TGI Friday's Inc & Anor v T.G.I Friday's Australia Pty Ltd & Anor

[1998] FCA 1233

TGI FRIDAY'S INC. and TGI FRIDAY'S OF MINNESOTA, INC. v. T.G.I. FRIDAY'S AUSTRALIA PTY LIMITED and BIG COUNTRY DEVELOPMENTS PTY LIMITED
No. NG 678 of 1996
T.G.I. FRIDAY'S OF MINNESOTA, INC. v. T.G.I. FRIDAY'S AUSTRALIA PTY LIMITED and BIG COUNTRY DEVELOPMENTS PTY LIMITED
No. NG 572 of 1997

BIG COUNTRY DEVELOPMENTS PTY LIMITED v. TGI FRIDAY'S INC. and TGI. FRIDAY'S OF MINNESOTA, INC.
No. NG 572 of 1997
FED No. 1233/98
Number of pages - 9

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

WHITLAM J

SYDNEY, 3-7 November 1997 (hearing), 9 September 1998 (decision)

#DATE 9:9:1998

No. NG 678 of 1996

Counsel for the applicants and

Cross-respondents:

D K Catterns QC and J V Nicholas

Solicitors for the applicants and

Cross-respondents:

Sprusons

Counsel for the respondents and

Cross-claimants:

A J L Bannon SC

Solicitors for the respondents and

Cross-claimants:

Henry Davis York

No. NG 572 of 1997

Counsel for the applicant and

Cross-respondent:

D K Catterns QC and J V Nicholas

Solicitors for the applicant and

Cross-respondent:

Sprusons

Counsel for the respondents and

Cross-claimants:

A J L Bannon SC

Solicitors for the respondents and

Cross-claimants:

Henry Davis York

No. NG 728 of 1997

Counsel for the applicant:

A J L Bannon SC

Solicitors for the applicant

Henry Davis York

Counsel for the respondents:

D K Catterns QC and J V Nicholas

Solicitors for the respondents:

Sprusons

THE COURT ORDERS THAT:

1. The proceedings are stood over to 16 September 1998 at 9.30am for the making of orders for their disposition or further conduct.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

WHITLAM J

Introduction

TGIF is an acronym for Thank God It's Friday. A dictionary of popular phrases published in England describes it as a catch phrase that was current in the 1940s. Peter Hesky first heard the expression in the 1960s when he was a student at Northeastern University in Boston.

TGI Friday's Inc. ("the applicant") is a company with its executive offices in Dallas, Texas. It owns and operates in the United States a chain of restaurants called T.G.I. Friday's. The applicant also licenses franchisees in the United States and in other countries to operate restaurants under the name T.G.I. Friday's.

In the early 1980s Mr Hesky visited, in Honolulu, a restaurant called TGI Friday operated by one of the applicant's franchisees. Mr Hesky then investigated the availability of that business name in New South Wales, but he discovered that it had already been registered by another person.

On 19 December 1985 the applicant applied for registration of the trade mark TGI FRIDAY'S in respect of "restaurant services and alcoholic beverage bar services". Acceptance of that application was advertised on 20 October 1988. Big Country Developments Pty Ltd ("the respondent"), of which Mr Hesky is a director, opposed the registration on the ground of its prior use of the mark in connexion with a tavern owned by it. The respondent's opposition was dismissed on 12 November 1991: Big Country Developments Pty Ltd v TGI Friday's Inc (1991) 23 IPR 523. On 26 October 1993 the applicant agreed to assign all its trade marks to a subsidiary, TGI Friday's of Minnesota, Inc ("TGIFM"), which, in turn, granted the applicant a non-exclusive licence to use those marks. Such licence includes the right to sub-license the marks to third parties.

On 15 June 1994 a columnist in The Australian Financial Review newspaper reported that a franchise had been awarded to operate TGI Friday's restaurants in Australia. That same day, Mr Hesky lodged an application to reserve the name, T.G.I. Friday's Australia Pty Limited, in respect of an intended company. On 22 June 1994 the Australian Securities Commission registered a company by that name ("the Hesky company").

After hearing another opponent to the application for registration of the trade mark, a Deputy Registrar of the Trade Marks decided, on 4 November 1994, to register the trade mark T.G.I. FRIDAY'S in the name of the applicant in respect of "restaurant services": Weller Hotels Pty Ltd v TGI Friday's Inc (1994) 30 IPR 631.

On 30 August 1995, the applicant entered into a franchise agreement whereby (inter alia) it granted TGI Friday's Developments Pty Ltd ("Developments") the licence to operate a restaurant under the name T.G.I. Friday's at a site in the Melbourne suburb of South Yarra and the right to use in connexion with that restaurant the trade marks registered in the name of TGIFM. Developments opened the Prahran restaurant on 12 October 1995.

The applicant commenced proceeding NG 678 of 1996 against the respondent and the Hesky company on 21 August 1996. At the first directions hearing TGIFM was joined as an applicant in that proceeding, in which relief is claimed for passing-off and for contraventions of ss 52 and 53(c) of the Trade Practices Act 1974. The impugned conduct relates to the use, or threatened use, of the trade mark T.G.I. FRIDAY'S in connexion with licensed premises at three locations in the Sydney metropolitan area. The Hesky company and the respondent have cross-claimed against both parties for passing-off and for contravention of s 52 of the Trade Practices Act.

The applicant was eventually, on 21 July 1997, registered as the owner of the trade mark T.G.I. FRIDAY'S in respect of "restaurant services". On the same day the assignment to TGIFM was recorded and TGIFM commenced proceeding NG 572 of 1997 against the Hesky company and the respondent claiming relief under the Trade Marks Act 1995 ("the Act") for infringement of its registered trade mark. The Hesky company and the respondent have cross-claimed for an order for rectification and for a declaration that the registration of the trade mark ceased to have effect on 19 December 1996.

Finally, in proceeding NG 728 of 1997, by notice of motion filed on 24 September 1997, the respondent applies to extend the time for filing an appeal from the decision of the Deputy Registrar given on 4 November 1994. All three proceedings have been heard together.

T.G.I. Friday's Restaurants

A restaurant and bar called T.G.I. Friday's opened in New York City in 1965. The applicant acquired that business in 1972. By mid-1996 the TGI Friday's chain comprised almost 400 restaurants operated by the applicant or its franchisees. They are spread widely across the United States in cities and towns of all sizes with several located in some metropolises and conurbations. There are also restaurants in twenty-nine countries outside the United States. There are over twenty T.G.I. Friday's restaurants in the United Kingdom. In addition to restaurant services, various goods are also sold under the trade mark T.G.I. Friday's. The combined sales revenues are immense.

T.G.I. Friday's restaurants provide what is described as casual dining. A cocktail bar is prominently placed in the restaurants which are decorated with red and white stripes and "memorabilia". The menu items are also said to provide differentiation. Customer service is standardized across the chain. Most importantly, each restaurant bears a sign with the name T.G.I. FRIDAY'S in a distinctive script, although the placement on each sign of the initials T.G.I. in relation to the word FRIDAY'S appears not to be uniform. The total expenditure on advertising and promotion of the restaurants is also huge.

The trade mark T.G.I. FRIDAY'S was assigned in 1993 by the applicant to TGIFM. It is alleged that TGIFM has acquired a large and valuable reputation and goodwill in Australia in relation to restaurant and alcoholic bar services supplied in association with that mark. Evidence has been adduced from several people who have dined at T.G.I. Friday's restaurants overseas, but a survey has not been professionally conducted to test brand recognition. The restaurants are, nonetheless, located in well-known international tourist destinations where many of them have been open for a significant period of time. Information from the Australian Bureau of Statistics has been received in evidence and shows a very great number of Australian residents have visited the United States and the United Kingdom each year since the applicant's first franchise outside the United States was opened in 1986. There is also evidence that credit card holders with Australian addresses charged a total of just under $US100,000 to American Express accounts in 2,102 transactions at T.G.I. Friday's restaurants in the United States between January 1994 and September 1996.

The former general manager of Developments also gave evidence of the launch of the South Yarra restaurant. This involved significant expenditure and publicity. He also said that in January 1997 Developments had opened a TGI Friday's restaurant in the Melbourne suburb of Doncaster at a Westfield shopping centre. (A restaurant apparently also opened in Townsville between 1993 and early 1995, but there is no evidence about its marketing.)

The applicant and TGIFM tendered a vast mass of material from different print media containing editorial items mentioning the T.G.I. Friday's restaurants. I think that, in the absence of readership information, this is of rather limited usefulness. The very ubiquitousness of the restaurants, combined with the travel statistics and the American Express evidence, provides a more useful basis for drawing inferences about the likelihood of the restaurants having acquired a reputation in Australia beyond potential customers in the South Yarra and Doncaster areas.

Big Country Developments Pty Ltd

The respondent is a property developer. Mr Hesky is its directing mind. He discovered that the business name T.G.I. FRIDAY had been registered on 11 January 1982 by one John Pond as the name of a restaurant/bar conducted at 1 Mitchell Street, Centennial Park. Mr Pond gave this address as his place of residence. When Mr Hesky could not register the name T.G.I. Friday, he registered instead the name Thank God It's Friday as the name of a restaurant at 1 Carlotta Street, Artarmon. There was, in fact, no such business carried on at that address. Mr Hesky monitored the registration of the business name T.G.I. Friday to see if it was renewed. When it was not renewed, he wrote to the Corporate Affairs Commission suggesting (undoubtedly correctly) that the name T.G.I. Friday did not appear to have ever been used by Mr Pond. The respondent was then registered in respect of that name as carrying on a business at the same address in Artarmon and at an address in Raby. The month before the Raby address had been notified as an additional place of business in respect of the name Thank God It's Friday.

Raby is a suburb of Campbelltown, which used to be described as a satellite town of Sydney. It is located on the south-western fringes of Sydney's urban sprawl. It 1982 the respondent purchased a site at Raby to develop a shopping centre. The development included the Raby Tavern, which is located at the corner of Spitfire Drive and Hurricane Drive. The tavern opened in November 1984 and on 7 February 1985 Mr Hesky notified the Corporate Affairs Commission that the respondent was now carrying on business at that address under the name Thank God It's Friday.

The Raby Tavern has a lounge bar and a public bar which are separated by shared toilet facilities. An entrance to the lounge bar faces Spitfire Drive. In May 1985 or thereabouts the words "T.G.I. Friday" were painted on a window pane above this entrance and a neon sign bearing the same words was installed behind the centre pane of a window next to the entrance. Between 1985 and 1987 entertainment was provided in the lounge bar area. There was recorded dance music on Wednesdays to Sundays combined with live bands on Thursdays, Fridays and Saturdays. Advertisements for the Raby Tavern described forthcoming Friday entertainment by reference to the words "TGI Friday". Many of the advertisements were headed "Fillies".

In essence, the evidence I have just outlined is the same as that earlier relied on to show first use by the respondent of the trade mark "Friday's" in opposition to an application for registration of that mark by one Alan Weller. The respondent failed to show first use in that case and his opposition was dismissed on 14 January 1993. The hearing officer's decision was, in my opinion, plainly correct.

Mr Hesky says that the lounge bar has always used the name "T.G.I. Friday". Mr Aidan Smith, who managed the Raby Tavern from its opening until May 1988, says that "Fillies" was the name given to the old public bar area in about mid-1987. This sounds rather odd because he confirms that the live entertainment at all times took place in larger bar area close to the drive-in bottle sales area on Spitfire Drive. The advertisements plainly suggest that the bands and dance music were associated with Fillies. Mr Hesky's recollection of events at the time may be safely disregarded. He could not recall ever having seen a sign bearing the name "Fillies" which, it must be accepted, was prominently displayed at the other entrance to the tavern. Indeed, it is clear that, until an entertainment licence was obtained for the tavern in about 1987, the two glass doors at the entrance to the lounge bar were marked "Colonial Room".

Around about the time the respondent began to assert its proprietorship of the trade marks "T.G.I. Friday's" and "Friday's", it, in fact, gave up the operation of the Raby Tavern. This fact emerged during Mr Hesky's cross-examination. The precise dates are not in evidence although, no doubt, the history of those licensed premises is comprehensively documented in the records of the Liquor Administration Board. Mr Hesky accepts that by mid-1989 the Raby Tavern had been leased to a company associated with a Mr Jeff Moore. The respondent did not resume operating the tavern until early 1996. During the intervening period its interest became that of the classic rentier, Mr Hesky merely attending at Raby once a month to collect a cheque.

Although the respondent was no longer running the Raby Tavern, Mr Hesky was astute to maintain the registration of various business names. At the same time the respondent was pursuing its opposition in the trade mark proceedings. In August 1989 Mr Hesky met Mr Wallace Doolin who was then the applicant's senior officer responsible for the development of franchises in Australia. (Mr Doolin is now the president of the applicant.) The two men had a further telephone conversation in April 1990. There is some slight controversy as to the terms of their discussions on these two occasions. Ultimately, I think that the different recollections are unimportant, although Mr Doolin struck me as a much more careful witness. Mr Hesky admits that he told Mr Doolin the respondent wanted $1,000,000 to give up the "right" to the name "T.G.I. Friday's" in Australia. Although Mr Hesky denies that he "seriously" wanted that sum, I am unable to accept that denial. I am quite satisfied that he meant to convey the impression that the respondent required that amount as the price for discontinuing its opposition in the pending trade mark application. In anticipation of the opposition proceedings Mr Hesky arranged to register further business names which added an apostrophe and an ess to both the names already registered.

I have already mentioned the incorporation of the Hesky company in June 1994, which was prompted by the Australian Financial Review article. Mr Hesky seems to have viewed the acceptance of its name for registration under Part 4.2 of the Corporations Law as a further way of protecting his "right" to the name T.G.I. Friday's. The Hesky company does not appear to have actually done anything beyond arranging to have a listing in the Sydney telephone directory. Mr Hesky seems to have been under the misapprehension that, in assiduously registering business names, the respondent was actually carrying on a business of some kind.

In November 1994 the respondent purchased the Grey Gums Hotel/Motel at the corner of Mulgoa Road and Blaikie Road in Penrith, a suburb on the western fringe of the Sydney metropolis. The next year, in May 1995, the respondent purchased land in Reserve Road, Artarmon, which is very near its office in Carlotta Street.

The opening of the South Yarra restaurant by Developments precipitated bizarre correspondence from the respondent's attorneys directed to Developments' parent (which is a listed company), the stock exchange and the Australian Securities Commission. Nothing more need be said of this episode, save that subsequently Mr Hesky obviously realized that something more was required to bring matters to a head.

The respondent completely refurbished the Grey Gums Hotel. It added to the front of the building gable roofs over entry porches to different sections of the hotel. One of these sections is designated as a cocktail bar on the plans in evidence. In April 1996 the respondent painted the name T.G.I. Friday's on the gable roof over the porch leading to this section. The name is written in the same primary colours of red, black and white as the applicant employs in its logos. Mr Darren Smith, the manager of the Grey Gums Hotel, describes this section as the lounge bar. It contains a bistro where lunch and dinner are served. The menu is labelled "T.G.I. Friday's". Entertainment has also been provided in this area since October 1996.

Mr Hesky registered the respondent as the proprietor of a business called "T.G.I. Friday's Restaurant" carried on at both the Grey Gums site and the Reserve Road site. In fact, no restaurant business was carried on at Reserve Road or, for that matter, at Carlotta Street. However, in May 1996 the respondent erected a sign on the Reserve Road site announcing "T.G.I. Friday's Is Coming Soon" with the words T.G.I. Friday's depicted in the same colours and style as was done at Penrith. The respondent has obtained development consent for a hotel on the Reserve Road site. Plans for the hotel are in evidence together with Mr Hesky's handwritten notes for the layout of the lounge bar, which the respondent proposes to call T.G.I. Friday's. The early plans show a bistro area between the public bar and the lounge bar. Mr Hesky was at pains to suggest that it was now proposed such an area should be more in the nature of a sandwich shop which was open to passers-by generally and independent of the alcoholic beverage services provided to patrons in the adjoining bar areas of the licensed premises. However, I regret to say that Mr Hesky's evidence in this respect struck me as contrived so as to give the impression that it was not proposed that the name T.G.I. Friday's be used in connexion with restaurant services of the type conducted by the applicant's franchisees. Mr Hesky acknowledged, albeit somewhat grudgingly, that his notes betrayed the influence of the design and memorabilia used in T.G.I. Friday's restaurants. He pointed out that he had also been influenced by design features in other themed restaurants in the United States and in at least one Sydney hotel.

The respondent also hoisted its new T.G.I. Friday's sign on a wall of the Raby Tavern soon after it resumed operating those premises in about April 1996. When the first of the proceedings now before the Court was threatened by the applicant, Mr Hesky arranged to advertise the Grey Gums Hotel and the Raby Tavern using the name T.G.I. Friday's.

Mr Hesky denies that the erection of the sign at Artarmon by the respondent was intended to convey an impression that a restaurant forming part of the applicant's chain was coming to that site. He says that it was meant to convey an association with the respondent's premises at Raby and Penrith. I find this suggestion quite fantastic.

Proceeding NG 678 of 1996

A Full Court of this Court recently dealt with questions of reputation arising in so-called s 52 cases: Campomar Sociedad, Limitada v Nike International Limited (Burchett, Sackville and Lehane JJ, 7 July 1998, unreported), see particularly per Lehane J at 9. The extent or scope of reputation required for passing off has been explained by Lockhart J in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 346-350.

The conduct of Mr Hesky must be at the forefront of any consideration of reputation. It is clear that he set out to pirate the name T.G.I. Friday's for use in connexion with premises licensed to sell liquor. His early efforts were plainly not such as to involve trade mark use. However that may be and notwithstanding the consistent advice of his solicitors and trade mark attorneys as to the limited usefulness of business names registration, Mr Hesky's conduct manifested his obvious recognition of a commercial advantage attaching to association with the name of the restaurants in the applicant's chain. This provides, as counsel for the applicant submit, a "reliable and expert opinion" both as to reputation itself and the likely consequences of the respondent's conduct: Australian Woollen Mills Ltd v Commonwealth (1937) 58 CLR 641 at 657.

I have mentioned the ubiquitousness of the applicant's restaurants or those of its franchisees. It does not matter that Developments saw a need to promote the brand name in Australia. I may be permitted to know of the importance of brand marketing in modern commerce. The very size of a chain, both the number of sites and sales volumes, will readily permit an inference to be drawn as to its reputation. There are, of course, many brand names, such as say XXXX, which are well known in one country for one product and in another for a very different product. But in this case the evidence of overseas visits by a number of Australians allows me to be satisfied that the TGI Fridays restaurants have acquired a not insignificant reputation in Australia.

Counsel for the respondent draws attention to the registration and use in other countries by the applicant or TGIFM of other names, such as Friday's The American Bistro, Thank God It's Friday and Friday's. There is ample evidence that T.G.I. Friday's restaurants are often referred to, even in their own advertising and internal communications, as Friday's. But that does not mean that by 1996 when the respondent erected its signs the applicant's name T.G.I. Friday's had not acquired a distinctive reputation.

The respondent relies upon a mass of evidence to show that the expression Thank God It's Friday has been extensively used at many locations throughout Australia. It is, of course, used in promoting activities on a Friday, which has become recognised as a day or evening of celebration for those white-collar workers lucky enough to enjoy a regular five-day working week. Even respectable law firms, where once a fairly weak punch at the annual Christmas party was the only time alcohol was ever permitted, now have regular Friday night drinks under some such banner. Bonhomie blazes everywhere on Friday nights now in a sea aflame with alcohol.

The applicant and the Weller organization eventually compromised their litigation arising out of the Deputy Registrar's decision of 4 November 1994. The very terms of the parties' deed of settlement tend to confirm the distinctiveness of the reputation of the restaurants in the applicant's chain. It does not matter that the trade mark registration was in respect of services described simply as restaurant services, or that such registration gives no right to the exclusive use of the letters TGI. The fact is that the name T.G.I. Friday's is peculiarly distinctive in its use in relation to licensed premises where meals are provided. That use is not the same as promotion of events on a Friday night. Nor is it the same as the use on other days of the week of the name Friday's in different contexts.

It may be that the denizens of the Raby Tavern and the Grey Gums Hotel would appear to be from another planet to the patrons of a bar at the corner of 63^rd Street and First Avenue on the island of Manhattan. That is why the respondent's conduct in hoisting its signs with the T.G.I. Friday's name in the colours of the applicant's logo and so blatantly contravening ss 52 and 53(c) of Trade Practices Act calls for restraint. The applicant has also established the elements of the tort of passing-off, as they were explained in Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369. The public is likely to believe that the services offered by the respondent are those of the applicant or one of its franchisees.

Conclusion

The focus of the dispute between the parties switched, not unnaturally, to the question of trade mark infringement once the applicant was eventually registered under the Act. But the extraordinary delay in effecting that registration has posed difficult and novel problems of the Act's construction in proceeding NG 572 of 1997. As I have reached the firm conclusion that the applicant is entitled to an injunction under s 80 of the Trade Practices Act in proceedings NG 678 of 1996, I see no reason to further delay granting a final injunction. The terms of the order may require some debate: Capomar Sociedad, Limitada v Nike International Ltd per Sackville J at 17-20. Suffice it to say at this stage, that the vice I have found in the respondent's conduct is that alleged in paragraphs 9 and 9A of the further amended statement of claim filed on 5 November 1997. I am conscious, of course, that interlocutory undertakings have been given.

The three proceedings were heard together, but they have not been consolidated. The resolution of proceeding NG 572 of 1997 may not now be necessary in view of my conclusion, save of course as to the question of costs. A good part of the time and effort devoted to oral argument and written submissions was concerned with that proceeding. There remains too the question whether the applicant wishes to pursue a claim for damages in proceeding NG 678 of 1996.

So far as proceeding NG 728 of 1997 is concerned, the respondent was at all times advised of its rights of appeal. It exercised an informed choice not to appeal the Deputy Registrar's decision. The respondent has not identified any special circumstances which could justify extending the time for instituting an appeal. The motion should be refused.

I shall stand the matter over for a week and direct the parties to bring in short minutes of the orders they propose for the disposition or further conduct of the proceedings.