Verrocchi v Direct Chemist Outlet Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Verrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234

Citation: Verrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234
Parties: MARIO VERROCCHI and JACK GANCE v DIRECT CHEMIST OUTLET PTY LTD (ACN 123 831 210) and IAN TAUMAN
File number: VID 781 of 2013
Judge: MIDDLETON J
Date of judgment: 17 March 2015
Catchwords:

TRADE AND COMMERCE — Trade Practices — misleading or deceptive conduct — passing off — secondary reputation in colour or colour palette and other trade indicia — date for assessing reputation — overall impression — whether respondents’ use of primary colour palette in branding was misleading or deceptive — identification of the class of consumers — intention to deceive — evidence of copying — relevance of use of common trade indicia — sufficiency of differentiation

TRADE MARKS — validity — whether mark inherently adapted to distinguish — infringement — use as a trade mark — descriptive words

PRACTICE AND PROCEDURE — jury — misleading or deceptive conduct — quintessential question of fact to be determined — usual mode of trial is by judge without a jury — no departure from usual mode of trial

Legislation:

Competition and Consumer Act 2010 (Cth)
Evidence Act 1995 (Cth)
Federal Court of Australia Act 1976 (Cth)
Trade Marks Act 1995 (Cth)
Trade Practices Act 1974 (Cth)

Cases cited: ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640
Australian Competition and Consumer Commission v Telstra Corporation Ltd (2004) 208 ALR 459
Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641
British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397
Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45
Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48
Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60
Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511
Comcare v John Holland Rail Pty Ltd (2010) 189 FCR 173
Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431
H P Bulmer Ltd v J Bollinger SA [1978] RPC 79
Hansen Beverage Co v Bickfords (Aust) Pty Ltd (2008) 171 FCR 579
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216
Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172
Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 122 FCR 494
Kettle Chip Co Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152
KoninklijkePhilips Electronics NV v Remington Products Australia Pty Ltd (2000) 100 FCR 90
Madden v Seafolly Pty Ltd (2014) 313 ALR 1
McDermott v Collien (1953) 87 CLR 154
Mobileworld Communications Pty Ltd v Q & Q Global Enterprise (2004) 61 IPR 98
Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd [1946] 63 RPC 39
Optical 88 Ltd v Optical…
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Details
Case
[2015] FCA 234
Decision Date

CaseChat Overview and Summary

The case of Verrocchi v Direct Chemist Outlet Pty Ltd involved a dispute between the applicants, Verrocchi and Gance, and the respondents, Direct Chemist Outlet Pty Ltd and others. The applicants sought relief for alleged misleading or deceptive conduct, passing off, and trade mark infringement concerning the use of branding and colour palettes in the pharmacy retail sector. The case was heard in the Federal Court of Australia.

The legal issues before the court included whether the respondents' use of a primary colour palette in their branding was misleading or deceptive, and whether their use of common trade indicia infringed on the applicants' secondary reputation. The court also needed to determine the appropriate class of consumers to consider for the purposes of assessing the likelihood of deception or confusion. Additionally, the court had to assess the sufficiency of differentiation between the parties' branding and whether there was evidence of copying.

The court determined that the usual mode of trial was appropriate for this case, given the significant factors such as the opposition of all parties to a trial by jury and the practical considerations of cost and preparation burden. The court found that the respondents' use of the primary colour palette was not misleading or deceptive, and that the class of consumers identified by the applicants was too narrow. The court held that there was insufficient evidence of copying, and that the use of common trade indicia did not infringe on the applicants' secondary reputation. The court also found that the differentiation between the parties' branding was sufficient to prevent confusion.

In light of these findings, the court dismissed the application and allowed the cross-claim, with appropriate consequential orders. The court ordered that by 4.00 pm on 27 March 2015, the parties confer and file and serve a joint minute of orders reflecting these reasons, including as to costs, or in the event of disagreement, a separate minute of order with short written submissions in support thereof.

Orders

Orders of the court

1. By 4.00 pm on 27 March 2015, the parties confer and file and serve a joint minute of orders reflecting these reasons (including as to costs), or in the event of disagreement, a separate minute of order with short written submissions in support thereof.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Nevertheless, I considered that the normal mode of trial was appropriate. A significant factor was that all parties opposed a trial by jury. The parties also pointed to a number of practical considerations. Foremost was the fact that at the time that consideration was given to this issue, the trial was listed for an estimate of a seven day hearing. Interlocutory steps had been undertaken on the basis that a judge alone would hear the proceeding. There is no doubt that, as a practical matter, the introduction of a jury would invariably have added a significant further cost and preparation burden to the parties. CONCLUSION In light of the foregoing reasons, the application should be dismissed, and the cross-claim allowed with appropriate consequential orders. In normal events, costs would follow the event. I propose to order that, by 4.00 pm on 27 March 2015, the parties confer and file and serve a joint minute of orders reflecting these reasons (including as to costs), or in the event of disagreement, a separate minute of order with short written submissions in support thereof.

Ratio Decidendi

Legal Principle Established

Furthermore, the test is not one of actual deception or confusion but the likelihood of deception or confusion occurring by reason of the use of the mark. In Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 Kitto J at 595 explained:It is not necessary, in order to find that a trade mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough — for there must be a real, tangible danger of its occurring — it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt…(citations omitted)CONSIDERATION Chemist WarehouseThe history of Chemist Warehouse Mr Verrocchi has been a registered pharmacist for over 34 years and Mr Jack Gance has been a registered pharmacist for over 40 years. The Applicants and Mr Sam Gance have owned pharmacy businesses in partnership with one another and other pharmacists for over 32 years, trading under and by reference to various names including “Chemist Warehouse”, “My Chemist”, “Amcal”, “Gance Chemist”, “Verrocchi Chemist”, as well as other names. In or around 1997, the Applicants, Mr Sam Gance and his late wife Ms Lydia Gance had, between them, approximately 30 pharmacies in Victoria, about half of which traded under the “Amcal” banner. In or about mid-1997 they collectively decided to end their relationship with Amcal and create their own new banner group for their pharmacy stores called “My Chemist”. My Chemist stores, like Amcal, were traditional community pharmacies that typically traded from retail premises that were approximately 200 m2 in size, and were either located within shopping centres or on high streets. Between 1997 and late 1999, there were approximately 40 My Chemist stores in Victoria and one in Adelaide. These stores were owned either alone or in partnership by the Applicants, Sam and Lydia Gance, Mr Verrocchi’s twin brothers Adrian and Marcello, and some others. In late 1999, the Applicants and Mr Sam Gance identified a business opportunity to establish large format discount retail pharmacies in Australia. There were a number of factors which led them to pursue this. First, prior to this time, as far as they were aware, there were no chains of large format discount pharmacies in Australia. There were signs at the time that “big box” discount retail formats would be successful in Australia. Specifically, they discussed how the retail hardware industry was being revolutionised by Bunnings Warehouse which had quickly overtaken the market share of established local hardware stores such as Mitre 10. They also identified a similar trend emerging with consumer electrical retailers. Large discount stores such as JB Hi-Fi were quickly winning market share at the expense of long standing electrical retailers such as Brashs and Billy Guyatts, which ultimately closed down. The Applicants and Mr Sam Gance were also attracted to the rental advantages of operating in large premises outside shopping centres.