Nutrientwater Pty Ltd v Baco Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Nutrientwater Pty Ltd v Baco Pty Ltd [2010] FCA 2

Citation: Nutrientwater Pty Ltd v Baco Pty Ltd [2010] FCA 2
Parties: NUTRIENTWATER PTY LTD (ACN 009 936 574) and LMBB PTY LTD (ACN 130 333 845) v BACO PTY LTD (ACN 100 922 709) 
File number(s): VID 471 of 2009
Judge: KENNY J
Date of judgment: 6 January 2010
Catchwords: TORTS – Passing off – Misleading and deceptive conduct – Adoption of similar get-up for enhanced water products – No liability where allegedly appropriated features were in common use in enhanced water market – Adoption of features of competitors’ get-up permissible where respondent’s products sufficiently distinguished through branding and other means – No proof of relevant reputation in features allegedly appropriated – No proof of deception amongst ordinary reasonable consumers – No proof of intent to mislead – Application dismissed 
Legislation: Trade Practices Act 1974 (Cth), ss 52, 53
Cases cited:

McCormick & Co Inc v McCormick (2000) 51 IPR 102 Hornsby Building Information Centre Pty Ltd  v Sydney Building Information Centre  Ltd (1978) 140 CLR 216 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302
Reckitt and Colman Products Ltd v Borden Inc [1990] RPC 341
Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd (‘Pub Squash’) [1980] 2 NSWLR 851
Morgan & Banks Pty Ltd v Select Personnel Pty Ltd (1991) 20 IPR 289
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354
Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731
Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd [1998] ATPR 441–624
Childrens Television Workshop Inc v Woolworths (NSW) Ltd [1981] 1 NSWLR 273
Draper v Trist (1939) 56 RPC 429
Ricegrowers Ltd v Real Foods Pty Ltd (2008) 77 IPR 32
Health World Ltd v Shin-Sun Australia Pty Ltd (2008) 75 IPR 478
Hansen Beverage Company v Bickfords (Australia) Pty Ltd (2008) 79 IPR 174
Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641

Telmak Teleproducts (Aust) Pty Ltd v Coles Myer Ltd (1989) 15 IPR 362
The Kettle Chip Company Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152
WD & HO Wills (Australia) Ltd v Philip Morris Ltd (1997) 39 IPR 356
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397
Mars Australia Pty Ltd v Sweet Rewards Pty Ltd (‘Sweet Rewards’) (2009) 81 IPR 354
S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354
Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431
Dr MartensAustralia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Thai Wood Import & Export Co Ltd v Shuey Shing Pty Ltd

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Details
Case
[2010] FCA 2
Decision Date

CaseChat Overview and Summary

Nutrientwater Pty Ltd, the applicant, brought an action against Baco Pty Ltd, the respondent, in the Federal Court of Australia. The dispute centres around the alleged misappropriation of design features by Baco, which Nutrientwater claims has resulted in consumer confusion and infringement of intellectual property rights. Nutrientwater asserts that Baco's product design, particularly for its 'Grassroots' enhanced water products, closely resembles Nutrientwater's distinctive packaging and branding, leading to potential consumer deception and passing off. Baco, in response, argues that its product design is sufficiently distinct and that it was permissible to adopt certain features from the market, provided it did not mislead consumers into mistaking its products for Nutrientwater's.

The primary legal issues the court had to resolve included whether Nutrientwater had established a relevant reputation in the distinctive features of its products and whether Baco's adoption of similar design elements amounted to passing off or constituted misleading or deceptive conduct under the Trade Practices Act. The court also had to consider whether Baco's use of market-common design elements, combined with its own branding, was likely to deceive or mislead the ordinary consumer.

In dismissing Nutrientwater's claims, the court found that Nutrientwater had not established the necessary reputation in the design features it claimed were infringed. Furthermore, the court held that Baco was entitled to adopt common market design features, as long as it did not mislead consumers. The court found that Baco's product design, while incorporating some market-common elements, was distinctive due to its branding and other differentiating features. The similarities between Baco's and Nutrientwater's products, therefore, did not meet the threshold for passing off or misleading conduct.

Orders

Orders of the court

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Background

Background to the litigation

For the reasons explained in detail hereafter, I would dismiss the applicants’ claims against Baco. In summary, NW has failed to make out its claims, first, because it failed to establish a relevant reputation in the features that Baco allegedly appropriated. Secondly, the authorities establish that a trader is entitled to adopt the features of competitors’ products, providing the result is not likely to deceive or mislead the ordinary reasonable consumer into mistaking the trader’s goods for the goods of competitors. The design of Baco’s ‘Grassroots’ enhanced water products took on various features of the get-up used by Baco’s market competitors, especially NW. At the same time, Baco’s product design was, and was intended to be distinctive. Apart from Baco’s products’ branding – name and logo – many of the other significant design features used by Baco were, by May 2009 when Baco entered the market, being used by others in the enhanced water market besides NW. Furthermore, by its branding – name and logo – and other features of its get-up or packaging, Baco clearly differentiated its products from its competitors’ products in the enhanced water market. Accordingly, such similarities as exist between Baco’s and NW’s enhanced water products cannot ground an action in passing off, or under ss 52 or 53 of the TPA. B: FACTS1. The NW Product Range NW was known as Natureau Pty Ltd (‘Natureau’) between 2006 and 17 February 2008, after which it took its current name. Mr Matthew Dennis, a founder and director of the company, gave evidence, which I accept, that he started the business of NW (formerly Natureau) with his friends, Mr Luke Marget and Mr Brad Wilson, in 2003. His evidence was that he, together with Mr Marget and Mr Wilson, developed the packaging for the NW Product Range. He also gave evidence, which I accept, that there was no market category for enhanced waters in Australia until NW entered the market in November 2005. On this date, NW marketed its first range of four enhanced water products under the names ‘Antioxidant (Green Tea)’, ‘Energy (Passionfruit Citrus)’, ‘Immunity (Valencia Orange)’, and ‘Multi Vitamin (Cranberry Grapefruit)’. Almost a year later, in October 2006, NW relaunched its product range in the packaging used by it at least until the time of trial. Mr Dennis said that, for reasons of cost and design improvement, NW wanted to adopt the new bottle shape and get-up, for which he, Mr Marget and Mr Wilson were responsible. Mr Dennis said that NW relied on the spectrum of colours used across the NW Product Range, the colour horizontal bands, and the shape of the bottle to make the product stand out on the shelves in retail stores. The relaunched NW Product Range consisted of the original themes and flavours, as well ‘Endurance (Dragonfruit)’. ‘Rehab (Pomegranate Berry)’ was launched in February 2007. Each product in the NW Product Range is presented in a cylindrical, clear plastic 575 ml bottle, with curved ‘shoulders’, a tall, slim overall shape, and a clear plastic lid. Each bottle has a comparatively wide mouth relative to the bottle’s diameter. A tall label wraps around the bottle. The label, with a large surface area relative to the size of the bottle, has a central white field with bright horizontal bands of colour at the top and bottom corresponding to the bright colours of the variant beverage. Each variant beverage is described by a functional name such as ‘Antioxidant (Green Tea)’ and is brightly coloured. Seen together, the variant beverages form part of a spectrum from green to purple. The central white field has nutritional information on one panel, a list of ingredients on another, and a light-hearted comment about the beverage on a third. The black and white logo – a large stylized ‘NW’ in lower case with the word ‘NutrientWater’ – appears three times around the top coloured portion of the label. A photograph of the NW Product Range as at February 2007 appears below:Almost all the NW Product Range has been promoted and sold in this form since October 2006. ‘Rehab (Pomegranate Berry)’ has been sold in this form since February 2007. A product in the NW Product Range is a relatively low-cost item to consumers, selling for $3.50 to $4.00. (a) Geographical distribution

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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