Natural Raw C Pty Ltd v Maicap Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Natural Raw C Pty Ltd v Maicap Pty Ltd [2023] FCA 51

File number: NSD 495 of 2022
Judgment of: NICHOLAS J
Date of judgment: 3 February 2023
Catchwords:

CONSUMER LAW – whether respondent engaged in conduct likely to mislead or deceive in the course of supplying packaged coconut water – whether packaging likely to lead ordinary and reasonable consumer to think that the respondent’s product was made by or with the permission of the applicant

CONTRACTS – whether applicant validly terminated a settlement agreement made between applicant and respondent following mediation – whether applicant precluded by settlement agreement from maintaining the proceeding  
Legislation: Australian Consumer Law s 18
Cases cited:

Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592

Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

Francis Gregory Hannigan v Inghams Enterprises Pty Limited [2019] NSWSC 321

Gore v Australian Securities and Investment Commission [2017] FCAFC 13

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd (2017) 349 ALR 598

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd (2018) 264 FCR 422

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216

Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657

Natural Waters of Viti Ltd v Dayals (Fiji) Artesian Waters Ltd (2007) 71 IPR 571

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191

Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177

Verrocchi v Direct Chemist Outlet Pty Ltd (2016) 247 FCR 570

Warner v Hung (No 2) (2011) 297 ALR 56

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 78
Date of last submissions: 23 December 2022
Date of hearing: 15 and 16 December 2022
Counsel for the Applicant: Mr MR Hall SC with Ms EE Whitby
Solicitor for the Applicant: HWL Ebsworth Lawyers
Counsel for the Respondent: Mr EJC Heerey KC with Mr AK Baillie
Solicitor for the Respondent: Cowell Clarke Commercial Lawyers

ORDERS

NSD 495 of 2022
BETWEEN:

NATURAL RAW C PTY LTD ACN 160 678 419

Applicant
AND:

MAICAP PTY LTD ACN 074 616 881

Respondent

ORDER MADE BY:

NICHOLAS J

DATE OF ORDER:

3 FEBRUARY 2023

THE COURT ORDERS THAT:

1.The amended originating application be dismissed.

2.Any party seeking a different costs order to that referred to in [77] of the reasons for judgment published today (“the Proposed Costs Order”) is to file a written submission (limited to 2 pages in length) within 5 days.

3.Any submission in answer (limited…

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Details
Case
[2023] FCA 51
Decision Date

CaseChat Overview and Summary

Natural Raw C Pty Ltd brought proceedings against Maicap Pty Ltd, seeking relief for misleading or deceptive conduct in the course of supplying packaged coconut water and for breach of contract. The Federal Court of Australia was tasked with determining whether the respondent engaged in conduct likely to mislead or deceive consumers and whether the applicant could validly terminate a settlement agreement.

The primary legal issues were whether the respondent's packaging was likely to mislead or deceive consumers into believing the product was made by or with the permission of the applicant and whether the applicant could terminate the settlement agreement. The court examined evidence of consumer confusion and the similarity in packaging colours and styles. It considered whether the Australian Woollen Mills principle applied and whether the respondent's conduct was intended to mislead or deceive consumers.

The court found that the evidence of consumer confusion was not persuasive and that the similarities in packaging were attributable to the nature of the product and common packaging styles. The court did not accept that the respondent intended to appropriate the applicant's trade or reputation or to mislead consumers. The court concluded that the Australian Woollen Mills principle did not apply, and the respondent's conduct did not mislead or deceive consumers. Additionally, the court ruled that the applicant could not validly terminate the settlement agreement.

The court dismissed the amended originating application and ordered that any party seeking a different costs order must file a written submission within specified timeframes. If no submissions are filed, the court will make the proposed costs order without further hearing from the parties.

Orders

Orders of the court

1. The amended originating application be dismissed.

2. Any party seeking a different costs order to that referred to in [77] of the reasons for judgment published today (“the Proposed Costs Order”) is to file a written submission (limited to 2 pages in length) within 5 days.

3. Any submission in answer (limited to 2 pages in length) is to be filed within 7 days.

4. In the event any written submission is filed pursuant to order 2 then the question of costs will be dealt with on the papers.

5. In the event no written submission is filed pursuant to order 2 then the Court will make the Proposed Costs Order without hearing further from the parties.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Counsel for the applicant placed considerable reliance on the aqua blue colour used on the respondent’s 2021 packaging which, it was suggested, is very similar to the aqua colour used on the Raw C Coconut Water including on the top and on each side of the packaging. While there is some similarity in colour, the aqua blue used by the respondent in the 2021 packaging is clearly darker than the aqua colour used by the respondent in the 2022 packaging. The aqua colour used by the respondent in the 2022 packaging is closer to the applicant’s aqua blue than the aqua blue used in the 2021 packaging. Evidence of confusion There is no evidence of any consumer having been deceived or confused when purchasing or looking to purchase either the applicant’s or the respondent’s products. Mr Mendelson gave an account of walking past an IGA store at Oxford Street in Paddington in September 2022. He said that he saw out of the corner of his eye an aqua and white one litre product in a Tetra Pak in the refrigerated section which he initially recognised as the applicant’s Raw C Coconut Water product. He said that he “did a double take” and walked back to the store to discover that it was actually the Nature’s Delight product. Although there was no cross-examination on the topic, this incident occurred some months after the applicant had commenced this proceeding and at a time when Mr Mendelson was well aware of the existence of the Nature’s Delight product with the 2021 packaging. Moreover, this evidence is based on what appears to have been a fleeting observation made by Mr Mendelson as he strolled past the store, and does not explain why, given that he knew of the existence of the Nature’s Delight product, he assumed that the product he saw was the applicant’s product. In any event, it is apparent that when he looked at the product a second time (though there is no indication that he entered the store for this purpose) he recognised that it was the Nature’s Delight product on display. I do not find his evidence on this topic at all persuasive. Ms Katerina Ilievska, who worked as a financial assistant for the applicant, gave evidence of having seen the Nature’s Delight product with the 2021 packaging at the applicant’s office in May 2022. She said that she assumed that both products were made by the applicant “… because they had the white and teal colours, with the teal in a block at the top and the teal at the bottom and bold, texta writing in the middle”. I find it difficult to accept that Ms Ilievska could have been confused into thinking that this was a product made by the applicant given the presence of the Nature’s Delight brand on the front of the pack, the absence of the Raw C device mark, or any other mention of the applicant on the packaging. Even when Ms Ilievska noticed the Nature’s Delight mark on the front of the packaging, and the absence of any reference to Raw C, she still “thought it may have been a new variety of Raw C coconut water because the packaging was so similar”. The mental processes that lead Ms Ilievska to think that the Nature’s Delight product was the applicant’s product were not explored in cross-examination and her evidence does not explain what significance, if any, she attributed to the absence of the Raw C device mark. Ms Ilievska’s response, which assumed that the Nature’s Delight product was the applicant’s product, or a repackaged version of the applicant’s product, is not consistent with the mental processes in which a reasonable consumer who has some basic understanding of the function of a trade mark or brand name would engage when purchasing, or looking to purchase, either the applicant’s or the respondent’s products. On noticing the different brand names the reasonable consumer would not likely infer that the products came from the same manufacturer. I do not regard Ms Ilievska’s evidence as persuasive.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The applicant ultimately submitted that the Court should find that on the balance of probabilities Ms D’Arcy used her visit to Coles to inform her understanding of the design process of the 2021 packaging, that she saw the applicants’ Raw C product and its packaging at that time, and that significant elements incorporated into her design on 29 March 2021 were derived from the impression she retained of the Raw C product. It further submitted that it was Ms D’Arcy’s “intention to take what was best of the current market practice, best at attracting customers and making her product stand out”. The applicant submitted that coupled with Ms D’Arcy’s borrowing of features from the same source (ie. the Raw C product), the AustralianWoollen Mills principle applies and that it should be presumed that the 2021 packaging was “… fit for purpose and would be likely to mislead or deceive”. Consideration I am not persuaded that the respondent adopted any part of its 2021 or 2022 packaging for the purpose of appropriating the trade or reputation of the applicant. In particular, I am not persuaded that the respondent adopted any part of such packaging with the intention of misleading or deceiving purchasers or potential purchasers of its products. Ms D’Arcy denied that she copied the packaging of the Raw C Coconut Water product. Although I am prepared to accept that she most likely saw that product on sale at Coles, and that it influenced her design of the 2021 packaging, I do not accept that she intentionally copied the applicant’s product or that she did so for the purpose of taking advantage of the applicant’s reputation or misleading consumers. On my view of the facts, the AustralianWoollen Mills principle does not apply. For reasons I have stated, the evidence of confusion relied on by the applicant is not persuasive. In determining whether the 2021 packaging is misleading or deceptive or likely to mislead or deceive the ordinary reasonable consumer into thinking that the respondent’s product is made by the applicant or with the applicant’s permission, I give that evidence no weight. Some important similarities in the relevant products are attributable to the nature of the product and the shape and style in which products like them are commonly packaged. As Bennett J explained in Natural Waters of Viti Ltd v Dayals (Fiji) Artesian Waters Ltd (2007) 71 IPR 571 at [46]:The fact that Natural Waters may establish reputation in the Fiji Water get-up does not mean that it has a monopoly over each aspect of that get-up. The goods are ordinary articles of consumption. By their nature, goods of different manufacturers will bear some resemblance to each other. Water is sold in bottles, frequently in transparent bottles and commonly with blue caps. The marks, brands and labels play an important part in distinguishing the goods of one manufacturer from those of another … Whether the reason for the distinctiveness of Fiji Water is one or more particular aspects of its packaging or the totality of its get-up, the offending product will only mislead or deceive consumers where it has taken the distinctive aspect(s) or so much of the totality of the get-up that the overall impression or the “gestalt” of the Fiji Water brand … is adopted. If Dayals adopted an aspect of the get-up for its product, that fact alone does not dictate a finding of passing off …(citations omitted)