Ricegrowers Co-Operative Ltd v Howling Success Australia Pty Ltd

[1986] FCA 656

CATCHWORDS

TRADE PRACTICES - respondent marketing rice-based horse feed

pellets with similar-sounding name to product of applicant -

claim by applicant of contravention s.52 Trade Practices Act and

passing off - whether serious question to be tried -

interlocutory relief granted.

PRACTICE & PROCEDURE - interlocutory injunction - consideration

of nature of relief under s.80 Trade Practices Act and under

general law.

Trade Practices Act 1974 ss.52, 8 0 .

Abundant Earth Ptv Ltd v R & C Products Pty Ltd (1985) 59 ALR

211 ref'd to.

Parkdale Custom Built Furniture Ptv Ltd	v Puxu Pty Ltd	(1982) 149
CLR 191 cons.

World Series Cricket Ptv Ltd v Parish (1977) 16 ALR 181 ref'd to.

Corvisv v Corvisv [l9823 2 NSWLR 557 ref'd to.

Appleton Papers Inc v Tomasetti Paper Ptv Ltd [l9833 3 NSWLR 208

I ref'd to.

Epitoma Ptv Ltd v AMIEU (1984) 3 FCR 55 cons.

Assoclated Minerals Consolidated Ltd v Wvonq Shire Council (1974)

48 ALJR 464 ref'd to.

Castlemalne Toohevs Ltd v South Australia (1986) 60 ALJR 679

ref'd to.

RICEGROWERS' CO-OPERATIVE LIMITED	V HOWLING SUCCESS	AUSTPaIA PTY
LIMITED No. G 576 of 1986
GUMMOW J. SYDNEY

I 23 DECEMBER 1986

I

;rrj THE FEDERX COURT OF AUSTPALIA

)

NEW SOUTH WALES DISTRICT REGISTRY No.G 576 of 1986

i )

GENERAL DIVISION )

BETWEEN :	RICEGROWERS' CO-OPERATIVE
LIMITED

Applicant

m:	HOWLING SUCCESS AUSTRALIA PTY
LIMITED

Respondent

I

CORAM: Gummow S.

l

~: 23 December 1986

REASONS FOR JUDGMENT

( E X TEMPORE)

Gummow S.

The applicant in these proceedings seeks interlocutory

in-~unctive relief in respect both of contravention of s.52 of the

Trade Practices Act	1974 ("the Act") and of passing off.
TIE FACTS

Since 1974 the applicant has carried on a stock feed

business, apparently based in Leeton, New South Wales, under the

name "Coprice Feeds". Since 1981 it has manufactured and sold a

rice based horse feed pellet product which is marketed in three

categories, Coprice F for foals (with 20 per cent protein and 55

per cent rice), Coprice G for growing horses (with 15 per cent protein and 66 per cent rice) and Coprice M for mature horses (with 12 per cent proteln and 72 per cent rice). Registration in

respect of these three names has been effected in Victoria and

three other States under appropriate State stock food

legislation. This product has been promoted as having a

"cooling" effect, ie the moderation of the temperament of

otherwlse over-frlsky horses. There are horse feed products

emanating from South Australia known as "Cool Blend" and "Cool

Stamina" but they are not marketed as being rice based. There is

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also evidence of a product available in Victoria from a stock

feed business known as "Barastoc", but this also does not contain

rice. There is no evidence of any other horse feed product

promoted for its cooling qualities and, until the appearance of

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the respondent's product herein complained of, no evidence of any

other rice based horse feed product.

The applicant also uses "Coprice" to identify other

stock food pellet products, for example, for pigs and cows. The

applicant's product for horses is sold through general stock feed

wholesalers and retailers throughout Australia, and there is

!	evidence of what appear to have been substantial sales since
1981. There is also evidence of extensive advertising in
newspapers, trade magazines and on radio. Examples were also
given of Coprice Feeds display stands at agricultural shows in
New South Males and Victoria, and promotional efforts at sporting

,

events in what one might call the horsey 17Orld.

3.

Since January 1986 the Coprice product involved in this

case has been sold in 40 kilogram bags which are coloured orange

and white and show in black "COPRICE" and "HORSE PELLETS" in

large lettering and "High Energy ... Rice Based" in smaller

lettering. Previously, the bags were hessian or jute and were

stencilled or printed with substantially the same legend. Each

bag has attached to it a label of the size 9 millimetres by 15

i millimetres which shows boldly the letter "F", "G" or "M" to

indicate the particular category of the product and also contains

the specification thereof.

The respondent is a Victorian company which in about

April 1986 purchased a stock feed manufacturing business from the

liquidator of Saltram Nominees trading as VWG Stockfeeds. In

about late June 1986 the respondent commenced manufacture of a

line of stock feed products under the name "Great Australian school in Victoria had a telephone conversation with Mr Robert ICerr, a director of the respondent. On 7 July 1986 Mr Kerr received in confirmation a note with which was enclosed one of the above Coprice labels. The note said in part, "Friday's telephone conversation refers. Herewith COPRICE specs [meaning

specificationsJ. Please quote us the same type of product.

BARASTOC's product is not liked by our mares".

i

In paragraph 5 of his affidavit sworn in these

proceedings Mr Kerr says: - "In or about July 1986 the respondent

received various inquiries from customers regarding rice based

specialized stock feeds. As a result of those inquiries and

specifications provided by customers, the respondent decided to

manufacture a general rice based horse feed".

On 1 September 1986 the respondent applied to the

Victorian Department of Agriculture pursuant to the Victorian

Stock Feeds Act 1958 for registration of its product under the

name "Top-Rice Horse Pellets". The application, after discussion respondent's proposed product.

and correspondence with officers of the department, was amended

to "Great Australian Stock Feed Top-Rice Horse Pellets". In

The respondent has its own retail outlet but the first

retail sale of the respondent's product was made at the Warragul happens, the invoice for that sale was tendered in evidence by the applicant, the purchase having been made by one of its representatives.

The respondent markets its product only in Victoria and presently does not intend to expand into other states. ,,

No

evidence was given of the quantity of stock currently held by the

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respondent of its product or of any sales to date	or advertising
or promotional costs and commitments.

There is evidence o f limited newspaper advertising since

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November 1986. The applicant points in particular to page 36 of

the "Warragul Gazette" of 2 December 1986 which contains an

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advertisement fo r the Warragul Gram Store. The advertisement

includes the following:

"THE BIG SPECIAL

for people with horses...

COPRICE	r4
IN STOCK

CGreat Australian Stock Feed Logo3

TOP-RICE HORSE PELLETS

$10.90

40 kg bag"

The Coprice product retails for between $12.00 and

$13.50 per 40 kilogram bag.

The respondent's 40 kilogram bag is currently yellow

with red and dark blue printing upon it. It also features the Great Australian Stock Feed logo, to which I have referred, in

blue and red printing. The largest words are "Top-Rice" and

underneath in smaller but still large print "Horse Pellets". A

label, sized 15 millimetres by 12 milllmetres is stapled to the

top right hand corner o f the bag. It bears in black on dark red,

"Great Australian Stock Feed Top-Rice Horse Pellets" and the

logo. On the back of the label are particulars Including the

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6.

sentence, "By using this feed your horse will remain 'Cool' while

still obtaining sufficient energy and protein to remain in top

condition".

THE LAW

"Coprice" might ear as an int erplay betwe en

"co-operative" from the applicant's title, "Rice" and "Price".

It was not strongly disputed but that words or expressions that

are not inventive combinations of known words may yet acquire

distinctiveness or a secondary meaning for the purposes both of

5-52 of the Act and of passing off: Abundant Earth Pty Ltd v R &

I

- C Products Ptv Ltd (1985) 59 ALR 211 at 216-217.

As I have mentioned, the applicant puts its case on two

bases, contravention of 5.52 of the Act and passing off, the

latter being entertained in the accrued jurisdiction of the

Court. In dealing with the passing off claim the Court is

concerned with protection of private rights, in particular with

the applicant's right to protect its alleged goodwill against

tortious interference or appropriation by another trader. On the

other hand, as has often been observed, although a rival trader

has standing to seek to enjoin contravention of 5.52 this is only

because of the presence of the term "any other person" in s .80 (1 )

of the Act, and 5.52 is designed to protect members of the public

I	in their capacity as consumers of goods and services: Parkdale
Custom Built Furniture Ptv Ltd v Puxu Ptv Ltd (1982) l49 CLR 191

7

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at 202-203 (Mason J.). The contrasting charactcr of the rights

involved here 1s further reflected in the approach to be taken to

I

an award of mterlocutory Injunctive relief.

Counsel for the respondent submitted that if I came to

the question of balance of convenience, I should deal dlstinctly

with s.52 and passing off. This was because in dealing with

in~unctive relief in respect of the s.52 claim the Court had to

consider the pre~udice (or lack of it) to the public of a grant

1

or denial of injunctive relief against his client, a different

exercise to that in finding the balance of convenlence In the

passing off claim. In my view, this submlssion is correct.

Section 80 of the Act is not simply the casting into

statutory form of the traditional equity jurisdiction to grant

in~unctive relief for breach of statutory duties or prohibitions.

The creation by statute of a remedy identified therein as an

"injunction" presents a threshold question. This is whether on

its proper construction the statute (a) does no more than import

the remedy of injunction developed by courts of equity or (b)

adopts or modifies the characteristics that identify an

injunction In those courts: World Series Cricket Ptv Ltd v

Parish (1977) 16 ALR 181 at 185-187 (Bowen CJ.), 199-200 (Brennan J.); Corvisy v Corvisv C19823 2 NSWLR 557 at 558-9; Appleton

Papers Inc v Tomasetti Papers Ptv Ltd C19831 3 NSWLR 208 at 215;

Tvtel v Australian Telecommunications Commission (1986) 67 ALR

433 at 441; cf South Carolina Insurance Co. v Assurantie

Maatschappii'de Zeven Provincien' N.V. C13863 3 All ER 487 at

495-6, 499 (HL).

8 .

Section 80 falls in category (b). Thus, in respect of

s.80 the traditional requirement for protection of private

rights, that unless an injunction be granted there wlll follow

irreparable injury inadequately compensated in damages, 1s

qualified by the terms of subsections.(4)(c) and (5)(c).

The power to grant interim relief in this case in

respect of the alleged contravention of 5.52 is conferred by

s.80(2) of the Act, the criterion being whether "in the opinion of the Court it is desirable to do so". It has been assumed

generally that this form of words brings uith it the traditional

concepts of a first stage of "prima facie case" or some variant

or explication of that notion leading, if satisfied,	to	the
second stage of considering the balance of convenience.	In	the

present case it was accepted by both parties that the requirement

to pass the first stage under s.80(2) was to be expressed as "a

serious question to be tried" in accordance with the Full Court

decision in Epitoma Pty Ltd v AMIEU (1984) 3 FCR 55. As to the

passing off claim it was not submitted that any other formulation

of prima facie case applied in the accrued jurisdiction.

In respect of the balance of convenience there is, as I

have indicated, a distinction to be observed, given that the

claim in the accrued jurisdiction is to protect private not

public rights. It should, however, be noted that in this respect

5 - 8 0 does not necessarily produce a result markedly different

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from the qeneral law. This is because where in a court of equity

an injunction is sought in aid of public rather than private rights, special considerations may apply: Associated Minerals

Consolidated Ltd v Wyonq Shire Council (1974) 48 ALJR 464 at 470

(FC), Castlemaine Toohevs Limited v South Australia	(1986) 60
ALJR 679 at 681-2.

It is also to be observed that whilst Epitoma Pty Ltd v

AMIEJJ deals with what for s.80(2) is involved in a prima facie

case, it may not do so for all branches of this Court's statutory

injunctive jurisdiction. For example, where the plaintiff relies

upon s.39B of the Judiciary Act 1903 (the language of which is

drawn from s.75(v) of the Constitution) to have this Court enjoin

an officer of the Commonwealth, close consideration of the

adverse effect of interlocutory in~unctive relief upon the public

interest may in some cases require a probabililty or even a distinct probability of success in order to obtain such relief

(Castlemaine Toohevs Limited v South Australia (supra) 1 .

In this application, I turn to consider whether the

I

applicant has shown that there is a serious question to be tried

and if so whether the balance of convenience favours injunctive

relief at this stage. The balance of convenience may, as counsel

for the respondent submitted, be itself affected by the Court's

evaluation or perception of the seriousness of the question, that

is, the weight of the applicant's case: Castlemaine Tooheys

Limited v South Australia (1986) 60 ALJR at 682.

I

I should emphasize that the issues presented at this

stage are formed by application of the principles abovementioned

and that these differ in substance as well as in form from those

that will govern the result of a final hearing. Further, the

evidence may be expected to undergo some modification at a final

hearing, each parti having indicated to the other an awareness of

deficiencies in what the limitations of time had permitted to be

presented to the Court at the interlocutory hearing. There was,

as is appropriate and esirable at his tage, limited

cross-examination and of course no time for discovery and

I interrogatories, even assuming those procedures to be appropriate

in this case. In short, the Court is not now concerned wlth

whether it ultimately should be held that there is contravention

of s.52 of the Act or passing off by the respondent.

CONCLUSIONS

In my view there is at the interlocutory level

sufficient to show prima' facie that "Coprice" has acquired

distinctiveness or a secondary meaning in respect of the rice

pellet product, both for the purposes of s.52 of the Act and

passing off. The products of the applicant and the respondent

have the same general character and seek to meet the same

consumer need. The respondent asserts and the applicant denies

that there is on visual comparison little likelihood of deception

being suffered by consumers who buy by personal shopping in

produce stores.

11.

Mr Kerr gave short evidence of his admittedly brief

experience with the applicant's retail outlet and emphasized the

impact of display of the goods for sale in such stores. The

respondent also stressed the impact of the logo and words "Great

Australian Stockfeed"	as a house brand	or line of product
identification.

On a side by side comparison there may be much to be

said for there being some clear distinctions between the

packaging of the products of the parties. However, there is a

real measure of visual similarity between "Coprice" and

"Top-Rice", even allowing that only the second name may convey a

"puffing" endorsement of the rice in question. At this stage the

evidence does not enable me to approach the matter on the footing

that both products will usually be stocked by the same stores and

that, if they are, they will usually be displayed or stored side

by side. Nor would I now be correct in concluding that where the

goods are bought by personal shopping this is preceded, as the usual practice, by visual inspection of the packaging. Further,

the passing off cases are replete with warnings against

overstressing dissimilarities that appear on a side by side

comparison of packaging, and the same would be true of 5-52.

On the evidence as it now stands, including paragraph 6

of the affidiavit of Mr Hanley, I must give some real weight to

the prospect of deception of consumers who seek to buy the

applicant's product by personal shopping. There is in my opinion

a serious question that arises here.

1 12.

1 ' I

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As the advertisement from the Warragul Gazette

!	indicates, there is evidence which on one view suggests that
concurrent availability of both products at the same retail
stores may provide the occasion for advertising by retailers that
may give rise to the misleading of customers. Fkat is not
apparent at this stage is a sufficiently serious question as to
whether for such misleading conduct the respondent would be
responsible either in passing off (Brinsmead v Brinsmead (1913)
30 RPC 493 at 511) or under the Act (Parkdale Custom Built
Furniture Ptv Ltd v Puxu Ptv Ltd (1982) 149 CLR 191 at 211).

An auditory comparison of "Coprice" and "Top-Rice" does

as a matter of impression suggest a stronger similarity than does

a visual comparison. The applicant took this aspect of the case

further by tendering fairly comprehensive affidavit evidence as

to the practice in the trade of ordering goods of this character

by telephone. This the respondent sought to counter by

submitting that even if sales be made on the strength of

mishearing the trade name, at the end of the day no harm would

flow because the goods might be returned or some commercial

accommodation reached.

Even if, as it presently does not, the evidence showed

this would be the way such problems were dealt with in the trade, there would still, on the authorities, have been a passing off (where, after all, the older, narrower formulation of the tort

13.

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was that the defendant should not his goods as those of the

plaintiff: Erven Warnink B.V. v J Townend and Sons Limited

C19807 RPC 31 at 91-92] and also contravention of s.52 (cf Stuart

Alexander and CO (Interstate) Pty Ltd v Blenders Pty Ltd	(1981)
37 ALP. 161 at 169).

More significantly, the respondent points to the

circumstance of the "Coprice" product being sold in three grades,

"F" "G" and "M" and says that any purchasers who place oral

orders would be likely to signify the grade and so alert the

retailer against construing the order as one f r the respondent's product. Further, the respondent whilst conceding that there is some evidence that points unequivocally to the practice of oral

orders for retail sales (as in the affidavlt of Karen Lyn Pryor),

disputes the weight to be given to evidence of deponent5 who

operate both on a retail and wholesale level and depose to a

significant practice of telephone orders but do not distinguish

in respect of that practice between retail and wholesale

customers. The latter, in the respondent's submission, will,

even if dealing with a wholesaler who stocks both products, be

highly likely to make it clear what product they wish to

purchase.

All these matters inay no doubt be clarified by evidence

at the trial and the respondent may then effectively meet what

now seems a fairly weighty case on what I call auditory

deception. As the evidence stands at present there are in my

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view serious questjons to	be tried in respect of contraventions
of s.52 and passing off.

That brings me to the balance of convenience. The

evidence indicates that the applicant has an established trade for its product and as a result it may f o r present purposes be

taken that.there is a significant recognition of that product by

consumers. Indeed, there is some direct evidence by consumers

that they regard the "Coprice" product as efficacious for their

i

horses.

The respondent's product is a new one and there has

been, so far as is indicated by the evidence offered at this

stage by the respondent, limited marketing of this product.

There is little if any direct evidence of the expenditure which

the respondent kas incurred or to which it is committed or as to

the degree of disruption an interlocutory injunction would cause,

or as to the inadequate nature of the applicant's undertaking as

to damages. On the other hand, the applicant points out that

sales of its products shall increase in February with the start

of preparation of horses for autumn show season. Taken as a

whole, these conslderations plus the comparative strength of the

applicant's case on the prima facie case requirement, indicate

that the balance of convenience favours the grant of relief.

In respect of the passing off claim the respondent urges

that in this, as generally, the keeping of accounts by it should

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2

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suffice and that an injunction is an inappropriate interlocutory

I remedy. There are observations arquendo to the effect that in many instances the keeping of accounts would be an absolutely adequate remedy: Hornsby Buildinq Information Centre Ptv Ltd v

Sydney Buildinq Information Centre Ltd (1978) 140 CLR 216 at

217-8. However, it must be remembered that, as I have mentioned,

equity restrains passing off to protect goodwill agalnst

interference and also that it does so because injury to so

delicate and complex an intangible as goodwill is plainly

difficult of adequate or satisfactory monetary assessment: Turner

I

v General Motors (Australia) Ptv Ltd (1929) 42 CLR 352 at 362-3

(Isaacs J.) 368 (Dixon J.1; Erven Warnink B.V. (supra) at 92-93

(Lord Diplock), 101-3 (Lord Fraser).

In respect of the 5.52 claim, the respondent submitted

that special regard should be paid upon assessing the balance of

convenience to the circumstances that (a) there was no claim at

this stage of the proceedings that its product was of inferior

quality, nor was it shown the consumers derived any particular

benefit from the applicant's product not also found in the

respondent's product, and (b) the cheaper retail price benefitted

consumers.

I have taken these matters into account, but I also must

give substantial weight to the applicant's submission that

consumers should be supplied Yith the product of the particular

provenance that they identify from the reputation of "Coprice"

with consumers.

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Finally, although I am by no means persuaded that it was

necessary to do so, I have taken into account in respect of both

head of relief the considerations that whilst it knew of the

applicant's product at least by July 1986, the respondent was at

pains to comply and does appear to have complied in the manner	I
have described with the Victorian stock foods legislation, and

that it may have been unaware of the general application of s.52

I of the Act.

I conclude that there are, as indicated, serious

questions to be tried and that the balance of convenience favours

interlocutory relief by injunction. This is true both of passing

off and 5.52, but the one order will suffice to give the

applicant appropriate protection. The orders	I propose to make
are :

1. undertaking as to damages, order that the respondent by

Upon the applicant by its consent giving the usual further order from, in trade or commerce, advertising, promoting, displaying, offering for sale or selling any stockfeed product under or by reference to any name

comprising or including "Top-Rice'' , "Coprice" , or any

name misleadingly or deceptlvely similar to "Coprice".

2. I grant liberty to apply on three days' notice.

17.

3 . Costs of this application including any reserved costs be costs in the proceedings.

I certify that this and the /L preceding

pages are a true copy of the

Reasons for Judgment of	his Honour Mr Justice
Gummow.
Associate:
Date: 23

Counsel and Solicitors for	Mr M.R. Ellicott instructed
the Applicant:	by Williams Niblett

Counsel and Solicitors for Mr J.C. Campbell instructed

Respondent: the Ellison by Hewison &

Whitehead (Melbourne)

Date of Hearing:	18 December 1986
Date of Judgment:	23 December 1986