Telstra Corp Ltd v Phone Directories Co Pty Ltd - [2014] FCA 568

FEDERAL COURT OF AUSTRALIA
Telstra Corporation Limited v Phone Directories Company Pty Ltd [2014] FCA 568

Citation: Telstra Corporation Limited v Phone Directories Company Pty Ltd [2014] FCA 568

Parties: TELSTRA CORPORATION LIMITED (ACN 051 775 556) and SENSIS PTY LTD (ACN 007 423 912) v PHONE DIRECTORIES COMPANY PTY LTD (ACN 059 776 091), AUSTRALIAN LOCAL DIRECTORIES PTY LTD (ACN 078 856 318), ADAM HARGRAVES, GLENN HARGRAVES, DANIEL STOTEN and LOCAL DIRECTORIES COMPANY PTY LTD (ACN 130 550 971)

File number: VID 276 of 2007

Judge: MURPHY J

Date of judgment: 30 May 2014

Catchwords: TRADE AND COMMERCE – Trade Practices – misleading or deceptive conduct – misleading or deceptive conduct in the taking of a competitor’s trade indicia – passing off – secondary reputation in the colour yellow on covers of telephone directories – date for assessing reputation in yellow – relevance of international use of colour yellow – whether respondents’ use of yellow covers on telephone directories was misleading or deceptive – identification of the class of consumers – erroneous assumption as to trade source – intention to deceive – failed intention to deceive – relevance of strength of reputation – relevance of use of common trade indicia – sufficiency of differentiation between similar products – whether respondents have done enough to differentiate their directories – conduct not misleading or deceptive
TRADE AND COMMERCE – Trade Practices – misleading or deceptive conduct – advertisements in telephone directories – misleading advertisement regarding comparative consumer usage
COPYRIGHT – unjustifiable threats of copyright infringement – relevance of bona fides – whether threat is groundless or unjustifiable

Legislation: Acts Interpretation Act 1901 (Cth)
Circuit Layouts Act 1989 (Cth)
Competition and Consumer Act 2010 (Cth)
Copyright Act1968 (Cth)
Federal Court Act 1976 (Cth)
Patents Act 1990 (Cth)
Trade Marks Act 1995 (Cth)
Trade Practices Act 1974 (Cth)

Cases cited: .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) ALR 521
Anheuser-Busch, Inc v Budejovick Budvar, Nrodn Podnik & Ors [2002] FCA 390
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v SMS Global Pty Ltd [2011] FCA 855
Australian Competition and Consumer Commission v Telstra Corporation Limited (2007) 244 ALR 470
Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352
Australian Health & Nutrition Association Limited trading as Sanitarium Health Food Company v Irrewarra Estate Pty Ltd trading as Irrewarra Sourdough [2012] FCA 592
Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641
Avel Pty Limited v Intercontinental Grain Importers Pty Limited (1996) 65 FCR 154
Benmax v Austin Motor Co Ltd [1953] 70 RPC 284
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shop Pty Ltd (No 8) 75 IPR 557
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 72 IPR 261
CampomarSociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Connect.Com.Au Pty Ltd v GoConnect Australia Pty Ltd (2000) 50 IPR 535
Coogi Australia Pty Ltd v HySport International Pty Ltd & Ors (1998) 86 FCR 154
Cooper Engineering Co-Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536
Curley v Duff (1985) 2 NSWLR 716
Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 119 FCR 491
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281
Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431
Fexuto Pty Limited v Bosnjak Holdings Pty Limited and Ors [1998] NSWSC 293
Ghosn v Principle Focus Pty Ltd & Ors (Ruling) [2008] VSC 454
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1
Hansen Beverage Co v Bickfords (Aust) Pty Ltd (2008) 171 FCR 579
HG v The Queen (1999) 197 CLR 414
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216
IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458
JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68
Longhurst v Hunt [2004] NSWCA 91
McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394
Moorgate TobaccoCo Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414
National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420
Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99
Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 146 FCR 144
Nutrientwater Pty Ltd v Baco Pty Ltd (2010) 265 ALR 140
Office Cleaning Services Ltd v Westminster Window & General Cleaners Ltd (1946) 63 RPC 39
Ordukaya v Hicks [2000] NSWCA 180
Paula Brock & Ors v The Terrace Times Pty Ltd (1982) 56 FLR 464
Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639
Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited [2014] FCA 373
R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152
REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559
Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1
Ringrow Pty Ltd v BP AustraliaLtd (2003) 130 FCR 569
Roach v Page (No 11) [2003] NSWSC 907
S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 43 IPR 581
S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1980) 30 ALR 657
State Government Insurance Corp v Government Insurance Office of New South Wales (1991) 21 IPR 65
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Telecom Corporation of New Zealand Ltd & Anor v Colour Pages Limited & Anor (High Court of New Zealand, unreported, 14 August 1997, McGechan J)
Telmak Teleproducts (Aust) Pty Ltd v Coles Myer Limited (1989) 89 ALR 48
Telstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors [2011] HCATrans 248 (2 September 2011)
Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149
Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCA 44
Telstra Corporation Limited v Singtel Optus Pty Ltd [2014] VSC 3
Thai World Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289
U & I Global Trading (Aust) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 60 FCR 26
Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971
Vivo International Corporation Pty Ltd v Tivo Inc [2012] FCAFC 159
Weitmann v Katies Ltd (1977) 29 FLR 366
Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286
Winnebago Industries, Inc v Knott Investments Pty Ltd (No 2) [2012] FCA 785
YPG IP Limited and Anor v Yellow Book.com.au Pty Ltd and Ors [2007] NZHC 1947

Dates of hearing: 18-21, 25-28 February, 1 March, 18 April 2013

Place: Melbourne

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 681

Counsel for the Applicants: Mr M D Wyles SC with Mr S Rebikoff and Mr P Creighton Selvay

Solicitor for the Applicants: King & Wood Mallesons

Counsel for the Respondents: Mr C Golvan SC and Mr T Cordiner

Solicitor for the Respondents: K & L Gates

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 276 of 2007

BETWEEN:
TELSTRA CORPORATION LIMITED (ACN 051 775 556)
First Applicant

SENSIS PTY LTD (ACN 007 423 912)
Second Applicant

AND:
PHONE DIRECTORIES COMPANY PTY LTD (ACN 059 776 091)
First Respondent

AUSTRALIAN LOCAL DIRECTORIES PTY LTD (ACN 078 856 318)
Second Respondent

ADAM HARGRAVES
Third Respondent

GLENN HARGRAVES
Fourth Respondent

DANIEL STOTEN
Fifth Respondent

LOCAL DIRECTORIES COMPANY PTY LTD (ACN 130 550 971)
Sixth Respondent

JUDGE:

MURPHY J

DATE:

30 may 2014

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
A. INTRODUCTION

The primary claim

In this matter the first and second applicants, Telstra Corporation Limited and its wholly owned subsidiary Sensis Pty Ltd (“Sensis”) (collectively “Telstra”) bring claims of misleading or deceptive conduct and passing off against the first, second and sixth respondents, Phone Directories Company Pty Ltd (“PDC”), Australian Local Directories Pty Ltd (“ALD”) and Local Directories Company Pty Ltd (“LD”) (collectively the “PDC Respondents”). The conduct is alleged to be in breach of ss 52 and 53(c) and (d) of the Trade Practices Act 1974 (Cth) (“TPA”) and the successor provisions of the Australian Consumer Law (“ACL”) in Sch 2 to the Competition and Consumer Act 2010 (Cth) (“CCA”).
The third, fourth and fifth respondents, Adam Hargraves, Glenn Hargraves and Daniel Stoten, are alleged to have been accessories to the conduct. Each was at a relevant time an officer of one or more of the PDC Respondents and involved in company operations through an executive role. Given my decision it is usually unnecessary to refer separately to the corporate and personal respondents and I will refer to them collectively as “the respondents”.
It is uncontentious that in 1994 PDC commenced publishing directories (“PDC directories”) under the names “Phone Directories”, “PDC” or a PDC logo (“the PDC Name and Logo”) in some cities and regions in Queensland and Northern Territory. It used yellow pages for the business classified section of its directories and, from 1996, these directories also featured yellow covers. The PDC directories have used yellow covers since then. From approximately June 2005:
(a)PDC continued to publish the PDC directories in Queensland and Northern Territory, but did so under the “Local Directories” name and logo (“LD Name and Logo”); and
(b)ALD expanded the coverage of the respondents’ business and commenced publishing the PDC directories in New South Wales under the LD Name and Logo.
From 1 July 2008 LD commenced publishing all PDC directories in Queensland, Northern Territory and New South Wales under the LD Name and Logo. It has done so ever since.
The proceeding centres around the PDC Respondents’ conduct from approximately June 2005 in publishing:
(a)print directories that featured yellow covers, under the LD Name and Logo, and using some other indicia inside the directories (“Other Trade Indicia”);
(b)a website which came to include an online directory, that used yellow icons, yellow as a background and as a highlight, as well as some other indicia including images of the yellow pages and covers of the print directories; and
(c)a mobile telephone application (“mobile app”) with an electronic directory which also featured yellow on its screens.
Telstra’s claims arise in the circumstances that it has, either itself or by its predecessors in title or through Sensis published print telephone directories in Australia since 1880. It has used yellow coloured pages and featured the colour yellow on the covers of its business classified directories since 1975. It registered the composite “Yellow Pages” trade mark including the walking fingers logo (“Walking Fingers”) in 1977, and in the ensuing years registered various other related marks all exhibiting, either alone or in combination, the words Yellow Pages and the Walking Fingers (collectively the “Yellow Pages Trade Marks”).
Since 1975 Telstra has annually distributed to businesses and households around Australia a huge number of print business classified directories with yellow coloured pages, yellow covers and under the Yellow Pages Trade Marks. Since 1994 it has published the Yellow Pages online directory which features the colour yellow, and since 2008 it has published a mobile app that contains a directory which features the colour yellow. Telstra has had a strong yellow theme in its marketing from an early date, and it has spent a great deal of money in promoting its directories under the Yellow Pages Trade Marks.
As a result, Telstra contends that by 1996 it had achieved a secondary reputation in the colour yellow, which became associated in the minds of consumers with Telstra as the producer of the Yellow Pages directories and associated products.
Telstra alleges that, by reason of its secondary reputation in the colour yellow, the respondents’ conduct in publishing their print directories, website and mobile app was such as to create the impression with, or convey the representation to, consumers (including directory users and advertisers) that their products were published by, originated from and were otherwise associated with Telstra.
Telstra contends that the respondents’ conduct represented to consumers that:
(a)their print directories were Telstra’s directories, Yellow Pages directories or local or regional versions of them; or
(b)their print directories were produced by, connected, associated, sponsored, approved, licensed, endorsed and/or affiliated with Telstra or its directories; and/or
(c)the respondents had a connection, association, affiliation, commercial and/or other arrangement with Telstra.
Telstra makes similar allegations in relation to the respondents’ websites over the period and the mobile app.
If the respondents’ conduct created the impression or conveyed the representations alleged, there is no doubt that it was and is misleading or deceptive and constitutes passing off. Since 1994 the respondents have been in direct competition with Telstra in the telephone directory market. Their directories have no connection, association, sponsorship, approval, licence, endorsement or affiliation whatsoever with Telstra or its directories.
Telstra seeks injunctions which largely aim to restrain the respondents’ use of the colour yellow on their print directories, webpages and mobile app screens. It also claims loss of profits and damages.
I consider Telstra’s claims must be dismissed. I am not satisfied that the respondents’ conduct:
(a)created the impression or conveyed the representations alleged;
(b)was misleading or deceptive or likely to mislead or deceive as alleged; or
(c)amounts to passing off.
The evidence shows that the colour yellow is internationally recognised as a standard colour used in respect of classified directories. Around the world classified directories commonly have yellow pages and covers, and when Telstra adopted yellow coloured pages and yellow covers in 1975 it was following an international trend to do so.
From an early date classified directories throughout Australia have used yellow, and a few have used yellow covers too. From 1996 the respondents used yellow pages and yellow covers on their directories. They published approximately eight million such directories in cities and regions in Queensland, Northern Territory and New South Wales up to July 2006, when Telstra first complained about their use of yellow covers. Telstra made no complaint until 2006 although it was earlier aware of the respondents’ conduct and concerned by their emergence as competitors. A number of other small directory providers in discrete markets in Australia also published classified directories with yellow pages and covers from about the mid-1980s, without complaint by Telstra.
Viewed in isolation, I accept that Telstra had a secondary reputation in the colour yellow but I do not consider that the claimed association in the minds of consumers between yellow and Telstra or its products is a strong one. I say this because:
(a)yellow is not distinctive in itself, being a colour widely used on products and services;
(b)yellow is internationally recognised as a standard colour of classified directories and to some extent was so recognised by Australian consumers;
(c)Telstra only ever used the colour yellow coupled with its well-recognised Yellow Pages Trade Marks including the Walking Fingers, and never independently; and
(d)Telstra’s use of yellow on its directory covers after 1996 was inconsistent and declined over time.
Telstra contends that the respondents set out to deceive consumers when they adopted yellow covers in 1996, and also when they maintained their use of yellow covers and commenced to publish their directories under the LD Name and Logo in June 2005. I am not satisfied this was so. Nor am I satisfied that there was any widespread practice amongst the respondents’ sales representatives to describe themselves as being from or associated with Telstra or the Yellow Pages directories.
Although the PDC directories had a yellow cover I have no difficulty in finding that the respondents did enough to distinguish their directories from June 2005. I do not accept that the PDC directories created or imparted the impression, or conveyed the representation, to consumers that they were published by, originated from, or were in any way associated or affiliated with Telstra or its directories.
Given Telstra’s delay in complaining about the respondents’ use of yellow covers, the respondents also rely on the equitable of defences of estoppel, laches and acquiescence. As I have dismissed Telstra’s claims it is unnecessary to decide whether or to what extent these defences would have been available to the respondents.
The cross-claim of misleading or deceptive conduct
The PDC Respondents filed a cross-claim alleging misleading or deceptive conduct by Telstra in publishing advertisements in its directories between 2004 and 2007 which purported to set out the comparative consumer usage of Telstra’s and PDC’s directories.
In 2003, 2004 and 2006 Telstra had, via a market research company, surveyed consumer usage and awareness of directories and related services in certain regional markets. It published results from these surveys in the impugned advertisements. As an example, one advertisement stated that 57% of the consumers surveyed in that regional market said that the Yellow Pages directory was their most used source of buying information, and that only 2% of consumers surveyed used the relevant PDC directory. A footnote to the advertisement indicated that the source of the data was “independent research” of people aged between 18 and 64 in certain “regional directory markets” or groups of such markets.
In my view the advertisements were misleading because the advertisements did not provide a fair or accurate picture of the comparative usage of the rival directories. In many cases the consumers surveyed did not have available a PDC directory as an alternative reference to the Yellow Pages directory because the respondents’ directories did not cover that area. Further, in many cases the regional market surveyed was much greater than the area served by the relevant PDC directory, and in other cases the surveys reported on “PDC” directories when the only directories distributed by the cross claimants in some of the areas surveyed were published under the “Local Directories” name. I consider that Telstra’s conduct in publishing the advertisements was misleading or deceptive or likely to mislead or deceive directory advertisers.
The cross-claim of unjustifiable threats of copyright infringement
The PDC respondents also cross-claim pursuant to s 202 of the Copyright Act1968 (Cth) (“Copyright Act”) that Telstra made unjustifiable threats of proceedings for copyright infringement. The respondents seek declaratory relief and damages.
It is uncontentious that:
(a)on 10 June 2006 Telstra threatened proceedings for breach of copyright; and
(b)Telstra brought a claim of breach of copyright in the present proceeding which failed.
Telstra contends that its threat of proceedings, and the proceedings themselves, were soundly made on the law as it then stood, and were made in good faith in the honest belief that copyright had been infringed. I accept Telstra’s contentions. I do not consider that its threats were unjustifiable within the meaning of s 202.
B. The Evidence and objections to Evidence
The evidence in the proceeding is voluminous. The Court Book totalled 19 lever arch binders, with further documentary evidence adduced during trial. A total of 81 witness affidavits were filed although the evidence of many witnesses was not challenged. The parties were requested to prepare and file a Statement of Agreed Facts, and also prepared detailed chronologies. As a result, much of the factual history is not contentious, but there remains a contest between the parties on various important issues and numerous objections to evidence.

Given the volume of the evidence it is not practical to fully recount it and I will set out only the salient facts to the disposition of the claims. Inevitably this will involve some loss of nuance but that is unavoidable. I separately deal with my view of the evidence of the numerous witnesses. For ease of understanding I will separately deal with the facts in the cross-claims.
There were numerous objections by the parties to various parts of the affidavit evidence sometimes at the level of parts of sentences and parts of paragraphs. Where I have considered the evidence significant to my decision I have set out my view on the objection in dealing with the relevant issue. It is unnecessary to deal with each small objection where it relates to evidence which has had no bearing on my decision.
I thank the parties for the lengthy Statement of Agreed Facts, their chronologies and for the care and quality of their detailed written submissions. I have been greatly assisted by them and have drawn directly on them at various points. Sometimes I will directly record my view of a particular aspect of evidence. On other occasions, given the great volume of evidence, I have taken the more convenient path of simply setting out the facts as I see them. In doing so I set out my view of the evidence.
The parties
Telstra and Sensis are together the applicants in this proceeding. Their identities have already been detailed above at [1].
PDC, the first respondent, was incorporated in April 1993 and carried on the business of publishing and distributing telephone directories. It began marketing and selling advertising space for print directories in 1993 and in 1994 commenced publishing and distributing its print directories under the name “PDC Directories” and “PDC” in some cities and regions in Queensland and the Northern Territory, and expanded from there. In 2001 it launched its website.
In June 2005 PDC commenced publishing its directories in Queensland and the Northern Territory under the name “Local Directories”, and it changed the domain name of its website accordingly. Until mid-2008 PDC continued to produce and distribute the impugned directories in cities and regions in Queensland and the Northern Territory. From that date LD assumed these operations.
ALD, the second respondent, was incorporated in June 1997 and commenced trading on 20 October 2004. It began marketing and selling advertising space for its directories and from about June 2005 it commenced to publish the impugned directories and website in cities and regions in New South Wales. It continued until mid-2008 and from that date LD also assumed its operations.
LD, the sixth respondent, was incorporated in April 2008. From mid-2008 it commenced to publish all of the impugned directories and website in Queensland, Northern Territory and New South Wales.
Adam Hargraves, the third respondent, is one of the two founders of PDC. He was a member of PDC from its incorporation until April 2008, and was actively involved in its day-to-day operations. He held various positions within the company, including as a director from incorporation until June 2010 and as Company Secretary from April 1997 to July 2001. He was also a member of ALD from June 1997 until October 2004 and a director from June 1997 to September 2004.
Glenn Hargraves, the fourth respondent, is the other founder of PDC. He was a member of PDC from its incorporation until April 2008. He too was actively involved in the day-to-day operations of PDC. He held positions as a director and as Company Secretary from incorporation until April 1997. He was also a member of ALD from June 1997 until October 2004, and has been a director of LD since March 2010.
Daniel Stoten, the fifth respondent, was a director of PDC from February 1998 until June 2010, and was Company Secretary from July 2001 until June 2010. He held the position of Operations Manager and was actively involved in day-to-day operations. He became Managing Director in 1999. He was also a director and secretary of ALD from September 2004 to June 2005 and he managed ALD’s business in the period in which it published the impugned directories.
The evidence of the respondents’ senior officers
Much of the evidence in the case is documentary, much of the evidence has found its way into the Statement of Agreed Facts, and my decision in large part turns on the view that I take of the appearance of the PDC directory. In many respects the evidence of the respondents’ senior officers is not central. Insofar as their evidence is contentious, I deal with it in setting out my view of the facts.
It must be noted though that Telstra vigorously attacked the credibility of the respondents’ senior officers particularly Glenn Hargraves, Adam Hargraves and Mr Stoten. The attack surrounded Telstra’s contention that they set out to deceive when they adopted yellow covers in 1996, and when they maintained the use of yellow covers and adopted the name Local Directories in 2005. The attack included references to the fact that Adam Hargraves and Mr Stoten were convicted of taxation fraud in 2010. As I explain at [489]-[555] I am not satisfied that they set out to deceive. I do not propose to rehearse each of the attacks.
It suffices to note that I found Mr Stoten’s evidence to be consistent with contemporaneous documents, consistent with my view of the other evidence, and largely reliable. He made concessions against interest and gave a plausible account.
As I later explain at [528]-[532], I was concerned by aspects of the evidence of Glenn and Adam Hargraves but in the finish I concluded that, in the main, they gave reliable evidence. Their evidence was consistent with contemporaneous documents, consistent with my view of other evidence, they gave their evidence thoughtfully, made concessions against interest, accepted that it was possible that some consumers were confused or misled by their directories, and gave a plausible account. While a vigorous attack was made upon their credibility, I largely accept their evidence.
Richard Wilkin, a director of ALD, involved in selling advertising space and training sales representatives, also gave evidence. It was largely unchallenged and I accept it.
The market for telephone directories
It is uncontentious that the market for telephone directories in Australia encompasses both print and online directories, and (more recently) mobile telephone applications. The parties agree that directories are used by two categories of consumers:
(a)consumers who use the directories to search for contact details, products and services (“directory users”); and
(b)businesses who are typically small to medium sized enterprises, and who use the directories to promote their products and services, paying a fee to the directory producer for doing so (“advertisers”).
Telstra’s directories
When Telstra first began publishing its directories the business classified section of its directories was published using pink paper. In 1975 Telstra started using yellow coloured paper instead and renamed its directories as “Yellow Pages”. As I have said, in 1977 Telstra first registered a composite trade mark featuring the words Yellow Pages and the Walking Fingers, and then registered a series of related trade marks over the ensuing years.
Telstra’s print directories were initially only produced for major capital cities, but in 1986 their coverage was extended to regional cities and areas, and in 1994 to local areas within major capital cities.
In addition to its print directories, since 1994 Telstra has published an online directory at its website at the domain name Since 2006 Telstra has published a mobile phone app which contains an electronic directory.
Since launching the Yellow Pages directories, Telstra has engaged sales representatives who directly canvass businesses in the relevant geographical area seeking that they advertise in them. From an early date Telstra’s marketing has also targeted directory users through extensive advertising campaigns in a range of mediums.
The evidence is that between 1975 and 1996 Telstra distributed approximately 231 million Yellow Pages directories to Australian business and households, and between 1978 and 1996 it spent approximately $200 million on advertising the Yellow Pages brand. During this period the circulation averaged approximately 9.5 to 12 million copies annually. From 1997 onwards the distribution increased to roughly 14 to 15 million copies annually, with an annual advertising spend of between about $13 to $33 million. The evidence shows that the Yellow Pages website has been popular since its launch. For example, it consistently recorded approximately 2.2 million to 2.6 million visitors each month in the period September 2006 to June 2007.
Much of the Statement of Agreed Facts is devoted to recounting Telstra’s various Yellow Pages advertising campaigns. That these campaigns occurred is uncontentious and I do not propose to set them out in detail. I will summarise their salient features insofar as they show the extent and reach of the campaigns, and their use of the Yellow Pages Trade Marks and the colour yellow. Telstra sought that I treat some of its marketing evidence as confidential, but I have not done so where I saw it as necessary to properly explain my decision.
Among the first of Telstra’s major promotions of its Yellow Pages directories was the “Hello Yellow” campaign which began in 1982, and which included television and radio advertisements, a direct mail campaign and the distribution of stickers. There were over 450 television commercials screened between November 1982 and June 1983, 1,200 short radio advertisements in Sydney alone, and a large volume of letters and brochures were mailed to prospective advertisers and directory users.
Beyond the Hello Yellow campaign, Telstra’s marketing continued with a strong yellow theme. For example, Telstra distributed about 19,000 letters and yellow stickers as part of the 1993 “Find us in the Yellow Pages” campaign in eastern New South Wales and regional Australia. Advertisers were encouraged to place these stickers in the windows of their business premises. Similarly, in 1996, Telstra conducted a mail out of 27,000 yellow coloured letters and brochures to advertisers in the Australian Capital Territory and New South Wales.
Between March and July 1990, Telstra conducted a direct mail campaign in which 100,000 brochures were sent out in regional and metropolitan areas of Australia. These had the same appearance as the cover of a Yellow Pages directory, featuring the colour yellow and a Yellow Pages Trade Mark including the Walking Fingers..
Other than in radio advertisements Telstra’s marketing campaigns always involved use of the Yellow Pages Trade Marks, and featured the colour yellow. For example, Stephen Harvy, Group Marketing Manager for the Yellow Pages, gave evidence of the “Goggomobil” television advertisement between 1992 and 1996. This advertisement concludes with a still picture of a composite Yellow Pages Trade Mark including the Walking Fingers which is depicted in yellow in contrast with a black background. I have reviewed the other television advertisements of which Mr Harvy gave evidence, including those titled “Train Set”, “Lamp” and “Leak”, and they used similar indicia.
In February 1998, Telstra ran a Valentine’s Day campaign involving an advertisement featuring a yellow coloured Yellow Pages directory folded into a shape of a heart which was published in national circulation newspapers such as the Sydney Morning Herald, Daily Telegraph, Herald Sun, The Age, Courier Mail, Advertiser and West Australian.
Between March and April 1998, Telstra published further newspaper advertisements as part of its “Paint the Town Yellow” campaign in these same national circulation newspapers. Many of these featured a Yellow Pages directory with its yellow cover and pages, against a yellow background with a composite Yellow Pages Trade Mark. Mr Harvy gave evidence that, from 2000, these and similar advertisements extended to local and regional newspapers.
In 1999, the Paint the Town Yellow campaign was extended to include television commercials in high rating television programs and times in each capital city. By way of example, in Melbourne it screened 350 such commercials at a cost of almost $1 million. One commercial titled “Party aftermath” opens to a scene of a messy house after a party. Two men then look for the Yellow Pages directory with the viewer assuming they are looking for a cleaner. Instead the men use the directory to order a pizza. The yellow cover of the directory is featured throughout the commercial.
In 2000, Telstra launched its “Not Happy Jan” commercial at a cost of $3.2 million. This campaign was centred on the story of an employee forgetting to place an advertisement in the Yellow Pages directory on behalf of her employer. The employer is depicted thumbing through a Yellow Pages directory, noticing that the advertisement is missing, and shouting at the employee through a window. The advertisement concludes with yellow writing against a black background saying “Closing soon. Call 13 23 78” together with a composite Yellow Pages Trade Mark including the Walking Fingers.
Between April and May of 2002 Telstra conducted an extensive outdoor advertising campaign at a cost of $1.2 million. This included yellow painted buses and trams in Melbourne and Sydney, large billboards in high traffic areas and advertising panels on trains, trams and buses, each of which depicted a Yellow Pages Trade Mark including the Walking Fingers.
In early 2005 Telstra began to promote its directories through television, print and online media with the phrase “Find it in Yellow”, which it registered as a trade mark. The Find it in Yellow campaign ran until June 2006 at a cost of approximately $9 million, and consisted of five separate phases:
(a)Phase 1 primarily involved press advertisements in high circulation newspapers and magazines in capital cities and some regional centres. All of these advertisements featured a composite Yellow Pages Trade Mark including the Walking Fingers, and some also featured the Yellow Pages website at Campaign materials, including leaflets, bookmarks and note pads with the phrase Find it in Yellow and featuring the colour yellow were also placed into residential letter boxes and distributed at CBD train stations and shopping malls. This was a high volume campaign and Telstra distributed approximately 1.6 million note pads alone by June 2005.
(b)Phase 2 ran from August 2005 to January 2006 using similar media but with the addition of an extensive outdoor campaign on billboards in prominent locations in major cities and on public transport. Once again these advertisements made extensive use of the colour yellow. For instance, a large yellow coloured billboard showed an online Yellow Pages website search screen with the words “Not only did they find me a business, they showed me how to get there”.
(c)Phase 3 ran from January to March 2006, and returned to the Paint the Town Yellow slogan in a range of advertising media. The evidence is that Telstra’s press advertising in this phase reached a consumer audience of one million, its billboard advertising reached 1.67 million and its online advertising reached 40 million.
(d)Phase 4 ran from April to May of 2006 as a competition in which consumers were encouraged to visit the Yellow Pages website for a chance to win one of three yellow Volkswagen Beetles and cash prizes. This phase focused on online advertising, and the evidence is that pop-up advertisements on high volume websites which featured the Find it in Yellow trade mark on a yellow background made 143.4 million impressions during this two-month period.
(e)Phase 5 ran from May to June of 2006 at a cost of $1.07 million. It used a combination of advertisements in newspapers, television, outdoors, online and printed directories. For example, 17 yellow-themed billboards were placed in high traffic areas in Melbourne and Sydney and online pop-up advertisements made 30 million impressions.
The evidence shows that until September 2006 Telstra’s directories, website and marketing always used a Yellow Pages Trade Mark with the Walking Fingers. It extensively used the colour yellow on its directories or website. I was not taken to a single example of independent use of yellow on its directories. But if there was ever any such use, it was isolated and rare. For all practical purposes Telstra only used the colour yellow together with a Yellow Pages Trade Mark.
In September 2006, Telstra ceased using the Yellow Pages Trade Marks as the umbrella or overarching brand for its print and online directories and commenced to use “Yellow” in that capacity. Telstra spent approximately $20 million on marketing to launch the Yellow brand, and its marketing used that brand together with the Walking Fingers, and strongly featured the colour yellow. From this date Telstra published its directories and websites under the Yellow brand and, for all practical purposes, it only ever used the colour yellow together with the Yellow brand and the Walking Fingers. It continued to strongly promote its directories, spending approximately $33 million on marketing in 2007 and 2008.
In 2009, Telstra returned to using Yellow Pages as the overarching brand. Since then Telstra has continued to promote its directories in extensive and broad reaching campaigns using various advertising media. It has continued to use the Yellow Pages Trade Marks and continued to feature the colour yellow on its directories and its marketing.
The respondents’ directories
The commencement of PDC
Glenn and Adam Hargraves gave evidence as to the commencement of PDC. It is uncontentious that in 1992 and 1993 Glenn Hargraves worked for a USA telephone directory provider named Phone Directories Company Inc (“PDC-USA”) which specialised in producing telephone directories for USA local markets. He worked as a sales consultant which involved him telephoning and visiting prospective advertisers to sell advertising space in the directories.
I accept his evidence that there were over 100 companies publishing telephone directories in different USA markets at that time and they commonly used yellow pages, had yellow covers and used the name Yellow Pages.
Adam Hargraves worked for the same USA company for a three-month period and he and Glenn Hargraves returned to Australia together in 1993. They decided to build on the experience they had acquired and start their own business in Australia producing and distributing telephone directories. They incorporated PDC for this venture on 14 April 1993. It is also uncontentious that Glenn and Adam Hargraves initially found it difficult to become established in the marketplace.
The distribution of the respondents’ directories
The print directories
PDC commenced publishing print telephone directories in Queensland and Northern Territory in 1994. It published its first directories in Rockhampton & Gladstone, and Mackay in Queensland, and Darwin and Alice Springs in the Northern Territory. In the years that followed it expanded the coverage of its directories in Queensland and the Northern Territory to include Townsville and the Sunshine Coast in 1995, the Gold Coast in 1996, Cairns in 1997, Tweed Heads in 1999, Southern Gold Coast in 2000, Mount Isa in 2001, Tweed Coast in 2008, Bundaberg, Tablelands and Gold Coast South in 2010, and Gympie, Hervey Bay and Cassowary Coast in 2011.
As I have said, in about June 2005 there was a change in the respondents’ operations in that:
(a)PDC continued to publish the PDC directories in Queensland and Northern Territory but commenced to do so under the LD Name and Logo; and
(b)ALD commenced publishing directories in New South Wales under the LD Name and Logo.

ALD was incorporated in June 1997 under the name Adcom Enterprises Pty Ltd, with Glenn and Adam Hargraves as two of its directors, but it did not trade. In October 2004 the company’s name was changed to Australian Local Directories Pty Ltd and it commenced selling advertising space in its pending directories in New South Wales. Adam Hargraves ceased to be a director in September 2004 and the directors were then Glenn Hargraves, Mr Stoten and Mr Wilkin.
It appears that ALD was to operate for the benefit of Glenn Hargraves, Mr Stoten and Mr Wilkin and not for the benefit of Adam Hargraves, who had ceased actively working in the business. Glenn Hargraves, Mr Stoten and Mr Wilkin were actively involved in the day to day activities of ALD even though in June 2005 Glenn Hargraves and Mr Stoten ceased as directors.
ALD published directories for the Coffs Harbour & Grafton region in 2005 and then expanded to Port Macquarie and Taree & Forster-Tuncurry in 2006, Northern Rivers in 2007 and Port Stephens in 2008.
Telstra attributes some significance to the fact that ALD published the PDC directories in New South Wales from June 2005. However I do not see it as having any great significance in the proceeding. In this period, PDC continued to publish the Queensland and Northern Territory directories and did so under the LD Name and Logo. I accept Mr Stoten’s evidence that PDC also conducted the back office tasks for ALD’s operations in return for a fee, including the actual production of the ALD directories. From June 2005 all of the PDC directories in Queensland, Northern Territory and New South Wales were published under the LD Name and Logo. While it appears that Adam Hargraves was not to share in ALD’s profits and there was a split in the ownership and control of PDC and ALD, Glenn Hargraves and Mr Stoten were actively running both businesses, and the operations of the two businesses remained closely connected.
In any event, from 1 July 2008 LD took over production and publication of the PDC directories throughout Queensland, Northern Territory and New South Wales and there was no longer any split in the ownership and control of the businesses. It has continued to publish and distribute the PDC directories since that date. The respondents continued to expand the coverage of their directories into regional New South Wales. They commenced publishing directories for Maitland in 2009 and Newcastle in 2011, and their expansion continues. Commercially, the commencement of ALD as the publisher of the PDC directories in New South Wales was little more than a continuation of the expansion of the respondents’ existing business.
Each PDC directory has a distribution commensurate with the size of the relevant region, ranging from approximately 21,000 for the Mount Isa directory to approximately 150,000 for the Rockhampton & Gladstone directory.
Before directories are delivered to the public the respondents deliver directories to each business that advertised in it. They guarantee that every advertiser will get the number of directories they have requested, and that they will deliver a directory to every single address in the territory covered.
David McCurdy, the respondents’ Sales Manager, said and I accept that when the directories are delivered to each business that advertised, they are delivered by a PDC employee wearing a company branded shirt and cap. A week or two later a sales representative other than the person who made that sale again attends the business wearing a company branded shirt, cap and lanyard. If the relevant business agrees the representative will affix a sticker to the business premises which features the LD Name and Logo and a slogan such as “You’re local, We’re local” or “Local Directories - we’re in it”.
The respondents print and distribute over one million directories each year. Once the distribution to each business and household in the territory is complete, additional copies of the directories are made available for the public to collect from local IGA supermarkets.
The website and online directory
In 2001 the respondents commenced operating a website containing information about their directories and their business which was located at the domain name In 2004 the respondents commenced publishing their website at the domain name In 2006 the respondents commenced publishing their website at the domain name which included an online directory.
The PDC Respondents have registered a number of trade marks to support their directory products, starting with a “PDC” logo in 1998 before moving to several composite trade marks including the word “Local Directories” and a stylised “LD” in around 2006.
The respondents’ use of yellow and other trade indicia
Features of the respondents’ print directories
It is uncontentious that the PDC directories have had the following features:
(a)since 1994 the classified listings sections have been printed on yellow coloured pages;
(b)since 1996 the covers and spine of the directories have featured the colour yellow;
(c)from 1994 until about June 2005 the directories were published under the PDC Name and Logo. This can be seen in the name “Phone Directories Company” along with the acronym “PDC” on the spine of the directories, and the acronym “PDC” on the front cover, together with the use of the name “Phone Directories Company” on every second page of the A-Z listings section of the directories. I reproduce below an image of the PDC Name and Logo inside a map of Australia which is displayed on the front cover of the PDC directories and an image of the PDC Name and Logo on the spine of the PDC directories:
(d)from June 2005 the directories were published under the LD Name and Logo. Initially the LD Name and Logo appeared with the tag-line “Your Local Phone Book” in stylized font as I reproduce below:
(e)from 2006 the LD Name and Logo was changed to appear as follows:
(f)from 1994 to March 2007 the term “Yellow Section” was used to describe the classified listings section;
(g)from 1994 to March 2007 the term “White Section” was used to describe the alphabetical listings section;
(h)from 2003/2004 to 2007 the “General Telephone Information Page” contained a “General Enquiries” section in which Sensis was listed first and Telstra was listed second, out of alphabetical order;
(i)from 2000 to 2005, one of the pages contained a Yellow Pages Publishers Association (“YPPA”) symbol which included a depiction of walking fingers as follows;
(j)from February 2006 to September 2006 one of the pages included a Yellow Pages Association (“YPA”) symbol which included depiction of walking fingers as follows;
(k)from 1994 to 2007, the directories included a “Quick Find Index” with a red coloured strip and red capitalised letters in red rectangles as a heading structure within the index.
The YPPA is the predecessor of the YPA. I accept Mr Stoten’s evidence that PDC became a member of this organisation in about May 1999. The evidence shows that the YPA is an association based in the USA and its members include:
(a)publishers of Yellow Pages directories;
(b)certified marketing representatives who are involved in selling advertising in Yellow Pages directories; and
(c)associate members who include industry stakeholders such as Yellow Pages advertisers, vendors and suppliers to the industry.
The evidence shows that the YPA has members in 29 countries and has used a logo which includes a walking fingers device since the 1980s. The evidence indicates that its members often display this logo on the directories they publish.
The disclaimers in the print directories
From 1994 the respondents published the following disclaimers in their print directories:
(a)in 1994 and 1995 the preface of the directories contained the following statement:
Phone Directories Company Pty Ltd (PDC) was developed in response to a need in the market place for a viable alternative to Yellow Pages … Phone Directories Company is not associated in any way with Yellow Pages, or any other subsidiary of Telstra Corporation. Phone Directories Company is not a directory of subscribers to or persons with any telecommunications service by Telecom.
(b)in addition to this express disclaimer, the 1994 and 1995 directories featured the following indicia which identified PDC as the producer:
(i)the name “Phone Directories Company” printed on every second page of the A-Z listings section of the directories;
(ii)the name “Phone Directories Company” along with the acronym “PDC” on the spine of the directories; and
(iii)the acronym “PDC” on the front cover.
(c)from 1999, in addition to the name “Phone Directories Company” being printed on every second page of the A-Z listings section, disclaimers were included on the first page of the A-Z listings section of the directories. In the earlier directories the disclaimer stated:
PDC Directories was developed in response to a need in the marketplace for a viable alternative to Yellow Pages…
PDC Directories is not associated in any way with Yellow Pages, or any other subsidiary of Telstra Corporation. PDC is not a directory of telephone number subscribers.
(d)then after June 2005, the disclaimer (located on the first page of the A-Z listings section) stated:
Australian Local Directories was developed in response to a need in the marketplace for a viable alternative to Yellow Pages.
Australian Local Directories is not associated in any way with Yellow Pages, or any other subsidiary of Telstra Corporation. Australian Local Directories is not a directory of telephone number subscribers.
(e)then after April 2008 the disclaimer (located on the first page of the A-Z listings section) stated:
Local Directories was developed in response to a need in the marketplace for a VIABLE ALTERNATIVE to Telstra’s Yellow Pages & White Pages.
LOCAL DIRECTORIES IS IN NO WAY ASSOCIATED WITH TELSTRA CORPORATION LIMITED OR ANY PART OF ITS PUBLICATIONS INCLUDING YELLOW PAGES & WHITE PAGES. Local Directories is not a directory of telephone number subscribers. (Emphasis in original.)
(f)from 2006, the extent of the disclaimer was expanded so that each reference to Telstra, such as in the General Enquiries section was accompanied by an asterisk and an explanation that “this directory is in no way associated with, sponsored, or authorised by Telstra Corporation Limited, Yellow Pages, White Pages or Sensis Pty Ltd.” In addition, from September 2006, the following statement appeared on the front inside page of the directory:
Proudly and independently Australian owned and operated, Local Directories is in no way associated with, sponsored, or authorised by Telstra Corporation Limited, Yellow Pages, White Pages or Sensis Pty Ltd.
(g)from about May 2007, the extent of the disclaimer was increased by including the following statement on the bottom of each alternate page in both the A-Z listings and classified sections:
Local Directories is in NO WAY associated with Telstra Corporation Limited or Sensis Pty Ltd.
As a result, since May 2007 each of the PDC directories included over 500 disclaimers stating that the respondents’ directories were not associated with Telstra in any way.
(h)from 2008, the disclaimer in the preface of the directories stated:
Local Directories is a 100% Australian owned wholly independent phone book publisher. Local Directories has absolutely no association whatsoever with Telstra Corporation Limited or Sensis Pty Ltd.
Since 1993, Local Directories, as a competitor and real alternative to Sensis White Pages and Yellow Pages regional directories, has published over 130 annual editions of its local phone books throughout Australia. (Emphasis in original.)
A similar disclaimer was published on a flyer included in each directory’s wrapping.
Although there was some slight variation in the disclaimers between different regions their thrust was the same and they were printed with similar prominence.
Features of the respondents’ websites and online directories
It is uncontentious that the respondents’ websites had the following features:
(a)from 2000, the respondents’ website published at the domain name contained general information about the corporate respondents and the directories;
(b)from 2001 to 2007, the directories were described on the respondents’ website as “white and yellow page directories” and “white and yellow page phone books”. This practice ceased in response to a complaint from Telstra;
(c)from about 2004, the respondents’ website was published at the domain name It referred to “yellow page listings” and “Yellow Section” in the print directories and displayed images of the yellow covers of the print directories.
(d)from 2005, the respondents used the colour yellow as a highlight and background colour on the website, and displayed the yellow covers and pages of the directories throughout the website. The website began to refer to PDC as a fully accredited member of the YPPA;
(e)from September 2006, the respondents’ website was published at the domain name and it contained an online directory. Each of the directories were progressively made available online. The online directory included images of the yellow covers and pages of the directories; and
(f)from 2006, the website featured a map of Australia shaded in yellow indicating the regions where the directories are published.
The disclaimers on the respondents’ websites
The respondents’ websites contained disclaimers and other statements which indicated that they were not published by or associated with Telstra:
(a)from 2001, in the “Frequently Asked Questions” under the question “Is PDC a part of Yellow Pages or Telstra?” the website stated:
No, PDC is an independently wholly Australian owned company which began in 1992.
(b)Under the question “Where do the listings come from?” the website stated:
A number of different sources are used to compile the listings published in our directories, including public domain databases. PDC also has a business listings supply licence agreement with Pacific Access Pty Ltd, Telstra’s publisher of White Pages and Yellow Pages. PDC is also a committee member of the Integrated Public Number Database (IPND) – Australian Communications Industry Forum. The IPND contains every individual phone listing (with daily updates) and is used for national security, emergency services and directory publishing. PDC also receives hundreds of listing information updates from individual members of the public.
(c)from 2006, under the heading “About Us” the website stated:
Local Directories is a privately owned, wholly independent Australian business. The company is a member of Communications Alliance Ltd, an international member of the Yellow Pages Association (YPA), the Association of Directory Publishers (ADP) and an associate member of the European Association of Directory Publishers (EADP). Local Directories has no association whatsoever with Telstra Corporation Limited, Sensis Pty Ltd, White Pages or Yellow Pages. One of Local Directories major sources of telephone data information is the Integrated Public Number Database (IPND). This database is regulated by the Australian Communications and Media Authority. (Emphasis in original.)
(d)from 2008, the wording of the disclaimer in the “About Us” section was changed slightly and it stated:
Local Directories is a privately owned, wholly independent Australian business. The company is a member of the Communications Alliance Ltd, an international member of the US Yellow Pages Association (YPA), the Association of Directory Publishers (ADP) and an associate member of the European Association of Directory Publishers (EADP). Local Directories HAS NO ASSOCIATION whatsoever with Telstra Corporation Limited, Sensis Pty Ltd, White Pages or Yellow Pages.
Since 1993, Local Directories, as a REAL ALTERNATIVE, has brought a refreshing new image to advertising. Compact and complete, Local Directories combines traditional, time-tested features with exciting new innovations. (Emphasis in original.)
(e)in 2009, the wording of the disclaimer was again changed slightly but its thrust was unchanged.
Features of the respondents’ mobile application
The respondents’ mobile app which contained an electronic directory become available in June 2011. It is uncontentious that it features yellow as a background, has a yellow icon on the loading screen and rows of yellow icons on the home screen. It contains no disclaimers.
The respondents’ use of yellow in its marketing
Together with their use of yellow pages in their directories since 1994 and their use of yellow covers since 1996, the respondents also featured the colour yellow in their marketing since 1993.
Mr Stoten deposed, and I accept, that the respondents’ marketing strategy had clearly defined pre-publication and post-publication phases. The pre-publication marketing campaign was conducted during the period that the “sales canvass” is performed. In this period the respondents’ sales representatives directly approach businesses within the area covered by the directory and attempt to sell advertising space to them. The pre-publication marketing campaign is aimed at the respective advertisers and was commonly made up of testimonials from the respondents’ existing advertisers.
The post-publication marketing campaign occurs at the time the relevant directory is being published. This campaign is primarily aimed at directory users in the relevant region to advise them that the directories are being distributed, and that extra copies can be collected at the local IGA supermarket.
Catherine McGarry, General Manager of Local Directories, deposed that the respondents conducted various types of television advertisements in the pre and post- publication marketing campaigns, including:
(a)“Coming soon advertisements” which advertised the commencement of a PDC directory in a new region;
(b)“Client Testimonials” which included testimonials from the respondents’ existing advertisers;
(c)“Closing Now advertisements” which advised that the deadline for advertisers to place advertisements was approaching;
(d)“Distribution advertisements” which informed directory users that directories could be collected from local IGA supermarkets;
(e)“Online advertisements” which announced the launch of the online directory from 2006; and
(f)“In the Street advertisements” which included testimonials from directory users.
Ms McGarry deposed, and I accept, that the respondents’ television advertisements since 1994 have featured the colour yellow. I accept too Mr Stoten’s evidence to similar effect.
Ms McGarry gave examples of the respondents’ advertisements from 1994 to 2012 which consistently featured the colour yellow. Firstly, the advertisements typically used a yellow ribbon which appeared on the bottom of the screen, particularly in the testimonial style advertisements. Such advertisements showed an individual explaining the success of his or her advertisements in the respondents’ directories while a yellow coloured ribbon featuring the LD Name and Logo appeared at the bottom of the screen. The image below is a screenshot from a 2004 advertisement screened in Rockhampton and Gladstone.
The image below is a screenshot from a 2008 advertisement screened in Darwin. This advertisement commenced with a large LD Name and Logo before cutting to the ribbon layout shown.
Secondly, the advertisements typically used an image of the front cover of one of the respondents’ directories. In some instances this was in addition to a yellow coloured ribbon which appeared later in the advertisement. By way of example, the image below is a screenshot from a 2005 advertisement shown on the Sunshine Coast.

A further example is the following image, which is a screenshot from a 2007 advertisement screened in Coffs Harbour.
This image of the directory was the central visual point in the advertisement. After a close up shot of its cover, the book opens and its yellow coloured pages become visible as can be seen below.
These images are accompanied by a voiceover with the following words:
It’s here. On your doorstep and at your fingertips. Your new Local Directories phone book is being delivered free to every single household and business. It’s packed full of updated maps, local businesses, residential listings and community information. You can even pick up extra copies from these local outlets. Access it online at localdirectories.com.au. It’s your local phone book. Local Directories: proudly independent and Australian owned.
I accept Ms McGarry’s evidence that television advertisements of these general types were screened in the various regional areas in which the respondents published their directories, and she provided schedules which set out the time periods during which the advertisements were screened and the stations on which they were aired. She said that the respondents have not retained the schedules for the 1994-2004 period, but that period is not central in any event. Ms McGarry produced schedules for the 2005-2010 and 2011-2012 periods.
I infer that the advertising schedules for the 2005-2010 and 2011-2012 periods are roughly representative of the schedule for the missing period. I am satisfied that the advertisements were aired widely across the relevant regions often for many months. Using the period of the 2008 sales canvass as an example, the respondents published television advertisements including on Southern Cross 10, Prime 7, Nine Broadcasting Network, and Win during the following periods and covering the locations listed:
(a)Port Stephens: from 28 May 2007 to 30 November 2007;
(b)Port Macquarie: from 25 May 2007 to 21 December 2007;
(c)Taree: from 16 July 2007 to 21 March 2008;
(d)Cairns: from 7 August 2007 to 30 March 2008;
(e)Darwin: from 3 September 2007 to 30 March 2008;
(f)Townsville: from 18 September 2007 to 1 June 2008;
(g)Tweed Coast: from 1 January 2008 to 8 August 2008; and
(h)Rockhampton: from 14 January 2008 to 29 August 2008.
While there was little documentary evidence of the frequency and placement of these advertisements, I accept Ms McGarry’s evidence that the television advertisements were “broadcast widely in the particular region in which the respondents’ directories are distributed.” I am satisfied that the advertisements informed many prospective advertisers and directory users in the regions covered that the respondents intended shortly to publish, or had published, a telephone directory in that region.
The respondents also promoted their directories through newspaper advertisements. There was little evidence of the frequency and placement of these advertisements but I infer that they were published with reasonable frequency in local newspapers in an endeavour to reach the target audience of prospective advertisers and directory users. The evidence is that the advertisements typically used yellow as a background, and also used images of the yellow covered directories. I reproduce below an example of an advertisement placed in the Port Macquarie News on 28 November 2008.
Ms McGarry said, and I accept, that the respondents also used yellow in materials distributed widely by their sales representatives and made available on their website. These materials included advertising guides aimed at assisting prospective advertisers to select the appropriate advertisement for their business. She said that the respondents’ sales representatives have distributed approximately 125,000 such guides since 1994. The guides are not all the same but I am satisfied that they extensively and consistently used yellow as the dominant colour. As an example I reproduce below the 2007 “B2 Directory Advertising Guide”.
The evidence also shows a strong yellow-related theme in the respondents’ other marketing materials and merchandise. As an example I reproduce below:
(a)a June 2004 photograph of the stand at a local supermarket from which the respondents’ directories were made available to directory users. The respondents used such stands at supermarkets, local banks and other distribution points from 1994 to the present; and
(b)an image of the magnetic sign placed on the sides of employee motor vehicles from 2002 to the present.
The respondents also led extensive evidence of other yellow-themed marketing material, including balloons, t-shirts worn by sales representatives, stickers, calendars, lanyards, pens, stubby holders, drink bottles and mouse pads. I will not detail this evidence.
I am satisfied on the evidence that the respondents had a strong yellow-related theme in the marketing of their directories from 1994. In my view the respondents’ marketing was sufficient to inform many advertisers and directory users in the relevant regions that:
(a)a directory under the LD Name and Logo with a strong local focus was shortly to be published, or had recently been published, in that region; and
(b)that the directory had yellow covers and pages.
The respondents do not contend that they have acquired a secondary reputation in the colour yellow through their extensive use of it since 1994, and I make no such finding. I am though satisfied that many advertisers and directory users would have come to see the yellow covers on the respondents’ directories as an important part of the respondents’ branding.
The use of yellow in classified directories in Australia
It is uncontentious that there have been and are a large number of directory providers in the Australian market. The directories they have produced and distributed vary greatly in terms of layout and the extent of their distribution. The parties are at issue over the extent to which other directory providers have used the colour yellow in respect of their directories.
In my view the evidence shows that classified directories in Australia commonly used yellow coloured pages from an early date, and some also used yellow covers. Yellow covers were used by:
(a)the respondents who distributed more than eight million yellow covered directories in various regions of Queensland, Northern Territory and New South Wales from 1996 to 2006; and
(b)a handful of other small directory providers in discrete markets from about the mid-1980s.
The evidence also shows that respondents used yellow covers for 10 years without complaint by Telstra.
Telstra seeks to draw a firm line between the use of yellow pages and the use of yellow covers but I do not consider that is appropriate. The relevance of the use of yellow in the present context is its likely effect on the minds of consumers and, while I accept they are different, I do not draw a sharp distinction between the use of yellow coloured directory pages and yellow coloured directory covers. The evidence shows that the use of the colour yellow generally in respect of classified directories in Australia is widespread.
I now set out the evidence showing the use of the colour yellow in respect of classified directories.
The BIG Directory
Geoffrey Moule, a former senior employee of Business Marketing Australia Pty Ltd (“BMA”) gave evidence about the Big Colour Pages Directory (“the BIG Directory”) published by that company.
He said that BMA published “The Melbourne BIG directory” annually in Melbourne from 1987 undergoing a name change to “BIG Colour Pages” in about 1991. Over the period 1991 to 1997, BMA expanded the geographical coverage and distribution of the BIG Directory until it was published in Melbourne, Sydney, Perth, Brisbane, Gold Coast, Sunshine Coast, Northern Territory, Adelaide, Hobart, Northern NSW, Cairns, Townsville, Wollongong and Canberra. During the period 1997 until 2002 (when the BIG Directory ceased) BMA distributed approximately 3.5 million BIG Directories nationwide each year.
Mr Moule’s evidence is that since its inception BMA used yellow pages in the classified directory section of the BIG directory. It is significant to my decision that he testified that BMA’s 1986 decision to use yellow pages was made because yellow was used worldwide as the standard colour for classified directories. Mr Moule was not cross-examined and I accept his evidence.
Regional community directories in WA
Darren Lee, Managing Director of Market Creations Pty Ltd (“Market Creations”), gave evidence about Market Creations’ publication of regional community directories in Western Australia from 1997. It published the following directories:
(a)Shire of Broome Directory;
(b)Karratha & Districts Chamber of Commerce & Industry Business and Community Directory;
(c)Port Headland Information Directory;
(d)Mid West Business & Community Directory;
(e)Carnarvon Business & Community Directory & Coral Bay;
(f)Newman Business & Community Directory;
(g)Narrogin Business & Community Directory;
(h)Esperance Business & Community Directory; and
(i)Jurien Bay & Surrounding Districts Business & Community Directory.
Mr Lee’s evidence is that these directories did not use yellow pages, but used yellow or yellow/orange colour coding on the edge of the pages to identify the classified directory section. The Karratha & Districts directory referred to that section as the “Yellow Pages” in at least the editions published in 2002-2003, 2005-2006, 2006-2007 and 2007-2008.
Mr Lee was not cross-examined and I accept his evidence.
The Yellow Envelope
Thomas Greene, Chairman of Horizon Media Pty Ltd (“Horizon”), gave evidence about an advertising product distributed by his company called “The Yellow Envelope” since 1997. The evidence is that Horizon direct mailed to households throughout Australia a yellow coloured envelope which prominently featured the words The Yellow Envelope. It was distributed to its recipients up to five times per year, and on average about 17 million copies were distributed each year between 1999 and 2003.
Mr Greene was not cross-examined and I accept his evidence. However Horizon did not produce and distribute telephone directories and this evidence is of little relevance. While his evidence confirms that yellow is a bright primary colour that traders commonly use to attract the eye of consumers that question is not central in the dispute.
Other directories
Ms McGarry also gave evidence about third-party use of the colour yellow. I found her a careful and reliable witness and in the main I accept her evidence. In particular I accept her evidence as to the use of yellow in the following directories:
(a)Rockingham, Mandurah, Kwinana: from 1985 RMK published directories in the Rockingham, Mandurah and Kwinana region of Western Australia featuring various yellow indicia including yellow covers and yellow pages. Later editions used a yellow coloured background in the maps section. From 2001 to 2003, these directories were named “Yellow Directories”. Ms McGarry’s evidence is that from 2004 to the present their circulation averaged approximately 64,000 copies annually.
She also gave evidence of the corresponding website which has operated from at least June 2004 to December 2011 at the domain name The website used a yellow background and side bar as well as yellow in the headings;
(b)Chinese Business Directory: from 1991 the “Chinese Business Directory” was published in Brisbane. This used yellow coloured front and back covers as well as a yellow spine and yellow pages for the classified listings section;
(c)Australian Business Directory – Your Multicultural Guide: from 1993 to 2007 this directory was published in Sydney. They had yellow pages for the classified section, yellow borders for the introductory pages, as well as the information pages and a yellow background in the index. Most editions used yellow on the front cover;
(d)Whitsundays Telephone Guide: from at least 2007 to 2009 and 2011 to 2012 this directory was circulated within the Whitsundays, Queensland. It had a yellow background on the front and back covers, yellow pages in the classified section and yellow coloured text on the front cover. It referred to the classified section as “Business Directory (yellow pages)”; and
(e)Yellow Duck: this online directory operated from at least 2006 to March 2011 at the domain name It used yellow as a background and highlight colour and, evidently, the word yellow in the name.
Ms McGarry also adduced evidence of a number of other third-party print directories which used yellow pages including local directories such as the Port Hedland Information Directory, the Hastings Community Quick Find Directory, Lower Hunter Street and Telephone Directory 1996, The Directory – National Mobile Directory, The Localink 2004, Agnes Water – Town of 1770 – Captain Creek Telephone Guide 2007/2008, Capricorn Coast Telephone Guide and the Central Coast Street and Telephone Directory. Many of these also adopted yellow as a feature of the cover or spine.
Additional online directories referred to by the respondents include and On my view of the evidence, these directories used the word yellow in their name and in their domain name and made at least some use of the colour yellow.
I am satisfied that yellow pages were ubiquitous in classified directories around Australia. The use of yellow covers in such directories was not as widespread but in my view it was still common. Other than the respondents, most of the directory providers who used yellow covers did so in small or discrete markets.
The use of yellow in international classified directories
There is an abundance of evidence that the colour yellow was widely used in respect of classified directories from an early date. I will now deal with that evidence.
Mr Harvy’s evidence is important on this issue. He annexed to his affidavit a 2006 Sensis document titled “Yellow – a timeline” which stated:
1975The Yellow Pages directory is born. The pink pages of the classified directory are changed to yellow, which is the internationally recognised colour for classified directories….
This statement was put to Mr Harvy in cross-examination and he made no attempt to distance himself from it. He conceded that the colour yellow and the name Yellow Pages were widely used by classified directory providers around the world before Telstra adopted them, and he acknowledged that in adopting those indicia Telstra was following an international trend to do so. His evidence is confirmed by a great deal of other evidence that overseas directories commonly used yellow pages and yellow covers. Mr Harvy accepted that Yellow Pages directories have been published in Canada, France, Ireland, Israel, New Zealand, the Netherlands, the United Kingdom and the USA, and that for the most part they had yellow pages and yellow covers.
It is significant that, in accepting that yellow was internationally recognised as the colour of classified directories in 1975, Mr Harvy did not suggest that its recognition in Australia was any different to the rest of the world.
Secondly, Mr Moule said that in 1986 BMA decided to use yellow pages in the BIG Directories in Australia because yellow was used worldwide as the standard colour for classified directories.
Thirdly, as already described above, the evidence is that in 1992-1993 Glenn and Adam Hargraves worked in the USA for a directory provider, PDC-USA Inc. Glen Hargraves said, and I accept, that at that time there were over 100 companies publishing telephone directories in different USA markets and they commonly used yellow pages, yellow covers and the name Yellow Pages.
Fourthly, Ms McGarry tendered examples of numerous print classified directories from other countries that used a yellow get up. These included the following:
(a)1993 Jackson Hole Phone Directory in Wyoming, USA, which used yellow pages for the classified section and named that section the Yellow Pages;
(b)2000 Pacific Bell SMART Yellow Pages in California, USA, which used a yellow cover, yellow pages in the classified section, and had the word yellow in its title;
(c)2003 Yellow Pages in Papua New Guinea, which used a yellow cover and the word yellow in its title and I infer that it also used yellow pages;
(d)2006 Dublin Golden Pages in Ireland, which used a yellow front cover;
(e)2008-2009 Yellow Book in the USA, which used yellow pages, yellow front and back covers, the word “yellow” in its name and in the name of the classified section. The front cover stated “Complete Yellow and Business White Pages Residential White Pages & yellowbook.com”; and
(f)2011 Go to Guide Telephone Directory in the USA, which used yellow pages and named the classified section the Yellow Pages.
I infer that many of these directories commenced to use the colour yellow as they did earlier than the dates on the examples tendered.
Ms McGarry also tendered examples of numerous international directory websites which used the colour yellow, including websites for directories in Fiji, South Africa, Thailand, Singapore, Hong Kong, Peru, France, Italy, Indonesia, Ireland, Papua New Guinea, Egypt, Malaysia, China, Eritrea, Bahrain, Cyprus, Germany, Israel, USA, Suriname, Macau, Thailand, Vietnam, Bermuda, Malta, Turkey, Brazil and the UK. Many used the name Yellow Pages for the directory and in the domain name, for example, Vietnamese website Canadian website South African website Singapore website and the Thai website While little information was provided in relation to the dates when these websites commenced, the abundance of the sites leads me to infer that at least some were active in the late 1990s and early 2000s.
I am well satisfied that prior to the respondents commencing to use yellow pages and covers on their directories the use of these indicia on international directories was widespread.
Telstra’s awareness of the PDC respondents as a competitor
The evidence shows that Telstra became aware of the respondents’ business in 1993 and has engaged in extensive monitoring of their business and directories since that time. There is no doubt that Telstra was aware from shortly after its commencement that the respondents’ directories had yellow pages and yellow covers. This can be seen in contemporaneous consumer surveys adduced through Mr Harvy and Michelle Sherwood, Executive General Manager of Strategic Marketing of Sensis. The respondents objected to this evidence primarily on the basis that the surveys constituted inadmissible hearsay. As I later explain, I consider they are admissible.
In 1995 Telstra commissioned a consumer survey by Reark Research (“1995 Reark Research Survey”). Amongst other things, the survey was aimed at ascertaining the awareness of directory users of the PDC directories and Yellow Pages directories, and their reasons for choosing to use one or other of the directories. The salient findings of this survey included that:
(a)92% of participants were aware of the PDC directories, including 16% who recalled it without prompting;
(b)80% had a PDC directory and 99% had a Telstra directory;
(c)63% stored the PDC directory together with Telstra’s directory;
(d)33% thought that Telstra’s directories were more comprehensive or complete, 20% considered them more familiar, and 19% thought they covered a wider area;
(e)40% thought that the PDC directories were smaller in size, 25% thought them to be handier and more convenient, and 12% considered their local focus was desirable; and
(f)57% said they would prefer to receive both directories.

This was accompanied by a graph which showed that 57% of people surveyed use the Yellow Pages as their most used source compared with 2% for PDC’s directories. I reproduce the graph below.
Each Advertisement was accompanied by a footnote which provided that the source of the data was “independent research” of people aged 18 to 64 in certain regional directory markets between 2003 and 2006.
The Advertisements in each of the relevant editions followed a similar format. While the different surveys produced varying results the figure for “PDC” was always comparatively tiny.
In response to a complaint from the cross-claimants, Telstra undertook not to publish the claims in the Advertisements in any future editions of its Yellow Pages directories, and it has not done so.
The target class
The conduct about which cross claimants complain was not directed at any specific individual and it is necessary to identify the target section or sections of the public.
The relevant conduct is Telstra’s publication of the Advertisements in the relevant editions of its directories between 2004 and 2007. They were directed to people in the geographical regions covered by those directories who were advertisers or prospective advertisers in classified directories, who own or manage businesses in those regions. The Advertisements were aimed at persuading prospective advertisers to choose to advertise in Telstra’s Yellow Pages rather than in other directories, including the cross-claimants’ directories.
The broad class is made up of people who are advertisers or prospective advertisers in print and online directories who own or manage a business in the areas in which the Advertisements were published, who are or may be prepared to pay to list their goods or services in such directories.
The characteristics of the class
Apart from the fact that the Advertisements were published in less geographical regions than the representations in the primary claim, the class of directory advertisers in the cross-claim has the same characteristics as that class in the primary claim. Not all members of the class are likely to respond to the Advertisements in the same way. The class will include a broad range of business people of differing shrewdness, education, commercial experience, information, age and vocations. The evidence shows that most are small business people, and although not sophisticated they are unlikely to be lacking in discernment.
Consideration
The cross-claimants allege that the Advertisements conveyed four related representations which I deal with below.
The consumers surveyed had access to the cross-claimants’ directories
Firstly, the cross-claimants allege that the Advertisements conveyed the representation that the consumers surveyed had available to them the cross claimants’ directories as an alternative reference to Telstra’s directories for information about suppliers of goods or services (“the First Representation”).
Telstra denies this and contends that:
(a)the Advertisements made no representation as to the individual circumstances of the consumers surveyed; and
(b)the representations were about the “use” rather than the “availability” of the directories.
I do not agree. I consider that the Advertisements conveyed the First Representation. The hypothetical ordinary or reasonable advertiser would have understood from the Advertisements that the consumers surveyed had an opportunity to access the directories or information sources (“the directories”) about which they were being surveyed, and that the survey results reported were based on the participants’ knowledge of those directories. The Advertisements said that they were the product of “independent research” which would form or strengthen the expectation of an ordinary or reasonable advertiser that the surveys were conducted fairly and reliably.
Of course, the reader would understand that individual survey participants may not have actually owned or used the full range of the directories covered in the survey. But the Advertisements would have caused an ordinary or reasonable advertiser to understand that the directories were at least available to them.
The First Representation was misleading or deceptive or likely to mislead or deceive because the evidence shows that many of the survey participants were from areas where the cross-claimants’ directories were never published. The surveys covered different geographical areas to the areas in which the cross-claimants published their directories. They provided evidence of numerous examples of this, and it is unnecessary to detail them.
In essence, the evidence is that the cross-claimants’ directories were only published in four of the 14 regions covered by the 2003 survey, two of the 13 regions covered by the 2004 survey and three of the eight regions covered by the 2006 survey. That is, they were not published in the majority of the geographical areas from which the survey participants were drawn.
Sometimes, where the cross-claimants’ directories were published within a geographical area covered by the survey, their publication did not extend throughout that area. For example, the 2006 survey included a region identified by Telstra as “Northern Queensland”. It was impossible for the reader to know exactly what that description covered. However, the description “Northern Queensland” covers an area which is about five times larger than the areas covered by the cross-claimants’ directories. At the time of the Advertisements the cross-claimants’ Queensland directories covered only Cairns, Townsville, Sunshine Coast, Rockhampton & Gladstone, Mackay and Mount Isa.
The cross-claimants published directories throughout the areas surveyed
Secondly, the cross-claimants allege that the Advertisements conveyed the representation that the cross-claimants were publishing and/or had published telephone directories in the whole of the areas in which the surveyed consumers were surveyed (“the Second Representation”).
Telstra denies this. It contends that the Advertisements did not convey this representation because it:
(a)did not purport to provide any information as to whether the cross-claimants’ directories were published in the whole of the areas surveyed; and
(b)did not make any representation about the publication of the cross-claimants’ directories.
I disagree. I consider that the Advertisements conveyed the Second Representation. A footnote to the Advertisements listed the areas in which the survey was conducted, and the Advertisements contained no suggestion that the directories named were published in only a handful of those areas. The Advertisements would have conveyed to the hypothetical ordinary or reasonable advertiser that the directories which were the subject of the consumer survey were available in all of the areas in which consumer usage and awareness was being measured.
As I have said, the Advertisements stated that they were the product of “independent research” which would have formed or strengthened the expectation that the survey was conducted fairly and reliably. Prospective advertisers had no reason to think that the directories which were the subject of a consumer awareness survey were not even published in the location where awareness was being measured. Even if they understood that the survey was somehow more nuanced or skewed, prospective advertisers could not know which of the directories mentioned were published in the surveyed areas so that they could properly understand the results.
The Second Representation was misleading or deceptive or likely to mislead or deceive because, as I have said, the evidence shows that the cross-claimants’ directories were not published in all of the areas surveyed.
The cross-claimants published directories by reference to the acronym “PDC”
Thirdly, the cross-claimants allege that the Advertisements conveyed the representation that the cross-claimants are and/or were publishing directories which were branded under or by reference to the initials “PDC” (“the Third Representation”).
Telstra denies this and contends that the Advertisements made no representation as to how the cross-claimants’ directories were branded.
I do not accept Telstra’s contention. I consider that the Advertisements conveyed the Third Representation. I reiterate that the survey was said to be based upon “independent research” which implied that it was conducted fairly and reliably. The survey participants were asked identify which directory they used and only a tiny percentage said they used “PDC”. However, the cross-claimants did not use that name on their directories in Queensland and Northern Territory after 2005/2006 and never used it in New South Wales. The survey result was therefore likely to understate the real number of consumers who used their directories.
A prospective advertiser would assume that the Advertisements recording the results for “PDC” accurately set out consumer usage of the cross-claimants’ directories when they did not. The Advertisements conveyed a representation to an ordinary or reasonable advertiser that the cross-claimants’ directories, which were the subject of the survey, were branded “PDC”.
The Third Representation was misleading or deceptive or likely to mislead or deceive because the Advertisements set out consumer usage of directories produced by “PDC” when that was not always the name under which the cross-claimants’ directories were published.
The survey results provided an accurate basis for comparing use of the directories
Fourthly, the cross-claimants allege that the Advertisements conveyed the representation that the survey results provided an accurate and reliable basis for comparing the use made by the surveyed consumers of Telstra’s directories with the cross-claimants’ directories for the purpose of sourcing information about the supply of goods or services (“the Fourth Representation”).
Telstra accepts that the Advertisements conveyed this representation. This representation was the whole point of the Advertisements. However Telstra denies that the representation was false.
Telstra accepts that the result in relation to this representation flows from the result in relation to the three earlier representations. I have found the First, Second and Third Representations were conveyed and that they were misleading or deceptive or likely to mislead or deceive. It is therefore established that the Fourth Representation was misleading or deceptive. The survey results did not provide an accurate or reliable basis for comparing consumer usage and awareness of Telstra’s directories with the cross-claimants’ directories, and were in fact wholly unreliable in the form presented. Telstra made no attempt to remedy the likely misconception which advertisers would suffer by setting out the limitations of the survey data in a footnote.
Telstra’s further contentions
Telstra seeks to rely on the fact that the Advertisements published in 2004 referred to “Geelong info pages”. It contends that prospective advertisers in New South Wales, Queensland and the Northern Territory would have understood that directories relating to Geelong were not available to them or published in their states or territory, and would therefore have understood that the First and Second Representations were not made.
As a matter of logic, I accept this but I do not accept that the reference to “Geelong info pages” meant the First and Second Representations were not conveyed. It is the impression conveyed to the ordinary or reasonable advertiser which is important, rather than a careful analysis of each part of the Advertisements. As a matter of impression an ordinary advertiser would have understood that the consumers surveyed had access to the various directories referred to, and that the cross-claimants’ directories were published throughout the geographical areas surveyed.
Telstra also contends that the First and Second Representations were (if made) substantially true when published in 2007/2008. It argues that the cross-claimants’ directories were published in the whole of, or almost the whole of, the regions surveyed for those Advertisements (namely, Northern Territory, Northern Queensland, Northern New South Wales and the Sunshine Coast). As an example, it argues that by publishing separate directories for Cairns and Townsville the cross-claimants’ directories cover most of the Northern Queensland survey area.
I do not accept this. Telstra offered no evidence which allowed the Court to compare the geographical areas covered by the cross-claimants’ directories with the survey areas, or any evidence which allowed the Court to compare the population within the area covered by the cross-claimants’ directories with the population in the survey area. I note also that the impugned Advertisements were published from 2004 to 2007 and Telstra makes this contention only in relation to the Advertisements in 2007/2008.
Finally, Telstra notes that the cross-claimants made no allegation based on the falsity of the survey results presented in the Advertisements. For example, it contends that the 2004 survey result in the Rockhampton survey shows only a marginal difference between the 1% result for “PDC” presented in the Advertisements and the true figure of 2%.
I do not accept this. Without properly performing the surveys to take account of the identified deficiencies it is impossible to know what the survey result would have been. Further, even using the figures presented, this submissions does not withstand scrutiny. The survey results were presented as regional averages not as city specific figures. I accept the cross-claimants’ contention that in the example cited, the 1% figure for Rockhampton would have risen to about 9.3% if averaged across the Rockhampton, Mackay and Whitsundays region.
Conclusion
I am satisfied that Telstra engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive in breach of s 52 of the TPA.
The issues of liability and damages have been separated. I will direct the parties to confer and propose a timetable for that hearing, including an order for mediation.
M. the Unjustifiable threats of copyright infringement cross-claim
PDC, ALD and LD (“the cross-claimants”) seek declaratory relief and damages for unjustifiable threats pursuant to s 202 of the Copyright Act.
The Facts
It is uncontentious that Telstra threatened breach of copyright proceedings against the cross‑claimants in a letter of demand of 10 July 2006 sent to the cross-claimants and their solicitors. The letter relevantly stated:
As you are no doubt aware, Telstra has copyright in the Yellow Pages and White Pages directories (“Telstra’s Directories”) and the headings books used to generate the headings used in Telstra’s directories (“the Headings”). This was confirmed by the Full Federal Court in Desktop Marketing Systems Pty Ltd v Telstra Corporations [sic] Ltd (2002) 55 IPR 1. Therefore, it is a breach of Telstra’s copyright for PDC/ALD to reproduce a substantial part of Telstra’s directories or the Headings.
Telstra also pointed to Telecom Corporation of New Zealand Ltd & Anor v Colour Pages Limited & Anor (High Court of New Zealand, unreported, 14 August 1997) in which McGechan J found that copyright subsisted in telephone directories.
It is uncontentious too that Telstra subsequently brought a claim of copyright infringement against the cross-claimants, and that claim was unsuccessful before the Federal Court and the Full Court. The High Court refused special leave: see Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCA 44 (“Telstra Copyright Trial”); Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149 (“Telstra Copyright Appeal”); and Telstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors [2011] HCATrans 248 (2 September 2011) (“Telstra Copyright Special Leave Application”).
Legislative framework and relevant principles
Section 202 of the Copyright Act relevantly provides:
202Groundless threats of legal proceedings in relation to copyright infringement
(1)Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first‑mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first‑mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.
(2)The mere notification of the existence of a copyright does not constitute a threat of an action or proceeding within the meaning of this section.
…
Similar provisions relating to groundless threats appear in almost all Australian intellectual property legislation. In my view, there is no relevant difference between the prohibition of groundless threats in s 202 and the unjustified threats provision in s 128 of the Patents Act 1990 (Cth) (“Patents Act”), and analogous provisions in s 129 of the Trade Marks Act 1995 (Cth) and s 46 of the Circuit Layouts Act 1989 (Cth). The authorities relating to these analogous provisions are applicable in the present case.
In JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 (“JMVB”) at [208]-[211] Crennan J summarised the operation of the Patents Act regime in the following terms:
The aggrieved party, in this case the respondent, must first establish the making of a threat: Australian Steel Co (Operations) Pty Ltd v Steel Foundations Ltd (2003) 58 IPR 69; [2003] FCA 374 at [16]. The threat must be made in Australia, in that it must be received in Australia and relate to an Australian patent or design: for an example in the context of a patent, see Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469 at 474 (Townsend Controls).
A threat arises where the language, by direct words or implication, conveys to a reasonable person that the author of the letter intends to bring infringement proceedings against the person said to be threatened: U & I Global Trading (Aust) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 60 FCR 26 at 31; 32 IPR 494 at 499–500 (U & I Global). A threat may arise without a direct reference to infringement proceedings: Lido Manufacturing Co Pty Ltd v Meyers & Leslie Pty Ltd (1964) 5 FLR 443 at 450–1. However, a communication merely notifying a person of the existence of a patent or a patent application, together with a statement that any suggestion that the recipient is entitled to replicate the invention is not maintainable, or a communication seeking confirmation that no improper or wrongful use or infringement of the patent has come to the recipient’s attention is not a threat: see s 131; Australian Steel Co (Operations) Pty Ltd v Steel Foundations Ltd at [17].
Once a threat has been established, it is prima facie unjustifiable unless the person making the threat establishes that it was justified: U & I Global at FCR 32; IPR 500. The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent: s 129; see also U & I Global at FCR 33; IPR 500–1; Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 308 ; 53 IPR 270 at 273; [2001] FCA 1877. Ultimately, the grant of relief is discretionary: Townsend Controls at 475.
A threat can be made by means of a letter from a legal representative: Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2001) 53 IPR 359 at 374 ; [2001] FCA 1350. I am satisfied that the letters in this case amount to threats. The statement that proceedings “will be commenced forthwith” if the relevant campervans are not withdrawn from the market is clear. Further, the statement that the respondent “reserves” its right to sue if certain information and declarations are not provided is a threat to sue for infringement on a future occasion: see U & I Global at FCR 32; IPR 501.(Emphasis added.)
In my view each of these points are applicable to a claim pursuant to s 202 of the Copyright Act.

The onus of establishing that the threat is justifiable is on the holder of the copyright. Once a claim of an unjustifiable threat has been made the authorities provide that it is prima facie unjustifiable unless the respondent establishes that it was justified: JMVB at [210].
Consideration
There can be no question that Telstra’s letter of demand constituted a threat of copyright infringement. The only question is whether that threat was unjustifiable within the meaning of s 202.
In brief, Telstra contends that it proceeded with its copyright claim on the basis of the law as it then was and that it was only because of the handing down of the High Court’s decision in IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 (“IceTV Appeal”) that its claim failed. Thus, Telstra says that its threat was not “unjustifiable”.
The cross-claimants contend that s 202 provides a statutory cause of action for groundless threats of infringement even if made bona fide and they argue that the defence to the groundless threats claim must therefore be rejected. I do not agree.
The authorities show that it is no defence to a claim for an unjustifiable threat of copyright infringement that it was made in good faith in the honest belief that copyright had been infringed: S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1980) 30 ALR 657 (“S W Hart”) at 661 per Lavan SPJ; Coogi Australia Pty Ltd v HySport International Pty Ltd & Ors (1998) 86 FCR 154 (“Coogi”) at 193 per Drummond J and Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 146 FCR 144 at [48] per Lindgren J; Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 (“IceTV Trial”) at [228] per Bennett J cf Benmax v Austin Motor Co Ltd [1953] 70 RPC 284 at 295 per Evershed MR (with Jenkins LJ and Morris LJ concurring).
In my view bona fides must be understood as a reference to the subjective state of mind of the party making the threat. For example in S W Hart at 661 Lavan SPJ described it by reference to “good faith” and “honest belief”. Butterworths Concise Australian Legal Dictionary defines bona fide as meaning “in good faith; with sincerity” and “to do something in good faith or with an honest intention.” Conduct may be bona fide yet unjustifiable where a party honestly believes that a particular course of conduct is legitimate, but it is not.
The parties were unable to refer the Court to any authorities on the meaning of “unjustifiable threats” within s 202. Section 13 of the Acts Interpretation Act 1901 (Cth) permits section headings to be considered in construing a provision. Section 202 appears under the heading “Groundless threats of legal proceedings for copyright infringement.” “Groundless” is defined in the Macquarie Dictionary to mean “without basis or reason”. The term “unjustifiable” has the same meaning. The Macquarie Dictionary defines it to mean the inverse of “justifiable”, which means “capable of being justified; that can be shown to be, or can be defended as being, just or right; defensible.” In context I consider the meaning of “unjustifiable” is a reference to the objective strength of the legal position underpinning the threat.
673 Support for this approach can be found in the rationale for s 202 and analogous provisions in the other intellectual property regimes. As Bennett J observed in IceTV Trial at [228]:
The history of the section suggests that it was concerned to deter unjustified threats themselves, threats that did not result in infringement proceedings or could not be justified for actual infringement; threats made to “frighten away competitors or to damage such persons less directly, by threatening to sue their customers as joint tortfeasors”… It is a right extended to the threatened person not generally available to those threatened with an action for a civil wrong. (Citations omitted.)
In Avel Pty Limited v Intercontinental Grain Importers Pty Limited (1996) 65 FCR 154 at 159 per Sheppard, Beazley and Tamberlin JJ, the Full Court held that an important rationale for the groundless threats regime in copyright, patents and trade marks legislation is to guard against abuse of the protections afforded under that legislation. Their Honours went on to conclude that a mere “threat in the air” would be caught by the provision. Similarly, Cooper J described the Patents Act regime as “a statutory defence to proceedings against conduct which is otherwise unlawful”: U & I Global Trading (Aust) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 60 FCR 26 at 32.
It follows that the question of whether a threat is justifiable is to be answered by reference to whether the threat had a proper legal basis. Contrary to the cross-claimants’ contention, the question before the Court is not limited to the bona fides of Telstra in making the threat that it did. The question is whether Telstra’s threat was objectively groundless or unjustifiable. This is a different enquiry to an enquiry as to Telstra’s subjective intent and the two ought not be conflated.
Telstra submits that its threat was justified because it asserted a legal position that was supported by Full Court authority at the time. The cross-claimants did not argue that Telstra’s position, at that time, was not well grounded.
At the time Telstra made its threat, Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 119 FCR 491 (“Desktop Marketing”) per Black CJ, Sackville and Lindgren JJ was binding Full Court authority. In that case Telstra successfully argued that copyright subsisted in its directories and that Desktop Marketing had infringed its copyright by producing CD-ROMs with directory listings that had been obtained from its directories and rekeyed by workers in the Philippines. The Full Court held per Sackville J at [431]–[432] (with Black CJ and Lindgren J delivering separate but concurring judgments) that a directory is a factual compilation and may be protected by copyright as an original work on the basis that substantial labour and expense has been devoted to its creation.
Desktop Marketing was accepted as good law in contemporaneous intellectual property texts. For example, the learned authors Davison M, Monotti A and Wiseman L in Australian Intellectual Property Law (Cambridge University Press, 2010) at [6.2.1.1.2] cited it and stated “[t]here are many examples of compilations that have been protected by copyright. For example … telephone directories.” Similarly, Stewart A, Griffith P and Bannister J in Intellectual Property in Australia (LexisNexis Butterworths, 2010) at [6.10] noted that “the Desktop Marketing decision reinforced the prevailing view that the standard of originality required under Australian law was low.”
Desktop Marketing remained good law until the High Court decision in the IceTV Appeal. In this case, although not necessary to decide, at [187]-[188] Gummow, Hayne and Heydon JJ expressed their disapproval of Desktop Marketing in the following terms:
One final point should be made. This concerns the submission by the Digital Alliance that this Court consider the Full Court’s decision in Desktop Marketing and, to the contrary of Desktop Marketing, affirm that there must be some “creative spark” or exercise of “skill and judgment” before a work is sufficiently “original” for the subsistence of copyright.It may be that the reasoning in Desktop Marketing with respect to compilations is out of line with the understanding of copyright law over many years. These reasons explain the need to treat with some caution the emphasis in Desktop Marketing upon “labour and expense” per se and upon misappropriation. (Citations omitted. Emphasis added.)
Following the IceTV Appeal Gordon J heard the Telstra Copyright Trial in an earlier part of the present proceedings. Applying their Honours’ observation in the IceTV Appeal, Gordon J held that some independent intellectual effort or the exercise of sufficient effort of a literary nature was required for copyright to subsist. Her Honour decided that copyright did not subsist in Telstra’s directories. As I have said, this conclusion was affirmed by the Full Federal Court and special leave to appeal to the High Court was refused.
I am satisfied that on the law as it stood on 10 July 2006, Telstra’s threat of copyright infringement was based on strong Full Court authority. It had good legal grounds for asserting the rights against the cross-claimants that it did. Although its claim of copyright infringement failed, I do not consider that s 202 is aimed at deterring such an action. I cannot see Telstra’s conduct in making the threat as an “abuse” of the copyright regime, or a “threat in the air”. Telstra’s letter of demand was not conduct of the kind that s 202 is aimed at capturing. In my view, Telstra’s threats were not “groundless” or “unjustifiable” within the meaning of s 202. The cross-claim must be rejected.

I certify that the preceding six hundred and eighty-one (681) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.
Associate:
Dated: 30 May 2014

Citation:	Telstra Corporation Limited v Phone Directories Company Pty Ltd [2014] FCA 568
Parties:	TELSTRA CORPORATION LIMITED (ACN 051 775 556) and SENSIS PTY LTD (ACN 007 423 912) v PHONE DIRECTORIES COMPANY PTY LTD (ACN 059 776 091), AUSTRALIAN LOCAL DIRECTORIES PTY LTD (ACN 078 856 318), ADAM HARGRAVES, GLENN HARGRAVES, DANIEL STOTEN and LOCAL DIRECTORIES COMPANY PTY LTD (ACN 130 550 971)
File number:	VID 276 of 2007
Judge:	MURPHY J
Date of judgment:	30 May 2014
Catchwords:	TRADE AND COMMERCE – Trade Practices – misleading or deceptive conduct – misleading or deceptive conduct in the taking of a competitor’s trade indicia – passing off – secondary reputation in the colour yellow on covers of telephone directories – date for assessing reputation in yellow – relevance of international use of colour yellow – whether respondents’ use of yellow covers on telephone directories was misleading or deceptive – identification of the class of consumers – erroneous assumption as to trade source – intention to deceive – failed intention to deceive – relevance of strength of reputation – relevance of use of common trade indicia – sufficiency of differentiation between similar products – whether respondents have done enough to differentiate their directories – conduct not misleading or deceptive TRADE AND COMMERCE – Trade Practices – misleading or deceptive conduct – advertisements in telephone directories – misleading advertisement regarding comparative consumer usage COPYRIGHT – unjustifiable threats of copyright infringement – relevance of bona fides – whether threat is groundless or unjustifiable
Legislation:	Acts Interpretation Act 1901 (Cth) Circuit Layouts Act 1989 (Cth) Competition and Consumer Act 2010 (Cth) Copyright Act1968 (Cth) Federal Court Act 1976 (Cth) Patents Act 1990 (Cth) Trade Marks Act 1995 (Cth) Trade Practices Act 1974 (Cth)
Cases cited:	.au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) ALR 521 Anheuser-Busch, Inc v Budejovick Budvar, Nrodn Podnik & Ors [2002] FCA 390 Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 Australian Competition and Consumer Commission v SMS Global Pty Ltd [2011] FCA 855 Australian Competition and Consumer Commission v Telstra Corporation Limited (2007) 244 ALR 470 Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352 Australian Health & Nutrition Association Limited trading as Sanitarium Health Food Company v Irrewarra Estate Pty Ltd trading as Irrewarra Sourdough [2012] FCA 592 Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 Avel Pty Limited v Intercontinental Grain Importers Pty Limited (1996) 65 FCR 154 Benmax v Austin Motor Co Ltd [1953] 70 RPC 284 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shop Pty Ltd (No 8) 75 IPR 557 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 72 IPR 261 CampomarSociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 Connect.Com.Au Pty Ltd v GoConnect Australia Pty Ltd (2000) 50 IPR 535 Coogi Australia Pty Ltd v HySport International Pty Ltd & Ors (1998) 86 FCR 154 Cooper Engineering Co-Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 Curley v Duff (1985) 2 NSWLR 716 Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 119 FCR 491 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (1999) 44 IPR 281 Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 Fexuto Pty Limited v Bosnjak Holdings Pty Limited and Ors [1998] NSWSC 293 Ghosn v Principle Focus Pty Ltd & Ors (Ruling) [2008] VSC 454 Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 Hansen Beverage Co v Bickfords (Aust) Pty Ltd (2008) 171 FCR 579 HG v The Queen (1999) 197 CLR 414 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 Longhurst v Hunt [2004] NSWCA 91 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 Moorgate TobaccoCo Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 146 FCR 144 Nutrientwater Pty Ltd v Baco Pty Ltd (2010) 265 ALR 140 Office Cleaning Services Ltd v Westminster Window & General Cleaners Ltd (1946) 63 RPC 39 Ordukaya v Hicks [2000] NSWCA 180 Paula Brock & Ors v The Terrace Times Pty Ltd (1982) 56 FLR 464 Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639 Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited [2014] FCA 373 R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152 REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559 Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 Ringrow Pty Ltd v BP AustraliaLtd (2003) 130 FCR 569 Roach v Page (No 11) [2003] NSWSC 907 S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 43 IPR 581 S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1980) 30 ALR 657 State Government Insurance Corp v Government Insurance Office of New South Wales (1991) 21 IPR 65 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Telecom Corporation of New Zealand Ltd & Anor v Colour Pages Limited & Anor (High Court of New Zealand, unreported, 14 August 1997, McGechan J) Telmak Teleproducts (Aust) Pty Ltd v Coles Myer Limited (1989) 89 ALR 48 Telstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors [2011] HCATrans 248 (2 September 2011) Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149 Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCA 44 Telstra Corporation Limited v Singtel Optus Pty Ltd [2014] VSC 3 Thai World Import & Export Co Ltd v Shuey Shing Pty Ltd (1989) 17 IPR 289 U & I Global Trading (Aust) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 60 FCR 26 Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971 Vivo International Corporation Pty Ltd v Tivo Inc [2012] FCAFC 159 Weitmann v Katies Ltd (1977) 29 FLR 366 Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286 Winnebago Industries, Inc v Knott Investments Pty Ltd (No 2) [2012] FCA 785 YPG IP Limited and Anor v Yellow Book.com.au Pty Ltd and Ors [2007] NZHC 1947
Dates of hearing:	18-21, 25-28 February, 1 March, 18 April 2013
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	681
Counsel for the Applicants:	Mr M D Wyles SC with Mr S Rebikoff and Mr P Creighton Selvay
Solicitor for the Applicants:	King & Wood Mallesons
Counsel for the Respondents:	Mr C Golvan SC and Mr T Cordiner
Solicitor for the Respondents:	K & L Gates

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 276 of 2007

JUDGE:	MURPHY J
DATE:	30 may 2014
PLACE:	MELBOURNE