The Real Thing Food Supplements CC v Media Tag Pty Ltd

[2018] NSWCA 318

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	The Real Thing Food Supplements CC v Media Tag Pty Ltd [2018] NSWCA 318
Hearing dates:	23 November 2018
Decision date:	14 December 2018
Before:	Macfarlan JA at [1] Gleeson JA at [2] Barrett AJA at [85]
Decision:	(1)   Appeal dismissed.  (2)   Appellant to pay the respondents’ costs.
Catchwords:	CONSUMER LAW – misleading or deceptive conduct – where respondent distributed to Woolworths on trial basis health food supplements manufactured by appellant in South Africa under brand name “The Real Thing” – respondent later supplied Woolworths with locally sourced products with labels including the initials “TRT” and later the words “The Real Thing” – whether respondent misleadingly or deceptively represented to Woolworths that its goods were manufactured by or under the authority of the appellant – Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18 – whether primary judge misread the pleading of the appellant’s reputation in Australia – whether error in finding appellant must prove Woolworths knew of the appellant and the products supplied during the trials were those of the appellant – whether error in finding appellant had not established that Woolworths relied on labelling of the respondent’s products   TORTS – passing off – whether respondent passed off its products as those of the appellant – whether primary judge erred in finding that the appellant had not established that it had a reputation in Australia with Woolworths
Legislation Cited:	Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 232, 236 Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited:	Anheuser-Busch Inc v Budejovicky Budvar NP [1984] FSR 413 Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 Brock v Terrace Times Pty Ltd (1982) 40 ALR 97 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302; (1992) 23 IPR 193 Consorzio del Prosciutto di Parma v Marks and Spencer plc [1991] RPC 351 Dairy Vale Metro Co-operative Ltd v Brownes Dairy Ltd (1981) 35 ALR 494; (1981) ATPR 40-215 Equity Access Pty Limited v Westpac Banking Corporation & Westpac Savings Bank Limited [1989] FCA 506; (1990) 40-994 Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158; (2006) 69 IPR 62 Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572 Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 268 ALR 613 Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98; (2011) 280 ALR 639 Powell v Birmingham Vinegar Brewery Co Ltd (1897) 14 RPC 720 Premetis v 260 Oxford Street Pty Ltd [2005] NSWSC 904 Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491; (1990) 17 IPR 1 Ricegrowers Ltd v Real Foods Pty Ltd [2008] FCA 639; (2008) 77 IPR 325 San Remo Macaroni Co Pty Ltd v San Remo Gourmet Coffee Pty Ltd [2000] FCA 1842 at [26]; (2000) 50 IPR 321 Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31; [2015] 1 WLR 2628; [2015] 3 All ER 469 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Telstra Corp Ltd v Phone Directories Co Pty Ltd (2014) 316 ALR 590 TGI Friday’s Australia Pty Ltd v TGI Friday’s Inc [1999] FCA 304 Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361
Texts Cited:	Mark Davison, Tracey Berger and Annette Freeman, Shanahan’s Australian Law of Trade Marks and Passing Off (4th ed, 2008, Thomson Reuters)
Category:	Principal judgment
Parties:	The Real Thing Food Supplements CC (Appellant) Media Tag Pty Ltd (First Respondent) Graham Meyerowitz (Second Respondent)
Representation:	Counsel: Mr A Franklin SC (Appellant) Mr A Fox (Respondents)   Solicitors: Marsdens Law Group (Appellant) Wotton + Kearney Lawyers (Respondents)
File Number(s):	2018/156039
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2018] NSWSC 585 Date of Decision: 3 May 2018 Before: Stevenson J File Number(s): 2016/289088

Judgment

1. MACFARLAN JA: I agree with Gleeson JA.

2. GLEESON JA: The appellant, The Real Thing Food Supplements CC (TRT Corporation), is a South African corporation which supplies a range of health supplements made in South Africa, using the brand name “The Real Thing”. In 2013 and 2014 the first respondent, Media Tag Pty Ltd (Media Tag) distributed some products sourced from TRT Corporation to Woolworths as part of two “trials”. Subsequently between November 2015 and June 2017, Media Tag supplied Woolworths with products sourced in Australia and unconnected with TRT Corporation.

3. In the proceedings below, TRT Corporation alleged that Media Tag had engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) and committed the tort of passing off by packaging Media Tag’s products using the same, or misleading or deceptively similar, brand name as TRT Corporation’s products. It was alleged that this conduct would or would likely lead Woolworths to believe that the products offered by Media Tag were the products of TRT Corporation, or were affiliated with the products of TRT Corporation. TRT Corporation also brought a claim of accessorial liability against two directors of Media Tag, Mr Graham Meyerowitz, the second respondent, and Mr Mark Lasarow.

4. On 8 December 2017, the Commercial List Judge ordered a separate trial of all questions, except quantum and remedies. On 3 May 2018, the primary judge (Stevenson J) delivered reasons for judgment and dismissed the proceedings with costs: The Real Thing Food Supplements CC v Media Tag Pty Ltd [2018] NSWSC 585.

5. TRT Corporation has appealed against that decision and orders, except the dismissal of the accessorial liability claim against Mr Lasarow.

Factual background

6. The primary facts as found by his Honour are not in dispute. The health supplements manufactured and supplied by TRT Corporation, under The Real Thing brand, are sourced from raw materials from various locations around the world. The products are sold in the form of capsules, tablets or powder contained in jars bearing The Real Thing brand. TRT Corporation has never had a presence in Australia. It has never advertised, promoted or sold its goods directly in Australia.

The Woolworths’ trials – 2013 and 2014

7. In September/October 2013, TRT Corporation engaged Media Tag to import four of its supplement products for the purposes of a trial with Woolworths. The products were known as “The Real Thing Wheat Grass Powder”, “The Real Thing Veggie Super Foods”, “The Real Thing Barley Grass Powder” and “The Real Thing Green Power Powder”. Media Tag supplied Woolworths with 1,224 units of supplement products sourced from TRT Corporation. The first trial between October and December 2013 involved 504 units of product. The second trial in 2014 involved 720 units of product. The total amount paid by Woolworths for the trial products was $6,075.37.

8. The products bore labels prepared on behalf of Media Tag which were modified versions of TRT Corporation’s labels used in South Africa. The modified labels were provided to TRT Corporation in South Africa and printed and applied to the products to be supplied to Media Tag. The labels, which contained three panels, did not bear any reference to TRT Corporation. The centre panel was the main label. The left panel described the product in general terms and contained the words “Distributed by Media Tag Pty Ltd”, together with its Australian address. The right panel contained detailed nutritional information and contained the words “Made in South Africa from imported products”.

9. The primary judge described the labels on the trial products (the Trial Label) in these terms at [21]-[24]:

[21] Taking the Wheat Grass Powder Trial Label as an example:

(1) the centre panel described the product as “The Real Thing Wheat Grass Powder | 100% Organic Wheat Grass Powder”;

(2) the left panel was headed “What is The Real Thing Wheat Grass?”. It gave a general description of it as a “superfood” with particular characteristics, and contained a subheading “Why Is There Nothing Like the Real Thing?”;

(3) the right panel set out detailed “Nutritional Information”;

(4) a sentence at the foot of the right panel stated the product was “made in South Africa from imported products” (with no reference to TRT Corporation itself); and

(5) a sentence the foot of the left panel stated that the product was distributed by Media Tag.

[22] Thus, the Trial Label for Wheat Grass Powder was in the following form:

[23] The Trial Label was attached to a container which had this appearance (but without the red oval which was placed on this image for emphasis):

[24] The Trial Labels and containers of the other products (Veggie Superfoods, Barley Grass Powder, Green Power Powder and Green Power Tablets) were different in detail, but generally in the same format.

Media Tag’s supply to Woolworths - 2015

10. In April or May 2015, Woolworths informed Media Tag that it was likely to order further trial products. Mr Meyerowitz gave evidence that following a review meeting with Woolworths attended by Mr Lasarow, Mr Lasarow said to him words to the effect:

Woolworths has said that they will likely pick up the trial products for further distribution in their store. We will probably receive large orders later in the year.

11. Mr Meyerowitz then approached Mr David Allen, the sole director of TRT Corporation, to obtain a quotation for the supply of products, but they could not reach agreement on price. In the expectation that it would receive further orders from Woolworths, Media Tag arranged to source products locally to be known as, among other names, “Wheat Grass Powder”, “Veggie Superfoods”, “Barley Grass Powder” and “Green Power Powder”: the same names as the products of TRT Corporation that Media Tag had distributed during the Woolworths trials.

12. In around September/October 2015, Woolworths advised Media Tag that it would be receiving orders for three products from November 2015: Veggie Superfoods, Wheat Grass Powder and Barley Grass Powder. Woolworths commenced placing purchase orders for these products in November 2015. The Woolworths orders described the products as “R/T Wheat Grass”, “R/T Vege Food” and “Real Thing Barley Grass”.

13. The primary judge found that Media Tag supplied products to Woolworths from November 2015 in containers which differed in appearance from those supplied during the Woolworths trial. The Media Tag containers had the appearance of the centre and right image below; compared to the TRT Corporation’s containers which had the appearance of the image to the left:

14. The primary judge further found that Media Tag used three different labels for its products between November 2015 and June 2017. Like the labels used in the Woolworths trials, the Media Tag labels had three panels. The first label from November 2015 to February 2016 bore in small text “TRT” in the centre panel. The second label from February 2016 to August 2016 contained the words “THE REAL THING” in the centre panel under the words “GRASSES & GREENS” in larger print. The third label from late 2016 to June 2017 bore the words “WORK OUT LIFE” in the centre panel and no reference to “The Real Thing”.

15. With respect to the first label, the primary judge made the following findings (taking the Wheat Grass Powder product as an example in the form reproduced below) at [46]-[53]:

[46] The getup and colours used on the Media Tag Label are different from those used in the Trial Label.

[47] However like the Trial Label, the product is described in the centre panel as “Wheat Grass Powder | 100% Organic Wheat Grass Powder”.

[48] Instead of the words “The Real Thing” the words “Just Greens” are used and the product is described as “100% Australian made and grown”.

[49] In the top left had corner of the centre panel appear the initials “TRT”.

[50] Mr Meyerowitz said in his affidavit:

“This was included on the label to assist Woolworths in identifying Media Tag’s products. At that time I understood that Woolworths used the words ‘The Real Thing’ or ‘TRT’ for its internal product description on its EDI platform. In short, the reason that the letters ‘TRT’ were used was for Woolworth’s internal record keeping and logistical convenience.”

[51] The left hand panel is headed “What’s In Just Greens Wheat Grass?” (compared to “What Is The Real Thing Wheat Grass” on the Trial Label) but contains text corresponding closely to that which appears on the left panel of the Trial Label (save that the subheading “Why Is There Nothing Like The Real Thing?” has been changed to “Why Is There Nothing Like Just Greens?”).

[52] At the foot of the left panel it is stated that the product is “[m]anufactured in Australia and solely and distributed by” Media Tag.

[53] The right hand panel, like that in the Trial Label, is headed “Nutritional Information” and replicates the panel on the Trial Label.

16. With respect to the second label reproduced below, the primary judge made the following findings, again using the Wheat Grass Powder label as an example at [56]-[59]:

[56] In the centre panel the words “Grasses & Greens” have been substituted for “Just Greens” and the words “The Real Thing” have been added above the main label “Wheat Grass Powder | 100% Certified Organic Wheat Grass Powder”.

[57] In the left panel, the heading “What’s In Just Greens Wheat Grass?” has been changed to “What Is The Real Thing Wheat Grass?”; the exact words used in the corresponding panel in the Trial Label.

[58] Further, the subheading “Why Is There Nothing Like Just Greens?” has been changed to “Why Is There Nothing Like The Real Thing Wheat Grass?;” the same subheading used in the Trial Label (save that the words “Wheat Grass” are added to the end).

[59] The right panel headed “Nutritional Information” remains almost identical to that in the Trial Label.

17. The primary judge accepted the evidence of Mr Meyerowitz explaining the reason for the change in labels from February 2016 as follows (at [60]):

In February 2016, Media Tag altered the labels for the Work Out Life Products by adding the words ‘The Real Thing’ back into the labels. I noticed that the purchase orders received from Woolworths still had erroneous product descriptions such as ‘R/T’ or ‘Real Thing’. I then though that a way to resolve [the] issue was to put ‘The Real Thing’, un-stylised and in plain font, on the label. This decision was made by me in order to assist Woolworths to associate the Work Out Life Products with Media Tag and reduce errors being made on invoices issued to Media Tag from Woolworths. In addition, it was my opinion that no one owned the words ‘The Real Thing’ as a brand in Australia, so that having them as descriptors was fine. I recall checking the Australian register of trademarks on the IP Australia website and did not find any person or company with a registered trade mark for the words ‘The Real Thing’ at that time. I also knew that [TRT Corporation] had never traded in Australia and was not selling its products in Australia.

18. The primary judge observed (at [61]) that the reference by Mr Meyerowitz to Woolworths still having “erroneous product descriptions such as ‘R/T’ or ‘Real Thing’” on its purchase orders, at least in the period between November 2015 and July 2016, was that Woolworths had used these product descriptions when ordering from Media Tag just as it had done during the trial period. Mr Meyerowitz gave evidence that he had tried to persuade Woolworths to change the product description on its purchase orders in August 2015 and November 2015 by submitting Woolworths’ product forms requesting changes in a name on Woolworths’ system. Mr Meyerowitz said that he again resubmitted product forms in August 2016. It seems that at about this time, Woolworths accepted the name change to “Work Out Life” for Media Tag’s products.

19. With respect to the third label, the primary judge made the following findings at [66]-[69]:

[66] The final label change made by Media Tag, again using Wheat Grass Powder as an example, was as follows:

[67] In this iteration of the label, in the centre panel the words “The Real Thing” have been removed and substituted with the words “Work Out Life”. Corresponding changes have been made to the heading and subheading in the left panel (although the wording remains virtually the same as in the earlier iterations and as in the Trial Label).

[68] The right hand panel was unchanged.

[69] Mr Meyerowitz said that Woolworths has not ordered any product since June 2017 and that his “impression is that Woolworths has lost interest” in Media Tag’s products and “will no longer buy them”.

The pleaded case

20. Given TRT Corporation’s primary complaint that the primary judge misread the pleadings, it is appropriate to refer to the relevant parts of its pleaded case as advanced at trial in the Further Amended Commercial List Statement (List Statement).

Misleading or deceptive conduct

21. The key allegations with respect to the misleading or deceptive conduct claim relying on s 18 of the Australian Consumer Law, were as follows.

22. First, it was alleged in par 20B of the List Statement that Media Tag had distributed TRT Corporation’s products to Woolworths under the brand “The Real Thing” and that TRT Corporation had “goodwill and reputation within Australia on and from those dealings”.

23. Second, it was alleged in par 21 of the List Statement that the defendants, Media Tag, Mr Meyerowitz and Mr Lasarow, made four types of representation to Woolworths, namely:

1. Media Tag goods were manufactured by or under the authority of TRT Corporation;

2. the Media Tag goods had the sponsorship or approval of TRT Corporation;

3. the Media Tag goods were the same or the equivalent in quality to the TRT Corporation’s supplement goods; and

4. Media Tag was affiliated with TRT Corporation,

(together referred to as the Representations).

24. In this Court, ultimately only the first representation was relied on by TRT Corporation.

25. In support of the alleged representations, TRT Corporation provided the following particulars:

1. Media Tag’s products were packaged using the same, or misleadingly and deceptively similar, brand name as TRT Corporation’s supplement goods;

2. representatives of Media Tag have made express oral and/or written representations that Media Tag was associated with TRT Corporation; or

3. alternatively, the representations referred to in (2) were implicit from the conduct of the representatives of Media Tag.

26. At trial, no evidence was led in support of the alleged oral or written representations made by Media Tag to Woolworths.

27. Third, it was alleged in par 24 of the List Statement that, induced by and acting in reliance on the Representations, Woolworths purchased goods from Media Tag which directly compete with TRT Corporation’s goods.

28. Fourth, it was alleged in par 29 of the List Statement that Mr Meyerowitz, among others, was a person involved in Media Tag’s contravention of s 18 of the Australian Consumer Law by reason of having engaged in some or all of the conduct of the type referred to in s 232(1)(c), (d), (e) and (f) of the Australian Consumer Law. In this Court, the accessorial liability claim against Mr Meyerowitz for damages under s 236 of the Australian Consumer Law was only pressed on the basis that he was “directly or indirectly, knowingly concerned in, or party to, the contravention”, relying on s 232(1)(e) of the Australian Consumer Law.

29. Fifth, it was alleged that the Representations were misleading or deceptive, or likely to mislead or deceive, given that Media Tag’s goods are not manufactured by TRT Corporation or under its authority, did not have TRT Corporation’s sponsorship or approval, and that Media Tag is not affiliated with TRT Corporation.

Passing off

30. With respect to the passing off case, the key allegations in the List Statement were:

[32] Further, or in the alternative, the Plaintiff has and continues to have goodwill and reputation attached to the words “The Real Thing”, which is identified in the mind of the purchasing public being Woolworths by association with the Plaintiff’s product names.

[33] The Representations the Defendants made as pleaded in paragraph 21 above, have led or will likely lead … Woolworths … to believe that the goods offered by the First Defendant are the Supplement Goods of the Plaintiff or are affiliated with the Supplement Goods of the Plaintiff.

[34] The Plaintiff has and is likely to continue to suffer damages by reason of the erroneous belief engendered by the Defendants’ misrepresentation that the source of the First Defendant’s goods is the same as the source of those Supplement Goods offered by the Plaintiff.

31. No claim was made against Mr Meyerowitz on the passing off claim on the basis that he was a joint tortfeasor with Media Tag: Keller v LED Technologies Pty Ltd [2010] FCAFC 55 at [88], [291], [404]-[405]; (2010) 268 ALR 613.

TRT Corporation’s case at trial

32. In closing argument at trial, senior counsel for TRT Corporation (who was not senior counsel who appeared in this Court) accepted that TRT Corporation needed to prove the matters alleged in par 20B(b) of the List Statement for either of its causes of action, relevantly, that TRT Corporation had goodwill and reputation in Australia from 2013.

33. When asked by the primary judge what evidence supported that contention, counsel for TRT Corporation responded by pointing to pars 22 and 24 of the affidavit of Mr Meyerowitz sworn 7 December 2017. In par 22 of his affidavit, Mr Meyerowitz deposed that in about October 2013 Mr Lasarow told him of the proposal that Woolworths trial a number of superfood products which Media Tag would source from TRT Corporation in South Africa. In par 24 of his affidavit, Mr Meyerowitz deposed to his understanding from his dealings with Mr Lasarow that Media Tag acted as a selling agent for TRT Corporation in Australia for the purposes of the Woolworths trial.

34. Unsurprisingly, the primary judge asked how it followed from those matters that TRT Corporation had goodwill and reputation in Australia from 2013. Counsel for TRT Corporation gave a non-responsive answer, referring to the history of labelling of Media Tag’s products between November 2015 and August 2016 as set out in Mr Meyerowitz’s affidavit.

The primary judge’s reasons

Misleading or deceptive conduct

35. The primary judge dealt first with the misleading or deceptive conduct case, which was the primary way in which TRT Corporation put its case at trial.

36. After noting that the argument focused on the three alleged representations set out at [22(1), (2) and (4)] above, his Honour summarised TRT Corporation’s case as being that Media Tag sought to impersonate it and pass its products off to Woolworths as those supplied during the Woolworths trial, and thus as those of TRT Corporation: at [73]. His Honour also noted that TRT Corporation’s case was advanced solely on the basis of the manner in which Media Tag labelled the products it sold to Woolworths: at [74].

37. His Honour made the following factual findings (which TRT Corporation accepts and embraces on appeal). First, that Media Tag labelled its products in a manner which was in many respects similar to the manner in which TRT Corporation’s products were labelled during the course of the Woolworths trial and that this was deliberate conduct by Media Tag: at [75]-[76]. Second, that Mr Meyerowitz adopted and made changes to Media Tag’s labels to maintain an association with TRT Corporation’s products which Woolworths had previously bought and in which Woolworths had continued to express its interest (by placement of purchase orders): at [77]. Third, that much of the wording, particularly in the side panels on the labels, is the same and the second iteration of Media Tag’s labels used the words “The Real Thing” being the brand used by TRT Corporation for its products which were supplied to Woolworths by Media Tag during the trials: at [80].

38. Having observed that the adoption by Media Tag of labels of such similarity may have amounted to sharp conduct, his Honour identified the relevant question as to whether Media Tag’s labels conveyed the representations alleged: at [81]-[82]. His Honour concluded that the conduct of Media Tag did not convey the alleged misleading representations, giving the following reasons, each of which are challenged by TRT Corporation.

39. First, it was necessary for TRT Corporation to prove that Woolworths knew of TRT Corporation and knew that the products supplied during the trial were those of TRT Corporation: at [83].

40. Second, it was TRT Corporation’s pleaded case that TRT Corporation itself (not just its products) had “goodwill and reputation within Australia” in respect of products it manufactured in South Africa: at [87].

41. Third, TRT Corporation needed to show that such goodwill and reputation was known to Woolworths given its case that Media Tag represented to Woolworths that Media Tag’s goods were manufactured by, or had an association with, TRT Corporation, and that Woolworths was thereby induced to purchase products from Media Tag: at [88].

42. Fourth, there was no evidence that Woolworths had any knowledge of TRT Corporation’s identity, and TRT Corporation did not have any reputation in Australia that could warrant the conclusion that Media Tag’s labelling misled Woolworths into thinking that Media Tag’s products had any connection with TRT Corporation: at [93].

43. Fifth, having concluded that TRT Corporation’s case must fail for these reasons, his Honour also observed that there was a further problem in that Media Tag’s labelling played no role in Woolworths decision to purchase further product in April or May 2015 long before it saw the labelling on the products supplied by Media Tag from November 2015: at [96]-[97]. His Honour noted that it was a matter of speculation whether from November 2015 Woolworths decided to continue to order products from Media Tag by reason of the manner in which Media Tag labelled that product, and the evidence suggested that it did not. That was because Woolworths continued to order products from Media Tag whether its product labels contained the initials “TRT”, the words “The Real Thing” or (after August 2016) neither of these descriptors: at [98].

Passing off

44. Turning to the passing off claim, his Honour found that this claim could not succeed for the same reasons that the misleading or deceptive conduct claim failed, as was accepted by counsel for TRT Corporation during argument: at [100]. His Honour gave two brief reasons. First, in order to establish the tort of passing off, it is necessary for TRT Corporation to establish that its products had a reputation with (in this case) Woolworths, and second, TRT Corporation had not established that it had such a reputation. Again, TRT Corporation challenges those two findings by his Honour.

45. Given the above findings it was not necessary for the primary judge to consider the accessorial liability claim against Mr Meyerowitz or Mr Lasarow.

Grounds of appeal

46. Ground 1 contends, without any particularity, that the primary judge erred in dismissing TRT Corporation’s claims for misleading or deceptive conduct and for passing off. This ground may be taken to cover the same matters as raised by the other grounds.

47. Ground 2 contends that the primary judge erred in making the seven findings set out at [39]-[44] above.

48. Ground 3 contends that the primary judge should have held that (a) all that TRT Corporation needed to show was that its products, “The Real Thing” supplements, had acquired a reputation with Woolworths such that Woolworths regarded such products as emanating from a single source, whether known or unknown; (b) that TRT Corporation had proved the relevant reputation evidenced by orders from Woolworths from November 2015 for “R/T” and “The Real Thing” products; (c) by fulfilling Woolworths’ orders from November 2015 with its own products, Media Tag represented to Woolworths that its products were “The Real Thing” and passed off its products as and for “The Real Thing”; and (d) alternatively, by fulfilling orders from Woolworths for “R/T” and “The Real Thing” products with its own products marked with the acronym “TRT” and the words “The Real Thing”, Media Tag misrepresented to Woolworths that its products were “The Real Thing” and passed off its products as and for “The Real Thing”.

49. Senior counsel for TRT Corporation acknowledged that no passing off claim is made in relation to the third iteration of the label on Media Tag’s products from August 2016, which did not contain the reference to “The Real Thing” on the label.

Principles

50. Given the scope of the grounds of appeal, it is only necessary to refer to some matters of principle concerning the claims for misleading or deceptive conduct and passing off.

Misleading or deceptive conduct

51. Conduct will be misleading or deceptive if it induces or is capable of inducing error: Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572 at [63]; approved in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [15] (French CJ and Kiefel J).

52. In this regard, it is first necessary to identify to whom the conduct in question is directed: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 (Campomar) at [102]-[103]; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 (Butcher) at [36]-[37]. In the present case, the focus of attention is on the impact of the impugned conduct on Woolworths being the only person alleged to have been led into error by Media Tag’s conduct: Campomar at [100]; Butcher at [37].

53. Whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact to be determined having regard to all the contextual circumstances within which something was said or done: Butcher at [112] (McHugh J). As the plurality in Butcher explained at [37] (Gleeson CJ, Hayne and Heydon JJ), in assessing whether the conduct is misleading, regard must be had to the nature of the parties, the character of the transaction contemplated, the facts that each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.

Passing off

54. In Campomar, the High Court said (at [108]) that passing off, at least so far as concerns equitable relief, protects against injury to the goodwill built up by the activities of the plaintiff. The relevant principles were explained by Gummow J in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (ConAgra) at 355-356, 372-374; (1992) 23 IPR 193.

55. As Lord Oliver explained in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 at 499; (1990) 17 IPR 1 at 7 “[t]he law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another”. He immediately went on to say, a plaintiff has to establish three elements in order to succeed in a passing off action:

First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services.

Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name.

Thirdly, he must demonstrate that he suffers, or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.

56. These three elements of the tort of passing off have been described as “the classical trinity” of (1) reputation, (2) representation, and (3) damage: Consorzio del Prosciutto di Parma v Marks and Spencer plc [1991] RPC 351 at 368-369 (Nourse LJ); referred to by Gummow J in ConAgra at 355-356. The statement by Lord Oliver was approved by the Full Court of the Federal Court in Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98 at [212]; (2011) 280 ALR 639 (Greenwood J, Tracey J agreeing); Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369 (Beaumont, Branson and Lindgren JJ); Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 at 356 (Goldberg J); TGI Friday’s Australia Pty Ltd v TGI Friday’s Inc [1999] FCA 304 at [25] (Wilcox, Kiefel and Emmett JJ); Ricegrowers Ltd v Real Foods Pty Ltd [2008] FCA 639 at [55] (Rares J); (2008) 77 IPR 325.

57. It is necessary to say a little more about the first and second elements of a passing off action.

58. As to the first element – reputation – the law in Australia has departed from that in the United Kingdom on the issue of customer presence within the jurisdiction. It was established in ConAgra that it is not necessary in Australia that a plaintiff, in order to maintain a passing off action, must have a place of business or a business presence in Australia; nor is it necessary that the plaintiff’s goods are sold in Australia. It is sufficient if the plaintiff’s goods or services have a reputation in Australia with a substantial number of persons who would be potential customers were those goods or services to be marketed within the jurisdiction: Lockhart J at 339-341; Gummow J at 372-374; French J at 377-378.

59. By contrast, in Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31; [2015] 1 WLR 2628; [2015] 3 All ER 469, Lord Neuberger (with whom Lords Sumption, Carnwath, Toulson and Hodge agreed), said at [47] after acknowledging the force of the reasoning in ConAgra:

…. I consider that we should reaffirm that the law is that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. And, where the claimant’s business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not do, even if they are customers of the claimant when they go abroad.

60. In the present case, it is common ground that the relevant class of potential customers in Australia comprised only Woolworths. No case was advanced that TRT Corporation (or its products) had acquired a reputation with customers of Woolworths who had purchased the products during the Woolworths trials. It is also not in dispute that TRT Corporation had to establish its claim as at the inception of the use complained of, that is, as at November 2015 when Media Tag commenced supplying its products to Woolworths: Anheuser-Busch Inc v Budejovicky Budvar NP [1984] FSR 413 at 462; Starbucks (HK) Ltd v British Sky Broadcasting Group plc at [16]; San Remo Macaroni Co Pty Ltd v San Remo Gourmet Coffee Pty Ltd [2000] FCA 1842 at [26]; (2000) 50 IPR 321.

61. As to the second element – misrepresentation – it is not necessary that the public associate the business or goods being passed off with a known individual. In an action for passing off (or for misleading or deceptive conduct), the identity of the plaintiff need not be known to customers where the trade indicia in question have acquired a secondary meaning, relevantly, indicating to the appropriate class of purchasers or potential purchasers that the goods have come from a particular source, whether the name of that source is known or not: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 190 (Franki J); Brock v Terrace Times Pty Ltd (1982) 40 ALR 97 at [99] (Bowen CJ and Franki J); Telstra Corp Ltd v Phone Directories Co Pty Ltd (2014) 316 ALR 590 at [402] (Murphy J).

62. An early example of this principle is Powell v Birmingham Vinegar Brewery Co Ltd (1897) 14 RPC 720, which involved a passing off claim with respect to “Yorkshire Relish”. Lord Halsbury LC said (at 729):

I am satisfied that a person who puts forward this ‘Yorkshire Relish’, made as it is by the present Appellants, is representing it as being a particular manufacture. It may be true that the customer does not know or care who the manufacturer is, but it is a particular manufacture that he desires. He wants ‘Yorkshire Relish’ to which he has been accustomed, and which, it is not denied, has been made exclusively by the Plaintiff for a great number of years. This thing which is put into the hands of the intended customer is not ‘Yorkshire Relish’ in that sense. It is not the original manufacture. It is not made by the person who invented it. Under these circumstances, it is a fraud upon the person who purchases to give him the one thing in place of the other.

63. Lord Herschell was to the same effect (at 730):

I think that the fallacy of the Appellants’ argument rests on this: that it is assumed that one trader cannot be passing off his goods as the manufacture of another unless it be shewn that the persons purchasing the goods know of the manufacturer by name, and have in their mind when they purchase the goods that they are made by a particular individual. It seems to me that one man may quite well pass off his goods as the goods of another if he passes them off to people who will accept them as the manufacture of another, though they do not know that other by name at all.

64. These statements were accepted by White J in Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158 at [77]; (2006) 69 IPR 62. See also Premetis v 260 Oxford Street Pty Ltd [2005] NSWSC 904 at [59] where Gzell J referred with approval to the statement of Lord Halsbury LC.

65. Turning to the grounds of appeal, it is convenient first to address the pleading point.

Grounds 2(a), (b), (c), (d) and 3(a) and (b)

66. Grounds 2(a), (b), (c) and (d) and 3(a) and (b) are related. They are all directed to the pleading of TRT Corporation’s reputation in Australia.

67. TRT Corporation submitted that the primary judge misread the pleading in par 20B(b) of the List Statement concerning the basis of TRT Corporation’s alleged reputation in Australia with respect to “The Real Thing” range of supplement products. TRT Corporation contended that the primary judge erred in finding that TRT Corporation’s pleaded case was that TRT Corporation itself (and not just its products) had “goodwill and reputation within Australia” in respect of products it manufactured in South Africa arising from the dealings in 2013 and 2014 involving the Woolworths trials.

68. TRT Corporation also submitted that the primary judge had overlooked the pleading of the passing off claim in par 32 of the List Statement, that TRT Corporation has a reputation attached to the words “The Real Thing”.

69. In support of these submissions, TRT Corporation referred to Powell v Birmingham Vinegar Brewery Co Ltd and Hoath v Connect Internet Services Pty Ltd. Reference was also made to the statement by the learned author of Shanahan’s Australian Law of Trade Marks and Passing Off (4th ed, 2008, Thomson Reuters) at 694:

Provided customers recognised the plaintiff’s products by the indicia in suit, it does not matter that they are ignorant of the plaintiff’s actual identity.

70. Media Tag sought to uphold the primary judge’s view of the pleading in par 20B(b) of the List Statement and submitted that the same conclusion applied to the passing off pleading in par 32 of the List Statement.

Decision

71. In a case such as the present, it was necessary for TRT Corporation to establish that in the minds of the relevant public – Woolworths – there existed some established truth against which the notion of misleading or deceptive conduct can be measured: Dairy Vale Metro Co-operative Ltd v Brownes Dairy Ltd (1981) 35 ALR 494 at 501; (1981) ATPR 40-215 at 42,943 (Toohey J).

72. On a fair reading of TRT Corporation’s pleading, it is plain that what is alleged in par 20B(b) of the List Statement is that TRT Corporation itself has a reputation in Australia which it acquired from the dealings involving the Woolworths trials in 2013 and 2014. The same may be said about the pleading of the passing off claim in par 32 of the List Statement. Neither pleading alleged that “TRT Corporation’s products” had acquired a reputation in Australia from the Woolworths trials.

73. As indicated, when the primary judge sought clarification in closing argument as to the way in which TRT Corporation put its case, TRT Corporation accepted that it needed to prove the reputation alleged in par 20B(b) for either of its causes of action: see [32]-[33] above. It was not argued that Woolworths recognised TRT Corporation’s products by the brand name “The Real Thing” and that it did not matter that Woolworths was ignorant of TRT Corporation’s actual identity. Nor was it argued that the words “The Real Thing” had acquired, amongst relevant members of the public – Woolworths – a secondary meaning distinctive of TRT Corporation’s business or goods: Equity Access Pty Limited v Westpac Banking Corporation & Westpac Savings Bank Limited [1989 FCA 506; (1990) 40-994 at 50,956 (Hill J).

74. Given the pleading and the way in which TRT Corporation put its case at trial, there is no merit in TRT Corporation’s complaint that the primary judge misread the pleading.

75. Turning to the finding concerning TRT Corporation’s reputation in Australia, the labels on the trial products supplied by Media Tag to Woolworths did not contain any reference to TRT Corporation as being the manufacturer or source of the “The Real Thing” products. And, no evidence was adduced by TRT Corporation (as foreshadowed by the particulars to par 21 of the List Statement: see [24(2)] above) of conversations between Media Tag and Woolworths that would have led Woolworths to associating the manufacturer or source of the trial products with TRT Corporation.

76. In light of the evidence, the primary judge did not err in finding that TRT Corporation had failed to establish that it had a reputation in Australia with potential customers – relevantly, Woolworths – as the manufacturer or source of products under the brand name “The Real Thing” that were supplied to Woolworths during the trials in 2013 and 2014. That finding was fatal for both the misleading or deceptive conduct claim and the passing off claim, given the pleading and the way in which the case was put at trial.

Grounds 2(e) and 3(c) and (d)

77. These grounds are directed to the primary judge’s alternative finding that TRT Corporation had not established that Woolworths had relied upon the labelling of Media Tag’s products when deciding to purchase further trial products in mid-2015.

Decision

78. In Campomar at [98], the plurality emphasised the requirement of a sufficient nexus between the impugned conduct and the misleading or deception or likely misleading or deception of prospective purchasers. The factual difficulty with the “reliance” grounds, as senior counsel for TRT Corporation fairly acknowledged, is that Woolworths made its decision in April/May 2015 to purchase more trial products and placed its purchase orders with Media Tag in November 2015 before Media Tag supplied its own products with labels containing the initials “TRT” or the words “The Real Thing”. Further, TRT Corporation continued to place purchase orders with Media Tag, after August 2016, when the product labels contained neither of these descriptors.

79. Given these circumstances, TRT Corporation failed to establish that Woolworths relied on the references on the labels to the initials “TRT” and later the words “The Real Thing” when deciding to order further trial products in April/May 2015 and in placing purchase orders in and after November 2015. Counsel for TRT Corporation accepted in this Court that the allegation of inducement and reliance in par 24 of the List Statement could not be supported on the facts.

80. Notwithstanding this difficulty, TRT Corporation submitted that the relevant misrepresentation occurred when Woolworths, having decided in mid-2015 to order the trial products, having told Media Tag in September/October 2015 that it would order three trial products and having ordered the trial products in November 2015, was supplied by Media Tag with substitutes manufactured by or on behalf of Media Tag and this was said to be misleading or deceptive conduct.

81. This submission involved the contention that Media Tag engaged in misleading or deceptive conduct by failing to disclose to Woolworths when supplying products in response to Woolworths’ purchase orders in and after November 2015 that Media Tag’s products were not the same as the trial products that had been earlier supplied by Media Tag to Woolworths in 2013 and 2014. But that is not the way in which the misleading or deceptive conduct claim was pleaded. Nor did TRT Corporation seek to advance any wider case in this Court than that based on the pleadings. And, any attempt to do so would have been met by an objection that a party is bound by the conduct of his or her case: Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68 at 71.

82. There was no error in the primary judge’s finding that the misleading or deceptive conduct case must also fail because of the absence of evidence that Woolworths had relied upon the labelling of Media Tag’s products when deciding in April/May 2015 to purchase more of the trial products and thereafter placing purchase orders for such products with Media Tag in and after November 2015. The same reasoning applies to his Honour’s rejection of the passing off claim.

Accessorial liability claim

83. Although no ground of appeal is specifically directed to the accessorial liability claim against Mr Meyerowitz, it is common ground that TRT Corporation challenged the primary judge’s dismissal of the proceedings against Mr Meyerowitz. However, given the failure of the misleading or deceptive conduct claim against Media Tag, the accessorial liability claim against Mr Meyerowitz under s 232(1)(e) of the Australian Consumer Law does not arise.

Conclusion and Orders

84. The appeal by TRT Corporation has failed. There is no reason why costs should not follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. Accordingly, I propose the following orders:

1. Appeal dismissed.

2. Appellant to pay the respondents’ costs.

85. BARRETT AJA: I agree with Gleeson JA.

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Decision last updated: 14 December 2018