Ocean Pacific Sunwear Ltd v Ocean Pacific Enterprises Pty Ltd
[1990] FCA 168
•18 APRIL 1990
Re: OCEAN PACIFIC SUNWEAR LIMITED and WILTON INTERNATIONAL PTY LTD
And: OCEAN PACIFIC ENTERPRISES PTY LTD
No. G100 of 1988
FED No. 168
Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Von Doussa J.(1)
CATCHWORDS
Trade Practices - corporation - name of respondent incorporating words comprising the trade mark of the applicants - whether use by the respondent of its name in the fields in which the applicants had an established goodwill in the trade mark was misleading or deceptive - whether passing off - respondent had an established goodwill in its name in other fields of commercial activity - whether the respondent should be required to change its name.
HEARING
ADELAIDE
#DATE 18:4:1990
Counsel for the applicants : Mr J.R. Mansfield QC
with Mr J.M. Fitzpatrick
Solicitors for the applicants : Corrs
Counsel for the respondent : Mr V. Gray
Solicitors for the respondent : Finlaysons
ORDER
A. (1) That the respondent, its officers, servants and agents be
restrained and an injunction is hereby granted restraining the respondent, its officers, servants and agents from passing off and enabling to be passed off its business and goods supplied in the course of its business as and for the business and goods of the applicants or as connected or associated therewith or as products imported, supplied or manufactured by or on behalf of the respondent with the permission or authority of the applicants; and in particular from :
(a) using the words "Ocean Pacific" and the letters "Op" or any other substantially identical or deceptively similar words or mark in relation to the distribution for sale, sale, promotion or labelling of garments and clothing apparel;
(b) using in connection with the distribution for sale, sale, promotion or labelling of garments and clothing apparel any identifying logos, designs, insignia or labels which are substantially identical or deceptively similar to those used by the applicants;
(c) infringing the first applicant's trade marks numbered A282123 and A399301.
(2) That if the respondent hereafter carries on the business of importing, manufacturing, distributing for sale or selling garments and clothing apparel, the respondent shall forthwith do all such things as may be necessary to cause the name of the respondent to be changed to delete the words "Ocean Pacific" including taking such steps to cause to be passed by the shareholders of the respondent company a special resolution to change the name of the respondent company to delete the words "Ocean Pacific" and to lodge such a resolution at the New South Wales Corporate Affairs Commission together with an application to change the respondent company's name.
(3) That the respondent shall forthwith deliver up to the applicants at 167 Botany Road, Waterloo in the State of New South Wales all garments, items of clothing apparel, labels, swing tags, stationery, promotional material and other items used in connection with the distribution for sale of garments and clothing apparel bearing the words "Ocean Pacific" or the mark "Op" or any substantially similar words or marks save and except that the respondent shall not be required to deliver up its historical corporate records.
(4) That the respondent, its officers, servants and agents be restrained and an injunction is hereby granted restraining the respondent, its officers, servants and agents from displaying on or in connection with its business and on any stationery and premises used therein the words "Ocean Pacific" written in the script style or the colour combination of red lettering on a blue or blue-striped background, the same as or similar to the writing of the words "Ocean Pacific" depicted on exhibit A1 tendered in evidence herein.
(5) That the applicants' claims for damages and an account do stand adjourned for further consideration at a time and date to be fixed.
(6) That the applicants be at liberty to apply to a single judge of this Court to vary the terms of this order.
(7) That the applicants recover from the respondent the costs of and incidental to these proceedings to date save in respect of the hearing on 19 December 1989; and that there be no order as to costs in respect of the hearing on 19 December 1989.
B. Liberty to the parties to speak to these minutes on
application made to the trial judge within 14 days of delivery of judgment.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
The applicants claim relief against the respondent in respect of contraventions of ss.52, 53(c) and 53(d) of the Trade Practices Act 1974 ("the TP Act"), for passing off and for infringement of trade marks. By the time these proceedings came on for trial the only issue remaining in dispute, apart from questions of damages and an account which are to be stood over, concerned the ambit of the injunctive relief which should be granted against the respondent, and in particular whether the respondent should be required to change its name so as to remove the words "Ocean Pacific".
The first applicant, Ocean Pacific Sunwear Limited, is a company incorporated in the State of California in the United States of America. It manufactures and distributes clothing apparel, sporting articles including surf boards, and associated products which bear the name OCEAN PACIFIC, the letters Op, and various trade marks, logos and insignia incorporating those words or letters, many of which have been registered by the first applicant in various countries including Australia as trade marks. The first applicant has an established goodwill and reputation in the trade marks, logos and insignia which are distinctive of the first applicant's business and goods in Australia and elsewhere. The trade marks registered in Australia in respect of OCEAN PACIFIC and Op are registered in relation to goods in Classes 25 and 28 of the Trade Marks Regulations. The first applicant has used its registered trade marks, logos and related insignia on clothing apparel, and on its promotional material, in Australia since about 1974. At first it imported goods manufactured elsewhere into Australia for sale, but since June 1975 has permitted manufacture under licence in Australia.
The second applicant, Wilton International Pty Ltd, is a company incorporated in the State of South Australia. It has since 1985 been licensed by the first applicant to use the first applicant's trade marks in connection with the manufacture, distribution and sale of clothing apparel and associated products throughout Australia. The second applicant is the registered user of the first applicant's trade marks in Australia.
The respondent was incorporated in the State of New South Wales on 21 October 1982. The company has since then carried on business in the fields of shipping as an agent for international sea freight containers, container leasing, and the manufacture, import and distribution of clothing. It is apparent from correspondence tendered by the respondent (exhibited to the affidavit of Kevin Ip) that the first applicant and the respondent recognised the potential for confusion arising from the similarity of their corporate names and their business activities in the clothing apparel market in 1983 and 1984. At that time the companies agreed to certain matters, which for present purposes are irrelevant, to avoid that risk. However, it seems that in early 1988 the respondent extended its activities in relation to the manufacture and sale of clothing apparel so as to bring it into competition and conflict with the activities of the applicants in Australia.
The applicants' attention was drawn to the activities of the respondent which are now impugned by them when the respondent made application under s.23 of the Trade Marks Act 1955 for the removal of the first applicant's registration of trade mark number 282123 for non-use. This application lapsed, but patent attorneys instructed by the first applicant investigated the respondent's activities. It was discovered that the respondent carried on business from premises at 167 Botany Road, Waterloo in the State of New South Wales. At that address was situated a two-storey corner building, painted pale blue with signage including the words "Ocean Pacific" in bright red in a distinctive style emblazoned on two sides of the building. Within the building, the respondent conducted a business manufacturing women's clothing which was being labelled, promoted and distributed for sale under the name "Rosangela by Ocean Pacific".
Early in these proceedings the respondent contended that its activities were lawful as the applicants and the respondent were supplying different sections of the clothing industry and were not in competition. It is now conceded that when the proceedings were commenced the parties were in competition, and that the distribution of clothing apparel by the respondent under its "Rosangela by Ocean Pacific" label infringed the trade marks and goodwill of the applicants relating to OCEAN PACIFIC, and the related insignia. It is conceded by the respondent that clothing apparel distributed for sale by it which bears the words "Ocean Pacific" will be associated in the clothing industry with the business of the applicants. However the respondent contends that to require it to change its corporate name would be, in effect, to give the applicants a monopoly in the words "Ocean Pacific" which are two common words, and which in combination do not comprise a concocted or fancy name: cf Chase Manhattan Overseas Corporation and Ors v. Chase Corporation Limited and Anor (1986) 70 ALR 303 at 305 per Lockhart J. and 321 per Beaumont J. It is submitted that it does not follow from the fact that the applicants have an established goodwill in relation to clothing apparel and certain fields of sporting equipment in the OCEAN PACIFIC mark that a company which has the words "Ocean Pacific" in its name will also be so associated with the applicants' business or goods as to entitle the applicants to have the use of those words in the companies' name enjoined.
The mere incorporation of the words "Ocean Pacific" in the respondent's name, without more, would not infringe any legal right of the applicants: cf Burswood Management Limited and Ors v. Burswood Casino View Motel/Hotel Pty Ltd and Ors (1987) ATPR 40-824 at 48,918; however as soon as the respondent engages in trade and commerce, the presence of those words in its name has the potential to do so. It is clear that the use of the words "Ocean Pacific", in relation to the distribution for sale of clothing apparel in those sections of the clothing industry in which the applicants sell their goods will infringe the applicants' registered trade marks, will contravene ss.52, 53(c) and 53(d) of the TP Act, and will amount to passing off. So much is conceded. For reasons which follow I consider the presence of the words "Ocean Pacific" in the respondent's name also contravenes the provisions of the TP Act, and constitutes a passing off where that name is used in connection with the distribution for sale or sale of clothing apparel.
The use of the words "Ocean Pacific" by the respondent in connection with distribution for sale or sale of clothing apparel was restrained by interlocutory injunction made in these proceedings on 16 March 1989, and the respondent concedes that the applicants are entitled to a permanent injunction in similar terms to the interlocutory injunction. But it is contended that the respondent's present activities, as disclosed in the affidavit of Mr Ip, filed just before the trial commenced, do not involve the promotion or distribution for sale of clothing apparel under the name "Ocean Pacific", or in association with the logos and related insignia used by the applicants, and therefore do not, and are not likely to, involve passing off or a contravention of the provisions of the TP Act. Mr Ip deposes to the present activities of the respondent as being :
"...
3. The Respondent has carried on business trading under its corporate name as an agent for international sea freight containers since 1982 and has developed domestic and international business relationships in that industry since 1982. The Respondent continues to carry on that business under its corporate name as at the date hereof and intends to continue to do so hereafter. The Respondent has built up a substantial goodwill under its corporate name with shipping companies, container depots and others in its industry.
4. The Respondent has not manufactured any garments or other articles of clothing for retail sale under its own name since the institution of these proceedings. The Respondent has a garment manufacturing capacity which is used for contract clothing manufacture on behalf of other businesses which manufacture distribute and sell their own goods under their own brands labels and trademarks. No garment is manufactured distributed or sold by the Respondent under a brand label or trademark which is or incorporates the words OCEAN PACIFIC or the letters OP or any other words or letters deceptively resembling those words or letters or which could reasonably be confused therefor. Nor does any garment manufactured distributed or sold by the Respondent carry any label which bears the Respondent's corporate name or otherwise display the words OCEAN PACIFIC or the letters OP.
5. The Respondent imports clothing manufactured outside Australia which bears the name brands labels and trademarks of the foreign manufacturer. No such manufacturer is elated (sic) to or connected with the Respondent in the sense of having common ownership or directors. No such clothing carries any name brand label or trademark which is or incorporates the name OCEAN PACIFIC or the letters OP. All clothing so imported is distributed and sold under the same name brand label and trademark as those it bore at the time of importation."
Objection was taken in a number of respects to Mr Ip's affidavit, and in particular to the admissibility of paragraph 3 as proof of the goodwill of the respondent in its corporate name, but as the correspondence previously referred to in 1983-1984 revealed to the applicants that the respondent carried on business in the shipping and container leasing fields, I accept that the respondent has established some goodwill in these fields. I am unable to say how extensive that goodwill is. These fields of activity are so removed from the fields in which the applicants carry on business that there could be no reasonable likelihood of people associating the respondent's shipping and the container leasing activities with the business and goods of the applicants merely from the presence of the words "Ocean Pacific" in the respondent's corporate name.
However the activities of the respondent deposed to in paragraphs 4 and 5 of Mr Ip's affidavit are in the clothing industry. To consider whether in those activities the respondent's name is likely to infringe the legal rights of the applicants requires reference in more detail to the evidence.
One of the marks widely used by the first applicant in the promotion of its goods comprises the letters Op in blue print on a blue lined background with OCEAN PACIFIC underneath written in a distinctive script style with the words running on an angle upwards to the right in bright red. The affidavit of Mr Rutherford, the executive president in charge of international operations of the first applicant, establishes on the balance of probabilities that the distinctive red script writing of OCEAN PACIFIC on a blue-lined background ("the script mark") is a mark, amongst others, which has become distinctive of the first applicant's clothing apparel and of its business. I consider the proper inference to be drawn from Mr Rutherford's affidavit is that the script mark was distinctive of the first applicant's goods and business before the date of incorporation of the respondent viz 21 October 1982. The evidence of Mr Pitt, the general manager of the second respondent, confirms that this mark is widely used by the second applicant and is distinctive of the goods and business of the applicants in Australia. The distinctiveness of the script mark is important as the respondent, at least since 1988, has used substantially identical or deceptively similar marks in relation to its business. I have already referred to the signage on the respondent's business premises at 167 Botany Road, Waterloo. The building colour provides a blue background for the written name "Ocean Pacific" which appears in bright red, and in a script style which for practical purposes is an exact copy of the style of the script mark of the applicants.
The letterhead which the respondent uses in its business correspondence, as appears from the affidavits of Mr Catt and Mr Pitt, also has the words "Ocean Pacific" in the exact same style prominently appearing at the top, with the script writing in bright red on a blue-lined background.
In my opinion the use of the words "Ocean Pacific" in the script style on the respondent's building and letterhead constitutes a passing off of the business of the respondent as that of the applicants, and is likely to mislead people dealing with the respondent, even retailers and other people in the clothing trade, to believe that the respondent's business has the approval of, or an affiliation with, the applicants; and that the respondent's goods have a sponsorship or approval from the applicants.
Counsel for the respondent contends that the evidence does not prove which party first used the script mark, and that for this reason it should be left out of account. As I have indicated, I consider the proper inference to be drawn from the affidavit of Mr Rutherford is that the script mark was in use by the applicants before the respondent was incorporated. In the absence of any evidence from the respondent to explain its use of the script mark, or one substantially identical thereto, and the adoption of the colour scheme involving red lettering on a blue background, I consider it is proper to act on the inference from Mr Rutherford's affidavit as proof on the balance of probabilities. It is also unlikely that a Californian company with an established international reputation would choose to copy the lettering style and colour combination used in promotional material by the respondent in New South Wales.
The likelihood of people being misled or deceived is a question of fact to be assessed in all the circumstances of the case. The get-up of the respondent's building and letterhead are important facts in the total picture. Another matter in the overall circumstances is the application of s.218 of the Companies Code to the respondent. This section requires that the name of a company shall appear in legible characters on "every business letter, statement of account, invoice, order of goods..." (para.218(1)(b)). It follows that whilst the respondent retains the words "Ocean Pacific" in its name, in transactions of the kind described in paragraphs 4 and 5 of Mr Ip's affidavit the respondent will be exhibiting the "Ocean Pacific" name, or at least a name which incorporates the words "Ocean Pacific" to its customers in written communications. Particularly in the case of clothing imported by the respondent in the manner outlined in paragraph 5 of the affidavit, even though such clothing may be distributed for sale and sold under the same brand label and trade marks as the clothes bore at the time of importation, the use of "Ocean Pacific" in communications by the respondent with its customers is likely to mislead the customers into believing that the respondent is associated with the applicants. Further, the use of "Ocean Pacific" in connection with imported clothing, even though the clothing may be supplied under another brand label or trade mark, is likely to mislead the respondent's customers into believing that the clothing has the sponsorship or approval of the applicants, or quality characteristics that could be expected from the applicants' business.
The OCEAN PACIFIC and Op trade marks, logos and related insignia are widely known. As an indication of the extent of the reputation and goodwill of the first applicant in international markets, in 1987 (the most recent information before the Court) the international sales under these trade marks amounted to approximately US$330m, and the first applicant spent about US$5m on advertising and promotion. In 1988 in Australia sales of goods under the OCEAN PACIFIC and Op marks amounted to some A$3m, and about A$90,000 was spent on advertising. The OCEAN PACIFIC and Op marks are not so widely known as, for example, the Seiko name, the reputation of which was considered in TEC and Tomas (Aust.) Pty Ltd v. Matsumiya Computer Co. Pty Ltd and Ors (1984) 2 IPR 81 at 91, but the evidence satisfies me that it is sufficiently well known amongst retailers of clothing apparel in Australia for the use of a name incorporating the words "Ocean Pacific" by a wholesale distributor to be a likely "door opener" which causes retailers to commence to deal with the respondent under the mistaken belief that the respondent is part of, or is associated with, the business of the applicants.
In my view the applicants have established a reputation and goodwill in the use of OCEAN PACIFIC and Op, and associated logos and insignia, to the extent that any use of those marks, either alone or by incorporating the words "Ocean Pacific" in the respondent's name, in connection with the supply, promotion and distribution for sale of clothing apparel in the ways described in paragraphs 4 and 5 of Mr Ip's affidavit is likely to give rise to a sufficient degree of confusion and mistaken belief as to the association of the clothing with the business and goods of the applicant to amount to a passing off and misleading or deceptive conduct. I consider that the applicants have established an entitlement to have such uses by the respondent of words "Ocean Pacific", enjoined in respect of the importation, manufacture and distribution for sale of clothing apparel.
In his affidavit Mr Ip deposed that if the Court considered the activities described by him in his affidavit constituted conduct which created an unacceptable risk to the goodwill of the applicants, then the respondent's activities referred to in those paragraphs could be immediately terminated and thereafter assumed and continued by another company, Roymancorp (Australasia) Pty Ltd, which Mr Ip controls. I consider that the relief which this Court should grant should be couched in terms which will enable the respondent to follow this course, and to retain its present name and associated goodwill in connection with its business in the fields of shipping and container leasing.
The respondent should be enjoined in all circumstances from using the script mark, or any mark or writing of the words "Ocean Pacific" in a similar style, as the use of that mark passes off the respondent's business as that of the applicants, and is misleading and deceptive for that reason. This will require the respondent to change at least the style of writing of "Ocean Pacific" on its premises at 167 Botany Road, Waterloo, and on its letterhead and stationery.
In formulating the orders which are set out below, which I consider should be made, I have reflected so far as I think appropriate the minutes of order submitted by the applicants, and the respondent's submissions about those minutes.
I also received submissions from the parties on the question of costs. The respondent contends that the costs of the trial should be awarded to it in the event that it is not required to change its corporate name as this was the only real issue of contention between the parties. On the other hand the applicants contend that whatever the outcome they should receive their costs as they have succeeded in their allegations that the respondent's conduct constituted an infringement of its trade marks, passing off, and contraventions of the TP Act. It is submitted that the information about the respondent's shipping and container leasing activities, and its ability to transfer its clothing import manufacturing and distribution activities to another company, were not revealed through the affidavit of Mr Ip until so close to the trial (and well after the date fixed for the filing of affidavits) that the applicant had no opportunity until the trial commenced to consider the relevance of that information. There is merit in both arguments, but I think I should also take into account that the correspondence exhibited to Mr Ip's affidavit disclosed that back in 1983 and 1984 the communications between the parties revealed to the applicant that the respondent's business activities included those in the shipping container leasing areas, and the applicants should have had regard to that aspect of the respondent's business throughout the proceedings. In my opinion justice would be done between the parties if the respondent is ordered to pay the costs of the proceedings save and except for the hearing on 19 December 1989. In respect of the hearing on that day there should be no order as to costs.
In my opinion the following order should now be made, but I shall reserve liberty to the parties to speak to the minutes:
The Court orders :
1. That the respondent, its officers, servants and agents be restrained and an injunction is hereby granted restraining the respondent its officers, servants and agents from passing off and enabling to be passed off its business and goods supplied in the course of its business as and for the business and goods of the applicants or as connected or associated therewith or as products imported, supplied or manufactured by or on behalf of the respondent with the permission or authority of the applicants; and in particular from :
(a) using the words "Ocean Pacific" and the letters "Op" or any other substantially identical or deceptively similar words or mark in relation to the distribution for sale, sale, promotion or labelling of garments and clothing apparel;
(b) using in connection with the distribution for sale, sale, promotion or labelling of garments and clothing apparel any identifying logos, designs, insignia or labels which are substantially identical or deceptively similar to those used by the applicants;
(c) infringing the first applicant's trade marks numbered A282123 and A399301.
That if the respondent hereafter carries on the business of importing, manufacturing, distributing for sale or selling garments and clothing apparel the respondent shall forthwith do all such things as may be necessary to cause the name of the respondent to be changed to delete the words "Ocean Pacific" including taking such steps to cause to be passed by the shareholders of the respondent company a special resolution to change the name of the respondent company to delete the words "Ocean Pacific" and to lodge such a resolution at the New South Wales Corporate Affairs Commission together with an application to change the respondent company's name.
That the respondent shall forthwith deliver up to the applicants at 167 Botany Road, Waterloo in the State of New South Wales all garments, items of clothing apparel, labels, swing tags, stationery, promotional material and other items used in connection with the distribution for sale of garments and clothing apparel bearing the words "Ocean Pacific" or the mark "Op" or any substantially similar words or marks save and except that the respondent shall not be required to deliver up its historical corporate records.
That the respondent, its officers, servants and agents be restrained and an injunction is hereby granted restraining the respondent, its officers, servants and agents from displaying on or in connection with its business and on any stationery and premises used therein the words "Ocean Pacific" written in the script style or the colour combination of red lettering on a blue or blue-striped background, the same as or similar to the writing of the words "Ocean Pacific" depicted on exhibit A1 tendered in evidence herein.
That the applicants' claims for damages and an account do stand adjourned for further consideration at a time and date to be fixed.
That the applicants be at liberty to apply to a single judge of this Court to vary the terms of this order.
That the applicants recover from the respondent the costs of and incidental to these proceedings to date save in respect of the hearing on 19 December 1989; and that there be no order as to costs in respect of the hearing on 19 December 1989.
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