New Zealand Natural Pty Ltd v Grannys Natural New Zealand Ice Cream Pty Ltd
[1990] FCA 501
•14 SEPTEMBER 1990
Re: NEW ZEALAND NATURAL PTY LIMITED
And: GRANNY'S NATURAL NEW ZEALAND ICE CREAM PTY LIMITED; AVANTGARDE
INVESTMENTS PTY LIMITED; ENTRANCE HOLDINGS PTY LIMITED; SUE ROBBIE; ARCTIC
IMAGE PTY LIMITED; DEEP STAR PTY LIMITED and PARKLAND HOLDINGS PTY LIMITED
No. G469 of 1990
FED No. 501
Trade Practices
19 IPR 214
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J.(1)
CATCHWORDS
Trade Practices - Alleged misleading conduct - Rival traders - Respondents trading under name which includes all the elements in the applicant's name - These words descriptive in nature and not claimed to have acquired a secondary meaning - Claim of applicant that use of these words in context of shops selling similar product and with some similarities in decor is misleading - Effect of substantial dissimilarities in logo and "get up".
Trade Practices Act 1974, 1974, s.52
HEARING
SYDNEY
#DATE 14:9:1990
Counsel for the Applicant : D.M.J. Bennett, QC and L.J. Ellison
Solicitor for the Applicant : S.A. Teen
Counsel for the Respondent : G. Gibson, QC and R. Litster
Solicitors for the Respondent: Litster Mann and Ffrench
ORDER
The Application be dismissed.
The applicant pay to the respondents their costs of the proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is a contest between ice cream vendors over the use of a name. The applicant, New Zealand Natural Pty Limited, has traded under that name since July 1987. The company is the sole Australian distributor of ice cream manufactured by a particular New Zealand supplier. The applicant sells this ice cream to various licensees appointed by it, each of whom is authorised to trade under the name "New Zealand Natural". In May 1988 the applicant granted to Fiduci Pty Limited an option to acquire the Queensland distribution rights. That option was subsequently exercised and, in late 1988, Fiduci established "New Zealand Natural" outlets at Surfers Paradise and Coolangatta.
On 13 March 1989, with the applicant's consent, Fiduci entered into a sub-licence agreement with Sue Robbie, the fourth respondent, or her nominee. Thereafter, either directly or through companies controlled by her, Ms Robbie established outlets at The Pier, Cairns; Lake Road, Cairns; Townsville; Southport; Fortitude Valley, Brisbane; and Logan City. These outlets operated under the name "New Zealand Natural", using the "get-up" adopted by the applicant for its other stores and selling ice cream supplied by the applicant through Fiduci. The companies involved in the operation of the various shops are the second, third, fifth, sixth and seventh respondents.
Towards the middle of 1990 differences arose between Fiduci and Ms Robbie and her companies. As a result, all the sub-licensees gave Fiduci notice of termination of their sublicences, as from 31 July 1990. Apparently the sub-licensees were the tenants of the premises in which their various businesses had been conducted. Accordingly, Ms Robbie decided that, with one exception, the businesses would continue to trade after 31 July but under a new name. She formed or acquired a company known as Granny's Natural New Zealand Ice Cream Pty Limited, the first respondent. That company entered into licences with other respondent companies, permitting each to sell, at a particular site and under the style "Granny's Natural", ice cream imported from New Zealand by Natural Developments Pty Limited, another company controlled by Ms Robbie. The exception was the shop at Lake Road, Cairns which was closed on 31 July. It appears that, at 31 July, some at least of the sub-licensees still had stock which had been purchased by them from Fiduci. They offered to return this stock to Fiduci, but that offer was refused. Accordingly, they sold this ice cream to the public during August. Supplies of the old stock ran out at varying dates but, at the latest, by the end of the month. As stocks became exhausted, they were replaced by ice cream supplied by Natural Developments.
After the rupture with Ms Robbie, the applicant and Fiduci continued to trade, using the name "New Zealand Natural". At the present time there are 36 "New Zealand Natural" shops in Australia. Four of these shops are in Queensland: at Coolangatta, Broadbeach, Surfer's Paradise and Fairfield, a suburb of Brisbane. They continue to use the name and "get up" formerly used by the respondents' shops.
However, about 1 August 1990, substantial changes were made to the shops controlled by the respondents. The name was changed to "Granny's Natural New Zealand Ice Cream". The "get up" of the shops was changed, the most notable change being the adoption of orange and yellow as the dominant colours in the "get up"; in contrast to the dominant green of the old "get up".
Notwithstanding this change in "get up", the applicant took the view that the use by the respondents of a trading name which included the words "New Zealand Natural", or any combination thereof, for the purpose of an ice cream supply business, was likely to mislead members of the public; and, consequently, to contravene s.52 of the Trade Practices Act 1974. Accordingly, on 17 August 1990, an Application was filed seeking injunctive relief and damages.
The matter came before the Court on 22 August, pursuant to leave to serve short notice. At that time there was discussion about interlocutory relief, the grant of which - I was told - would be contested. However, I was able to offer the parties an early final hearing of the matter, so the applicant did not press its claim for interlocutory relief. The matter was fixed for hearing on 10 September, appropriate directions being made. During the course of discussing the directions, it emerged that there was a disagreement between the parties as to whether the case should be heard in Sydney, where it had been commenced, or in Brisbane, as the respondents wished. It appeared that witnesses from both Sydney and Brisbane would be called.
On 22 August 1990 I left the place of hearing unresolved, pending the filing of affidavits. However, on 4 September 1990, at a further directions hearing, that question again arose. In terms of the convenience of witnesses and the parties' legal representatives, there was no clear advantage either way. But counsel for the respondents made the submission that the Court ought to inspect those of the parties' shops which were located in Brisbane or on the Gold Coast. I was told that, although photographs would be tendered, they could not adequately convey the extent of the difference in visual impression provided by the respective "get ups". Although I felt a little sceptical about that claim, I acceded to the submission and directed a hearing in Brisbane.
The hearing was held on 10 and 11 September. During the course of the hearing, in the company of counsel, their instructing solicitors and representatives of the parties, I viewed each of the applicant's four Queensland shops and the three shops of the respondent which are situate in Brisbane or on the Gold Coast. Before the view I was informed by counsel that the parties were in agreement that the view should be used by me for a wider purpose than usual, not merely to enable me better to understand the documentary and oral evidence, but also as primary evidence in the case; but subject to my calling attention to any matter which was not the subject of documentary and oral evidence and which I thought might be significant in the resolution of the case.
Having regard to this agreement, I thought it desirable to summarise those observations which I had made which might possibly be significant. When the hearing resumed after the inspection I read onto the transcript record the following summary:
"The court inspected four shops operated by the applicant being respectively at Coolangatta, Broadbeach, Surfers Paradise and Fairfield. In each shop the dominant colour used was green with white lettering. The lettering advertising the name of the business and its product was in a block style, although in one case, namely at Surfers Paradise, the effect of the block style was affected by the overlay of neon lettering. In each case the decor included prominent use of the applicant's logo of a cow being milked with the superscription on the logo in large letters, 'New Zealand Natural', and in smaller letters the words, 'Natural Ice Cream'. Also in each shop there was a large certificate-like sign giving information about the ice cream sold in the shop which stressed its New Zealand origin and freedom from preservatives and artificial colouring agents.
In each shop there was a cone-making machine which had the capacity to attract the interest and custom of passers by. The machines in each of the shops were substantially similar, having gas-heated flat plates served by double wooden handles. The cone mix was squirted from a large container on to each plate, the mix being spread when the top plate was closed and cooked as the plate passed over the burners before returning to the operator. At that stage the cooked flat cone was manually extracted and shaped by a pointed wooden implement.
Most of the cone-making machines had six plates. In one case, namely at Coolangatta, there were only five. Some cone-making machines were supported by a single black metal column, some by three columns in a tripod-like structure. In each case, in these four shops the staff were dressed in uniforms similar to those depicted in exhibit SR19, the colours being green and white and featuring the applicant's logo which I have already described. In each case, the applicant offered a range of flavours, I think the smallest number being 10 at Fairfield, up to 16 in some of the other shops. In one case only, namely at Broadbeach, the shop featured dark green marble or imitation marble in its decor; but in all cases green was the dominant colour in the shop fit-out. Another common feature was the use of timber which was stained or painted to a natural brown colour. The lay-outs of the signs listing the flavours offered and the other products available, notably drinks, were similar in each shop but with some variation necessary to accommodate the geometry of the available space. The words depicted in the large white letters varied somewhat from shop to shop. At Coolangatta and at Fairfield the words were 'New Zealand Natural'; at Broadbeach and Surfers Paradise the words were 'Waffle Ice Cream', but in the latter case there was also a sign on the side of the building saying 'New Zealand Natural Ice Cream'.
There were some differences in the decor of the shops. For example, the extent of the use of brass railings, etcetera, and there was also some difference in the detail of the list of prices; for example, the use or non-use of the word 'scoop'. The labels on the display cabinets were consistent as between each shop and they were in accordance with exhibits 1 to 4 containing the applicant's logo.
The court also inspected three shops operated on behalf of the respondents, namely at Southport, Logan City and Fortitude Valley. The decor of these three shops, as between themselves, seemed to my eye to be more homogenous than that of the applicant's shops, as between themselves. The predominant colours used in each case were yellow and orange. In each case there was prominent use of a logo, with a portrait of an elderly woman and the words 'Granny's Natural'. This logo was always placed between large lettering at the outside of the shop, the lettering being in white against an orange and yellow background and using the words 'New Zealand Ice Cream'.
As counsel pointed out, it was possible to read the word 'natural' at the bottom of the logo so as to form a composite description 'New Zealand Natural Ice Cream'; although it has to be said that the ease of doing this varied a little from one shop to another. In each case, in the respondents' shops, green was prominently used in the furnishing of the shops. Also there was a use of natural wood colours similar to the use of those colours in the applicant's shops. In each of the three shops there was green marble or imitation marble used, in a similar way to that in the applicant's Broadbeach shop. In each case, there was a cone machine which had the same characteristics as those of the applicant. The ice cream display area was similar,although the name labels were quite different being in red and orange edging with no logo. The flavours offered were similar although, I think, with some variations as between the respondents and the applicant. The display board at the back of the serving area in each of the respondents' shops were similar as between the three shops and they offered a range of products similar to those of the applicant, subject to the variation in some flavours; but the colouring of the display board was orange and yellow and the 'Granny's Natural' logo was prominently displayed. The court also visited the Royal Copenhagen shop at Surfers Paradise. We there saw a cone-making machine similar to that seen in the shops of the present parties. But the plates were somewhat larger resulting in a larger manufactured cone, and I had the impression that the plates were somewhat rounder in that case than in the case of the cone-making machines we saw in the other shops."
I invited counsel to add to, or correct, this summary. Counsel for the applicant pointed out that the cone-making machine at the Royal Copenhagen shop had overhead angulated bars, unlike the machines in the parties' shops. They also mentioned the similarity of the square block lettering and the fact that the Fairfield shop lacked an external logo. Otherwise this summary was accepted as adequate and accurate.
It is desirable, before dealing with the critical question in the case, to refer to three matters. Firstly, it is apparent that there is some feeling between the parties arising out of the termination by the respondents of their association with Fiduci. That is understandable; but, as counsel expressly disclaimed any reliance on those circumstances in relation to the exercise of the Court's discretion, the circumstances of that termination have nothing to do with this case. Taking that view, I rejected questions directed to those circumstances. There is, therefore, no evidence before me as to the rights and wrongs of the positions taken by Fiduci and the respondents, respectively, and I have no view whatever about them. They are irrelevant. If the course of conduct undertaken by the respondents since 1 August 1990 is one likely to mislead members of the public as to the nature of the ice cream offered by them for sale or as to their association with another organisation, such as the applicant, the applicants are entitled to succeed in this case; and this would be true even if there had never been an earlier association between the parties or if, there being an association, Fiduci had been wholly to blame for its termination. Conversely, if the respondents' conduct does not offend s.52 of the Act, they are entitled to succeed in this case whatever their breaches of obligation to Fiduci.
Secondly, it is not suggested by the applicant that the use by the respondents of the words "Natural" or "New Zealand" are inherently misleading; that is, as descriptions and leaving aside any problem caused by the applicant's use of these words. The uncontested evidence of Ms Robbie is that the ice cream which has been supplied to the respondents' shops by Natural Developments is made in New Zealand, apparently by a different manufacturer than the one which supplies the applicant. So it is properly described as "New Zealand ice cream".
The application of the word "natural" is not quite so obvious. But it appears that this term is used by both parties to refer to ice cream which does not contain any artificial flavouring, colouring or preservatives. Although the precise connotations of the word were not explored or explained, it is accepted by the applicant that the respondents' ice cream is a "natural" ice cream in this sense.
Thirdly, and following on from the last point, counsel for the applicant accept that the words "Natural New Zealand Ice Cream", in the first respondents' name and on the shops operated by the respondents, is a collocation of descriptive terms, in the sense explained in Hornsby Building Information Centre v Sydney Building Information Centre (1978) 140 CLR 216; see especially per Stephen J. at pp 229-230. Nor do they contend that their client's use of these words in its name and "get up" over a period of about three years has resulted in them acquiring a secondary meaning; see BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1977) 51 ALJR 254 at pp 257-258 and Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 at pp 42-43. But they argue that the use by the respondent of a name which includes each of the three elements in its own name - viz. "New Zealand", "natural" and "ice cream" - in conjunction with a "get up" reminiscent of that of the applicant is conduct which is likely to mislead members of the public into believing that the ice cream sold at the respondents' shops is the same as that sold by the applicant's licensees and that there exists an association between the respondents and the applicant. The likelihood is heightened, say counsel, by the circumstance that all of the respondents' existing shops formerly sold ice cream which was supplied by the applicant, through Fiduci, and which were operated by sub-licensees of the applicant. Counsel emphasise that the shops conducted under the auspices of the applicant and the respondent, respectively, are the only "chains" of shops advertising the supply of New Zealand ice cream. They are thus in competition with each other in a narrowly defined product area and in connection with a product whose cost is low and whose purchase is unlikely to long engage peoples' investigative and intellectual capacities. In this connection they refer to what was said by a Full Court in Abundant Earth Pty Limited v R and C Products Pty Limited (1985) 7 FCR 233 at pp 237-238 and by Jenkinson J in Hunters Products Pty Limited v R and C Products Pty Limited (1987) ATPR 40-785 at p 48,569. Counsel emphasise some similarities between the signage of the parties. Both use descriptive words, prominently printed in a white block style, broken by a logo containing a picture and the word "natural". Counsel correctly point out that it is possible to read the respondents' sign - by incorporating the word "natural" at the bottom of the logo - as "New Zealand natural ice cream"; although, I must say that, except in the Fortitude Valley shop, the word "natural" is out of alignment with the block words "New Zealand Ice Cream" and, in all cases, counsel's reading would be strained and artificial. Counsel also point to similarities in the decor of the shops. Green is used in both cases; although much more in the applicant's shops than in the respondents'. Natural coloured timber is used in all the shops, although only to a minor degree. All of the shops feature cone-making machines. As it seems to me, these machines have the potential to attract the interest of passers-by - and, perhaps, therefore their custom. The evidence indicates that they are not common in ice cream shops in Australia, although found in some shops other than those of the present parties. The machines in the parties' shops are substantially similar in appearance.
This is not a case in which it is claimed that the name adopted by the respondents will confuse suppliers of goods, or any other people with whom the respondents deal on a recurring and substantial basis. The only claim made by the applicant is that ordinary members of the public - customers and potential customers - are likely to be misled. Accordingly, the case must be looked at from the customer's point of view; the Court determining the matter by its evaluation of the likely impression of the name, read in its context, upon ordinary members of the public. The Court should consider customers of ordinary intelligence with ordinary powers of observation, disregarding both the unusually stupid and unobservant and those who might make a minute inspection of the shops in order to note points of similarity and dissimilarity.
I have no difficulty in accepting that the applicant has developed a reputation for its shops and its product under a name which includes the elements "New Zealand", "natural" and "ice cream". The critical question in the case is whether an ordinary member of the public, as described above, would be likely to mistake a shop of the respondents for a shop of the applicant. If so, that person would be likely to be misled both into believing that the ice cream offered for sale in the shop was the same ice cream as was offered by the applicant and that there was some commercial association between the applicant and the operator of the shop. If not, neither of those beliefs would be likely to arise.
The persons who come to one of the respondents' shops, and who contemplate a purchase, will, of course, have a variety of experience of the applicant's shops. Some may have no knowledge whatever of the applicant. Such people could not, of course, be misled in the manner suggested by counsel for the applicant. Others may have a dim recollection of one or more of the applicant's shops. Others, again, may remember them well. Some people will even be aware that the particular shop which they now see styled "Granny's New Zealand Ice Cream", and decorated with the respondents' colours and logo, was once a "New Zealand Natural" shop.
I think that the applicant's case is put at its highest in asking what would be the conclusion reached by a person who well knew the applicant's shops, or one of them; who was even aware that a particular shop used to be operated on behalf of the applicant. Only such a person is likely to retain a recollection sufficiently clear to note the similarities mentioned by counsel: the type of lettering used on the external signs, the cone-making machines etc.
The postulated person may be assumed to recall seeing on the applicant's shop, or on this very shop in earlier days, the words "New Zealand", "natural" and "ice cream". He or she may be assumed to remember the experience of eating - and possibly enjoying - an ice cream which was said to come from New Zealand and to be "natural". Confronted with one of the respondents' shops, such a person may be expected to notice the words "New Zealand" and "Ice Cream" prominently displayed on the exterior signs and also the words "Granny's natural" within the logo. He or she may wonder whether this is the same "natural" New Zealand ice cream as that previously consumed. But I do not think that the potential customer would form an affirmative belief that it was. In my opinion, the overwhelming impression gained by such a person would be of differences between the applicant's shop, or this shop in its former manifestation, and the shop as it now is. The orange and yellow colour scheme is dominating and pervasive; extending not only to the exterior signs but also to the notice boards at the back of the serving area and the uniforms worn by staff. This colour scheme is in marked contrast to the green tone used by the applicant in its shops. It is true that a keen observer would notice similarities; the cone-making machine, the use of natural coloured timber and some use of green tiling in the respondents' shops. But I think that these similarities would be swamped by the dissimilarities.
Shops are, of course, refitted from time to time; operators sometimes adopting a lay-out and colour scheme quite different from that previously used. Our hypothetical observer might wonder whether this was the explanation for the observed differences. Such an explanation would be supported by the similarity between the products offered for sale and those previously offered. It would tend to be denied by the fact that the ice cream was now described as "Granny's natural" and the use of an entirely different logo.
I do not think that any reasonable person, in the postulated position,would come to an affirmative conclusion that the respondents' shop offered the same ice cream or was associated with the applicant. I found the view more instructive than I had expected. Visiting one shop after another, the overwhelming impression I gained was of the difference in presentation between the applicant's shops on the one hand and the respondents' on the other. There were of course many similarities. But these similarities were readily explicable as resulting from their similarity of function. The impression I gained was that,within those constraints, the respondents had set out to present themselves as differently as possible. The difference in "get up" is, to my mind, critical. Just as similarity of "get up" often supports a conclusion that one product is likely to be mistaken for another, differences in "get up" may negative the inference which might otherwise be drawn from a similarity of name or product description.
I am of the opinion that the use by the respondents of the words complained of, in the context of the shop presentation revealed in the evidence in this case and on the view, would not be likely to mislead members of the public into believing that the ice cream offered by the respondents was the same as that offered by the applicant or that there was any business connection between the operators of those shops and the applicant. Accordingly, the application must be dismissed. The applicant will be ordered to pay the respondents' costs.
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