Mitre 10 Australia Pty Ltd v Masters Home Improvement Australia Pty Ltd
[2011] VSC 343
•26 July 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. SCI 2011 3479
| MITRE 10 AUSTRALIA PTY LTD (ACN 009 713 704) | Plaintiff |
| v | |
| MASTERS HOME IMPROVEMENT AUSTRALIA PTY LTD (ACN 066 891 307) | Defendant |
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JUDGE: | MACAULAY J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 July 2011 | |
DATE OF JUDGMENT: | 26 July 2011 | |
CASE MAY BE CITED AS: | Mitre 10 Australia Pty Ltd v Masters Home Improvement Australia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 343 | |
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INTERLOCUTORY INJUNCTION – Whether use of a fourfold colour scheme by the defendant is likely to mislead or deceive consumers – Passing off – Whether a prima facie case for relief is shown – Balance of convenience – Interlocutory injunction refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C D Golvan S C | Middletons |
| For the Defendant | Mr A J Bannon S C Mr M R Hall Mr S M Rebikoff | Mallesons Stephen Jaques |
HIS HONOUR:
Introduction
The plaintiff (Mitre 10) is a wholesaler of home improvement, hardware and outdoor goods. It currently licences an Australia-wide network of 353 retail stores that trade under the ‘Mitre 10’ name. Mitre 10, or its predecessors, have operated a retail hardware store network in Australia since 1959.
On many of its current stores, and in its advertising and online presence, Mitre 10 chiefly uses white lettering on blue background, in combination with a lighter blue and grey colours, in its get-up.
The defendant (Masters) is a joint venture between Woolworths Limited and Lowe’s (a United States company) that is about to enter the home improvement and hardware market, opening its first store shortly in Braybrook, Victoria. Thereafter it intends to create a chain of some 150 stores Australia-wide trading as ‘Masters’.
On 2 May 2011 Masters published its proposed get-up for its stores and website design. That get-up features the use of white lettering on a blue background, with a ‘screw-bit’ logo depicted in a lighter shade of blue. Its building façade also features some grey colouring.
Mitre 10 seeks an interlocutory injunction to restrain Masters from using a get-up constituted by the combination of the colours blue, light blue, grey and white (as depicted in various images in a schedule to the summons) in its marketing or advertising of its stores, and in its store get-up. Mitre 10 alleges that if Masters uses that get-up it will, in breach of certain provisions of Schedule 2 of the Competition and Consumer Act 2010 (Cth),[1] likely mislead or deceive consumers to believe that:
(a)Masters’ stores are Mitre 10 stores;
(b)Masters’ stores are advertised, promoted and operated with the licence or approval of Mitre 10; and
(c)The Masters’ business is the Mitre 10 business which has the sponsorship or approval of Mitre 10 or is affiliated with it.
[1]Competition and Consumer Act 2010 (Cth), Schedule 2 (‘The Australian Consumer Law’) ss 18, 29(1)(g), 29(1)(h).
Further, Mitre 10 claims that Masters is proposing to pass off its stores as those of Mitre 10, and its business as having a connection or affiliation with Mitre 10.
Proceeding
The proceeding was commenced by writ on 6 July 2011, with a summons issued on the same date, for hearing in the Practice Court. Masters expressed its desire to have the matter proceed by way of early final hearing, stating that it believed it could be ready for such a trial within four weeks.
I have acceded to the plaintiff’s request to have this interlocutory application heard in the Practice Court, the parties having taken considerable trouble to prepare for an interlocutory hearing by assembling extensive affidavit material and their legal teams (including senior and junior counsel) for the purpose. Following the outcome of this interlocutory hearing the Court may well be able to accommodate an early final hearing if both parties are willing to cooperate in doing so.
Evidence
The matter has proceeded solely on affidavit. I will not allude to all of the evidence but I will mention the general subject matter of the most pertinent affidavits.
Mr Mark Robert Laidlaw, chief executive officer of Mitre 10, gave evidence about the history of Mitre 10; the use of store colours over a duration of time; the colours Mitre 10 has used in advertising and communication material; and confidential information relating to Mitre 10’s expenditure on its advertising Australia-wide. Mr Laidlaw produced many examples of current and past store get-up, as well as examples of websites, point of sale materials, product catalogues and television commercials, all with a view to demonstrating the extent of the use of what were referred to as the ‘Mitre 10 colours’. Further, Mr Laidlaw produced colour printouts of Masters’ website and an artist’s impression of a Masters’ store, depicting its proposed colour scheme and logo. He also gave evidence of the damage that would allegedly flow to Mitre 10 should Masters not be restrained from using the proposed colour scheme and get-up.
Ms Nadia Juanita Venier, legal counsel for Mitre 10, produced a large bundle of photographs of Mitre 10 stores which comply with its National Brand Compliance Program to which I will shortly refer. Her affidavit was otherwise principally responsive to affidavits of Ms Anderson and Mr Taylor, filed by Masters, to which I will refer below.
Masters filed a number of affidavits. Mr Don T Stallings, chief executive officer of Masters, dealt with the plan of Masters to open stores throughout Australia; the history of the proposal to develop the chain as a joint venture between Woolworths and Lowe’s; the engagement of Hulsbosch Pty Ltd as a brand consultant and the evolution of the Masters’ get-up, including the selection of its colour scheme; the range of goods Masters intends to sell; and the publicity given and proposed to be given for the launch of the chain. Mr Stallings also gave evidence as to the likely impact of any restraint upon Masters from using the get-up which it has developed.
Ms Melissa Anderson, a solicitor employed by the solicitors for Masters, produced a number of colour printouts from internet searches she conducted displaying images of Mitre 10 stores, and promotional and advertising materials published by Mitre 10. Some of the images which she produced were subsequently criticised by Ms Venier as being out of date. Ms Venier in her affidavit mentioned above, provided updated information in relation to some of the examples produced by Ms Anderson.
Ms Anderson also produced printouts obtained from internet searches of websites from other hardware and building supply stores (other than Mitre 10 or Masters) which incorporated the colour blue in their branding and store get-up. She also produced colour printouts from internet searches of websites from stores and businesses in the broader home improvement industry whose logos and branding also incorporated the prominent use of the colour blue.
Mr Ken Taylor, a licensed private inquiry agent, produced photographs of various Mitre 10 stores around the country, and Mitre 10 signage, together with photographs of other hardware and home improvement businesses (other than Mitre 10 and Masters) prominently using the colour blue in their store colour schemes.
Mr Luke Dunkerley, General Manager, Marketing for Masters, and Hans Hulsbosch, Creative and Managing Director of Hulsbosch Pty Ltd, each gave evidence concerning the evolution of the branding concept and colours, and general marketing get-up, developed for Masters. They also referred to the influence of the Lowe’s colour scheme (used in the United States) upon the evolution of Masters get-up. That colour scheme features the use of white letters on a blue background, that blue background commonly having a red border.
For the purpose of determining this interlocutory application I will necessarily confine myself to what I regard as the essential facts, although there was a great deal more information produced to me than I will mention.
Mitre 10 branding
As mentioned, Mitre 10 has operated a retail hardware store network in Australia since 1959. Most stores are owned and operated by independent retailers under licence from Mitre 10. Often, Mitre 10 stores incorporate the name of the owner, or a particular locality, in the store name and in its advertising. For example
•Costa’s Mitre 10;
•Crazy Jim’s Mitre 10;
•Bob’s Mitre 10;
•Torquay Mitre 10;
•Bunbury Mitre 10; and
•Richmond Timber and Hardware Mitre 10.
The fourfold colour scheme described by Mitre 10 as its ‘Mitre 10 colours’ consist of specific shades and tones which may be described by reference to particular numbers within the Pantone Matching System (PMS): for example, the principal blue (called by the plaintiffs ‘Mitre 10 blue’) is PMS 2728CVC. I will refer to the colours as the blue, the light blue (or cyan), white and grey. Mitre 10 was anxious to emphasise that the blue, light blue and grey are specifically selected shades of those colours and that Masters not only proposes to use colours of a similar kind, but almost identical shades and tones of those colours.
It is self-evident, however, from inspecting the many photographs and internet printouts that have been produced in the evidence that not all Mitre 10 stores in Australia currently use the fourfold ‘Mitre 10 colours’. This is explained by the fact that Mitre 10 is in a process of transition, endeavouring to bring its whole network of 353 stores into a consistent and uniform branding and colour scheme. Although Mr Laidlaw said that, since 1985 Mitre 10 has ‘extensively used the colour blue as the predominant colour for store fit-outs and branding’, and that since 2001 Mitre 10’s corporate livery, point of sale, promotional and advertising materials have ‘extensively and consistently used the colour combination of blue, white and grey’, it has only been since 2007 that Mitre 10 has embarked upon a National Brand Compliance Program to ensure consistency of its stores around Australia in the use of the four colours.
It is not stated in the evidence exactly when the conversion of the stores under the National Brand Compliance Program began, but the evidence reveals that, as at 31 May 2011, the percentage of Mitre 10 stores branded in compliance with the scheme is:
•Victoria 49% of stores;
•New South Wales 48% of stores;
•Queensland 47% of stores;
•Western Australia 46% of stores;
•South Australia 38% of stores; and
•Tasmania 38% of stores.
In total 47% of 353 stores in Australia have been converted to comply with the branding and colour scheme. They are being converted in accordance with a Style Guide prepared in 2007. It is envisaged that the stores will be progressively transformed in accordance with that Style Guide until the process is completed within a further 18 months, assuming the target is met. As well as 47% having been re-branded already, another 32% of stores have committed to doing so. It therefore appears that around 20% of stores have not yet committed to making the changes.
The preferred new store branding, as dictated by the Style Guide, requires the name ‘MITRE 10’ to be in white letters of a particular style, incorporating a diagonal blue slash through the numeral 0 in ‘10’, set against a blue background conforming to the particular shade of blue called the ‘Mitre 10 blue’.
Any proprietors’ names are also to be in white lettering. The facades of buildings are to predominantly feature the Mitre 10 blue. A particular shade of grey is specified for the non-dominant areas, below the main signage. Red and green colours are specified for particular signs being ‘Trade Centre’ and ‘Garden Centre’ respectively, where applicable. A lighter shade of blue (cyan) is specified for some subsidiary lettering for such messages as ‘Trading Hours’ or ‘Services We Provide’, such messages to be set against the primary blue background.
Images of stores converted in accordance with the National Brand Compliance Program were produced in evidence. It is clear from them that the most consistent and prominent features on all stores are the white letters ‘MITRE 10’, with or without a proprietor’s name, set against the blue background. Not all stores necessarily display words in the lighter blue. Where they do so, it is often to display the words ‘Mighty Helpful’ somewhere on the signage. The grey colour on secondary facades is not always evident but where it is, it seems very much to be a background feature.
It is also apparent that whilst the branding scheme is consistent, the size, shape and style of buildings to which that scheme is applied are not always consistent with one another. No doubt that is because the network consists of a large range of individually evolved and owned stores licensed by Mitre 10. That means however that the application of colours to features on buildings, and the use and location of words and messages on buildings, is partly determined by the particular architecture of those buildings. Such differences in architecture may account for some variations in emphasis in the colours of the branding scheme as applied to different buildings.[2]
[2]Compare the Clennett’s, Bob’s and Glynde stores, with the Richmond Timber & Hardware and the Petrie’s stores, in Exhibit ML 3.
The ‘older generation’ of Mitre 10 stores exhibit a variety of different colours, styles, logos and messages. One style and colour scheme which appears in a number of exhibits, is the word ‘Mitre’ in yellow lettering, followed by the numerals ‘10’ in either orange or red colour. They are set against a blue background.
Another version displays ‘Mitre’ in white letters, ‘10’ in yellow, and the word ‘Solutions’ in yellow, partly enclosed in a white outline in the shape of a house, all set on a blue background. Yet another, used in several locations, includes the words ‘Mitre 10 Handy’ on a blue background, where ‘Mitre’ is in white but ‘10 Handy’ is in green. Some other instances use white and orange lettering on blue background, or white and red lettering on blue background.
Mitre 10 also operates three ‘mega stores’ in Australia, two in Victoria and one in Queensland. They are in addition to the 353 stores already referred to. As their name suggest, those stores appear to be particularly large, warehouse sized stores. They seem to use different colour schemes altogether, employing white, orange and black. Mitre 10 does not intend to build any more such stores but neither does it intend to change the colour scheme.
Much evidence was produced depicting Mitre 10’s web pages for various stores, its in-store point of sale signage, catalogues and so on. Most of them prominently depict white lettering on the primary blue, with some subsidiary lettering in the lighter blue. The grey is harder to find but sometimes it can be seen as a background colour to other images, or, for example, in the colour of an item on the page such as a paint roller.
A good deal of evidence was presented concerning Mitre 10’s expenditure on advertising, both print and electronic. Evidence was also given of its exposure as a sponsor of a prominent television home renovator program. All of this was designed to point to the likely dimension of consumer association between the corporate livery and get-up featuring the fourfold colour scheme, and the Mitre 10 business.
Principles
There is no dispute as to the particular principles that should apply in deciding the matter at an interlocutory stage. A number of factors are considered and, although they may be stated separately, they are nonetheless interrelated.
The first is whether the plaintiff has made out a prima facie case. This consideration is explained in Australian Broadcasting Corporation v O’Neill[3] in which Gummow and Hayne JJ said:
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
‘The first is whether the plaintiff has made out a prima facie case, in the sense 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 ...’.
By using the phrase ‘prima facie case’, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.[4]
[3](2006) 227 CLR 57.
[4]Ibid 81 [65].
The second consideration is whether or not damages would be an adequate remedy.
The third consideration is what is usually called the balance of convenience, but has been expressed by the Court of Appeal in Victoria in terms of where the lowest risk of injustice lies:
In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’, in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.[5]
[5]Bradto v State of Victoria [2006] 15 VR 65, [35].
Each party, unsurprisingly, claimed that the evidence supported its cause on each of these considerations.
Prima facie case
Mitre 10 contends that, on the evidence, it has made out a prima facie case, in the sense just described, that Masters will mislead or deceive consumers to believe that its stores are Mitre 10 stores, or otherwise in the ways summarised earlier in these reasons.[6]
[6]See above para [5].
Plainly, as the evidence shows, each company’s stores and marketing will prominently feature their quite different names and trademarks in their respective signage, websites, catalogues and other advertising. However, Mitre 10 argues that the fourfold combination of colours, of itself, is so well associated in the minds of consumers with Mitre 10 stores in the hardware and home improvement market, that its use alone, independently of the particular trade name, conveys a representation to consumers that the store so branded is affiliated with Mitre 10. It claims that its use of the four colours is an example of secondary branding as explained by Merkel J in Telstra Corporation v Royal & Sun Alliance Insurance Ltd[7] in these terms:
Secondary branding or suggestive brand advertising occurs when a word, character, symbol or image creates, on its own, instant recognition or association with a particular product or business. The adoption of such characters, symbols or images by another advertiser will usually raise the question of whether that advertiser is representing that it, or its goods or services, have an affiliation, association or connection they do not have.[8]
[7][2003] FCA 786.
[8]Ibid [57].
Mitre 10 claims that these circumstances are very clearly analogous to those in which an interlocutory injunction was granted in favour of Clark Rubber by Goldberg J in Intellectual Property Pty Ltd v Mygroups Pty Ltd.[9] In that case, Goldberg J restrained an operator of a foam-rubber product store in Victoria from trading whilst the store’s exterior was painted in bright yellow, with red and blue lettering for signage. That was the same combination of colours used by Clark Rubber on its stores selling the same or similar products. The evidence was that Clark Rubber had 70 stores Australia-wide, 65 of which used that colour scheme. It had traded in Australia for 60 years. The selection of colours was accepted by his Honour to be, rather than functional or utilitarian, idiosyncratic. His Honour accepted that on the evidence in that case there was a serious question to be tried that:
… the Clark Rubber colour scheme is quite distinctive and that it creates a strong impression with consumers who view it independently of the name ‘Clark Rubber’.[10]
[9][2006] FCA 15.
[10]Ibid [20].
Thus, in that case, Goldberg J considered there was a serious question to be tried that consumers would be misled or deceived to think that the rival store was a Clark Rubber store.
In order to make good the proposition, at least hypothetically, that the use of colour may be evocative, in the minds of consumers, of an association with a particular trader, Mitre 10 referred me to various passages of the Full Federal Court’s consideration of potential expert evidence on the subject in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd.[11]
[11][2007] FCAFC 70 (in particular [23], [27], [33] and [75].
For its part, Masters relied heavily on what was said by the High Court in Campomar Sociedad, Limitada v Nike International Limited[12] in respect of whether a representation made to the public at large was misleading or deceptive:
Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted. In formulating this inquiry, the courts have had regard to what appears to be the outer limits of the purpose and scope of the statutory norm of conduct fixed by s 52. Thus, in Puxu, Gibbs CJ observed that conduct not intended to mislead or deceive and which was engaged in ‘honestly and reasonably’ might nevertheless contravene s 52. Having regard to these ‘heavy burdens’ which the statute created, his Honour concluded that, where the effect of conduct on a class of persons, such as consumers, was in issue, the section must be ‘regarded as contemplating the effect of the conduct on reasonable members of the class’.
…
Nevertheless, in an assessment of the reactions or likely reactions of the ‘ordinary’ or ‘reasonable’ members of the class of prospective purchasers of a mass-marketed product for general use, such as athletic sportswear or perfumery products, the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful. For example, the evidence of one witness in the present case, a pharmacist, was that he assumed that ‘Australian brand name laws would have restricted anybody else from putting the NIKE name on a product other than that endorsed by the [Nike sportswear company]’. Further, the assumption made by this witness extended to the marketing of pet food and toilet cleaner. Such assumptions were not only erroneous but extreme and fanciful. They would not be attributed to the ‘ordinary’ or "reasonable" members of the classes of prospective purchasers of pet food and toilet cleaners. The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.[13] [Emphasis added]
[12](2000) 202 CLR 45.
[13]Ibid 85 [103], 86 [105].
On the evidence before me, I entertain real reservations that the so-called fourfold colour scheme, said to comprise the ‘Mitre 10 colours’, is so distinctive in the minds of consumers of the Mitre 10 business, that its use by another trader in the same or similar goods is likely to mislead or deceive consumers in the way contended.
Firstly, I do not consider the evidence to be very persuasive that all four colours (white, blue, light blue and grey) constitute the uniform colour scheme, as applied in practice, which is or could become distinctive of the Mitre 10 business. The evidence is strongest regarding the use of white letters on the ‘Mitre 10 blue’, with weaker evidence regarding the use of light blue, and weaker evidence again regarding the use of grey. The effect of this observation is to reduce the scope for acquired distinctiveness when only two (or arguably three) colours constitute the relevant colour scheme, although by no means does that observation alone determine the issue.
Secondly, the particular colours, white on blue, with a lighter blue which is used for contrast against the darker blue to pick out subsidiary messages, could not be described as being ‘idiosyncratic’ in the same way that the colours used in the Clark Rubber Case were. The colours, and their combination, are too common-place in the hardware and home improvement industry generally to be so-described. Again, what this means is that it is likely to prove much more difficult to ultimately satisfy a court that the particular colour scheme, independently of a name, logo or trademark, conveys a representation to consumers that the business is that of any particular trader. Whereas red and blue letters, on a bright yellow background, as used by Clark Rubber may well be described as distinctive of Clark Rubber because of the unusual combination of colours, and with long usage, it is more difficult to say the same of white letters on a blue background – even taking into account some lettering in a lighter shade of blue.
Thirdly, the evidence of the duration of usage by Mitre 10 of its now preferred colour scheme, in accordance with the National Brand Compliance Scheme, does not lead strongly to an inference that it is likely to be entrenched in the minds of consumers as indicative of the Mitre 10 brand. Blue has been used prominently since 1985; blue, white and grey is said to have been used ‘extensively’ in its corporate livery (particularly advertising) since 2001; but its conversion of stores to the current colour scheme did not begin earlier than 2007.
Fourthly, and allied to the previous point, in the past there has been quite a diverse range of colours and devices used in conjunction with store get-up and marketing. A considerable number of Mitre 10 stores even today remain decorated in such other schemes. It must be remembered that less than 50% of its 353 stores have been converted to comply with the National Brand Compliance Scheme. It therefore seems likely to me that Mitre 10’s present colour scheme is still ‘competing’ with its earlier manifestations to gain widespread traction in the minds of consumers as ‘the Mitre 10’ scheme. No doubt this ‘competition’ is being advanced in favour of its preferred scheme with every dollar spent on advertising and marketing, including exposure through sponsoring a popular television program, but it remains the case that its transition to a uniformly recognised colour scheme appears still to be a work in progress.
Fifthly, there is quite strong evidence that white letters on blue background, is commonly used in association with other hardware, building materials and home improvement goods businesses – not only on the exterior of buildings but also in websites and marketing materials. True it is that some use those colours in conjunction with other colours as well, but it is quite conspicuous – at least in the examples produced to me - how relatively commonplace is the use of white letter on blue background. I recognise, of course, that to some extent that impression is the product of the deliberate focus given to obtaining samples using that colour scheme, rather than contrasting schemes.
Sixthly, and importantly, the case for Mitre 10 requires that the use of the relevant colour scheme, independently of the trader’s name or logo, should convey a misleading and deceptive association with the Mitre 10 business. In all of the images of buildings, websites and marketing material produced in evidence, the rival names of ‘Mitre 10’ and ‘Masters [plus distinctive logo]’ appear prominently in conjunction with the colours. I think there is much force in Masters’ argument that, in the face of clearly different names and marks labelling the rival stores and their associated marketing, any misconception that a Masters’ store is a Mitre 10 store could not readily be attributed to the ‘ordinary and reasonable members of the classes of prospective purchasers’. Analysis of this issue, of course, is influenced by the matters set out above that point, in my view, to a relatively low degree of distinctiveness which the so-called Mitre 10 colours have probably acquired as a secondary brand of Mitre 10.
My view is further influenced by the real prospect that Masters’ entrance into the market will be accompanied by significant publicity making it plain to a large body of consumers that Masters is a new player in the market, and not merely a new emanation of an existing player, Mitre 10.
Mitre 10 emphasised the fact that many consumers are used to seeing, in the name of a Mitre 10 store, multiple names (ie. including the owner’s name, or locality) so that the appearance of ‘Masters’ will not dispel the assumption, engendered by the use of the fourfold colour scheme, that the store is affiliated with Mitre 10. I am not persuaded there is much force in this argument. Where it appears, ‘Masters’ is accompanied by a very distinctive logo and, obviously, it does not appear as a component of a multiple name which also includes ‘Mitre 10’, as is the case in Mitre 10 stores.
In all the circumstances, I am not persuaded that Mitre 10 has demonstrated a sufficient likelihood of success on its causes of action to justify the prevention by interlocutory injunction of Masters employing its proposed colour scheme on its stores and generally in its get-up.
Balance of convenience
Even if I were persuaded to a contrary view, but still assuming a likelihood of success at the lower end of the range, I do not consider that the balance of convenience favours the grant of an interlocutory injunction.
Mitre 10 contends that its substantial investment in creating its brand by reference to the fourfold colour scheme would be eroded if Masters could enter the same market using the same scheme. It argues that damage would be virtually impossible to quantify, whereas damage to Masters, because it has not yet commenced trading and has no effective goodwill, would be much easier to quantify – that is, in terms of delay and alteration costs.
Masters contends that its work for two and a half years in formulating its corporate livery would have to be revisited. Advertising and promotion already in train, and already booked, will have to cease or be cancelled. Employees engaged for the proposed first tranche of sites will still have to be paid whilst the delay occurs. Expected profits from the new stores will be deferred, meaning that recovery of incurred development and running costs will also be deferred. New development applications will need to be made to planning authorities for those stores where permissions have been granted. It further argues that the practical effect of an interlocutory injunction would be that Masters would need to alter its colour scheme pending final trial, and once it does so, it is unlikely to revert to its original, chosen scheme should it later succeed at trial. Thus it argues that an interlocutory injunction is likely to be final relief. Finally, it claims that a delay and the publicity accompanying an interrupted launch of its new venture will cause reputational damage to its nascent brand. It asserts that damages would be very difficult to assess and would not be an adequate remedy.
I do not propose to deal with this issue at length. But, in my view, the risk of damage to the goodwill of Mitre 10, should I not grant the injunction, is outweighed by the risk of damage to Masters through the probable delay that would occur to the well publicised launch of its new venture in the Australian market if I were to grant the injunction. I find the arguments raised by Masters on this question to be more persuasive than those of Mitre 10, in part because of the view I have formed as to the likely degree to which its goodwill is dependant upon its use of the ‘Mitre 10 colours’ to the exclusion of others.
Mitre 10 urged me to regard the asserted impact upon Masters of an injunction to be exaggerated. It is not possible on an application such as this to be overly analytical of the evidence, without proper testing. Further, there is nothing in the categories of loss and impact forecast by Masters that I find improbable or lacking in some appropriate evidentiary foundation.
However, I also consider that any impact upon Mitre 10’s goodwill through Masters’ use of those same colours, or some of them, pending the final determination of the proceeding is likely to be relatively confined. That is so because Masters currently plans to open its first store in Braybrook, Victoria, in September, with only a small number of the proposed 150 stores being planned for launch before the end of 2011. With the real prospect that a final hearing could be heard and determined in that time frame, assuming the parties cooperate with the Court in getting the matter ready for trial (and Masters has said that it would), the scope of damage to Mitre 10 is primarily going to be limited to the diversion of custom in particular geographical territories.
Other matters
I was urged by Masters to take account of an asserted delay on the part of Mitre 10 in bringing its application from its first discovery, in early May, of Masters’ proposed get-up. I am not persuaded that Mitre 10 did delay the bringing of its application. Masters also urged upon me the difficulty in crafting an injunction that would, in form, be sufficiently clear and ambiguous to permit enforcement. In the circumstances it has not become necessary for me to give much consideration to that argument.
For these reasons, I dismiss Mitre 10’s application for an interlocutory injunction.
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