The Ohio Art Co v Hunter Leisure Pty Ltd

[1998] FCA 983

FEDERAL COURT OF AUSTRALIA

Trade Practices – misleading or deceptive conduct – identical products produced from the same mould – whether the get-up is sufficiently similar to mislead or deceive consumers that they are buying applicant’s product – whether necessary for s 52 claim that applicant must show chain of title to use of name of celebrity sportsman “Michael Jordan” – whether Michael Jordan acquiesced in use of his name by applicant – whether get-up of respondent’s product subliminally suggests applicant’s product.

Trade Practices Act 1974 - s 52

Abundant Earth Pty Limited v R & C Products Pty Ltd (1985) 7 FCR 233 - cited
Reckitt & Colman Products Limited v Borden Inc [1990] 1 WLR 491 – dist.
Tot Toys Ltd v Mitchell [1993] 1 NZLR 325 – dist.

THE OHIO ART COMPANY V HUNTER LEISURE PTY LIMITED

NG 463  of   1998

JUDGE:         BEAUMONT J.
PLACE:         SYDNEY
DATE:           12 JUNE 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 463 of 1998

BETWEEN:	THE OHIO ART COMPANY APPLICANT
AND:	HUNTER LEISURE PTY LIMITED RESPONDENT

JUDGE:	BEAUMONT J.
DATE:	12 JUNE 1998
PLACE:	SYDNEY

REASONS FOR RULING

BEAUMONT J:

The Ohio Art Company (“Ohio”) seeks a permanent injunction restraining Hunter Leisure Pty Limited (“Hunter”) from engaging in conduct likely to mislead or deceive by using the “Technology for the manufacture and/or distribution in Australia and New Zealand of any game identical with or deceptively similar to [Ohio's] game ‘Pro Basketball’” (see the application filed 15 May 1998, para A 1(b)).  Ohio also seeks to restrain Hunter permanently, in connection with the supply or possible supply of goods, from falsely representing that any game manufactured and/or distributed in Australia and New Zealand by Hunter has the sponsorship or approval of, or an affiliation with, Ohio (application para A 1(c)).  Further, Ohio seeks to permanently restrain Hunter from passing off any game or product manufactured or distributed in Australia and New Zealand by Hunter as a game or product of Ohio (application para A 1(d)). 

The claims thus made are said to arise from a number of possible causes of action but, in the course of argument, it was accepted on behalf of Ohio (and in my view properly accepted) that the cause of action, if any, that was appropriate in the present circumstances, was one arising under s 52 of the Trade Practices Act 1974 (“the Act”). In other words, it was acknowledged that, although there are many similarities in the practical operation of the general law of passing off, on the one hand, and the provisions of Part V of the Act on the other, for present purposes it was only necessary for the Court to deal with the claim under the Act.

The case made on behalf of Ohio in this connection was sought to be grounded upon a similarity in the respective get-ups of the products of the parties.  It should be said at once that it appears, and I think now is, in any event, common ground, that the two products are themselves, for all relevant purposes, the same.  The essential question for present purposes is whether the get-up used by Hunter is similar, or sufficiently so, that consumers would be likely to be misled or deceived into believing that they were purchasing Ohio's product when, in truth, they were purchasing the product of Hunter.

In order to understand this issue it will be necessary to describe the get-ups which the parties have used.  There were examples of these in the evidence, but for immediate purposes it will be sufficient to refer to an illustration of the get-up used in connection with the sale by Hunter of Ohio's product as appears in a catalogue published by Hunter during the term of the agreement.  (Page 23 of that catalogue, which appears as page 73 of the affidavit of Meyer Diamond sworn 4 June 1998, is annexed to these reasons.)  An example of the get-up now used by Hunter appears in exhibit 2 which consists of artwork prepared for the purpose of use on labels on the packaging to be used in the retail sale of the product, and on the product itself.  The artwork (also annexed to these reasons) consists firstly of a depiction of the basketball set itself on the first page; and, on the second page, a larger depiction of the artwork which will appear on the backboard of the Hunter product when sold. 

As has been said, the products themselves are, in all essential respects, the same.  There is some difference in colouring in certain areas.  It will be seen that Ohio's get-up emphasises the name of Michael Jordan, a famous basketball player, whose face and signature are prominently displayed on the board, together with the word “Pro”, which again is prominently stated.  In the case of Hunter's get-up, it will be noticed that prominence is given to the letters “NBA”, which, it is common ground, is a reference to the American National Basketball Association.  However, some prominence, although not to the same degree, is given to other matters.  In particular, there is quite a prominent statement to the effect that this is a “Huffy Sports Basketball Set”.  In addition, Hunter's get-up includes references with logos to several teams who participate in the American NBA.  They include, but are not limited to, the “Chicago Bulls”.  Again, it is common ground that Mr Jordan is a member of that team, and as has been said, that team participates in the NBA, but along with many other teams, several of whose names and logos are also depicted quite prominently on Hunter's backboard.

Before going to the ultimate questions that arise in this connection, several other background considerations should be mentioned.  In the first place, the evidence is that the parties' basketball sets retail for around $69.00.  Secondly, Hunter has not, at this stage, actually carried out, at least on any scale, the retail distribution of its product.  However, shipments for this purpose are ready, and it is acknowledged, indeed asserted by Hunter, that unless restrained, it proposes to launch its product, under the get-up which I have described, into the retail trade.

Another related consideration, from Ohio's point of view, is that Ohio's counsel accepts, quite properly I think, that his application for injunctive relief is really made upon a quia timet basis, since no actual retail sales have yet occurred, although it appears certain that they soon will. One point of significance that emerges in this connection is that although there is no evidence before me of any actual deception, given the circumstances I have mentioned, no inference against Ohio should be drawn on that account. As a matter of legal principle, it is not, of course, essential, or even necessary, that a party seeking relief under Part V of the Act, or in passing off, adduce such evidence, as it is a matter for the Court to infer the likelihood of deception. At the same time, as the authorities plainly indicate, the presence of that evidence may assist a court in finding, as a proper inference, that deception is likely to occur.

Before proceeding further I should mention, for the purpose of disposing of it, one point sought to be advanced on behalf of Hunter.  There is in evidence two licence agreements between Ohio and a company which appears to be controlled by Mr Michael Jordan.  On behalf of Hunter, it was submitted that when properly construed, those licence agreements do not confer upon Ohio any right to sub-licence the use of the name, as happened in the present case.  Other submissions were advanced in this connection, but need not be spelt out at this point.

It was then said on behalf of Hunter that upon the assumption that the interpretation it sought to put upon those licence agreements was correct, it must follow, the argument ran, that it was not open to Ohio to make a claim of passing off or of a contravention of Part V of the Act. In essence, as I follow the submission, the argument was that Ohio had had to make out, in effect, a chain of title before it could sue in passing off or under s 52, where any part of that claim relied upon the use of the name Michael Jordan.

I have difficulty accepting the submission. That is to say, I cannot accept that it is a necessary ingredient in a claim for passing off or for contravention of s 52 that an applicant must show a legal title in the sense I have mentioned. In particular, so far as at least s 52 is concerned, I cannot see how it can be any answer to a claim made of contravention of what is essentially a consumer provision, that there is a technical deficiency in the contractual arrangements that may have been made between a trader in the position of Ohio and third parties.

The question posed by s 52 is, as the statute itself provides, and as the course of authority indicates, whether in all the material circumstances the conduct of the respondent was likely to deceive others; in this case specifically, members of the public who might purchase the respondent's product. It can be no answer to such a claim, (except in one situation to which I will return), that a rival trader with, let it be assumed, a similar get-up, is unable to establish a perfect chain of title, in the sense I have previously mentioned, to a name such as that of Mr Jordan, as a matter of contract.

There are a number of answers to Hunter's submission, in my view, and I do not need to state all of them.  One obvious answer is that whatever the strict contractual position might have been as between Mr Jordan and Ohio, if, for instance, Mr Jordan had informally acquiesced in the use of his name by Ohio or those sublicensed by Ohio, this could provide no answer to a claim made that Hunter had in all the circumstances engaged in conduct that was likely to deceive consumers.  This would be so notwithstanding any technical shortcomings in the state of the contractual relationship between Mr Jordan and Ohio.

There is no evidence before me to suggest that Mr Jordan did not acquiesce in the use of his name by the sub-licence given by Ohio to Hunter.  The licence agreements themselves provide at least a context in which the Court may infer that, whatever the strict contractual position, Mr Jordan acquiesced in the use by Ohio of his name in its arrangements with Hunter for the term of those arrangements.

I turn now to the substance of Ohio's claim that, by the use of the get-up I have described, Hunter proposes to engage in conduct which is likely to deceive consumers.  I approach this question taking into account, as a material consideration, the circumstance that the product retails for an amount which although not substantial, is not inexpensive and therefore not likely to be purchased in haste (cf. Abundant Earth Pty Limited v R & C Products Pty Ltd (1985) 7 FCR 233 (at 239)).

On behalf of Ohio, particular reliance was placed upon the approach taken by Lord Oliver in Reckitt & Colman Products Limited v Borden Inc [1990] 1 WLR 491 as applied, in particular, in the decision of Fisher J in Tot Toys Ltd v Mitchell [1993] 1 NZLR 325. But, in my opinion, that line of authority is distinguishable for present purposes. They establish no more than that a distinctive get-up may be found in the shape, design and appearance of a product. However, it is clear that, in the present case, there is nothing capricious but everything merely functional, about the shape, design and appearance of these products. There is, in my view, only one possible way in which it may be said that the get-up proposed to be used by Hunter might be likely to deceive, and that is if it may fairly be said that Hunter's artwork should be viewed as a subliminal suggestion of some association or connection with Mr Jordan.

I have difficulty, at least on the present evidence, in accepting that such a connection can be read into the message that will ordinarily be conveyed by Hunter's packaging and artwork.  I emphasise that this finding is made on the evidence before me.  Since I have noted that this is, at this stage, an application made on a quia timet basis, it could not be expected that there would be any evidence of actual deception.  I accept, as is common ground, that Mr Jordan is a member of the Chicago Bulls team.  I further accept that his team participates in the NBA.  But when the get-up proposed to be used by Hunter is viewed in its entirety, the main message that is transmitted is an association or connection with the NBA.  There is no case put by Ohio that a statement or message that conveyed an association between Hunter’s product and the NBA (as opposed to the Chicago Bulls) was itself misleading or deceptive.  Of itself, it does not, to my mind, carry with it any real message that thereby Mr Jordan is somehow involved.

It is true, as I have noted, that his team is mentioned, but it is mentioned as one of several other teams all of whom participate in the NBA.  More importantly perhaps, if there is a secondary message emanating from Hunter's proposed get-up, it is that there is a connection with "Huffy Sports".  There is no suggestion that Mr Jordan has any connection with that message.

In my opinion, when the circumstances I have mentioned are all taken into account, it is not appropriate that the Court draw an inference that consumers are likely to be deceived, by Hunter's proposed get-up, into believing that they were purchasing the product of Ohio.

I mentioned one reservation when dealing with what I described as the chain of title submission. The reservation I would make is that if this were a claim only for passing off, that is, under the private general rule, and if it could be shown that Ohio was relevantly engaging in some illegal activity, for instance, using the name of a third party unlawfully, it may, of course, be open to the Court, as a matter of discretion, to refuse injunctive relief on the ground that the applicant lacked clean hands. However, the present claim, as I see it, is based upon a contravention of Part V of the Act, and the Court's discretion under s 87 of that Act is, as the cases show, a broad one.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont

Associate:

Dated:             12 June 1998

Counsel for the Applicant:	Mr D Ryan
Solicitor for the Applicant:	Deacons Graham & James
Counsel for the Respondent:	Mr J Styring
Solicitor for the Respondent:	Kennedy Guy
Date of Hearing:	11 and 12 June 1998
Date of Judgment:	12 June 1998