Sabre Corporation P/L v Russ Kalvins Hair Care Company

[1993] FCA 1005

JUDGMENT No. 00 n. . . . . . . . . . . . /oos J ........ .... 9 3

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No. G712 of 1993

)

GENERAL DIVISION )

BETWEEN:  SABRE CORPORATION PTY LTD

Applicant

AND :  RUSS KALVIN'S HAIR CARE
COMPANY

First Respondent

DAVID ROBERTS

Second Respondent

MICHAEL YOUNG

Third Respondent

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) NO. NG 779 of 1993

)

GENERAL DIVISION )

BETWEEN:  MATRIX ESSENTIALS INC

First Applicant

SA1 ON MARKETING SERVICES PTY LTD i tradina as MATRIX ESSENTIALS AUSTRALIA)

RECEIVED Second Applicant

75JAN1994 . AND : RUSS KALVIN'S HAIR CARE

AUSTRALIA COMPANY

These are motlons for interlocutory injunctions in two matters which are being heard together by consent, the evidence

PRINCIPAL	First Respondent
REGISTRY

DAVID ROBERTS

Second Respondent

MICHAEL YOUNG

Third Respondent

10 December 1993

REASONS FOR JUDGMENT

LOCKHART J.

in one being treated as the evidence in the other. The respondents in each case are the same, though the applicants are different. In one case the applicant is Sabre Corporation Pty Limited. In the other case the applicants are Matrix Essentials Inc and Salon Marketing Services Pty Limited trading as Matrix Essential Australia. The applicants in the two cases are independent of each other and not related.

The case of the applicants is in brief that each of them markets hair care products of various kinds in this country, and that the respondents are proposing to engage in conduct representing that their respective products are the products of the applicants or that they are equivalent products, but nevertheless coming from the same source as the applicants' products. I will deal with the arguments in detail in a moment.

The evidence before the Court consists of affidavits. There

has been no oral evidence; and I should indicate at the outset

that the task of the Court is to determine whether or not the	applicants have established a serious question to be tried or a
reasonably arguable case in accordance with well-established principles to which I need not refer, as they are so well known. The applicants assert that they surmount that obstacle and that they surmount the next obstacle; namely, that they have shown a preponderance of balance of convenience in favour of the grant of interlocutory injunctive relief. The respondents dispute all propositions of the applicants.
The only relevant difference between the case asserted by Sabre Corporation as opposed from that asserted by Matrix is that, in the Matrix case, Matrix Essentials Inc, the first applicant, is the registered proprietor of certain Australian trademarks (to which I shall refer in a moment) which would entitle it to argue that there is a threatened infringement of its trademark rights. That proposition cannot be put in the case where Sabre Corporation is the applicant because it is not the proprietor of the relevant trademarks. The relevant proprietor is a United States company, Joico Laboratories Inc (Joico), with which Sabre Corporation has commercial links, but is not entitled to enforce whatever rights Joico may have in respect of the marks themselves. However, in the Sabre Corporation case that company relies upon certain statements in the packaging of the respective products of the respondents relatingto certain statements as to trademarks to support its primary case which I have already broadly described.
With that introduction I will turn briefly to the assertions in the case, then to the evidence and to my interlocutory
findings .
Sabre Corporation is a company incorporated in this New South Wales. The first respondent, Russ Kalvin's Hair Care Company (Russ Kalvin's), is a United States corporation. The second and third respondents, David Roberts and Michael Young, are and have been at all material times employed by Russ Kalvin Is. It is not disputed for the purpose of this interlocutory proceeding that, if the Court should find that the applicants are entitled to interlocutory injunctive relief against Russ Kalvin's, then the usual relief should also go against the personal respondents on the basis that a case would have been made out against them under S. 75B of the Trade Practices Act 1974.
Joico is a United States corporation which manufactures hair care products in the United States under the name Joico, including a variety of products, one of which is named Kerapro, and others bear other names. Joico is the registered proprietor of certain Australian trademarks including Joico and Kerapro. Sabre Corporation has the sole and exclusive right to sell, promote and distribute Joico products in Australia, a distributorship which it has held since 1985. Sabre Corporation has sold and promoted and distributed Joico products in this country slnce 1986. I am satisfied, again I emphasise for
have acquired a substantial reputation and goodwill throughout interlocutorypurposes, that Sabre Corporation and Joico products Australia.
The Joico products are formulated with a multi-level formulation of human hair keratin products called triamine complex that is manufactured exclusively for Joico for use in its products. That makes the Joico products different from other hair care products. Sabre Corporation promotes the Joico products as specialist or exclusive hair care products and in the main sells and distributes them only through professional hair salons and professional hair care sales outlets.
Russ Kalvin's manufactures certain hair care products, including the products which are in dispute in the present prva~e~ding. Russ Kalvin's sells certain of its products in Australia; but it is not at the present time selling the products which have been the subject of evidence before me today and which relate to the matters in dispute today, though, as I have said, it is threatening or proposing to sell them. However, Russ Kalvin's has very properly informed both Sabre and Matrix of its intentions to produce its products in the future and this has generated these proceedings.
Matrix Essentials Inc (Matrix' is a United States corporation and Salon Marketing Services Pty Limited (Salon Marketing), the second applicant, is an Australian corporation.
Matrix manufactures hair care products under the name Matrix, including amongst others products known as Vavoom, shampooing and
conditioning, glazing and foaming gel, and Systeme Biolage. Matrix is the registered proprietor of certain Australian trademarks including Matrix, Vavoom and Systeme Biolage. Salon Marketing Services is the exclusive distributor of Matrix products in Australia and has been promoting and distributing Matrix hair care products in this country since 1987. I am satisfied, for interlocutory purposes, that each of Matrix and Salon Marketing and the Matrix hair care products has acquired a substantial reputation and good will throughout Australia.
Salon Marketing promotes the Matrix products as specialist or exclusive hair care products and sells and distributes them through professional hair salons. Russ Kalvin's manufactures certain hair care products and it has been selling and promoting them in this country. The products which it proposes to produce, which are the subject of these proceedings in particular include a product to which I shall for convenience refer to as Systeme Biolage. That is however a shorthand description: it is not intended to describe it fully for present purposes.
Sabre Corporation is asserting in these proceedings that it is proposed to be represented by Russ Kalvin's to the Australian public that: (a) the products of Ru~js Kalvin's being generic brand products are versions of Joico Kerapro and certain other Joico products; (b) insofar as the generic brand products are
versions of the Joico products, they have the same ingredients, formulations, quality, characteristics, level of satisfaction and distinctiveness as the Joico products; (c) that the only
difference between the generic brand products of Russ Kalvin's and the Joico products is with respect to packaging and price; (d) that the Joico products are distinguished from the Russ Kalvin product solely by their packaging; (e) that the Joico products are not distinguished by their ingredients formulation, quality, characteristics or level of satisfaction; (f) that the generic brand products are made by Joico and packaged by Russ Kalvin; (g) that there is connection between Russ Kalvin and Joico in respect of each of the relevant generic brand products.
It is asserted that these representations to the public are likely to mislead and deceive and that they would constitute contraventions of S. 52 and certain other sections of the Trade Practices Act, as well as equivalent provisions in the fair trading legislation of Queensland and Victoria, and that they constitute a prospective passing off of the Joico products. The case has been conducted by all parties on the basis that it is sufficient to look at the matter for interlocutory purposes, with respect to S. 52 of the Trade Practices Act, as the other sections would take the matter no further and nor would other ingredients be necessary to establish passing off. There is one difference in relation to the Matrix case, to which I have already referred and to which I will refer again.
Matrix puts its case against the respondents in substantially the same way as does Sabre Corporation, so far as
S. 52 and passlng off are concerned, the only relevant difference
being, as I have already said, that it also propounds a case based on threatened infringement of the trademark rights of Matrix to which I have already referred. I have in evidence the product and the packaging in which it is contained, produced by both the Sabre Corporation and Matrix and I have also in evidence the proposed package in which Russ Kalvin's would market its relevant products. For present purposes, the case turns primarily upon the arguments that have been advanced with respect to the packaging.
The case for the applicants, Sabre Corporation and Matrix, broadly relies on two propositions. First, that when viewed as a whole, the proposed packaging of the Russ Kalvin's products would convey the impression to the public that they are Joico products. Second, as an alternative proposition, that if not the same products, they are represented as equivalent products. In support of the second way of putting the case, counsel for the Sabre Corporation and Matrix assert that the ingredients and formulations used in the Joico products are in fact different from those used in the Russ Kalvin's products, that evidence that this is so is supported by small print on the prospective labelling of the Russ Kalvin's products. So, it is said that if the ingredients and formulations are not the same, there is a likelihood that the products would not have the same performance
characteristics in use.
It is therefore said that in those circumstances, the representation which is said to be made by the packaging of Russ Kalvin's products, that its products are equivalent products to those produced by Sabre Corporation or Matrix could not be so and therefore constitutes misleading conduct.
There is another way in which the applicants put their case, namely, that they say that there is a deliberate attempt being made and proposed to be made by Russ Kalvin's to confuse the public, of the kind to which reference has been made in certain cases including Bridge Stockbrokers Limited v Bridges ( 1 9 8 4 ) 4
FCR 460.
Turning to the question whether there is a serious question to be tried, the applicants rely upon the following matters which they say arise from the prospective packaging of the Russ Kalvin's generic brand relating to Joico Kerapro. I need not describe the whole of the packaging. They say that at the top of the label with a blue background and in white print the words and figures "50 per cent more free than the name brand when volume and price are compared" suggests that the name brand must be that of Joico Kerapro because it is the only relevant brand that could be said to be the basis of a comparison.
Second, that the words RUSS Kalvin's Generic Brand Shampoo on the packaging either means that Russ Kalvin's is saying that theirs is the same product as the generic brand, namely, Joico Kerapro, but with a different brand, namely Russ Kalvin's, and that the words that follow, "unauthorised version of Joico Kerapro" do not remove the overall impression the viewer will gain from perusing the label as a whole.
Third, it is said that the very statement of "50 per cent more free than the name brand when volume and price are compared" compares like-with-like, that is the Joico product with the Russ Kalvin's product.
Fourth, it is said that the words themselves, generic brand, pley on the assumption which would be said to exist in the public mind that the manufacturer of the generic brand, that is JO~CO,
is the manufacturer of the Russ Kalvin's brand though produced in different wrappers or containers or that Russ Kalvin's is the manufacturer of an equivalent, if not the same product, (equivalent that is with respect to ingredients, formulations, performance characteristics and use).
Fifth, it is said that the word version that appears in bold black print on the label connotes tha. the Russ Kalvin's brand is the same or an equivalent product as the Joico brand and product.
Sixth, it is said that the reference that appears against the word, "Joico" and against the word "Kerapro" in more than one place on the package to an R inside a circle which is the customary method of indicating a trademark protection indicates that the Joico product and the Kerapro product are really linked with the Russ Kalvin product in some way, as coming from the same general commercial stream.
Seventh, it is said that the words in white in reasonably bold print on a red background, "compare and save" which appear on the Russ Kalvin's prospective label reinforce the impression that would be gained from the words against the blue label at the top of the label which draw the attention to the comparison between the Russ Kalvin's product and the generic product of Joi CO.
Eighth, it is said that the word "Joico" and the word "Kerapro" are in very bold print and would lead the viewer to think that the product produced by Russ Kalvin's is the Joico or Kerapro product. On the back of the label there appears at the top in red writing on a white background the word, "versions" in the context of "Ask for Russ Kalvin's versions of Clinique, Lancome and Mary Kay in the skin care section" and again the word, "version" is relied upon as indicating some link with the Joico product.

I need not deal in detail with the submissions advanced by

the applicants in respect of the Matrix product except to say that the packaging that is proposed for the Russ Kalvin's product is in substance the same as it is with respect to the Joico product, save that the words in bold black print are an unauthorised version of Matrix Systeme Biolage Normalising Shampoo, again, with the trademark references to the marks Matrix and Systeme Biolage in more than one place. The submissions are otherwise substantially the same, but Matrix says, in addition, that the reference to the trademarks to which I have just referred establishes a seriously arguable question to be tried that the words "Matrix" and "Systeme Biolage" with the trademark reference would indicate to the viewer or prospective consumer that the Russ Kalvin product has the same badge of orlgin as the Matrix product and is therefore a use of a trademark as a mark in the sense in which the cases so describe it, and therefore, would give rise to a cause of action for infringement of the mark.

Counsel for the respondents deny the propositions advanced by counsel for the applicants and say, in particular, that it could not reasonably be inferred from the prospective packaging of the Russ Kalvin's product that the Russ Kalvin's product is the same product or so close as to be equivalent to the Joico or the Matrix product, but simply that they are comparab .e products, though emanating from different sources. It is said that persons who would be purchasers of the Russ Kalvin's products would be

persons who would purchase primarily from hairdressing salons or	similar outlets, although some perhaps from cut price pharmacies.
So that there is a reasonably discriminating class of purchaser, and in addition, a class of purchaser who would purchase their goods presumably after consulting or with the ability to consult a hairdresser or pharmacist who would have some degree of knowledge of the rival products themselves, and may know that they do not, in fact, come from the same source. I need not go through the arguments of counsel for the respondents in detail because they join issue with every one of the propositions which has been advanced by counsel for the applicants.
I emphasise again that I am not determining this matter on a final footing, I am simply expressing my tentative conclusions for the purposes of interlocutory relief.
In my opinion the arguments that have been advanced by counsel for the applicants are to be preferred, that there is a serious question to be tried or a reasonably arguable case of contravention of section 52 and of passing off, and indeed, I think, in the case of Matrix there is a reasonably arguable case in relation to trademark infringement.
I do not think it appropriate to express a view as to the strength of the arguments beyond saying that I do not find the
of the spectrum, that is, either just barely crossing the border case that has been adduced by the applicants to be at either end
or very strong. I prefer to express no view whatever on that, that really is for a final hearing.
I turn to balance of convenience. This is an issue that is usually linked to some degree with the question of seriously arguable question - serious question to be tried or reasonably arguable case. In the present case there is some degree of
confusion, perhaps, as to whether the evidence which the
applicants wish to rely upon to prove that the ingredients and formulations of the rival products are different is complete or not.
However, I do not think that matters for present purposes because the evidence that exists is sufficient to support the
seriously arguable question as to the formulations of the rival
products being different, and therefore, to support the case for the applicants that I have alreedy outlined.
Then it is said by counsel for the respondents that although it has the benefit of the undertaking as to damages that will be proffered, of course, by the applicants as the price for obtaining interlocutory injunctive relief, it is a case where it will be very difficult for the respondents if they should ultimately succeed, as indeed they may, to make out a case for damages.

It is difficult to gauge this question at the moment. I can

see some force in the argument of counsel for the respondents that it would be a difficult case to establish damage, but this so often happens in cases of this nature, and it is well established that this is a relevant matter to take into account. However, I am not persuaded that it is a matter which should militate against the grant of interlocutory injunctive relief. The applicants have been in business in this country with their products for some considerable time and are well established in the field. So, indeed, it seems are the respondents, but not with respect to the proposed packaging of their products in this case.

The status quo is truly represented in the market place by the presence of the applicant's products, not the products of the respondents with their proposed form of packaging. The balance of convenience points strongly in favour of the grant of interlocutory injunctive relief, and I therefore propose to grant it.

I should add, however, one matter. On the question of whether or not there would be a deliberate intent to confuse the public, I do not propose to enter into that debate. It is unnecessary to do so, and I do not think it is, in this case, appropriate to venture into it.

In matter NG 712 of 1993, upon the applicant by its counsel

giving the usual undertakings to damages the Court orders that:-

1.   each of the respondents, and in the case of the first respondent by itself, its servants or agents, be restrained pending the final determination of the proceeding or further order from marketing, distributing or offering for sale or selling the hair care products described in the schedule below in packaging in the form of that used in exhibit 2 or any other form of packaging substantially similar thereto;

2.   The costs of this interlocutory application be the applicant's costs in the proceeding;

3.    The parties have liberty to apply to the Court on 24 hours notice;

4.    The matter is adjourned to 16 December 1993.

In matter NG 779 of 1993, upon the applicants by their counsel giving the usual undertaking as to damages, the Court orders that:-

1.	Each of the respondents, and in the case of the first respondent by itself, its servants and agents, be restrained pending the final determination of the proceeding or further order from marketing, distributing,	offering for sale or selling the hair care products	described in the schedule below in packaging in the form of
that used in exhibit 4 or any other form of packaging substantially similar thereto.
2.	The costs of this interlocutory application to be the applicant's costs in the proceeding.
3.	The parties have liberty to apply to the Court on 24 hours notice.

I certify that this and the preceding sixteen (16) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Dated: 10 December 1993

Counsel for Matrix Essentials Inc :	Mr D K Catterns QC Mr Elliott
Solicitors for Matrix Essentials
Inc	Dunhill Madden Butler
Counsel for Russ Kalvin's Hair
Care Company	Mr Webb
Solicitors for Russ Kalvin's Hair
Care Company	Allen Allen & Hemsley
Date of Hearing	10 December 1993

Date of Judgment 10 December 1993