Parke Davis Pty Ltd v Wilkinson Sword Pty Ltd

[1981] FCA 260

Re: PARKE DAVIS PTY. LIMITED
And: WILKINSON SWORD PTY. LIMITED
No. G183 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.

CATCHWORDS

Trade Practices - misleading or deceptive conduct - false representation - interlocutory injunction - applicant and respondent sell "pivoting head razors" and "razor blade cartridges" in various packs - whether the public would be misled or deceived by stickers affixed to the respondent's packs into thinking that the respondent's product is the same as, or, that it came from the same source as the applicant's product - whether the stickers falsely represent that the respondent's cartridges have the same performance characteristics, accessories, uses or benefits as the applicant's cartridges. Trade Practices Act 1974 (Cth.) ss. 52, 53 (c), 80

HEARING

SYDNEY

#DATE 23:12:1981

JUDGE1

The parties to this dispute are fighting over razors and razor blades. Parke Davis Pty. Limited, the applicant, sells and, since December 1980 has sold, razors and razor blades of various descriptions including what are called in the trade "pivoting head razors" and "razor blade cartridges". For convenience I shall refer to them as razors and cartridges respectively.

From about March or April 1979 to December 1980 these products were sold by the applicant's predecessor in business in Australia, Parke Davis and Company, a United States company which sold its business to the applicant on 31 December 1980.

Certain of the razors and cartridges of the applicant and its predecessor are and, since about March or April 1979 have been, sold in packs bearing the brand name "Ultra" in yellow lettering on a black background. The word "Schick" also appears on the packs and is the registered trade-mark in Australia of Warner-Lambert Company in the relevant class of goods. Warner-Lambert Company is the ultimate holding company of the applicant and was incorporated in the United States of America.

The applicant's razors and cartridges are sold from at least 10,000 retail outlets throughout Australia. They include supermarkets, pharmacies, variety stores, department stores and barber shops. The products bearing the name "Ultra" have been extensively promoted and advertised throughout Australia. More than $600,000 has been spent by the applicant in promoting and advertising these products during the twelve months ended 30 October 1981. The "Ultra" razors and cartridges are marketed by the applicant in three packs. The first pack has the razor together with some cartridges. The second pack has nine "Ultra" cartridges without the razor and the third pack has five "Ultra" cartridges also without the razor. The principal sales of the "Ultra" products are of the nine and five cartridge packs.

The major competitor of the applicant is Gillette (Australia) Pty. Limited which sells in Australia razors and cartridges under the brand name and trade-mark "Contour". The name "Contour" is most frequently displayed in white lettering on a background which shades from black to grey. The Gillette product is sold in a pack containing a "Contour" razor and five cartridges. A second pack is sold containing ten cartridges and no razor. A third pack contains five cartridges and no razor.

Razors and cartridges bearing the brand name and trade mark "Profile" have been sold throughout Australia by Wilkinson Sword Pty. Limited, the respondent, in competition with the products of the applicant and Gillette, since about August 1979.

The "Profile" razor and cartridges are sold together in one pack. Another pack is sold containing five cartridges and no razor. A third pack includes ten "Profile" cartridges and no razor. Until early December this year the "Profile" razors and cartridges were sold in packs bearing the name "Profile" in white lettering on a black background.

Recently the respondent had printed two types of stickers, one of which was designed to be placed on the pack containing both the razor and the cartridges and stating "Ultra & Contour blades will fit Profile". It also contains the words "Wilkinson Sword" and the Wilkinson Sword emblem.

"Ultra" and "Profile" are printed on the sticker in yellow. There is also a yellow band round the outside of the sticker. The words "& Contour" appear in white, and the words "blades" and "will fit together" and also the Wilkinson Sword emblem are in red. The background shades from black to grey. The sticker has been affixed by representatives of the respondent in each State of Australia to packs containing the "Profile" razor and cartridges by arrangement with retailers.

Sometimes the sticker has been placed towards the top of the pack below a slit designed to enable the pack to be suspended from a hanger commonly found in supermarkets and shops. Sometimes the sticker has been fixed towards the bottom of the pack, positioned so as to correspond with the front face of the cartridge pack.

The second type of sticker is designed to be placed, and has in fact been placed, over most of the face of the container which houses the cartridges on the "Profile" packs sold independently of the razor itself (both five and ten cartridge packs) and the words "fits Ultra & Contour razors" appear on the sticker.

The word "Ultra" appears in yellow print; and yellow is the background colour towards the upper left-hand corner of the sticker. It is also the background colour of the bottom right-hand corner of the sticker. The words "& Contour razors" appear in white print. There is a red band across both the yellow corners and the words "Ultra & Contour razors" appear on a background which shades from black to grey.

The words "Wilkinson Sword" and the Wilkinson Sword emblem appear in the bottom right-hand corner of the sticker. Any description of the product and of the packaging and stickers is, of course, only properly appreciated if they are seen. It is not clear from the evidence when the respondent first sold the razors and cartridges with the stickers placed upon the packs in their new and present form but it seems that this was early in December. this year.

The Gillette "Contour" razors and cartridges are the market leaders in the field of pivoting head razors and razor blade cartridges in Australia. The "Ultra" razors and cartridges of the applicant come next in market share, gaining an increasing percentage during 1981. The "Profile" product of the respondent has a lower market share than that of the applicant and this share has been declining during 1981.

The respondent has, of course, been aware of its declining market share and has set out to reverse this decline. The change in the form of packaging to which I have referred is one method adopted by the respondent to achieve this result. I do not propose to state the actual percentages of the market enjoyed by "Contour", "Ultra" and "Profile" as the evidence rests in this respect primarily upon reports received by the applicants from marketing research consultants which, in turn, are based upon surveys of the public. Although these reports were admitted into evidence without objection, the methodology was not established in a manner which satisfies me that the reports are reliable.

I do not suggest that the reports are not accurate, nor do I suggest that the methodology is incorrect or unreliable. All I say is that at this interlocutory stage of the hearing I am not satisfied as to the reliability of the reports and do not propose to rely upon them to any great extent. However, I should say that if I were to do so, although certain conclusions would support the applicant, others would favour the respondent.

It is common ground that the three brands of razor and cartridge - "Profile", "Ultra" and "Contour" - are interchangeable one with the other. In other words, each of the three brands of cartridge may be used with each of the other brands of razor. A feature of the "Ultra" cartridge which differs from other cartridges on the market is what the applicant calls its "push-clean action". If the "Ultra" cartridge is fitted to a "Profile" or "Contour" razor the push-clean action works in the same way as if the cartridge were fitted to an "Ultra" razor. The push-clean action is a function solely of the cartridge and is independent of any razor to which it is fitted. The "Profile" cartridge does not have this action whether it is fitted to a "Profile", "Ultra" or "Contour" razor. So it is with the "Contour" cartridge. This push-clean attribute of the "Ultra" cartridge is stressed in television commercials for the "Ultra" product.

On 11 December 1981 the applicant commenced proceedings in this Court seeking injunctions pursuant to s. 80 of the Trade Practices Act 1974 (Cth.) ("the Act") to restrain the respondent essentially from promoting, selling or distributing razors or cartridges bearing the words "Ultra" or "Ultra & Contour" in the form appearing on the stickers to which I have referred.

On Monday of this week, 21 December, the applicant sought interlocutory injunctions. The applicant puts its case on a twofold basis.

First, it contends that the respondent is contravening s. 52 of the Act by engaging in conduct that is misleading or deceptive in that the buying public would think that the "Ultra" and "Profile" products were produced by the same manufacturer, or that they came from the same source. This contention is based primarily on the sticker affixed to the pack containing both razor and cartridges and is based on the fact that the words "Ultra" and "Profile" are both in yellow print.

The respondent contends that such evidence as there is as to the reputation of the applicant, the respondent or Gillette in any of the products marketed as "Ultra", "Profile" or "Contour" is not only scant but establishes, if anything, that there is no established reputation in the mind of the buying public in any of those names in any relevant sense at all.

As far as the application for interlocutory relief is concerned, my task is to determine whether the applicant has made out a sufficient case for such relief and, if it has, to turn to the question of balance of convenience, although those two questions can, of course, be related. It is not the function of the Court at this stage to decide the issues which will arise on a final hearing. In hearing an application for interlocutory injunctive relief:-

" . . . the court does not undertake a preliminary trial and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. It looks to see whether the applicant for the injunction 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 applicant will be held entitled to relief (Beecham Group Limited v. Bristol Laboratories Pty. Limited (1968) 118 C.L.R. 618; 1968 A.L.R. 469). I have already stated my views on the nature of the case which has to be made out to meet this test (see World Series Cricket Pty. Limited v. Parish (1977) A.T.P.R. 40-040; 16(1977) A.L.R. 181 at pp. 185-186 and Commercial Bank of Australia Limited v. Insurance Brokers Association of Australia (1977) A.T.P.R. 40-053; (1977) 16 A.L.R. 161 at p. 168). I adhere to what I have previously said and will refrain from repeating it."

Per Bowen C.J. in Transport Workers' Union of Australia and Others v. Leon Laidely Pty. Limited (1980) A.T.P.R. 40-149 at pp. 42,141 and 42,142; also (1980) 28 A.L.R. 589 at p. 593.

Accordingly, any findings of fact that I may make are made with those principles in mind and certainly not as an ultimate or final finding of fact when at this stage the evidence is only in its infancy.

It is not disputed that the respondent adopted the two new forms of sticker for the purpose of emphasising that the "Profile" cartridge will fit the "Ultra" and "Contour" razors and that the "Ultra" and "Contour" cartridges will fit the "Profile" razor. Indeed, the choice of the colour yellow and the adoption of the same form of printing of the word "Ultra" as appears on the applicant's own pack were designed by the respondent for the purpose of drawing the buyer's attention to the interchangeability of the two products in the sense I have mentioned; similarly as to "Contour" razors and cartridges.

The word "Contour" is printed on the respondent's stickers in white on a background which is black merging to grey similar to the "Contour" pack itself. There is one important difference, however, namely that the letter "C" in "Contour" on the "Contour" pack is in a rather distinctive form which is not adopted on the respondent's stickers. The evidence suggests that this was done deliberately so as not to offend Gillette's trade mark in the word "Contour". There is no registered trade mark of the applicant in the word "Ultra".

As to the sticker which appears on the ten and five cartridge "Profile" packs, although the sticker does not mention the word "Profile" itself, it nevertheless emphasises when it is read as part of the pack as a whole that the "Profile" (printed on the pack in large letters and in white) cartridge fits the "Ultra" and "Contour" razors.

In my opinion no prima facie case has been made out by the applicant in the requisite sense. I do not think that the buying public would be misled or deceived or would be likely to be misled or deceived into believing that the "Profile" product is the same as the "Ultra" product or that they come from the same source. The stickers to my mind emphasise, whether the product be "Ultra", or "Contour" that those blades will fit the "Profile" razor, and that the "Profile" cartridge will fit the "Ultra" and "Contour" razors. The very statement as to interchangeability, when coupled with the adoption of the word "Ultra" in the same large printing and yellow colour as on the "Ultra" pack and the word "Contour" in white on a black to grey background (although the "C" on the stickers is different from the "C" on the "Contour" pack) emphasises that the buyer's mind will be drawn to the fact that the three products are probably separate each from the other.

I have some reservations about the sticker used on the "Profile" pack containing both razor and cartridges where the word "Profile" appears in yellow print together with the word "Ultra".

The combination of the word "Ultra" in yellow lettering on a black background in the relevant market for the sale of razors and cartridges in Australia has, until this month, been adopted exclusively by the applicant. The explanation for this change by the respondent was given by Mr. Gibbons, sales and marketing manager of the consumer products division of Wilkinson Sword Group Australia Limited, who was responsible for the supervision of all sales representatives employed by the respondent and for all its advertising and promotional material. He said that it was deliberately intended to use the word "Ultra" in a yellow colour so as to be as close as possible to the format on the "Ultra" product for the purpose of emphasising the interchangeability of the two products, "Ultra" and "Profile". He said it was the graphics department of the respondent that chose or suggested the use of the yellow colour for the word "Profile" because as "Ultra" was in the top left-hand corner of the sticker and "Profile" was in the lower section, one balanced the other as did the word "blades" in red balance the words "will fit" also in red in diagonally opposite corners.

The relevance of the reason for the respondent adopting this course may be open to question. All I wish to say at the moment is that I have some difficulty with the explanation proffered by Mr. Gibbons in the absence of corroboration because the evidence is at too early a stage for questions of credibility to be determined unless they are central to the case of either the applicant or the respondent, which they are not. Notwithstanding my reservations about this aspect of the matter, in my opinion no prima facie case has been established.

Thus far I have dealt with the first basis on which the applicant puts its case. The second basis upon which the applicant puts its case at this stage is that the respondent is infringing s. 53 (c) of the Act in that it is said to be falsely representing that the "Profile" products have performance characteristics, accessories, uses or benefits they do not have by representing on the sticker which is placed on the ten and five cartridge packs that the "Profile" cartridges fit the "Ultra" razors, in that the buyer would assume that the "Profile" cartridge has the same advantage and benefit as the "Ultra" cartridge, namely the push-clean feature. In my opinion a prima facie case has not been made out in relation to this complaint.

The evidence before me at this stage of the case suggests that it is more likely that a buyer would simply assume that the "Profile" cartridge is a razor blade cartridge which fits the "Ultra" pivoting head razor. He would not assume that the "Profile" cartridge had the characteristic of push-clean. Furthermore, the evidence suggests that only a very small section of the public has ever heard of any push-clean characteristic and that only a small section of that section associates this characteristic with the "Ultra" product itself.

What the applicant is seeking to do is in substance to restrain the respondent from doing the very thing which the applicant itself does, namely attribute to its own cartridges a feature that it also fits the razors of its principal competitors. The applicant states on its packs of nine and five cartridges that the "Ultra" cartridge "FITS CONTOUR, PROFILE & GII RAZORS". "GII" is another trade mark of Gillette.

No prima facie case has, in my view, been established, In all the circumstances it is unnecessary to turn to the balance of convenience. The respondent has indicated that it is prepared to give the appropriate undertaking to the Court to keep relevant records of the numbers of stickers affixed to "Profile" packs.

This case ought to be brought on for final hearing as soon as practicable. Although I do not intend to grant interlocutory relief, I propose to stand the matter down until a little later this morning so that the respondent may formulate with precision an appropriate undertaking as to the keeping of records of stickers prepared and affixed to packs and so that the parties may bring in short minutes as to the future conduct of the proceedings including matters such as pleadings, discovery and interrogatories.

The order of the Court is that interlocutory relief is refused. The costs of the applicant will be costs in the proceedings.

I note the undertaking of the respondent by its counsel to the Court that it will, until the hearing of this proceeding or further order, keep proper records of the numbers of stickers the subject of these proceedings distributed by it to retailers or affixed by them to packs whether before or after distribution and to separate the figures between the two types of stickers, the two types of stickers being those appearing on exhibits "GVG 9" and "GVG 10".

I give the following directions:

1. That the applicant file and serve a statement of claim on or before 6 January 1982;

2. That the respondent file and serve its defence on or before 27 January 1982;

3. That the parties administer any interrogatories on or before 4 February 1982;

4. That any such interrogatories be answered on or before 17 February 1982;

5. That the evidence on the final hearing be primarily by affidavit subject of course to cross-examination;

6. That the applicant file and serve all affidavits intended to be relied upon on or before 24 February 1982;

7. That the respondent file and serve all affidavits intended to be relied upon on or before 9 March 1982;

8. That the proceedings stand over for further directions to 12 March 1982;

9. Each party has liberty to apply in the meantime on two days' notice.

The exhibits may be handed out. Any documents produced on subpoena may be returned whence they came.