Targetts Pty Ltd v Target Australia Pty Ltd

TARGETTS PTY LTD v. TARGET AUSTRALIA PTY LTD
No. TG1 of 1993
FED No. 259
Number of pages - 19
Trade Practices - Passing Off

COURT

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIAN DISTRICT REGISTRY
GENERAL DIVISION
Heerey J(1)

CATCHWORDS

Trade Practices - misleading and deceptive conduct - entry by large mainland trader into Launceston market - local trader having substantial reputation in same field of trade under a similar name and logo - nature of misleading and deceptive conduct - whether erroneous assumption of consumers - whether different styles of operation sufficient to negate assumption of connection between businesses - perception of local consumers - likely ways of deception - exercise of discretion by court - promotion of competition - Trade Practices Act 1974 (Cth) s.52(1).

Passing Off - existence of local reputation - likelihood of deception - whether actionable passing off.

Trade Practices Act 1974 (Cth) s.52(1)

Annand and Thompson Pty Ltd v Trade Practices Commission (1979) 40 FLR 165.

Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302.

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216.

McWilliam's Wines Pty Ltd v McDonald's Systems of Australia Ltd (1980) 49 FLR 455.

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

Reckitt and Colman Products Pty Ltd v Borden Inc (1990) RPC 341 at 406.

Siddons Pty Ltd v The Stanley Works Pty Ltd (1991) 29 FCR 14 at 17.

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.

HEARING

LAUNCESTON, 5-7 April 1993

#DATE 26:4:1993

Counsel for the applicant: W J Martin QC and R Pearce

Solicitor for the applicant: Douglas and Collins

Counsel for the respondent: R C Macaw QC and B N Caine

Solicitor for the respondent: Corrs Chambers Westgarth

ORDER

THE COURT ORDERS THAT:

1. The respondent Target Australia Pty Ltd, by itself or its servants or agents, is restrained from using in connection with any business of retail sale of clothing, footwear or manchester products within 30 kilometres of the intersection of Charles and Brisbane Streets, Launceston

(i) the name "Target" and/or

(ii) the logo

(LOGO OMITTED)

2. The application be adjourned for further directions on a date to be fixed on seven days notice.

3. Liberty to apply is reserved.

4. The respondent pay the applicant's costs to be taxed, including reserved costs.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

JUDGE1

Introduction

HEEREY J As its name might suggest, this case arise from a dispute between two traders using very similar names. The applicant Targetts Pty Ltd (Targetts) has for many years carried on a retail clothing and footwear business in Launceston. The respondent Target Australia Pty Ltd (Target) operates some 82 discount department stores throughout mainland Australia. It is about to commence trading in Launceston. Targetts claim that by so doing Target will contravene s.52 of the Trade Practices Act 1974 (the Act) and also commit the tort of passing off. Targetts - History

In the mid to late 1950s Mr Cliff Targett established a small retail men's clothing business at 160 Brisbane Street, Launceston. The business was called "Cliff Targett" but was colloquially referred to as "Targetts". The main stock consisted of men's workwear such as work trousers, shirts, jumpers, coats and working footwear.
On 15 November 1965 Mr John Notley Symons and his wife purchased the business from Mr Targett. Soon afterwards Mr and Mrs Symons, who operated the business as a partnership, formally changed the name to "Targetts". The word always appears in upper case and without the possessive apostrophe. It is pronounced with the emphasis on the first syllable.
In 1970 the business moved to larger premises at 123 Charles Street, about four times the size of the Brisbane Street shop. The range of stock was expanded to introduce general menswear.
On 29 June 1976 Targetts was incorporated and continued to operate the business under that name.
In 1977 Targetts purchased a retail footwear business called "Roses Footwear" which was conducted from premises at 140 Charles Street.
In 1982 the next door shop at 123A Charles Street became vacant. Targetts took over this shop and opened a men's sportswear department which stocked men's sports clothing and footwear as well as a small range of ladies' sports clothing and footwear.
In 1984 Targetts purchased a schoolwear clothing business previously operated by a company called McKinlays Pty Ltd as a department of its general clothing business. This business was moved to the premises at 123-123A Charles Street. The business sold school clothing and school uniforms for about 35 schools in Launceston and surrounding areas. In the meantime Targetts had expanded the Roses Footwear business, changed its name to "Quality Shoe Warehouse", and moved it to premises at 5 The Kingsway.
In August 1986 Targetts purchased "Pete's Boyswear", a retail business selling boys' clothing and schoolwear in rented premises at 124 Charles Street.
By October 1986 the schoolwear side of the business had outgrown the premises at 123-123A Charles Street. Targetts purchased a shop at 102 Charles Street and moved its schoolwear business there. In addition to the schoolwear range the shop sold a limited range of girls' clothing. This shop operated under the name "Targetts Fashion and Schoolwear". The menswear business continued at 123A Charles Street.
In October 1988 Targetts rented premises at 112 Charles Street and moved the Targetts Menswear and Quality Shoe Warehouse businesses to that address. These premises have access at the rear from The Kingsway.
Targetts also acquired a formal wear hire business called "Bellingers Suit Hire" which was installed in the upper floor of 112 Charles Street. Quite recently a manchester section has been established at the same premises.
Targetts Logo From about 1981 Targetts has used in connection with its business, a logo in the form of a rondel with an arrow as follows:

(LOGO OMITTED)

The logo was devised for the purposes of television advertising. Since about 1984 it has been used on all Targetts' printed documents and stationery. The form is used with slight variations. The two larger bands and central bulls-eye of the rondel are always coloured red, blue and red respectively. Sometimes the two smaller dividing bands are yellow and sometimes white. Sometimes the word "Targetts" appears on the outer band at the top. A consistent feature of the logo is the arrow striking to the centre bulls-eye from the northeast. The name "Targetts Pty Ltd" and the logo are used on business documents such as receipts, invoices, stationery, envelopes, statements of account and price tickets. Customers in all stores are provided with plastic bags which bear the Targetts logo about 17 cm in diameter. In this instance the logo has the word "TARGETTS" on the outer band at the top and the words "MENSWEAR, SCHOOLWEAR, BOYSWEAR, FOOTWEAR" at the bottom. Underneath are the words

TARGETTS PTY LTD.

Departments:

Menswear and Sportswear 112 Charles Street ) Suit Hire (Bellingers) 112 Charles Street ) Ph 31 4622 Schoolwear 102 Charles Street ) Footwear (Quality Shoe Warehouse) 23 Kingsway Ph 34 1877 Boyswear (Pete's Boyswear) 124 Charles Street Ph 31 5207

The bag also contains a triangular shaped logo in red, yellow and blue with the words "FRONTLINE STORES" and in smaller letters "A Member of Frontline Stores Group". Frontline Stores is a buying group of which Targetts is a member.

Targetts - Current Operations
14. The following plan shows the location of Targetts' current premises in Charles Street and also those of Target, to which I shall later refer.

(PLAN OMITTED)

Targetts has three premises, all on the western side of Charles Street between Brisbane Street and York Street. Charles Street in this vicinity is a busy retail street in the central business district of Launceston. Going from north to south the premises are as follows:

(i) 102 Charles Street is a single fronted shop. On the outside of

the verandah are painted the words "TARGETTS FASHION AND SCHOOLWEAR" and underneath the verandah at right angles to the shop front is a sign with the words "FASHIONWEAR TARGETTS SCHOOLWEAR" and underneath that a banner with the Targetts logo and the word "SCHOOLWEAR". The shop sells school uniforms including items such as blazers, pullovers, socks and ties in school colours, football jumpers, tracksuits, accessories such as materials and braid, gloves and mittens, lunchboxes, flasks and backpacks. There are also fashion items for older girls such as jeans, polo shirts, rugby tops, swimwear and rainwear.

(ii) 112 Charles Street extends over two shop fronts, one of which is

sub-let to a discount book store. The two upper stories above the ground floor are covered by a large signage panel of white vertical boards bearing the logo and the word "TARGETTS" in large letters. On the front of the verandah is the logo again and the words "TARGETTS MENSWEAR and SPORTSWEAR". The menswear section sells a complete range of men's clothing including workwear, informal and casualwear and business clothing as well as men's and women's sportswear. Towards the rear of the shop on the ground floor are the footwear and manchester sections.

(iii) At 124 Charles Street, on the corner of York Street, there are

premises with the name "PETE'S BOYSWEAR" painted on the verandah. The shop sells a range of boys' clothing including accessories, school shirts, T-shirts, cardigans and jumpers, swimwear, shorts, jeans and trousers. The name "Targetts" and the logo do not appear on the exterior of the premises; however the shop uses the same statements, invoices and plastic bags as the other shops and it is included in Targetts' advertising.

The total turnover of Targetts at the three premises in the last three years has been as follows:

1989/90 $2.362 million

1990/91 $2.396 million

1991/92 $2.486 million

Targetts employs 15 full-time and three part-time employees. It is the registered proprietor under the Business Names Act 1962 (Tas) of the following business names:

Targetts Fashion and Schoolwear

Targetts Launceston

Targetts Boyswear

Pete's Boyswear

Quality Shoe Warehouse

Bellingers Suit Hire

Targetts Suit Hire

In November 1992 the previous registered name "Targetts Menswear" was allowed to lapse and "Targetts Launceston" registered.
Targetts honours the usual credit cards and also offers credit accounts. There are about 5,000 credit account customers and 800 to 1,000 account statements are sent out each month representing about 20 per cent of the total business.
Since Mr and Mrs Symons purchased the business in 1965 Targetts has advertised extensively in the Launceston news media. There is only one daily newspaper based in Launceston, the Examiner, one commercial television station and one commercial radio station. For the financial year ended 30 June 1992 Targetts' advertising cost $110,000. A substantial part of the advertising budget is spent on television. In the calendar year 1992 this accounted for just over $60,000. Three of Targetts' television commercials were tendered in evidence. They showed contrasting styles. Two were obviously produced specifically for Targetts. Different items of clothing and footwear and their prices are portrayed. In one the message stresses the personal attention which shoppers may expect at Targetts. Various members of the staff are portrayed dealing with particular types of clothing, eg "See Debbie for toddlers' shorts and T-shirts".
The third commercial has been provided by the makers of Levi jeans. The setting is America in about the 1950s. A World War II vintage fighter lands on a desert highway in front of a large car. Travelling in the car are a uniformed chauffeur, an attractive secretary and her employer. The pilot, whose dramatic arrival appears to have been not entirely unexpected by the secretary, throws her a pair of jeans into which she quickly changes. They appear to be a good fit. The trademark "Levi" can be observed. The secretary then climbs up on the plane, embraces the pilot and they fly off into the sunset, much to the astonishment of employer and chauffeur. The commercial finishes with the words on the screen "Original Levi Red Tab jeans. Do you fit the legend?" and the Targetts logo. The voiceover says "Levi at special prices from Targetts and Pete's Boyswear". Targetts' Reputation
The evidence as to Targetts' history and current operations leads me to the conclusion that Targetts has a well established reputation in Launceston and surrounding areas in the business which it conducts. The steady expansion, and the increase of turnover in recent years in the face of severe recession, indicate that this reputation is a good one. There was no suggestion to the contrary. Further, that reputation is bound up with recognition in the Launceston public's mind of the name "Targetts" and the logo which for many years have been prominently identified with the business. Target - History
Target goes back to 1925 when a firm called Lindsay and McKenzie commenced a drapery business in Geelong. In 1947 the business was incorporated as Lindsay and McKenzie Pty Ltd and in 1968 that company was purchased by Myer Emporium Pty Limited. It is today a member of the Coles Myer Group.
The name "Target" appears in upper and lower case with a full stop in rectangular form. It is pronounced with the emphasis on the first syllable.
Target has for many years used a rondel in connection with its business. It is as follows:

(LOGO OMITTED)

The outer band is red, the inner band white and the bulls-eye red.

The name and the rondel became associated with the business in 1969. They originated with the Dayton Hudson Department Store Group of Minneapolis. Mr Barry Coad, Target's Divisional General Manager, Marketing Division said in his evidence that the Dayton Hudson Group

"... were about to start a discount operation in America called Target and they were very friendly with the Myer family and they decided between the Myer family that they were not going to operate in Australia and so the concept of Target, the name, the word, mark, the whole lot was brought over here and operated independently of that American operation."

There is today a Target chain operating in the midwest of the United States using a similar logo. Target - Current Operations
Currently Target operates 82 stores throughout Australia, located as follows: Victoria (30), New South Wales (23), Queensland (12), Western Australia (9) and South Australia (8). Apart from the store which is the subject of these proceedings, Target has never operated in Tasmania.
For the 1991/92 financial year turnover was $1.3 billion. Staff total approximately 15,000.
Target sells men's, women's and children's clothing and footwear, household items such as mirrors, clocks, electrical appliances, kitchen ware, bathroom and kitchen towels, bed linen, rugs and cushions; leisure items such as portable furniture and sporting goods; gardening items such as garden tools, watering systems, plants, seeds, fertilisers and chemicals and do-it-yourself items such as paint, wallpaper, hand tools, hardware and motor accessories.
Target's marketing approach concentrates on high stock turnover and competitive prices. It relies heavily on "house brands", that is to say goods manufactured exclusively for it which are sold under its name. Some 60 per cent of all merchandise is sold under house brands. Target's stores are laid out in supermarket style with wide aisles and trolleys and baskets available for customers. Payment is made at check outs.
Target honours most credit cards. It also offers its own credit card and EFTPOS facilities whereby an instantaneous debit can be made to a customer's bank account and cash provided. Thus a customer might buy an item for $50, have a debit entered for $200 and receive $150 cash. Target offers a money back guarantee to dissatisfied customers.
Each of Target's stores displays prominent signs bearing the name "Target" and the Target logo inside and outside the store and on promotional material, tags, packaging, shopping bags, price tickets and stationery such as receipts, account statements, envelopes and sales orders.
Target engages in substantial advertising. A high proportion of its expenditure (78 per cent of $24 million in 1991/92) is on catalogues. In 1991/92 129 million catalogues were produced. It also advertises extensively on radio and television, particularly leading up to Christmas, Mothers Day and special promotion sales. One aspect of Target's current television advertising on which it placed some reliance in the present case is a series of animated commercials featuring the Target logo. One shows various credit cards in the form of little trucks with wheels in the shape and colour of Target's logo. Another stresses the message that Target will accept return of goods if the customer's purchase proves to be too large (a large logo is shown), too small (a small logo), the wrong shape (a logo in triangular form) or the wrong colour (a logo in various psychedelic colours).
Clearly the name "Target" and the Target logo are prominently identified with Target's business in the localities where it has operated and Target has a substantial reputation in those localities. As with Targetts, I think the conclusion can be drawn that Target's reputation is a good one.
However for present purposes it is necessary to consider how far that reputation has extended to Tasmania, and in particular Launceston, since one question in this case (although, for reasons which will be later discussed, by no means the only question) is whether people in Launceston who are aware of Targetts are likely to be aware of Target as a separate and distinct business.

Launceston Awareness of Target
35. Target adduced a body of evidence designed to show it had a pre-existing reputation in Launceston. Australian Bureau of Statistics figures indicate that in the 1992 financial year there were 231,000 interstate trips by Tasmanians. That figure would include multiple trips by frequent travellers such as business people and would also include children. The figure given is for the whole of Tasmania (pop. 465,000). The population of Launceston is about 88,000. There is thus no basis in the evidence for a finding even in the most approximate terms as to the number of customers or potential customers of Targetts who have visited or might be likely to travel to the mainland. Still less is there any rational basis on which it could be concluded how many of those would visit or be likely to visit Target stores. The nature of Target's operations is not such as to suggest that in itself a visit to Target might have provided a motive for Tasmanians to travel to the mainland.

Target's evidence was that copies of its catalogues are mailed to 37 Tasmanians. It was not stated how many of those lived in Launceston. Since Target produces 129 million catalogues, on a comparative basis publication in the Launceston area is minimal, even accepting that the total figure would include many different catalogues.

There are 427 shareholders of Coles Myer Limited in Northern Tasmania, each of whom would receive a copy of the Coles Myer annual report which includes details of Target's trading performance and activities.
The monthly magazine "Ita" contained from February 1992 to January 1993 advertising on behalf of Target. It was said the magazine circulated in Tasmania but the evidence does not disclose how many copies were sold in Launceston or in the state as a whole. Target's evidence does not suggest any other advertising of Target in Tasmania prior to its announcement of the Launceston store in late 1992.
The evidence of Target was that it had received "numerous requests from persons in Tasmania to open a store or stores in that state". However the only detail given was that 15 written requests had been received on printed forms made available to customers of mainland Target stores. Those requests were received as a confidential exhibit on the basis that they identified existing customers of Target. However without damaging that interest in confidentiality it can be revealed that, of the 15, one came from a suburb of Hobart, 14 came from cities and towns on the North West Coast (i.e. west of Deloraine) and one came from a small town about 20 km from Launceston. None came from Launceston itself.
Although there is no doubt that some people in Launceston (including some of Targetts' witnesses) were aware of Target's business on the mainland, the evidence does not show that prior to the announcement of Target's plans for its Launceston store there was any substantial widespread awareness amongst the Launceston public of its existence and operations. This is perhaps hardly surprising since Target did not trade in Launceston (there is no evidence of it conducting any mail order business) and there would be no point in spending money on promotion and advertising in that city. And, absent advertising, there was no reason for Launceston people to become aware of Target except for incidental encounters on visits to the mainland or chance conversations with mainland friends and relatives.

Target Comes to Launceston
41. For some years Venture Stores operated a store in Launceston with frontages to Charles Street and Brisbane Street and rear access to a car park. Venture Stores' operation was a discount department store broadly similar to those operated by Target on the mainland.

In about July 1992 Target became aware that Venture was likely to leave and that the premises would become available for lease. Mr Coad's evidence was that at this time Target "was aware that (Targetts) was conducting a relatively small older style mens and boyswear business in Launceston."But Target considered that Targetts' "range of products, store design, get-up and style of operation was so different to (Target's) own that there was little likelihood of any harm being caused to (Targetts) by reason of any confusion between the businesses".
Negotiations with the landlord took place and agreement was reached on 20 October for a term of 10 years with four options of five years. The landlord agreed to expend an estimated $1.2 million on structural redevelopment. Work started on this in late November. Target entered into contracts for the fit-out of the store including items such as carpets, fixtures, fittings, lighting, cash registers, computers and office equipment. There were five major contractors and about 20 local sub-contractors. The contract value of the work was in excess of $1.5 million and a further $545,000 has been allowed for. The plans provided for a sales area of 310,000 square metres spread over two floors with a further 800 square metres for office and staff facilities. In December 133 staff were engaged, only 5 of whom are from the mainland. Of the local employees, 48 are permanent and the remainder employed on a casual weekly basis.
The first public announcement of Target's intentions appears to have been in an article in the Examiner on Saturday 28 November 1992 under the heading "Target to take over Venture's prime site/New city store". The article stated that "Discount retailer Target will open its first Tasmanian store in Launceston next April. It will spend $2.5 million refurbishing the Charles Street site now leased to Venture, and will employ up to 100 people". After quoting some comments by Mr Coad critical of the Tasmanian Government's policy on shop trading hours, and reference to the fitout work commencing on 6 January, the article stated "Target specialises in children's, women's and menswear and also sells domestic textiles and a wide range of hard goods".
On 2 December Targetts' solicitors Douglas and Collins wrote to the Managing Director of Target at its Geelong head office referring to the recent publicity and stating that should Target commence business at the proposed site

"... it would undoubtedly result in customers and potential customers of our client becoming confused and misled about the entity with whom they are dealing. Our client's reputation would be undermined and its substantial goodwill would be damaged as a consequence."

A request was made that Target undertake that should it commence business in Launceston it would not be under the name "Target" or anything similar.
Messrs Corrs Chambers Westgarth replied on behalf of Target by a fax dated 11 December. The fax included the following:

"With respect, we cannot agree with the conclusions reached in your letter. In our opinion, both companies have a substantial reputation and it is unlikely that any court or individual would find that Target has deliberately tried to appropriate Targetts' reputation for Target's own purpose. Similarly, we do not believe that when Target opens its store in Launceston there will be any confusion or breaches of the Trade Practices Act 1974 as Target clearly distinguishes its goods, services and business by its name and its logo. Indeed, both our clients have such a substantial reputation in their respective areas of the retail trade that we cannot understand why they cannot peacefully co-exist in the market place.

However, should your client choose to take this matter further then Target will have no alternative but to defend any proceedings brought by your client and will produce this letter on the issue of costs."

On 20 January 1993 Douglas and Collins replied formally demanding an undertaking not to commence business. The letter stated:

"On our instructions your client company has not traded in Tasmania, and more particularly in the north of Tasmania. It has no goodwill in that location. The fact that some portion of the population in Tasmania may know of the existence of Target Australia Pty. Ltd. does not detract from the assertions made in this letter. It is not necessary to establish in any action that Target Australia Pty. Ltd. has deliberately tried to appropriate our client's reputation for its own purposes.

There have already been examples of persons having been misled by the publication of your client's intention to commence business, and the use of the word 'Target' phonetically so similar to 'Targetts' the name by which our clients enjoys a deservedly good reputation."

Corrs Chambers Westgarth's reply on 3 February included the following:

"We, for our part, maintain that our client has an equally good reputation in relation to its business, namely discount stores, not only on the mainland but also in Tasmania.

Our client has established its reputation in an area of business quite distinct from that of your client. Therefore, we do not understand how there can be any confusion or breaches of the Trade Practices Act 1974 by Target opening a store in Launceston with both our clients enjoying substantial reputations in their own respective areas of the retail trade. We believe they can peacefully co-exist in the market place. Nevertheless, if Targetts intends to pursue this matter in the Federal Court, then Target will have no alternative but to vigorously defend those proceedings and, if necessary, issue a cross-claim against your client."

Not having received any satisfaction in this correspondence Targetts issued the present application on 5 February. Application was made on 17 February for an interlocutory injunction. On that date Northrop J dismissed the application but ordered that there be a speedy trial limited to the question of liability and gave procedural directions.

Target Promotion in Launceston
51. Commencing on 4 February 1993 Target engaged in advertising in the Examiner. The first of these was headed:

"Target is coming to Launceston!"

and stated,

"Target is Australia's leading fashion discount retailer offering fashionable, quality merchandise at competitive prices all backed by our refund and exchange service. Each of our 82 stores throughout mainland Australia benefits the community by boosting local economies through employment and using services from local suppliers. Our stores are designed for the 1990s shopper providing fast efficient service and a convenient merchandise layout. In fact, everything you would expect from a discount retailer and more."

The advertisement then proceeded to indicate "what Target Launceston has to offer you". Reference was made to ladies' fashion, children's fashion, manchester fabrics and yarns, kitchenware and houseware, electrical and lighting as well as their money back guarantee etc. On 12 February another advertisement appeared headed "Target Launceston opening in 1993". Pictures of different parts of the store and a store layout were included.
Evidence was given that Target would circulate some 70,000 catalogues in and around Launceston. There would be extensive advertising on radio and television and in the press.
When the hearing concluded on Wednesday 7 April the evidence was to the effect that Target would probably open for business unannounced on Easter Saturday 10 April primarily for staff training and then have an advertised opening on the following Tuesday 13 April.

Target's Premises
55. Target's premises have frontages to Charles Street and Brisbane Street. Some of Target's advertising material which was tendered in evidence gave the address of the business as Brisbane Street but the entrance to that street appears to be only used for fire escape purposes, although it was said that the necessary wiring is in place to have check out counters at that entrance if necessary. Presently the only access to the premises is through the Charles Street frontage and the car park at the rear. There are check out counters at both these points.

Externally the name "Target" and the Target logo appear prominently on both the Charles Street and Brisbane Street frontages. Merchandise is displayed on the ground floor and at first floor level.
From the eastern side of Charles Street Target's and Targetts' premises can all be seen in the one glance.

Targetts and Target Areas of Competition
58. As has been seen, Targetts' business is almost entirely clothing and footwear, the only real exception to this being the small manchester section which has recently opened. Target sells many other lines. Mr Coad's evidence was that the categories of goods sold by Target which are the same as those sold through Targetts' stores were as follows:

Women's participating sportswear

Girlswear

Boyswear

Menswear

Footwear

Bed linen

Bed coverings

Bathroom and kitchen textiles

Based on experience in other Target stores he estimated that sales of those items through Target's Launceston store would occupy 31 per cent of total sales value.
The categories of merchandise which Targetts and Target have in common appear to be broadly comparable in style, price and quality. It is true, as has been mentioned, that much of Target's merchandise is sold under house brands, but that does not appear to be a feature that is made prominent to the potential customer in the advertising or presentation of goods.
While I accept that 70 per cent in value of Target's merchandise will be lines not sold by Targetts, that bare statistic does not give the full picture. Clothing is, and is presented as, probably the major part of Target's business. For example, the advertisements that were in evidence appear to feature clothing very prominently. Entering the store from the main entrance in Charles Street it is clothing which is immediately apparent. There is a completeness and variety in the range of clothing which is not present in other lines such as sporting goods. I do not think it would be an unfair generalisation to say that Target is a business which sells clothing and other things. In any event, Target is in direct competition with Targetts in respect of all of the latter's business with the exception of school uniforms.

Evidence of Actual Mistake
62. Targetts tendered evidence of a number of instances where Launceston people, having heard of the new store opening, formed a belief that it was Targetts'. Mr Anthony Clayton, the Manager of Targetts Menswear and Sportswear at 112 Charles Street said that since the end of November 1992 he had received comments "almost on a daily basis" throughout December such as "Have you outgrown this building?""Why are you moving?""When are you moving into your new shop?" "Will you still have this shop as well as the other shop after you move?"Miss Julie Hamilton, a Sales Assistant at Pete's Boyswear, gave evidence of comments such as "When do you move to your new store?"There was other evidence to similar effect.

There was evidence of misdeliveries of goods such as one by Hammond Freight Lines who delivered to Targetts' shop at 112 Charles Street a parcel intended for Target and addressed "Target Launceston, Charles Street, Launceston".
There was evidence of the converse mistake. In early March Targetts published a catalogue of its manchester products and a number of people, who were aware of the existence of Target on the mainland and of its new shop in Launceston, thought that the catalogue related to the new Target store. One such witness was Mrs Helen Bingley who has three young children. She received the catalogue and thought it was "advertising from the Target shop which was opening up in Charles Street". She had shopped in Targetts Fashion and Schoolwear but was not aware that Targetts had opened a manchester department. She was aware of the Target chain of stores because her sister who lives in Canberra had spoken to her about buying children's clothing. Mrs Bingley deposed:

"Until I was told on 18 March 1993 I was not aware that there was any differences at all in the spelling of 'Target' and 'Targetts' or that there were any differences in the symbol. I thought that the name and the symbol for each of the businesses was the same."

Since the trial concluded before the actual trading operations of Target commenced, the principal issue in this case is whether the conduct of Target is likely to mislead or deceive. Essentially I have to make a finding as to what is likely to happen in the future. Nevertheless, evidence of the kind I have just mentioned, the veracity of which was not challenged, is useful as confirmation of the perception that people in Launceston have of Targetts' business and the potential for error created by the similarity of the two names. Section 52 Criteria
Section 52(1) of the Act provides

"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

Targetts' case is that the carrying on of business by Target at its Charles Street premises under the name "Target" and with the use of the Target logo in the sale of clothing and other goods sold by Targetts would be likely to mislead or deceive the public in Launceston and its surrounding areas into believing that there is some connection between Targetts and Target and that the business of Target is associated with the business of Targetts.
In assessing the effect of Target's conduct I have to consider the effect on the relevant section of the public, including

"... the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge, although the test is not the effect on a person who is, for example, quite unusually stupid. The question is not whether the purchaser was deceived but whether the conduct was misleading or deceptive."

Annand and Thompson Pty Ltd v Trade Practices Commission (1979) 40 FLR 165 at 176 per Franki J; see Siddons Pty Ltd v The Stanley Works Pty Ltd (1991) 29 FCR 14 at 17.
The relevant section of the public would appear to be retail purchasers of clothing, footwear and manchester products in Launceston and its environs, a section which would include virtually the whole population of that area, except for young children.
It is sometimes said that conduct which creates confusion, puzzlement or wonder in the minds of the public need not necessarily contravene s.52. However such generalisations are perhaps not of great assistance in determining whether, in a given case, the conduct complained of has had, or is likely to have, the proscribed effect. Claims under s.52 based on the use of similar names and other commercial identification call for analysis of the effect, or likely effect, of the conduct complained of on the relevant section of the public and consideration as to whether that effect is caused by misleading or deceptive conduct of the respondent or by some other factor for which the respondent is not responsible. Some leading cases of the genre will be briefly examined.
In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216 the Sydney Centre complained that the carrying on of business by the Hornsby Centre under its corporate name was likely to mislead or deceive because its use suggested some affiliation of the newly established Hornsby Centre with the long established Sydney Centre. The High Court held that a descriptive name like "Building Information Centre" is equally applicable to any business of a like kind and thus "its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public" (at 229 per Stephen J).
In McWilliam's Wines Pty Ltd v McDonald's Systems of Australia Ltd (1980) 49 FLR 455, McDonald's complained of the use of the expression "Big Mac" by McWilliam's in the advertising for some of its wine. The Full Court of the Federal Court held that McDonald's had not established a breach of s.52. On the evidence, the expression "Big Mac" certainly identified the McDonald's hamburger but was not synonymous with the business entity trading as McDonald's (per Smithers J at 463). Any person who was mislead or deceived by the advertisement would only arrive at this state of mind on the erroneous assumption that McWilliam's could not lawfully use the same name for its wine pack as McDonald's had used for its hamburger unless this was done in conjunction with McDonald's (at 464-465). The conclusion that McWilliam's must have made some arrangement with McDonald's for the use of the words "Big Mac" (which in fact was not the case) rested on an assumption that the words "Big Mac" belonged to McDonald's and could not lawfully be used by anyone without McDonald's consent, even in relation to totally different products (per Northrop J at 474-475 and per Fisher J at 478-479). This was an erroneous assumption.

In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, the respondent manufactured furniture which was virtually identical in appearance to furniture sold by the applicant. However there was no suggestion of false labelling or false description. The respondent's furniture was sold to retailers with a label of a kind normally used in the trade which clearly identified the respondent as the manufacturer. The High Court held that there had not been a breach of s.52 because any conclusion by a purchaser that the respondent's furniture was the applicant's was necessarily based on an assumption that in itself it was unlawful, without more, to manufacture a product which closely resembled somebody else's (per Gibbs CJ at 198-200, per Mason J at 202-203 and 210-211). Brennan J remarked (at 225):

"Section 52 operates in a milieu of the external legal order so that the character of conduct which falls for consideration under s.52 is to be determined by reference to the external legal order as it exists when the conduct is engaged in. Therefore, a manufacturer who exercises his freedom to manufacture goods according to a design which is not protected by valid registration does not engage in conduct which is misleading or deceptive or which is likely to mislead or deceive. If consumers or potential consumers believe that all goods of a particular design are manufactured by him who first establishes a market reputation as a manufacturer of those goods, that belief is or may be erroneous. The error may be attributed to a preconceived belief that the manufacturer who first establishes a market reputation has a monopoly in the manufacture and sale of goods of that kind but, unless the manufacturer has acquired a statutory monopoly, that belief is also erroneous and the error flows from a misconception of law. A later manufacturer who does no more than exercise his freedom to manufacture and sell goods made in accordance with a design in the public domain does not mislead or deceive; and if a consumer has an erroneous preconceived belief that the first manufacturer has a monopoly, a false assumption by the consumer as to the source of the later manufacturer's goods is self-induced. That was the approach taken by the Full Court of the Federal Court with respect to trade names in McWilliam's Wines Pty. Ltd v McDonald's System of Australia Pty. Ltd, and I respectfully agree with it."

In Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 the applicant was the proprietor of a Mexican style restaurant in Bondi. The restaurant had operated since 1970. It seated about 90 people. The other party was a US company which opened a restaurant at Granville and another in George Street Sydney in 1981. The respondent, which had not previously conducted business in Australia, operated 1366 restaurants under the name "Taco Bell" in 40 states of the United States, in Canada and in Guam. The restaurants had a standardised Mexican decor and colour scheme. The Full Court upheld the Bondi company's claim under s.52 and rejected a corresponding cross-claim by the US company. The majority (Deane and Fitzgerald JJ) said (at 205):

"We have already indicated our view that the conduct of the Bondi company in continuing to carry on its restaurant under its established name cannot properly be seen as the cause of any actual or likely misconception as to a connection between its Bondi restaurant and the Taco Bell chain. The cause of any such misconception is the use by the US company of the name "Taco Bell" in connection with the Sydney operations of a chain of Mexican food restaurants in circumstances in which the US company had no prior reputation in respect of the local use of that name and in which that name was, in respect of local operations, clearly associated with an established Mexican food restaurant at Bondi. Such conduct by the US company is misleading or deceptive or is likely to mislead or deceive within the meaning of the section. We agree with the decision of Ellicott J that the US company's conduct in establishing and operating its two Mexican food restaurants under the name "Taco Bell" constituted and constitutes conduct of the type proscribed by s 52 of the Act. That conduct is, in the circumstances, such as to convey to a significant section of the public the representation that there was a connection between the Bondi restaurant and the Taco Bell chain." (Emphasis added.)

The trial Judge (Ellicott J) stressed the importance of the use of identical or very similar names which identify two businesses, as distinct from being merely descriptive. His Honour said (40 ALR 153 at 160-161):

"I also conclude from the evidence that a substantial number of those who have dined at the (Bondi) restaurant, who would themselves form a significant section of the public, would on seeing the respondent's restaurant at George Street or Granville, form the view that in some way it was associated with the applicant and its restaurant. Their views might vary, eg they may think it is "the same business" or that it is a "franchisee" or is a "branch" of the business conducted at Bondi. This would be so, in my opinion, notwithstanding the distinctive nature of the architecture and get-up of the respondent's restaurant and notwithstanding the obvious differences in the style and manner of conducting them....

The ordinary public are educated to treat distinctive names like "Taco Bell" as representing the goods or services of particular traders and if they are confronted by the use of very similar names, I think it takes a great deal to remove the assumption which they naturally make - that the goods or services in relation to which they are used are the product of the same or a related business." (Emphasis added.)

Targetts' Case

In my opinion Targetts has made out a case that by using the name "Target" and its logo, Target is likely to mislead or deceive members of the public in Launceston in a number of different ways.
First, I think it likely that a significant number of potential customers who had in mind dealing with Targetts will end up going to Target. One valuable element of a trader's reputation is knowledge and recommendation that spread by word of mouth. In the present case the names "Target" and "Targetts" are phonetically very similar. Indeed when "Target" is used in the possessive, or before a word starting with "s", they sound exactly the same: e.g. "Target's jeans" and "Targetts' jeans", "the Target store" and "the Targetts store", "the Target sale" and the "Targetts sale".
The word "Target" is in no way descriptive of the business of Targetts or Target. Its function is purely one of identification. And for that function it is particularly well suited. The word is short and easy to pronounce and remember. It carries positive connotations of achieving something desirable, something aimed at. Its impact is reinforced by the logo (both Targetts' and Target's). The word is the name of the logo and the logo is a picture of the meaning of the word.
Take for example a mother giving her daughter money and telling her "Go to Targetts' store in Charles Street and buy some shoes."The child goes to Charles Street, sees Target's store, and buys the shoes there. The conduct of Target in having its store in Charles Street and using a name which is very similar to that of Targetts, and which in many everyday collocations sounds the same, has had the consequence that the mother, acting through her agent the daughter, has been misled into dealing with Target, and not Targetts as she intended.
Secondly, I think people seeing the similar name and logo being used in the same business by a new entrant are likely to believe that this could not have happened without some arrangement or connection between the old established business Targetts and the newcomer Target. Such mistaken belief may have very practical consequences which are detrimental to Targetts. For example, a loyal Targetts customer may think that the existence of some arrangement between the two, presumably freely entered into, will mean that Targetts must benefit in some way if he or she shops at Target and that Targetts is quite content for its customers to go to Target. Target's Case
Target's case is based on the difference between its style of retailing operation and that of Targetts. It says that, because Target projects a fundamentally different image from Targetts, there is no significant risk of people being misled.
The existence of such a difference is obvious enough. But also obvious is the fact that each method of operation will be seen as having its own particular advantages. A shopper will recognise the convenience of shopping in Target supermarket style with self-service, wide aisles, shopping trolleys and an adjacent car park. There is convenience in being able to buy clothing and footwear at the same time as other household items. The scale of operations may result in cheaper prices, or at least the perception that such is the case.
On the other hand a shopper, particularly one looking for a more expensive item, may value help and advice on matters of style, colour and fit. There may be the attraction of dealing with a familiar assistant who has provided good advice in the past. There may be appeal in buying a nationally advertised garment such as Levi jeans rather than a less well known house brand.
But Target's case rests on an assumption that the customer will conclude that even though two businesses appear to have very similar names and logos and are operating in the same field, the fact that they have different styles of business operation means they must be in different proprietorship and there can be no arrangement between the proprietors as to the use of those names and logos. I do not think that follows at all. To someone within Target, like Mr Coad, it may seem inconceivable that Target should conduct its business in any other way, and in particular that it should run, or be in any way associated with, a "small", "provincial" or "old-fashioned" kind of operation (as its case variously described Targetts). However for present purposes that is not the relevant perception. What has to be gauged is the effect, or likely effect, on a member of the Launceston public familiar, perhaps for several decades, with the Targetts name and logo. Why should not such a person more readily conclude (this being a topic to which substantial enquiry and analysis is probably unlikely to be given) that the new business of Target is in some way connected with the well established business of Targetts and that this connection has been made to give to the public a choice of two different kinds of business? Why should not this conclusion be reached whether or not the person had previously been aware of Target's operations on the mainland (given that Target had not previously traded in Tasmania)?
The contrary conclusion, which happens to be the truth, is in my opinion much less likely to be drawn. It requires the hypothetical member of the Launceston public to conclude that Target has simply arrived in Launceston and without the agreement of Targetts (indeed, against its vigorous protest) set up business in the same street, selling the same merchandise under a very similar name and logo. (The tender by Target of reports of these proceedings in the Examiner is in my opinion quite insufficient to prevent a finding that a significant number of people in Launceston now and in the future will not reach this conclusion.)
I think such a person would assume that there must have been some sort of arrangement between Target and Targetts because without such an arrangement Target could not lawfully do what it had. Such an assumption would not be erroneous. The circumstances of the present case contrast with those discussed above. It would be erroneous to assume that, without more, one trader could not lawfully use the same descriptive name as another (Hornsby) or use the same name in connection with a quite different product (Big Mac) or manufacture goods which were identical in appearance (Parkdale). In all these cases a wrong conclusion that there was some connection or arrangement between applicant and respondent would not flow from any conduct of the respondent but from the erroneous assumption by anyone who drew such a conclusion. But the present case, in my opinion, is on all fours with Taco Bell.
In the present case, considering the conduct of Target in the milieu of the external legal order, to use Brennan J's expression in Parkdale, what Target is proposing to do is not lawful. It is proposing to use a name and logo deceptively similar to those to which the established reputation of Targetts has attached in such a way as to confuse or deceive members of the Launceston public. The fact that Target might honestly believe it can do this, or that it does not have any intention to injure Targetts, or at any rate not beyond such injury as might be inflicted by ordinary competition between traders, is not to the point: Hornsby, 140 CLR at 228.
There was some force in the point made by Targetts' counsel that if Targetts were to establish a business along the lines of its Launceston shops within sight of Target at Camberwell or Malvern it is unlikely that Target would accept there was no risk of the public being misled or deceived and that the two businesses could "peacefully co-exist in the market place".
In my opinion the continued use by Target of the name "Target" and its logo in connection with the retail sale of clothing, footwear and manchester products is likely to mislead or deceive members of the public in Launceston. An injunction should go to restrain such conduct unless there are countervailing discretionary grounds of sufficient weight. Passing Off
The existence of the reputation of Targetts in Launceston and the likelihood of deception amongst its customers and potential customers by the use of a deceptively similar name and logo by Target persuade me to the conclusion that such conduct by Target would constitute the tort of passing off, actionable at the suit of Targetts. See generally Reckitt and Colman Products Ltd v Borden Inc (1990) RPC 341 at 406; Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302. Targetts is in my opinion entitled to injunctive relief on this basis.

Discretionary Factors
92. The only discretionary ground advanced by Target was the argument that "the public interest in stimulating commercial activity and competition in Launceston favours withholding an injunction".

In Parkdale Mason J rejected a similar argument. His Honour said (149 CLR at 204-5) that he found it

"... difficult to accept the appellant's notion that the general, yet clear, words of s.52(1) should be read down so as to enable the policy of freedom of competition enshrined in Pt IV (of the Act) to prevail. In a collision between one of two different statutory policies and plain words giving effect to the other statutory policy the plain words will prevail. To my mind the words "misleading" and "deceptive" as applied to conduct in trade and commerce are reasonably plain. And in a collision between the general policy of encouraging freedom of competition and the specific purpose of protecting the consumer from misleading or deceptive conduct it is only right that the latter should prevail. It would be wrong to attribute to the Parliament an intention that the indirect and intangible benefits of unbridled competition are to be preferred to the protection of the consumer from the misleading or deceptive conduct which may be an incidental concomitant of that competition. Given the statutory context here it is more likely that Parliament intended to promote free competition within a regulatory framework that prohibits the trader from engaging in misleading or deceptive conduct, even if it means that one trader cannot in particular cases compete with another trader because the opposite view would give a paramountcy to freedom of competition not accorded to it by the statute."

In my respectful opinion there is no public interest in the promotion of competition by means which contravene an express statutory prohibition of misleading and deceptive conduct in trade or commerce.
In any case, there is no evidence that the cessation of Target's business in Launceston, whether in relation to goods of the kind sold by Targetts or generally, would deprive the Launceston public of an adequate choice of goods or have any effect on the existing level of competition. Orders
I make the following orders:

1. The respondent Target Australia Pty Ltd, by itself or its servants or agents, is restrained from using in connection with any business of retail sale of clothing, footwear or manchester products within 30 kilometres of the intersection of Charles and Brisbane Streets, Launceston

(i) the name "Target" and/or

(ii) the logo

(LOGO OMITTED)

2. The application be adjourned for further directions on a date to be fixed on seven days notice.

3. Liberty to apply is reserved.

4. The respondent pay the applicant's costs to be taxed, including reserved costs.

[1993] FCA 259

26 APRIL 1993