Verrocchi v Direct Chemist Outlet Pty Ltd

Case [2016] FCAFC 104

FEDERAL COURT OF AUSTRALIA

Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104

Appeal from: Verrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234; (2015) 112 IPR 200
File number: VID 211 of 2015
Judges: NICHOLAS, MURPHY AND BEACH JJ
Date of judgment: 16 August 2016
Catchwords: TRADE PRACTICES – misleading or deceptive conduct – storefront get-up – secondary reputation in colour or colour palette and other trade indicia – common trade indicia – overall impression – consistency and distinctiveness of get-up – intention to mislead or deceive – evidence of copying – sufficiency of differentiation – no error by primary judge – appeal dismissed
Legislation:

Competition and Consumer Act 2010 (Cth), Sch 2, ss 18 and 29

Trade Practices Act1974 (Cth) ss 52 and 53
Cases cited:

Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397

Dr Martens Australia Pty Ltd v Rivers (Australia) Pty Ltd (1999) 95 FCR 136

Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90

Peter Bodum A/S v DKSH Australia Pty Ltd (2011) 280 ALR 639; [2011] FCAFC 98

Sydneywide Distributors Pty Ltd  v Red Bull Australia Pty Ltd (2002) 234 FCR 549; [2002] FCAFC 157

Warren v Coombes (1979) 142 CLR 531

Windsor Smith Pty Ltd v Dr Martens Australia Pty Ltd (2000) 49 IPR 286; [2000] FCA 756
Date of hearing: 16 November 2015
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 139
Counsel for the Appellants: Mr C D Golvan QC with Mr T D Cordiner
Solicitor for the Appellants: Rotstein Commercial Lawyers
Counsel for the Respondents: Mr G S Clarke QC with Mr I P Horak
Solicitor for the Respondents: Harwood Andrews

ORDERS

VID 211 of 2015
BETWEEN:

MARIO VERROCCHI

First Appellant

JACK GANCE

Second Appellant
AND:

DIRECT CHEMIST OUTLET PTY LTD (ACN 123 831 210)

First Respondent

IAN TAUMAN

Second Respondent

JUDGES:

NICHOLAS, MURPHY AND BEACH JJ

DATE OF ORDER:

16 AUGUST 2016

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellants pay the respondents’ costs of and incidental to the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

THE COURT:

  1. The appellants have appealed the decision and orders of a judge of this Court dismissing their application for relief against the respondents for misleading or deceptive conduct and misrepresentation in contravention of ss 18 and 29 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the predecessor provisions ss 52 and 53 of the Trade Practices Act 1974 (Cth) and for passing off.

  2. The appellants also sought relief below for trade mark infringement, but such an application was…

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Details
AGLC
Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104
Case
[2016] FCAFC 104
Decision Date

CaseChat Overview and Summary

Verrocchi and Gance, two registered pharmacists, appealed against the primary judge's dismissal of their proceeding against Direct Chemist Outlet Pty Ltd (DCO). The appellants argued that DCO's storefront get-up, which included a bright yellow painted shop exterior with red and blue colours and a narrow blue band along the base, infringed on their secondary reputation in the colour or colour palette and other trade indicia, such as slogans like “Is This Australia’s Cheapest Chemist?” and “Prescriptions Up To 50% Off”. They claimed that DCO's storefront get-up was misleading or deceptive, as it was similar to the get-up used by the appellants in their Chemist Warehouse pharmacies.

The court was required to determine whether DCO's storefront get-up constituted misleading or deceptive conduct, and whether it infringed on the appellants' secondary reputation in the colour or colour palette and other trade indicia. The court also needed to consider whether DCO's get-up was sufficiently differentiated from the appellants' get-up and whether DCO intended to mislead or deceive the public.

The court found that the appellants had not established that DCO's storefront get-up was likely to mislead or deceive the public, or that it infringed on the appellants' secondary reputation in the colour or colour palette and other trade indicia. The court held that the overall impression created by DCO's get-up was not similar to the appellants' get-up, and that the differences between the two were sufficient to avoid any confusion in the minds of the public. The court also found that the appellants had not provided any evidence of copying or intention to mislead or deceive. Accordingly, the appeal was dismissed.

The court dismissed the appeal and ordered that the appellants pay the respondents' costs of and incidental to the appeal. The court held that no error had been identified with respect to the primary judge's findings and determination, and that the appeal did not succeed in establishing any grounds for setting aside the primary judge's decision. The court also found that the appellants had not demonstrated any exceptional circumstances that would warrant a departure from the usual costs order.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellants pay the respondents’ costs of and incidental to the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

As we have said, his Honour dismissed the appellants’ proceeding. In our opinion, no error has been identified with respect to his Honour’s findings and determination. The appeal will be dismissed.BACKGROUND Before proceeding further, it is appropriate to set out a brief statement of the factual background. The appellants, Mr Mario Verrocchi and Mr Jack Gance, are registered pharmacists. They have owned pharmacy businesses in partnership with one another and other pharmacists for over 32 years. They have traded under various names including “Chemist Warehouse”, “My Chemist”, “Amcal”, “Gance Chemist” and “Verrocchi Chemist”. Between 1997 and late 1999, approximately 40 pharmacies in Victoria and one in Adelaide were owned either alone or in partnership by the appellants and with others. In late 1999, the appellants identified a business opportunity to establish a new chain of large format discount retail pharmacies in Australia. Between 2000 and 2001, the appellants developed certain key features for their stores. Such features included a bright yellow painted shop exterior together with red and blue colours, a narrow blue band along the base of the store exterior, and signage containing slogans such as “Is This Australia’s Cheapest Chemist?” and “Prescriptions Up To 50% Off”. Apparently, one of the appellants’ primary objectives in developing their store get-up was to differentiate their pharmacies from “traditional community” pharmacy businesses at the time. In June 2000, the appellants launched their first discount pharmacy in Victoria under the name “Chemi Stop”. Over the 12 months from mid-2002, the appellants decided to slowly transition the Chemi Stop brand name to the Chemist Warehouse name so as not to lose any goodwill or brand recognition. On 21 May 2002, the appellants applied to register the trade mark “Chemist Warehouse” comprising a logo containing an outline of a house without a chimney. In mid-2002 they decided to include a chimney in the house logo. The appellants decided that a red house with a chimney would be used on all Chemist Warehouse signage and marketing materials. In approximately September 2002, the appellants began trading under their current name, Chemist Warehouse. In April 2003, the first store branded fully as Chemist Warehouse was opened in Victoria. Since that time, the appellants have also operated an online retail pharmacy at >The appellants have licensed the use of the Chemist Warehouse trade marks, get-up and slogans to proprietors of retail pharmacies. Each Chemist Warehouse pharmacy is owned by registered pharmacists or companies owned by registered pharmacists trading either alone or in partnership. As at 26 May 2006, there were approximately 38 Chemist Warehouse stores nationally. On 28 August 2007, the appellants applied to register the trade mark “Is This Australia’s Cheapest Chemist?”. The primary judge found this trade mark to be invalid (at [293]) and allowed the first respondent’s cross-claim seeking revocation thereof. This determination has not been challenged before us.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Ground 19 fails as it asserts a conclusion based upon the assumed success of one of the earlier grounds.CONCLUSION None of the appellants’ grounds of appeal have been made out. Accordingly, the appeal must be dismissed. We also see no good reason why costs should not follow the event. We will order accordingly.

Ratio Decidendi

Legal Principle Established

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