Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd
[2015] FCA 227
•16 March 2015
FEDERAL COURT OF AUSTRALIA
Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited [2015] FCA 227
Citation: Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited [2015] FCA 227 Parties: SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED (ACN 002 915 648) v LG ELECTRONICS AUSTRALIA PTY LIMITED (ACN 064 531 264) File number: NSD 615 of 2011 Judge: NICHOLAS J Date of judgment: 16 March 2015 Corrigendum: 23 March 2015 Catchwords: CONSUMER LAW – television commercials (TVCs) advertising 3D TVs – whether TVCs misleading or deceptive or likely to mislead or deceive – whether false or misleading representations conveyed – where TVCs parody comparative tests in comparing new 3D technology with conventional 3D technology – use of humour and exaggeration – whether scenes depicted in TVCs likely to be taken literally – whether consumers likely to be led into error – whether representations made with respect to any “future matter”
CONSUMER LAW – point of sale advertising representing 3D TV is “Full HD” and “1080P” – meaning of “Full HD” and “1080P” when used in relation to 3D TVs – whether “Full HD” or “1080P” convey representations as to “viewable image” when TV operating in 3D mode and viewed through 3D glasses – whether point of sale material likely to convey representation that viewable image in 3D mode is equivalent to resolution of 1920 x 1080p – significance of absence of recognised standard against which to assess such claims – whether such representations false or misleading in case of respondent’s 3D TVs having a display resolution of 1920 x 1080p
EVIDENCE – admissibility of survey evidence – whether if survey otherwise admissible it should not be given weight – questionnaire design – whether responses elicited from respondents likely to be accurate and reliable – whether coding of responses likely to be accurate and reliable – pilot study – significance of failure to make pilot study available to other party prior to embarking on survey where suitability of questionnaire is disputed – significance of failure to test questionnaire – whether survey methodology and data analysis otherwise appropriate
TORTS – tort of injurious falsehood – elements of tort – whether false representation conveyed – whether applicant established that it suffered actual loss as a result of broadcast of TVC alleged to convey false representation
Legislation: Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) ss 4, 18, 29(1)(a)
Trade Practices Act 1974 (Cth) ss 51A, 52
Evidence Act 1995 (Cth) ss 53, 66A, 79, 190Federal Court Rules 2011 (Cth)
Cases cited: Arnison v Smith [1889] 41 Ch D 348
Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45
Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435
Gould v Vaggelas (1984) 157 CLR 215
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216
Interflora Inc v Marks and Spencer plc [2012] EWCA Civ 1501; [2013] 2 All ER 663
Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Ratcliffe v Evans [1892] 2 QB 524Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1Gately on Libel and Slander (2008) 11th ed
The Law of Torts (2011) 10th edDate of hearing: 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 17, 18, 19, 21 December 2012 and 3, 4, 5, 8, 9, 10, 11, 15, 17, 18 and 19 April 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 373 Counsel for the Applicant: Mr RC Macaw QC with Mr DB Studdy SC and Mr JM Hennessy SC Solicitor for the Applicant: Gilbert + Tobin Counsel for the Respondent: Mr R Webb SC with Mr M Hall Solicitor for the Respondent: King & Wood Mallesons FEDERAL COURT OF AUSTRALIA
Samsung Electronics Australia Pty Limited v
LG Electronics Australia Pty Limited [2015] FCA 227CORRIGENDUM
1. In paragraph [366], delete “In cross-examination” and in lieu thereof insert “In an affidavit in reply”.
I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate:
Dated: 23 March 2015
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 615 of 2011
BETWEEN: SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED (ACN 002 915 648)
ApplicantAND: LG ELECTRONICS AUSTRALIA PTY LIMITED
(ACN 064 531 264)
Respondent
JUDGE:
NICHOLAS J
DATE OF ORDER:
16 MARCH 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The applicant file and serve by 30 March 2015 a draft minute of any proposed declarations and orders (including as to costs) which it contends should be made in this proceeding together with a written submission (not to exceed 5 pages in length) in support.
2.The respondent file and serve by 13 April 2015 a written submission (not to exceed 5 pages in length) in answer.
3.The applicant is to notify the respondent by 30 March 2015 whether it proposes to maintain its claim for damages in respect of the respondent’s contraventions of ss 18 or 29(1)(a) of the Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law).
4.The proceeding be stood over to 9.30am on 20 April 2015 for the making of further orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 615 of 2011
BETWEEN: SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED (ACN 002 915 648)
ApplicantAND: LG ELECTRONICS AUSTRALIA PTY LIMITED
(ACN 064 531 264)
Respondent
JUDGE:
NICHOLAS J
DATE:
16 MARCH 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION
These are my reasons for judgment in a proceeding brought by the applicant (Samsung) against the respondent (LG) in relation to a series of television commercials (TVCs) and related internet, cinema and point of sale advertising undertaken by or on behalf of LG in 2011.
Samsung alleges that each of the TVCs and the related advertising material was misleading or deceptive, or likely to mislead or deceive and that, as the person who communicated or authorised the communication of the TVCs and the dissemination of the related advertising and point of sale materials, LG contravened ss 18 and 29(1)(a) of the Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) (ACL). Samsung seeks declaratory and injunctive relief together with damages in respect of these contraventions. Samsung also alleges that LG committed the tort of injurious falsehood in relation to which it also seeks damages and injunctive relief.
Questions relating to the quantum of any damages that might be awarded to Samsung in respect of the alleged contraventions of the ACL have been reserved for consideration after determination of questions of liability. The position in relation to injurious falsehood is slightly different. It is necessary for Samsung to establish that it at least suffered some pecuniary loss as a result of what it alleges were false and malicious statements made by LG about Samsung’s goods. If I am satisfied that Samsung has suffered such loss, then it is common ground that further questions pertaining to the quantum of any damages to be awarded in respect of injurious falsehood will also need to be considered at a further hearing.
The TVCs and related advertising were part of a substantial campaign (the LG campaign) devised by LG’s Korea-based parent company (LG Korea) to advertise and promote a range of 3D televisions (the LG Cinema 3D TVs) that employs a form of 3D technology known as “film patterned retarder” (FPR) or “passive” technology. It will be necessary to explain this technology and the way in which it differs from the conventional or “active shutter” 3D technology employed by Samsung and other well-known manufacturers of 3D televisions later in these reasons.
In the course of the LG campaign, Samsung brought an application for interlocutory relief in relation to the TVCs, which was dismissed on 18 May 2011 subject to LG providing an undertaking in relation to one of these commercials (the Flickering TVC). Samsung’s case was later expanded to include other advertising and promotional material and another TVC (the Modified Flickering TVC) in addition to the five TVCs the subject of the interlocutory application.
The following six TVCs are in issue:
·the Flickering TVC (a transcript of which appears in Schedule 1 to these reasons);
·the Modified Flickering TVC (a transcript of which appears in Schedule 1A to these reasons);
·the Brightness TVC (a transcript of which appears in Schedule 2 to these reasons);
·the Battery TVC (a transcript of which appears in Schedule 3 to these reasons);
·the Power Cable TVC (a transcript of which appears in Schedule 4 to these reasons);
·the Weight TVC (a transcript of which appears in Schedule 5 to these reasons).
Each of the TVCs runs for 15 seconds and was broadcast in Australia at various times between May 2011 and August 2011. The Flickering TVC was broadcast from 1 May 2011 to 7 May 2011 on 131 occasions and on another eight occasions between 5 June 2011 and 15 June 2011. The evidence establishes (and it is not disputed) that the June 2011 broadcasts of the Flickering TVC (which occurred after LG provided its undertaking to the Court on 18 May 2011) were inadvertent. The Modified Flickering TVC was broadcast for one week in August 2011. The TVCs were also screened in cinemas and uploaded onto YouTube. There were almost 15,000 screenings of the TVCs in cinemas between 12 May 2011 and 9 February 2012. There is no suggestion that the Flickering TVC was screened in cinemas after 18 May 2011. The hearing of the present proceeding occurred long after the LG campaign had ended.
One of the key issues that was introduced into the case after the interlocutory application was determined relates to point of sale stickers affixed to LG Cinema 3D TVs upon which the expressions “Full HD” and “1080P” are alleged to have appeared. There is an issue in the proceeding as to what representation is conveyed by the presence of these stickers on LG Cinema 3D TVs and whether such representations as are conveyed are misleading or deceptive when made in relation to the televisions on which they appear. This issue generated a large amount of technical evidence directed to establishing what constitutes “Full HD” and “1080P” television and what those terms mean to consumers particularly when used in relation to 3D television.
Photographic reproductions of the Full HD and 1080P stickers and related point of sale material (the Full HD POS) to which I have already referred appear in Schedule 6 to these reasons.
Samsung also alleges that LG made misleading or deceptive statements on LG’s website (the Website Representations) and in retailer instructions (the Retailer Instructions) distributed by LG to retailers of its 3D televisions in Australia. A copy of the Retailer Instructions is reproduced in Schedule 7 to these reasons.
WITNESSES
There were 36 witnesses who gave evidence at the hearing, 31 of whom were cross-examined. The following brief account of the witnesses and the matters to which their evidence relates is given in the same order as they were called to give oral evidence. Witnesses called by Samsung are designated (S) and those called by LG are designated (L). In some cases, I have also recorded some observations concerning the relevance and reliability of their evidence.
Philip Newton (S)
Mr Newton is the Director of Samsung’s Audio-Visual Division. He has many years of experience in the consumer electronics industry in Australia relating to the marketing of consumer electronics products. His evidence concerned the Australian television market, including the position of the four major suppliers of televisions in the market. Mr Newton’s evidence also addressed the factors that drive demand for new televisions and the introduction of 3D technology to the home television market. He also gave evidence relevant to the issues of battery life and damages.
Bradley Wright (S)
Mr Wright is Samsung’s National Sales and Marketing Manager – Audio Visual. He has nine years of experience in marketing electronic products including six years of experience in marketing TVs and other consumer electrical products. He gave evidence in relation to the launch of 3D TV in Australia in 2010 and the release by Samsung and its competitors of new product ranges in 2011.
Philip Lelyveld (S)
Mr Lelyveld is an entertainment technology business development consultant. He prepared an expert report on the history of 3D technologies and the various ways in which 3D images are created for use in cinema and television, the use and application of 3D technology across a range of industries, and other related topics. The relevance of his evidence was slight.
Michael Williams (S)
Mr Williams is the solicitor for Samsung. He gave evidence of an exercise he conducted in which he attempted to simulate what was depicted in the Brightness TVC in order to test the amount of reflected light that would appear on a person sitting in front of the screens of each of a Samsung 3D TV and an LG Cinema 3D TV. A video recording of the experiment undertaken by Mr Williams is also in evidence. The relevance of this evidence was also slight.
Gerard Bardsley (S)
Mr Bardsley is the Manager of Customised Research (NSW) at Roy Morgan Research Ltd (Roy Morgan) who gave evidence in relation to the Roy Morgan Survey. He has extensive experience in market research and data analysis. He was the market researcher responsible for carrying out the Roy Morgan Survey. He also gave evidence concerning the Galaxy Survey. I did not find Mr Bardsley to be a wholly satisfactory witness. There were criticisms made by him of the Galaxy Survey that lacked substance (in particular, that it should have been an online survey) which suggested to me that his evidence lacked objectivity.
Dr Sergei Dorofeev (S)
Dr Dorofeev is the statistician for Roy Morgan International Ltd. He is based in London and is the most senior statistician in the Roy Morgan group of companies. He gave evidence in relation to statistical matters.
Iain Bell (S)
Mr Bell is Project Director of Customised Research at Roy Morgan in Sydney. He has extensive experience in the field of market research. He had a minor involvement with the Roy Morgan Survey in the form of brief discussions with Mr Bardsley in relation to the form of the questionnaires used for the purposes of that survey and the coding of responses based upon the Representations Document. He considered the form of questionnaire and the approach to coding adopted by Mr Bardsley to be consistent with standard practice. He made an affidavit in reply (but not in chief) that did little more than rehearse the same arguments made by his colleague, Mr Bardsley, when responding to Mr Briggs’ criticisms of the Roy Morgan Survey.
David Briggs (L)
Mr Briggs is the Principal of Galaxy Research in Sydney (Galaxy). He has extensive experience in the field of market research. He gave evidence concerning the Roy Morgan Survey and the Galaxy Survey. He was the market researcher responsible for carrying out the Galaxy Survey.
Dr Stephen Downes (S)
Dr Downes holds the position of Principal of QBrand Consulting, a management consulting firm that specialises in marketing, communications and brand strategy. He has worked in these fields since 1988 and has extensive experience as a lecturer and teacher in marketing and advertising at RMIT University in Melbourne. His evidence was directed to various marketing and brand-related topics including comparative advertising and the use of humour in advertising.
Stephen Gater (L)
Mr Gater is the CE Consumer Marketing Director for LG Electronics UK Ltd (LG UK). He gave evidence concerning statements published on LG UK’s website in January 2011 concerning the resolution of 3D images viewed through active shutter and passive glasses.
Dr Pierre van Osselaer (L) and David Cobbold (L)
Dr Van Osselaer and Mr Cobbold have expertise in the field of advertising and communications including semiotics, which was described by them in their joint expert report as “the science of signs”, including how readers or viewers make sense of signs by interpreting them in context. They undertook an analysis of the TVCs, the comedic devices employed in them, and their likely impact on viewers. Though their joint expert report was engaging, I have given it only slight weight, and then only for the purpose of testing my own impressions of the TVCs.
Dongbae Lee (S)
Mr Lee is the Principal Engineer in the Visual Display Business Unit of Samsung Electronics Co Ltd in Korea. Mr Lee has extensive experience in research and development, design, testing and evaluation of televisions and computer monitors. He gave evidence concerning a range of matters including the development of 3D TV technology, and the circumstances in which a viewer of 3D TV using active shutter technology might experience “crosstalk” or other interference affecting the operation of active shutter glasses. Mr Lee also gave evidence concerning the “resolution” of 3D TVs and the differences between Samsung’s active shutter and LG passive 3D TVs including with respect to viewing angles.
Dr Heejae Kim (L)
Dr Kim is the Chief Research Engineer in the Picture Quality Team at LG Korea. She gave evidence relating to a number of technical issues including the meaning of the terms 1080p and Full HD. Her evidence on that topic was somewhat inconsistent. At times she suggested that “Full HD” as it relates to 2D televisions implies a display resolution of 1080p whereas she also suggested that “Full HD” was a marketing term the meaning of which was much less precise. She was heavily criticised by Samsung in submissions on a number of counts including her disdainful treatment of Mr Kane’s opinions, her evidence concerning health warnings extracted from user manuals for 3D TVs, and viewing distances. I did not find Dr Kim’s evidence of any particular assistance expect insofar as it related to what was referred to in evidence as “the LG algorithm” which I accept is relevant to the overall picture quality of LG Cinema 3D TVs, and not resolution in any technical sense.
Timothy Barnes (L)
From 2010 to 2012 Mr Barnes was LG’s Senior Marketing Manager for Home Entertainment. He gave evidence concerning the TV market in Australia including the market for 3D TVs, the launch of the LG Cinema 3D TV range in April 2011, the LG Campaign, and his understanding of the messages that the TVCs were intended to convey to viewers. He specifically denied that he intended to mislead or deceive Australian consumers about conventional 3D technology by means of the TVCs. I accept that evidence, but note that some of the evidence given by Mr Barnes as to what messages he believed the TVCs to convey (especially the Flickering TVC) is much harder to accept.
Professor Martin Banks (S)
Professor Banks is a Professor of Optometry at the University of California, Berkeley who has expertise in vision science, including binocular fusion and depth perception. He gave evidence concerning the human vision system and how it perceives objects and images in 3D. His evidence also explored the impact of different 3D TV technology on the human vision system, and included evidence of experiments he conducted using an LG Cinema 3D TV and a Samsung active shutter 3D TV viewed through 3D glasses at various viewing distances in order to determine what he referred to as the “effective resolution” or “viewable image” of each TV when operating in 3D mode. Although I considered Professor Banks to be an impressive witness, the presentation of the results of his second study raised concerns in my mind about his impartiality.
Joseph Kane Jr (S)
Mr Kane Jr is a consultant in electronic imaging, video display standards and video signal display of analogue and digital video signals. He has many years of experience working with video signals, including the design and construction of electronic components to record, carry and process video signals. Mr Kane also has considerable experience in the development of standards for video signal processing, and the testing of video signal processing and display equipment. Mr Kane gave evidence relating to these topics and tests he conducted in relation to the resolution and brightness of LG Cinema 3D TVs and Samsung 3D TVs. He appears to have had a commercial relationship with Samsung extending over many years which raised concerns in my mind as to his impartiality. Mr Kane’s evidence was of limited assistance, and his evidence concerning the capacity of an LG Cinema 3D TV to deliver a “viewable image” of 1080p was of no assistance at all.
James Burge (S)
Mr Burge is the Managing Director of a company known as Research Now which was responsible for providing the online panel which was used as the sample frame for the Roy Morgan Survey.
Dr Edward Kelley (L)
Dr Kelley has considerable experience in the field of display metrology. However, his evidence was directed to a wide range of topics, some of which went well beyond his field of expertise. I found Dr Kelley’s evidence to be of limited assistance, especially in relation to matters concerned with vision science. Dr Kelley’s evidence concerning his experimental work with what was referred to as his “binocular fusion camera” was of no assistance at all.
Professor Brian Rogers (L)
Professor Rogers is a Professor of Experimental Psychology in the Department of Experimental Psychology, University of Oxford and a distinguished academic. Most of his research work over the past 30 years has been in the field of 3D vision, with a particular emphasis on binocular stereopsis and motion parallax. He has co-authored (with Professor Howard of York University, Toronto) two major reference works on binocular vision, stereopsis, and 3D vision in general, entitled Binocular Vision and Stereopsis (Oxford University Press 1995) and Seeing in Depth (Iporteus Press 2002). Professor Rogers gave evidence in response to Professor Banks’ evidence, as well as of his own experiments which he conducted using an LG Cinema 3D TV and a Samsung 3D TV at various viewing distances when operating in both 2D and 3D modes. He was an impressive witness.
Dr James Sheedy (L)
Dr Sheedy is Professor of Vision Science at Pacific University, Portland, USA. His expertise is in optometry and vision science. His expert report covered a wide range of topics including various studies conducted by him for a variety of purposes which were said by LG to be relevant to the incidence of symptoms associated with 3D viewing (dizziness and nausea), brightness, resolution, crosstalk and viewing angles. Dr Sheedy’s evidence failed to engage with numerous points raised by Professor Banks and Dr Duenas relevant to his evidence and the weight it should be given. I derived little assistance from Dr Sheedy’s evidence.
Dr Michael Duenas (S)
Dr Duenas is an expert in optometry and public health, with extensive experience in both those areas. He provided evidence concerning symptoms that may be experienced when watching stereoscopic 3D and their causes. He was an impressive witness.
Keith Jones (L)
Mr Jones is Managing Director of Australian Digital Testing, Sydney. His area of expertise is in the field of testing and measuring digital equipment. Mr Jones’ evidence was relevant to the issues of brightness, weight of glasses and the display resolution of the LG Cinema 3D TVs in 2D and 3D mode.
Kyuchan Her (L)
Mr Her is the TV Product Manager for LG. He has degrees in economics and business. He worked for LG Korea for at least 15 years before taking up his current position with LG in August 2010. He took up his current position with LG in August 2010. He approved the TVCs and played a key role in overseeing execution of the LG Campaign including point of sale materials such as product stickers. It is apparent from Mr Her’s evidence that he relied heavily on LG Korea to ensure that product claims sourced from its head office were accurate.
Dr Peter Török (S)
Dr Török is a Professor of Optical Physics at the Imperial College of Science, Technology and Medicine, London. He has expertise in the field of optical physics. His evidence was responsive to the evidence of Dr Kelley but primarily related to picture “fidelity”. His evidence was of marginal relevance.
Martin Kim (L)
Mr Kim holds the position of National Sales Operations Manager for LG. He gave evidence in relation to the Retailer Instructions which he prepared using “sales communication guides” prepared by LG Korea and (according to his oral evidence) after carrying out his own research of product reviews, blogs, online forums and “anything” he could access using Google. Although I formed a poor impression of Mr Kim as a witness, I do not think anything turns on his evidence.
Professor Dominick Maino (S)
Professor Maino is a professor of Paediatrics and Binocular Vision at the Illinois College of Optometry, Illinois Eye Institute (IEI) in Chicago, USA. Professor Maino has over 30 years’ experience in optometric medicine, and has extensive academic and professional expertise concerning binocular vision disorders, and the incidence and treatment of vision disorders amongst children. He gave evidence concerning adverse side effects associated with viewing active shutter 3D TV. He also gave evidence about the role of 3D TV, including active shutter glasses, in the diagnosis and treatment of binocular vision disorders. Professor Maino was an impressive witness.
George Karatzis (L)
Mr Karatzis holds the position of Executive Engineering Officer for LG, Sydney. His oral evidence (and related documentary evidence) indicated that for some time he doubted whether the LG Cinema 3D TV could be classified as “Full HD” when operating in 3D. Mr Karatzis (who is not a vision scientist) was in no position to determine what the “effective resolution” of any 3D TV operating in 3D mode was and I regard statements made by him in early 2011 suggesting that the vertical resolution of the Cinema 3D TV in 3D was half what it was in 2D as mere conjecture by a person without any expertise in vision science.
Peter Fritz (L)
Mr Fritz is the Digital Marketing Manager for LG in Sydney. He gave evidence concerning the LG website. His evidence was said by both Samsung and LG to be relevant to intention. His evidence was of marginal relevance to Samsung’s case based upon the Website Representations.
Toolendrie (Evelyn) Soud (L)
Ms Soud is the Legal and Compliance Manager for LG based in Sydney. Her evidence was said by LG to be relevant to the substantiation of claims made in the TVCs, on the LG website, in point of sale materials, and to intention. She was cross-examined at length about what steps she took to substantiate claims made in the TVCs which she approved. In submissions Samsung criticised Ms Soud’s evidence in numerous respects principally on the basis that it should have been obvious to her that the TVCs conveyed representations to the effect of those pleaded by Samsung. Further, a submission was made to the effect that Ms Soud denied that particular messages were conveyed merely in order to justify her failure to ensure that such messages could be substantiated. I do not accept that submission.
Luke Solyom (L)
Mr Solyom is employed by LG as Marketing Strategy and Planning Manager in its Sydney office. He gave evidence in relation to sales and market share data for the 3D TV market, and the role that the LG Campaign may have played in Samsung’s loss of market share in the period from May to August 2011.
Mark Powderly (S)
Mr Powderly is Samsung’s Marketing Intelligence Manager. He provides market analysis and sales forecasts to divisions of Samsung, including the Audio-Visual division which is responsible for marketing Samsung’s TVs. He gave evidence of sales and market share for the Australian 3D TV market. Mr Powderly was not cross-examined.
Anna Grunseit (S)
Ms Grunseit is a lawyer employed by Gilbert + Tobin. She weighed Samsung’s active shutter 3D glasses, Samsung’s competitor’s 3D glasses (both active shutter and passive), and various branded sunglasses and branded spectacles. Ms Grunseit was not cross-examined.
Kane Lloyd (S)
Mr Lloyd is employed by the theeyecarecompany (ECC). He is the store manager and head of customer care at ECC’s store located on Pitt Street, Sydney. Mr Lloyd also gave evidence concerning the weight of sunglasses and branded spectacles and consumer preferences. Mr Lloyd was not cross-examined.
Alexander Porter (S)
Mr Porter is a Chief Engineer for Programs, Performance and Durability employed by the Commercial and Electrical Division of the company Intertek. Intertek is an international testing laboratory which provides third party testing and evaluation services to customers through a network of laboratories located around the world. Mr Porter gave evidence concerning a test report prepared by Intertek for Samsung Electronics America Inc relating to “observed resolution” and “crosstalk viewing angle” for a Samsung active shutter 3D TV and an LG passive 3D TV. A copy of the Intertek test report was annexed to Mr Porter’s affidavit. In submissions Samsung placed reliance upon the Intertek test report on the issue of “effective” or “visible” resolution. However, the test report indicates that the testing that was undertaken involved viewing distances of less than 1.85m (ie. less than 2.3 times the screen height for a 55" TV). On that basis, and for reasons that will become apparent, I have not given the Intertek test report any weight in relation to that issue.
Charles Rego (S)
Mr Rego is the Senior Corporate Counsel employed by Underwriters Laboratories (UL). UL is a global independent safety science company which provides product safety and verification services. UL undertook comparative tests for 3D resolution and crosstalk of a Samsung active shutter 3D TV and an LG passive 3D TV and issued a test report describing the test procedures and results, a copy of which was annexed to Mr Rego’s affidavit. Samsung relied on UL’s test report on the issue of “effective” or “visible” resolution. However, the test methodology adopted involved the use of cameras (which both Professor Banks and Professor Rogers agree is inappropriate) and at viewing distances that are not specified. I have given the UL test report no weight.
BACKGROUND FACTS
Samsung and LG are competitors in the market for TVs in Australia including 3D TVs. 3D TV was first introduced into Australia in 2010 and was still a relatively new technology when LG first released its Cinema 3D TVs in about April 2011. Samsung was the first to release a 3D TV, using active shutter technology, in about April 2010. These televisions were known as the C-Series and were available in plasma, LCD and LCD with LED panel types. The Samsung C-Series was sold through a large number of retail stores throughout Australia and was the subject of an extensive media campaign.
Televisions have a rectangular array of pixels that are used to display images. A pixel is an addressable single point which contributes to the image displayed on the television screen. “Resolution” is the term which, when used in its technical sense, refers to the number of pixels capable of displaying an image on the screen. “Full HD” generally refers to a television which has an array comprised of a total of 2,073,600 addressable pixels, made up of 1,920 pixels vertically (making up the horizontal resolution) and 1,080 pixels horizontally (making up the vertical resolution) refreshed on a progressive (p) basis. Such displays are often referred to as “1920 x 1080p” or simply “1080” or “1080p” displays and are capable of displaying an input signal with an equivalent resolution. At the time of the LG campaign 1080p was the highest available resolution on the market. There is a dispute between the parties as to what is conveyed by the term “Full HD” (but not the term “1080p”) when used to describe a 2D television. There is also a dispute between the parties as to what “Full HD” and “1080p” convey when used in relation to a 3D television.
3D TVs operate in either normal 2D mode or 3D mode. When operated in 3D mode, the TV is viewed by the viewer through 3D glasses. A 3D TV operating in 3D mode is not designed to be viewed without 3D glasses. Not only is the image as perceived by the viewer not 3D, it is distorted and difficult to watch.
By the end of 2010, all major TV manufacturers had released active shutter 3D TVs in Australia. These manufacturers included Sony, Panasonic and LG. Stock of Samsung’s
C-Series 3D TVs remained in the market until at least July 2011. Sony, Panasonic and LG’s active shutter 3D TVs were also available at that time.
On 6 April 2011 Samsung announced the Australian launch of its 2011 range of plasma and LCD with LED TVs known as the D-Series 3D TV range. The D-Series also used active shutter technology and generally operated in the same way as the C-Series except for some additional settings and certain improvements to the shutter glasses. Samsung began distribution of the D-Series 3D TVs in the first week of April 2011. By late May 2011, the full range of the D-Series was available in most of the same retail outlets that had been selling Samsung’s C-Series.
On about 14 April 2011 LG launched a new range of LCD/LED 3D TVs called “LG Cinema 3D TV”. From the time of the release of the LG Cinema 3D range there were two types of 3D technology employed in 3D TVs sold in Australia. The first, introduced in 2010, was the active shutter technology; the second, introduced with the release of the LG Cinema 3D range, was the FPR technology which was also referred to in the evidence and submissions as “passive” technology.
With active shutter technology, a viewer watches the screen wearing special glasses which are synchronised with different images displayed on the television. In simple terms, a 3D effect is created through the use of a technology that simulates normal binocular vision by sending distinct left eye images (LEI) and right eye images (REI) and prevents the left eye from seeing the REI and preventing the right eye from seeing the LEI. Each image is of the same scene but from a slightly different perspective. The 3D image is created when the viewer’s visual system (essentially the eyes and the brain) combines the LEI and the REI through the process of “binocular fusion” to see a single stereoscopic, or 3D, image.
The lenses of the shutter glasses have a liquid crystal layer which becomes dark when voltage is applied. These lenses darken about 60 times per second per lens, thereby blocking the right eye from seeing the LEI and the left eye from seeing the REI. This shuttering of the lenses occurs at a rate that is imperceptible to the ordinary viewer in normal viewing conditions.
LG’s passive or FPR technology operates quite differently to active shutter technology. Unlike the latter, which rapidly displays one full image after another, FPR involves displaying two full images on the screen at the same time. It works by polarising the odd and even lines of image information that appear on the screen. One eye receives half of the information on display (all of the odd rows of pixels) and the other eye receives the other half of the information on display (all of the even rows of pixels). If the left eye is seeing the odd rows, then the even rows will be black for the left eye (and vice versa for the right eye). The brain translates the information received by the two eyes into a 3D image. The passive glasses do not shutter, nor do they require a power source.
The active shutter 3D TVs sold since 2010 have included televisions that utilise LED/LCD panel technology and TVs which utilise plasma panel technology. All of LG’s FPR 3D TVs utilise LED/LCD panel technology. LG’s range of plasma 3D TVs continues to use active shutter technology, as do all other brands of 3D TVs for both the LED/LCD and plasma panel types.
LG entered the Australian market for 3D TVs in May 2010 with a range of TVs employing active shutter technology. Sony did the same in June 2010. Although by December 2010 there were eight competitors in the market, which also included Sharp, Hisense, Voxson and Toshiba, it is clear that the major competitors were Samsung, LG, Sony and Panasonic. As stated by Mr Barnes, the 3D television market in 2011 was essentially “a four horse race”. The evidence also included market data which showed that when the LG campaign commenced in May 2011, 3D television was at a relatively early stage of its product category life cycle. Dr Downes gave evidence that it is likely that fewer than 4% of Australian households would have owned 3D TVs as at May 2011. Mr Barnes also agreed that the TVCs were directed to a consumer market which would not at that time have had much understanding of 3D technology. It was submitted by Samsung that a large proportion of the consumers who saw the TVCs would have had little or no prior knowledge or experience of 3D home televisions. I accept that submission.
RELEVANT STATUTORY PROVISIONS
Section 18(1) of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 29(1)(a) of the ACL relevantly provides:
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a)make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
…
Section 4 of the ACL provides:
4 Misleading representations with respect to future matters
(1) If:
(a)a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and
(b)the person does not have reasonable grounds for making the representation;
the representation is taken, for the purposes of this Schedule, to be misleading.
(2)For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:
(a)a party to the proceeding; or
(b)any other person;
the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.
(3)To avoid doubt, subsection (2) does not:
(a)have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or
(b)have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.
(4)Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:
(a)a misleading representation; or
(b)a representation that is misleading in a material particular; or
(c)conduct that is misleading or is likely or liable to mislead;
and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.
RELEVANT PRINCIPLES
The principles to be applied in determining whether a person contravenes s 18 of the ACL are relatively well-established and were for the most part settled while s 52 of the Trade Practices Act 1974 (Cth) (TPA) was still in force.
The question whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact that must be determined in light of the relevant surrounding circumstances: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [109] per McHugh J.
A person may be found to have contravened s 18(1) even though he or she lacked any intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J.
Conduct may be misleading or deceptive if it induces error but it is not sufficient merely to show that it may have led to confusion or caused people to wonder: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 per Gibbs CJ.
Evidence that some people may have been misled is not essential but is admissible and may be persuasive: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (at 199 per Deane and Fitzgerald JJ). Ultimately, however, the question whether conduct is misleading or deceptive or likely to mislead or deceive is a matter for the Court.
It is necessary to distinguish the question whether an advertisement, alleged to be misleading or deceptive, has a tendency to lead a consumer into error, from the question whether the consumer has suffered loss and damage as a result of being led into error. The former question is logically anterior to the latter: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG) at [49] per French CJ, Crennan, Bell and Keane JJ.
The characterisation of conduct alleged to be misleading or deceptive “generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error”: TPG at [49], quoting French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319 [25]. As the majority observed in TPG at [50]:
It has long been recognised that a contravention of s 52 of the TPA may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the target audience have been enticed into “the marketing web” by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded. That those consumers who signed up for TPG’s package of services could be expected to understand fully the nature of their obligations to TPG by the time they actually became its customers is no answer to the question whether the advertisements were misleading.
(footnote omitted)
In order to establish that conduct is misleading or deceptive or likely to mislead or deceive it is not necessary to show that it conveys a false or misleading representation: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 555 per Lockhart J.
However, in the present case the conduct alleged by Samsung to be misleading and deceptive is said to consist of the making of various representations. In these circumstances it will be necessary for Samsung to show that each of the alleged representations was conveyed and that it was misleading or deceptive or likely to mislead or deceive.
When the Court is concerned to ascertain the mental impression created by a number of representations conveyed by one communication it is wrong to attempt to analyse the separate effect of each representation: TPG at [52] citing (inter alia) Arnison v Smith (1889) 41 Ch D 348 at 369 (Lord Halsbury LC) and Gould v Vaggelas (1984) 157 CLR 215 at 252 (Brennan J).
The meaning and effect of an advertisement must be ascertained from the advertisement as a whole in its context. The dominant message of the advertisement is of crucial importance: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 (Coles) per Allsop CJ at [42] citing TPG at [45].
If it is established that a corporation did intend to mislead, a Court may more readily infer that the conduct complained of was misleading: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 (Campomar) at [33].
Where there is an issue in proceedings under s 52 of the TPA (or s 18 of the ACL) as to the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the Court must consider whether “the ‘ordinary’ or ‘reasonable’ members of that class” would be misled or deceived: Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 443 [7] per French CJ, Crennan and Kiefel JJ citing (inter alia) Campomar [102].
In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1, Hill J, referring to a newspaper advertisement, observed at 50:
Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error …
HALF TRUTHS/UNFAIR COMPARISONS
A representation may be misleading or deceptive, or likely to mislead or deceive, because it conveys what is sometimes referred to as a “half truth”. A half truth is a statement which, on one view, is literally true, but likely to mislead or deceive unless suitably qualified. Stephen J provided his now well-known example of the unknown opera singer who shares a prima donna’s name in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 227.
In Hoover (Australia) Pty Ltd v Email Ltd (1991) 104 ALR 369 at 375 Gummow J noted that a comparison of goods or services may be rendered misleading as a result of the omission of material that would be necessary to render the comparison fair. His Honour referred with approval to the following statement of Burchett J in Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293 at 299:
In the area of comparison advertising, it has repeatedly been said that particular care is required. An unfair comparison may, quite simply, because it is unfair, be misleading. It may mislead a consumer into thinking there is a basis for a choice where, in truth, there is not; or that a choice may be made on grounds which are not truly valid.
This statement will be most applicable where the comparison being presented is put forward in the advertisement as involving a scientific or technical comparison that the ordinary and reasonable viewer might expect was illustrative of what he or she would actually encounter in practice.
HUMOUR
An important consideration relevant to the Court’s assessment of the likely impact of the TVCs and, in particular, their propensity to mislead or deceive, is their admittedly humorous style. LG contends that each of the TVCs uses, and would be recognised by viewers in Australia as using, humour and parody to convey information about the features of LG Cinema 3D TVs and conventional 3D TVs, and would not be understood by such viewers as presenting a literal depiction of the experience of actually watching each of the 3D TVs. It is convenient to consider the parties’ submissions on this issue at a general level before examining each of the TVCs in any detail.
LG submitted that the humorous style of the TVCs was a contextual matter which had to be born steadfastly in mind when determining whether each of the alleged representations is conveyed. It submitted that many of the representations pleaded against LG by Samsung depended upon the viewer taking the TVCs literally in circumstances where no ordinary or reasonable person would do so. As will be seen, I think there is considerable force in this submission in relation to many of the representations pleaded by Samsung. Nevertheless, I do not think it provides a complete answer to Samsung’s case.
Samsung submitted that the LG defence, insofar as it sought to rely upon the humorous style of the TVCs, sets up a false dichotomy between viewers taking the images literally, or “tongue in cheek”. Samsung submitted that a misleading or deceptive message can be humorously conveyed by a TVC without it being understood literally in all respects, and that the humour in each of the TVCs is achieved through exaggeration, which necessarily recognises and asserts some underlying or unexaggerated truth.
Samsung also submitted that since the TVCs convey information to the viewer about features of the TVs, such information is apt to be regarded as factual and is likely to be taken seriously (my emphasis), especially by viewers not well informed about the different 3D technologies. There is an obvious difficulty in considering this submission at a general level and without first understanding what information is actually conveyed. But the submission is circular if it is assumed that every statement made, or situation depicted in, the TVCs constitutes a piece of information that a viewer will take seriously. Some of the information conveyed by the TVCs could not possibly be taken seriously but is nevertheless likely to make some contribution to another more serious message conveyed to ordinary and reasonable viewers. The difficulty lies in understanding what serious message will be conveyed by the TVCs in circumstances where the message falls short of what is literally conveyed. This task is informed by the relevant parts of Samsung’s second further amended statement of claim (SOC) in which Samsung identifies the particular representations that it contends are conveyed by the TVCs to ordinary and reasonable viewers and that are likely to lead such viewers into error.
As I will explain, many of the representations relied upon by Samsung will only be conveyed to viewers who interpret information conveyed by the TVCs in a highly literalistic or true to life manner. This ignores the fact that ordinary and reasonable viewers will make significant allowance for what is readily discernible as exaggeration and parody aimed at making the TVCs entertaining and engaging.
FUTURE MATTERS
Samsung alleged that various representations which it says were conveyed by the TVCs were representations made with respect to a future matter so as to enliven s 4 of the ACL. For example, Samsung submitted that the Brightness TVC, which is alleged to have conveyed a representation that “conventional 3D TVs can only be viewed in the dark” (SOC, para 23(a)), also conveyed a representation that “a person watching conventional 3D TV will have to do so in the dark” (SOC, para 24(a)). Another example relates to the Power Cable TVC, which is said to convey a representation to the effect that “conventional 3D glasses require a power cable during use” (SOC, para 33(a)). Samsung submitted that the Power Cable TVC also conveyed a representation that “a person using conventional 3D glasses will need to connect them to a power cable when using them.” (SOC, para 34(a)). The latter representation was relied upon by Samsung as a representation made with respect to a future matter which enlivened the operation of s 4 of the ACL. The same argument was made in relation to a large number of other representations said to have been made with respect to future matters by means of the TVCs.
Most of the representations which Samsung alleges were conveyed by the TVCs consist of representations about the performance characteristics of conventional 3D TVs and LG Cinema 3D TVs. Each of these representations is pleaded as, and in substance is, a statement of fact. Whether or not the TVCs also convey representations with respect to future matters depends upon the proper characterisation of the representations actually conveyed.
The expression “future matter” is not defined by the ACL. The same expression as used in s 51A of the TPA, was also not defined. However, when read in context, the expression is not hard to understand. A “representation with respect to any future matter” for the purposes of s 4 of the ACL and, before it, s 51A of the TPA, is a representation which expressly or by implication makes a prediction, forecast or projection, or otherwise conveys something about what may (or may not) happen in the future.
It is important to distinguish between the representation actually conveyed by a product advertisement and what conclusions might be drawn from it. A person may reasonably infer from the statement “this is a 3D TV” that he or she will be able to view the TV in 3D at some time in the future. However, this does not change the fundamental character of the representation which is one made with respect to an existing state of affairs. In this case I am satisfied that none of the representations conveyed by the TVCs can be characterised as having been made with respect to a future matter.
In its submissions Samsung referred me to Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302 at [123]-[124] in which Lindgren J held that s 51A of the TPA was engaged in relation to various representations made with respect to an “ion mat” consisting of an electrified mat. The representations made, as found by his Honour, were broadly to the effect that as a result of its emission of negative ions, the mat benefits the health of persons who sleep on it. That decision, and others concerned with the efficacy of therapeutic products that are said to offer health benefits when administered or used as directed, are distinguishable from the present case. In such cases the representation is made with respect to a future matter in that the consumer is told that if he or she uses the product a particular health benefit will be obtained at some time in the future. I do not think it is possible to tease any such representation out of any of the TVCs in issue in this proceeding.
THE TELEVISION COMMERCIALS
Common Elements
Each of the TVCs begins with the image of a man in a “lab coat” standing adjacent to a flip chart on a stand on which the words “3D TV TEST” appear together with a number and short description of a feature. For example, the information appearing on the flip board in the Flickering TVC is as follows:
The man in the lab coat is obviously dressed up as a scientist or technician. But the man’s physical appearance, especially his facial expression, indicates that the TVC is in the nature of a comical and exaggerated comparison of different types of 3D television technology. He provides the introduction which sets the tone for what follows.
It was submitted on behalf of Samsung that the visual elements that make up this common introduction to each of the TVCs would lead viewers to expect that the comparison between the two rival technologies depicted in the TVCs would be “fair and accurate”. I do not accept this submission. On the contrary, these images signal to the viewer at the very outset that what they are about to witness is a parody of a scientific or pseudo-scientific comparison. This is both confirmed and reinforced in the exaggerated and ludicrous scenes that follow.
Except for the Modified Flickering TVC, each TVC also includes what was referred to in evidence as a disclaimer or an “elucidator”. The elucidator was in small white print that briefly appeared on the screen (about six seconds) and stated:
Conventional 3D*
*refers to 2010 3D TVs using shutter glasses
In my view, nothing turns on the presence or size of the elucidator.
The Flickering TVC/The Modified Flickering TVC
Samsung alleges in SOC, para 18 that LG made the following representations to members of the public in Australia by means of both the Flickering TVC and the Modified Flickering TVC:
(a)that the shutter effect of the lenses of conventional 3D glasses is visible as flickering when conventional 3D glasses are used (18(a));
(b)that the lenses of conventional 3D glasses flicker up to 60 times a second (18(b));
(c)that the shutter effect of the lenses of conventional 3D glasses interferes with the viewing experience (18(c));
(d)that the use of conventional 3D glasses causes discomfort and adverse side effects (18(d));
(e)that users of conventional 3D glasses experience a flickering effect after they cease using the glasses (18(e));
(f)that conventional 3D glasses have side effects from which users need time to recover after using the glasses (18(f)); and
(g)that the demonstration portrayed in each of the Flickering TVC and the Modified Flickering TVC fairly and accurately depicts the relative effect on the viewer of using the relevant 3D glasses with conventional 3D TVs as compared to LG passive 3D TVs (18(g)).
Samsung also alleges in SOC, para 19 that the Flickering TVC and the Modified Flickering TVC conveyed a number of representations with respect to future matters. These representations are pleaded as follows:
(a)that a person who uses conventional 3D glasses will see the shutter effect of the lenses of conventional 3D glasses as flickering;
(b)that a person who uses conventional 3D glasses will experience flickering of the lenses up to 60 times a second;
(c)that the viewing experience of a person who uses conventional 3D glasses will be interfered with by the shuttering effect of the lenses of those glasses;
(d)that a person who uses conventional 3D glasses will experience discomfort and adverse side effects;
(e)that a person who uses conventional 3D glasses will experience a flickering effect after they cease using them; and
(f)that a person who uses conventional 3D glasses will need time to recover from the side effects of using them.
LG admits that representation 18(b) is conveyed but denies that any of the other representations are conveyed by either the Flickering TVC or the Modified Flickering TVC.
It is convenient to first deal with representation 18(g). In my view no such representation is conveyed. Samsung’s case based upon representation 18(g) completely overlooks the fact that each of the Flickering TVC and the Modified Flickering TVC is a parody that presents a comical and exaggerated comparison of the different types of glasses used for 3D viewing. The general public is familiar with the widespread use of parody, exaggeration and other techniques employed to make advertising both amusing and engaging. I do not think even the most naive viewer of either TVC would be led to believe that it fairly and accurately depicted the relative effects on the viewer of the different glasses. The viewer does not need to understand anything about 3D television to recognise that no manufacturer of 3D televisions (including Samsung, Sony and Panasonic) is likely to release a product that performs in the ridiculous manner depicted in each of the TVCs. I am satisfied that the ordinary and reasonable viewer would not think these TVCs were purporting to present an accurate comparison of the different glasses free of exaggeration or hyperbole.
It is necessary to distinguish the two different ways in which the term “flicker” or “flickering” may be used. They may convey no more than the words shutter or shuttering do when used to describe the manner in which active shutter glasses operate (ie. the alternating darkening of each lens). It may also be used in the more general sense to describe the quality of light, picture or image as unsteady or unstable. The use of these terms in the Flickering TVCs is ambiguous and the overall impression conveyed is a conflated one. LG contended that “flicker” was used merely as a synonym for the “shutter” action. In my view the terms “flickering” and “flicker” are used in the Flickering TVCs in a manner calculated to convey a message about both the mode of operation of the glasses and its impact on the viewer.
It was also submitted by LG that the Flickering TVC does not convey any detailed technical message. I accept that the message conveyed was not detailed, but I do not accept that it was not technical in nature. The Flickering TVC explains, albeit in an exaggerated and comical sense, the difference between the mode of action of the two types of glasses, one which flickers and one which is described (and said to be certified) as “flicker free”.
In my view the actual message conveyed by the Flickering TVC is that the conventional 3D technology utilises glasses that shutter and that the shuttering effect causes discomfort and interferes with the viewing experience. The key message conveyed is that flicker and flickering is a feature of conventional 3D technology which produces side effects from which it may take a viewer some time to recover. The most obvious side effect called to mind by the flickering depicted in the Flickering TVCs is dizziness, a condition which is likely to interfere with the viewing experience, and from which a viewer may need some time to recover. The phrase “still recovering?” is central to the message conveyed by the Flickering TVC and gives meaning to the images of the flickering glasses and eyes that would otherwise be absent, by suggesting that dizziness will persist even after the glasses are removed.
I am satisfied that the Flickering TVC conveyed representations 18(b), 18(c), 18(d) and 18(f). I am not persuaded that representations 18(a), 18(e) or 18(g) are conveyed. In the Modified Flickering TVC the voiceover is different and, unlike the Flickering TVC, does not use the phrase “still recovering?”. I see this as a significant point of difference. I do not think the Modified Flickering TVC conveys any of the representations pleaded in para 18.
I have reached the above conclusion without finding it necessary to draw any inference in relation to LG’s intentions. However, there are a number of observations I would make in relation to that topic.
I consider the most persuasive evidence as to LG’s intention with respect to the Flickering TVC to be the document (of which there are multiple iterations) entitled “LG Cinema 3D TV – Sales Communication Guide” (the LG Communication Guide). This was a document prepared in Korea by the Home Entertainment Marketing Strategy Team or HE Marketing Strategy Team (HEMS Team). It refers to a number of “USPs” or “Unique Selling Propositions” (USPs). One of the key USPs referred to in the document is the “Certified Flicker-Free 3D” USP which is said to be as follows:
LG CINEMA 3D TV reduces dizziness by allowing you to enjoy flicker-free 3D images for an extended time comfortably.
The document states that with conventional 3D TVs:
Many people feel dizziness and even nausea from watching 3D TVs because of flickering images.
and that LG Cinema 3D TV:
… is certified Flicker-Free, so you can enjoy watching 3D TV comfortably.
Mr Barnes agreed that the LG Communication Guide was provided to LG by LG Korea to communicate to LG the key USPs which LG Korea said should be conveyed as part of the marketing campaign for LG Cinema 3D TVs.
LG’s internal documents emanating from the HEMS Team also refer to active shutter and FPR respectively as first and second or next generation technologies. Other documents emanating from the HEMS Team speak of leading the 3D TV market by creating a “generation war”. In particular, these documents make clear that the 15 second TVCs that were to be used as part of the worldwide campaign were to focus on the USPs to which I have previously referred. The “Creative Tactic” is described as being to “effectively communicate our Key USPs [by] ‘Side-by Side’ Comparison”. It is clear that the Flickering TVC was produced by or on behalf of LG Korea as part of a proposed global campaign aimed at promoting LG Cinema 3D TVs with FPR technology at the expense of its competitors’ products all of which utilised active shutter technology.
It was submitted on behalf of LG that it was not that company’s intention to convey the key messages referred to in the documents emanating from LG Korea to which I have referred. In support of this submission LG referred to evidence from Mr Barnes in relation to his and LG’s local advertising agency’s (George Patterson Y&R) conduct in selecting the five TVCs from 11 prepared by or on behalf of LG Korea, and in making modifications to them. Mr Barnes’ evidence suggested that the TVC campaign, as executed in Australia, was intended to present a positive message around a new technology but not so to denigrate the old technology. I find this evidence unconvincing and I do not accept it. The television campaign as executed in Australia was very much in line with what was required of LG by LG Korea.
Mr Barnes also gave evidence suggesting that it was up to LG rather than LG Korea to decide what advertisements would be run in Australia and that marketing material from LG Korea was considered by LG and either rejected or adopted. To the extent Mr Barnes was suggesting that LG considered that it was not required to develop and execute its campaign for the LG Cinema 3D TV in accordance with the global strategy developed by LG in Korea then I would not accept such evidence. That is not to say that LG would broadcast a TVC prepared by LG Korea that LG was advised by its local lawyers could not be legally broadcast in this country. However, short of that, I consider it unlikely that LG would do anything other than act in accordance with direction and guidance provided by LG Korea in relation to a global campaign of the kind that was developed around LG Cinema 3D TVs.
I am satisfied that LG intended the Flickering TVC to convey each of the representations which I have found conveyed. These representations reflected a key message which the creators of the global campaign plainly intended the Flickering TVC to convey and I am satisfied that in all relevant respects, LG’s intentions mirrored those of LG Korea.
For the reasons previously stated I do not think any of the representations pleaded in SOC para 19 were conveyed by either the Flickering TVC or the Modified Flickering TVC.
Falsity
Samsung submitted that representation 18(b) must be false because its glasses shutter not up to 60 times per second, but up to 120 times per second for both lenses together. LG admits that the lenses of the glasses flicker up to “60 times per second, per lens”. It seems to me that representation 18(b) is ambiguous rather than false.
Whether flickering occurs at the rate of 60 or 120 times per second is not a matter that would be of any significance to ordinary and reasonable viewers of the Flickering TVCs.
The Flickering TVCs makes clear that shuttering occurs at a very high speed. Insofar as it may be said that the Flickering TVCs are in error in asserting that conventional 3D glasses flicker up to 60 times per second, then I think this is an inconsequential misstatement.
It seems to me that the various representations conveyed by the Flickering TVC (representations 18(b), 18(c), 18(d) and 18(f)) converge into a central message viz. due to the mode of operation of glasses used in conventional 3D technology, users experience discomfort and side effects which interfere with the viewing experience, and which require recovery time. The question is whether this message is misleading or deceptive or likely to mislead or deceive.
LG submitted that there was considerable evidence to show that perceptible flicker is a phenomenon that can sometimes occur under ordinary viewing conditions. In support of this submission LG referred to Dr Kelley’s evidence. The instructions provided to Dr Kelley sought his opinion on various matters including his understanding of the term “flicker” in the context of 3D TV technology, his observations of flicker in relation to Samsung 3D TVs and LG Cinema 3D TVs, and his opinion as to the circumstances in which a viewer of a Samsung 3D TV might perceive flicker.
Dr Kelley defined “flicker” as “the large-area flashing that can be seen in our peripheral vision when the refresh rate of the screen is sufficiently slow.” In cross-examination he added that you would get the same effect if the shutter glasses were shuttering too slowly. Dr Kelley’s conclusion, as stated in his report, does not address all the questions asked of him in the letter of instruction, but merely states:
This author, who normally can’t see flicker, can see flicker on the Samsung 3D TV wearing shutter glasses. There is no flicker with FPR technology.
Dr Kelley was said by LG to have tested Samsung 3D TVs (2010 and 2011) in accordance with the VESA Flat Panel Display Measurements Standard Version 2.0 (the VESA standard). This is a standard that related not to television displays, but to colour displays used in the workplace, in laptop computers or the equivalent. The “flicker visibility assessment” referred to in the VESA standard calls for the use of a test pattern such as “a white full screen (or whatever pattern is determined to produce the worst-case flicker) …”.
I do not consider Dr Kelley’s test results based on the use of a white full screen test pattern to be of any assistance in determining whether Samsung 3D TVs produce noticeable flicker under normal viewing conditions. To my mind his tests say little (if anything) about the likelihood of a viewer observing flicker under normal viewing conditions. I do not give Dr Kelley’s opinion any weight.
I accept Dr Kelley’s evidence that a viewer might experience flicker if he or she was wearing shutter glasses that were shuttering too slowly or if the refresh rate of the screen was too slow. But that is not something that would occur under normal viewing conditions in the absence of a malfunction. In my opinion Dr Kelley’s evidence does not justify an unqualified representation to the effect that the shuttering of the glasses will cause the viewer discomfort or otherwise interfere with the viewing experience.
LG also relied upon a number of Samsung’s own statements which appear in the manual for the Samsung Series 7 and on Samsung’s website. The manual for the Samsung Series 7 states:
[W]hen watching 3D images under a fluorescent lamp (50hz–60 hz) or 3 wavelength lamp, you may notice a small amount of screen flickering. If so, dim the light or turn the lamp off.
Samsung’s website also states, in answer to the question “what are the best viewing conditions for 3D TV in my home”, that:
[C]ertain conditions in your home may affect the normal operation of your 3D TV and glasses when in 3D mode. Direct sunlight and some devices that emit IR frequencies (eg fluorescent lights) may interfere and cause your glasses to see “flicker”. To alleviate this, Samsung recommends that you block sources of direct sunlight and switch off fluorescent lights in the vicinity of your TV.
LG pointed to the evidence of a number of lay witnesses which it said established that they had observed perceptible flicker when watching Samsung active shutter TVs. I shall deal with the evidence of each of these witnesses in turn.
Mr Karatzis stated in his affidavit that he had experienced “flicker” and “crosstalk” when watching Samsung 3D televisions. He gave oral evidence that he could perceive flicker when wearing active shutter glasses under fluorescent lighting. There is no reason to doubt the truth of that evidence.
However, Mr Karatzis also said in cross-examination that he could perceive flicker even in the absence of such lighting. In this context he referred not to flickering but shuttering in the sense of “the lenses switching” and “a change in brightness … at a rapid rate.” When pressed on this evidence Mr Karatzis referred to a number of factors that he said can interfere with the viewing experience when using active shutter glasses. He mentioned interruption to a signal caused by infrared (IR) interference, the presence of certain lighting conditions and battery failure, though he later accepted that battery failure has nothing to do with flicker.
To the extent Mr Karatzis was suggesting that he had experienced flicker in each of the situations involving IR interference or fluorescent lighting then I would not question the correctness of his evidence. But insofar as he was seeking to suggest that either “flicker” or “shuttering” is perceptible by a viewer with normal eyesight in any other situation not involving exposure to IR interference, fluorescent lighting or direct sunlight, then I do not accept it.
Ms Soud gave evidence that she had personally observed flicker when watching Samsung 3D TVs in the presence of fluorescent lighting or possibly sunlight. She also referred in cross-examination to a conversation with Mr Karatzis on the topic of flicker. It was not suggested to Ms Soud by Mr Karatzis during that conversation that flicker occurs other than in situations involving fluorescent lighting or in a room “lit with sunlight”.
Mr Her gave evidence in cross-examination that he believed active shutter glasses caused flicker, dizziness, nausea and discomfort. He claimed to have personally experienced flicker and dizziness but not nausea. I have strong reservations concerning Mr Her’s evidence. His assertion that active shutter technology causes dizziness seemed to me to have been based on the fact that LG Korea had made an assertion to that effect in a market communication package which was received by LG from LG Korea.
LG also relied upon internal documents of Samsung including emails written or received by Mr Brendon Sparks who was a product manager with Samsung at the relevant times. These documents refer to potential problems that may arise as a result of watching 3D TV in the vicinity of direct sunlight or fluorescent lighting. In one such document Mr Sparks identifies the following problems which might affect in-store demonstrations of Samsung 3D TVs:
1.External IR interference – The connection between the 3D glasses and 3D television uses an IR signal to keep the “active shutter” in sync. In certain environments (like in store) other devices create IR interference and can cause problems when demonstrating. The result can be disconnection of the 3D glasses or a ghosting effect on screen. The causes of this interference are typically large Plasma TVs and strong fluorescent lighting.
…
2.External Flicker – Our 3D glasses are active shutter. Very simply, this means that the glasses turn on and off very quickly to create the 3D image. Currently, our 3D glasses turn on and off at a rate of 120 times per second. In Australia, we run 50Hz power and in certain lighting conditions (fluorescent and compact fluorescent) this means that the light cycles based on this power. The end result is that the 3D glasses and lights do not run in time and you see a flickering effect when there is a light in your view.
Another internal document provided to Mr Yoon, the managing director of Samsung at relevant times, indicated that care needed to be taken in relation to the placement and demonstration of 3D products in stores because of the risk of “external flicker”.
For the most part, the internal documents relied upon by LG concern the problems arising out of the presence of fluorescent lights in retail stores. There was, however, evidence of a letter of complaint by a person from Tasmania who said that her friend became ill as a result of exposure to a 3D display. I do not give this letter of complaint any weight. In particular, it is not apparent whether the author’s friend suffered from any pre-existing condition that may have pre-disposed her to an adverse reaction of some kind. There was no other evidence of consumers having complained to Samsung or LG (which also marketed active shutter 3D TVs) about the physical effects of watching 3D TV.
In its submissions LG relied upon the failure of Samsung to call a number of witnesses who either wrote or received the internal documents to which I have referred including Mr Sparks and Mr Yoon. It was submitted that this failure to call these witnesses permitted the Court more confidently to draw the inference that Samsung knew in 2010 and 2011 that active shutter produced flicker that was perceptible to some viewers in some circumstances.
It is not necessary to draw any inference from any failure to call witnesses to conclude that Samsung was aware in 2010 and 2011 that active shutter TVs produced flicker that was perceptible to some viewers in some circumstances. I would draw that inference from the website statements and the statements in the Series 7 manual. But as LG’s own submission recognised, the evidence indicates that when this does occur, it will usually occur in one or the other of the two situations identified in the internal documents.
Professor Maino gave evidence of the use of 3D technology in optometric medicine including, in particular, as a tool in the diagnosis of binocular vision disorders that affect viewing of 3D images.
Much of Professor Maino’s evidence concerned the potential health effects of viewing 3D TVs. Professor Maino has treated hundreds of patients each year using active shutter technology in a clinical environment and it is clear that he has substantial experience in this field. He is eminently qualified to express his opinions on the potential side effects of watching 3D television. I reject the criticism made of Professor Maino’s evidence in LG’s written submission (para 157) which was founded upon a misrepresentation of his evidence.
Professor Maino’s evidence indicated that he had encountered only one patient who reported experiencing flicker in the clinical environment. He said that this patient noted the presence of flicker when using an active shutter display in a room that was illuminated with fluorescent light.
It was suggested to Professor Maino in cross-examination that stress associated with watching 3D material may produce a number of symptoms including dizziness and nausea. He accepted that in his own practice dizziness and nausea may be experienced by up to six percent of patients. It was not put to Professor Maino that such symptoms might be attributable to the use of active shutter technology as opposed to other 3D technology.
Professor Maino expressed the opinion that individuals who experience symptoms while watching 3D content do so because they have pre-existing vision problems, not because of any problems caused by the particular form of 3D technology involved.
I am satisfied that flicker is primarily the result of people watching 3D television using active shutter glasses in the vicinity of fluorescent lighting or in direct sunlight. These are not what I would regard as ordinary viewing conditions. I am also satisfied that viewing 3D television may cause dizziness and nausea under ordinary viewing conditions and that this can occur in a relatively small proportion of the population who are likely to have some pre-existing binocular vision disorder that affects the viewing of 3D images. I am also satisfied that the risk of such people suffering from these symptoms is likely to be the same irrespective of whether they are viewing 3D images using active shutter or passive technology.
In my view the representations conveyed by the Flickering TVC were misleading or deceptive and likely to mislead or deceive. While it is true to say that viewers may experience flicker which can interfere with the viewing experience if watching a 3D TV through active shutter glasses in the vicinity of fluorescent lighting or in direct sunlight, the central message conveyed by the Flickering TVC is unqualified, and suggests that viewers experience flicker in ordinary viewing conditions or when the 3D TV is used in accordance with the manufacturer’s recommendations. Further, the Flickering TVC suggests that a person who watches a 3D TV with active shutter technology is more likely to experience dizziness than a person who watches 3D TV with passive technology. I am satisfied that this is not correct.
The Brightness TVC
Mr Bardsley accepted that the follow-up questions were repetitive, but said that when testing the understanding of an advertisement, they were standard practice because people generally will not give a full answer. He said that this was particularly so in the case of an online survey. Mr Briggs’ evidence was that the follow-up questions were “leading” and that their use in this Survey raised considerable doubts about the value of the results. He conceded that, as Mr Bardsley had asserted, probing was a technique frequently used in market research.
Mr Briggs was cross-examined extensively on the basis that it would not be accurate to characterise the follow-up questions as leading because they did not suggest any particular answer. However, Mr Briggs’ point was that the questions were leading in the sense that they “probed” the respondents for further information and, by doing so, encouraged them to focus on specific features of the relevant TVC in a way they may not when viewing the TVC in a different, and less artificial, context. I think Mr Briggs is correct.
In my view the follow-up questions, especially QA5 & QA6, are highly problematical. It is important to note that the follow-up questions are asked after the respondent has already been instructed to type a detailed response in answer to the first of the open-ended questions: “What was the ad telling you?”. That same instruction is given for each successive follow-up question in which the respondents are told to “tell us everything the ad was telling you about” a specific matter (eg. the weight of conventional 3D glasses). The overall effect, in my view, was to require, or at least encourage, the respondents to provide detailed responses to a succession of questions about a 15 second TVC that may never have triggered any detailed response in the first place.
Another criticism raised by LG’s solicitors in their letter of 6 December 2011 concerned the matter of humour. The point was expressed in this way:
[T]he advertisements are intended to be humorous and light-hearted. Yet the survey is very literal and [LG] is concerned that there is no attempt to ascertain whether humour is being conveyed by the television commercials.
The point was developed through cross-examination and in submissions. It was submitted by LG that the Survey is flawed because the TVCs can be interpreted in either a highly literal manner or in a less literal manner that makes allowance for the use of exaggeration and comedy, so as to convey to the viewer something less than, or different to, what is conveyed to a person interpreting the TVCs literally.
I think the form of the follow up questions was likely to prompt some respondents to provide a literal account of what they saw, even though it could not possibly reflect the actual message conveyed to them. The problem is illustrated by some well-chosen examples referred to in evidence in which some respondents responded that a person wearing conventional 3D glasses could fall though the floor. Mr Bardsley decided to code on the basis that this respondent was indicating that the Weight TVC was telling him or her that the glasses were too heavy. I think it is equally if not more likely that the Weight TVC was telling this respondent that LG 3D glasses were lighter than conventional 3D glasses and/or that conventional 3D glasses were heavier than LG 3D glasses.
Another example drawn directly from Mr Bardsley’s affidavit has a respondent saying: “The glasses that one uses for conventional televisions are heavy. They could cause neck damage and make your chair fall through the floor.” Another example quoted by Mr Bardsley has a respondent saying: “[T]he weight of the glasses are [sic] unbearable.” Mr Bardsley interpreted these respondents as indicating that that they were being told by the Weight TVC “that conventional 3D glasses are too heavy to wear comfortably.”
I am satisfied that the use of extensive probing, and the related problem of how to interpret and code highly literal responses, considerably undermines the reliability of the Survey. I am also satisfied that Mr Bardsley underestimated the difficulties involved in ascertaining what serious message (ie. one likely to lead ordinary and reasonable viewers into error as opposed to a “non-serious” message such as “you could fall through the floor”) was conveyed to consumers by the TVCs if that is indeed what he (or whomever it was who designed the Survey) was actually seeking to do.
In the correspondence exchanged in late 2011 between the parties’ solicitors, the solicitors for LG asked:
whether a pilot survey has been conducted by Samsung (whether using Roy Morgan or another research company) or your firm and if so, [we request] a copy of the questionnaire used in the pilot and the survey results.
The solicitors for Samsung responded that this was not a proper request, but that is clearly wrong. The request was a natural and obvious one to make in circumstances where LG was being asked to agree to a questionnaire that was to form the basis for the market research evidence that Samsung was seeking to adduce. In particular, LG was entitled to know whether the proposed survey instrument had been tested in any pilot survey or trial with a view to ensuring that it was suitable for the purposes stated in Roy Morgan’s letter of retainer.
In the course of his evidence Mr Williams was asked whether his firm undertook a pilot survey, or caused a pilot survey to be undertaken, prior to Mr Bardsley conducting the Survey. He declined to answer that question and claimed privilege. Senior Counsel for LG did not contest the privilege claim.
The usual practice in the UK is to require a party seeking permission to carry out a survey to provide the Court (and a fortiori the opposite party) with a copy of the results of any pilot survey: Interflora Inc v Marks and Spencer plc [2012] EWCA Civ 1501; [2013] 2 All ER 663 at [151]. This Court’s Practice Note CM13 “Survey Evidence” does not in terms require that this be done. However, at least where the form of the questionnaire is a matter of dispute then it seems to me appropriate that, as in UK, the party wishing to rely on the survey should produce any pilot study that was conducted for the purpose of designing or testing the questionnaire.
In the present case there is no direct evidence that there was any pilot study or trial conducted to test the suitability of the questionnaire. The purpose of a pilot study is to ensure that the questionnaire works. The absence of any direct evidence that the questionnaire was tested before it was put into the field is a matter that I have taken into account in deciding what weight to give to the Survey.
Whether a party seeking to tender a survey can successfully maintain a claim for privilege over any pilot survey it conducted beforehand and, if it can, what consequences follow in terms of the admissibility of the survey (particularly in light of s 135 of the Evidence Act) are questions for another case.
My conclusion is that the Survey results should not be given any weight in deciding which of the pleaded representations were likely to have been conveyed.
Other arguments were raised by LG as to the representativeness of the sample frame from which the respondents were drawn. These arguments centred on the “self-selecting” nature of the Research Now Panel and the absence of any cogent evidence (including from Mr Burge) as to its representativeness and, a fortiori, the sample drawn from it. It is not necessary to resolve these arguments.
The Survey Results
Although I have determined that the Survey should not be given weight, it is desirable that I refer to the results in a little more detail. I do this for the purpose of making clear that, leaving aside problems with the survey design and methodology, many of the representations pleaded by Samsung derive no support from them, while others derive only slight support. Further, some results also serve to confirm that Mr Bardsley’s interpretations of some responses were questionable and incorrectly coded.
The “topline” results were presented by Mr Bardsley as a percentage of those respondents who provided responses that corresponded with one or more of the coded representations. These were as follows:
Topline Results
There are a number of observations to make concerning these topline results and the related percentage breakdowns provided by Mr Bardsley in his affidavit evidence. The tables reproduced below are based upon that evidence.
Weight TVC – 77.4%
The topline result for the Weight TVC (77.4%) seems very high but that is not surprising given that the coded representations include the representation that “the conventional glasses are heavy.” On the assumption that Mr Bardsley’s coding is correct, it appears that 66.4% of the respondents understood the Weight TVC to be saying that conventional glasses are heavy. The proportion of respondents who said that they understood the Weight TVC to say that the glasses were too heavy to wear comfortably is clearly much lower than this.
Battery TVC – 9.8%
The topline result for the Battery TVC (9.8%) does not support Samsung’s case. The vast majority of respondents that make up the 9.8% appear to have understood the Battery TVC simply to be telling them that you cannot watch conventional 3D TVs in 3D after the 3D glasses run out of battery power. That is plainly correct.
Power Cable TVC – 44.5%
The topline result for the Power Cable TVC (44.5%) also seems high. However, there are indications in Mr Bardsley’s own affidavit that some of the responses have been incorrectly coded based upon an incorrect or idiosyncratic interpretation of either the response or the relevant representation. For example, he cites one respondent as having said that “it needs to be recharged often which requires a lead.” Mr Bardsley apparently understood this respondent to be saying that conventional 3D glasses cannot be used for ordinary viewing without being connected to a power cable. I think it is clear that Mr Bardsley has misinterpreted this answer.
Flickering TVC – 60.5% Modified Flickering; 41% (coupled); 31.2% (uncoupled)
The results for the Modified Flickering TVC (coupled) provide no support for pleaded representations 18(e) and 18(f) and little support for all others except perhaps representation 18(b).
Brightness TVC – 45.4%
The topline result of 45.4% for the Brightness TVC is consistent with the view that most viewers would not understand it to be conveying any of the pleaded representations. One matter of some significance is that only a very small proportion of total respondents thought that the Brightness TVC (12.4%) was telling them that LG Cinema 3D TVs appear substantially brighter than conventional 3D TVs. The figure given for this group is less than half of the figure given for the group who responded that conventional 3D TVs generate a dark viewing experience or provide a poor picture quality. This seems to me to be a significant discrepancy in the results that was not explained by the evidence.
Ruling
I admit the Survey (and related materials) that was the subject of LG’s objection into evidence but, for the reasons given, do not give the results any weight. In circumstances where the survey evidence has already been read, considered and weighed by me, no useful purpose would be served by excluding it pursuant to s 135 of the Evidence Act.
THE GALAXY SURVEY
This survey (the Galaxy Survey) was relied upon by LG to provide evidence directed to the allegation in SOC, para 42A that the term “Full HD” was commonly understood in the Australian market to mean “full high definition resolution containing 1920 x 1080 pixels refreshed on a progressive basis … and/or the highest or best resolution in the market.”
Samsung did not object to the Galaxy Survey so it was admitted into evidence unconditionally. However, Samsung submitted that the results should not be given any weight because the survey was “fundamentally flawed”.
Samsung raised many issues relating to the reliability of the Galaxy Survey but in submissions it principally relied upon the following:
·the absence of evidence from the company that provided the sample frame (SamplePages) or the company (Q&A Market Research) that conducted the telephone interviews;
·the proportion of mobile phone numbers included in the sample frame was too small (8% rather than 18%);
·the absence of any evidence from a statistician verifying the statistical reliability of the results;
·the inappropriateness of a telephone survey; and
·the fact that the Galaxy Survey was part of an omnibus survey.
The Galaxy Survey was part of an “omnibus” telephone survey conducted on the weekend of 14 to 16 September 2012 using a sample of 1,057 Australian aged 18 or older randomly drawn from a very large sample frame consisting of 5,600,000 landlines and 600,000 mobiles stratified on the basis of area, age and gender. The sample of 1,057 was made up of respondents from NSW/ACT (316), Victoria/Tasmania (294), Queensland (188), South Australia (126), Western Australia (122) and Northern Territory (11).
The respondents were asked the following questions:
·“Thinking now about televisions If you were purchasing a television for your household, in terms of deciding which type and brand to buy, would you be the main decision maker, a joint decision maker, have some influence, or have no influence in the purchase decision?” (Question B1);
·“In relation to televisions, what do you think the words ’Full HD’ mean?” (Question B2); and
·“What do you understand the words ’Full HD’ to mean about a television screen resolution?” (Question B3).
Question B1 was used for the purpose of screening. The number of respondents who went on to respond to Question B2 and B3 was 883.
For each of Questions B2 and B3, interviewers were instructed to “probe fully”. Question B3 was included at the request of Samsung.
The results were said by Mr Briggs to show that in response to both Questions B2 and B3:
·about 1% of Australian consumers (all males) involved in making purchase decisions for televisions understood that Full HD referred to “1920 x 1080”;
·about 5% of Australian consumers involved in making purchase decisions for televisions understood that Full HD referred to “1080” or “1080p”;
·the highest result was “Better picture / clearer / better quality” comprising 53% of responses to Question B2.
Mr Briggs said in his affidavit evidence that at the 95% confidence level, the maximum error margin for Question B1 would be +/-3% and, for Questions B2 and B3, the maximum error margin would be +/-3.3%. He expressed the opinion that this error margin was within the range of acceptable error, and that the survey provided a reliable and statistically meaningful representation of the Australian population at the 95% confidence level.
The summary of coded results for Question B3 in Mr Briggs’ affidavit evidence is more illuminating since it was specifically directed to “television screen resolution”. The results for Question B3 (using Mr Briggs’ coding) are as follows:
Mr Bardsley disputed the accuracy of some of the coding that was carried out as well as Mr Briggs’ weighting and population figures. However, leaving aside the dispute with regard to the weighting and population figures, Mr Bardsley’s evidence indicates that, using some modified coding, the number of respondents who gave at least one answer to either Question B2 or B3 that was the equivalent of “1080p/1080/1080 pixels”, “1920 x 1080” or “highest or best” accounted for 11.3% of respondents.
In cross-examination, Mr Bardsley said:
Another significant problem with the Galaxy Survey is that no context was given to the respondents before they were asked about their understanding of the term “Full HD”. I have been informed that this term is used by LG Australia in its advertising and marketing of televisions, including on in-store materials such as stickers affixed to the screens of televisions on display in electronics retail stores and in product descriptions on its website. However, because the Galaxy Survey was a telephone survey, it was not possible to show respondents the words “Full HD” appearing on the stickers or the website.
I do not agree with this criticism. The purpose of the Galaxy Survey was to investigate the correctness of the allegations in SOC, para 42A. It was not necessary to show respondents “in-store materials” or anything else in order to elicit their understanding of the term “Full HD”.
I accept that there will be circumstances where an internet survey will be appropriate or even preferable to a telephone survey. However, if the purpose of the survey was to ascertain consumers’ understanding of the term “Full HD”, then I do not think Mr Briggs can be criticised for opting for a telephone survey rather than an internet survey.
Mr Bardsley’s evidence also suggested that the sample frame was deficient because it did not include enough mobiles. This evidence does not sit comfortably with his decision to use the Research Now Panel (made up of approximately 170,000 recruits) as the sample frame for the Roy Morgan Survey. In that case, the sample frame could only have included respondents who used the internet and who had chosen to be included in the Research Now Panel. It seems to me that in this case a telephone survey using the SamplePages sample frame was likely to be more representative of the relevant population than an online survey due to problems of coverage (with online panels being limited to internet users) and bias (with online panels being made up of recruits who receive financial benefits in return for their participation).
Dr Dorofeev gave evidence that the results of the Galaxy Survey are not statistically reliable. In particular, he said that it was not possible to accurately calculate standard errors and confidence intervals for the Galaxy Survey and he explained why. According to Dr Dorofeev, the problem was that the sampling method involved initially sampling households (identified by telephone numbers) and then undertaking a separate selection process from within the households of individuals to participate in the study. Without knowing how many eligible respondents reside in a household, it was not possible to know the probability of a given respondent being selected to participate in the survey because an individual’s probability of selection is inversely proportionate to the number of eligible people in the household, with an eligible person who lives alone having a greater probability of selection than an eligible person who lives with other eligible people.
I accept that Dr Dorofeev’s evidence is correct as a matter of theory. However, I am also mindful that in giving his evidence in relation to the Roy Morgan Survey, he acknowledged that survey sampling is by its nature an imperfect process, and that samples used in commercial, scientific and academic studies will almost always constitute an imperfect representation of the target population. In the case of the Roy Morgan Survey, Dr Dorofeev appears to have assumed (as did Mr Bardsley) that the Research Now Panel was representative of the target population, an assumption that is highly questionable.
Nevertheless, Dr Dorofeev’s evidence was not challenged in cross-examination or disputed by Mr Briggs or any other witness who gave evidence. Nor was any argument put to me by LG in closing submissions as to why I should give the Galaxy Survey any weight in circumstances where Dr Dorofeev’s criticism of it was left wholly unanswered. I therefore accept Samsung’s submission that the results of the Galaxy Survey should not carry any weight.
DISPOSITION
Samsung has satisfied me that LG contravened ss 18 and 29(1)(a) of the ACL by causing the Flickering TVC to be broadcast in Australia during May and June 2011. Samsung has also satisfied me that LG contravened ss 18 and 29(1)(a) of the ACL by causing the Retailer Instructions to be distributed during March and July 2011.
I will give the parties an opportunity to address me in relation to the specific form of relief that should be granted, and on questions of costs. My present view is that it would be appropriate to grant declarations and final injunctions specifically directed to the Flickering TVC and the Retailer Instructions, and that Samsung should be required to pay a considerable proportion of LG’s costs of the proceeding. There will be an order requiring Samsung to notify LG within 14 days whether it proposes to maintain its claim for damages.
I certify that the preceding three hundred and seventy-three (373) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate:
Dated: 16 March 2015
Key Legal Topics
Areas of Law
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Consumer Law
Legal Concepts
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Misrepresentation
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Compensatory Damages
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Limitation Periods
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Admissibility of Evidence
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Expert Evidence