The Really Useful Group Ltd v Gordon & Gotch Ltd

[1994] FCA 505

9th September 1994

Just a note to say, please replace the original distributed

judgment of 505-94 with thls new edited copy.

Thank you

Judgments Clerk

JUDGMENT No. ..., s0sJ& ,.

FEDERAT. COURT OF AUSTRAT .U 1 1

SOUTH WAI .FS DIS-	REGISTRY	) No NG 388 of 1994
1

- 1

lum!EE& REALLY USF.FUL GROUP

IJMmzQ

Applicant

-

First Respondent

ORBIS PUBLISHING LIMITEQ

Second Respondent

m:	Davies J.
WS	1 July 1994
ZIiux:	Sydney

Amendments to the Reasons for Judgment given by Davies J. on the above date:-

Page l - para l - line 3	1
Page 3 - last para - lines 2 & 7	) "Weber" should read "Webber"
Page 5 - para 2 - line 2	1
Page 8, third paragraph should read -	major factors which weigh
.!l,	lLQt 'The two major factors with

Christos ~a i tz ia r i s	RECEIVED
Associate to Justice Davies	- 7 SEP 1994
FEDERAL COURT 01
6 September 1994	AUSTRALIA
PRlNaPAL

JUDGMENT No. . , , so a

I . COURT OF AUS'I'&&JA ) 1

NE	-G	ISTRY	W	) No NG 388 of 1994
1 1

BETWEEN: -

Applicant

-

First Respondent

P

Second Respondent

.	-	Davies J.
R&:	1 July 1994

W: Sydney

RECEIVED

FEDEWLL CWRT Or

AUSTRALIA	PRINCIPAL
REOnsTRY . /

1.         The motion for an interlocutory injunction be dismissed.

2.         The applicant pay the costs of the motion.

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

COURT OF AUSTRAT .U	)
1

8P-W SOUTH WALES DISTRICT R E G I S W	) No NG 388 of 1994
1
1

BETWEEN: -

Applicant

-

First Respondent

ORBIS PUBJ .ISHING J JMITED

Second Respondent

m:	Davies J.
l&!%	1 July 1994
zlax:	Sydney
This is a motion for an interlocutory injunction. The applicant, The Really Useful Group Limited ("RUG), for which Mr D. Catterns QC appeared at the hearing, is a company which represents inter alia the interests of Mr Andrew Lloyd Weber, one of whose musical works, 'The Phantom of the Opera", is currently playing at The Theatre Royal in Sydney.

The respondents were represented at the hearing by Mr D. Yates and Mr R. Alkadamani of counsel. The first respondent, Gordon & Gotch Limited ("Gordon & Gotch"), is an Australian company with an extensive business in, inter alia, the distribution of magazines. The second respondent, Orbis Publishing Limited (Orbis) which is based in the United Kingdom, is a publisher particularly of partworks and 1s presently the market leader in partworks in the United Kingdom, Australia, Germany and

Japan. It is one of the compames in an internabonal publishing group of which the

parent company is Institute Geografico de Agostini.

Partworks are a series of magavnes which can be collected together to form a reference work. Issues are usually published weekly or fortnightly, so that over a period of time a purchaser may collect the complete set. The partworks put out by Orbis are available for subscription but most are sold through newsagencies and some supermarkets. Partworks sometimes combine a magazine with a cassette or compact disc ("CD"); a matter which led to the customs duty issue considered in C o n s u w

. .

v. Collector of Customs (1987) 76 ALR 313.

In the last two years, Orbis has pubhshed and Gordon & Gotch has distributed

in Australia 'The Classical Collectiont' and 'The Blues Collectiont', which were partwork

magazines with associated sound recordings. Orbis is now publishing a partwork entitled

'The Musicals Collectionn. There have already been large sales in the United Kingdom.
Gordon & Gotch propose to commence distribution to retailers in Australia on 5 July

1994, and even earlier if the distribution is over a substantial distance. Sales by retailers are planned to commence on 7 July. An extenswe advertising campaign on television is

due to commence on 6 July and to continue through to 15 July.	It is proposed to market
the first two issues at the same time and at a tempting price.	Part 1 will feature 'West
Side Story" and Part 2 'The Phantom of the Opera".	Subsequent parts are to be issued

fortnightly. I have been informed by Mr Yates that 100 parts in all may be issued.

In seeking an interlocutory injunction, Mr Cattems has not relied upon any

intellectual property right. For the purposes of the present motion, it is not alleged that

there has been any breach of cowright or of a trademark. Reliance is placed upon s.52

of the -ties & (1974) (Cth) and upon the principles of passlng off. I

. .

discussed relevant aspects of s.52 and of passing off in J3 & C Products Ptv M v.

. .

& Sons Ptv J m (1993) 26 IPR 98 and I need not repeat the comments

there made.

Mr Catterns has sought an injunction restraining both the proposed television advertisements in which 'The Phantom of the Opera" is mentioned, amongst other works, and the distribution of the part which features 'The Phantom of the Opera". Having regard to the timing proposed for distribution and sale, it is clear that, if an injunction is ever to be granted, it must be granted now. By the tune of the trial the goods

complained of will have been distnbuted and sold.

Mr Catterns submitted that 'The Phantom of the Opera" magazine, which gives

great prominence to Mr Andrew Lloyd Weber and his CO-producer, Mr Cameron

McIntosh, will lead purchasers to the conclusion that the product was connected with

RUG. Mr Catterns relied inter alia upon the use, in the magazine, of photographs similar to those in the programme for the present Australian production. Mr Catterns submitted that because of the emphasis given by the magazine to past performances of the musical, to Mr Weber, to Mr McIntosh and the like, purchasers will be likely to be deceived into thinking that the music is a reproduction of a performance of the London

cast or the Australian cast.

However, both the cassette and the CD have labels which state: "Exciting New Recording'' and in smaller print: "Great New Cast". The orchestra is described as the Munich Symphony Orchestra conducted by J.E. Edwards and the National Symphony

Orchestra conducted by Martin Yates. The magazine lists and describes the members

of the cast, who can be contrasted with the original London cast who are also listed on

the same page.

In my opinion, a purchaser or potenbal purchaser will not be likely to be misled.

The case has some similarities with &g& v. Terrace (1982) 82) ALR 97 in which the Court by majority, Bowen U and Franki J., Davies J. dissenting, applied

the principle that the purpose of s.52 of the m d e Practices Act is not to confer monopoly rights upon a trader which the trader does not otherwise possess, but to protect the public by proscribing conduct which is likely to mislead or deceive. Their

some confusion. It must have a likelihood to deceive or mislead; a point which was Honours had it in mind that conduct will not breach the section if it merely results m

. . . .

enunciated in 't v. Svdnev B u l d u

Information (1978) 140 CLR 216 at 229 and in McWilliam's Wines P&

v. -ems of - g (1980) 49 FLR 455 and has been

affirmed in subsequent cases. Bowen U and Franki J therefore held at 102:-

"Put at its highest, the evidence only shows that some people may rnltially wonder whether there

ia any mn~~ection between the appellants' and the respondent's books. Once the books were

emmined it would be clear that they came from different sources. Potential purchasem may mnsider that the appellants had mpied the mncept of the Terrace times books. However, this view would serve rather to dwtinguiah the books."

And so in the present case, although potential purchasers might originally wonder

if the performance had a connection wth the London cast or the Australian cast, I

consider that it would be apparent to them on a brief examination that was not so.

Mr Catterns submitted that customers will be likely to consider that the product

was one which was nevertheless put out by, or sponsored by, Andrew Lloyd Weber's
organisation.

In my opinion, customers will be much more likely to consider that the product

is put out by and promoted by Orbis, for it will be sold as one issue of the partwork.

The issues will be displayed for sale as issues of the partwork, 'The Musicals Collection",

and will be displayed in a special cardboard stand designed for the purpose, on which the

name of Orbis will be prominently stated.

In my opinion, customers will not be likely to conslder that this issue of the

partwork is a product of the organisation responsible for the production of 'The Phantom

CDs of the Australian performance and of the London performance to be available at	of the Opera" which is currently playing in Australia. Customers will expect cassettes and
music stores at a higher price.

It is to be noted that, although the magazine has some similarities with the

program for the Australian production, the magazine and cassette or tape are not sold

as theatre merchandise but through newsagents and supermarkets. The magazine is not
a program but an informative booklet about the musical and the persons who have been
connected with it.

Customers may well expect that there is some connection between the product and the RUG organisation, but they will not be deceived in that respect. Due to the compulsory licence provisions of s.55 of the -tAct 1968 (Cth) and the arrangements which have been entered into extending the licence to imported goods, the Australasian Mechanical Copyright Owners Society Limited which, in Australia and New

Zealand acts on behalf of RUG and others in licensing and adm~nistering reproduction rights, entered into a written agreement with Orbis dated 7 June 1994, of which clause 2 provides:-

'SUBJECT to the term and cond~tions et out in thls Agreement AMCOS grants to the Limnaee, and its Agent, a non-exclusive conditional licence to import Sound Recordmp embodying AMCOS Repertoire into Australia and New Zealand for the purpose of retail sale in Australia and New Zealand. The grant of a llcence is only wth respect to the Articles stlpulatcd in Schedule A"

"Article" was defined as:-

"... the product which the Llcensce is in the busmess of supplying and ~ncludes	the
parhwrk and the Sound Remrdlng contained thereln."

Schedule A specified 'The Musicals Collection"

Accordingly, RUG has, by its agent and in considerahon of the fees agreed upon, authorised Orbis to import sound recordings for the purpose of retail sale in Australia as part of 'The Musicals Collection". Furthermore, for a fee of $250, RUG, by letter of 26 August 1993, confirmed "this company's permission to reproduce designs and publicity

material from 'The Phantom of the Opera' in its new magazine. It is m e that the request for permission did not specifically state that 'The Mus~cals Collection" would include music, but whether RUG was rmsled thereby is not known. Orbis obtained

permission from other sources for other photographs used m the magazine.

Mr Catterns relied upon the fact that the television advertisements will include a reference to "AU the great performances". This will be misleading, at least in respect to The Phantom of the Opera. However, it is only a small point in the overall facts. I

would not grant an injunction for that cause.

Mr Catterns also relies upon the fact that parts 1 and 2 have a stlcker which reads

"Issue .... only $6, regular price $8.95". Mr Catterns submitted that this was misleading

as the regular price of $8.95 will not be established until later parts are issued. However,

the sticker will be understood as indicating that the regular price for issues will be $8.95

but that issues 1 and 2 are issued at the low price of $6.	This n a well-understood
marketing ploy and is not misleading or deceptive.
In the circumstances, I do not consider that the applicant has sufficient prospects of success in the proceedings to justify the grant of an injunction.

I should add, moreover, that I do not consider that the applicant has any prospect of obtaining a final injunction in these proceedings. Mr Catterns very properly submitted that goodwill is a precious commodity and that courts tend to protect it zealously, as damage is hard to trace and to prove. That is so and it is the reason why injunctive relief

is a most powerful and effective weapon in this field.

Nevertheless, the respondents' product does not pretend to be the authorised

release of 'The Phantom of the Opera" musical, it is merely an issue in what will be a
large partwork.

Mr Catterns complained of the quality, pointing out that it is not of the quality of

RUG'S authorised merchandise. However, having regard to what it is, the magazine does

not appear to be of poor quality. I have not played the cassette or the CD so I make

no comment about them. The partwork is not a~med	at persons who have the funds to
collect top quality recordings.

The two major factors with weigh against the grant of an injunction are, first, that

'The Phantom of the Opera" part is merely one ~ssue in a large work and, secondly, that RUGS agent has given to Orbis a licence to Import the music for retail sale in Austraha

in 'The Musicals Collection".

I accept the evidence of Mr E.E.A. Phillips, the editor of Orbis, that it would not

be practicable for the respondents simply to omit the subject part from the collection.

'The Phantom of the Opera" promotes the next part, which features "Oliver". Mr Phillips	"Part 1, West Side Story", advertises 'The Phantom of the Opera" and the magazine for
deposed that the period of greatest sensitivity so far as readership loyalty is concerned
is during the sales of the first four issues. Intempuon with these issues, the sale of which is encouraged by the television advertisements, has the potential to affect the financial
viability of the entire series.

Similarly, h41 P.S. Bissett, whose company represents Orbis in Australia, gave this

"In my experience the key to a successful partwork senes a to maximise sales of the launch hues (in the uw of The Musicals CoUecuon Issues 1 and 2). The entire promotion of a panwork series is focused solely on the launch period. Continuity s alticaL If Issue 2 were to be unavailable, in my experience with partworks, tha would have an Btremely detrimental impact on the s u m of the serles. In my experience, when a member of the public commits to a partwork it expecu a complete series to be available. Were a pan as early in a series as Pan 2 to be unavlulable, this would in my experience jeopardise commitment to stay with the series. The high upfront mt of launching a pcutwork seriu is intended to be amortised over the full series. Tha will not happen if there Ls no commtment to the senes. Funhermore, it would lower the credibility of the publuher concerned and partworks as a form of publ~cation."

Evidence was given that the loss to Orbis, if the project did not go ahead, could exceed $4 million and that Orbis was committed to television advertising expenditure of more than $1 million, the recovery of which, in whole or in part, if the advertisements were cancelled, would depend on the exercise by the television stations of their discretion. On the other hand, the damage to RUG is not likely to be great, as a similar dispute

between RUG and Orbis was settled for the United Kingdom, the Republic of Ireland,

New Zealand, Singapore, Malaysia, Malta and South Afnca, but not for Australia, by the

payment to RUG of !255,000. That is a relatively small amount in relation to the loss

which Orbis might suffer should the injunction issue.

Indeed, it is difficult to see that the sale of part 2 of the partwork will be likely to

cause any loss to RUG. Part 2 will be published as a product of Orbis and as part of

The Musicals Collection. It is published by a reputable publisher of partworks. The

Musicals Collection will, one would think, be more likely to encourage people,

particularly young people, to take an interest in musicals than the contrary.

- l0 -

In my opinion, the possible harm to Orbls if an injunction were to lssue will so

outweigh the possible harm to RUG should an injunction be refused, that there is no
reasonable basis for the grant of an injunction.

.."

For these several reasons the motion for an interlocutory injunction will be

dismissed with costs.

I certitj that this and the 9 precedmg pages

are a true copy of the	judgment herein of
the Honourable Mr
Date:	1 July 1994

Counsel for the applicant:  Mr D. Catterns QC

Solicitors for the applicant:	Blake Dawson Waldron
Counsel for the respondents:	hh D.M. Yates
& Mr R. Alkadamani
Solicitors for the respondents:	Allen, M e n & Hemsley
Date of hearing:	1 July  1994
Date of judgment:	1 July  1994
Sonia,

The attached Corrigenda is self-explanatory.

The reason I am attaching a completely new hard, signed copy of the decision, together with the Corrigenda, is because, aside from the amendments to be made - one of the characters, the "E'; doe6 not appear on the page it is meant to appear on.

You have the disk. Any questions, just contact me on

x8480.

Thank you.