Solahart Industries Pty Ltd v Solar Shop Pty Ltd
[2011] FCA 700
•21 June 2011
FEDERAL COURT OF AUSTRALIA
Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700
Citation: Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700 Parties: SOLAHART INDUSTRIES PTY LTD and RHEEM AUSTRALIA PTY LTD v SOLAR SHOP PTY LTD and SOLAR HUT PTY LTD File number: NSD 717 of 2009 Judge: PERRAM J Date of judgment: 21 June 2011 Catchwords: TRADE MARKS – Infringement – ‘use’ of trade marks – whether marks substantially identical – whether marks deceptively similar – principles relevant to determination of goods of the same description – significance of aural infringement – domain name as trade mark ‘use’ – Trade Marks Act 1995 (Cth) ss 120(1), 120(2)
TRADE PRACTICES – Misleading or deceptive conduct – passing off – whether use of mark suggested a connexion to another entity or brand – reputation and goodwill in logo – misrepresentation in deceptive similarity – no damage in passing off as misunderstanding would benefit applicant – Trade Practices Act 1974 (Cth) s 52
PRACTICE AND PROCEDURE – Pleadings – application to amend – no explanation for delay
PRACTICE AND PROCEDURE – Suppression order – application under Federal Court of Australia Act 1976 (Cth) s 50 – whether necessary to prevent prejudice to the administration of justice
Legislation: Federal Court of Australia Act 1976 (Cth) s 50
Competition and Consumer Act 2010 (Cth)
Trade Marks Act (Cth)s 120
Trade Practices Act 1974 (Cth) s 52
Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth)Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 cited
Australian Broadcasting Corporation v Parish (1980) 43 FLR 129 cited
Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 cited
Australian Competition and Consumer Commission v MSY Technology (No 2) [2011] FCA 382 cited
Betfair Pty Ltd v Racing New South Wales (No 5) [2009] FCA 1011 cited
CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 cited
Colorado Group Ltd v Strandbags Group Pty Ltd (No 2) (2006) 69 IPR 281 cited
Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 cited
Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 cited
CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408 cited
E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2009) 175 FCR 386 cited
Hogan v Australian Crime Commission (2010) 240 CLR 651 cited
In the matter of the Australian Wine Importers Trade Mark [1889] 6 RPC 311 cited
John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 ALD 471 cited
New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549 cited
Nissan Motor Co v Nissan Computer Corp 378 F.3d 1002 (2004) (9th Cir. 2004) cited
Qantas Airways Ltd v Rolls-Royce PLC [2010] FCA 1481 cited
Re Jellinek’s Application (1946) 1A IPR 393 cited
Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 cited
Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 cited
Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 cited
Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No 1) (2010) 86 IPR 337 cited
Sports Warehouse Inc v Fry Consulting Pty Ltd (2010) 186 FCR 519 cited
Yara Australia Pty Ltd v Burrup Holdings Ltd (No 2) [2010] FCA 1304 citedDate of hearing: 12-14 October 2010 Date of last submissions: 20 January 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 138 Counsel for the Applicants: Ms S J Goddard SC with Mr P Maddigan Solicitor for the Applicants: DLA Piper Counsel for the Respondents: Mr R J Webb SC with Mr C Burgess Solicitor for the Respondents: Minter Ellison
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 717 of 2009
BETWEEN: SOLAHART INDUSTRIES PTY LTD
First ApplicantRHEEM AUSTRALIA PTY LTD
Second ApplicantAND: SOLAR SHOP PTY LTD
First RespondentSOLAR HUT PTY LTD
Second Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
21 June 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order by 5 July 2011.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 717 of 2009
BETWEEN: SOLAHART INDUSTRIES PTY LTD
First ApplicantRHEEM AUSTRALIA PTY LTD
Second ApplicantAND: SOLAR SHOP PTY LTD
First RespondentSOLAR HUT PTY LTD
Second Respondent
JUDGE:
PERRAM J
DATE:
21 June 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
Since the 1970s there has been a gradual increase in the use of solar power for domestic purposes. Initially this largely involved the use of roof mounted solar hot water systems. In more recent years, there has been a proliferation of systems involving photovoltaic cells which directly generate electricity. Rising public concerns about the adverse consequences of global warming have fuelled subsidy and rebating arrangements which have increased the popularity both of solar hot water and photovoltaic systems. The manufacture, sale and installation of solar hot water heaters is a mature industry involving established businesses with brands that are prominent. Amongst those is the first applicant, Solahart Industries Pty Ltd (‘Solahart’), which commenced manufacturing solar hot water systems as early as 1953. In the 1970s it became the leading domestic hot water system and also the leading hot water system in the United States, the Middle East, South East Asia and Europe. Its solar hot water heaters are sold under the name SOLAHART and it has, unsurprisingly, registered that name as a number of trade marks to which it will be necessary to return. The Solahart brand looks like this:
The respondents are also in the solar power business. The first respondent, Solar Shop Australia Pty Ltd (‘Solar Shop’), is presently a merchant of photovoltaic systems. It seeks to position itself at the premium end of the market as a supplier of high-end systems with comprehensive pre-sale and post-sale support. Prior to September 2009, it had also sold solar hot water systems but in 2009 it decided to move exclusively into the photovoltaic market. This decision is, in part, explicable on the basis of the Commonwealth subsidies then available for products of that kind. Solar Shop also owns the second respondent, Solar Hut Pty Ltd (‘Solar Hut’), which is a more budget orientated and web-based vendor of photovoltaic systems. Solar Hut commenced its business in May 2009 after detecting increased demand for photovoltaic systems at the lower end of the market.
When the new Solar Hut business was commenced it was launched from a web site with the URL and using a logo which looked like this:
Shortly thereafter the Solar Hut website came to the attention of Solahart which was not impressed by, and was concerned about, the similarity – particularly, the aural similarity – of the word SOLARHUT to the word SOLAHART. Correspondence ensued. In early October 2009, Solar Hut decided to abandon its use of the word SOLARHUT in favour of a new name SUNSAVERS. A new website was created with the URL and with it a new logo which looked like this:
As events transpired, however, Solar Hut (which did not change its corporate name) did not wholly abandon its use of the word SOLARHUT. Although the business was now conducted under the mark SUNSAVERS from the URL nevertheless it continued to maintain the URL which, if accessed, would take an internet user through to the new business at That state of affairs appears to have persisted until 7 October 2010.
The first part of this case arises from that collocation of circumstances in the following way: Solahart owns three trade marks consisting of the word SOLAHART and contends that each of those marks has been infringed: first, by Solar Hut’s sale of its photovoltaic systems using the word SOLARHUT; secondly, by keeping the website and, thirdly, by maintaining the website after the switch to the SUNSAVERS brand as a redirect to >
This third claim is very much, although not exclusively, driven by the proposition that searching for the words ‘Solar Hut’ using a search engine would have continued to funnel consumers to the website at In addition to these claims, Solahart also alleges that Solar Hut has, by the same conduct, infringed s 52 of the Act formerly known as the Trade Practices Act 1974 (Cth) as well as engaged in passing off. These three familiar controversies constitute the first part of this case. (For completeness, it should be noted that by reason of the transitional arrangements in the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) s 52 of the Trade Practices Act continues to apply to this proceeding and I will, in that circumstance, make no further mention of the Competition and Consumer Act 2010 (Cth): cf Australian Competition and Consumer Commission v MSY Technology (No 2) [2011] FCA 382 at [5]-[6]]).
There is, however, a second part to the case. Solar Hut’s switch of brand to SUNSAVERS in October 2009 attracted the attention of the second applicant, Rheem Australia Pty Ltd (‘Rheem’). Rheem has traded in Australia since 1936 and soon after that time began manufacturing gas and electric hot water heaters. It is one of the largest manufacturers of gas water heaters, electric water heaters and solar hot water systems in Australia and the Pacific region. Related entities trade in the United States, Singapore and New Zealand.
As a participant in the solar energy industry it has an interest in fostering public awareness of the availability of government rebates for solar energy sources. Since 2001 there have been a number of government initiatives designed to increase the amount of energy generated from renewable resources. It is not always easy to understand these initiatives or how they relate to particular products. In December 2008, Rheem decided to create a service to provide readily understandable information about the available rebates and those of Rheem’s goods which were apposite for that purpose. To this end, it created a new brand, the RheemSolarSavers brand, and, under that brand, it has provided a number of goods and services. The goods consisted of various water heating systems with a renewable energy profile; the services of information about matters such as rebates and renewable energy certificates. The RheemSolarSavers brand looks like this:
Rheem has applied for the registration of the word ‘SolarSavers’ as a trade mark but this is presently subject to opposition proceedings and it does not rely on that mark in this case. It does, however, submit that Solar Hut’s use of SUNSAVERS on its website is misleading and deceptive because it suggests a connexion between the business conducted by Rheem under its RheemSolarSavers brand and Solar Hut’s business which, both parties agree, does not exist. It also alleges that the same conduct constitutes passing off.
Solahart’s claim against Solar Hut for its use of SOLARHUT and Rheem’s claim against it for its use of SUNSAVERS are separate, and basically unrelated, claims. Consequently I will deal with them separately and in the order set out above. One final fact should be noted, if only for clarity’s sake: Rheem acquired Solahart in 1998 and since 2002 Solahart has been a wholly owned subsidiary of Rheem. Despite that, the two businesses are quite separate and their claims distinct.
I. Solahart’s claims against Solar Hut
Solahart’s claims straddle two periods:
(a)the period during which Solar Hut sold its photovoltaic systems using the mark SOLARHUT from its website at period after 6 October 2009 when it stopped using SOLARHUT directly and sold instead its photovoltaic systems under the mark SUNSAVERS from the website but maintaining the website which, if accessed, redirected consumers to >
During those periods, Solahart alleges that Solar Hut has:
(i)infringed its three trade marks through s 120(1) of the Trade Marks Act 1995 (Cth);
(ii)infringed its three trade marks through s 120(2) of the Trade Marks Act;
(iii)engaged in passing off; and
(iv)breached s 52 of the then Trade Practices Act.
Section 120(1)
Solahart owns three registered trade marks in class 11 for the word SOLAHART. Section 120(1) of the Trade Marks Act provides:
A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
In respect of what goods and services had the first applicant registered its SOLAHART marks? The first mark was registered on 17 December 1975 in respect of:
Solar operated hot water systems in class 11
The second was registered on 27 January 1977 in respect of:
Class: 11 Domestic water heaters, swimming pool heaters, air heaters and conditioners, solar furnaces and cookers; solar cells and sundry solar devices being parts of installations included in Class 11.
The third was registered on 25 October 1985 in respect of:
Class: 11 All goods in this class including ventilation systems, air circulating systems and fans and parts and accessories included in Class 11 for ventilation systems, air circulating systems and fans; but excluding cooking apparatus and parts and fittings included in Class 11 for cooking apparatus.
Good covered by Class 11 are:
Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes.
The marks were not and are not registered with respect to any services. At its highest, Solahart’s case is that Solar Hut used the word SOLARHUT with respect to the sale of its photovoltaic cells. Those cells generate electricity, a quality they share with coal fired power stations, certain species of nuclear reactor and a car battery. It is true that each of the apparatus described in class 11 is capable of being operated by electricity but it is not to be accepted that a device which generates electricity and thereafter powers one of the apparatuses appearing in class 11 is, without more, such an apparatus itself. Were it otherwise, any source of electricity would be a hot water system in class 11, a proposition whose outlandishness at once identifies the premises upon which it rests as unsound.
For that reason, one should reject the notion that photovoltaic cells can be described, in terms of the first mark, as a ‘solar operated hot water system in Class 11’. Precisely the same reasoning disposes of the more general contention that the photovoltaic cells are substantially identical to the apparatus in class 11 itself. A similar conclusion attends the second mark. Further, whilst its registration refers to ‘solar cells and sundry solar devices’ this is immediately qualified by the further requirement that such devices be ‘parts of installations included in Class 11’. Consequently, the solar cells in question have to form part of an apparatus described in Class 11 (that is, relevantly, an apparatus for heating water) and I cannot comfortably, or at all, accept that a device which generates electricity for general use can be so described. A different answer to that question might result if it were shown that the photovoltaic cells in question were dedicated solely to providing electricity to heat water. That would then require close attendance to the word ‘cell’. However, there was no evidence that such a product existed and the rigours of a close examination of that word may therefore be evaded.
So far as photovoltaic systems are concerned, that disposes of the second mark. There was, however, some evidence which suggested that Solar Hut did, in fact, sell solar hot water heaters of the kind in respect of which the second mark was registered. This evidence was given by one of Solahart’s witnesses, Ms Tucker. She was employed as a customer service representative for one of Solahart’s dealers. On 16 June 2009, she was asked by Solahart’s State manager to make a telephone call to Solar Hut. She did so on 17 June 2009 and gave evidence that she spoke to a man called ‘Bart’ or possibly ‘Bert’. She proceeded to ask him a series of questions. Her account in her affidavit was as follows:
Ms Tucker:Can the solar power system also heat my hot water?
Bart/Bert:You will need a solar hot water system, Solar Hut sell Rheem hot water systems and Rheem solar hot water will be able to be purchased online on the Solar Hut website shortly.
Ms Tucker:What do I need to do to go solar?
Bart/Bert:There is information about this on the Solar Hut website, Solar Hut do not conduct site visits.
Ms Tucker:Is there somewhere I can look at the hot water systems and the solar power systems?
Bart/Bert:Solar Hut is a web based business and only sells its products online. Solar Hut is part of the Solar Shop, even though Solar Hut is in competition with the Solar Shop. You can look at the goods sold by Solar Hut by visiting the Solar Shop on Payneham Road.
Ms Tucker:Do you sell Solahart hot water systems?
Bart/Bert:Solar Shop sells Solahart hot water systems and Solar Hut sells Rheem hot water systems.
I do not accept Ms Tucker’s evidence about this for five reasons: first, there is no documentary evidence referred to by either party which indicates that Solar Hut has ever done anything but sell photovoltaic systems; secondly, that is consistent with Solar Hut’s role as a no-frills adjunct to Solar Shop’s photovoltaic business; thirdly, both the chief executive officer of Solar Shop, Mr Thornton, and the general manager of Solar Hut, Mr Branch, testified that Solar Hut did not sell solar hot water systems; fourthly, that evidence is consistent with the fact that photovoltaic systems were receiving substantial government subsidies which were not available in the case of solar hot water systems; finally, Ms Tucker accepted that she was not the author of the words set out above which had appeared in her affidavit. Indeed, under cross-examination she went somewhat further and explained that she could not recall everything attributed to her in the affidavit. For example, this exchange occurred:
Mr Webb:Pardon me a moment, Ms Tucker. Now, the – you see, I want to suggest to you that – I’m sorry, I withdraw that. He didn’t say to you, did he, that the Solar Shop sold Solahart hot water services, did he?
Ms Tucker: No, he told me that they sell solar hot water.
Mr Webb:I see, and he – he said – did he say to you that they sell Rheem hot water services?
Ms Tucker:He told me they sell solar hot water.
Mr Webb:I see. So he didn’t mention any brand of solar hot water services in the conversation, to the extent that you can recall it now?
Ms TuckerNo. He just said that they sell solar hot water and it will be on their website soon.
Mr Webb:Now, after you – you see, in your affidavit you set out some words that you attribute to the gentleman you spoke to on the telephone, which is to the effect ‘Solar Shop sells Solahart hot water systems, and Solahart sells Rheem hot water systems.’ And that, I gather, is incorrect, having regard to the evidence you have just given?
Ms Tucker:I can’t remember.
Mr Webb:You can’t remember?
Ms Tucker:No, that I can’t.
This did not relate directly to the question in issue but it does warrant approaching Ms Tucker’s affidavit evidence with some circumspection, particularly where, as here, it is contradicted by other material. In those circumstances, I find that Solar Hut does not sell, and has never sold, solar hot water systems. I reject Ms Tucker’s evidence to the contrary.
That disposes of Solahart’s case under s 120(1) of the Trade Marks Act in relation to all three of its registered trade marks. In each, an essential precondition for the operation of s 120(1) has not been met: the use by Solar Hut of the word SOLARHUT to sell photovoltaic systems was not use in relation to goods in respect of which any of Solahart’s three trade marks were registered.
It is necessary then to turn to the case under s 120(2).
Section 120(2)
Section 120(2) provides:
A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(a)goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or
(b) services that are closely related to registered goods; or
(c)services of the same description as that of services (registered services) in respect of which the trade mark is registered; or
(d) goods that are closely related to registered services.
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
Solahart alleges two infringements under this provision. First, it says that Solar Hut’s use of SOLARHUT in relation to the promotion, sale, supply or installation of its roof mounted photovoltaic cells was use of a trade mark which was deceptively similar to or substantially identical with each of Solahart’s three trade marks ‘in relation to… goods of the same description’ as those in respect of which those three marks were registered; that is to say, an infringement under s 120(2)(a) was alleged. Secondly, it is said that the same infringing use occurred in relation to ‘services that are closely related to’ the goods in respect of which its three marks were registered. The service relied upon was the service of installing the panels on the roofs; that is to say, an infringement under s 120(2)(b) is alleged.
The first issue which one must resolve is whether Solar Hut’s photovoltaic cells are goods of the same description as the goods in respect of which the three trade marks are registered. Solar Hut’s products consist of solar panels made of semi-conductor material which, when struck by radiation from the sun, generate electricity. The panels are typically installed on a customer’s roof and supply electricity to the household. In circumstances where electricity excess to requirements is generated, provision is made for its supply to the general electricity grid. If that occurs, customers receive a payment, usually by way of a set off from their ordinary domestic electricity bill. By contrast, Solahart’s hot water heaters are heat transfer devices. Heat is collected from the roof top cells and transferred into the household’s hot water system. In some cases the transfer occurs into roof mounted tanks and, in others, into tanks located within the structure of the house.
It will be obvious that both sets of products bring about a reduction in a household’s use of electricity; both involve roof mounting of solar collectors; both utilise radiation coming from the sun. On the other hand, their purposes are different: one is a hot water heater, the other an electricity generator. Unsurprisingly perhaps, one is installed by a plumber, the other by an electrician.
The question posed by s 120(2)(a) of whether one kind of good is ‘of the same description’ as another is a question whose answer will often be inherently contestable. That goods are of the same description as other goods is really but another way of saying that they belong to the same genus, but that observation only exchanges the uncertainties attending the concept of ‘same description’ with the ambiguities attending the word ‘genus’; at the end of the day the concepts are the same and in such expressions the legal mind encounters an inherently vague standard not susceptible to further analysis. The delimitation of such a concept is notoriously controversial: one may no more readily answer whether a monkey is an animal of the same description as a baboon than one may say that trade mark attorneys are lawyers of the same description as intellectual property barristers.
The difficulties in identifying the relevant ‘description’ are well-known. This case exemplifies them. Both products can be described as roof mounted devices for collecting energy from the sun and, in that sense, they are goods bearing the same description. On the other hand one is a hot water heater and the other an electricity generator and, in that sense, they are not. In almost all cases it will be possible to locate a description or genus in respect of which both sets of goods may be seen as members.
The difficulty in this area has existed not in the identification of any particular description but in sifting those descriptions which are relevant from those which are not. In that endeavour a number of guides have been suggested: the nature and origin of the goods; the uses made of the goods including their intended uses; and, the trade channels through which the goods are bought or sold: see Re Jellinek’s Application (1946) 1A IPR 393 at 403 per Romer J; Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 at 94 per Dixon J. Some doubt has been cast over the last in light of the rise of the modern department store (cf. Colorado Group Ltd v Strandbags Group Pty Ltd (No 2) (2006) 69 IPR 281 at 287 [26] per Finkelstein J). To that, one might add the phenomenon of internet retailing which rather tends to blur, almost to extinction, these kinds of consideration. No doubt, a sensible business judgment is called for (In the matter of the Australian Wine Importers Trade Mark [1889] 6 RPC 311 at 318 per Lindley J) and in that context notions of substitutability appear to be apposite: New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549 at 566 per Gummow J. In that case it was held that whilst it might well have been true that flavoured milk and lunch sized package cheese were both sources of calcium for children they were not goods of the same description because, in fact, there was no evidence that they were substituted for each other.
None of these maters is conclusive. I accept that the mechanism involved in both sets of devices is profoundly different at a technical level but I do not think that is probably of much relevance to the average consumer who understands neither calorific transportation nor the photoelectric effect. At the consumer level, the choice lies between the purchase of a solar powered hot water system, on the one hand, and a solar powered electrical generator on the other. Similar motives may lie behind a decision to purchase either. There will be those moved by concern for the environment; there will be those moved by a desire to utilise the generous government subsidies available in the case of such renewable energy resources; some may be moved by both. There are some factors which suggest a degree of cross-over between the two types of products. Amongst those consumers whose desire is to reduce their electricity bill by the use of renewable energy there is likely to be competition between the two products, a process naturally affected by the size and generosity of the rebates. But there are factors in the opposite direction too. Persons wishing to buy a new hot water heater are probably not going to be interested in acquiring photovoltaic panels to achieve this same outcome.
I do not disregard the different ways these products are sold or the different ways in which they are installed and these differences must be frankly acknowledged. Ultimately, however, the class of consumers to whom these products are sold sufficiently overlap to mean that they are goods of the same description. The situation is not so very distinct from the beer and wine at issue in E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2009) 175 FCR 386 (special leave to appeal on this issue refused in the High Court, see E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144): not the same product certainly; not interchangeable at the lips of every drinker; but substitutable nevertheless for some drinkers of a certain outlook and both properly and usefully described as alcoholic beverages. For completeness, I should say that I did not find the evidence led on this issue especially persuasive in either direction. Mr Mundy, the General Manager for Renewables of each of the applicants, testified in re-examination for Solahart that the market in photovoltaic systems had expanded by 150% in the 2010 calendar year whilst the market for solar hot water heaters had dropped 35%. Ms Goddard SC, who appeared with Mr Maddigan for Solahart, submitted that this showed they were, in some senses, alternatives. On the other hand, Mr Thornton gave evidence for Solar Hut that Solar Hut’s competition was ‘almost exclusively and predominantly… other photovoltaic retailers’. I do not think that that evidence demonstrates that the two products lack the quality of substitutability. Rather, it tends to show that photovoltaic systems are presently much more successful in the market place. Mr Mundy’s evidence not only shows that but, more importantly, it also shows that part of the demand for photovoltaic systems is being drawn away from the solar hot water market, an indicium of substitutability.
In those circumstances, the appropriate conclusion is that there is a more than trivial degree of substitutability between the two. Although I would not regard that as the sole test to be applied, it is a factor which, given the somewhat inconclusive nature of the other factors, warrants the conclusion that Solar Hut’s photovoltaic systems are goods of the same description as the solar hot water heating systems in respect of which Solahart’s first and second marks are registered. I do not think, however, that such reasoning supports the broader notion underpinning the third mark. In its case, the relevant apparatus would be those for heating or those for supplying water. Pitched at that level of generality it is not possible to say that photovoltaic cells are goods of the same description: wine may be a good of the same description as beer, but it would be altogether too much to say that wine is a good of the same description as a drink. So too here. A photovoltaic cell is not a good of the same description as water heating devices having no necessary solar element to them. In the end, therefore, I reach the conclusion that s 120(2)(a) is applicable to the first and second marks but not the third. I do that by asking, in terms of the provision, whether the goods are ‘of the same description’.
By contrast I do not think that that s 120(2)(b) is engaged. It is true, as Solahart submits, that Solar Hut’s solar roof panels are necessarily installed by skilled tradesmen so that it may be said that SOLARHUT has been used in relation to ‘services’, in particular, the services of those tradesmen. But the question is whether those services ‘are closely related’ to Solahart’s solar hot water heaters. I do not see how the installation of those panels can be ‘closely related to’ solar hot water heaters: cf. Colorado Group Ltd v Strandbags Group Pty Ltd (No 2) (2006) 69 IPR 281 at 287 [27] per Finkelstein J.
Having concluded that it is s 120(2)(a) alone which is engaged it is then necessary to determine whether infringement under that provision is established. We are concerned here, initially, with the period between 1 May 2009 and 6 October 2009. Infringement will be established if SOLARHUT is ‘substantially identical’ to the trademark SOLAHART or if it is ‘deceptively similar’ to that mark. By those words two different standards are erected. In considering whether two marks are substantially identical they are to be ‘compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison’: Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414 per Windeyer J. The word SOLAHART is not, in my opinion, substantially identical to the word SOLARHUT. One may accept that both feature the root ‘SOLA’ and that this, in turn, derives from a common invocation of the sun. But the word HUT looks different to HART not only in its length but in its structure too. SOLARHUT features the whole word SOLAR and with it the ‘R’ which is missing on an inspection of SOLAHART.
The question of whether the two marks are deceptively similar raises altogether different considerations. Section 10 defines a trade mark as deceptively similar to another trade mark ‘if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion’. The principles are not in doubt and are conveniently collected in the Full Court’s decision in Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 at 17-19 [72]-[81]: the question of deceptive similarity is not to be judged by a side by side comparison; instead, what is involved is a comparison, on the one hand, of the impression based on recollection of the applicant’s mark that persons of ordinary intelligence would have and, on the other, the impression such persons would get from the respondent’s mark; in that assessment aural similarity may be important. The risk of deception must be tangible but it is enough if an ordinary person entertains a reasonable doubt. So, too, in assessing the recollection of a mark allowance must be made for the frailty of human memory and this means that, when it comes to considering whether one mark so nearly resembles another that it is likely to cause confusion or deception, account must be taken of the imperfect nature of recollections. That principle extends even to marks which are not just invented words. Thus if a mark includes words which can be regarded as an essential feature another mark incorporating those same words may infringe the registered mark.
As the discussion above in the context of substantial identicality under s 120(2)(a) shows, there are, no doubt, visual similarities between the words SOLAHART and SOLARHUT. Both plainly invoke, or suggest, the word ‘solar’ and thereby a connexion with the sun. But this is hardly surprising in an industry literally focused on the sun. It is true that in SOLAHART the ‘R’ has been dropped from the word SOLAR but I do not think that is especially material. There will be many reasonable people who do not know, or who will not remember, that SOLAHART is missing the ‘R’.
On the other hand, HART and HUT are plainly different from a visual perspective. A person of ordinary intelligence’s recollection of the SOLAHART mark would, in my opinion, at least remember that the mark was not about ‘huts’ but something else. It may be for some that a connotation relating to ‘heart’ is lodged in their memory or for others, a kind of deer or for others yet an invented name with no meaning. None of them, however, is likely to recall that the mark is associated with ‘huts’ or other modest residential structures. A comparison, however, of the two marks by reference to how they sound and the recollection of a person of the two marks when spoken is, in this case, important. The difference between the two is nearly imperceptible. This is not only because the missing ‘R’ has little or no phonetic effect on the preceding ‘A’ but because the words HART and HUT sound almost the same. This is a case where the aural impression makes a decisive difference: the SOLARHUT mark is deceptively similar to SOLAHART within the meaning of s 120(2)(a).
It is necessary then to turn to the particular infringements alleged. To make good infringement it is necessary for Solahart to demonstrate that Solar Hut’s use of SOLARHUT was use by it as a trade mark.
In issue here is the period between 1 May 2009 and 6 October 2009 when the SOLARHUT mark was the name under which Solar Hut’s business was conducted and before its retreat into the SUNSAVERS brand. During that period SOLARHUT was allegedly used by Solar Hut in the following ways:
(a)as part of its then domain name at which was located an extensive website offering for sale photovoltaic systems. The trade mark used throughout that site at that time was SOLAR HUT;
(b)as part of the initial launch of the Solar Hut business which included television, radio and print advertisements. The television and radio advertisements included the visual depiction of SOLAR HUT and also its spoken rendition;
(c)sales by telephone; and
(d)sales by referral.
There is no question but that in May and June 2009 Solar Hut ran three television commercials in Adelaide and Melbourne. The first of these, entitled ‘Eclipse’, began with the appearance of what appears to be a solar eclipse. A male voice immediately said ‘Solar Hut will install solar power for just $899 if you qualify for the government rebate but you only have until May 10 before this offer disappears.’ As those words were said the screen gradually darkened to black. At no point in this first segment did Solar Hut’s name appear in writing nor did the brand set out above at [3] appear. When the screen became completely black, however, that logo did appear and at the same time the male voice said ‘visit solarhut.com.au right now for details’. The advertisement lasted 15 seconds. The second advertisement and third advertisements were not materially different. The radio broadcasts were similar; listeners were introduced to Solar Hut, told of the rebate scheme and invited to visit the website at Of course, during the radio advertisement the written words SOLARHUT could not appear. In both cases, it is clear that Solar Hut used the mark SOLARHUT as a trade mark.
A witness, Mr Cranch, gave evidence by affidavit for Solahart about the advertisements placed by Solar Hut but his evidence did not suggest the existence of a print advertisement. However, one of Solar Hut’s witnesses, Mr Branch, gave evidence in cross examination that there had been some advertisements in the print media. Only one advertisement was tendered from the June 2009 edition of the Have-A-Go News (issue no. 207). Mr Branch thought that this was a Western Australian publication. I therefore find that there were some advertisements in newspapers although I can affirmatively find only one specific one. The use of SOLARHUT in that advertisement was, however, plainly trademark use. There was some very limited evidence from Ms Tucker that Solar Hut used the mark SOLARHUT during telephone sales and since that proposition accords with commonsense I am prepared to infer that it did so use the mark. I was not taken to any evidence of telephone canvassing and I do not find that allegation proven.
On the other hand, there is no doubt that during its brief existence the Solar Hut website made extensive use of the mark SOLARHUT. It would be surprising indeed if it were otherwise. Leaving to one side for now the question of whether use of the domain name was, by itself, trade mark use (as to which see below) each use of SOLARHUT on the website was trade mark use.
On the second day of the trial, Solar Hut sought to amend its defence to include a plea under the closing words of s 120(2): ‘However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion’. At that time I refused that part of the application for reasons which appear below. It is not necessary therefore to consider the issues thrown up by that provision.
Insofar as the period between 1 May 2009 and 6 October 2009 is concerned my conclusions are therefore:
(a)the mark SOLARHUT was used by Solar Hut in respect of goods of the same description as the goods in respect of which Solahart’s first and second registered marks are registered;
(b)the mark SOLARHUT is not substantially identical to the trade mark SOLAHART but it is deceptively similar;
(c)the use by Solar Hut of SOLARHUT in its television, radio and newspaper commercials was trade mark use, as was its use during telephone sales;
(d)the use of SOLARHUT on its website was also trade mark use;
(e)in respect of each of those uses Solahart has established infringement under s 120(2)(a).
A further question then arises as to whether Solar Hut’s use of the domain name was also an infringement. This issue is to be considered across two different periods: first, the period 1 May 2009 to 6 October 2009 during which Solar Hut’s business was conducted under the name SOLARHUT from secondly, the period from 6 October 2009 to about 7 October 2010 during which Solar Hut’s business was conducted under the name SUNSAVERS from the website but during which period a consumer visiting would have been taken immediately to >
In the first period, the matter is to be approached this way. All of the issues which arise under s 120(2)(a) are the same as those which have already been considered save that one needs to examine afresh the issue of deceptive similarity (because the sign is not the same sign as SOLARHUT) and trade mark use (because Solar Hut submits that use in a domain name is not trade mark use). As to the first question, the use of is deceptively similar to SOLAHART. In the context of domain names, one should put to one side in the analysis the various accoutrement of domain names such as ‘www’ and ‘com.au’ to which consumers do not pay any substantive attention. These do not have any impact on the questions either of substantial identicality (from which analysis they must be excised) or on deceptive similarity. Consequently, I conclude that the use of SOLARHUT in the domain name was deceptively similar to SOLAHART.
The issue of whether use of a domain name is trade mark use is more difficult. The questions which arise in this area were usefully considered, and the authorities collected, by Kenny J in Sports Warehouse Inc v Fry Consulting Pty Ltd (2010) 186 FCR 519 at 552-556 [141]-[156] and I acknowledge the value and considerable advantage I have derived from her Honour’s reasons in what follows. A number of propositions should be accepted: first, mere registration of a domain name does not establish the infringement of a trade mark; secondly, where a cybersquatter does not seek to attract consumers to the occupied domain name but merely seeks to treat with the owner of the mark it is unlikely that trade mark infringement will be shown for there will be no goods or services being proffered to consumers to which the impugned sign, contained within the domain name, may be reasonably be seen as relating (‘[t]here could be a threatened infringement if one were to take seriously the suggestion that [the cyber squatter] intended to engage in the sugar trade’: CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408 at 416 [412] per Hill J); thirdly, where a person uses a domain name to attract consumers to a website which promises connexions with goods or services relating to the registered mark infringement may be established even if the owner of the domain name does not sell the goods or services and instead merely benefits from a flow of traffic over the website (Nissan Motor Co v Nissan Computer Corp 378 F.3d 1002 (2004) (9th Cir. 2004)); fourthly, where a domain name is used to conduct a website from which goods or services are sold the same kinds of questions which arise in ordinary trade mark litigation will arise, for in such cases the analogy between the sign on the front of a shop and the goods sold within will be established; fifthly, explicit advertising of the website in that context is obviously relevant for it will show more clearly the connexion between the sign and the service.
The application of those principles to the first period is as follows. Solar Hut advertised its products by reference to the mark SOLARHUT and invited consumers to visit the website at At that website, goods were available for purchase under the name SOLARHUT. It is not to be doubted, in those circumstances that what was involved was trade mark use. The domain name, in that circumstance, is properly to be viewed as largely analogous to a shop front.
It is then necessary to turn to the infringement issues which arose when Solar Hut, in the face of complaint from Solahart, ceased, at least in a direct sense, from using the mark SOLARHUT and retreated to a new brand, SUNSAVERS. Although there was some confusion about this early in the litigation, it now appears reasonably clear that on 6 October 2009 Solar Hut commenced operating from a new website called under the name ‘sunsavers.com.au’. Mr Branch gave evidence for Solar Hut that from 6 October 2009 it had stopped promoting its products and services under the SOLARHUT mark and was no longer carrying on business by that name.
In fact, however, the situation turned out to be somewhat more complex. That complexity was brought to light by the efforts of Solahart’s solicitor, Ms McDonald, in monitoring the website at Her periodic checking of that website revealed that access to it took an internet user through to Solar Hut’s new website at from which the business ‘sunsavers.com.au’ was conducted. Further, searching for ‘Solar Hut’ in the search engine maintained by Google Inc at brought up links to Ms McDonald was also able to locate at some usage of SOLARHUT up to 15 September 2010. This could be done by clicking through to the ‘Order Now’ page. I should say, however that this usage was somewhat de minimis. On that page, the words SOLARHUT do not appear at all, although it remained possible to purchase Solar Hut goods through the page. They appear instead only in the address window for that particular page which reads:
Although, as discussed above, use of a domain name may constitute trade mark use this is not a domain name but rather merely the name of a file accessed at the ‘sunsavers.com.au’ site. That conclusion is underscored by the clear references to the servers sub-directories also appearing in the name. That kind of incidental file reference is of little relevance except to those administering the website, almost never read by consumers and, in my opinion, is not trade mark use.
Be that as it may, Ms McDonald’s efforts did at least reveal that it was not correct to say, as Mr Branch initially did, that the domain name was not being used after 6 October 2009. Confronted with that fact, Mr Branch gave somewhat more detailed evidence about the history of the website. Solar Hut, until very recently, maintained only one website with a single internet protocol address (the ‘IP address’). That single IP address had been linked both to the domain name and also to by means of what is known as the ‘A-record’. This is the data field used in the domain name registration system globally for all top level domains and it directs the browser of users entering a domain name to the specified IP address. The effect of that process is to allow numerous alternative domain names to be linked to a single IP address. So viewed, and were merely two different doors on to the same webpage. It was precisely for that reason that Ms McDonald’s investigation of the former had revealed it to be active and to involve what appeared to be a redirect to the latter, although for reasons just given redirect is not strictly an accurate description of what occurred.
Mr Branch endeavoured to explain why Solar Hut had done this. There is no escaping the deliberate nature of the decision involved for there was tendered as Exhibit 8 an email chain between Mr Branch and a Mr Randall, the external web designer, which took place just before the launch of In response to a question from Mr Randall as to whether he wished to remain active Mr Branch responded ‘I want to keep solarhut for a couple of months and then we will re point it to sunsavers’ [sic]. Nor, in fairness, did Mr Branch seek to suggest to the contrary. The reason this had been necessary was, so he said, because of issues arising from the Federal Government’s solar rebate scheme. That scheme had been active when Solar Hut had first begun to trade. In order to claim the rebate, so Mr Branch testified, customers had to lodge an application with the Government, specifying, among other things, the product that they had purchased and the identity of the business from whom they had purchased it. There were also circumstances where the customer’s right to a rebate was assigned to Solar Hut for it to collect on their behalf. Mr Branch’s concern was, so it would seem, that the immediate disappearance of the website might very much complicate that process. His second concern related to the cancellation of the rebate programme on 9 June 2009. Mr Branch also gave evidence that ‘[c]ustomers who had placed orders before then were, among other things, under the false impression that they could not change to another supplier and still claim their rebate’. There was placed in evidence a number of press releases and internet news stories said to support the existence of this problem.
That state of affairs persisted, according to Mr Branch, until September 2010. As it happens, the concerns Mr Branch had in relation to the rebate scheme had no currency, according to him, after 31 July 2010, when installation of photovoltaic systems had to be complete to be eligible for the rebate. It followed that, even on Mr Branch’s view, there was no need for the domain name to continue after that date. Those customers with outstanding installations, challenging rebate refusal, had been informed of the switch to the SUNSAVERS brand after that time. On 14 September 2010, Solar Hut commenced operating the website from a new IP address and after that date the whole of the business was conducted through that page. That new page was designed and constructed by an external firm. The website was not redirected to this new IP address. In fact, as events transpired, the page at the original IP address persisted after 14 September 2010 although it was connected in the way described above to the original page (with the previous IP address).
Mr Branch says that he forgot that the website was still operating after 14 September 2010 and only became aware that it was, in fact, doing so when apprised of this by an affidavit prepared by Ms McDonald on 29 September 2010. He says he then gave instructions to terminate the site. He swore that from 7 October 2010 he was unable to access the site using >
Solahart invited me to find that the domain name was really kept alive in order to obtain the benefit of the Solahart trademark and not, as Mr Branch contended, to deal with the rebate issues to which he referred. Further, it was, I think, implicit that Solahart did not accept that after 14 September 2010 the use of the domain name was accidental.
I did not find Mr Branch’s evidence on this point at all persuasive. The first concern nominated by him was the need to keep the Solar Hut business alive for the purposes of making easier the administration of rebate arrangements. The difficulty with that explanation is that the purpose would not be served by maintaining as a doorway to It is difficult to accept that the rebate scheme’s efficacy depended on the presence of a mere domain name redirected to an apparently unrelated website. Nor is it possible to embrace his second argument. Mr Branch’s evidence did not explain either how the confusion in consumers’ minds, that they could not switch suppliers, arose; or how the existence of could be seen as assuaging it. And although in his evidence he said that various media reports attached to his affidavit recorded the same concern, those reports do not bear this out. In the same vein, I have difficulty accepting that in a context where Solar Hut was actively being sued about its website that Mr Branch simply forgot after 14 September 2010 that the website was still active. This evidence struck me as distinctly unlikely and redolent of a lack of professionalism which I did not otherwise apprehend in the conduct of Solar Hut’s affairs. The more likely inference, and the one I draw, is that Mr Branch intended to keep the Solar Hut website in place for as long as possible to take advantage of whatever the benefits of its continued existence might be.
Contrary to Solahart’s submissions, however, I am not persuaded that the perceived benefit was exploitation of the SOLAHART mark. It is much more likely that it was simply the exploitation of the goodwill generated by the initial period in which business was done under the mark SOLARHUT into which time and money had been invested and the departure from which was unwished for and involuntary.
One has, therefore, this position: the use of the word SOLARHUT as part of the domain name access to that address taking consumers to what appeared to be a different website – – at which identical goods were sold; and an intention by Solar Hut to exploit the goodwill in the mark SOLARHUT to attract business to its website conducted from The effect of the use of SOLARHUT in the mark was to increase the traffic to Solar Hut’s website. It was not used on a whim but as a sign whose only purpose was to increase sales of photovoltaic systems. This, within the principles I have outlined above, was trade mark use.
Although Mr Branch gave evidence that the website was completely taken down by 7 October 2010 it was submitted by Solahart that remnants of the site were still available, as links appearing in internet searches, during the time at which the trial was being conducted. No evidence was led to prove this. Accepting that that be so, however, I do not think that these matters can amount to trade mark use. I accept Mr Branch’s evidence of that matter and, consequently, that there was no trade mark use after 7 October 2010.
Conclusions on trademark infringement
Solar Hut has infringed two of Solahart’s three registered SOLAHART trade marks by using a deceptively similar mark SOLARHUT in its television, radio and newspaper commercials, on its website, as part of its domain name and during telephone sales by its staff. These infringements occurred between 1 May 2009 to 6 October 2009. After that date and until 7 October 2010 Solar Hut also infringed Solahart’s SOLAHART trade mark by using the mark SOLARHUT as part of a domain name which channelled customers to its website at >
I turn then to the passing off and s 52 claims.
II. Passing Off and Section 52
Solahart submitted that it had acquired a reputation in the name Solahart in connexion with solar power. That reputation meant that the word Solahart had acquired a secondary meaning such that any use of the word Solahart in connexion with solar hot water systems, solar energy systems, solar photovoltaic systems or renewable energy systems would indicate a connexion to Solahart itself. It then argued that Solar Hut’s use of the mark SOLARHUT suggested such a connexion. It was explicit in Solahart’s case that it did not rely upon any confusion with its get-up; the case was placed entirely on the reputation inhering in the word SOLAHART itself and not, in any way, on its brand flag.
Solar Hut submitted that Solahart’s reputation lay in its logo (set out above at [1]) and not in the word SOLAHART; that whatever reputation it had related to solar hot water heaters and not the more diffuse concept of ‘solar energy systems’; and, more significantly, that the brand flags, in which both the word SOLAHART and SOLARHUT were enmeshed, were so different that no possible confusion could arise.
Because the stratagems of traders are continually altering attempts to provide a completely comprehensive definition of passing off have proved elusive. ‘[T]he law of passing off’, Gummow J has observed, ‘contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in the short term’: Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 356. Whilst acknowledging the disparate collection of tests which do exist, it is safer, in general, to proceed by reference to three matters – ‘the classical trinity’ – reputation, misrepresentation and damage.
(i) Reputation
It is necessary to identify, in the first instance, whether Solahart’s goodwill resides in the word SOLAHART (as Solahart contends) or in its brand flag (as Solar Hut contends) or, possibly, in both. The evidence suggests, and I accept, that the logo depicted above in [1] has been used by Solahart since 1978. As Solar Hut correctly points out, the existence of goodwill in that logo is supported by the lengths to which Solahart goes to protect it. It points to the fact that all of Solahart’s dealers are bound contractually to use the Solahart logo in accordance with a 16 page style guide which lays out, in detail, the font, colour breakdown and tagline for a number of uses of the logo ranging from letterhead to vehicle signage through to clothing and advertising.
One may infer from this close superintendence of the logo that Solahart regards it as worth protecting and from that inference one may draw the further inference, which I do, that that position is adopted because the logo is a key element in attracting customers to Solahart’s business and distinguishing it from other businesses. I accept, therefore, Solar Hut’s contention that goodwill resides in the logo. It does not, however, follow that there is no goodwill in the word SOLAHART for they are not mutually exclusive propositions. Since 1955 Solahart has been carrying on business under the name SOLAHART selling solar hot water systems. In the process of carrying on that business it has engaged in extensive advertising under that name. It has done this under various logos. It seems to me that it is likely that it does have some goodwill in the name SOLAHART, independent of the logo.
Understandably, Solahart sought to emphasise the breadth of activities to which its goodwill in SOLAHART related. Included were not just solar hot water heaters but ‘solar energy systems, solar photovoltaic systems and renewable energy systems’. On the other hand, Solar Hut pursued the opposite strategy submitting that any goodwill which existed related only to solar hot water systems. The correct position lies somewhere between these polar extremes. Whilst it is true – recent history aside – that the mark SOLAHART has not been used to market photovoltaics, I accept that in the public mind there is a tendency to group together solar products regardless of their precise internal workings.
Although the matter cannot be stated with perfect precision, the aspects of substitutability referred to above are a reflection of the same proposition. Some consumers of solar hot water systems – by no means all – may be persuaded to buy photovoltaic systems instead of a solar hot water heater; the opposite is also possible. That partial intermingling or overlapping of the various solar industry markets makes it difficult to accept that the goodwill of a trader in any of those markets is confined to the particular market in which it presently operates.
For that reason I would accept that Solahart’s goodwill in the mark SOLAHART extends to its use not only in relation to solar hot water systems but also solar energy systems generally. If a member of the public were to see a photovoltaic system with the word SOLAHART emblazoned on it such a person would be likely to conclude that the system had been produced by, or had an affiliation with, Solahart. I reject, however, the notion that the goodwill in the mark SOLAHART would attach to the sale of renewable energy sources generally. The range of such sources is so disparate that one could not be confident that there was any association between those systems and Solahart’s business in the public mind. For example, a renewable energy system consisting of methane capture from untreated sewage is not one which I would expect the public to associate with Solahart. Other examples may be closer to the line. In any event, pitched at the level of generality of renewable energy systems the claimed goodwill cannot be accepted.
Granted, then, that Solahart did, and does, have goodwill in the word SOLAHART and granted further that that goodwill relates to solar energy systems including photovoltaic systems what consequences does this have? The answer, I think, is this: it means that if Solar Hut has intimated in its various uses of the mark SOLARHUT that there is a connexion between its business and Solahart’s then, subject to damage, passing off will be established.
(ii) Misrepresentation
In the trade mark part of the case I have accepted that SOLARHUT is deceptively similar to SOLAHART. One of the principal reasons I have accepted this is because of the way the two marks sound. However, the visual presentation of the two marks is entirely different and the two brand flags radically so. I do not accept that any person seeing the former could think for a moment that it was related to the latter. The only way in which any possibility of confusion arises is in the way the names sound. Insofar as the website is concerned I do not accept that a member of the public would be left wondering whether there was not perhaps some connexion with Solahart. This is not only because the words look different but because Solahart’s logo is quite plainly different to Solar Hut’s. I do not accept, in that circumstance, that visual depictions involving the word SOLARHUT could give rise to passing off.
The situation is otherwise in relation to the radio commercial. In that case, the public only heard the mark SOLARHUT said and, communicated in that way, it is indistinguishable from the way in which the mark SOLAHART is pronounced. I accept, therefore, that the radio commercial misrepresented a connexion between Solar Hut’s business and Solahart’s. A person listening to the radio commercial would think that the goods being advertised were Solahart’s goods. This leaves the question of damage.
(iii) Damage
Here Solahart’s case encounters a problem. The difficulty is that the confusion engendered by the radio commercial is so complete that it can only have worked to Solahart’s advantage. Any person who had heard the commercial and mistook the mark SOLARHUT for the mark SOLAHART would also have misunderstood the spoken invitation to visit the website at as an invitation to visit Indeed, any action by a listener to act on the deception engendered by the commercial can only have led the listener into the arms of Solahart. It is not possible, in that circumstance, to imagine that the radio commercial can have harmed Solahart; indeed, its misleading nature must have operated to the detriment of Solar Hut itself and to the benefit of Solahart.
It follows that the passing off case must fail. Whilst goodwill in the word SOLAHART did exist there was, apart from the radio commercials, no occasion on which the public would have been misled into thinking that Solar Hut’s business was related to Solahart’s. In the case of the radio commercial whilst it is true that such a confusion could easily have arisen it could have caused no loss which is an essential element of the cause of action: Reckitt & Colman Products Ltd v Borden Ltd [1990] 1 WLR 491 at 510-511. It is true that the issue of damages had been separated from that of liability for the purposes of the present trial but that division was concerned with the issue of quantum. In the present context one can be quite sure no loss could have been suffered. The passing off claim therefore fails.
The claim under s 52 of the Trade Practices Act fails for the same reasons. The written representations were not misleading or deceptive. The radio commercial was but it could not have resulted in loss to Solahart.
Conclusions on Solahart’s claims against Solar Hut
It follows from all of the above that in this first part of the case:
(a)Solahart has succeeded in demonstrating an infringement of two of its registered trade marks under s 120(2)(a) by reason of Solar Hut’s use of the word SOLARHUT on its website, as part of its domain name, in its television, radio and newspaper commercials and by reason of its telephone sales.
(b)Solahart’s case based on s 52 of the Trade Practices Act and passing off fails.
I turn then to the second part of the case.
III Rheem’s case against Solar Hut
Rheem’s case is that it has acquired goodwill in the mark SOLARSAVERS. It says that it set up the website in or around May 2009 and from that website advertised its goods and services. Substantial sums of money were spent on television commercials in metropolitan, regional and pay television stations. It says that it has also promoted the SOLARSAVERS mark through the websites of some of its own customers (who are themselves distributors). In consequence, whilst accepting that the mark is relatively new nevertheless Rheem says that it does have goodwill attaching to the word SOLARSAVERS. That being so, it contends that Solar Hut’s use of the mark sunsavers.com.au to sell its photovoltaic systems constitutes both misleading and deceptive conduct as well as passing off. Why? Because the mark sunsavers.com.au is either ‘substantially identical with or deceptively similar to’ the SOLARSAVERS mark. That allegation is couched in the language of s 120(2) of the Trade Marks Act but Rheem does not directly put such a case for it does not rely on a registered trade mark.
In my opinion, for reasons which follow, this case has little merit. As has already been noted, Rheem is one of the largest manufacturers of gas water heaters, electric water heaters and solar hot water systems in Australia. It has traded under that name in Australia since 1936 and in the United States since just before the Great Depression. Since 1953 it has owned the registered trade mark 114668 in respect of hot water systems and all other engineering, architectural and building contrivances. That mark is as follows:
In around 2001 there were put in place a series of complex rebate and subsidy arrangements for various solar industries. Some were means tested; some were not. The amount of the subsidy varied between the devices involved. It is not necessary to set out in any detail what these arrangements were or how they varied over time as political enthusiasm for greener energy policies has waxed and waned. It is not necessary to do so because all that matters for this case is the single fact that this morass of schemes was essentially incomprehensible to ordinary people. That is not to criticise the operation of the schemes or to pass comment on their substance. It is instead merely a reflection that complex government policy – particularly where political compromise interacts with environmental enthusiasm – is likely to give rise to intricate administrative arrangements.
The difficulty which existed in the public’s understanding of the refunds and rebates available engendered in Rheem a commercial desire to explain to the consuming public just what was available. In or about December 2008, Rheem decided to create a service to provide easy to understand information about the rebates which were available and also about Rheem’s own goods and solar products. Mr Ben Murphy, who was the group products manager for renewables at Rheem (and who is now the new business development manager) conceived the name SOLARSAVERS to identify that service. Just before Christmas 2008, Mr Murphy activated the necessary internal procedures at Rheem to seek the registration of SOLARSAVERS as a trade mark. Because it will presently be of some relevance, it should be noted that Rheem sought to register the mark in class 35 for ‘commercial information and advice for consumers relating to water heating installations’; that is to say, not as a mark in respect of goods but instead as a mark in respect of services. Because Rheem does not seek to rely upon this mark it is of no direct relevance; but its registration with respect to services is consistent not only with the idea underpinning the original inception of the SOLARSAVERS concept but, as will appear in due course, with the manner in which that word was, in fact, used.
Mr Murphy’s evidence attempted to show the use of the SOLARSAVERS mark in a number of different media. These included television commercials, websites, magazine publications, specialised promotional publications, newspaper advertisements and business cards.
It is convenient to begin with the websites. Mr Muphy’s evidence disclosed that Rheem maintained three websites: and which it is convenient to call the RheemSolarSavers site, the SolarSavers site and the Rheem site respectively. In fact, the RheemSolarSavers and SolarSavers websites are identical in content and Rheem only advertises the existence of the RheemSolarSavers website.
There were placed in evidence print outs from these websites at various dates which show the use to which the mark SOLARSAVERS was put. So far as the two identical RheemSolarSavers and SolarSavers sites are concerned the following features are, I think, particularly important:
(a)at the top of each page of the site the word SOLARSAVERS appeared in large type;
(b)it was on every occasion accompanied on its immediate left by the stylised word Rheem in a circle (above at [82]) so that together the appearance was as in the logo set out at [9] of these reasons;
(c)the websites provided pages which contained information about rebates and upgrades;
(d)there were hot water systems identified on the website such as, for example, the ‘Vulcan Split System’ but, and perhaps rather to the contrary of the impression engendered by Rheem’s written submissions, in no case were these goods marketed by reference to the word SOLARSAVERS.
Insofar as the Rheem website is concerned it is to be observed that the primary branding of the site, as one might expect, was under the Rheem brand; that is, the word Rheem in a circle. The phrase ‘Install a Rheem’ also frequently appears. The appearance of the word SOLARSAVERS is modest. A small logo appears on parts of the website bearing this question: ‘Solar rebates confusing?’ and having immediately underneath it the RheemSolarSavers logo accompanied by the website address Sometimes this appears as a pop-up.
The effect of the web pages in terms of branding is, I think, quite clear. SOLARSAVERS is an information service operated by Rheem and responsible for dispersing information about, inter alia, solar rebates. The service offered by the RheemSolarSavers and SolarSavers websites was the free provision of information about solar rebates. But the marketing of those websites was not under the name SOLARSAVERS by itself but instead under the RheemSolarSavers mark. It is that mark which appears on the sites and it is that mark which is used not only on the Rheem site itself but as the publicly advertised domain name >
That said, there is some ambiguity as to whether what was being marketed was an information site under the name SOLARSAVERS from which information about solar rebates and Rheem’s goods was available or whether, instead, what was being marketed were those same matters under the RheemSolarSavers mark. Solar Hut submitted it was the latter so that Rheem’s goodwill did not reside in the word SOLARSAVERS alone. In that regard it drew attention to the existence of numerous sites provided by Rheem to its distributors which were essentially in the same form as the front page of the RheemSolarSavers site but with the branding of the distributor rather than Rheem. There was, for example, a website in the SOLARSAVERS format for Reece hardware: reecesolarsavers.com.au. On that website the brand Rheem was replaced by the word ‘Reece’. The page did, however, make extensive reference to the RheemSolarSavers site. Similar pages were maintained for a number of other businesses involved in the distribution and installation of hot water services.
In addition to its internet presence, Rheem also ran two television commercials each of 15 seconds duration. Each commenced with a smiling person having what is plainly a hot shower. In the first commercial, over pleasant but innocuous background music, there are heard the words ‘here’s another reason to smile with Rheem Solar; with government rebates and incentives you’ll save thousands of dollars’. Alluring images of hot water tanks are then briefly flashed on the screen. The shower scene then fades and is replaced by an image of a roof with a solar panel on it. At the bottom of the screen are the words ‘$ave thousands in government rebates and incentives on solar water systems’. The roof then disappears and is replaced by a blue screen (which is probably, but not certainly, a moist showerscreen). Most of the screen is filled with the red Rheem logo (that is, the word Rheem in a circle in red font above at [82]). At the top of the screen in white appears the words ‘Install a Rheem. Australia’s No. 1’. At the bottom of the screen appear the words in white lower case ‘rheemsolarsavers.com.au’. At the same time the male voice over says ‘to find out how visit rheemsolarsavers.com.au’. In the background, a small vocal group encourages the viewer to ‘install a Rheem’ in what is certainly a major key. The second commercial is materially similar but refers to gas hot water systems rather than solar.
These cheerful commercials were broadcast on metropolitan television on the Seven, Nine and Ten networks between May and October 2009; that is, for a period of six months. In the month of May 2009 they were run almost everyday on Channels Seven and Nine and thereafter sporadically. On Chanel Ten they were broadcast from July onwards to October. Although it was by no means a saturation campaign it is appropriate to conclude that it was substantial and of reasonable intensity. I will not set out the details of the broadcasts on regional and pay television; it suffices to say that they were of a corresponding order. Evidence was placed before me of the cost of the campaign which, in order to avoid disrupting competition in the advertising market, I will not set out. It may be noted, however, that the expenditure was substantial.
The television campaign was complimented by a limited programme of newspaper and magazine advertisements. I do not regard these, however, as being of any real significance. There were only two newspaper advertisements in evidence: one in the 16 August 2009 edition of The Sunday Telegraph and one in the 29 July 2009 edition of the Wingham Chronicle. The former was part of a special report on solar hot water rebates which was four pages in length. The last page consisted of a full page ad headed ‘Solar rebates confusing?’ followed by an invitation to visit the RheemSolarSavers website. The Wingham Chronicle advertisement was similar although not whole page in size. Naturally too, its effect would have been limited to Wingham and its immediate surrounds.
The magazines were not mainstream magazines like New Idea, The Spectator or Zoo Magazine but were instead trade journals such as Plumbing Connection, Building Connection and Australian Plumbing Industry. Volume 25 No 3 of Australian Plumbing Industry (the Winter 2009 issue), for example, carried an advertisement which began ‘Solar rebates confusing?’ and which was similar to the advertisements carried in the newspapers discussed above; the others carried advertisements for the ‘MPs-325 Split Design Heat Pump’ which was advertised under the Rheem brand and which concluded, in relatively small type, ‘Call 132 552 for more information or visit
Mention, too, should be made at this point of a series of flyers which were distributed by Rheem at various trade outlets. These totalled 140,000 in number and appeared in trade outlets and trade stores such as Reece and Tradelink. These advertised hot water systems by reference to the savings which could be made from rebates. At the foot of each appeared the words ‘To find out more visit Finally, Rheem provided its sales staff with 200,000 business cards emblazoned with the words The cards also featured the phrase ‘Solar rebates confusing?’ and the Rheem mark, but did not otherwise feature the SOLARSAVERS mark. Although there was no direct evidence of this I infer that some of these cards have been distributed, most likely to distributors.
What was the effect of this promotional activity? Mr Webb SC, who appeared for Solar Hut, submitted any goodwill lay in the RheemSolarSavers mark and not in SOLARSAVERS by itself; further he contended that the use was too recent to admit of any ready conclusion that goodwill had been created.
I accept that Rheem has succeeded in establishing that it has goodwill in the mark RheemSolarSavers. It was that mark which was the subject of the television and print campaigns, which formed the core component of its publicly advertised domain name and which has been the focus of its advertising efforts. But I do not accept that it has any such goodwill in the name SOLARSAVERS by itself. That name has not been used by Rheem on its own, save as a passively existing domain name.
However, the conclusion that Rheem has goodwill in the RheemSolarSavers mark does not assist it. The question is whether the use by Solar Hut of the SUNSAVERS logo (above at [4]) might cause a consumer to wonder whether there was some connexion with Rheem’s business. There is, in my opinion, no chance of that occurring. The logos are so different that no risk of confusion arises. One is plainly associated with Rheem; one is not. I do not think that any ordinary reasonable member of the class of consumers constituted by those interested in solar products would think that was in any way connected to Rheem. Consequently, both the claim based on passing off and that based on s 52 of the Trade Practices Act must fail.
IV. Solar Shop
Both Rheem and Solahart pursued a claim in the pleadings against Solar Hut’s parent company, Solar Shop. That claim principally assumed that everything which was done by Solar Hut was done by Solar Shop. I did not apprehend that case actually to have been pressed but if it had been I would have rejected it as contrary to axiomatic principles of company law. A case was also pursued that somehow Solar Shop was involved in the promotion of Solar Hut. The only evidence relating to this consisted of Ms Tucker’s testimony of her discussion with Bart/Bert which I have already concluded is unreliable. It would, in any event, have fallen very well short of what would be required to make good such a case.
V. Amendment to pleadings
On the second day of the trial (which lasted three days) Solar Hut applied for leave to amend its defence. Solahart and Rheem consented to most of the amendments but opposed a grant leave in respect of two paragraphs. The amendments to those paragraphs sought to raise the defence conferred by s 120(2) of the Trade Marks Act. At that time I refused the application and indicated that I would provide reasons at a later stage. These are those reasons.
The defence contemplated by s 120(2) of the Trade Marks Act is a defence to a claim for infringement made under the same provision; that is, the section both confers a cause of action for infringement and, at the same time, establishes a defence to that self-same action. Solahart made an infringement claim under s 120(2) by alleging that the respondents’ use of SOLARHUT in relation to its photovoltaic systems was use which was substantially identical or deceptively similar to Solahart’s registered mark SOLAHART. The defence conferred by s 120(2) is, it will be recalled, in these terms:
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
Solar Hut submitted that it should be permitted to add, to its defences to the claims under s 120(2), a defence based on this provision because the inquiry mandated by the provision largely overlapped with the factual inquiry already demanded under the rubric of deceptive similarity. Furthermore, so it was submitted, the question of whether the use of SOLARHUT was likely to deceive or cause confusion had already arisen in substance under Solahart’s alternate allegations based on passing off and s 52 of the Trade Practices Act.
There are legal subtleties about the operation of the expressions ‘substantially identical’ and ‘deceptively similar’ in the context of s 120(2) (and subs (1) which is not relevantly different). Substantial identicality is to be determined, as discussed above, by examining the impugned sign side by side with the registered mark. But quite a different inquiry obtains in the case of deceptive similarity. There what is required instead is a comparison between ‘on the one hand, the impression based on recollection of the plaintiff’s mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant’s television exhibitions’: Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 415 per Windeyer J. That test is broad enough, so it seems, to embrace an analysis of similarity ‘considered in relation to the circumstances of the goods, the prospective purchasers and the market covered by the monopoly attached to the registered trade mark’ (New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549 at 589 per Gummow J; cited with approval by successive Full Courts in the Hill of Grace/ Hill of Gold case, CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 at 62 [44], and Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1 at 21 [87]).
Such an approach widens the palette so that the inquiry may range beyond the mere form of marks themselves. But, broad though that approach may be, it does not take into account reputation or, at least, not generally. So, in Henschke, the Court thought that it was difficult ‘to see what relevance the reputation an applicant may have in a particular mark (even the ‘icon status’ of that mark) has in an action for infringement brought in reliance on s 120(1) of the TM Act’ (at 62-63 [45]). Despite the breadth of that principle, reputation can be examined under the principle that ‘in assessing the nature of a consumer’s imperfect recollection of a mark, the fact that the mark, or perhaps an important element of it, is notoriously so ubiquitous and of such long standing that consumers generally must be taken to be familiar with it and with its use in relation to particular goods or services is a relevant consideration’ (Henschke at 66 [52], Crazy Ron’s at 22 [90]). Quite how all this squares with the words ‘deceptively similar’ or the fact that s 120(3) explicitly deals with the topic of well-known marks is not presently a relevant inquiry.
It will thus be seen that the reputation of the SOLAHART mark is likely to be irrelevant to the question of whether the SOLARHUT mark is deceptively similar to it. However, the wording of the defence erected by s 120(2) directs attention to the manner in which the impugned sign was used and that use’s capacity to confuse or deceive. As a matter of theory, the defence must embrace situations where a sign has been found to be deceptively similar to the registered mark by reason of the comparison contemplated in Shell Co. The particular point to be emphasised here is that the infringement issue thrown up by s 120(2) does not, at least directly, involve an analysis concerning notions of reputation whereas the defence conferred by the same provision may well do. In that last regard, it should be noted that neither party took me to any authority about the operation of the defence in s 120(2).
As the issues for trial stood on the second day of the trial Solahart was obliged to prove that the use of SOLARHUT was misleading or deceptive and to do so by reference to a range of factors extending beyond the bare appearance of the mark. So much flowed from its claims under s 52 of the Trade Practices Act and for passing off. Further, that affirmative case was going to involve, almost inevitably, an attempt to prove the existence of a reputation in the word SOLAHART. Under the trade mark infringement case matters stood somewhat differently. Solahart still bore the onus of proving that SOLARHUT was deceptively similar to SOLAHART but this burden could be discharged without a consideration of the reputation of SOLAHART. If the defence under s 120(2) were to be raised it would mean that Solahart would be obliged to meet, as a matter of defence, some form of claim that the manner in which the SOLARHUT mark was used was not deceptive. Solar Hut’s attempts to prove that could proceed either by showing that there was no relevant conduct towards consumers (whether by representation or otherwise) or, even if there were, that the absence of any reputation in SOLAHART meant that whatever had occurred was not confusing or deceptive. It is true that Solahart bore an onus in its own s 52 and passing off claims to prove the reverse of those propositions but being in a position to put an affirmative case is not the same as being in a position to defend the corresponding negative case. To take a simpler analogy, a plaintiff who alleges the existence of a contract is not necessarily to be assumed to be in a position to meet a defence that there is no such contract. The positive case may be proved by some simple method such as the tender of a document but the defence to the negative case may be far more wide ranging including, for example, illegality, frustration and so on. Of course, that need not be the case. It is possible that the disproof of the negative case and the proof of the positive case may correspond; but the present point is that it is not inevitable that they do. I do not accept therefore that Solahart’s putting of the positive case inevitably implies its complete preparedness to meet the negative case.
Ms Goddard SC, for the applicants, did not seek to overstate the prejudice which might be suffered by reason of the amendment. She did not say that she would require an adjournment to meet the amendments and she did not say that she could not cross-examine the respondents’ witnesses. She did, however, indicate that it would require additional thought and emphasis and some inconvenience. I accept this. There exists, therefore, a species of prejudice at the lower end of the spectrum. There is also, I think, an additional problem which is that the operation of the defence in s 120(2) is not presently known with any great precision. It is natural to be concerned that the case may be conducted on one view of its operation and then the defence be found to operate in an entirely different manner.
I would not regard the three matters to which I have made reference (being thought, emphasis and some inconvenience) as being in their nature grave or insurmountable. They do exist, however, and whilst they are modest none is trivial. That is important when one comes to consider what the interests of justice require. No evidence was placed before me to explain why it was that the defence under s 120(2) was only sought to be added on the second day of the trial. The reasons for it are, however, tolerably clear. In its outline of opening submissions Solar Hut did pursue the defence under s 120(2) (see paragraph 29(b)). During his opening, Mr Webb SC suggested that s 120(2) operated such that it was for Solahart to prove that Solar Hut’s use of SOLARHUT was confusing or deceptive which brought forth from Ms Goddard SC the objection that this was not so having regard to the defence conferred by s 120(2). It is that concatenation of events which explains why the application was made when it was. But the reference to the defence in the outline of submissions well shows that the issue was a live one in Solar Hut’s camp before the trial commenced. Those submissions were dated Friday 8 October 2010 and the trial did not commence until the following Tuesday, 12 October 2010. All of that takes on an increased significance when there is brought to account, as in my opinion there must be, Solar Hut’s own successful resistance of Solahart’s attempts to amend its statement of claim the previous Friday, 1 October 2010: Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No 1) (2010) 86 IPR 337. That amendment, of course, related to Solahart’s contention that its mark was a well-known one within the meaning of s 120(3). Similar considerations led me to refuse that application.
I do not think that an amendment in the present circumstances would have been out of the question. However, in order to accede to the application it would have been necessary to understand when it was that Solar Hut first understood that it wished to pursue the defence under s 120(2) and when the decision was made to take some step in that regard. As presently advised, and without the assistance of any evidence from Solar Shop to explain what occurred, it seems to me that the issue had arisen no later than 8 October 2010; that a decision was made not to seek to amend the defence prior to trial; and that this decision was revisited when Ms Goddard SC objected to Solar Hut’s elegant, but unsuccessful, attempt to finesse the defence in under the guise of a proposition concerned with the onus of proof.
In that circumstance, I am deprived of the ability to weigh the modest prejudice involved against the injustice caused by not permitting the amendment to occur. Authority establishes that explanation is required where there has been some delay in making an application for an amendment: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 215 [103] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. There is no reason to think that that principle is necessarily limited in its scope to the prejudice constituted by the delay. Without adequate – or some – explanation for the late raising of an amendment it is not generally desirable to permit the amendment if so doing will occasion prejudice of any species. No doubt with lesser forms of prejudice – as here – not much in the way of explanation is likely to be required. But without that explanation, the balancing exercise required cannot be undertaken and the applicant for leave on each occasion simply fails to prove where the interests of justice lie.
It was for those reasons that I declined to grant leave to amend the defence to raise a fresh defence under s 120(2).
VI. Confidentiality
Following the conclusion of the hearing the parties invited me to make orders pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) suppressing evidence which had been tendered, broadly, on the grounds of commercial sensitivity. The power of the Court to make such an order is undoubted but it is enlivened only when the order is ‘necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth’: Hogan v Australian Crime Commission (2010) 240 CLR 651 at 663 [29].
This is a high threshold involving, as it does, the notion of necessity. It reflects the fundamental principle that justice be done in the open, where it can be seen. That principle can often be unpleasant for litigants. But it secures the important value of transparency. The Full Court of this Court has observed that the reference to the security of the Commonwealth well shows that the kinds of matters likely to be involved are not trivial: Australian Broadcasting Corporation v Parish (1980) 43 FLR 129 at 133 per Bowen CJ; see also Hogan at 664 [30]. One may, for example, exclude at once the idea that evidence should be suppressed because it is embarrassing or even inconvenient.
Of course, there are well known areas in which it is accepted that the administration of justice requires suppression. The Court will not permit the publication of evidence identifying informers or those who are subject to blackmail: John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 ALD 471 at 474 per Kirby P and 488 per Mahoney JA, with whom Hope AJA agreed at 495. Nor will the Court force those seeking to protect trade secrets to divulge them in public: see Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [13] per Greenwood J; Qantas Airways Limited v Rolls-Royce PLC [2010] FCA 1481 at [21] per Rares J.
That last proposition is itself an example of a broader proposition which is that in commercial causes neither party should be required by the very process of the suite itself to suffer significant commercial harm. Thus the Court will not compel a corporation to disclose its marketing strategies where there is compelling evidence that the release of such information will confer a benefit on competitors and a detriment in the party seeking the order: see Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [13] per Greenwood J; Yara Australia Pty Ltd v Burrup Holdings Ltd (No 2) [2010] FCA 1304 at [21], [25] per Barker J; and my own decision in Betfair Pty Ltd v Racing New South Wales (No 5) [2009] FCA 1011 at [30].
But, and this should be emphasised, the risk must be real and the evidence compelling because the order reversing the ordinary principle of open justice is not to be made lightly. The requirement of s 50 is not inconvenience or suspicion or concern; it is necessity and only proof positive of necessity will enliven the power.
Solahart sought the making of an order pursuant to s 50 that large tracts of the evidence remain confidential and not be published beyond counsel and solicitors. I deal with each item of evidence.
Confidential Exhibit SC1
This exhibit contains the sales figures for Solahart from 1981 to 2009. Mr Mark Jackman, the Chief Financial Officer of Solahart gave evidence by affidavit that this information is commercially sensitive. Broadly speaking he thought that it would assist Solahart’s competitors to know the sales figures so as to compete.
I do not accept that such information before 2007 could possibly assist a competitor. On the basis that 2007-2009 may reveal the existence or non-existence of a trend having continuing contemporary relevance I would be prepared to make an order in relation to those years.
Confidential Exhibit SC3
This exhibit contains the overall advertising expenditure of Solahart for 2004-2010. Mr Jackman swore that release of this information would assist competitors in business planning, determining market investment and how much to spend on marketing. I do not understand how this could be so. Presumably the competitors are already aware of the extent of Solahart’s advertising and, no doubt, the approximate costs of advertising in general. I cannot see that any great delicacy can subsist in such general information.
Confidential Exhibit SC5
This exhibit is a series of spreadsheets setting out Solahart’s television advertising plans for various periods. They show, by reference to particular TV programmes, when the commercials were to run. They also show the cost. From Solahart’s perspective, I do not regard this information as requiring a s 50 order. The timing of an advertisement is a public fact. I do, however, regard the rates which the media supplier was charging Solahart as requiring such an order. Plainly enough, disclosure of the media supplier’s rates may have an impact on its negotiations with other purchasers. I will not make the order which was sought but I will make an order suppressing those figures. This will require the production of two sets of exhibits; one redacted available for public inspection; one set available only to the parties’ lawyers.
Confidential Exhibit SC6
This exhibit contains Solahart’s total approximate television commercial spend from 2004 to 2010. For reasons given in relation to Exhibit SC3 I do not accept that this warrants an order under s 50.
Confidential Exhibit SC8
This exhibit sets out the total costs to Solahart in conducting the Solahart websites. Mr Jackman says that it would assist Solahart’s competitors in formulating their business strategies for market investments to know how much was spent on the websites. He also says that it would assist them in knowing how much to spend. I do not agree. Knowing that Solahart pays a certain amount to run its websites assists no-one.
Confidential Exhibit SC9
This exhibit reveals the amounts paid by Rheem, for various advertising services. Because it discloses the rates charged by the media supplier I am prepared to suppress the dollar figures in this document. Mr Jackman said that the document disclosed the identity of the search engines in respect of which Rheem used search engine key listings. This is true. I do not, however, regard that information as having any particular value. There are no names on that list which are in any way surprising. It is true that the exhibit reveals the websites on which Solahart has sought to advertise but those advertisements necessarily occur in the public domain. The fact of them is not secret.
Confidential Exhibit SC10
This exhibit discloses the print media advertising schedules. Insofar as it discloses the rates paid, an order under s 50 is appropriate. Insofar as it discloses the fact and nature of particular advertisements these are already in the public domain and an order under s 50 cannot be ‘necessary’.
Confidential Exhibit SC11
This exhibit discloses the amounts of money spent by Solahart on attending trade shows. Mr Jackman gave evidence that this would assist competitors but that, with respect, seems to me a most unlikely proposition.
Confidential Exhibit BM1
This exhibit contains a list of all of Solahart’s customers who have bought goods marketed through the SOLARSAVERS site between September 2008 to February 2010 and the number of units purchased in each case. I accept that the release of this information to competitors would deleteriously affect Solahart and a s 50 order should be made in relation to it.
Confidential Exhibit BM2
This exhibit is similar to Exhibit BM1 and shows sales for particular hot water heaters for the period May 2009 to February 2010. For the same reasons it is entitled to protection.
Confidential Exhibit BM3 and BM5
These two exhibits, between them, disclose the amount of money spent by Solahart on advertising during the period May 2009 to February 2010. For reasons already given I do not accept that it is appropriate to suppress details of this spend.
Exhibit 1
This is a letter from Energy Aware Pty Ltd to Rheem. It suggests a commercial relationship under which Energy Aware would provide certain services, relating to installation, to Rheem. It contains terms as to rates. I accept that those rates should not be made publicly available. The appropriate course is, as before, to place a redacted version of the exhibit in evidence to be publicly available but limit access to the complete document to the parties’ lawyers.
Exhibit 15
This exhibit consists of Solahart’s standard form dealership agreement. The parties are agreed that a redacted version should replace the current Exhibit 15, which should occur. However, Solahart also seeks s 50 orders in relation to cll 5.7, 6.1, 6.9, 6.17, 6.20, 6.21 and the definition of ‘default rate’ in cl 21.
Clause 5.7 deals with the prices which may be charged to Solahart’s dealers. Mr Jackman says (of all of the clauses in which such a claim is made) that knowledge of that matter would give its competitors an advantage in treating with would-be dealers. I accept that this is so. Clause 5.7 should remain confidential.
Clause 6.1 requires the dealer to take certain steps in relation to marketing. I do not accept that the revelation of its contents would prejudice Solahart.
Clause 6.9 requires the dealer to maintain a showroom in a particular way. There is nothing warranting the suppression of this clause.
Clause 6.17 regulates the issue of how advertising aids are to be paid for. Disclosure would assist in the negotiation of terms and it is appropriately the subject of an order.
Clauses 6.20, 6.21 and the definition of ‘default rate’, if disclosed, would tend to indicate important financial aspects of the agreement. They should remain confidential.
In relation to all of these exhibits, except the distribution agreement, where a s 50 order is indicated it must be drafted so as to expire at the end of 31 December 2013. I do not accept that any of the material will be sensitive thereafter. In the case of the distribution agreement that temporal limit is not necessary.
VII. Conclusions
Solahart has succeeded in its trade mark claim in relation to two of its marks but failed in relation to its third. It has also failed on its claims in passing off and s 52. Rheem has failed in both of its claims. There remains the question of damage to be tried. This will need to be subject to trial preparation orders. I will hear the parties on costs if they wish. My preliminary view is that each party should bear its own costs having regard to the parties’ relative successes and failure. The directions I will make are that the parties provide to my associate by 5 July 2011 short minutes of order by consent giving effect to these reasons, failing which the matter will be listed for directions on 6 July 2011. The respondents are to file an amended defence pursuant to the grant of leave given on 13 October 2010 so that the Court file may be regularised.
I certify that the preceding one hundred and thirty-eight (138) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 21 June 2011
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