or goods) dealt with or provided by him was not distinctive within the meaning of s.41 of the 1995 Act. I have also held that the 1995 Act rather than the 1955 Act applies to the rectification claim. I will now consider the position, in terms of the alleged “distinctiveness” of Mr Oxlee’s mark, as if under the 1955 Act, in the event that I be wrong in applying the 1995 Act.
In Top Heavy Pty Limited v. Killin (1996) 34 IPR 282, Lehane J. compared the provisions of the two Acts in this area and concluded that there were no differences of a substantial kind. With respect, I agree with that analysis. It follows that I would not have been satisfied, for the purposes of the 1955 Act, that Mr Oxlee, or the second and third respondents, were entitled to register the mark as a distinctive mark.
In the Nike Case, above, Sheppard J. dealt with an expungement application on the basis that the 1955 rather than the 1995 Act applied. I respectfully agree with his Honour’s analysis of the authorities in this area especially on the “blameworthy conduct” question (at 396-405). My attention has been drawn to the somewhat different approach taken by Tamberlin J. in Canon v. Brook (1996) 36 IPR 88 (at 101), but I note that they were opposition, not expungement, proceedings and may be distinguished accordingly.
As I have held in my reasons, there was a likelihood of confusion, in terms of persons “wondering” about their source, arising between the use of the same name by both Melhero and Mr Oxlee in selling the same or similar products. There was also, in my view, for the reasons already given, conduct on the part of Mr Hill in proceeding to apply for the registration of the mark which could fairly be described as “blameworthy”. It would have followed, in my view, that expungement proceedings under the 1955 Act should also have succeeded.
I certify that this and the preceding one hundred and six (106) pages are a true copy of the Reasons for Judgment herein of the Court.
Associate
Dated:20 January 1997
Counsel and Solicitors Mr. J. Ireland Q.C.
for applicants: Instructed by Hunt & Hunt
Counsel and Solicitors Mr A. Bannon
for respondents: Instructed by Rockliffs
Dates of hearing: 10, 11, 12 April 1996, 22 August 1996
Date Judgment delivered: 20 January 1997
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