United Pacific Industries Pty Ltd v Madison Sports Pty Ltd

[1998] FCA 614

FEDERAL COURT OF AUSTRALIA

COPYRIGHT - infringement - interlocutory injunction - whether two-dimensional pattern on the external surface of a prototype is a work of artistic craftsmanship - whether prototype sufficiently original to support claim for copyright

PASSING OFF - elements of - whether respondent’s logo and packaging sufficiently distinguishes the respondent’s products from the applicant’s products

TRADE PRACTICES - misleading and deceptive conduct - protection of the public to be considered in granting injunctions

Copyright Act 1968 (Cth) ss 10, 32, 35
Trade Practices Act 1974 (Cth) s 52(1)

American Cyanamid Co v Ethicon Ltd [1975] FSR 101 referred to
Boots & Co Ltd v Approved Prescription Services Ltd [1988] FSR 45 considered
Burke & Anor v Spicers Dress Designs [1936] 1 Ch 400 discussed
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 referred to
Cuisenaire v Reed [1963] VR 718 referred to
Dillworth v Commissioner of Stamps [1899] AC 99 referred to
Erven Warnik v VVJ Townsend & Sons (Hull) Ltd [1980] RPC 31 applied
George Hensher Ltd v Restawhile Upholstery (Lancs) Ltd [1975] RPC 31 considered
NWL Ltd v Woods [1979] 1 WLR 1294 discussed
Radley Gowns Ltd v Kostas Spyrou [1975] FSR 455 referred to
Reckitt & Colman Products Ltd v Barden Inc [1990] RPC 341 applied

UNITED PACIFIC INDUSTRIES PTY LTD v
MADISON SPORTS PTY LTD & ORS
VG169 of 1998

FINKELSTEIN J
MELBOURNE
2 JUNE 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 169 of 1998

BETWEEN:	UNITED PACIFIC INDUSTRIES PTY LTD Applicant
AND:	MADISON SPORTS PTY LTD TREVOR VICTOR HOHNS and BRIAN DAVID CARMODY Respondents
JUDGE:		FINKELSTEIN J
DATE OF ORDER:		2 JUNE 1998
WHERE MADE:		MELBOURNE

THE COURT ORDERS THAT:

Upon the applicant and the applicant’s director, Maurice John Callinan each undertaking to pay to any party adversely affected by the interlocutory injunction such compensation (if any) as the Court thinks just, in such manner as the Court directs:

1. Until the trial of this proceeding or further order the first respondent, whether by itself, its directors, officers, servants or agents or otherwise howsoever, be forthwith restrained from promoting, offering for sale and selling those of its products which have the get up of the applicant’s Blue Thermoskin range of heat retainer products exemplified by exhibits MJC 30 to MJC 38 of the affidavit of Maurice John Callinan sworn 6 May 1998.

1. The costs of the application be reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 169 of 1998

BETWEEN:	UNITED PACIFIC INDUSTRIES PTY LTD Applicant
AND:	MADISON SPORTS PTY LTD TREVOR VICTOR HOHNS and BRIAN DAVID CARMODY Respondents
JUDGE:		FINKELSTEIN J
DATE OF ORDER:		2 JUNE 1998
WHERE MADE:		MELBOURNE

THE COURT ORDERS BY CONSENT THAT:

1. The issue of liability be determined separately from the issue of quantum, and that these directions deal only with the issue of liability.

1. The respondents file and serve their defence and cross-claim (if any) by 4.15 pm on 9 June 1998.

1. The applicant file and serve its reply and defence to cross-claim (if any) by 4.15 pm on 16 June 1998.

1. Each of the applicant and the respondents file and serve a list of discoverable documents by 4.15 pm on 23 June 1998 and permit inspection of those documents by 4.15 pm on 30 June 1998.

1. The applicant file and serve any affidavits in support of its application by 4.15 pm on 14 July 1998.

1. The respondents file and serve any affidavits upon which they intend to rely by 4.15 pm on 28 July 1998.

1. The applicant file and serve any affidavits in reply by 4.15 pm on 11 August 1998.

1. The respondents file any affidavits in reply in relation to its cross-claim by 4.15 pm on 14 August 1998.

1. The matter be adjourned for further directions to a date to be fixed.

1. The costs be reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 169 of 1998

GENERAL DIVISION

BETWEEN:	UNITED PACIFIC INDUSTRIES PTY LTD Applicant
AND:	MADISON SPORTS PTY LTD TREVOR VICTOR HOHNS and BRIAN DAVID CARMODY Respondents

JUDGE	FINKELSTEIN J
DATE:	2 JUNE 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

The applicant asks for interlocutory injunctions to restrain the first respondent from promoting, offering for sale and selling products that are referred to as heat retainers. The applicant relies on three causes of action to found the relief that it seeks: infringement of copyright in certain features of a knee heat retainer, a knee patella heat retainer and a shorts heat retainer, the tort of passing off and contraventions of s 52(1) of the Trade Practices Act 1974 (Cth) which provides: “A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.

A heat retainer is a close fitting elastic garment designed to cover various parts of the human body.  Its function is to retain body heat and to provide support for muscles, ligaments and tendons.  Heat retainers are used by sportsmen and sportswomen both to prevent soft tissue injuries and to assist in their rehabilitation.  They are also used by people recovering from injuries such as broken limbs and in the treatment of conditions such as arthritis and rheumatic pain.

A heat retainer is made from layered materials typically with an intermediate strip of thermally insulating material which is covered on the inner surface by a layer of wicking material that is glued to the insulating material and with the exterior surface covered by a non-absorbent material.  The seam joins must be extensible and this is usually achieved by joining the seams with a tape known as mausser tape.

The applicant manufactures and sells thirteen heat retainer products each for a different part of the body; for example a knee heat retainer, an ankle heat retainer, an elbow heat retainer and so on.  The products are marketed under the trade name “Thermoskin”.

Each of the applicant’s heat retainer products is available in two external colours, beige and royal blue.  This action is concerned with the royal blue products which the applicant refers to as its Blue Thermoskin range.  Each product in the Blue Thermoskin range shares certain characteristics: the inner surface wicking material is red, the exterior surface material is royal blue, the mausser tape joining the seams is horizontally striped in red, white and blue (or blue white and red dependent on the manner in which the machinist inserts the tape into the sewing machine) and all edges are overlocked with a red thread that matches the colour of the inner surface.  In addition each product carries a white logo which is comprised of the word “Thermoskin” and a stylised triple A.

The business of manufacturing and selling the Thermoskin range of products was established by Thermoskin International Medical Pty Ltd (Thermoskin International) in about 1984.  The applicant acquired the business in March 1991 from Johnson & Johnson Australia Pty Ltd who had previously purchased the business from Thermoskin International.

Shortly after it acquired the business the applicant decided to improve the quality of one heat retainer in the range, the knee heat retainer, and to add another heat retainer, a shorts heat retainer, to the range of products available for sale.

The existing knee heat retainer was cylindrical and made from a single piece of layered material with the unsatisfactory consequence that when it was worn the front would move on the knee and the rear would bunch up when the knee was in a bent position.  Mr Callinan, the executive director of the applicant, thought those difficulties could be overcome if the knee heat retainer was made from three sections of material joined horizontally to produce a slightly bent shape to follow the shape of the knee.  In about March 1991 Mr Callinan instructed an employee of the applicant, Ms M Hajko, to make up a prototype.  He told her to make the prototype using the colours of the Blue Thermoskin range and he also instructed her to use the red, white and blue mausser tape to join the horizontal seams.  The prototype was made, tested and then the new product was introduced into the range.  A short time later, probably in about April 1991, Mr Callinan designed a variation to the new knee heat retainer the variation being the introduction of a circular opening in the middle section where the patella would be located to provide radial support for the patella.  He again instructed Ms Hajko to make a prototype.  A prototype was made and the product, known as the knee patella heat retainer, was also added to the range.

The shorts heat retainer was designed principally for use by football players.  It is not clear who designed the product but I will assume that it was Mr Callinan.  Mr Callinan says that in March or April 1991 he instructed Ms Hajko to make a prototype of a shorts heat retainer out of the material used for the Blue Thermoskin range and, as with each other product in that range, to use the red, white and blue mausser tape to join the seams of the short.  The shorts heat retainer was added to the range shortly thereafter.  Changes were made to this product in 1992 and in 1993.  The first change was the incorporation of a dark coloured gusset which was joined to the short by the red, white and blue mausser tape and the second change was the incorporation of a dark coloured waist strap, the colour matching that of the gusset.  The incorporation of the waist strap required an additional strip of mausser tape to be applied to the short horizontally and immediately below the location of the waist strap.

Since 1991 the Blue Thermoskin product range has been widely promoted by the applicant.  Products in the range are worn by well known sportsmen and sportswomen.  They are worn by rubgy league players who play in competitions that are shown on television.  They are worn by athletes who compete at the Olympic Games and the Commonwealth Games and by rowers who participate in the World Rowing Championships.  These sporting activities are also shown on television.  Players in the National Basketball League wear products in the Blue Thermoskin range.  Participants in a television series called the “Gladiators” also wear these products. 

The applicant sells its products principally to retail outlets such as pharmacies, medical clinics and sporting goods stores.  By far the largest segment of the market are pharmacies who take approximately eighty five per cent of the products sold by the applicant.

The first respondent is a wholesaler and distributor of a wide variety of sporting goods.  In 1994 it was appointed as the exclusive distributor in Queensland of the applicant’s heat retainer products.  That distributorship was terminated in October 1997. 

In about February 1998 the first respondent commenced selling nine heat retainer products, including a knee heat retainer, a knee patella heat retainer and a shorts heat retainer, each of which is included in the applicant’s range of products.  In appearance the first respondent’s heat retainers are in all respects but one the same as those manufactured and sold by the applicant.  The one difference between the applicant’s heat retainers and those sold by the first respondent is that the first respondent’s products do not bear the applicant’s logo but have printed on them in the same location as the applicant’s logo the first respondent’s logo which is constituted by a stylised letter M that incorporates the word ‘Madison’.

For reasons that will become apparent it will not be necessary for me to express any concluded view on whether the applicant has made out a case for infringement of copyright at least to the standard required for an interlocutory injunction, namely whether there is a serious issue to be tried: American Cyanamid Co v Ethicon Ltd [1975] FSR 101; Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148. However, in deference to the detailed arguments that were put on this aspect of the case, it is appropriate to set out the tentative views that I have reached.

By s 32 of the Copyright Act 1968(Cth) copyright subsists in an original artistic work and by s 35 it is the author or the employer of the author of that work who is the owner of the copyright. “Artistic work” is defined in s 10 to mean:

“(a)     a painting, sculpture, drawing, engraving or photograph, whether the       work is of artistic quality or not;

(b)a building or a model of a building, whether the building or model is of artistic quality or not;  or

(c)a work artistic craftsmanship to which neither of the last two preceding paragraphs applies;”

The applicant says that it is the owner of the copyright subsisting in three original artistic works being “the features of two dimensional pattern or ornamentation constituted by the combination of a fabric, colour and a stripe applied to (three) product(s), the said stripe comprising contiguous red, white and blue stripes, wherein the stripe is applied at particular locations on the fabric and the fabric is of blue colour and makes up the external surface of the product(s)” the three products being the knee heat retainer, the knee patella heat retainer and the shorts heat retainer.  Although not clear from the pleadings it soon became apparent during the course of submissions that the claimed copyright was in respect of the external surface of the prototype for each of the three products.

The reason the applicant asserts that it is the owner of the copyright that subsists in works of two dimensional form is to be found in ss 74 to 77 of the Copyright Act.  Shortly stated, the effect of those sections is that if an artistic work is applied industrially then the only protection allowed in respect of that work is under the Designs Act 1906 (Cth).  However,
ss 74 to 77 do not apply to an artistic work that is a design consisting solely of features of two-dimensional pattern or ornamentation applied to a surface of an article.

The two dimensional pattern or ornamentation constituted by the external surface of each of the three prototypes will be an artistic work only if it is a work of artistic craftsmanship.  This is because it does not fit within any other limb of the definition of artistic work and, as I have said, that definition is exhaustive of the works that may be artistic works: compare Dillworth v Commissioner of Stamps [1899] AC 99 at 105.

The meaning of the expression “work of artistic craftsmanship” has been considered in a number of cases including the decision of the House of Lords in George Hensher Ltd v Restawhile Upholstery (Lancs) Ltd [1975] RPC 31. Before turning to that case it will be convenient to consider an earlier English decision, Burke v Spicers Dress Designs [1936] 1 Ch 400. The facts in Burke are remarkably similar to the facts presently under consideration and if that case was correctly decided it would lead to the conclusion that the applicant’s claim for copyright in the pattern or ornamentation constituted by the external surface of the prototypes would fail.  However certain aspects of what was decided by Clauson J in Burke have been doubted in later decision (see George Hensher in the Court of Appeal [1975] RPC at 49 and Radley Gowns Ltd v Kostas Spyrou [1975] FSR 455) and Laddie, Prescott & Vitoria state in their text “The Modern Law of Copyright and Designs” (2nd ed) Vol 1 at 209 fn 3 that the case is only cited to be ignored. Be that as it may, I propose to say something about Burke not only because of its similarity to the present case but also because it does provide some assistance when considering the issues raised by the copyright claim.

In Burke the plaintiff company claimed copyright in a frock on the basis that it was a work of artistic craftsmanship and thus within the definition of “artistic work” in s 35 of the Copyright Act 1911 (UK).  The frock had been designed by Ms Margo Burke but was made up by an employee of the company from the design prepared by Ms Burke.  The defendant, who had copied the frock, argued that unless the art and craft required to make the frock originated from the same mind the frock could not be an original work of artistic craftsmanship.  Clauson J agreed.  However, his Lordship went on to say (at 408):

“I can concede it possible that Ms Burke might design a frock and make it all herself, and if she did that I can well understand she might be the author of an original work of artistic craftsmanship, but that is not what has happened in this case.  I do not want it to be assumed that, even so, I should feel able to hold that a lady who designed a frock and made it all herself was necessarily entitled to copyright.  The point is not one which it is necessary for me to decide.  It must, however, be borne in mind that the meaning of the term “artistic” as indicated in the Oxford English Dictionary, is that which pertains to an artist.  An artist is defined in the same dictionary as: ‘one who cultivates one of the fine arts in which the object is mainly to gratify the aesthetic emotions by perfection of execution whether in creation or representation.’  Does a designer who herself designs and makes a frock cultivate one of the fine arts in which the object is mainly to gratify the aesthetic emotions by perfection of execution whether in creation or representation?  A possible view is that what she does is merely to bring into being a garment as a mere article of commerce.”

In both George Hensher in the Court of Appeal and Radley Gowns it was noted that
Clauson J had expressed no final opinion on whether a dress, designed and made up by the same person, could be a work of artistic craftsmanship.  Further, in George Hensher, a case that was concerned with the subsistence of copyright in prototype chairs and settees that were designed by one person and made up by another, the Court of Appeal suggested that if it could be shown that the person who had made the prototypes had absorbed the ideas of the person who had designed them than the person who made the prototypes might be the sole author of the works: see also Radley Gowns at 466. Here, however, the evidence does not suggest that Ms Hajko absorbed any of the ideas of Mr Callinan. On the contrary the evidence suggests that she merely did what she was told to do.

The expression “work of artistic craftsmanship” was, as I have said, considered by the House of Lords in George Hensher.  The question that arose for determination in that case was whether the prototypes which served as models for a new range of furniture to be manufactured by the appellant were works of artistic craftsmanship.  It appears that the parties argued the case on the assumption that the prototypes were works of craftsmanship and the only matter that was in dispute was whether they were artistic works.  Unfortunately, the Law Lords did not adopt a uniform approach to the question raised and some of their Lordships even doubted whether the prototypes were works of craftsmanship.  The following passages from the speeches of the members of the House highlight the differences in approach.

Lord Reid said (at 53-54):

“A work of craftsmanship suggests to me a durable useful hand made object and a work of artistic craftsmanship suggests something, whether of practical utility or not, which its owner values because of its artistic character.
...
I think that by common usage it is proper for a person to say that in his opinion a thing has an artistic character if he gets pleasure or satisfaction or it may be uplift from contemplating it.
...
It is I think of importance that the maker or designer of a thing should have intended that it should have an artistic appeal but I would not regard that as either necessary or conclusive.  If any substantial section of the public genuinely admires and values a thing for its appearance and gets pleasure or satisfaction, whether emotional or intellectual, from looking at it, I would accept tat it is artistic although many others may think it meaningless or common or vulgar.”

Lord Morris said (at 57):

“I consider that in its place in the phrase “work of artistic craftsmanship” the word “artistic” will be well understood.  As a word it can stand on and by its own strength.  It needs no interpretation.
...
In deciding whether a work is one of artistic craftsmanship I consider that the work must be viewed and judged in a detached and objective way.  The aim and purpose of its author may provide a pointer but the thing produced must itself be assessed without giving decisive weight to the author’s scheme of things.  Artistry may owe something to an inspiration not possessed by the most deft craftsman.
...
So I would say that the object under consideration must be judged as a thing in itself.  Does it have the character or virtue of being artistic?”

Viscount Dilhorne said (at 62):

“The phrase “works of artistic craftsmanship” is made up of words in ordinary use in the English language.  Unless the context otherwise requires, they must be given their ordinary and natural meaning.  I can find nothing in the context to require that they should be given a different meaning from that.

So in my view, it is simply a question of fact whether a work is one of artistic craftsmanship.”

And finally Lord Kilbrandon said (at 72):

“Whether a given object is a work of artistic craftsmanship can be posed as a question of fact, but only after the meaning of the word “artistic” has been determined;  what is that meaning is, is a question of law, since it involves a decision of what Parliament meant by the word Parliament used.  I do not believe that it is possible, as matter of law or of exegesis, to arrive at a comprehensive definitive interpretation of such a familiar English word, so as to be armed with a test which will enable one, by the application of it, at a glance, to exclude all that does not properly fall within the scope of the simple word itself.  It is, indeed, seldom that a simple word can, by translation into some easier or more difficult phrase, be rendered the more capable of furnishing such a test.”

As a result of George Hensher I think that it is arguable that artistic craftsmanship is involved in executing the design for and making up a prototype heat retainer at least in the case where both the design and the making up is undertaken by one person or where the person who makes the prototype has absorbed the idea of its design from some other person.  In suggesting that the point is arguable I have assumed that making up the prototypes requires special skill and knowledge of a type employed by an artisan: see Cuisenaire v Reed [1963] VR 718 at 729.

However, in this case the applicant does not claim copyright in the prototypes for the three heat retainers.  It only claims copyright in the two dimensional external surface of each prototype.  During the course of his submissions I suggested to Mr Hess, counsel for the applicant, that there might be some difficulty in accepting the notion that whilst each prototype might be a work of artistic craftsmanship it was also possible to isolate the external surface of each prototype as a separate work of artistic craftsmanship.  Mr Hess said that I should approach the matter from a metaphysical point of view.  No doubt Mr Hess was inviting me to apply abstract reasoning to his submissions.  On the other hand, the proposition put by him might be described as overly subtle or too abstract.  According to the Oxford English Dictionary one meaning of metaphysical is: “fanciful, fantastic, imaginary.”.  While I will not go so far as to describe the argument as fanciful etc my impression is that it is not correct to say that the creation of one prototype can result in two separate works of artistic craftsmanship one of which is constituted by the external surface of the prototype and the other being the prototype excluding its external surface.

Let me return to the example of the Ms Burke’s frock that might, at least according to modern authority, constitute a work of artistic craftsmanship.  Can it also be said because the frock is made of separate components such as a sleeve, a collar, a bodice and so on that each separate component is a work of artistic craftsmanship for the purpose of attracting copyright protection?  I think not.  The reason is that the frock is a single work and it is that work in respect of which copyright will subsist if it subsists at all.  On the other hand the frock may have had printed on it a design and that design may itself be the subject of copyright.  Here the argument, so it seems to me, is that the pattern constituted by the external surface of each prototype should be regarded as the equivalent of the design printed on the frock.  I doubt whether this can be so.  It assumes that the craftsmanship employed to make up each prototype has led to the creation of two works whereas it appears to me, having regard to the articles here under consideration, that only one work has been created.  At all events, even if I was of the view that it was arguable that copyright did subsist in the external features of the prototypes I do not regard it as sufficiently arguable to warrant the grant of equitable relief: compare NWL Ltd v Woods [1979] 1 WLR 1294 at 1307 where Lord Diplock said that where the grant of an interlocutory injunction would have the practical effect of putting an end to an action, as seems possible here, the degree of likelihood that the plaintiff will succeed in establishing his right to an injunction at trial is a factor to be brought into the balance in deciding whether to grant an interlocutory injunction.

There is another difficulty with the copyright claim which would also lead me to conclude that injunctions should not be granted.  The difficulty is that the evidence tends to suggest that there is little, if any, originality in the external features of the prototypes to support a claim for copyright.  Mr Callinan said that when he decided that the three prototypes were to be made up he also chose the colour of the fabric from which they should be made, that he selected the red, white and blue mausser tape as the tape to join the seams and that he chose the location for the application of that tape.  In a sense all of that is no doubt true.  But in substance all that occurred was that Mr Callinan instructed Ms Hajko to make the prototypes from the same material and with the same mausser tape as was being used for the existing Blue Thermoskin range.  Thus it seems to me that neither Ms Hajko nor Mr Callinan expended any skill, knowledge or labour in the selection of the colour for the prototypes or in the selection of the tape to be used to join the seams.  The selection of those features was dictated by the fact that the new products were to be added to an existing range of products and were to follow the external appearance of that range in all respects apart from the actual shape of each prototype.  This is equally true of the location of the mausser tape which was to be applied to every seam.

I can now turn to the passing off claim.  The elements that must be established to make out a case for passing off were not in dispute before me.  They are to be found conveniently stated in two decisions of the House of Lords, Erven Warnik v VVJ Townsend & Sons (Hull) Ltd [1980] RPC 31 and Reckitt & Colman Products Ltd v Barden Inc [1990] RPC 341. I will content myself with citations from the speeches of Lord Oliver and Lord Jauncey in Reckitt& Colman. There Lord Oliver said (at 406):

“First, he must establish a good will 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’ (where it consists simply as 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 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 ... .  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.”

Lord Jauncey said (at 417):

“It is a prerequisite of any successful passing-off action that the plaintiff’s goods have acquired a reputation in the market and are known by some distinguishing feature.  It is also a prerequisite that a misrepresentation has deceived or is likely to deceive and that the plaintiff is likely to suffer damage by such deception.  Mere confusion which does not lead to a sale is not sufficient.”

Before turning to consider whether the applicant has made out a sufficiently arguable case for passing off it is convenient if I set out those facts that are not presently in dispute and those facts that have been established to the degree necessary in an application for interlocutory relief.

There is a sizeable market in Australia for heat retainer products.  Annual sales are of the order of $6 million to $8 million.  There are a number of competitors in the market who supply products that are similar in design to those supplied by the applicant.  Some of the products that are supplied by competitors, I leave aside the products sold by the first respondent, are blue and some are black, beige and perhaps other colours as well.  Of the products presently available in the market the applicant’s products, again I leave aside those sold by the first respondent, have a distinctive get-up constituted by their colour, the use of the red, white and blue mausser tape and the red overlocking of the edges.  This distinctive get-up might also include the colour of the inner surface.

The first question then is whether this get-up distinguishes the applicant’s goods from those of its competitors.  In my view the evidence enables me to make the following findings.  First, there will be many people who are familiar with the applicant’s products and when they see those products they will be aware that they are manufactured and distributed by the applicant.  Sporting goods retailers and pharmacists will fall into this category.  Secondly, there will be many people who are familiar with the applicant’s products and when they see those products they will assume that they emanate from one source although they may not be aware that the source is the applicant.  Those who fall into this category will include people who have seen the applicant’s products worn by sportsmen and sportswomen and others.  They may have been seen on television, on a sporting arena or elsewhere.  Some of these people might not be familiar with the applicant’s logo because they have not been in a position where the logo was capable of being seen or read.  Here I have in mind, by way of example, spectators at a sporting venue and television viewers.  Nevertheless, even to a person not familiar with the applicant’s logo, the applicant’s products are sufficiently distinctive by reason of their get-up that they will be regarded as emanating from one source.  It follows that the applicant has established that its products have a reputation or goodwill that distinguishes them from those of its competitors.

The second question is whether it is arguable that members of the public or a sufficiently significant section of them will be deceived into thinking that the first respondent’s products are either the applicant’s products or originate from the same source as the applicant’s products.  Mr Savage, counsel for the first respondent, says that when it comes to this question there is no serious issue to be tried.  His argument is quite straight forward and relies on the following facts.  The first respondent’s products are marked with the first respondent’s logo and that logo is very different from the applicant’s logo.  The first respondent’s products are sold in packaging which has printed on it the first respondent’s logo and also has printed on it, in a prominent position, the name “Madison”. Further, a photograph of the first respondent’s product appears on each package and the first respondent’s logo is clearly visible in the photograph.  Thus it is said that the first respondent’s products are sufficiently distinguished from those of the applicant that no possibility of deception could arise.

Superficially, this is an attractive argument because it is quite true, as Mr Savage says, that there is little similarity in the packaging in which the competing products are displayed for sale.  Presently my impression is that there will be people familiar with the applicant’s products and logo who are unlikely to believe upon seeing the same products bearing the first respondent’s logo that the first respondent’s products emanates from the applicant.  For example, I doubt whether those who retail these products, that is the sporting goods store proprietors and the pharmacists, are likely to be misled into thinking that the applicant’s products and the first respondent’s products come from the same source although there is some contentious evidence before me that one person in this category was in fact misled.

However, Mr Savage’s argument does not meet the case of those people, and I suspect that there will be many who will fall into this class, who are familiar with the applicant’s products by reason of their distinctive get-up but who are not aware of their actual source because they have not seen the applicant’s products at close hand and are therefore not familiar with the applicant’s logo.  I have no doubt that people in that class who wish to purchase the product because they have seen it worn by some sportsman or sportswoman upon seeing the first respondent’s range of products will believe or are likely to believe that the first respondent’s product come from the same source as the products they have seen and desire to purchase.

I venture to think that even in the case of a person who has seen the applicant’s logo often it will be the get-up of the product that will make a lasting impression and when that person wishes to purchase the same product it will be the get-up and not the logo that will be brought to mind when confronted with the first respondent’s products unless the applicant’s products and the first respondent’s products are offered for sale side by side.

Finally in this connection, on the present state of the evidence I am left with the clear impression that the first respondent has deliberately copied the get-up of the applicant’s products for the very purpose of taking advantage of the applicant’s goodwill in those products.  Mr Callinan asserted this to be the case in his affidavit in support of the motion for injunctions and while a number of affidavits were filed in response dealing with a variety of matters in none of them was it said that the first respondent did not copy the applicant’s products (an unlikely possibility in any event) or that the purpose of copying the applicant’s products was for some reason other than to obtain a benefit from the reputation enjoyed by them. 

The last matter that must be considered in deciding whether the applicant has made out a case for passing off is whether it has suffered or is likely to suffer damage by reason of the conduct of the first respondent.  It is not seriously in dispute that the applicant will suffer some damage at least by the loss of sales to the first respondent.  The applicant puts its case higher than that.  It says that it has a significant advantage in the market place by reason of the exclusivity of its products’ appearance and image and that if that exclusivity is lost its goodwill will be damaged.  On the present state of the evidence I accept that there is a real risk that this will be so

That leaves the cause of action based on s 52(1) of the Trade Practices Act 1974 (Cth). Does the first respondent, by offering for sale and selling its heat retainer products, engage in conduct that is misleading or deceptive or likely to mislead or deceive? In this case, this raises no different questions from those involved in the passing off claim. Thus, once the evidence indicates that there is a serious question as to whether the first respondent has committed the tort of passing off, it follows that there must also be a serious question as to whether the first respondent has contravened s 52(1).

Is it appropriate then to grant the injunctions sought or should the applicant be left to its remedy in damages if it is ultimately successful in the proceeding?  Looking at the position from the applicant’s point of view if the only loss that the applicant is likely to suffer is a loss of sales that loss would easily be quantifiable and injunctions should be refused: Boots & Co Ltd v Approved Prescription Services Ltd [1988] FSR 45. However, it is my opinion that there is a real risk that the applicant will also suffer damage to its goodwill in the manner it has alleged. That type of damage is not so easily compensable by an award of damages because the quantification of that damage is always a difficult task. Further, if the applicant is ultimately successful at the trial it is likely that it will obtain the grant of permanent injunctions. It must be remembered that s 52(1) of the Trade Practices Act is designed to protect members of the public from deceptive or misleading conduct and their interests will not be adequately protected if the first respondent is permitted to continue to engage in that type of conduct.  I should also mention the fact that the first respondent does not suggest that it would suffer any significant harm if the injunctions were granted.  I accept that it is likely that the first respondent will suffer some loss if it is prevented from selling its goods in their present form but as the first respondent failed to adduce evidence setting out the magnitude of that loss I must assume that whatever loss it will suffer is not so great as would dissuade me from granting interlocutory relief.

During final submissions the first respondent did offer an undertaking not to sell its products to pharmacies. This offer was made for the reason that it is to pharmacies that the applicant sells most of its products and thus the effect of the undertaking would be to minimise the loss of sales which the applicant would suffer. Nevertheless, the undertaking is no answer to the prejudice that may be caused to members of the public whose interests must be protected when there appears to be a contravention of s 52(1) of the Trade Practices Act.

Accordingly, the applicant has satisfied me that it is entitled to injunctions to restrain the first respondent from promoting, offering for sale and selling those of its products that have adopted the get-up of the applicant’s Blue Thermoskin heat retainer range.  To obtain these injunctions the applicant has offered the usual undertaking as to damages.  But I have no evidence of the applicant’s substance to ensure the utility of its undertaking.  It seems to me that unless there is such evidence or that it could be inferred from the nature of the applicant’s activities that the applicant could meet its undertaking I should not make the assumption that it will be able to do so.  Nor do I think it always falls upon a respondent to adduce evidence to demonstrate that an applicant lacks substance.  When I raised this matter during the course of submissions Mr Hess proposed that if I was not satisfied with an undertaking from the applicant the undertaking would be given by Mr Callinan who is a principal shareholder of the applicant.  In this case I think that the appropriate course for me to adopt is to require the undertaking to be given by both the applicant and Mr Callinan.  If those undertakings are given then the injunctions will be granted.

The applicant should bring in short minutes of orders to give effect to my reasons for judgment.  Those minutes should also provide for directions necessary to enable this action to come on for trial speedily.  If the parties are unable to reach an agreement on appropriate directions the matter can be listed before me at short notice.

I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein

Associate:

Dated:             2 June 1998

Counsel for the Applicant:	BJ Hess
Solicitor for the Applicant:	McMaster & Associates
Counsel for the Respondent:	D Savage
Solicitor for the Respondent:	FG Forde Knapp & Marshall
Date of Hearing:	19, 20 May 1998
Date of Judgment:	2 June 1998