Siddons Pty Ltd v The Stanley Works Pty Ltd

[1990] FCA 428

Re: SIDDONS PTY. LTD.
And: THE STANLEY WORKS PTY. LTD.
No. V G148 of 1990
FED No. 428
18 IPR 630

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Jenkinson J.(1)

HEARING

MELBOURNE

#DATE 9:8:1990

Counsel for the Applicant : Mr. D. Shavin

Solicitors for the Applicant : Freehill Hollingdale and Page

Counsel for the Respondent : Dr. C.N. Jessup QC and Mr. S.R. Horgen

Solicitors for the Respondent : Mallesons Stephen Jaques

JUDGE1

Claims and cross-claims for civil remedies in respect of conduct alleged to have contravened provisions of Part V of the Trade Practices Act 1974.

1. The applicant, which I will call "Siddons", is a Victorian company which manufactures, inter alia, hand tools and sells by wholesale, inter alia, hand tools. The respondent, which I will call "Stanley Works", is a Tasmanian company which sells by wholesale, inter alia, hand tools and manufactures, inter alia, hand tools. Stanley Works has sold in this country spanners on which are delineated by the metal of which the spanner is made the words "Made in Australia", and also the word "Stanley". The spanners are made of a piece of metal which is brought to the desired shape by the application of force and of heat and is affected in its molecular arrangement by heat and cold and has its surface plated. Some of these processes are carried out in Taiwan, but other, later processes are carried out in Australia. When brought from Taiwan to Australia the piece of metal is approximately of the dimensions of the spanner which is sold, but modification of molecular arrangement and treatment of the surface is carried out here. The strength and durability of the piece of metal is substantially less on arrival here than it is when the spanner is sold.

2. The words "Made in Australia", in application to a tool such as a metal spanner, in my opinion mean in ordinary parlance that most of the processes by which a piece of metal is brought into the shape of the tool as sold have occurred in this country. It is unnecessary to consider whether the meaning is such as to require more than that. None of those processes occurred in this country in the case of these spanners. The putting by Stanley Works into trade and commerce of such a spanner in circumstances in which the words "Made in Australia" on the spanner would be read by the purchaser by retail before purchase would in my opinion constitute a contravention of s.52, s.53(a) and s.53(eb) of the Trade Practices Act 1974 (Cf. Korczinsky v. Wes Lofts (Aust) Pty. Ltd. (1985) 10 FCR 348; Netcomm (Australia) Pty. Ltd. v. Dataplex Pty. Ltd. (1988) 81 ALR 101; and Thorp v. C.A Imports Pty. Limited (1989) 90 ATPR 50,962). Stanley Works still has many of these spanners on hand. Stanley Works proposes that any injunctive order be so framed as to permit sale of the spanners so packaged that the words "Made in Australia" on the spanner would not be visible until after retail sale of the spanner and removal of the packaging. The question was debated whether, if that were done, any contravention of Part V would occur by reason of the circumstance that the purchaser and, probably, other persons would, after purchase, see those words as well as the word "Stanley". It was submitted by Dr. Jessup Q.C., who appeared with Mr. Horgan for Stanley Works, that no such a contravention would occur. It was said that at the time of sale no such a contravention would have occurred. That may be granted. It was said that once goods have reached a consumer they are no longer in the course of trade and two cases of high authority in the field of trade mark law were cited in justification of that proposition : Aristoc Limited v. Rysta Limited (1945) AC 68; W.D. and H.O. Wills (Australia) Limited v. Rothmans Limited (1955) 94 CLR 182. The proposition forms a step in reasoning to the conclusion that, since the function of a trade mark is to give an indication to a potential purchaser of the trade source of the goods, acquisition of the goods by that purchaser will, if he be a consumer of the goods and not a trader in the goods, result in cessation of "user" of the trade mark, within the meaning of that word in trade mark legislation. But it is not, in my opinion, correct to say that because a thing has ceased to be the subject of trading activity and is no longer in the course of trade it cannot thereafter be the instrument by which conduct of a particular description is done in trade and commerce. The article may carry to potential purchasers of goods a representation in words endorsed on that article about those goods or about the maker or the distributor or the retailer of those goods. It is nothing to the point, in my opinion, that the representation was or was not also carried to the consumer who bought the article before the purchase was made, and nothing to the point whether the representation relates or does not relate to the article on which it is endorsed or to some person concerned in the making or the selling of that article.

3. Dr. Jessup sought to rely also on the reasoning in Concrete Construction (NSW) Pty. Ltd. v. Nelson (1990) ALJR 293. In my opinion nothing in that reasoning casts any doubt on the proposition, which I think to be correct, that representations by words endorsed on an article intended to be sold for use by a consumer are being made "in trade or commerce" within the meaning of that expression in Part V of the Trade Practices Act to those who are potential consumers of an article concerning which, or concerning the maker or distributor or seller of which, the representation is made and who read the words after the article on which the words are endorsed has passed into the possession of the purchaser who is to use it, provided that the person making the representation contemplated that the words would be read at that time by such potential consumers. I should say that I do not intend by that general statement to comprehend the case in which the endorsement on the article is effected in compliance with a legal, usually statutory, requirement that the article bear information concerning the article. It has, as I believe, always been assumed that the endorsement or attachment of statements about an article in compliance with a legal requirement may constitute a representation in trade or commerce. And I am not concerned to question that assumption. A common example is the requirement that the composition of the material of which an article of clothing is made be stated on the garment. But I do not intend to express any opinion as to whether, after such a garment has been purchased by retail, the statement which is on the garment, and is on the garment because it was necessary to comply with a legal requirement, is a statement made to any person thereafter in trade or commerce. I express no opinion at all on that question.

4. It would be obvious to Stanley Works' officers that purchasers of these spanners would read the words endorsed on the spanner after purchase and that others might also; and obvious that such persons might thereafter have occasion to buy hand tools of the kinds Stanley Works expects in the future to be selling, as it has sold in the past. The representation inducing a belief that spanners of the kind in question, that is to say of the kind I am now considering, are made in Australia by Stanley Works, is likely to influence some potential consumers of hand tools to seek out hand tools, whether or not spanners of the same kind, sold under the trade name of Stanley Works, and is, in my opinion, a representation made in trade and commerce to those potential consumers.

5. Stanley Works also sells sockets on the outer surface of which are delineated by the metal of which they are made the word "Stanley", and immediately below that word the word "Australia". The socket is made from a piece of metal which is brought to the shape of the socket, as sold, by the application of force and the surface of which is hardened and plated by several processes, including a process which changes the chemical composition of the surface. There is a sequence of processes, some carried out in Taiwan, the rest in Australia. When the piece of metal arrives in Australia it is approximately of the dimensions of the socket as sold, but further processes are carried out here, including hardening and plating processes. For the reasons given in respect of the spanners, it would, in my opinion, be a contravention of s.52, s.53(a) and s.53(eb) to represent that such a socket was made in Australia. Siddons alleges that the two words on the socket do constitute such a representation. Mr. Shavin of counsel for Siddons submitted that, on the socket, the word "Australia" would be understood by a substantial number of potential purchasers as an assertion as to the place of origin of the thing on which the word is marked. I cannot deny that some would. But my conclusion is that those who did would be thus misled, not by what the words in all the circumstances under which they stand on the metal socket mean to the reasonable member of the public who regards them, but by mental processes which are at fault. The two words, the one immediately above the other, may in my opinion reasonably be taken to assert both a connection of some commercial kind between whatever entity the word "Stanley" signifies and the socket, and a connection of some kind between that entity and the place named, Australia. It cannot, in my opinion, be reasonably concluded that the words also assert a connection between that place and the socket, except the connection which the other two assertions involve.

6. By cross-claim Stanley Works alleges misrepresentations in contravention of Part V by Siddons. On the outer lid of a box of tools, sold by retail, and on a card attached to the inner surface of the lid, there is represented above the word "Sidchrome", which is a trade name of Siddons, an outline map of Australia. On the left-hand side of that outline is the word "unconditionally", and on the right-hand side of the outline is the word "guaranteed". Endorsed across the outline of Australia is the word "Australian". In each instance, namely on the outer surface of the lid and on the inner surface of the lid, the words "unconditionally" and "guaranteed" are printed in the same colour. That is to say the word "unconditional" is in the same colour as the word "guaranteed". In each instance the word "Australian" is in a different colour from the other two words. In the case of the outer surface of the lid, below the word "Sidchrome" are the words "quality tools". In the case of the inner surface, below the word "Sidchrome" is printed the figures and words, "112 piece combination tool chest". It was Dr. Jessup's submission that in each case the word "Australian" would reasonably be understood as an assertion that the tools in the box were of Australian origin, and, if it is to say anything different, that the tools were made in Australia.

7. Mr. Shavin, for Siddons, submits that the word should be understood as asserting only that the unconditional guarantee to which the words "unconditionally guaranteed" may be taken to refer is of an Australian character or has an Australian character, presumably in the sense that he who offers or gives or declares the guarantee is either a resident or citizen of Australia.

8. In my opinion, the reasonable person regarding what I have described as endorsed on the top and underside of the lid, would reasonably understand the words to be asserting that the contents of the tool box are unconditionally guaranteed and that the contents of the tool box are made in Australia and have Australia as their place of origin. The evidence establishes that in respect of some of the tools in the box, as it is sold, the representation is incorrect, and accordingly the conclusion follows that the putting into trade of the box of tools thus marked constitutes a contravention of s.52, s.53(a) and s. 53(eb).

9. Another cross-claim relates to packaging used by Siddons in relation to single hand tools sold by it by retail. The packaging consists of an orthogonal piece of cardboard and a piece of moulded, transparent material. The tool is covered by the transparent substance, which is attached to the surface of the card so that the tool remains against the card however the card is moved. That side of the card against which the tool rests is coloured red and on that side of the card are printed words. In some instances, it may well be in all, at the top of the card is the word "Sidchrome", in white against the background red, and then below "Sidchrome" a strip about a centimetre wide of yellow colour on which is printed the name and dimensions of the particular tool, together with some other numbers and letters which may be some means of identifying the tools in some list of products of Siddons. Then, in approximately the middle of the card, is in yellow against the red background an outline of Australia delineated, and at the foot of the card there is a circular marking - "unconditionally guaranteed" around the word "Sidchrome". In the bottom right-hand corner in yellow against the red background are the words "Siddons Industries", to the left of which is a symbol of the letter S and the symbol of the top of a nut, and below those words in yellow, the word "Australia".

10. Dr. Jessup submits that that face of the card on which the tool rests conveys as a whole a representation that the tool was made in Australia, that its place of origin is Australia. And, in support of that submission, he draws particular attention to the prominent representation of the shape of the continent in the middle of the card and immediately below part of the tool itself.

11. My conclusion is that neither the surface of the card as a whole nor any part of it is reasonably to be taken as making any assertion concerning the origin of the tool which is attached to the card. It may be, as in the case of the sockets, that one can conclude that it is asserted that Siddons has a connection of a commercial kind with Australia and, of course, that the tool has a connection with Siddons, an obvious connection. And involved in those two assertions is an assertion of a connection of a kind between the tool and Australia. But reasonable reflection upon what is upon the face of the card carries one, in my opinion, no further than that. Accordingly I conclude that to put the tools into trade and commerce packaged in the way that I have described does not involve a contravention of any of the provisions of Part V.

12. Now, it is to me very difficult to form an estimate of the extent to which potential consumers of hand tools would be influenced in favour of buying a Stanley Works hand tool, rather than another's, by the mistaken belief that a spanner which was marked "Made in Australia" and "Stanley", and which they had seen after the spanner had been sold by retail, was wholly made in this country. I am persuaded on the whole of the evidence, and particularly by the evidence of the conduct of the parties to this litigation manifesting their strong inclinations to associate their products and themselves with this country in the minds of consumers, that the degree of influence of the words on the spanners would be substantial on many potential consumers who saw the words on the spanners. The policy of Part V is to prevent the influence of mistaken beliefs on consumers. On the other hand, the interdiction of trading by retail in these spanners in this country will, as I shall assume, result in the total waste of the production processes by which they were produced. Dr. Jessup did not propose, as an alternative, labelling the spanners with a message designed to correct the misrepresentation. Further, any such labelling could be expected ordinarily to disabuse the mind of only the person who first used the spanner. Stanley Works did take expert legal advice on the lawfulness of marking the words on the spanners, and got the opinion that it was probably lawful, together with a warning that it might not be. To a responsible trader, as I think Stanley Works to be, mitigation of the law's rigour might well be thought to be an encouragement carefully to observe the law thereafter. But, on balance, I have concluded that the degree of influence on consumer behaviour to be expected of the misrepresentation the words convey is too substantial to permit of that mitigation. Accordingly, there will be an injunctive order against distribution of the spanners in trade and commerce in this country.