Trade Practices Commission v QDSV Holdings P/L

[1994] FCA 1021

TRADE PRACTICES COMMISSION v. QDSV HOLDINGS PTY LIMITED trading as BUSH
FRIENDS AUSTRALIA
No. G651 of 1994
FED No. 1021/94
Number of pages - 12
Trade Practices
(1994) 128 ALR 551

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
DAVIES J

CATCHWORDS

Trade Practices - consumer protection - whether label contained misleading or deceptive representations as to the country of origin of the goods - meaning of "made in Australia" - meaning of "component" - importance of relative size of representations appearing on the label - consideration of substantial transformation test under customs legislation.

Trade Practices Act 1974 (Cth), ss 52, 53 (eb)

Thorpe v CA Imports Pty Limited (1990) ATPR paras 40-996
Netcomm (Australia) Pty Limited v Dataplex Pty Limited (1988) 81 ALR 101
Anheuser-Busch Brewing Association v The United States 207 US 556 (1908)
Trade Practices Amendment (Origin Labelling) Bill 1994 (Cth)
Rules of Origin in International Trade, Vermulst, Waer and Bourgeois eds, 1994

HEARING

SYDNEY, 9-10 November 1994
#DATE 16:12:1994
#ADD 15:5:1995

Counsel for the Applicant: I D Faulkner

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondents: P W Neil

Solicitors for the Respondents: Chrysiliou Moore Chrysiliou

ORDER

THE COURT DECLARES THAT
The cardboard labels appearing in exhibits A and C are in breach of ss 52 and 53 (eb) of the Trade Practices Act 1974 (Cth)
and ORDERS THAT:
(1) The respondent, whether by itself its servants,

agents or otherwise, be restrained from selling or distributing its toy koalas if the infringing labels are attached to or associated therewith.

(2) The applicant have leave to apply for any

further order as may seem meet.

(3) The respondent pay the costs of the proceedings.

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

JUDGE1

DAVIES J In this application, the Trade Practice Commission ("the Commission") seeks orders under s 80 of the Trade Practices Act 1974 (Cth) ("the Act") seeking to restrain labelling which is alleged to be misleading or deceptive or likely to mislead or deceive in breach of s 52 of the Act and which is alleged to make a false or misleading representation concerning the place of origin of goods in breach of s 53(eb) of the Act.

1. The respondent, QDSV Holdings Pty Limited, which trades under the name "Bush Friends Australia", is a wholesaler of soft animal toys. In early 1994, QDSV commenced to supply a range of toy animals, in respect of which it used what is alleged to be an unregistered mark, "Aussie Born". One of these toys is a koala, which is sold in several sizes. Exhibit A, a koala some 17 cm high, is made of soft synthetic plush fabric which is grey in colour, but the belly and the front parts of two fluffy ears are white. Its claws are of black felt, it has black and brown eyes on a white felt background and a large black nose. The koala is in a sitting position, its limbs outstretched and its head turned slightly upwards and to the left.

2. When the koalas were first marketed, a cardboard label was stapled to the left ear. On the outward side of the tag was a picture of a koala on a green background and in large letters the words "AUSSIE BORN". On the other side, this description appeared:-
   

* The AUSSIE

BORN range is made in The Hunter Valley, Australia by BUSH FRIENDS AUSTRALIA (a wholly owned Australian Company) and meets all international child safety standards. The major component of the manufacturing process uses Australian labour and materials. In order to maintain the highest quality and value, some elements (including the casings) have been purchased abroad. BUSH FRIENDS AUSTRALIA - WORLD WIDE GUARANTEE

If you are not entirely satisfied with your purchase, you may return it

for refund or exchange to BUSH FRIENDS AUSTRALIA, 96 Gloucester Street, Sydney NSW 2000. Phone: [phone] AUSTRALIAN MADE *

1. The parties are in agreement that this label was misleading. In September 1994, QDSV advised the Commission that it would no longer use that label. Accordingly, in relation to that label, it is sufficient that there be a declaration of breach. No further use of the label is threatened.

2. The second label has on one side a depiction of a koala on a yellow background and the words in large letters "AUSSIE BORN". Against those letters in small print are the letters "TM". Evidence has been given, which I accept, that the use of those letters is an indication to the public that the term "AUSSIE BORN" is used as a trademark.

3. On the other side of the label is this description:-
   

The

AUSSIE BORN

range from the Hunter Valley, Australia is a product of BUSH FRIENDS AUSTRALIA (a wholly owned Australian Company) The major component of the manufacturing cost is in Australian labour and materials. In order to maintain the highest quality and value, some elements have been purchased abroad. Gentle Machine Wash BUSH FRIENDS AUSTRALIA - WORLD WIDE GUARANTEE

If you are not entirely satisfied with your purchase, you may return it

for refund or exchange to BUSH FRIENDS AUSTRALIA.

Level 5, 62 Pitt Street, Sydney NSW 2000. Phone: [phone]

MADE IN AUSTRALIA WITH SOME IMPORTED COMPONENTS

1. The koala was designed by QDSV. The fur fabric is produced in China. It was selected by Mr Bruce Arrata, a director of QDSV, who went to China for that task. The fur fabric is purchased by another firm in China which produces a wide range of soft toys for QDSV. Many of these toys are fully manufactured by the firm in China.

2. However, in the case of the "Aussie Born" koalas, the Chinese firm cuts the fur fabric into shape and forms holes therein so as to enable the eyes and the nose to be inserted later. The firm then sews the pieces together, leaving the head and torso separate. The head is comprised of six pieces, there being a grey and a white piece for each of the ears, a piece for the back of the head and a piece for the front of the head. The torso is made of two pieces for the back and a piece for the front, an additional piece for each of the bottom legs and two pieces for each of the upper legs, a total of 9 pieces. Into the upper and lower legs are sewn fabric claws. There is also a piece of velcro attached to the upper limbs so that they can be joined together and there is sewn into the koala a tag which, on one side, shows "Bush Friends Australia" and, on the other, "All new materials, Gentle Machine Wash Reg Design Applied". The reference to the design application is false but we are not concerned with that.

3. When the process of sewing has been completed, the head and torso parts are inside out and it is in that form that they are sent to QDSV in Australia.

4. The eyes and nose of the koala are produced in Hong Kong or Taiwan. The appropriate number of noses and eyes are usually sent by the Chinese firm to QDSV in Australia together with the head and torso; but QDSV also keeps a stock of eye and nose parts. The eyes, the nose and the fittings for them are invoiced separately from the sewn skins.

5. The koalas are completed at a factory at Dungog, New South Wales, which QDSV has established. The casings are turned the correct way and the noses and eyes fitted and clipped into position at the factory itself. The heads and torsos are then given out to piece workers who, at their own homes, insert the filling and sew the heads and torsos together and make any stitching repairs as may be required. The piece workers also brush each toy. Each koala is given a final inspection in the factory and the labels are then affixed by a plastic staple to the left ear.

6. The parties have agreed on the following description of the manufacturing processes carried out in Australia:-
   

"a) The torso casing is turned from inside out to right side out and shaken and brushed to remove excess fluff. b) The arms and legs of the casing are pushed out and extended. c) All seams are checked for sewing faults and necessary repairs made by hand.

d) The head casing is turned from inside out to right side out and the ears are extended.

The seams are checked and repaired if necessary. e) A check is made to see that the eye holes and nose aperture are in the correct positions which involves checking the holes and apertures against a chart for correct sizing. f) The correct nose and eye size is selected from the Respondent's size chart. The eyes are then affixed to the desired position in the eye apertures by a manually operated machine after a piece of white material has been correctly placed at the back of each eyeball. g) The nosepiece is then affixed to the nose aperture by a similar process.

h) The pressure for the eyes is different to the pressure for the nose and the pressure must be set at a level that does not break the eye or nose but is hard enough to push the locking washer over the locking ridge on the back of the eye and nose. In this manner the locking washers are utilised in the process for affixing the eyes and noses to the face of the toy. It is necessary to check the pneumatic pressure on the locking machine which affixes the eyes and nose to prevent damage to them.

i) Thereafter the filling of the casings is commenced, starting at the extremities, that is the hands and feet. The filling process is carried out by hand. j) The filling continues with the stuffing of the head and the nose area to achieve the correct shaping of the face. A little is added at a time and is pushed into place with a wooden rod.

k) The filling used is a 70-30% blend of silicone coated synthetic material which is purchased by the Respondent in Australia.

l) After filling is completed the head is sewn on to the torso of the casing. The head must be positioned so that it fits in proper alignment with the torso. The position of the head varies according to the particular design and look desired for the toy. In some instances the head is sewn at a 45 degree angle while in other instances it is sewn at a 90 degree angle. The sewers are familiar with variations of designs and fit the head in the appropriate position to accord with the design brief. The first stitch is positioned at the back of the head and is double knotted to anchor the head in the correct position. The stitching then continues around the neck region in a blanket stitch pattern and the tension is pulled tightly on every third or fourth stitch. It is necessary to place some extra fill into the back section of the neck to properly support the head and the final stitching is then completed with a double knot to avoid any unravelling of the stitching.

m) The inner ears are then hand stitched to the side of the head so that the ears sit forward and give a proper 'koala' appearance.

n) It is not easy to create an authentic koala look. In some instances a stitch is made from under the chin area of the toy to the bottom of the left eye and then returned to under the chin area and up to the right eye and again returned to under the chin area.

o) Thereafter the toy is hand brushed all over using a claw tooth steel brush. A steel spike is often used on the seams to pull out small pieces of fabric which have been caught in the seams and which give an untidy appearance. p) The toy is then the subject of a final inspection process during which the production manager examines each toy, checking the general appearance, the consistency of the filling and the contours of the toy follow the design and pattern. It is checked to ensure that the stitching is neat and well concealed and tied off tightly. q) The label is then affixed by a plastic staple to the left ear in a way which ensures that the plastic earplug goes completely through the ear and the tag does not cover the face of the toy. The labels are triangular in shape so as to not conceal the appearance of the koala's facial features. The labels are affixed so that the 'Aussie Born' side of the label faces outwards. r) The toys are then hand packed into cartons to comply wit

(sic) particular customer orders."

1. As can be seen, all the materials, except the filling, are overseas materials. The fur, the eyes, the nose, the claws, the velcro and the "Bush Friends" tag are overseas products.

2. The Managing Director of QDSV, Mr G.B. Hodge, gave evidence that the average cost of production of the koalas was $10.19 per toy and that:-
   

"This amount is made up of the following

(i) $1.65 in respect of imported materials

(ii) $1.28 in respect of money expended in Australia other than on labour or overhead

(iii) $ 7.26 in respect of wages directly applicable to the toy and a proportionate share of overheads allocated to the toy

3. Of the average production cost of $10.19, 17% is the amount paid for the imported material and 83% is the average local content component."

1. It is, I think, unfortunate that an independent accountant was not called to investigate the books of QDSV and to give a breakup of costs. In respect of items (ii) and (iii), Mr Hodge included such matters as the cost of the label, which is irrelevant as the description in the label does not refer to the label itself. Moreover, all overheads were included, including the cost of effecting sales. Also included in the Australian costs were the costs of the employee who travels to and from China constantly to supervise the production being undertaken by the Chinese firm. Included also were the costs of any trip undertaken to China by the directors of QDSV.

2. I think that I need not attempt to work out a precise figure for myself. It may be noted that, in the Trade Regulation Reporter, para 7775 at 11,442, there is a note of advisory opinions in the United States in which it was thought that, if 23% of the cost of a computer was accounted for by foreign parts, it would be improper to designate the computer as "Made in USA" and, if 20% of the component parts were imported, it would be improper to label a product as manufactured by a particular American company. I do not rely upon these indications as authorities, but simply as indications that the relative costs incurred in relation to what was done in China and what was done in Australia in the present case are in the range where, if the case is such as to make the finding appropriate, it could be held that the words "Made in Australia" were misleading.

3. Of course, a difficulty in using a comparison of this type is that the wages in China are so much lower than those in Australia. Accordingly, a mere comparison of cost does not accurately indicate the extent of the work done in one country as against that carried out in the other.

4. In Thorpe v CA Imports Pty Limited (1990) ATPR paras 40-996, Sheppard J held that the labelling of a toy koala as "Made in Australia" was misleading. At 50,966-7, Sheppard J said:-
   

"It seems to me that there were three essential steps in the process of manufacture that is in question. In saying this, I agree with submissions made by counsel for the prosecutor that it is not appropriate to include the designing of the koala bears as a step in their manufacture. Many articles are designed in one country, but made in another. The first essential step was the cutting and sewing of the material to form the casing, the second, the filling of the casing, and the third, the further sewing and checking procedures. It is true that, of these, only the first was carried out in Korea, but in my opinion that was the step which transformed the material which was used into the essential shape and appearance of a koala bear. It is equally true that each of the three steps was an essential element in the production process. Without any one of them, no koala bear would have been produced. So it might be just as wrong to say that the bears were made in Korea. Only a statement such as I have formulated above correctly describes the position. As Jenkinson J pointed out in the Wes Lofts case (Korozynski v Wes Lofts (Aust) Pty Ltd (1986) 10 FCR 348), a statement such as 'Made in Australia' is an historical statement. The expression suggests at least substantial manufacture in Australia. In my opinion the fact that the casings were cut and sewn in Korea prevents the statement from being one which can be correctly applied to the articles in question here."

1. It should be noted, however, that in that case, the work done in Korea completed the koalas to a much greater extent than occurs in the present. The facial features were completed, and the ears, the legs and the body were all sewn together in Korea. When, the casings, which were inside out when imported, were turned in Australia, there was in appearance a bear, though a bear which lacked filling.

2. In the present case, the imported components were too separate and incomplete to have that character.

3. In Netcomm (Australia) Pty Limited v Dataplex Pty Limited (1988) 81 ALR 101, Gummow J discussed the words "Made in Australia" in this way, at 106-7:-
   

"What then is meant by a false or misleading representation concerning the place of origin of goods? 'Origin' directs attention, consistently with the Oxford English Dictionary meaning, to the beginnings of existence of the goods with reference to a source or cause of that existence; the concept is that of beginning regarded in connection with its cause. In s 4(1) of the TP Act, 'goods' is defined as including such sophisticated items as ships and aircraft as well as primary produce such as minerals and crops. With minerals or crops, it may be quite easy to state what is their place of origin and so to characterise representations concerning that place of origin as being or not being false or misleading. The concept of 'place of origin' will present difficulties where sophisticated articles derive their value and character as articles of commerce by various circumstances involving design and manufacture. There is then more likely to be a complex of integers constituting the origin of those articles. The present is such a case. To say of goods that they were made in Australia plainly is to make a statement concerning their place of origin. The making of goods involves the steps and procedures which preceded and resulted in the formation or composition of the goods: cf Korczynski v Wes Lofts (Aust) Pty Ltd (1986) ATPR 47-206 at 47,212. When used in relation to equipment, such as the DPX-224 modem, and without a qualifying context to limit it, the expression 'Made in Australia' suggests that the steps in the composition or construction of the item, including the design work which makes it the technically proficient equipment it is promoted to be, were taken in Australia. The expression will, depending on the context, amount to a representation, and depending on the facts the representation may be false or misleading."

1. In the view of Gummow J, the words "Made in Australia" make a representation as to the place of origin and a statement which concerns the steps and procedures which preceded and resulted in the formation or composition of the goods. His Honour distinguished such a statement from "built in Australia" which his Honour, at 107, considered not to relate to the origin in the sense of design and manufacture but rather to "the fitting together of separate parts".

2. Gummow J's exposition was not followed by the draftsman of the Trade Practices Amendment (Origin Labelling) Bill 1994. The Bill provides that the description "Made in Australia" may not be used unless "the goods acquired their essential character or qualities in Australia", of which circumstance the following examples are given in the Notes accompanying cl. 65VE:-
   

"(1) The goods were given their essential function, shape or appearance in Australia.

(2) The major processes which transformed the goods from their component parts into the finished goods happened in Australia.

(3) If the goods are promoted as having certain characteristics or functions, the goods were given the characteristics or functions in Australia."

1. The approach taken in the Bill is similar to that which has been adopted in relation to drawback and preferential tariff provisions of customs legislation. In Anheuser-Busch Brewing Association v The United States, 207 US 556 (1908) Mr Justice McKenna, delivering the opinion of the Court, said at 562:-
   

"Manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary, as set forth and illustrated in Hartranft v. Wiegmann, 121 U.S. 609. There must be a transformation; a new and different article must emerge, 'having a distinctive name, character or use.'"

1. The substantial transformation test has had wide application in the United States notwithstanding that, as Joseph A. LaNasa III has observed in 34 Harvard International Law Journal 381 at 385:-
   

"The substantial transformation standard gives customs officials the freedom to apply the standard on a highly subjective, case-by-case basis that often results in seemingly arbitrary decisions. In reviewing these origin determinations, courts have had a great deal of trouble discerning the point at which a processing operation causes a product to be substantially transformed, and as a result, they have developed a variety of inconsistently applied criteria. Not only have the courts failed to develop a uniform set of criteria for substantial transformation, but they have also applied the test inconsistently in similar situations depending upon the purpose of the determination."

1. The International Convention on the Simplification and Harmonization of Customs Procedures 1973 (the Kyoto Convention) adopted the concept of substantial transformation, though it modified it by the principle of change of tariff heading, as did the US Canada Free Trade Agreement 1988. See G N Horlick and M A Meyer in Rules of Origin in International Trade, Vermulst, Waer and Bourgeois eds, 1994, at 404.

2. I mention these matters so as to emphasise that the substantial transformation test has particular relevance for customs purposes when it is necessary to decide whether a particular manufacturer or importer should obtain the benefit of a drawback or a tariff preference in the circumstance that parts of the manufacturing process have occurred in more than one country.

3. In Australia, as is pointed out by K Steele and D Moulis in Rules of Origin in International Trade at 200, Australian rules of origin did not originate from a need to define the countries from which all goods originated, but rather as specifications of the conditions under which tariff preference would be accorded to particular goods. The current provisions, ss 153A-153T of the Customs Act 1901 (Cth), certainly cannot be regarded as a relevant guide to the present issue.

4. Even in the United States, where the substantial transformation test is firmly established, matters arising in the context of trade regulation may be considered under somewhat different tests. Thus, the Trade Regulations Reporter, when dealing with the subject of misrepresentation, states at para. 7775, p 11,422, inter alia:-
   

"Cases regarding misrepresentation of origin of products are legion. Issues range from calling domestic products imports and vice versa to use of names of places where products were not made in the product name. Symbols representing origin and language have been attacked. Affirmative disclosure might permit use of some of the challenged appellations. Special care must be taken with respect to products of varied origin, such as perfumes compounded in the United States containing oils imported from France, or products 'made in the U.S.A.' containing foreign parts. For example, although more than 50% of the parts of a product are of domestic origin, or more than 50% of total cost is the result of domestic labor, it may nevertheless not be unqualifiedly represented as 'Made in U.S.A.'"

1. I have already mentioned two of the examples which the paragraph gives.

2. I therefore approach the current issue by giving to the words used on the label their meaning in ordinary parlance, not the meaning which would be given by the application of the substantial transformation test, or its equivalent, the essential character test which appears in the Trade Practices Amendment (Origin Labelling) Bill. In my opinion, the ordinary meaning of the words "Made in Australia" is that enunciated by Gummow J in Netcomm.

3. I should say, however, that if the substantial transformation or essential character test were applied in the present case, I would hold that the component parts were transformed into a toy koala in Australia and that, prior to their transformation in Australia, they were merely component parts. In my opinion, the goods obtained their essential character as a toy koala in Australia. The skill exercised in Australia in filling the head and the torso, and in sewing the two parts together at the correct angle, was crucial to achieving the desired result.

4. Notwithstanding the wide application received by the concept of substantial transformation for the purposes of customs law, this is not the context in which the issue arises in the present case. The present issue is whether consumers in Australia would be misled or deceived or would be likely to be misled or deceived by the respondent's labelling and whether there has been a misleading representation in Australia as to the place of origin of the goods.

5. In my opinion, the subject toy koalas were manufactured partly in China and partly in Australia. This is not a case where certain parts which were produced for general sale in another country were purchased and imported into Australia and incorporated into a new product in Australia. The koalas were designed in Australia but were partly manufactured in China by a firm which was producing goods for QDSV and the production of which was supervised by an employee of QDSV.

6. In the course of the hearing, evidence was given that, if ingenuity were applied, the torso and/or the head could be converted to uses other than that of making a koala. That may be so, but the fabric was cut in China for the specific purpose of being made into koalas and it was there sewn together for that purpose. I did not find the evidence helpful.

7. It is clear that a significant part of the manufacturing process occurred in China. There is also the point that the components, in the sense of all the parts and materials save the filling, were produced overseas, in China or principally in China. But it is not necessary, or I think useful, in the present case to attempt to put a precise percentage upon the extent of the part played by China in the manufacture.

8. It is in this light that I turn to the second label. It may be noted that, on the reverse side of the label, the words "Made in Australia" are twice as large as any other words on that side of the label and very much larger than most of the words.

9. Size is important. The larger the print, the more it catches the eye. Even without his glasses, the trial Judge can read the words "Made in Australia" on that side of the label and also the words "Aussie Born" on the other side of the label; though he cannot read any other part of the label.

10. As a matter of strict theory, if words such as "Made in Australia" are misleading and deceptive, qualifying words which are added to render the message accurate should be in the same sized print, for the qualification is just as important as the description itself.

11. I consider that the words "Made in Australia", in the print size in which they appear, are misleading and deceptive. Only some of the manufacturing process, in the sense explained by Gummow J in Netcomm, occurred in Australia. A significant part of the manufacturing process occurred in China and most of the components were imported.

12. The next matter is the qualification contained in the words "with some imported components". The word "component" is ordinarily understood to be "a constituent part". See the Macquarie Dictionary, meaning 2. A consumer would take the term as referring to the materials making up the koala, such as the fur, the nose and the eyes. A consumer would be misled. Most, not some, of the components are imported.

13. A statement which appears after "Bush Friends Australia (a wholly owned Australian company)" is "The major component of the manufacturing cost is in Australian labour and materials." In the present case, the major component of cost in relation to materials is the cost of the imported materials. Moreover, the reference to Australian labour fails to direct attention away from the fact that there was substantial Chinese labour involved in the manufacture of the koalas and that labour in China is paid at a fraction of the rate of Australian labour. Again, the statement appears to me to be misleading and deceptive.

14. The next statement is "In order to maintain the highest quality and value, some elements have been purchased abroad." That is misleading in several ways because the word "element" in association with the word "purchased" would be taken to refer to parts and materials. Most, not some, of these were purchased abroad. Moreover, the reference to "some elements have been purchased abroad" misleads the consumer, for the fact is that the arrangements between QDSV and the Chinese firm involve the use of Chinese labour to undertake a part of the manufacturing process, a process which is supervised by an employee of QDSV. Persons reading the label would not understand that Chinese labour is used in the manufacture of the toy koalas and that this is done, not to maintain quality, but to reduce the cost.

15. The use of the trademark "Aussie Born" on the front side of the label enhances the impression given by the label that, apart from some imported components, the koala is an Australian product. Thus, the trademark adds to the misleading and deceptive nature of the label. I have not attempted to form a view as to whether the words "Aussie Born" would be misleading and deceptive absent the words "Made in Australia" on the reverse side of the label. The imputation arising from the mark could alter depending upon what was said on the reverse side of the label.

16. I am of the view that the second label misrepresented the origin of the goods. They were not made in Australia. They were made partly in China and partly in Australia. Accordingly there has been a breach of s 53(eb) of the Act.

17. Two other points were raised. It was said on behalf of QDSV that, if an injunction were to issue, the respondent would have to close its factory at Dungog and that the many persons which it employs there on a full or a part-time basis would lose employment. I understand the argument; but if the label is misleading, it should not be permitted. It would be unfair to the retailers of the koalas, to consumers and to other manufacturers and importers of competing toys that the respondent should be allowed to market its product in a misleading way.

18. Secondly, it was put on behalf of QDSV that the Australia Council had certified the use of the words "Made in Australia" for many products which were manufactured in a manner similar to that of the respondent's koalas. However, such evidence as there is before the Court shows that the material given to the Australia Council, when application was made for certification, did not disclose that there was to be an overseas manufacturing process equivalent to that which the respondent's product undergoes in China. Accordingly, I consider that this part of the evidence was not helpful. Nor did I gain assistance from the examples in evidence of names and packaging of the goods which suggest a connection with Australia. It is impossible to deduce from this evidence either that the advertising of other competitors is misleading and deceptive or that the labelling of the respondent is not.

19. For these reasons, I am of the view that the Commission should succeed in its application.

20. I shall make declarations that both labels were in breach of ss 52 and 53(eb) of the Act. There will be an injunction restraining QDSV from selling or distributing the toy koalas to which the infringing labels are attached. I shall reserve leave to the Commission to apply should the Commission seek any further order that QDSV recall such of the toy koalas with either of the labels attached as yet remain unsold to an ultimate consumer. The application should be supported by material providing evidence as to the feasibility of a recall, as to the number of toy koalas likely to be involved and as to the likely cost of the recall. Should the Commission seek a correctional advertisement, details of the advertisement, of its benefits and costs should similarly be given.

21. QDSV should pay the costs of these proceedings.