R. & C. Products Pty Ltd v Abundant Earth Pty Ltd

[1984] FCA 286

Re: R. & C. PRODUCTS LIMITED
And: ABUNDANT EARTH PTY LIMITED; MARLENE ROTH SNIDER; DAVID ROSS SNIDER; JOHN
AVERY GOODYEAR and DAVID GILLAIRD MEREDITH
No. G106 of 1984
Trade Practices
55 ALR 38 / 3 FCR 40 / (1984) ATPR para 40 - 488

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sweeney J.(1)

CATCHWORDS

Trade Practices - consumer protection - misleading and deceptive conduct - applicant markets a vegetable oil cooking aid sold in aerosol cans under the name "pure and simple" - respondent company markets mustard sold in jars under the name "Pure & Simple" - undertaking proferred by respondents to affix a sticker to the jars of mustard disclaiming any association with the spray whether respondent company's conduct is in contravention of s.52(1) - and whether injunction granted.

Trade Practices Act 1974: ss.52; 53: 75B; 80(4);

Trade Practices - Misleading and deceptive conduct - Mustard sold under the name "Pure and Simple" where that name used for vegetable oil spray product - Trade Practices Act 1974 (Cth), ss 52, 53, 75B, 80(4).

HEADNOTE

The sale and display for sale of mustard under the name "Pure and Simple" constituted misleading and deceptive conduct where a vegetable oil in spray can form had been and continued to be widely marketed or known under the same name.

Consideration of whether persons knowingly concerned in a contravention within the meaning of s. 75B of the Trade Practices Act 1974 (Cth).

HEARING

Sydney, 1984, August 7, 8; September 17. #DATE 17:9:1984

APPLICATION.

Application alleging contraventions of ss 52 and 53 of the Trade Practices Act 1974.

P. Hely Q.C. and J.J. Garnsey, for the applicant.

D.K. Catterns, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Allen Allen & Hemsley.

Solicitors for the respondent: Smithers Warren & Tobias and Davenport & Mant.

G.F.V.

ORDER

That the respondent company has, in trade or commerce, engaged in conduct that was misleading or deceptive in contravention of s. 52(1) of the Act.

That the second, third, fourth and fifth respondents were, and each of them was, involved in that contravention, within the meaning of the Act.

That the respondent company by itself its servants or agents be restrained in trade or commerce from advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with mustard and other foodstuffs other than mustard and foodstuffs marketed by the applicant under or by reference to the name "Pure and Simple" or any name substantially identical with or deceptively similar to the name 'Pure and Simple" (the conduct).

That the second, third, fourth and fifth respondents by themselves, their servants or agents be restrained and each of them be restrained from aiding, abetting, counselling or procuring of being directly or indirectly knowingly concerned in the conduct.

That the costs of the applicant of and incidental to the application, including any reserved costs, are to be paid by the respondents.

That general liberty to apply be reserved to any party.

That liberty to apply in relation to damages or the claim for passing off be reserved to the applicant.

Orders accordingly.

JUDGE1

This is an application by R & C Products Pty Limited (the applicant) alleging contraventions of ss.52 and 53 of the Trade Practices Act 1974 (the Act) by Abundant Earth Pty Ltd (the respondent company) and alleging that Marlene Roth Snider (the second respondent), David Ross Snider (the third respondent), John Avery Goodyear (the fourth respondent) and David Gillaird Meredith (the fifth respondent) were persons involved in those contraventions within the meaning of s.75B of the Act. The second, third, fourth and fifth respondents are and were at all material times directors of and controlled and directed the business of the respondent company. It was also alleged that the respondents had passed off the respondent company, its business and goods as and for the applicant, its business and goods.

Paragraphs 3 to 10 of the statement of claim read as follows:

"...

3. The Applicant manufactures, sells, supplies and distributes in the Commonwealth of Australia a vegetable oil in aerosol form marketed throughout the Commonwealth of Australia under the trade mark "PURE AND SIMPLE", and has manufactured, sold, supplied and distributed that product in the Commonwealth of Australia since approximately 1972.

4. By reason of the matters aforesaid, the name "PURE AND SIMPLE" used in relation to foodstuffs has become known and at all material times has been known in the trade and to the general public in the Commonwealth of Australia as signifying exclusively foodstuffs marketed, sold, supplied and distributed by and/or for the Applicant.

5. By reason of the matters aforesaid the Applicant has acquired a substantial reputation and goodwill in the trade and with the general public within the Commonwealth of Australia and the States and Territories thereof in the name "PURE AND SIMPLE".

6. The First Respondent carries on and is carrying on business in the Commonwealth of Australia and in the course of its business has been advertising and selling to the public mustard not being mustard marketed by the Applicant and which has been and is identified by the name "PURE AND SIMPLE".

7. The Respondents and each of them have represented the mustard of the First Respondent as mustard manufactured and marketed by and/or under the licence of the Applicant and the First Respondent has conducted its business in a manner calculated to deceive and mislead the general public into believing that the mustard marketed in the course thereof by the First Respondent is mustard manufactured and marketed by and/or with the licence of the Applicant.

8. (1) By reason of the facts and matters alleged above:

(a) the Respondents have contravened Section 52 and Section 53 of the Trade Practices Act, 1974;

(b) the Respondents have passed off the First Respondent, its business and goods as and for the Applicant, its business and goods; and

(c) the Respondents have engaged in unfair and unlawful trade and competition.

The Second, Third, Fourth and Fifth Respondents and each of them have aided, abetted, counselled, procured and induced the First Respondent to contravene and have been directly or indirectly knowingly concerned in the contravention by the First Respondent of the provisions of Sections 52 and 53 of the Trade Practices Act, 1974.

9. By the acts and conduct aforesaid, the Respondents have injured the reputation and goodwill of the Applicant and caused damage to the Applicant and threaten and intend unless restrained by this Honourable Court to repeat such injuries, acts and conduct and continue to cause such damage.

10. The First Respondent has in the said acts hereinbefore complained of made and will if the said acts continue further make large profits thereby."

The respondents in their defence admitted the allegations contained in paragraph 3 of the statement of claim but denied those contained in each of the following paragraphs except for paragraph 6 in response to which they said:

" . . . . . the Respondents admit that the First Respondent carries on and is carrying on business in the Commonwealth of Australia and in the course of its business has been advertising and selling to the public exclusively in health food stores and in the health food departments of other stores mustard not being mustard marketed by the Applicant and which has been and is:

(a) identified by the name 'Pure & Simple Stoneground Mustard' or 'Pure & Simple Mustard',

(b) further identified by a label bearing clearly the words:

'Distributed by Pure & Simple, Inc Corona CA 91720', and

(c) further identified by a sticker bearing clearly the words:

'Australian Distributor Abundant Earth PTY LTD 211 Bulwara Road Pyrmont. NSW - 2009."

Paragraph 11 of the defence read:

"In further answer to the whole of the Statement of Claim, or in the alternative, the Respondents say that as from 6 April 1984, all products despatched by the First Respondent bearing the name 'Pure & Simple' have had affixed to them a sticker bearing clearly the words:-

'Australian Distributor Abundant Earth PTY LTD 211 Bulwara Road Pyrmont. NSW. - 2009.

Neither Abundant Earth Pty Limited nor this product has any connection with 'Pure and Simple' cooking spray or with R & C Products Pty Limited".

There was little controversy between the parties as to the facts giving rise to this application. The applicant's product (the spray) is a cooking aid which is claimed to prevent food from sticking to utensils. It is, as the defence admits, a vegetable oil, and is sold in aerosol cans. It was originally introduced to the Australian market in 1969 under the trade name "Spray & Cook". The spray was relaunched by the applicant on 1 August 1972 under the name "Pure and Simple". The name "PURE and SIMPLE" was registered as a trade mark in Part B of the Register of Trade Marks under the Trade Marks Act 1955 (the Trade Marks Act) on 6 June 1972 in respect of the class of goods "edible oils and fats including vegetable oils including lecithin, packaged in an aerosol form for spraying onto cooking surfaces to prevent food being cooked from sticking to the cooking surface." Pursuant to s.32 of the Trade Marks Act the proprietor of the trade mark was required, as a condition of registration, to disclaim any right to the exclusive use of the word "PURE" or of the word "SIMPLE". Until approximately late 1979 the spray was the only one of this type on the Australian market. It was estimated that 90% of businesses involved in the grocery trade stocked the spray. The spray is extensively advertised nationally in magazines and on television.

In the years ending 31 October 1981, 1982 and 1983 the amounts expended by the applicant on advertising for the spray were $265,000.00, $261,000.00 and $34,000.00 respectively and the total sales figures for the spray based on the manufacturer's selling price were $2,146,000.00, $1,958,000.00 and $1,864,000.00 respectively.

Several cans of the spray were tendered in evidence. The get-up of the front of these cans has basically remained unchanged. The words "pure and simple" in lower case lettering, with the word "pure" and the word "simple" in larger print than the word "and", feature prominently. On the more recent cans the words "pure and simple" are followed by an asterisk which is explained on the rear of the can by the words "Pure & Simple is a Registered Trade mark of R & C Products P/L."

In its extensive advertising campaigns the applicant has emphasised various qualities of the spray including its natural ingredients, its ability to stop food sticking to cooking utensils, the number of uses to which it can be put and the ease with which it can be used.

In 1975 the formulation of the spray was changed to a blend propellant formulation as a result of which one of the fluorocarbons was replaced by a butane/propane mixture. In 1981 the formulation was changed to a water based one thereby removing all fluorocarbons from the formulation.

There was evidence that from November 1983 onwards the applicant had been investigating a new system of dispensing food known as an alternative aerosol system. This pressurised system also dispensed the product in a spray form but did not involve any of the current aerosol type technology such as the use of propellants.

The applicant contemplated applying this new technology to expand the range of products sold by it in aerosol containers. The four areas of expansion the applicant decided to explore were: firstly, dairy products including whipped cream, dairy dessert topping, cheese spread cheese and spinach filling for Filo pastry and other forms of savoury spread; secondly, sweet products including honey, toppings for ice-cream, desserts and pavlova, and whole fruit toppings; thirdly avocado spread; and fourthly, condiments including salad dressings and prepared mustard. The applicant intended to market this new range of products under the name "Pure and Simple." Mr Showyin, the technical director of one of the divisions of the applicant, went to the United States in November 1983 to investigate the new technology and discussions were held with the master licensor in Australia of the new technology before Christmas 1983. Other steps taken by the applicant in relation to this project included a consideration of the market potential for the new range of products and of the type and capacity of container, and valve system to be used.

The respondent company carries on the business of promoting and distributing health food products in Australia. Since May 1983 it has distributed in Australia some products which it has imported from Pure & Simple Inc of Corona, California, USA. The respondent company first became aware of the distribution of these latter products in the U.S.A. in about November 1982. They are there sold under the name "Pure & Simple". Initially the respondent company imported mustard, ketchup and baby dills but the range of products has since been increased to include mayonnaise, saurkraut, taco sauce and a seltzer. The product which was the focus of attention in the present case was the mustard imported in jars from Pure & Simple Inc and istributed by the respondent company. (the mustard)

The evidence established that the mustard was distributed by the respondent company only to health food stores in New South Wales, to the discrete health food departments in Grace Bros stores in New South Wales, to several gourmet or specialty outlets in New South Wales and to specialist health food wholesalers in other States of Australia. The mustard was not distributed to supermarkets. The health food departments of Grace Bros are specifically designated areas within the store where only health food products are stored and offered for sale. Such a department was described by one witness as a "store within a store".

Evidence was given on behalf of the respondents that health food stores do not stock the spray or any other aerosol product. Aerosol products were said to have no place in health food stores because the propellants and other ingredients used in them are alleged to cause harmful effects to the environment. Evidence was also given that customers in health food shops regularly read the labels on products available for purchase and are particularly interested in the ingredients which products contain.

The mustard is packaged and sold in glass jars with screw-top lids. There is a label attached to the front of each jar and another to the rear of the jar. The label on the front of the jar is headed "PURE & SIMPLE" in upper case lettering with the ampersand in larger print than the words. The only word appearing on the label in larger print than "PURE & SIMPLE" is the word "Mustard". The label on the rear of the jar bears the words, amongst others, "Distributed by Pure & Simple, Inc. Corona, CA91720."

Until 6 April 1984 the respondent company sought to ensure that each Pure & Simple product which it distributed, including the mustard bore a sticker stating "Australian Distributor Abundant Earth Pty. Ltd. 211 Bulwara Road Pyrmont, N.S.W. 2009." The system used by the respondent company was not very effective before 6 April, the estimate which it made being that until then at least 50% of its products bore such a sticker when leaving its warehouse.

After that date the respondent instituted a new system in an endeavour to ensure that no Pure & Simple product left its warehouse without a sticker in the above terms and an additional sticker, stating:

"NEITHER ABUNDANT EARTH PTY LTD NOR THIS PRODUCT HAS ANY CONNECTION WITH - PURE AND SIMPLE - COOKING SPRAY OR R&C PRODUCTS PTY LTD".

To appreciate the full significance of the second sticker it would be necessary for a prospective purchaser to have read the other sticker, with its message that Abundant Earth Pty. Ltd. was the Australian distributor of the product.

During the hearing of the application, the respondents of their own volition, proffered an undertaking to the court in the following terms:

"The respondents and each of them undertake to the Court that they will not by themselves their servants and agents, in trade or commerce, advertise, promote, display, offer for sale, or sell foodstuffs under or by reference to the name 'PURE AND SIMPLE' or 'Pure & Simple' without

(a) affixing to the container of all such foodstuffs a clearly legible notice bearing the words -

'Neither Abundant Earth Pty. Ltd. nor this product has any connection with Pure and Simple Cooking Spray or R&C Products Pty. Ltd.'

or words to the same effect.

(b) including in any advertisement which depicts such foodstuffs a clearly legible notice bearing the words -

'Neither Abundant Earth Pty. Ltd. nor this product has any connection with Pure and Simple Cooking Spray or R&C Products Pty. Ltd.'

or words to the same effect.

PROVIDED that it shall not be a breach of this undertaking if the words Abundant Earth Pty. Ltd. in the above notices are replaced with the whole or part of the first respondent's name from time to time registered as a business name."

The applicant sought to rely upon the affidavit evidence of a number of people who had been interviewed in streets near various stores.

The people interviewed on 20 March and 22 March 1984 were shown only a photocopy of a jar of the mustard. This photocopy was of poor quality and reproduced only the label on the front of the jar. The people interviewed on 19 April 1984 were shown a jar of the mustard and the people interviewed on 27 April and 1 May 1984 were initially shown a jar of the mustard and were also later shown a can of the spray. Those affidavits included statements that the deponents did not recognise the mustard; they identified the words "Pure & Simple" which appeared on the label on the front of the jar of mustard with the spray; when asked whether they knew any product under the name "Pure and Simple" they identified the spray.

In my opinion the affidavits were, to this extent, admissible to show that some people associated the words "Pure & Simple" only with the spray, which is not surprising when one remembers the evidence of extensive national advertising of the spray and the absence of any such evidence in relation to the mustard. The fact that there was no evidence that the deponents were the only people who had been interviewed, or, if they were selected, of the manner in which they were selected, goes to the weight of the evidence. Some of the deponents stated that they thought that both products were made by the one company, but the questions put to them were leading in form, and there was some coaxing by the interviewers. In my opinion these statements were admissible, but of very little weight.

There was evidence on behalf of the respondents by a proprietor of a health food store which had stocked the respondent company's products since about May 1983 that he had never had any queries or comments from any of his customers as to whether there was any connection between those products and the spray or the applicant.

It was submitted by the applicant that the spray was widely known to the public in Australia under the name "Pure and Simple" and that the applicant had established a substantial reputation and goodwill in this country. It submitted that the name "Pure and Simple" had acquired a secondary meaning in that a significant section of the relevant public associated it with products having their trade origin in the applicant. It was said that the distribution in Australia by the respondent company of the mustard under the name "Pure & Simple" was conduct in breach of s.52 of the Act because it caused the public to form the mistaken belief that the mustard came from the same trade source as the spray. The applicant submitted that it was a natural and reasonable conclusion for a sufficient section of the public to believe that products in the same field marketed under what was substantially the same name come from the same trade source. It was the use of the name "Pure & Simple" and not some other extraneous cause which gave rise to this conclusion.

The respondents resisted the application on a number of grounds. Their primary submission was that the conduct of the respondent company prior to 6 April 1984 was not in contravention of s.52 of the Act. Alternatively they submitted that if such conduct was found to be in contravention of s.52 the conduct of the respondent company after that date was saved because of the affixing of the additional sticker which disclaimed any connection with the applicant or the spray. They urged the court to refuse injunctive relief as a matter of discretion despite the provisions of s.80(4) of the Act, which are:

"The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised-

(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind;

(b) whether or not the person has previously engaged in conduct of that kind;

(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind."

The respondents submitted that the applicant had established a reputation by the use of the name "Pure and Simple" which was referable to a single product, namely the spray, and not to a range of products or to the applicant as its manufacturer.

It was submitted that it was clear upon the evidence that the respondent company was importing and distributing a range of products from the USA which were regularly marketed there under the name "Pure & Simple". The respondents submitted that the applicant and the respondent company did not trade in a common field of activity and that the spray and the mustard did not fall within the same class of goods. The spray was described as an aerosol which was not a food but fell somewhere between a tool and a food. It was submitted that the evidence established a complete segregration of the products in the market-place. The mustard was sold only in health food stores and departments and such stores and departments did not stock the spray or any other aerosol product. The mustard was marketed using a different get-up and packaging.

The respondents submitted that the relevant section of the public by reference to whom the respondent company's conduct falls to be tested consisted of those people who shop in health food stores and health food departments. The evidence was that such people regularly read the labels on products and reliance was placed upon the labels and stickers affixed to jars of the mustard which I have already described.

The respondents sought to rely upon the distinction between conduct which causes confusion and wonderment in people's minds and that which falls within s.52. see McWilliam's v McDonald's 49 FLR 455 per Smithers J at p.459-460, per Fisher J at p.476; Parkdale v Puxu 149 C.L.R. 191 per Gibbs CJ at p.198, per Mason J at pp.209-210. They submitted that at worst there may be some confusion in the minds of relevant consumers as to whether the mustard comes from the same trade source as the spray. However they submitted that the likelihood of confusion as to a common trade source was lessened by the fact that the spray is an aerosol and regarded by some as an unhealthy product, whereas the mustard was a genuine health food product.

The respondents further submitted that if consumers were under any misconception this was not caused by any conduct by the respondent company but rather was induced by erroneous and unwarranted assumptions made on their part. They relied upon the judgments of Smithers J and Fisher J in McWilliam's v McDonald's supra and Brennan J in Parkdale v Puxu supra. The alleged self-induced error was described in the following terms:

"you are not allowed to use . . . the same name for different goods unless you are the same manufacturer; therefore, since they have done it, they must be the same manufacturer"

The respondents also submitted that the words "Pure and Simple" were descriptive words not distinctive of any particular product and relied upon the judgment of Stephen J in the Hornsby case. 140 CLR 216 at pp. 229-230. It was said that the emphasis in the applicant's advertising upon the pure ingredients of the spray and how simple it was to use illustrated this. They submitted that the words pure and simple were equally apt to describe the mustard.

It is clear that the question whether particular conduct of which complaint is made is misleading or deceptive or likely to mislead or deceive is a question of fact to be answered objectively by the court in the context of the evidence as to the alleged conduct and as to relevant surrounding facts and circumstances. The conduct of the respondent must be looked at as a whole. It is necessary to identify the relevant section of the public by reference to which the challenged conduct falls to be tested. To fall within the section the challenged conduct must be misleading or deceptive to "a significant section of the relevant public" or likely to mislead or deceive such a section. (see Snoid v Handley) (1981) 54 FLR 202 at 209.

Evidence of members of the relevant public that they have been misled is admissible but is not essential. Ultimately the question is one for the court to determine objectively. As was said by Lord Morris in Parker-Knoll Ltd v Knoll International Ltd (1962) RPC at 279, "In arriving at a decision the court must not surrender in favour of any witness its own independent judgment."

Stephen J in Hornsby at p.228 said:

"But to determine whether there has been any contravention of s.52(1) it is necessary to inquire why this misconception has arisen in the minds of others."

The importance of this inquiry is to determine whether the misconception was caused by the conduct of the respondent, or by some other extraneous factor.

In McWilliam's v McDonald's Smithers J said at p.466:

"It follows from the above that those persons who, by approaching the advertisement with erroneous ideas in their mind and interpreting its contents by reference thereto, and are thereby misled, do not arrive at their erroneous conclusion as a consequence of the terms of the advertisement, but because of the application, to those terms, of reasoning based on erroneous assumptions of their own. A member of the public can hardly complain of being misled by the conduct of another if because of errors made by himself he erroneously interpreted the nature of that conduct. And one would not contemplate that conduct, only misleading to those who misinterpret it because they apply erroneous assumptions in the exercise of interpretation, would be proscribed by the legislature. Such conduct would not be, one would think, truly misleading or deceptive."

His Honour went on to conclude (at p.467) that "such misunderstanding as occurs is the consequence not of misleading conduct by the appellants but of a misunderstanding by observers induced by erroneous assumptions on their part." Fisher J. reached a similar conclusion saying (at p.479): "It follows that a member of the public could only be 'misled' if he pursued a line of conjecture based on and motivated by the unwarranted albeit reasonable assumption." The assumption of which his Honour was speaking was that nobody else could make use of the words "Big Mac" without the approval of McDonald's.

In McWilliam's case the evidence showed that there was no doubt that the subject of the advertisement was a product of McWilliam's and not of McDonald's. (see per Smithers J. at p.464) There was no corresponding evidence in the present case.

The idea of self-induced erroneous assumptions was also discussed in Parkdale v Puxu by Brennan J. who said at p.225

"Conduct cannot be held to fall within s.52 unless a consumer, not labouring under any mistake or imperfection of understanding of law, would be or would be likely to be misled or deceived by that conduct. Section 52 operates in a milieu of the external legal order, so that the character of conduct which falls for consideration under s.52 is to be determined by reference to the external legal order, as it exists when the conduct is engaged in. Therefore, a manufacturer who exercises his freedom to manufacture goods according to a design which is not protected by valid registration does not engage in conduct which is misleading or deceptive or which is likely to mislead or deceive. If consumers or potential consumers believe that all goods of a particular design are manufactured by him who first establishes a market reputation as a manufacturer of those goods, that belief is or may be erroneous. The error may be attributed to a preconceived belief that the manufacturer who first establishes a market reputation has a monopoly in the manufacture and sale of goods of that kind but, unless the manufacturer has acquired a statutory monopoly, that belief is also erroneous and the error flows from a misconception of law. A later manufacturer who does no more than exercise his freedom to manufacture and sell goods made in accordance with a design in the public domain does not mislead or deceive; and if a consumer has an erroneous preconceived belief that the first manufacturer has a monopoly, a false assumption by the consumer as to the source of the later manufacturer's goods is self-induced. That was the approach taken by the Full Court of the Federal Court with respect to trade names in McWilliams's Wines Pty. Ltd. v. McDonald's System of Australia Pty. Ltd. (72), and I respectfully agree with it."

Mason J. said (at p.210):

"Here I am prepared to infer that the very close resemblance of the appellant's and respondent's furniture could lead a person who had previously seen the respondent's furniture either displayed in a shop or advertised in the media mistakenly think on seeing the appellant's "Rawhide" suite that it was a "Contour" suite."

His Honour went on to conclude (at p.211):

"Therefore I conclude that the appellant's practice of labelling its "Rawhide" furniture ensured that the similarity of the two suites, even if it might otherwise have been "misleading or deceptive," did not contravene s.52."

It appears that the rationale underlying Brennan J's conclusion was his view that s.52 of the Act does not add to the scope of existing statutory monopolies. His Honour said (at p224):

"It would be surprising if s.52 of the Trade Practices Act were to alter the "careful balance" of the Patents Act 1952 and the Designs Act by a side-wind and, after four centuries, open the way to the creation of prescriptive monopolies for the manufacture of goods. In my view, it does not have that effect."

However Mason J's approach to s.52 was different. At p.205 his Honour said:

"In a collision between one of two different statutory policies and plain words giving effect to the other statutory policy the plain words will prevail. To my mind the words "misleading" and "deceptive" as applied to conduct in trade and commerce are reasonably plain. And in a collision between the general policy of encouraging freedom of competition and the specific purpose of protecting the consumer from misleading or deceptive conduct it is only right that the latter should prevail. It would be wrong to attribute to the Parliament an intention that the indirect and intangible benefits of unbridled competition are to be preferred to the protection of the consumer from the misleading or deceptive conduct which may be an incidental concomitant of that competition. Given the statutory context here it is more likely that Parliament intended to promote free competition within a regulatory framework that prohibits the trader from engaging in misleading or deceptive conduct, even if it means that one trader cannot in particular cases compete with another trader because the opposite view would give a paramountcy to freedom of competition not accorded to it by the statute."

His Honour rejected the argument that the ordinary meaning of the plain words of the provisions of s.52 should be read down by reference to considerations of policy said to arise from the Patents Act and the Designs Act. Faced with these differing opinions, I respectfully prefer that of Mason J.

I would respectfully adopt what was said by Deane and Fitzgerald JJ. in Taco Company of Australia Inc., v Taco Bell Pty., Ltd., (1982) 42 ALR 177 in relation to the notion of self induced erroneous assumptions: Their Honours said (at p.200)

"In McWilliam's v McDonald's, supra, a Full Court of this court held that conduct of McWilliam's in using the expression "BIG MAC" in connection with the supply or possible supply of wine, in a context where that expression was well known as the name of a particular type of hamburger sold by McDonald's, did not constitute conduct which was misleading or deceptive or likely to mislead or deceive within the meaning of s.52(1) of the Act. In the course of their respective judgments, Smithers and Fisher JJ placed particular emphasis on the fact that a person would only be misled or deceived into thinking that the use of the expression "BIG MAC" by McWilliam's indicated some arrangement between McWilliam's and McDonald's if he made the erroneous assumption that the expression could not have been used by McWilliam's in the absence of such an arrangement. There has been a tendency - in our view mistaken - to see their Honours' comments in that regard as involving some general proposition of law to the effect that intervention of an erroneous assumption between conduct and any misconception destroys a necessary chain of causation with the consequence that the conduct itself cannot properly be described as misleading or deceptive or as being likely to mislead or deceive. In truth, of course, no conduct can mislead or deceive unless the representee labours under some erroneous assumption. Such an assumption can range from the obvious, such as a simple assumption that an express representation is worthy of credence, through the predictable, such as the common assumption in a passing-off case that goods marketed under a trade name which corresponds to the well-known trade name of goods of the same type have their origins in the manufacturer of the well-known goods, to the fanciful, such as an assumption that the mere fact that a person sells goods means that he is the manufacturer of them. The nature of the erroneous assumption which must be made before conduct can mislead or deceive will be a relevant, and sometimes decisive, factor in determining the factual question whether conduct should properly be categorized as misleading or deceptive or as likely to mislead or deceive. Beyond that, generalizations are themselves liable to be misleading or deceptive. Thus, one might generalize that the need for a simple assumption that an express representation is literally true could never be a factor militating against a finding that conduct which has misled or deceived is of its nature misleading or deceptive. Such a generalization would, however, ignore the part that irony can legitimately play in human communications. On the other hand, conduct which could only mislead or deceive if the representee were to make a fanciful assumption and which ordinarily would be innocent, may be misleading or deceptive if it appears that the person engaging in the conduct knew that the person to whom the relevant conduct was directed was convinced of the validity of that assumption."

In Lego Australia Pty. Ltd. v Paul's (Merchants) Pty. Ltd. 42 ALR 344 the court concluded (at p.352) that the conduct of the respondent, viewed objectively, could not, properly be seen as involving or conveying any representation to the effect that the manufacturer of the irrigation equipment was connected with the manufacturer of the plastic building blocks. Franki J. said at p.346, "There is no obvious similarity between building blocks for toys and irrigation equipment." He concluded that the use of the name "Lego" of that particular case in relation to the irrigation equipment did not found a "reasonable" or "legitimate" inference that the manufacturer of the irrigation equipment and the building blocks was the same. Deane and Fitzgerald JJ. said at p.352 that "the toys and the irrigation equipment are quite different in nature, appearance and function." Their Honours acknowledged the fact "that companies may and sometimes do expand the range of products which they produce" but said that this "cannot of itself warrant a conclusion that a particular company has done so."

The applicant has extensively advertised the spray under the name "Pure and Simple" since August 1972. There is no suggestion that before the mustard came on the market in May 1983 there was any other product marketed under that or a similar label. Looking at the question objectively, it seems to me that, when one bears in mind the nature of the products here in question, it would be reasonable for a significant section of the relevant public, those interested in buying products such as the spray and the mustard, seeing substantially the same words used as the highlight of the label on the mustard, to believe that it originated from the same trade source as the spray, whether that source be as the manufacturer or as the company entitled to the rights of distribution.

We are not dealing as the court was in Lego, with products which are far removed from one another. The evidence here showed that some shoppers in supermarkets and stores who had had an opportunity to become familiar with the spray also shopped from time to time in health stores, which are the outlet for the mustard. Health food shoppers would also have been exposed to the extensive advertising of the spray. Having viewed the applicant's television commercials as part of the evidence, it is easy to understand how they could give rise to an association between the oft repeated "Pure and Simple" and the spray. The spray and the mustard are not so far removed from each other as were the toys and irrigation equipment which gave rise to the Lego case. It is easy to see how shoppers would form the belief that the company which was the manufacturer, or held the rights of distribution, of the spray included in its business the manufacture or distribution of a condiment such as mustard. That misconception was caused by the conduct of the respondent company. The misconception is natural and human. It is the human tendency to err which makes it possible for the conduct of the respondent company to be misleading and deceptive. It does not deprive its conduct of that character.

In my opinion, the respondent company, by marketing the mustard under the name "Pure & Simple", has in trade or commerce engaged in conduct that is misleading or deceptive within the meaning of s.52(1) of the Act.

I do not consider that the undertaking proffered by the respondents would, if it were accepted and honoured, save the conduct of the respondent company from infringing s.52(1), or amount to a reason justifying the refusal of injunctive relief.

Members of the High Court in the Puxu case attached great significance to the presence of the label on the expensive suite then under consideration at the time when it left the manufacturer's factory. In the present case, the respondents' own evidence showed how easy it was for an intention to affix a label not to be carried consistently into effect. The mustard jar is under 12 centimetres in height and its get-up emphasises the phrase "Pure & Simple", when one looks at it from either the front or the rear. The additional sticker disclaiming any connection between the respondent company or the mustard with the spray or the applicant is necessarily small and is placed diagonally across the front of the jar, but not so as to obscure the original labels. Many members of the public would need the assistance of spectacles to read it, if they were minded to go to such a length. When one considers the price of a jar, under $2.00, even making full allowance for the disposition, said to be shown by health food shoppers, to take a keen interest in statements on containers indicating the ingredients contained in them, it seems to me that the proposed disclaimer does not help the respondents. The original label sets out the ingredients and would itself set the minds of such shoppers at rest on this score. It does not seem to me to accord with the realities of the market place to attribute to the purchasers of such an item a willingness to go to whatever lengths may be necessary to scrutinise all written information contained on such labels and stickers, so as to appreciate to what extent they are repetitive or contain information relating to the absence of a relationship between that product and any other or between their distributors. The whole technique of exposing such low-cost articles for sale, with a get-up designed to place no strain upon the prospective purchaser but to induce a quick and positive response tells against attributing to additional stickers such as these any real value in countering that desired response.

I turn now to consider the claim of the applicant that the respondents other than the respondent company have, and each of them has, been involved in its contravention of s.52.

Section 75B of the Act provides:

"A reference in this Part to a person involved in a contravention of a provision of Part IV or V shall be read as a reference to a person who-

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d) has conspired with others to effect the contravention."

In Yorke v Lucas (1983) 49 ALR 672 a Full Court of this court held that to be involved in a contravention within the meaning of s.75B of the Act, a person must have knowledge, actual or constructive, of the essential facts and elements necessary to constitute the contravention. It is not sufficient to render an individual liable if he is shown to be aware of some only of those facts and elements. Yorke v Lucas was applied by another Full Court in Sent v Jet Corporation of Australia Pty., Ltd., unreported Melbourne 6 July 1984.

The respondents admitted the allegation made in the statement of claim that "the second, third, fourth and fifth respondents are and were at all material times directors of and controlled and directed the business" of the respondent company. The second respondent was the managing director of the respondent company. In her affidavit sworn 1 June 1984 she deposed that from May to July 1983 she was the only sales representative of the respondent company. She went on to say "For a further four or five months thereafter I had one assistant sales representative, but I was still actively involved in selling 'Pure & Simple' health food products to retail health food stores on a 'face-to-face' basis." The second respondent gave oral evidence that the fourth respondent in his capacity as a director of the respondent company went to the USA in February 1983 to visit the Californian company, to see its products and to bring back samples of the products. She also gave evidence that from 6 April 1984 onwards the third respondent was responsible for double checking that every container of the imported products had a disclaimer sticker affixed to it before it left the respondent company's warehouse.

The respondents tendered a bundle of letters and telexes being correspondence that had passed between the respondent company and the Californian company concerning the imported products. The applicant's objection to the tender was deferred. In my opinion the documents were admissible. Three of these letters and telexes were written by the third respondent on behalf of the respondent company and another was written by the fifth respondent on behalf of the respondent company.

In my opinion each of the second, third, fourth and fifth respondents was aware of the essential facts and elements of the contravention by the respondent company of s.52(1) of the Act, and each was a person involved in the said contravention within the meaning of s.75B of the Act.

It is not necessary to consider whether the conduct of the respondent company amounts to a contravention of s.53 of the Act.

I now turn to the applicant's claim for passing-off. In Taco Co Deane & Fitzgerald JJ. said at pp.205-206:

" . . . . we consider that the Federal Court should not, as a matter of general discretion, proceed to decide additional claims where it is pointless so to do. There are plainly many cases where an associated claim for passing-off provides no basis for wider or more effective relief than the primary claim for contravention of s.52 and where, if the primary claim fails, the associated claim will plainly also fail. In such cases, the court should not be troubled by the associated claim.

On the other hand, there may well be cases in which there are legitimate reasons for pursuing a claim for passing-off in addition to a claim for contravention of s.52. It is, for example, conceivable that a claimant might be entitled to relief for passing-off, even though his primary claim for contravention of s.52 of the Act fails. Alternatively, a wider form of injunction or more extensive damages might, arguably, follow from success in the associated claim for passing-off. In such circumstances, however, the applicant should, either in his pleading or in the presentation of his case, make clear the reason for the joinder of the associated claim or claims."

The applicant submitted that in the circumstances of the present case its claim for passing-off might succeed even if its primary claim for a contravention of s.52 failed, because for the purposes of passing-off it is relevant to take into account evidence that the applicant intends to extend its field of goods and activities. It relied upon the decision in L.R.C. v Lilla Edets (1973) R.P.C. 560.

In my opinion in view of the conclusion I have reached in relation to the s.52 claim it is not presently necessary to consider the merits of the passing-off claim. The applicant is entitled as a result of the contravention of s.52 to the injunctive relief which it seeks. Liberty will be reserved to the applicant to apply in relation to damages and to the claim for passing-off.

The court orders and declares as follows:

1. that the respondent company has, in trade or commerce, engaged in conduct that was misleading or deceptive in contravention of s.52(1) of the Act.

2. that the second, third, fourth and fifth respondents were, and each of them was, involved in that contravention, within the meaning of the Act.

3. that the respondent company by itself its servants or agents be restrained in trade or commerce from advertising, promoting, displaying, offering for sale, selling or otherwise in trade or commerce dealing with mustard and other foodstuffs other than mustard and foodstuffs marketed by the applicant under or by reference to the name "Pure and Simple" or any name substantially identical with or deceptively similar to the name "Pure and Simple" ("the conduct").

4. that the second, third, fourth and fifth respondents by themselves, their servants or agents be restrained and each of them be restrained from aiding, abetting, counselling or procuring of being directly or indirectly knowingly concerned in the conduct.

5. that the costs of the applicant of and incidental to the application, including any reserved costs, are to be paid by the respondents.

6. that general liberty to apply be reserved to any party.

7. that liberty to apply in relation to damages or the claim for passing off be reserved to the applicant.