Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.2)
[2010] FMCA 121
•12 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PIERSON’S PRO-HEALTH PTY LTD & ORS v SILVEX NOMINEES PTY LTD & ANOR (No.2) | [2010] FMCA 121 |
| TRADE MARKS – Whether infringement of registered trade mark – trade mark – sign – whether substantially identical – whether deceptively similar – colloidal silver products. TORTS – Passing off – whether reputation or goodwill – whether misrepresentation or deception – colloidal silver products. TRADE PRACTICES – Whether misleading and deceptive conduct – whether false or misleading representation concerning goods – colloidal silver products. |
| Evidence Act 1995 (Cth), ss.59, 135(a) & (b) Trade Marks Act 1995 (Cth), ss.6, 10, 17, 20(2) & (3), 120(1) & (2), 122(1)(e), 124, 126 Trade Practices Act 1974 (Cth), ss.52, 53(c), 82(1) |
| Angove’s Pty Ltd v Johnson (1982) 43 ALR 349 Anheuser-Busch Inc v Budejovicky Budvar, Narodni Podnik & Ors (2002) 56 IPR 182; [2002] FCA 390 Australian Society of Accountants v Federation of Australian Accountants Inc (1987) 9 IPR 282 Barton v Croner Trading Pty Ltd (1984) 3 FCR 95 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42; [2000] FCA 1539 Cadbury-Schweppes Pty Ltd v Pub Squash Co Ltd [1981] RPC 429; [1980] 2 NSWLR 851 Campomar Sociedad Limitada & Anor v Nike International Ltd & Anor (2000) 202 CLR 45; [2000] HCA 12 Coca-Cola Co v All-fect Distributors Ltd (1999) 96 FCR 107; [1999] FCA 1721 Dairy Vale Metro Co-operative Ltd v Brownes Dairy Ltd (1981) 54 FLR 243; [1981] FCA 63 E & J Gallo Winery v Lion Nathan Australia (2008) 77 IPR 69; [2008] FCA 934 Faessler v Neale (1994) 29 IPR 1 Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Henderson v Radio Corp Pty Ltd [1960] SR(NSW) 576 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; [1978] HCA 11 J Bolinger v Costa Brava Wine Co Ltd (1960) Ch 262 Pacific Dunlop Ltd v Hogan (1989) 14 IPR 398 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Pete Waterman Ltd v CBS United Kingdom Ltd (1990) 20 IPR 185 Peter Isaacson Publications v Nationwide News Pty Ltd (1984) 6 FCR 289 Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365; [1999] FCA 1020 S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354; [2002] FCAFC 157 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 |
| First Applicant: | Pierson’s Pro-health PTY LTD |
| Second Applicant: | GRENVILLE GEORGE FRANKLIN |
| Third Applicant: | LEEANNE MAREE FRANKLIN |
| First Respondent: | SILVEX NOMINEES PTY LTD |
| Second Respondent: | HEALTH MINDERS PTY LTD |
| File Number: | PEG 259 of 2007 |
| Judgment of: | Lucev FM |
| Hearing dates: | 15-17 July and 13-14 August 2008 |
| Date of Last Submission: | 14 August 2008 |
| Delivered at: | Perth |
| Delivered on: | 12 March 2010 |
REPRESENTATION
| Counsel for the Applicants: | Mr S K Shepherd |
| Solicitors for the Applicants: | Irdi Legal |
| Counsel for the Respondents: | Mr M G Pendlebury with Mr C Pruiti |
| Solicitors for the Respondents: | Williams and Co |
ORDERS
That the application be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Perth |
PEG 259 of 2007
| PIERSON’S PRO-HEALTH PTY LTD |
First Applicant
| GRENVILLE GEORGE FRANKLIN |
Second Applicant
| LEEANNE MAREE FRANKLIN |
Third Applicant
And
| SILVEX NOMINEES PTY LTD |
First Respondent
| HEALTH MINDERS PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Colloidal silver is a liquid suspension of microscopic silver particles. Historically, it was used as an internal medication to treat a variety of diseases. With the rise of modern antibiotics, and concern about adverse side affects, the use of colloidal silver was largely discontinued in the 1940’s. However, in the 1990’s there was a resurgence in the use of colloidal silver as an alternative medicine, with a variety of claims concerning its curative qualities, none of which is supported by a body of medical or scientific evidence.[1]
[1] See “Colloidal Silver Products” at being the web page of the US National Institute of Health National Center for Complementary and Alternative Medicine, and “Regulation of Colloidal Silver and Related Products” at being a web page for the Australian Government’s Department of Health and Ageing Therapeutic Goods Administration.
In this case the applicants allege that the respondents have:
a)infringed their trade mark in a colloidal silver product;
b)tried to pass off the respondents’ colloidal silver products as those of the applicants, or at least the first applicant; and
c)engaged in misleading and deceptive conduct and made false and misleading representations concerning the applicants’ silver colloidal products.
Issues
The issues which arise in these proceedings are as follows:
a)whether the respondents, Silvex Nominees Pty Ltd[2] and Health Minders Pty Ltd,[3] have infringed the first applicant’s, Pierson’s Pro-Health Pty Ltd’s,[4] trade mark,[5] and in relation to that issue:
[2] “Silvex”.
[3] “Health Minders”.
[4] “Pierson’s”.
[5] “Pierson’s Trade Mark”.
i)whether product labels used by Silvex and Health Minders are:
(A)substantially identical; or
(B)deceptively similar,
to Pierson’s Trade Mark;
b)whether, if a breach of Pierson’s Trade Mark is otherwise established, a defence under ss.122 or 124 of the TM Act is available;
c)whether Silvex and Health Minders have passed off their colloidal silver products as those of Pierson’s, and in that regard:
i)whether there is some reputation or goodwill on the part of Pierson’s and the second and third applicants, Mr Grenville George Franklin and Ms Leanne Maree Franklin[6] subsisting in their colloidal silver products;
ii)whether Silvex and Health Minders have engaged in deceptive or misrepresentational conduct in relation to those products; and
iii)whether there exists, or is a threat of, damage to Pierson’s or the Franklins, as a consequence of the conduct of Silvex and Health Minders as a result of the alleged passing off;
d)whether Silvex and Health Minders have engaged in misleading and deceptive conduct under s.52 of the TP Act and made false and misleading representations under s.53(c) of the TP Act in relation to those products.
Facts
[6] Individually “Mr Franklin” and “Ms Franklin” respectively, collectively “the Franklins”.
1999 – October 2005
On 2 November 1999 the business name “Sutton’s Colloidal Solutions” was registered. The person carrying on the business was recorded as Mr Sutton.[7]
[7] Exhibit R15: Business Names Extract – Western Australia for “Sutton’s Colloidal Solutions”.
At some time shortly thereafter in late 1999 or 2000, Mr Sutton entered into a distribution agreement with Sutton’s Solutions Pty Ltd[8] to sell SSPL branded colloidal silver.[9]
[8] “SSPL”.
[9] Mr Franklin’s first affidavit sworn 7 December 2007, para.22 (“Mr Franklin’s First Affidavit”); Ms Nazzari’s first affidavit affirmed 26 June 2008, para.16 (“Ms Nazzari’s First Affidavit”).
Mr Franklin commenced work for SSPL in July 2002.[10]
[10] Mr Franklin’s First Affidavit, para.12.
In about March 2003 the directors of SSPL offered to sell SSPL (including distribution rights, customer base and goodwill) to Mr Franklin for $120,000. This sale did not eventuate.[11]
[11] Mr Franklin’s First Affidavit, paras.25 and 31.
In May 2003 SSPL changed its name to “Hydrosan”.[12] On 9 July 2003 Mr Franklin resigned from SSPL/Hydrosan.[13]
[12] Mr Franklin’s First Affidavit, para.39 and Annexure E.
[13] Mr Franklin’s First Affidavit, para.32.
The business name “Pierson’s Pro-Health” was registered by Mr Franklin on 30 September 2003.[14]
[14] Mr Franklin’s First Affidavit, para.41.
Some time late in 2003 Mr Franklin commenced to negotiate with Mr Sutton for a distribution agreement in relation to colloidal silver solution manufactured by Sutton’s Colloidal Solutions.[15]
[15] Mr Franklin’s First Affidavit, para.42.
In or about December 2003 an oral agreement was entered into between Mr Franklin, Ms Franklin and Mr Sutton whereby Mr Sutton, trading under the name “Sutton’s Colloidal Solutions”, would, at his own cost, exclusively manufacture a colloidal silver solution for the Franklins, who would “label, package and distribute” that colloidal silver, at their own cost, on the basis that net profits would be shared 50/50 between the Franklins and Mr Sutton. During the negotiations in respect of this agreement the Franklins refused to pay Mr Sutton for any goodwill, asserting that there was no goodwill to sell, because Mr Sutton’s role, through Sutton’s Colloidal Solutions, was to manufacture.[16]
[16] Mr Franklin’s First Affidavit, paras.52 and 53.
Health Minders started to sell and distribute to retailers Pierson’s products under the brand name “Allan Sutton’s Original Colloidal” from in or about the first quarter of 2004, without, it appears, any written agreement being in place.[17]
[17] Paul Curlisa’s second affidavit sworn 4 July 2008, para.5 (“Mr Curlisa’s Second Affidavit”); Mr Franklin’s First Affidavit, para.48.
At about Christmas 2004 Mr Sutton offered to sell his Dwellingup property[18] and plant and equipment[19] to the Franklins.[20] It was upon this property, and using this plant and equipment, that Mr Sutton manufactured colloidal silver.[21]
[18] “Dwellingup Property”.
[19] “Dwellingup Plant and Equipment”.
[20] Mr Franklin’s First Affidavit, para.69.
[21] Mr Franklin’s First Affidavit, para.43.1.
A standard form contract of offer and acceptance for purchase of the Dwellingup Property, including the Dwellingup Plant and Equipment, was signed, seemingly sometime around or just after Christmas 2004.[22] Following marital difficulties between Mr Sutton and his wife, the Franklins decided to walk away from, and tore up, the First Dwellingup Contract and no longer have a copy.[23]
[22] “the First Dwellingup Contract”.
[23] Mr Franklin’s First Affidavit, paras.71-73 and 77.
The purchase price under the First Dwellingup Contract was $550,000 allocated as follows:
a)$450,000 to the Dwellingup Property;
b)$100,000 to the Dwellingup Plant and Equipment.[24]
[24] Mr Franklin’s First Affidavit, para.73.
Before negotiations had concluded for the purchase of the Dwellingup Property and the Dwellingup Plant and Equipment the Franklins moved into the Dwellingup Property in February 2005.[25]
[25] Mr Franklin’s First Affidavit, para.84.
At some time in 2005 Pierson’s commenced manufacturing Allan Sutton’s Original Colloidal Silver.[26] Because of the Franklins’ move to the Dwellingup Property it is likely that that manufacturing commenced sometime after February 2005.
[26] Mr Franklin’s First Affidavit, para.4.
Sometime between 10 August 2005 and 14 October 2005 a new contract for the purchase of the Dwellingup Property and Dwellingup Plant and Equipment was completed.[27] Under the Second Dwellingup Contract the Franklins[28] purchased “the land described in the Schedule and all Improvements (“the Property”) … together with the Chattels (if any) described in the Schedule”. The Schedule described:
a)the Property as “2111 Williams/Pinjarra Road Dwellingup WA 6213” … being Lot 1030”; and
b)“Chattels including all fixtures and fittings, plant and equipment, and all farm machinery currently on property. Chattels to include those in cottages.”
[27] Mr Franklin’s First Affidavit, paras.85 and 86, and page 38 - Annexure G (“the Second Dwellingup Contract”). Completion or settlement date is not express on the face of the Second Dwellingup Contract, but acceptance of the offer occurred on10 August 2005, the settlement date was said to be within 60 days thereof, but the final date for loan approval was 14 October 2005.
[28] Ms Franklin was at that time Ms O’Connor.
At the time the Second Dwellingup Contract was entered into, Mr Sutton and the Franklins also “agreed … in principle” that their businesses should “merge”.[29]
[29] Mr Franklin’s First Affidavit, para.88.
The Franklins’ negotiations with Mr Sutton – more detail
Mr Sutton had for some time prior to becoming involved with the Franklins, arranged for the production, packaging, labelling and distribution of colloidal silver products, under labelling arrangements by which the labels bore his name in some form of connection with the nature of the product, namely colloidal silver product. These products, marketed by SSPL immediately before Pierson’s, carried with them whatever goodwill derived from the use of Mr Sutton’s name. The colloidal silver products marketed by SSPL using Mr Sutton’s name were marketed via a distribution agreement or relationship between them. That relationship broke down, and negotiations commenced between Mr Sutton and the Franklins concerning the distribution of colloidal silver products.[30]
[30] Mr Franklin’s First Affidavit, paras.16-22, 27-29 and 33-42.
In about May 2003 there were discussions with the Franklins in which Mr Sutton said he was “willing to enter a new distributorship” with the Franklins, and Mr Franklin’s evidence is that “verbal” terms were agreed upon for the “new distributorship”, but that these were never reduced to writing.[31]
[31] Mr Franklin’s First Affidavit, paras.28-29 and 31.
Sometime later in 2003 there were further discussions between Mr Sutton and the Franklins, and they began to “negotiate the terms of a new distribution agreement” for colloidal silver solution.[32] The terms of the subsequent agreement, settled on in December 2003, but again not reduced to writing, were that:
a)colloidal silver solution would be manufactured by Mr Sutton under the name of Suttons Colloidal Solutions;
b)Mr Sutton would bear the costs of manufacturing the colloidal silver solution;
c)the Franklins would label, package and distribute Mr Sutton’s product;
d)the Franklins would pay all distribution costs;
e)there would be a splitting of net profits between Mr Sutton (50%) and the Franklins (50%); and
f)Mr Sutton would not supply colloidal silver solution to, nor make it for, any other persons.[33]
[32] Mr Franklin’s First Affidavit, para.42.
[33] Mr Franklin’s First Affidavit, para.43 (“Manufacturing and Distribution Agreement”).
The Franklins started business with Mr Sutton under the Manufacturing and Distribution Agreement early in 2004.[34]
[34] Mr Franklin’s First Affidavit, para.47.
The Franklins were not prepared to pay any money to Mr Sutton for goodwill in relation to the distribution rights held by SSPL.[35]
[35] Mr Franklin’s First Affidavit, para.53.
Mr Franklin said that Mr Sutton gave consent to Pierson’s to use his name on the packaged product. Under cross-examination Mr Franklin gave evidence about the use of Mr Sutton’s name and the colloidal silver product, as follows:
“Back to [paragraph] 43.1 [of Mr Franklin’s First Affidavit] where you give evidence as to the agreement that you eventually reached with Mr Sutton, do you see that it was Mr Sutton trading under the name of Sutton’s Colloidal Solutions. So here we have Mr Sutton with the name Sutton’s Colloidal Solutions, telling you that he is happy for you to use that name or a very similar name in products that he supplied or in the labelling of products that he supplied to you? --- Yes.
That’s a correct statement of the position? --- Yes.
You would label it, package it and distribute his product, this is what you say in 43.2? --- His product, his colloidal silver, yes.”[36]
[36] Transcript, 15 July 2008, p.50.
There is no affidavit evidence of purchase from Mr Sutton of goodwill in relation to any matter concerning the colloidal silver solutions by Pierson’s.
Having said that there was no goodwill and that the Franklins were not prepared to pay for any goodwill, Mr Franklin said in cross-examination that:
a)there was only one agreement entered into between Mr Sutton and the Franklins, namely the Second Dwellingup Contract;
b)Mr Franklin understood that the Second Dwellingup Contract included the acquisition of goodwill in Mr Sutton’s business;
c)he understood the distinction between land, plant, equipment and goodwill; and
d)the goodwill was not purchased under the Second Dwellingup Contract (contrary to what was previously said), but rather, by way of a separate verbal agreement entered into prior to the Second Dwellingup Contract.[37]
[37] See generally the Transcript of Mr Franklin’s cross-examination on 15 July 2008 and on 16 July 2008, especially at p.2-27 of the Transcript of 16 July 2008.
The evidence of Mr Franklin concerning the acquisition of goodwill from Mr Sutton in relation to colloidal silver products is inconsistent, both as to whether any goodwill:
a)existed; and
b)if it did exist, when and how it was said to be purchased.
It is significant that the allegation that there was a separate contract for the purchase of goodwill arose for the first time in cross-examination, and is unsupported by any particulars as to the nature of the agreement. Critically, there is no evidence of consideration for the purchase of goodwill under the alleged separate contract for the purchase of goodwill. It appears to the Court that the suggestion that there was a separate contract for the purchase of goodwill made at a time prior to the Second Dwellingup Contract is a matter of recent invention by Mr Franklin. It is inconceivable that such an allegation, in relation to such an important and fundamental matter, could only arise for the very first time in cross-examination. The Court has therefore concluded that there was no separate contract or arrangement entered into between the Franklins and Mr Sutton for the purchase of goodwill in relation to colloidal silver products.
Mr Franklin gave evidence that he understood the concept of goodwill, and could distinguish it from the purchase of land, plant and equipment. He also gave evidence that, ultimately, he considered that Mr Sutton’s name was of value when used in relation to colloidal silver products.[38] Having regard to the state of Mr Franklin’s knowledge, and the fact that no express provision is made for goodwill in the Second Dwellingup Contract, and, further, that there is no mention of any “business” in that contract, the Court considers that the express terms of that contract do not cover the purchase of any goodwill in Mr Sutton’s colloidal silver products business. The Court is not prepared to imply a term into the Second Dwellingup Contract as to goodwill where to imply such a term:
a)would be contrary to the express terms of that contract; and
b)the term is not so obvious as to go without saying in the context of the contract as a whole; and
c)it is unnecessary to give business efficacy to the contract for the purchase of land, plant and equipment which is what the Second Dwellingup Contract relates to.[39]
[38] Transcript, 15 July 2008, p.49.
[39] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 per Lord Simon of Glaisdale, Viscount Dilhorne and Lord Keith of Kinkel.
Pierson’s and goodwill
In relation to Pierson’s, there is no evidence that Pierson’s was a party to any contract in relation to:
a)the Dwellingup Property;
b)the Dwellingup Plant and Equipment, or
c)the purchase of any goodwill from Mr Sutton, in relation to Mr Sutton’s colloidal silver products business.
Consideration generally for goodwill and unregistered intellectual property
There is no evidence of any consideration paid by either Pierson’s or the Franklins to Mr Sutton in relation to any goodwill in Mr Sutton’s colloidal silver products business, or for the purchase of what is described in submissions on behalf of Pierson’s and the Franklins as “unregistered intellectual property”. No sum other than the purchase sum of $550,000 set out in the Second Dwellingup Contract appears to have been paid to Mr Sutton, and for reasons set out above, it is apparent that that sum relates only to the purchase of the Dwellingup Property and the Dwellingup Plant and Equipment.
Labels and bottles
In around December 2003 Mr Franklin designed a series of labels for products then being produced,[40] and which were bottled in bottles of the kind shown in Annexures A-D of Mr Franklin’s First Affidavit, and which Mr Franklin says are essentially the same bottles as were being used by SSPL to distribute their colloidal silver products. Annexures
A-C are reproduced as Annexures 1-3 to these Reasons for Judgment.[41]
[40] Mr Franklin’s First Affidavit, para.46 and Annexures A-D.
[41] Annexure D to Mr Franklin’s First Affidavit has not been reproduced as it was a poor and illegible reproduction in the original, let alone a copy.
The significant feature of Annexures 1 and 3 is that they contain the phrase “Allan Sutton’s Original Colloidal Silver” (in the form that would ultimately be registered as Pierson’s Trade Mark – save that “original” is there used) while Annexure 2 also refers to “Allan Sutton’s Original” but “Extra Strength Body Spray”.
1 April 2006 – August 2006
On 1 April 2006 the business name “Sutton’s Colloidal Solutions” was transferred from Mr Sutton to a company named Australian Colloidal Silver Pty Ltd.[42] The directors of Australian Colloidal Silver were Mr Sutton, Mr Franklin and Ms Franklin.[43]
[42] “Australian Colloidal Silver”, Exhibit R15.
[43] Mr Franklin’s First Affidavit, Annexure J.
Pierson’s was incorporated on 11 April 2006,[44] and the Franklins transferred inventory in the Pierson’s Pro-Health business to Pierson’s at about that time, with all new orders to suppliers being placed through the incorporated Pierson’s.[45]
[44] Mr Franklin’s First Affidavit, para.96 and Annexure I.
[45] Mr Franklin’s First Affidavit, para.99.
The Franklins say that at about this time they became aware that Mr Sutton:
a)was manufacturing a colloidal silver solution in Bali under the name “Allan Sutton’s Original Colloidal Silver”; and
b)owed money to the Australian Taxation Office.[46]
[46] “ATO”, Mr Franklin’s First Affidavit, para.100.
The Franklins were unwilling to put the “new arrangements”, that is the Manufacturing and Distribution Agreement, in place until Mr Sutton had:
a)undertaken to cease manufacturing Allan Sutton’s Original Colloidal Silver in Bali; and
b)“sorted out his problems with the ATO”.[47]
[47] Mr Franklin’s First Affidavit, para.101.
The Franklins assert that the conditions to the Manufacturing and Distribution Agreement were not met, and as a consequence Australian Colloidal Silver never traded.[48] Despite this, the “original arrangements with Mr Sutton continued”, but the business was run through Pierson’s and the Franklins now manufactured the colloidal silver at the Dwellingup Property and Mr Sutton merely oversaw that process.[49]
[48] Mr Franklin’s First Affidavit, paras.100-103.
[49] Mr Franklin’s First Affidavit, para.104.
On 19 August 2006 Mr Sutton sent an email to Mr Franklin saying that:
a)the current business arrangements were not working;
b)the Franklins had not met their obligations to him; and
c)he (Mr Sutton) had met his obligations to the Franklins.[50]
[50] Exhibit R7.
The business name “Allan Suttons Original Colloidal Silver”, was registered by Mr Sutton on 22 August 2006.[51] The following day Mr Sutton emailed the Franklins. He adverted to earlier emails, and then the state of his finances: “it has become necessary for me to tidy up my finances”. Mr Sutton sought, under the heading of “business funds”, for $10,000 to be paid “urgently” to an account in his name by close of business that day.[52] The Franklins refused to pay and disputed Mr Sutton’s entitlement to be paid the $10,000 requested.[53]
[51] Ms Nazzari’s Second Affidavit, para.5; Mr Franklin’s First Affidavit, Annexure N.
[52] Exhibit R8; Mr Franklin’s First Affidavit, para.106.
[53] Exhibit R11; Mr Franklin’s First Affidavit, paras.106-107.
Silvex was incorporated on 28 August 2006.[54] The business name “Allan Sutton’s Original Colloidal Silver” was transferred by Mr Sutton to Silvex on 30 August 2006.[55]
[54] Ms Nazzari’s First Affidavit, para.26.
[55] Ms Nazzari’s second affidavit affirmed 9 July 2008, para.5 (“Ms Nazzari’s Second Affidavit); Mr Franklin’s First Affidavit, Annexure N.
Pierson’s Trade Mark application and registration
Pierson’s’ Trade Mark was applied for on 8 September 2006 under an application dated 20 August 2006 in respect of “Allan Sutton’s original Colloidal Silver”.[56]
[56] Exhibit R12; Mr Franklin’s First Affidavit, para.167. The trade mark application is for “original”; the trade mark alleged to have been infringed in this case is for “Original”.
Pierson’s is the registered owner of Pierson’s Trade Mark, which is Australian Trade Mark 1134519, a copy of which is Annexure 4 to these Reasons for Judgment.
Pierson’s Trade Mark was sealed on 13 September 2007, but Pierson’s rights in respect of the Pierson’s Trade Mark date from the deemed date of registration, namely, 8 September 2006.
The goods and/or services in respect of which registration was sought were as follows:
“Class No: 5 Pharmaceutical, veterinary and sanitary preparations
Materials for dressing disenfectants [sic] preparation for destroying vermin fungicides herbicides
Class No: 1 Chemicals used in agriculture horticulture and forestry chemical substances for preserving food stuffs
Class No: 3 Substances for laundry use, soaps, perfumery essential oil cosmetics hair lotions dentrifices [sic]
Class No: 11 Water supply and sanitary use.”[57]
[57] Exhibit R12.
On the application Pierson’s also claimed that the trade mark applied for was a special kind of sign as to colour of the product or packaging and in that respect included the following description of that special kind of sign as to colour:
Blue border
Writing ‘Alan Sutton’ – Blue
Box – Blue
Writing ‘Original Colloidal Silver’ – White
It will immediately be observed that:
a)the protection for the words ‘Alan Sutton’ written in blue is inconsistent with the registered Trade Mark which refers to “Allan Sutton’s”, and which is written in blue; and
b)that “Original” written in white is in fact inconsistent with “original” on the registered Trade Mark.
September 2006 – December 2007
Mr Franklin adduced evidence of Mr Sutton’s:
a)resignation as a director of Australian Colloidal Silver, and from all other positions in Australian Colloidal Silver; and
b)termination of the Manufacturing and Distribution Agreement,
in a letter dated 26 September 2006.[58]
[58] Mr Franklin’s First Affidavit, para.108 and Annexure K (“Mr Sutton’s 26 September 2006 Letter”).
The terms of Mr Sutton’s 26 September 2006 Letter are unequivocal:
a)“You [the Franklins] did not, either at the time of our initial agreement or at the establishment of Australian Colloidal Silver Pty Ltd pay any money to acquire any rights whatsoever to Allan Sutton’s original Colloidal Silver – the product, its label, its reputation, my name or goodwill”; and
b)“I reserve the right to take legal action should you persist in representing to the market that you are in any way supplying or distributing any colloidal silver which bears my name, trades on my reputation as a manufacturer and supplier of colloidal silver, or states or implies that I am the manufacturer.”
Read as a whole, Mr Sutton’s 26 September 2006 Letter makes it apparent that whatever relationship existed between Mr Sutton and the Franklins (or by that time, Pierson’s) was over.
Significantly, Mr Sutton’s 26 September 2006 Letter contains the following:
“The basis of our agreement to form Australian Colloidal Silver Pty Ltd was to provide a structure to our then existing agreement that you would distribute the colloidal silver which I manufacture.”
This is confirmation that there was a Manufacturing and Distribution Agreement between Mr Sutton and the Franklins.
Silvex and Health Minders – manufacturing, distribution labels and get-up
Silvex commenced manufacturing and selling colloidal silver products under the business name “Silvex Solutions” on or about 21 October 2006.[59]
[59] Ms Nazzari’s First Affidavit, paras.3, 8(a) and 30 (“Silvex Colloidal Silver Products”).
Prior to commencing to manufacture Silvex Colloidal Silver Products, there had been discussions involving Mr Sutton on the one hand, and Ms Nazzari and Mr Koenig from Silvex on the other hand. During those discussions it was agreed that Mr Sutton would be used as a production consultant by Silvex, but that the business of manufacture of Silvex Colloidal Silver Products would be established as a completely new entity to that which Mr Sutton then operated, with a new trading name and branding. However, it was also agreed that Mr Sutton’s name would be used on the label.[60]
[60] Ms Nazzari’s First Affidavit, para.25.
Silvex Colloidal Silver Products are marketed in various sizes of container as follows:
a)a 1 litre bottle – first sold by Silvex on 21 October 2006;
b)a 500 ml bottle – first sold by Silvex on 21 October 2006;
c)a 375 ml bottle – first sold by Silvex on 22 November 2006 but manufactured specifically and sold to only one distributor located in Queensland;
d)a 175 ml bottle – first sold by Silvex on 21 February 2007, although it was in use as a promotional or bonus item from 21 October 2006 and 8 December 2006 respectively; and
e)a 100 ml bottle – first sold by Silvex on 21 February 2007.[61]
[61] Ms Nazzari’s First Affidavit, para.3.
From:
a)October 2006 to approximately 31 December 2007, Silvex Colloidal Silver Products were sold with labels and get-up that featured the name “Allan Sutton” in a large red dot at the top centre-right of the label, which contained the following text, with the words “Allan Sutton” in significantly larger font than the rest of the text:
“We proudly announce that Allan Sutton now manufactures colloidal silver exclusively for Silvex Solutions.”
b)21 February 2007 to 31 October 2007 Silvex Colloidal Silver Products were sold featuring a photographic image of Allan Sutton on neck tags attached to the neck of bottles containing Silvex Colloidal Silver Products with the following text:
“I am Allan Sutton
Silvex Solutions is the only colloidal silver made with my expertise and experience
I NO LONGER MANUFACTURE ANY OTHER COLLOIDAL SILVER
When you buy Silvex Solutions you are buying quality and reliability you can trust – I guarantee it!”[62]
[62] Ms Nazzari’s First Affidavit, para.8 and Annexure KLN 2 (“Silvex Former Labels and Get-Up”).
Silvex Former Labels and Get-Up, being the bottle label and neck tag are attached to these Reasons for Judgment as Annexures 5 and 6 respectively.
From approximately:
a)1 November 2007:
i)Mr Sutton ceased to supply colloidal silver products to Silvex;
ii)Silvex changed the bottle neck tags which it supplied with the 1 litre and 500 ml products, with the result that the neck tags did not:
(A)refer to the name “Allan Sutton”; or
(B)use a photographic image of Allan Sutton; and
b)1 January 2008, Silvex changed its labels on the Silvex colloidal silver products with the result that the labels:
i)did not refer to the name “Allan Sutton”;
ii)did not use a photographic image of Allan Sutton; and
iii)had colouring and get-up that is consistent with Silvex’ own registered Trade Mark numbered 1138135 sealed 6 August 2007.[63]
[63] Ms Nazzari’s First Affidavit, para.10 and Annexure KLN 3 (“Silvex Current Labels and Get-Up”).
A copy of Silvex Current Labels and Get-Up is attached to these Reasons for Judgment as Annexure 7.
On 1 November 2006 Health Minders and Silvex entered into:
a)a distribution agreement with respect to Silvex Colloidal Silver Products; and
b)a licence agreement for Silvex to manufacture Healthy Life products and for Health Minders to distribute those products.[64]
[64] Ms Nazzari’s First Affidavit, paras.12 and 31-32; Ms Nazzari’s Second Affidavit, para.14; Mr Curlisa’s First Affidavit, para.4.
During 2007 and the early part of 2008 Silvex marketed Silvex Colloidal Silver Products using marketing material which referred to Mr Sutton in a number of ways, including:
a)accompaniment by a photo of Mr Sutton;
b)various statements to the effect that Silvex Solutions was the only colloidal silver that he made and that he no longer manufactured colloidal silver for any other manufacturer.[65]
Some of this marketing material was utilised by Health Minders.[66]
[65] Ms Nazzari’s First Affidavit, paras.19-21.
[66] Ms Nazzari’s First Affidavit, paras.19-21.
Pierson’s ceased to manufacture colloidal silver for Healthy Life sometime around February 2007.[67]
[67] Mr Franklin’s second affidavit, sworn 25 June 2008, para.15 (“Mr Franklin’s Second Affidavit”); Ms Franklin’s second affidavit, sworn 25 June 2008, para.32 (“Ms Franklin’s Second Affidavit”).
Silvex Solutions’ colloidal silver Trade Mark
On 28 September 2006 Silvex’ Trade Mark application 1138135 was registered for a design which included the words “Silvex Solutions Colloidal Silver” and seven water droplets within a border.[68] A copy of the Silvex Trade Mark is annexed to these Reasons for Judgment as Annexure 8.
[68] Ms Nazzari’s First Affidavit, Annexure KLN 34 (“Silvex Trade Mark”).
The classes with respect to which the Silvex Trade Mark was registered are as follows:
Chemicals used in agriculture, horticulture and forestry; chemical substances for preserving foodstuffs being goods in class 1
Substances for laundry use; cleaning; soaps; perfumery; essential oils, cosmetics, hair lotions, dentifrices being goods in class 3
Pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medical use; food for babies; plasters, materials for dressings; dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides being goods in
class 5
Apparatus for ventilating, water supply and sanitary purposes being goods in class 11”[69]
[69] Ms Nazzari’s First Affidavit, Exhibit KLN 34.
Sutton’s Colloidal Solutions
On 7 March 2007 the business name “Sutton’s Colloidal Solutions” was transferred from Australian Colloidal Silver to Pierson’s. The change of name form was signed by Ms Franklin on behalf of Australian Colloidal Silver.[70] The “Sutton’s Colloidal Solutions” business name was, the respondents argued, transferred unilaterally by Ms Franklin to Pierson’s, and without the consent of Mr Sutton or the payment of any consideration. Given the transfer of the business name to Australian Colloidal Silver on 1 April 2006, and Mr Sutton’s resignation as a director of Australian Colloidal Silver on 26 September 2006, it is not apparent as to why the consent of, or payment to, Mr Sutton would have been required.
[70] Exhibits R15 and R16.
Evidence concerning the colloidal silver market
The applicants led little useful evidence concerning the market for, and marketing of, colloidal silver products.
An affidavit from Adrian Paul Irdi, an articled clerk in the applicants’ solicitors employ, simply said that he went to a chemist in the inner northern Perth suburb of Leederville and “examined a number of colloidal silver products that were on display on an open shelf for sale” and “purchased a 500 ml bottle of the colloidal silver product.”[71] It will be immediately apparent that Mr Irdi’s Affidavit is internally inconsistent, referring to a number of colloidal silver products and then referring to the purchase of “the” colloidal silver product. The colloidal silver product purchased is in a bottle labelled with the Silvex Current Label and Get-Up.[72] A copy of the receipt given to Mr Irdi at the time of purchase is attached and it refers to “SUTTON’S COLLOIDAL SILVER”.[73]
[71] Affidavit of Adrian Paul Irdi, sworn 26 March 2008, paras.2 and 3 (“Mr Irdi’s Affidavit).
[72] Mr Irdi’s Affidavit, Annexure AI-1.
[73] Mr Irdi’s Affidavit, Annexure AI-2.
The fact that the receipt refers to “SUTTON’S COLLOIDAL SILVER” proves nothing with respect to infringement of Pierson’s Trade Mark, namely, “Allan Sutton’s original Colloidal Silver”, and may indicate nothing more than that the chemist concerned had not altered receipt descriptions since SSPL were distributing “Sutton’s Colloidal Silver”, prior to Mr Sutton and the Franklins entering into the Manufacturing and Distribution Agreement. No proper conclusion can be drawn by the Court from the purchase of this bottle, particularly when no information is given as to the other colloidal silver products that were allegedly on display.
There is also affidavit evidence from Graham Mitchinson, who on 16 March 2008, visited a health food shop in Perth. He said that he wanted to buy colloidal silver and that he had been told that “Sutton’s is the best brand of colloidal silver. Do you have any?”[74] Mr Mitchinson was given a bottle of colloidal silver product with the Silvex Former Label and Get-Up attached.
[74] Affidavit of Graham Mitchinson, sworn 26 March 2008, paras.2-5, the quote is from para.5.
Again, Mr Mitchinson’s Affidavit is of little assistance in determining the issues. What was asked for was “Sutton’s”, not “Allan Sutton’s Original Colloidal Silver”.
In neither case is there any evidence from the chemist or the shop employees as to their knowledge of the products given to Mr Irdi and Mr Mitchinson respectively. Otherwise, there is little useful direct evidence of what was happening in the marketplace in relation to Allan Sutton’s Original Colloidal Silver. Significant portions of the evidence of the Franklins were struck out. The reasons for that evidence being struck out were that:
a)it was hearsay contrary to s.59 of the Evidence Act 1995 (Cth);[75]
b)because much of it was based on assumption and speculation, and otherwise vague, it was likely to be confusing;[76] and
c)much of it was constituted by complaints or queries by persons not called, and given that the applicants generally, or at least often, had the contact details for those persons, the failure to call them (or at least some of them), and allow the opportunity for their evidence to be tested, was unfairly prejudicial to the respondents.[77]
[75] “Evidence Act”.
[76] Evidence Act, s.135(b).
[77] Evidence Act, s.135(a).
The applicants led no expert evidence concerning the nature of the market for colloidal silver products in Australia or Western Australia. There was no survey evidence in relation to either the market or the buying patterns of consumers within the market. There was no direct evidence from normal or regular consumers of colloidal silver products, or retailers of those products.
In the circumstances, the Court is left with insufficient evidence to form any proper view as to the nature of the colloidal silver market in which the parties operated, or the habits of consumers of colloidal silver products in any relevant market.
Alleged Trade Mark infringement
A registered owner of a trade mark may sue for its infringement.[78] In relation to an alleged infringement it must be shown that:
a)there has been a sign used as a trade mark;
b)that sign is substantially identical to or deceptively similar to a registered trade mark; and
c)the use of the sign has been by a person other than the owner of the registered trade mark; and
d)the sign has been used in relation to goods of the same description as that of goods in respect of which the trade mark is registered.[79]
[78] TM Act, s.20(2).
[79] TM Act, s.120(1) and (2).
Definition of trade mark and sign
A “trade mark” is defined as “a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by another person”.[80] Essentially use “as a trade mark” is use of a mark as a “badge of origin” indicating a connection in the course of trade between the goods and the person who applies the mark to the goods.[81]
[80] TM Act, s.17.
[81] Coca-Cola Co v All-fect Distributors Ltd (1999) 96 FCR 107 at 115 per Black CJ, Sundberg and Finkelstein JJ; [1999] FCA 1721 at para.19 per Black CJ, Sundberg and Finkelstein JJ (“Coca-Cola”).
A “sign” is defined as:
The following or any combination of the following, namely any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.[82]
[82] TM Act, s.6.
The Court must determine as a matter of fact what sign was used by Silvex.
The Silvex sign
Pierson’s and the Franklins allege that the “sign” used by Silvex, and consequently by Health Minders, until the end of 2007, which allegedly breached Pierson’s Trade Mark, was that which appears as Annexures 5 and 6 to these Reasons for Judgment. This is said to be by reason of the use of the words “Allan Sutton” in conjunction with the Silvex sign, those words and that sign being used conjunctionally in relation to goods (colloidal silver preparation) in respect of which Pierson’s Trade Mark is registered.
Silvex and Health Minders say that the Silvex’ “sign” is a combination of:
(a) the “striking” red circular label and the, clearly corrective, wording appearing thereon – which includes the name “Allan Sutton”;
(b) the name “Silvex Solutions” which appears to the left of the red label;
(c) the wavy blue band that appears underneath (a) and (b);
(d) the expression “Colloidal Silver” that is contained within the wavy blue band;
(e) the green “tears” or “droplets” that appear underneath the wavy blue band.[83]
[83] Respondents’ Outline of Submissions, para.6.
In the Court’s view the Silvex sign is that which appears as Annexures 5 and 6 to these Reasons for Judgment, that is the Silvex Former Labels and Get-Up, save that in relation to Annexure 5 the sign consists only of the combination of the matters referred to in (a) to (e) in the previous paragraph, with the addition of “and wavy green thin lines on either side of the wavy blue band” between the words “band” and “that” in (c) of the previous paragraph.
Whether substantially identical
The phrase “substantially identical” is not defined in the TM Act. Its meaning is therefore its ordinary or usual meaning, which means that two trade marks are substantially identical if they are in substance the same or essentially the same.[84] Whether two trade marks are substantially identical is a question of fact.[85]
[84] Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 387 per Branson J; [1999] FCA 1020 at para.70 per Branson J.
[85] Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414 per Windeyer J (“Shell v Esso”).
Consideration of whether trade marks are substantially identical requires side-by-side comparison, noting of similarities and differences, and their assessment having regard to the essential features of the registered trade mark, and the total impression of resemblance or dissimilarity emerging from the side-by-side comparison.[86]
[86] Shell v Esso at 414 per Windeyer J; Coca-Cola FCR at 121 per Black CJ, Sundberg and Finkelstein JJ; FCA at para.38 per Black CJ, Sundberg and Finkelstein JJ.
Pierson’s argues that the Silvex sign is substantially identical to the Pierson’s Trade Mark because:
a)the words “Allan Sutton’s” are the most prominent and essential element of the Pierson’s Trade Mark. It says that the use of the possessive form incorporates an implication as to the origins of the goods upon which the Pierson’s Trade Mark is used;
b)the words “Colloidal Silver” are the next most prominent element, but that they contribute less to the Pierson’s Trade Mark, being descriptive of particular goods;
c)Silvex has used the words “Allan Sutton” on product labels, neck tags and in marketing materials in contexts that state or import that Allan Sutton is the source of the goods on which those labels are used, and which are the subject of Silvex marketing materials;
d)the words “Allan Sutton” have been used as a trade mark in conjunction with the Silvex Trade Mark;
e)by using the words “Allan Sutton” in conjunction with the Silvex Trade Mark, Silvex has taken itself outside of the protection granted by s.122(1)(e) of the TM Act;
f)Silvex has used the sign in question in relation to goods in respect of which the Pierson’s Trade Mark is registered, namely, “colloidal silver preparation in liquid form for the use of water sanitisation”; and
g)Pierson’s says that the use of the sign “Allan Sutton” by Silvex is substantially identical to the Pierson’s Trade Mark, because it takes the entirety of the essential element of the Pierson’s Trade Mark, and uses it in contexts reproducing the implication conveyed by the Pierson’s Trade Mark’s use of the words “Allan Sutton’s”.
Silvex argues that none of the features of its sign, set out above,[87] appear in Pierson’s Trade Mark, and therefore, both individually, and even more so, by the combined effect of that absence, preclude the conclusion that the Pierson’s Trade Mark and the Silvex sign are substantially identical. It also argues that questions of implication and importation are not relevant to the issue of whether the Silvex sign is substantially identical to Pierson’s Trade Mark.
[87] See para.80 above.
Consideration – substantially identical
When the Pierson’s Trade Mark and Silvex sign, as it appears on the bottles (see Annexure 5 to these Reasons for Judgment), are examined side-by-side the Court observes that:
a)they are quite differently coloured and worded:
i)the Pierson’s Trade Mark is bi-coloured dark blue on a white background, save for a large slightly above-centre rectangular block in which the words “Original Colloidal Silver” appear in white on a dark blue background; and
ii)the Silvex sign is primarily a mid-blue on a white background, save for:
(A)a slightly above-centre curved rectangular block, with “parallel” curved light green lines on the top and bottom sides of the rectangular block, with the words “Colloidal Silver” in white on a mid-blue background;
(B)a large red dot on the centre-right of the label:
(a) within which the words “we proudly announce that Allan Sutton now manufactures colloidal silver exclusively for Silvex Solutions” appear written in white, on the red background, other than the words “Allan Sutton” which are in white but etched in blue on their edge;
(b)a light green circle around the red dot; and
(c)seven water droplets in light green appear toward the centre bottom-right on the white background;
and thus the Pierson’s Trade Mark uses two colours, whilst the Silvex sign uses four colours, and when the two bottles (one with the Pierson’s Trade Mark, the other with the Silvex sign from Annexure 5) are examined side-by-side the Pierson’s dark blue and the Silvex mid-blue are distinctly different;[88]
[88] Bottles of 500 ml colloidal silver product with the Pierson’s Trade Mark and the Silvex sign (including neck tag) (that is the Silvex Former Label and Get-Up) are Exhibits A2 and A5 in the hearing respectively, and enabled the Court to do a side-by-side comparison of those bottles, in preparing these Reasons for Judgment.
b)two of the colours in the Silvex sign are used in relation to distinctive features of that label, namely:
i)the red dot; and
ii)the light green droplets;
c)the layout of the two labels is different in that:
i)the Pierson’s label is laid out in straight-line left-to-right fashion, save for the word “Allan” as part of “Allan Sutton’s” which is placed above the “S” of Sutton’s but at a 45° angle to the left of the “S”;
ii)the Silvex label:
(A)contains some straight-line left-to-right writing; and
(B)also has curved left-to-right writing;
iii)the Pierson’s Trade Mark is in upper and lower case in a stylised handwriting font; and
iv)the Silvex sign contains a mix of stylised italics, block capitals, and in the red dot, upper and lower case all in Times New Roman font; and
d)the words “Colloidal Silver” appear in both the Pierson’s Trade Mark and the Silvex sign, but:
i)in the Pierson’s Trade Mark they are prefaced by the words “Allan Sutton’s Original”;
ii)in the Silvex sign they are prefaced by the words “Silvex Solutions”,
and, both visually and aurally (if said aloud, for example), are quite distinct, and even if the words “Allan Sutton” are dragged out of the red dot and seen and read as part of the description of Silvex Solutions Colloidal Silver, the use of the possessive in “Sutton’s” and the use of “Original” give the Pierson’s Trade Mark a distinctive effect which makes it quite different to the Silvex sign.
In the Court’s view there is very little similarity on a side-by-side comparison between Pierson’s Trade Mark and the Silvex sign in Annexure 5. Each is quite distinctive. The Court finds that they are not substantially identical for the purposes of the TM Act.
The same conclusion follows from a side-by-side examination of the Pierson’s Trade Mark and Silvex sign as it appears on the neck tag (Annexure 6), and more particularly so because:
a)in this case the red dot which appears on the top right-hand corner does not make reference to Allan Sutton or the manufacture of colloidal silver but simply contains the words “quality”, “reliability” and “trust”;
b)there is a photo of Allan Sutton;
c)there are the words “I am Allan Sutton”;
d)there are three separate paragraphs dealing with Mr Sutton’s involvement in the manufacture of Silvex Colloidal Silver Products; and
e)the use of the trade name “Silvex Solutions”, the descriptor “Colloidal Silver” and the use of the seven water droplets are the same as in Annexure 5.
Once again, in the Court’s view there is very little similarity on a side-by-side comparison between the Pierson’s Trade Mark and the Silvex sign in Annexure 6. They are not substantially identical for the purposes of the TM Act.
Deceptively similar
A trade mark is “deceptively similar” to another trade mark if it “so nearly resembles that other trade mark that it is likely to deceive or cause confusion”.[89]
[89] TM Act, s.10.
Determination of whether a trade mark is “deceptively similar” does not involve a side-by-side comparison, but a determination as to “whether there is a likelihood of deception or confusion from a recollection or impression of the registered trade mark”.[90] What is to be compared is the impression a person would have based on a recollection of the registered trade mark normally used and the impugned trade mark as it appears in the use complained of, the impression being that of the person of ordinary intelligence and memory. Some attempt to estimate the impression produced on the minds of such persons must be made, but it is the impression carried away and retained that is necessarily the basis of any mistaken belief that the challenge to the trade mark is the same, allowing for the fact that the impression (based on recollection) may be imperfect. Ultimately whether a trade mark is likely to deceive or cause confusion is, a matter of impression and common sense.[91]
[90] Anheuser-Busch Inc v BudejovickyBudvar, Narodni Podnik & Ors (2002) 56 IPR 182 at 216 per Allsop J; [2002] FCA 390 at para.143 per Allsop J (“Anheuser-Busch”), cited with approval in E & J Gallo Winery v Lion Nathan Australia (2008) 77 IPR 69; [2008] FCA 934 at para.53 per Flick J (“Gallo Winery”).
[91] Anheuser-Busch IPR at 217-218 per Allsop J; FCA at para.143 per Allsop J; Gallo Winery IPR at 79-80 per Flick J; FCA at paras.53-55 per Flick J.
In determining deceptive similarity:
a)there is no need to prove any reputation or goodwill in a trade mark; and
b)it is not necessary to establish actual confusion or actual probability of deception.[92] Thus, it is sufficient that a person of ordinary intelligence and memory, and perhaps imperfect recollection, of the registered trade mark, be caused to wonder whether the products containing the allegedly infringing trade mark came from the same source as the products containing the registered trade mark (in this case the Pierson’s Trade Mark).[93] However, the mere possibility of confusion is insufficient – there must be proof of likelihood.[94]
[92] CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 at 62-63 per Ryan, Branson and Lehane JJ; [2000] FCA 1539 at para.45 per Ryan, Branson and Lehane JJ (“Henschke”).
[93] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595 per Kitto J (“a real, tangible danger of its occurring”), and at 608 per Dixon CJ, McTiernan, Webb, Fullagar and Taylor JJ. See also Henschke IPR at 62-63 and 68 per Ryan, Branson and Lehane JJ; FCA at paras.43-45 and 57 per Ryan, Branson and Lehane JJ, noting that at IPR 68 and FCA para.57 it was held that the similarity between “Hill of Gold” and “Hill of Grace” was not such that it would “cause the uninvolved consumer to wonder whether the two wines may come from the same source.”
[94] Anheuser-Busch IPR at 218 per Allsop J; FCA at para.152 per Allsop J.
Differences in style, substance and composition can lead to a finding that there is no deceptive similarity, and therefore no trade mark infringement. In Faessler v Neale[95] the phrase “ST GEORGE GRAPES” constituted the registered trade mark. The alleged infringing mark also contained the words “ST GEORGE GRAPES”. However, the alleged infringing mark did not contain the caricature of a mounted knight armed with a lance attacking a dragon, which was part of the registered trade mark, and the marks were dissimilar in style, set-out, colour and design.[96] It was held by the Federal Court that there was no trade mark infringement.[97]
[95] (1994) 29 IPR 1 (“Faessler”).
[96] Faessler at 7 per Drummond J.
[97] Faessler at 7 per Drummond J.
In determining whether there is deceptive similarity it is important to recognise that:
a)confusion must be the likely result of the alleged infringement;[98]
b)it is possible for other aspects of a mark incorporating a registered trade mark to negative any likelihood of confusion or deception arising from its possible use;[99]
c)the likelihood of deception is to be judged not by the degree of similarity alone, but by the effect of that similarity in all the circumstances;[100] and
d)confusion may not result where there is a “wholly different visual context”.[101]
[98] Angove’s Pty Ltd v Johnson (1982) 43 ALR 349 at 371-372 per Fitzgerald J (“Angove’s”).
[99] Angove’s at 372-373 per Fitzgerald J.
[100] Shell v Esso at 416 per Windeyer J.
[101] Faessler at 7 per Drummond J.
The applicants argue that the sign “Allan Sutton” is deceptively similar to the Pierson’s Trade Mark, and that the impression created by the Pierson’s Trade Mark in the mind of a person of ordinary intelligence and memory, but imperfect recollection, would be such as would be likely to cause that person to wonder whether the Silvex Colloidal Silver Products came from the same source as products branded with the Pierson’s Trade Mark. The market and consumer evidence led by the applicant in this case is, for reasons set out above, not sufficient to allow the Court to form a view about the necessary impression created in the mind of a person of ordinary intelligence and memory but imperfect recollection. Therefore, the matter is ultimately one to be decided by the Court according to its opinion of the likelihood of deception or confusion of a person of ordinary intelligence and memory but imperfect recollection.[102]
[102] Anheuser-Busch FCR at 218 per Allsop J; FCA at para.151 per Allsop J.
The respondents contend that the impression created by a proper assessment of the sign “Allan Sutton” by a person of ordinary intelligence and memory but imperfect recollection would be that Allan Sutton now produces exclusively for Silvex, and that any misleading contention to the contrary is in fact corrected by a proper assessment of the totality of the Silvex sign. The respondents say that the Silvex sign would not have been likely to cause a person to wonder whether products marked with the Pierson’s Trade Mark and the Silvex sign came from the same source.
Consideration – deceptively similar
It is not possible for the applicants to succeed in their argument because there is no possibility, in the Court’s view, of confusion between the Pierson’s Trade Mark and the Silvex sign in the form of the Silvex Former Label and Get-Up. That is because the two are different:
a)textually, particularly in relation to the Silvex sign, by reason of:
i)its clear indication that Mr Sutton is “now” “exclusively” manufacturing for Silvex Solutions, from which the person of ordinary intelligence and memory (and who had some recollection of the Pierson’s Trade Mark) would realise that he is no longer manufacturing the “Original Colloidal Silver” referred to in Pierson’s Trade Mark; and
ii)the prominence of the “Silvex Solutions” business name;
b)in style and set-out of the wording; and
c)in style, set-out and colouring when viewed as an overall design or package.
The differences to which the Court has referred above,[103] are sufficiently extensive, and arguably so extensive, for the Court to form the view that there is no risk that a person of ordinary intelligence and memory but imperfect recollection would confuse the Pierson’s Trade Mark with the Silvex sign. They are therefore not deceptively similar.
[103] See paras.86, 88 and 97 above.
The Court notes, for the sake of completeness, that the above analysis applies with even greater force to the Silvex Current Label and Get-Up, which contains no reference at all to Mr Sutton, either on the bottle label or the neck tag.
TM Act infringement
In the circumstances the applicants have failed to establish the alleged infringement of Pierson’s Trade Mark. It is therefore unnecessary to consider any defences under the TM Act.
Passing off
Matters essential to a successful passing off action were crisply clarified in Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd where it was said that an applicant must establish:
(a)that his goods have, or his business has, a certain goodwill or reputation;
(b)that the actions of the defendant have caused, or in all probability will cause, the ordinary purchasers of the plaintiff’s goods, or the ordinary customers of the plaintiff’s business, to believe that the defendant’s goods are those, or that the defendant’s business is that, of the plaintiff;
(c)that, in consequence, the plaintiff has suffered, or is likely to suffer, injury in his trade or business.[104]
[104] [1981] 1 NSWLR 196 at 204 per Powell J. See also Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369 per Beaumont, Branson and Lindgren JJ (“Vieright”).
Reputation
Whether or not a reputation has been established will be a question of fact in each case. An applicant must establish a pre-existing public perception about the applicant’s business,[105] and that the complaining trader’s get-up, “including any brand name, is recognised by the public as distinctive specifically of the plaintiff’s goods.”[106]
[105] Dairy Vale Metro Co-operative Ltd v Brownes Dairy Ltd (1981) 54 FLR 243; [1981] FCA 63.
[106] Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7 per Lord Oliver, cited in Vieright at 369 per Beaumont, Branson and Lindgren JJ.
The applicants argue that they have a commercial goodwill and reputation in relation to the sale of colloidal silver products under the name “Allan Sutton’s Original Colloidal Silver”, as marketed in the get-up depicted at Annexures 1 and 3 of these Reasons for Judgment. The applicants say that the respondents labelled and promoted Silvex Colloidal Silver Products in a deceptively similar get-up to that of Pierson’s. They further argue that the respondents labelled and promoted the Silvex Colloidal Silver Products using the name “Allan Sutton” which, in the context of Pierson’s reputation, constituted misrepresentations that Silvex Colloidal Silver Products were related to, or could be identified, with, the business of Pierson’s.
The applicants refer to Ms Nazzari’s evidence that Silvex intentionally referred to “Allan Sutton” in its marketing of the Silvex Colloidal Silver Products as part of its strategy to “get into” the colloidal silver market.[107] The applicants say that the misrepresentations were therefore intended by the respondents to appropriate goodwill from Pierson’s.
[107] Ms Nazzari’s Second Affidavit, para.13; Transcript, 14 August 2008, p.307.
The applicants submit that this constitutes a passing off of the Silvex product as being connected with the business of Pierson’s.
The respondents essentially submit that the applicants had no goodwill in the name “Allan Sutton” when Silvex entered the market, and therefore there cannot have been any passing off and there cannot have been any actual damage to the applicant’s reputation[108] and that, in any event, the applicants cannot establish the requisite goodwill or reputation for the purposes of an action in passing off.
Consideration – reputation
[108] Citing Peter Isaacson Publications v Nationwide News Pty Ltd (1984) 6 FCR 289 and Pete Waterman Ltd v CBS United Kingdom Ltd (1990) 20 IPR 185 at 209 per Browne-Wilkinson V-C.
Acquisition of intellectual property and goodwill
The Franklins assert that they purchased “unregistered intellectual property” and “goodwill” from Mr Sutton in relation to colloidal silver products.
In order to understand this submission it is necessary to understand the nature of the relationship between the Franklins and Mr Sutton. Most of the evidence in relation to that relationship comes from the Franklins, and in particular Mr Franklin.
The Franklins assert that they purchased intellectual property from Mr Sutton, including:
a)the appearance of the labels appearing as Annexures 1 and 3; and
b)the appearance of the containers used to package the Pierson’s product appearing as Annexures 1 and 3.
Pierson’s also assert that they purchased the goodwill of colloidal silver products originally marketed by Mr Sutton under his own name.
There is no evidence of the purchase by the Franklins of intellectual property or goodwill in Mr Sutton’s colloidal silver products or business.[109]
[109] See paras.24-32 above.
Existence of goodwill or reputation
There is sufficient in the evidence of:
a)Mr Franklin set out above; and
b)Ms Nazzari in relation to Silvex’ desire to use Mr Sutton’s name in connection with the Silvex Colloidal Silver Products,[110]
for the Court to conclude that some goodwill or reputation did exist in the colloidal silver product produced by Pierson’s and bearing the Pierson’s Trade Mark (albeit that the Franklins never paid for such goodwill).
[110] See paras.30 and 104 above.
Misrepresentation
Any alleged misrepresentation by the respondents must have occurred in the course of trade and have been made to prospective customers or the consuming public in a manner capable of deceiving consumers or potential customers into believing that the respondents’ product was the applicants’ product, or that there was some connection of a kind between them. Whether or not there was a misrepresentation (or deception) is a question of fact, and a matter for the Court alone to determine.[111]
[111] Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354; [2002] FCAFC 157 (“Sydneywide Distributors”); Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ.
If there is proof that a respondent’s conduct is calculated to injure an applicant’s business or goodwill a court will be more ready to infer that damage is likely to be suffered by an applicant.[112] However, as the High Court observed in Campomar, by referring to the actual decision in favour of the defendant in Cadbury-Schweppes Pty Ltd v Pub Squash Co Ltd:[113]
Even an imitation of one product by another does not necessarily bespeak an intention to deceive purchasers.[114]
[112] Campomar Sociedad Limitada &Anor v Nike International Ltd & Anor (2000) 202 CLR 45 at 63 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ; [2000] HCA 12 at para.33 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ (“Campomar”).
[113] [1981] RPC 429 at 493-494 per Lord Scarman; [1980] 2 NSWLR 851 at 861 per Lord Scarman.
[114] Campomar at 63 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ; HCA at para.33 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ.
The applicants argue that passing off captures deceptive or misrepresentational conduct causing the Silvex Colloidal Silver Products to be mistaken for the applicants’ products, and particularly that marketed as Allan Suttons Original Colloidal Silver. The applicants argue that the relevant conduct extends to:
a)any conduct by the respondents likely to deceive others into identifying the respondents’ business with that of the applicants;[115]
b)misrepresentations that the applicants’ sponsor approved of the respondents’ product;[116] and
c)misrepresentations that the respondents’ product shares some exclusive quality with that of the applicant.[117]
[115] Sydneywide Distributors.
[116] Henderson v Radio Corp Pty Ltd [1960] SR(NSW) 576; Pacific Dunlop Ltd v Hogan (1989) 14 IPR 398.
[117] J Bolinger v Costa Brava Wine Co Ltd (1960) Ch 262; Australian Society of Accountants v Federation of Australian Accountants Inc (1987) 9 IPR 282.
The respondents say that the statements and representations contained in the labelling of the Silvex Colloidal Silver Products, and marketing material supplied to distributors and retailers of Silvex Colloidal Silver Products, was not of such a nature as to cause the respondents’ goods to be mistaken for those of the applicants. Indeed, the respondents say that the statements and representations on their goods were to the opposite effect, and would leave an ordinary customer in no doubt that the products were not those of the applicants. The labelling and marketing material used on the Silvex Colloidal Silver Products is, the respondents argue, effectively a disclaimer of any association between the two competing lines of product and their businesses. The respondents say that Mr Sutton had the entitlement to use his own name, and to decide to allow the respondents to use his name in the manner in which they did, and the fact that doing so may have had the effect of causing some consumers to wonder whether the applicants had an association with Mr Sutton, when they no longer had any association with him, is not deceptive nor a misrepresentation, particularly in circumstances where Mr Sutton had, in fact, an association with Silvex in the manner stated and represented on the Silvex product.
Consideration – misrepresentation
In the Court’s view, there was no conduct that misrepresents the true position or which was likely to deceive. That is because:
a)at a glance, the Pierson’s Trade Mark and Silvex sign are individually distinctive;
b)the Pierson’s Trade Mark and Silvex sign make it clear that:
i)one product is “Allan Sutton’s Original Colloidal Silver”; and
ii)the other is “Silvex Solutions Colloidal Silver”.
In the first descriptive label the emphasis is on the name of “Allan Sutton” and use of the word “Original”. In the second descriptive label the emphasis is on the trade name “Silvex Solutions”;
c)the words in the large red dot on the bottle label in the Silvex Former Label and Get-Up makes it clear that Allan Sutton is “now” manufacturing “exclusively” for Silvex Solutions, a statement which was true and accurate when it was made;
d)statements attributed to Mr Sutton on the neck tag on the Silvex Former Label and Get-Up, namely that:
i)“Silvex Solutions is the only colloidal silver made with my expertise and experience”; and
ii)“I NO LONGER MANUFACTURE ANY OTHER COLLOIDAL SILVER”,
are both true and accurate;
e)the fact that Silvex were seeking to “get into” the market by using Allan Sutton in their marketing is not indicative of an endeavour to pass off the Silvex Colloidal Silver Products for those manufactured by Pierson’s, because:
i)that is a usual commercial imperative when marketing a product new to the market; and
ii)the other steps taken by Silvex, as set out above, run contrary to any intention to pass off, but are rather consistent with an intention to distinguish the Silvex Colloidal Silver Products in the market place; and
f)otherwise, for the reasons relied upon above by the Court arriving at the view that there was no deceptive similarity between the Pierson’s Trade Mark and the Silvex sign.
Conclusion - passing off
The Court therefore concludes that the passing off action fails.
TP Act claims
The applicants claim that the respondents have engaged in misleading and deceptive conduct and made false or misleading misrepresentations as to goods under ss.52 and 53(c) of the TP Act.
Misleading and deceptive conduct is conduct that leads into error.[118] Conduct is likely to mislead or deceive if there is a “real or not remote chance or possibility” of misleading or deceiving, and the chance may exist whether it is more or less than 50%.[119] Intention is not relevant to whether conduct is misleading or deceptive, and even where a corporation has acted honestly and reasonably it can still be said to have engaged in conduct which is misleading or deceptive.[120] If, however, an intention to mislead or deceive is found, a court will more easily find that the conduct was misleading or deceptive.[121]
[118] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 per Gibbs CJ (“Parkdale Custom Built Furniture”).
[119] Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ.
[120] Parkdale at CLR 197 per Gibbs CJ; Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 (“Hornsby Building Information Centre”).
[121] S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 362 per Hill, RD Nicholson and Emmett JJ.
A threat to reputation by another party’s misleading or deceptive conduct may be protected by ss.52 and 53(c) of the TP Act,[122] and ss.52 and 53(c) of the TP Act may be contravened by:
a)misleading packaging or labelling;[123]
b)adopting a competitor’s business name;[124] and
c)copying a competitor’s design or product get-up.[125]
TP Act – consideration
[122] Hornsby Building Information Centre.
[123] Barton v Croner Trading Pty Ltd (1984) 3 FCR 95.
[124] Hornsby Building Information Centre.
[125] Parkdale Custom Built Furniture.
Having regard to the Court’s findings with respect to:
a)deceptive similarity above;[126] and
b)misrepresentation for the purposes of passing off, set out above,[127]
the Court is of the view that similar considerations apply with respect to the alleged misleading and deceptive conduct and false or misleading representations concerning goods under ss.52 and 53(c) of the TP Act, and, having regard to the facts and the findings made above, the TP Act claims cannot succeed.[128]
[126] See paras.97-99 above.
[127] See para.117 above.
[128] Faessler at 8 per Drummond J.
Summary of conclusions
In summary, the Court has concluded that the applicants have failed to establish the:
a)trade mark infringement claims;
b)passing off; and
c)misleading and deceptive conduct and false and misleading misrepresentation as to goods,
claims.
Accordingly, there will be an order that the application be dismissed.
I certify that the preceding one hundred and twenty-four (124) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: S. Gough
Date: 12 March 2010
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